General contents

IP-8. Policies and procedures to communicate to consumers

Labeling Requirements

The pertinent regulatory labeling requirements for the product market vary by category. For the national market, we apply the specific Mexican Official Standard (NOM). If there is none, we apply the general laws and regulations, such as: Product and Service Health Control: From the General Health Law on matters of health control of activities, establishments, products and services; Resolution determining additives and coadjutants in food, beverages, and supplements, their health use and provisions; Resolution determining prohibited or permitted plants for teas, infusions, and edible vegetable oils; among others. For the case of export products, we apply the applicable regulations from the country to which we will be exporting.

As a volunteer practice that goes beyond the legal requirements, we review the sub-ingredients of the raw materials included in the formula to evidence any additive or contaminant that may affect the innocuity of the product. Additionally, we request results of contaminant analysis from some vendors, depending on the nature of the ingredient or product both for domestic and export consumption. In some cases, we send such information to be verified with specialized agencies or with bromatology studies in the destination country.

Information on content and ingredients

All our products that correspond to the food, non-alcoholic beverages, and food supplement categories include the list of ingredients and relevant nutritional information.

In food and beverages, we mandatorily include energy content, proteins, total fat, saturated fat, carbohydrates, total sugars, dietary fiber, and sodium.

In food supplements, we include energy content, proteins, total fat, carbohydrates, and sodium by portion per 100g of product.

The main source of nutritional information is the label. However, some of the websites of the company include such information. Additionally, the 01 800 customer service line, for each of the food and non-alcoholic beverage brands has the relevant updated information. All statements must be made in labels that must be supported with scientific evidence to be able to include these in the label and comply with the applicable regulations for the product and market in which the product will be sold.

Within our internal guidelines, we have agreed to indicate in the label:

• Artificial or natural coloring; natural, artificial, or identical flavoring to the natural one; hydrolyzed protein and MSG are declared as such
• There is no declaration of Genetically Modified Organisms (GMO) according to national law
• We declare sweeteners as required by the Additives Resolution
•  We declare all present allergens and those that may be present in the product
• Practically none of our products is fortified, unless it is a requirement mandated by regulations
• Methods used in food processing to maintain their innocuity

In 2021, 2.4% of the total products sold corresponds to products with reduced sodium, saturated fat, trans fat, or added sugar.

SASB. Sustainability accounting standards

IP-7. Research and Development Management

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

Research and Development expenses during the past 3 years have been:

A product is considered new for 5 years after its launch.

IP-1. Client and customer relations

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

Points of Contact:

01-800 Lines: Each Brand has an assigned number in which product quality problems, complaints, or suggestions are resolved.

Digital Media: We have official websites for most of our brands, where consumers and customers may find all product information. We additionally have more than 20 brand profiles in social media, where the “Q&A” interaction allows us to monitor our good choices, concerns, and questions from our customers.

All our corporate brands and accounts have an account on YouTube, except for: Blasón®, Embasa®, Helados Nestlé® and Kikkoman® México.

417-3. Marketing incidents

Neither Grupo Herdez, S.A.B. de C.V., nor its subsidiaries have failed to comply with marketing communications in 2021.

417-2. Product labeling incidents

Neither Grupo Herdez, S.A.B. de C.V., nor its subsidiaries have failed to comply with the product information and labeling of products and services in 2021.

417-1. Product labeling requirements

All labels of our products comply with labeling Mexican Official Standards (NOM), and these have the requirements that we must comply with.

We conduct an initial review of compliance of the ingredients. We perform the review of the ingredients that compose the formula of the different products exhaustively to ensure compliance with the applicable regulations, not only locally, but also, as applicable, of the countries to which we export.

• Product Health Control Regulations.
• NOM-050-SCFI-2004: Commercial Information; General Product Labeling.
• NOM-051-SCFI/SSA1-2010: General Labeling Specifications for Food and Non-Alcoholic Beverages Prepackaged Food – Commercial and Health Information.

IP-6. Agricultural Sustainability

Sustainable Agriculture Program

The program consists of guiding, training, overseeing, and following-up on the production practices carried out by our agricultural vendors, having as their basis the conservation and improvement of the environment, giving special attention to protected zones or areas, use of hydric resources, soil conservation, and air cleaning.

We apply this Program through compliance Rules:

• Preservation of biodiversity

• Air, water, and soil protection

• Energy and climate change

• Waste management

• Integrated crop management

• Agrochemical reduction

• Health and safety

• Decent work

• Social responsibility

• Communication and participation

The main benefits of this program are:

1. Promoting, incentivizing, and developing sustainable agriculture in our vendors as a new agricultural production culture.
2. Reducing the use of pesticides to lower the environmental impact and promote adequate use of agrochemicals (BUMA).
3. Preserving soil, air, and water quality in farm areas and their surrounding areas.
4. Incentivizing practices to improve soil quality.
5. Promoting practices for efficient management and use of resources, favoring reduction, reuse, and recycling.
6. Promoting the protection of sensitive or protected areas and species.

Audit

To give continuity and validity to the program, we have a team of internal auditors that assesses and follows-up on the condition of the plots of land. This is carried out through a checklist, which measures the progress and points of improvement of each vendor.

Mid 2021, we had 32 evaluated vendors (January to June 2021) at the end of 2021, we had evaluated 30 vendors (December 2021).

29 of the 30 vendors comply with the program, which represents 96.6% compliance as of the closing of December 2021.

The main existing controls to monitor the progress of the implementation of the programs are:

1. Providing document control at the start of the agreement. Frequency: annual.
2. Periodic oversight of each vendor: Frequency: every fifteen days.
3. BPA audits. Frequency: Quarterly.
4. Water, soil, and fruit analysis. Frequency: water and soil one once. Fruit, on a monthly basis.
5. Tours. Frequency: monthly.
6. Activity reports of the Agricultural Auditors: Frequency: weekly.

Use of agrochemicals

The main method to reduce the use of agrochemicals is under the Integrated Crop Management (use of biological products), mainly:

From our total agricultural vendors, the compliance percentage of the Good Use of Agrochemical Management is 90%, the same percentage as last year.

*Note: The program only covers fresh raw material vendors, as a first stage, these are onion, tomato, pepper, cilantro vendors, among others.

409-1. Operations with a child labor risk

In our Vendor Code of Conduct, we have the minimum guidelines that our current and potential vendors must comply with respect to social and environmental conditions for development of their operations and services.

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

408-1. Child labor risk

We have strict control in our hiring processes, and a Vendor Code of Conduct, which each vendor must sign when establishing a business relationship with Grupo Herdez.

The code provides clauses that prohibit child labor or forced labor. The foregoing, as a measure to prevent the risk of using child labor throughout our value chain, especially in the most vulnerable sectors such as agriculture and fishery.

The Vendor Code of Conduct may be checked at: https://grupoherdez.com.mx//wp-content/uploads/2021/09/Codigo-de-Conducta-de-Proveedores-GH-25.junio_.2021-VF.pdf

204-1. Significant operations expenses

IP-9. Health and Nutrition Care Strategy Development

Within the Technical Department, the Scientific and Regulatory Affairs Department validates that the products developed at Grupo Herdez contain permitted ingredients, and in the dose indicated by the applicable regulation for each product category. Additionally, it determines the nutritional icons that the Front Labeling must have, for consumers to have the nutritional information that the product contributes.

We continue strengthening the internal nutritional criteria within the nutritional guidelines for development of new products of the entire Group, creating the categories and their respective nutritional criteria indicating the maximum content limits for added critical nourishments and specific indications that must be considered and/or must be complied with. In 2021, we incorporated 10 categories plus nutritional criteria tables.

This year, 3.2% of the total sales volume was of products with low contents of saturated fat, trans fat, sodium, or added sugar.

We improved the nutritional quality in 15 formulas of our products with some type of reduction of added critical nourishments (sugars, sodium, saturated fats). The formulas that had such nutritional improvement were:

a) Sodium reduction: All varieties of ground tomato from Del Fuerte®, and also the ground tomato formula for the Herdez® brand.

b) Sugar reduction: The formulas involved for this nourishment were 6 varieties of hard ice cream for the Nutrisa® brand and a formula (popsicle) for the Nestlé® brand.

c) Sweetener elimination: In the formula (popsicle) for the Nesté® brand.

This year, we carried out a nutritional mapping the purpose of which was to understand the amount of warning seals of existing critical nourishments in each formula, artificial conservative content, and also sweeteners and flavoring. We also identified the possibility of reducing added critical nourishments or otherwise reducing the number of warning seals.

416-2. Violation incidents

Neither Grupo Herdez, S.A.B. de C.V., nor its subsidiaries have failed to comply with the voluntary regulations or codes on health and safety matters on products and services in 2021.

416-1. Product impact evaluation

100% of the product portfolio, both domestic and export, are evaluated on health and safety matters to promote improvements.

On health matters:

-25.6% of the domestic product portfolio are of a better nutritional quality. Such percentage is represented by products that do not contain added critical nourishments (sugars, sodium, saturated fat), and products that had some reformulation in added critical nourishments.

– 2.7% of the domestic product portfolio was reformulated to improve the nutritional profile, eliminating or reducing the content of added critical nourishments (sugars, sodium, saturated fat), and eliminating sweeteners.

From the product design, raw material and packaging material selection, we conduct a risk assessment according to the market in which the product will be marketed, and based on this we establish the specifications and limitations to comply with. Additionally, we have external audits to obtain the certification in FSSC22K.

All new and existing products conform their specifications to National and official quality standards, and Export standards to CFR, FDA, and USDA, as applicable.

308-1. Our vendors have passed evaluation and selection filters in accordance with environmental criteria

Through the Sustainable Agricultural Program, we conduct the evaluation of 100% of new vendors every 6 months, complying with the rules checklist.

Mid 2021, we had 32 evaluated vendors (January to June 2021) at the end of 2021 we completed the evaluation with 30 vendors (December 2021).

29 of the 30 vendors comply with the program. This represents 96.6% compliance at the closing of December 2021.

301-3. Reused products and packaging materials

In 2021, we recovered and recycled 4.5 tons of cans through the “Recicla la Lata” initiative. For more information: https://porunmundomasvivo.com/

Grupo Herdez forms part of ECOCE, a non-profit environmental organization, which has a comprehensive post-consumption waste management plan. Through this alliance, we work to recover waste and integrate it to the recycling cycle, in addition to adopting and promoting environmental care and sustainability.

301-2. Used recycled inputs

At Grupo Herdez we are starting our path to circularity, and working on specific initiatives to achieve our goals for 2025. On the subject of recycled inputs, the materials that contain these are derivatives of corrugated carbon such as small boxes, boxes, and trays.

301-1. Materials used by weight and volume

In 2021, we consumed materials within 3 categories: agricultural raw materials, non-perishable raw materials, and packaging materials.

Renewable materials

• Agricultural raw materials: 163, 740 Ton
• Raw materials: 304,729 Ton
• Packaging materials: 118,695 Ton

Non-renewable materials

• Packaging materials: 1,789 Ton

306-5. Bodies of water affected by water poured and/or run-off

Discharges of wastewater from the facilities of Grupo Herdez are mainly discharged in the municipal sewage network. For the case of discharges to surface bodies of water or federal channels, we do not have technical evidence of their impact. Even so, all discharged water is previously treated, and the volumes are low/medium.

306-4. Transportation of hazardous waste

At Grupo Herdez, we do not transport, import, export, or treat any hazardous waste. The hazardous waste generated in the Group is sent to collection centers and/or controlled confinement centers.

306-3. Significant spills

We did not have any spills of material, waste, substances, and/or liquids in 2021.

306-2. Types of waste and elimination methods

This year, we generated 45,515 tons of hazardous and non-hazardous waste, a 31.6% year over year, due to an increase in production, the addition of the waste volume at the Coronel Espinoza plant; greater control of the health and safety conditions resulting from the pandemic, in addition to the generation and handling of greater volumes of obsolete equipment. To compensate for this increase, we were able to increase recycling of the waste generated by 86.6%.

Total weight of hazardous waste by elimination method

Total weight of non-hazardous waste by elimination method

Total weight of the waste generated during the past 4 years

Note: We made an adjustment to the 2020 figures, eliminating the Avomex plant, which does not belong to the own operations of Grupo Herdez.

306-1. Water discharges by quality and use

303-5. Water Consumption

The volume of rainwater collected and stored on an annual basis is 76 megaliters, corresponding to the maximum installed capacity.

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

Notes: 

• The reported consumptions are measured directly through measurement instruments that are overseen and some of them certified by the federal, state, and municipal authorities. These consumptions are reported to such authorities through different reporting forms and mechanisms.
• The volume of rainwater is an estimated volume of what Complejo Duque de Herdez, Mexico Plant, and Mexico Distribution Center recover and use for garden watering.
• Since we are not using rainwater in the production processes, we will be reporting separately.

303-4. Water discharges

Water discharges by source

For the following sources: Underground (wells); seas, oceans; rainwater and discharged water from another organization, we did not carry out discharges.

Volume by discharges in areas with hydric stress

For freshwater, there are no discharges.

Note: We made an adjustment to the 2020 figures, eliminating the Avomex plant, which does not belong to the own operations of Grupo Herdez.

We took as a hydric stress determination criteria which is reported by Aqueduct Water Risk Atlas 2019 since it is an internationally recognized tool with the exception of Merida, where we considered the CONAGUA criteria by considering it more adjusted to the reality of the country.

Wastewater Treatment

Priority concern substances for water discharge

Substances: Oxygen Biochemical Demand (OBD), Total Suspended Solids (TSS), Total Dissolved Solids (TDS), Sedimentable Solids (SS), Hydrogen Potential (HP), Electrical Conductivity, Temperature, Greases and Oils.

Method to define its importance: Compliance with national standards and particular discharge conditions established by the Mexican government.

Substance: Oxygen Chemical Demand (OCD).

Method to define its importance: Standard determined for operational control of the system.

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

• NOM-001-SEMARNAT-1996: Establishes the maximum permissible limits of contaminants in wastewater discharges and national property
• NOM-002-SEMARNAT-1996: It establishes the maximum permissible limits of contaminants in wastewater discharges to urban or municipal sewage systems
• State Technical Standard NTE-SLP-AR-001/05: It establishes particular conditions for wastewater discharges to the drainage and sewage network of the Municipalities of San Luis Potosí, Soledad de Graciano Sánchez, and Cerro de San Pedro
• Particular Discharge Conditions: Established by federal authorities in accordance with Article 140 of the Regulations to the National Waters Law, which sets forth that to determine the particular discharge conditions, “The Commission” will consider the parameters and maximum permissible limits contained in Mexican Official Standards issued by the authorities with jurisdiction on matters of wastewater discharges and for treatment of water for human use or consumption, and the parameters and maximum limits derived from the Classification Declarations of National Waters Body published under the terms of Article 87 of the “Law”.

303-3. Water Extraction

Total water extraction, in megaliters, by source. 

303-2. Management of the impacts related to water discharges

The minimum standards established for the quality of the effluent discharges of Grupo Herdez are:

* Oxygen Biochemical Demand (OBD)

* Total Suspended Solids (TSS)

* Total Dissolved Solids (TDS)

* Sedimentable Solids (SS)

* Hydrogen Potential (HP)

* Electrical Conductivity (CE)

* Greases and Oils (G&O)

* Oxygen Chemical Demand (OCD)

Specific standards:

• NOM-001-SEMARNAT-1996:It establishes the maximum permissible limits of wastewater discharges and national property
• NOM-002-SEMARNAT-1996:It establishes the maximum permissible limits of contaminants in wastewater discharges to urban or municipal sewage systems.
• State Technical Standard: NTE-SLP-AR-001/05, which established particular conditions for wastewater discharges to the drainage and sewage network of the Municipalities of San Luis Potosí, Soledad de Graciano Sánchez, and Cerro de San Pedro.
• Particular Discharge Conditions: Established by federal authorities in accordance with Article 140 of the Regulations to the National Waters Law.

303-1. Interaction with water as a shared resource

Extraction

Discharges

Note: The quality of wastewater discharges sent to recipient bodies of water is overseen through compliance with the maximum permissible limits established by the relevant Mexican Official Standards.

Basins where water is extracted by the organization:

Related impacts

Our goals regarding water are established based on water consumption and wastewater discharge indicators that are carried out for each facility. Currently, each facility identifies areas of opportunity in its processes and makes estimates on the potential savings that each may provide, to then propose a reachable annual goal. Such goals are unrelated to the local context of their locations.

Note: No analytical, holistic, or deep approach is applied to identify the potential impacts, rather we only intuitively consider the potential impacts that may be caused by the consumption volumes of water extracted at the sources and, due to the number of contaminants present in the wastewater discharged to the different recipient bodies of water.

IP-10. Percentage of renewable energy consumed in the organization

In 2021, 69.2% of the energy consumed by Grupo Herdez came from clean sources.

Renewable energy (wind) 41.5 %

Clean energy (cogeneration): 27.7%

305-7. Nitrous oxide (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 that come from direct fixed (stationary) and mobile sources.

To determine the emission factors to be used, we considered the provisions issued by the UK Department for Environment, Food and Rural Affairs (DEFRA), la US Environmental Protection Agency (EPA), and the Intergovernmental Panel on Climate Change’s (IPCC) 2006 Guidelines for National Greenhouse Gas Inventories, through the Mobile Combustión GHG Emissions Calculation Tools and Stationary Combustion GHG Emissions Calculation Tools that may be checked at the GHG Protocol Website.

On the other hand, although the data represents the Group’s concentrate, the estimate is based on specific data provided by each facility, considering fuel consumption -measured directly- in fixed and mobile sources of Grupo Herdez. Likewise, unit conversion factors based on the decimal metric system were used for the conversion from kilograms to tons.

305-6. Emissions that are damaging to the ozone layer

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

The most used refrigerants are R-410A, R-134A, R-407C, R-404A, R-507, R-147, R-427, and R-MO99. For 2021, some facilities have already been established  overseeing the non-use of R-22 refrigerant, and other prohibited refrigerants.

305-5. Reduction of greenhouse gas emissions

305-4. Intensity of greenhouse gases

Considering the emissions from plants and distribution centers at the same time, including in these emissions those that are direct (mobile and fixed sources) and indirect (electricity from non-renewable sources), the intensity of GG emissions for 2021 was 0.106 Ton of CO2e/Ton produced, which represents an approximate reduction of 15.9% year over year. Unlike in 2020, for the year 2021, the consumption of electricity from the Cogeneration Plant in the Barilla and McCormick (Duque de Herdez) Plants, and the San Luis Potosí Distribution Center was declared with 0.00 emissions since, due to the SBTI analysis and to not duplicate accounting of Group level emissions, the emissions generated by this type of source were assigned directly to the Cogeneration Plant in scope 1 for its consumption of natural gas. The intensity of GG emissions is expressed in tons of CO2e per tons produced, and it is expressed based on the sum of direct and indirect emissions reported in the prior emission indicators, adding the emissions from fuel consumption and emissions due to consumption of electricity from the Federal Electricity Commission (CFE).

305-2. Indirect Greenhouse Gas Emissions (Scope 2)

Total indirect emissions

(Ton CO2 equivalent)

2021- 10,337

2020 – 16,146

2019 – 25,019

Notes: 

We made an adjustment to the 2020 figures, eliminating the Avomex plant, which does not belong to the own operations of Grupo Herdez. 

The gases included in the calculation were CO₂e.

In 2021, we had a slight increase in the amount of electricity from wind sources supplied to our plants.

The electricity generated by the Cogeneration Plant was sold to the facilities of Grupo Herdez (Barilla, McCormick (Duque de Herdez) plants, and San Luis Potosí Distribution Center), and the other part of the electricity generated was used by the Cogeneration Plant for self-consumption.

In the 2020 report for the Barilla, McCormick (Duque de Herdez) plants, and San Luis Potosí Distribution Center, we reported generation of emissions from electricity sold by the Cogeneration Plant. However, in 2021, this consumption of electricity was deemed ZERO emissions since, due to a recommendation of the SBTi methodology, emissions derived therefrom were fully counted for the Cogeneration Plant, since it is the one that uses the fuel for generation, sale, and self-consumption of electricity, and to prevent a double accounting of emissions.

305-1. Direct Greenhouse Gas Emissions (Scope 1)

302-4. Reduction in energy consumption

In 2021, we had a 6.0% increase in energy consumption due to a 6.6% increase in production, therefore, we consumed more fuel. At the Cogeneration Plant, we had an increase in production of electricity, which caused greater consumption of natural gas.

302-3. Energy Intensity

Regarding electricity consumption, energy intensity for 2021 was 136.71 Kwh/ton produced, i.e., a 5.4% increase from the previous year, where 129.65 KWh/ton produced was consumed. This, due to greater annual production in 2021.

Regarding fuel consumption, energy intensity for 2021 was 22.84 m3/ton produced, i.e., 18.9% more than the previous year, where the intensity was 19.21 m3/ton produced. This was due to greater production and also to greater consumption of fuel at the Cogeneration Plant.

The total energy intensity of the group in GJ/Ton produced was 2.05, i.e., 14.5% more than the previous year.

• 2021: 2.05 GJ/Ton produced
• 2020: 1.79 GJ/Ton produced
• 2019: 2.35 GJ/Ton produced

Note: We made an adjustment to the figures, eliminating the Avomex plant that does not belong to the own operations of Grupo Herdez.

302-1. Energy Consumption

Fuel Consumption

2021 – 902, 353 Gj

2020 – 802,955 Gj

2019 – 975,667 Gj

Type of Fuel

Natural gas: 546,661 GJ

Fuel Oil: 295,988 GJ

Industrial Diesel: 1,941 GJ 

LP Gas: 57,238 GJ 

Gasoline: 525 GJ

Electricity Consumption: 79, 274, 501 kw

Regarding the absolute total, in 2021, we consumed 1,187,741.15  GJ, a 6% increase with respect to 2020, where we consumed 1,122,684.94 GJ (figured adjusted for this report, since the one published in 2020 included Avomex, which plant does not belong to the own operations of the Group).

The increase is due to the fact that in 2021 we had 6.6% more production than in 202, which resulted in greater energy consumption, mainly fuel. Additionally, the Cogeneration Plant also had an increase in the production of electricity, which caused greater consumption of natural gas.

Our calculation methodology is based on converting consumption in m3 of fuel to caloric units (Gjoules and of the KWh of electricity consumed, to Gjoules through conversion factors applicable nationwide.

415-1. Political Contributions

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

We have an Ethics Committee composed of 6 members of different departments, which join their efforts with our directors to provide advice regarding ethical and legal conduct.

You can check our Code of Ethics at:

https://grupoherdez.com.mx/storage/2021/10/Codigo-de-Etica_18.5×13.5cm-2020_HQ.pdf

205-3. Confirmed cases of corruption and measures adopted

In 2021 we confirmed 7 cases of corruption, 3 more cases than last year. All of these cases resulted in the Company cutting ties with all people involved.

205-2. Communication and training on anticorruption policies and procedures

All of the 9 members of the Board of Directors (100%) receive and are aware of the Group’s anti-corruption policies:

• Code of Ethics
• Policy on Illegal Payments and No Bribery.
• Conflict of Interest Policy.
• Gifts Policy.

In 2021, we informed to:

•  7,095 collaborators (69% of total) on anti-corruption policies and procedures of the organization.
• 6,430 collaborators (62% of total) took classified courses on Ethics and Legality, with 9,225 hours invested.1,148 new business partners (100% of total) signed our Vendor Code of Conduct (this Code contemplates our policies), since it is an indispensable requirement to establish a business relationship.

From the training team, we conducted efforts aimed at informing and/or reinforcing knowledge of our policies and procedures, including those related to anti-corruption.

COMMUNICATION

Throughout the year, we implemented a communication campaign called “Non-Negotiables of the Code of Ethics” in which we included two anti-corruption related communications:

– Fraudulent Conducts: This communication was sent by email and placed in the bulletin boards of the plants.

– Illegal Payments: This communication was sent by email and placed in the bulletin boards of the plants.

TRAINING

– Training of the Code of Ethics: 5,078 collaborators(49% of total) received training on matters related to the Code of Ethics, whether in courses with this name or institutional induction courses.

– Annual Endorsement of the Code of Ethics of 1,632 trained collaborators (16% of total).

– Culture of Legality Course:

In this program, we trained 4,143 collaborators (40% of total) virtually, remotely, and in person.

– Legality Ambassadors:  We trained 48 legality ambassadors (collaborators that held helped on this subject at our locations) in groups organized by Grupo Herdez. 8 additional ambassadors were trained in groups organized by Consejo Mexicano de Negocios and México Unido Contra la Delincuencia.

In total, we have 14,344 records of people that received communications and training.

Note: The members of the Board of Directors, collaborators and business partners trained in a culture of legality or who receive communication of the policies and procedures are from all regions where the Group has operations and from all labor categories for collaborators.

205-1. Operations assessed for corruption-related risks

At Grupo Herdez, the Human Resources Department, jointly with the Internal Audit are commissioned with monitoring all complaints for violations of the Code of Ethics, including complaints and reports regarding corruption and money laundering, in addition to human rights violations, workplace violence, and psychosocial risks. We do not make a formal analysis of the risks related to these issues, however, through this monitoring, it is possible to detect the subjects that arose with the greatest incidence: abuse of authority, abuse of trust, preferential treatment, theft of goods, conflicts of interest, and thus established the necessary measures to prevent actions of this kind.

We do not consider the number of operations but rather of cases, and we respond in indicator 205-3.

IP-3. Eating Healthy

Healthy Eating Program

The  Healthy Eating Program provides food advice to our collaborators to modify their habits through balanced food plans and monthly consultations.

In 2021, we provided 1,286 remote nutritional consultations, 6% more than the prior year. A monthly average of 117 collaborators in Mexico City, State of Mexico, and Los Mochis. Between all participants, they were able to lose 466 kg, 60% more than in 2020.

A Summer with Grupo Herdez. With the goal of promoting a culture of healthy eating among the children, for 4 months, we published infographics related to eating healthy and capsules preparing fun dishes in the online platform Papalote en Casa. We were able to reach more than 347,000 people..

Navegantes en la Cocina

In November 2021, Saber Nutrir®, in collaboration with Fundación Herdez and Ediciones el Naranjo, published the book “Navegantes en la Cocina”, a story that seeks to approach children with the goal of contributing to their education regarding good eating habits.

We also had nutritional talks with the goal of discovering the riches and variety of the food that composes our diet, and promoting the bases for healthy eating. The total interactions of the digital activities reached 12,400 people.

IP-5. Type and rate of injuries, professional sickness, lost days, absenteeism, and work-related mortal victims

The Environmental, Health, and Safety (CASH) Control department maintains a culture of prevention, taking care of the integrity and continuity of the business, therefore, this year, we reduced the number of accidents by 44.3%, and regarding absenteeism, we had 71.2% less lost days, thanks to home office flexibility and timely follow-up of health protocols for all collaborators.

(*) The rate of accidents expresses the number of accidents in the year in connection with the total man-hours worked, multiplied by the factor 200,000.

(**) The rate of days lost is expressed by comparing the total days lost in the year with the total man-hours worked, multiplied by the factor 200,000.

Note: The information presented herein covers all collaborators of the Group, since the Company does not have outsourced personnel.

Extraction of information from the absenteeism registry.

403-8. Health and safety management system

The Environmental, Health and Safety (CASH, for its acronym in Spanish) Control department monitors our health and safety management system. Such systems are applicable for all facilities of Grupo Herdez, including plants, distribution centers, stores, and corporate offices. Additionally, it covers all personnel that work inside our facilities. The occupational health and safety management systems implemented apply for all employees and for workers that are not employees of Grupo Herdez.

100% of workers are covered under this management system, and 94% of these are subject to an internal audit.

403-7. Impact prevention and mitigation

The company has an Industrial Safety Policy that applies to any person that works at the facilities of Grupo Herdez and applies to all hired or outsourced personnel. It focuses on minimizing unsafe conditions and acts, complying with the effective regulations applicable inside Grupo Herdez.

403-6. Employee Health Promotion

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

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

All medical information of collaborators is strictly confidential. To ensure the foregoing, we have our Code of Ethics.

• 01800 Line (01800 CONFIANZA – 01800 266342692).
• Trust Email (confianza@herdez.com).
• Suggestions Box.

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

403-5. Health and Safety Training

403-4. Employee participation and consultation

Grupo Herdez has different processes to promote participation of and consultation with workers in developing, implementing, and evaluating the management system. Additionally, to provide access and communicate relevant information on occupational health and safety to workers, such as:

We have health and safety management committees to timely follow-up on each relevant matter described as follows:

Additionally, we have formal local agreements with unions, for the benefit of workers on occupational health and safety matters, such as: emergency brigades, evacuation, firefighting, fighting diseases and work accidents; health and safety campaigns; workplace risk prevention system, and all provisions of laws, regulations, and Mexican Official Standards.

403-3. Occupational health services

The participation of the Occupational Health service (Medical Service) starts with a safety tour program, highlighting unsafe conditions. Based on the obtained risk mapping, an annual program of general and special tests is established, with spirometry, audiometry, vibrations, depressed and/or elevated temperature conditions, etc.

Medical files are strictly confidential, solely for doctor-patient knowledge.

403-2. Hazard and Risk Identification

The processes used to identify work risks and assess risks periodically or sporadically are performed from the Environmental, Health, and Safety (CASH) department.

In the STOP system, we analyze the number of unsafe acts and conditions. The accident ratio and safety pulse has the goal of being above 94%.

The indicators are reviewed and analyzed on a weekly basis with the safety leaders, together with the progress that they had in their regulatory folders.

The monthly and annual results are sent to local management departments (plants, for example), CASH department and supply chain department, and work plans and the “logic tree” related to the CASH department are created based on results.

The report is through cards that are deposited in mailboxes, reports documented through verification lists and through reports from the Health and Safety Commission. The information is confidential, and a review committee intervenes with support from management in the case of plants.

For the case of stores, only if a situation is relevant is it reported to the District Managers, which provide particular support to the case.

Accidents are classified as: incapacitating, non-severe accidents (that do not require incapacity leave), accidents without injuries (without affected personnel, only facilities), almost accidents.

Policies and processes in case of incidents

403-1. Health and safety management system

The Environmental, Health, and Safety Control (CASH, for its acronym in Spanish) department monitors our health and safety management systems. Such systems are applicable to all facilities of Grupo Herdez, including plants, distribution centers, stores, and corporate offices. Additionally, it covers all personnel that works at or are located 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 safeguard the integrity and wellness 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 whose right to liberty of association and collective bargaining may be in jeopardy

In all facilities of Grupo Herdez, we respect the guidelines provided by Law to exercise freedom of association and collective bargaining. https://grupoherdez.com.mx/en/downloads/

406-1. Discrimination incidents

Harassment and discrimination due to ethnicity, religion, nationality, gender, marital status, sexual preference, age, disability, or for any other reason is prohibited in all aspects of our work activities.

You may check our Code of Ethics, and other Policies at: https://grupoherdez.com.mx/en/downloads/

No cases of discrimination occurred in 2021.

405-2. Ratio of wage base and of compensation of women vis-à-vis men

In line with our commitment to gender equity, we calculate the ratio of the base wage of women vis-à-vis men, which enables us to focus our efforts on closing the wage gap.

405-1. Diversity in governance body and employees

The structure of the Board of Directors is located in indicator 102-18.

2 of its 9 members are women, 22% of the total. The details of the diversity of the members of the governance body can be found in indicator 102-22.

Employees by work category and sex

At the closing of 2021, we had 13 people with disabilities in our workforce at the operational level, 10 men and 3 women.

401-3. Parental leave

We offer maternity and paternity benefits as provided by the Federal Labor Law.

In 2021, 103 female collaborators and 38 male collaborators took parental leave.

82% of women and 100% of men came back to work after  maternity and paternity leave.

401-2. Full-time employee benefits

The social benefits that we offer our collaborators are above what the Federal Labor Law (Ley Federal del Trabajo, LFT) requires, and are a common denominator in all Companies of the Group.

All of our personnel are offered life insurance, public health services, coverage for incapacity or disability, maternity or paternity leave, and retirement provisions.

Other benefits include:

• Grocery vouchers
• Health insurance
• Check up for executive personnel
• Weight control campaigns
• Nutritional evaluations
• Vacation days in addition to those required by Law
• Marriage bonus
• Children’s Day, Mothers’ Day, and New Year’s Celebrations
• Breastfeeding rooms
• Shareholding

Through our Gender Equity Policy, we promote equality in our workforce. Wages for each category or vacancy are established regardless of gender.

You may check this policy at: https://grupoherdez.com.mx/en/downloads/

401-1. New employee hires and personnel turnover segmented by age group and region in 2021

The following tables contain the new employee hires and personnel rotation segmented by age group and region in 2021.

New Hires

Total: 2,952

Women: 43%

Men: 57%

Turnover Rate

The turnover rate was 15% 

Total: 1,515

Women: 12%

Men: 17%

404-3. Percentage of employees that receive periodic performance and professional development evaluations

The performance and growth of our employees is evaluated at least once a year. Of our total non-unionized workforce, 2,183 evaluations were conducted, 30.4% more multidimensional performance evaluations (9-box methodology) than the previous year.

Performance evaluations were made on: 42% women and 58% men.

The percentage of evaluations by work category were:

Strategic – 4%

Operational – 40%

Operational/Regulatory – 44%

Tactical – 12%

404-2. Programs to improve employee skills and transition assistance program

We have training programs with which collaborators may improve their skills, such as: Operational discipline matrix, 5’s System, Time Management, Self-Belief, Motivation, Leadership, Management Abilities, Collaboration, Communication, SafeStart, basic courses for Herdez Leaders (principles and qualities of genuine leadership, managing emotions, collaborating for an impeccable service, the three keys for success of leaders, such as developing agility in the team), decision-making, and teamwork.

In the case of the assistance provided, the training team supports collaborators with the use of technology, search for vendors and logistics for training events. We currently do not have training programs related to managing the end of professional careers.

404-1. Average hours of training per year per employee

These hours represented an investment of more than $12,600,000 Mexican Pesos MXN. 

• Operations Training: In the year, we had more than 2,400 training sessions for development in different technical and regulatory competencies related to the position, training more than 9,000 collaborators.
• Store Training: This year, the Nutrisa®, Cielito Querido Café®, Moyo®, and Lavazza® brands received training on matters related to non-discrimination through the Universidad Grupo Herdez platform, in addition to the offering of courses related to operational information, Code of Ethics, and legality culture.
• Leader Initiative: 1,416 collaborators trained in developing competencies and knowledge for leaders at Grupo Herdez; a 16% increase year over year.
•   Trainer of Trainers and Mentors Initiative: 1,250 expert collaborators, 83% more than last year, shared their knowledge and experience with others. We provided 2,400 courses in total, of technical and institutional knowledge, reducing the learning curve and integration of collaborators in new work positions.
•   Young Talent Initiatives: 31 young people participated in the Professional Practice and Jóvenes Construyendo el Futuro programs, 7 of which were hired for vacancies in the Group.

We also participated in the Líderes en Movimiento Media Superior and Líderes en Movimiento Universitarios initiative, promoted  by Consejo Mexicano de Negocios (CNM) and Centro de Investigación y Docencia Económicas (CIDE). For 2021, 7 of the 100 young people selected formed part of the communication between collaborators and family members of the Group, from a set of 3,000 candidates sent by 60 companies.

419-1. Violation of social and economic laws and regulations

Neither Grupo Herdez, S.A.B. de C.V., nor its subsidiaries have violated social and economic laws or regulations in 2021.

307-1. Violation of environmental laws and regulations

Neither Grupo Herdez, S.A.B. de C.V., nor its subsidiaries have violated environmental laws or regulations in 2021.

206-1. Unfair competition suits

In 2021, no suit was filed relating to monopolistic or unfair practices. However, and notwithstanding that in the past few years no case of this kind has arisen, we have an Antitrust and Economic Competition Policy.

https://grupoherdez.com.mx/storage/2021/09/POLITICA-COMPETENCIA-ECONOMICA.docx.pdf

IP-4. Environmental and Social Investments

Social Investment

We promote food safety in the communities where we operate, so that all people have access to sufficient, safe, and nutritious food to cover their nutritional needs, while satisfying their cultural preferences for a healthy and active life.

Social investment was $109,046,493.00, a 66% increase year over year. This included activities carried out by Fundación Herdez through in-kind donations to Asociación Mexicana de Bancos de Alimentos, A.C. (BAMX), the Saber Nutrir® program with donations to Patronato Pro Mazahua A.C. and other social projects of the Group such as Semillero Nutrisa® Program.

In addition to construction of the “Casa Doña María” space, the new headquarters of Fundación Herdez in San Luis Potosí, and a special donation from Stewart Investors equivalent to 10,000 pounds, the purpose of which was centered on relieving the effects of the pandemic in Mexico through the “Unidos Hacemos Más” campaign.

Environmental Investment

Our environmental commitment has a preventive approach favoring sustainable development, promoting initiatives, and disseminating new technologies to reduce the environmental impacts of our operations, within the directives and scopes established in the environmental management system.

Our environmental investment was $73,320,786.0, an 62% increase year over year. This included the “Por un Mundo Más Vivo” program of the Herdez® Brand; Un Legado más Fuerte of the Del Fuerte® Brand, and sustainability training for collaborators.

Additionally, we started the sustainability progress level evaluation program for 100 of our main vendors in alliance with IKUS. The 2025 objective of this program is to guarantee a supply chain with sustainable criteria in at least 70% of purchases.

207-4. Country by country report

The tax jurisdiction of Grupo Herdez is the United Mexican States.

Figures expressed in Mexican Pesos MXN.

207-3. Participation of stakeholders and management of tax-related concerns

There are no compliance agreements with the tax authorities. There is no promotion or participation of public policy on tax matters.

207-2. Tax governance risk control and management

People responsible for compliance with tax obligations: Office of the Assistant Director of Management and the Tax Management Department

Mechanisms to ensure compliance with tax obligations: The Office of the Assistant Director of Management has a centralized and specialized Tax Department to ensure timely and adequate compliance with tax obligations.

Mechanisms to ensure compliance with tax obligations: Control and recording of compliance with tax returns and obligations, federal and state tax compliance opinions. We submit these to the authorities and external audit. We provide financial reports, study matrix and control and local and international transfer pricing; continuous training of personnel on tax matters, outside counsel and tax advisors.

Reporting Mechanisms: Internal and external audits, issuing federal and state tax compliance opinions, and financial reports, assistance from outside counsel and tax advisors. (Note: There is no individual physical or organizational strategy in the Group, and none was applied)

207-1. Tax approach

At Grupo Herdez we fully comply with applicable regulations, both national and international.

201-4. Financial aid received from the government

At Grupo Herdez we do not receive any financial aid from the government

201-2. Impacts from climate change

By being a leading company in the food sector, we are highly dependent on natural resources, mainly agricultural inputs and water; therefore, to guarantee the continuity of our operations and continuous growth, it is fundamental to anticipate and manage the impacts derived from environmental changes.

Therefore, in addition to our environmental actions to reduce our emissions, efficient use of water, and taking care of biodiversity, such as reducing fuel consumption, we have the Renewable Energy Cogeneration Project, use of wind energy, and the Agricultural Sustainability Plan.

We have a Climate Change Risk Study, the purpose of which is to identify the impact of climate change on the continuity of the businesses of the Group.

With this, we seek to prioritize business risks and conduct a financial impact assessment, to be able to present manageable initiatives.

We classified the identified risks in accordance with their probability of occurrence and impact.

The three risk factors identified here are related to the material aspects identified in the Materiality Study of Grupo Herdez.

1. Increases in average temperatures.
2. Changes in rain patterns and extreme variability in climate patterns.
3. Changes in consumer preferences.

Below is a matrix identifying the risk factors for climate change. This identification and description includes a description of the risk factors, a classification according to TCFD risk categories, and at what point in the value chain they could materialize.

103-1. Explanation of the material matter

The material matters of Grupo Herdez were identified in accordance with the materiality study, considering the main stakeholders.

The financial performance explanation is in the letter from the Chief Executive Officer of the 2021 Annual Report.

For Grupo Herdez, complying with the labor conditions and relations aspect allows us to improve quality of life, labor conditions, and spaces with greater equality of opportunity for all of our collaborators. Jointly with the training and career development aspect, we promote a labor environment where collaborators develop their personal and professional capacities to the maximum, and with this, we retain our best talent through training plans, development, and continuous feedback plans; achievement recognition; respect for the collective organization, and through a culture of ethical performance.

The occupational health, safety, and wellness aspect is complied with through unification of continuous improvement strategies and processes, managed by the Environmental, Control, Health, and Safety (CASH, for its acronym in Spanish) department. We safeguard the integrity and wellness 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.

For the compliance and ethics and anti-corruption aspect, the Code of Ethics is the set of basic principles and guidelines of conduct applicable to all of us that form part of the Group, therefore, it is our responsibility to comply with it, and cause for it to be complied with. This code additionally seeks that the conduct of each collaborator be congruent with our mission, vision, and values, which are an essential part of our organizational culture. Through training sessions, communication campaigns, and different initiatives, we strengthen the standards and values under which we operate, thus promoting ethical behavior in our value chain.

We recognize the importance of having collaborators and strategic partners that share our comprehensive ethical focus, which enables us to have regulatory agents that reject and report illegal acts such as corruption, bribery, and any violation of human rights; the main social issues that we currently face, which prevent us from having just, peaceful, and inclusive societies.

The Research and Development department of Grupo Herdez is consolidated, not only on conceptualizing products that anticipate or adapt to the changing lifestyles and needs of our customers and customers to comply with the consumer health, safety, and wellness aspect, but rather also making the necessary changes on matters of health, safety, quality, and nutrition of our existing broad product portfolio.

At Grupo Herdez, we promote a culture of respect and care for the environment, creating programs that reduce the impact on our environment, and thus comply with the environmental aspect, with the priority matters being: water, energy, emissions, waste, and materials.

103-2. Management and components approach

The management and components approach is in the letter from the Chief Executive Officer in the 2021 Annual Report. Additionally, our management and components are based on compliance with the law and with all applicable regulations for the activities of Grupo Herdez.

The website below includes all internal policies and manuals applicable to collaborators and vendors of the Group to ensure best performance:

https://grupoherdez.com.mx/en/downloads/

Our 5 strategic directives are:

1. Maintain and create partnerships by developing intelligence.
2. Implement technologies that enable to accelerate communication processes with consumers, innovation, and multinationals.
3. Promote sustainable management, prioritizing water care and efficient use of energy.
4. Support and generate growth through talent development and investment in infrastructure.
5. Exercise responsible corporate citizenship, promoting social development initiatives.

201-1. Financial value generated

Figures expressed in thousand of Mexican pesos MXN

102-56. External verification

For the eighth year in a row, we audited our sustainability information with Ernst & Young México (EY).

102-54. Statement of preparation of the report on compliance with GRI Standards

This report has been prepared in accordance with the Essential Option of the Global Reporting Initiative (GRI) Standards.

Additionally, complying with the 10 principles of the UN Global Compact, and communicating the progress of this site, and the contribution to the Sustainable Development Goals that are material for the Group.

SDG 2: Zero hunger

SDG 5: Gender equality

SDG 6: Clean water and sanitation

SDG 8: Decent work and economic growth

SDG 12: Responsible consumption and production

SDG 13: Climate action

For the first time at Grupo Herdez, we report under the Sustainability Accounting Standards Board (SASB) methodology for the food and beverage industry, using the Processed Food guide.

102-53. Point of contact for questions on the report

Corporate Offices: Monte Pelvoux 215, Col. Lomas de Chapultepec, Del. Miguel Hidalgo, P.C.. 11000. Mexico City

Telephone: +52(55) 5201-5655

Contact: Jazel Ayala Núñez

jeayalan@herdez.com

102-50. Period subject to the report

The scope of the information of this Report covers from January 1, 2021 to December 31, 2021.

102-47. List of material matters

The material matters identified in the materiality analysis conducted in 2019 were:

Critical matters

• Consumer health, safety, and wellbeing
• Brand trust and reputation
• Innovation (products and processes)
• Sustainable containers and packaging, reuse, and recycling

Strategic matters

• Profitable growth in markets and financial sustainability
• Water management
• Energy consumption and efficiency
• Ethics and anti-corruption
• Labor conditions and relations
• Supply chain quality and safety
• Transparency in product information and labeling
• Career training and development
• Compliance
• Customer experience

102-46. Definition of the contents of the report

At Grupo Herdez we communicate our social, environmental, and financial performance since 2008, using the international benchmark standards developed by the Global Reporting Initiative.

The environmental, social, financial, and governance subjects that we select based on our Materiality Analysis, with the last update being in 2019.

Our sustainability strategy has the purpose of being passion, culture, and a global benchmark for innovation in sustainable development. In alignment with global trends and benchmarks on Environmental, Social, and Governance (ESG) subjects, we redefined the sustainability objectives for the Group at the end of 2021:

1. Achieve management with ESG criteria.
2. Identify and mitigate the potential social and environmental risks of the operations.
3. Promote our brands in sustainability innovation projects.

Our pillars of action: people, community, planet.

The subjects included in the sustainability strategy seek to answer the concerns and expectations of our main stakeholders: shareholders/investors, customers, collaborators, consumers, and vendors. Additionally, we contribute to 6 of the 17 United Nations Sustainable Development Goals (SDG) .

Coverage for environmental matters includes the most relevant locations and the own operations of Grupo Herdez:

Plants: Herdez El Duque Industrial Complex (Barilla, El Duque and Cogeneration Plant), Coronel Espinosa Plant, Mexico Plant (Zumpango), Herdez San Luis Potosí (Industries), Santa Rosa Tomates, Santa Rosa Vegetales, Herdez Villagrán, Nutrisa Plant, Lagos de Moreno.

Distribution Centers (Cedis): Mexico, San Luis Potosi, Los Mochis, Merida, Guadalajara, Monterrey, CAF Lagos de Moreno and Tijuana.

Given the foregoing, for 2021, the coverage of the data presented in 2020 is adjusted, to be able to have estimates of reduction and increase, referenced to the same scope.

The main operations of the Group are located in  detail at  the Annual Report in the “Description of Main Assets” section.

We have applied the four Principles to define the contents of the report: stakeholder inclusion, sustainability context, materiality, and comprehensiveness explained in the report.

102-45. Entities included in the consolidated financial statements

102-43. Focus for stakeholder participation

102-41. Collective bargaining agreements

We respect the right to collective bargaining. Of our 10,342 collaborators, 32% are adhered to a collective agreement.

102-40. List of Stakeholders

We seek to generate long-term relationships that are mutually beneficial to ensure the success and transcendence of our social, environmental, and economic strategies and objectives.

• Consumers
• Collaborators
• Vendors
• Customers
• Shareholders

102-36. Process to determine compensation

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

102-35. Compensation Policies

In accordance with the bylaws of the Company, the compensation for the members of the Board is of three coins of $50.00 gold pesos (centenario) or its equivalent for the attendance to each meeting, which compensation is not contingent on the results of the Group.

102-29. Identification and Management of ESG Impacts

The Board meets on a quarterly basis, and has intermediate bodies commissioned with overseeing the management and execution of the objectives of the Company. A performance report is presented in meetings of the Board on sustainability matters, which contemplates economic, social, and environmental performance.

102-25. Conflicts of interest

To prevent conflicts of interest, each director signs a statement representing the absence of conflicts of interest. Additionally, each Committee has rules that establish its duties and its relationship with the Board of Directors.

Additionally, we have a Code of Ethics and a Conflict of Interest Policy, which are binding documents that are mandatorily applied to all collaborators.

You can check it at: https://grupoherdez.com.mx/en/downloads/

102-24. Nomination and selection of the highest governance body

We conduct the director ratification process through voting by the shareholders in the Annual Meeting. To be selected, directors must satisfy the following requirements:

1. Professional training in economic-management sciences, with a graduate degree in such fields being desirable.
2. Minimum professional experience of twenty years in executive positions in consumer and/or financial sector companies.
3. Experience as directors in companies in the manufacturing and/or financial sector.
4. Membership in business organizations.

102-23. Chairman 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

Experience and qualifications

Héctor Hernández-Pons Torres (Mexican)

Chairman of the Board of Directors (Shareholder)

Chief Executive Officer (Member of the Corporate Practices Committee)

He graduated from the Law School at Universidad Anahuac and University of San Diego Ca., where he obtained a Master’s in Business Administration. He joined Herdez in 1978 in the Legal department, and since then, he has performed different duties inside the Company. In 2004, he was appointed Chairman of the Board of Directors and Chief Executive Officer of Grupo Herdez.

In addition to his responsibilities inside the Group, he has occupied several association positions, such as: Regional Director of Banamex and of Nacional Financiera, Vice Chairman of Concamin, Chairman of the Steering Committee of Papalote Museo del Niño and of the National Chamber of the Canned Food Industry (Canainca). He is currently Chairman of Fundacion Herdez, Director of Papalote Museo del Niño and of Canainca, and he participates as a member of the Board of Trustees of Consejo Mexicano de Negocios and of Consejo de la Comunicación.

Enrique Hernández-Pons Torres (Mexican)

Vice Chairman of the Board of Directors (Shareholder)

(Member of the Corporate Practices Committee)

He obtained a Bachelor’s in Business Administration with a graduate degree overseas in Business Marketing and Management. He has been at Grupo Herdez since 1971 in several departments and held positions such as Sales, Marketing, Accounting, and other departments. He currently acts as Vice Chairman of the Board and Assistant Chief Executive Officer of Grupo Herdez, and as Chairman of the Board of MegaMex in the United States.

His visionary and entrepreneurial spirit, in addition to his business sense, have generated constant growth in the companies he leads, creating joint ventures with large transnational consortiums such as McCormick & Co., Hormel Foods, with the company in the United States MegaMex Foods, Barilla Italia, among others, entering new markets, taking advantage of the cutting edge technology of its Associates.

His leadership, always focused on results, in addition to his positive attitude, character, and teamwork capacity, make him a top notch executive.

His personal and business relations are another important part of his business management, in addition to being a sports, food, and architecture aficionado.

Flora Hernández-Pons Torres (Mexican)

Director (Shareholder)

She obtained a Bachelor’s in Psychology degree from Universidad Anahuac, with studies in Economy and Finance and Contemporary History. She is currently a member of the Board of Directors of Grupo Herdez, a position that she has occupied since 2004. She was also a member of the Steering Committees of Centro Mexicano para la Filantropía, Fundación para la Salud, Fraccionamiento Las Brisas in Acapulco, Mexicano de la Gastronomía, Club de Raqueta Bosques, and she is currently an advisor of Fundación Herdez.

Ana Sofía Sánchez Juárez Cardoze (Mexican)

Director (Independent)

She obtained a Bachelor’s in Marketing from Tecnológico de Monterrey, and has a Master’s in Communication, Advertising, and New Media degree from Institut National Supérieur D´Études Économiques et Commerciales (INSEEC) in France. She also has studies in HEC Paris and from Wharton University in Philadelphia. She is a professor at Instituto Superior para el Desarrollo de Internet (ISDI) in the Master’s in Internet Business program. Currently, she acts as Chief Executive Officer of Waze Mexico, and prior to joining Waze, she was a Business Director in Mexico and Central America in Facebook, which is a position that she occupied for more than five years.

She previously acted as Brand Solutions Manager for Google and was Business Lead for YouTube Mexico.

Enrique Castillo Sánchez-Mejorada (Mexican)

Director (Independent)

He obtained a Bachelor’s in Business Administration degree. He started 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 Mexico, and he was Chairman of the Board of IXE Grupo Financiero. He was also Vice Chairman and Chairman of Asociación de Bancos de México. He is currently Chairman of the Board of Directors of Maxcom Telecomunicaciones and Non-Executive Chairman of the Board 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 (Mexican)

Director (Independent)

(Member of the Audit Committee)

Eduardo studied elementary, middle, and high school at Instituto Cumbres. He obtained a Bachelor’s in Business Administration from Universidad Anáhuac (From 1973 to 1977).

He started his professional career in 1976 at Herdez, where he worked in the marketing department for nearly six years.

In 1982, he joined Richardson Vicks, S.A. de C.V., where he worked for six years in the marketing department. For the last two years, he worked for Procter & Gamble, which bought Richardson Vicks. He joined a SC Johnson and Son, S.A. de C.V. in March 1988 as Marketing Director. In 1992, he participated for ten months in a sales training program in Los Angeles, California, as International Sales Associate. In 1993 he returned to Mexico and was appointed Sales Director of SC Johnson Mexico and Central America, and in 1995 he was promoted to Chief Executive Officer of Mexico and Central America. In April 2001, he was appointed Vice President and Chief Executive Officer of Mexico and Central America. Eduardo retired from SC Johnson in January 2013. He then worked as Chief Executive Officer of Aerobal and of Grupo Zapata.

He currently participates in the following boards and foundations:

Independent Director of Grupo Herdez, S.A.B. de C.V., and member of the Audit Committee.

As of January 2020, he is an Independent Director of PROCSA; Director of Fundación Un Mañana para la Comunidad, A.C.; Director of Fundación Xochitla, A.C.

Previously, he participated as director of different organizations, among others:

Board of Vendors of Walmart de México y Centroamérica since its creation until January 2013; Director of Consejo de Autorregulación y Ética Publicitaria, A.C. (CONAR); Director of Centro Mexicano para la Filantropía (CEMEFI), and Member of the Executive Committee. In 2009, he was Chairman of the Annual Meeting of CEMEFI; Director of ENACTUS México; Member of the Advisory Committee of Great Place To Work –Mexico.

José Roberto Danel Díaz (Mexican)

Director (Independent) (Chairman of the Corporate Practices and of the Audit Committee)

Certified Public Accountant, graduated from Universidad Iberoamericana. He has Graduate Studies in Management from Instituto Tecnológico Autónomo de México (ITAM); Senior Management from Instituto Panamericano de Alta Dirección de Empresa (IPADE); and Governance from the Yale University School of Business, from Stanford University Graduate School of Business, and from Harvard University School of Business.

As an independent director, he is a member of the Board of Directors and chairs or forms part of different committees of the Board, in public and private companies, and financial institutions. He is a Member of Colegio de Contadores Públicos de México, Instituto Mexicano de Contadores Públicos and he was a member of Instituto Mexicano de Ejecutivos de Finanzas.

Chairman of the Best Governance Practices Committee of Consejo Coordinador Empresarial; es member of Instituto Latinoamericano de Gobierno Corporativo (OECD-World Bank), of the National Association of Corporate Directors (USA), of the International Corporate Governance Network (UK), and of its Risk Committee.

Luis Rebollar Corona (Mexican)

Director (Independent) (Member of the Corporate Practices Committee)

Chemical Engineer graduated from Universidad Nacional Autónoma de México (UNAM), with experience as Chief Executive Officer of Fábrica de Papel San Rafael, Cia. Industrial de San Cristóbal, Alcatel, Sidek, and Situr. He was also a Director, acting as Chairman of the Board of Sidek and Situr. He is currently a Director at Grupo Gigante, Grupo Sánchez, and Grupo Industrial Mexicano. He participated in the restructuring of Satélites Mexicanos, acting as Chairman of its Board. He was Chairman of the Board of Sandvik de México for 18 years.

Michael Bernhard Jost (Swiss)

Director (Independent) (Member of the Audit Committee)

He is a professional in the field of finance; he graduated in “Economics and Business Administration” from Bern University, with 25 years in experience in Latin America, 17 of which have been as CFO in different companies of Nestlé. He has led initiatives on matters of mergers, acquisitions, divestment; he has implemented restructuring initiatives; he has supported strategic planning and business risk management processes. He acted as a member of the Compensation Committee and of the Compliance Committee in Nestlé Brazil and in Nestlé Mexico.

102-21. Consultation of stakeholders on ESG matters

In 2019, we updated our Materiality Analysis, for the purpose of confirming the current status of the material matters identified in the prior years, and of identifying the changes to give them due relevance.

This update contemplated our acquisition of the Impulso segment, and had a greater approach with the different stakeholders.

We were able to identify key and relevant subjects for Grupo Herdez on environmental, social, and governance (ESG) matters, considering the expectations and concerns of our main stakeholders to be key:

• Consumers
• Customers
• Vendors
• Investors
• Collaborators

The material subjects identified were:

Critical Matters

• Consumer health, safety, and wellness
• Brand trust and reputation
• Innovation (products and processes)
• Sustainable containers and packaging, reuse, and recycling

Strategic Matters

• Profitable growth in markets and financial sustainability
• Water management
• Energy consumption and efficiency
• Ethics and anti-corruption
• Occupational health, safety, and wellness
• Labor conditions and relations
• Value chain quality and safety
• Transparency in product information and labeling
• Career training and development
• Compliance
• Customer experience

102-20. Responsibility at the executive level on ESG matters

The Board of Directors meets on a quarterly basis and has intermediate bodies commissioned with overseeing the management and execution of the objectives of the Group. This also happens with the other indicators of the Company; in these meetings, the progress on sustainability matters is presented.

• Eduardo Ortiz Tirado Serrano – Responsible for labor practices
• Luis Rebollar Corona – Responsible for environmental practices
• José Roberto Danel Díaz – Responsible for Governance and Chairman of the Corporate Practices and Audit Committee

In 2021, we created the Sustainability Committee composed of the Executive Committee of the Group. The Executive Director of Finance and Technology has under its subordination the Finance and Sustainability Department, with two positions fully dedicated to the sustainability strategy. Additionally, the Group has the Environmental Sustainability department, which jointly with the technical departments,are  the team of collaborators dedicated to achieving the objectives of the sustainability strategy of the Group.

102-18. Governance Structure

The Board of Directors is the highest governance body of the Group, which is the legal representative of the company and has all authority to perform the operations related to its purpose.

It is composed of 9 directors, including Héctor Hernández-Pons Torres, Chief Executive Officer of Grupo Herdez, who acts as Chairman and CEO.

102-17. Ethical concern advice mechanisms

All levels of authority inside the company and stakeholders such as vendors and collaborators are governed by our codes and policies, which are continually reinforced through training, communications, and meetings. https://grupoherdez.com.mx/sustentabilidad/codigos-y-politicas/ There is a Trust line where people may request advice on ethical and legal conduct, and on the integrity of the organization, and report concerns related to unethical or illegal conducts.

Trust Line (800 CONFIANZA – 800 266342692).

Trust Email (confianza@herdez.com).

Scope:

Employees (provides whistleblower protection).

Vendors (provides whistleblower protection).

Dissemination media; Grupo Herdez Code of Ethics (Exhibit 1), Vendor Code of Conduct (Exhibit 2), Website (Exhibit 3), notices in plant and distribution center bulletin boards (Exhibit 4).

In 2021 we received 249 anonymous reports. We responded to 98% and 2% were left in process.

102-16. Values, principles, and standards of conduct

Mission

Provide consumers with quality food, beverages, and products, with reputable brands with growing value.

Vision

Grupo Herdez wishes to consolidate, grow, and position itself as a leading organization in the food, beverage, and wellness products business, recognized for the quality of its products, and for the effectiveness of its efforts aimed at ensuring satisfaction of the needs and expectations of its clients and customers, within a framework of competitive attention and service, under strict profitability, strategic, and sustainability potential.

Values

Honesty, result-oriented, teamwork, and reliability.

All collaborators must sign as proof that they read and received the code of ethics, in addition to the campaigns carried out throughout the year that promote living the values of the organization at all levels.

102-13. Membership in Associations

Industrial

• Asociación Mexicana de la Cadena Productiva del Café (AMECAFE)
• Cámara Nacional de Fabricantes de Envases Metálicos (CANAFEM)
• Asociación Mexicana de Industriales de Galletas y Pastas (AMEXIGAPA)
• Asociación Nacional de la Industria de Suplementos Alimenticios (ANAISA)
• Cámara Nacional de la Industria de Conservas Alimenticias (CANAINCA)
• Cámara Nacional de Industriales de la Leche (CANILEC)
• Consejo Mexicano de la Industria de Productos de Consumo (CONMEXICO)
• Consejo Nacional de Producción Orgánica (presidido por SAGARPA)
• Federación Internacional de Movimientos en Agricultura Orgánica (IFOAM)
• Movimiento Orgánico Mexicano

Business

• Asociación Mexicana de Estándares para el Comercio Electrónico (AMECE)
• Chambers of Commerce: Canadian, British, Spanish, and American
• Confederación de Cámaras Industriales (CONCAMIN)
• Consejo Coordinador Empresarial (CCE)

Sustainability

• Centro Mexicano para la Filantropía
• Comisión de Estudios del Sector Privado para el Desarrollo Sustentable (CESPEDES)
• Compromiso Empresarial para el Manejo Integral de Residuos Sólidos
• Consejos de Cuenca (in CONAGUA)
• ECOCE
• Iniciativa GEMI
• United Nations Global Compact
• Zero Hunger, Circular Economy, and Biodiversity Working Groups of the Global Compact
• Consejo Coordinador Empresarial
• ”Climate Change and Health” Working Group of the Organization for Economic Co-operation and Development

102-11. Principle of Precaution

At Grupo Herdez, we promote a culture of prevention that enables us to identify the risks that our business may face, and we may also capitalize on opportunities, adding to the stability and growth of the Group.

Since we are aware of the operational, environmental, safety, and quality risks, we address the principle of precaution through the Environmental Control, Health, and Safety (CASH, for its acronym in Spanish) department and the Risk department, the purpose of which is to safeguard the integrity of our collaborators, facilities, and operations to ensure maintained continuity of the business.

In 2020 we published our Comprehensive Risk Management Policy, based on the ISO 31000 standard, for the purpose of making improvements to our risk identification and management processes.

Prevention Plans

We have a World Class Manufacturing (WCM) model the purpose of which is continuous improvement management in all of our plants. This program has helped us:

• Achieve competitive costs
• Improve productivity
• Have a quality benchmark
• Achieve world class management and operation
• Have effective information systems.

We also have the major emergencies plan, a program that is designed to respond to any contingency at plants and distribution centers. It is composed of brigades that support and coordinate communication between the surrounding affected areas and corporate offices.

Participation in Associations

We participate in Coparmex as an advisor and consultant on health and safety, and environmental matters; we are also active members of the safety committee of CONMEXICO.

Certifications

Environment

• Clean industry certificate issued by PROFEPA (Federal Environmental Protection Agency).

Safety

• Safe Industry Certification issued by STPS (Ministry of Labor and Social Welfare)

Quality

• Certification issued by the COFEPRIS (Federal Commission for Protection Against Health Risks).

Civil Protection

• Each year, we conduct the internal protection program, which is audited by the personnel of this agency, and it is focused on preventing risks from fire, spills, leaks, and others.

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

In April 2021, we signed an agreement with General Mills for distribution of their products in Mexico. With this agreement, we expanded the capacities of the Group in the Impulso portfolio, with the distribution of the Häagen-Dazs™ brand, and  we entered the cereal bar category (Nature Valley™, Fiber One™, and Lära Bar™) and prepared flour for desserts (Betty Crocker™ and Pillsbury™).

102-9. Supply Chain

In 2021, Grupo Herdez had 312 active vendors.

We consider 3 main activities:

1. Source of supply
2. Production process
3. Distribution

Breakdown by type of vendor:

171 Suppliers of non-perishable raw materials – $6,485,972,197 MXN

109 Suppliers of packaging materials – $3,911,836,165 MXN

32 Agricultural suppliers – $1,097,000,000 MXN

87.7% of suppliers of raw materials are Mexican.

Geographic Location: Germany, Chile, United States, Mexico (Aguascalientes, Campeche, Chihuahua, Coahuila, State of Mexico, Guanajuato, Michoacán, Morelos, Puebla, San Luis Potosí, Sinaloa, Sonora, Yucatán and Zacatecas), and Turkey.

Industrialized manufacturing, without intensive use of labor.

Suppliers of agricultural raw materials must have flexible time schemes that enable the personnel to integrate their academic and/or social activities with labor activities.

102-8. Information on employees and other workers

Breakdown of collaborators by gender

Sex	Total	Percentage
Man	6,004	58%
Woman	4,338	42%
Total	10,342	100%

Breakdown of collaborators by employment agreement

Sex	Plant	Temporary	Total
Man	5,226	778	6,004
Woman	3,788	550	4,338
	9,014	1,328	10,342

Breakdown of collaborators by region

Region	Plant	Temporary	Total	Percentage
Corporate offices	976	83	1,059	10%
Plant	3,242	814	4,056	39%
Distribution Centers	699	97	796	8%
Stores	1,801	45	1,846	18%
Sales Routes	2,296	289	2,585	25%
	9,014	1,328	10,342	100%

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 collaborators, including those hired temporarily have a direct agreement with the company, we also do not have reduced workdays.

102-7. Size of the organization

The infrastructure of the Group is composed of:

13 plants

24 distribution centers

624 stores: Nutrisa, Lavazza, Cielito Querido Café, and Moyo

10,342 collaborators

26,153 million pesos in net sales

3,944 million pesos of EBITDA

5.25% of net profit in social investment

The Company was founded in 1914 and is listed in the Mexican Stock Exchange (Bolsa Mexicana de Valores) under ticker symbol HERDEZ*.

102-6. Served markets

The main operations of Grupo Herdez are located in Mexico.

102-5. Ownership and legal form

We are a company listed in the Mexican Stock Exchange (Bolsa Mexicana de Valores) since 1991 under ticker symbol HERDEZ*.

102-4. Location of our operations

We have a presence in 21 countries and in 6 different regions of the world.

102-3. Location of our headquarters

Our corporate headquarters are located at Monte Pelvoux 215, Lomas de Chapultepec, Ciudad de México, P.C. 11000.

102-2. Activities, brands, products, and services

Grupo Herdez is a leading company in the processed food sector, and one of the main players in the ice cream category in Mexico, in addition to being the fastest growing company in the Mexican food category in the United States. We participate in a broad range of categories, including homemade salsas, organic products, honey, ice cream, jellies, mayonnaise, mole, mustard, pasta, spices, tea, tomato puree, tuna, among others. These products are marketed through an exceptional Brand portfolio, highlighting the following: Aires de Campo®, Barilla®, Blasón®, Búfalo®,Carlota®, Cielito Querido Café®, Moyo®, Del Fuerte®, Doña María®, Embasa®, Helados Nestlé®, Herdez®, McCormick®, Nutrisa®, Wholly Guacamole®, and Yemina®.

Additionally, we have distribution agreements in Mexico for the following products: Frank’s®, French’s®, Kikkoman®, Reynolds®, Lavazza®, Betty Crocker™, Pillsbury™, Nature Valley™, Fiber One™, and Haagen Dazs™

We have 13 production plants, 24 distribution centers, 624 points of sale with the Nutrisa®, Cielito Querido Café®, and Lavazza® brands, and a workforce of 10,342 collaborators.

102-1. Name of the organization

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