Cemex Sustainability-Linked Financing Framework Second-Party Opinion (2023)

Project Details

Project

Client

CEMEX, S.A.B. de C.V

Project Type

Sustainability Linked Bond or Note; Sustainability Linked Loan;

Industry Group

Construction Materials

Use of Proceeds

N/A

Location

Mexico

Evaluation Date

Aug 2023

Evaluation Summary

Sustainalytics is of the opinion that the Cemex Sustainability-Linked Financing Framework aligns with the Sustainability-Linked Bond Principles 2023 and the Sustainability-Linked Loan Principles 2023. This assessment is based on the following:

Selection of Key Performance Indicators

The Cemex Sustainability-Linked Financing Framework includes three KPIs: i) scope 1 and scope 2 CO2 emissions per tonne of cementitious product; ii) clinker factor to cementitious; and iii) alternative fuels rate. Sustainalytics considers KPI 1 to be very strong and KPIs 2 and 3 to be strong based on their materiality, relevance, scope of applicability and comparability to external benchmarks.

Calibration of Sustainability Performance Targets

Sustainalytics considers the SPTs to be aligned with Cemex’s sustainability strategy. Sustainalytics further considers SPT 1 to be highly ambitious, SPT 2 to be moderately ambitious and SPT 3 to be highly ambitious based on comparisons with past performance, peer performance and science-based trajectories.

Bond and Loan Characteristics

All sustainability-linked bonds and notes issued under the Framework will be linked to KPI 1, and may also be linked to KPIs 2 and 3, depending on the specifics of each issuance. Failure to meet the SPT(s) associated with each issuance will trigger a premium payment, repayment amount, or adjustment to the coupon margin by an amount or percentage specified in the transactional documentation. All Sustainability-Linked Loans obtained under the Framework will be linked to all three KPIs with the performance against each SPT verified annually. Failure to achieve any SPTs will result in a premium payable by Cemex, while any SPT that is achieved will trigger a discount. Pricing adjustments will be based on the net of premiums and discounts from the respective SPTs and applied annually, on a non-cumulative basis. This is aligned with the Sustainability-Linked Bond Principles and Sustainability-Linked Loan Principles.

Reporting

Cemex commits to reporting on its progress against the KPIs annually or as required pursuant to the provisions of the transactional documents. The reporting will usually be made available in its Integrated Report, which will be published on its website. Cemex commits to disclose relevant information that may materially affect the KPIs, such as any

recalculations of the KPI baseline, restatement of the SPTs, and climate related data as part of CDP reporting, as well as updates to the Company’s sustainability strategy, targets, methodology or benchmark changes, and reporting. This is aligned with the Sustainability-Linked Bond Principles and Sustainability-Linked Loan Principles.

Verification

Cemex commits to have external limited assurance conducted against each SPT for each KPI at least once a year, which is aligned with the Sustainability-Linked Bond Principles and Sustainability-Linked Loan Principles.

Climate Transition Finance Handbook

Sustainalytics has evaluated Cemex’s transition governance, strategy, decarbonization targets, and intentions to report on transition progress and finds the Company to be aligned with the recommendations of the Climate Transition Finance Handbook 2023. As a cement producer, Cemex is involved in an energy-intensive sector and has established CO2 emissions intensity reduction targets validated as being in line with the 1.5°C Scenario of the SBTi. Cemex has outlined an implementation plan and capital investment plans for its “Future in Action” programme, which is designed to reduce its carbon emissions.