Corporate sustainable development report 2009 strength performance passion holcim

Covering the Group’s cement, aggregates and ready-mix concrete businesses, this fifth Holcim Corporate Sustainable Development Report focuses on key facts and figures and highlights our

Strength Performance Passion.

Corporate Sustainable Development Report 2009

Sustainable development is embedded in our vision, strategy and values 6

80%

of our product portfolio is composite cements.

Continuous improvement

CO 2 emissions per tonne of cement have been reduced by 21% since 1990.

Introduction

The integration of the principles of sustainable development into our core business strategy and our aim to create value for all stakeholders has ensured that our commitment remains resolute, even in the face of current global economic challenges.

Holcim is one of the world’s leading suppliers of cement and aggregates (crushed stone, gravel and sand), as well as further activities such as ready-mix concrete and asphalt including services The Group has majority and minority holdings in around 70 countries across all continents

Covering the Group’s cement, aggregates and ready-mix concrete businesses, this fifth Holcim Corporate Sustainable Development Report focuses on key facts and figures and highlights our most material issues: sustainable products and sustainable construction, energy and climate, resources conservation and social commitment It complements our Annual Report 2009 and the more comprehensive information available on our website www.holcim.com/sustainable

The report and complementary information is aligned with the Global Reporting Initiative’s G3 guidelines and also forms part of our communication on progress for the UN Global Compact The report itself has been assured against the principles of the AA1000 Assurance Standard and our WBCSD CSI commitments, with CO2 and occupational health and safety data separately assured Furthermore, an External Report Review Panel was established to review the report

A glossary defining the terms used in this report can be found on our website www.holcim.com/sustainable

Key to symbols:

see page in this report see our Annual Report see graph data visit www.holcim.com/sustainable for more information reference to GRI indicator

Contact us at Holcim Sustainable Development

Ruksana Mirza Phone +41 58 858 82 30 Fax +41 58 858 82 34 sustainable.development@holcim.com

Corporate Communications

Roland Walker Phone +41 58 858 87 10 Fax +41 58 858 87 19 communications@holcim.com

Investor Relations

Bernhard A Fuchs Phone +41 58 858 87 87 Fax +41 58 858 80 09 investor.relations@holcim.com

Awards and ratings

The awards received by our Group companies and our continuous inclusion in the FTSE4Good and the Dow Jones

Sustainability Indexes are the best evidence of our commitment to sustainable development The table below

highlights a sample of the many awards received at a local level A complete list of awards received by Group

companies in 2009, as well as in previous years, is available on our website www.holcim.com/sustainable

Ratings

9

For the DJSI assessment of company performance compared with others in the sector, visit www.holcim.com/sustainable

Environmental awards

Greentech Environmental Excellence Gold Award in the Cement Sector to Tikaria for

environmental performance. ACC Limited, India

Federación de Áridos awarded El Puente Gravel Pit with the First prize in Biodiversity in the

category “big company” for rehabilitation work and level of biodiversity achieved. Holcim (España), S.A., Spain

Gold Cup for Environment Protection by Ministry of Natural Resources and Environment for

contributions to the environmental protection and preservation in Vietnam. Holcim (Vietnam) Ltd, Vietnam

Special Jury Price of ALM (Aujourd’hui le Maroc) ecology trophy for engagement and

environmental policy based on sustainable development. Holcim (Maroc) S.A., Morocco

PEP – Partners for Environmental Progress award for the storm water conservation program

at Theodore plant. Holcim (US) Inc., USA

Social awards

Award from Centro Mexicano para la Filantropía for being a socially responsible company. Holcim Apasco S.A de C.V., Mexico

Wirtschaftspreis Schleswig-Holstein for successful HR concept for employee recruiting/retention

and the integration of migrants Holcim (Deutschland) AG, Germany

Fundación Adecco awarded Holcim España for integrating people with a disability Holcim (España), S.A., Spain

High-prestige award from CSR Hungary as an acknowledgement of activities in order to spread

sustainable construction and to set an example on CSR to create value for stakeholders. Holcim Hungária Zrt., Hungary

The Department of Conservation award in recognition of Holcim’s contribution to the community

and conservation in the Buller region. Holcim (New Zealand) Ltd, New Zealand

OH&S awards

Special recognition for safety, occupational health and environment performance by

The Colombian Safety Council. Holcim (Colombia) S.A., Colombia

Zero lost-time injuries in South Carolina for Taylor Street, Lugoff, Simpsonville, Powderville, New

Cut Road, Greer, Imo and Batesburg plants presented by Carolina Ready Mixed Concrete Association. Aggregate Industries Management Inc., USA

Safety Award presented by Ready Mixed Concrete Association of Ontario for having no

lost-time injuries Holcim (Canada) Inc., Canada

Golden Flag Safety Award by the Indonesian Ministry of Public Work for Occupational Safety. PT Holcim Indonesia Tbk.,

Indonesia

Occupational Health and Safety Excellence Award presented by the Ministry of Labor of Nicaragua for

the excellence on risk management practices and full legal compliance at Nagarote cement plant. Holcim (Nicaragua) S.A., Nicaragua

Chairman and CEO statement

The need for companies to engage with stakeholders and society to ensure license to operate is more

important than ever.

In the two years since our last Corporate Sustainable Development Report, the economic crisis has affected many regions and sectors However, as sustainable development is such a fundamental objective, we remain committed to its principles Our commitment to sustainability engages our people, and also allows us to operate more effi ciently – providing us with competitive advantage throughout the entire value chain

The most important contribution to sustainable development is through products and services By offering added solutions to customers, we ensure sustainability of profi ts and benefi ts to society Concrete is the most versatile, cost-effective and durable building material available; it substantially contributes to energy effi ciency in buildings and it is – in itself – a sustainable product Our company is continually improving the effi ciency of our production processes and developing more “eco-friendly” products At the end of 2009, over three-quarters

value-of Holcim’s product portfolio consisted value-of composite or lower clinker content cements The Holcim Foundation for Sustainable Construction continues to promote sustainable building practices and innovation in the construction industry

Holcim’s business depends on access to natural resources Related responsibilities are taken very seriously We must – like all players – try to increase the effi ciency of the use of scarce resources and avoid material loss in production processes wherever possible We have, together with the International Union for Conservation of Nature (IUCN) created an expert panel to advise us on how to manage biodiversity The panel has already visited Holcim sites in

a number of countries and has provided invaluable guidance

Reduction of CO2 emissions continues to be an area of focus In 2009, we achieved the CO2 emission reduction target earlier than planned, and are pleased to report that CO2 emissions per tonne of cement were more than 20% lower than in the reference year of 1990 Holcim also actively participates in the policy debate on climate change and on effective regulatory incentives to improve energy effi ciency and CO2 containment

“Sustainability is an integral part of the Group strategy Even in difficult times, Holcim takes its environmental and social responsibilities very seriously Programs to strengthen the safety culture across the Group will be continued without exception The Board of Directors and Executive Committee is doing everything in its power to achieve the objective of worldwide comprehensive workplace safety.” Rolf Soiron, Chairman of the Board of Directors.

Chairman and CEO statement Vision and strategy Priorities Performance data Methodology and assurance

This report refl ects a number of new targets that have been set at an even higher level:

• We now aim to further reduce our specifi c net CO2 emissions by 2015 to 25% below the 1990 benchmark

• We will be developing and rolling out a comprehensive biodiversity management system Of sites situated

in high biodiversity value areas, 80% must have biodiversity action plans in place by 2013

• Recognizing that building constructive and trustful relationships with communities in which we operate

is imperative; all plants are bound to have community engagement plans by 2012

Safety of employees, subcontractors and third parties remains an area of concern and key focus Management

continues to improve the effectiveness and impact of safety programs and directives To change mindsets and to

embed a culture of safety can still be a challenge in some places, but we remain committed to our vision of “zero

harm to people”

The current report describes our path toward sustainability, as we understand it for our industry It discloses

performance data across a broad range of indicators, including those from the Global Reporting Initiative* relevant

to our specifi c businesses and has been externally assured A panel of external stakeholders has also contributed to

this report with valuable guidance and comments

We have been in continuous contact with stakeholders and have recently joined the Corporate Support Group of

the International Committee of the Red Cross (ICRC) We look forward to cooperating in specifi c confl ict-affected

countries where both Holcim and the ICRC operate Humanitarian actors like the ICRC substantially contribute to

stabilizing the operating environment in such areas

Holcim’s efforts in the area of CSR and SD have been well recognized The best evidence is the many awards received

by Group companies Holcim has also been confi rmed as a member in the Dow Jones Sustainability World Index for

the seventh consecutive year and the company again received the SAM Gold Class classifi cation for 2009

We thank all those who are accompanying Holcim on its journey We are grateful to customers, suppliers and

partners for their continued support A very special word of thanks goes to our employees all over the world,

who have lived our values and have delivered on our commitment to build a sustainable future in these

challenging times

Chairman of the Board of Directors Chief Executive Offi cer

May, 2010

* This report is aligned with the Global Reporting Initiative (GRI) G3 Sustainability Reporting Guidelines released in October 2006, at an

application level of A+.

“The development of new and sustainable products and services is of high priority The rapid

dissemination of existing expertise and new findings is heavily encouraged, while experiences

gained in the market are being systematically incorporated into our research This multiplication

effect, as well as cooperation with leading universities and research institutes, has helped

accelerate the pace of innovation.” Markus Akermann, Chief Executive Offi cer.

Chairman and CEO statement Vision and strategy Priorities Performance data Methodology and assurance

An organization with integrity

Holcim applies the highest standards of business conduct

At a corporate level, we follow the Swiss Code of Best Practice for Corporate Governance while the Holcim Code of Conduct, which is applied throughout the Group, provides a consistent framework and clear direction for daily decision-making In addition, the Holcim Compliance Policy spells out the rules for compliance with laws, regulations and Group-wide policies and directives

For more information on corporate governance and the Code

of Conduct, please see pages 80 and 81 in our Annual Report.

“We at Holcim are proud to work for a company with such a clear and effective vision and focus with regard to sustainable development Our global strategy and standards, applied locally according

to the requirements and realities of each country in which we operate, result in sustainable and responsible operations that are noted for their high performance, multiple initiatives and enduring commitment to the communities.” Eduardo Kretschmer, CEO, Holcim Apasco, Mexico

Visit www.holcim.com/sustainable to read more.

Vision and strategy

At Holcim, we believe that delivering value for all stakeholders while operating with integrity is key

to our long-term success.

Working within the triple bottom line

To meet the increasing demand for high-quality and sustainable construction products, which are critical for global infrastructure development and economic growth, we have fully integrated the principles of the triple bottom line (value creation, sustainable environmental performance and social responsibility)

in our business strategy and into our product and service portfolio See strategy house in the next column.

The current, challenging economic climate has not weakened our commitment to sustainable development

We continue to strive to improve safety at all our operations, and to work on identifying new, sustainable business opportunities while minimizing the impacts

of our extraction and production activities

Holcim’s values of strength, performance and passion are our promise to perform, providing the foundation for sustainable business relationships based on trust

We aim to deliver on this promise through all aspects

Permanent Marketing Innovation

Human Resources Excellence

Corporate Social Responsibility (CSR)

Geographic Diversification Local ManagementGlobal Standards

People

Chairman and CEO statement Vision and strategy Priorities Performance data Methodology and assurance

9

The Code of Conduct covers all aspects of our operations,

including specific provisions on bribery and corruption

The code is very clear – violations will not be tolerated

Non-compliance with the code may be subject to

disciplinary sanctions, including termination of

employment, and this is explicitly stated within the code

Group companies are responsible for ensuring

that employees and managers are aware of their

responsibilities under the code and for implementing

appropriate measures These include training and

information sessions, integration of Code of Conduct

provisions into contracts and a requirement for

employees to sign the code Visit www.holcim.com

Building on our existing program, in 2009 we refreshed

the Holcim Value Creation in a Competitive Environment

(VCCE) program We rolled this out with a series of

workshops on the rules of fair competition, also as

contained in our Fair Competition Directive, which is

binding for all Holcim employees worldwide In 2009,

10 VCCE workshops were conducted covering Group

companies in all regions In 2010, further VCCE training

will be conducted in all the consolidated operating

companies of the Group For more information, please see

page 25 in our Annual Report.

In addition to the Code of Conduct and Fair Competition

Directive, we require our employees to comply with all

relevant policies, including Group policies on alternative

fuels and raw materials, corporate social responsibility,

environment and occupational health and safety

Visit www.holcim.com/sustainable to download the policies.

Managing sustainable development

Responsibility for SD ultimately rests with every employee, and the commitment of line managers to implement Group targets and objectives related to SD is key to our aspiration to remain a leader in our industry

A steering group for SD operates as a sub-committee

of the Executive Committee (Exco), and includes the CEO, the Exco members accountable for SD and occupational health and safety (OH&S) as well as senior SD managers

At Exco level, since 2010, accountability for SD and OH&S falls under Roland Köhler, and the Sustainable Development and Occupational Health and Safety departments report directly to him A graphic illustrating our integrated approach is available at www.holcim.

com/sustainable

To assist us in managing our performance and ensure that global standards are maintained, various management systems are in place The starting point

in managing our performance is ISO certification

Holcim has also developed its own management tools

Examples of these include the Holcim Environmental Management System with its Plant Environmental Profile (PEP) monitoring and reporting tool, which goes beyond the requirements of ISO 14001, and the Holcim OH&S management system, which goes beyond the requirements of OHSAS 18001 See page 30

Visit www.holcim.com/sustainable

Code of Conduct

Our Code of Conduct provides the guiding principles against which to make decisions.

Visit www holcim.com/ sustainable for more information.

For further information see page 26 and visit our website www.holcim.com/sustainable

Cement, aggregates, concrete and other construction materials Payments

Goods and services

Monetary flows

Source: Holcim, 2009 data

* See page 26 for additional information on political contributions and subsidies.

Non-monetary flows

Dividends Capital Interest Capital Taxes Services Salaries Labor Good

neighbor to operateLicence

SUPPLIERS

Input costs (CHF 12.0 billion)

SHAREHOLDERS (CHF 0.8 billion) CREDITORS (CHF 0.8 billion) GOVERNMENTS* (CHF 0.6 billion) EMPLOYEES (CHF 3.9 billion)

DIRECT IMPACTS

CUSTOMERS Net sales (CHF 21.1 billion)

MULTIPLIED INDIRECT IMPACTS

MULTIPLIED

INDIRECT

IMPACTS

COMMUNITIES (See page 25)

Retained in business (CHF 1.2 billion) and depreciation (CHF 1.9 billion)

Economic impacts along the value chain

Chairman and CEO statement Vision and strategy Priorities Performance data Methodology and assurance

Our SD priorities

We constantly re-examine our SD priorities to enable

us to focus on those issues which are the most material

to our business and where we can make a meaningful difference Continuity and focus are critical aspects of this re-evaluation process Our current priorities are:

• sustainable products and sustainable construction

• energy and climate

• resources conservation

• social engagement (including employment practices, OH&S, community engagement and human rights)

These priorities were confi rmed by an External Report Review Panel, which we convened as part of our materiality review process (see below) and to review Holcim’s corporate SD report The panelists’ biographies are available on our website at www.holcim.com/

sustainable

Determining material issues

Holcim has a well-embedded business risk management process for identifying risks at both corporate and Group company level For more information, please see pages 28 and 85 in our Annual Report.

Since 2007, a materiality review has been implemented

at Group level to ensure the identifi cation of SD risks and opportunities as well as the integration of stakeholder views Since this process was introduced, materiality reviews have been conducted by many Group companies Results reveal that the full list of material issues is consistent with the Group-level review, but there are differing weightings according

to local circumstances

The results of the latest Group-level materiality review, incorporating the results of the Group companies’

reviews as well as the views of the External Report Review

Panel at a consultation in September 2009, are shown

in the graphic below In conjunction with our business risk management system, the consultation confi rmed that the issues identifi ed on the matrix remain the most material for Holcim The fundamental difference from the previous review was that almost all external stakeholders felt that water management and human rights should be refl ected separately The difference between the company and stakeholder view on water is likely to narrow as the new water management scheme is implemented

“Holcim demonstrates a credible approach to sustainability However, I would like to see the Group take a clearer leadership in reducing absolute fossil CO2 emissions This is a key challenge for the entire cement industry Efforts to increase the use of biofuels also need to be intensified over time.”

Patrik Bosander, Business Development Director, Billerud AB.

Corporate governance Customer and supplier relations Economic impact

CO 2 and energy Ec0-efficient products Sustainable construction Atmospheric emissions Resources management and biodiversity Waste and transport Water

View from Holcim and external stakeholders coincide.

Range of external stakeholder views.

Represents a clear difference between internal and external view.

Low: Low level of concern to stakeholders and low level of current

impact on Holcim.

High: High level of concern to stakeholders and high level of current

or potential impact on Holcim.

Importance of issues – global view

SD materiality review – aligning global stakeholder feedback with current Group priorities

the report Details

of the panel can

Performance against targets

The following table is a status report on our progress toward goals set in the past and also reflects new SD targets Targets already achieved are not repeated here – please refer to our website for an overview of all targets Note that many of these are “evolving targets” due to the continued dynamic growth of the Holcim Group Our priority is to ensure that Group companies and new acquisitions

embrace these measures Visit www.holcim.com/sustainable

Vision, strategy and corporate governance

Strategy Integration of SD materiality review in existing

business risk management system for use by

This target was reached in 2009 2010 21%

Reduce global average specific net CO 2 emissions

(kg CO 2 /tonne cementitious materials) by 25%,

using 1990 as reference.*

2015 New

Environmental

impacts Emissions monitoring and reporting standard implemented. This figure excludes our plants in India We anticipate that they will have continuous emissions monitoring in place by 2011. 2004 85%

Reduce global average specific nitrogen oxides,

sulfur dioxide and dust emissions (g pollutant/

tonne cementitious materials) by 20%, using

2004 as reference.

We have already far exceeded the reduction target in specific

SO 2 emissions in 2009 Due to the current economic conditions, our efforts to reduce dust and NO x emissions have focused on implementing primary reduction measures The target date has thus been revised to 2012 for dust and 2013 for NO x

2012 NO x -16%

SO 2 -59% Dust -7%

Quarry rehabilitation plans This is a rolling target as newly acquired Group companies

require time to implement plans. 2006 91%Biodiversity: 80% of sensitive sites to have

PCB equipment elimination Electrical equipment containing PCB to be eliminated from the

cement sector (cement and grinding plants) by the end of 2010, and from the non-cement sector (aggregates, ready-mix and asphalt) by 2011.

2011 New

Social performance

Community

involvement CSR review completed by all Group companies. This target was not reached by the end of 2009 due to a focus on more pressing issues Group companies will be encouraged

to conduct the reviews going forward.

2009 40%

Every Group company to have a community

engagement plan for its sites. 2012 NewOH&S Reduce lost-time injury frequency rate by at least

30% per annum in each operating company,

using 2004 as reference, from 2006 to 2009.

Within an acceptable tolerance allowance, this target was met for the Holcim Group Some Group companies, however, have not yet reached the target.

2009 See

Progress

OH&S fatality prevention elements

implemented. Implementation of the current 11 OH&S fatality prevention elements is ongoing and the target date has been adjusted

to 2010, when implementation status will be audited in all Group companies.

2010 See

Progress

OH&S contractor safety management

implemented. The OH&S Contractor Safety Management Directive has been aligned with the relevant 2009 CSI Guidelines Full and

sustainable implementation will take another 2–3 years and the target date has been adjusted to 2012.

2012 See

Progress

Targets included in previous reports on areas such as CO 2 assurance, employment practices and

supplier qualification programs have already been met and are thus not listed in the above.

Visit www.holcim.com/sustainable to read more.

Chairman and CEO statement Vision and strategy Priorities Performance data Methodology and assurance

* Excluding own power generation.

Demand for construction products is increasing

Concrete is a versatile material indispensable to infrastructure and economic development – and after water is the most widely used product in society

Concrete is made of aggregates, water and cement

Cement is the “glue” that provides strength and durability and represents 15% of concrete’s volume

Although concrete and cement have a relatively low embedded CO2 intensity compared to other construction materials, high demand results in the cement industry producing an estimated 5% of man-made CO2 emissions

The dilemma that Holcim and other responsible players face is how to meet the growing demand for high-quality products while limiting emissions and decreasing our ecological footprint

Studies have shown that buildings account for up to 40%

of primary energy consumption Sustainable construction can reduce energy consumption and the CO2 emissions

of existing and new buildings signifi cantly For example, buildings with a Gold or Platinum Leadership in Energy and Environmental Design (LEED) certifi cation consume

up to 50% less energy than those using less effi cient designs Examples include IUCN’s conservation center in Gland, Switzerland and Development Alternatives’ headquarters in Delhi

Visit www.holcim.com/sustainable for case studies

Innovation in products and processes

As a major player in the industry, Holcim has a role

to contribute to sustainable products and building techniques We are developing new solutions through product innovation and process innovation

Product innovation We are developing environmentally friendly cementitious materials for specifi c applications Examples include products with minimum carbon footprint combined with extended service life and concretes that reduce peak temperatures through water absorption or desorption Additionally, we are developing materials to increase the durability and longevity of buildings and roads We are also currently conducting detailed lifecycle assessments with government, academics and other partners

The use of composite cements is another vital strand of product innovation at Holcim Our focus on substituting (and therefore reducing) clinker in cement with slag, fl y ash, pozzolans and other minerals is highly effective in carbon reduction By 2009, we had decreased the share

of Ordinary Portland Cement to 20% of our product portfolio and increased the share of composite cements

to 80% See chart on page 11.

“I believe that our creative imagination, by definition, is unbounded, and that the principles

of sustainable design are not a limitation; rather, they provide fertile ground for engaging the imagination to nurture a vibrant architecture of the future.” Ashok B Lall (India), Visiting Professor,

Guru Gobind Singh Indraprastha University (GGSIU); Principal, Ashok B Lall Architects; and Head, Holcim Awards jury Asia Pacifi c 2008.

Visit www.holcim.com/sustainable to read more.

Sustainable products and sustainable construction

Population growth, socio-economic development and adaptation to climate change will increase the demand for construction products

Chairman and CEO statement Vision and strategy Priorities Performance data Methodology and assurance

Sustainable products and sustainable construction Energy and climate Resources conservation Social commitment

See pages 26–31 for full data tables Visit www.holcim.com/sustainable for more information.

Key data

Sustainable products and sustainable construction

Process innovation. Through research and development

in sustainable and energy-efficient manufacturing,

we are seeking technical solutions to the challenges ahead including the rising cost of electrical and thermal energy, ensuring their availability worldwide while also improving the emissions of cement kilns Holcim’s program aims to transform these challenges into opportunities for sustainable value creation across the Group As part of this, we leverage the diversity of our Group companies to multiply good practice and ensure that innovations and solutions are systematically shared

to create competitive advantage

Responsible relationships and partnerships

Providing our diverse customers with the right product for the right application is fundamental to a successful and sustainable business To ensure we are meeting these needs, 75% of Group companies carried out a customer survey in 2009, and of these, 88% measured customer satisfaction levels Product stewardship remains an important element of our customer relations In 2009, 54% of Group companies reported having a specific policy covering customer health and safety and 50% reported having policies on product information and labeling

To ensure a sustainable supply chain, Holcim is mindful that its suppliers should respect our social and environmental policies Our Group procurement policy and supplier qualification programs include a self-assessment of suppliers’ compliance with social and environmental standards Details of supplier assessments are shown opposite

Working with academic institutions is key to achieving

a sustainable future In this regard, Holcim engages with Clausthal University and the Swiss Federal Institute for Technology in Zurich and Lausanne who are both permanently represented on our process and product innovation committees In addition, the Holcim Foundation for Sustainable Construction has a network of partner and associated universities that is representative of every continent The foundation’s aim

is to promote sustainable responses to technological, environmental, socio-economic and cultural issues affecting building and construction at national, regional and global levels

Cement types produced by Holcim* in 2009

OHS standards EMS systems

Labor standards (other than human rights) Social accountability or other human rights criteria

20% Ordinary Portland Cement 5% Masonry cement, oilwell cement, white cement, special binder 17% Multiple blend cement

Fly ash cement 26% Limestone cement 14%

Pozzolan cement 9% Slag cement 9%

The Holcim Forum, convened by the Holcim Foundation for Sustainable Construction, provides an academic platform for architects, engineers, construction professionals and other specialists to exchange information on sustainable built environments and sustainable development Forums on “Basic Needs”,

“Urban Transformation” and “Re-inventing Construction”

have been convened

The Holcim Foundation for Sustainable Construction promotes and encourages sustainable construction practices;

for more information, visit www.holcimfoundation.org

* All but Ordinary Portland Cement are composite cements Composite cements increased from 30% in 1990 to 80% of our product mix in 2009.

Chairman and CEO statement Vision and strategy Priorities Performance data Methodology and assurance

Sustainable products and sustainable construction Energy and climate Resources conservation Social commitment

Sustainable products and sustainable construction

or social housing programs, mainly in Latin America and Asia and three mega-cities projects in Jakarta, Manila and Singapore are being implemented In 2009, an estimated 27,600 families benefi ted from the affordable housing schemes

The housing defi cit in Nicaragua, a country with seven million inhabitants, amounts to more than half a million With 85% of the population considered as poor

or extremely poor and the number of inappropriate houses rising steadily, shelter is one of the country’s main challenges In order to contribute to meeting this challenge, Holcim Nicaragua started implementation

of Edifi cando Vidas, an affordable housing program It aims at offering Nicaraguan families an appropriate,

sustainable and culturally accepted housing solution that complies with Holcim’s sustainability requirements

In order to achieve this goal, the company – in collaboration with its distribution channel Construmas and the Holcim Nicaragua Foundation for Sustainable Development – selected pilot communities and conducted a participatory assessment of housing needs As a result of these community consultations, the project team developed a technical solution that is appropriate for local conditions and uses construction techniques and materials that are familiar locally The solution was well accepted by the community and project advisory panels were set up and are now managing community participation In addition to providing the housing solution, the project integrates

a fi nancing option and supports the development of construction-related micro-enterprises Model houses have been erected at the plant in Nagarote at the beginning of 2010 There are plans to construct 30 to

40 houses for participating families in the course of the year

“Holcim’s efforts to provide affordable housing in Latin America and Asia are extremely commendable To build on these first achievements, I would encourage Holcim to share the resulting learning with a wider range of companies and organizations to collaborate on a roll-out of such programs This will help to reach not just dozens, but thousands of families.”

Fernando Almeida, Executive President, Business Council for Sustainable Development, Brazil.

Visit www.holcim.com/sustainable to read more.

12 Chairman and CEO statement Vision and strategy Priorities Performance data Methodology and assurance

Sustainable products and sustainable construction Energy and climate Resources conservation Social commitment

Innovation in practice

The Holcim Commercial Awards acknowledge

excellence along the Holcim Value Chain, and are judged

against criteria of customer orientation, innovation,

value creation, sustainability and transferability Among

the projects recognized by the awards are the following:

The Integra Construction System was developed by

Holcim Costa Rica Integra is an innovative wall system,

based on a modular concrete block and also integrates

other innovative aggregate and cement products

The system reduces waste, increases productivity and

durability and improves safety on construction sites

Holcim Green and Holcim Supercrete were developed

by Holcim Singapore, who was recognized for the

development of eco-friendly concrete products Holcim

Green reduces the usage of imported materials by

replacing fine aggregates with recycled materials while

Holcim Supercrete, because of its strength, facilitates

smaller columns and more usable spaces in buildings

Construction can be faster and can result in up to 45%

less concrete use for a structure Both products obtained

a Green Label from the Singapore Environment Council

Red Minetti was developed by Juan Minetti, our Group

company in Argentina It is a national chain of outlets

for building materials where end users (normally

owner-builders) can find, in one place, all the materials needed

to build their house, personalized guidance on how to

use the materials and assistance with purchase finance

Cirkelstad was developed by Holcim Netherlands –

a regeneration project for inner-urban areas with a

focus on recycling and re-use of “old” city demolition

materials for “new” city construction The project also

had the goal of providing job opportunities for

long-time unemployed people from the local community

London 2012 Olympic village

The Olympic Delivery Authority (ODA), the body responsible for the building of the 2012 Olympic Games venues, identified sustainable construction as key in the procurement of materials and construction

of the games infrastructure With this in mind, the ODA set “green” targets for all the bidding companies At least 25% of the materials supplied need to be recycled and at least 50% of materials, by weight, have to be transported to the Olympic Park by sustainable methods

Our Group company in the UK, Aggregate Industries, successfully bid to supply the project with aggregates and ready-mix concrete It ensured that the sustainable transport target was substantially exceeded in the bid, with over 90% of the aggregates to be supplied by either rail or barge In addition, Aggregate Industries

is confident that it will well exceed the ODA’s aim of 25% for recycled aggregate materials delivered to the project It will achieve this through its use of secondary aggregates from assets in Cornwall in England, as well

as recycled glass and recycled concrete derived from demolition sites in London

An example of

a “Red Minetti” outlet in Argentina The chain offers a

“one-stop” solution for owner-builders.

Mohammed Rafati (far left) and Said Saoudi (left) are employees of Holcim Netherlands working on the

“Cirkelstad”

project aimed at regenerating inner-city urban areas with a focus

on recycling.

13 Chairman and CEO statement Vision and strategy Priorities Performance data Methodology and assurance

Sustainable products and sustainable construction Energy and climate Resources conservation Social commitment

Energy and climate are critical factors for sustainability

Global energy demand is predicted to rise by 45% by

2030 (World Energy Outlook), accompanied by higher energy costs, depleting energy sources and limited discoveries of affordable new ones The combined challenges of energy and climate require unprecedented investment and changes in production, consumption and behavior

Addressing the challenge of climate change requires global emissions to be stabilized then reduced and all sectors have a responsibility We advocate differentiated responsibilities at country level, accepting the need for absolute CO2 emission reductions in developed countries and increases to be limited in emerging economies Holcim further believes that no single policy instrument can fi t all sectors, and that a range

of instruments is needed to incentivize the growth of the most CO2-effi cient and energy-effi cient companies and products

Energy and CO 2 effi ciency

Holcim is committed to further improve the effi ciency

of its production processes and products and to remain

an industry leader In cement production, our focus

is on lowering the clinker factor, increasing the use

of alternative fuels and materials and improving energy effi ciency

To maximize all available emission-reduction levers, Holcim advocates that industry benchmarks should include the entire production process and products, and that these should incentivize both product innovation and consumer choice

For further information on our positions on climate and energy, visit www.holcim.com/sustainable

According to the McKinsey Global GHG Abatement Cost Curve, the maximum potential to reduce specifi c emissions in the cement industry is -23% by 2030, excluding carbon capture and storage The International Energy Agency (IEA) estimates an absolute reduction potential in 2050 of 18%, including carbon capture and storage A Cement Sustainability Initiative (CSI) study, see page 16, identifi ed similar levers and

abatement potentials Holcim has already signifi cantly contributed to reducing emissions In 2009, we met our target by achieving a 21% reduction in net CO2

emissions per tonne of cement (2008: 19.6%) One of the main drivers has been our lowering of the clinker factor, Holcim’s being among the lowest

in the industry with an average of 71.1% of clinker in cement Furthermore, by implementing best practices and technology, Holcim increases energy effi ciency in production, thus lowering related CO2 emissions To further improve our performance we have a new target

to reduce CO2 emissions per tonne of cement by 25%, compared to 1990 levels, by 2015

“Holcim faces a major challenge in reducing its energy usage and carbon emissions I’d like to see more discussion of its possibilities to shift energy supply from fossil fuels to more sustainable energy sources.” Holger Walbaum, Chair in Sustainable Construction, Swiss Federal Institute

of Technology (ETH Zurich).

Visit www.holcim.com/sustainable to read more.

Energy and climate

Energy security and climate change are critical risk factors for the long-term sustainability of the company

and 15 for details.

Chairman and CEO statement Vision and strategy Priorities Performance data Methodology and assurance

Sustainable products and sustainable construction Energy and climate Resources conservation Social commitment

Key data

Energy and climate*

Overall, Holcim has improved its thermal energy consumption from over 4,500 MJ per tonne of clinker in

1990 to 3,580 MJ per tonne of clinker in 2009, reflecting efforts to upgrade technology and optimize operations

Concurrently, the substitution of traditional fossil fuels with biomass residues and waste-derived fuels recovers energy from waste, thus also reducing CO2 emissions Despite these improvements, Holcim’s absolute emissions from cement production are bound to rise due to increased demand for concrete Breakthrough innovations are needed to achieve absolute reductions

See page 30 in our Annual Report for examples of Holcim’s efforts in this area

For details of specific CO 2 emissions, clinker factor and substitution rate by alternative fuels, see charts opposite

Data on other atmospheric emissions including SO 2 , NO x and dust is reported on page 28 and at www.holcim.com/sustainable

Policy and stakeholder engagement

Holcim constructively contributes to policy debate

to develop effective regulatory incentives to improve energy efficiency and CO2 intensity We believe that the most effective way to reduce society’s carbon footprint is via mandatory government policies and regulated market instruments that set CO2 and energy benchmarks

To promote our positions on energy and climate, we support GLOBE, an organization bringing together legislators who share an interest in developing sound environmental legislation This has proven to be

a positive platform through which to channel our viewpoints to members of national parliaments and the European Parliament alike

Carbon capture and storage (CCS) may offer important carbon reduction potential Holcim, with others in the industry, supports the ongoing work of the European Cement Research Academy (ECRA) on CCS technologies

in the cement industry

For details of our engagement with the WBCSD Cement Sustainability Initiative see page 16.

See pages 26–31 for full data tables Visit www.holcim.com/sustainable for more information.

* Due to ownership changes in 2009, figures for previous years have been restated.

Average % of clinker in cement

% of thermal energy from alternative fuels

Specific gross CO 2 emissions (excluding on-site power generation)

Specific net CO 2 emissions (excluding on-site power generation)

% improvement trendline Sector average emissions (WBCSD GNR database)

1990 2000 2005 2007 2008 2009 2015

500 550 600 650 700 750 800

129.0

12.1 11.1

11.7

Chairman and CEO statement Vision and strategy Priorities Performance data Methodology and assurance

Sustainable products and sustainable construction Energy and climate Resources conservation Social commitment

as Holcim has already shown in places such as the El Puente aggregate quarry in Spain.”

Dr Christoph Imboden, Chair of the Independent Expert Panel of the Holcim–IUCN Partnership.

Visit www.holcim.com/sustainable to read more.

Working with the Cement Sustainability Initiative (CSI)

Holcim is a founding member of the CSI,

www.cementwbcsd.org, part of the World Business

Council for Sustainable Development (WBCSD) The CSI has developed in consultation with international stakeholders a “sectoral approach” model which

is a framework enabling countries to fulfi ll their commitments to the UNFCCC’s Bali Roadmap The model shows the same mitigation drivers as the McKinsey Cost Curve and the IEA Technology Roadmap, and all three models show, albeit in varying degree, that sequestration such as carbon capture and storage will be required to reduce absolute emissions from the global cement industry The approach was presented to governments and negotiators in the lead-up to the 15th

UN Climate Change Conference (COP15) in Copenhagen

in December 2009 Work on this approach is continuing

A key factor in enabling a sectoral approach is the availability of robust and verifi ed global data, allowing for fair, meaningful and effective benchmarking of the industry’s CO2 and energy performance against which to set improved targets Holcim has participated with the CSI members in developing the Getting the Numbers Right (GNR) database as part of enabling this approach

To facilitate a more streamlined process for the approval

of projects under the Clean Development Mechanism

(CDM), Holcim has supported the CSI in developing a new CDM baseline and monitoring methodology based

on benchmarking This tool, together with data from

a pilot project undertaken by Holcim Ecuador, was presented to the UNFCCC’s CDM methodology panel

in mid-2009 and deliberations are continuing

For a case study on working toward CO 2 -neutral sites, visit www.holcim.com/sustainable

Experts help shape our management of biodiversity

Through our global agreement with the International Union for Conservation of Nature (IUCN), signed in

2007, Holcim has forged strong links with this leading organization See page 17 for more about the partnership One of the key activities of our partnership was the convening of an Independent Expert Panel (IEP), consisting of fi ve well-respected biodiversity specialists and chaired by Dr Christoph Imboden, an ecologist and biodiversity conservation expert Visit www.holcim.com/ sustainable for biographies of the panel members.

The IEP’s role is to advise Holcim on developing a biodiversity management framework, including overarching policies and practical toolkits to enable

“on the ground” management of biodiversity The panel has conducted visits to Group companies in Belgium, China, Spain, Hungary, Indonesia, the UK and the USA

to learn about the company and its operations The visits allowed the panel to experience the diversity in size, geography, maturity, outputs, issues and different regulatory landscapes of Holcim operations

16

Cement Sustainability Initiative

Chairman and CEO statement Vision and strategy Priorities Performance data Methodology and assurance

Sustainable products and sustainable construction Energy and climate Resources conservation Social commitment

This interaction has led to a better understanding of

the relevance of biodiversity to our business and a set of

recommendations for Group and local operations Some

of the panel’s initial observations are that:

• biodiversity management should cover a full scope

of operations, cement and aggregates sites

• biodiversity issues must be considered throughout

the entire lifecycle of a site, from early planning

through to closure

• sites should work with local experts and partners to

leverage their expertise

• rehabilitation can be done more cost-effectively by

providing the right conditions and structure so that

nature can re-establish itself, rather than planting

expensive flora

• progressive rehabilitation should be the preferred

option This approach has proven to be more effective

in cost and time than an after-care program

In addition to the global agreement with the IUCN,

Group companies and IUCN local branches have

undertaken joint projects in Costa Rica, Spain, Sri Lanka

and Vietnam A joint workshop on capacity-building is

also being planned by our associated company in China

with the IUCN For a case study on biodiversity action plans

in the UK and New Zealand, visit www.holcim.com/sustainable

Water conservation in Thailand

Our Group company in Thailand, Siam City Cement

has collaborated since 2007 with a local NGO to

support the construction of check dams to promote

water conservation

Check dams retain water for use during droughts, slow

the flow of water in creeks, so reducing erosion and

other damage, and aid soil fertility Water can also be

diverted from the dams into forest areas to limit the build-up of dry leaves and reduce fire risk Studies by Chiang Mai University, supported by Siam City Cement, have shown that check dams restore ecological balance, revive natural resources, contribute to improved air quality and help to raise local living standards

The project was started following an environmental initiative by the King of Thailand Siam City Cement provided funding of 27 million baht (USD 820,000) over three years and supplied cement for construction Over 1,000 volunteers, including Siam City Cement employees, built 3,880 check dams in eight provinces over the three-year period, which were handed over to the Chai Pattana Foundation in a ceremony in December 2009

Quarry or natural habitat? This rehabilitated quarry at El Puente

in Spain has become a haven for an increasing variety of bird species.

17

Our Group company in Thailand, Siam City Cement, has been promoting water conservation with a project to construct 3,880 check dams

in the country.

Chairman and CEO statement Vision and strategy Priorities Performance data Methodology and assurance

Sustainable products and sustainable construction Energy and climate Resources conservation Social commitment

Biodiversity and water: key issues to be addressed

Growing population levels and continuing economic development are increasing the demand for land, food, water, energy and other resources, adding to the pressure on ecosystems and biodiversity Holcim

is a resource-intensive business with 154 cement and grinding plants, 485 aggregates plants, 1,457 ready-mix concrete plants and some 800 quarries worldwide

We recognize that biodiversity supports essential ecological functions and human wellbeing It helps

to maintain ecosystem services, secure food supplies, provide opportunities for recreation and tourism, and safeguard sources of wood, medicines and energy

Holcim has a long history of conducting environmental and social impact assessments and of quarry

rehabilitation The work we are undertaking in partnership with the IUCN has confi rmed that biodiversity needs to be considered throughout the complete lifecycle of our operations from site opening

to closure This is not just at a policy and planning level, but also to ensure that existing tools are being adapted and new ones integrated in an overall biodiversity management system More details on the partnership with the IUCN can be found under stakeholder engagement in this section

We aim for effi cient water use in all our operations

In cement production, water is used for cooling heavy equipment and hot exhaust gases, for dust control and for preparing slurries in wet process kilns Water is also used in concrete and aggregate operations Feedback from stakeholders has emphasized the importance

of improving our performance in managing water resources, especially in areas where water is in short supply Holcim has reported among the lowest water consumption in the sector, having reduced specifi c water consumption signifi cantly from 430 liters per tonne of cement in 2005 to 360 liters in 2009 Water recycling is key to reducing process water usage in our aggregate and ready-mix concrete operations Just under three-quarters (72%) of ready-mix concrete operations have water recycling systems in place

We have taken note of stakeholder concerns and are developing a water management scheme for all business units, which we intend to implement by the end of 2013

Eco-effi ciency is at the core of Holcim’s business – producing more while using fewer resources and producing less waste and pollution per tonne of product At Holcim, we are convinced that conserving natural resources plays an ever-increasing role in our long-term resource and reserve strategy and we aim

at continuously improving our performance

“We have to find ways in which we can satisfy the housing and construction needs of the world without jeopardizing the environment with chemicals and affecting the flows of substances like water The mining of limestone not only adversely affects the landscape, but also the hydrological cycle in the area.” Ashok Khosla, Chairman, Development Alternatives.

Visit www.holcim.com/sustainable to read more.

Chairman and CEO statement Vision and strategy Priorities Performance data Methodology and assurance

Sustainable products and sustainable construction Energy and climate Resources conservation Social commitment