Page 29 - 2023 Sustainability Report

COMPANY OVERVIEW

Climate Related Risk Analysis and Management

In this report, and in our annual reports to the SEC, we continue to provide enhanced climate related disclosures,
including information about the physical and transition risks and opportunities relating to climate change. We believe our
objectives are consistent with the objectives of the Task Force on Climate-related Financial Disclosures (TCFD)
recommendations and Sustainability Accounting Standards Board (SASB) guidelines for the construction materials sector.

The Board and management have identified certain risks related to the transition to a lower-carbon economy, risks related
to the physical impacts of climate change and other climate-related opportunities.

Transition Risks

The Company’s sustainability risk management framework is designed to identify various transition risks, including policy
and legal risks, technology risks, market risks and reputation risks, associated with climate change and transitions to a
lower-carbon economy.

Policy and Legal Risks

A number of governmental bodies, including the U.S. Congress and various U.S. states, have proposed, enacted or are
contemplating legislative and regulatory changes to mitigate or address the potential impacts of climate change, including
provisions for GHG emissions reporting or reduction, the use of alternative fuels, carbon credits (such as a cap-and-trade
system) and a carbon tax. For example, in the United States, the United States Environmental Protection Agency (USEPA)
promulgated a rule mandating that companies considered to be large emitters of GHGs report those emissions. The
manufacturing operations of the Company’s Magnesia Specialties business release carbon dioxide, methane and nitrous
oxides during the production of lime, magnesium oxide and hydroxide products. The Company’s two magnesia-based
chemicals facilities, as well as its cement operations in Texas, file annual reports of their GHG emissions in accordance
with the USEPA reporting rule. The primary business and operations of the Company, however, including its aggregates,
ready mixed concrete and asphalt and paving product lines, are not considered “major” sources of GHG emissions subject
to the USEPA reporting rule. Most of the GHG emissions from aggregates plant operations are tailpipe emissions from
mobile sources, such as heavy construction and earth-moving equipment.

The Company’s cement plants, as well as its Magnesia Specialties plants, are strictly regulated with respect to GHG
emissions and hold Title V Permits, and each (other than the Manistee, Michigan facility) is also subject to the U.S. Clean
Air Act’s Prevention of Significant Deterioration (PSD) requirements which require a permit program for certain new or
modified sources of emissions. Although several large-scale projects for carbon capture are in the development phase, no
technologies or methods of operation for reducing or capturing GHGs have yet been proven successful in large-scale
applications, other than improvements in fuel efficiency. If future modifications to the Company’s facilities require PSD
review for other pollutants, GHG permitting requirements may also be triggered and may require significant additional
costs, which the Company expects would be passed on to customers. It is not currently possible to estimate the cost of
any such future requirements. In addition, the USEPA and the U.S. Supreme Court have taken different positions with
respect to the USEPA’s authority to make rules in these and other areas which could create uncertainty regarding
regulatory compliance on these matters in the future.

In 2021, a pair of executive orders and a presidential memorandum were issued making climate change central to U.S.
policy and setting out several administrative priorities and undertakings to reduce GHG emissions. The United States
reentered the Paris Agreement in January 2021 and later announced the U.S. reduction commitments under the Paris
Agreement, including a 50% to 52% economy-wide reduction in net GHG emissions from 2005 levels by 2030. The
United States also entered a pact with 103 countries and jurisdictions, known as the Global Methane Pledge, to reduce
global methane emissions by 30% from 2020 levels by the end of the decade.

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