Page 32 - 2023 Sustainability Report

COMPANY OVERVIEW

reduction and net zero targets, and any differences between its commitments and those of any companies to which the
Company is compared, could harm the Company’s reputation, adversely affect its ability to effectively compete (including
as a result of disclosure of proprietary information regarding its plants or changes in its ability to raise capital), adversely
affect its recruitment and retention efforts or expose the Company to potential legal liability. In addition, while the
Company is committed to pursuing its sustainability objectives, there is no assurance that it will achieve any of its
sustainability goals or commitments, that low-or non-carbon-based energy sources and technologies required to meet
long-term emissions reduction goals in some of the sectors in which it operates will be available at scale in the United
States on an economically feasible basis or that its suppliers can meet sustainability, diversity and other standards that are
required by current or future laws or established by its investors and other stakeholders. Failure to meet these
commitments could result in reputational harm to the Company and changes regarding climate risk management and
practices may result in higher regulatory and compliance risks and costs. Any violations of law (including environmental
law) or improper conduct could damage the Company’s reputation.

Physical Impacts

In addition to impacts from increased regulation, climate change may result in physical impacts that could have adverse
effects on the Company’s operations or financial condition. Physical impacts may include disruptions in production and/or
regional supply or product distribution networks due to major storm events, shifts in regional rainfall and temperature
patterns and intensities, as well as flooding from sea level changes. In addition, production and shipment levels for the
Building Materials business correlate with general construction activity, which occurs outdoors and, as a result, is affected by
erratic weather patterns, seasonal changes and other unusual or unexpected weather-related conditions, which can
significantly affect that business. In the Company’s cement and downstream operations businesses, the physical impacts of
climate change may result in disruptions to its operations or its customers’ transportation activities, including impacts on
production capabilities and capacities, supply chain interruptions and project delays that can impact the Company’s
reputation and result in additional costs to the Company. Excessive rainfall and other severe weather jeopardize production,
shipments and profitability in all markets served by the Company in its Building Materials business. In addition, climate and
inclement weather can reduce the useful life of an asset. In particular, the Company’s operations in the Atlantic and Gulf
Coast regions of the United States and The Bahamas are at risk for hurricane activity, most notably in August, September
and October. The Company is also at risk for Pacific Ocean storm activity. The last few years brought an unprecedented
amount of precipitation to the United States and particularly to Texas and the southeastern United States, notably the
Carolinas, Florida and Georgia, where it impacted the Company’s facilities. In California and Arizona, drought conditions
have led to water use restrictions in numerous water districts, and insufficient supply of water for the Company’s operations
in those areas could impact production. In California, early 2023 storms and flooding caused operational delays and
challenges. While reconstruction activities may offset some or most of the financial impacts on sales and demand, any of
these events could have a material adverse effect on the Company’s business and operations.

As the Company’s footprint of quarries and aggregates facilities has grown nationwide, management believes it has
bolstered resilience in its operations by maintaining a geographically diverse business and distribution network that is
increasingly able to adjust to local disruptions and source materials from different facilities. In addition, because the
Company transports aggregates products by various methods, including rail and water, it may be able to mitigate supply
or transportation issues in any location caused by severe weather or disruptions in any transport modality. The Company
implements risk management strategies with respect to these physical risks. These include employee training and the
development of procedures to address emergencies caused by physical climate impacts or otherwise.

Climate-Related Opportunities

Notwithstanding the foregoing risks and uncertainties relating to climate change, there may also be opportunities for the
Company to increase its business or revenues, both in terms of the physical impacts of climate change and market
opportunities associated with the transition to a low-carbon and climate-resilient economy. For example, warm and/or

30 2023 SUSTAINABILITY REPORT