Mercon Coffee Group Sustainability Report 20-21

Building a better coffee world

Mercon Coffee Group

Sustainability Report 20-21

Last year was a great adventure for all of us. Despite the obstacles, we broke down all barriers innovating and setting a new standard of what is possible. Our Made in Mercon essence allowed us to not only have the best financial results in the last five years, but also leave an important mark in each of our sustainability pillars: prosperity, people, and planet.

Being a close partner that generates wellbeing for all is part of our essence. In the 20-21 harvest we reinforced our focus to support our producers. Through more than 19,000 technical

assistance visits and U$17M in credits, we supported their growth objectives to produce in a sustainable way. We are proud to see our LIFT producers continue to improve and increase their productivity levels, in average, 29% higher than the productivity of the countries were we have presence in Central America.

The circle of prosperity that Mercon promotes was also centered in the development of our coffee communities. In alliance with the Seeds for Progress Foundation, we invested more than U$1.8 M to provide quality education to more than

6,000 children in Nicaragua and Guatemala. We believe that access to education is essential to create opportunities to improve the quality of life of our producers and their families, and that together we can contribute to a sustained economic development for all.

During 20-21, we made progress to continue identifying our environmental impacts and consolidating metrics and indicators to strengthen our environmental management system. In addition, through our LIFT platform and with the support of our producers we continue reinforcing our efforts to protect our natural resources through the conservation of 7,037 water sources and 8,210 hectares of forests.

The support of our allies has been crucial to build a more sustainable chain in our operations. By developing 20 partnerships, we managed over U$2.5 M in joint initiatives to promote the best social and environmental practices, raising the quality of life in the regions where we operate.

Before inviting you to get to know in detail our progress in

the following pages, I want to highlight that behind each of our achievements, there is a committed team that has made a big effort to surpass each challenge and has been focused in making Mercon the best place to work with our purpose of building a better coffee world. Thank you, team!

I am confident that we have a brilliant future ahead of us, and that together, as One Group, One Team, we will continue to create a circle of prosperity for all.

Oscar Sevilla CEO Mercon Coffee Group

Our

history!

Is about how a coffee farm in Nicaragua birthed one of the leading green coffee companies in the world, with sustainability initiatives that drive innovation and community prosperity.

Our seven-decade journey:

Jose Antonio Baltodano, President, Mercon Coffee Group

1853 - It all begins when Moises Baltodano, grandfather of our current president, buys a coffee farm in Nicaragua.

1896 - Moises travels to Europe to trade coffee.

1952 - CISA is founded in Nicaragua.

1979 - CISA closes due to all coffee exports in Nicaragua being nationalized.

1982 - José Antonio Baltodano founds Mercon Coffee Corporation in the United States.

1991 - CISA Exportadora is reinstated.

1998 - Mercafe Vietnam is inaugurated.

1999 - CISA Exportadora implements Corporate Social Responsability programs in coffee-growing communities.

2000 - Mercon Honduras is inaugurated.

2005 - CISA Exportadora pioneers the production of Robusta coffee in Nicaragua.

“Coffee brings hope, connects hearts, and gives back. Coffee transforms”.

2010 - The nursery operation is established.

2012 - Mercon Brazil is inaugurated.

2013 - To bolster Mercon’s efforts in coffee-growing communities, Seeds for Progress Foundation, a nonprofit, is created to support education.

2014 - Mercon Guatemala is inaugurated.

2014 - LIFT, our sustainability platform for coffee producers, is established.

2016 - Headquarters are established in Amsterdam.

2019 - Mercon Specialty is established in the United States.

2020 - Mercon Ethiopia is inaugurated.

Our operations

Founded in 1952 as a coffee exporter, Mercon, a Netherlands-based company specialized in coffee, ranks among the top 10 leading coffee suppliers in the world. We boast an unparalleled presence across the coffee supply chain, from farming and production to trading, logistics, and risk management. In addition, our agricultural division incorporates both farm and nursery management, and Mercapital offers financing to producers at competitive rates and terms.

• Mercon Honduras

• CISA Exportadora

• Mercon Guatemala

• Nursery (Transplanta)

• Farm Management (Digranisa)

• Spain

• Netherlands

Mercon Brazil

Mercon USA

Mercon Specialty US

Mercon Ethiopia

Mercon Vietnam

Mercon Specialty Vietnam

Mercapital

Mercon Europe

Building a better coffee world

Mercon Coffee Group is a vertically integrated, global, green coffee supplier committed to consistently sourcing the right quality of coffee for our customers and creating sustainable livelihoods in coffee-growing communities.

Delivering Sourcing

Building a better coffee world

Producers

We are extremely proud to incorporate social and environmental responsibility in our strategy.

Roasters

Adding long- term value

At Mercon, our philosophy is simple: we work as One Group, One Team. We seek to change the way coffee is produced, traded, and consumed around the world through sustainability, innovation, and community growth. This goal is captured in our purpose: to build a better coffee world.

Mercon at a Glance

4,224 LIFT producers

1,215,104 60 kg bags supported by LIFT

19,320 Technical assistance visits +$17M In producers financing

$2.5M In joint initiatives

21 Nationalities make up our team

13,363 Hours of training to our employees

72% In excellence in our customer service survey

+300 Costumers

$2.5M initiatives

11% Female LIFT producers

$ 1.8M Invested in education for coffee growing communities

7,037 Water sources protected

8,210 Ha

Of forests preserved

+60 Countries with presence

4.27 Engagement index score on a scale of 5

29% Increase on LIFT productivity (on average)

Our Robusta coffee in Nicaragua

contributing to the development and growth of the region

Our Robusta story is a perfect example of what building a better coffee world really means. It’s a story of hope and transformation, of dreams and resilience.

By pioneering Robusta production in Nicaragua–a country which until that time exclusively produced Arabica coffee–we helped bring newfound prosperity to Nicaragua Caribbean region.

55 producers start to grow Robusta coffee

First trainings to our producers and purchase of La Esperancita, our first farm with 11.5 Ha of land

Purchase of our second farm, San Antonio -

253 Ha

Purchase of our third farm San José - 320 Ha

Adaptation of the LIFT platform for Robusta coffee

Inauguration of La Luz, the first Robusta mill in in Nicaragua

More than 900 producers grow Robusta coffee

Beginning of support to schools in the region by Seeds for Progress Foundation

Purchase of our fourth farm

La Palmira - 800 Ha

638 producers

80k 60kg bags of production

+86k 60kg bags of production

Together with our producers, customers, and key allies, we are nurturing a completely new industry in Nicaragua, creating opportunities that promote sustainability across the region. As an agent of change, the production of Robusta has helped to improve the standard of living by creating jobs; promoting good agricultural practices through LIFT; and, in partnership with the Seeds for Progress Foundation, facilitating access to quality education for children in the communities.

We reaffirm our commitment to producers through their stories and experiences:

I am proud to produce Robusta coffee because, despite being a woman, it allows me to bring home more money. It also allows me to provide work for others. That’s what I’m most proud of: knowing I can give my people work. I can offer them a way to a better life.

Click here to watch a video of Ana Julia

Lopez- Robusta producer

Ana Julia Lopez Martinez –Robusta coffee producer

Our Sustainability strategy

Sustainability is foundational to everything we do. Our purpose of building a better coffee world led to the creation of initiatives that allow a holistic approach to our operations. As our sustainability model continues to evolve, during the 20-21 harvest we integrated it even more extensively into our day-to-day operations and into global requirements and expectations. This resulted in greater alignment of our strategic objectives and material issues rooted in three pillars: Prosperity, Planet, and People.

Additionaly, our model is supported by the relationships we cultivate with our stakeholders under the highest standards of ethics and conduct.

• Maximize our competitive advantage by optimizing our resources efficiencies and business processes

People:

• Our Made in Mercon culture

• Talent development

• Drive the Mercon essence to engage our talent in the achievement of sustainable growth

• Human Rights

Prosperity:

• Programs and services with producers and their communities

• Partnership with strategics stakeholders

BUILDING A BETTER COFFEE WORLD

Planet:

• Environmental management and climate action

• Becoming the preferred coffee partner while promoting a sustainable supply chain

• Grow by diversifying across the coffee supply chain

Stakeholder engagement

Employees, producers and their communities, customers, financial partners, industry associations, shareholders, media, critical goods and services providers, government institutions, and civil society.

Ethics and compliances system Code of ethics, grievances mechanism, producer’s code of conduct

Our sustainability report is intended to communicate and share the results of each of our material issues.

PROSPERITY

At Mercon, we are committed to positively impacting coffee producers and their communities to create a circle of prosperity for all. This objective requires aligning our operations with sustainable, inclusive, and transformative growth. Our focus is on:

Developing our coffee producers by implementing sustainable agricultural practices that improve crop productivity and quality.

Strengthening and empowering our coffeegrowing communities by increasing the standard of living, creating better opportunities, and leveraging education as a fundamental tool for sustained growth and prosperity.

Promoting joint initiatives with customers and allies focused on generating value across the coffee supply chain.

A circle of prosperity for all

Producers´ development

4,224 LIFT Producers 29% Increase in LIFT productivity (on average)

1,215,104 60 kg bags supported by LIFT +$17M In producers financing

Strengthening Communities

+$1.8M Invested in education in coffee growing communities

452 Female LIFT producers ......................................

16,746 Training hours to our producers

2,900 Producers financed 5.1 M Of plants delivered 9% LIFT index improvement

28 Schools served

3 “Cultivating Education” centers benefiting 570 children and 360 families

6,000 Students benefited

Strategic Alliances

+$2.5M In joint initiatives

+ 10,000 Producers benefited

The UN’s 2030 Agenda for Sustainable Development identifies prosperity as an area of critical importance: “We are determined to ensure that all human beings can enjoy prosperous and fulfilling lives and that economic, social, and technological progress occurs in harmony with nature.”

11 “Seeds to Lead” pilot schools benefiting 1,281 students and 138 teachers

72% In excellence in our customer service survey

+20 Alliances

Producer’s growth and development

Our strategy, which is focused on generating value across the supply chain, is rooted in building our producers’ capacity by providing them with a number of integrated solutions through LIFT, our sustainability platform.

According to the Oxford English dictionary, the word ‘lift’ means “to raise someone to a higher position or level,” perfectly capturing the objective of our sustainability platform based on three pillars:

LIFT continues to the services offered producers and is process of obtaining recognition from Coffee Platform.

Prosperity (sustainable growth)

Increase economic viability through sustainable practices that improve coffee productivity and quality.

People (social development)

Promote good workplace practices, mitigate child labor, and promote community development.

Planet (environmental impact)

Take action on environmental impacts in the coffee chain to conserve resources and mitigate climate change.

LIFT productivity VS Country productivity

strengthen offered to in the obtaining the Global

LIFT is a versatile platform that has adapted to the characteristics and needs of our producers in the various areas and countries where we operate.

Using digital platforms, we capture and monitor each producer’s progress directly from their farm, thereby guaranteeing the program’s effectiveness.

Mercon’s proprietary LIFT Index measures 18 metrics that assess our producers’ adoption of practices that improve productivity, forward social development, and have positive environmental impacts. In 20-21, we obtained a LIFT Index of 81.16, which represents a 9% improvement compared the previous crop.

Nicaragua

Technical Assistance

Carry out diagnosis, farm management planning, training, and individual visits for purposes of recommending, implementing, and monitoring best agricultural practices.

Financing

Facilitate access to short- and long-term financing, providing working capital at competitive rates and terms.

Our 20-21 LIFT

Forward Sales

Promote access to income stability and reduced risk and uncertainty due to price volatility on the stock market through an agreement on the percentage of the harvest to be set up.

19,320 Technical assistance visits

938 Training events

+$ 17M In loans granted

+335k

60 kg bags in volume financed

+1,700 Producers with access to electronic transfers

2,900 Producers financed

34,900 Ha Financed

GOAL:

100% sustainable sourcing for 2030

16,746 Training hours to producers

Our 99% collection rate is a testament to the relationship of trust, respect, and collaboration we have with our producers.

Certifications

Support producers in ensuring compliance with requirements for top certification seals.

Impacts

4,171 Producers with access to forward sales

Crop renewal and diversification

Supply pest- and diseaseresistant coffee plants (Arabica and Robusta) to yield better results. We also supply vegetables and forest species.

5.1M Plants sold

780,920 60 kg bags of certified coffee

6,011 Certified

+1,600 Ha Renewed producers

70 Certified organic producers

We are proud of the relationships we have forged with our producers and of our commitment to build a better coffee world together. Our future is full of challenges, and we have a long way to go, but that is why we are working to make our supply chain 100% sustainable by 2030.

Luis Chamorro, Origin Director

This goal poses an important challenge: how to implement a consistent, cross-cutting strategy across our origins. To that end, we have made progress in defining a roadmap and creating the Mercon Producer’s Code of Conduct.

Constant dialogue and communication with our producers is essential to maintaining a longterm relationship of trust that is allowing us to grow together. During the 20-21 harvest we launched “My Voice”, a secure and confidential channel for our producers and other stakeholders to make suggestions, submit grievances, share ideas, and/or file complaints. Similarly, in Nicaragua we opened two new channels: CISA TV and CISA WhatsApp.

We reaffirm our commitment to producers through their stories and experiences:

will all be happy when we build a better coffee world, because that is what we all want—success to enjoy our profits from the coffee sector and to live a better life…

We

Click here to watch a video of Carlos Moreno- LIFT producer

Carlos Jose Moreno Cruz Farm El Progreso Jinotega (Nicaragua).

equitable, and sustainable communities

At Mercon, we firmly believe that winning enterprises flourish in successful environments and partnerships. By providing a number of key services to producers, we help to improve not only their productivity and well-being, but also that of their communities, thereby working to consistently foster thriving, equitable, and sustainable communities.

In this framework, empowering women is essential to attaining a circle of prosperity for all, and represents a source of income improvement and stability that drives sustainable development.

1. Gender equity diagnosis at the coffee sector. Prepared by Conservation International, it gives us an overview and recommendations.

2. Strenghtening awareness and understanding of the gender equality, diversity, and inclusion at the management level with the support of IFC.

3. Defining our baseline and identifying industry best practices.

4. Developing a roadmap to set the direction and focus in Mercon’s 2021-2025 strategy.

A better coffee world also means cultivating prosperous,

During the 20-21 harvest we made significant progress in:

452 Female LIFT producers

11% Of our financing granted to women

Up to + 14% more productivity on farms managed by women

90% of our LIFT producers in Nicaragua consider that access to the services we provide is given under equal conditions for men and women.

Brenda: Strong and resilient like coffee

As a mother of two, I had to juggle my time between work and family. I was never trained in how to grow coffee, but I chose to accept the challenge.

When I look back and see the challenges I have overcome, I feel a sense of pride. My goal is to be an example for my children and for other women in my community.

Brenda Samayoa of Guatemala is the proud owner of Casa de Adobe farm located in the community of Tontoles, in Esquipulas, Chiquimula. After her husband emigrated in search of economic opportunity, Brenda assumed the responsibility of managing the family farm and of getting involved in coffee, a sector traditionally dominated by men.

In 2018, after hearing about LIFT— Mercon’s sustainability platform— from other producers, she chose to join and became part of the first generation of LIFT producers in her community. Since then, Brenda has shown a keen desire to continue learning about coffee. Brenda has implemented the best practices recommended by technicians for better crop management, including soil analysis, nutrition plans, organic pest control, integrated weed management, among others. As a result, she has seen a 17% increase in yields. Moreover, she was able to establish 1 hectare with the Sarchimor variety, which will go into production next year, thereby ensuring her farm’s future.

Education,

an essential tool for growth and prosperity.

In partnership with the Seeds for Progress Foundation, we implement educational programs aimed at building competencies, developing skills related to coffee production, ensuring the continuity of the coffee culture in the region, and preventing child labor.

Through our commitment to improving the quality of education for children, we generate important impacts for the coffee-growing communities of tomorrow.

Among these programs:

Seeds for Learn

Seeds to Lead:

Focused on developing personal, family, social, and work-related skills in fourth- to eleventh-grade students. The program promotes initiatives that cultivate a sense of belonging to coffee-growing communities and the rural coffee culture.

+$250k Invested in communities

1,281 Beneficiary students

90 Trained and certified teachers

48 teachers undergoing training

11 Schools

Seeds to LIFT:

Aimed at helping young adults (ages 15 to 25) living in rural areas achieve their technical and professional training goals through local and international alliances. The program’s objective is to provide young people in the community with technical education, equipping them with the necessary skills to become better coffee producers and community leaders.

Cultivating Education:

Created for the children of families who live in or migrate to rural communities during harvest time. The program aims to mitigate child labor by creating safe spaces that facilitate educational development from a young age.

3 Centers implemented 570 Children served

360 Beneficiary families

My biggest dream is to be an agronomist, to be able to start my own business in my community, to show that rural students have potential, to be able to tell new generations that education and perseverance are key to achieving your dreams.

Michael Jackson Hernandez 2020 La Bastilla scholarship recipient

We reaffirm our commitment to developing prosperous communities through their stories and experiences:

As a single mother, I have faced some very difficult times in raising my children…. Now, I can go to work less stressed knowing they will be well-cared for at the center. Education is important because it gives you the tools to succeed. It motivates, it gives hope. With an education you can achieve great goals, becoming someone in life and achieving a brighter future.

Click here to watch a video of Martha Martinez- Cultivating Education

Martha Martinez video – Cultivating Education

commitment

growing

to the coffee-

In line with our commitment to the coffee-growing communities and in response to the devastating impact of hurricanes Eta and Iota in Nicaragua and Honduras, we created a Hurricane Emergency Relief Fund together with the Seeds for Progress Foundation.

Through this initiative and thanks to the support of our partners worldwide, we were able to raise

+ $180,000 +20,000 people

These funds were used to contribute to the regions’ most pressing needs, as well as for road rehabilitation, benefiting

The consistent service we offer along with the reliable quality of our coffee have set us apart for seven decades, allowing us to form enduring relationships with our customers and partners, and to achieve sustained market share and sales growth.

Because we work with customers of all sizes, from international roasters to growing startups, we understand their diverse needs, customizing our service offering accordingly.

Exports by Origin

18% Nicaragua

Honduras

12% Guatemala

24% North America

Sales Volume

Building a better coffee world requires strategic alliances with customers and partners who share our purpose.

18% Nicaragua

30% Others

19% Brazil

2% Ethiopia

3% Honduras

16% Vietnam

Imports by region

61% Europe

2% Central America

7% South America

6% Other regions

From farm to cup, our team’s knowledge and experience in the industry is second to none. Coffee is our specialty, and we are committed to providing our customers the best service experience. Year after year, this unwavering commitment is reflected in steady improvements in our customer service experience survey (NPS).

72% places us in the category of excellence.

The consistent service and reliable quality we have delivered for seven decades, has allowed us to earn the trust of our clients and partners, with family-like relationships that span years.

In 2021, Nespresso’s AAA Program awarded Mercon the title of “Strategic Partner” for its continued loyalty, commitment, and dedication, and its valuable contribution to achieving the Positive Cup sustainability goals for 2020. We also received the Farmer & Agronomist Award 2021 for our efforts and dedication to the AAA program.

Joint initiatives allow us to do more

The unwavering quality of our service has earned us the trust of both customers and allies, allowing us to pursue joint initiatives aimed at generating value across the supply chain.

Building a better coffee world is a collaborative effort that must be aligned not only with our strategy, but also with the priorities of a global sustainability agenda. Sharing a deep commitment to the sustainability of coffee allows us to join forces to promote robust solutions and, in turn, face the challenges that arise in the industry.

We are proud to work with our customers and allies to strengthen coffee communities:

Our strategic alliances are rooted in four fundamental themes:

2

3

Building a better coffee world Efficient water consumption and waste management

4

Child labor prevention

IDB - World Bank - Mercon Group Alliance to strengthen the coffee sector in Latin America by promoting sustainability and inclusion

Within the framework of our strategy to raise the standard of living of coffee-growing communities in the region to promote a positive environmental and social impact, we have partnered with IDB Invest, a member of the IDB Group and the International Finance Corporation (IFC), a member of the World Bank Group. Through a financing managed and administered by Rabobank, coffee value chain in Guatemala, Honduras, Nicaragua, Colombia, Peru, and Brazil will be benefited. The project will directly support small- and mediumsized coffee producers in rural areas by facilitating access to financing and will bolster climate-smart practices to reduce crop loss, improve efficiency, and decrease greenhouse gas emissions.

PLANET

Building a better coffee world reaffirms our commitment to leading initiatives that have a positive impact on the environment, protecting Mother Earth.

To maximize our positive impact on the environment, we focus on:

Operating responsibly, managing our natural resource consumption efficiently, and mitigating carbon emissions in our operations.

Working hand in hand with our producers, making them aware of their environmental impact, and providing them with the necessary tools to protect natural resources.

Highlights

1,080 Solar modules with 295 kWp of installed capacity

6,698 TON

Of biomass produced by reusing coffee husks

40% Reduction in nursery water consumption by utilizing germination trays (1 lt less per plant aprox)

Through LIFT, our sustainability platform:

7,037 Water sources protected

vs. 19-20

3,222 Farms have finalized soil conservation works to protect risk areas

vs. 19-20

8,210 Ha Of forests preserved

vs. 19-20

2,670 Wastewater treatment systems improved 64%+ vs. 19-20

Our alliances

16 Coffee-growing areas monitored by weather stations +90 Wet mills financed

85,650 Agrochemical containers collected

4,000 Ha In projects of regenerative agriculture

Operating Responsibly

Stages of our environmental management system

System design by conducting an environmental and cleaner production assessment that will enable us to:

• Analyze the gaps and establish baseline;

• Redefine indicators; and

• Develop an action plan.

We created a roadmap that will allow us to manage the significant aspects and impacts of our operations more efficiently. Rooted in the continuous improvement cycle, we adopted a systemic management approach to achieve environmental excellence in our processes based on four stages.

DO CHECK ACT

Promote continuous improvement through environmental performance reviews.

Our roadmap as a group for a cross-cutting, standardized environmental management system

Harvest 20-21

• CISA Exportadora

• Farm Management

• Nursery

Harvest 21-22

• Mercon Honduras

• Mercon Guatemala

Harvest 22-23

• Mercon Brazil

• Mercon Vietnam

In this way, we started an implementation that will allow us to:

Increase the use of renewable energies

Optimize the consumption of natural resources

Maximize the eco-efficiency of our processes

Environmental Management System Planning

Cleaner production assessment

During the 20-21 harvest we conducted a cleaner production assessment of our operations in Nicaragua (coffee exports, nurseries, and Robusta coffee farm management) with the objectives of:

This enabled us to establish a cleaner production baseline Nicaragua against which we can continuously measure the Environmental Management System.

Analyzing material, water, and energy consumption and waste generation in the production process.

Identifying and evaluating the significant environmental aspects and impacts of each facility.

Evaluating cleaner production and environmental management alternatives. Redefining environmental indicators.

baseline for our operations in the performance of our System.

Similarly, we defined our priorities in terms of essential business aspects that, based on the defined scope, have a downward impact on our carbon footprint and, in turn, help us to achieve our goal.

As Mercon Group, our goal is to reduce our carbon footprint by 20% over the next 5 years.

Water

Define projects to recover discharge water. Continue improving water quality through the installation of disinfection systems, where necessary.

Waste management Waste

Implement a 3R program (reduce, reuse, recycle).

0.043

(kg / QQ OB)

Energy and emissions

Expand the use of renewable energy.

Continue with the energy savings plan.

Eco-efficiency during the 20-21 crop

Given that the responsible use of natural resources is a high priority for Mercon, our commitment did not just begin with this crop but, rather, extends over years of dedicated focus on implementing initiatives that maximize our eco-efficiency.

Our achievements this year are reflected in:

Energy efficiency

Maximizing the use of renewable energy by:

Installing 1,080 solar modules at San Carlos mill in Nicaragua—the Group’s largest mill—which has contributed 6% of renewable energy to our energy matrix.

Producing 6,698 tons of biomass by reusing coffee husks—a significant byproduct of our operations—thereby eliminating the need to consume 4,638 m3 of diesel.

Water conservation

Our focus is on the operations and processes that consume the most water.

Nursery management: Given that this operation represents 52% of all water consumption, we implemented a pilot project using germination trays, which led to a 40% reduction in water consumption. Based on these extraordinary results, we plan to expand this initiative during the next cycle.

Efficient “honey water” management: Over the past several years, we have been working to adequately manage the wastewater, or “honey water”, resulting from our wet mill in Nicaragua. By establishing a honey water treatment system based on anaerobic reactors, we are able to produce biogas. This, in turn, allows for greater efficiency of the system and prevents the release of methane into the environment, a gas that is 21 times more likely to cause global warming as compared to carbon dioxide.

Waste management

To properly manage the waste and byproducts derived from our operations, reusing and recycling are key elements of our efforts.

Reuse:

100% of coffee husks to generate heat in the mechanical drying process and as an insulating and absorption layer for sun drying.

74% of coffee bags and 66% of boxes to transport plants, thereby reducing the demand for raw materials, especially those derived from petroleum.

Recycle:

100% of the agrochemical and fertilizer containers used in our nursery and farm operations, equal to more than 3,600 kg of plastic. Once used, they are triple washed and stored safely for delivery to the Clean Field program in alliance with the Nicaraguan Association of Formulators and Distributors of Agrichemicals (ANIFODA), which then transports them to recycling plants.

100% of scrap metal is sold thanks to our waste management program, thereby preventing disposal in municipal landfills.

Working hand in hand with

our producers

Through LIFT, our sustainability platform, we provide interconnected services for our producers to improve their crop quality and productivity, promoting good agricultural practices and protecting the environment. In terms of environmental impact, our top goals are to:

Make coffee resilient to climate change and to help mitigate its effects.

Preserve natural resources, protecting forests, biodiversity, and water resources.

Reduce the use of agrochemicals, eliminating those that represent a high risk to the environment and communities.

7,037 Water sources protected.

11% + vs. 19-20

As the coffee industry faces tremendous sustainability challenges, it becomes particularly important and necessary to join our efforts through alliances seeking to ensure the long-term permanence of coffee, and to protect and care for our planet. We are proud to foster alliances in which we share a belief that we must give back to Mother Earth more than we take.

Our LIFT results:

8,210 Ha Of forests preserved.

30% + vs. 19-20

3,222 Farms have finalized soil conservation works to protect risk areas.

117% + vs. 19-20

2,670 Wastewater treatment systems improved

64% + vs. 19-20

Our alliances focus on:

Climate Change

Understanding that climate change poses a threat to coffee production, we recognize the importance of connecting stakeholders to focus efforts and resources on implementing initiatives that enable its mitigation and adaptation.

Conservation International (CI):

Since 2020, we have partnered with CI to research and monitor the adoption of natural climate solutions in coffee farms within our supply chain. To date, we have made progress on:

Evaluating LIFT: Of the 18 practices promoted by the program, CI determined that 10 have an impact by increasing carbon sequestration and/or reducing greenhouse gas (GHG) emissions. These practices include coffee planting and pruning, use of fertilizers, pest management, forest conservation, protection of water resources, use of pulp, and mitigation of risk areas.

Selecting a carbon footprint measurement methodology at farm level: Three tools were evaluated in an effort that spanned over 24,000 hectares and created a forest inventory of 150 farm points. Based on the findings, Cool Farm tool was selected as the most efficient and reliable field method.

In the upcoming crop season, we will measure the baseline for all LIFT producers in Central America, developing respective action plans based on those results.

Conservation International and IDB Invest:

Explore innovative approaches to measure the amount of carbon present in and around coffee farms. This will allow us to incentivize over 2,000 LIFT producers to incorporate climate solutions to reduce emissions on their farms.

+24,000 Ha Mapped

Technoserve:

+1,200 Producers

Paulig-Kesko:

Renew areas with more productive, pest- and disease-resistant coffee varieties and increase the amount of shade.

Strengthen and expand the network of weather stations to create an early warning system that will allow better crop management through timely decisions.

16 Coffee-growing areas monitored

86,000 Plants donated

255 Ha Of coffee farms

Conduct tests on various production systems and areas to determine the productivity of different varieties, sharing recommendations with producers to improve their income.

3 Varieties undergoing trials

12 Experimental plots

World Coffee Research (WCR):

Regenerative Agriculture:

Given the limited capacity of our natural resources, we recognize the importance of moving beyond protection to seeking solutions that promote rehabilitation. The concept of regenerative agriculture emerged in 2014 as an approach capable of naturally regenerating soil fertility. By promoting better agricultural practices and diversifying the agroecosystem, the objective is to regenerate systems to keep them naturally productive.

Projects with the Latin American Solidaridad Foundation/ Illycaffe/German Development Bank (DEGInvest)/Lavazza:

Pilot programs with regenerative production systems to validate practices and upscale recommendations. These projects also include incorporating other crops to diversify income.

CIRAD Agricultural Research Center:

Actively participate in the ECOFFEE (Ecological Coffee) initiative, which brings together the coffee sector’s main industries and organizations to progressively reduce the need for pesticides.

Starbucks: Technoserve:

Conduct soil analyses and supply better fertilizers to reduce emissions and increase productivity through an improved nutrition plan.

Conduct soil mapping to improve fertilization recommendations and extend these recommendations to all producers in the area.

+130 Ha

Sampled for baseline diagnosis of pesticide use

+4,000 Ha

Of coffee under regenerative agriculture projects

+11,200 Producers benefited

+4,300 Ha Analyzed

+6,300 Soil analyses conducted

Pilot programs for both Arabica and Robusta coffee

Efficient water consumption and waste management:

Preserving natural resources is a priority action and we are committed to using natural resources efficiently.

Technoserve: Starbucks:

Improve wet mill infrastructure and the design of wastewater treatment systems to transfer technologies to producers and prevent the contamination of water sources.

Provide financing for the construction of eco-friendly wet mills that improve water use efficiency.

Nicaraguan Association of Formulators and Distributors of Agrochemicals (ANIFODA)/Honduran Association of the Agricultural Health and Fertilizer Industry (AHSAFE)/Association of the Agricultural Chemical Guild (AGREQUIMA):

Every year, we actively participate in the Clean Field program, collecting agrochemical containers and taking them to recycling centers. Through this program, we provide our producers with a unique alternative for handling this waste and preventing contamination.

82% Average reduction in water contaminants (BOD and COD)

+90 Wet mills

85,650 Containers collected +12,000 kg Of plastic discarded appropriately +10 Collection events

PEOPLE

Our people are the heart of Mercon and the reason for our success. Our philosophy is simple: we work as One Group, One Team.

To drive our people’s success, we focus on:

Fostering our Made in Mercon culture, which defines our essence as a team and determines who we are as an organization.

Strengthening talent development to keep our work teams highly motivated, well trained, and fully committed to achieving goals and continuously improving.

Promoting a harmonious, safe, and healthy workplace.

4.27 Engagement index score on a scale of 5

883 Acknowledgements posted on Thank You Day

15 Reports received through “My Voice”

13,363 Training hours

Talent Development

87 Training sessions

Development

368 Employees evaluated based on competencies

609 Employees evaluated based on objectives

1.53 Accidentability Rate

Workplace

1,656 Hours of training in occupational health and safety

+60% Of our employees vaccinated against COVID 19

Our Made in Mercon culture

Our Made in Mercon culture is rooted in our values of Integrity, Teamwork, Entrepreneurship, and Excellence. These values drive us to promote a positive, diverse, and inclusive workplace where we all feel welcome, heard, valued, respected, and essential to our purpose of building a better coffee world.

Our team is made up by employees from all around the world whose diverse cultures, perspectives, and experiences greatly enrich our Group.

Creating bonds that bring us closer together

Thank You Day

Recognition feels good! On this special day, we all wear orange to celebrate and take time to thank each other for our contributions to making Mercon the best place to work.

Harvest Toast

At every new harvest, we welcome the new year together! On our last event, we held a virtual concert in which we toured each Mercon country through its music.

Harvest End Event

An activity in which we all gather globally as One Group, One Team, celebrating the year’s results which are reflective of every player’s passion to add value and live out our purpose.

Our multiculturalism allows us to break down barriers and to connect in an open environment and through different events. Creating bonds that bring us closer together by providing safe spaces where ideas are freely shared.

Our Events

Birthday Celebration

We enjoy sharing the important moments in our employees’ lives, celebrating their birthdays by holding monthly meetings with virtual games and prizes.

Mercon Games

Employees from different areas met virtually to complete challenges and work together to celebrate teamwork.

One Group, One Team Profiles

As part of an effort to better get to know each other, in 20-21 we invited our employees to share more about themselves and their culture. We received a total of 98 profiles from team members around the world which are being shared in our Mercon News newsletter.

Our communication channels

We promote an open-door culture to improve communication and trust at all levels of our organization. Over the past several years, we have implemented a number of internal communications channels to strengthen our connection as One Group, One Team.

“During my time at Mercon I have learned that we all have different perspectives and how important it is to respect them and to work together as One Group, One Team to achieve the same goal. I really admire that everything the organization does is done with honesty and this is something that is encouraged in all employees.”

Juan Carlos LopezNicaragua

During the 20-21 harvest we made progress in:

Consolidating My Voice:

This communications channel, operated by a third party, offers employees a safe and confidential environment in which to make suggestions, submit grievances, or simply share ideas on issues related to Mercon.

Reports received: 15

Report by country

Report by Business Unit

Strengthening our channels

Mercon Whatsapp

To receive news and information from the organization directly on one’s phone.

Mercon Media Spotlight

To stay up to date on articles published about Mercon in the media around the world.

Implementing “Coffee with a Leader”

This initiative gives employees the opportunity to have direct and in-depth communication with our leaders, exchanging points of view and learning from their experiences. In our first session, a group of employees from around the world had a virtual coffee break with Mr. J. Antonio Baltodano – President of Mercon Group, during which they discussed issues related to Mercon and the industry and shared advice and personal anecdotes.

IDEA our internal innovation program, is named because everything starts with an idea! It seeks to identify opportunities for improvement within our processes and programs. We encourage change that has a positive financial, social, and/ or environmental impact on our organization. In 20-21, we received submissions for nine projects from various areas and countries.

Likewise, for the second consecutive year, we are working on developing the Mercon Kata program. Based on the Lean Six Sigma philosophy, we currently have 16 yellow- and green-belt employees who have assumed the challenge of making our processes more efficient. Since Mercon Kata’s inception in 2019, 14 projects have been implemented, representing over $200,000 in savings per year.

We are a creative, open, and flexible team

Nguyễn Thị Thanh Phương –Vietnam

“At Mercon, employees are an essential part of the organization; management always listens to our ideas and fosters a creative and innovative workplace. I truly appreciate that at Mercon, we do everything as a team and with honesty.”

Talent Development

Our Made in Mercon essence drives employees to strive for excellence. For this reason, we base our talent management strategy on a competency model allowing us to forward growth by strengthening the alignment between our talent and their skills to the Group’s strategy.

Commitment to results

Quality and continuous improvement

Passion for the client Communication

Lead

Each year, we conduct competency assessments as part of a process of introspection that fosters individual and organizational growth.

Employees evaluated based on competencies

Moreover, we complement our employee evaluations by measuring the objectives and indicators set out in work plans.

Employees evaluated based on objectives

This evaluation process enables us to assess our behaviors and performance for the year. These are incorporated in development plans that contribute to reinforcing our strengths and to closing gaps, thereby driving growth within the organization.

Our evaluation processes

During the 20-21 harvest we enhanced our evaluation process by implementing calibration sessions. Through this tool, a multidisciplinary team exchanges perspectives with the aim to align our employees’ strengths and opportunities for improvement.

Evaluation Process

Evaluation

1. Self-evaluation

2. Immediate supervisor evaluation

Development plans

1. Selfdevelopment

2. Trainings

Calibration sessions Feedback

1. Person to person

2. Specific

1. Align strengths and opportunities for improvement

2. Identify critical roles and high-potential candidates

Training our talent

Because our Made in Mercon essence drives us to be better every day, we invest in nurturing and growing our talent. A training assessment needs (TAN) process is in place through which our employees, together with their immediate supervisors, define

the needs of the position or work area, determining whether training could help close any gaps in knowledge and skills.

During the 20-21 harvest we delivered:

13,363 hours of training

1,229 employees

81 training sessions Investment of +$100k

In order to strengthen our team’s development and to leverage its full potential, this harvest we implemented the new Thrive Library a space stocked with self-development resources. With a wide range of online courses, it is a symbol of our commitment to continue strengthening and investing in our most important resource: our people. The sky’s the limit when it comes to self-development!

Our top commitment is to our people, making the health and welfare of our employees and their families a priority for Mercon. We continuously promote a safe and healthy workplace, backed by our Occupational Health and Safety system rooted in ISO 45001. Additionally, we focus on a culture of risk prevention and zero tolerance of unsafe conditions.

During the 20-21 harvest we continued to make progress in strengthening our model of Excellence in Safety by expanding implementation of our system across the agricultural division and in Mercon Honduras. This resulted in:

Establishing a base line of standard safety indicators for our operations in Central America

+300 Employees trained in our standards procedures

10.07 LTIFR 1.53 Accidentability rate

1,656 Hours of training in occupational health and safety

By taking care of yourself, we take care of each other!

Similarly, given the unprecedented situation that is the COVID-19 pandemic, we made a number of support services available to our employees:

Additional alternatives to social security in each country:

Specialist consultations.

Health check packages at competitive prices and with financing options.

Awareness campaigns to:

Reinforce preventive and palliative measures.

Encourage vaccination. At the end of 20-21 crop, 64% of our employees were vaccinated.

Motivational talks:

Focused on processes of reflection, gratitude, resilience, balance, and selfknowledge, among others, to provide tools to help our employees face this crisis in the best way possible.

We are better when we are

engaged!

Our success is reflected in our people, engaged teams demonstrate high performance and achievement. We strive for engagement through:

A solid culture

Promotion of the entrepreneurial spirit

Open and transparent communication at all levels

A robust recognition program

Talent development aligned with our objectives

A safe and healthy workplace

Over the years, our strategies have yielded steady improvements in our employee engagement index.

This has positioned us as a company with a workplace appreciated and valued by each team member. Together, we are making Mercon the best place to work!

Sonja Huizink

“I love our Made in Mercon values! I feel they come naturally to me, such as caring about others or believing in the importance of integration to create harmony and strength in work teams to make them more efficient and effective.

I am proud to be part of a team that dedicates its full potential to building a better coffee world.”

Conducted by Gallup, the world’s leading company in Human Resource surveys.

This is our culture and our essence, what drives us every day to build a better coffee world.

Building a better coffee world 20-21 Sustainability Report

Our fourth sustainability report as a Mercon group, “has been prepared in accordance with the GRI Standards: Core Option”. We develop the report annually and include the management between October 2020 to September 2021 (corresponding to the coffee harvest cycle). The scope relates to the activities developed by the group companies present throughout the coffee production and commercialization chain: Transplanta, Digranisa, CISA Exportadora, CIGRAH, Mercon Guatemala, Mercon Brazil, Mercon Vietnam, Mercapital, Mercon USA,

More Information

Giacomo Celi Sustainability Director

E-mail: gceli@merconcoffee.com

Mercon Europe, Mercafé Vietnam and Mercon Specialty. The report does not present changes or re-expressions of the information. It was not subject to an external verification process however, it was validated by the internal control systems and monitored directly by the Group’s Executive Team, which guarantees its integrity and credibility.

Anabell Cajina Moncada Strategic Planning and Sustainability Manager - Origin

E-mail: acajina@merconcorp.com

Name of the organization

Activities, brands, products, and services

Location of headquarters

Location of operations

Markets served

Scale of the organization

Information on employees and other workers

Supply chain

Significant changes to the organization and its supply chain

External initiatives

Membership of associations

Statement from senior decision-maker

Values, principles, standards, and norms of behavior

Mechanisms for advice and concerns about ethics

List

Defining report content and topic Boundaries

List of material topics

Restatements of information

Changes in reporting

Reporting period

Date of most recent report

Reporting cycle

Contact point for questions regarding the report

Claims of reporting in accordance with the GRI Standards

No

were made.

Likewise, it is explict on our policies and ethical programs.

There were no cases.