As the company prepares for a potential $30 billion spinoff of its North American business on the New York Stock Exchange, Industrious Labs issues warning to investors after scorecard gives Holcim a D for failing to meet basic standards on climate, environmental expectations.

September 19, 2024 – The proposed $30 billion valuation of cement giant Holcim’s North American spinoff hides mounting costs and a failure to adapt to a growing demand for cleaner cement that will drive the next 40 years of production, warns Industrious Labs. A new scorecard released today gives Holcim a D grade for failing to reduce direct emissions from its plants, a lack of measurable investments in materials efficiency and thermal energy efficiency, and no clear plan to minimize fossil fuels from its cement production. 

“Holcim’s investors are no strangers to risky bets, and have paid the price for poorly managed mergers in the past through lost valuation. Now, as Holcim prepares to spin off its North American facilities as an independent company, investors could once again face the risk of paying more for less. We think this proposed $30 billion valuation could be based on a cracked foundation,” said Ash Lauth, Senior Campaign Strategist for Industrious Labs. “Before Holcim dumps its most polluting assets on the New York Stock Exchange, investors should learn more about the facilities they’re buying, and the risk they carry with Holcim’s poor track record on climate.” 

Despite its carefully cultivated image as an industry leader in sustainability, Holcim’s North American operations remain far off track of international climate commitments. The company seeks one of the largest construction industry listings in recent history, but without a clear plan to reduce emissions from its North American facilities, it will fall further behind competitors in the race for the next giant cement market. As a result of these factors and more, Holcim’s proposed $30 billion price tag may be well above the value it can deliver to shareholders. According to Industrious Labs’s scorecard: 

• F for on-site emissions: Emissions from Holcim’s 13 U.S. facilities rose 12% from 2017 to 2022. 

• C- for net zero roadmap: Holcim has no specific plans to reduce emissions from its North American facilities nor long-term plans to minimize fossil fuels. 

• C for flagship plants: Holcim has no net zero flagship plant under construction in the U.S., unlike its competitors. 

• C+ for emissions intensity: Holcim’s U.S. cement operations had an emissions intensity of 880 kg of carbon per ton of cement in 2021, nearly double the International Energy Agency’s benchmark goal of 450 kg of carbon per ton of cement by 2030. 

• D+ for clinker dependence: While Holcim’s European and Latin American plants are pursuing low-carbon cement that could slash 50% of emissions from clinker, Holcim’s U.S. facilities are far less ambitious and continue to rely on cement processes that only reduce emissions by 10%.

• D for energy efficiency: Holcim’s thermal efficiency has remained above the 2019 global average.  

“Holcim’s U.S. facilities are woefully behind when it comes to reducing climate pollution from cement production. The longer the company delays, the higher the risk to shareholders through lost value as the company faces mounting costs to catch up,” said Nachy Kanfer, a partner at Industrious Labs. “Any potential investors deserve a concrete understanding of Holcim’s climate record as well as a clear plan on how the company plans to upgrade to cleaner cement making, reduce its emissions, and ultimately minimize the use of fossil fuels.”

Holcim’s IPO comes at a moment when much of the industry is rapidly innovating and investing in cleaner cement-making measures in response to the growing market for clean cement. The passage of the Inflation Reduction Act in 2022 represented a sea change in demand for clean cement, alongside unprecedented funding to help the industry scale up low-carbon cement alternatives. While competitors like Heidelberg have been awarded hundreds of millions in federal funding to scale up technologies that could slash climate pollution from cement making, Holcim has been passed over. As competitors begin to ink contracts to supply low-carbon cement to public works projects across the U.S., Holcim’s polluting U.S. facilities will be stuck with a product they can’t sell to longtime customers such as state, municipal, and federal governments. 

“There are concrete benefits to investing in clean cement, but as long as Holcim’s North American facilities continue with status-quo practices that perpetuate the use of fossil fuels, these facilities will not only remain a climate risk, but risk losing market share as competitors scale up cleaner cement alternatives,” concludedLauth. “While some of these facilities helped build football stadiums, monuments, and major infrastructure projects around the U.S., Holcim’s North American spinoff might see itself become a monument to the past if the company fails to plan today to invest in cleaner cement.”