How to read this report
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We are pleased to present KUO's sixth integrated annual report for the fiscal year 2022. The information contained in this report shows the results of Environmental, Social and Corporate Governance (ESG) impact management, in addition to the Company's relevant Financial, Operational and Sustainable results. Throughout the document you will appreciate the commitment to transparency and accountability to all stakeholders on material issues.
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In order to identify what content is referred to, at the beginning of each section, the reader will find the respective codes for the GRI standard (GRI 2-6, for instance) or SASB benchmark. The reader can also refer to the GRI or SASB index at the end of this report.
01
About Kuo
02
Risk Management and Monitoring
03
Sustainability Model
04
Corporate Governance
05
Employee Development
06
Customer Satisfaction
07
Sustainable Processes and Products
08
Operational Efficency and Continuity
Message from the Chairman and Chief Executive Officer
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DESA
RRO
LLO
del colaborador
WE ARE AN EXTRAORDINARY TEAM
+290K
horas de
capacitación
Employee
Development
¨Human Capital is a key element for effectiveness and long-term value generation¨
Our people relationship is based on our values. We believe that providing healthy work environments promotes a high sense of responsibility, productivity, development, and well-being to our employees.

For this purpose, we have a management system that allows us to ensure good Labor Relations, positively impacting the organization, achieving operational continuity free of labor conflicts, maintaining a healthy work environment and climate, as well as ensuring the quality of the service we provide to customers and consumers.

Through this work system we define, establish, regulate, and develop all the elements that make up the management, such as the workday, roles and responsibilities of employees, competitiveness of remuneration, recognition, productivity, technical and organizational competencies, among others.
The main tools with which we manage personnel management are the following:
  • Operational Work Plan
  • Internal Work Regulations
  • Conduct Code
  • Labor Procedures Manual
  • Talent Identification and Recruitment Policy
  • Talent Identification, Training and Coaching Procedures
  • Annual Development and Training Plans
  • Annual Performance Management Program
  • Succession Planning
  • Labor Thermometer
  • Work-life Balance Campaigns
In addition, we maintain strict compliance with the corresponding legislation in each of the places where we operate, including the Federal Labor Law, which establishes the right to collective-union organization, regulated through the Ministry of Labor and Social Welfare (STPS), the Mexican Social Security Institute (IMSS), the National Workers' Housing Fund Institute (Infonavit), and the National Workers' Consumer Fund Institute (Fonacot).

We measure management through various indicators, such as employee satisfaction levels, productivity levels, results of collective bargaining agreement revisions, number of operational stoppages, number of lawsuits, absenteeism, turnover, accident rates, training hours, results of NOM 35 surveys, and other similar indicators. It is important to note that we use the results to propose continuous improvement actions in accordance with the objectives and goals of each business.
At the end of 2022, the Group's workforce consisted of approximately 24,000 employees, the variation compared to the end of 2021 is a minimal reduction of 0.39%. Ninety-four percent of our employees are located in Mexico, 3% in Spain, 2% in the USA and 1% in Belgium. Below are the percentages by sector, which do not have a significant variation in relation to the year 2021.
94% employees
in Mexico
97% of the employees are permanent, an increase of more than 2 percentage points compared to 2021.

On the other hand, during the year we added 331 women to our workforce, with 32% female personnel, up one percentage point compared to 2021.

In relation to age ranges, 60% of the personnel are between 30 and 50 years of age, with no variations with respect to the previous year.

With respect to workers who are not employees of the Company, we have a non-significant number.
The scope of the figures shown includes the Pork Meat, Synthetic Rubber, Polymers, Transmissions and Aftermarket businesses, as well as Herdez del Fuerte and Megamex. Herdez del Fuerte and Megamex will not be considered in this chapter.
Benefits we offer
our people
Regardless of the business unit to which they belong, all of our employees receive the same benefits, including health insurance, parental leave, disability coverage, and life insurance. We also provide some additional benefits, such as food coupons, a savings fund, paid leave for special occasions, and other similar benefits.
Human Rights
As stated in the Code of Conduct, KUO respects human rights and labor standards, so employees and third parties who have a relationship with the company or act on its behalf must:
  • Treat everyone with dignity and respect.
  • Promote equal opportunities between men and women and not allow gender violence.
  • Ensure that there is no forced or child labor.
  • Eliminate any practice of discrimination based on sex, marital status, age, religion, race, physical ability, health status, political preferences, social class, etc.física, estado de salud, preferencias políticas o clase social, etc.
  • Any type of discrimination is prohibited at KUO.
We also have a Social Responsibility Policy, whose compliance is based on our three pillars: KUO People, Environment and Community. For the purposes of this chapter, we highlight the following principles directly related to the KUO People pillar:
  • Employment Practices: Equal opportunities, free association, rejection of child labor in our operations as well as in those of our employees, customers, and suppliers; and quality of life in the company, providing our personnel with an environment that promotes a high sense of responsibility, productivity, development, safety, and quality of life; in accordance with the environment and situation of the business to which they belong.
  • Health, safety, and hygiene.
In this same policy, we recognize and adopt the "Universal Declaration of Human Rights" and its corresponding guidelines. Likewise, KUO works for the principles of the Global Compact and the Sustainable Development Goals (SDGs) of the United Nations. More information about the SDGs can be found in Annex 3 of this document.

Finally, we have a labor inclusion policy defined as "the creation of favorable conditions for the participation of any person eligible to provide services within the labor market. These conditions are free of discrimination and with equal opportunities in access, permanence, remuneration and promotion in employment; and in accordance with all the rights and obligations set forth in the Federal Labor Law.

Today, we continue to work on awareness-raising activities, talks and training to minimize and eliminate behaviors that could be considered discrimination in the Company.
Trade Union
42% of total
unionized workers
¨We respect the ideology and principles of the trade union organizations that represent the interests of the workers in our companies and establish an environment of trust, as a condition for generating highly productive and mutually beneficial partnerships. Likewise, we fully respect the management autonomy of the trade union organizations and the freedom of unionization.¨
Aligned with the negotiations and collective bargaining agreements we have with unionized workers, the deadlines for notifying about organizational changes depend on the magnitude of the situation and are estimated according to the needs of each business. These can vary from two weeks in advance to notification at annual meetings. It is important to note that we have an Organizational Communication Policy and a Union Relations Policy, which helps us to maintain transparency in the company.
Parental Leave
All employees are entitled to parental leave, both men1 and women. During 2022, 564 employees requested parental leave, of which 86% returned after the corresponding leave and 80% remained in the Company after their reinstatement.
 1. Article 132, section XXVII Bis of the Federal Labor Law (LFT) establishes the employer's obligation to grant paternity leave of 5 working days with pay to working men at the time their child is born.
Employees' Training and Development
“We grow together." We assume with commitment the collaborative work to achieve higher goals. We unite talents and creativity, generating synergies with our skills, competencies, and experience².
In the Code of Conduct we declare the Company's commitment to promote equitable professional development, encouraging the training of employees and favoring the improvement of those skills and competencies that are related to the performance of their duties. Likewise, personnel hiring, and promotions are based on the capacity, results, and demonstrable professional merits.

We provide courses and training from the induction process to the preparation of employees to assume new functions both in the company and in their professional life; developing their technical, digital, management and cultural competencies and skills, which ensure the fulfillment of their current functions, the resolution of complex problems and their adaptation to work environments according to short-, medium- and long-term trends. The courses range from specialties specific to each business, to leadership and management skills, in order to ensure the professional and personal development of employees. To this end, we have a Training and Coaching Manual and Procedures.

The total number of training hours increased 6% over the previous year, totaling 295,795 hours, of which 69% were for men and 31% for women, slightly proportional to the number of employees by gender. The average number of training hours was 19.3, lower than the average for the previous year, which was 18.1 hours.
In addition, we periodically evaluate and monitor the performance of our employees, which allows us to manage the needs of our human capital more efficiently, as well as align the objectives of the entire workforce with KUO's general strategy. To this end, we have a Performance Management Policy, which establishes the guidelines and standards for defining, aligning, evaluating, and providing feedback on the progress and achievement of personnel objectives.

During the year, we carried out performance evaluations of 81% of the total number of employees, increasing the number of evaluations carried out in 2021, a year in which 77% of the personnel were evaluated.
Our future goal is to evaluate 100% of our employees, regardless of their job category and/or function.

It is important to note that we have an Organizational Succession Planning Policy in place to ensure the continuity of KUO. The Directors of each business are responsible for ensuring that all their employees are qualified by the leaders in one of the 9 Talent Groups considered in the talent management tool, as well as in the commitment criteria, within the Succession Module of the Integral Organizational Management System (SIGO). In addition, review sessions are held every six months to analyze the talent within each business, identify successors for key positions, and make decisions on the development and retention of such talent.
Rotation
Compared to 2021, during 2022, revenues have been similar, and terminations have been lower.
niveles sucesión
Health and Safety at Work
The well-being of our employees is one of KUO's priorities. An adequate management of people's health and safety allows all the company's activities to be carried out in a healthy and safe environment, which in turn improves the company's work environment, thus demonstrating the commitment of the Top Management with all the employees. It is important to point out that establishing strict safety controls reduces costs and increases productivity.

In addition to the Official Mexican Standards on Occupational Health and Safety, our Occupational Health and Safety Policy establishes the guidelines and behaviors to be followed in this matter, with the purpose of protecting the employees and preventing injuries; as well as avoiding risks in the safety of the processes through the implementation and execution of the guidelines of the Occupational Health and Safety System, the identification of hazards, risk assessment and the establishment of prevention, correction, control and/or transfer measures.
In our Social Responsibility Policy, we highlight the following principles:
  • In addition to operating within the legal framework and applicable laws to which our productive activities are subject, our goal is to protect the integrity of our employees, contractors, and visitors, as well as the surrounding community. We apply national and international safety standards and guidelines, promoting training and performance measurement. We promote healthy, safe, and healthy workplaces, and develop safety awareness among our employees.
  • We apply a preventive attitude of zero tolerance to unsafe actions and risk situations.
  • We monitor the health of our employees, taking care of their integral condition for the best performance of their functions, and we also comply with current Social Security regulations.
The Psychosocial Risk Factors Prevention Policy (PRF) establishes guidelines to identify, analyze and prevent risks, as well as to promote a favorable organizational environment. We promote a favorable organizational environment through a friendly treatment between employees and other people with whom we interact, we conduct active listening meetings so that employees can express their doubts, we provide training focused on the welfare and development of employees, we implement promotion plans, and periodic medical examinations, among others. It also establishes the dynamics of communication, promoting a sense of belonging, ensuring that each employee knows their responsibilities and is trained to perform them.
The Safety Management System is based on the participation and consultation of employees
Consumer
Chemical
Automotive
The Pork Meat business has established a Safety Management System, through which it strengthens its commitment to occupational health and safety, providing a healthy and safe environment for employees, ensuring legal compliance, eliminating, or minimizing risks and promoting the participation of all workers. The system is implemented through 21 interrelated elements, in which criteria are established to ensure the involvement of senior management, the competencies of all workforces, participation in preventive safety activities, health care, industrial hygiene, mechanical integrity, and change management, among others.

Each year, challenging objectives are defined to improve the safety and health culture and indicators; it also establishes minimum standards and requirements to ensure the identification, evaluation, and control of operational risks and to ensure legal compliance.

The effectiveness of occupational health and safety management is evaluated through internal audits and the monitoring of various indicators, which are monitored during the Operational, Tactical and Strategic Committees, with the participation of the employees. In order to reinforce these meetings, we also carry out training and safety rallies, which allow the implementation of a safety culture aimed at maintaining the integrity of the workforce.

In processing facilities, we adapted the Occupational Health and Safety Management System (OHSMS) to ensure compliance with ISO 45001:2018.

In 2022, there was a 7.5% decrease in the number of disabling injury accidents.

We have a procedure for the reporting, investigation and monitoring of incidents and accidents, which indicates that all incidents or accidents must be reported and establishes the steps to follow for the investigation and definition of permanent actions to address the root causes of the events and thus prevent recurrence. We have software for recording accidents, investigations, and action plans, which allows us to track in real time the status of actions until they are closed.

Through ISO 45001:2018, the Medical Service, in conjunction with a team, determines the hazards to which employees are exposed and which could cause injury or health deterioration; they also propose preventive measures and monitoring for the identified risks. The identification of risk factors includes, in addition to the occupational medical evaluation, the analysis of risk factor reports, and studies according to:

- Time of exposure to risk factors during the workday.
- Concentration and levels of contaminants in the environment, areas, and workstations.
- Physicochemical characteristics of contaminants.
- Occupational health and safety prevention measures identified in the health surveillance program for employees in previous years.

Once the hazards have been identified, medical examinations are determined by position, indicating the type of evaluation and frequency; and the information is recorded in the job profile by risk of exposure.
Preventive Health
We have occupational health services contributing to the identification, prevention, and elimination of hazards, and to the minimization of risks.

These are classified as follows:
1. Promotion
2. Prevention
3. Surveillance
4. Assistance
5. Management

On the other hand, on an annual basis, the Medical Service, in coordination with Safety, prepares and implements occupational safety programs in accordance with the Master Occupational Health Plan, considering at least the following:
  • Industrial hygiene programs required by applicable regulations.
  • Epidemiological surveillance activities for work-related illnesses and absenteeism.
  • Medical examinations for selecting employees according to risk factors in the work environment.
  • Early detection campaigns for chronic degenerative diseases.
  • Wellness programs for health promotion and addiction prevention.
  • Occupational health training in accordance with risk factors and production processes.
  • Internal first aid brigade program.
  • Recording, analysis and evaluation of indicators of consultations and occupational illnesses.
  • Definition of objectives to improve the occupational health of employees.
Additionally, the Occupational Health area carries out frequent studies of its employees in relation to specific health problems, whether or not they are occupational diseases, accidents, or exposure to occupational risk factors.
EMPLOYEE ENGAGEMENT AND TRAINING
Participation and consultation of the employees is the basis of the Safety Management System. The activities in which the workforce participates are defined in the Administrative Participation standard, which establishes the preventive safety activities to be carried out by the employees depending on their job position. Similarly, the employees participate in risk analyses (ASTs) and accident investigations, as well as in labor surveys to determine the level of satisfaction on different issues, including the safety and health of the facility. In addition, our facilities have Safety and Hygiene Commissions, which conduct tours to identify substandard conditions and to ensure the corresponding improvement.

In the case of processing facilities, the Participation Plan and Consultation Plan define all the consultation and participation mechanisms, the frequency of execution, those responsible, evidence and indicators.

The safety courses given to the workforce include the Safety Induction, which provides the policy, an introduction to the Safety Management System, emergency response plans, use of fire extinguishers, main risks at the facilities, personal protective equipment, the Hazardous Work Permit System, procedures in the event of an accident, and the main accidents at the facility.

In order for the supervisors to be able to investigate their accidents properly, they are given the TASC accident investigation technique. Also, all middle managers are trained annually in the Administrative Participation Procedures and the use of safety software.

In the production area, all partners are given the "Behavior-based safety" course, both middle management and workforce.

In the case of Processors and in accordance with the ISO45001: 2018 standard, there is a training needs detection and an annual training program that establishes the minimum courses that the workforce must have depending on their job position and the annual schedule to meet the competencies defined for each of them.
Health and safety management focuses on the integrity and well-being of the workforce, as well as on reducing absenteeism due to illness and accidents. A safe work environment, with healthy employees, brings in turn, an increase in their productivity, thus a decrease in the company's risk premium.

We comply with safety and health regulations and procedures for strengthening good practices, recognition, reorientation and correction of unsafe acts and conditions. We also implement occupational health and safety campaigns and programs that are part of our employees' daily lives. We also have health and safety diagnostics and procedures for the identification, prevention, and management of ergonomic risks.

It should be noted that the Synthetic Rubber facilities, have ISO 4500:2018 certification in Occupational Safety and Health. These certified management systems include the definition of the necessary actions to drive continuous improvement in operations.

We measure management through accident and accident rate indicators, as well as health indicators such as percentage of healthy and sick population, morbidity, medical examinations, attention and follow-up of COVID-19 cases, occupational risk management, follow-up of critical cases either due to illness or accidents.

In order to prevent accidents and promote the health care and well-being of our personnel, in 2022 we carried out the following activities:
  • We apply and strictly comply with the procedure for high-risk jobs.
  • We identify agents and risk factors through mapping of work areas, controls, and effectiveness evaluation.
  • We carry out an annual health and safety diagnosis.
  • We comply with current safety and health regulations.
  • We conduct training on health and safety issues.
  • We implemented the DESContigo Program2
 2. DESContigo is a service that provides psychological care for emotional distress through a helpline that operates via telephone (24/7) and/or an on-site psychologist.
Preventive Health
The role of the medical service is based on the identification and minimization of risks, through the assessment and medical diagnosis of each employee and candidate, following up annually on their health condition, together with the identification of risks. This service, after the corresponding evaluations, provides recommendations, if necessary, for the control or elimination of the source of risk.

It should be noted that equipment calibration is performed by certified suppliers, and laboratory analyses are performed by certified institutions. All employees are provided with medical consultation and advice.

In order to evaluate, monitor and mitigate acute and chronic respiratory illnesses, we conduct periodic medical studies of the workforce, training on the use of personal protective equipment, risk analysis and regulatory studies in accordance with the risks identified.
Employee Engagement and Training
The participation of employees is mainly through the Health and Safety at Work Committees, as well as through the Annual Health Program, which establishes the execution of communication campaigns, vaccinations, first aid brigade training, online training, delivery of information of interest in health matters, talks to internal workforce, communications on health care issues, webinars, promotion of good nutrition, disease prevention, as well as detections before COVID-19.

Among the main health and safety courses, the following training was provided in 2022:
  • Hazard communication
  • Pressure vessels
  • Emergency organization chart
  • Working at heights, confined spaces, cutting and welding
  • Access to Restricted Areas
  • Accident and incident investigation reports
  • Use of fire extinguishers, ladders and workforce protection equipment, evacuation, and use of autonomous air equipment.
The health and safety of the employees is mainly supported by the Occupational Health and Safety Policy, and other tools and processes, highlighting the following:
  • Integrated Safety, Quality and Environmental Policy
  • Monthly accident rate report
  • Follow-up of unsafe conditions and acts
  • Monthly medical reports for corporate medical coordination
  • Weekly work meetings of the internal Industrial Safety Committee (ISC).
  • Planning and management of safety program: Critical Conditions and Errors that lead to accidents.
To guarantee the quality of our prevention activities, we received multiple audits, such as those from the Ministry of Health, the Federal Commission for Protection against Health Risks (COFEPRIS), STPS, and internal audits.

As a result of the activities carried out, including the implementation of a culture of self-care among our employees, and the follow-up and control of vulnerable workforce, we have achieved the following results:
  • Decrease in the risk premium reported to the IMSS.
  • Decrease in absenteeism due to occupational hazards and illnesses in general (days lost, absenteeism, partial and permanent disability).
Among the actions for the safety of our employees, we can highlight the following:
  • Health and safety diagnosis
  • Medical care procedure
  • COVID-19 Protocol
  • Mapping and communication of health risks
  • Ergonomic risk identification, prevention,
    and management procedure.
  • Legal Compliance
  • Behavioral observations methodology
    CSH tours
  • Supply management under environmental and health and safety policies
  • Risk analysis
  • Environmental, safety and hygiene inductions
  • Security Week
Preventive Health
Among the accident prevention programs and initiatives focused on promoting the health care and well-being of our employees, in 2022 we carried out the following:
  • Evaluation of psychosocial risks in compliance with NOM 030 STPS3
  • Preventive occupational health and safety program
  • Medical Health Surveillance Procedure
  • Periodic and REVENUE medical examinations
  • Assessment of employees and contractors assigned to hazardous work within the company
  • DESContigo Program
  • Compliance with NOM 0364   
  • Health and accident prevention campaigns
  • Management of occupational risks before the IMSS-STPS
We also perform annual medical examinations to identify changes in the state of health, data of incipient disease or by direct reference after perception of any change in "usual" health. This examination includes the respiratory part: physical examination of lung fields, with measurement of oxygen saturation and heart rate, spirometry, chest X-ray, according to the employee's job.

Extra health promotion campaigns are carried out, such as "Lose weight, gain health" and "Health for women", where we work to modify eating habits, family violence, physical activation, and addictions. These programs are extended to the employees' families. We also hold a "Health Week" where we promote talks with invited experts, inviting the workforce to participate in multiple check-ups: optometric, dental, nutritional, venous, and benefits with gyms.

The health area has integrated programs related to the monitoring and control of disease prevention such as hearing conservation, respiratory function, occupational epidemiological surveillance, risk maps, general medical consultation and care, and emergency care.
 3. Mexican Official Standard NOM-030-STPS-2009, Preventive services of safety and health at work-Functions and activities. Establish the functions and activities to be performed by preventive occupational safety and health services to prevent occupational accidents and diseases.
4. The objective of NOM 036 STPS Ergonomic Risk Factors is to establish the elements to identify, analyze, prevent, and control Ergonomic Risk Factors in work centers derived from the manual handling of loads, in order to prevent alterations to the health of employees.
Employee Engagement and Training
In addition to complying with applicable legislation, in general, all workforce participates in an induction course on topics related to occupational safety, occupational hazards, identification of hazardous activities and emergency plans, as well as the use of fire extinguishers. The induction also includes training on specific Medical Service topics, such as types of care, periodic medical examinations, health campaigns, pregnancy, addiction control, general emergency protocol, IMSS disability procedures, among others.

According to the position or position of the employees, we have a training matrix that includes basic and job-specific knowledge.

In addition, we conduct monthly theoretical and practical health talks on occupational disease risks: noise, extreme temperatures, vibrations, ergonomics, psychosocial risks, skin, and respiratory tract damage due to exposure to chemicals, prevention of metabolic diseases, etc.

It is important to point out that we maintain communication with our personnel through the NOM 035 Complaints Mailbox for psychosocial risk factors in the workplace.
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