At El Puerto de Liverpool, we want to serve our customers, to be a part of their lives, while creating value for our other stakeholders. We are committed to our employees, supporting their talents and offering them opportunities for advancement; and to our commercial partners, encouraging them to operate in a socially and environmentally responsible manner.

We have been a part of the lives of Mexican families for more than 170 years and want to continue to stand beside them, building a more sustainable world, respecting the environment for the good of present and future generations.

Our Company operates four different businesses: retailing, consumer credit, insurance and real estate. Our retail arm operates Liverpool and Suburbia brand stores and the boutiques division, all in Mexico. We also own a 50% stake in Unicomer, a company that operates retail sales chains in 26 Latin American countries.¹

1 https://grupounicomer.com/rse/

Human capital

(GRI 401-1, 401-2, 404-1, 404-2, 405-1, 405-2)

Diversity, equality and inclusion

El Puerto de Liverpool respects diversity and believes that it enriches our teams and allows us to grow as an organization. We have an Equality, Diversity and Non-Discrimination Policy that establishes the foundations for hiring and retaining the best talent, creating unbiased job opportunities and continually improving the workplace environment.

As a result of this policy, today 60% of our workforce is made up of women, and 42% of middle management positions are held by women. We continue to work toward bringing more women into executive positions, in order to develop key talent regardless of gender.

We also strive to incorporate employees with auditory, motor or intellectual disabilities in different areas of the Company, like stores, warehouses or distribution centers and our Call Center.

Labor demographics

Other workforce indicators

• Turnover is calculated as the number of employees who left the Company divided by the average number of employees in the year. Voluntary turnover is calculated in the same way, based on the number of employees who left the Company voluntarily. The improvement in retention this year is attributed to COVID-19.
• Absenteeism includes paid sick leave due to accident or illness, divided by the number of days worked by all employees in the year.
• The number for 2019 includes all employees who completed their study plans, meaning graduates; starting this year we are counting only students who also completed their degree or diploma, in other words, LVU degree holders.

Talent training and development

Liverpool Virtual University is a key part of our workforce development efforts. With a program accredited by Mexican educational authorities, it offers study plans ranging from grade school diplomas through Master’s degrees.

In response to COVID-19, we evolved our latest classroom programs to a fully online system. Recognizing the different circumstances our employees might be facing, we supported those who might have connectivity issues and paused educational programs for those who were unable to continue in this new context.

Our retention indicators were higher than 90% for primary, high school and preparatory school programs, and 87% in higher education, an improvement of 10% over 2019.

We also reinforced training on our model of leadership skills, including new programs on ways of working during the pandemic and other topics.

Additionally, in our ongoing effort to spread a culture of service, which is part of our DNA, we trained close to 20,000 employees in customer experience.

Opportunities for advancement go hand-in-hand with performance, which we evaluate each year in all of our full-time employees. We incorporate strategic goals like fulfilling the commercial plan, service quality and other aspects, depending on the position, as well as professional conduct, which is part of every evaluation.

Well-being and commitment

A concern for the health and well-being of our employees is something we at El Puerto de Liverpool have been known for since our beginnings. Last year we continued to advance in various areas relating to personnel management, following up on opportunities identified in internal organizational climate surveys of our employees. Efforts like these earned Liverpool the REX Leadership Distinction for Human and Solidary Company Response to COVID-19 in 2020.

Environment

(GRI 302-1, 302-4, 302-5, 303-3, 303-4, 303-5, 305-1, 305-2, 305-4, 305-5, 306-3, 306-4, 306-5)

The environmental impact of our operations is generated primarily through electrical energy consumption, which is the most important aspect to be managed.

We are committed to gradually incorporating renewable energy. Despite the circumstantial difficulties, we closed the year with 34% renewable energy in our mix, 9 pp more than in 2019. We combine supply from outside sources with self-generation from solar panels installed at our stores.

To consume energy more efficiently, we continued the process of installing LED lighting in all of our facilities, and today 100% of our stores and corporate offices are equipped with this technology. The previous lighting fixtures accounted for 60% of our hazardous waste, which we completely eliminated with this change.

Through our Comprehensive Sustainable Packaging System, we made more progress in offering customers in our retail business various alternatives for environmentally respectful bags, containers and packaging. To date we have eliminated 96% of the SKUs that did not meet our standards, and have conducted various customer awareness programs.

On the issue of waste management, we continued pilot testing four biodigesters to reduce the generation of organic waste in our restaurant operations.

Additionally, with the rapid growth in online sales due to COVID-19, we managed the recovery and recycling of cardboard boxes used in shipping.

• Starting in 2020 the data includes gasoline vouchers for utility vehicles as well as vouchers for company cars.
• Limited to Liverpool and Real-Estate operations.
• Reduction in processed waste is due to closures for COVID-19.
• Three criteria were used to rate the packaging and whether the Company would continue using it: origin of the material, with preference for those of renewable and/or recyclable origin; durability, meaning the time the material remains in the environment after being discarded, with a preference for minimal durability; and postconsumer recyclability, with more points given to materials with a high potential for monetization at the end of their useful life.

 

Relationship with our commercial partners

We extend the values of El Puerto de Liverpool to our commercial partners, encouraging them to operate under the same principles of integrity. Through our Responsible Sourcing program, we verify our suppliers’ adherence to the Ethical Trade Initiative code of conduct, auditing labor practices like fair wages, preventing child labor and working conditions in the factories of all suppliers included in this program.

This year, we incorporated the suppliers of all the Suburbia store brands, strategic suppliers, and four suppliers of Liverpool store brands, certifying 558 in total, which is 99.5% of the universe defined for this first phase. In 2020 we will work on auditing those who supply 36 additional Liverpool store brands. At the end of the first phase, we had evaluated 85.8% of Suburbia suppliers as low or very low risk, and 67.3% for El Puerto de Liverpool, because the program was only newly introduced to the Liverpool division.

We also continued our effort to incorporate sustainable products into our store brands, working with materials that have less of an environmental impact at their origin (like those made with recycled raw materials) and/or in their manufacturing process (for example, wastewater treatment). This commitment includes the bags used to carry our products, which are biodegradable.

Our external brands include sustainability leaders and international benchmarks that feel that Liverpool is aligned with their principles.

Social commitment indicators	2020	2019	% Change	2018
Donations to the reverse logistics program (Ps. Mn)	188	180	4%	183
Employee volunteer time (hours)*	680	ND	ND	ND
Christmas toy drive	926	ND	ND	ND
Non-employee graduates of the LVU training program	108	0	100%	0

* Digital volunteers in 2020s

Social commitment

In connection with our operations, our reverse logistics program donates merchandise in good condition to various social organizations.

We actively involve our employees in this social effort through volunteer work. This year the effort was primarily digital, for example accompanying elderly people in video calls in order to assist the most vulnerable members of our communities, and sending messages of solidarity to frontline health workers.

In our traditional Christmas toy drive, we launched the campaign through digital media for the first time using an online toy registry and also with physical donation boxes at our headquarters. More than 900 new and semi-new toys were presented to boys and girls in need.

The 2020 El Puerto race was conducted virtually, inviting all of our employees in Mexico to help support the cause of Fundación Proideas, which funds Multiple Attention Centers for disabled youth in the State of Mexico. The race was attended by 1,695 employees and their families.

Our commitment to education goes beyond our employees, because we believe in the need to continue transforming Mexico.

That is why we opened Liverpool Virtual University to the public in 2020, through a 100% online program entitled “Empower your skills,” which builds employability, entrepreneurship, innovation and leadership. This is one way we wanted to help in this difficult time for the job market. To date, more than 1,000 people have signed up for the course. The first generation had more than 450 participants, 24% of which completed the four-month program. Enrollment improved by 19% in the second generation, which will complete the program in 2021.

Business ethics and compliance

(GRI 102-16, 102-17, 205-3, 406-1)

This year has been key to the strength and transparency of our integrity and compliance program. In the first quarter of the year, we created the El Puerto de Liverpool Compliance Office, and among its first results was our remarkable rise in the ranking of “500 Companies Against Corruption” published by Expansión magazine, from 374^th to 26^th place. We will continue our effort to make ethics an essential part of the daily lives of all our employees.

In 2020, we also drafted and published our Code of Conduct and Integrity, which complements the Code of Ethics and provides guidelines on relations between our employees and external stakeholders.

We are also backing up this culture of compliance through awareness-building plans that ensure our policies are distributed to and understood by the entire El Puerto de Liverpool community.

Finally, we have an Ethics Hotline available to all our employees and suppliers. It is accompanied by a process that is respectful of all parties and involves the Ethics Committee.

Ethics and integrity indicators	2020	2019	% Change	2018
Number of reports received and addressed in our Ethics Hotline*	286	523	-45%	567
% reports involving labor issues (harassment, bullying, discrimination)	66%	81%	-15 pp	80%
% of reports involving operations (negligence, inappropriate use of assets, conflicts of interest)	22	8%	14 pp	11%
% of reports involving corruption, fraud or theft	12%	11%	1 pp	8%
Requests to exercise ARCO rights**	2,946	3.315	-22%	NA

• Not including reports that were dismissed or those regarding COVID-19 issues; repeat reports are counted only once if referring to the same case
• Access, Rectification, Cancellation or Opposition to the treatment of personal data.

Cybersecurity and data protection

The technological leap forward made by all of society during the pandemic has also accelerated the risks associated with cybersecurity and personal data protection. At El Puerto de Liverpool we were already in the process of developing a solid strategy, which we buttressed with the introduction of the Cybersecurity Operation Center, to actively monitor and respond to possible threats. We also obtained PCI-DSS International Security Certification 3.2.1 for the second year in a row for credit and debit cards as means of payment.

Because of the robustness of our processes, there were no security breaches of our webpage, despite the general rise in high-risk cyberattacks. And as the number of employees working remotely grew, we had to expand the protection perimeter of our systems and keep our employees aware of security culture.

Corporate Governance

(GRI 102-18, 102-19, 102-22, 102-23, 102-24)

The Board of Directors of El Puerto de Liverpool appoints the Chief Executive Officer, defines the Company’s strategy, approves the annual budget, reviews the performance and operating results of the management team, and ensures compliance with the applicable laws. It is made up of 15 board members, all of them professionals with extensive business experience. All of them are regular members, and there are no alternates.

Seven of our board members are equity (related) members and the rest are independent (53% of board members). Women make up 13% of our Board, and we are committed to continuing to increase diversity in our various governance bodies.

Board members are appointed by a simple majority of votes in the Shareholders’ Meeting. They hold these positions for a period of one year, and may be reelected. The current average seniority of board members is 20 years. The Board meets on a quarterly basis to review the Company’s performance and financial statements, and to decide on and monitor short-, medium- and long-term planning.

The Board of Directors is supported by the Advisory Board, which issues specific recommendations and has four members.

There is also an Audit and Corporate Practices Committee, made up of three board members, all of them independent. This Committee supports the Board in overseeing internal and external audits, ensuring that financial information is pertinent and transparent, and guaranteeing the existence of internal mechanisms for complying with external and internal regulations, as well as avoiding contingency situations.

Our commitment to best corporate governance practices is aligned with our nature as a publicly-traded company, and with our commitment to safeguarding the interests of our shareholders, while creating value for all of our stakeholders. El Puerto de Liverpool is listed on the Mexican Stock Exchange (BMV).

Also at the senior management level, in 2020 we created a Sustainability Desk, which is in charge of monitoring ESG Strategy, an ongoing effort that will reinforce current programs, and headed by our CEO, Graciano F. Guichard G.

Environmental, Social and Governance