We contribute to sustainable development in our country creating value in all our relationships.

www.racafe.com

SustainabilityReport2016-2017

Where we operate and where we sell our coffee

ECO

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2017 launched the Center for Creation and Development of Products 3/37Eval

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CSR 64

years of experience in the market MILLING PLANTS

8 Reached

MARKETshare

DispatchedTRUCKSGlobal

91 ports2016

2017 2016

2017

1.78%

1.51%1,660

1,8142016

2017

2016 982017 108

2016 392017 41 98

ports

(35 ton)

Coffee bags sold (60 kg)

2016

2017

1,541,670

1,505,445

33%

28%

67%

72%

COLOMBIA EXPORTED

Number of bags sold from regional programs and direct relation,

certified and verified

2016

2017

210,859 bags (60 kg)

368,661 bags (60 kg)

Clients in

ColombiaParticipation in the Colombian

MARKET

2016

2017

182

1862016

2017

10.8%

10.6%

Producersin the direct

trade network

2016

2017

3,521

5,029

Certified and verified

producers

2016

2017

1,139

2,463

Trainedproducers

2016

2017

381

1,457

We buy in

Municipalitiesin Colombia

Localassociations

and/orintermediary

groups

2016

2017

235

218

2016

2017

24

36

Employees

2016

2017

84

90122

130

in

InternationalCLIENTS

Countries

Bonuses paid over differentiated coffee

2016

2017

9,540 million COP

10,479 million COP

Greenhouse gases(GHG) emission

2016

2017

2.4 Kg CO2 - e / bag

2.3 Kg CO2 - e / bag

ENERGY consumptionper bag of coffee

2016

2017

4.39 (Kwh year/bag)

3.98 (Kwh year/bag)

Coffee contributioncollection

2016

2017

25,276 million COP

25,534 million COP

2,299 million COPENVIRONMENTAL INVESTING

2016 - 2017

Who we areWe are one of the main coffee traders in Colombia, dedicated to the purchase, milling, trading and product development of green coffee. We support responsible consumption of coffee by integrating sustainability principles in our management that guide our decisions and contribute to the improved perfor-mance of our organization.

POPAYAN

NEIVA

BOGOTAARMENIA

BUCARAMANGA

MEDELLIN

PEREIRABUENAVENTURA

CARTAGENA

SANTA MARTA

We promote differentiated coffeetrading

· 4C· C.A.F.E. Practices· Rainforest Alliance™· UTZ Certified· Fairtrade

· ECOCERT· Regional coffee· Farm coffee· Special coffee per cup

· Consumo and Pasilla (traditional lower grades)· Excelso for export· New Product of Colombia qualitities

1,505,445 coffee bags sold by 2017

Number of bags sold (60 kg)

TRADED PRODUCTS

2016

2017

175,376

331,252

35,483

37,409

1,330,811

1,136,784

Certified and verified coffees

Conventional coffees

Coffees from regional programs and from direct relations

We promote sustainability in the supply chain through the fulfillment of the following standards:

CERTIFICATES WITH PRODUCT

LABELS

VERIFICATION OF SUPPLY CHAINS

SOCIAL RESPONSIBILITY AND GOOD BUSINESS

PRACTICES

· Cedex

We issued the sustainability report for the period 2016 - 2017 following the GRI (Global Reporting Initiative) methodology. We identified the key issues for our stakeholders and the organization. As a result, we present the materiality matrix.

Sustainability

Rel

evan

ce f

or i

nter

est

gro

up

s

ME

DIU

MLO

WH

IGH

Importance for the organization

MEDIUMLOW HIGH

Materiality matrix

SOCIAL

ENVIRONMENTAL

ECONOMIC

MATERIAL TOPICS· Product quality· Economic performance· Involvement with the producers· Health and safety of the collaborators and contractors· Waste management· Company-worker relationship· Use and efficient saving of energy· Good Corporate Governance· Relationship with suppliers and contractors· Atmospheric emissions and noise

Relevant topics related to sustainability in the following areas:

Contribution to the Sustainable Development Goals

We have incorporated the 11 principles of our sustainability policy. At the same time, we identified the contribution of our projects in the Sustainable Development objectives, actions and achievements. In addition, during the years 2016 and 2017, we worked to respond to the material issues that create value in the relationship with our groups of interest.

CONTRIBUTION

· We promoted sustainable agriculture. We increased the number of certified and verified producers, 1,139 for 2016 and 2,463 for 2017.· We provided training in the supply chain for the respect of human rights to eradicate practices such as forced or child labor and led actions to adapt to climate change. We trained a total of 1,457 farmers in 2017.

· We are oriented toward a model of inclusive business to reduce poverty, while maintaining the economic viability of the company. We distributed 96% of the economic value generated in the 2016 and 97% in 2017.· We train farmers in good agricultural practices and in the standards they can apply into actions for the development of sustainability in the coffee sector. Training reflected an increase of 24% compared to the previous year.· We contribute to the economic development of communities and conduct fair and timely payments to producers. There was a 10% increase from 2016 to 2017, of the bonuses paid for differentiated coffees to producers.

· We guide our conduct and actions through the core values.· We developed the second sustainability report, following the GRI methodology.· We established strategies to develop partnerships with other actors.· We implemented rules that mitigate fraud with our SIGRACAFE system.· We ensure the transparency of our operations. We launched our ethics line in 2017 and trained 100% of our collaborators.· We adopted the BASC standards for the verification of our suppliers.· We received a recognition in the year 2017 from the Colombian American Chamber of Commerce AMCHAM for our stated commitment to transparency and the fight against corruption.

· We innovated and developed actions of optimization with sustainability criteria. We invested 2,034 million COP in new optical sorting machines with the latest new technology.· We give priority to the allocation of economic resources in accordance with our long-term vision. Between the period 2016 - 2017 we conducted total investments in infrastructure and new technologies for a value of 6,592 million COP.

SUSTAINABILITY POLICY

PRINCIPLE

MATERIAL SUBJECT

· Integration of sustainability (shifting towards the whole value chain)

· Strategy and procurement policies

· Responsible local purchases

· Creation of value for the communities in which we operate

· Involvement with producers

· Ethics and responsibility in business

· Transparency in communication and accountability

· Good corporate governance

· Fight against corruption

· Financial strength and long-term approach

· Economic performance

SDG

· We provide our collaborators the opportunity to develop their careers under equal conditions.· We acknowledge the work of our partners by providing benefits. During 2016 our company awarded 1,536 million COP and during 2017, 1,595 million COP.

· 80% of our collaborators received regular assessments of their performance and professional development.· Through the Seedlings Plan we trained new generations. 2 managers of milling plants became part of this training plan.· We promoted professional development among our staff.· We provided education benefits for 425 million COP during 2016 and 438 million COP during 2017.

· We increased the number of certified and verified coffee from regional programs and direct relationships by 75%, during 2017.· In 2017 we opened the Center for Development and Creation of Products 3-37, as a space of constant learning for our clients, and for the creation, research and development of our products.

· We make proper management of solid waste in each one of the milling plants.

· Decreased by 9.3% the consumption of energy per bag of milled coffee.· In 2017 we signed a project contract for photovoltaic energy.· We maintained the environmental management system and developed mitigation and prevention strategies.· We conducted environmental investments for 2,299 million COP for the period 2016 - 2017.

· We measured the carbon footprint of our organization to establish goals and implement strategies to reduce CO2 emissions for the short and long term.· We incorporated new technologies that improve energy efficiency in the process. We invested in machinery, 526 million COP during 2016 and 3,081 million COP during 2017.· We began operations in the new Neiva milling plant during 2016.

· We carried out training with producers to preserve the natural conditions of their environment.· We promoted the fight against climate change and the proper use of resources throughout our supply chain. We donated 2,149 trees to the community in 2017.

· We promote health and safety in the workplace, assigning a budget of 200 million COP.

· Good labor practices

· Respect for fundamental human rights

· Worker- company relationship

· Diversity and equality

· Good labor practices

· Customer service

· Innovation

· Product quality

· Caring and commitment with the environment

· Waste management

· Caring and commitment with the environment

· Savings and efficient use of energy

· Caring and commitment with the environment

· Atmospheric emissions and noise

· Caring and commitment with the environment

· Biodiversity

· Land use

· Good labor practices

· Health and Safety of its employees and contractors

· We cooperate in the sustainable development of the local economy. We increased our network of direct marketing, from 3,512 producers in 2016 to 5,029 producers for 2017.· We provide knowledge in our supply chain. We implemented the first phase for the improvement of coffee drying with 21 producers.

· Dialog with interest groups

· Relations with suppliers and contractors

· Professional development

· Training and employee training

Through the various activities derived from our direct relationship with producers and customers, we are responding to their interests and expectations. Before a globalized market, our greatest contribu-tion to the supply chain is the integration and establishment of a relationship between Colombian coffee producers and the national and international coffee industry.

We create value

“

We are a bridge between Colombian producers and the coffee industry around the world. ”

Our operations

We have the capacity to offer

from 1 to more than 1,5 MILLION

bags per year, tailor-made to our

clients’needs

PRODUCERS

TRADING

PURCHASE

PARCHMENT COFFEE RECEIPT

· Batch assignment· Milling order· Sending samples

MILLING

INDUSTRIAL PROCESS IN THE MILLING PLANT

· Dispatch instruction

TRANSPORT

· Boarding notice

DELIVERY AT FOB PORT

DELIVERY AT CLIENT’S PLANT

RECEIPT FROM CLIENT

· Commercial transaction

· Boarding instruction

We are green coffee traders

Based on the commitment that we have within the supply chain we continue to grow our business supported by our processes of risk management, internal control, and the adoption of International Financial Reporting Standards (IFRS).

Generated economic value

For the year 2017 we maintained an increase of the generated and distributed economic value, thus contributing to the profitability of our business and the growth of our collaborators, producers and other actors in the value chain.

Commitments· Continue to expand the participation of different interest groups through relationships building.· Reduce the consumption of energy in the milling plant per bag by 5%.· Prioritize and align all sustainable development goals (SDGS).· Reduce and offset greenhouse gases emissions by 5%.· Manage the sustainable mobility project in Racafé’s main office.· Manage 1 project for energy generation and energy efficiency.

Sust

aina

ble

deve

lopm

ent

man

agem

ent

· Development and consolidation of "cross-docking" project with a budget of 7 days storage.· Increase the efficiency percentage in freight, to a value between 88% and 93%.· Trading development of new exportable coffee qualities.· Build new origin coffee programs.Co

mm

erci

al

logi

stic

s m

anag

emen

t

GENERATED, DISTRIBUTED AND RETAINED ECONOMIC VALUE

2016 2017ECONOMIC VALUE*

100% $816,212

99.47% $811,859

0.53% $4,353

100% $829,801

99.52% $825,796

0.48% $4,005

Generated

Distributed

Retained

2016 2017DISTRIBUTED

ECONOMIC VALUE*

*Data in COP million

WE SHARE OUR PROGRESS

Operationalcosts

Collaborators salaries and benefits

Payments tocapitalproviders

Investment in the community

Governmenttaxes

$794,734

$16,227

$6,865

$6,896

$1,074

$781,253

$15,741

$7,422

$6,599

$844

· Increase support with producers in the improvement of the drying process, with at least 30 solar drying modules.· Continue with the implementation of voluntary standards of sustainability. Reach at least 50% of the producer’s network.· Identify and promote at least 10 sources with potential for differentiated coffee production.· Increase the bonuses paid for differentiated coffees.Pr

oduc

ers

man

agem

ent

in

the

supp

ly c

hain

· Implement measurement models that will make it possible to monitor the mobilization process productivity in the milling plants.· Develop a Seedlings Plan to ensure the competence of at least 3 collaborators who could replace the manager of each milling plant when they retire.· Implement teamwork workshops in the milling plant.· Develop a training plan geared towards the core competencies of each job.

Hum

an t

alen

t m

anag

emen

t

· Financial strength.· Competitiveness of resources.· Continue with profits growth through greater differentiation.· Keep the management strategy to minimize financial risks and ensure the financial sustainability in the long term.· Increase the production capacity of the milling plants reaching the goal of 150 bags/hour, through the improvement of processes.

Econ

omic

- fi

nanc

ial

man

agem

ent

· Implement the safety and health management system at work on the basis of continuous improvement in 100% of the branches of the Company.· Implement a program of accident control to decrease by 50% risk events caused by storage.

Hea

lth

and

safe

ty

man

agem

ent

at w

ork

· Strengthen good manufacturing practices and improving processes to ensure food safety conditions in coffee.· Implement the rules of the "Food Safety Modernization Act" - FSMA.

Qua

lity

man

agem

ent

and

prod

uct

deve

lopm

ent

· Maintain our relations with the customers and suppliers that evidence good behavior in Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT), guided by BASC rules.· Obtain the certificate of Authorized Economic Operator, in order to strengthen the confidence and security of our company within the supply chain, being internationally recognized.· Report the follow-up results of the cases reported in the ethical line.

Risk

man

agem

ent

and

inte

rnal

con

trol