At FEMSA, we understand that robust governance is vital to ensure the responsible management and operation of our business, as well as to achieve long-term value generation by aligning and driving both economic and social performance, while ensuring accountability and building legitimacy with all stakeholders.

We view governance – and the importance of our ethics and values – as the foundation of our strategic sustainability framework, upon which the pillars of Our People, Our Community, and Our Planet, are built. Our governance efforts are aligned with four U.N. Sustainable Development Goals and cover three priority topics: Corporate Responsibility, Ethical & Socially Responsible Behavior, and Fiduciary Responsibility.

Our corporate practices comply with the laws of all countries where we operate. As a publicly listed company in the Mexican Stock Exchange and the New York Stock Exchange, we also comply with all applicable standards, rules, and regulations in Mexico and the United States, including the Mexican Securities Market Law and the U.S. Sarbanes-Oxley Act, as applicable for foreign issuers. Additionally, we observe the recommendations of the Code of Best Corporate Practices of the Business Coordinating Council (Consejo Coordinador Empresarial).

Corporate Responsibility
To advance our commitment to Corporate Responsibility, we focus on transparency in our disclosures, ensuring that our shareholders have the information they need to regularly monitor and assess the Company’s performance. Through annual financial and non-financial reporting – including adherence to leading sustainability reporting frameworks (see 2021 Sustainability Report) and the expectations of our membership in the United Nations Global Compact – we utilize multiple engagement mechanisms to maintain open communication with our stakeholders.

We strive to incorporate sustainability at every level, starting with the Board of Directors, who are responsible for directing corporate strategy and defining and supervising the implementation of the Company’s vision and values. FEMSA’s sustainability team, headed by the Chief Executive Officer of FEMSA Negocios Estratégicos (who reports directly to the CEO and is a member of our Board of Directors), oversees the integration of sustainability into all of FEMSA’s business units through specific policies and processes, and supervises sustainability performance and targets. The sustainability team is responsible for formulating, developing, implementing, and monitoring sustainability policies, and reporting the results thereunder.

Our boards, committees, and governing bodies are periodically evaluated for their performance and compliance with corporate governance best practices in terms of structure, diversity, experience, and operation, among other criteria. This includes transparently evaluating the compensation structures of our key executives.

We recognize that the individuals and structures that execute on our governance priorities have a strong influence on the quality of oversight and decisions made for the generation of economic and social value.

During 2021, the Board of Directors was composed of 18 directors, of which 78% were men and 22% were women, assisted by one Secretary (non-member) and one Alternate Secretary (non-member). In accordance with our bylaws and the Mexican Securities Law, at least 25% of the members of our Board of Directors are independent. Directors are appointed for a term of one year and are eligible for re-election after the completion of their term in office. The By-Laws of the Company provide that the holders of the FEMSA B Shares may elect at least eleven Directors and the holders of the FEMSA D Shares may elect five Directors.

Ethical & Socially Responsible Behavior
To advance ethical and socially responsible behavior across our organization, we focus on building a culture of ethics and legality, expanding risk management practices, and strengthening sustainability management.

To advance ethical and socially responsible behavior across our organization, we focus on building a culture of ethics and legality, expanding risk management practices, and strengthening sustainability management.

Our Code of Ethics (“the Code”) – which is reviewed annually – forms the basis of our corporate behavior and the foundation of our policies, guidelines, and procedures for responsible business conduct. The Code establishes the fundamental principles and standards that guide our ethical behavior in relation to our shareholders, customers, suppliers, authorities, civil society organizations, the environment, communities, and everyone who interacts with FEMSA. It also indicates the steps to follow for reporting any breach, conduct, or practice that does not comply with the Code and the rest of our corporate guidelines. The Code, approved by the Board of Directors, applies to members of the Board and employees in all the countries where we operate.

Similarly, FEMSA’s Supplier Guiding Principles contains the minimum expectations that we require of our suppliers in the areas of human and labor rights, sustainability, lawful culture, and information security. It is the supplier’s responsibility, in its relationship with FEMSA, to adopt the necessary methods and practices to comply with our Supplier Guiding Principles.

To support risk management, we utilize risk matrices and other tools and processes to identify and manage economic, environmental, and social risks to which our businesses and brands may be exposed. We have also set up processes, forums, and governing bodies dedicated to defining, managing, and promoting the FEMSA Sustainability Strategy.

In addition to our Code of Ethics, we have a set of policies – including our Human and Labor Rights Corporate Policy; Sustainability Corporate Policy; Environment Corporate Policy; Community Commitment Corporate Policy; and Anti-corruption Corporate Policy – that comprise an essential part of our corporate governance program. These mandatory policies establish the guidelines that all employees are expected to follow as part of FEMSA’s culture of respect, honesty, and integrity. To comply with these policies, we have established the required internal controls to prevent, identify, investigate, sanction, and remedy any risks of violation.

FEMSA Ethics Line

In accordance with the provisions set forth in our Code of Ethics and other corporate policies, we maintain a grievance / whistleblower system for employees and stakeholders to report complaints, concerns, make suggestions, or seek advice. Topics shared may relate to potential Code of Ethics violations, the law or other inappropriate conduct or risks related to corruption, privacy, or human rights. Available 24 hours a day, every day, an independent party manages our ethics line. This system offers our stakeholders three confidential, anonymous communication channels: phone, website, or e-mail. In 2021, 4,264 reports were received and reviewed, of which 82% were resolved in the same calendar year. Among other areas, the reports related to work environment, operations, and financial information.

Fiduciary Responsibility
As part of our responsibility to our shareholders, we disclose the Company’s financial and non-financial results on a timely basis, in line with regulatory requirements and expectations. We also work with independent, third-party assurance providers to audit our financial results and verify our sustainability results in accordance with current standards.

We also focus on achieving sustainable capital allocation by ensuring that our investments are aligned with FEMSA’s Sustainability Strategy and that they take into consideration material environmental, social, and governance risks and opportunities.

Finally, in support of information and data security, we have robust policies, structures, tools, and management processes in place to guarantee the protection of the Company’s information.