CENTERS OF EXCELLENCE: TRANSFORMING OUR STRATEGIC CAPABILITIES

Propelled by our centers of excellence (CoEs), we are designing, developing, and deploying state-of-the-art models, initiatives, and practices throughout our operations—supported by best-in-class processes, technology, and innovation.

COMMERCIAL CoE

In 2017, we accelerated the implementation of our upgraded KOFmmercial Digital Platform (KDP). This comprehensive platform is based on four integrated pillars.

1. Advanced analytics for revenue transformation
2. Dynamic initiative management
3. Omnichannel
4. Route-to-market

During 2017, we completed the rollout of KDP across our traditional sales channel in Mexico. Additionally, we finished the implementation of KDP in Brazil, including the recently integrated territories of Vonpar. Furthermore, we concluded the deployment of KDP across our traditional sales channel in the Philippines, Costa Rica, Nicaragua, and Panama. As a result, we achieved increased point-of-sale coverage, greater availability of our primary portfolio, improved point-of-sale execution, and enhanced resource allocation. In 2018, we will continue upgrading and rolling out KDP throughout our markets.

MANUFACTURING CoE

We are enlarging the scope and impact of our highly experienced team of specialists to bolster our manufacturing quality, productivity, and efficiency. We continued the design and rollout of our Manufacturing Management Model, comprised of our:

• Plant Operating Model
• Centralized Plant Maintenance Planning
• Standardized Maintenance System
• Manufacturing Execution System

This year, we began the rollout of our new Manufacturing Execution System (MES) plus Statistical Process Control (SPC) platform. This modular MES + SPC platform, which integrates microbiology and sensory analysis process control, is designed to digitize all of our manufacturing processes. In 2017, we implemented our platform’s SPC quality control modules across 45 bottling plants that produce more than 80% of our company’s total beverage volumes. We also deployed our MES platform’s real-time monitoring of our utilities process—covering all aspects of our plant’s power needs—throughout 10 of our bottling plants. We further deployed our full MES platform across all seven of our production processes—from water treatment to bottling and utilities—at three of our plants by year-end. Thanks to the implementation of our new MES + SPC digital platform, we not only significantly improved our production quality, but also substantially increased our energy efficiency.

In 2017, we increased the number of bottling lines under our Plant Operating Model from 64 to 82 —covering 43% of our company’s total beverage volumes. With our Plant Operating Model, we match our experts’ technical skills with each of the different areas of the plant such as fillers, packers, palletizers, and auxiliary services. We also make our production crews’ self-sufficient, with the skills to produce, sanitize, change over bottling lines, and perform preventive maintenance at any time.

Building on last year’s successful pilot of Centralized Plant Maintenance Planning in Brazil, we expanded our deployment of this model to six bottling plants throughout the country. Moreover, we began implementation of this model at our two largest plants in the Philippines. Through this model, we centralize our plants’ maintenance planning and budgeting at the country level.

Additionally, we advanced on the design and deployment of our Standardized Maintenance System. During the year, we designed standardized maintenance routines for the equipment utilized for all of our critical production processes, including water treatment, sugar clarification, finished syrup, bottling, and utilities. We also began to deploy these standards in all of our countries’ operations—putting us on track to finish the implementation of this system by 2020.

Ultimately, our Manufacturing Management Model offers us an integrated operational perspective to optimize costs, drive efficiency, and raise productivity. For example, as a result of our initiatives, we have increased our overall plant efficiency by more than six percentage points over the past three years—equal to approximately US$250 million of production capacity or avoided capital expenditures. Importantly, we have generated manufacturing savings of US$145 million during the same three-year period.

DISTRIBUTION & LOGISTICS CoE

Under the umbrella of our redefined organizational structure, KOF Logistics Services (KLS), we designed and deployed our Supply Chain Planning model: from our strategic logistics network to weekly and daily tactical planning. Through this new model, we enhance our customer service while optimizing our costs and capital allocation by leveraging our scale and expertise through standardized processes, enhanced centralized organizational capabilities, and cutting-edge technological tools. In 2017, we completed the rollout of our KLS model across all of our plants, distribution centers, and long-haul distribution fleet in Mexico and Colombia. As a result, we have already generated savings of US$6.4 million across these operations.

We also continued the deployment of our Digital Distribution system, which is comprised of three core elements—KOF Digital Distribution app, mobile delivery devices, and vehicle telemetry equipment. These features enable us to not only offer improved customer satisfaction, but also deliver increased resource optimization and enhanced driver safety. In 2017, we installed telemetry equipment on our Mexico operation’s entire secondary distribution fleet of 6,600 company-owned delivery trucks. We also implemented mobile delivery devices across 2,700 delivery routes. We further began deployment of Digital Distribution in Brazil, installing telemetry equipment on 500 company-owned and third-party delivery trucks. In Mexico, we have generated savings of US$2.7 million resulting from a 6% reduction in fuel costs, a 4% reduction in maintenance expenditures, as well as avoiding the use of 16.5 million sheets of paper. An additional benefit of our mobile delivery devices is the potential for cashless transactions with our customers.

We further continued to benefit from warehouse optimization. From our voice directed picking to our truck load optimizer and our warehouse management system, we are reengineering our distribution centers’ internal processes to optimize our storage, handling, and labor costs—thereby enabling our delivery routes to spend less time at our distribution centers. Through warehouse optimization, we achieved a 67-minute distribution labor time reduction in Mexico and an 82-minute labor time reduction in Brazil at a daily basis for 2017.

SUSTAINABILITY & EFFICIENCY: RESPONSIBLY ADDRESSING OUR OPERATIONS’ IMPACTS

We embrace a holistic approach to sustainable development. To this end, we strategically, efficiently, and responsibly address our operations’ impacts across our value chain—from sourcing to manufacturing to distribution to community development.

Sustainable Sourcing

We promote the growth and development of our suppliers, while improving their social position and reducing the environmental impact of our value chain. Our suppliers are key partners in our business’ success. To contribute to their economic, social, and environmental development and to the sustainability of our industry in the countries in which we operate, we offer a comprehensive Sustainable Sourcing Program.

Sustainable Development for Suppliers

We facilitate sustainable development across our value chain by ensuring that applicable social, environmental, and ethical guidelines permeate our suppliers’ processes—positively impacting their people, the environment, and their communities. We continuously design action and work plans to develop these aspects of their operations.

Savings due to environmental efficiencies
million of dollars

Investments in environmental projects
million of dollars

Based on these principles we follow a comprehensive five-step Sustainable Sourcing Strategy:

1. Category Prioritization
2. Sustainable Purchasing
3. Assessment & Evaluation
4. Capabilities Building
5. Assessment

Consistent with this strategy, The Coca-Cola Company assesses, and enforces compliance with their own guiding principles and sustainability standards categories of strategic suppliers. Consequently, we select and work only with The Coca-Cola Company’s list of approved suppliers in those categories.

In 2017, 197 supplier evaluations have been performed on issues ranging from human rights to the environment and labor practices through the The Coca-Cola Company’s Supplier Guiding Principles.

Correspondingly, in Coca-Cola FEMSA we conduct an assessment of prioritized suppliers through our Sustainable Sourcing System. Through this process, we ensure our suppliers are aligned with the principles and values that form the foundation for the way in which our company operates. To ensure transparency, the information obtained from our suppliers on an online evaluation platform is reviewed and verified by a third party. Based on this process, we provide feedback and create action plans to foster supplier development, ethics, and sustainability. All suppliers with low qualifications are audited at their facilities and are re-evaluated periodically to ensure their continuous improvement.

In 2017 we made 538 evaluations through FEMSA’s Supplier Guiding Principles, taking this assessment for the first time to Guatemala and Brazil. Since 2014 we have made 1,100 evaluations.

Considering this year results, from 735 supplier evaluations (including TCCC and Coca-Cola FEMSA), improvement opportunities were identified on a range of sustainability areas, including environment, labor rights, human rights, and community practices. All of our new suppliers in Mexico, Costa Rica, and Nicaragua have been evaluated on these criteria, and we continue to work to generate improvement action plans. Because Coca-Cola FEMSA is part of The Coca-Cola Company System, we comply with all of the requirements established by The Coca-Cola Company for strategic suppliers, including commitments and memberships it has acquired by being part of the Global Food Safety Initiative and the Roundtable on Responsible Palm Oil.

Developing Business Capabilities

To strengthen our suppliers’ business capabilities, we provide them access to training and growth initiatives on topics such as finances, marketing, and human resources, among others. We also support their growth and strengthen their business skills, improve their companies, and develop high-quality products aligned with our principles and values.

In collaboration with the Mexican Competitiveness Center (Centro Mexicano de Competitividad), we carry out a comprehensive Supplier Development Program for carefully selected small and medium-sized suppliers (SMEs) to improve their business capabilities. Through this program, we partner with these suppliers to not only improve their sustainable competitiveness, but also forge stronger relationships with our company and other large enterprises. Indeed, some participating suppliers have increased their sales by up to 50% and have reduced their costs by up to 10%. During 2016, 61 of our suppliers in Mexico participated in this program and for 2017 we added 90 suppliers from Mexico and 30 from Costa Rica with a total amount of 181 suppliers over the past two years.

Water

Water is the main ingredient in the production of our beverages that meet our consumers’ hydration needs. Consequently, we are especially committed to ensuring that we make efficient use of this invaluable natural resource for the benefit of our company, our communities, and our planet.

Consistent with this commitment, we have established a comprehensive water strategy, founded on three pillars:

1. EFFICIENCY IN WATER USE AT OUR PLANTS
2. FACILITATING ACCESS TO WATER AND SANITATION IN OUR COMMUNITIES
3. REPLENISHMENT AND WATER FUNDS

• Increase our efficiency in water usage to 1.5 liters of water per liter of beverage produced.
• Return to our communities and their environment the same amount of water used in our beverages.

From 2010 through 2017, we decreased our absolute water consumption by 15%—representing savings of more than 5.69 billion liters.

Fostering Water Efficiency

As a beverage bottler, efficient water management is essential to our business, our communities, and our planet. Our goal is to increase our water use ratio to 1.5 liters of water per liter of beverage produced by 2020. For 2017, we achieved 1.65 liters of water per liter of beverage produced—a 16% increase in our water use ratio from our 2010 baseline. Moreover, our water efficiency initiatives and projects generated savings of US$3 million in 2017.

Through our Top 20 Water Saving Initiatives program, we foster efficient water consumption across all of our plants. To this end, we registered significant progress across our operations, focusing on 20 key measures—from our detection and elimination of leaks to optimal water use in our plants to our water recovery systems.

Facilitating Access to Safe Water and Sanitation in Our Communities

In collaboration with the FEMSA Foundation, we carry out projects designed to improve communities’ quality of life by helping to provide them with safe water, improved sanitation, and hygiene education. While the Foundation intervenes considerably at the outset of each project, all of these initiatives utilize the necessary elements to enable communities to adopt them in a sustainable way—enduring over the long term.

Water Replenishment and Conservation

We are committed to returning the water we use in our processes by replenishing and conserving water basins in order to ensure water equilibrium in the communities with which we interact. To this end, our goal is to return to the environment and our communities the same amount of water we use to produce our beverages by 2020. Consistent with our commitment, we currently give back to the environment more than 100% of the water we use in the production of our beverages in Brazil, Colombia, Mexico and Central America.

In light of the substantial scope, importance, and complexity of water conservation and replenishment, we work to strengthen water funds and conserve water basins through sustainable initiatives involving partnerships with several stakeholders. Through the Latin American Water Funds Alliance—comprised of the Nature Conservancy, the FEMSA Foundation, the Inter-American Development Bank (IDB), and the World Environmental Fund—we jointly seek to offer hydrological safety in the region, ensuring sustainable access to a sufficient quantity and quality of water to sustain human life and socioeconomic development.

To date, the Alliance has developed 21 water funds. Of these funds, 6 are in areas of KOF operations - Brazil, Colombia, Guatemala, Costa Rica and Mexico. As a result of this partnership, the Alliance has worked to restore the infrastructure of 204,646 hectares of land through various conservation measures, benefiting approximately 15,700 families in areas near the water basins through job creation and capabilities training since the beginning of the projects.

Energy Efficiency

We strive for energy efficiency across our value chain. We further integrate clean and renewable sources of energy and technologies to reduce our carbon emissions thus contributing to climate change mitigation.

Consequently, our operations’ energy consumption centers on a comprehensive strategy that encompasses our entire value chain. Consistent with this strategy, we have defined the following 2020 goals:

• Reduce the carbon footprint of our value chain by 20% against our 2010 baseline.
• Supply 85% of the energy we use for manufacturing in Mexico from clean sources.

As part of our commitment to corporate sustainability, we measure our greenhouse gas emissions across each link in our chain—manufacturing, distribution, refrigeration, ingredients, and packaging—in order to reduce them in the coming years.

Efficiency in greenhouse gas emissions across the value chain¹
grams of CO₂(eq) per liter of beverage

¹ Due to the complexity of these measurements, the following data corresponds to 2016; in 2018, we will report the data for 2017.

To reduce our CO₂(eq) emissions, we have implemented several initiatives, including using recycled resin, consuming renewable energy, implementing lightweight PET initiatives, and improving our manufacturing plants’ energy consumption, that have achieved significant benefits and savings. To improve the way in which we report this information, we measured the impact of these efforts since 2011, estimating that we have avoided the emission of 718,431 tCO₂e from 2011 through 2016.

Manufacturing

Our aim is to improve the energy efficiency of our manufacturing operations, while simultaneously reducing our greenhouse gas emissions. To this end, we managed to increase our energy efficiency by 22% from 2010 to 2017.

Reducing Manufacturing Emissions

From 2010 through 2017, we achieved a 35% decrease in our manufacturing operations CO₂(eq) emissions, reaching 13.63 grams of CO₂(eq) per liter of beverage produced in 2017.

Emissions in manufacturing
tons of CO₂(eq)

Clean Energy Consumption

By 2020, we look to satisfy 85% of our Mexican manufacturing operations’ energy requirements with clean energy. By year-end 2017, we achieved 57% coverage of our Mexican bottling operations’ power needs. Beyond our goal, we reached 100% clean energy utilization in our Brazilian manufacturing facilities.

For the year, we reduced our energy consumption by 7.15%, resulting in the following total savings:

• US$4.1 million Clean energy
• US$6.0 million Energy efficiency
• U$$10.1 million Total energy savings

Safety

Our safety area defined, consolidated, and communicated our uniform, companywide Road Safety Standard. This standard encompasses all of our organizational levels and extends beyond our company’s drivers to our collaborators and third-party drivers. Our goal is to implement this standard throughout 2018.

In 2017, we also deployed mandatory safety specifications for all new secondary distribution trucks that we purchased. These specifications include:

• Safe designs – cautionary yellow/black striped bumpers, circular traffic cones, and reflective signage.
• Ergonomic equipment – to reduce operator injuries – handrails, internal body lights, pullout steps, stirrups, and hand truck holders.
• Safe driving devices – convex mirrors, reverse maneuver safety equipment, GPS to measure driving habits, and onboard driver training devices.

For the year, we implemented these mandatory safety specifications for 164 new delivery trucks that we bought in Mexico and the Philippines.

Moreover, through our distribution ally, Solistica, our drivers of primary distribution fleet receive continual training on eco-efficient driving and safety, as well as a program to prevent transportation risks, and periodic evaluations.

Crash Rate Reduction

By 2020, our goal is to achieve a 50% crash rate reduction from our 2016 baseline.

Vehicle Efficiency

Currently, we are designing, developing, and testing more fuel-efficient, light-body delivery trucks. These lighter weight vehicles will not only consume less fuel, but also improve vehicle utilization through their increased load capacity. Beyond light-body trucks, we are working on a flexible vehicle body configuration that will enable us to generate new vehicle specifications more rapidly and respond to specific operational needs more quickly.

Additionally, we are executing route optimization strategies to maximize our overall vehicle efficiency. In Mexico, we installed telemetry equipment on 100% of our secondary distribution fleet of 6,600 delivery trucks. We also implemented mobile delivery devices across 2,700 delivery routes. Thanks to our trucks’ telemetry data—combined with the functionality of our mobile delivery devices—we enjoy the capability to identify and correct deviations in our distribution route execution versus our route plan. This equipment also enables us to analyze our route execution patterns in order to identify an optimal combination of variables to improve our route planning process. As a result, we optimize our fleet’s usage, minimizing our vehicles’ downtime while maximizing our vehicles’ uptime.

Moreover, we deployed dynamic routing across our secondary distribution fleet in Brazil, Colombia, and Argentina. Through this dynamic distribution model, we enjoy the flexibility to plan our vehicles’ routes every day, thereby optimizing our available fleet resources and our distances traveled to serve our customers. Consequently, we are able to improve our fleet utilization by approximately 15% and to achieve an 8-kilometer route reduction.

Emissions Reductions

In 2017, we continued to evaluate the commercial viability of new lower emission vehicles and emission reduction devices. In Mexico, we examined electric cars for our corporate fleet, and we analyzed natural gas cars and primary distribution trucks with Solistica. We also ran tests on particle material filters and catalytic converters for our secondary delivery trucks.

Additionally, we leveraged our secondary fleet substitution program in Mexico, where we maintain our largest volume of delivery trucks. Over the past two years, we have substituted more than 600 trucks—approximately 10% of our total fleet—with vehicles that meet higher emission standards. Thanks to this program, we not only reduce our emissions and maintenance costs, but also reinforce our commitment to eco-efficiency with local environmental authorities.

In Mexico City, we continued to work closely with local governmental authorities on the metropolitan area’s self-regulation program. Under this voluntary program, we commit to minimize our local delivery fleet’s emissions through key initiatives, including our efficient maintenance process and ongoing fleet substitution program. Among other benefits, local authorities permit us to continually operate our complete secondary distribution fleet every day—fostering our social license to operate.

In recognition of our voluntary efforts to reduce our vehicles’ emissions, we earned the Clean Transportation Award from Mexico’s ministries of Environment and Natural Resources (SEMARNAT) and Communications and Transportation (SCT) for the seventh consecutive year.

Waste & Recycling

At Coca-Cola FEMSA, our objective is to mitigate the environmental impact of our operations’ processes. In this way, we help to preserve our natural resources and to decrease our emissions.

We promote a culture of waste management throughout all of our operations and our value chain, focusing on the following priorities:

1. COMPREHENSIVE AND RESPONSIBLE WASTE MANAGEMENT
2. POST-CONSUMPTION COLLECTION
3. INTEGRATE RECYCLED MATERIALS IN OUR PACKAGING

• To recycle at least 90% of the waste we generate in every one of our bottling plants.
• To include 25% of recycled materials in our PET packaging.

Operating Waste Management

In 2017, 17 of our bottling plants earned Zero Waste certification. Designed for our Mexico operations, this initiative establishes specific measures to improve waste management, disposal, and repurposing—resulting in improved waste efficiency per liter of beverage produced.

By 2020, we aim to recycle at least 90% of our waste in each of our bottling plants. At year-end 2017, 90% of our plants successfully achieved this goal. Overall, we recycled 94.4% or approximately 144 thousands tons out of 152 thousands tons of manufacturing waste generated.

Currently, 20 of our plants in Mexico have obtained Clean Industry certification from the Federal Environmental Protection Agency (PROFEPA). Moreover, in 2017, 50 of our distribution centers in Mexico received air quality certifications from PROFEPA the state of Mexico’s Environmental Agency, and Mexico City’s Ministry of the Environment, and the Secretary of the Environment of the Federal District (SEDEMA). These and other recognitions confirm our commitment to the environment and overall sustainability.

To this end, we diligently work to ensure our processes comply with the highest national and international and standards and with all applicable laws, avoiding sanctions and fines pertaining to environmental issues, while reaffirming our commitment to efficient operational processes, environmental performance, and competitiveness.

Innovative Packaging Development

We foster research to develop lighter packaging that requires fewer raw materials. We also use recycled resin contributing to reducing the tons of PET used in our beverages’ packages and, consequently, producing lower greenhouse gas emissions.

To this end, our goal is to incorporate 25% recycled material into all of our PET packages by 2020. In 2017, we successfully integrated 21% of recycled materials into the production of all of our PET presentations. Additionally, we launched a new bottle made of 100% recycled resin for all of our one-way PET presentations for Ciel water.

Consistent with our efficient resource management and optimization of our packaging materials, in 2017, we deployed a wide-ranging light-weighting strategy for our Mexico operation’s sparkling beverage presentations, including: reducing all of our 600-ml PET presentations for our flavored sparkling beverages from 20.5 grams to 17.75 grams; decreasing our 1-liter PET presentation for Coca-Cola from 29.5 grams to 26.5 grams; and implementing our third generation light-weight cap for all of our PET sparkling beverage presentations. Moreover, we introduced a new fully recyclable 20-liter PET jug for Ciel water.

Similarly, in the Philippines, we maintained our leadership position by offering the lightest bottles in the global Coca-Cola system. In 2018, this country will also become the first ASEAN (Association of Southeast Asian Nations) nation to use 25% recycled resin in its single-serve PET presentations. In total, we have deployed 221 light-weighting projects since 2014.

We carried on with our optimization strategy for all of our secondary packaging’s stretch and shrink film—reducing our use of low-density polyethylene by a total of 2,000 tons throughout all of our countries. Furthermore, in 2017, we introduced a new Green Crate made of 100% recycled high-density polyethylene to handle our returnable glass and PET bottles in Mexico.

Pet packaging materials
% of renewable or recycled materials in our PET packaging

Thanks to our efficient resource management, optimization of our packaging materials, and light-weighting initiatives, we generated savings of US$24.4 million in 2017.

To strengthen our packaging capabilities, we further provided mandatory training, along with accompanying certification, across our plants in the proper use of 17 packaging materials. Through this special certification process, our plants must show clear enhancement across key packaging process indicators, while implementing corrective and improvement actions. This year, all of our operations earned “KOF Packaging Material Certification”.

Post Consumption Collection & Recycling

By joining efforts, we multiply the effects of our actions. Accordingly, as part of our collection and recycling efforts, we involve communities, authorities, and NGOs in the regions where we operate in different programs that promote the proper disposal and handling of the waste generated from consuming our products.

For over 15 years, we have collaborated with other food and beverage companies through ECOCE, a Mexican civil association that promotes the collection of waste, the creation of a national market for recycling, and the development of recycling programs. Thanks to this collaborative effort, in 2017, ECOCE collected 57% of the total PET waste in Mexico.

Furthermore, we are leaders in PET bottle-to-bottle recycling in Latin America. In Mexico, in 2005, we joined efforts to operate the first Food Grade PET Recycling Plant in Latin America, called IMER (Industria Mexicana de Reciclaje). In 2017, this plant recycled 12,415 tons of PET.

Overall, in 2017, we utilized a total of almost 59,202 tons of recycled and renewable materials in our plants in Argentina, Brazil, Central America, Colombia, and Mexico. As a result of these efforts, we have used more than 209,448 tons of recycled PET since 2010. Consequently, we have considerably reduced the amount of virgin materials we use in producing our packages, while lowering our plants’ energy consumption.

Aligning our efforts with The Coca-Cola Company, we embrace their global goal of helping to collect and recycle the equivalent of 100% of our packaging by 2030 through the “World Without Waste” initiative.

Safety

We view and understand safety as a principle action and key pillar for our business. Consequently, we are committed to promoting a Safety Culture—valued for improving the welfare of our employees, business partners, contractors, and their families, together with the communities where we operate.

• To reach a Lost Time Injury Rate (LTIR) of 0.5 per 100 employees and a Total Incident Rate (TIR) of 1.5.

To this end, we have designed a four pillar Safety Strategy:

We aim to achieve zero work-related injuries and illnesses among our employees, contractors, and communities by ensuring the safety of our workplace through minimizing safety risks, eliminating incidents that could arise in our work centers, and developing safety capabilities across our organization.

Based on a thorough diagnosis and analysis of the best practices of companies that are leaders in safety, this strategy opens the door for us to transform our safety culture through strong leadership, communication, recognition, training, consulting, and risk management initiatives geared to our employees and their families.

As a result of these initiatives, we reported a LTIR of 1.17 in 2017, representing a 28% decrease compared to 2016 and a 65% reduction compared to 2014. They also contributed to a 29% reduction in our Lost Time Injury Severity Rate (LTISR), from 37.78 in 2016 to 26.97 in 2017. We also achieved a 2.33 Total Incident Rate, representing a 24% reduction versus 2016.

Importantly, our manufacturing sites achieved our 2020 goal of a LTIR of less than 0.5 during 2017, realizing a 43% reduction year over year. Our distribution sites accomplished a 27% reduction versus 2016, while 50% of our manufacturing plants and 20% of our distribution centers reached our goal of zero work-related injuries throughout the year.

In 2017, we implemented multiple initiatives to promote and ensure the safety of our employees and their families. From Alignment & Leadership Construction to Cultivate Safety Knowledge, we developed and implemented processes, programs, and technologies that enabled us to manage more effectively the critical activities of our “Top 5 Initiative” and “Key Risks Standardization” across our production and distribution facilities.

We also continued to carry out the “KOF Cultural Transformation Program” that we began last year, aligning the model and the plan for each country. Through this transformational journey, we address our people’s beliefs about safety and manage their behavioral consequences across each of our 10 operations. Among our actions, we are carrying out safety culture diagnoses, leadership sessions for our top and middle management, and cultural transformation deployment, while developing our KOF Responsibility Model and Risk Management and Leadership Program.

At the end of 2017, we designed our School of Safety, which we will launch at the beginning of 2018. This three-year, 12 technical module program is focused on providing technical, functional, and leadership skills to the people who are in charge of the Safety and QSE function throughout our operations. When they complete this program, these safety professionals will earn our School of Safety certification.

To prevent and drastically reduce our injuries and road incidents rates, while protecting the physical integrity of our fleet, we continued to develop and introduce innovative technologies to help us to reduce crashes on the road. These technologies include the installation of telemetry systems in our fleets, which enable us to monitor and improve the behavior and performance of our drivers; devices to ensure safe reverse maneuvers; and the development of competencies through simulators and virtual reality tools that enable us to accelerate learning processes and develop positive driving capabilities. Additionally, we developed a road safety policy and program together with a road safety expert, which we will implement throughout all of our operations in 2018. Through these and other measures, we reported a Crash Rate of 23.14 in 2017, representing a 46% decrease compared to 2016. We also won the National Road Safety Award in different countries.

At Coca-Cola FEMSA, we firmly believe that all accidents can be avoided. Accordingly, we continually research, analyze, and identify the measures required to reduce the number of injuries resulting from our operations.

For 2017, we made progress by reporting the total number of fatalities that fall within and without our company’s responsibility. This data includes our manufacturing, distribution, and trading operations that impact both our employees and our communities. Compared to 2016, we reduced these total fatalities by 45%.

Additionally, we decreased the number of fatalities for which our company is accountable from 10 to 8, with none occurring inside our manufacturing facilities. While this is positive progress, the loss of any individual associated with our operations is unacceptable, so we continue to work hard to achieve our goal of zero injuries and fatalities.

Fatalities imputable to the company

Community Development

To build closer bonds with our neighboring communities, we encourage continuous dialogue and interaction. By collecting and analyzing available data and approaching them to address their particular needs and concerns, we can develop and deploy activities that result in benefits for both our company and our communities. To this end, we strive to build trust and secure the commitment of all involved parties—ensuring we maintain our social license to operate.

Ultimately, our social license not only enables us to consolidate positive relationships with our communities, but also contributes to our ability to serve the market while better identifying key opportunities to collaborate with our neighbors.

• to put in place a Community Relations Plan throughout 100% of our key work centers by 2020.

Community relations’ management model

To create a community relations vision that we can put it into practice in a standardized and systematic manner, we developed a management model that includes five sequential steps—which are the foundation of our Model for Addressing Risks and Relations with the Community (MARRCO).

Social programs and initiatives

At Coca-Cola FEMSA, we have built positive relationships with our communities by carrying out different social programs and initiatives in order to improve local living conditions from the moment we begin our operations. Recognizing the diversity of our countries and communities, we develop enriching activities aligned with their local needs.

In 2017, we carried out 59 community development programs and social initiatives, along with 34 local environmental impact measures. As a result, we benefited more than 420,000 people across the 10 countries where we operate.

Among our many different activities, our exemplary social programs and initiatives in these countries include:

• Philippines
  5by20 program: Sari-Sari Store Training and Access to Resources (STAR), we work with The Coca-Cola Company to build an environment in which women in the retail mom-and-pop sector are economically empowered.
  Coordinates for Life program: Developed by FEMSA, we continued to implement this program to help develop decision-making capabilities and complement school education with experiences outside the classroom.
• Brazil
  Coca-Cola Coletivo: In collaboration with the Coca-Cola System, this program prepares young people for the labor market through professional training courses focused on their particular needs.
• Argentina
  Canteros Alcorta program: We rehabilitated the boulevard in front of our Alcorta plant by installing sports poles.