Danone // 2020 Universal Registration Document

5 Social, Societal and Environmental Responsibility 5.3 Preserve and renew the planet ’ s resources 159 DANONE UNIVERSAL REGISTRATION DOCUMENT 2020 Risk and opportunity categories Risk and opportunity descriptions Probability of occurring between 2020 and 2030 Significance of the potential financial impact 2030–baseline scenario (a) Significance of the potential financial impact 2030–alternative scenarios (a)(b) Transition risks Shift to plant-based alternatives High ++ +++ Growing consumer engagement in fighting climate change High ++ +++ Carbon pricing in the procurement of packaging and logistics Medium ++ ++/+++ Carbon pricing in the cost of direct operations Medium ++ ++ Increasing reporting obligations Medium + + Physical risks Water stress and thermal stress on the milk supply chain Medium ++ ++ Water stress and thermal stress on agricultural ingredients Medium ++ ++ Extreme events affecting direct operations Low +++ +++ Water stress on direct operations Low ++ ++ Impact of climate change on product use Low + + (a) The significance of the financial impact has been assessed on the basis of the reduction in the Company’s profit margin if the risk occurs. (b) Some risks have two impact assessments because their financial impact differs depending on which climate change scenario is concerned. Policies and action plans Climate Policy As part of its Climate Policy, Danone pledged in 2015 to achieve carbon neutrality throughout its entire value chain by 2050 (scopes 1, 2 and 3, i.e. all direct and indirect emissions, including those of suppliers and consumers) by reducing its greenhouse gas emissions and offsetting remaining emissions. In September 2019, Danone underlined its pledge by signing the “Business Ambition for 1.5°C pledge” at the UN Climate Summit, undertaking to reach its peak emissions in 2020. In order to reach its goal, Danone has developed the following strategy: • cutting greenhouse gas emissions; • transforming the agricultural practices of its supply chain; • keeping more carbon in the ground; • eliminating deforestation from its supply chain by end of 2020; • offsetting remaining GHG emissions. Danone has also decided to increase the speed and range of its actions to transform its value chain and place climate change at the heart of its growth model; consequently, in February 2020 it announced a multi-year investment plan amounting to around €2 billion (see section Outcomes ). Cutting greenhouse gas emissions Danone’s greenhouse gas emissions reduction trajectory is consistent with the 2°C warming scenario set by the United Nations Framework Convention on Climate Change (UNFCCC). To achieve this, in 2017 the Company set the following interim targets, which were also approved by the Science Based Targets initiative (SBTi): • reduce its emissions intensity by 50% on its full scope of res- ponsibility (scopes 1, 2 and 3) between 2015 and 2030; • reduce its absolute emissions by 30% on scopes 1 and 2 between 2015 and 2030. In 2019, Danone pledged to define targets for cutting greenhouse gas emissions in line with the 1.5°C climate change scenario (keeping global warming below 1.5°C), and it is working to build its new trajectory. In this context, Danone is a member of the working group led by the Science-Based Targets initiative (SBTi) to define 1.5°C industry trajectories. Lastly, as part of the RE100 initiative, Danone has pledged to shift to 100% renewable electricity by 2030, with an interim target of 50% by 2020 (see section Outcomes ). Transforming agricultural practices and keeping more carbon in the ground Danone has placed agriculture at the center of its low-carbon strategy, notably through the implementation of regenerative agriculture practices. By adopting these practices, partner producers reduce their greenhouse gas emissions, thereby improving soil quality and keeping more carbon in the ground (carbon sequestration). Danone is working to implement its strategy by participating inmany actions of the Sustainable Agriculture Initiative (SAI) Platform and the “4 per 1000” international platform, which serve as a catalyst for cooperation regarding soil health and carbon sequestration (see section Transition toward regenerative agriculture that includes organic agriculture ). Eliminating deforestation from the supply chain At the end of 2020, Danone took key steps towards the elimination of deforestation, notably by achieving high traceability on raw ma- terials–palm oil, paper & board and soy. The deforestation-related action plans of Danone are based on two general policies—its Forest Footprint Policy and its Packaging Policy—and three special policies assessed by the Global Canopy Program (Palm Oil, Soy, and Paper and Cardboard Packaging).