Danone // 2020 Universal Registration Document

Social, Societal and Environmental Responsibility 5.3 Preserve and renew the planet ’ s resources DANONE UNIVERSAL REGISTRATION DOCUMENT 2020 162 Danone’s total emissions from its value chain in 2020 for scopes 1, 2 and 3 amount to 26.1 millionmetric tons of CO₂ equivalent compared with 27.2 million in 2019, mainly due to the results of the action plans relating to regenerative agriculture (-0.5 million metric tons CO₂ equivalent) and continuing to adopt energy sources that produce lower CO₂ emissions under the Company’s RE100 commitment, mainly consisting of green electricity (-0.1 million metric tons CO₂ equivalent). Moreover, consumption changes resulting from Covid-19 have reduced the Company’s total sales volumes as well as the share relating to sales by its Waters Reporting Entity (which has the lowest GHG emissions ratio in Danone) (-0.2 million metric tons CO₂ equivalent). The ratio of Danone’s total emissions across its value chain on scopes 1, 2 and 3 increased by 2.1% between 2019 and 2020. On a like-for-like basis, this ratio increased by 0.1% compared to 2019, due to a drop of 4% linked to regenerative agriculture projects, offset by an 4.1% increase due to the smaller share of Waters Reporting Entity volumes in total sales. On a like-for-like basis, this ratio is still decreasing by 24.5% compared to 2015, mainly as a result of productivity gains among producers fromwhich Danone purchases itsmilk directly and the global milk supply chain, as well as increased purchases of electricity from renewable sources. In 2020, Danone continued to measure the effects of its ambitious plan to shift to regenerative agriculture, particularly in the following countries: • in Russia, due to a preferential procurement arrangement with farms producing low-carbon milk, as well as action plans on the carbon footprint of inputs; • in Mexico, due to the installation of biodigesters to improve ma- nure management, farm reforestation projects, and action plans to improve the performance of small farmers in the Margarita project (see Danone website for more information); • in Brazil, due to action plans to convert manure into compost, and the traceability of animal feeds in areas with no deforestation risks. With 95.6% of Danone’s total emissions across its value chain, scope 3 represents the largest contributor, more than those from scope 1 (2.6%) and scope 2 (1.8%). In 2019, Danone estimated that the peak of its carbon emissions on scopes 1, 2 and 3 had been reached five years ahead of its original target (2025) and one year ahead of its “1.5°C Science-Based Targets initiative” pledge. Since last year, Danone has disclosed a ‘carbon-adjusted’ recurring EPS evolution that takes into account an estimated financial cost for the absolute GHG emissions on its entire value chain. Given the business context and despite the emissions reduction achieved that contributed to the -4.1% decrease of the cost of carbon per share, the ‘carbon-adjusted’ recurring EPS decreased in 2020 by -19%, penalized by the decrease of -13% in recurring EPS (see section 3.2 Examination of consolidated income and 5.8 Methodology Note ). 3% Scope 1 2% Scope 2 37% Scope 3 Milk 15% Scope 3 Dairy ingredients 1% Scope 3 Waste generated by operations Agricultural emissions breakdown in 2020 (a) 8% Scope 3 Other rawmaterials 10% Scope 3 Purchased goods and services: Packaging 6% Scope 3 Purchased goods and services: Purchased finished products 7% Scope 3 Use of sold products 6% Scope 3 Downstream transportation and distribution of goods 1% Scope 3 Upstream transportation and distribution of goods 3% Scope 3 End-of-life treatment of sold products 1% Scope 3 Full- and energy-related activities (a) Greenhouse Gas scope, see Methodology Note. Total emissions breakdown in 2020 (a)