Danone // 2020 Universal Registration Document

5 Social, Societal and Environmental Responsibility 5.5 Promoting sustainable, inclusive growth with suppliers 183 DANONE UNIVERSAL REGISTRATION DOCUMENT 2020 5.5 PROMOTING SUSTAINABLE, INCLUSIVE GROWTH WITH SUPPLIERS Danone has identified three risks linked to sourcing, namely: (i) tra- ding and pricing practices, (ii) responsible sourcing, and (iii) human rights. These risks are addressed below, first for milk and then for all other ingredients. This section is designed to cover the steps involved in complying with the French law on Duty of Vigilance: risk mapping, regular risk map-based evaluation procedures, appropriate measures for risk mitigation and prevention of serious breaches, whistleblowing system and monitoring of measures and assessment of their efficiency (see section 5.1 An integrated approach of sustainable business model ). RESPONSIBLE SOURCING – MILK Definition Both consumers and civil society are increasingly sensitive to fairness towards suppliers and producers, in areas ranging from business practices to value-sharing and pricing. This is especially true for milk sourcing, which is the main raw material that Danone purchases. Governance Danone has a dedicated team—the Agriculture cycle—which oversees milk supplier relations and the rollout of the Company’s roadmap. It reports to the Cycles and Procurement Department and works closely with other cycles such as the Water & Nature Cycle, mainly through the regenerative agriculture taskforce. At the local level, the milk departments in each country where Danone operates implement this roadmap with their local milk suppliers. Policies Sourcing strategy Danone sources local raw milk from more than 50,000 farms in around twenty countries, both directly and indirectly. Most of the milk sourced by the Company comes from small or family farms. About 80% of the partner producers own small farms with fewer than ten cows and are located primarily in emerging countries in Africa and Latin America. These small farms supply about 30% of Danone’s total milk volume. Danone also works with family farms (with herds ranging from a few dozen to thousands of cows), which represent about 20% of the Company’s suppliers and nearly 70% of milk volumes, the latter being generally directly collected by the Company. In North America and some Middle Eastern countries, Danone occasionally works with larger farms to ensure reliable access to sufficient volumes of quality milk. Danone’s sourcing of fresh milk 5.1 million tons of fresh milk collected in 2020 Europe 29% CIS 24% North America 21% Latin America 11% Other regions 15% % of fresh milk sourcing per geographic area By geographic area