Danone // 2020 Universal Registration Document

Social, Societal and Environmental Responsibility 5.5 Promoting sustainable, inclusive growth with suppliers DANONE UNIVERSAL REGISTRATION DOCUMENT 2020 184 Action plans and outcomes Danone supports dairy farmers by providing themwith training and technical support to transform their practices while ensuring the viability of their business models. For example, the Farming for Generations alliance, created in 2019 and in which Danone par- ticipates, has identified 58 best practices and innovations across various farming models, farm sizes and geographic areas. Through the Sustainable Dairy Partnership, the Company has continued to work for a more sustainable dairy industry by supporting the pre- vention of deforestation, the protection of human rights and animal welfare, as well as compliance with local legislation. In 2020, it also headed a regenerative agriculture assessment project with the aim of analyzing farmers’ practices in the areas of soil health, biodiversity and water management and issuing recommendations. In addition to these collaborative actions, specific tools and methodologies are deployed and monitored by Danone’s Agriculture cycle: • MilQSat : an initiative co-developed by the EDP Reporting Entity and its partner farmers to assess the performance of farmers from which Danone purchases milk directly in terms of quality, food safety and traceability; • Cool FarmTool and Cap2Er : specific tools for calculating green- house gas emissions from livestock. Cool FarmTool, implemented at 14 entities in 2020, covers most of Danone’s sourcing, and Cap2Er, developed by the French Livestock Institute (Idele) is the reference tool for all Danone entities in France; • animal welfare tool : launched in 2016 and now implemented in 14 countries (see section 5.3 Transition toward regenerative agriculture that includes organic agriculture ); • water risk assessment in relation tomilk sourcing : updated in 2020, methodology used to identify farms or collection centers located in water-stressed areas and to determine an appropriate approach (mitigation, adaptation or relocation of the supply source). Danone also supports the next generation of farmers, who play a leading role not only in producing the food we eat but in implementing responsible practices such as carbon sequestration, protection of water resources and biodiversity. Cost Performance Model (CPM) Danone works with producers in the United States, Europe and Russia to develop innovative contracts, with an average term of three to five years, to reduce milk price volatility and thereby offer farmers greater visibility and financial stability. These long-term Cost Performance Model (CPM) contracts factor production costs into milk pricing and are developed in partnership with milk producers or their organizations. In 2020, 43%of milk collected in Europe (41% in 2019) and 55%of milk collected in the United States (53% in 2019) came from producers with CPM contracts. Altogether, 29% of the milk Danone collects is covered by CPM contracts (28% in 2019). Opportunities By developing viable financial models with its dairy partners, the Company also helps encourage and maintain the transmission of agricultural expertise across generations. These actions are an opportunity for the Company to secure its supply chain while ensuring that practices evolve to address mounting social and environmental challenges. As an example, the MVP Dairy Farm (Danone North America’s milk supplier), which has pledged to use farming methods that ensure land preservation and soil health improvement, obtained B Corp™ certification in 2020. These actions also strengthen the positioning of the Company’s brands and meet consumers’ responsible sourcing expectations. RESPONSIBLE SOURCING – SUPPLIES OTHER THAN MILK Definition The global supply chains that power the food and beverage sector carry the risk of human rights and environmental violations, both upstream of the farm sector and at the Company’s direct suppliers. To limit these risks, Danone has established a set of fundamental principles and has made specific public commitments. It fulfills these commitments by working with suppliers towards more res- ponsible practices. Policies Sustainability principles Danone’s responsible sourcing approach is based on the Company’s Sustainability Principles, which cover its operations and supply chain and labor rights, environmental protection and business ethics topics and include: • seven labor principles based on the criteria set by the International Labour Organization (ILO): elimination of child labor, elimination of forced labor, non-discrimination, freedom of association and the right to collective bargaining, workplace health and safety, working hours and compensation; • five environmental principles: preservation of resources, re- duction of use of chemicals, fight against climate change and reduction of greenhouse gas emissions (GHG), environmental management and animal welfare; • principles of business ethics for fair, lawful transactions that reflect the provisions of Danone’s Code of Conduct for Business Partners. These principles are incorporated into a clause in its contracts with direct suppliers. Pursuant to this clause, the supplier warrants that the labor and ethical principles are already in place in its own organi- zation, and that its employees, agents, suppliers and subcontractors comply with these as well. The supplier also undertakes to adopt the environmental principles. Environmental commitments In addition to its sustainability principles, Danone’s environmental strategy covers issues that require the involvement of its value chain partners and suppliers, particularly with respect to its commitments related to elimination of deforestation, regenerative agriculture, preservation of water resources, circular economy and reduction of GHG emissions (described in detail in section 5.3 Preserve and renew the planet’s resources ). The Company has made the following commitments: • since the publication of its Forest Footprint Policy in 2012, to eliminate deforestation from its supply chains and to apply the principle of no deforestation, no development on peat and no exploitation of the rights of workers, indigenous people and local communities (NDPE). At the end of 2020, Danone had reached key milestones towards achieving these goals, in particular the creation of the first supply chain for RSPO-certified segregated palm oil in the United States. The Company’s efforts have been recognized by the CDP, which awarded Danone the highest pos- sible score (A) for the CDP Forests questionnaire (see section 5.3 Preserve and renew the planet’s resources );