Danone // 2020 Universal Registration Document

Social, Societal and Environmental Responsibility 5.5 Promoting sustainable, inclusive growth with suppliers DANONE UNIVERSAL REGISTRATION DOCUMENT 2020 186 Agricultural supply chain transparency With input from independent experts, Danone is working on trans- parency for the following five priority categories: • palm oil : Danone works with Earthworm Foundation (formerly The Forest Trust) to ensure traceability of palm oil. At the end of 2020, 95% of the palm oil sourced by Danone was certified RSPO segregated, 3%was certified RSPOMass Balance and the remaining 2% was conventional palm oil sourced in Africa (see section 5.3 Preserve and renew the planet’s resources ). Since 2018, the Company has also published a list of its palm oil suppliers (direct and mill-level) on its website; • fruit: in 2020, 100% of Danone’s fruit supplies were traceable to the Company’s Tier 2 suppliers; • cocoa: in 2018, Danone reached 70% country-level traceability and sourcing of cocoa products remained unchanged in 2020; • sugar cane: Danone works with the NGO ProForest to ensure traceability of sugar cane, which reached 83% in 2020, of which 41%mill-level traceability and 42% plantation-level traceability. The drop versus 2019 was linked to a decrease in purchased volumes as a result of Covid-19; • soy: • soy used in plant-based products: in Europe ( Alpro ) and in North America, soy comes from areas with very low defores- tation risk. In addition, 100% of soy used for the Alpro brand is ProTerra-certified. • soy for animal feed: Danone estimates that soy accounts for less than 5% of the feed consumed by the dairy cows in its supply chain. In North America and Brazil, its dairy farmers buy soy locally in regions with no risk of deforestation. Through research with Transparency for Sustainable Economies (TRASE), the Company estimates that 20% of the soy used for animal feed in Europe, Russia and Africa could come from regions at risk of deforestation. To mitigate this risk, it has implemented action plans consistent with its soy policy and aims to promote the use of local soy or other local alternatives. Danone also purchases RTRS (Round Table on Responsible Soy) credits – a widely recognized certification scheme – in proportion to the risk for the Company. Direct (Tier 1) supplier risk mapping In 2020, Danone conducted a new risk analysis that combined risks and purchase amounts for its top 50 suppliers (in terms of purchase amounts) of its representative operating units and global categories. The Company developed an in-house human rights impact score for each supplier based on (i) the inherent country social risk index as identified by the new Sedex (Supplier Ethical Data Exchange) risk tool (50%), (ii) the purchase amount (30%), and (iii) the purchase category risk (20%) based on the analysis of 892 audits conducted worldwide on Danone’s suppliers in 2018 and 2019. In 2020, the Company focused on the largest purchase amounts to better understand the coverage rate of its suppliers in terms of Sedex registration and auditing (the previous 2018 risk analysis included small suppliers). As a result, 838 suppliers were measured based on this human rights impact score, representing approximately 26% of purchase amounts. Regular risk map-based evaluation procedures for direct suppliers Danone asks its direct suppliers to register on the Sedex collaborative platform and complete a self-assessment questionnaire evaluating their sustainability performance. At the end of 2020, 3,891 supplier sites were registered on the platform vs. 4,062 in 2019 (this drop was mainly due to tightening of the registration renewal rules), and 57% had completed the new 2020 questionnaire. Regarding on-site assessments, Danone conducted the remaining six audits from its 2019 audit plan in the first quarter of 2020 using the SMETA (Sedex Members Ethical Trade Audit) protocol. As travel was restricted due to the Covid-19 pandemic, Danone focusedmainly on (i) improving its assessment procedure to identify high-impact suppliers in regions and for the priority categories and (ii) providing resources to help suppliers improve their performance. Based on its 2020 impact analysis, the RESPECT team worked with purchasing departments around the world to co-develop the 2021 audit plan, selecting 119 potentially at-risk and commercially important sites. The Company plans to implement virtual audits in 2021 conducted by third-party organizations in accordance with the Sedex Virtual Audit (SVA) protocol. Through the Sedex platform, the Company can also access audits of shared suppliers by peer companies and participates in mutual audit recognition through the AIM-Progress forum. As a result, in 2020 Danone had access to 309 SMETA audits carried out on its suppliers, either by the Company itself or by its peers. With regard to continuous supplier improvement and audit closure, Danone’s goal is to establish regular dialogue with its direct sup- pliers on their responsible purchasing processes and monitor audit effective remediation, including when audits of shared suppliers are conducted by peer companies. In 2020, in the context of the Covid-19 pandemic, Danone focused on developing new processes to increase the robustness and sustainability of its supplier remediation plans. The Company relied on dedicated experts in China and Mexico to help suppliers develop their corrective action plans. Audit closure is monitored through the RESPECT KPI 3 indicator. Mitigating risk and preventing serious violations Training and engagement Danone trains its RESPECT champions and buyers on the RESPECT program and ensures that they are aware of risks related to forced labor and the CGF’s three priorities. In 2020, the central team in charge of this program stepped up this training by organizing mon- thly training webinars and sessions regarding audits. They included more than 327 buyers, champions or purchasing managers, with one-third attending more than one session. In 2020, the RESPECT teamalso developed e-learningmodules that will be part of the buyer skills program. These initiatives significantly strengthened buyers’ engagement and fostered discussions about local requirements. They supplement the training module on human rights and forced labor already offered online (see section 5.4 Focus – Respecting and promoting human rights in Danone operations ). At the end of 2020, more than 3,500 Danone employees had completed this training. Certification The Company uses certification for the following categories: RSPO for palm oil; UTZ for cocoa and for Danone North America’s coffee, FSC or equivalent for paper, and RTRS or Proterra for soy. Projects The Company works directly with selected producers further up its supply chain and has developed many collaborative projects that help producers address environmental and labor issues, such as: • the launch in 2020 of a third phase of the Cartoneros project which supports waste pickers in Argentina, in collaboration with the Danone Ecosystem Fund and local partners, to counter forced labor and informal employment abuses in the recycling of plastic. The objective is to increase the impact of the project, by raising waste recycling rates while improving the working and living conditions of urban collectors organized into recycling cooperatives, and empower 45,000 people within 40 cooperatives in 35 cities in Argentina;