Danone // 2020 Universal Registration Document

Social, Societal and Environmental Responsibility 5.8 Methodology note DANONE UNIVERSAL REGISTRATION DOCUMENT 2020 198 This is the third year that the Company has used the emissions factors from the Cool Farm tool to calculate emissions for milk used in products, which accounted for 37% of Danone’s emissions in 2020. This tool was developed by the cross-sector Cool Farm Alliance, whosemembers includemanufacturers, research centers and non-governmental organizations, with the aim of developing and promoting the use of measurement systems for sustainable agriculture. In France, Danone uses the emissions factors from the Cap2Er tool (automated calculation of the environmental performance of ruminant farming), developed in collaboration with the French Livestock Institute (Idele). By default, Danone uses the FAO’s 2019 emissions factors for countries outside of France where the Cool Farm tool has not been implemented. This is the third year that, in order to calculate emissions for dairy ingredients, which accounted for 15% of Danone’s emissions in 2020, the Company has used specific emissions factors that are calculated by its suppliers and take into account emissions related to the milk in dairy ingredients and emissions related to processing techniques, which factor in the energy intensity of production for each ingredient, as well as transportation between the farms and Danone’s suppliers. By default, the FAO’s 2019 emissions factors are used for suppliers for which these emissions factors are not available. The updated methodology and rules for calculating scope 3 emis- sions were documented in a report shared with all contributors to the Company’s emissions reporting. An independent third party has confirmed that these carbon accounting guidelines comply with the GHG Protocol. Danone improved its analysis of the contribution of methodological effects to the change in the ratio of its total scope 1, 2 and 3 emis- sions between 2019 and 2020. This improvement was also made to the analysis of the methodological effects between 2018 and 2019. Carbon-adjusted recurring EPS To give its stakeholders more visibility on the cost of Danone’s scope 1, 2 and 3 emissions as a share of earnings, in February 2020 Danone presented carbon-adjusted recurring earnings per share (EPS). This metric takes into account the estimated financial impact of the cost of carbon on its value chain. These carbon-adjusted recurring EPS are calculated as the difference between recurring EPS (defined in section 3.6 Indicators not defined by IFRS ) and the cost of carbon per share. The cost of carbon per share is the product of Danone’s total scope 1, 2 and 3 emissions (see section 5.3 Preserve and Renew the Planet’s Resources ) by the cost per ton of carbon, divided by the number of shares after dilution (see section 3.2 Consolidated net income review ). The cost per ton of carbon is estimated at €35/t, a figure that Danone has used internally since 2015 as well as in its reporting to the Carbon Disclosure Project. This estimate is corroborated by the cost per ton of carbon (i) on the regulated ETS markets, (ii) on the voluntary carbon credit market, and (iii) by a benchmark of companies that provide information on cost per ton of carbon. Packaging The data on packaging concern primary, secondary and tertiary packaging (excluding pallets) purchased for Danone’s operations and are given in tons of material. Packaging purchased for subcontrac- tors who manufacture finished products for Danone is excluded. Calculations relating to the recyclability rates of Danone packaging are based on the new definition of recyclability as a proportion of the type of packaging recommended by the Ellen MacArthur Foundation (EMF) for the circular economy. According to this methodology, a packaging is recyclable if post-consumer collection, sorting, and recycling is proven to work in practice and at scale, which means it achieves a 30% post-consumer recycling rate in multiple regions, collectively representing at least 400 million inhabitants. The calculation of recycled components for cardboard and plastic materials is based on actual volumes used. Assumptions for the calculation of recycled components for glass and metal materials are based on the best available data as well as supplier data: • Recycled components for glass: 50% worldwide • Recycled components for metal and aluminum: 40% worldwide Waste Following the application of a new standard, the Food Loss and Waste Protocol (version 1.0 of June 2016), since 2016 Danone has consolidated the quantities of waste generated according to the following categories: treatment facilities’ sludge, whey waste, food waste collected on site and food waste discharged with wastewater, packaging waste, hazardous waste and, lastly, other non-hazardous waste. In 2019 and 2020, Danone focused on the most substantial categories (food waste and packaging waste) and excluded hazar- dous waste and other non-hazardous waste, representing 10% of total quantities of waste produced at production sites in 2020, from the consolidation scope. The Food Loss and Waste Protocol is the first international stan- dard for measuring food losses not used for human consumption. It was established under a partnership between the Consumer Goods Forum, the Food and Agriculture Organization of the United Nations, the United Nations Environment Programme, the World Business Council for Sustainable Development (WBCSD), and the World Resources Institute. Food waste is consolidated for the Product Sites Environment scope with the exception of the Waters Reporting Entity plants. It includes finished product, raw material and by-product (whey not used for human consumption) losses. This waste may be collected or discharged with wastewater, or form part of the wastewater treatment plant sludge: • whey and okara collected on site and not used for human consump- tion is reported as dry matter content; • waste collected on site is reported in real weight, i.e. weight as shown in on-site waste removal orders; • waste discharged with wastewater and recovered in the sludge at treatment facilities is reported as a percentage of dry-matter content in sludge; • waste discharged with wastewater and not recovered in the sludge at treatment facilities is calculated in tons of chemical oxygen demand (COD) discharged. In 2020, Danone also introduced reporting that consolidates food waste from its production sites with food waste generated in the scope 3 downstream sub-scope within the Greenhouse Gas scope.