Danone // 2020 Universal Registration Document

2 Overview of activities, risk factors 2.6 Risk factors DANONE UNIVERSAL REGISTRATION DOCUMENT 2020 23 DESCRIPTION MANAGEMENT MEASURES strong Packaging Packaging is fundamental to Danone’s ability to provide people around the world with safe, nutritious, high-quality food and drinks. Danone’s total packaging represented 1.5 million tons in 2020, of which plastic represented 0.7 million tons. Today’s mainstream packaging system is unsustainable and there is a global focus on plastics because large amounts of plastic are flowing into the natural environment, particularly the oceans. As a result, regulatory and consumer pressures around plastics are moving at an unprecedented pace. To the extent that Danone would not (i) reduce sufficiently its use of plastics, (ii) find appropriate replacement materials at a com- mercially reasonable price, and/or (iii) ensure sufficient recycling post-consumer use, therefore not being successful delivering its circularity ambition agenda, or should new regulations on plastic packaging result in higher costs for plastic, the Company could be exposed to (i) loss of volume sales in its main categories (especially in beverages which is at the forefront of the anti-plastic pressure) and (ii) significant cost increase to transition from linear to circular packaging, which could negatively impact its sales, margin, and results and its reputation. Danone’s strategic priority is to make its packaging 100% circular and pursue a transition towards a circular economy of packaging. This means (i) eliminating the packaging Danone does not need, (ii) innovating so that all the packaging it does need is designed to be safely reused, recycled or composted and (iii) ensuring that the material it produces or uses stays in the economy and never becomes waste or pollution. By 2025, Danone targets to design all its packaging so that it is 100% recyclable, reusable or compostable (vs 81% in 2020) and to increase recycled content tomore than 50% for all packaging (vs 36% in 2020), specifically for plastics (below 10% in 2020). This ambition was sup- plemented in 2020 by a series of additional commitments, notably the phasing out of polystyrene used mainly for dairy and plant-based products and the use of 100% recycled PET across Europe in 2025 and 50% worldwide for Waters Reporting Entity brands. Danone is steadily increasing the use of recycled material in its plastic packaging and has met 2020 target to reach 25% recycled PET for the Waters Reporting Entity where local standards and regulations allow for it. For more information on Danone’s packaging, its packaging policy and targets, see section 5.3 Preserve and renew planet’s resources , section Circularity of packaging .