Danone // 2020 Universal Registration Document

Overview of activities, risk factors 2.6 Risk factors DANONE UNIVERSAL REGISTRATION DOCUMENT 2020 28 DESCRIPTION MANAGEMENT MEASURES medium Regulatory changes As a player in the food and beverage industry active in many coun- tries, Danone operates its business in a complex, changing and increasingly stringent regulatory environment. Laws and regulations applicable to Danone activities include laws and regulations governing notably food & beverage products, the protection of the environment, intellectual property, taxation, inte- grity, data privacy, antitrust and labor. For more information on the regulatory environment of the Company, see section 2.4 Other elements related to Danone’s activity and orga- nization . For example: • in many countries, local consumer law restricts marketing practices of products for babies and kids; • in China, regulations require infant milk formula recipes to be registered by a public authority (SAMR) before they can be sold on the market. In 2018, these regulations were strengthened to require an audit by SAMR of production sites before the registra- tion of any infant milk formula products and such on-site audits to overseas factories have no timeline set in the regulations, which extends the duration and brings more uncertainties in the registration process for new products and innovations; • in many countries, local laws regulate the conditions of water extraction/bottling rights, which may include the granting of administrative authorizations; • Danone’s production sites are subject to strict environmental regulations and standards on energy use, water use and waste management. Changes in applicable laws and regulations, more stringent evolution, or toughening of their application could (i) limit Danone’s ability to pursue or develop its business activities, thus requiring Danone to adapt or reduce its activities, assets or strategy (including its geo- graphical presence), and/or (ii) expose Danone to incur additional constraints, costs or investments. This could lead to significant adverse effects on the sales, margin and financial position of Danone. Danone has developed a General Secretary organization, including public affairs, legal, regulatory affairs and compliance, at the regional and central levels. The Company and its subsidiaries, assisted by their legal departments and/or external legal advisors, take steps to ensure that they comply with applicable laws and regulations and identify any new applicable regulations. In addition, Danone has developed and implemented internal poli- cies and procedures relating to compliance (see section 2.7 Control environment ). In order to ensure that such measures are commonly practiced at Danone, the Company has integrated compliance into its quality approach and internal control system.