Ferrero Group Sustainability Report 2020 Ferrero Group 1 Sustainability Report 2020

Introduction Introduction Welcome to our 12th sustainability report approach Our sustainability This report is a progress report which builds on our new approach to reporting introduced last year to streamline and increase the transparency of the Group’s sustainability efforts and vision.

Our responsible way of doing things focuses on four pillars: 1 2 3 4 and performance Our progress Protecting the Sustainably sourcing Promoting Empowering

environment high-quality responsible people raw materials consumption Our reporting This year, we describe our action to go beyond what we have achieved as we grow our global business. This includes remaining steadfast in delivering our sustainability commitments under the challenging environment shaped by the pandemic and progress

made in integrating recent acquisitions. data Key As we are closing out the 2020 goals, the report showcases how we are planning to go beyond the strong foundations we already built. Ferrero Group 2 Sustainability Report 2020

Contents Introduction Our progress and performance 15 Empower people 66 Introduction – How we empower people 67 Protect the environment 16 – Engaging our people 69 – How we protect the environment 17 – Diversity and inclusion 70 – Climate action 19 – Continuous learning 71 – Energy 21 – Employee rights 73 – Water 22

What’s – Health & safety and wellbeing 74 approach Our sustainability – Waste 23 – Human rights 77 – Compliance and certification 24 – Ferrero Foundation 78 – Logistics 25 – Michele Ferrero – Packaging 26 Entrepreneurial Project 79 inside Source ingredients sustainably 31 – Kinder Joy of moving 80 – How we source Introduction 1 ingredients sustainably 32 Our reporting 82 and performance Our progress Executive Chairman – Cocoa 35 Materiality 83 and CEO Statement 3 – Hazelnuts 41 Governance 85 About us 4 – Palm oil 47 About this report 87 – Milk and eggs 51 Our sustainability approach 9 Key data 88 – Sugar 53 Building out our strategy 10 Performance data 89 – Shea and Sal 55 Our reporting – Soy Lecithin and Paper 56

Promote responsible consumption 57 – How we promote responsible consumption 58 – Products and ingredients’ safety and quality 59 Key data Key – Quality and safety of our Surprises 61 – Nutrition 62 – Responsible communications, marketing and labelling 64 Ferrero Group 3 Sustainability Report 2020

Executive Chairman and CEO statement Introduction Executive Chairman CEO Introduction Statement Statement Welcome to our 12th Sustainability Report, Throughout this challenging year, the Ferrero our iconic brands – strengthening internal R&D activities and which marks the end of an unprecedented Group demonstrated the agility to guarantee investing in our factories, plants and equipment as part of twelve months and the final year of our operational continuity and continued to our continuous approach to improving the quality, freshness, food safety, competitiveness and environmental impact of our approach Our sustainability sustainability goals for 2020. deliver products to our consumers. products. We have increased the scope of our sustainability reporting to include new acquisitions – Thorntons in the he impacts of Covid-19 have provided the main eyond manufacturing, protecting workers and UK, Fannie May and the Nestlé chocolate confectionary headlines of the year, and they continue to be felt farmers in agricultural supply chains was a key business in the US – and we are working to further extend our globally. While we have improved our management priority, especially in less developed markets. scope over the next years to the newly acquired Companies.

T of the virus and the outlook is improving for many B Our partnerships and collaborations have Countries, the situation is still uncertain. This global health As we close out our 2020 goals, we are proud to have proved invaluable to reaching those in need of support. crisis has shone a light on the inequalities that exist around met our target to source 100% sustainable cocoa through We collaborated with the World Cocoa Foundation and the the world, with the social and economic impacts varying independently managed standards. and performance Our progress International Cocoa Initiative to identify the needs of cocoa dramatically between countries. farmers and their communities and develop action plans in We have now extended the target to include outsourced Despite these challenges, the Ferrero Group successfully response. We also carried out an assessment in partnership chocolate to provide full transparency of our cocoa supply adapted to the evolving situation, and prioritised consumer with CAOBISCO and the International Labor Organization (ILO) chain. We continued to source 100% RSPO certified and employee health and safety. Furthermore, our business to contribute to the health and safety of hazelnut farmers segregated palm oil and we are developing a transition continues to expand through new acquisitions and and seasonal agricultural workers. And we implemented roadmap for the newly acquired Companies toward our organic growth. remote auditing and safety measures with our palm oil responsible sourcing standards. We are also working towards suppliers to protect workers’ health in the mills. In all cases, achieving 100% traceable hazelnuts, an ongoing challenge. As we develop our new sustainability framework and educating people on the preventative measures and providing Our new carbon targets for 2030 were validated by the Science Our reporting commitments for the period to 2030, the global leadership access to protective and hygiene equipment has been key. Based Targets initiative (SBTi) in December 2020. They have team has renewed its commitment to the United Nations given new impetus to actions to reduce emissions across our Global Compact. We have strengthened our sustainability The goals of the Kinder Joy of moving Program to help global operations and supply chain. Other highlights include governance with the creation of a Sustainability Operative children enjoy physical activity was given new meaning in progress in making 100% of our packaging to be recyclable, Committee. It brings people together from across the light of the pandemic and the need to keep children active reusable or compostable by 2025; we reached 82.9% this year. group to drive the sustainability agenda as we look to and connected during social isolation. With in-person And we were pleased to meet our target of a 5% increase the coming decade. activities on hold for much of the year, we provided parents, in women in managerial positions in January 2021. families and teachers around the world with resources to

I cannot end without first recognising and thanking all data Key engage children – from activities to promote teamwork in You can find out more about these projects in this report as the Ferrero employees and partners who have pulled Argentina to online Joy of moving games in Brazil. well as online at www.ferrerosustainability.com. I hope you together over the last year to continue to deliver for our will find it informative and I welcome your feedback so that customers while supporting the communities we are We closed the financial year with a consolidated turnover of we can continue our journey for improved sustainability proud to be part of. 12.3 billion Euro, an increase of +7.8% compared to the previous performance and transparency. /s/ year. We now have 105 companies and 31 manufacturing plants worldwide, selling directly and via distributors in /s/ Giovanni Ferrero Lapo Civiletti Executive Chairman, Ferrero Group over 170 countries. Moreover, we accelerated investments in CEO, Ferrero Group Ferrero Group 4 Sustainability Report 2020

About us Introduction Our purpose, values and structure provide a strong foundation which continues to evolve in line Introduction with our global expansion, changing consumer needs and innovation of our products and packaging.

Our purpose Our values How we do things Ferrero has been built by generations of people We live out our purpose who share a commitment to continuous improvement. every day through our Our core values provide the foundation for our purpose approach Our sustainability and are a guiding force for our people and suppliers WE CARE as our Company continues to grow. CONSUMERS

Loyalty and trust Passion for quality, FOR THE Responsible marketing practices, high-quality Our loyalty towards consumers and research and innovation ingredients and innovative products the trust they place in our products Our goal is to create unique products and performance Our progress BETTER are at the core of the long-lasting through innovative research and relationships we enjoy with them. production processes, careful selection of raw materials, and Respect and responsibility quality and traceability across

COMPANY Based on respect for equality our businesses. of treatment, we promote the Respect and care for our people professional and personal Entrepreneurship through the organisation development of our people

Our success lies in our ability to Our reporting and strong relationships with establish a clear vision and be local communities. proactive with our investments, timely with our undertakings and Integrity and moderation excellent in our execution. BUSINESS PARTNERS Our communications reflect the Integrity and trustworthy approach values of human dignity, family Work, create, donate to our retailers and suppliers and children in line with strong We identify with the motto conceived moral and ethical principles and a by Michele Ferrero: “work, create, data Key commitment to healthy lifestyles. donate”. Alongside the Ferrero Foundation, the entire Ferrero Group engages in social responsibility activities as an integral part of our COMMUNITIES way of doing things. Care for the communities in which Read more about our Core Values we operate and where we source from Ferrero Group 5 Sustainability Report 2020

About us continued Introduction Introduction Our presence

in the world 31 manufacturing plants across five continents1 1. Italy – Alba 1946 2. Germany – Stadtallendorf 1956

3. France – Villers-Écalles 1960 approach Our sustainability 4. Italy – Pozzuolo Martesana 1965 50+ 5. Australia – Lithgow 1974 Countries and Regions 6. Ireland – Cork 1975 7. Ecuador – Quito 1975

8. Italy – Balvano 1985 Argentina Georgia Portugal 9. Italy – S. Angelo Dei Lombardi 1985 Australia Germany Puerto Rico 10. Belgium – Arlon 1989

Austria Greece Romania 11. Poland – Belsk Duzy 1992 and performance Our progress Belgium Hungary Russia 12. Argentina – La Pastora 1992 Brazil India Serbia 13. Brazil – Poços De Caldas 1994 Bulgaria Indonesia Singapore 14. Cameroon – Yaoundé* 2005 Cameroon Ireland Slovakia 15. Canada – Brantford 2006 Canada Israel South Africa 16. South Africa – Walkerville* 2006 Chile Italy South Korea 17. India – Baramati* 2007 China Japan Spain 18. Russia – Vladimir 2009 Our reporting China, Hong Kazakhstan Sri Lanka 19. Mexico – S. José Iturbide 2013 Kong S.A.R. Kuwait Sweden 20. Turkey – Manisa 2013 China, Taiwan Luxembourg Switzerland Manufacturing plant Ferrero Hazelnut Company 21. China – Hangzhou 2015 Colombia Malaysia Turkey 22. United Kingdom – Alfreton 2015 Croatia Mexico Ukraine HCO – Hazelnut Company 23. USA – North Canton 2017 Czech Republic Monaco United Arab 24. USA – Bloomington 2018 Denmark Morocco Emirates 6 Agricultural Companies 7 Manufacturing Plants 25. USA – Franklin Park 2018 Ecuador United Kingdom Netherlands Argentina Chile Serbia Chile Turkey 26. USA – Louisville 2019 Finland United States data Key Norway Australia Georgia South Africa Italy 27. USA – Florence 2019 of America France Poland 28. USA – Augusta 2019 29. USA – Chicago 2019 For more information visit Ferrero 30. Spain – Alzira 2019 Hazelnut Company website 1 Plants acquired starting from 2019 onwards are not included 31. Italy – Castel d’Ario 2019 in the scope of this report (n.26 to 31) – except where specified. * Michele Ferrero Entrepreneurial Project – active in three countries. Ferrero Group 6 Sustainability Report 2020

About us continued Introduction Introduction Our brands Our company Expanding our portfolio Alongside organic growth, our global presence is constantly expanding as we enter new product categories and expand our footprint across Europe and North America through strategic acquisitions. We are constantly growing our portfolio of well-established

170+ 34,121 105 approach Our sustainability Countries where our products Employees (Full Time Equivalent)2 Consolidated companies brands that consumers love, allowing us to diversify are present and sold 2018/19 33,0032 managed under Ferrero and capitalise on exciting growth opportunities. International S.A 2015 Acquired Oltan Group (Turkey). Geographical distribution of consolidated net turnover: Acquired Thorntons (UK).

1. and performance Our progress 3. 2017 Acquired Fannie May (USA).

2018 1. Italy 12% Acquired former Nestlé U.S. chocolate confectionery business with iconic brands, such as Butterfinger, BabyRuth, 100Grand, 2. Rest of Europe 56% Raisinets, and the exclusive right to Crunch brand (USA). Our reporting 3. Outside Europe 32% 20191 Acquired Kellogg Company cookie, cone and pie crust ® 2. businesses, including the iconic cookie brand Keebler , top selling on-the-go Famous Amos® cookies, the premium family cookie brand Mother’s®, and Murray® sugar free cookies, as well as Little Brownie Bakers®, supplier of cookies to the Girl Scouts.

Acquired a controlling stake in Ice Cream Factory data Key The consolidated net turnover (€) Comaker (ICFC).

2019/2020 12,266,961 +7.8% 2018/2019 11,376,634

1 These acquired companies will be integrated in the future 2 FTE excluding external personnel. reporting cycles. Ferrero Group 7 Sustainability Report 2020

About us continued Introduction Our value chain Introduction As we continue to grow our business responsibly, we ensure sustainability is fully embedded by considering our impacts and PACKAGING opportunities along the value chain – from raw materials to end of life. Packaging protects the

quality and freshness of approach Our sustainability our products to guarantee CONSUMPTION a delightful experience Our products bring joy and RAW MATERIALS for our consumers. It is pleasure for consumers also an important means as part of a healthy and We source raw materials of communication with LOGISTICS balanced lifestyle. We do END OF LIFE

such as cocoa, palm oil, consumers, by providing this responsibly, going hazelnuts, sugar, milk and Our products are Packaging plays a crucial clear and understandable beyond legal requirements eggs to make our products. distributed and sold directly role but it can cause harm information. The materials and through authorised with our marketing to the environment if it We nurture long-term and performance Our progress that go into our packaging communications and relationships with suppliers dealers in more than 170 is not disposed of in the includes for example glass, ingredients information and to ensure they understand, countries. We work with right way. Providing clear paper and plastic. offering serving sizes that practice and embrace our logistics operations to guidance on how to dispose let consumers manage their values. Traceability enables transport raw materials, of our packaging and daily energy needs. us to monitor how our raw See page 26 semi-finished products ensuring it is reusable, ® materials are produced and and KINDER Surprise recyclable or compostable where they come from. PRODUCTION materials throughout the See page 58 is key to managing value chain via our network our impacts.

Our products are produced Our reporting of warehouses. See page 32 in 31 Ferrero manufacturing plants globally and we work See page 30 with third-party suppliers See page 25 (for example to produce our KINDER® Surprise toys), aiming for the highest quality and safety standards in our manufacturing and third-party operations and data Key managing the environmental and social impacts are high priorities.

See page 12 Ferrero Group 8 Sustainability Report 2020

About us continued Introduction Introduction As a precautionary measure to protect RESPONDING employees, we applied remote working As a company that has been where possible while guaranteeing dedicated to supporting the TO THE COVID-19 essential services and business continuity. communities in which we We are currently working on a Global operate for over 70 years, we PANDEMIC Wellbeing Programme designed made donations of medical to provide a holistic framework for During an unprecedented supporting the wellbeing of Ferrero people supplies including gloves, masks year, our colleagues across moving forwards. and hand sanitisers. At the approach Our sustainability same time, we spread a little the globe came together to Supporting the communities involved keep producing and delivering in our supply chain was a high priority. happiness by donating more quality products to consumers Covid-19 disrupted global supply chains than 700,000 kilos of product and protect local communities and impacted communities world-wide, to medical staff, children and

and workers involved in our with smallholder farmers particularly people in need around the globe. hard hit. The stay at home measures supply chain. adopted around the world to reduce transmission were not possible for many and performance Our progress he health and safety of our involved in sustaining global supply chains. employees, consumers and We acted quickly to support the health communities was – and continues and livelihoods of farmers and suppliers T to be – a foremost priority. involved in our raw materials supply. We deployed precautionary and hygiene We discuss these initiatives in more detail measures across all our manufacturing later in the report under each of our pillars. plants to ensure they could continue

to operate safety. A Coronavirus Our reporting Operations Monitoring Team was created at Group See page 25 level to ensure all preventive and control measures were effectively monitored, Cocoa formulated and implemented globally. See page 35 In addition, a special task force ensured Hazelnuts the procurement of protective materials See page 41 such as masks, goggles, gowns and disinfectants to maintain a hygienic Palm oil

See page 47 data Key working environment in Ferrero premises around the world and protect our Our People employees and workers. See page 67 Ferrero Group 9 Sustainability Report 2020 Introduction

Our approach Our sustainability

and performance Our progress

sustainability approach Our reporting

Building out our strategy 10 Key data Key Ferrero Group 10 Sustainability Report 2020

Building out our strategy

Performance overview of Introduction Ferrero sustainability goals GOAL PROGRESS Achieved In progressExtended

e have met many of our goals Achieve Group ISO 50001 certification for 19 Group plants are ISO 50001 certified. and developed others as our Protect the the 17 production sites active for Ferrero in business and the context environment August 2014 – excluding the plants of the Hangzhou and Baramati, initially not included in the target scope, Michele Ferrero Entrepreneurial Project – were certified as well. W in which we operate has including power generation plants by 2020. evolved. Here we provide an overview

of our achievements. 100% virgin cardboard from certified Achieved in December 2014 and still valid. approach Our sustainability sustainable supply chains. The perimeter of our Company has changed since we first set our 2020 100% virgin paper from certified Achieved in December 2017 and still valid. goals. We have worked to extend sustainable supply chains. the perimeter of our reporting and

sustainability standards to include recent 100% of packaging to be reusable, 82.9% reusable or recyclable or compostable. acquisitions including Thorntons (UK), recyclable or compostable. Fannie May (USA) and former Nestlé U.S. (by 2025 at global level) chocolate confectionery business. and performance Our progress The 2020 consolidated performance Reduce absolute Scope 1 and 2 emissions See “About our environmental data” – page 100 presented below includes the by 50% from a 2018 base year. aforementioned companies for (by 2030 at global level) Fiscal Year 2019/2020 (1st September 2019 – 31st August 2020) unless Reduce Scope 1, 2 and 3 emissions intensity See “About our environmental data” – page 100 by 43% per tonne of product produced from stated otherwise. a 2018 base year. (by 2030 at global level) Our reporting

Food safety certification (FSSC 22000) FSSC 22000 certification achieved for all Ferrero plants. Promote for all Group production sites by 2020. MFEP plants (Baramati, Walkerville and Yaoundé), Bloomington and Franklin park responsible plants, initially not included in the target scope, were also certified. Alfreton consumpton (Thorntons) and North Canton (Fannie May) certifications are on-going as they were not part of the initial scope. Key data Key Ferrero Group 11 Sustainability Report 2020

Building out our strategy continued Introduction

GOAL PROGRESS Achieved In progressExtended

100% cocoa beans certified 100% sustainable cocoa beans sourced through independently Source as sustainable by 2020. managed standards. ingredients In addition, in January 2021 the target has been extended to include chocolate sustainably sourced from third-parties.

100% sustainable palm oil certified Reached and maintained 100% RSPO certified palm oil as segregated for Ferrero approach Our sustainability RSPO as segregated by 2020. products and the acquired company Thorntons. Overall, we have achieved sourcing 99.28% RSPO certified palm oil as segregated, with the remaining 0.72% sourced as conventional palm oil for the acquired companies Fannie May and acquired former Nestlé U.S. chocolate confectionery business due to on-going integration.

100% refined cane sugar from sustainable 100% of cane sugar sourced through Bonsucro and Altromercato. sources by 2020. and performance Our progress Implementation of the traceability Reached 51% traceability of our sourced hazelnuts. Commitment extended with plan for 100% of hazelnuts by 2020. the launch of our Hazelnut Charter.

100% cage-free eggs. EU plants (representing 95% of Ferrero global eggs supply): 100% reached in

September 2014. (by 2025 at global level)

NON-EU plants (representing 5% of Ferrero global eggs supply): in progress. Our reporting 5% increase of women in managerial positions* +5% increase of women in managerial positions achieved in January 2021. Empower by 2020 (compared to 31 August 2015). people Promote internal initiatives to support The goal is achieved, and the programme continues a “culture of diversity” by 2020. Read more at page 70

Enhance the activities of the Ferrero The goal is achieved and the programme continues. Foundation and of the Michele Ferrero Entrepreneurial Project by 2020. Key data Key

On-going support and expansion of the In August 2018 the programme reached 34 countries. † Kinder Joy of moving programme by extending it in 30 countries and moving In August 2018 the programme “moved” 4.4 million children instead of 5 million, 5 million children by 2018. favouring the quality of activities rather than the quantity of children reached.

* Managerial positions include Middle Manager & above. † Number of Countries reached. Numbers of children moved partially reached. Ferrero Group 12 Sustainability Report 2020

Building out our strategy continued

What we have learnt Protect the We partially met our 2020 commitment for Source ingredients Introduction and looking ahead self-produced electricity and there are a 1 environment number of energy efficiency and renewable 2 sustainably n 2020, we reached the end of our energy projects in the pipeline which will As our Company perimeter continues Cocoa sustainability strategy for 2012-2020 contribute to driving down emissions from to grow and expand, our previous which set out our Group commitments production. In FY 2019/2020 we self- We reached our target to source 100% commitments set in 2011 to achieve and approach to protecting people and produced 46% of our energy and 97% of certified sustainable cocoa beans in I a 40% reduction in carbon emissions the planet and increasing transparency the thermal energy used in our operations. August 2020. In FY 2019/2020, Ferrero from production and a 30% reduction in In Europe, we purchased 100% green sourced all of its cocoa beans, close across our operations. We have been approach Our sustainability emissions from transport and storage undergoing a period of transition, defining electricity and the share of renewable to 144,000 metric tonnes, through activities by 2020 will not be met. new commitments and targets that will energy increased to 20.5%. leading certification bodies and other These targets were fully replaced with drive further progress across the period up independently managed standards. more ambitious science-based carbon We met our goal to expand Group ISO to 2030. The new commitments will build We also extended the target to include targets for 2030. 15001 certification with 19 plants certified on lessons learnt over the past decade as outsourced chocolate supplied by external

as of August 2020. The Hangzhou and well as the evolving global context and Our science-based carbon targets for third-parties. Baramati plants, which were initially not changing stakeholder needs. 2030, validated by the Science Based included in the 2020 goal, have been Palm oil Targets initiative (SBTi) in December

certified as well. Our target to source 100% RSPO certified and performance Our progress 2020, will be a key foundation of the new sustainable palm oil as segregated was strategy. They will drive progress to reduce We achieved our target of sourcing met in January 2015 and we continue absolute Scope 1 and 2 emissions by 100% paper and cardboard from sources to meet this objective year after year. 50% Scope 1, 2 and 3 emissions intensity certified sustainable. In line with industry For Ferrero we reached and maintained by 43% per tonne of product produced best practice, we are now working to make 100% sustainable palm oil RSPO certified from a 2018 base year. We have set out 100% of our packaging to be recyclable, as segregated since 2015. Concerning the a roadmap for reducing Scope 1 and 2 reusable or compostable by 2025. recently acquired brands, Thorntons emissions to achieve the first target and we In FY 2019/202020, 82.9% of our has met the same standard of 100% are working with our suppliers to identify packaging was recyclable, reusable Our reporting RSPO certified as segregated, while for a pathway which will involve rethinking or compostable. Fannie May and the former Nestlé U.S. solutions with a lower carbon impact to chocolate confectionery business work deliver the second target. The first step is is still on-going. Globally (considering to formally document our suppliers’ carbon the extended scope) we have achieved intensity for our main materials so that we 99.28% RSPO certified as segregated can work together to set reduction targets with the remaining 0.72% sourced as and monitor progress. conventional palm oil. Key data Key Ferrero Group 13 Sustainability Report 2020

Building out our strategy continued

Hazelnuts Introduction Promote responsible Empower Protect the environment Achieving our commitment to source See page 16 100% traceable hazelnuts is an on-going 3 consumption 4 people Source ingredients sustainably challenge; in FY 2019/2020, we achieved Product safety and quality has been a Our target for 2020 was to promote See page 31 51% traceability of our total sourced top priority over the last decade and we diversity and deliver a 5% increase in the Hazelnuts. In some geographies – such met our target to achieve FSSC 22000 number of women in managerial positions Promote responsible consumption See page 57 as Chile and the USA – we achieved food safety certification for Ferrero against a 2015 baseline. As of January 100% traceability. To fulfil our ambition manufacturing plants including those of 2021, there were 29.8% women and 70.2% Empower people of full traceability down to farm level, the Michele Ferrero Entrepreneurial Project. men among our managerial positions, See page 66 approach Our sustainability we decided to redesign and strengthen We continue work to extend certifications achieving a 5% increase of women in our traceability approach, also mitigating to all newly acquired plants. managerial positions. We have launched the consequences of the Covid-19 along a new three-year plan to develop the We will maintain our current the industry. leadership, process and guidelines that are commitment to responsible marketing

needed to support further change. We estimate to be able to trace ~60% and communications and further of Ferrero hazelnuts to farmer level in develop our nutrition strategy, focused Our human rights approach has FY 2020/2021. on four key principles serving size, high significantly matured over the past and performance Our progress Other ingredients quality ingredients, food education and decade through collaboration with leading encouraging active lifestyles. experts to identify our human rights risks, We reached our target of using 100% develop our due diligence approach and cage-free eggs within the EU (accounting enter partnerships to scale our positive for 95% of total Ferrero global eggs supply) impact. Our strategic partnerships, such in 2014 and we are working to achieve as with the Consumer Goods Forum the expanded commitment to source (CGF) Coalition on Human Rights, the only cage-free eggs and egg ingredients International Labor Organization (ILO) and globally by 2025. Save the Children will help us in delivering Our reporting We committed to source 100% cane sugar the expected results moving forwards. from sustainable sources by 2020 and we In addition to activities in our raw achieved this goal a few months ahead materials supply chains, we continue to of schedule. potentialise our societal impact through We are now working to produce raw social responsibility projects alongside materials charters to go beyond what our value chain. These include the we are already doing for each of our main Ferrero Foundation, Kinder Joy of moving, raw materials – cocoa, hazelnuts, palm Michele Ferrero Entrepreneurial Project data Key oil, milk etc. The charters will set the way and activities of our businesses around forward and define our ways of working the world. These projects will continue to to cover key risks and opportunities for be part of our sustainability approach. each specific raw material spanning environmental protection, social issues and human rights, and traceability, auditing and transparency. Ferrero Group 14 Sustainability Report 2020

Building out our strategy continued

I Introduction n the coming months, we will Developing the sustainability framework engage the global leadership team to identify and validate sustainability key issues as part of our materiality assessment Our Sustainability Framework validation to shape our new strategy. Protect the Source ingredients Promote responsible Empower approach Our sustainability he new strategic framework will environment sustainably consumption people focus on the four pillars set out last We are committed to managing and We are focused on building a thriving We strive to offer products of the We will continue to develop and year with detailed plans and targets reducing our environmental impacts. supply chain that empowers farmers highest quality and freshness motivate our people and focus informed by a renewed materiality We are driving environmental and their communities and protects and always endeavour to on strengthening diversity and T efficiency in our operations and people and the environment. communicate responsibly. inclusion across the business. assessment and driven by a robust new supply chain, reducing emissions and governance structure. water consumption, and increasing the circularity of our manufacturing Ambitious commitments under each and packaging. strategic pillar will be delivered through and performance Our progress key enablers: – We will work in partnerships to scale our initiatives and drive transformation in the confectionery sector and across global supply chains. – We will harness the power of technology FOR THE and innovation to achieve our goals and BETTER Our reporting increase transparency. – We will continue to use certification to provide assurance of our sustainability impact and that of our supply chain. Strong governance is the foundation to build a resilient and successful organisation Partnerships Technology Certifications in which sustainability is embedded at all levels. data Key

For more information on sustainability Governance structures, policies and processes governance at Ferrero see page 85 Ferrero Group 15 Sustainability Report 2020 Introduction

Our progress approach Our sustainability

and performance and performance Our progress

Protect the Source ingredients Promote responsible Empower 1 environment 2 sustainably 3 consumption 4 people Our reporting How we protect the environment 17 How we source How we promote How we empower people 67 Climate action 19 ingredients sustainably 32 responsible consumption 58 Engaging our people 69 Energy 21 Cocoa 35 Products and ingredients’ Diversity and inclusion 70 safety and quality 59 Water 22 Hazelnuts 41 Continuous learning 71 Quality and safety of our Surprises 61 Waste 23 Palm oil 47 Employee rights 73 Nutrition 62 Compliance and certification 24 Milk and eggs 51 Health & safety and wellbeing 74 Responsible communications, Sugar 53 data Key Logistics 25 marketing and labelling 64 Human rights 77 Packaging 26 Shea and Sal 55 Ferrero Foundation 78 Soy Lecithin and Paper 56 Michele Ferrero Entrepreneurial Project 79 Kinder Joy of moving 80 Ferrero Group 16 Sustainability Report 2020 Introduction approach Our sustainability

Protect the environment and performance Our progress

We are committed to managing and reducing our environmental impacts. We are driving environmental efficiency in our operations Our reporting and supply chain, reducing emissions and water consumption, and increasing the circularity of our manufacturing and packaging. 1 data Key Ferrero Group 17 Sustainability Report 2020

How we protect the environment

Our Corporate Environmental and Introduction Why does it matter? Our approach Energy Policy and Supplier Code set MANAGING THE IMPACTS OF ACQUISITIONS A resilient and healthy planet is crucial Our strategic approach applies a out our commitments to protecting the We gained nine additional plants through for sustaining the ingredients and precautionary principle to managing risks environment, supported by detailed our recent acquisitions and we are commodities we depend on. However, the and opportunities that arise through our operational procedures. Key elements of working to embed them within the scope consequences of human consumption and direct operations, ensuring we do not harm our approach include compliance with of our reporting. Since last year, three new rising demand for energy, land and water the environment or people. legislation, certification of plants, robust plants have been added to the reporting are having a major impact on the planet. data collection and monitoring, and We consider the climate impacts of our scope: Walkerville (Ferrero South Africa) investment in technology to reduce our Action on climate change is crucial to the products and packaging across the and the acquired plants Bloomington approach Our sustainability operational impacts. future of society and it connects many entire value chain and focus on the areas and Franklin Park (former Nestlé U.S. areas of environmental management where we have the greatest opportunity Our plants define local action plans in chocolate confectionary business).1 across the value chain – from energy, to achieve meaningful change. We also line with corporate guidelines and local water and waste to biodiversity and the manage the environmental impacts of context. The Central Direzione Operations transition to a circular economy. sourcing the raw materials we use to

Sustainability, Environment and Energy make our products as described in the (DOSEE) function works closely with local Our environmental impacts arise Sourcing Ingredients Sustainably chapter Industrial Sustainability, Environment and through our manufacturing operations,

of the report. Energy (ISEE) managers to drive engagement and performance Our progress the resources we use for our products and increase capabilities and best-practice and packaging, and their end of life Our key focus areas for managing the sharing. ISEE Managers oversee local management. As our materiality direct impacts of our operations are: environment management and are the focal assessment shows, climate action, Climate action – reducing our carbon point for environmental topics at plants. packaging and the circular economy are footprint by driving down GHG emissions Bloomington plant among our top rated material issues. We support the transition to a circular across our operations and value chain economy and are working to ensure Energy efficiency – reducing the amount our packaging is reusable, recyclable or

of energy required for our operations compostable. The Direzione Packaging Our reporting Unit (DPU) department works on our Water stewardship – responsible water packaging from concept design to the final use in our production processes, reducing industrialisation process, including display our water consumption and managing and point of sales materials. We use a data- wastewater discharge based approach to design and develop our Packaging and circular economy – packaging – identifying the best materials, Walkerville plant supporting the transition to a circular minimising impacts and communicating economy in which packaging and the clear information about safe disposal. Key data Key residuals from manufacturing never LifeCycle Assessment (LCA) enables us to become waste or pollution. link environmental aspects – such as use of natural resources and air emissions – to 1 The following plants are currently excluded from the their impacts, ensuring improvements are scope of our environmental reporting: Cameroon meaningful across the whole product lifecycle. – Yaoundé (Ferrero – MFEP), USA – North Canton 2017 (Fannie May), Louisville 2019 (acquired from We have conducted the product LCA of all Kellogg’s), Florence 2019 (Kellogg’s), Augusta 2019 our main products, including their packaging. (Kellogg’s), Chicago 2019 (Kellogg’s), Spain – Alzira 2019 (ICFC), Italy – Castel d’Ario 2019 (ICFC). Ferrero Group 18 Sustainability Report 2020

How we protect the environment continued

RESPONDING Introduction TO THE COVID-19 PANDEMIC

While the pandemic did not cause

major disruptions to our operations or approach Our sustainability production at our plants, it did impact on energy, water and waste performance. The measures we put in place to guarantee safe working condition for employees caused an increase in energy consumption

and waste. Our energy consumption rose as we enhanced air exchange to avoid

recirculation and mixing between rooms, and performance Our progress along with UV-C lamp disinfection, more frequent cleaning and replacement of Air Handling Units filters. These measures will continue until conditions can be returned

to normal. Plants recorded an increase in specific waste categories linked to virus protection measures such as masks, gloves and plastic bottles used for sanitiser, etc. Our reporting Reduced employee presence within the plants partly offset impacts on our environmental performance. In addition, activities in office, business travel and visits by external parties were suspended. External audit activities on our manufacturing plants were mostly performed remotely so that ISO 14001 and Key data Key ISO 50001 management systems could be kept under control. Ferrero Group 19 Sustainability Report 2020

Climate action

Climate change poses an In 2020, we announced a new set of WHAT WE HAVE ACHIEVED Introduction increasing risk all along our value science-based commitments for 2030 chain. Ferrero has been engaged which were validated by the SBTi in December 2020: We measure our Total Carbon Footprint to identify the impacts in climate action for decades and – Reduce absolute Scope 1 and 2 emissions of our activities and the areas with the greatest opportunity we are accelerating efforts with to reduce our emissions. specific science-based targets by 50% from a 2018 base year; to reduce our climate impacts. – Reduce Scope 1, 2 and 3 emissions intensity by 43% per tonne of product Scope 1 Scope 3 produced from a 2018 base year. Our short- to medium-term carbon Scope 3 emissions are the emissions for approach Our sustainability s an active leader in the food and reduction approach is focused on which we have indirect responsibility beverage industry, we play an We have developed a detailed roadmap to decreasing emissions from our own across our value chain, including raw important role in helping to meet reduce emissions from plants, warehouses operations which is the area of our carbon materials and packaging. In FY 2019/2020, A the goals of the Paris Agreement to and main offices to achieve the first footprint over which we have the most Scope 3 emissions totalled 6,023,579 limit average global temperature. We are target. It mainly focuses on levers such as direct control. Scope 1 emissions account tonnes of CO2eq equivalents and accounted committed to the Science Based Targets increasing energy efficiency and shifting to for 7.1% of the total. We are investing in for 91.2% of our total carbon footprint. initiative (SBTi) – a collaboration between renewable energy. energy-efficient technologies, increasing At 61.7%, the cultivation and production CDP, the United Nations Global Compact These plans are continuously evolving as production of on-site renewable energy, of agricultural raw materials is the biggest and performance Our progress (UNGC), World Resources Institute changes in local context influence how we improving energy efficiency and aiming source of Scope 3 emissions followed by (WRI) and World Wildlife Fund (WWF) will deliver our commitment, for example to use alternative sustainable fuels to packaging at 12.5% and logistics product to validate climate change goals in line developments in government policy and local generate energy. transportation at 6.8%. Because we do with climate science.

availability of renewable energy. Detailed not have direct control over many of these “zero emission” studies are underway at our Scope 2 activities, involving many stakeholders and Poços de Caldas (Brazil) and Arlon (Belgium) this part of our carbon footprint remains the Scope 2 emissions are the indirect plants to define the decarbonisation most challenging to reduce. It will involve WE CONGRATULATE FERRERO FOR emissions arising from purchased scenarios to reach the emissions targets. rethinking products and packaging and Our reporting electricity, heat and steam. They account engaging with suppliers to involve them SETTING EMISSION REDUCTION TARGETS For the second climate target, which for 1.7% of our total carbon footprint. in reducing emissions. Our current focus CONSISTENT WITH LIMITING WARMING also involves Scope 3 emissions, we are We can achieve positive impact by consists in understanding and assessing working together with our suppliers to reducing Scope 2 emissions in the short TO 1.5°C, THE MOST AMBITIOUS GOAL our suppliers' climate commitments and reduce emissions and rethinking solutions to medium term. We continue to increase OF THE PARIS AGREEMENT. BY SETTING emissions in order to establish a baseline with lower carbon impact. To reduce in the amount of renewable electricity and approach for future activities. TARGETS GROUNDED IN CLIMATE Scope 3 emissions, we aim to optimise purchased by our factories through green SCIENCE, FERRERO IS POSITIONING supply chain logistics while supporting certification mechanisms and, where

THEMSELVES AS LEADERS IN THE the continued growth in quantity and size feasible, Power Purchase Agreements data Key FOOD AND BEVERAGE PROCESSING of shipments to the market. Our strategy (PPAs). is focused on network and saturation SECTOR FOR THE TRANSITION TO optimisation, decarbonising fleets A NET-ZERO ECONOMY. and shifting to intermodal solutions. At distribution centres, the opportunities Cynthia Cummis, Director of Private Sector Climate include renewable and efficient energy use Mitigation at World Resources Institute, one of the and internal and network optimisation. SBTi initiative partners Ferrero Group 20 Sustainability Report 2020

Climate action continued

Our performance MEASURING AND MONITORING Introduction Scope 1 and 2 emissions remained Emissions FY 18/19 FY 19/20 constant in absolute value versus the The journey towards reaching our previous year even considering the GWP Emissions TOTAL (Total Scope 1 + Scope 2 Market environmental goals (packaging and inclusion of three new plants in the based + Scope 3) tCO2eq. 6,500,552 6,601,490 climate) is constantly evolving so it perimeter. Our Scope 1, 2 and 3 emissions is crucial to approach it strategically, GWP Scope 1 Emissions – Total emissions tCO2eq. 469,556 466,715 have decreased by 4.8% in intensity. supporting decisions with timely and GWP Scope 2 Emissions – Market based tCO2eq. 116,838 111,196 reliable data. approach Our sustainability

GWP Scope 2 Emissions – Location based tCO2eq. 264,863 288,442 We collect a significant amount of information on our entire value chain – GWP Scope 3 Emissions – Total emissions tCO2eq. 5,914,157 6,023,579 key ones being operations, logistics, raw materials and packaging – from a number of internal and external stakeholders. In FY 2019/2020 we developed a dedicated IT platform that simplifies the whole process. Artificial Intelligence (AI) data is constantly collected from multiple and performance Our progress sources, bots support users by performing automated checks – drastically reducing Scope 1 the time required and improving reliability. The results are then aggregated in a 7.1% Scope 3 solid data pool and made available to all relevant internal stakeholders allowing 91.2% 61.7% internal reporting, external reporting,

performance tracking and support to Our reporting 1.7% Raw strategic long-term decision making. materials

Scope 2* Other**

7.2% Key data Key * Market-based Scope 2 emissions. 3% **  Employee Travel – Waste and auxiliary products – Capital goods – Leased assets – Downstream transportation and distribution – Surprises*** 6.8% 12.5% End of life treatment of solid products. *** Emissions are linked to production hubs that deliver KINDER® Surprise products to Ferrero plants, including materials, moulds Supply chain (logistics Packaging product transportation) and transport of the Surprises. Ferrero Group 21 Sustainability Report 2020

Energy

We invest in modernising our facilities Introduction Energy efficiency is fundamental More than 20% of the total capacity of our and implementing new technologies to WHAT WE HAVE ACHIEVED to achieving our carbon reduction own energy generation plants is now fed increase energy efficiency in production. goals and is central to our In FY 2019/2020, we increased our energy with renewable sources. Investments over the years have included efficiency by 1.8% and established a central responsible consumption of replacement of burners, improvement We are on a journey to source 100% CapEx programme dedicated to reducing natural resources. of machines’ thermal insulation and the green electricity for our plants. our carbon footprint. Every year, funding installation of heat recovery systems and high- Despite a 7% increase in total electrical will be centrally allocated to support carbon he International Energy Agency’s efficiency motors. Additional improvements energy consumption due to the perimeter (IEA) Energy Efficiency 2020 report reduction projects across plants, in addition

to production infrastructure include ovens extension compared to FY 2018/2019, the approach Our sustainability to local investment. highlights global investments in with scheduled switch-off, use of efficient renewable share increased to 43%, up 4% T energy efficiency projects have water pumps and installation and automation We have targeted investments towards from previous year. Our plant at Manisa been decreasing since 2015 and progress of high-energy efficiency refrigeration units, increasing production of on-site renewable (Turkey) purchased renewable energy from has been hampered by Covid-19. This is compressors and air conditioning systems. energy and use of alternative sustainable the grid throughout in FY 2019/2020 and a concern as under the IEA’s Sustainable Energy efficiency improvements to lighting fuels. In FY 2019/2020, we self-produced Bloomington and Franklin Park (U.S.) Development Scenario, energy efficiency systems involving the installation of new LED 46.2% of the electricity and 97.2% of the did so from January 2020. At the end of should deliver more than 40% of the technologies have delivered further reductions. thermal energy used in our operations. FY 2019/2020, 14 Ferrero plants were reduction in energy-related emissions over This year we installed photovoltaic plants sourcing 100% renewable electricity,

As we move ahead, we will identify and and performance Our progress the next 20 years. at four locations: Alba (Italy), Baramati accounting for around 71% of the electricity target energy efficiency investments in our (India), Pozzuolo Martesana (Italy) and we purchased for all our manufacturing sites We invest assets and projects through a newly acquired businesses. central CapEx programme to optimise our Quito (Ecuador), adding more than worldwide. Vladimir (Russia) and Poços operations according to the best available 1 Megawatt (MW) to the total power de Caldas (Brazil) are switching to 100% techniques. Projects are identified through installed across our plants. purchased renewable electricity in 2021. scientific assessment and engagements 71.5% 100% such as energy audits, technical assessments, employee workshops and of the purchased electricity green electricity for our manufacturing purchased for Our reporting best practices shared through our monthly In September 2019, we completed plants comes from our European sustainability meetings, internal auditors the installation of a 700 kWp solar renewable sources manufacturing plants photovoltaic system on the roof of our and energy experts. (FY 2018/2019: 64%) GOING SOLAR Baramati plant’s warehouse in India. IN INDIA The project increased the total photovoltaic Energy efficiency in operations capacity installed on-site to 2.5 MWp. We have focused on technical and Manufacturing The plant covers an area of about 7,000 behavioural improvements to reduce Full Scope1 plants only square metres and generates energy equal to about 970 MWh per year – equivalent our energy consumption in operations. FY 18/19 FY 19/20 FY 19/20

to the energy required to meet the daily data Key Green energy Investments in training and awareness 19.0 20.5 20.7 needs of approximately 900 households. raising, best practice sharing among consumption (%) 100% of the energy generated by the solar plants and continuous energy efficiency Purchased system is consumed by the factory which will electric energy 63.7 68.3 71.5 deliver an annual reduction of around 1,250 improvements are delivered under the certified tonnes CO2. framework of ISO 50001 certification and renewable (%) Energy intensity are central to our approach. 8.40 8.26 8.19 ratio (GJ/t) 2 ICFC plants (Alzira and Castel d’Ario) are out of the Photovoltaic plant in Baramati reporting scope of this Report. Both plants purchased 1 Full Scope includes manufacturing plants and warehouses. 100% renewable electricity. Ferrero Group 22 Sustainability Report 2020

Water

Water sustains life and secure Water consumption Reuse and recycling WHAT WE HAVE ACHIEVED Introduction access to healthy, clean water is a We began carrying out water audits at We continue to investigate and promote basic human right. As a company, our plants in 2018 to identify opportunities opportunities for water recycling and reuse Considering our manufacturing sites we take a responsible approach for improvement and efficiencies. In 2019, within our production and our utilities only, our water consumption ratio for to caring for local communities we further developed our water scarcity processes. For example, when replacing FY 2019/2020 was 4.18m3 per tonne. risk assessment in collaboration with the cooling towers, a main area of water use by ensuring our operations don’t Water intensity decreased by around Polytechnic University of Turin (Italy) to in our factories, we evaluate options such 4% on the previous year, despite the adversely impact the supply and refine the methodology for determining as of dry/adiabatic technologies that extension of the data perimeter with quality of local water resources. water availability and risk in the areas pre-cool incoming air and reduce water the inclusion of Bloomington, Franklin approach Our sustainability where our manufacturing plants are consumption. Where we use wet cooling Park (USA) and Walkerville (South Africa) ur long-term success depends located. In FY 2019/2020, we started using towers, we install treatments such as plants. This trend is mainly due to projects on having sustainable access to the tool which includes a water dashboard softening and reverse osmosis to enable and initiatives in our plants such as water in the areas where our raw for internal benchmarking and to identify water reuse. condensate recovery and installation of materials are sourced, our factories new opportunities for improvement. O One of the challenges we face is balancing adiabatic cooling towers. Many factories are located and our stakeholders live. the trade-offs of different activities have addressed commitments to improve While our products are not water intensive, Wastewater treatment designed to deliver improvements in the cleaning processes from a technological

our operations require a steady supply of and performance Our progress We treat the water used in our production sustainability of our operations. We adopt point of view while delivering water water for operational purposes such as processes in wastewater treatment plants a holistic approach when we assess savings (see case study “Improvement cooling and washing. – either municipal or our own plants. investment decisions to consider all of cleaning processes”). With climate impacts increasing Our aim is to reduce pollutants in our impacts including energy, CO2 emissions, Our wastewater ratio for FY 2019/2020 pressure on water resources, especially wastewater by finding alternative or more water and waste. decreased compared to the previous year, in water stressed areas, we pursue efficient washing methods and using more mainly due to further improvements on efficient use of water resources in our ecological products, sharing this approach internal wastewater treatment plants production processes. Our factories with our suppliers. and reduction in water consumption. set local targets on water consumption Our reporting consistent with a Group long-term view One of opportunities we have to reduce Manufacturing Full Scope1 plants only on water stewardship and reducing water consumption at our plants lies in water consumption. IMPROVEMENT OF optimising washing cycles and processes. FY 18/19 FY 19/20 FY 19/20 Some plants, such as Pozzuolo Martesana Water (Italy), have launched programmes aimed at consumption 5,330,059 5,450,191 5,417,347 (m3) CLEANING PROCESSES improving Cleaning in Place (CIP) systems – the automated systems that clean our Water manufacturing equipment. After a dedicated consumption 4.38 4.20 4.18 ratio (m3/t)

technical check on the current situation, a data Key Wastewater list of possible technical improvements was 3,367,387 3,391,409 3,360,181 -4.3% defined. The plant started carrying out those (m3) actions aimed at optimising washing cycle decrease in water intensity in timings and washing efficiency. This has 1 Full Scope includes manufacturing plants and warehouses. our manufacturing plants and allowed Pozzuolo plant to save more warehouses compared to last year than 4,000 m3 of water annually, helping the plant to achieve its own yearly water Pozzuolo Martesana plant consumption target. Ferrero Group 23 Sustainability Report 2020

Waste

Waste management is a global ur main waste streams from our WHAT WE HAVE ACHIEVED Introduction issue which has local impacts operations are paper, plastic, cardboard and the organic waste and cost implications for our Considering our manufacturing sites Four factories have achieved 100% O that arises from making our only, the waste ratio recorded by the recovery: Baramati (India), Bloomington business. Reducing waste products. We follow the waste hierarchy Group decreased from 77.6 kg/tonne (USA), Cork (Ireland) and Hangzhou through prevention, reduction, principles in our management approach in FY 2018/2019 to 71.5 kg/tonne in (China). Another six production sites reuse and recycling is crucial to – eliminating and reducing waste and FY 2019/2020. This decrease was mainly reached a recovery rate higher than prioritising recycling and reuse. a circular economy. We see waste due to waste reduction projects, namely 99%: Alfreton (UK), Arlon (Belgium), materials as a valuable resource Our operations set local waste efficiency improvements to production Franklin Park (USA), Pozzuolo M. (Italy), approach Our sustainability and aim to keep them in use for management reduction targets and lines and increased reuse of wooden Stadtallendorf (Germany) and Villers- as long as possible to reduce commit to zero waste to landfill. We are pallets and cardboard. In some cases, local Écalles (France). environmental impacts and constantly exploring new ways to use legislation allowed us to upgrade previous our waste materials in collaboration with waste materials to by-products. Manufacturing conserve natural resources. Full Scope1 plants only

suppliers and other industry sectors, for We succeeded in reducing our waste example through the upgrade of waste FY 18/19 FY 19/20 FY 19/20 in absolute terms by almost 6% despite materials to by-products that have value Waste the extension of the data perimeter, the production 82.2 72.9 71.5 in other applications. and performance Our progress impact of new products and installation ratio (kg/t) of additional production lines at some Total waste (t) 99,988 94,553 92,794

plants. Our waste recovery rate remained Percentage constant at 96.6%. This was achieved of recovered 96.8% 96.1% 96.6% waste >99% through better waste separation at plants 10 of our production plants reached a waste recovery and engagement with suppliers to find 1 Full Scope includes manufacturing plants and warehouses. rate higher than 99% more sustainable treatment solutions. Our reporting Waste management hierarchy Our Poços de Caldas plant (Brazil) has adopted strategies to reduce its waste GOOD RESULTS FROM impacts by collaborating with waste Reduction/Prevention Lowering the amount of waste produced suppliers, improving processes and raising employee awareness. EFFECTIVE WASTE Local campaigns have enabled the reuse of Reuse Using materials repeatedly 100 tonnes of wooden pallets and 40 tonnes of MANAGEMENT cardboard. Plastic waste has also been reduced in the office by handing out reusable cups and Key data Key Recycle Using materials to make new products flasks to employees. The plant increased its waste recovery rate by eight percentage points in FY 2019/2020, from 89% to 97%. This was Recovery Recovering energy from waste achieved by working with waste treatment providers to identify waste streams and local facilities and by finding opportunities to shift Landfill Safe disposal of waste to landfill to more sustainable treatment processes (e.g. canteen waste sent to composting). New waste storage area in Poços de Caldas plant Ferrero Group 24 Sustainability Report 2020

Compliance and certification

Compliance with applicable ISO 14001 and ISO 50001 certification Introduction environmental and energy laws, regulations and site permits is fundamental to our success and helps to drive continuous improvements and transparency across our operations. approach Our sustainability e are committed to implementing and maintaining multi-site certification, compliant with W ISO 14001 and ISO 50001 for environmental and energy management standards. Our Environmental Management System (EMS) has been certified in compliance with ISO 14001 since 2012. and performance Our progress At the end of FY 2019/2020, 21 of our factories and all warehouses directly managed by Ferrero Group were certified Countries with certified factories and warehouses according to the ISO 14001 standard. As per (ISO 14001/ 50001 or our medium-term plan, we will extend the ISO 14001) ISO 14001 certification to Alfreton (UK) and Ferrero factory planned Walkerville (South Africa) plants in 2021. to be certified

Franklin Park and Bloomington plants Our reporting (USA), both independently ISO 14001 certified, will be included in our Group multi-site certificate in the coming years. We committed to achieve Group Operations audits and compliance Due to pandemic travel restrictions, many certification against the ISO 50001 All operations plants are periodically internal audits were carried out remotely. standard for energy management for audited to verify compliance with the The programme of on-site cross-audits will 17 production sites active in August 2014. four-pillar standard within the SMETA be resumed as soon as possible. With the addition of Baramati (India), data Key audit approach – a methodology using La Pastora (Argentina), Quito (Ecuador) best practice ethical audit techniques to and San Josè Iturbide (Mexico), 19 plants help auditors conduct high quality audits were ISO 50001 certified as of August that encompass all aspects of responsible 2020, exceeding the original target. business practice. The approach covers The full list of manufacturing plants the four pillars of labour, health and safety, can be found on page 5 environment and business ethics. Ferrero Group 25 Sustainability Report 2020

Logistics

We aim to optimise supply chain Introduction logistics to reduce emissions while supporting the continued growth in quantity and size of shipments to the market.

errero Logistics is responsible for approximately 7% of total value chain approach Our sustainability CO2 emissions. We are committed F to reduce the environmental impact of logistics in line with our SBTi targets, including Scope 1, 2 and 3 (see page 19). Measuring performance and creating granular transparency across logistics operations is key to identifying the

activities that have the greatest impact and performance Our progress and potential to help deliver our climate change targets. Our strategy for reducing emissions from logistics will be deployed through a number of levers across transport and distribution centres: Transport – network and saturation optimisation, decarbonising fleets and REDUCING EMISSIONS Our reporting shifting to intermodal solutions FROM LOGISTICS Distribution centres – renewable and efficient energy use, internal process and network optimisation. To reduce the impacts of logistics, we The method considered “well-to-wheel” require granular information that provides information covering the entire flow of energy transparency over the impacts and using a Global Logistics Emissions Council

opportunities for improvement. (GLEC)-certified measuring tool. By tracking data Key In FY 2019/2020, we carried out a pilot GHG emissions and generating detailed project in four regions to increase end-to-end region, lane and yearly overview reports, visibility using specific logistics and shipment we were able to identify opportunities for information and calculations. improvement. We will continue to expand the scope of the project and automate data collection to optimise the network and share knowledge internally. Ferrero Group 26 Sustainability Report 2020

Packaging

Packaging is an essential enabler Our approach Introduction to deliver an outstanding taste Our roadmap to 2025 Offering the highest-quality products is a performance for consumers. key pillar of the packaging design process. It also ensures food safety and Consumer safety and product quality 1 quality, reduces food waste remain at the centre of our decisions when Existing packaging development and redesign: we design and develop our packaging. and communicates transparent Evolving our packaging to ensure recyclability, Increasing the circularity of our packaging information to consumers. compostability and reusability through alternative is the second pillar. We use fact-based

The design and development of our materials and packaging redesign. data and invest time and resources approach Our sustainability packaging is central to the transition Read the case study on page 27 in testing, exploring and developing towards a circular economy where opportunities to increase circularity in packaging. packaging never becomes waste. 2

Reusable means packaging has been ustainable packaging is a key R&D and Open Innovation: designed to accomplish a minimum topic for our business and our Reimagining packaging by leveraging stakeholders. As part of our support new technologies and global partnerships, number of trips or rotations in a system S for the circular economy, we maximising use of recycled materials where for reuse so that it is refilled or used for the and performance Our progress announced a commitment to make 100% it is safe for consumers and exploring same purpose for which it was conceived. compostable materials. of our packaging to be reusable, recyclable Recyclable means packaging has been or compostable by 2025. Read the case study on page 28 designed to be successfully collected after

We signed the Ellen MacArthur Foundation’s 3 use, sorted and recycled – in practice and at scale. Recycling is a manufacturing New Plastics Economy Global Commitment Partnering with recyclers and national in 2019 and became members of the Ellen waste management systems: process used to obtain secondary MacArthur Foundation’s New Plastics Developing solutions for hard-to-recycle (recycled) raw material. It excludes energy Economy Initiative in 2020, reflecting materials and exploring opportunities to recovery and the use of packaging as Our reporting our ambition to play an active role in use packaging waste as a resource. a fuel. eliminating problematic and unnecessary Read the case study on page 29 Compostable means packaging has been plastic packaging through redesign designed to be successfully collected after and innovation. 4 use, sorted and composted – in practice We face some challenging years ahead as and at scale. Compostable packaging Educating consumers for a successful is made of materials which biodegrade we work to deliver this step change and transition to a circular economy and bring new sustainable packaging designs under specific or controlled conditions e.g. actions to eliminate waste: Using the power data Key to market, especially across our recent of our brands to share knowledge and tools, forced aeration, temperature, etc. acquisitions. Projects require investment offering recycling tips, upcycling opportunities in R&D and packing lines and finding the and clear end of life information. right solutions takes time. We are fully Read more at Protect the environment | committed to the investments required Ferrero Sustainability in our packaging lines and equipment to achieve our commitment for 2025. Ferrero Group 27 Sustainability Report 2020

Packaging continued

Evolving our packaging To reach the goal of 100% of our packaging Introduction We use around 39% glass and 37% portfolio being reusable, recyclable or THE NUTELLA paper and cardboard in our packaging, compostable, our packaging designers followed by 17% rigid plastic, 5% flexible are carefully selecting and combining REUSABLE JAR plastic and 3% other materials, such as materials so that the final packaging can metals and wood. When considering the be successfully disposed of, collected, whole lifecycle of our products, packaging sorted and reprocessed. contributes 12.5%6 on average to our We have been working to our 5Rs overall CO2eq emissions. guidelines for many years and have approach Our sustainability We must take a balanced view when achieved a rich pipeline of projects to assessing the impacts of our packaging. remove unnecessary packaging, reduce The food waste that would occur if packaging weight and promote reuse of products were not properly protected our packaging.

by packaging could generate much Read more about our 5Rs guidelines higher environmental impacts than at Protect the environment | Packaging the packaging itself. Ferrero Sustainability and performance Our progress

6 Data has been calculated based on the lifecycle of Ferrero main products (excluded products with Surprises).

Materials used for Packaging Applications (2019-20) Reuse can change the way we think about It meets all the criteria for reuse such as being packaging as a high-value asset that can durable, safe, hygienic and featuring a label Metals benefit consumers, our business and the and seal that can be easily removed during the

1% Other Our reporting planet. According to the Ellen MacArthur wash cycle. Flexible Plastic 1% Foundation, reusable packaging plays the The resulting packaging features include: 5% most virtuous role in the transition towards a circular economy. – embossing on the front of the jar to remove the paper label and enhance the uniqueness Rigid Plastic We have partnered with Loop, a TerraCycle of the jar with a special design; 17% company leading on return and reuse and systems, to pilot a reuse business model for – a wash-off label on the back of the jar, Nutella. In 2020, Nutella joined forces with reporting nutrition information and other Glass Loop and Carrefour to launch a pilot scheme essential information, which is easily released 39% in the Paris region of France. Shoppers can during the washing process, removing all Key data Key purchase a specially designed reusable glue residual from the glass; and Nutella jar for which they pay a deposit. – an induction sealing system applied to the Empty jars are collected for washing and rim of the jar to avoid glue residuals and returned to the Ferrero plant to be refilled and facilitate the washing of the jars. Paper and Board put back into the loop for repurchase. Our in- 37% house design team worked closely with Loop’s experts to develop the new jar. Figure 1 – Materials used for packaging applications (FY 2019/2020. Includes food packaging and surprise packaging. Data from plants acquired in 2018 (Bloomington and Franklin Park – USA) are included in this analysis). Ferrero Group 28 Sustainability Report 2020

Packaging continued

Our performance For glass and plastics, we aim to maximise Introduction In FY 2019/2020, 82.9% of our packaging recycled content according to regulatory was recyclable, reusable or compostable, frameworks and supply chain availability. 8 ULTRATHIN up from 81.7% in FY 2018/2019. We use over 33% recycled glass in our ® This included glass, paper, cardboard, Nutella jars. We plan to use at least FLEXIBLE FILMS aluminium, wood, some plastic packaging 50% of recycled PET in all of our PET and other materials used for both food and bottles by 2025, with the first range of surprise packaging applications.7 products with recycled PET on the market

in 2021. When it comes to paper-based approach Our sustainability We aim to use recycled materials in our products, where we cannot use recycled packaging where regulations, quality paper for safety reasons our sourcing requirements and technology allow. This is strategy ensures we use only virgin already the case for glass, aluminium, paper and cardboard from sustainable plastic and paper materials for selected certified sources. applications. Recycled aluminium is widely used in all aluminium cans. and performance Our progress FY 19/20 (extended Packaging FY 18/19 scope)9

Recycled materials in packaging 34.2% 34.6%

Renewable materials in packaging 36.9% 36.5%

Reusable, compostable or recyclable packaging 81.7% 82.9% Our reporting Flexible films are an ideal packaging 20% thickness reduction versus standard material for many food applications films. The first ultrathin flexible films with because they offer excellent barrier reduced environmental impact will be properties and are very lightweight. implemented on selected products, including Maintaining barrier properties is an KINDER® Bueno, starting in 2022. This will important priority as materials need lead to an annual reduction of about 550 to guarantee quality and protection tonnes of materials and about 1,450 tonnes throughout handling and transport. of CO2 equivalent. The benefits will increase as the new packaging material is rolled out to We have been working to adopt mono- other products in the coming years. material flexible packaging in line with data Key design guidelines that enable greater recycling. We decided to go further by reducing the amount of material as well as improving recyclability. In close 7 Data from plants acquired in 2018 (Bloomington and Franklin Park – USA) are included in this analysis. collaboration with leading-edge upstream 8 Average annual recycled content referred to glass used in jars, calculation based on information provided by suppliers, our packaging team developed a packaging suppliers. material for direct food contact with around 9 Data from the 21 plants analysed in 2020 and plants acquired in 2018 (Bloomington and Franklin Park – USA) are included in this analysis. Ferrero Group 29 Sustainability Report 2020

Packaging continued

Partnerships and collaborations Introduction In 2020 we launched two strategic collaborations with To achieve our packaging commitments, 4evergreen and with the Coalition of Action on Plastic Waste. we will need to engage with actors across the packaging supply chain – from municipalities and recyclers to suppliers and consumers. Our network of collaborations is rapidly expanding to include strategic alliances, technical partnerships and communication/ approach Our sustainability education initiatives. 4evergreen – a cross-industry alliance Coalition of Action on Plastic Waste – Our packaging team contributes expertise aiming to optimise the circularity of under the Consumer Goods Forum (CFG), to technical working groups to support the fibre-based packaging and reduce its the Coalition of Action on Plastic Waste harmonisation of eco-design guidelines, environmental impact. 4evergreen enables includes 40 member companies committed development of new materials and cooperation between companies along to stopping plastic waste ending up in technology, and new test protocols for the the entire value chain – from brand owners nature – both land and sea. To achieve recyclability of materials that are relevant to material suppliers and recyclers. this goal, Ferrero is contributing to to our current and future projects. Members aim to raise the recycling rate of three workstreams: and performance Our progress fibre-based packaging to 90% by 2030. Design for recycling: aims to align a critical 4evergreen put in place four work streams mass of companies behind common with relevance for Ferrero: packaging design guidelines and principles – development of harmonised test for flexible and rigid materials. protocols for the assessment of fibre- Extended producer responsibility (EPR): based packaging recyclability; aims to promote industry view on EPR – development and alignment of design

programmes and the adoption of an Our reporting guidelines for fibre-based packaging; aligned framework for efficient, effective – boosting collection and sorting of fibre- and sustainable EPR schemes. based packaging; and Chemical recycling: aims to scale up – development of sorting and recycling alternative processes to complement technology with a focus on innovative mechanical recycling, especially for flexible materials as paper materials replace packaging, engaging key stakeholders to some plastic applications offering new ensure broad support among investors and

barriers and enhanced properties. upstream suppliers. data Key Ferrero Group 30 Sustainability Report 2020

Packaging continued

Engaging with consumers The labelling system also indicates Introduction Consumers have a central role to play to the consumer where to dispose of in making packaging more circular. the packaging after use. We always Providing clear information on how recommend checking local municipality collection systems work and how they instructions in case of specific sorting can help keep packaging materials rules. We are monitoring regulations that circulating in the economy as resources aim to harmonise labelling systems across – not waste – is key. countries. Where well established end-of-

life packaging labelling systems exist, we approach Our sustainability Through our known and trusted brands, endorse these systems. We consult local we aim to play a relevant and educational labelling systems, such as the On-Pack role in sharing knowledge and tools so that Recycling Label scheme (OPRL) in UK, everyone can contribute to the transition how2recycle in USA, the Australasian towards a circular economy. Our end use Recycling Label (ARL) in Australia label informs consumers about which and New Zealand when developing material the packaging is made of so that our approach. it can be easily collected for sorting after and performance Our progress use. We do this through simple pictograms Read more about engaging consumers on the label. on Nutella Jar recycling SIMPLIFYING THE KINDER® CHOCOLATE WRAPPER

PP 5 PAP 21 C/PAP 82 GL 70

A key focus of packaging We are in the process of removing The combination of the two films Our reporting reduction is on reducing a packaging component from the has allowed us to maximise consumption of resources wrapping of KINDER® Chocolate product quality, improve packaging and enabling recycling to in Central and South America, aesthetics and deliver packaging alleviate pressure on current while still delivering the required line efficiencies. We have achieved PLASTIC PAPER C/PAPER GLASS recycling infrastructure. quality and protection standards the same results with a specially during handling and transport. developed mono-material wrapper KINDER® Chocolate used to be for KINDER® Chocolate which, packaged with an inner wrapper when rolled out, will deliver a and an outer wrapper made of two reduction of about 26 tonnes of

separate materials. packaging material per year. data Key Ferrero Group 31 Sustainability Report 2020 Introduction

Source approach Our sustainability

ingredients sustainably and performance Our progress

We are focused on building a thriving supply chain that empowers farmers and their communities and protects people Our reporting and the environment. 2 data Key Ferrero Group 32 Sustainability Report 2020

How we source ingredients sustainably

Why does it matter? Our approach Introduction Responsibly sourcing safe, high-quality Our approach to responsible sourcing is Responsible Sourcing strategy based on a Four Steps Approach: the higher ingredients is crucial to our products and embedded in the way we do business. the risk, the stronger the level of understanding and protection of the supply chain our stakeholders. The business benefits Responsible Sourcing is the way we of sourcing responsibly are clear – it helps build our supply chains across all our to ensure the high quality we are looking categories and this has become a non- Responsible Sourcing Approach for, reduces risk, drives innovation and negotiable requirement of the Procurement Risk Mitigation Programmes promotes transparency in our supply chains. Leadership at Ferrero. approach Our sustainability Responsible sourcing also benefits the Our approach to responsible sourcing Standards and Certifications farmers and communities we source from is built around a robust due diligence, – improving livelihoods, increasing financial supplier management, traceability Supply Chain Visibility resilience and addressing systemic issues and transparency, certification and Supplier Risk Management (Due Diligence) such as child labour and deforestation. standards, partnerships and collaboration.

Covid-19 disrupted global supply chains Building long-term relationships and and impacted communities world-wide, supply chain transparency is deep-rooted

with smallholder farmers particularly hard in our culture. And when we believe all and performance Our progress hit. The “stay at home” measures adopted of this is not enough, we invest in our to reduce transmission and protect the supply chains through targeted mitigation We are able to trace all our relevant When this is not enough, we invest directly. health of populations were not possible programmes to improve the environmental, raw materials back to origin (palm oil Our recent partnerships with Save the for a significant part of the population social and governance (ESG) conditions and cocoa are mostly traceable back to Children in Ivory Coast and Ghana, ILO in involved in sustaining global and national and the standards of the supply chain. plantation/farmer, while milk and eggs Turkey and Earthworm in South-East Asia supply chains. We acted quickly to support have a high level of traceability, which are a clear sign that the Group is selecting We don’t apply an “either-or” approach the health and livelihoods of farmers and will continue evolving). Most of our direct strategic partners to make a difference to to our categories and supply chains. suppliers. Case studies are provided for spend categories (raw and packaging the supply chains in which we operate. We increasingly cover all our sourcing Our reporting our three main ingredients throughout materials), follow strict sustainability categories with a “protection” approach this chapter. standards – for example RSPO for Palm that is based on the risk assessed for each Oil, independently managed standards sourcing category. All the suppliers of the like UTZ, Fairtrade for Cocoa, FSC/ PEFC Group across all spend categories (direct for our virgin paper, Bonsucro for our cane materials and/or services) need to undergo sugar. When we decide to embark on a a minimum level of due diligence and standard, we always aim for full coverage risk assessment. of our supply chain. Key data Key Ferrero Group 33 Sustainability Report 2020

How we source ingredients sustainably continued

Supplier risk management We work with the Supplier Sustainability Introduction and due diligence Assessment platform, EcoVadis, to run assessments and maintain Supplier management enables us to find transparency over our supply chain. ways to measure and improve supplier The EcoVadis Assessment Methodology practices. It includes risk and opportunities covers 21 criteria across the four analysis, compliance and improvement main topics of Environment, Labor & activities and capability building. Human Rights, Ethics and Sustainable

Our robust due diligence approach is Procurement Practices. approach Our sustainability designed to ensure suppliers are aligned As output of the Due Diligence process, with and adhere to the Supplier Code. we have run the first EcoVadis campaign It comprises three steps, which apply to the In August 2020, to assess 60 suppliers whole portfolio of suppliers of the Group: within Packaging, Supply Chain, General

1. Prioritisation to identify major risks Procurement and Technical Procurement based on ESG risk scoring purchasing categories: around 50 2. Supplier assessment suppliers completed the assessment

with an average score of ~42 out of 100, and performance Our progress 3. Verification and audit to monitor and in line with average EcoVadis score. mitigate high risk issues The second EcoVadis campaign launched Depending on the risk categories identified in January 2021 includes 224 suppliers and in step one, we may ask suppliers to it will continue until all high-risk suppliers provide certain assurances, standards or have been assessed with a minimum certifications or to undergo third-party audit Ecovadis score of 45 out of 100. Below this and/or other assessments such as risk and score, Ferrero will require them to carefully impact assessments to ensure they are follow a proposed remediation plan. Our reporting operating in line with our requirements. By August 2021, in total around 1,000 We are on a journey to assess and suppliers will be invited to undergo an prioritise all Ferrero suppliers using the EcoVadis assessment. due diligence approach. We are sending the Supplier Code and a responsible We also engage with selected suppliers, sourcing assurance questionnaire to all based on the initial risk assessment, prioritised suppliers to explore, request through the third-party audit management

and collect certifications and standards. Platform, Sedex. The SMETA (Sedex data Key Members Ethical Trade Audit) methodology The process started in July 2020 and in and platform, Sedex Advance, allows us August we had already enrolled around to request and verify social audit reports 300 suppliers. By the end of FY 2020/2021, from our suppliers covering four key areas: ~4,200 suppliers will undergo the process labour standards, health and safety, including all suppliers in raw material environment and business ethics. categories and mid-high risk suppliers in all other categories. Source: Ferrero Responsible Sourcing Dashboard Ferrero Group 34 Sustainability Report 2020

How we source ingredients sustainably continued

Traceability and certification Policies, certifications These charters set out the minimum Introduction requirements our suppliers must meet in IMPACT OF MERGERS AND ACQUISITIONS We can only meet our commitments to and standards full alignment with the Supplier Code and quality and responsibility if we know from For each business that becomes part We expect our business partners to uphold due diligence process and define which where our raw materials originate and of Ferrero Group, the first step is the our Code of Business Conduct and Human sustainability certifications and standards how they were produced. We source our investigation and establishment of Rights Policy Statement at all times. we require for that specific spend category raw materials from hundreds of thousands a transition roadmap toward overall The Ferrero Supplier Code, which contains including the level of traceability we aim of smallholder farmers and we need to Group responsible sourcing standards. the key pillars of the Human Rights Policy for (specifying adopted methodology engage them to understand the issues they The implementation of these actions Statement, was published in June 2020 and technology). In addition to this, the face, identify challenges and provide the is dependent on specific market and approach Our sustainability and engages suppliers on a journey of Charters outline the commitments the right support. supply chain conditions, including some continuous improvement through the due Group is willing to put forward to further enabler such as: traceability, segregation, Traceability is an essential building block diligence approach already described. improve the conditions of own supply chain certification and standards. of a fair and sustainable supply chain. The Code covers three pillars: human (“Going Beyond”). We expect our suppliers to support this rights and social practices; environmental For example, we extended our commitment by being transparent over protection and sustainability; and Mitigation programmes commitment to source 100% sustainable their own activities and those of their supplier transparency. delivered through partnerships cocoa sourced through independently supply chains. managed standards to the acquired

The Ferrero Supplier Code applies and collaboration and performance Our progress Fannie May and former Nestlé U.S. Farmer mapping is a tool for improving across all spend categories of the Group. Because some of the sustainability chocolate confectionery business traceability of raw materials like cocoa, It defines the minimum requirements challenges faced in different supply chains (see page 38). We are also providing palm oil and hazelnuts. Knowing the and expectations of Ferrero and must be are deep rooted and complex, we partner location and size of each farm makes it transparency over our newly acquired

acknowledged by each supplier engaging with NGOs, scientists, universities, local businesses to deliver our commitment to possible to trace raw materials to the in a commercial relationship with the and national authorities, peer companies, source only sustainable palm oil that is farm gate level. This allows us to know Group. This is a key condition for working industry bodies, suppliers and other certified 100% RSPO Segregated (see where, how and by whom our raw with us. stakeholders to achieve our ambitions. materials were grown so that we can page 49).

When we evaluate that due diligence, Our reporting target interventions, support sustainable In addition, we are developing Commodity Charters (e.g. the Hazelnut Charter and traceability and standards are not enough livelihoods and prevent risks such as to improve the “quality” of our supply deforestation, child labour and forced Palm Oil Charter) which vertically cover all Download our Human Rights chains, we invest directly together with Policy Statement labour. Certification schemes, when the Group requirements and commitments for a specific spend category, which we trusted partners to deliver impact on the available, are an additional lever to our ground: key partnerships are described for Download the Ferrero Code approach. They provide third-party will be continuing to develop in Fiscal Year of Business Conduct 2020/2021. each of our main raw materials throughout assurance that specific traceability this chapter. requirements and sustainability standards Download the Ferrero Supplier Code set by independent bodies have been met. data Key

Download the Ferrero Hazelnut Charter

Download the Ferrero Palm Oil Charter Ferrero Group 35 Sustainability Report 2020

Cocoa

errero recipes have strict What are the challenges? While the long-term impact of climate Introduction requirements when it comes to Cocoa farmers can face significant change on cocoa production remains Cocoa the origins of our cocoa. Today, we challenges when it comes to securing a uncertain, it is expected that increasing F source the cocoa used for Ferrero sustainable living. Poverty rates are high temperatures will impact cocoa Cocoa is a fundamental products from six origins. Ivory Coast and and the majority of small-scale cocoa productivity and quality, along with an ingredient in Ferrero products. Ghana are our two main sourcing origins, farmers earn an income that is below increase prevalence of pests and disease. complemented by Nigeria, Cameroon, the poverty line set by the World Bank. Changes in the suitability of current cocoa Our quality promise to Ecuador and Colombia. growing areas could pose a risk of further consumers drives us to specify Poverty is a significant driver of systemic

deforestation. Adaptation strategies, such approach Our sustainability One of the things that makes Ferrero issues in cocoa producing countries like as switching to Climate Smart Cocoa strict quality standards in how distinctive is that we source 75% of our Ivory Coast and Ghana including child practices (see page 40), planting shade we source and process our cocoa as raw beans which we process labour, forced labour and deforestation. trees and income diversification, can help cocoa. This has a direct impact in-house at our three processing plants. This is exacerbated by limited agricultural to reduce the impacts. on the sustainability of the cocoa This means we can produce the cocoa knowledge and poor access to equipment and resources.

butter, liquor and powder we require in the supply chain. Our approach right way, using our know-how to give our Child labour is a long-term systemic issue We are committed to actively contributing products their unique taste. Nutella, for among cocoa growing communities in

to a sustainable and responsible cocoa and performance Our progress example, contains only in-house processed Africa. The root causes are many and supply chain by working with all relevant cocoa powder. One of the key advantages complex. They include poverty, gender stakeholders. Our objective is to make is that it means almost 100% of our cocoa inequality, lack of awareness, poor access producing cocoa profitable and attractive beans are physically traceable from to education and lack of birth certificates farmer group level to plants. Also called for farmers while protecting the rights of which are required for children to children and safeguarding the environment “segregated”, we know where our cocoa attend school. beans come from and we can guarantee that cocoa farmers depend on for that this cocoa ends up in the products we Breaking the poverty cycle and making their income. bring to market. cocoa farming a profitable business is key We apply the Ferrero due diligence as Our reporting to driving sustainable, long-term change. a minimum requirement to all our Tier The cocoa beans we buy meet specific The focus needs to be on taking care of 1 suppliers; in addition we support the quality requirements, often surpassing today’s cocoa farmers and inspiring youth farmers and communities in our direct industry standards. When they are to become the cocoa farmers of the future. supply chain through our FFV Cocoa delivered to our manufacturing plants, It requires a multi-stakeholder approach Programme, an integrated approach they must pass meticulous quality checks that spans the entire cocoa supply chain. before being accepted and used in based on three pillars in total alignment our products. with the World Cocoa Foundation “Pathway Strategy” (1. Improving farmers’ Key data Key livelihoods 2. Protecting children’s rights 3. Safeguarding the natural capital). Implementing partners including direct suppliers, farmer groups and NGO partners such as Save the Children help deliver our objectives on the ground. Ferrero Group 36 Sustainability Report 2020

Cocoa continued

Historically, our responsible sourcing Introduction Ferrero Farming Values Cocoa Programme How much of our cocoa is certified? commitments have focused on sourcing our direct cocoa beans as sustainable and The three pillars Almost 10 years ago, Ferrero made a bold traceable. In 2019, we extended the scope commitment to source 100% sustainable of our commitment to include outsourced cocoa beans via independently managed chocolate. This means our commitment standards by the end of 2020. We have now covers the entire cocoa volume we made steady progress year-on-year. produce and buy. Improving farmer Protecting Safeguarding In FY 2019/2020, Ferrero sourced all of and community children’s rights the natural capital its cocoa beans, close to 144,000 metric For FY 2019/2020, we are reporting approach Our sustainability livelihoods tonnes, through leading certification progress towards sourcing the chocolate bodies and other independently managed used for our products as 100% sourced via standards. We reached our 100% target in independently managed standards for the August 2020. first time. By August 2020, 71% of our total

Long-term relationships with farmer groups – certified, mapped and traceable cocoa chocolate volume (almost 34,000 tonnes Extending our commitment in FY 2019/2020) was already covered. to outsourced chocolate As of January 2021, we achieved our goal

Ferrero has a strong focus on delivering Certification and traceability and all Ferrero products using outsourced and performance Our progress In terms of our overall cocoa supply chain, impact beyond its direct supply chain It is crucial that we deliver on our promise chocolate now contain 100% sustainable to contribute to positive change across Ferrero is distinctive in that the majority cocoa sourced via independently managed to consumers to provide products of the (75%) of our cocoa is sourced as raw cocoa the entire cocoa value chain. We are a highest quality and freshness, produced standards. Our investments in a chocolate long-time member of the World Cocoa beans which are processed in Ferrero- manufacturing plant in the U.S. will see the in a responsible way. We do this in three owned facilities and only 25% is supplied Foundation and the International Cocoa key ways: proportion of our cocoa sourced as raw Initiative. We are also a founding member as chocolate by third-parties. beans increase in the coming years. of the Cocoa & Forests Initiative. – Sourcing cocoa beans that are physically traceable to the farmer groups and that Read more about our new facility In 2020, we announced our intention to Our reporting are not mixed with non-certified cocoa in Bloomington, U.S. support two public-private initiatives from unknown sources. (PPIs), the Child Learning and Education Cocoa certification roadmap Facility (CLEF) and the Early Learning – Sourcing cocoa through leading and Nutrition Facility (ELAN) which aim certification bodies and other to promote quality education and early independently managed standards. childhood development for over 6 million – Collecting information and processing children in Ivory Coast. it with technology to map farms and 25% 50% 81% 100% sourcing areas so that we know their Key data Key location, size and productivity. We source our cocoa under different sustainability schemes including UTZ, Rainforest Alliance, and Fairtrade. August 2013 August 2016 FY 2018/2019 End of 2020 Ferrero Group 37 Sustainability Report 2020

Cocoa continued

RESPONDING Introduction TO THE COVID-19 PANDEMIC Supporting cocoa farmers An extensive support plan was launched with investment targeting farmers and during the pandemic approach Our sustainability communities in all six origins where we From a sourcing perspective, the impact source cocoa. Our focus was on education of Covid-19 on cocoa supply was limited. and safety, for example communicating We mainly buy cocoa beans from crops information on preventive measures, that are sourced from farmer groups distributing protective masks, soap and

between the months of October and handwashing stations and suspending March, so the beans were already activities involving large gatherings along purchased when major impact of the with the protection of field officers.

pandemic began and most of the volumes and performance Our progress were in warehouses or in transit to Ferrero We are proud of the support we have plants. With supermarkets remaining provided to communities together with our open, our products continued to be sold partners, but we know the pandemic is far and supply continued as normal relative from over. We continue to closely monitor

to impacts elsewhere. the situation in our cocoa supply chain so that we can take meaningful action again From our position as a company that when the situation calls for it. takes responsibility for the wellbeing of its

suppliers, Covid-19 had a serious impact Our reporting on the farmers and communities in our cocoa supply chain. As soon as the severity of the situation became clear, we took action and engaged with our suppliers, including through collective platforms like the World Cocoa Foundation and the International Cocoa Initiative, to identify

the challenges and needs of cocoa farmers data Key and their communities and develop action plans in response. Ferrero Group 38 Sustainability Report 2020

Cocoa continued

Improving traceability How much of our cocoa In total, ~92% of Ferrero’s cocoa volume Because cocoa doesn’t provide a year- Introduction We put robust mechanisms in place to is traceable? was sourced from dedicated Ferrero round income, we support farmers to farmer groups supported through Ferrero’s diversify through agroforestry and other follow our cocoa beans from the farmer In FY 2019/2020, 99% of our cocoa sustainability programme. Over 157,000 crops or by setting up income generating to our plants where we process the beans were traceable from Ferrero plant farmers were part of the FFV Cocoa activities off-farm such as beekeeping, cocoa beans for our products. We map to farmer group and 96% to farmgate programme and 86% farms were polygon grasscutters and petty shops. the locations of cocoa farms and collect level. More than 70% of our outsourced mapped, enabling traceability to farmgate data which helps us and our partners chocolate was traceable from the supplier Our Farmer Field Schools provide level. Our aspirational objective is to map understand the situation on the ground, processing plant to the farmer group and training in good agricultural, social and

100% of farms but achieving it is very approach Our sustainability including the challenges and opportunities to farmgate level. environmental practices and promote challenging. In FY 2019/2020, Covid-19 for positive intervention for each farmer. access to inputs such as cocoa and multi- hampered efforts to further extend the purpose tree seedlings and fertilisers. In early 2021, we published on our website coverage of farms mapping. Additionally, Together with our partners, we provide all Tier-1 suppliers and cocoa farmer farmer groups have on average annual individual farm and financial management groups from which the Company sourced 10% turnover of farmers, meaning there

coaching to selected cocoa farmers and cocoa and chocolate during FY 2019/2020. are always new farmers to be mapped and develop Farm Development Plans tailored We will continue to share updates on our farmers are usually re-mapped every three to their specific needs and situation. cocoa Tier-1 suppliers and farmer groups years to ensure the data is still valid. list regularly on our website. and performance Our progress Beyond certification: WHAT WE HAVE ACHIEVED Source: Sourcemap platform “Mitigation Programmes” In FY 2019/2020, almost 15,000 people

Certification alone is not enough to were supported with Income Generating improve the conditions in the supply chain. Activities (IGA) and more than 157,000 To meet our due diligence standards, the farmers received a cash premium on top FFV Cocoa Programme looks beyond of cocoa market prices. Almost 118,000 TRANSPARENCY TO THE FARMER GROUP LEVEL MEANS WE certification across the three pillars: farmers were trained in Good Agricultural Our reporting KNOW WHICH FARMER GROUPS SUPPLY THE COCOA THAT improve the livelihoods of farmers and Practices and more than 1 million cocoa communities, protect children’s rights and seedlings were distributed. 1,500 farmers FERRERO BUYS VIA ITS DIRECT SUPPLIERS COMES FROM. safeguard natural capital. were supported on land tenure and more than 1,000 individuals participated in Improving the livelihoods of cocoa youth-focused projects and activities TRANSPARENCY TO FARMGATE LEVEL GOES ONE STEP farmers and their communities such as providing agricultural services to farmers like pruning. FURTHER, IDENTIFYING THE FARMERS AND THEIR FARM We work with the farmer groups that

supply our cocoa beans to deliver data Key LOCATIONS THAT HAVE SOLD THE COCOA TO THE FARMER sustainability projects that secure GROUPS THAT SUPPLY FERRERO. sustainable livelihoods, improve the wellbeing of women and children, and protect the environment and wildlife. Supporting cocoa farmers to improve quality and productivity so that they can earn more from cocoa is a key priority. Ferrero Group 39 Sustainability Report 2020

Cocoa continued

Protecting children’s rights We also focus on women’s empowerment Introduction Ferrero is strongly committed to promoting and reducing gender inequality due to human rights throughout the global supply the critical role of women as agents for PROMOTING CHILD chain and supporting families to enable a economic, environmental and social joyful growth for children. This starts with change. This includes supporting Village PROTECTION IN THE NAWA protecting children from the risks of child Savings and Loans Associations (VSLA) as labour. Our Child Labour Monitoring and a successful concept for providing women REGION WITH SAVE THE Remediation Systems (CLMRS) involves field with access to small loans to support entrepreneurial activities. officers and community agents who monitor CHILDREN: RESULTS FROM approach Our sustainability cocoa farmer households in West Africa to identify children at-risk of child labour. WHAT WE HAVE ACHIEVED PROJECT 2017-2020 When cases of child labour are found, they are reported to the responsible authorities In FY 2019/2020, our strong focus in After a successful pilot in 2016, Ferrero and and a solution for the child is developed this area meant 93% of Ferrero-dedicated

Save the Children launched a three-year together with the parents. We have farmer groups were covered by the partnership targeting 20 cocoa communities committed that 100% of our cocoa supply Ferrero CLMRS or an equivalent system, in the Nawa region of Ivory Coast to protect

chain will be covered by the CLMRS or an up from 44% last year. 267 communities children’s rights. and performance Our progress equivalent system by 2025. in Ivory Coast and Ghana were supported through the Community Development It is critically important that children have Programme and there were 525 access to quality education, good nutrition active VSLA groups involving around and basic necessities like clean drinking 13,000 members, mainly women. water. We work with partners such as Save 325 of these were newly established Credits: Lorenzo Pallini for Save the Children the Children to implement Child-Centred in FY 2019/2020. Community Development programmes to put Our key objectives were to – All 20 communities have a – Two community schools were protect children against the the mechanisms in place to protect children Community Action Plan and constructed and equipped and Our reporting worst forms of labour, abuse Child Protection Committee six more received support. and to provide opportunities for children and violence and to promote in place. Moreover, the Child – 23 Village Savings and Loan through access to quality education, basic community development to Protection Committees have Association (VSLA) were facilities like water, sanitation and hygiene create an enabling environment been transformed into SOSTECI established and 100 members of for child protection. The project (WASH) and good nutrition. Our three- Village Committees. crop diversification groups were focused on four action areas: year project with Save the Children came – 4,878 awareness raising sessions trained in plantain and cassava child protection; education; food reached 54,292 people (39,656 production and two hydraulic to an end in 2020, the results of which are security; and livelihoods and adults and 22,119 children) and pumps were rehabilitated. discussed below. community development. through the two social centres By collaborating closely with Following, the success of the three- that were upgraded. data Key community leaders, children’s year project in the Nawa region, – 121 child protection cases were groups, community organisations we have renewed and extended successfully closed. and other stakeholders, the our strategic partnership with Save project has achieved impressive – 100 children were provided with the Children on cocoa for another results including: birth certificates, 358 children five years, committing significant attended bridge courses to investment to protect children in prepare for school and 599 cocoa communities. children were supported to enrol in formal schools. Ferrero Group 40 Sustainability Report 2020

Cocoa continued

Safeguarding natural capital we are taking wide-ranging measures – WHAT IS CLIMATE SMART COCOA? Introduction Deforestation and forest degradation from fostering traceability and mapping cocoa farms in our supply chain to training LOOKING AHEAD is a critical issue in the global cocoa Climate Smart Agriculture is an integrated cocoa farmers in good agricultural supply chain. Deforestation threatens approach to guide the needed changes of We will continue to strengthen practices and supporting the distribution to undermine the resilience of the cocoa agricultural systems, given the necessity our cocoa sustainability and planting of multi-purpose trees. sector and, with it, the livelihoods of to jointly address climate change impacts These measures focus on three main programme to achieve a millions of smallholders. Ferrero is and food security. In this context, Climate areas defined by the CFI (Cocoa & positive and lasting impact committed to addressing challenges to Smart Cocoa is an approach to achieve

Forests Initiative): forests protection and on the cocoa value chain. approach Our sustainability end deforestation in the cocoa sector and long-term, sustainable production and restoration; sustainable cocoa production implementing principles and strategies development in the cocoa value chain in In 2021, we will release the and farmers’ livelihoods; and community that underpin socially and environmentally the face of climate change pressures. new Ferrero Cocoa Charter engagement and social inclusion. sustainable cocoa production. outlining our commitments In FY 2020/2021, we will accelerate our It involves developing the technical, policy, We are signatory of the Cocoa & Forest action on key CFI indicators such as the governance and investment conditions to and long-term vision as part of Initiative’s (CFI) framework to end distribution of multi-purpose trees in Ivory achieve viable and sustainable cocoa and our cocoa plan for 2030 in line deforestation and restore forest areas in Coast to reach our 2022 targets. agricultural development, livelihoods and with the Ferrero Responsible cocoa producing countries Ivory Coast food security in a climate resilient landscape. Sourcing approach to our and Ghana.1 To fulfil our commitment, and performance Our progress Read the contents of our action plan It is composed of five main pillars2: key commodities. 1 https://www.worldcocoafoundation.org/initiative/ 1. Sustainably increasing cocoa and Other activities will include: Read the contents of our CFI Annual cocoa-forests-initiative/ agricultural productivity and incomes, Progress Report – Investment in our U.S. while maintaining quality chocolate manufacturing plant 2. Adapting and building resilience to which will significantly increase the climate change impacts proportion of cocoa beans directly WHAT WE HAVE ACHIEVED total area of cocoa agroforestry to 48,000 3. Mitigation; reducing and/or removing sourced by Ferrero. ha of cocoa agroforestry, an increase of Our reporting greenhouse gases emissions, including As of FY 2019/2020, more than 164,000 35,000 ha during FY 2019/2020. – Further increase our volume of ha were covered by our deforestation effective Monitoring, Reporting direct sourcing regarding our 3,991 farmers received payments through risk assessments, an increase of 26% and Verification (MRV) and ending outsourced chocolate. Payments for Environmental Services deforestation and forest degradation from 130,000 the previous year. 31,000 – Scaling up our activities with Save (PES) agreements – voluntary contracts in the cocoa sector farmers have been trained in the Climate the Children demonstrating our consisting of payments for compliance Smart Cocoa approach which translates 4. Improving food security and continuous commitment to protecting with a plans for land use and/or change climate science into applications on the a diversification children’s rights in our cocoa supply of agricultural practices. The purpose of ground to end deforestation and promote chain with the plan to roll out the 5. Promoting social and data Key the PES approach is to support small- sustainable livelihoods. economic development initiative in 65 new communities over scale cocoa farmers to invest in productive the next five years. Over 700,000 multi-purpose trees were agricultural practices, which are respectful We provide training for farmers on distributed for on-farm planting and of the environment and forests, such as the Climate Smart Cocoa approach to – Strong acceleration on key CFI there are now 26,000 farmers applying agroforestry. This allows them to diversify increase understanding and capabilities indicators such as distribution of agroforestry, of which almost 19,000 their sources of income and strengthen to deliver Climate Smart Cocoa. multi-purpose trees in Ivory Coast to started in FY 2019/2020. This brings the their resilience to climate change. reach our 2022 targets. 2 Touton Climate Smart Cocoa Standard. Ferrero Group 41 Sustainability Report 2020

Hazelnuts

ur hazelnuts come from many parts What are the challenges? Like many places in the world, the hazelnut Introduction of the world, the main origins being Risks in the hazelnut supply chain arise harvest in Turkey attracts seasonal Hazelnuts Turkey, Italy, Chile and the USA. from several complex, systemic and deeply migrant workers who arrive to pick O In the Northern hemisphere, they ingrained challenges. These include the hazelnuts before moving on to harvest Hazelnuts characterise the are harvested between the beginning of exploitation of seasonal workers, be it other crops in new locations. Many of unique taste of many Ferrero August and the end of September and in any form of bonded labour or child labour, these workers travel with their families the Southern hemisphere from February poor working conditions and inadequate and lack access to schools and childcare. products. Being a relevant to April. The harvested hazelnuts are sent Hazelnuts are mainly grown on small hazelnut user, we aim to accommodation for farm workers. to plants where they are sorted, cracked, We acknowledge these issues exist and family orchards, also making traceability a approach Our sustainability be a driving force behind shelled, calibrated, selected and then we are increasing transparency and challenge. We are working to tackle these a hazelnut industry where packed and shipped to Ferrero plants. identifying interventions to address them. challenges through a programme designed hazelnut production creates We carry out stringent quality checks to fully cover our sourcing areas and before the roasting process to ensure Being able to trace our hazelnuts back to mitigate the risks. value for all. all selected hazelnuts meet our high their origin – down to farm level – enables standards to guarantee excellent product us to be confident in how they were grown Our approach quality for consumers. and to support farmers and suppliers to Our ambition is to be a driving force develop better social and environmental

behind an evolving hazelnut industry and performance Our progress We have been directly involved in the practices. Production at scale can make where farmers and farming communities hazelnut supply chain since 2000 and traceability difficult because of the highly are thriving, workers’ and children’s we are driving their cultivation in new complex supply chains involved. These are rights are unequivocally respected and regions of the world such as Argentina, typified by a variety of intermediaries, Australia, Chile, Georgia, Serbia and South environmental values are enhanced scattered information and different data through regenerative agriculture practices. Africa. This is important to guarantee a processing systems. high quality and fresh supply of hazelnuts We are on a journey of continuous throughout the year. Ferrero is actively engaged in minimising improvement and excellence to create a the environmental impact of hazelnut sustainable and ethical hazelnut value Our reporting The Ferrero Hazelnut Company (HCo) growing in all its sourcing countries. Long- chain. We have been reshaping the Ferrero is an example of a fully integrated value term projects and collaborations have Farming Values (FFV) for Hazelnuts chain company with activities from been agreed with leading universities, and expanding its reach to reflect new farm to factory. It brings all hazelnut agricultural research centres and learnings and developments in the sector. activities together under one business international subject matter experts structure, maximising potential for quality to improve the growing of hazelnuts With strategic support of Earthworm improvements and innovation. worldwide. The challenges for the industry Foundation we developed the Ferrero include the optimisation of the water Hazelnut Charter, published in

Find out more about the Ferrero usage, investigation of plant nutritional 2021. This will outline our long-term data Key Hazelnut Company needs and promotion of an integrated pest commitments with specific short-term management system to ensure inputs are objectives (2023) to become a driving force used optimally. We are also investigating behind a hazelnut industry that creates innovative approaches to maintain or value for all. increase the level of organic matter in soil, contributing to minimising the usage of mineral fertilisers. Ferrero Group 42 Sustainability Report 2020

Hazelnuts continued

The Charter is structured around three The FFV framework consists of four Introduction Ferrero Hazelnut Charter Pillars pillars that will apply to all of our hazelnut strategic drivers that provide the building suppliers: human rights and social blocks for current and future initiatives The three pillars are founded on a due diligence process which covers all Ferrero suppliers practices; environmental protection and globally and are tailored to meet sustainability; and supplier transparency. local needs: These three pillars are founded on the – Agronomic Knowledge: sharing same due diligence framework which knowledge and experience in applies to all the categories of the Human rights Environmental Supplier hazelnut cultivation to improve quality Ferrero Group. and social protection transparency and productivity. practices and Sustainability approach Our sustainability The Hazelnuts FFV will remain central to – Owngrowing: demonstrating the our approach, along with partnerships benefits of sustainable agricultural and collaboration with our suppliers, practices by implementing them in trusted partners and others involved in the our Agrifarms.

hazelnut value chain. – Outgrowing: collaborating with hazelnut Ferrero committing Ferrero applying the Ferrero achieving to joyful growth principles of regenerative full traceability to The Hazelnuts FFV actively supports stakeholders to develop modern and child protection agriculture on its farms farm level for all actions on the ground to promote capacity hazelnut value chains in new and across all its sourcing across selected territories its sourcing building and improvements along the value existing countries. and performance Our progress chain. It is founded on our commitment – Traceability and sustainability: enabling The Ferrero Farming Values (FFV) Hazelnut Production Standard to improve sustainable agricultural and the full transparency of the hazelnuts social practices and share the expertise we source from the farm to production created through our initiatives with all the and improving social conditions for stakeholders in the hazelnut value chain – Working conditions – Farm-level all stakeholders. documentation – recognising that strong collaboration – Health and safety is crucial. The FFV programme demonstrates – Child labour – FFVh participation

the way Ferrero works with farmers – Compensation Our reporting The Hazelnuts FFV follows a specific to implement good agriculture and and recruitment production standard for good agricultural social practices. In practice, FFV teams – Working hours Human rights and social practices. It was created in Supplier are fully connected to the ground with and social 2012 when there was no recognised transparency farmers and farmer communities. practice certification scheme for hazelnuts. In order to demonstrate principles and FFV hazelnut The standard is designed to ensure crops set an example, we have also created are produced in a way that is respectful – Management production a network of six Agrifarms in Argentina, of inputs and sensitive to nature, human rights and standard Australia, Chile, Georgia, Serbia and – Pruning the surrounding environment. data Key South Africa. – Soil carbon – Harvesting – Water management Environmental – Waste management protection and – Product drying sustainability and storage Ferrero Group 43 Sustainability Report 2020

Hazelnuts continued

On our Agrifarms as well as in other The farming community is invited to Human rights and social practice Introduction countries with ground presence but where actively engage in dialogues, and We chair and represent the private sector in RESPONDING we do not own (e.g. Turkey and Italy) we run we share needs, concerns, ideas and an extended Public-Private Partnership (PPP) special orchard, harvest, mechanisation, solutions regarding social issues in with CAOBISCO (the European Association of TO THE COVID-19 drip irrigation and pruning educational farming. Both areas are further facilitated Chocolate, Biscuits & Confectionery Industries) days along with trainings explaining health through the FFV Standards, which are the and the International Labour Organization (ILO) PANDEMIC and safety and sustainability practices. framework to guide good agricultural and in Turkey focused on eliminating of worst forms We carried out a rapid impact The social agenda of the FFV promotes social practices. of child labour in seasonal agriculture. It aligns the transition to responsible agriculture assessment in partnership with Despite the challenges posed by Covid-19, with the Turkish Government’s strategy which approach Our sustainability and builds farmers’ understanding of the CAOBISCO and the ILO as well we continued with audits and activities of combines the National Employment Strategy regulatory system related to employment as directly with a local research the FFV in FY 2019/2020, leveraging phone (2014-2023) and the National Programme for of workers through social dialogue. organisation in Turkey to understand and digital technologies wherever possible. the Elimination of Child Labour (2017-2023). the issues and measures that could The project is based on three pillars: capacity be taken to support these groups building, direct intervention and raising in response. KEY ACHIEVEMENTS OF THE FFV HAZELNUT IN TURKEY IN FY 2019/2020 awareness. To date, our focus has been on three hazelnut producing regions of Turkey The aim was to contribute to the health and safety During the 2020 growing season, our teams visited more than 450 orchards a day, of hazelnut farmers, seasonal agricultural workers,

and the province of Sanliurfa where many and performance Our progress covering more than 75,000 ha and 24,708 farmers. Further milestones delivered migrant workers come from. their children and other stakeholders in our value through the FFV programme and assessed our internal Monitoring & Evaluation System chain. Based on the result of the assessment, We plan to build on the achievements and the FFV team in Turkey distributed protective created within the Strategic Alliance with GIZ (Deutsche Gesellschaft für Internationale and hygiene materials in the field and launched Zusammenarbeit GmbH) include: learnings to extend the Caobisco-ILO PPP awareness raising initiatives aimed to prevent for another three years (2021-2023) and the spread of Covid-19 due to seasonal migration expand it into two new geographies: Giresun of agricultural workers. By providing protective and Samsun. In addition to the collective PPP, equipment and hygiene material, we ensured health we will be investing €3.5 million in a direct & safety of hazelnut farmers, seasonal agricultural 6,567 24,708 23,300 workers and their children.

partnership between the ILO and Ferrero Our reporting What we achieved: Participants On-site farm visits PPEs distributed to which will support knowledge sharing received training* performed improve workers' safety about what works to address child labour, – 28.000 informative materials on safety measures particularly in the hazelnut supply chain – hygiene kits distributed to 25,000 FFV farmers to maximise learning opportunities across and 2,900 seasonal agricultural workers our entire hazelnut supply chain in Turkey. – cleaning material packages for 480 households 4,342 546 112 of seasonal workers Our aim is to enhance the ability of national Farmers trained Muhtars trained labour brokers trained and local stakeholders to take the actions – water bottles for 960 children of seasonal workers to ensure their access to clean water needed to eliminate the worst forms of child Key data Key labour in two additional hazelnut producing – thermo-bags and thermos bottles for 50 households of seasonal workers to ensure their 1,198 1173 areas in our supply chain: Trabzon and access to safe food Zonguldak as well as one sending province. – health screening of 605 seasonal workers workers trained internal observations The direct intervention achievements between 2013-2020 in the hazelnut supply chain * 2,466 trainings (Including in person and virtual trainings) to 6,567 participants through the PPP with CAOBISCO and ILO provided to farmers, women, labour brokers (& some certified) and others. Turkey are displayed in the table at page 44. Ferrero Group 44 Sustainability Report 2020

Hazelnuts continued

A programme designed to fully cover Ferrero sourcing areas Environmental protection Supplier transparency Introduction and sustainability Being able to trace our hazelnuts back In 2019, we announced our collaboration to their origin enables us to be confident with Earthworm Foundation to shape the in how they were grown and to support FFV ground ILO Collective ILO Collective ILO Private responsible sourcing approach and create farmers and suppliers to develop better presence Engagement Engagement Engagement social and environmental practices. Sakarya, Düzce, Samsun Sakarya, Düzce, Samsun, Giresun, Zonguldak, Trabzon, a joint action plan of practical work on Ordu, Giresun, Trabzon Ordu, Şanlıurfa Şanlıurfa Şanlıurfa the ground. A traceable supply chain also provides a basis for effective supply chain monitoring

Existing team Existing programme New programme New programme The partnership was launched in summer and supports all actors who wish to approach Our sustainability 2019 with field visits in Italy and Turkey’s improve the traceability of the hazelnut Eastern and Western Black Sea regions value chain. during the harvest season. Together with Earthworm Foundation experts we spent We understand the importance of tracing time interviewing and speaking with hazelnuts to their source and supplier farmers, seasonal labourers, labour brokers, transparency will be a key commitment of village heads, local project partners and the new Ferrero Hazelnut Charter released other actors related to the value chain. in 2021. This is not just an exercise in numbers but a commitment to foster a and performance Our progress Based on the findings, Earthworm Foundation deep understanding and relationship with have recommended actions to address the businesses and farming communities so opportunities and challenges linked to our that we can better identify challenges

hazelnut value chain. These include continuing and implement solutions with sector- to strengthen the relationships Ferrero has wide benefits. fostered with stakeholders in the hazelnut ŞANLIURFA community – such as government, suppliers, farmers and NGOs – to develop effective Our reporting multi-stakeholder solutions.

Achievements between 2013-2019 in the hazelnut supply chain through the PPP with CAOBISCO and ILO Turkey 2020 results*

2013 2014 2015 2016 2017 2018 2019

Families Counselling services 330 313 1,033 1,500 1,050 668 964

442 105 data Key Individual counselling 192 101 202 267 330 349 701 Families Intermediaries Children withdrawn/prevented Education services 381 408 1,165 1,200 1,125 1,252 1,806 Regular attendance 252 310 719 1,015 1,064 1,022 1,384 612 145 Intermediaries Group/individual counselling 22 20 41 48 54 112 63 Children (reg. att 430) Orchard owners

Orchard owners Counselling services 104 307 75 202 341 196 160 * Due to Covid-19 related restrictions, educational activities for children conducted only in Ordu in 2020. Ferrero Group 45 Sustainability Report 2020

Hazelnuts continued

The hazelnut supply chain includes specific To fulfil our ambition of full traceability Through Sourcemap’s platform, we will Introduction challenges that may be deeply rooted in down to farm level by 2023, we be able to support the value chain through the environmental and social conditions decided to redesign and strengthen our data science, detect tomorrow’s agricultural DEVELOPING A NEW of each geography. They range from traceability approach, also mitigating the and social challenges, and ensure the high fragmentation of the Turkish consequences of the Covid-19 along the performance is continuously improving. BENCHMARK FOR value chain, which includes several industry. In 2020, Ferrero began a new intermediaries who sell and process partnership with Sourcemap, a leading Third-party verification ENVIRONMENTAL AND the nuts, to the limited availability of provider of supply chain mapping and and certification technology in many hazelnut-cultivating digital transparency solutions, with the SOCIAL STANDARDS approach Our sustainability regions. Addressing these issues is crucial ambition of developing a global traceability Turkey to develop a transparent supply chain and platform that we estimate to be able to We have worked with Scientific Certification it will require close collaboration among trace ~60% of Ferrero hazelnuts to farmer Systems (SCS Global Services) in Turkey stakeholders – from the farmer to the level in FY 2020/2021. since 2012. A strengthened sample final processor. methodology for our FFV Production

Sourcemap’s state-of-the-art technology Standard was developed. And the audit was How much of our hazelnuts provides a comprehensive platform to conducted for the ninth year in a row during are traceable? trace hazelnuts from farm to factory, the harvest period of 2020. SCS Global Our traceability activities were impacted further strengthening Ferrero’s efforts Services executed the verification audit and performance Our progress in working with its suppliers to achieve by the pandemic over the last year, which and reached 209 farmers in five regions. We are working with the support of agronomic reduced the possibility to visit farms greater transparency. All non-compliances identified were specialists and conservation organisations to and to deliver farmer training in almost tackled through a corrective action plan. define specific farming indicators as part of an environmental and social benchmark scoring all geographies. We continued with system that appraises each farm’s operations audits leveraging telephone and digital and impacts on our own environmental technology wherever possible. and social parameters along with relevant legislation and local standards. At the end of FY 2019/2020, we had achieved 51% traceability of our total The benchmark assessment will provide a Our reporting foundation for engaging with farmers to develop sourced Hazelnuts. Some geographies, and deliver Farm Management Plans (FMPs) like Chile and USA, have reached 100% – a living document designed to evaluate and traceability. Others benefit from the mitigate potential impacts on people and nature continuous partnership with third-party to deliver our standards. The FMP guides Agri- certification bodies, like Italy that record business advisors by translating Ferrero policy and local country regulation into practical and a considerable increase, up to 64% targeted implementation plans. These plans traceability, and Turkey, where despite consider the reality of resources and time required

the complexity of the supply chain, the to achieve meaningful change, while keeping data Key cooperation between farmers, suppliers the farm profitable and functional. As a result, Ferrero will leverage on its farms as opportunities and FFV field team achieved 44%. to test first-hand and demonstrate the most promising agricultural practices and share best practices with farmers. The FMP also incorporates best available science and proven approaches and supports trials to test new and more sustainable practices. Source: Sourcemap platform traceability system example in Turkey Ferrero Group 46 Sustainability Report 2020

Hazelnuts continued

Italy Chile Introduction We have collaborated with the global AgriChile has collaborated with SCS assurance provider DNV to develop Global Services since 2017 to certify LOOKING AHEAD concrete actions for farmers and its own production processes under Using our Supplier Code and strategic partnerships as associations since 2015. The main actions the Sustainably Grown Standard (an a foundation, we will continue working on the priorities taken in FY 2019/2020 were: accredited certification programme aligned defined in our Hazelnut Charter: to global programmes and recognised – Training: Good social practices/good by major stakeholders operating in Pillar 1: Human rights and social practice agricultural practices training delivered sustainability). Its first Sustainably Grown approach Our sustainability remotely for the first time due to The path to long lasting meaningful change comes from solutions certification was acquired in 2019, entering Covid-19. It included 249 participants, created with the communities linked to the hazelnut value chain: we will the three-year auditing cycle. In 2020, including farmers, associations develop pilot projects with farmers, workers and community members the surveillance audit by SCS Global was and traders. to enhance farmer resilience and reduce social risks during the hazelnut carried out remotely due to the Covid-19 harvest season, including but not limited to decent living conditions – Audit: On-site audits by DNV performed outbreak. Even with many restrictions in on farm. on farmers, associations and traders. place, AgriChile’s Agrifarms and drying First-tier suppliers audited demonstrated facilities were fully audited by means of Pillar 2: Environmental protection and sustainability knowledge of all topics included in cameras constantly connected with the The details of the Farm Management Plans of AgriAustralis, AgriChile, and performance Our progress the Ferrero checklist, and their overall auditor. The administrative processes AgriSer and Agrisudafrica will be defined. We will further develop a level of compliance with the checklist have been extensively reviewed with roadmap for Georgia and Argentina Agrifarms as well as small scale requirements demonstrated a positive attention to employee working conditions, structures in selected territories to be assessed and appropriate trend. Moreover, despite difficulties health and safety and social practices. FMPs to be defined, to be then implemented at the right timing. posed by the pandemic, farmers adapted The successful outcome of the 2020 Moving beyond, we aim to focus on Regenerative Agriculture Principles, to make physical audits possible and Sustainably Grown standard confirmed the including but not limited to Minimum Soil Disturbance, Maximising enable remote training and remote commitment of AgriChile to the sustainable Biodiversity and Optimisation and minimisation of agricultural remedies. audits to be conducted when needed. development of the hazelnut value chain.

Pillar 3: Supplier transparency Our reporting Serbia We will start the implementation of our re-designed traceability AgriSer, our hazelnut farm located in system in all the hazelnut sourcing areas. During this process we will Serbia, is Sustainably Grown certified directly engage with all our suppliers and build a continuously updated and the certification programme provides database, generated and managed by Sourcemap. agricultural producers with a technical curriculum to improve the sustainable management of their plantations. At the same time, this provides customers Key data Key with assurance that products meet environmental standards, that farm workers and farm communities are protected and engaged, and that the farm is economically resilient. Ferrero Group 47 Sustainability Report 2020

Palm oil

he use of palm oil in human nutrition In addition to environmental concerns, Introduction 4 dates back to over 10,000 years. Country Volume % # of Mills there are social issues that need to be Palm oil Over 40 countries around the world Brazil 0.65% 5 addressed in the palm oil supply chain. T produce palm oil, Malaysia and Protecting land rights is a key issue Colombia 0.53% 8 We are committed to playing a Indonesia together account for around 85% concerning indigenous communities whose leading role in the sustainable of global production. Costa Rica 0.40% 2 land rights are often not recognised, risking governments handing over their land to When sustainably sourced, there are good transformation of the palm oil Guatemala 3.17% 6 oil palm companies. This impacts rural sector to benefit the environment reasons to use palm oil; it has been used

livelihoods and cultural heritage and is approach Our sustainability for thousands of years and provides a Honduras 1.32% 1 closely connected with deforestation as and people living and working in livelihood for millions of people. Palm oil Indonesia 15.48% 40 the displacement of rural farmers can lead palm oil producing communities. has an excellent yield compared with to land clearance. Labour rights is another other vegetable oils – it requires 0.26 ha to Malaysia 77.18% 39 important issue, as workers can live in poor produce one tonne of palm oil compared Papua New Guinea 1.23% 7 conditions without access to basic facilities.

with 1.25 ha for rapeseed and 2 ha for sunflower oil.3 Our approach We source palm oil for Ferrero products What are the challenges?

We are dedicated to leading the way in and performance Our progress as it plays an important role in achieving The tropical areas suitable for palm industry transformation, working with our a balance between the components, oil plantations are rich in biodiversity. suppliers and partners to ensure a palm ensuring that the product has the desired For many years, palm oil production has oil supply chain that is reliable, safe and structure. This enhances the taste of the been associated with negative impacts on ready to innovate and improve. We are other ingredients since it is odourless and biodiversity as it significantly contributes committed to securing a “No deforestation, tasteless after the refining process. It helps to land-use changes in tropical forests, No development on peatlands and No maintain the distinctive taste of Ferrero peatlands, and other species-rich habitats. exploitation”5 palm oil supply chain through products along the entire shelf life because Tropical natural forests hold large stores of collaboration with NGOs, stakeholders of its stability, also thanks to our way of Our reporting carbon and biodiversity, and are critical for and suppliers. processing it. For example, palm oil is key millions of indigenous peoples who depend to Nutella’s recipe as it ensures its texture A key factor in our work is maintaining on forests for their livelihoods. However, and, with its neutral taste, heightens the robust traceability of the origins of our this carbon is released and biodiversity flavour of other ingredients. palm oil. Maintaining robust mill and is lost when these forests are cleared – grower level traceability allows us to In FY 2019/2020, we sourced around otherwise known as deforestation. understand the first mile of our palm 220,000 metric tonnes of palm oil from oil supply. This enables us to work seven countries (see table). This amount is efficiently with suppliers and ensure we just below 0.3% of the total annual global data Key do not contribute to risks such as worker palm oil production. exploitation and deforestation.

3 Source: IUCN https://www.iucn.org/theme/science-and-knowledge/our-work/culture-science-and-knowledge/palm-oil-and-biodiversity-conservation/infographic 4 The traceability KPIs presented in this chapter are collected considering the period July 2019 – June 2020. 5 NDPE policies include commitments to the following: Free, Prior and Informed Consent (FPIC) for indigenous and other local communities, zero burning, preventing poor working conditions, and preserving High Conservation Value (HCV) areas, High Carbon Stock (HCS) areas and peatlands. Ferrero Group 48 Sustainability Report 2020

Palm oil continued

The Ferrero Farming Values (FFV) Palm Driving change through Committed to transparency Introduction RESPONDING Oil Programme and the Ferrero Palm Oil industry-wide collaboration We commit to source only palm oil that Charter have been in place since 2013. We are an active member of various is 100% RSPO Certified Segregated and The Palm Oil Charter demonstrates our TO THE COVID-19 multidisciplinary expert platforms and traceable to plantations. We have worked ambition to continuously increase the roundtables that are shaping the future extensively with our suppliers requiring standards in the Palm Oil industry. It goes PANDEMIC of the palm oil industry. We have been a palm oil that is traceable according to the beyond 100% Roundtable on Sustainable member of the RSPO, a not-for-profit that RSPO Segregated supply chain. The palm oil supply chain was significantly Palm Oil (RSPO) segregated supply unites stakeholders from across the palm impacted by the pandemic as it is labour chain certification by incorporating the The segregation model ensures that oil value chain to develop and implement approach Our sustainability intensive and heavily dependent on requirements and Verification Indicators sustainable palm oil is kept separately global standards for sustainable palm oil, foreign workers who were impacted of the Palm Oil Innovation Group (POIG), from non-sustainable palm oil all the since 2005. by movement restrictions. This was the High Carbon Stock (HCS) Approach way along the supply chain, meaning it is exacerbated by climate impacts which (see page 50) and the Free and Fair Labour In 2020, Ferrero became a member of the traceable back to the plantations. This is impacted volumes of palm oil produces in Palm Oil Production: Implementation RSPO Board of Governors' alongside NGOs something that other certification models Malaysia, where approximately 80% Guidance.6 and growers, and we continue to promote such as Mass Balance and Book and Claim of our palm oil comes from. It will see and democratise sustainable palm oil, cannot guarantee. We have been a member of the RSPO pressure on the supply chain, including following RSPO rules. We welcomed the

since 2005. In 2015, we became one As well as providing assurance that and performance Our progress availability of certified palm oil, driven by Board of Governors' approval of landmark of the first global companies to source environmental and social standards are increasing demand as companies catch up rules calling for “Shared Responsibility,” sustainable palm oil that is 100% RSPO being met, certification helps to support from the pandemic. and for all members of the RSPO to Certified Segregated. In 2013, we created suppliers’ sustainable livelihoods by “Mobilise, Act and Transform” to fulfil We worked with our suppliers to implement remote the Ferrero Palm Oil Charter to manage expanding access to markets, technical auditing and ensure measures were put in place to its mission. our impacts on palm oil communities support and knowledge, and access to protect workers’ health in the mills. Measures included Covid-19 testing and on-site temperature screening, and address the leading causes of We are also a member of the POIG, good seedlings which mean a higher disseminating information on preventative measures deforestation and social issues, as usual a multi-stakeholder initiative with a output and better income. and social distancing, making handwashing facilities building on top of the Group due diligence mission to transform the palm oil industry. Ferrero’s palm oil supplies have come from Our reporting and sanitiser readily available throughout the process, as per all the commodities of We actively support the POIG and share plantations and establishing houses for employees 100% RSPO certified and segregated the Group. who needed to isolate along with meals and health its vision to break the link between palm oil oil since 2015. We are recognised for and deforestation, and human, land and support. Workers had the option to be paid in part We are proud to lead the industry in terms our efforts: Ferrero‘s palm oil sourcing in cash to avoid the need to visit an ATM and on-site labour rights violations. practice is ranked as the most sustainable shops were provided with loans to maintain stocks of rigorous and credible traceability and and fair prices. we actively call for this to become the We work closely with the European Palm out of 173 companies in the industry in industry standard. Oil Alliance (EPOA), a business initiative the WWF’s Palm Oil Buyers Scorecard that collaborates with national initiatives published in early 2020.

throughout different European countries, data Key Download the Ferrero Palm Oil Charter by educating stakeholders on the full palm oil story, facilitating science-based communication and creating a balanced view on the nutritional and sustainability aspects of palm oil. EPOA strongly 6 https://respect.international/free-and-fair-labor-in- supports the uptake of 100% sustainable palm-oil-production-principles-and-implementation- palm oil. guidance-2/ Ferrero Group 49 Sustainability Report 2020

Palm oil continued

Although our new acquisitions (Fannie Increasing traceability of our mills Introduction May and brands that were part of Nestlé’s To increase the transparency of our supply chocolate business in the United States) chain, we have disclosed traceability data use only a very small volume of palm oil for our supplying mills twice yearly since (less than 1% of our total palm oil sourced 2018. In December 2020, we published in FY19/20), we are working to extend two lists for the mills through which we to them our commitment to source only source our palm oil for: sustainable palm oil that is 100% RSPO Segregated certified. This process will take – Ferrero products – not including acquired approach Our sustainability time as we align the new businesses to products (100% RSPO SG certified our established processes, standards and sustainable palm oil). existing capabilities of the various supply – Acquired products: Thorntons, REDUCING chains (e.g. traceability and segregation). Fannie May and the brands that were part of former Nestlé U.S.

THE PESTICIDE How much of our palm oil is chocolate confectionery business traceable? in the United States (currently mainly FOOTPRINT OF PALM conventional palm oil). In the period July 2019 – June 2020, and performance Our progress we were supplied with 212,000 tonnes OIL PRODUCTION of palm oil, of which 100% was RSPO See our disclosure on our palm oil mills Segregated certified sustainable palm oil

(excluding new acquisitions). We achieved 100% traceability quantity to 108 palm Improving social conditions Developing a sustainable palm The pilot project aims to develop An international and oil supply chain includes the a set of recommendations for interdisciplinary team of oil mills and 99.96% traceability to 525 for palm oil workers need for reducing the impact of a Biodiversity and Advanced Entomologists, botanists, eco- plantations. We recorded the contribution Responsibly sourcing palm oil agrochemicals such as pesticides Integrated Pest Management (IPM) toxicologists and ecologists of some 41,087 smallholder growers. and to developing biodiversity- strategy to support producers and has analysed the results and requires more than just addressing Our reporting friendly production practices that reduce the pesticide footprint of oil developed recommendations on When including newly acquired companies environmental concerns, although social promote resilient and nature- palm production in Malaysia. how to promote the presence (Thorntons, Fannie May, Nestlé U.S. and environmental impacts are often based production systems. The pilot includes the survey of and conservation of beneficial confectionery business), between January interrelated. We are extending our focus biodiversity-friendly practices insect populations. Based on the We are part of a pilot project led results, a set of advanced IPM and and June 20207, we sourced 99.28% RSPO to include the social impacts of palm oil by the Sustainable Agriculture currently being implemented by farmers as well as a census of insect biodiversity conservation practices certified Segregated palm oil and 0.72% such as worker rights, fair livelihoods and Network (SAN), a global will be tested based on beneficial other social practices. Our main focus collaborative coalition of 16 NGOs diversity – both pest and beneficial conventional palm oil. Of this total, 99.7% insects – and associated host plants organisms and low-risk pesticides will be in Malaysia, our main sourcing and involving the Malaysian tailored to Malaysia’s palm is traceable back to plantations. organisation “Wild Asia”, focused on palm oil farms. Country, where the palm oil supply chain oil production. on helping small-scale farmers, The project consists among other data Key significantly relies on foreign workers. workers and rural communities things of the development of We will start to assess our main suppliers to thrive. Malaysia-specific pesticide data using a third-party and make an action for the inclusion in the “Pesticides plan to improve social practices based on and Alternatives” app, designed to enable extension trainers to find less the findings. This will be included in the chemical-intensive ways to manage new Palm Oil Charter. agricultural pests and diseases. 7 Data availability for business acquired in the U.S. started from January 2020. Ferrero Group 50 Sustainability Report 2020

Palm oil continued

Eliminating deforestation Introduction We are an active supporter of the High SUPPORTING SMALLHOLDERS TO Carbon Stock Approach (HCSA) – a methodology that identifies forest areas BE PART OF THE SUSTAINABLE for protection and areas of degraded land with low carbon and biodiversity value PALM OIL SUPPLY CHAIN that may be developed. The methodology Source: Starling satellite monitoring and verification service helps to ensure a transparent, robust and scientifically credible approach to halt Zero Deforestation Verification Protocol: approach Our sustainability deforestation in the tropics, while ensuring from October 2020, we have started the rights and livelihoods of local people using the Starling satellite monitoring and are respected. verification service to ensure all of our supply Ferrero and other members of the chain is deforestation-free. The system

RSPO adopted the new RSPO Principles independently verifies and monitors land & Criteria in 2018 which introduced use and identifies potential deforestation “No Deforestation, No Development and conversion occurring within our palm on Peatlands and No Exploitation” oil supply chain. Operated by Earthworm and performance Our progress restrictions. Foundation and Airbus, it uses a combination The smallholders with whom seamlessly. Moreover, we have go beyond certification schemes of high-resolution radar and optical satellite we work in Malaysia produce been working with the Forum for such as RSPO have been tested To reinforce our Palm Oil Charter principle imagery to monitor land cover change and sustainable palm oil with Sustainable Palm Oil (FONAP8), and applied with the aim to scale of No deforestation, we have been forest cover disturbance in near real time. RSPO certification. WWF Germany and the local NGO these measures across the whole working with Earthworm Foundation to Wild Asia to train smallholders on palm oil supply chain in Malaysia. They harvest their crops develop and implement our own Zero the use of sustainable cultivation Initial evidence revealed that Deforestation Verification Protocol to using basic tools and a small methods. Wild Asia has extensive diversification can have a positive transportation firm gathers the training expertise in sustainable impact on soil fertility and income demonstrate to external stakeholders Our reporting fruit, driving from plantation to palm oil production and works with while reducing the dependency the level of progress and compliance in LOOKING AHEAD plantation – including those of independent smallholders to improve on synthetic fertilisers and achieving zero deforestation in our palm oil Building on many years of positive non-certified growers. However, their farming practices and comply pesticides. The project supports certified plantation owners supply chain. The methodology will include impact, we are engaging with key with national and international smallholder farmers to contribute internal and external stakeholders – must be able to prove which standards such as Malaysian to a sustainable supply chain pathways to follow in cases in which no crops are theirs in order to retain Sustainable Palm Oil (MSPO) and and tackle conservation and deforestation is not possible to claim. including NGOs, smallholders, suppliers their status as certified palm oil the Roundtable on Sustainable Palm deforestation issues. Examples of activities in this case may and internal stakeholders – to review producers. Hence it is vital that Oil (RSPO). Ferrero has sponsored and update the Ferrero Palm Oil Charter. small producers and distributors include engagement with suppliers, field the first phase of the project which verification, forest conservation projects are able to keep track of which lasted from July 2018 until July 2019 The new Charter will build on what products are certified. data Key as well as the second phase of the and active reforestation in key landscapes. we have learnt and achieved to date. Therefore, we have supported project which ran from December The partnership will also develop initial Having made good progress around training smallholders to use the 2019 to March 2021. 8 https://www.forumpalmoel.org/ guidance for scaling up Zero Deforestation environmental issues, especially using “PalmoilTrace FarmGate” app to The outcomes show that chemical- en/welcome FONAP is an alliance Verification Approach to other priority record transactions of certified of companies, non-governmental satellite monitoring, we will increase free production is possible and organisations, associations, the raw materials. smallholder producers and can even lead to higher yields. German Federal Ministry of Food and the focus on social practices, including palm oil distributors. This allows The add-on criteria which have Agriculture (BMEL) and the Federal conditions for foreign and migrant workers certified palm oil to be traced Ministry for Economic Cooperation been developed by FONAP and and Development (BMZ). in the palm oil supply chain. Ferrero Group 51 Sustainability Report 2020

Milk and eggs

ur objective is to build a Milk This enables us to create a streamlined Introduction comprehensive programme The key issues in developing a sustainable system of traceability which goes beyond Milk and eggs dedicated to animal welfare, milk supply chain include ensuring high legislation to provide a clear picture of the O improving the quality and safety standards of animal welfare, reducing journey from farm to product. of our products and the sustainability Animal welfare is a central carbon emissions and managing the We strictly adhere to national production of our supply chains. We require all principle of our ethical sourcing impacts of dairy farming on water regulations on raw milk and other dairy Ferrero suppliers to take appropriate and biodiversity. products which vary from country to initiatives. One of our main steps to ensure the protection of animals objectives is to ensure the Through the Ferrero Farming Values country. Our high standards for the supply

and the respect of animal welfare, as approach Our sustainability of milk are applied globally, regardless specified in our Supplier Code, seeking a for Milk, we have developed long-term progressive improvement of of local regulations, and we source milk constant progressive improvement of the relationships with carefully selected animal welfare standards within directly from our dairy partners, selected mental and physical needs of animals. local milk producers who adhere to our the supply chains of animal according to strict standards to ensure the Animal welfare contributes to the quality standards and enable us to assure and control of the entire chain and constant origin products. and safety of products as well as the improve the freshness and quality of

freshness, taste and safety. sustainability of the supply chain. our milk. We use these relationships to strengthen our controlled, short supply chain, paying particular attention to milk quality and activities of suppliers and performance Our progress in the areas of animal welfare and environmental responsibility.

VISION DAIRY

Vision Dairy is our leading quality and sustainability programme for our dairy Our reporting supply chain developed in collaboration with FAI Farms and in consultation with key stakeholders such as Compassion in World Farming and our dairy suppliers. The project aims to drive sustainability and continuous improvement across three main areas and 15 principles on our supplier dairy farms:

Cow welfare Farm performance Environmental stewardship To identify and demonstrate best To support efficient, resilient and To protect and enhance our practice in cow and calf welfare. ethical business practices. shared environment. Key data Key – Optimise animal welfare – Build healthy and productive herds – Reduce carbon footprints – Provide sustainable diets – Efficiently delivering safe, high – Protect water quality – Deliver quality calf care quality milk – Support soil health – Practice responsible medicine use – Uphold human rights – Minimise fresh water use – Employ humane transport – Support health and wellbeing – Conserve and enhance biodiversity and slaughter practices of workers – Develop knowledge and skills of workers Ferrero Group 52 Sustainability Report 2020

Milk and eggs continued

How much of our milk Sustainable Dairy Partnership Eggs9 Cage free eggs sourcing roadmap Introduction is traceable? Ferrero has been a member of the The fair treatment of chickens is one of We can trace our milk back to dairy farms Sustainable Dairy Partnership (SDP) the main issues to be addressed in the globally. We work with our suppliers since 2018 (part of SAI platform). egg supply chain. Our egg supply chain to drive continual improvement and It provides a multi-stakeholder platform is fully integrated, meaning suppliers encourage them to adopt best practices for developing a sustainable milk supply have the control over the lifecycle of their in milk production. chain through collaboration between animals and the feed composition. We are FY 2019/2020 dairy customers, farmers cooperatives committed to sourcing cage-free eggs for 95%

To create a shift towards greater and suppliers. The SDP approach allows our global supply chain. approach Our sustainability sustainability in dairy farming, we processors to leverage work already being have a role to play in bringing relevant done as part of industry sustainability How many of our eggs come stakeholders together to engage in initiatives, national programmes, voluntary from barn hens? constructive dialogue and to identify certifications and regulatory compliance. shared causes and solutions. We will As a member, we will consider the best Back in 2014 we reached our objective of leverage the experience gained through way to align the Ferrero Milk Charter with using 100% cage-free eggs within the EU. the Vision Dairy journey – including a pilot the SDP standards. Our European egg supply chains accounts to understand suppliers' sustainability for 95% of all the eggs we use globally. performance covering both European and However, our commitment is to source and performance Our progress 2025 global dairy supply chains. The outcomes only cage-free eggs and egg ingredients 100% will be used to develop the Ferrero Milk globally by 2025. Charter, to be published by the end of

In 2013, we developed two new 2021. The Charter will state our ambition manufacturing plants outside Europe, in for a milk industry that does good for Turkey and Mexico. The eggs used in these people and nature and reinforce our plants make up approximately 5% of our commitment to deliver this ambition global consumption and we are working through our own milk sourcing. Our reporting with our suppliers to supply them with cage-free eggs, which are not readily available within the markets, to fulfil our commitment by 2025. Key data Key

9 Eggs sourced for the newly acquired plants in North America are not included yet. Ferrero Group 53 Sustainability Report 2020

Sugar

e have a long-standing What are the challenges? Our approach Introduction commitment to building strong, Global sugar cane production is increasing We have developed long-standing Sugar trusting relationships with the and brings a number of socio-economic partnerships with suppliers who W agricultural cooperatives and and environmental challenges. There is provide us with quality sugar and our We have a long-standing producers that supply our sugar. In FY a risk of poor working conditions in some procurement and quality teams apply commitment to building strong, 2019/2020, we purchased approximately sugar cane producing countries and issues a baseline selection procedure for new 25% refined cane sugar and 75% beet such as low wages and poor health and suppliers. This allows us to guarantee trusting relationships with the sugar. We primarily source beets from agricultural cooperatives and safety can exist. Sugar cane production raw sugar that meets our strict quality European producers and our sugar cane can also have a negative environmental criteria. We systematically evaluate approach Our sustainability producers that supply our sugar. comes mainly from Brazil, India, Mexico impact, including loss of biodiversity and available certification schemes to and Australia. We are committed to pollution of land and water. understand their robustness, impact, sourcing 100% sustainable cane sugar. resource and cost efficiency as we work to expand our sustainable sugarcane supply chain. We also hold intensive

discussions and field visits to identify and engage with suppliers to ensure sound

sustainability strategies. and performance Our progress

Sustainable cane sugar sourcing roadmap Our reporting 10% 40% 48% 100% Key data Key March 2015 End of 2016 FY 2018/2019 End of 2020 Ferrero Group 54 Sustainability Report 2020

Sugar continued

How much of our cane sugar Bonsucro certified FY 2019/2020 was a challenging year for Altromercato certified cane sugar Introduction is certified sustainable? sustainable cane sugar sugar cane producers with forest fires, Altromercato has created socially and hurricanes, social unrest and Covid-19 We committed to source all our refined We have been a member of Bonsucro environmentally sustainable Fairtrade which caused significant disruption cane sugar from sustainable sources Limited, a global non-profit organisation supply chains for over 30 years. and impacted demand from industrial by 2020. We achieved this, with 100% that exists to promote sustainable Ferrero has a commercial agreement with users as manufacturing slowed down. cane sugar from sustainable sources, up sugarcane production, processing Altromercato to source 20,000 tonnes Sugarcane mills also saw a surge in from 48% in FY 2018/2019. We sourced and trade around the world since of cane sugar between 2016 and 2020. demand for ethanol, a co-product often sustainable cane sugar directly from 2010. The scheme is underpinned by Altromercato focuses on developing

produced alongside sugar, and many approach Our sustainability Altromercato and Bonsucro (Mass Balance a production standard that focuses on sustainable cane sugar supply chain in Bonsucro members donated ethanol to and through credits10). reducing environmental and social impacts Mauritius. Its main objective is to ensure no local governments and hospitals to help including biodiversity, ecosystem, human adverse environmental, social or economic prevent the spread of the disease. rights and labour standards, as well as impacts on the approximately 700 families legal compliance. The Bonsucro Production Standard who are part of the project.

was used as a framework for enhanced As a part of Bonsucro, we engage in Altromercato has developed a number protocols to protect the health and continuous dialogue with local sugar of initiatives thanks to the sustainability safety of sugarcane workers and their producing communities and other incentive linked to the commercial

communities. Bonsucro launched a and performance Our progress Bonsucro members to find ways to agreement with Ferrero. They include a new Code of Conduct and Grievance promote sustainable sugarcane production Young Professionals group which provides Mechanism in 2020 and made good and promote certification against the technical and administrative support to progress on the revision of the Bonsucro Bonsucro production standard. young sugar farmers while facilitating Production Standard as it works to develop good practices and access to services. a five-year strategic plan to be launched Improved practices for applying fertilisers in 2021. in combination with microorganisms which improve the soil have been introduced in

line with recent government policies on Our reporting WE ARE EXCITED ABOUT THIS SIGNIFICANT MILESTONE – bio-farming in Mauritius. IT FULLY DEMONSTRATES FERRERO’S STRONG COMMITMENT These initiatives have allowed the 25 farmer cooperatives participating in the TO ENVIRONMENTAL AND SOCIAL SUSTAINABILITY IN project to record overall productivity results of the cane above the national SUGARCANE. CONGRATULATIONS TO THE TEAM THAT average, improving the condition of the WORKED FOR YEARS TO ACHIEVE THIS GOAL. 704 shareholders and their families. Around 8,000 people have been reached data Key Rafael Seixas, Membership Manager at Bonsucro annually by direct and indirect benefits of the programme.

10 Bonsucro Credits are proof that a unit of sugarcane has been sustainably produced to Bonsucro’s Production Standard. Credits reward Bonsucro Certified Mills and Farms for their commitment to sustainability, and a portion of fees from Bonsucro Credit sales are invested directly in local impact initiatives for other farms and mills to adopt more sustainable practices. They account for around 60% of the total certified volume. Ferrero Group 55 Sustainability Report 2020

Shea and Sal

Shea We support Kolo Nafaso,a project that Sal Introduction The shea tree is a wild-growing tree that is empowering women and is enhancing Sal is a semi-deciduous tree which grows Shea and Sal is found in the Sahel belt of West Africa. responsible sourcing of shea kernels mainly in moist evergreen regions of India. Its fruit provides nutrition and income to through our Shea supplier AAK, of Sourcing of sal seeds has strong social Shea stearin, processed from the rural population and the bark, leaves, which Ferrero is the largest customer value and provides an important sap and roots are used for traditional and contributor. Shea nuts, is used to enhance source of income and nutrition for the medicines. Women collect the shea fruits the taste and consistency in The programme provides support, local population. our products. and the kernels are boiled, de-shelled and interest-free micro loans, training and dried. The income from selling some of direct trade for woman collecting shea We source our Sal butter through a approach Our sustainability Sal butter is extracted from its these kernels enables families to pay for kernels. Launched in 2009 in Burkina Faso, leading supplier, who has worked with school fees, clothing and farm equipment. the indigenous people that traditionally fruit seeds and then processed extended over the years to neighboring countries and now reaching more than collect sal seeds. Our Sal supplier and refined to obtain a light- What are the challenges? 320,000 woman up 39% on 2019. In this collaborates with thousands of women coloured butter which has a 11 self-help groups and millions of tribal One of the key challenges in the Sahel way Kolo Nafaso reaches about 8% of people across forest villages in India for the low odour and smooth, dense region is the seasonality of shea crop all Shea exporting woman. In 2020, the sustainable sourcing of superior-quality of texture that makes it suitable which leads to fluctuating incomes. programme was externally verified by

raw material. and performance Our progress for cosmetics and food. Many households experience limited Proforest for the first time. financial and food resources during part In 2020, Kolo Nafaso’s main priority in of the year when they need to invest in the response to Covid-19 was to ensure the next crop season. Another key challenge to health and wellbeing of its employees and

consider is the declining tree population. the women involved in the programme. After some delays to pre-financing Our approach payment early in 2020, the AAK team Ferrero is a member of the Global Shea in West Africa was able to achieve a Alliance (GSA), a non-profit association “new normal” shea buying process. Our reporting with more than 700 members which Close working between AAK and the provides a platform to meet the needs members of Kolo Nafaso enabled clear of members and shea stakeholders. communication and found innovative The GSA’s mission is to drive a competitive ways to give women access to their and sustainable shea industry and improve money. By being creative and agile, the the livelihoods of rural African women Kolo Nafaso team ensured an as normal and their communities. GSA members as possible shea season for the women it supports. have launched several new sustainability data Key projects and investments, including the establishment of public private partnerships (PPPs).

11 The Global Shea Alliances estimates a total of 4 million woman to be involved in shea exporting, as Kolo Nafaso reaches 320.000 woman this equals to 8%. Ferrero Group 56 Sustainability Report 2020

Soy Lecithin and Paper

e source it from Europe, egardless of the risk category Introduction India and Brazil where issues we require our converters to Soy Lecithin include the sustainable use Paper supply us only virgin fiber paper W of pesticides and fertilisers R and cardboard from sustainable We buy small volumes of Soy (Europe), addressing labour standards Paper converters have been certified sources, this means that 100% Lecithin which is used in many in the supply chain (India) and avoiding assessed and prioritised using of our virgin fiber paper and cardboard deforestation (Brazil). are certified FSC or PEFC. of our chocolate products. the due diligence approach. In Brazil, we work with selected suppliers As general rule we accept PEFC and Proterra, a non-profit organisation standard for European based approach Our sustainability that promotes the sustainability of the converters considering the robustness food production system, to reinforce of the legislative framework, while FSC our commitments on deforestation. is required for converters operating in The initiative encourages the rational more challenging geographies.

use of natural resources, recovery of degraded areas, promotion of technology and training and education. The ProTerra

Standard focuses on the challenges faced and performance Our progress by companies in the food supply chain to create social, environmental and economic benefits for everyone, starting from the protection of the Amazon, Cerrado, Chaco

biomes, and any other High Conservation Value Areas. Through this project, our supplier supports rural producers and raw materials suppliers who work for our plants. Our reporting Already 80% of our soy lecithin is sourced as ProTerra certified (of which 100% of the soy sourced in Brazil). Key data Key Ferrero Group 57 Sustainability Report 2020 Introduction

Promote approach Our sustainability

responsible consumption and performance Our progress

We strive to offer products of the highest quality and freshness and always endeavour to communicate responsibly. Our reporting 3 data Key Ferrero Group 58 Sustainability Report 2020

How we promote responsible consumption

ur products provide pleasure and As a leading producer of sweet, packaged To ensure the quality and freshness of Introduction joy for consumers in more than food, we must ensure our communications our products, we measure perceived 170 countries. Ensuring they meet are consistent with the principles of product quality at many different stages, O the highest standards of safety good nutrition, balanced diet and including point-of-sale. The Ferrero and quality and that they are consumed physical activity. Responsible marketing Supplier Code also requires inspections to responsibly, as part of a balanced diet communications and product labelling be carried out at our suppliers’ production within an active lifestyle, is part of our assist consumers in making appropriate sites to ensure security and quality of sustainability journey. choices about the food products they buy supplies. Consumer feedback, requests and consume. Marketing to children is one and complaints are an important tool approach Our sustainability Why does it matter? of the most sensitive areas of marketing. for reinforcing trust and improving As children can be highly receptive to product quality. Nutrition is fundamental to human life. marketing messages but lack the maturity Addressing both diet and lifestyle are key We live in a society where food plays to form well-considered judgements, factors in our approach which is shaped a central role in cultures, both as a we always ensure to target adults and

by the latest science on food nutrition and necessity and a pleasure. But the way parents with our product marketing focuses on: food is produced, marketed and consumed communications across our entire portfolio. needs to be sustainable and contribute to – serving sizes that let consumers manage wellbeing and health. Our approach their daily energy needs within their and performance Our progress As one of the world’s biggest chocolate overall diet; Our Quality Policy drives us to reach the and confectionery producers, nutrition, – high-quality ingredients that provide highest quality standards across all our health and lifestyles are material issues for essential energy and micronutrients; plants. It is designed to ensure excellence our sustainable approach. Rising obesity at the time of consumption, maximum – food education including information on rates in the global population, including product freshness and product and ingredients, foods, and structured eating among children and adolescents, is a packaging design that complies with occasions (balancing meals and snacks); complex issue with multiple causes. and

environmental standards and avoids Our reporting Globally, the increasing focus on diet, unnecessary waste. – encouraging active lifestyles through physical activity and health has put our educational programme, Kinder Joy a spotlight on transparent marketing Our highly rigorous quality system aims of moving. and communications. to guarantee product excellence across our global production sites. All production Marketing and labelling ensure our sites are subject to international communications are consistent with the recognised quality certifications such as principles of conscious consumption, the international standard for Quality physical activity and personal choice.

Management System certification, ISO To reinforce the credibility of our data Key 9001, and FSSC 22000 for food safety. commitments, our annual performance is Safety-oriented design is especially certified by independent, external third- crucial to Surprise toy development and all party organisations. Kinder® Surprises must be fully compliant with international regulations and our own internal requirements. Ferrero Group 59 Sustainability Report 2020

Products and ingredients’ safety and quality

he quality and safety of our products The Ferrero Quality & Food Ensuring the quality and Our global taste project has a wide Introduction starts with engaging our suppliers Safety Management System freshness of our products geographic coverage and involves 2,081 to use only safe, high quality and tasters around the world who are selected The Ferrero Quality & Food Safety To ensure the quality and freshness of our T responsibly sourced raw materials. and trained according to the Ferrero Group Management System comprises a products, we measure perceived product Our manufacturing plants are required to Tasting Procedure. This project is aimed at global network that includes the Central quality at different stages, including point- meet the standards set out in our Quality maintaining trained panels and extending Quality Department and Local Quality of-sale. We carried out 759,621 store & Food Safety Management System and continuous taste tests across an increasing Departments in our commercial and visits to measure the freshness (period we carry out rigorous assessments of our perimeter of product coverage and number industrial subsidiaries. The Group Quality between the production date and the of tasters.

products to ensure quality and freshness. approach Our sustainability Organisation oversees the entire value audit date in store) of finished products Ferrero’s new Quality & Food Safety chain from raw materials to market. and temperature in store. Due to Covid- Policy, published in January 2021, drives It works closely with local teams to 19-related restrictions, the number of Ensuring the quality of raw the development of strategy, standards define quality and food safety objectives store visits and quality checks was around materials and packaging and competencies that deliver the highest and monitor performance through a 20% lower in FY 2019/2020 than planned. The quality and freshness of raw materials

consumer experience. Our business model complex system of indicators and audit. Perceived quality of the finished product is crucial to the organoleptic characteristics is designed to: Quality results are published in dedicated at point of sales was assessed in 304,057 of our products. This is fundamental to monthly reports and shared with relevant stores with auditors behaving as shoppers – promote a quality and food safety consumer trust in our products and we

departments and corporate management. to check the presence of visual defects and performance Our progress culture driven by people centricity have always paid careful attention to against a defined list for each product. our ingredients from a food safety and and engagement; In FY 2019/2020, the impacts of quality perspective. – achieve organoleptic excellence and Covid-19 meant the three-day annual To ensure products comply with the product freshness throughout the value Quality Convention was held online. required sensory profile, a sensory Our so-called “known-bag” comprises chain in all markets; In addition, the e-commerce quality evaluation is carried out alongside a set of internal procedures that are process played a major role in shaping laboratory tests. This evaluates the – ensure global integration across the carried out by specialist food technicians. how we adapted to the new consumption organoleptic attributes of each product, business of our Quality & Food Safety They include sensorial evaluations and behaviours derived from Covid-19 crisis. its aesthetic appearance and presentation. Management System; analysis, supplier inspections and food It brought Ferrero people together from Tasting and sensory evaluation includes safety practices to guarantee the raw Our reporting – protect brand reputation through around the world to strengthen the concept raw material taste tests and taste tests of material’s traceability. Our suppliers around effective risk management; of “Group Quality” through sharing ideas, semi-finished and finished products on the the world are selected and evaluated using – drive continuous improvement by problems and best practices. production line. Quantitative Descriptive the defined criteria through an electronic standardising the monitoring and Analysis is carried out by a trained panel platform that connects them with our analysis of primary processes and of tasters in our centralised product expert food technologists. quality and food safety objectives; and observatory and production units. As an example, 76,300 sensory tests The Ferrero Supplier Code requires – leverage communication resources for continuous inspections to be carried

were carried out on Nutella across our data Key an optimal information management out at our suppliers’ production sites to within Ferrero and with our production sites and central observatory in FY 2019/2020. ensure security and quality of supplies. external stakeholders. Our plants use an internal risk-based Group protocol to define the type and frequency of the physicochemical, microbiological and organoleptic controls that must be performed on samples from incoming materials. Ferrero Group 60 Sustainability Report 2020

Products and ingredients’ safety and quality continued

Listening to consumer feedback Advancing standards across Across our production plants and in main HOW ARE WE DOING? Introduction Consistent and effective management our plants sub-contractors, a dedicated integrated global SAP (System Applications and of consumer requests, complaints and Our highly rigorous quality system aims ISO 9001:2015 – Certification of the Products) software system allows data feedback allows us to reinforce trust to guarantee product excellence across Ferrero Quality Management System related to the Ferrero Quality model to and satisfaction and improve product our global production sites. The Corporate be shared, integrated and monitored. Within the framework of ISO 9001, quality. The Consumer Complaints Quality Audit system provides the The system has now been implemented a third-party certification body sampled Method function, part of the Ferrero ultimate assurance of quality compliance. across all Ferrero plants including Alfreton four plants in FY 2019/2020: Alba (Italy), Group Quality Organisation, allows We continuously monitor and improve Hangzhou (China), Villers Ecalles (France)

(UK), Bloomington and Franklin Park approach Our sustainability us to provide consumers with prompt standards through a structured monitoring (U.S.) where the management of process and Vladimir (Russia) as well as our and effective support and resolve the system that covers all quality processes. controlling was implemented in 2020 company headquarters in Luxembourg. cause of complaints through systematic This includes inspections by qualified as planned. Overall results were positive with no site and consistent analysis of all consumer personnel of our plants, warehouses and having any major “non-conformity” issues. feedback to improve of product contractor premises to verify the correct To ensure the effectiveness of the Ferrero quality. The function is responsible for FSSC 22000 – Certification of the

application of standards and identify Quality System, all production sites are implementation of the Customer Relation opportunities for improvement. subject to international recognised Quality Ferrero Food Safety System Management (CRM) tool – Ferrero CARE – Certifications by accredited third-parties. Regarding the framework of FSSC 22000

and the maintenance and enhancement of We use the international standard for certification, all certified production plants and performance Our progress the Contact Management Quality System Quality Management System certification, in the Group were audited to verify the which is applicable to all our brands and ISO 9001. Our Food Safety Management standard compliance. The overall outcome entities. We are working on a new project System has been certified according was positive with no critical “non- to enable consumers around the world to the FSSC 22000 standard across all

conformity” issues found. to contact us directly through a central our production plants. Other certified IFS – International Food Standard “Contact Us” module on the corporate management standards are applied locally Ferrero website. The module will be based on market demand (e.g. IFS, BRC, Audits were carried out to verify implemented by the end of FY 2020/2021. SQF) or statutory requirements. compliance with the IFS standard at production sites in Alba (Italy), Our reporting We promptly activate certification Arlon (Belgium), Belsk (Poland) and procedures for production plants Stadtallendorf (Germany). These audits In FY 2019/2020, across 23 Ferrero production plants when we acquire new companies. uphold the highest level of compliance, and 6 HCo manufacturing plants, we carried out: Integration projects for FSSC 22000 providing a “higher level” certificate. and ISO 9001 are on-going at our acquisitions at Alfreton (UK), North Canton, Bloomington and Franklin Park (USA). We expect to complete them by end Key data Key 1,563,221 1,351,871 of 2022. controls on raw materials in addition controls on primary and secondary to the controls on semi-finished and packaging including organoleptic finished products and defect detection tests Ferrero Group 61 Sustainability Report 2020

Quality and safety of our Surprises

Safety-oriented design is one Strict guidelines related to the dimension, The Code of Conduct, called the “Ethical, developed by Sedex members (a non- Introduction of the key pillars of Surprise shape and morphology of toys are Social and Environmental Requirements profit membership organisation) to give a ® toy development. enforced on any item developed for for Suppliers of KINDER Surprise central agreed protocol and is one of the KINDER® Surprise. Toys”, is inspired by the most advanced most widely used ethical audit formats international ethical codes and is equally in the world. During the audit are verified he Ferrero Toys Testing Protocol states These precautions include avoiding button rigorous and detailed. The Code and its topics under the four pillars: Labour rights, that KINDER® Surprises must be fully cell batteries, magnets and colours that implementation provide reassurance Health and Safety, Environment and compliant with international regulations could be confused with chocolate. We use that KINDER® Surprise toy suppliers Business Ethics. We have appointed two and Ferrero internal requirements. only high-quality materials chosen to

T are operating in compliance with certified and globally well recognised approach Our sustainability avoid breakage of the toy and its parts to All toy certification tests are performed our requirements regarding working third-party bodies (Bureau Veritas and guarantee high design standards. by independent, accredited laboratories conditions. Manufacturers undergo a Intertek) to inspect KINDER® Surprise that are world leaders in Safety Research A physical prototype of each toy is created strict audit (with SMETA Methodology toy manufacturers. Suppliers are audited and Certification. using 3D printing technology. four pillar) aimed at verifying that they (announced and unannounced) to ensure respect the fundamental rights set out in that our ethical requirements are applied

This prototype reflects the shape the Code. SMETA is an audit methodology and complied with. International standards and the function of the Surprise, and regulations while taking into account safety and

We strictly apply international regulations: production requirements. and performance Our progress – European directive on toy safety A thorough analysis is carried out on any 2009/48/CE; Surprise reaching the market: EDUCATIONAL WORLD OF OUR – the European toy safety standards on Safety assessment: we run an extended SURPRISES: THE APPLAYDU APP mechanical and chemical requirements preventative safety assessment of every (EN71); single toy during the design and prototype – the international toy safety standard phases, with the assistance of accredited There is an evolution of kids’ Through this innovative digital The application is COPPA1 certified external laboratories and doctors. way of playing: the phigital platform kids will discover a new and received the highest score on

ISO 8124 Our reporting play. Modern kids are naturally generation of surprises where all the educational App store. – MERCOSUR standards on internationally Medical check: a dedicated working group switching between the digital to physical toys come to life through Applaydu is carefully tested with produced toys; and analyses and evaluates whether aspects the physical worlds. augmented reality. A new era of children and parents before any – national standards and legislations of of the prototype comply with requirements interaction, storytelling and never- major release in order to integrate While the physical experience is ending play for a magic and bigger their feedback. all the countries where Surprise toys are based on medical criteria. and remains crucial, the time spent WOW. A new era of enjoyable The Applaydu App has been commercialised (e.g. REACH regulation on digital devices is constantly learning and playing moments. Age grading evaluation: an independent growing. To capture this evolving progressively launched globally and ASTM F963 standard for the USA). All aspects of the app are EU Pledge since August 2020 until January third-party evaluates all toys using way of playing, KPS launched compliant and, therefore, contain Applaydu, a disruptive playing 2021 and the partnership with internationally recognised age grading no products, ads, nor marketing Gameloft and Oxford will evolve Ferrero internal requirements guidelines to verify they are suitable for, experience designed with best in messages. Also, Applaydu intercepts data Key class partners: Gameloft to develop in the coming years to ensure the We also carry out additional voluntary tests and appeal to, only children over three the needs of parents to be reassured best edutainment experience. an extremely engaging digital about how kids spent their time on as part of the Ferrero Toys Testing Protocol years of age. gaming experience and Oxford The partnership with Oxford has the digital devices, both in terms of been extended until January 2023 which are more restrictive than those provided University to ensure that every Toy certification tests are performed by time and in terms of quality of the in order to allow the researchers by international regulations. The number of single detail is accurately crafted to contents. In line with the KINDER® two independent, accredited laboratories support children’s development. to certify the educational value of tests required by the Ferrero Toys Testing brand promise: “Delight kids while the App. – both world leaders in Safety Research reassure parents”. Protocol is far higher than regulatory 1 The Children's Online Privacy and Certification. Protection Act. requirement, 75 for Ferrero vs. 48 required. Ferrero Group 62 Sustainability Report 2020

Nutrition

By 2050, the global population Our approach How and when are our Repartition of the Product Data Records Introduction is expected to reach 10 billion. products consumed? according to the target eating occasions, Ferrero produces and markets some of the on marketed volumes* As it stands, the way we produce world’s best-loved confectionery products. We continue to expand and refine our and consume food as a society We believe all food types can be part of a analysis of the nutritional impacts of Occasional is pushing the planet and its varied and balanced diet without excluding our products. In FY 2019/2020, we 26.7% extended the scope of analyses to Breakfast systems to the limit. To ensure certain foods or condemning specific 36.7% ingredients or nutrients. include products of recent acquisitions enough safe, nutritious and (Thorntons, Fannie May and Nestlé U.S. sustainable-produced food for One of our goals is to help consumers make chocolate confectionery businesses). approach Our sustainability all, we need a new approach to proper food choices and adopt a varied These are being integrated step by step “Sustainable Nutrition” that and balanced diet which provides essential within the pillars of our historical range nutrients and the right amount of energy of products. We assessed 100 Products optimises health and nutritional Dessert from every food type. Data Records2 covering 95%3 of our core outcomes whilst respecting the 5.0%

marketed volumes. ecosystems the world depends on. In line with the scientific evidence, our strategy is based on the following Breakfast and Between Meals Eating hese are complex issues that cannot key principles: Episode (BMEE) are confirmed to be the and performance Our progress be solved in isolation. As one of the most common eating occasions for our BMEE 31.6% leading companies in confectionery, Suitable serving sizes of our products core products, covering around 68% of T we want to help drive the change 1 that allow consumers to better manage our marketed volumes. This role of our * Marketed volumes worldwide, in the that is needed. We believe in the concept their daily energy needs within their products within consumers’ eating habits

FY 2019/2020. Ferrero Group internal source. of Sustainable Nutrition applied through overall diet. aligns with the sweet, packaged food a system-wide approach encompassing sector. We contribute to efforts to promote agriculture, food, nutrition, health, Careful selection of high-quality raw the importance of having breakfast livelihoods and the environment. 2 materials that provide essential energy regularly as a good eating habit and to and micronutrients. The quantity and encourage moderate food consumption Our reporting We also believe that the effects of food importance of these ingredients’ natural among all age groups and especially on health must consider the overall components are preserved by strategic young people. composition of macronutrients and the role industrial processes, maintaining their of the food matrix, as evidenced by the physiological role. most recent scientific evidence. The food matrix considers the complex assembly Promotion of ingredients, foods and of physical and chemical interactions 3 structured eating occasions that can that take place between the compounds be integrated into food education present in the food. The physiological programmes for consumers and the data Key response and health benefits of a medical-scientific community. particular compound depend on these interactions. For example, the introduction Education on the importance and of bio-compounds present in raw material 4 benefits of an active lifestyle. 2 Products Data Records: aggregated products with similar nutritional characteristics (delta Energy <5% on average value among “flavours”/“version” of the same product). by-products, such as hazelnuts, can lead to 3 Exclusion criteria concern mixes (seasonal and stable products of which marketed values do not referred health benefits in final products as part of to specific product), mini versions (when they do not report a codified portion) and some seasonal a circular economy approach. products (marketed for specific occasion for sharing and festive moments without a codified portion). Ferrero Group 63 Sustainability Report 2020

Nutrition continued

Great brands in small servings We now have scientific data on the Our science-led approach Introduction Most of our products are offered as Glycaemic Index (GI) of 85.3% of our Food education is an efficient and single-wrapped servings. This enables core marketed volumes. The GI is a relative effective way to promote conscious REFORMULATING people to enjoy them within a varied ranking of carbohydrate in foods according nutrition and healthy diet choices. diet, in small serving sizes with a low- to how they affect blood glucose levels. Our research and education programmes OUR PRODUCTS calorie load. In accordance with our Carbohydrates with a low GI value (55 or are constantly expanding to include new nutritional principles, 89% of our marketed less) are more slowly digested, absorbed ways of improving food and nutrition volume has a serving size with a calorie and metabolised. They cause a lower and knowledge and information, including load of equal or less than 130 kcal. slower rise in blood glucose (and therefore within our own Company. We work with approach Our sustainability This is comparable with previous years also usually insulin levels) and there is a recognised experts in different scientific and reflects our commitment to promote general scientific consensus supporting the fields to spread knowledge among 4 products that can be flexibility combined positive effect of a “low-GI” diet. Due to their Ferrero employees. We also keep up to in individual structured eating episodes. composition and structure, the vast majority date on the latest science-based data of our analysed Product Data Records have on the impact of ingredients and our Of our marketed volumes in FY 2019/2020, a low (55 or less) or medium (56-69) GI: products on human and planetary health. around 65% were marketed in a serving 88% are rated low GI, 8% medium and only size of 100 kcal or less and around 7% 4% high GI (70 and above). We determine In FY 2019/2020, we carried out and exceeded 150 kcal per serving, up from the GI of new products when they are supported scientific research with and performance Our progress 4% in FY 2018/2019. This percentage launched and stabilised on market. internationally recognised scientific increase is due to the inclusion of products institutes. We select and work with of our new acquisitions and we are University research groups and well- The control of the serving is a solid way to Repartition of the Product Data Records control the intake of nutrients such as sugar working to apply a common standard according to the energy delivered by known international experts with and fats, characterising confectionery. to historical Ferrero products and newly portion, on marketed volumes* unrestricted grants, recognising their The majority of our SKUs within the historical acquired commercial brands/entities. expert standing in scientific research brands has already 8.0 g or less total sugars/ Our focus on consumers means we apply >200 kcal and importance of guaranteeing the serving, 4.6 and 2.2 g/serving of total and 1.1% a step-by-step approach to changing the >150 – ≤200 kcal ≤10 kcal principle of impartiality, independence and saturated fatty acid, respectively, and 14 or Our reporting standards of new brands in order to let 5.5% 3.6% intellectual freedom. These collaborations less mg/serving of sodium. Nevertheless in FY consumers of these products adapt to aim to create solid scientific evidence to 2019/2020, we reformulated or launched a number of existing and new products including a our core nutritional principles. be disseminated through conferences, breakfast bakery product with more than 3 g per >130 kcal congresses and workshops and published 100 g of dietary fibres. 10.8% FY 18/19 FY 19/20 in scientific journals. As part of our commitment to the IFBA product formulation and innovation framework, we ≤10 kcal 4.9% 3.6% We publish an official list of research stopped using partially hydrogenated fats in our ≤130 kcal results on our website showing the products in 2006. This is fully in line with recent

>10 – ≤100 kcal 61.7% 61.9% 89.2% scientific work undertaken by the WHO requests of limiting industrial trans fats at data Key Group in last three years. a global level. Ferrero is actively collaborating >100 – ≤150 kcal 29.3% 27.9% to support the achievement of this objective, together with all other involved stakeholders. >150 – ≤200 kcal 3.0% 5.5% >100 – ≤150 kcal >10 – ≤100 kcal Download the list of scientific research 27.9% 61.9% and conferences for FY 2019/2020 >200 kcal 1.0% 1.1% * Marketed volumes worldwide, in the FY ≤130 kcal 91.2% 89.2% 2019/2020. Ferrero Group internal source Read our Statement on Product Formulation and Innovation 4 https://www.sciencedirect.com/science/article/pii/ S0939475315001271 Ferrero Group 64 Sustainability Report 2020

Responsible communications, marketing and labelling

We are committed to responsible In general, advertising and marketing As an active player in these frameworks, Internally, a number of teams are involved Introduction communications that assist standards are administered by a broad Ferrero is a member of: in responsible marketing and advertising legal framework that is further defined including Institutional Affairs, Marketing, consumers in making appropriate – The International Food & Beverage by industry standards. In Europe, legal Legal, Media Planning and Business Units. Alliance (IFBA), through which the choices about the food and standards include the Unfair Commercial They work together to ensure we achieve world’s leading food companies commit beverage products they buy and Practice Directive and the Misleading the highest possible level of compliance. to promote self-regulation programmes consume. Communications and and Comparative Advertising Directive. We continue to develop internal guidance regarding responsible advertising and They work in combination with a series of and training tailored to the specific needs labelling help consumers nutrition information, formulation and global, regional and local Industry Self- of the different markets and regions. understand the role of nutrition, portioning of food, and promoting approach Our sustainability Regulatory Codes. To further complete the In 2020, we created and launched a physical exercise. diet and movement in achieving structure, we also voluntarily subscribe to “responsible marketing to children” a healthy and active lifestyle. Industry Code of Conducts on responsible – The World Federation of Advertisers e-learning module as part of the Ferrero marketing to kids, such as the EU Pledge (WFA), an international organisation University. It is specifically designed lobally, the increasing focus on diet, and International Food & Beverage which promotes good and to support our marketeers globally in

physical activity and health has put Alliance (IFBA) Global Responsible efficient practices in relation to understanding the details of our global a spotlight on the role of marketing Marketing Policy. responsible advertising. responsible marketing to kids’ principles G and communications. As a leading with real case examples and a quick test producer of sweet, packaged food, we Commitment to voluntary Responsible marketing to children to put the principles into practice. and performance Our progress ensure our communications are consistent As a group commitment, we apply the with the principles of good nutrition, self-regulation Our responsible marketing commitments IFBA Global Responsible Marketing Policy. balanced diet and physical activity. We apply the “Framework for responsible are included in the Ferrero Advertising This means that at a global level we do and Marketing Principles. These are food and beverage communication” As we know that responsible marketing adopted by the International Chamber not advertise any our food products to frequently updated to keep up with the can be a powerful force for behaviour of Commerce (ICC) – the world’s audiences primarily composed of children latest developments of the self-regulatory change, we use it to convey the information foremost business organisation under the age of 12 on TV, radio, print, frameworks and are publicly available on consumers need to make responsible promoting responsible marketing and cinema, online (including Company- our corporate websites. Our reporting choices about our products and to engage advertising communications – as well owned websites and social media), DVD/ them on the issues they are interested as relevant regional and national self- CD-ROM, direct marketing, product in. We go beyond legal requirements by regulatory codes. placement, interactive games, outdoor adopting Industry standards on nutrition marketing, mobile and SMS marketing. labelling and advertising to tangibly Effective self-regulation of commercial Beyond the placement of product improve our positive social impact. communications provides a valuable marketing communications, we also framework to serve the interests of consider the content of our advertising consumers by providing truthful and to ensure it is not designed to appeal

accurate communications. We recognise primarily to children under 12. In Europe, data Key the need for proper enforcement we take part in the EU Pledge initiative mechanisms to sanction or amend which mirrors the parameters of our global advertisements that do not meet these commitment and fosters a responsible self-regulatory requirements. approach to food product advertising to children under the age of 12 across the same media. Ferrero Group 65 Sustainability Report 2020

Responsible communications, marketing and labelling continued

How responsible is our marketing Commitment to Commitment to In European markets, we voluntarily Introduction and advertising? healthy lifestyles transparent labelling provide nutrition information on the front of pack of 100%8 of our eligible Compliance with the EU Pledge Ferrero has made a series of commitments Our labels provide consumers with products in the EU (KINDER® and Nutella® commitment is subject to annual to support the promotion of physical accurate and transparent nutrition ranges and Ferrero snacks), in line with monitoring carried out by two independent activity through national Ensemble information on front and back of packs the requirements of Regulation (EU) third-party organisations: Ebiquity5 for Prévenons l’Obésité Des Enfants (EPODE)- in compliance with current legislation No. 1169/2011 on the provision of food television advertising and the European based programmes in selected countries. in different countries as well as information to consumers and labelling Advertising Standards Alliance (EASA) for voluntary commitments.

The European Commission has formally recommendations of FoodDrinkEurope. approach Our sustainability brand websites, social media profiles and recognised EPODE as a best-practice Globally, we are committed to meeting influencer marketing posts.6 We also offer voluntary nutritional model because it brings stakeholders the IFBA Principles for a Global Approach information on the front of packs outside In FY 2019/2020, our overall compliance together – including local authorities, to Fact-based Nutrition Information7 the EU to ensure consistency across the rate mirrored the positive results of health professionals, teachers, private on eligible products. This was finalised Group. The nutrition information displayed previous years: 98.8% for television partners and local communities – through in January 2017 in countries where

includes the energy value and – when advertising and 100% for online an integrated approach to prevent local regulation allows it. The general appropriate – amount of nutrients per advertising. This means all brand websites, childhood obesity. principles are that the provision of nutrition portion and/or per 100 g of product, as social media profiles and influencer information should be:

In 2020, we financially supported the well as an indication of what this amount and performance Our progress marketing posts that were analysed national French project “Vivons en forme” – Objective, fact- and science-based; represents as a percentage of an average aligned with the EU Pledge commitment. (VIF) which comprised a series of initiatives – Presented in a legible, clear and visible person’s daily dietary needs. to promote the benefits of physical activity, format; and In countries where a recognised reference

nutrition and personal wellbeing among – Understandable to consumers to intake value does not exist or is not children and adults. enable them to make informed dietary permitted, only the calorie content per decisions about the foods and beverages 100 g and/or per portion is displayed on they choose. our packaging. 98.8% 100% Our reporting Overall compliance rate Overall compliance rate for television advertising for online advertising Key data Key

5 Ebiquity monitored TV advertising broadcasted in Bulgaria, France, Germany, Italy, Poland and Spain. 6 In 2020, EASA monitored brand websites, social media profiles and influencer marketing through evaluations carried out by the national advertising self-regulatory organisations in Belgium, France, Germany, Greece, Italy, Romania, Spain and Sweden. 7 https://ifballiance.org/publications/ifba-principles-for-global-approach-to-nutrition-information/ 8 This percentage does not cover small packs or seasonal products, as the recommendation explicitly exempts such categories. Ferrero Group 66 Sustainability Report 2020 Introduction approach Our sustainability

Empower people and performance Our progress

We will continue to develop and motivate our people and focus on strengthening diversity and inclusion across the business. Our reporting 4 data Key Ferrero Group 67 Sustainability Report 2020

How we empower people

Our focus on people extends across the Introduction Why does it matter? Our approach whole value chain, ensuring we uphold With over 37,000 employees based in more Ferrero employees are first introduced to high standards of safety, human and than 50 countries, we must engage all our the Company vision when they join the labour rights in both our operations and people to continue to succeed. This means Company and they continue to be engaged global supply chain. We apply a due listening and responding to their views and throughout the employee lifecycle. diligence-based approach which ensures creating a working environment where Our People Centricity Strategy is focused the standards set out in the Ferrero Code people feel valued and able to grow. on bringing about positive change in three of Ethics and Code of Business Conduct key ways: are adhered to by our employees, suppliers For over 70 years, we have believed approach Our sustainability and collaborators (see page 77). that a diverse and inclusive workforce – Evolution of the relationship between and culture of strong values is crucial to Ferrero and its employees. This includes We also deliver societal impact through our long-term business success. We motivate enabling proactivity and accountability social activities: and develop our employees to improve for growth and career development The Ferrero Foundation – offering Ferrero their decision making, consumer focus through digitalisation. Seniors (Group employees who have and engagement. Their safety is of – Developing a new role and expectations retired) a new concept of old age with its paramount importance and we strive to for line managers as catalysts for programme of creative, recreational and ensure their wellbeing and manage risks and performance Our progress change. This is delivered through the social activities, accompanied by social to our business. Line Managers Excellence manifesto and healthcare services investing in the Respect for human rights is a core value and programme. promotion of individuals and of culture within our operations and supply chains. – Enabling Human Resources (HR) (page 78).

We work with multiple stakeholders professionals to play an innovative and Michele Ferrero Entrepreneurial Project to address worker safety, labour rights transformative role as guarantors of – supporting social initiatives that and children’s rights and to contribute processes, while facilitating Managers to safeguard the health, education and social to inclusive and thriving communities. be accountable and proactive. development of children and young people Our reporting Our strategy applies across the entire in the least developed areas of emerging employee lifecycle and guides all aspects countries (page 79). of employee engagement, development of Kinder Joy of moving – our international HR processes and tools and leadership. social responsibility project which aims to bring the joy of movement into the life of every child by promoting physical activity and an active lifestyle in an easy, engaging

and joyful way (page 80). data Key Ferrero Group 68 Sustainability Report 2020

How we empower people continued

RESPONDING Introduction TO THE COVID-19 PANDEMIC Despite the challenging and ever- At the same time, office-based employees changing situation, we maintained our adapted quickly to remote working, approach Our sustainability focus on achieving high ethical standards supported by measures to ensure a and ensuring the wellbeing of our seamless transition and support their employees, communities and consumers. wellbeing. Thanks to the technologies The challenges posed by the pandemic in place and the progress of our digital provided an opportunity to renew this transformation, we were able to adapt

contract of engagement and enhance our without compromising the health and commitment to protect the health of our safety of our employees or the wider employees. All our production sites were business continuity. During this time, exposed to sudden changes in working each region has developed a detailed and performance Our progress conditions and they adapted quickly and communication plan to keep people effectively. Measures were put in place in informed and engaged, organising record time according to Group Guidelines meetings, virtual events and other

and local requirements to prevent risks of activities. On top, thanks to the support of infection while maintaining production. our Line managers, we have monitored the These measures included distributing wellbeing of our employees. The dedicated masks for employees, calls and emails services of our Employee Assistance

managed by the Security Control Room, Programme were already in place and in Our reporting and development of Group and local the meantime a Group solution has been guidelines. Moreover, a dedicated app designed and it will be launched. has been launched to keep employees Covid-19 affected the delivery of learning promptly informed about the evolution and development with many programmes, of the virus and the different travel including Ferrero University courses, restrictions, and give them the possibility to adapted to be delivered online. report a positive or suspected case to the Ferrero Global Security Operations Center. Partly as a result of employee feedback Key data Key during the pandemic, we developed a A consolidated view of production sites Global Wellbeing Programme designed to was updated daily by our security teams provide a holistic framework for supporting to monitor the consistent implementation the wellbeing of Ferrero people around the of measures across plants and share world (see case study on page 75). examples of good practices. Ferrero Group 69 Sustainability Report 2020

Engaging our people

As Ferrero grows and diversifies, 71% of employees took part in the survey We continue to facilitate open and Global employee survey 2020 Introduction we need to support the business despite it being launched at the start of the consistent communication across our by engaging and inspiring our pandemic, and 40% of respondents replied Company using newly developed digital to the open-ended question. These two tools and channels. Forward is our global workforce. Facilitated by indicators highlight our people’s desire digital platform, available in 10 different digital platforms, we encourage to be heard and to play an active role in languages, that provides a key entry point a culture of managerial improving their workplace. for employees to Company news, tools and applications. Our aim is that all employee 10 excellence and an inclusive The overall key learnings are: different languages mindset to ensure the highest groups will be able to access content from approach Our sustainability – High level of responses that prove the their computers, smartphones and other level of engagement among willingness of our people to be engaged; devices – anytime, anywhere. our people. – overall improvement vs last two Survey editions; e conduct a global YOU PERFORMANCE MANAGEMENT

employee Survey every – good results in terms of pride to be in Our Performance Evaluation process is two years to understand Ferrero and to recommend others to based on employee achievement and W progress and opportunities for join us; 71% behaviours across three dimensions: improvement. The survey engages more – positive comments regarding the and performance Our progress individual performance, contribution to of employees took part than 20,000 employees and we analyse family dimension of the Company and the team and contribution to the matrix in the survey despite it the quantitative results and qualitative appreciation of our distinctive product organisation (multifunctional team) – all of being launched at the comments made by participants. know-how; which must reflect the Ferrero values and start of the pandemic The results of the survey are essential – areas of improvements targeted to core competencies. Employees receive input for developing our action plans. the managerial capabilities of our line feedback from their professional and In 2020, we launched the third survey, managers and the work-life balance; and managerial heads and internal clients. In YOU 2020, to measure employees’ – diversity is confirmed to be a crucial topic FY 2019/2020 11,158 employees, from perceptions of the deployment of our for the Company and it remains an area 55 locations (71% employees, 25% middle Our reporting actions plans via a questionnaire provided of attention. managers and 4% senior managers and by the Great Place to Work Institute®, above) were involved in the performance a globally recognised organisation that evaluation process, of which 41% were 20,000 assists in evaluating results against women and 59% were men. more than 20,000 national and international benchmarks. employees engaged The survey included employees of new acquisitions such as the Nestlé U.S. confectionery business. data Key Ferrero Group 70 Sustainability Report 2020

Diversity and inclusion

We are committed to building Actions taken include: – Country Navigator, a cross-cultural Introduction platform that supports people from REGIONAL DIVERSITY a diverse and inclusive culture – Appointment of the Company’s first different backgrounds to improve cultural & INCLUSION AMBASSADORS in which all employees feel Global Diversity and Inclusion Manager. intelligence, was made available to all welcome, appreciated and – Design and communication of a global employees globally. governance model, including a group treated equally. Our diversity – Ferrero became a global supporter of council and several regional councils to of talent makes the Ferrero Catalyst, a global non-profit that works drive the global and local D&I agenda work environment multicultural, with over 800 companies around the respectively. Regional councils will be world to accelerate women into leadership. approach Our sustainability innovative and highly rewarding. established during FY 2020/2021. This diversity is an essential – 17 Regional D&I Ambassadors were Looking ahead, we will continue to building block for developing a nominated to work as a network on D&I evolve our strategy focusing on creating strong culture and workplace. programmes considering local needs. an inclusive mindset. During the next year, our objective will be to put inclusive – Creation of a global D&I dashboard and policies and process into practice, engage ur culture is rooted in values such roll out to all regions to monitor KPIs employees and embed D&I into various as respect and integrity. We believe (such as representation per gender, Company programmes. all our people are equally talented generations, nationalities in the different and performance Our progress O in their own way. In nurturing their levels of the organisation, recruitment of curiosity and natural abilities, we provide female candidates, turn over, promotion Increasing gender balance the means to succeed personally and rates) and progress. This will hold our among our managerial positions professionally throughout their journey management and regional D&I Councils We committed to increase the number of with Ferrero. accountable and enable us to evaluate women in managerial positions by 5% by progress against our internal and Our recognition that diversity and inclusion 2020 against an August 2015 baseline. D&I Ambassadors will drive the external targets. (D&I) are key drivers of business success We reached this target in January 2021. regional Diversity and Inclusion agenda, has seen D&I included as a priority in the – Gender pay equity analysis was As of August 2020, there were 29.8%

reinforcing the subject regionally and Our reporting Ferrero Group strategic plan which will conducted for around 1,000 people women and 70.2% men among our elevating local voices by adapting the shape our actions in the years to come. (representing mainly Senior Manager managerial positions (Middle Manager and Group vision in accordance with specific Our diversity programme focuses on the and above population) with no above), a 3.9% increase. This increased by priorities and needs. four dimensions of gender, nationality, significant gaps found. This analysis will January 2021 to 30.8% women and 69.2% generations and working culture. be extended to all employees in 2021. men, representing a 5% increase since 2015. This result includes new acquisitions Building a truly inclusive environment (Thorntons, Fannie May and the Nestlé takes time and requires the development U.S. confectionery business). of processes and guidelines to support the Key data Key change. In FY 2019/2020, we started the deployment of a three-year plan including a full set of initiatives addressing aspects Gender balance among our managerial positions such as recruitment, succession planning, 2015 2016 2017 2018 2019 2020 learning, flexible working and reward. Unit Men Women Men Women Men Women Men Women Men Women Men Women

Middle Manager and above % 74.1 25.9 73.1 26.9 72.1 27.9 70.8 29.2 69.8 30.2 69.2 30.8 Ferrero Group 71 Sustainability Report 2020

Continuous learning

As our Company becomes We are lucky to have many expert Introduction increasingly international and professionals who, in addition to their day Welcome to Ferrero jobs, support the design, development we evolve our governance and 1 A 12-month targeted programme of and delivery of the learning provided training for new University graduates. business model, it is imperative by our central University team. To date, In FY 2019/2020, 183 graduates from that our approach to developing more than 100 of our professionals have Europe, Colombia, Brazil, Australia, people also changes. been involved in the creation and delivery Welcome to Ferrero programmes support China, Mexico, Russia and Singapore of learning as Subject Matter Experts employees during the onboarding phase participated in six editions of JOIN! Due (SMEs) and instructors, disseminating their e aim to preserve and protect approach Our sustainability at a global and local level. The goal is to to the pandemic, five of the six editions the unique and distinctive know- expertise and knowledge to others in the provide an interactive experience using a were delivered virtually and facilitated how, experience and expertise organisation through the programmes of blended learning approach. on Microsoft Teams. The programme will we have built up throughout our the University. When it comes to learning W continue to be delivered virtually for the long heritage while developing new skills delivery, more than 200 internal trainers next year. We will continue to improve the and capabilities through lifelong learning. of various seniority facilitate or instruct programme to support the learning needs Ferrero University programs. Ferrerità is a programme designed for of young graduates upon joining Ferrero. The Ferrero University We have developed seven programmes new employees to understand the spirit of the Company, its culture, values and

The Ferrero University provides critical which are delivered through an online and performance Our progress business model. In FY 2019/2020, five programmes aligned with business needs learning platform organised around three classroom editions were delivered to 261 to foster employee development globally. pillars. This structure supports a solid A new series of e-learning courses participants in Brazil, Italy, Luxembourg, Some are delivered locally and some are learning experience for our employees designed to support all Ferrero employees Poland and Russia. As a result of the delivered online, including mandatory and professionals. with acquiring common knowledge pandemic, we embarked on a major programmes. Covid-19 deeply affected relevant to all functional areas. The courses project to convert Ferrerità into a virtual the learning strategy of Ferrero University illustrate the foundational concepts programme combining modules with and many courses were adapted to be Starting the learning journey of the “Ferrero Way” of doing things virtual instructor-led sessions that can delivered online. across essential topics. In FY 2019/2020, 1 Welcome to Ferrero take place over a month. We will deliver three e-learnings were launched to all Our reporting this e-learning over the coming year employees worldwide: Governance Risk Building technical skills with Talent teams worldwide trained to and Compliance Corporate Standards; deliver the programme to local colleagues. Ferrero Know- Data Protection; and Anti-bribery 2 Combining online and in-person options and Corruption. In the next year, three How Academies provides an opportunity to enlarge the additional e-learning courses will be made reach of this programme in the long term. available: Cybersecurity Fundamentals; Developing Cultural Intelligence; and Becoming a leader Health and Safety Basics. data Key 3 Ferrero Leaders Ferrero Group 72 Sustainability Report 2020

Continuous learning continued Introduction

2 Know-How Academies 3 Leadership Masters in International Management 599,238 Overall training hours A bespoke Masters programme jointly designed with the prestigious Italian The Know-How Academies safeguard The Leadership pillar of the Ferrero international business school, SDA and disseminate distinctive areas of University supports employees in Bocconi. In FY 2019/2020, we launched approach Our sustainability expertise. An Academy Board comprised management positions to develop their the third edition and 32 Ferrero Managers of functional experts governs each leadership capabilities. Becoming a leader started their 18-month learning journey Academy and is responsible for identifying at Ferrero means fully understanding in November 2019. The programme was and prioritising the professional, functional the Company vision, culture and values. already designed to be virtual which 24,460 training programmes that each Academy Along with sharing their deep knowledge limited the impacts of Covid-19. Training participants

designs and delivers. By the end of and expertise, our leaders are expected FY 2019/2020, there were 12 Academies to engage and inspire Ferrero people. and 96 Senior Leaders involved in the The Leadership pillar supports our initiative

Academy Boards. of building Line Manager Excellence and performance Our progress throughout our organisation. A course to give Line Managers awareness The Ferrero Know How Academy of the Line Managers Excellence Manifesto, programmes are delivered by 24 internally HR processes and core competencies and accredited trainers and/or external elements of the Employee Lifecycle. 17.5 facilitators. We reviewed the training In FY 2019/2020, more than 90% of the training hours per capita A milestone Senior Manager promotion offer in light of Covid-19 and converted target population completed the course. 15 courses to be delivered virtually using and integration programme supported Microsoft Teams and other platforms by by Ferrero University. Each year, we the end of FY 2019/2020. promote between 40-80 people to the Our reporting Senior Manager role in our Company. The programme supports them by sharing experiences, discussing relevant business and people management topics, and reflecting on leadership behaviours and critical skills for new ways of working. Participants learn how to cope with the changing nature of our business and Key data Key stay connected, continuing to develop their networks and support their teams. Covid-19 meant we had to shift to online learning and virtual instructor-led learning platforms for a majority of courses in FY 2019/2020. Ferrero Group 73 Sustainability Report 2020

Employee rights

Ferrero has a long history Driving improvements in Activities of the European EWC meetings were held remotely in Introduction of upholding employee rights workplace conditions Works Council all locations: in Belgium (August 2020) and in Poland, Ireland, Italy, France and and maintaining positive and Our annual ethical audit programme, As of the end of 2020, the European Works Germany (September 2020). The meetings launched in 2019, continued despite Council (EWC) involved more than 18,500 constructive industrial relations. were supported by an external difficulties posed by the pandemic. (corresponding to approximately 55% consultant to manage the interventions Specific areas of the business of all Ferrero Group employees) Ferrero ur mature approach to industrial and encourage active group working were examined using the SMETA employees including workers, employees relations made it possible to renew among the participants. the expiring agreements in countries 6.1 methodology which combines best of the commercial network and the 10 O in South America and Europe in practice ethical audit techniques focused plants located in Italy, Germany, Belgium, A virtual method was also adopted for the approach Our sustainability 2020. Despite challenging socio-economic on four pillars of labour, health and France, Poland, Ireland and the UK. Institutional Meeting in which all members conditions in some countries, negotiations safety, environment and business ethics. The mutual agreement and communication of the EWC participate simultaneously. ended positively in compliance with Evaluations are underway to extend the among the European plants reinforce our This involved the use of an online the schedule to the satisfaction of the use of this methodology to other areas network and way of working. platform that could support simultaneous

of the Company to monitor the situation translation into five languages. stakeholder involved. The impacts of Covid-19 changed the relating to labour conditions, health and The meeting took place on 6 and nature of management of European safety, environment and business ethics. 7 October and lasted one and a half days. industrial relations. It stimulated us to

Based on the findings, we will develop During the meeting, participants jointly and performance Our progress find innovative solutions to guarantee specific projects to further raise the ethical agreed to extend the validity of the EWC's the activity of our EWC, including the standards of the Group. founding agreement until October 2021, virtual management of its seminars and postponing the renewal of the framework training courses. agreement in light of the pandemic and

We made up for the missed spring meeting related limitations. by using local training to maintain contact between all the countries involved in the EWC. The training is a requirement of the Our reporting THE IMPACTS OF COVID-19 CHANGED THE NATURE EWC agreement and is held every two years across relevant European sites. OF MANAGEMENT OF EUROPEAN INDUSTRIAL In 2020, the subject was environmental RELATIONS. IT STIMULATED US TO FIND INNOVATIVE and social sustainability. Our aim is to resume the previous joint training format SOLUTIONS TO GUARANTEE THE ACTIVITY OF OUR through local delivery moving forwards. EWC, INCLUDING THE VIRTUAL MANAGEMENT OF ITS SEMINARS AND TRAINING COURSES. data Key Ferrero Group 74 Sustainability Report 2020

Health & safety and wellbeing

Our vision is a proactive culture To perform an effective risk assessment Strengthening H&S Some of the main projects and Introduction which protects and continuously and put in place appropriate control operational management processes include: measures, we have incorporated the improves the health and safety In FY 2019/2020, we strengthened – Development of H&S training within the concept of the hierarchy of controls across the organisational H&S structure to Ferrero Academy framework starting of everyone. all Group procedures. This concept helps consolidate activities in manufacturing and with an e-learning training mandatory facilities to prioritise and select the most extend efforts beyond direct operations, for everyone, providing basic knowledge e are committed to effective way to control an identified risk starting with the Agri-business and on safety principles and precautions; Zero Accidents through during the implementation phase. continuous improvement and non-manufacturing areas. – Reinforced focus on consistency of We also extend our safety standards to the approach Our sustainability W implementation of robust safety We continued the develop and reporting of key H&S data capturing all third-parties who work at our sites and aim management systems. We focus on visible implement the “Ferrero Operational locations of the Ferrero Group including to manage and mitigate impacts on health leadership, safe behaviours and training Requirements H&S” Programme to guide commercial locations, offices, retail and and safety deriving from interactions with and equipping employees to safely carry the development and implementation Research and Development; contractors and commercial relationships out their work. of a comprehensive H&S management – Deployment of Safety Culture

with third-parties. Ferrero has put in place system and develop our safety culture. Assessment in cooperation with Dupont contractual obligations and requirements Our approach The aim of the programme is to drive Sustainable Solutions to identify our for the health and safety of contractors. In Ferrero all production facilities must H&S improvement in a systematic way, Strengths and Weaknesses in order to

A H&S induction is provided to all Ferrero and performance Our progress using leading and lagging KPIs and develop our Ferrero H&S management comply with applicable health and contractors and visitors before entering applying a step-wise approach which system (F.O.R. – Ferrero Operational safety (H&S) legislation in the country our facilities to work and information takes into account the maturity of sites in Requirements) further; of operation, as well as Ferrero’s stricter on specific work-related hazards and the journey towards H&S excellence. It is procedures. The Group Health and Safety hazardous activities are shared with – Definition of H&S strategy for non- based on the gradual and progressive Function provides strategic direction contractors by both sides. manufacturing areas with initial and leads the development of Group- application of requirements supported by focus on safety precautions in wide initiatives, tools, frameworks and the implementation of specific operational office environments; tools and monitoring. requirements applicable to all sites. – Development and implementation of These focus on high-risk activities and Our reporting The annual H&S Strategic Plan process mandatory Group H&S procedures topics of relevance to our operations (e.g. represents a key moment in the year when for the highest risk activities, defining Lock Out, Tag Out (LOTO), machine safety, the global functional strategy for aligning minimum requirements for all Ferrero working at heights, etc.) and in accordance all areas of the business within a common sites to adhere to independent with international best practice standards framework is defined. In FY 2019/2020, of location; including ISO, ILO, IOSH and other relevant we defined a strategic plan with the applicable international standards. – Health and Safety digitalisation vision to build a global health and safety processes; and organisation with long-term orientation

– Conducting pilots in partnership with an data Key and increasing safety performance. external provider to implement a global contractor qualification process. Ferrero Group 75 Sustainability Report 2020

Health & safety and wellbeing continued

Developing our safety culture Introduction To develop a robust safety culture, our plants develop campaigns and training THE GLOBAL EMPLOYEE to engage employees and address local health and safety needs according to local WELLBEING PROGRAMME legislation and Ferrero H&S requirements. WELLBEING

The roll-out of a Safety Culture In September 2019, we started Assessment Process will identify work to develop a Global Wellbeing approach Our sustainability our Strengths and Weaknesses in Programme designed to provide a order to develop our Ferrero H&S holistic framework for supporting the wellbeing of Ferrero people around management system (F.O.R. – Ferrero the world. It responds to employee Operational Requirements). feedback and questions about how to stay resilient, positive and Occupational health services are offered

forward-looking, especially during to support employee wellbeing in line with the pandemic. regulatory requirements. These include The programme will encompass 20 initiatives, grouped in 4 pillars, which access to works doctors/ nurses, first and performance Our progress aid services and counselling, etc. H&S aims at developing and promoting: professionals are employed in the regions – a healthy lifestyle at the workplace and countries where we operate to and beyond by providing physical ensure occupational health hazards are and mental wellbeing initiatives and encouraging healthy habits identified and risks minimised through and behaviors; the development of occupational health – high energy levels to increase services. These services are subject to emotional and mental resilience; regular review by local HR and the Ferrero – a high level of protection at Our reporting Group H&S function. Additional activities work by providing the safe and and benefits aimed at prevention and secure workplaces; wellbeing are offered to employees free of – social wellbeing by fostering charge at various sites, including: internal networks and creating a sense of belonging as well as – A free nurse and doctor on-site service establishing external initiatives for first-aid and other services such through volunteering to as paediatrician; provide a positive contribution to communities.

– Employee Care Assistant on-site; data Key The Programme will be rolled out – A balanced food offer in indoor alongside local wellbeing activities restaurant with nutritionist on-site; starting in FY 2020/2021 and over the next three years. It will be – Free regular medical check-ups; accompanied by the global launch of – Internal promotion to sports an Employee Assistance Programme communities; and (EAP) in FY 2020/2021. This will be accessible to all employees and their – Fitness on-site with various classes. immediate family members. Ferrero Group 76 Sustainability Report 2020

Health & safety and wellbeing continued Introduction WHAT WE HAVE ACHIEVED TRIR vs LDIR 1 The TRIR includes all FY 2019/2020 performance recordable accidents, lost injury cases, medical treatment cases Overall, the trend for H&S in FY 2019/2020 12 10.71 10.56 and restricted worked cases. was positive. From September 2019, four 10 8.59 The frequency index is new plants located in North America (see calculated including temporary 8 page 5) were included in within the scope workers, excluding commuting 7.77 7.66 of our safety data along with the Hazelnut 6 7.10 accidents. Statistical data on

the occurrence of workplace approach Our sustainability Company (seven production plants and 4 accidents in the area did not six Agrifarms). include contractors and third 2 party business relationships. From September 2019, we have used 1 0 the TRIR (Number of total recordable 2017/18 2018/19 2019/20 accidents per million hours worked TRIR LDIR requiring more than one day of absence from work) in addition to LDIR (Number accidents per million worked hours more Ferrero Group accident severity rate CRITERIA: The injuries included and performance Our progress than one day of absence from work). for the KPIs are the ones with Severity Index (1.000 hrs) Excluded commuting We started to monitor and report the an absence of more than 1 day TRIR as it is a more inclusive measure, (excluding commuting accidents); temporary worker data is included accounting several types of accidents. 0.16 for FY 2019/2020.

0.15 0.15 In FY 2019/2020, our LDIR decreased 0.15 from 7.66 accidents per million hours 0.14 worked to 7.10 (- 7.3%). The TRIR was 0.14 0.13

10.56 and the injury severity rate, which Our reporting measures the days of work missed every 0.12 1,000 hours worked, was 0.153. 0.11

0.10 2017/18 2018/19 2019/20 Key data Key Ferrero Group 77 Sustainability Report 2020

Human rights

Together with the Company 7. Health and safety Partnerships and collaboration Introduction values, Ferrero’s respect for 8. Privacy Partnerships are critical to addressing LOOKING AHEAD human rights guides strategy, 9. Environmental-related human complex human rights issues and we policy and activities across our rights issues collaborate with business partners, We are in the process of operations and supply chain. 10. Rights relating to consumer health and international organisations, governments developing a new Human responsible marketing and NGOs to tackle potential issues across Rights Strategy for 2030 and our value chain. e promote respect for human Ferrero's Human Rights Policy Statement strengthening our Company- rights along the entire value In the agricultural sector, migrant workers, sets out our response to these issues. wide approach including: approach Our sustainability chain, adhering to the Principles women and children may be exposed It also highlights our approach and drives – Defining a human rights policy W of the United Nations Global engagement with our employees, business to hazardous conditions and can be statement in line with UN guidelines Compact and to the United Nation Guiding partners and relevant stakeholders on vulnerable to poor labour practices such Principles of Business and Human Rights as forced labour, human trafficking and and current regulatory trends our Human Rights Policy Statement and strengthening our human (UN Guiding Principles). We are determined and principles. child labour. We work with others to raise to eliminate of all forms of modern slavery, awareness of these issues, tackle the rights governance; human trafficking, forced, compulsory and root causes and advance the promotion – Embedding strong human rights due prison labour, and child labour – beginning Human rights due diligence of human rights in agricultural supply diligence including clear standards with its worst forms. Our due diligence-based approach ensures chains, reaching all the way to our and risk assessments to identify high and performance Our progress we identify, prevent and address any farmers. The Ferrero Farming Values risk areas within our operations and Understanding our human adverse human rights impacts we may Programs (FFV) focus on addressing key supply chain; rights risks cause or contribute to – either directly sustainability impact areas including – Developing human rights grievance or indirectly – through our operations, human and labour rights for each of our mechanisms and a remediation To strengthen our human rights due products, services and business main raw materials (see page 32). policy which we will also extend to diligence, we collaborated with Shift, relationships. As human rights issues are our operations and supply chain; and the leading centre of expertise on Human systemic, we expect our business partners Rights globally. In 2018, we worked with – Capacity building through training

to take appropriate steps and measures to Our reporting and awareness of human rights risks them to identify 10 key salient human do the same. rights risks which occur across the value and issues, as well as responsible chain and on which we focus our efforts: The Ferrero Code of Ethics and Business sourcing in 2021. Code of Conduct clearly set out our human 1. Child protection and no child labour rights expectations of our employees, 2. No forced, bonded and suppliers and collaborators, who are compulsory labour contractually required to comply with them. 3. Fair wages We have conducted a series of impact

assessments to inform our future approach data Key 4. Working hours towards addressing human rights – 5. Diversity and inclusion, including no including developing a Human Rights discrimination and harassment Due Diligence Framework and identifying 6. Freedom of association and remediation actions. collective bargaining Ferrero Group 78 Sustainability Report 2020

Ferrero Foundation

The Ferrero Foundation – This made it possible to identify a cluster The Ferrero nursery Introduction established by Michele Ferrero of people within the Ferrero Senior Group The Ferrero nursery in Alba is well- as a pioneering social initiative who had taken part in a stay in Alassio known for serving children and providing HOSPITAL MICHELE (Italy) in February 2020. They became the a space for meetings, information in 1983 – officially became a subjects of a scientific paper published in Foundation in 1991. Today, under exchange for parents, educators and & PIETRO FERRERO the international magazine “Aging Clinical care and support workers, and creative the guiding principle of “Work, and Experimental Research” entitled “Why activities. The nursery can look after 80 – VERDUNO Create and Donate”, it supports data on frailty and SARS-CoV-2 infection children aged between three months and are basic to progress”. employees with 25 years of three years old. Ferrero Seniors act as approach Our sustainability work experience – affectionately The medical service continued working “grandparents”, participating in activities known as Ferrero Seniors. throughout the year with 628 medical with children and parents and offering examinations carried out. Physical exercise their time, experience and affection. was suspended in March 2020 and The Foundation’s medical service also Responding to the pandemic provides advice at the Ferrero nursery.

activities resumed “one-to-one” in June to The social and cultural activities of the September, registering 604 attendees. Ferrero Foundation were shaped by The Piera, Pietro and Giovanni the health measures taken in response Promoting active aging and performance Our progress to Covid-19 in 2020.3 In March, the Ferrero Foundation Nursery School Foundation suspended all planned In cooperation with Dr. Alberto Zucchelli The Piera, Pietro and Giovanni Ferrero activities and its medical lab was approved of the Stockholm Karolinska Institutet, Nursery School welcomed 80 children in by the local healthcare centre to support a new project was launched to support the school year 2020/2021. The Nursery the frontline response to the health scientifically rigorous research on the School offers intergenerational encounters emergency from April 2020. effects of the activities of the Ferrero with Ferrero Foundation’s Seniors. Foundation on the “successful ageing” of A Scientific Committee chaired by This included providing rapid antibody Ferrero Seniors. A Facebook page went live Professor Marcel Rufo, one of the world’s tests for SARS Cov-2, nasopharyngeal in May and appointments started in June. Our reporting most authoritative specialists in childhood On 29 September 2020, a new hospital in antigen rapid swab tests for SARS Cov- and adolescence, has been established to A series of expert dialogues were held on Verduno, Italy, was named after Michele and 2, nasopharyngeal antigen rapid swab ensure a high educational standard. Pietro Ferrero – a sign of gratitude towards tests for the virus of influenza, A and B, Covid-19 and other topics. These involved the two entrepreneurs who were deeply immunologists, clinicians, geriatricians, bonded to their community. and saliva antigen swab tests for SARS Future initiatives Cov-2. In total, 705 diagnostic tests were epidemiologists and virologists and Mrs. Maria Franca Ferrero, president of the performed during the year. other leading experts from hospitals and In November 2021, The Ferrero Foundation will Ferrero Foundation, and Mr. Giovanni Ferrero, research institutes across Italy. host Healthy Ageing Week – a week of events, Group Executive Chairman, took part in the symposia and conventions on the topic of ceremony. A new initiative was announced during the event to create a park surrounding the Key data Key For full information on activities see the ageing. These events are being planned in hospital to provide a healing garden for patients, Ferrero Foundation website cooperation with Turin Medical Academy, healthcare personnel and visiting relatives. Milan Catholic University of the Sacred Heart Hospitalised children and adults will be able to and Stockholm Karolinska Institutet. In addition, stay outdoors, move around and enjoy the area – between October 2020 and February all crucial to wellbeing and psychophysical health. 2021, an international art exhibition will be 3 Information reported on the Ferrero Foundation held in tribute to the Italian artist Alberto covers the calendar year 1 January 2020 to Burri (Città di Castello 1915-Nizza 1995). 31 December 2020. Ferrero Group 79 Sustainability Report 2020

Michele Ferrero Entrepreneurial Project Introduction FERRERO SOUTH LOOKING AHEAD In 2020 Covid-19 pandemic slowed down the implementation, The entrepreneurial and AFRICA’S PRIMARY at field level, of new social projects both in South Africa and in India, philanthropic spirit that has HEALTH CARE CENTRE however without halting them altogether. characterised Ferrero since its In South Africa, progress was made Also in India progress was made

founding was the inspiration towards the completion of a new project towards the completion of the first approach Our sustainability behind the Ferrero Social at the Laerskool De Deur Primary three “anganwadi” in villages within Enterprises, established in School (not far from the Ferrero plant the Baramati district (Maharashtra 2005 in Cameroon, and later in at Walkerville), where its original basic state) where the Ferrero plant is located. sports facilities were fully upgraded Anganwadi are centres for mother and South Africa and India. In 2015, and turned into a proper modern sports child care providing supplementary nutrition, to honour their founder, these centre. The school will dispose of a health, immunisation and non formal pre- were renamed Michele Ferrero football field equipped with an irrigation school education to children under five system; bleachers covered with canopies; years; health and nutrition education, health

Entrepreneurial Project (MFEP). and performance Our progress and changing rooms for pupils. It will be check-up, and referral services to lactating ully fledged commercial enterprises Ferrero South Africa’s Primary Health Care accessible to c.5,000 pupils from 5 local mothers, vulnerable adolescent girls and joining the MFEP share the goal of Centre (PHCC): an effective outpost in the rural schools most of which do not dispose women especially in rural areas. The Ferrero war against Covid-19 earning profits in a “social” spirit, at all of sport facilities. Once operational, it Anganwadi Programme is planning the

F by creating job opportunities and In March 2018, a primary health care centre is meant to serve as a stepping stone also construction of further five anganwadi in carrying out humanitarian initiatives aimed (PHCC) was launched near the Ferrero plant at for the future launching, in South Africa, of other Baramati villages, home to many Walkerville (in Gauteng, South Africa). at safeguarding the health, educational Ferrero “Kinder Joy of moving” project. of its local plant workers. The PHCC's original scope was to improve and and social development of the young, strengthen the occupational medical services to Our reporting within emerging countries. the Ferrero plant workers by extending them to include also free of charge primary health care Locally sourced raw materials are selected Projects benefiting and involving the local when possible, creating additional communities where the Ferrero plants operate Mission services accessible by Ferrero workers, their children and family members. jobs to support economic development are identified in partnership with the institutional Be a catalyst for local During the period covered by the present and prosperity within the wider local authorities of the host countries and the Ferrero socio-economic development Sustainability Report, the PHCC proved to be also community, promote children’s health and Foundation. To date, they have focused on The MFEP contributes to foster a modern, an un-hoped for powerful tool against Covid-19, educational care in the local communities. providing educational and healthcare assistance greatly contributing to support the Company’s industrial workplace culture in communities to children. Activities include: construction of safety preventive measures introduced to contain Each company participating in the Michele nurseries and primary healthcare facilities; characterised by low employment rates the spreading of the virus among Ferrero workers data Key Ferrero Entrepreneurial Project commits to and a high prevalence of so-called “informal and its impact on the plant operations. renovation of primary schools; construction of make financial allocations to a dedicated economic activities” i.e. activities that are not schoolrooms for children of refugee families; a Local Social Fund. These funds can be subject to government regulation or taxation. primary healthcare centre; funding of seminars accessed on a three-year basis to support to raise awareness on the prevention of social and humanitarian projects. Ferrero production plants in Cameroon, infectious diseases among young people. India and South Africa provide business opportunities for a variety of companies Further online information on the in the area. Michele Ferrero Entrepreneurial Project Ferrero Group 80 Sustainability Report 2020

Kinder Joy of moving

he project, now in its fifteenth year, We continued to propose digital content, On-field and virtual activities have ensured Introduction aims to bring the joy of movement suggestions and advice, to always be the presence of the project in 28 Countries into the life of every child by alongside families and encourage parents and Regions, with 2.6 million kids moved T promoting physical activity and to move with their children, even at home, with joy, together with accredited an active lifestyle in an easy, engaging reaching 81 million social users worldwide. partners and experts including 120 Sports and joyful way. Federations and 5 Olympic Committees, We activated several initiatives, mainly Government institutions, and Universities; At the heart of the project is the strong in Italy, France, Poland, Spain, Portugal, with an investment of 10.3 million euros. belief that a positive attitude towards Argentina, Brazil and United Kingdom. Kinder Joy of moving is a Kinder movement will make today’s children, These include recommendations for Kinder Joy of moving is inspired by a approach Our sustainability Social Responsibility project better adults tomorrow; because children home and outdoor games, enriching the scientifically recognized educational that is part of the Ferrero who manage to associate movement content stream dedicated to families method, that inspires kids to move through Group Corporate Sustainability with joy and fun are more likely to develop with new sections such as the “JOM play, while developing key skills in 4 major moving as a habit that leads to a healthier Games”. Designed for children aged 3 areas: physical fitness, motor coordination, approach. Having its commitment

lifestyle as adults. to 10, they are based on the innovative cognitive function and creativity, and in bringing joy to children through educational Joy of moving method, life skills. The commitment didn’t even stop during moving, encouraging their allowing kids to acquire or improve specific the Covid-19 emergency: Kinder Joy of The methodology is part of school

skills while having fun at the same time. and performance Our progress natural inclination to be active, moving has strengthened its purpose of activities in some countries such as Italy, Specific content has also been provided move and play, and ensuring their being close to people, increasing its social Australia, Brazil and Saudi Arabia, through for schools, receiving considerable right to play everywhere in the responsibility value despite the partial stop the collaboration with the Ministries of appreciation from both teachers of in-field events. Education and Universities, with efforts world, the project forms part of and parents. the “Empower People” pillar. toward further expansion into new areas. When conditions allowed, with great In the UK and USA, the Joy of moving attention to safety and prevention, Kinder methodology is present through extra Joy of moving was back to the field for curriculum activities in collaboration with

its Global events, such as the Kinder Joy strong local partners. Our reporting of moving Tennis Trophy and the Garda Lake Optimist Meeting, as well as local initiatives held in different countries.

In evidence: Target reach Key data Key

million users reached with Kinder Joy of moving editorial plan on social channels 81 Period: March-November 2020 Ferrero Group 81 Sustainability Report 2020

Kinder Joy of moving continued

Further to this, other countries like Introduction Poland and Romania collaborate with the WHATEVER THE GAME, LET JOY WIN THE RIGHT TO PLAY Ministries of Education by implementing the Kinder Joy of moving program in Irrespective of the sports discipline, Kinder Joy of moving is committed to different school contexts. the playing field and the level of bring the joy of movement into the life performance or ability of the child, all of every child, all around the world, It is particularly noteworthy that in 2020 Kinder Joy of moving activities are based in accordance with Article 31 of the Vision to the Joy of moving method also enriched on the joyful aspect of play and on the United Nations Convention on Children’s INSPIRE the advanced training proposals of motto “Whatever the game, let joy win”. Rights, that recognises playing as a approach Our sustainability the Bachelor's Degree Course in Motor fundamental right of all children. and Sport Sciences at the SUISM Turin Future generations to adopt University (Italy) with the new training the culture of physical activity course Winter School SUISM “JOY OF and to lead a life full of joy MOVING MindMovers & ImaginAction and

a new internship dedicated to the method.” In the wake of the experience during the Covid-19 emergency, Kinder Joy of moving is opening a new project dedicated to and performance Our progress families, with games promoting physical activity and an active lifestyle in an easy, Mission: engaging and joyful way that can be

TO FACILITATE applied within one’s daily routine: Joy of moving Family. Also, Village Joy of moving – a sports Physical activity as a simple, center in Alba (Italy) and a permanent Our reporting daily practice for children research center on the Joy of moving all over the world method that is recognised by Institutions focused on children’s motor activity – did not stop during the emergency period, providing its members with distance learning and virtual training activities thanks to its specialised trainers. Objective: TO MOVE data Key WITH JOY

The largest possible number of children worldwide Ferrero Group 82 Sustainability Report 2020 Introduction

Our approach Our sustainability

and performance Our progress

reporting

Materiality 83

Governance 85 Our reporting About this report 87 Key data Key Ferrero Group 83 Sustainability Report 2020

Materiality Introduction To succeed in a changing world, Materiality assessment process we must identify, respond and adapt to the sustainability Step 1 Defining the Step 2 Engage Step 3 Analyse Step 4 Validate issues that matter most to our issues universe stakeholders results findings stakeholders and our business. This understanding defines our strategy and shapes our identified 21 issues of list issues material 2020 Ferrero 32 organisational units involved

Industry approach Our sustainability reporting to meet the needs via survey trends of diverse audiences. Ferrero 2019 material issues

e have carried out a detailed Analyse results to 5 internal determine priority materiality analysis to identify workshops issues, develop matrix

and assess the relative Standards Validate findings W importance of different and with Sustainability sustainability topics for their impact on our frameworks External interviews Operative Committee Determine implications ability to create value and their relevance with NGOs, and performance Our progress and recommendations suppliers and other to key stakeholders. We analysed internal for report and strategy and external stakeholder perspectives Ferrero stakeholders and ranked key material topics following

a stepwise process (see infographic): Datamaran Datamaran mapping quantitative analysis

Defining the issues universe Stakeholder engagement Results analysis Validate findings Our reporting Using the material topics We engaged internal and We used the outcomes of The outcomes were validated identified in 2019, we carried external stakeholders via Step 2 to determine priority by the Sustainability out a desk-based review of online surveys, workshops and topics to develop a materiality Operative Committee. external information sources interviews to collect quantitative matrix before considering the including external standards and qualitative feedback on the implications for our strategy frameworks and industry trends relative priority of each issue. and reporting. to identify a list of 21 topics for This was supplemented this further analysis. with quantitative analysis using data Key Datamaran, a fully automated solution to identify and monitor sustainability topics on an ongoing basis – by scanning the regulatory, media and corporate disclosure environments. Ferrero Group 84 Sustainability Report 2020

Materiality continued

Outcomes of the assessment Introduction Biodiversity, deforestation Qualitative analysis via There were a number of key outcomes and prevention and sustainable direct engagement insights from the materiality assessment: agriculture Human rights in supply chain This year, we included direct stakeholder – Most topics on the matrix are linear Nutrition, health engagement as part of our qualitative and lifestyles suggesting broad agreement between Climate action analysis of material issues for the Ferrero internal management and first time. external stakeholders about the relative Supplier engagement Product design, packaging importance of topics. and transparency and the circular economy Internal stakeholders: 32 organisational units from across the Group were approach Our sustainability – There was a reduction from nine to seven engaged via an online survey with an topics within the top priority section Diversity and Inclusion Water management 80% response rate. We also carried five compared to the assessment undertaken Products and ingredients safety dedicated workshops involving more than

last year. s and quality r 25 colleagues from different departments. e d – “Human rights in supply chain” moved l

o

h External stakeholders: We carried to the top of the list with “Climate e Responsible Collaboration and out direct interviews with external

action” and “Product design, packaging ta k marketing

s partnerships for the goals

r stakeholders including representatives and performance Our progress

and the circular economy” following o f from NGOs, suppliers, universities and closely behind. e Employee satisfaction industry associations.

– A mapping exercise found that v an c Animal welfare

e and development l Industrial and topics are inherently interlinked and e External stakeholder perceptions provided R food waste

tackling one topic may either support a number of key insights and the picture progress on another topic or present was completed through quantitative tensions. For example by implementing Employment and analysis performed with Datamaran. Employee occupational Labour Relations transparent responsible marketing health and safety and Governance and practices, the business can help wellbeing Business ethics Our reporting address issues within nutrition, health Group security and lifestyles. and data privacy

Community livelihoods Innovation and development and digitalization Key data Key Relevance and potential impacts for Ferrero

Material topics

Biodiversity, deforestation Diversity and inclusion Product design, packaging prevention and sustainable and the circular economy agricultu re Human rights in supply chain Supplier engagement Climate action Nutrition, health and lifestyles and transparency Ferrero Group 85 Sustainability Report 2020

Governance

e have evolved our governance The Executive Chairman, Mr. Giovanni Ferrero, Ferrero Group Governance structure Introduction structure to ensure sustainability reviews and approves the Group long- is fully embedded across the term direction and strategy in line with our W Ferrero Group as we continue culture and values, defining new business to expand into new markets. We develop directions and breakthrough innovations. policies and programmes to guide our He leads the Strategic Staff (composed of practices and manage impacts at all Strategic R&D, Strategy and Sustainability, Executive locations where we operate around Financial Planning & Control & Mergers Chairman & Acquisitions), Group Leadership Team

the world. approach Our sustainability (GLT), the Audit Committee and the Ferrero Corporate Governance1 following Group Boards: Human Resources (HR) & Organisation Development Board; Ferrero is a family-owned company and Industrial & Supply Board; Product Board; the Group adopts a traditional Corporate Strategic Financial Strategy & Procurement Board; Reputation Board. Strategic Governance model. The Shareholders’ R&D Planning, Control Sustainability Staff Meeting, Board of Directors, Executive The CEO, Mr. Lapo Civiletti, focuses on and M&A Chairman and Chief Executive Officer achieving short- and mid-term results

(CEO) guide projects and initiatives in line in line with the Executive Chairman’s and performance Our progress with the long-term strategic objectives long-term direction, ensuring business of the Group, promoting transparent continuity and maximising our managerial CEO and consistent communications towards capabilities to: the stakeholders. – contribute to the definition of The Board of Directors includes Ferrero business targets, in line with the long- family and non-family members. It is term guidelines; assessed on a regular basis to ensure – secure the achievement of business appropriate balance of knowledge, skills targets by operations (budget and one Operative Our reporting Staff and expertise and a proactive contribution to three-year plan); Areas – Europe, Global Industrial Information Institutional Group from all the Board members to drive the International, Brands and Supply & Technology Affairs and Finance – oversee and manage trade-offs and achievement of the Group’s goals. APAC-MEA Corporate arbitrages among Functions and Areas; Communication – enhance the protection of Group know- how and foster its development; and – ensure continuity in Ferrero values

and promote our innovative product data Key development culture.

HR & Group Legal Procurement Group Sales Organization & the Business 1 The information provided refers to the organisation in Ferrero Hazelnut Development place since 1 September 2020. Company (HCo) Ferrero Group 86 Sustainability Report 2020

Governance continued

The CEO leads the Group Management Its responsibilities include: Guiding principles Introduction Team (GMT). It is composed of the SUSTAINABILITY OPERATIVE COMMITTEE – driving the sustainability agenda for business ethics Heads of the following functions: Areas – within Ferrero Group by integrating Our guiding principles are set out in As part of our governance structure, Europe, International, APAC-MEA; Global sustainability principles into strategies, the Ferrero Code of Ethics and Code of we established a Sustainability Operative Brands; Industrial & Supply; Information policies and procedures; Business Conduct. Employees are required Committee which met for the first time in & Technology; Institutional Affairs & to respect these principles and all Ferrero November 2020. Corporate Communication; Finance; – successfully steering responsible employees receive a copy of the Code of Human Resources and Organisation & business practices; and The committee is made up of managers Ethics when joining the Group.

Improvement; Legal; Procurement & HCo; – contributing to create positive impacts from across the Group representing approach Our sustainability Sales Business Development. within the communities in which The Ferrero Integrity Helpline is available different departments working on we operate. for employees and those who work with sustainability topics, including packaging, As of 31 August 2020, the Group was us to report concerns and ask questions operations, human resources, brands composed of 105 consolidated companies, Its objectives are the following: related to the Code of Ethics and Code social responsibility, risk management, managed under Ferrero International S.A., – define the Group’s sustainability of Business Conduct. Managed by an communications, institutional affairs and

the parent company based in Luxembourg. strategy based on key sustainability and independent third-party, the confidential sourcing. The committee will be involved consumer trends, integrating it into the helpline is available 24 hours a day, in key decisions on sustainability and Sustainability Governance Group’s strategic long-term Guidelines; 365 days a year in 43 languages via a responsible for ensuring implementation and performance Our progress A robust sustainability governance – support all business functions in website and toll-free local numbers in 55 of the strategy, guaranteeing coordinated structure ensures we define the Group’s implementing plans and monitoring countries. Reports are made available to effort and alignment between the sustainability strategy based on key sustainability initiatives with a main a Ferrero Steering Committee for review functions involved. sustainability and consumer trends focus on monitoring key social and and investigation. and embed it into the Group’s strategic environmental sustainability initiatives; sustainability approach. The Ferrero Group Anti-Bribery and – develop long-term corporate Corruption Policy sets out our commitment The CSR & Sustainability organisational sustainability projects; and to ensure no detrimental treatment of any unit is part of the Strategic Staff and person as a result of reporting in good faith – develop and maintain a transparent Our reporting interacts with business functions reporting system. their suspicion that an actual or potential to provide strategic guidance on all violation of the standards has taken place. sustainability topics. Key data Key Ferrero Group 87 Sustainability Report 2020

About this Report

This Report explains the Ferrero – the “Organisation for Economic Information on the Piera, Pietro Introduction Group’s sustainability strategy Cooperation and Development and Giovanni Ferrero Foundation and global activities during (OECD) Guidelines for Multinational (“Ferrero Foundation”) is included Enterprises”; and in a specific chapter. Fiscal Year (FY) 2019/2020 (from – the GRI and the UN Global Compact A specific methodological note regarding 1 September 2019 to 31 August publication “An Analysis of the Goals 2020). Along with the objectives our environmental data is included in the and Targets”. Key Data section of this report. set out in previous reports, the It was drafted by the CSR & Sustainability issues in this 12th edition have This report was the subject of a limited approach Our sustainability organisational unit. assurance engagement (under the been selected via a materiality International Standard on Assurance process involving internal and The scope of economic data included in the report corresponds with Engagements 3000 (Revised) “Assurance external stakeholders (described Ferrero International’s consolidated Engagements other than Audits on page 83). financial statement. and Reviews of Historical Financial Information”) by PwC Luxembourg in some his report has been prepared in With regard to the qualitative and of its parts.The details of the scope of the accordance with the GRI Standards: quantitative data on social and assurance are reported at page 101. Core option; the GRI Content environmental aspects, the following and performance Our progress entities were excluded from the scope Changes of calculation methodologies of T Index is available in the section previously published figures, provided for of reporting: “Sustainability Reports” of our website: comparison, are clearly indicated as such. www.ferrerosustainability.com – the companies belonging to Kellogg Company’s cookie, fruit snack, ice cream The Sustainability Report is also accessible Previous reports are available online at: online at www.ferrerosustainability.com, www.ferrerosustainability.com cone and pie crust businesses (except where specified) and Ice Cream Factory where our previous ten reports (named The following points of reference were Comaker (except where specified). “CSR Reports” in the editions from 2009 to also taken into consideration: 2018, “Sustainability Report” in 2019) are Our reporting also available. – the “Ten Principles” of the United Nations Global Compact (UNGC); The previous edition (11th Ferrero Group – the ISO (International Standard Sustainability Report) was published in Organisation) 26000:2010 “Guidance October 2020. on social responsibility”; We will continue to publish reports on an annual basis. Key data Key Ferrero Group 88 Sustainability Report 2020 Introduction

Key data approach Our sustainability

Performance data 89 and performance Our progress

Our reporting Key data Key Ferrero Group 89 Sustainability Report 2020

Plant location and biodiversity

We map our plants according to the WDPA – The World Database on Protected Areas. Introduction None of our plants are located in protected or highly biodiverse areas. In some cases, there are protected areas near our factories (less than 2 km away). Please find the list below:

Plant name Protected area Type of area Type Distance IUCN cat. Area (square km)

Belsk Dolina Rzeki Jeziorki Protected Landscape Area National <1 km Not Ass. 153.794095

S.Angelo dei Lombardi Querceta dell’Incoronata (Nusco) Site of Community Importance (Habitats Directive) Regional <1 km Not Rep. 13.62 approach Our sustainability

Alfreton Oakerthorpe Local Nature Reserve National <2 km IV 0.0266097

Alfreton Penny Town Ponds Local Nature Reserve National <2 km IV 0.0545065

Belsk Modrzewina Nature Reserve National <2 km IV 3.3219

S.Angelo dei Lombardi Alta Valle del Fiume Ofanto Site of Community Importance (Habitats Directive) Regional <2 km Not Rep. 5.9

Stadtallendorf Brückerwald und Hußgeweid Site of Community Importance (Habitats Directive) Regional <2 km Not Rep. 4.1075 and performance Our progress Stadtallendorf Herrenwald östlich Stadtallendorf Site of Community Importance (Habitats Directive) Regional <2 km Not Rep. 28.5208

Villers-Ecalles Boucles de la Seine normande Regional Nature Park National <2 km V 896.138423

IUCN categories in order of significance: Category Ia: Strict Nature Reserve Category Ib: Wilderness Area Our reporting Category II: National Park Category III: Natural Monument or Feature Category IV: Habitat/Species Management Area Category V: Protected Landscape/Seascape Category VI: Protected Area With Sustainable Use Of Natural Resources Key data Key Ferrero Group 90 Sustainability Report 2020

Environment

Energy Introduction

UNIT 2018/19 2019/20

Green energy consumption % 19.0% 20.5%

Purchased electric energy certified renewable % 64% 68%

Energy intensity ratio GJ/t 8.4 8.3

Total energy consumption TJ 10,222.0 10,714.5 approach Our sustainability

Total fuel consumption TJ 9,434.5 9,598.3

– Total fuel consumption from non-renewables TJ 8,446.3 8,610.7

– Total fuel consumption from renewables TJ 988.1 987.6

Total electricity consumption (electricity sold excluded) TJ 997.0 1,338.9

– Total electricity consumption (electricity sold excluded) from non-renewables TJ 42.6 129.2 and performance Our progress – Total electricity consumption (electricity sold excluded) from renewables TJ 954.5 1,209.8

Steam or hot water consumption (sold streams excluded) TJ (209.5) (222.7)

Our reporting Key data Key Ferrero Group 91 Sustainability Report 2020

Environment continued

Emissions Introduction

UNIT 2018/19 2019/20

GWP Emissions TOTAL (Total Scope 1 + Scope 2 Market based + Scope 3) tCO2eq. 6,500,552.01 6,601,489.25

GWP Sc.1 Emissions – Total emissions tCO2eq. 469,556.27 466,714.71

GWP Sc.1 Emissions – (Of which) for Energy streams sold externally tCO2eq. 80,445.26 73,199.77

GWP Sc.1 Emissions – Net total emissions tCO2eq. 389,111.02 394,706.18 approach Our sustainability

GWP Sc.2 Emissions – Market based tCO2eq. 116,838.45 111,195.55

GWP Sc.2 Emissions – Location based tCO2eq. 264,863.40 288,442.19

GWP Sc.3 Emissions – Cat 1.Purchased goods and services tCO2eq. 4,767,559.46 4,884,782.34

GWP Sc.3 Emissions – Cat 2.Capital goods tCO2eq. 171,483.34 149,416.35

GWP Sc.3 Emissions – Cat 3.Fuel-and-energy-related activities tCO2eq. 92,116.38 92,762.51 and performance Our progress

GWP Sc.3 Emissions – Cat 4.Upstream transportation and distribution tCO2eq. 610,173.59 634,612.05

GWP Sc.3 Emissions – Cat 5.Waste generated in operations tCO2eq. 4,790.87 5,574.52

GWP Sc.3 Emissions – Cat 6.Business travel tCO2eq. 19,887.51 10,659.71

GWP Sc.3 Emissions – Cat 7.Employee commuting tCO2eq. 48,791.81 39,033.45

GWP Sc.3 Emissions – Cat 8.Upstream leased assets tCO2eq. 105,980.92 109,414.19 Our reporting GWP Sc.3 Emissions – Cat 9.Downstream transportation and distribution tCO2eq. 10,312.94 11,001.44

GWP Sc.3 Emissions – Cat 10.Processing of sold products tCO2eq. – –

GWP Sc.3 Emissions – Cat 11.Use of sold products tCO2eq. – –

GWP Sc.3 Emissions – Cat 12.End of life treatment of sold products tCO2eq. 83,060.48 86,322.45

GWP Sc.3 Emissions – Cat 13.Downstream leased assets tCO2eq. – –

GWP Sc.3 Emissions – Cat 14.Franchises tCO2eq. – – data Key

GWP Sc.3 Emissions – Cat 15.Investments tCO2eq. – – Ferrero Group 92 Sustainability Report 2020

Environment continued

Water Introduction

UNIT 2018/19 2019/20

Water consumption m3 5,330,058.80 5,450,190.80

Water consumption from water main % 63.3% 65.3%

Water consumption from well % 22.5% 26.5%

Water consumption from river % 14.1% 8.2% approach Our sustainability

Water consumption from other sources % 0.7% 0.0%

Water consumption ratio m3/t 4.38 4.20

Wastewater m3 3,367,387.23 3,391,409.02

Wastewater Sewage % 94.7% 94.8%

Wastewater Surface water % 3.4% 3.2% and performance Our progress Wastewater Ground and underground % 1.9% 2.0%

Waste

UNIT 2019 2020

Waste production ratio kg/t 82.21 72.88 Our reporting Total waste t 99, 987. 90 94,552.69

Percentage of recovered waste % 96.8% 96.1%

Non-hazardous waste recycled t 96,095.67 90,027. 93

Non-hazardous waste disposed t 2,431.44 2,755.09

Hazardous waste recycled t 665.85 849.49 Key data Key Hazardous waste disposed t 794.94 920.18 Ferrero Group 93 Sustainability Report 2020

Environment continued

Packaging and other figures Introduction

UNIT 2018/19 2019/20

Recycled materials in packaging % 34.2% 34.6%

Renewable materials in packaging % 36.9% 36.5%

Reusable, compostable or recyclable packaging % 81.7% 82.9%

Total raw materials used t 1,971,811 2,042,494 approach Our sustainability

Refrigerant gases: ODP contribution kgR11eq. 10 1

Refrigerant gases: GWP contribution tCO2eq. 10,943 12,225

and performance Our progress

Our reporting Key data Key Ferrero Group 94 Sustainability Report 2020

Added Value

By “Added Value” we mean the economic value generated by our Group. Added Value Generated in FY 2019/2020 Introduction The “Net Added Value” in particular represents the economic value generated during the reporting period, net of depreciation and operating costs, which includes payments to Depreciation 5.5% suppliers (mainly for raw materials and services). As illustrated in the chart below, our Net Operating costs reclassified 68.1% Added Value for the period considered in this Sustainability Report is distributed in different ways to various internal and external stakeholders. Net Added Value 26.4% The item “Human Resources” includes all types of salaries and wages paid for work carried

out by employees, including social and welfare contributions made by our Group. approach Our sustainability Added Value Distributed in FY 2019/2020 The item “Capital Remuneration” includes the distribution of the net profit for the reporting year and the recognition of accrued interest. Value Distributed

The item “Public Sector” represents the amount our Group must pay to public bodies as Human resources 66.8% corporation tax and other contributions directly connected to the Company assets, with the exclusion of taxes and additional costs relating to operations (duties and customs fees). Capital remuneration 25.2% The item “Community” includes donations, gifts and investments in social projects and Public sector 6.7% partnerships with universities and research centres. Community 1.3% and performance Our progress Finally, the item “Enterprise System” represents the economic value retained in our Group: the difference between the generated economic value and the distributed economic value. Value Retained

Enterprise system 0.1% Our reporting Key data Key Ferrero Group 95 Sustainability Report 2020

Health & Safety

Ferrero Group (industrial and supply) safety performance Introduction

2017/18 2018/19 2019/20

Frequency Rate – LDIR (1.000.000 hrs) 7.77 7.66 7.10

Frequency Rate – TRIR (1.000.000 hrs) 8.59 10.71 10.56

Accident Severity Rate (1.000 hrs) 0.151 0.137 0.153

The TRIR includes all recordable accidents, lost injury cases, medical treatment cases and restricted worked cases. approach Our sustainability The frequency rate is calculated including temporary workers, excluding commuting accidents. Statistical data on the occurrence of workplace accidents in the area did not include contractors and third party business relationships.

Ferrero Group (industrial and supply) safety performance by geographic area

2017/18 2018/19 2019/20

Lost Day Injury Rate – LDIR

Europe 11.35 11.00 9.74 and performance Our progress

International 4.74 4.33 4.53

APAC MEA 2.06 2.59 1.82

Total Recordable Injury Rate – TRIR

Europe 11.65 11.55 11.15

International 6.79 10.00 9.30 Our reporting

APAC MEA 2.75 3.17 2.82

Accident Severity Rate*

Europe 0.23 0.21 0.23

International 0.09 0.06 0.06

APAC MEA 0.01 0.03 0.02 Key data Key * The injuries included for the KPIs are the ones with an absence of more than 1 day (excluding commuting accidents); temporary worker data is included for FY 2019/2020. Ferrero Group 96 Sustainability Report 2020

HR Workforce

Internal and external workforce as of 31 August Exact workforce of the Group as of 31 August Introduction

No. employees No. employees No. employees No. employees as of 31/08/2019 as of 31/08/2020 as of 31/08/2019* as of 31/08/2020**

Group 36,372 37,122 Total 35,963 36,240

Ferrero Foundation 11 12 Of which women 45.90% 45.17%

External workforce 7, 942 6,924 * Exact workforce figures include employees who are employed directly by Ferrero as of 31 August, including the employees of the Piera, Pietro and Giovanni Ferrero Foundation, but excluding those of Fannie May. approach Our sustainability ** Exact workforce figures include employees who are employed directly by Ferrero as of 31 August, including the employees of the Piera, Pietro and Giovanni Ferrero Foundation but excluding those of ICFC.

Group workforce by type of contract

No. employees % No. employees % Type of work contract as of 31/08/2019 as of 31/08/2019 as of 31/08/2020 as of 31/08/2020 and performance Our progress Fixed term 8,070 22.40% 7,865 21.70%

Permanent contract 27,893 77.60% 28,375 78.30%

Total 35,963 100% 36,240 100%

Europe* % Extra-Europe % Type of work contract as of 31/08/2020 as of 31/08/2020 as of 31/08/2020 as of 31/08/2020 Our reporting

Fixed term 5,338 23.37% 2,527 18.86%

Permanent contract 17,504 76.63% 10,871 81.14%

Total 22,842 100% 13,398 100%

* Europe includes the 27 European Union member Countries and the United Kingdom to guarantee comparability to 2019 data.

% % data Key Part-time / Full-time as of 31/08/2019 as of 31/08/2020

Part-time 6.80% 6.02%

Full-time 93.20% 93.98% Ferrero Group 97 Sustainability Report 2020

HR Workforce continued

Group Workforce at 31st August Introduction

No. employees Women % Men % No. employees Women % Men % Geographical Area as of 31/08/2019 as of 31/08/2019 as of 31/08/2019 as of 31/08/2020 as of 31/08/2020 as of 31/08/2020

Europe 23,021 44.98% 55.02% 22,842 44.33% 55.67%

Extra-Europe 12,942 47.72% 52.28% 13,398 46.60% 53.40%

Employee Category approach Our sustainability Blue Collar 22,308 49.00% 51.00% 22,268 47.71% 52.29%

Employees 10,068 44.84% 55.16% 10,466 44.92% 55.08%

Middle manager 2,549 35.66% 64.34% 2440 35.16% 64.84%

Senior manager 1,038 16.96% 83.04% 1066 17.54% 82.46%

Type of contract

Permanent 27,893 42.89% 57.11% 28,375 42.19% 57.81% and performance Our progress

Fixed term 8,070 56.60% 43.40% 7,865 55.96% 44.04%

Part Time / Full Time

Part-Time 2,428 79.20% 20.80% 2,183 78.70% 21.30%

Full-Time 33,535 43.56% 56.44% 34,057 43.02% 56.98%

TOTAL 35,963 45.96% 54.04% 36,240 45.17% 54.83% Our reporting Key data Key Ferrero Group 98 Sustainability Report 2020

HR Workforce continued

Personnel turnover* Introduction

Outgoing 2018/2019 Incoming 2018/2019 Europe Women Men Total Women Men Total

<30 89 105 194 179 229 408

30 – 50 147 183 330 178 241 419

>50 154 234 388 19 27 46 approach Our sustainability Total 390 522 912 376 497 873

% 3.91% 4.23% 4.09% 3.77% 4.03% 3.91%

Outgoing 2019/2020 Incoming 2019/2020 Europe Women Men Total Women Men Total

<30 377 164 541 435 332 767

30 – 50 308 258 566 238 288 526

>50 281 320 601 51 42 93 and performance Our progress

Total 966 742 1,708 724 662 1,386

% 9.33% 5.86% 7.42% 6.99% 5.23% 6.02%

Outgoing 2018/2019 Incoming 2018/2019 Extra – Europe Women Men Total Women Men Total

<30 253 236 489 274 304 578

30 – 50 411 631 1,042 327 559 886 Our reporting

>50 70 101 171 16 23 39

Total 734 968 1,702 617 886 1,503

% 13.46% 15.18% 14.38% 11.31% 13.89% 12.70%

Outgoing 2019/2020 Incoming 2019/2020 Extra – Europe Women Men Total Women Men Total

<30 182 181 363 405 376 781 data Key

30 – 50 377 437 814 407 632 1,039

>50 64 76 140 176 278 454

Total 623 694 1,317 988 1,286 2,274

% 10.09% 10.26% 10.18% 16.00% 19.01% 17.57%

* Thorntons retail workforce is excluded from the calculation of the turnover. Ferrero Group 99 Sustainability Report 2020

HR Workforce continued

Personnel turnover continued* Introduction

Outgoing 2018/2019 Incoming 2018/2019 Group Women Men Total Women Men Total

<30 342 341 683 453 533 986

30 – 50 558 814 1,372 505 800 1,305

>50 224 335 559 35 50 85 approach Our sustainability Total 1,124 1,490 2,614 993 1,383 2,376

% 7.28% 7. 96% 7.66% 6.43% 7.39% 6.96%

Outgoing 2019/2020 Incoming 2019/2020 Group Women Men Total Women Men Total

<30 559 345 904 840 708 1,548

30 – 50 685 695 1,380 645 920 1,565

>50 345 396 741 227 320 547 and performance Our progress

Total 1,589 1,436 3,025 1,712 1,948 3,660

% 9.63% 7.23% 8.41% 10.37% 9.80% 10.18%

* Thorntons retail workforce is excluded from the calculation of the turnover. Our reporting Key data Key Ferrero Group 100 Sustainability Report 2020

About our environmental data

Data collection Calculation details The emission factors related to the Data was collected in May 2018; values Introduction We manage the collection and analysis The percentage of recycled materials in conversion of energy from fuels come from have been calculated for the whole Fiscal of plants’ data through an internal packaging represents an estimate on the Ecoinvent 3.4 database datasets and EPA Year. The emissions resulting from capital platform called SuRe (Sustainability quantity of recycled content, as per our Centre for Corporate Climate Leadership – goods are based on estimations. Reporting). This tool allows better total packaging materials. GHG Emissions Factors Hub (March 2018). management, flow optimisation and Data perimeter For paper and cardboard, the data is based Products made in-house from renewable data transfer. The data is related to 23 production plants, on a calculation based on the composition sources and the electricity supply from excluding Yaoundè (Cameroon), North Moreover, we have developed with of the materials purchased. For rPET and a marketplace certified by renewable Canton (USA), HCo manufacturing plants approach Our sustainability Exentriq, a new dedicated platform rPP, the data is the exact calculation of sources do not contribute to greenhouse and the plants already defined as out of to aggregate, validate and manage the recycled material purchased in the gas emissions, which follows best- scope in the “About this Report” note (ICFC all Group environmental data, using reference year of this report. For glass practice examples stated in GHG protocol. and Kellogg’s cookies, crust and cones innovative technologies and allowing and aluminium the data comes from the Emissions from cooling gases have business plants). more complex analyses. suppliers’ surveys and takes into account been calculated using the IPCC Fifth

Assessment Report, 2014 (AR5) emission the different plants the materials were Data also includes warehouses directly factors, 100-year horizon. Standards and methodologies sourced from and is therefore linked to the managed by Ferrero except where efficiency of collection and recycling of the The emissions resulting from leased cars clearly indicated.

Our carbon footprint is fully compliant and performance Our progress countries in which the packaging suppliers with the Corporate Accounting and were calculated based on data collected are located and operate. Reporting Standard – GHG Protocol internally from all 30 countries in which we have leased cars. – developed by the World Resources The CO2eq emission coefficients used for Institute (WRI) for the World Business the assessment of Location-based and

Council for Sustainable Development Market-based emission factors come from (WBCSD), today used globally as the Ecoinvent 3.4 database, except for GHG emissions updated baseline the main internationally recognised the 2019 Location-based data (Ecoinvent We developed our GHG emissions reduction targets by 2030 considering a FY 2017/2018 measurement tool and carbon reporting 3.6). For Scope 3 GHG calculations, the baseline that includes also recently acquired companies and other significant contributions standard. We account our GHG emissions sources are mainly commercial databases which are not part of the disclosure of this report. Our reporting using an operational control approach. (i.e. Ecoinvent 3.1, International Energy Agency) as well as some specific datasets The environmental impact assessment Climate change Base year data Most recent year developed internally. targets [FY 17/18] data [FY 19/20] Delta is carried out following the ISO 14040 * and ISO 14044 LCA standards, including Scope 1&2 (Abs.) 724,697 [tCO2e] 627,021 [tCO 2e] -13.5% the relevant Principles and Reference ** Framework, Requirements and Guidelines. Scope 1,2&3 (Int.) 4.6 [tCO2e/t prod.] 4.4 [tCO2e/t prod.] -4.2%

* Market based Scope 2. data Key ** Includes key purchased goods (such as packaging, hazelnuts, cocoa, flour, palm oil, dairy, sugar), upstream logistics, upstream fuel and energy related activities and end of life. Note: this data it not subject of the third-party external assurance. Ferrero Group 101 Sustainability Report 2020

Material topics and key data covered by the external assurance Introduction Protect the environment p.16-30

Value FY 2019/20 Unit Value FY 2019/20 Unit

GWP Sc.1 Emissions – Net total emissions 394,706.18 tCO2eq. Energy data

GWP Sc.2 Emissions – Market based 111,195.55 tCO2eq. Green energy consumption 20.50 %

GWP Sc.2 Emissions – Location based 288,442.19 tCO2eq. approach Our sustainability Purchased electric energy certified renewable 68.00 %

GWP Sc.3 Emissions – Cat 1.Purchased goods and services 4,884,782.34 tCO2eq. Energy intensity ratio 8.30 GJ/t

GWP Sc.3 Emissions – Cat 2.Capital goods 149,416.35 tCO2eq. Total energy consumption 10,714.50 TJ GWP Sc.3 Emissions – Cat 3.Fuel-and-energy-related Total fuel consumption 9,598.30 TJ activities 92,762.51 tCO2eq. – Total fuel consumption from non-renewables 8,610.70 TJ GWP Sc.3 Emissions – Cat 4.Upstream transportation

and distribution 634,612.05 tCO2eq.

– Total fuel consumption from renewables 987.60 TJ and performance Our progress

Total electricity consumption (electricity sold excluded) 1,338.90 TJ GWP Sc.3 Emissions – Cat 5.Waste generated in operations 5,574.52 tCO2eq.

– Total electricity consumption (electricity sold excluded) GWP Sc.3 Emissions – Cat 6.Business travel 10,659.71 tCO2eq. from non-renewables 129.20 TJ GWP Sc.3 Emissions – Cat 7.Employee commuting 39,033.45 tCO2eq. – Total electricity consumption (electricity sold excluded) GWP Sc.3 Emissions – Cat 8.Upstream leased assets 109,414.19 tCO2eq. from renewables 1,209.80 TJ

Steam or hot water consumption (sold streams excluded) -222.70 TJ GWP Sc.3 Emissions – Cat 9.Downstream transportation and distribution 11,001.44 tCO2eq. Our reporting

GHG emissions data GWP Sc.3 Emissions – Cat 10.Processing of sold products – tCO2eq.

GWP Emissions TOTAL (Total Scope 1 + GWP Sc.3 Emissions – Cat 11.Use of sold products – tCO2eq. Scope 2 Market based + Scope 3) 6,601,489.25 tCO2eq. GWP Sc.3 Emissions – Cat 12.End of life treatment

GWP Sc.1 Emissions – Total emissions 466,714.71 tCO2eq. of sold products 86,322.45 tCO2eq.

GWP Sc.1 Emissions – (Of which) for Energy streams GWP Sc.3 Emissions – Cat 14.Franchises – tCO2eq. sold externally 73,199.77 tCO2eq. Key data Key GWP Sc.3 Emissions – Cat 15.Investments – tCO2eq. Ferrero Group 102 Sustainability Report 2020

Material topics and key data covered by the external assurance continued Introduction Protect the environment p.16-30 continued Source ingredients sustainably p.31-56

Value FY 2019/20 Unit Value FY 2019/20 Unit

Water consumption data Raw materials

Water consumption 5,450,190.80 m³ % certified sustainable cocoa 100.00 %

Water consumption from water main 65.30 % % certified sustainable chocolate 71.00 % approach Our sustainability

Water consumption from well 26.50 % % traceable cocoa to farmer group 99.00 %

Water consumption from river 8.20 % % traceable cocoa to farm gate 96.00 %

Water consumption from other sources – % % traceable hazelnuts 51.00 %

Water consumption ratio 4.20 m³/t % RSPO certified segregated palm oil 99.30 %

Wastewater 3,391,409.02 m³ % traceable palm oil to mills 100.00 % and performance Our progress

Wastewater Sewage 94.80 % % traceable palm oil to plantation 99.96 %

Wastewater Surface water 3.20 % % certified sugar incl. Bonsucro Credit System 100.00 %

Wastewater Ground and underground 2.00 % % certified sugar via Bonsucro Credit System 58.50 %

% eggs from barn hens 95.00 % Waste data Total raw materials used 2,042,494.00 t

Waste production ratio 72.88 kg/t Our reporting

Total waste 94,552.69 t

Percentage of recovered waste 96.10 %

Non-hazardous waste recycled 90,027. 93 t

Non-hazardous waste disposed 2,755.09 t

Hazardous waste recycled 849.49 t Key data Key Hazardous waste disposed 920.18 t Ferrero Group 103 Sustainability Report 2020

Material topics and key data covered by the external assurance continued Introduction Promote responsible consumption p.57-65

Value FY 2019/20 Unit Value FY 2019/20 Unit

Plants certifications Repartition of the Product Data Records according to the energy delivered by portion, on marketed volumes ISO 14001 certified plants 21 plants

> 200 kcal 1.10 % approach Our sustainability ISO 50001 certified plants 19 plants > 150 – ≤ 200 kcal 5.50 % FSSC 22000 certified plants All production plants plants > 100 – ≤ 150 kcal 27. 90 % Packaging data > 10 – ≤ 100 kcal 61.90 %

Recycled materials in packaging 34.60 % ≤ 10 kcal 3.60 % Renewable materials in packaging 36.50 % >130 kcal 10.80 % Reusable, compostable or recyclable packaging 82.90 % and performance Our progress ≤ 130 kcal 89.20 %

Nutrition SKUs Glycemic Index (GI)

Repartition of the products according to the Low (55 or less) 88 GI target eating occasions, on marketed volumes Medium (55-69) 8 GI Occasional 26.70 % High (70 and above) 4 GI Breakfast 36.70 % Our reporting Dessert 5.00 %

BMFE 31.60 % Key data Key Ferrero Group 104 Sustainability Report 2020

Material topics and key data covered by the external assurance continued Introduction Empower people p.66-81 Key data – Added value p.94

Value FY 2019/20 Unit Value FY 2019/20 Unit

Occupational Health & Safety Ferrero's Added Value (Added Value Generated in FY 2019/2020) Accident frequency rate (LDIR) 7.10 %

Depreciation 5.50 % approach Our sustainability Accident frequency rate (TRIR) 10.56 % Operating costs reclassified 68.10 % Accident severity rate 0.15 % Net Added Value 26.40 % Internal and external workforce Added Value Distributed in FY 2019/20 Group 37,122 employees Human resources 66.80 % Ferrero Foundation 12 employees Capital remuneration 25.20 % External workforce 6,924 employees and performance Our progress Public sector 6.70 % Kinder Joy of moving Community 1.30 %

Countries covered by the program 28 countries Value retained – Enterprise system 0.10 % N. of children moved 2,600,000 childrens

Investments 10,300,000 €

sports Our reporting Sports federations involved 120 federations Key data Key

Ferrero Group 105 Sustainability Report 2020

Assurance statement Responsibility of the “Réviseur d’entreprises agréé”

Our responsibility is to express a limited assurance conclusion on certain disclosures included in the Sustainability Report as detailed in the Table based on the assurance engagement we have performed.

We conducted our assurance engagement in accordance with the International Standard on Assurance Engagements (ISAE) 3000 (Revised): Assurance Engagements other than Audits or Reviews of

Historical Financial Information, issued by the “International Auditing and Assurance Standards Board” Introduction (IAASB). This Standard requires that we plan and perform the assurance engagement to allow us to conclude with limited assurance that nothing has come to our attention that causes us to believe that certain disclosures included in the Company’s Sustainability Report for the period from 1 September 2019 to 31 August 2020 as detailed in the Table have not been prepared, in all material aspects, in accordance with the relevant GRI-Criteria.

Independent Limited Assurance Report on the disclosures in the Sustainability Report In a limited assurance engagement, the procedures vary in nature and timing and are less in extent than for a reasonable assurance engagement. As a result, the level of assurance obtained in a limited To the Board of Directors of assurance engagement is substantially lower than the assurance that would have been obtained had

IndependentFerrero Limited International Assurance S.A. Report on the disclosures in the Sustainability Report we performed a reasonable assurance engagement.

To the Board of Directors of Work done Ferrero InternationalWe have performed S.A. a limited assurance engagement to report on the disclosures in the Sustainability Report of Ferrero International S.A. (hereinafter “the Company”), for the period from 1 September 2019 Within the scope of our engagement we did not perform an audit or a review on external sources of to 31 August 2020 (hereinafter the “Sustainability Report”). information or expert opinions, referred to in the Sustainability Report. approach Our sustainability We have performed a limited assurance engagement to report on the disclosures in the Sustainability Our engagement in this context relates solely to certain disclosures detailed in the table p.101 Within the scope of our limited assurance engagement, we performed, amongst others, the following Report of Ferrero International S.A. (hereinafter “the Company”), for the period from 1 September 2019 named: “Material topics and key data covered by the external assurance” (hereinafter “the Table”), procedures: to 31 August 2020 (hereinafter the “Sustainability Report”). inIndependent accordance Limitedwith the Assurancerelevant GRI Report-Criteria. on the disclosures in the Sustainability Report • Obtained an understanding of the structure of the sustainability organization, including governance

Our engagement in this context relates solely to certain disclosures detailed in the table p.101 and of the stakeholder engagement; UnderstandingTo the Board of Directorsthe reporting of and measurement methodologies named: “Material topics and key data covered by the external assurance” (hereinafter “the Table”), Ferrero International S.A. in accordance with the relevant GRI-Criteria. • Performed analysis of how the processes underlying the generation, collection and management of The Sustainability Report needs to be read and understood together with the principles stated in the Sustainability Reporting Standards of the Global Reporting Initiative (hereinafter the “GRI-Criteria”), information disclosed in the Sustainability Report operate;

Understandingwhich the the reporting Company andis solely measurement responsible methodologiesfor selecting and applying . The absence of a significant body

We have performed a limited assurance engagement to report on the disclosures in the Sustainability • Performed inquiries with the management of the Company regarding the internal control procedures ofReport established of Ferrero practice International on which S.A. to (hereinafterdraw to evaluate “the Company and measure”), for non the- periodfinancial from information 1 September allows 2019 for supporting the gathering, aggregation, processing and transmittal of data and information to the The Sustainabilitydifferent,to 31 August Report but 2020acceptable, needs (hereinafter to bemeasurement read the and“Sustainability understood techniques Report andtogether ”).can affectwith thecomparability principles betweenstated in entities the and department responsabile for the preparation of the Sustainability Report; Sustainabilityover Reporting time. Standards of the Global Reporting Initiative (hereinafter the “GRI-Criteria”),

which the Company Our engagement is solely responsiblein this context for selectingrelates solely and applyingto certain. The disclosures absence detailedof a significant in the bodytable p.101 • Identified the likely risks of material misstatement of the Sustainability Report under consideration of of establishednamed:Responsibilities practice “Material on which oftopics the to Board drawand key to of evaluate dataDirectors covered and measureby the external non-financial assurance” information (hereinafter allows “the for Table ”), the GRI-Criteria; and performance Our progress different, but in acceptable, accordance measurementwith the relevant techniques GRI-Criteria. and can affect comparability between entities and

over time. The Board of Directors of the Company are responsible for the preparation of the Sustainability Report • Analysed the compliance and the internal consistency of the qualitative information disclosed in the inUnderstanding accordance with the the reporting principles and stated measurement in the GRI- Criteria.methodologies Sustainability Report in relation to the GRI-Criteria; Responsibilities of the Board of Directors This responsibility of Company’s Board of Directors includes the selection and application of appropriate The Sustainability Report needs to be read and understood together with the principles stated in the methods of sustainability reporting as well as making assumptions and estimates related to individual • Analysis of relevant underlying supporting information supporting the key disclosures in the The Board ofSustainability Directors of Reportingthe Company Standards are responsible of the Global for theReporting preparation Initiative of the (hereinafter Sustainability the “GRI Report-Criteria”) , sustainability disclosures, which are reasonable in the circumstances. Furthermore, the board of Sustainability Report; in accordancewhich with the the Company principles is statedsolely responsiblein the GRI- Criteria.for selecting and applying. The absence of a significant body directors are responsible for such internal controls as they have considered necessary to enable the of established practice on which to draw to evaluate and measure non-financial information allows for • Compared the selected financial data and disclosures in Sustainability Report with corresponding preparationdifferent, but of acceptable, a Sustainability measurement Report that techniques is free from and material can affect misstatement comparability whether between due entities to fraud and or This responsibility of Company’s Board of Directors includes the selection and application of appropriate data in the consolidated financial statements and in the group management report for year ending error.over time. methods of sustainability reporting as well as making assumptions and estimates related to individual 31 August 2020;

sustainability disclosures, which are reasonable in the circumstances. Furthermore, the board of Our Independence and Quality Control directors areResponsibilities responsible for ofsuch the internalBoard of controls Directors as they have considered necessary to enable the • Evaluated the presentation of the disclosures in the Sustainability Report regarding sustainability

preparation Weof a haveSustainability complied Reportwith the that Code is offree Ethics from formaterial Professional misstatement Accountants whether issued due by to the fraud International or performance; The Board of Directors of the Company are responsible for the preparation of the Sustainability Report error. Ethicsin accordance Standards with Board the principles for Accountants, stated in which the GRI includes-Criteria. independence and other requirements founded

• Our reporting on fundamental principles of integrity, objectivity, professional competence and due care, confidentiality Obtained representations from management and the Company’s CSR responsible officer confirming2 compliance with the GRI-Criteria and completeness and accurancy of the information presented. Our Independenceand professional and Quality behavior. Control This responsibility of Company’s Board of Directors includes the selection and application of appropriate

methods of sustainability reporting as well as making assumptions and estimates related to individual We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our We have compliedsustainabilityOur firm withapplies thedisclosures, International Code of whichEthics Standard arefor Professionalreasonableon Quality Control in Accountants the 1 circumstances.and accordingly issued byFurthermore,maintains the International a comprehensive the board of system of quality control including documented policies and procedures regarding compliance with conclusion. Ethics Standardsdirectors Board are for responsible Accountants, for such which internal includes controls independence as they have and consideredother requirements necessary founded to enable the on fundamentalpreparationethical principles requirements, of aof Sustainability integrity, professional objectivity, Report standards thatprofessional is andfree applicable from competence material legal misstatement andand regulatory due care, whether requirements.confidentiality due to fraud or Conclusion error. and professional behavior. Responsibilit y of the “Réviseur d’entreprises agréé” Based on the procedures performed and evidence obtained, nothing has come to our attention that

Our firm appliesOur InternationalIndependence Standard and Quality on Quality Control Control 1 and accordingly maintains a comprehensive causes us to believe that the disclosures as detailed in the Table included in the Company’s Our responsibility is to express a limited assurance conclusion on certain disclosures included in the system of quality control including documented policies and procedures regarding compliance with Sustainability Report for the period from 1 September 2019 to 31 August 2020 has not been prepared, Sustainability Report as detailed in the Table based on the assurance engagement we have performed. ethical requirements,We have professionalcomplied with standards the Code andof Ethics applicable for Professional legal and regulatoryAccountants requirements. issued by the International in all material aspects, in accordance with the relevant GRI-Criteria. PricewaterhouseCoopers,Ethics Standards Board Société for Accountants,coopérative, 2 rue which Gerhard includes Mercator, independence B.P. 1443, L-1014 and Luxembourg other requirements founded T : +352 494848 1, F : +352 494848 2900, www.pwc.lu We conducted our assurance engagement in accordance with the International Standard on Assurance on fundamental principles of integrity, objectivity, professional competence and due care, confidentiality EngagementsCabinet de révision (ISAE) agréé. Expert 3000-comptable (Revised): (autorisation Assurance gouvernementale Engagements n°10028256) other than Audits or Reviews of and professional behavior. PricewaterhouseCoopers, Société coopérative Luxembourg, 13 July 2021 HistoricalR.C.S. Luxembourg Financial B 65 Information, 477 - TVA LU25482518 issued by the “International Auditing and Assurance Standards Board” Represented by (IAASB). This Standard requires that we plan and perform the assurance engagement to allow us to data Key Our firm applies International Standard on Quality Control 1 and accordingly maintains a comprehensive conclude with limited assurance that nothing has come to our attention that causes us to believe system of quality control including documented policies and procedures regarding compliance with PricewaterhouseCoopers,that certain Société disclosures coopérative, included 2 rue Gerhard in Mercator,the Company’s B.P. 1443, SustainabilityL-1014 Luxembourg Report for the period from T : +352 494848ethical 1, F : +352requirements, 494848 2900, professional www.pwc.lu standards and applicable legal and regulatory requirements. 1 September 2019 to 31 August 2020 as detailed in the Table have not been prepared, in all material

Cabinet de révisionaspects, agréé. in Expert accordance-comptable with (autorisation the relevant gouvernementale GRI-Criteria. n°10028256) R.C.S. Luxembourg B 65 477 - TVA LU25482518 In a limited assurance engagement, the procedures vary in nature and timing and are less in extent than for a reasonable assurance engagement. As a result, the level of assurance obtained in a limited Tal Ribon assurancePricewaterhouseCoopers, engagement Société is substantially coopérative, 2 rue lower Gerhard than Mercator, the assurance B.P. 1443, thatL-1014 would Luxembourg have been obtained had weT : +352 performed 494848 1,a Freasonable : +352 494848 assurance 2900, www.pwc.lu engagement. Partner

Cabinet de révision agréé. Expert-comptable (autorisation gouvernementale n°10028256) WorkR.C.S. Luxembourg done B 65 477 - TVA LU25482518

Within the scope of our engagement we did not perform an audit or a review on external sources of information or expert opinions, referred to in the Sustainability Report.

Within the scope of our limited assurance engagement, we performed, amongst others, the following procedures:

• Obtained an understanding of the structure of the sustainability organization, including governance and of the stakeholder engagement;

• Performed analysis of how the processes underlying the generation, collection and management of information disclosed in the Sustainability Report operate;

• Performed inquiries with the management of the Company regarding the internal control procedures supporting the gathering, aggregation, processing and transmittal of data and information to the department responsabile for the preparation of the Sustainability Report;

• Identified the likely risks of material misstatement of the Sustainability Report under consideration of the GRI-Criteria;

• Analysed the compliance and the internal consistency of the qualitative information disclosed in the Sustainability Report in relation to the GRI-Criteria;

3 • Analysis of relevant underlying supporting information supporting the key disclosures in the Sustainability Report;

• Compared the selected financial data and disclosures in Sustainability Report with corresponding data in the consolidated financial statements and in the group management report for year ending 31 August 2020;

2 www.ferrerosustainability.com