Sustainability Report 2019

Espresso House Group Report content 2

About this Report 3 Letter from the Group CEO 4 Highlights 5 About Espresso House Group 6-7 Sustainability at Espresso House 8 Our Brand Pillars 9 Our Mission 10 Our Stakeholders 11 Our Material Topics 12 Our Sustainability Risks 13 Product 14-30 Planet 31-41 People 42-54 GRI Content Index 55-57 About this Report 3

This is Espresso House Group’s third Sustainability Report. The previous report was published in March 2019. This report has been prepared in accordance with Global Reporting Initiative (GRI) Standards: Core option. Data and activities reported in this report occurred between January 1, 2019 and December 31, 2019 unless stated otherwise.

The report is also guided by the legal requirements of the EU Directive (2014/95/EU) on non-financial reporting and hence, Espresso House Group reports on five areas: environment, social conditions, personnel, anti-corruption as well as respect for human rights.

The Sustainability Report applies to all subsidiaries within the Espresso House Group in 2019 including Espresso House, Johan & Nyström, Baresso and Balzac Coffee. For the purpose of this report all Baresso activities will fall under Espresso House Denmark, and all activities by Balzac Coffee will fall under Espresso House Germany.

All subsidiaries operating under Espresso House Group in 2019 are included in the financial results in this report.

The GRI Content Index can be found in the end of this report. Letter from the Group CEO 4

At Espresso House, we believe in initiative and responsibility. We constantly try to listen to we see this as one of our outmost important areas. In this mission we also encourage a switch what’s important for our employees and guests and develop our brand in a positive direction to Reusables, and to help our guests we have new designs and materials for the collection, to do good and to stay relevant. An important part of this is to learn more and to deepen our and we have introduced several incentives for those that buy their drinks in a Reusable cup. understanding of how our activities impacts business and society. We want to ensure we take the right decisions today to provide a sustainable tomorrow, for both the people and the planet. Sourcing large volumes of coffee from all over the world means that we have a major Sustainability for me is and needs to be the foundation of our brand that is considered in responsibility within the supply chain of coffee. During 2019 we strengthened our Coffee everything we do. Sourcing program as well as verified an additional 20% of our coffee volume through the third- party verifier Enveritas. We also made several farm visits to ensure responsible sourcing of We have grown over the years and we are today a major Youth Employer with over 6000 coffee. In addition we continued our farmer community support program, contributing to a employees across five countries. They are the foundation of our brand, our Espresso House much needed health clinic in Ethiopia. Family, and makes us what we are today. It is key for us to develop the company and the brand in pace with the demands from our people to ensure we are a great place to work. To increase transparency around our sustainability journey and targets we introduced in 2019 During 2019 we have therefore introduced an updated feedback program with forums and our new sustainability platform, Tomorrow Friendly. We think it is important for all employees communication channels to intensify the possibilities to provide ideas and input on how we and stakeholders to follow our commitments and progress via www.tomorrowfriendly.com or ensure we are a sustainable employer today and tomorrow. We have a responsibility to be a through information in our coffee shops. I am happy to share the progress done during 2019 safe and positive place to work where our employees can grow with us through our various towards becoming a more Sustainable company, but for us it is an on-going journey and I am academy programs, just like I myself have done during my fifteen years with the company. We convinced that we can do even more and even better. Therefore our promise is to always believe in people and everybody are welcome to Espresso House, regardless of background. improve for the better and to be Tomorrow Friendly. For every initiative you read about in this report, there is a person behind, to generate the idea and the activation, so for sure they are the foundation of our sustainability journey.

In the past year we have propelled our Sustainability work within the areas of product, planet John Nylén, CEO Espresso House Group and people. What we serve has a major impact and our product teams has done incredible development and innovation with a large focus on increasing our plant-based and local assortment. We are on good way to reach our 2020 target to have 50% of the menu plant- based, ending with an average of 43%. In addition we have intensified our work towards reducing food waste and we now have food rescuing apps in all countries, and in Sweden we were awarded “Foodsavers of the year in 2019” by Karma for our ambitious initiative. Our John Nylén started his 2004 Barista commitment to fight plastic and reduce disposables has continued, including the introduction career within Espresso 2005 Coffee Shop Manager of our strawless lid and our decision to move to paper straws and FSC wood cutlery. House as a Barista in 2004 2005 Master Barista and has since then worked 2007 District Manager in various functions in the 2009 Regional Manager The changes made has led us to a reduction of serving and display methods using disposable company, until he became CEO 2012 COO EH Sweden plastics with 35%, and I am positive we are on good way towards our target of 50% reduction, for Espresso House Group in 2014 CEO EH Sweden with more changes to be rolled out during 2020. Since many of our guests choose take away 2015. 2015 CEO EH Group Highlights 2019 5

49% of all sold filter coffee Launched our 76% of our new Sustainability was organic website furniture tomorrowfriendly.com made in 2019 We have over 6000 stars in our team and received over was produced 77 000 applications in 2019 Contributed with $ 20 000 in Sweden towards building a Health Clinic in Ethiopia

43% plant based Espresso House in all countries cooperate with food and drinks in Food rescuing apps and assortment Espresso House Sweden was awarded with FOODSAVERS OF THE Donated over 1 000 000 SEK YEAR 2019 by Karma to different charities including Child Cancer Foundations, Red Cross and Red Nose. About Espresso House 66 Group

The story of Espresso House began in 1996, in the south of Sweden when the two young students Charles and Elisabet Asker opened the first Espresso House coffee shop in the small town of Lund. From start, passion and quality were the beacons of everything they did, and this is still true today.

At Espresso House we are all passionate Baristas. Our mission is to serve our guests an experience that exceeds their expectations. Friendliness is guiding our actions, both to each other, our guests and our planet. We also believe that everyone deserves really great coffee. It is our vision to show our world class guests what a world class coffee experience is, and we strive to do so by offering high quality Specialty Coffee that has been roasted in our own roastery. In addition we have a broad menu of warm and cold drinks, hot and cold food, as well as pastries from our own bakery. All is served by a friendly Barista in a truly cozy and extraordinary coffee shop atmosphere. In many of our locations we also offer catering for businesses and events, a popular service that we aim to expand further.

Espresso House Group has since the start grown into a leading premium coffee shop brand in the Nordics. The Group operates coffee shops under the brands Espresso House* and Johan & Nyström. We are established in five countries: Sweden, Norway, Denmark, Finland and Germany. The headquarter is located in Stockholm, Sweden.

At the end of year 2019, Espresso House Group had in total 470 coffee shops of which 463 are Espresso House and 7 Johan & Nyström. During the year we welcomed more than 42 million guests, and by December 2019 we had over 6000 people employed in all markets.

*Baresso and Balzac Coffee were in 2019 being converted into Espresso House and are therefore included under Espresso House in this report About Espresso House 77 Group

In 2019, Espresso House continued to expand with opening 55 new coffee shops, as well as we refurbished in total 49 units including the conversions of Baresso in Denmark and Balzac Coffee in Germany. Baresso finished converting its last coffee shop from Baresso to Espresso House in September 2019, and was in the end of 2019 operating all the coffee shops under the brand name Espresso House. In Germany, 11 Balzac coffee shops were converted into Espresso House and we will now continue with the remaining 25 conversions. One of Johan & Nyström coffee shops in Göteborg, Sweden was during 2019 replaced with Espresso House.

Espresso House is constantly identifying the needs of the consumers and digital services is an important area to constantly evolve. In the aim to improve service and speed, we have introduced the possibility for our guests to pre-order their food and drinks. Pre-order was incorporated as a new function in our popular loyalty app My Espresso House. The loyalty app now has one million members, and also Germany joined the scheme during 2019. Another key development was the premiere of Espresso House in the grocery stores in Sweden, Denmark and Norway in 2019. The Espresso House** Johan & Nyström ambition is to make it even easier to enjoy really great Espresso House coffee at home. About 160 selected stores now offer our espresso, filter coffee and coffee capsules. Revenue Revenue 2 982 987 217 SEK 250 843 141 SEK

At Espresso House, Sustainability is at the heart of every function in the organization and the Guests during 2019 Guests during 2019 coordination of the work is done at Group level. However, specialists are found in the different 42 107 814 455 738 subsidiaries and countries, which allows us to take Group-wide responsibility with local relevance and compliance in each country. In addition, we have policy documents (Environmental policy, Nr of Coffee shops Nr of Coffee shops Sweden: 262 Sweden: 6 HR policy, Anti-corruption policy, Sourcing principles, and Supplier code of conduct) that guides Norway: 58 Finland: 1 us in our everyday operations. Denmark: 51 Total: 7 Finland: 53 Espresso House Group is owned by JAB Holdings BV based in Amsterdam. The board of directors Germany: 39 consist of eight ordinary members, of whom six are from JAB, and two are from Espresso House. Total: 463 The Chief Executive Officer for Espresso House Group is John Nylén. He has held the position Employees Employees since 2015, and have previously held most operational positions within the company since he 6222 102 started his Espresso House journey as a Barista in 2004. *By end 2019 all Baresso coffee shops had been converted into the Espresso House Brand. **includes EH Sweden, EH Norway, EH Finland, EH Denmark incl. Baresso, EH Germany incl. Balzac Coffee. Sustainability at 8 Espresso House

Nature, society and business are all interconnected and for Espresso House being a large and international company, we are aware that our activities have an impact on the planet in various ways. It is therefore our responsibility, duty and will to do what we can to contribute to a Sustainable future. Our aim is to work towards reducing any negative impact and instead finding and creating solutions to craft a positive impact throughout our value chain. We strive to inform and educate all our stakeholders on the importance of our sustainable development and we clearly see that the interest and commitment among our employees, guests and suppliers is promptly increasing. In order to stay updated and relevant we also follow development closely. Sustainability is for us a key, long-term commitment that needs to be placed at the core of what we do as a company. To strengthen our commitment even further we have Sustainability as part of our Brand Strategy and Brand Pillars, along side our Manifest to be Tomorrow Friendly.

Our Tomorrow Friendly Manifest was launched in 2019 and is today our Sustainability promise and communication platform for all the initiatives we carry out within Sustainability and Social Responsibility. We believe it is important to inform and create transparency around the work we do, therefore we also created a new website with the same name where we will continue to talk about the important matters around Sustainability and the responsibility Espresso House take in regards to this. Espresso House is built on consideration. For our employees, our guests and for our planet. We always strive to be better and to make smart choices today which will benefit our planet tomorrow.

Follow our work for a sustainable tomorrow at www.tomorrowfriendly.com Our Brand Pillars 99

Nordic Roots The birth of Espresso House was a re-invention of a Nordic pastry shop and a bar. That’s us – always curious, tweaking trends and constantly evolving the traditional Nordic fika moments. In a unique blend of Nordic creativity, strong traditions of indulgent breaks and among the world’s most coffee drinkers. This is where we find our inspiration and thrive.

Warm & Welcoming Our house is your house. Come as you are, come solo, with friends, for a craving, to work or just to take a break. We are always happy to be your friendly host, foreseeing your every need and brighten up your day.

Public Premium We serve a public premium experience, taking trend and inspiration to the many. We add a premium touch to make sure we exceed your expectations. We pay attention to the details in everything we do, from what we serve & how we serve it, to how our interior, packaging and communication looks and feels.

Tomorrow Friendly Sustainability is in our DNA, built in to every building block of Espresso House. With passion we care about both our Planet and our People, of course we will act responsibly today but also ensure a great Tomorrow. We promise to always improve for the better and to be Tomorrow Friendly. Our Mission 1010

To build a strong cultural foundation we need to communicate clearly and define what we stand for as a business. It might be even more important now than ever to take a stand on what we, as a international company believe in and what our priorities are. We want our employees to know that they are important, that the work they do every day is important, and that they are contributing to creating world class experiences for our guests meanwhile considering the environment in which we operate.

In our aim to create an even stronger and including brand we developed a new Mission statement for Espresso House in 2019. It is a mission that place prominence on what is vital to us; our people, our guests and our planet. As Sustainability is at the heart of organization and of outmost importance to Espresso House it became naturally for us to incorporate it in our Mission.

The new Mission statement springs from listening to our employees and guests as well as our commitment to care for our planet. Our Stakeholders 11

Guests If we want to make a real difference, we need to listen to our Stakeholders. Stakeholder expectations, along with Espresso House own strategic direction, serve as a basis for the Our guests always comes priorities chosen for Espresso House Group’s sustainability work. In 2017, we sent out our first and represent our most important stakeholder group. first survey on the company’s sustainability work to a selected number of stakeholders, Annually we welcome over 42 including employees, guests and suppliers where we asked the stakeholders to rank the 000 000 guests in our coffee most important sustainability area for them. shops This study serves as the basis for the materiality analysis made. In total, 1122 stakeholders answered the sustainability survey. In addition, the survey was also answered by the Employees Espresso House Management Group. We want everyone to feel welcome at Espresso In 2018 and 2019 we have continued our stakeholder dialogue discussing sustainability House Group. Opinions and specifics and priority areas relating to our company, including new legislations and demands feedback from our employees both locally and globally. For example in the area of disposable materials we keep close are highly valued for us in dialogue with our suppliers to find more environmentally better materials. Our guests and our aim to become an even employees have also provided us with valuable feedback on our work through discussions, better employer focus groups and questionnaires. We also regularly monitor trends in sustainability and consumer behavior plus participate in different events related to Sustainability that provide valuable contributions to our insights and on-going work. Suppliers

We keep continuous In 2020 we are aiming to continue the dialogue with our stakeholders to ensure that our dialogue and work together own strategic plan within Sustainability is aligned and up to date with our Stakeholder with our suppliers. They expectations and priorities. represent an important part of our business 1212 Our Material Topics Materiality Analysis High Waste management

Disposable materials Responsible supply chain

Education & training The stakeholder survey from 2017 made up the base for the materiality analysis. Carbon footprint Gender equality Based on the valuable input received from our stakeholders we identified issue areas that can have a significant impact on our business, as well as those where Electricity use Customer health and safety we have the greatest potential to influence change.

The materiality analysis serves as an important foundation for the overall Competitive return sustainability strategy of the company. It also guides us in our daily operations Charity initiatives

and in our decision-making for future actions to both decrease our sustainability Importance for Stakeholdersfor Importance risks as well as improving our sustainability agenda moving forward. In addition to the materiality analysis we keep continuous dialogue with our stakeholders as well as monitoring new facts and trends related to Sustainability to help us in our decision-making moving forward.

Espresso House Impact High We have grouped our most important material topics in the areas of Product, Planet and People.

Product Planet People Ensure that our suppliers Minimize climate and Promote a culture of comply with established environmental impact in our diversity and equal international standards. operations by minimizing waste, opportunity. Educate and Promote local sourcing and reducing the use of disposable train our employees in the offer a healthy, relevant and materials and introducing best possible way. sustainable product environmentally better options assortment on the menu Our Sustainability Risks 13

Identified risks in the value chain

Espresso House Group is exposed to various sustainability risks in our daily operations. Coffee Producers The materiality analysis was an essential part in assessing these risks, however evaluation • Climate impact and risk analysis is done on a continuous basis to be able to identify important matters that • Local community impact potentially can have a negative impact. The risk management covers all levels of the value chain, from coffee bean to coffee cup. We also recognize the importance of monitoring Transports • Supplier Social assessment the possible risks related to human rights impact in our own operations, as well as in • Environmental impact our supply chain. • Corruption & Business ethics Roastery Our main sustainability risk relates to ensuring that sustainability is embedded into our • Materials and packaging services and products. The risks in our upstream supply chain activities are identified as • Attracting & retaining work force being highly significant. These risks are related to supplier social assessment and social responsibility in the value chain. To manage risks we have for example implemented a Coffee shops • Diversity & equal opportunity third-party assessment of our coffee producers as well as we now always outline a risk analysis in regards to the countries where we source coffee from. • Product health & safety • Waste and energy management The potential risks we are exposed to in the coffee shop include for example managing Guests our waste as well as attracting and retaining our employees. In 2019 we strengthened our • Damage to company reputation policy on waste management and designed in better space for waste management in our coffee shops. We also intensified our work within human resources and anti-corruption by strengthening our education and work-environment for Baristas, and by introducing new Recycling feedback channels including an anonymous whistleblower channel.

All our activities described in the following chapters represent steps for us to manage our identified sustainability risks, and strengthen our opportunities under the areas of product, planet and people. Note. Risk assessment is a continuous process for Espresso House, and therefore the risks are not limited to above points. 14

Product 15 What we Serve 1616

Espresso House Group’s greatest environmental impact trickles down to what we serve our guests. Therefore, we are placing a large focus and effort to provide our guests with a high quality, sustainable product assortment relevant for each country. We offer a wide range of hot and cold drinks as well as cold and hot food for breakfast, lunch, dinner and lighter evening meals. Our delicious bread and pastry assortment is baked with care by our baking masters in our very own bakery located in Arlöv, Sweden.

Our core product is of course coffee, which is sourced from different coffee regions around the world and then carefully roasted in our own roastery in Länna, located just outside Sweden’s capital Stockholm. We serve our coffee both hot and cold, in different sizes and flavors, with seasonal relevance and to the taste of our guests.

The product assortment coordination lies with the product team in each country, however with support lead from Espresso House Sweden. In 2019 we did a baseline study of all assortments in all countries with the aim to define a set of Product Sourcing Principles for certain products and product categories. These principles are being been rolled out to guide the product teams to always strive for sustainable choices in the product development. The principles focus local, national and sustainable sourcing of certain products and ingredients, and the use of certification to ensure sustainability aspects for some. For example, we aim to have only MSC certified fish and shrimp in our assortment. We also have guidelines for organic products and our tea assortment from Dear Tea Society is always organic. Furthermore we are continuously increasing our plant-based options in our assortment.

At the end of the day our guests always goes first, and therefore it is important to listen to what they want. Our product teams are in dialogue with the guests through interactions and in- shop tests as well as following trends and patterns both locally and globally. A meticulous and continuous work is done to always improve and refine our product assortments to satisfy our guests needs, and to make sure the products are tasty, healthy and sustainable. Our Coffee 17

At Espresso House we are passionate about coffee and we think that only the best quality is good enough for our guests. Therefore we are at Espresso House committed to serve Specialty Coffee. Specialty Coffee means that the coffee is ranked with at least 80 points on a 1-100 scale, which makes it fall within the highest quality coffee in the world according to the Specialty Coffee Association (SCA). We are today one of the largest coffee shop brands to offer this high quality. Our Signature Brew, Special Brew and Espresso blend is always Specialty Coffee. We also strive to always have an organic coffee option to serve in our coffee shops.

Behind every cup of coffee sold there is also a story. From the coffee farmer, to our roastery, and then brewed to the perfect cup by our Baristas for each and every guest. The perfect coffee bean is the foundation of the story, one that we need to care for and source responsibly and of course support the people who grow and nurture it.

We know that climate change is real, and that it can have a detrimental effect on the agricultural practices for farmers around the world, including all the coffee farmers whose livelihood depend on the coffee crop. With the threat of global temperatures rising, increased occurrences of plant-disease and less insects pollinating the plants, we stand before large challenges for agriculture in general. Without action to reduce carbon emissions, climate change is predicted to reduce the global area suitable for coffee production. This fact alongside market volatility is a problem for both farmers and consumers around the world. Therefore, we strive to not only serve the best coffee, but also to serve a coffee that has been sustainably produced. Being the largest coffee shop brand in the Nordics, we are in a unique position to take action. Together with Johan & Nyström our aim is to create positive change in the coffee trade by working closely with our farmers to create a sustainable coffee future.

Our ultimate aim is that we want everyone to be able to enjoy a good cup of coffee both today and in the future. Our own Roastery 1818

Our coffee beans are roasted in our very own roastery located in Länna just outside Sweden’s capital Stockholm. The roastery source and roast all the coffee for Espresso House and Johan & Nyström. Brand new facilities were built in 2017, which makes it one of Europe's most modern roasteries of Specialty Coffee.

The Roastery itself is run by a professional team of 28 passionate, and coffee loving persons who believe in better coffee for the people. Specialty Coffee roasting is an art in itself, which requires a high degree of knowledge and understanding. At our roastery we are committed to craft roasting, using the slow roasting method to ensure that every batch of beans is roasted to perfection. The beans are carefully selected and sourced from all around the world. In 2019 we roasted just over 1400 tons of coffee beans.

The roastery is continuously working towards reducing its environmental impact. Since 2019, 92% of the transportations within the Nordics are climate compensated. For the transports to Germany we try to streamline our transports with our tea supplier to ensure that no transportations are running empty. In 2018, we also conducted an energy mapping with the aim of identifying ways to further improve energy efficiency in the roastery. We try to minimize our use of energy through meticulously utilising the production hours of the roast machine. Furthermore, the roastery has organic waste management in place and separates all organic residuals from the roasting process.

The commitment to reduce food waste has been applied through various food waste initiatives. For example, we have a collaboration with Foodloopz where we have donated 344kg coffee to a project called Goodloopz which aims at creating a whole new exciting coffee product from coffee that would have otherwise gone to waste. Sourcing Coffee 19 At Espresso House

we want to take responsibility Our coffee beans are carefully selected and sourced from all around the world. In our work towards ensuring a responsible supply chain of the coffee we serve our guests, we are guided for the full coffee circle to ensure by our Coffee Sourcing Program that we further strengthened in 2019. It is a program containing routines, actions and principles which we have to adhere to in our work towards ensuring we are part of a sustainable sustainable sourcing of coffee. The coordination of this work is done by an internal Coffee coffee future. Council with members from both Espresso House and Johan & Nyström. At Espresso House we want to take responsibility for the full coffee circle to ensure we are part of a sustainable coffee future. The first step towards this is to create and maintain good relationships with our farmers, because we believe that this close connection and cooperation is the way towards transparency and sustainability. For us it is important to know where our coffee has grown and under what circumstances, therefore we strive to regularly visit the coffee farms or producer groups. In 2019 we visited 20% of our coffee producers and several trips are already planned for 2020.

We believe in Direct Trade and parts of our coffee is purchased with this purchasing method. For us Direct Trade means that we have built a long-term relationship and collaboration with a producer. We have a direct dialogue regarding coffee quality and allotments, and we set the price in consensus with the producer. We offer Single Estate or Single Origin coffee where the coffee comes from a specific farm or region to increase the traceability of the coffee bean’s path from plant to cup. Furthermore we also strive to always offer an organic filter coffee in our coffee shops.

We regularly monitor risks and opportunities in the countries where we source coffee. Our internal process consist of farm-visits where we make assessments based on three pillars of sustainable sourcing of coffee which includes Economic, Social and Environmental dimensions. In addition to this we also carry out third-party verifications of our coffee farms and cooperatives to ensure sustainable farming practices within the same three pillars as mentioned above, however with a little different approach that is explained on the next page. Third-party Assessments 2020

Our coffee commitment is to continue sourcing Specialty Coffee, with responsibility from bean to cup. In addition to our own internal farm-visits and assessments, we initiated third-party assessments for our coffee farms and cooperatives to provide independent validation of our supply chain performance. Since 2018, Espresso House Group has worked with Enveritas, a non-profit organization with an aim to help, in particular, smallholder farmers participate in a globally sustainable coffee industry. The majority of smallholder coffee farmers are excluded from high-value sustainability markets, not necessarily because their practices do not meet standards, but because it is more challenging to verify their activities. These farms are small, they are not organized into groups, their supply isn’t aggregated consistently, and they live in places that are difficult to reach. Enveritas closes this gap, by travelling to these places and verifying their sustainability practices, without any cost for the farmer. Interviews and observations on site are conducted with the farmers in the different places where we source coffee. The field assessments are evaluated against Enveritas standards, which cover three pillars of sustainability including social, environmental and economic dimensions.

By using third-party verification we are able to get a deeper understanding of the farming practices and identify areas needing improvement. It also contributes to more effective and transparent audits. In 2018, 20% of the coffee volumes were verified in Brazil and Guatemala. In 2019 an additional 20% was assessed in Ethiopia, Colombia, and Brazil. The work will continue in 2020 including Honduras and again Brazil where we source our largest coffee volumes.

Three Pillars of Sustainability Since 2018 we Social Environmental Economic

No Child labor No deforestation Above the poverty line have third-party No forced labor No pollution Transparent pricing Minimum wage respected Biodiversity protection Ethical business practices No discrimination Soil conservation No forced land evictions verified 40% of our Clean water Water conservation Sustainable production Decent housing Energy conservation Quality improvement Worker Rights and benefits No GMOs Traceability coffee volumes Freedom of association No banned pesticides Access to training Written contracts Safe chemical handling Access to finance Occupational health and safety Pest and disease management Records kept 2121 Organic Coffee Percentage of all sold cups of filtercoffee that was organic Espresso House 2019

100% 69% 55% 49% 39% 49% 50% 49% of all our sold cups of filter coffee was organic. 12% 0% EH Sweden EH Norway EH Denmark EH Finland EH Germany Average all countries Coffee has been identified as one of the worlds most important export crops according to the Swedish Society for Nature Conservation. Millions of people around the world depend on coffee production for their livelihoods with a large part being smallholder farmers. With the coffee crop being highly sensitive to pests and disease, a loss of harvest can have detrimental effects for these producers. Chemical substances such as pesticides and fertilizers are commonly used to combat these risks, however, these also carry with them health risks for the producers and their employees, as well as the risk of causing harm on the wildlife. Organic farming methods on the other hand avoids the use of these added substances. To be allowed to market coffee as organic it has to be certified by an internationally approved certification organ. This is a time consuming process and carry with it a cost that many of the small-scale producers are unable to afford. Here we are faced with a dilemma - do we promote organic beans from the certified producers that can afford it, or beans from actors who might not be able to afford the certification but with whom we have built a sustainable and long-lasting relationships with? We have decided to do both!

While our Signature Brew and Espresso is purchased from our long-time partners in Brazil and El Salvador, our Special Brew is organic with origins that varies over the year to help promote several farmers in different regions. We strive to always have an organic filter coffee option to serve our guests. In 2019, 49% of our total sold filter coffee was organic. Furthermore, we also have an organic brew option amongst our products in the retail stores. Our organic coffee is certified and labeled with the EU logo for organic production, which guarantees that the EU rules for organic farming have been respected. Coffee Community Support 22

At Espresso House we place high value on creating long term relationships and close dialogue The school is of course free for the farmers and we do this because we believe that education with our farmers, and we think that good coffee can and should contribute to good causes. By is an important and empowering tool to help ensure a long term positive development for working closely together, we are able to identify needs and to contribute positively to the farmers the coffee farmers. Our farmers are important to us as we depend on them for our core and their families by helping with support in meaningful projects. We are aware that the coffee we product, and our commitment towards them and their communities is therefore something source is from regions with various socio economic challenges, and therefore strive to identifying we want to prioritize. projects that are designed to support the social and economic development. These projects are for us an important part of our commitment towards creating positive and meaningful impact for our coffee farmers and their communities. The Sustainability division at Espresso House Group is responsible for the Coffee Community platform.

In 2018 we launched our first Anniversary Brew Coffee, a limited edition of organic Specialty The coffee community Coffee. Every cup and bag sold of Anniversary Brew has since the start contributed to different projects where the coffee was sourced from. projects are an important

One of these regions is Jimma in Ethiopia. In 2019 we decided to support our coffee producer part of our long term Ibrahim Hussein with funding towards the construction of a medical clinic. The goal is to improve access to health care for the community. The medical clinic is scheduled to be finished in 2020 commitment towards and is estimated to benefit 2500 people in the area. We have so far donated $ 20 000 towards the project, and will follow up closely on the progress. Prior to this, in 2018 we contributed with the creating positive and same amount of $ 20 000 towards a school project for the coffee farmers children in the region of Quillabamma in Peru. The aim of the project was to build a proper school canteen and to buy meaningful impact for our a school bus to enable children that live far away to access the school easier. The project was finished successfully in 2019. coffee farmers and their

In 2020, we will continue our support by contributing to setting up a Farmer field school in communities Colombia. We will help provide educational tools to increase their knowledge about natural resources and sustainable coffee farming as well as how to adapt to changing conditions in the coffee industry such as climate change. 23 Food & Pastries 2424

At Espresso House we love coffee, and while we do have a large focus on handcrafted drinks, we also offer a wide assortment of delicious and varying product pairings including hot and cold food as well as delicious baked goods from our own bakery. Meanwhile our product assortments varies throughout the year with seasonal trends and local relevance, our aim for high quality products is constant. In our continuous effort to become a more sustainable brand, we have developed a set of Product Sourcing Principles guiding Espresso House in all countries. These principles focuses on local and sustainable sourcing. Furthermore to minimize our effect on the climate we are increasingly looking to increase our plant-based options.

By December 2019, the Swedish assortment held 67% lacto-ovo vegetarian products, which is an increase from previous year when the same number was 60%. The product teams have in 2019 renewed the salad and veggie bowl assortments with a large focus on introducing more lacto-vegetarian and plant-based options. By the end of December the majority of our salads and vegetable bowls were either lacto-vegetarian or plant-based.

We source a lot of our product ingredients for our assortments regionally or nationally based on the countries where we have our coffee shops. By doing this, we can maintain high quality standards, ensure better traceability of our products, as well as reduce our transports. Furthermore it aides us to adapt and stay flexible to local needs and trends. While sourcing Lacto-ovo vegetarian warm & cold food Assortment Espresso House 2019 locally is both better for the environment and for local businesses, it does have its challenges to ensure enough supply independent of seasonal changes of some ingredients. Therefore 80% 67% 69% our product teams are continuously evaluating sourcing methods for new product launches. 70% 63% 65% 60% 50% As a part of our ambition to offer our guests a great food experience, Espresso House in 50% Sweden decided in 2019 to sign up to the European Chicken Commitment. We do 40% this as a commitment and a step towards improving chicken welfare. By raising our own 30% standards we hope to inspire others to do the same. Espresso House Denmark also 20% joined the commitment in february (2020). 10% 0% EH Sweden EH Norway EH Denmark EH Finland EH Germany We belive in Plant-based 25

Climate Change is a global challenge and at Espresso House we recognize that climate risks need to be considered when developing our food and drinks menu. In this work we continuously monitor trends and facts as well as recommendations from recognized organizations such as the Intergovernmental Panel on Climate Change who recommends the reduction of meat consumption due to the large amount of green house gas emissions caused by the animal agriculture from meat and dairy. Therefore, what we serve at Espresso House is an area of outmost importance and we continuously need to innovate and renew our range of products. We started to expand our range of plant-based and vegetarian products already in 2017, a work that we have continued since. We listen to the demands and therefore have set a goal that strives for a 50% plant-based food and drinks in our assortments. A goal that we are on a good way to meet, and we hope to fulfil in 2020. 2626 Plant-based food and drinks* in our assortment We belive in Plant-based Espresso House 2019 60% 50% 50% 47% 43% 40% 40% 37%

30%

Alongside the facts on climate change we also see a trend of increasing demand 20% for plant-based products from our guests. “In 2019 we have seen that the demand 10% for vegan and lacto-ovo vegetarian products amongst our guests has only gotten stronger. To stay relevant, we have therefore tried to keep up with the demand 0% EH Sweden EH Norway EH Denmark EH Finland EH Germany and introduced plenty of new plant-based products. Two of our most popular * The % is based on the food and drinks that are plant-based and drinks that can be served plant-based as an option. drinks turned vegan in 2019 when we introduced our Vegan Frapino and our Does not include Ready to drink. Vegan Santa Latte. Furthermore we launched more plant-based salads and bowls, wraps, overnight oats as well as more options for plant-based milk”. says Pontus Wretman, Product & Marketing Manager EH Sweden. Percentage of plant-based milk used in hot drinks Espresso House 2017 vs 2019 The increased interest and demand for plant-based can be seen overtime in the 12,0% behavioral patterns amongst our guests. For example this has been observed in 10,2% the demand for plant-based milk. In 2019, 8,2% of all hot drinks were sold with 10,0% 8,8% plant-based milk, compared to 6,4% in 2017. We have in parallel increased our 8,4% 8,2% 8,2% 8,0% 7,3% 6,7% variations and introduced more plant-based options, and to date those alternatives 6,4% 6,3% 6,1% includes oat, soy, pea and coconut milk with some variations between the countries. 6,0%

3,9% 4,0%

2,0%

0,0% EH Sweden EH Norway EH Finland EH Denmark EH Germany Total

2017 2019 Note. No data available for Germany from 2017 We believe in Local 2727 sourcing and Co-labs

The demand for local products is growing, especially within food and beverages. At Espresso House Group we believe in supporting and creating valuable relationships with local cultivators and producers and we strive to source as much as we can locally. Sourcing locally and supporting local businesses has many advantages and is for us an important step towards becoming more sustainable in our business practices. We also love to see that the suppliers themselves support environmental and social initiatives in different ways. We encourage all our countries and companies to create meaningful relationships and co-labs with local businesses. In 2019 we have collaborated with local producers in each country, and we will keep exploring opportunities in 2020.

At Espresso House Sweden a new focaccia was launched during the autumn with one of the ingredients being a green kale pesto from Svegro, a local greens and herbs producer from Färingsö. The pesto is partly made from re-used ‘rescued’ greens and herbs that would have otherwise gone to waste. Furthermore, we started a co-lab with the Malmö based company Sproud, launching a vegan Cappuccino. Sproud is a pea-based drink that suits as a perfect vegan option, not only in the coffee but also as a vegan base in our overnight oats. In the end of 2019 we also started collaborating with Solsken, a local beverage producer from Österlen. Together with this producer we put sunshine and apples in one drink resulting in completely new vegan drinks on our menu. Last but not least, Pärlans Kola, a local Stockholm caramel producer was a co-lab we entered in 2019. Together with Pärlans we presented a coffee caramel made from Pärlans caramel and our own Signature espresso, and we also created a unique Saffron Caramel Latte as a Christmas limited edition. At Espresso House Finland we introduced a Finnish seasonal product, the local favorite 28 Runebergintorttu from MBakery. MBakery is a quality pastry bakery located in western Finland whose products are all made by hand. The products use only high quality and best ingredients. We also use Finnish Kaslink Aito Oat drink as a plant-based option for our crafted drinks. Kaslink products are completely gluten-free and focuses on traceability in their supply chain. In the fall of 2019 we presented a new raw cake made by Makers, a small bakery in Helsinki. The cake is vegan and the flavor combination of the cake takes into account the freshness of the Finnish nature, consisting of lingonberries. The cake is made exclusively for us and is only available at Espresso House Finland.

At Espresso House Norway we collaborate with Heimdal, a small and exclusive chocolate factory in Arendal, where the focus lies on delicious quality products made by hand and shaped by creativity and knowledge. The chocolate is made in the same facilities where their little shop is. We also source many of our fresh bakery products from Brødbakerne, a small and local bakery located in Oslo with focus on handcrafted and high quality products.

At Espresso House Denmark we cooperate with Emmerys, which is a local premium organic bakery that provides daily fresh bread & pastry for all our coffee shops in Denmark. Espresso House Denmark has also been purchasing local and organic juice from Bornholms Mosteri which is a juice mill located on Bornholm. They produce and provide us with delicious and high quality products while simultaneously creating jobs for people that due to different reasons are unable to participate in an ordinary full time job.

At Espresso House Germany we work with small local bakeries to support them and to be able to offer high quality and handmade bakery, for example local products like the ‘Winter- Stollen’ which is a typical German product. Also we source drinks from Fritz-kola, a local German beverage producer that uses recyclable glass bottles instead of plastic. Our cold pressed and delicious organic juices and shots are sourced from a local supplier called Rawlution, a small startup with focus on sustainability. With our focus on this smaller and local producer we want to support them and give them the possibility to grow with us. Year Production scrap Our own Bakery 2929 2019 2,2%

2018 2,7%

At Espresso House we are proud to serve baked bread and pastry products from our very own 2017 (December) 4,0% Espresso House Bakery. Located in Arlöv outside Malmö in Sweden, the bakery is run by a dedicated and professional team of baking enthusiasts who are working everyday to develop and bake various delicious products of highest quality for our coffee shops. With its 7200 square meters and 52 employees, the bakery produced 3252 tons of products in 2019, including two million cinnamon buns, which is one of our most beloved products. The bakery continuously evaluate its opportunities and risks in the bakery operations, and strives to handle the bakery process in a sustainable manner. The coordination of this work is managed by the Quality Manager together with the Environment, Health and Safety coordinator.

In the continuous work towards maintaining and improving our food quality and safety, the bakery was in 2019 certified against the British Retail Consortium (BRC) Food Safety Standard version 8. This year we went from grade A to grade AA, which is the highest grade possible on audits booked in advance. Alongside ensuring safety and quality of the products our work has included to further evaluate the energy and water usage to set a baseline and goals for 2020. Furthermore we completed a raw material study in our aim towards ensuring sustainable sourcing of ingredients such as cocoa.

Moreover, when producing large amounts of products there is always a need to plan the production process carefully to minimize waste. This includes, for example, to identify where in the production flow we best can take care of deviating products or to adapt the machineries to minimize waste. Production scrap is followed up on a daily basis to keep control, and to be able to take precautionary action. “We started measuring production scrap in 2017 and in the end of that year we stood with 4% waste, and now two years later, in 2019 we had an average of 2,2% which means that our work has paid off” says Sara Klockars, Quality Manager Bakery. Even if we try to reduce production scrap as much as we can, some organic waste will always occur. In 2018 measures were taken to improve the recycling and waste management of organic waste, and since 2019 we separate our organic waste coming from production scrap. Supplier Code of Conduct 3030 & Anti-Corruption

Supplier Code of Conduct Since 2017, we ask all our suppliers to sign our Code of Conduct. The purpose of the Code of Conduct is to ensure that Espresso House Group’s suppliers work in accordance with internationally recognized minimum standards for human rights, labor law, the environment and anti-corruption. The code of conduct is a mandatory document that shall be used by all countries and companies under Espresso House Group. The supply chain division has the overall responsibility for the suppliers’ compliance at Espresso House Group and a yearly follow-up is made to ensure that our suppliers have signed the Code of Conduct.

Being a large actor, it is of outmost importance for us to take responsibility, as well as ensuring that our suppliers abide our standards. By December 2019, a total of 95% of all product suppliers had signed the Code of Conduct, which is an increase from 2019 when we had 87% signed. Our ambition and goal is always that 100% of all our existing and new suppliers shall have accepted and signed the Code of Conduct. In 2020 we aim to improve our system for supplier screening and follow-up.

Anti-corruption To be a trustworthy company that our guests, employees and suppliers can rely on, it’s extremely important that all parts of our operations are handled transparently and in accordance with existing laws and regulations in the countries we operate in. In 2018, we formulated an Anti-Corruption Policy for Espresso House Group. In October 2019 we further introduced a Year Percentage of suppliers that have whistleblower function in Espresso House Sweden that enables malpractice, unlawful or signed our Code of Conduct unethical behavior to be reported anonymously by our employees. Our aim is to roll this out in all countries in 2020. The Finance department has the ultimate ownership of the anti-corruption 2019 95% policy and the implementation of it. In 2019, zero incidents were reported in terms of issues 2018 87% related to corruption. 31

Planet 32 Our Environmental Impact 3333

Espresso House Group recognize that we, in our business activities have a fundamental impact on the planet. Therefore we work continuously to prevent and minimize negative impact from operating our coffee shops, bakery and roastery. Our Environment Policy is guiding our work and our ambition is to continuously and structurally work towards a set of goals which are revised and evaluated yearly.

In 2019 we continued our focus and efforts in key areas, including the important development of continuing to serve our guests a more plant-based menu. Furthermore we have made efforts in improving our waste management, in the coffee shops particular with focus on food waste. We also strengthened our product innovation of disposable materials by trialing new more environmental materials, we reduced plastic and introduced new reusables. We also try to streamline the transports more effectively, and our main product distributor HAVI use 97,4% renewable fuel for the transportations with own trucks to our coffee shops in Sweden. An important step for us have also been to start using our digital platforms in promoting options better for the environmentally, for example vegan options and incentivizing the use of reusable cups.

Some of these areas were also identified by our stakeholders as being material and hence, for us it is of outmost importance to work with in terms of improvement and managing our risks. Our ambition is to continuously and structurally work towards monitoring and reducing our climate footprint, and to ensure our sustainability strategy is aligned with our stakeholders’ expectations and of course the local and global demands. We have an important role to play, and therefore we will never stop developing new ambitious Sustainability goals within the areas where we are able to create a positive change. This next part of the Sustainability Report will focus on our key opportunity areas and how we manage some of our environmental risks. Zero Food to Waste Food Rescue 2019 3434

Globally, it is estimated that a third of all food that is produced for human consumption goes to waste, Karma Too Good To Go and therefore it is necessary to prevent and minimize any unnecessary food waste. Meanwhile 2018 Espresso House Sweden was a year when we set out an overall food waste reduction strategy for Espresso House Group, 2019 Espresso House Norway Rescued food: 177 504 products Rescued food: 59 613 product bags has been a year when we have propelled the actions. Espresso House in all countries have had the CO2 emissions: 117 911 kg CO2 emissions: 137 282 kg goal to initiate co-operations with food waste applications. Johan & Nyström Espresso House Denmark In order to reduce food waste, Espresso House first of all work specifically with preventing food waste Rescued food: 208 products Rescued food: 23 369 product bags CO2 emissions: 1092 kg in the coffee shops by planning and working carefully with ensuring freshness and quality of the CO2 emissions: 55 618 kg products in the shop. In fact, majority of our coffee shops prepare the food in-shop. In addition to this Espresso House Germany we took an important step 2018 by partnering up with leading food saving services at Espresso House Rescued food: 5571 product bags in Sweden, Norway and Denmark. The apps are helping consumers to rescue food that would CO2 emissions: 12 425 kg otherwise be discarded. In 2019, Espresso House in Germany and Finland also joined in on the mission and by the end of the year all five countries were cooperating with different food rescue ResQ Club applications. Espresso House Finland In Sweden we cooperate with Karma, and in 2019 we were awarded with ‘Foodsavers Of The Year’ Rescued food: 1174 product bags CO2 emissions: 2935 kg in the category ‘café’, which highlights our contribution to building the first zero food waste generation together with Karma. In Norway, Denmark and Germany we are cooperating with To Good To Go, and in Finland we collaborate with ResQ Club. Since September 2019 Johan & Nyström also cooperates with Karma to be able to rescue food that would have otherwise been going to waste. Percentage of coffee shops connected to food rescuing apps by December 2019 In total 418 of our Espresso House Group coffee shops in all countries were by December 2019 120% 100% 100% 100% 92% connected to the different apps, that is 89 % of out total amount of coffee shops who today have 100% 86% 89% joined in on the food waste mission. The quantity of rescued food during the year equaled an 80% amount of 327 tons CO2 emissions. In 2020 we aim to connect 100% of our coffee shops and 60% continue our mission to reduce food waste. 40% 20% 9% We believe that by creating valuable partnership with leading food rescue companies, we are able to 0% contribute to a positive change, and a win-win situation for guests and our coffee shops, and not least EH EH EH EH EH J&N All for the environment. Sweden Norway Denmark Finland Germany Food waste 3535

Proper waste management is critical for a sustainable society including the protection of the environment that we depend on. We have therefore implemented a mandatory waste management policy for the coffee shop operations that is currently being rolled out. The waste management strategy for Espresso House is set on a group level; however each country is responsible for the implementation and follow-up lies to ensure national and local compliance on waste management regulations.

The work towards solid waste management is challenging as it is necessary to both rebuild old coffee shops and integrate waste solutions, but also to put pressure on the different facilities where we are located and adapt to the different waste management regulations in the municipalities where we operate. Our aim forward is to improve the overall waste management system, and an important step towards enabling this was to redesign our coffee shop floorplans with a more cohesive space dedicated for waste management in our coffee shops, including food waste.

Through our waste management policy we set a long-term goal that 100% of our coffee shops shall have food waste management in place (i.e. separates food waste for collection). As per December 2019, 38% of our coffee shops had food waste management in place, which is an increase from previous year when we had 33 %. The implementation differs from country to country with differing rules and regulations that we need to adhere to. Being far from where we want to be in this work, we are aware that we have an important work to do, a work that we take seriously. Therefore we will in 2020 further prioritize and intensify our efforts towards reaching our goal. Reusing Coffee Grounds 36

We love serving our great coffee to our guests, which also means that we generate a lot of coffee grounds. Instead of going to waste, we are curious to find ways for coffee grounds to be re-used to support circular economy. We have been exploring new ideas on how to be able to reuse our coffee grounds in different ways, and we are eager to find new collaborations with innovative organizations and entrepreneurs working with this.

In 2019, we have had an initial trial together with Kaffe Bueno in Denmark to bake products out of their Kaffe Bueno Flour. Kaffe Bueno is a Copenhagen-based biotechnology startup using coffee’s by-product to produce ingredients for food and personal care products; Kaffe Bueno Flour is one of their ingredients. This is a flour made from used coffee grounds and later refined in a biorefinery. In our tests we used Kaffe Bueno Flour and made baking tests with various products such as buns, bread and cookies in our own bakery in Arlöv, Sweden. The initial test was successful and further tests will be made in 2020. With this we aim to explore possibilities of producing our own products made of Kaffe Bueno Flour, and also see if potentially our own left-over coffee grounds can be collected and refined into Kaffe Bueno Flour.

In 2018, Espresso House also participated in a circular waste project together with sustainability experts at ÅF, the Swedish Church, Refo and RISE. We experimented with the possibility to create a more sustainable way to generate heat by producing coffee logs made from coffee grounds, candle wax from leftover candles and molasses. The result of this experiment showcased that it was possible to produce coffee logs, however there was a need to develop the process further to be able to produce a sustainable product to put on the market. Packaging and Materials 37

Being the largest coffee shop brand in the Nordics and being a large provider of disposable existing disposable plastics. During 2019 we made two big purchasing changes, replacing our materials, Espresso House undoubtedly has a big responsibility to secure the use and plastic straws in to paper straws and replaced our take away plastic cutlery to FSC certified disposal of different materials including the materials we use for our guests. Our work in this wood. The new items will now be rolled out in the shops (2020). During 2019, we also area can, in broad terms, be divided into two categories: Reduce and Replace. The launched a new assortment of juices and smoothies in bottles made from 40% R-PET, thus Sustainability division has the overall responsibility for identifying areas of improvement in avoiding the previous serving method of disposable plastic cups, lids and straws. accordance with Espresso Houses’ Environmental Policy, and work closely with the product departments who evaluates and make tests on different options for improvement. In particular By reducing and replacing disposable materials we have since 2018 eliminated the number of our focus in 2019 has been to explore more environmentally better alternatives to disposable display and serving methods using disposable plastics with circa 35% with some variations plastic as well as to promote reusables. between the countries. The number is based on the Swedish market. With a target of 50% reduction we still have a very important work to continue in 2020. Reduce material An average of 70 % of Espresso House’s guests choose to sit down in our coffee shops when they have something to drink or eat. Using glass and porcelain to our guests that do not choose take-away provides a great opportunity of reducing the use of disposables. While most products are served in porcelain, we are working to also shift cold drinks in to a better serving option for in-house. We see progress in this area where Germany have introduced real glass at an early stage. During 2019 Espresso House Finland also switched from plastic to real glass for inhouse serving of cold drinks. Denmark started tests for snacks like overnight oats and yoghurts to be implemented in real glass jars. In 2020 we plan to implement improved material for remaining countries for cold drinks. To reduce plastic items, we also introduced the Strawless lid in 2019, which replaced a previous serving method with a lid and a straw. We estimate that we have avoided the usage of two million plastic straws in 2019 through this initiative. Furthermore we also encourage the use of reusable cups, read more on page 38.

Replace material Reducing the disposables used in-house is not enough, the disposables that are still in use need to be more sustainable. For us it is important that the materials we change to are both functional and environmentally better. We continuously trial different options that can replace 3838 Sales of Reusable Cups We love Reusables 2016-2019

60000 50000 In our mission to reduce disposables we have stepped up our game in 2019 by introducing 40000 rewards for our guests who bring their own reusable cup when purchasing a drink. We have also 30000 renewed our merchandise range of reusable cups with new materials and design. Our newest 20000 reusable cup is made of 80 % renewable sources. Another example is the Huskee cup partly 10000 made of coffee husk, using the waste material that otherwise would have been thrown away. 0 Furthermore we are trialing the use of empty and reusable Stelton bottles in Sweden and 2016 2017 2018 2019 Denmark where we sell empty bottles that the guest is welcome to refill with our tap water. These reusables are always placed in close proximity to the counter to inspire more people to buy and use them.

In 2019 we launched an entirely new initiative to reward our guests in our App when bringing their own reusable cup. By being a member in our loyalty program My Espresso House the guest normally gathers one stamp per purchase, and when reaching nine stamps, the tenth will be a drink on the house. Now if they instead purchase a drink using their own reusable cup, they will get two stamps instead of one, which means they will reach their free favorite drink at double pace. In addition to this, Espresso House in Norway and Germany also offered a monetary discount for all who bring their own reusable cup. These initiatives have received a lot of positive feedback from our guests.

We believe and hope that by offering incentives and keeping a high quality, nicely designed range of reusable merchandise, we are able to encourage and inspire towards an increased use of reusables. In 2019 we increased our total sales of reusables and sold on average 20% more reusable cups per coffee shop than in 2018. In 2019 we had over a quarter million drink purchases across all countries where the guest brought their own reusable cup, a number we hope to increase in 2020. Furthermore, during Black Friday in December 2019 we launched our own ‘Green Friday’ offer in Sweden, where we gave 20 % discount when purchasing one of our reusable cups. Through this initiative we saw a spike in Swedish sales of reusables with more than ten times usual sales volumes. Construction 39

Sustainable construction involves, the design and management of buildings, materials Waste Management performance, energy and resource efficiency, operation and maintenance, robust products and In 2019, we assessed and evaluated our coffee shop floorplans designated for waste viable environments. The architecture and construction department is responsible for drawing management. In our aim to improve our waste management system as a whole, we and building our coffee shops with a welcoming atmosphere for our guests at the same time as designed new and better areas for waste in the coffee shop. This space is dedicated to enabling a safe and practical work-environment for our employees. proper waste management and the allocation of waste bins. The waste management at Espresso House is governed by our waste management policy and the coordination is Our approach done locally in each country to ensure compliance to national regulations. Opening one new coffee shop a week demands careful planning, where sustainability aspects needs to be integrated to work towards reducing our impact on the environment. When building new and refurbishing existing coffee shops, we always adapt to the premises, both in terms of interior design and lighting, and we strive to source sustainable material of high quality to ensure the longevity of our furniture and fixtures. Furthermore we strive to continuously optimize our transportations by streamlining our operations with co-transportation and, if possible, allow the same transport to pick up at other suppliers in order to co-transport products and materials out to the construction site. We also favor local purchasing to simplify distribution and minimise transportation distances.

Energy Efficiency In 2018, we completed our first energy mapping in the coffee shops, bakery as well as the 76% of our roastery. The ambition was to identify areas where we can improve our energy use. While our coffee shops today follow daily coffee shop routines that aims to minimize the energy usage, there furniture made is always room for improvement and we need to explore further options. As of 2017, all new and refurbished coffee shops are equipped with LED-lights. Being a more energy efficient source of in 2019 was produced illumination, LED-light allow significant energy savings compared to conventional light. in Sweden Furniture & Materials 40

Furnitures made in Sweden While we do source parts of our furniture from abroad, we are proud to say that the majority of Espresso House’s coffee shop furniture is designed in-house by our own creative architect, and produced in Sweden. In fact, 76 % of our investment in furniture for the 2019 coffee shops was for furniture produced in Sweden by three different joineries.

Reusing furniture and materials We strongly believe in product design with reused materials, and we therefore recycle different materials that would have otherwise been discarded. For example many of our wall panels, tables and shelves are made from recycled old wooden scaffolding. Besides this, In our reluctance to throw away well-designed and functional materials of good quality our design and construction team plan carefully when refurbishing existing coffee shops. “When we refurbish coffee shops we try to reuse or re-sell as much as possible of the existing interior to reduce environmental impact” says Sonja Strid, Head of Architecture and Concept. In cases when we close coffee shops we also reuse the furniture for other purposes within the company.

“When we refurbish coffee In our work to avoid throwing furniture away, we collaborate with ReFurn in Sweden, a company who resells used furniture. In the instances when we are unable to reuse our shops we try to reuse or furniture for some reason, it will instead be sold through ReFurn. For our conversions of German Balzac coffee shops and Danish Baresso coffee shops into Espresso House, used re-sell as much as possible furniture has been sold and the revenues been donated to local charities. In this way we have been able to give much of the furniture a second life instead of being discarded, as well as it of the existing interior to has contributed to social causes that aims at improving peoples lives. reduce environmental impact”

Sonja Strid, head of Architecture and Concept Digital Services 41

The world is becoming more and more digitalized and we are racing towards a more cash-free Pre-order society, where cards and digital innovations are preferred. For Espresso House it is key to In our aim to improve service and speed we introduced digital pre-order during 2019. Via always consider consumer needs and level up our digital services. The Digital team on-going our App our guests can place and pay their order and then pick up their products quick assess and develop new innovative solutions to give our guests a great experience as well as and smoothly as they arrive at the coffee shop. By end 2019, 100 coffee shops in Sweden to simplify our operations for the employees. had pre-order and the roll-out will be finalized in 2020. During 2020 Finland will also introduce pre-order. Cash-free coffee shops Our journey towards cash-free started in our Swedish Espresso House coffee shops during 2017 and by December 2019, 256 coffee shops were cash-free and only accepted payment by card or the Espresso House App. This is an increase from previous year (2018) where we had 190 cash-free coffee shops ending the year. We believe there are many benefits by reducing the handling of cash in our coffee shops. Transactional transparency is increased and reduction of the work and management related to cash handling. We also increase the safety for our baristas since there is a reduced risk of theft and we can reduce transportation of Year Cash-free coffee shops (EH Group) money. By removing cash-handling from these coffee shops, we estimate that we eliminate circa 7680 money transports in varying distances yearly. 2019 54%

My Espresso House 2018 44% My Espresso House is our App-based Loyalty program aimed at creating an additional experience available for our frequent guests. The App works in all five countries, and as a member you receive various offers and discounts and is always updated with the latest news. It is also possible to pay with the App and get extra discount of 10 %. A popular feature is the digital “stamp card” where you can collect stamps for each purchase over 20 SEK. For every 9th stamp we treat you with your favorite drink for free. Our loyalty program members can also receive a birthday gift and send gifts to other members. In December 2019 we passed one million members in our Loyalty program. 42

People 43 Our People 4444

Our people are the foundation of our brand, and with our warm, personal, and including atmosphere we welcome everyone just the way they are. Our people values sets the foundation for our culture and they guide us every day in our work. The HR Manager in each country and company is responsible for the people function with guidance from our HR policies. 77 % of our employees at Espresso House Group are covered by collective bargaining agreements. As of December 2019 we had 6324 employees in both Espresso House and Johan & Nyström, and during 2019 we received over 77 000 work applications to come and work for us.

Gender distribution Gender distribution Employees Management

Espresso House (All countries) Espresso House (All countries)

2019 2018 2019 2018

Men 1083 (17%) 841 (16%) Men 25 (47%) 29 (57%)

Women 5139 (83%) 4466 (84%) Women 28 (53%) 22 (43%)

Total 6222 5307

Johan & Nyström Johan & Nyström

2019 2018 2019 2018

Men 59 (58%) 74 (57%) Men 4 (67%) 7 (64%)

Women 43 (42%) 55 (43%) Women 2 (33%) 4 (36%) Total 102 129

EH Group All employees 2019 EH Group Management 2019

18% 49% 51% 82%

Women Men Women Men Youth Employer 45

Our employees are our greatest ambassadors and we want everyone to be proud of Espresso House. We are a major youth employer and with that comes responsibility to ensure we are a safe and good workplace to enable our employees to thrive at work and succeed both as individuals and as team members. We continuously work towards strengthening our work environment and in our continuous effort to become an even better employer we have across all countries, had a big focus to improve work environment, education, communication and leadership even further.

We have for example introduced several ways to increase dialogue and feedback, focus groups, feedback e-mail and anonymous whistleblower system is put in place. For us it is important to always listen to our employees to get ideas and feedback on how we can develop. During 2019 we have also taken steps to reinforce and standardize central policies and guidelines, for example on work environment, equality and diversity.

In Norway we have introduced a new Safety representative program where we tripled the amount of persons being representatives for the Baristas, now having 14 safety representatives in total. In Finland the ‘Make it easy’ initiative was introduced in 2019, which encourage employees to share practices that make work easier. We have also worked towards improving the physical work-environment by designing new and improved employee rest and break areas in our coffee shops. These will start to be built in 2020 and aims at creating a better area for calm and rest during the work breaks.

We are overall strengthening the education of our employees as well as focusing on supporting our young leaders to strive in their role, and we are continuously improving Academy Learn which is our platform for competence development. Plan for Equal Rights 4646 & Opportunities

At Espresso House Sweden we have previously worked with gender equality plans when it comes to promote equal distribution between men and women. In 2019 however we decided to propel our work and get a broader perspective.

Not only is it important to work actively for women and men to have equal rights and opportunities. All our employees must have the right to be themselves, regardless of who they are or whatever their background is. We believe in the equal value of all people and that everyone should have the same opportunities and rights in working life, regardless of gender, gender identity or expression, ethnic affiliation, religion or other beliefs, disability, sexual orientation or age. We have thus gone from having a gender perspective only, to focusing on all the seven grounds for discrimination. In this way, all our existing and potential employees should feel welcomed, respected and safe at Espresso House, a workplace that is characterized by diversity and differences. The new plan for equal rights and opportunities will be implemented in operations in 2020 and shall in first instance cover the next two years. The plan goes hand in hand with our Equality Policy. Our people make us better 47

A priority for us is to provide a safe and meaningful place to work where our employees feel free to be themselves. In this work we acknowledge that we always have to evaluate and assess our operations and practices. We promote an open culture with high ceilings and where there always shall be room for discussion. With more than 6000 employees we know that it is our people that make us what we are today, and it is the people that we need to learn from to become even better. Thus, we always encourage our employees to speak with us and let us know their views, questions and concerns.

The feedback we receive from our employees is extremely important to us in our work to identify what opportunities there are to become an even greater place to work. We regularly conduct employee surveys in each country to follow up data relating to employee satisfaction, diversity and training. Employee surveys are revised regularly. Furthermore we hold meaningful focus groups with our employees where we shed light on their needs as well as both positive and negative things that we need to work on. We have work environment representatives and we work with open communication between our coffee shop operations and the service offices supporting these. Feedback channels for the employees are in place where queries and thoughts can be raised. Furthermore Espresso House implemented an anonymous whistleblower channel where suspected irregularities can be reported. The whistleblower channel was introduced for Sweden in October 2019, and other countries plan to follow suit in 2020, including Espresso House Norway who implemented it in January (2020).

In our aim to support our baristas we know that communication is key, however being a large organization with so many employees, communication can also be a challenging task. It’s therefore crucial for an organization to be able to communicate in an effective and engaging way with its employees, and therefore we are working to improve and strengthen our information flow. In order to boost our baristas with all the great things we as a company do, we have launched an app called Barista Boost. It is our own internal information platform created mainly for our baristas in order to update them on what is going on in our organization. Grow with Espresso House 48

In our aim to provide our guests with a world class coffee experience, education of our baristas Within leadership training we offer opportunities to embrace the role as a leader in different is fundamental and key to our success. Even if you do not have previous knowledge about the shapes. Either as a shift-leader or as a coffee shop manager for a coffee shop or even as a art of coffee before starting with us, we will provide you with the tools to succeed in the role. district manager for a full district of coffee shops. There are also possibilities to develop within We also provide good possibilities to grow into new roles within the company, often operations food preparation, and many other different functions. On average across all countries, our management, becoming a coffee shop manager or district manager. We also have many employees in operations received 31 hours of training in 2019, including both operational and examples of persons developing into other specialist roles like Training, HR or Product & theoretical modules. 100 % of all our coffee shop managers in Sweden were offered training in Marketing for example. This allows us to focus on the most important thing when we seek new cardiopulmonary resuscitation (CPR) during 2019. employees - the right person with the right personality and drive!

Espresso House Academy We want to see our employees grow with us, therefore if you want to immerse yourself in the art of coffee or if you choose to develop your leadership qualities at Espresso House, we offer several opportunities and courses to further educate yourself within different areas. We have our own “school” called the Espresso House Academy where our employees are trained to receive the right introduction, knowledge and prerequisites to feel safe at work and to be able to do the best job possible.

When working with us, every employee will first of all become a certified Barista. We also offer further training within coffee including opportunities for completing a senior Barista course or even a more deep diving advanced master Barista course. Our different Barista training programs are covering everything the employee need to know from our coffee farming, roasting, taste notes, quality, milk skimming, latte art and machine reparations. To boost our joy for coffee even more, we also each year arrange our international Espresso House Cup which is our own Barista competition where we through team play create joy around the art and quality of coffee. We want You – not 49 your Resumé

With one new coffee shop opening a week on average, we always look for new stars that would like to be a part of Espresso House. Our focus is on finding the person with the right personality and drive, and then enable for them to get that first job and grow with us. We are conviced that personality and drive is a crucial component in each and every indivduals journey to actualize their dreams. Your resume can be important, but your attitude is more important. This was the message behind the launch of “We want you – Not your Resumé” which is an initiative about giving you, regardless of your background, an opportunity to work and grow with us.

The recruitment campaign first took place in Sweden during 2018, with the ambition to inspire other countries to create their own inclusive recruitment campaigns. For example in Germany we introduced a campaign under the umbrella ‘Great Place to Work’ as well we have cooperation with High Schools, Universities and Institutions that has an aim to help young refugees to get a job.

In Finland we have during 2019 held several recruitment campaigns. The HR Manager says: “We plan the actions dynamically according to the needs. In addition to the traditional recruitment channels, we’ve been attracting applicants by utilizing social media, ads in our coffee shops, and in some cases also outdoor ads.” Hilppa Horneman, Human Resource Manager

In general across all countries we are happy to see an increasing amount of applications from people who are interested in working with us. In fact, we received over 77 000 applications in total across all markets in 2019, which is an increase of approximately 9% from previous year. Out of these, 42 000 of the applications was in the Swedish market. From Barista to 5050 District Manager

With her positive attitude and her curiousness to always learn new things, Elin has advanced within our company and she is today a driven and dedicated District Manager.

My journey at Espresso House started about six years ago, then as a Barista. It didn't take long to fall in love with both the company and the culture, as well as the guests and colleagues. This meant that a few months after my start, I grew into a role as Shift Leader and then Assistant Coffee Shop Manager at the same shop. I have had the privilege of working with amazing people around me who have supported my interest in personal and professional development. That meant that I dared to seek and shoulder a position as Coffee Shop Manager at one of the company's then largest coffee shops. In that role, I learned lots! My interest in leadership and creating strong results grew, and I felt strongly about continuing my journey at Espresso House. When the opportunity opened up for me to apply for a District Manager trainee program, I did not hesitate. I was then offered the opportunity for a position as District Manager before the end of the trainee program. Today I not only work in my role as District Manager, I also hold training courses for future and new leaders in our Coffee shops. I am also a supervisor for a Coffee Shop Manager who has started his District Manager trainee program. Of course it is a cool feeling!

I strive to make the decisions I make daily, based on the people I work with. Most closely I work with the Coffee Shop Managers who run the Coffee Shops that are part of my district and a prerequisite is that we know each other well. I know what motivates and drives them forward, what challenges they have ahead of them and what successes they have behind them. In this way, I hope to be able to set the requirements as well as provide the support they need to create fantastic results at their Coffee shops. I am proud to be part of the development Espresso House is doing for the young leaders who run Coffee shops. Working in an ever changing industry requires not least commitment, curiosity and the will of employees. I am proud that I can be a part of it and that I have the confidence to shoulder what it takes.

Elin, District Manager at Espresso House Sweden From Barista to 5151 Barista Coach

With a huge passion for sharing knowledge and passion within coffee Christine quickly advanced within our company and she is today an excellent Barista Coach. After mastering coffee, next in line is to learn more about equipment and coffee machines.

‘My name is Christine and my journey as a Barista Coach at Espresso House started in October 2017 in Hamburg. Before this I have worked with coffee since 2012. What I love about this job is that I work with so many amazing people that are keen on learning from me. Sharing my knowledge about coffee and spreading passion is something I enjoy.

I also love that I get to work with high-quality products on a big scale. Specialty coffee is usually a niche product and Espresso House makes this available to a vast amount of guests. My future goal is learning even more about coffee and the equipment around it as I think a coach must develop personally too! To learn new things regularly and to stay inspired to be able to motivate our baristas in the long run. Coffee is an everchanging industry with a lot of progress going on lately, especially when it comes to innovative processing methods or new technologies somewhere along the value-added chain. I want to stay curious about the movements and forming networks to be able to teach all of the exciting facts about coffee.

Coffee is a huge part of my life, even after work. I love visiting coffee places on the weekends for fancy breakfasts and I always prepare a list of go-to coffee shops before I travel somewhere new’

Christine, Barista Coach at Espresso House Germany More stars of Espresso House 52

Murat, Germany Ewelina, Sweden Pontus, Sweden Catrine, Norway Murat started his journey at Espresso House Ewelina started her career as a Barista in Pontus started his career at Espresso House Catrine started her journey at Espresso last year and quickly advanced to District Gothenburg, Sweden 2011. She has since in 2009 when he was working as a Barista House Norway in 2013 when there only were manager due to his big passion not only for then developed in various roles such as alongside his studies. He then got the chance two coffee shops and has been working with coffee but also to develop employees to Assistant Coffee Shop Manager, Master to join the Product & Marketing team in HR since then. She has been through a great become better baristas. His future goal is to Barista and Coffee Shop Manager. She left Sweden as a Product Assistant. This turned journey and been a huge part of the keep growing in this role, both as a Barista her role as Coffee Shop Manager for studies out to be the right area of passion for Pontus development and helped Espresso House and a manager. If Murat had the opportunity in 2015 and returned after the studies in 2017 and he has held several positions within the Norway to grow where they are today. to travel to one place in the world it would be as a Marketing Coordinator, now she has team. Now he has advanced and is since Catrine has a huge passion for people and Colombia for a single-origin brew. taken on a new role as Strategic Project 2018 the Head of Category & Marketing and the Espresso House culture and she now Manager for Espresso House Group. responsible for the function. Pontus is also a works as an HR Manager and is a part of the member of the Swedish Management team. Norwegian management team. Social Responsibility 53

Helping others gives us meaning and we are happy to support and make our contribution to charity initiatives in all our companies and countries where we operate. We follow up and evaluate our social engagements regularly, and we continuously assess new partnerships where we feel we can contribute to a positive change or development. The coordination of our Social Responsibility work is done locally in each country.

The support by Espresso House focuses primarily on contributions and support to local events and organizations, with the aim to improve peoples lives, often related to children and young people.

In 2019 we donated over one million SEK to different causes.

Espresso House Sweden supported the For the second year, Espresso House Norway Swedish Child Cancer Foundation once again united with the Norwegian Childhood (Barncancerfonden) for the third year in a row. Cancer Society (Barnekreftforeningen) to Together with our guests, we were able to raise support their important cause. Through different 355 600 SEK. Espresso House have also activations and with the help from our guests, participated in Swedish initiative Musikhjälpen Espresso House managed to raise a total of 541 since 2014, where companies, celebrities and 179 NOK. The donation help the organization private people join in the fight against injustices continue their important work towards the aim of in the world. Along with our guests, Espresso eradicating childhood cancer. House contributed also in 2019. Social Responsibility 54

Espresso House Denmark continued the Espresso House Finland contributed as a Espresso House Germany initiated its At Johan & Nyström We have a ongoing support for Danish Red Cross. Through proud supporting partner for Helsinki Pride support for the Kinderkrebsstiftung, a cooperation with Stadsmissionen, which is an furniture sales from Baresso conversions, and the important values it stands for, such foundation with an aim to fight child cancer. organization that work towards inclusion and different in-shop activations and together as equality and human rights, and the Together with our guests we managed to raise helping homeless people and others who feel with our guests, a total of 283 509 DKK was support will continue in 2020. Furthermore a total of 3309 Euro that will support the alienated in society. In 2019 we donated 1400 raised to support two important causes. One Espresso House joined in to support Red organization in its important cause. cups of coffee. In addition we also supported with the aim to support Danish families that Nose, which is one of the best-known charity Furthermore we held furniture and decoration Regnbågsfonden by donating 5 SEK per sold cannot afford celebrating Christmas by campaigns in Finland with the aim to support sales from Balzac Coffee conversions with the Earl Gay tea, as well as we supported the providing them with either gift cards or international development aid for children. aim to support the child aid organization called organisation Maskrosbarn by donating 3 SEK baskets with Christmas food, candy and gifts Together with our guests, Espresso House Die Arche. This organization supports per sold product called Tro Hopp och Kärlek for the children. The other cause is to help managed to raise 10 226 Euro. neglected children and young adults in (Faith, Hope and Love). reducing loneliness in the society Hamburg and Berlin. A total of 5387 Euro was donated. 55

GRI Content Index 56

General disclosures Name of disclosure Page in this Omissions or General disclosures Name of disclosure Page in this Omissions or report comments report comments

GRI 102-1 Name of the organization 1 GRI 102-40 List of stakeholder groups 11

GRI 102-2 Primary brands, products and/or 6, 7 GRI 102-41 Collective bargain agreement 44 services GRI 102-42 Identifying and selecting 11 GRI 102-3 Location of organization's 6 Drottninggatan 29, 111 51 stakeholders headquarters Stockholm, Sweden GRI 102-43 Approach to stakeholder 11, 16, 30, GRI 102-4 Country where the organization 6, 7 Sweden, Norway, Denmark, engagement 47 operates Finland, Germany GRI 102-44 Key topics and concerns raised 12 GRI 102-5 Nature of ownership and legal form 7 GRI 102-45 Entities included in the consolidated 3, 7 GRI 102-6 Markets served 6, 7 Sweden, Norway, Denmark, financial statements Finland, Germany GRI 102-46 Defining report content and topic 11-13 GRI 102-7 Scale of the organization 6, 7 Boundaries GRI 102-8 Total workforce 4, 6, 7, 44 GRI 102-47 List of material topics 12 GRI 102-9 Organization’s supply chain 13, 17, 18, description 19, 20 GRI 102-48 Restatements of information No restatements

GRI 102-10 Significant changes to the 7 Baresso in Denmark finished GRI 102-49 Changes in reporting No changes organization and its supply chain converting into the Espresso House brand in 2019.

GRI 102-11 Precautionary Principle or approach 16, 19-21, 24-28, 33-40 GRI 102-50 Reporting period Calendar year

GRI 102-51 Date of most recent report 3 March 31, 2019 GRI 102-12 List external initiatives 24, 34, 36, 40, 53, 54 GRI 102-52 Reporting cycle Annual

GRI 102-13 List membership of associations Sweden: Visita GRI 102-53 Contact point for questions regarding Eva Alm, Sustainability Finland: MaRa the report Manager EH Group [email protected] GRI 102-14 Statement from senior decision- 4 maker GRI 102-54 Claims of reporting in accordance of 3 This report has been prepared GRI Standards in accordance with GRI GRI 102-15 Key impacts, risks and 8, 13 Standards: Core level opportunities GRI 102-55 GRI Content Index 55-57 GRI 102-16 Values, principles, standards and 9, 10, 44 norms of behavior GRI 102-56 External Assurance Not externally assured

GRI 102-18 Governance structure 7 57

Topic-specific Name of disclosure Page Omissions or comments Topic-specific Name of disclosure Page Omissions or comments disclosures disclosures

200 ECONOMIC 400 SOCIAL GRI 205: Anti-Corruption GRI 404: Education & Training GRI 103 1, 2, 3 Management Approach 30 GRI 103 1, 2, 3 Management approach 44, 48 GRI 205-3 Confirmed incidents of corruption and 30 GRI 404-1 Average hours of training per year per 48 J&N not included action taken employee 300 ENVIRONMENT GRI 404-2 Programs for upgrading employee skills 48 Espresso House only and transition assistance programs GRI 301: Materials GRI 405: Diversity & equal opportunity GRI 103 1, 2, 3 Management approach 37 GRI 103 1, 2, 3 Management approach 44, 46 GRI 301-2 Recycled input materials used 37 Share of R-Pet GRI 405-1 Diversity of governance bodies and 44 employees EH Disclosure Sales of reusable cups 38 Includes all the reusable cups in our merchandise assortment. GRI 414: Supplier social assessment J&N not included GRI 103 1, 2, 3 Management approach 20, 30 GRI 306: Effluents and waste GRI 414-1 Percentage of new suppliers that were 20, 30 GRI 103 1, 2, 3 Management approach 35, 39 screened using social criteria EH disclosure Reduced food waste and Food waste 34, 35 GRI 416: Customer health and safety management GRI 103 1, 2, 3 Management approach 25 GRI 308: Supplier environmental assessment EH Disclosure Healthy food & food safety 24, 25, Percentage of vegetarian and GRI 103 1, 2, 3 Management approach 20, 30 29 plant-based assortment + Food safety in Bakery 308-1 New suppliers that were screened using 20, 30 environmental criteria 58