Sainsbury’s Sustainability Update 2020/21 J Sainsbury plc 01 Sainsbury’s Sustainability Update 2020/21 J Sainsbury plc 02 Welcome

Welcome ...... 02 Offering delicious, great quality food Committed to Net Zero by 2040 ...... 03 at competitive prices has been at the Net Zero by 2040...... 05 heart of what we do since John James Carbon...... 06 Water ...... 08 and Mary Ann Sainsbury opened our Food waste ...... 09 first store in 1869 . Today, inspiring and Plastics and recycling...... 11 £35m Healthy sustainable diets...... 13 189,000 raised for good causes delighting our customers with tasty Biodiversity...... 15 colleagues this year food remains our priority . Sustainable Sourcing...... 17

Our purpose is that driven by our environmental impacts Our People...... 20 our passion for food, together or contributing to a healthier, Our colleagues...... 21 we serve and help every more inclusive society . Our communities...... 24 customer . This is an update on Our suppliers...... 26 Over 189,000 colleagues are progress against our 14% Governance...... 28 reduction in absolute integral to our success, now and Corporate Responsibility greenhouse gas in the future . Our colleagues and Sustainability agenda in Corporate Responsibility and Sustainability Committee Report . . . 29 60+ Reporting frameworks...... 33 countries we source our emissions within our who work hard every day to 2020/21 . own-brand products own operations (against make our customers’ lives Performance Scorecard...... 34 from our 2018/19 baseline) easier and provide them with great products, quality and service . Our customers care about wide-ranging, complex issues that impact them and our wider world . They trust us to be a responsible business, whether that’s by supporting the communities we serve Find out more at and source from, managing www .about .sainsburys .co uk. . Sainsbury’s Sustainability Update 2020/21 J Sainsbury plc 03 Committed to Net Zero by 2040 In his first year as Chief Executive Officer and a year on from launching our ambitious Net Zero by 2040 commitment, Simon Roberts reflects on our progress and how we’re embedding sustainability across the business .

The past year has seen customers and colleagues safe, We have also taken our Net unprecedented change helping to feed the nation and Zero by 2040 plan further with within the business and supporting our communities the addition of an ambitious I’m proud of how we have and those most vulnerable in target across the value chain adapted at pace in order society . I am delighted that which requires the reduction to support our customers, we raised £35 million for good of absolute greenhouse gas colleagues and communities causes this year, which includes emissions by 30 per cent by during the COVID-19 pandemic . donations made to our partners 2030 . Remuneration targets Throughout the year Comic Relief and FareShare to were also approved for the we have had three support those severely affected Board against priority pillars, key priorities: by the pandemic . We also further embedding our keeping created an additional £1 million sustainability commitments our local community fund for into the business . stores in January and created a digital version of our instore As part of our Net Zero by 2040 Food Donation Programme . plan, we have set ourselves ambitious long-term goals Despite the level of change that require fundamental across the business this change and we are making year, our sustainability good early progress to reduce commitments remain as carbon emissions, food waste, important as ever . Last year we plastic packaging and water announced our commitment usage and increase recycling, to invest £1 billion over 20 years biodiversity and healthy and to become Net Zero across our sustainable diets . Positive own operations by no later than examples include where we’ve 2040 . In November we set out a decreased our food waste plan to transform our business by 16 per cent and reduced over the next three years, Net our absolute greenhouse Zero by 2040 is a key priority gas emissions within our for us and a central part of operations by three per cent, a our plan to put food back at 14 per cent reduction from our the heart of Sainsbury’s . 2018/19 baseline, keeping us on course for our headline target . Sainsbury’s Sustainability Update 2020/21 J Sainsbury plc 04

However in areas like plastic, issue and know the solution is increased volume as a result through collaboration, therefore of the pandemic impacted the as we look to the year ahead, amount of plastic we put into I’m really pleased we were the market, despite continuing chosen to be a Principal Partner to drive our plastic reduction of the UN Climate Change initiatives . From our varied Conference, COP26, taking results this year, we recognise place in Glasgow in November the need to go further and 2021 . An exciting moment for faster working closely with our the UK where world leaders, suppliers, but are confident that climate experts and businesses the activities and initiatives that will convene to collaborate on have been implemented over the challenges ahead . We will the year across the business also be hosting our inaugural will support us in achieving our Environmental, Social and future goals . Corporate Governance (ESG) day for investors in June . We continue to make progress on being a truly inclusive We have an exciting year retailer where people love to ahead and we understand the work and shop . This year we scale of our business means set new corporate objectives we can make an important for diverse representation in contribution to both society leadership positions for the top and the planet . We want to help 230 leaders and the next top everyone eat better and remain 1200 leaders (beneath the top committed to accelerating 230 leaders), with 2024 targets progress across our ESG agenda for female, ethnically diverse so that we can drive lasting, and Black representation . positive change . I’m pleased that 1,400 of our top leaders, including the Board, completed race fluency upskilling sessions this year, and we’ve continued to work on representation and transparency across the business, incorporating our ethnicity pay gap into our Gender Pay Report for the first time this year . Our colleagues and customers care about wide-ranging, complex issues and we know that climate change is at the top of their minds . We Simon Roberts recognise the enormity of the Chief Executive Officer Sainsbury’s Sustainability Update 2020/21 J Sainsbury plc 05 Net Zero by 2040 We have committed to investing £1 billion over twenty years towards becoming a Net Zero business across our own operations by 2040, aligned to the highest ambitions of the Paris Climate Change Agreement . We are implementing a programme of change, focusing on reducing carbon emissions, food waste, plastic packaging and water usage and increasing recycling, biodiversity and healthy and sustainable eating .

To support our commitment and to drive long-lasting and meaningful change, we will be supporting the UN Climate Change Conference, COP26, as Principal Supermarket Sponsor in the upcoming year and signed up to the UN’s Race to Zero campaign, designed to accelerate the adoption of net zero targets ahead of COP26 . We have also set remuneration targets for the Board against our key Net Zero by 2040 pillars to help drive business performance . More information on remuneration targets can be found in our Annual Report and Financial Statements 2021 . Sainsbury’s Sustainability Update 2020/21 J Sainsbury plc 06

Carbon Climate change and resource scarcity are complex, global challenges, which affect every part of our business . To grow our business sustainably, we are cutting carbon and maximising energy efficiency .

Net Zero by 2040 occur throughout our value committed to working closely chain . We want to reduce with our vast global supplier Last year we announced our the environmental impact of base to help them develop and commitment to invest £1 billion our business and work with then meet their own targets . over 20 years to become Net farmers, growers and suppliers Zero across our own operations throughout our supply chain to by no later than 2040 . This help them reduce theirs . target includes Scopes 1 and “ 2, covering our direct and The Science Based Targets initiative (SBTi) has approved “We congratulate indirect emissions within our Sainsbury’s for setting operations . our Science Based Targets for Scopes 1, 2 and 3 . For Scopes science-based targets 1 and 2, these include the consistent with limiting reduction of greenhouse warming to 1 5°C,. the gas (GHG) emissions from most ambitious goal of Sainsbury’s own operations to the Paris Agreement . Net Zero by 2040 in a bid to By aligning its goals 14% limit global warming to 1 5°C. . with a 1 5°C. future, and reduction in absolute asking its partners to do greenhouse gas We worked with the Carbon the same, Sainsbury’s emissions within our Trust to define an ambitious is ensuring it builds own operations (against Scope 3 target which requires resilience firmly into its our 2018/19 baseline) the reduction of absolute GHG business model and will emissions by 30 per cent by be positioned to thrive 2030, to align to a well below as the global economy 2°C scenario . The baseline transitions to a zero Setting science is 26,663,081 tC02e (2018/19) . emissions future .” The target includes reducing based targets emissions from purchased Alberto Carrillo Pineda goods, upstream transport Director, Science Based Targets This year we have taken our at CDP (one of the Science ambitious Net Zero by 2040 and distribution, services sold and our customers’ use Based Targets initiative plan further with the addition partners) of a Scope 3 target, which and consumption of the covers indirect emissions that products we sell . We have also Sainsbury’s Sustainability Update 2020/21 J Sainsbury plc 07

five to be used by in the UK and run on 100 per cent electric power, with battery charging at 79% depot and an axle generating of supermarkets fully electricity to top up the battery upgraded with LED when on the road . lighting (on track to install 100% by the end of 2021) Disclosure and transparency Cutting carbon We are proud to be recognised by CDP, an environmental emissions impact disclosure system, The impact of the pandemic for our environmental on our emissions has been transparency . We were substantial . We have seen a awarded an A rating for our reduction of energy usage due climate change disclosure for to the closure of certain areas the seventh consecutive year, of stores such as cafes and the only UK retailer to have counters and all of our office achieved this . We were also space . We have seen more fuel recognised by CDP as a usage due to the rise of online Supplier Engagement shopping and an increase in Leader for our work the number of products going engaging with our through our supply chain . suppliers to tackle climate Overall, we have reduced our change . absolute GHG emissions within our operations to 818,161 tCO2e, a reduction of three per cent year-on-year and 14 per cent from our 2018/19 baseline, keeping us on course for our headline target . We continue A rating to roll out our LED lighting programme, with 79 per cent for our CDP climate of supermarkets already fully change disclosure, the upgraded and we remain on only UK food retailer to track to install 100 per cent in achieve an A rating for our supermarkets by the end seven consecutive years of 2021 . Following a successful trial, we are looking forward to rolling out five electric fridge trailers this year . These are the first Sainsbury’s Sustainability Update 2020/21 J Sainsbury plc 08 Water Water is the most precious natural resource on the planet . But, as populations increase, there’s less of it to go around . We’re doing our bit to tackle water scarcity by improving the efficiency of our water use across our operations, and are working with experts to implement water-saving initiatives . Through robust water stewardship, we are addressing and managing all areas of water vulnerability in our business as we aim for water neutrality by 2040 .

Minimising water Rainwater supply so that we would have greater control over our water usage harvesting management, including meter This year we have seen a We continue to rollout rainwater readings, accuracy of data A rating reduction in water usage of harvesting systems across our and future water reduction eight per cent year-on-year, to estate in order to recycle water . activities . Self-supply is where for our CDP water 2,776,288m³ . This equates to a We currently have 120 rainwater a customer buys water supply disclosure, for the 14 per cent reduction from our 14% harvesting (RWH) systems and wastewater services second consecutive reduction in water from the water company year 2018/19 baseline, keeping us on usage within our own across our estate, and this year track to meet our commitment we installed our first micro and provides their own retail operations (against our services . In March 2021, we to minimise water use as we 2018/19 baseline) RWH system in Balderton . aim for water neutrality by began the transition of our 2040 . English estate to 100 per cent self supply . 120 rainwater harvesting Disclosure and systems across our transparency estate We are proud to be recognised by CDP, an environmental impact disclosure system, for our environmental Self-supply transparency . We were awarded an A rating for our transition​ water disclosure for the second We are reviewing every aspect consecutive year . of water across the business, measuring and lowering the amount of water used across our estate by as much as possible . We made the decision to transition to self- Sainsbury’s Sustainability Update 2020/21 J Sainsbury plc 09 Food waste Around a third of all food produced for human consumption is lost or wasted, therefore we’re working to reduce or put as much of our waste as possible to good use . This includes working with farmers and growers to reduce food waste in our supply chain, sending surplus food from our stores to good use including to our charity food donation partners and recovering energy from our waste .

Reducing food tonnes, of which 27 per cent to animal feed . We are also was surplus food redistributed looking into initiatives to waste for human consumption and divert more surplus food for We have committed to for animal feed . We continue human consumption . For more reducing food waste by 50 per to divert surplus bread to information on our surplus food cent across the whole value animal feed, and this year we donations, see page 24 . chain by 2030 . This year we have built on this work and reduced the food waste we are trialling diverting unsold send to anaerobic digestion fruit, vegetables and salads Collaborating for in our own operations by over greater impact 5,000 tonnes, a reduction of 16 per cent year-on-year, which We continue to support the puts us ahead of our target delivery of Courtauld 2025/ trajectory . This has been driven Champions 12 3. and the by reductions in our overall UK Food Waste Reduction operational waste figure, owing Roadmap . We wrote to our to propositional changes in our suppliers to encourage food service departments, as their participation in this well as growth in the volume initiative, and we are pleased redistributed to humans to have seen an increase in and sent to animal feed as a participation this year . We result of the pandemic and have also continued to work process improvement . We are on our pilot whole-chain working on further process waste reduction projects in improvements to support us on collaboration with WRAP delivering our commitment . and our suppliers . The first project reviewed the value chain of our own label frozen Redistribution of chips identifying key actions for improvement and waste surplus food reduction . We will finalise and The total amount of food waste implement findings from this generated this year was 36,338 project in the year ahead . Sainsbury’s Sustainability Update 2020/21 J Sainsbury plc 10

Food Waste 1,861 tonnes of surplus food was redistributed to local communities (a 19% improvement from last year) s ne on t 2 8 6, 0 54 ,8 5 5 1 to n n e s

7,932 tonnes of surplus bread was used for animal feed

(a 5% improvement on last year) 3

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1 ,5 62 1, to 86 nn 1 es ton 19/20 Baseline To humans nes 20/21 Result 19% improvement YOY

7,582 26,545 tonnes tonnes 19/20 Baseline To animals of food waste used for anaerobic 7,932 tonnes 20/21 Result 5% improvement YOY digestion This equates to 0.58% of our total weight of sales (a 22% improvement from last 19/20 Baseline year) 20/21 Result To anaerobic digestion 16% improvement YOY 30/31 Target Sainsbury’s Sustainability Update 2020/21 J Sainsbury plc 11 Plastics and recycling Packaging helps us deliver fresh, undamaged produce, but we know that it can have a negative impact on our planet, therefore reducing plastic across all our stores and supply chain is one of our absolute priorities . This is why we were the UK’s first major retailer to make a significant commitment to reduce plastic, pledging to cut plastic packaging by 50 per cent by 2025 .

Reducing plastic Our approach - Reduce and fresh fish range, removing 297 tonnes of plastic from packaging remove, reduce, We continue to redesign and entering the ocean each year, COVID-19 has had a significant replace, recycle lightweight packaging where and supporting customers to impact on our usage this year and reuse possible in order to reduce the make more sustainable choices . due to an increase in sales 70% volume of plastic used . This In the upcoming year, 34 per volume which has led to an reduction in steak year we delivered an 86 per cent of fresh fish and 80 per increase in plastic packaging packaging Remove cent reduction in pancake mix cent of strawberry punnets will used overall . Therefore progress packaging and 70 per cent be sold using packaging made made in plastic weight Since pledging to halve our use reduction in steak packaging from plastic recycled from reductions this year have been of plastic packaging by 2025, (in the So Organic and Taste the coastal areas . outweighed by the challenges Collaborating for we have removed thousands Difference ranges) . of the pandemic . Year-on-year success of tonnes of plastic across the We are working with Prevented the tonnage has increased by business, including eliminating Ocean Plastic to turn plastic 3,496 tonnes to 117,959 tonnes, We continue to collaborate 290 million loose produce collected from the coast into “ which puts us behind our target on research to develop new plastic bags, rigid plastic trays packaging for our strawberry “I’d like to thank trajectory . Overall there has packaging and recycling from tomatoes, courgettes, Sainsbury’s for identifying been a 1 7. per cent reduction in technologies . As members of kiwis & baby corn (216 tonnes), and embracing this real our food plastic packaging from WRAP’s UK Plastic Pact, we plastic overlids removed from and positive action to our 2018 baseline . are collaborating to eliminate cream pots (114 tonnes) and zip reduce Ocean Plastic unnecessary single-use removal on frozen fruit bags 86% Pollution, support coastal Although volume has increased packaging by 2025 and working (28 tonnes) . In the year ahead reduction in pancake collection communities this year, we continue to drive towards all plastic packaging we will also be removing 18 5. mix packaging and to help educate our plastic reduction initiatives being 100 per cent reusable, million plastic straws from our consumers that plastic which will support us with recyclable or compostable by own brand lunchbox carton is a valuable resource our longer term target . We 2023, as well as containing range . that can be recycled & recognise we have a lot more at least 30 per cent recycled not to be littered into to do on plastic packaging content by 2022 . environment .” reduction and along with new initiatives and a focus on Patrick Gautier collaboration, we look forward UK Division Director for Sharpak to making greater progress in the upcoming year . Sainsbury’s Sustainability Update 2020/21 J Sainsbury plc 12

Replace Recycle This year we launched 100% of our hangers used a 63-store trial for an in- for our Tu clothing are made This year we trialled a new Through our facilities we help store recycling system from recycled materials . Last plant-based alternative for our customers reduce their for flexible plastics . The year we recycled eight million our own-brand teabags, using waste and put it to positive innovative recycling system hangers, and in the year ahead Polylactic acid (PLA) made use, helping customers recycle allows customers to recycle we are looking at implementing from the sugars in cornstarch, unwanted clothing, metal cans, Polypropylene (PP) film found processes to further increase cassava or sugar cane . This glass, plastic, paper and other in several household products, the amount of hangers that we will be fully rolled out this materials at our managed with further roll out taking recycle . year which will see 815 million recycling facilities in 273 place in the year ahead . We individual teabags a year Sainsbury’s stores nationwide . also provide front of store We are also continuing our moved from using oil-based collection points for customers work on piloting Deposit Return plastic to plant-based plastic . to bring back polyethylene Schemes with our reverse vending machines . Customers We will also be removing the (PE) film and carrier bags to outer plastic wrapping from 11 supermarkets across the UK can recycle plastic, metal cans products, which will result in 273 which are recycled back into and glass drink containers in number of Sainsbury’s exchange for a 5p per item a reduction of 16 2. tonnes of recycling sites carrier bags . plastic per year . coupon towards their shopping . We are working collaboratively with industry organisations and are a founding member of Circularity Scotland, the new not for profit ‘System Administrator’ of the Deposit Return Scheme in Scotland .

Reuse and refill We are providing more sustainable choices for customers, including the option to purchase a reusable drawstring bag when buying loose fruit and vegetables, each made from one recycled bottle . This follows us removing all plastic produce bags from our bakery and produce aisles in 2019, the first retailer to do so . We are also looking into refillable packaging options and in the past year we trialled an Ecover refill station, with dedicated refill points for dish washing and laundry detergent . Sainsbury’s Sustainability Update 2020/21 J Sainsbury plc 13 Healthy sustainable diets We are serious about our responsibility to help our customers eat healthily, whatever their budget . As the UK’s second largest food retailer, we also know we have a role to play in helping to navigate customer choices and supplier behaviour towards more sustainable choices, helping to preserve our limited natural resources . A key priority for our business is to develop and deliver healthy and sustainable diets for all, therefore we aim to provide customers with the information, incentives and rewards to encourage healthier and more sustainable food choices .

Increasing weight of plate from healthy We have been reducing sugar including fibre and protein choices, similar to the approach for a number of years and levels . We restrict nutrition healthy sales of the Eatwell Guide, and continue to make strong and health claims on any We know that food that is therefore this is how we will progress within key categories . own-brand product with a red better for us is also better for be defining a future target . We have achieved over a 20 per traffic light label (except where the planet . This is why we have Our current position is 55 3. per cent sugar tonnage reduction naturally occurring), and we committed to develop and cent healthy sales tonnage, since 2015, from categories continue to reformulate to deliver healthy, sustainable 55.3% remaining the same year- contributing most to children’s reduce the number of red traffic ‘healthy’ sales relative to diets for all . This year we on-year . We undertook an sugar intake . Whilst 93 per lights across our ranges . total sales extensive piece of work to cent of our own brand products announced a mass colleague Our prepared foods range and customer campaign, review the nutrition criteria meet the Public Health England used to define healthy and maximum calorie per portion has a wide choice of fruit and helping everyone eat better, to In November 2020, we reported better for you sales . This target . vegetable portions, helping raise awareness and drive on the volume of ‘healthy’ approach will help us identify our customers increase their behaviour change . sales relative to better choices within categories We have a long history of consumption easily and in We want to help total sales . Moving for both branded and own-label providing clear nutritional different ways . Our Love make healthy forward, we believe products, along a spectrum information, and were the first Your Veg range emphasises eating choices reporting the from less healthy to most UK supermarket to introduce the benefits of increasing more affordable, tonnage of healthy healthy . front of pack traffic light vegetables in our easy and tasty, to and better for labelling in 2005, going beyond customers’ support having a you sales relative government requirements . diets . positive impact on to total sales is a We ensure that our products the health of our more credible way Making everyday are accurately and simply customers and the to reflect the products labelled, providing health of the planet . healthier nutritional claims on our products to help We have an ongoing customers understand programme of reformulation, the nutritional reducing sugar, salt and calories benefits of the from our own brand products, product, in order to improve the nutrient profile of our products without compromising on quality or taste for our customers . Sainsbury’s Sustainability Update 2020/21 J Sainsbury plc 14

Innovating for key vitamins in their diet, We know it is particularly vegetables, with over 450,000 four . The vouchers consisted Disclosure and including our Super Mushrooms important that we do our bit customers signing up to take of a £2 fruit and vegetable healthier choices fortified with B12 and Vitamin to encourage our youngest the challenge via the Nectar coupon, more than any other transparency We continue to innovate in D and our Scottish salmon customers on their journey app . Analysis conducted with retailer, to help families in We are pleased to be the our product ranges to provide with additional Omega-3 . The to developing healthy eating the Leeds Institute for Data need have access to nutritious highest scoring retailer customers with new healthier UK government advise two habits . That is why we are Analytics suggested that produce through the half-term within the Access to Nutrition choices . Our Plant Pioneers servings of fish a week, one particularly proud that our Nectar card holders who took and summer holidays . Initiative (ATNI), a review of the own-brand offer provides of which should be oily . 2020 Little One’s range was awarded part in the challenge took ten largest UK food retailers’ innovative and delicious marks the twelth anniversary the 2020 Peas Please prize for home an extra 3 6. portions of disclosures on nutrition, diets options to customers following of the launch of our responsibly Innovation in recognition of our fruit and vegetables per week Collaborating for and health . We also report flexitarian or plant based sourced Scottish farmed vegetable first-taste products during the challenge . We also our customers on the proportion of our total diets . In September 2020, we salmon reared exclusively on and for our Little One’s tray ran initiatives such as our food sales that come from increased our in store space RSPCA Assured farms on the meals which contain at least discounted 60 pence range We are committed to vegetables, which currently allocated to fresh plant-based West Coast and Islands of two of your five a day . where we aim to make fruit promoting healthier lifestyles stands at 12 per cent, as part of ranges by 40 per cent and Scotland . The salmon is fed a and vegetables more affordable to our customers and continue our Peas Please Pledge . continue to increase the diet specifically formulated to and encourage customers to to strive to ensure that all availability of these products . ensure our fresh salmon is high Helping increase their intake . promotions, adverts, incentives in healthy long chain omega customers to and product placements, both We also have products to help 3’s . For more on our approach to in-store and online, are offered customers get enough of the sustainable fish, see page 16 . make healthier Supporting responsibly . choices healthy balanced We also work with many 1st We understand many of our diets during the research and campaigning customers want to make organisations . Our partnership ranking in the Access healthier choices and we pandemic with Livestock Environment to Nutrition Initiative have been utilising ‘test and During 2020, the importance of and People (LEAP) supports learns’ to help nudge customer achieving a healthy balanced environmental research projects behaviour by incentivising diet to avoid excess weight with the University of Oxford . customers with value pricing or gain took centre stage, with As part of one project, we were additional Nectar points . Government announcing the first UK supermarket to that those who are obese trial selling meat-alternative In 2020 we launched the are significantly more likely products in meat aisles . first ever Great Big Fruit & to suffer worse outcomes of Veg Challenge to encourage We continue to invest in COVID-19 than those with a research to make healthy and and reward our customers healthy body weight . for buying more fruit and sustainable choices easier for Winner This year to support our customers and have partnered of the 2020 Peas Please customers and community in with the Institute of Grocery prize for Innovation accessing vital food to support Distribution and Consumer a healthy diet, we became Goods Forum on their Healthy a part of the Child Poverty and Sustainable Diets research 450,000 Task Force . In February we projects . customers took part in also topped up Healthy Start the inaugural Great Big vouchers, provided by the Fruit & Veg Challenge on Government to low-income the Nectar app pregnant women and families with children under the age of Sainsbury’s Sustainability Update 2020/21 J Sainsbury plc 15 Biodiversity We work closely with farmers, growers and suppliers – in the UK and internationally – so we can reassure customers about where and how our products are sourced . Sourcing our products sustainably helps us to improve people’s livelihoods, improve the quality of our products and contribute to tackling climate change .

Protecting sustainable palm oil and sustainable palm oil, please includes palm oil producers, visit www .about .sainsburys . forests palm oil processors and traders, co uk. . environmental NGO’s, consumer With many of the world’s Our longstanding partnership tropical forests at risk, we have goods manufacturers, social NGO’s, banks and retailers . with The Woodland Trust a long history of collaborating enables us to continue to with others to progress greater We are continuing to seek support the protection of sustainable sourcing of palm new ways to ensure more woodland and biodiversity in oil, cocoa, soy and timber of our palm oil is certified the UK . This year we planted globally, and we are committed sustainable each year and are 325,000 native trees . Since to sourcing 100% of our key working with other retailers and 2004 we have planted over 4 2. materials to an independent manufacturers in order to send million native trees, which have sustainability standard . a clear market signal to bring the potential to mitigate over sector-wide change . We are 1 million tonnes CO . During 2 founding members of the Palm this time we have raised £10 8. Oil Transparency Coalition and million for the trust and moving the Consumer Good’s Forum forward we aim to plant a 99.3% Forest Positive Coalition of further 1 5. million native trees palm oil sourced Action . For more information by 2025 . to an independent on our approach to sourcing sustainability standard

We use palm oil in a variety of our own brand products and are proud that 99 3. per cent 325,000 of our palm oil is sustainably number of native trees sourced to an independent planted in partnership standard, certified by the with The Woodland Roundtable on Sustainable Trust this past year, Palm Oil (RSPO) . The RSPO taking our total to 4.2 sets the environmental and million since 2004. social standards for sourcing Sainsbury’s Sustainability Update 2020/21 J Sainsbury plc 16

towards meeting the MSC sustainable seafood, and the standard for a number of largest number of MSC labelled species, including scallops, fish and seafood products of monkfish and langoustines, any UK retailer, our sixth win 89% to deliver a sustainable future in this category demonstrates of our cotton is sourced for these UK fisheries, as well our continued commitment to more sustainably as a number of international offering sustainable seafood to through the Better fisheries improvement our customers, and at the same Cotton Initiative (up projects . We also support time protecting the oceans . from 79% in 2019/20) a number of organisations driving responsible practice through pre-competitive Sustainable collaboration and innovation general We also continue to increase such as the Global Dialogue on our sourcing of sustainable Seafood Traceability, Fisheries merchandise and cotton, and currently 89 Innovation Scotland, Global clothing per cent of the cotton for Tuna Alliance and the Global our clothing and general Ghost Gear Initiative . As one of the largest general merchandise is sourced more merchandise and clothing We’re proud to haves won MSC sustainably through the Better retailers in the UK, we can Cotton Initiative (BCI), up UK Supermarket of the Year make a real difference . We in 2020, for the sixth time . from 76 per cent in 2019/20 . have focused on driving Sourcing of Better Cotton has 100 per cent of our farmed fish The MSC UK annual awards transparency, including through Responsible celebrate the outstanding provided an estimated water sources are independently updating our Tu website with saving of 6 28. billion litres of fishing certified to a recognised achievements in sustainable key sustainability facts about Collaborating on seafood across the entire UK water and an additional profit We continue to lead the way best aquaculture practice our business and plans for the of an estimated €2 8. million global goals standard . We are currently in seafood supply chain . With future . in sourcing fish responsibly benefitting BCI farmers in 2020 . With a growing population from both wild capture fisheries the process of transitioning to a consistently high range of the Aquaculture Stewardship and our planet’s resources and farms and are committed being pushed to their limits, to 100 per cent of our seafood Council (ASC) standard for our farmed fish, the world’s leading we are focusing our efforts sales being independently where we can make the certificated as sustainable . labelling programme for responsible aquaculture . greatest difference . We believe that industry collaboration 76 per cent of our wild caught is the only way to address fish and seafood are certified to domestic and global issues at the Marine Stewardship Council the speed and scale required . Winner (MSC) standard . Where fisheries We have a strong track record MSC UK Supermarket of are not yet certified, we are of partnering to help address the Year 2020, won for engaged with our suppliers in global challenges and drive the sixth time order to achieve certification in change in our value chains the shortest possible timescale and are currently involved in through structured fishery many industry collaborations, improvement programmes . including the Consumer Goods Forum, Better Cotton Initiative We continue to support and the Roundtable on Project UK, which is working Responsible Soy Association . Sainsbury’s Sustainability Update 2020/21 J Sainsbury plc 17

Sustainable Sourcing

We source products from over 60 countries and have a vital role to play in supporting our farmers, growers and suppliers across the world . We work collaboratively to tackle climate change, reduce our environmental impact and improve the livelihoods of farmers, growers and suppliers . Whether it’s our people, animals or the environment, we aim to have equivalent standards wherever we source from in the world . Sainsbury’s Sustainability Update 2020/21 J Sainsbury plc 18

Working closely Initiative for over 15 years, behaviours . We also continue suppliers on the year ahead . supporting rural communities to provide our Egg Tracker on This year the conference was with our farmers and over 100 beef producers in our corporate website, whereby held virtually for the first time and growers the far north of Scotland . customers can use the code and attendees were given a printed on each eggshell to find business update from our CEO, We’ve built strong relationships We have been working out where the egg came from . Simon Roberts, as well updates through our UK Farmer and collaboratively with our on our Fresh Food strategy and Grower Development Groups growers through our Crop We remain committed to our sustainability agenda . and are working with these Action Groups (CAGs) since working with our Development suppliers to develop a more 2006, sharing best practice Group farmers to share best We have a well established resilient and sustainable and supporting Integrated practice on animal health partnership with Linking British agricultural industry . Pest Management (IPM) . We’re and welfare across our supply Environment and Farming We continue to work closely proud to say that the number, chain . We have a data-led (LEAF), and this year we with our Dairy Development size and reach of these groups outcomes approach and returned as a principal sponsor Group, paying our dairy has grown considerably over work closely with our famers for their Open Farm Sunday farmers a fair price through this time . We run CAGs over and suppliers to collect data event, for the fifth year . Due to our cost of production model . varied crop areas, covering the across livestock areas . We the pandemic the event was This provides a ringfenced UK as well as other countries utilise data dashboards to adapted this year to the first supply which has continued and regions, including Spain give us the best insights LEAF Online Farm Sunday, to see benefits such as higher and South Africa . and engage our suppliers to providing virtual farm tours . health and welfare outcomes, drive improvements . We are confident in our approach of We also continue to support and improved efficiency and LEAF’s Farmer Time initiative business sustainability . We Improving measuring and managing to continuously improve the of which we are a founding have also been sourcing beef animal health supporter . Farmer Time through the North Highland health and welfare of our and welfare animals . aims to inspire, engage and educate young people about Protecting animal welfare is For more information on our the journey from farm to fork, a top priority for both us and approach to animal health alongside the everchanging our customers and we also and welfare, see our Animal diverse agricultural industry know that it increases farm Health & Welfare Report and using the power of digital productivity . We continue to Antibiotics Resistance Report at communication . To date, be the largest retailer of RSPCA www .about .sainsburys co. .uk . Farmer Time has paired 524 Assured products and this year schools with farms, which won MSC Supermarket of the amounts to over 15,000 children Year for the sixth time . Supporting chatting virtually to farmers We have sold 100 per cent British farming from their classrooms . cage free eggs since 2009 and As a UK retailer, we’re proud to this year have moved to 100 support British producers . As per cent free range eggs well as boosting the national sourced from UK farms economy we’re reducing food across our full range . transport miles . Free range birds enjoy unlimited access to We continue to hold our annual 100% the outside during the Farming Conference as it eggs sourced from free daytime and are free provides a great moment to range farms in the UK to exhibit their natural engage and converse with our Sainsbury’s Sustainability Update 2020/21 J Sainsbury plc 19

Trading for a of company performance on farm animal welfare . We fairer future also scored 47 per cent on the We have a long history of Fashion Transparency Index, a supporting smallholder farmers disclosure on policies, practices and workers in our supply and supply chains . This was chain . In 2009 we began a huge jump from 28 per supporting the smallholder cent the previous year which tea farmers of the Sukambizi demonstrates our investment Association Trust in Malawi to improve transparency of our through the development of a policies and commitments . nursery growing heat resistant tea seedlings . In 2017 we launched the Sainsbury’s Fairly Traded Programme with the ambition to expand our support to all our East African tea supply chains . We’ve directly benefitted 26,900 people through the funding of projects 47% supporting the environmental, scored on the Fashion social and economic resilience Transparency Index of farming communities across Malawi, Rwanda and Kenya . We will continue to evolve our approach as we work to address vulnerabilities in our supply chains . For more information see our Sainsbury’s Fairly Traded page at www .about . sainsburys .co .uk .

Disclosure and transparency Our customers care about Tier 2 where and how our products ranking on the Business are sourced, therefore Benchmark on Farm transparency within our Animal Welfare supply chains is important . We’re pleased to have been ranked Tier 2 again this year in the Business Benchmark on Farm Animal Welfare (BBFAW), a global measure Sainsbury’s Sustainability Update 2020/21 J Sainsbury plc 20 Our People

Our colleagues make a big difference to our customers, serving them well day in and day out, and we know that having engaged colleagues is critical to the long-term success of our business . We are committed to being an inclusive employer where everybody is treated fairly and with respect, and where colleagues love to work and are encouraged to develop their skills and fulfil their potential . We continue to play an active role in our communities, and we have high ethical standards that we and our suppliers adhere to . Sainsbury’s Sustainability Update 2020/21 J Sainsbury plc 21

Our colleagues

A place where 85 per cent last year . We also the hard work and commitment This helps us to ensure that introduced a check-in survey of our frontline colleagues we have the right level colleagues love to ensure we’re engaging with during the pandemic, can be of compliance in place to work colleagues regularly on how found in our Annual Report and around key areas such as they’re feeling and get their Financial Statements 2021 . training, fire safety and input on business activities . adherence to procedures, as well as reviewing culture Health and in individual stores through 86% Impact of Safety the lens of colleagues, regional of colleagues agree with COVID-19 management, and safety the statement ‘I feel I The health and safety of our teams . am able to be myself at COVID-19 has had a major colleagues and customers is work’ impact on colleagues across the a key part of our strategy . We We have strong governance business both professionally have seen a long-term decline in place which ensures and personally . Colleagues in both colleague and customer colleagues can feedback Colleagues are at the heart of adapted positively and at pace reportable injuries over the on issues, regular everything we do . We need to support our response to past five years; our colleague engagement with our them to understand our help feed the nation . We have reportable injury rate has unions and Board purpose and valued behaviours listened and responded to our declined by over 25 per cent, oversight . This and we are working on a colleagues and customers whilst our customer reportable includes our significant culture change throughout the pandemic and injury rate has declined by over Great Place to project to achieve that . We our colleagues have helped to 20 per cent . An independent Work groups, want our colleagues to feel inform many of the changes safety team supports our divisional level connected and engaged and we have made throughout . retail and logistics operations . safety steering we measure this through our We continue to invest in our They provide a combination groups, our Group annual colleague engagement colleagues, identifying and of coaching, expertise and Safety Committee which survey . This year we increased nurturing talent, providing challenge to our line managers reports into the Operating our sustainable engagement training and development using our innovative risk Board, as well as quarterly score by six per cent to 81 opportunities and ensuring mapping tool, utilising data updates to the plc Board . per cent, with 86 per cent of they are rewarded fairly . from a wide range of sources We have strong and well- colleagues agreeing with the More information on fair to identify the key areas established Primary Authority statement ‘I feel I am able to pay, including the thank-you requiring support in any of relationships in place that cover be myself at work’, up from payments made to recognise our stores across the business . all our risk areas across health and safety, food safety, fire Sainsbury’s Sustainability Update 2020/21 J Sainsbury plc 22

safety and petroleum safety . Celebrating and • All management must stages of our pipeline and the composition of These relationships are built on have a personal goal this year, with over 250 our talent pools a foundation of trust and we st empowering that is inclusion-focused, participants joining the openly share information with 71 diverse linking remuneration to programme • Race fluency upskilling our Primary Authority partners, ranking in the Stonewall positive improvements in sessions were completed including policies, procedures Workplace Equality colleagues this area • Each Operating Board by our top 1,400 leaders, member sponsors a including the Board and accident and incident Index, the highest We are active in our drive for data, to ensure we respond scoring business in the • We continue to be a high potential, ethnically inclusivity and the progression Disability Confident diverse colleague and • Mandatory inclusive effectively at pace to any issues retail sector of our diverse talent, for recruitment processes or incidents that occur . Leader - the highest tier many also have a ‘reverse example: of accreditation in the mentor’ from the I AM ME are well-embedded . In store support centre roles • Mandatory e-learning government’s Disability ethnically diverse network Confident Programme . we have maintained ‘Inclusion starts with I’ • Our Women in Tech was launched this year • We were ranked 71st in initiatives are designed to and has been completed the Stonewall Workplace attract, develop and retain by over 171,000 colleagues Equality Index, the great female talent into highest scoring business technology roles in the retail sector • We actively monitor • Our development and seek to improve programme for senior the diversity of our women with high Operating Board potential is now in its succession plans second year • We expanded our development programme for ethnically diverse colleagues in the earlier

Disability Confident Leader highest tier of accreditation in the government’s Disability Confident Programme Sainsbury’s Sustainability Update 2020/21 J Sainsbury plc 23

the number of offers this year, while our median sustainable change to improve attended by Non-Executive We also continue to invite our ‘temperature check’ survey to ethnically diverse gender pay gap has increased the lived experience and Directors . We have continual colleagues to complete our which runs several times a year . candidates at 21 per cent slightly to 5 0. per cent . Our opportunities for under- feedback on our internal annual colleague engagement For more information on how this year . An increase from mean ethnicity pay gap is 0 4. represented groups, be they social media channel which survey to give honest and we engage with our colleagues, 14 per cent over the past per cent . We set ourselves an colleagues or customers . includes live question and confidential feedback on see our Annual Report and three years aspirational target of reaching answer events with the CEO the business, and this year Financial Statements 2021 . 10 per cent ethnically diverse and Operating Board members . launched an additional • We amplified cultural representation in senior and religious events with Recognising our positions (top 230 leaders) great colleagues customers, including by the end of 2020/21; this Pride, Diwali and Black currently stands at 8 07. per We are also proud that some History Month, and are cent, remaining the same of our colleagues have been working hard to improve year-on-year . The proportion of recognised externally this year . the proposition, range women in senior management OUTstanding, a professional and experience for all our roles currently stands at network and membership customers 37 67. per cent, against our organisation, recognised our aspirational target of 40 per CFO, Kevin O’Byrne, and CTO, cent by 2020/21, an increase John Elliott, in their LGBT+ Role of 2 5. per cent year-on-year . Model 2020 list for their work Across the entire business, with the Proud@Sainsbury’s female representation is 52 9. LGBT+ Network . Sarah Nelson, per cent . who leads our I AM ME ethnically diverse network, To ensure sustained was shortlisted for the Ethnic 171,000 improvement, we continue Minority Executives List, whilst colleagues completed to look at focused initiatives, our CEO, Simon Roberts, was the mandatory culture and accountability named as one of the 2020 e-learning ‘Inclusion through aspirational targets . We HERoes Advocates for his starts with I’ which was have set new, stretching targets commitment to encouraging launched this year to take us to 2024 which covers women in business and more of our talent pipeline and creating a more diverse covers Black representation environment at Sainsbury’s . specifically (see table) . • We have a zero-tolerance Importantly, these targets will policy on racist or form part of our long-term offensive commentary, Engaging with 2021 Target – senior 2024 Target - senior 2024 Target - senior management incentives for management . leadership positions (top leadership positions (top positions (the top 1200 leaders both externally and For more information on our our colleagues 230 leaders) 230 leaders beneath the top 230 senior internally leadership positions) Gender and Ethnicity Pay We have a number of colleague Report, visit www .about . We continue to work engagement activities in place Female on representation and sainsburys .co .uk . 40% 50% 43% to ensure our colleagues remain (currently 37 .67%) transparency across the Being an inclusive organisation connected and engaged . Our business and we incorporated with diverse representation Great Place to Work National Ethnically our ethnicity pay gap into our diverse 10% 12% 12% at all levels of our business Group, our Workforce Advisory (currently 8 .07%) Gender Pay Gap Report for the is important to us . We Panel, is made up of colleagues first time this year . We have acknowledge we still have from across the business Black reduced our gender pay gap elected by their peers to (new target set n/a 3% 3% a way to go, and we are (currently 1 .35%) by 0 8. per cent to 9 7. per cent committed to driving positive, represent their views, and is for 2024) Sainsbury’s Sustainability Update 2020/21 J Sainsbury plc 24 Our communities Sainsbury’s is a place-based business and our long-term business success relies on resilient, thriving communities . We have presence in thousands of communities across the country through our supermarkets, convenience stores, store support centres and depots, as well as sourcing from over 60 countries across the globe . Whether it’s the communities we serve or the communities we source from, we aim to have a positive impact on these communities, with the help of our partners and colleagues, in order to make a positive difference .

Making a positive vulnerable in society during contributions through our We continue to support The the pandemic . This year we responsible approach to tax . We Royal British Legion’s Poppy difference in our raised a total of £35 million for contributed £2 2. billion in taxes Appeal and have raised an communities good causes, which includes borne and collected this year, estimated £40 million to date . corporate donations, customer this includes the business rates This year customers were We play an active role in the and colleague fundraising, relief Sainsbury’s chose to forgo . able to donate via a range communities we serve and merchandising and carrier of methods including the this year a key priority for bag profit . Alongside our rounding up of bills on manned us has been to support our community investment, we tills, fixed donations on self communities and the most make positive economic check-outs, donating points via Nectar and fixed donations via Groceries Online . Overall store donations were down year- £35m on-year but we saw a huge raised for good causes upsurge in online donations . this year We also introduced three new methods of donation; donation barcodes to be used with a SmartShop Digitalising device, contactless donation points trialled our approach to in twelve stores and fundraising charity QR codes in store . This year as volunteers were unable to fundraise in stores due to the impact of the Our Food pandemic, we adapted our Donation campaigns and programmes to take a more digital approach to Programme fundraising in order to protect We have a long history of the income of existing charity working with food banks partners . and community donation schemes to support our Sainsbury’s Sustainability Update 2020/21 J Sainsbury plc 25

local communities . We are a charities who have been amounts to their shops, with meals to communities over founding member of FareShare supporting the most vulnerable 100 per cent of donations going Christmas . which began in 1994 and during the pandemic . During to FareShare . The trial raised continue to work with them to this time, Sainsbury’s funded over £124,000 which resulted in Supporting our redistribute surplus food . and supported distribution of the distribution of over 297,000 communities over 24 million meals, via 3,945 meals . Due to it’s success, we To support the huge amount of unique charities . have made this an ongoing during the pressure on foodbanks, charities feature on Groceries Online . and community groups at We also trialled a digital Food pandemic the start of the pandemic, we Donation Programme this Supporting foodbanks, made a £3 million commitment year, whereby customers were Help Brighten charities and community to FareShare . To ensure a able to add a range of fixed groups was a key focus for us coordinated approach, we a Million during the pandemic . We also worked as an industry through Christmases supported Comic Relief and our partners, FareShare and Children in Need by matching the Institute of Grocery This year for our Help our customers’ donations £ Distribution, to help charities £3 Brighten a Million Christmases for £ in the The Big Night In and community groups access campaign, our focus was on Appeal, with the total donation much needed food . The grant million food donations to support commitment to exceeding £4 million, split was used to support the those most impacted by the FareShare, which between the two charities, end-to-end logistics, moving pandemic . Stores worked equated to 24 million to support those severely food donated from various with over 800 front of store meals distributed affected by the pandemic . organisations to frontline Food Donation partners to 479,000 brand new items of redistribute food to foodbanks, Tu clothing were donated charities and community towards local communities and groups . We also worked with charities via Comic Relief and FareShare and Comic Relief our existing charity network . across some of our digital We also supported Mail Force’s channels and in Argos . We Computers for Kids campaign, offered digital fundraising by donating 2,000 laptops to channels in store for customers help pupils during lockdown . to donate products (digital donation was money only) or a To support those shopping financial contribution . on behalf of others at the beginning of the pandemic, we We created a £5 million provided Volunteer Shopping community pot where we Cards in the form of e-gift cards matched every donation up to to make it easier for customers £4 million as well as a £1 million to support those who were community fund for stores and unable to shop for themselves . support teams to contribute We also supported vendors to local charities and good who were unable to sell The causes . In total the programme Big Issue on the streets, the raised £5 9. million, of which first time the magazine was we donated £1 8. million to available to buy in retail outlets, FareShare which supported the in order to maximise sales . distribution of over 10 million Sainsbury’s Sustainability Update 2020/21 J Sainsbury plc 26 Our suppliers Our customers want to be confident that the people who make or grow our products are not being exploited or exposed to unsafe working conditions . We are committed to establishing long-term, open and fair relationships with our suppliers, ensuring they have the skills and capacity to manage their workers responsibly .

Championing the business by using its results Supporting our for internal risk assessments . human rights We provided training for 170 suppliers We want to treat people fairly suppliers this year on how The pandemic provided a throughout our business and to prevent modern slavery in unprecedented challenge supply chains and we remain our supply chains . We also over the past year and a key committed to respect human supported the government’s priority for us was ensuring rights . We identify vulnerable response to the issues of forced the safety of workers in our workers and do not tolerate any labour in Xinjiang, China, own operations and within form of slavery or servitude in by working collaboratively our supply chains . We worked our own operations . with the industry and our with other Food Network for suppliers on policies, training Ethical Trade (FNET) members We launched our Modern and mappings risks . For more to sponsor the development of Slavery Risk Tool in 2017; this information on our a series of webinars to support gives us unique insights Human Rights Policy suppliers managing the impact into slavery risks across a and our Modern of COVID-19 in the workplace . complex global supply Slavery Statement, The supplier webinar series chain and we continue visit www .about . reached 3,993 participants in 55 to embed the tool into sainsburys .co uk. . countries .

3,993 participants reached with our webinar series to support suppliers managing the impact of COVID-19 in the workplace Sainsbury’s Sustainability Update 2020/21 J Sainsbury plc 27

Collaborating for disclosure’s ultimate goal is We also scored 44 per cent in policies and practices and looks to improve the quality of jobs Oxfam’s annual Behind the for behaviours that protect greater impact in multinational companies’ Barcodes scorecard on human workers, farmers and women . We are active members of operations and supply chains . rights, ranking us in second The Consumer Goods Forum This year we scored 89 per cent place (we were also ranked (CGF) Sustainable Supply for our disclosure, an increase first for our support to small Chain Initiative (SSCI), a of over 30 per cent year on year, scales producers) . The scorecard global benchmarking initiative and well above the average of examines supermarket’s 66 per cent for our sector and Winner for third-party audit and of the 2020 Workforce country . certification programmes . We Disclosure Initiative’s contribute to the Social and WDI also held the inaugural nd Supply Chain Data Management Criteria Technical WDI awards this year where we 2 award. Overall we Working Group and the gained a special mention for ranking in Oxfam’s scored 89% on our WDI Steering Committee . Through our COVID-19 response and won Behind the Barcodes disclosure (well above our policies and practices, we the award for our supply chain scorecard (1st for our the sector and country also support the CGF’s Human disclosure . support to small scale average of 66%). Rights Coalition; Working to producers) End Forced Labour and Forced Labour Priority Industry Principles, tackling three of the “ most problematic employment “We’re very happy to practices, listed below, with the congratulate Sainsbury’s ambition to eliminate forced for being one of the labour . three companies to win 1 . Every worker should have the Supply Chain Data freedom of movement Award in the 2020 WDI Workforce Transparency 2 . No worker should pay for Awards . Supply chains a job are of course hugely 3 . No worker should be complicated and indebted or coerced to changing all the time so work qualifying for the Award by providing so much data in Sections 11-13 Disclosure and of the WDI 2020 survey should be applauded transparency and celebrated . We hope We have taken part in the that more companies will Workforce Disclosure Initiative follow Sainsbury’s lead in (WDI) survey since its inception the future .” in 2017 . The WDI brings Rosie Mackenzie investors together to Senior Company Engagement request comparable data Manager, WDI from companies via an annual survey . The Sainsbury’s Sustainability Update 2020/21 J Sainsbury plc 28

Governance Sainsbury’s Sustainability Update 2020/21 J Sainsbury plc 29

Corporate Responsibility and Sustainability Committee Report

Dear Shareholder, The Committee oversees November 2020 . As the business the governance of being a adapted to feeding the nation, As a responsible retailer, sustainable business . The third the impact of the pandemic we want to help everyone year of my tenure as Chair of played a considerable role in eat better, offering our the Committee has seen some our progress this year . We’ve products in a way significant developments seen changes in energy usage that helps customers across the business, including due to the closure of store reduce their impact on the expansion of our Net Zero operations and the increase the environment one by 2040 plan to include Scope of deliveries into homes and plate at a time . 3, which we announced in store, whilst changes in our February 2021 . The inclusion of food service provision and the Net Zero by 2040 targets food surplus redistribution for senior management have impacted our food waste . remuneration targets for Even in a year of great change, 2021/22 has been a step forward we continue to drive forward and I’m really pleased that initiatives to reach our Net Zero the Net Zero by 2040 plan is by 2040 commitments . You can a central part of our plan to read more about how we have put food back at the heart of performed on page 34 . Sainsbury’s . This past year has also been unprecedented in As well as our Net Zero by terms of the business change 2040 target for Scope 1 and required to adapt to the impact 2 emissions, in line with the of the pandemic, and I am Paris Agreement to limit global proud of the pace at which warming to within 1 5°C,. this we’ve adapted to best support year the Committee approved our customers, colleagues, and our Scope 3 target . The target the communities we serve . is to reduce greenhouse gas emissions (GHG) by 30 per cent In January 2020 we announced by 2030, to align to a well below our Net Zero by 2040 plan 2°C scenario . We were pleased and committed to report on the Science Based Targets progress biannually, with initiative (SBTi) approved our our first results published in Science Based Targets for Sainsbury’s Sustainability Update 2020/21 J Sainsbury plc 30

Scopes 1, 2 and 3 . This year the on foodbanks and help those in in Glasgow in November 2021 . Committee worked with the our communities most severely Climate change is a key global Remuneration Committee to impacted by the pandemic . challenge which remains at the approve remuneration targets top of our agenda; we recognise linked to plastic reduction and As a Committee, we continue the scale of the issue and GHG emissions across Scopes to focus on stakeholder know the solution is through 1, 2 and 3, further embedding engagement including collaboration . these objectives into the our customers, colleagues, business . suppliers, and the community, and have listened to and We became signatories of the engaged with our stakeholders . Task Force on Climate-related Financial Disclosures (TCFD) There have been a number in January 2020, and this year of changes to the Committee we have taken this further this year . Martin Scicluna by reporting our roadmap and Simon Roberts joined the for TCFD disclosure . We are Committee on 1 June 2020 . We also disclosing against the also welcomed Keith Weed Sustainability Accounting to the Committee on 1 July Standards Board (SASB) 2020 following Jean Tomlin’s framework for the first time this departure . Keith has significant year . For a summary of this, sustainability experience visit www .about .sainsburys . having championed new ways co .uk . of integrating sustainability into business and building COVID-19 has had a significant brands with purpose in previous impact on the business over the roles . He has been a great past year, and the Committee addition to the Committee . has kept abreast of our key I would like to thank all priorities to keep our customers members for their contribution and colleagues safe, help feed this year . the nation and support our communities and the most We are looking forward to vulnerable in society . The holding an investor day amount of change has been in June 2021 focusing on substantial for colleagues this Environmental, Social and year and therefore ongoing Corporate Governance (ESG) engagement and clear where we intend to share communication have been what we’re doing to help the essential . We’re pleased that planet and society and ensure colleagues have remained we have a sustainable future . engaged, with our colleague The recordings from the day engagement score increasing will be available online for all by 6 per cent to 81 per cent . shareholders to view . We are also really pleased we were The Committee was also highly Jo Harlow supportive of the initiatives put chosen to be a Principal Partner in place to reduce the pressure of the UN Climate Change Chair, Corporate Responsibility Conference, COP26, taking place and Sustainability Committee Sainsbury’s Sustainability Update 2020/21 J Sainsbury plc 31

Principal Principal feedback . Engaging with shareholders on ESG matters is becoming role and activities in the The Committee was pleased increasingly important . The responsibilities year with the progress made on Committee discussed our supplier engagement and the approach and developments The Committee’s principal role The Committee met three times steps taken during the year in this area and the hosting is to review the sustainability during the year for scheduled that led to an increase in our of an ESG focused event strategy, ensuring it is aligned meetings and one additional benchmark position in both the with investors was approved with the Company’s purpose, meeting was arranged to Advantage Suppliers Survey for the upcoming year . The strategy, culture, vision and discuss remuneration targets . and Groceries Code Adjudicator Committee also worked with values . The Committee also The meetings focused on our report . The Committee also the Remuneration Committee plays a part in monitoring Net Zero by 2040 plan and received feedback from the to review and approve the the business’s engagement stakeholder engagement – Chair of the Sainsbury’s remuneration targets for senior with stakeholders including customers, colleagues, the Foundation Advisory Board management against key areas customers, suppliers, the community, suppliers and on the Sainsbury’s Fairly of our Net Zero by 2040 pillars . community, colleagues, shareholders . Updates and Traded Programme, how the shareholders and government progress against our Net Zero Foundation has functioned and For more information, please on sustainability and corporate by 2040 plan was a key focus opportunities for the future . read our Annual responsibility matters . of the Committee this year Report and Committee members were also Financial and the Committee played a keen to understand the actions Attendance at scheduled fundamental role in approving Statements Committee meetings being taken to respond to 2021 . the Scope 3 GHG emissions regulatory developments such Jo Harlow 3(3) targets . as supply chain legislation, Mike Coupe¹ 1(1) The Committee was updated on including a Defra consultation our customer and community on deforestation and on EU Simon Roberts² 3(3) response to the pandemic . Human Rights Due Diligence, Martin Scicluna³ 3(3) This included our evolved and the cost and impact of fundraising approach with these on the business . The Jean Tomlin4 0(1) the development of new Committee was also updated on the impact of extended Keith Weed5 2(2) digital fundraising channels and initiatives to support the producer responsibility, and The maximum number of income of existing partners . increased campaigner action meetings held during the year and public awareness of that each Director could attend Culture and colleague illegality in supply chains . is shown in brackets . engagement were an important Modern slavery and human part of the Committee’s trafficking are abhorrent agenda . The Committee was practices that still exist in many ¹ Mike Coupe stepped down from the updated throughout the year Board on 2 July 2020 parts of the world, including ² Simon Roberts joined the Committee on the impact of the pandemic the UK . The Committee on 1 June 2020 on colleagues and the ongoing reviewed the steps being taken ³ Martin Scicluna joined the Committee steps being taken to keep our to prevent modern slavery on 1 June 2020 colleagues and customers safe . 4 Jean Tomlin sent her apologies for and human trafficking in our the April meeting, she was assisting Members were provided with business operations and supply the government with COVID-19 related the results of the colleague chain and recommended that business . Jean stepped down from the engagement surveys and the Board approve our Modern Board on 2 July 2020 . discussed the initiatives put 5 Keith Weed joined the Committee on Slavery Statement . 1 July 2020 in place to address colleague Sainsbury’s Sustainability Update 2020/21 J Sainsbury plc 32

Governance

Oversight of the sustainability strategy J Sainsbury plc Board Chair: Martin Scicluna

Reviews the sustainability strategy; our Net Zero by 2040 plan . It also monitors the business’s engagement with colleagues, customers, suppliers, the community, shareholders and government on sustainability and Corporate Responsibility & corporate responsibility matters . Sustainability Committee Chair: Jo Harlow

Defines business-wide strategy, adapting to new regulatory requirements and trends . Reviews cross-value progress and signs off major investments . Operating Board Chair: Simon Roberts, Chief Executive Officer (as of June 2020)

Leads operational execution of our Net Zero by 2040 plan by overseeing working group activity, ensuring delivery of performance . Chair: Simon Roberts, CEO and Paul Mills-Hicks, Commercial Director / Mark Given, Chief Marketing Officer (as of Jan 2021)² Working Groups 1 . Carbon (Scopes 1&2) & Water 2 . Carbon Scope 3 3 . Healthy Sustainable Diets 4 . Plastics & Recycling 5 . Food Waste Net Zero Steering Committee¹ 6 . Biodiversity

¹ The Net Zero Steerco was established in February 2020 to support delivery of our Net Zero by 2040 plan . This forum initially existed alongside our Value Management Groups which governed our 2020 Sustainability Plan . These forums were phased out over the past year on completion of this plan, and our social agenda has been governed via Director forums and the Operating Board . To ensure effective governance across our ESG agenda, we have refreshed our CR&S governance structure which we intend to implement in the upcoming year . ² Mark Given became Chair from January 2021, replacing Co-Chairs Simon Roberts and Paul Mills-Hicks Sainsbury’s Sustainability Update 2020/21 J Sainsbury plc 33 Reporting frameworks

Taskforce on Climate-related Sustainability Accounting Financial Disclosures Standards Board The TCFD developed a framework to help public companies and other organizations more effectively The Sustainability Accounting Standards Board disclose climate-related risks and opportunities through (SASB) is an independent nonprofit organisation that their existing reporting processes . sets standards to guide the disclosure of financially material sustainability information by companies to Sainsbury’s became a signatory of TCFD in January 2020 their investors . SASB Standards identify the subset of as part of our Net Zero by 2040 launch . We committed environmental, social, and governance (ESG) issues to implementing the recommendations of TCFD and most relevant to financial performance in each of 77 have been making progress towards embedding climate industries . considerations into our reporting and decision making, as well as targets in place to measure progress and This year we are disclosing against SASB for the first incentivise performance . time . You can find this at www .about .sainsburys .com . For our TCFD disclosure, please see our Annual Report and Financial Statements 2021 .

UN Sustainable Development Goals CDP In 2015 the United Nations published the UN Sustainable CDP is a not-for-profit charity that runs the global Development Goals (SDGs); 17 ambitious goals which disclosure system for investors, companies, cities, states aim to end poverty, protect our planet and increase and regions to manage their environmental impacts . prosperity and peace for all . Sainsbury’s participate in the CDP surveys relating to We continue to fully support and contribute to climate change, water scarcity and forests annually . these goals . Whether it’s investment into our local We have been award an A rating for our climate change communities, reducing emissions to tackle climate disclosure for seven consecutive years, the only UK change, promoting sustainable agricultural practices in retailer to have done so . We have achieved an A rating our supply chains or ensuring diversity and inclusion for our water disclosure for two consecutive years, whilst within our organisation . Our sustainability agenda our forests disclosures are rated B . is aligned to these goals so that we can help create a more sustainable future for all . Our CDP disclosures can be found at www .about . sainsburys com. . Throughout this report we indicate where our activities and partnerships contribute towards these global goals . Sainsbury’s Sustainability Update 2020/21 J Sainsbury plc 34

See Page 7 & 8 See Page 14 See Page 19

See Page 19 See Page 27 See Page 27

Performance Scorecard Our performance scorecard provides an overview of our key commitments, KPIs and performance across our Net Zero by 2040 pillars . Sainsbury’s Sustainability Update 2020/21 J Sainsbury plc 35

Commitment Reduce absolute greenhouse gas (GHG) emissions from our own operations to Net Zero by no later than 2040 Metric Methodology Baseline Results Target 2018/19 2019/20 2020/21 2040/41 Absolute GHG emissions within Absolute, market based, scope 1 and 2 GHG emissions in the 949,744 tCO2e 843,741 tCO2e 818,161 tCO2e Net Zero our own operations financial year for Sainsbury’s Group supported by third party CBRE and disclosed in our Streamlined Energy and Carbon (SECR) report (please see our Annual Report and Financial Statements 2021 for this disclosure) . This is verified by the Carbon Trust later in the year .

Carbon Commentary We started the 2020/21 financial year ahead of our target trajectory which supported us to achieve our target . Store closures as a result of COVID-19 also contributed to the carbon savings across the year as did our continued focus on LED light installation, with a total of 472 supermarkets with LED lights installed by the end of the 2020/21 financial year . The future programme continues to be well planned and focuses on efficiency improvements . The 2021/22 financial year will see the LED programme completed across the estate .

Commitment Minimise the use of water in our own operations, driving towards water neutral by 2040​ Metric Methodology Baseline Results Target 2018/19 2019/20 2020/21 2040/41 Absolute water usage within our Absolute water usage in the financial year for both Sainsbury’s and 3,224,000 m3 3,029,859 m3 2,776,288 m3 Water Neutral own operations Argos as reported by third party WaterScan .

Water Commentary Improvements driven by operational response to COVID-19 (closure of property and propositions) and water saving taps completed for all sites (stores, support centres and depots) . Operational efficiency and deploying new technologies will deliver future targets . Sainsbury’s Sustainability Update 2020/21 J Sainsbury plc 36

Commitment Develop and deliver healthy and sustainable diets for all Metric Methodology Baseline Results Target 2019/20 2019/20 2020/21 2040/41 % healthy products sold as a Total sales of healthy and better for you choice food as a 55 .6% 55 .6% 55 .3% N/A proportion of total sales tonnage percentage of total food sales tonnage in the financial year (exclusive of beers, wines and spirits) . Healthy and healthier choice defined using a nutrition criteria tool .

Commentary Healthy Diets Flat year-on-year with no significant movement within a category . Improvement in future years will be driven by a new target and category level plans .

Commitment Reduce food waste by 50% by 2030 Metric Methodology Baseline Results Target 2019/20 2019/20 2020/21 2030/31 Food waste to anaerobic Total food waste tonnage sent to anaerobic digestion in the 31,615 tonnes 31,615 tonnes 26,545 tonnes 15,808 tonnes digestion tonnage financial year calculated as total operational food surplus i e. . food that is not sold to customers, less any food surplus redistributed to both humans and animals .

Commentary This year we reduced the food waste we send to anaerobic digestion in our own operations by over 5,000 tonnes, a reduction of 16 per cent year-on year, which puts us ahead of our Food Waste target trajectory . This has been driven by reductions in our overall operational waste figure, owing to propositional changes in our food service departments, as well as growth in the volume redistributed to both humans and animals as a result of impacts from the pandemic and process improvement . See page 10 for breakdown of redistribution to humans and animals . Our ability to meet our target is dependent upon increasing the amount we redistribute for human consumption and we are looking into third party tech solutions to enable this . Sainsbury’s Sustainability Update 2020/21 J Sainsbury plc 37

Commitment Reduce our use of plastic packaging by 50% by 2025​ and then go further Metric Methodology Baseline Results Target 2018/19 2019/20 2020/21 2025/26 Food: % reduction in plastic Plastic tonnage for the calendar year calculated by multiplying the 120,000 4 6%. 1 .7% 60,000 tonnes packaging vs baseline / tonnes primary plastic packaging weight of each Sainsbury’s food SKU by tonnes of plastic packaging​ (114,463 (117,959 the sales volumes of that SKU . SKU data is collated and updated by tonnes) tonnes) third party, Valpak . Plastic Commentary In 2020, our efforts to reduce packaging were hampered by COVID-19 due to increased sales volumes and having to use plastic for some high volume lines, e g. . for eggs, as pulp packaging supply ran out across the industry . However if we strip out the impact of COVID-19 we are still behind our trajectory so significant progress is required in order for us to meet our long term target .

Commitment Increase recycling and make it easier for our customers to recycle Metric Methodology Baseline Results Target 2019/20 2019/20 2020/21 2040/41 Number of Sainsbury’s managed Number of open Sainsbury’s sites, excluding store support centres, 274 274 273 N/A recycling facilities in all with public recycling facilities as at the end of the financial year . available sites

Recycling Commentary Removal of one site last year due to property works . Sainsbury’s Sustainability Update 2020/21 J Sainsbury plc 38

Commitment Ensure that the impact of our operations is net positive for biodiversity Metric Methodology Baseline Results Target 2019/20 2019/20 2020/21 N/A % timber sourced to an Total cubic metre volume of sustainably sourced timber products Sainsbury’s: 90% Sainsbury’s: 90% Sainsbury’s: 92% Sainsbury’s: 100% independent sustainability sold as a percentage of total cubic metre volume of all timber Argos: 43% Argos: 43% Argos: 34% Argos: 100% standard products sold in calendar year 2020, assessed by third party Track Habitat: 8% Habitat: 8% Habitat: 0% Habitat: 100% Record Global Ltd . Group: 65% Group: 100% Biodiversity % palm sourced to an Total volume of palm in our supply chain assessed to be 99 1%. 99 1%. 99 .3% 100% independent sustainability sustainably sourced as a percentage of total volume of palm used standard in our supply chain for the calendar year 2020 .

% soy sourced to an independent Total volume of soy in our supply chain assessed to be sustainably 6% 6% 42% 100% sustainability standard sourced as a percentage of total volume of soy used in our supply chain for the calendar year 2020 .

% cotton sourced to an Total tonnage of cotton sustainably sourced by third party Better 76% 76% 89% 100% independent sustainability Cotton Initiative (BCI) as a percentage of total cotton tonnage standard sourced in the calendar year 2020 .

% wild caught seafood sales Total sales volume of wild caught seafood which is independently 82 .3% 82 .3% 76 1%. 100% which is independently certified certified as sustainable as a percentage of total sales volume of as sustainable wild caught seafood for the financial year .

% farmed seafood sales which Total sales volume of farmed seafood which is independently 100% 100% 100% 100% is independently certified as certified as sustainable as a percentage of total sales volume of sustainable farmed seafood for the financial year .

Number of Woodland trees Total number of trees planted in the financial year through 493,750 trees 493,750 trees 325,000 trees 1,500,000 trees planted partnership with the Woodland Trust . (by 2025/26) Sainsbury’s Sustainability Update 2020/21 J Sainsbury plc 39

Commentary

% timber sourced to an independent sustainability standard Last year we reported on Sainsbury’s only . This is the first year that we have reported on Argos and Habitat which will be a focus going forward .

% palm sourced to an independent sustainability standard Our sustainable sourcing performance on palm oil remains strong and we continue to strive towards our 100 per cent target .

% soy sourced to an independent sustainability standard This year saw a significant improvement in the share of soy feed sourced sustainably in our supply chains as we continue engaging with our suppliers .

Biodiversity % cotton sourced to an independent sustainability standard Improvements this year are attributed to a greater sourcing of sustainable cotton within General Merchandise and Clothing .

% wild caught seafood sales which is independently certified as sustainable The fall this year can be attributed to mackerel loosing its Marine Stewardship Council (MSC) certification which creates challenges for meeting our long term target .

% farmed seafood sales which is independently certified as sustainable Our farmed seafood remains 100 per cent sustainably certified and we expect to be the first retailer to transition to Aquaculture Stewardship Council (ASC) in the UK .

Number of Woodland Trust trees planted Last year we focused on planting trees in strategic areas (schools and communities) as oppose to chasing the highest number .