Sustainability Report

2015 Sustainability Report 2015 Sustainability Report Luigi S.p.A.

2015 Lavazza Sustainability Report 2015 Contents

Sustainability Report CONTENTS 2015 S.p.A.

1. 2. 3.

NOTE ON METHODOLOGY Luigi Lavazza S.p.A. 17 Sustainability projects 47 A passion for excellence 65 Tradition, evolution and revolution in producing countries Fondazione Lavazza

Document objectives 10 1.1 2015: the year of sustainability 19 2.1 Fondazione Giuseppe e Pericle Lavazza 49 3.1 Lavazza’s approach to quality 67 control and management Drafting process and references 10 1.2 Growing economic engagement 37 2.2 Project overview 50 of the manufacturing process in sustainability Scope of the report 11 2.3 The importance of teamwork 52 3.1.1 Quality of the raw material 69 1.3 Business values, value of the business 38 56 3.1.2 Quality of the manufacturing process 78 Stakeholder Engagement and 11 2.4 Performance in 2015 materiality analysis 2.5 Focus on some projects 60 3.1.3 Certifications 80 of Fondazione Lavazza Assurance Process 15 3.2 Responsible supply chain 90 management

3.3 Monitoring and audits on suppliers 93

4 5 Lavazza Sustainability Report 2015 Contents

CONTENTS

4. 5. 6.

Sustainability and innovation 95 Human resources 119 Continuous improvement 147 development Lavazza objectives 2016-2018

GRI CONTENT INDEX 150 4.1 Innovation as an engine 97 5.1 Lavazza’s approach to people 121 for development 5.1.1 Training and Development: 122 4.2 Our commitment to 102 a structured and shared process GLOSSARY 160 environmental sustainability 5.1.2 Loyalty and transparency 129 4.3 Carbon Footprint 104 5.1.3 Internal communication 130 4.4 Health & safety, energy and 108 Environment Management System 5.1.4 Nuvola: a work in progess 134

5.1.5 Occupational Health and Safety 142

6 7 Lavazza Sustainability Report 2015 Introduction

ur business has grown tremendously in the This Report tells the story of what has proven to be ustainability is a topic that we all must take into with farmers, in order to increase their know-how, last years. This is a moment of extraordinary an extraordinary year for Sustainability, a story that consideration. Today, as ever more in the future, is crucial for Lavazza. We do that by providing farmers Odevelopment for us, as witnessed by our most kicks off with a series of special events held over the Sit will be an essential element of business. with appropriate tools and technologies to address recent acquisitions of Carte Noire, market leader in course of 2015 – Lavazza was in fact selected Official and minimise the environmental the French retail sector and Merrild, the main brand of the Italian Pavilion at the 2015 Universal A challenge that we at Lavazza face every day, making impact of their activities while supporting farming in and the Baltic countries. Sixth in global Exposition and presented its first Sustainability Report, our best effort to offer our consumers Quality methods improvement. coffee ranking, Lavazza reaffirms itself as a global as well as its compostable capsule. Moreover, Lavazza at all levels. In fact, we are aware that our consumers company, with more than 50% of its revenues deriving pushed innovation further through the launch of are not the same as ten years ago and that they Global markets require us to grow. We aim to build from exports. We are a leading international Group, the first in outer space, while supporting are becoming increasingly conscious of all aspects on what made us one of the most credible brands engaging consistently in offering the same quality and culture thanks to the partnerships with the New concerning product quality and value, including abroad: our values and identity. A vision that combines excellence that distinguished us for 120 years. York Guggenheim Museum and the Venetian Civic Company sustainability, both in terms of product tradition and innovation and, above all, respect for our Museums. Promoting international sport events, and production process. collaborators and consumers worldwide. We want to keep on growing without losing sight through partnership with the 4 Grand Slam tennis of who we are and where we come from, the values tournaments was also an important point on the Thanks to a targeted growth policy on key markets in which our business is rooted and the respect for our Company’s agenda. A special year characterised, and strategic acquisitions, Lavazza confirms itself Antonio Baravalle people, whose hard work and skills allow us to aim for above all, by one of the pillars of our entrepreneurial as a global leader. Our goal is to continue in this Chief Executive Officer of Luigi Lavazza S.p.A. and reach ambitious goals. vision: the attention and care we devote to our people. direction by leveraging our values, tradition, quality and our ability to continuously innovate. In other At the beginning of 2017 we will move to the new A story made of consistency and credibility, of vision words, leveraging on what makes Lavazza unique. Headquarters, which are just a short walk from the and momentum towards a future of challenges and places where the Company was born in Torino, opportunities. We are convinced that combining innovation and a city of innovation and change. This relocation will sustainability is the key to success. Thus, we have represent an opportunity to give a towards Alberto Lavazza more than doubled investments in research and a more sustainable, integrated and innovative President of Luigi Lavazza S.p.A. development in the last four years. management of our Company. The new Headquarters will be in fact characterized by a more efficient We believe in the importance of spreading our coffee management of energy consumption, lower use culture and the excellence of our authentic Italian of paper, more flexibility in the organization of brand worldwide. By the same token, cooperation space. Moreover, digital technologies will favour an increasingly cooperative spirit, as well as an effective communication within the Company and with our stakeholders. Sustainability represents for us a reality and an opportunity, and the new Headquarters is a concrete example of this approach.

8 9 Lavazza Sustainability Report 2015 Methodological note

METHODOLOGICAL NOTE

Document objectives Drafting process and references Scope of the report1 Stakeholder Engagement and materiality analysis

With this new edition, the Lavazza Group wishes to share the results The report was drafted by Lavazza’s “Institutional Relations & Lavazza’s manufacturing system is split across six manufacturing [G4-18] In accordance with the GRI-G4 guidelines, Lavazza has achieved in 2015 as part of its path of sustainability with Sustainability” and saw the active involvement of the Company’s entire : four in (Torino, Gattinara, Pozzilli, Verrès2), one in identified the contents of its Sustainability Report according to its stakeholders. organisational structure, as required by the drafting principles of the and one in India. Lavazza has 3,1003 employees, operates in more than the following principles: Sustainability Report issued as an internal procedure in 2014. 90 countries around the world, covering every continent, through both • Stakeholder inclusiveness; The Report, in fact, is the primary instrument for managing and The contents of the Sustainability Report have been prepared direct subsidiaries and a large network of distributors. • Sustainability context; reporting on economic, environmental and social sustainability according to the latest version (GRI-G4) of the Guidelines Domestically, Lavazza reaches its consumers directly through • Key factors; initiatives. It is also a transparent way to interact with and disclose (https://www.globalreporting.org/reporting/g4/Pages/default.aspx) operators such as large-scale retailers and public establishments. • Completeness. information to stakeholders. drawn up by the “Global Reporting Initiative” and the related Food Internationally, it is present in various markets through a network Processing Sector Supplement (“Food Processing Sector Supplement” of distributors specialised in the ‘at home’ and ‘away from home’ In identifying the structure and content of the Report, Lavazza has Lavazza adopts a strategic approach to corporate social responsibility - https://www.globalreporting.org/reporting/sector-guidance/ channels. Lavazza offers end consumers a vast range of products therefore taken into account its business (analysis of Lavazza’s (CSR), which involves the comprehensive integration of CSR themes sectorguidanceG4/Pages/default.aspx). designed to meet every need both at home and away from home. sustainability context), the interests of stakeholders and their throughout the value chain. Sustainability, for Lavazza, is therefore an To ensure that figures and information are comparable over time, expectations. integral part of its core business. The level of compliance with the GRI-G4 Standard selected by the this Report refers to the years 2013, 2014 and 2015. [G4-17] Lavazza Group is “in accordance - Core.” To identify the most relevant aspects to include and discuss This vision requires the adoption of precise, measurable and Quantitative data provided in the document refer to Luigi Lavazza in the Report, Lavazza has: repeatable key performance indicators (KPI), whose achievement is S.p.A., the parent company based in Torino, Italy, unless otherwise • Identified its stakeholders, using the list already available in the dependent on the involvement of all corporate functions and on the stated. Code of Ethics as reference [G4-25]; definition of guidelines in order to create a systemic process. • Examined their expectations and main areas of interest using Luigi Lavazza S.p.A. includes: Headquarters, Innovation Centre dedicated channels; With this aim in mind, in 2011 Lavazza adapted to this approach - and Sales & Marketing; Manufacturing plants in Settimo Torinese, • Analysed its sustainability context and that of the reference sector, already adopted by the company in terms of developing a company Gattinara, Verrès and Pozzilli. through benchmarking with its main competitors and analysing culture - by creating a dedicated position whose task is to define, subject areas considered relevant to the Company’s core business; implement and coordinate company-wide CSR activities focusing on • Performed a key factor analysis on the most relevant sustainability four main areas: the sustainability of the product and of production issues for the company, by assigning a priority to each issue and processes, and the sustainability of relations with internal and external building a ‘materiality matrix’. stakeholders. Stakeholder engagement activities carried out in 2015 chiefly Following in was Lavazza’s decision to form an “Institutional concerned the following categories of stakeholders: Relations & Sustainability” division that, besides managing the set • Employees (focus groups and corporate storytelling events were of tasks assigned to the aforementioned corporate function, also takes organised, which are described in detail in Chapter 5 of the Report); care of managing the Company’s relations with external parties, • Consumers (market research was conducted; please see Chapter 3 as well as the projects of Fondazione Lavazza. for more information); • Coffee producers (the Earth Defenders project described in Chapter 2).

1 The reporting scope of this Sustainability Report has not been amended compared to last year’s Report. The reporting period chosen in order to ensure that the data of the two years could be compared and the Report’s continuity with the one for 2014 is the three-year period (2013-2014-2015) [G4-22; G4-23]. 2 The manufacturing in Verrès will be the focus of an industrial plan that will lead to the progressive discontinuation of production (the factory officially shut down in July 2016), which will be transferred to the Group’s multi-functional centres throughout Italy. This decision fits into the Company’s goal of rationalising its manufacturing system and has seen Lavazza invest heavily in the redevelopment of its fully-owned manufacturing plants. The Company shared its plan for the future with local trade unions and institutions, assuring them that all actions that will help ensure a smoother transition have been taken and informing them that staff currently working in Verrès can be relocated elsewhere within its industrial system. The stakeholders were also informed that Lavazza has resorted to the Special Redundancy Fund (CIGS) progressively since the second half of January 2016. The manufacturing plant in Verrès is included in this Report because it has been operative for part of the three-year period (2013-2015). 3 The workforce refers to the Lavazza Group.

10 11 Lavazza Sustainability Report 2015 Methodological note

Lavazza stakeholders and main communication channels [G4-24; G4-26; G4-27] [G4-24; G4-26; G4-27]

EXAMPLES OF COMMUNICATION CHANNELS

• Customer Service Clients and consumers Governance bodies • Organisation of frequent meetings • Social networks • Ethics Committee • Sales network as a channel for reception, mediation and communication.

• Meetings to develop projects that promote sports, Local communities Partners • Organisation of events and frequent meetings culture, support the younger population and encourage integration. • Events • Meetings to understand needs and discuss problems

Press&Digital • Definition of communication strategies Media • Press releases and PR materials • Blogger relation/Digital PR • Meetings to define and implement Producing • Organisation of events and press conferences sustainability projects communities • Scheduling of coordination of interviews with • Frequent contacts to shape quality standards the Board and Top Management of Lavazza • Frequent interaction to discuss coffee purchase • Coordination of international Public Relations • Meetings to update about problems tied with

Human Resources • Training programmes • Leading Change • Frequent meetings Suppliers • Coffee Telling (sharing “leadership stories”) • Visits on site • Focus Groups and Welfare Plan • Improvement plans • Co-designing of spaces in new HQ • Sharing the Supplier Code of Conduct and Code of Ethics • Sharing of Employee Code of Conduct and Code of Ethics

• Participation in international round-tables National/international Trade unions/ • Frequent meetings to discuss the Group’s position • Events institutions, industry associations • Meetings to negotiate on corporate issues and within • Frequent focus meetings the manufacturing plant, developing the variable element non-governmental agencies of wages as a tool to promote better results and local institutions • Relations with and participation in trade association activities • System of industrial relations as a support to growth

12 13 Lavazza Sustainability Report 2015 Methodological note

Materiality matrix HIGH [G4-19; G4-20; G4-21; G4-27] [G4-19; G4-20; G4-21; G4-27]

Customer Health and Safety

Quality of Green Profitability and economic value Coffee

Occupational Health and Safety

Valorisation of Human Resources Initiatives for coffee producers Measuring and satifying Customer Satisfaction Waste Management

Relationship with suppliers Packaging and partners Community Engagement Enlarged area Production Consumption of natural resources of certified coffee MEDIUM Climate Change RELEVANCE FOR STAKEHOLDERS FOR RELEVANCE

Water Footprint

RELEVANCE FOR THE COMPANY RELEVANCE FOR THE COMPANY

LOW MEDIUM HIGH

Assurance Process

The graph shows the sustainability issues that are The Sustainability Report of the Lavazza Group has The results of their audits are contained in the considered essential to the Company (horizontal axis) been reviewed in part by PricewaterhouseCoopers auditor’s report at the bottom of this document. and to its stakeholders (vertical axis). The quadrant Advisory S.p.A.4 . in the upper right shows the key issues, i.e. most significant for the Company and its stakeholders. 4 Luigi Lavazza S.p.A., following a call to tender chose PricewaterhouseCoopers Advisory S.p.A. (PwC) to audit its Sustainability Report. The top management of Lavazza is involved in the assurance process by conducting individual interviews.

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1

Luigi Lavazza S.p.A. Tradition, evolution and revolution

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Over the course of 2015, Lavazza continued pursuing its path towards sustainability, an issue that has become one of the Company’s key areas for strategic development.

1.1 2015: the year of sustainability

In this context, Lavazza aims to be credible and consistent in its statements and intentions, acting as a first mover and a benchmark for best practices when it comes to sustainability. To further emphasise this aim, the report opens with an overview of a series of special projects commenced and completed in 2015, which for Lavazza can be referred to in all respects as “the year of sustainability”.

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Evolutions and revolutions The futuristic Lavazza Innovation March: Lavazza introduces the Center is established at the compostable capsule developed (in factory in Torino cooperation with Novamont) at the Sustainability Hub in , venue chosen 2010 for the development of the Company’s CSR activities during Lavazza Lavazza decaffeinated Paulista - the first coffee introduces coffee (originally to be packaged Lavazza starts May - October: Participation at EXPO, the innovative called Dec and then in a tin - is launched research to design where Lavazza receives the “Towards ‘vertical’ changed to Dek in a compostable a Sustainable Expo - A legacy for processing 1961) is launched capsule Sustainability” award as leader in ‘Food’ method 2007 e ‘Green Procurement’

Luigi Lavazza creates 12.44 p.m. May 3, 2015: Thanks to the first coffee blends Lavazza launches A Modo Mio, ISSpresso, the first coffee is enjoyed on a new automatic espresso the International Space Station and machine designed for home use the first experiment in fluid dynamics is conducted to study the behaviour of liquids under high pressure and temperature in space 1947 1957 1959

1960 2015 The manufacturing 2010 2014 1923 plant in Torino is opened, at the time the 1965 largest single-product factory in Europe Lavazza wins the tender to be the May: As part of the merger of D.E official coffee of the Italian Pavilion Master Blenders and Mondelez at the Universal Exhibition in Milan International, Lavazza presents an offer for the Carte Noire and Merrild 1910 Lavazza is the brands and for the license of the first coffee brand in manufacturer The Luigi Lavazza The Automatic The first to draw up a real Coffee Research Distribution division Lavazza September: Lavazza acquires the brand strategy is launched, with Calendar and Study Centre is distribution network in from in Italy the single-serving is published established a local partner Espresso Point capsule system September: Lavazza completes the acquisition of Danish brand Merrild

30 September - 1 October: The first In partnership with , Global Coffee Forum 2004 Lavazza develops ISSpresso, the is held in Milan thanks to Lavazza’s 1971 1979 1982 1989 1993 2003 first that can contribution, an international event work at zero gravity dedicated to all “Coffee-Lovers”

December: Lavazza participates in the International Conference COP21, Lavazza launches prepackaged where it presents the compostable coffee using “Pergamin”, a An innovative Internationalisation Lavazza BLUE marks ¡Tierra! makes its capsule and its new partnership with package composed of two vacuum-packed begins with the a watershed moment debut: a high-quality Shamengo. layers of paper, to keep the bag is introduced establishment of the in automatic distribution coffee resulting from the original flavour of the coffee alongside the tin French subsidiary with an innovative company’s first untouched extraction system independent CSR project

20 21 Lavazza Sustainability Report 2015

Expo

During the 6 months of Expo 2015, of steaming coffee welcomed visitors Expo’s success, with 21.5 million Milan was the centre of the World. and wafted across the Hall. From tickets sold, was a success also for As the official coffee of the Italian Terrazza Martini to restaurant Peck, Lavazza and offered the opportunity Pavilion, Lavazza was involved but also in the Coop supermarket to use a global platform to present in this remarkable event, which of the future and at the two Eataly itself as a benchmark in the revolved around the theme of “Feed stands “Caffè Bar Vino Libero”, as well field of sustainability, innovation the planet, Energy for life”. as in several other . and quality, both nationally and internationally. All throughout the Expo, the aroma of At Expo, Lavazza offered visitors Lavazza coffee spread from Piazzetta 100% sustainable !Tierra! coffee del Caffè at the Italian Pavilion, and a selection of exclusive recipes designed by renowned architect prepared by the Lavazza Training Fabio Novembre, where a huge cup Centre.

Towards a sustainable Expo

Lavazza’s commitment in the field of CSR was recognised by other initiatives or special projects), recovering and cataloguing all the Programme “Towards a Sustainable Expo – A legacy for the documentation of the supply chain and certifications, starting Sustainability”. In this Programme Lavazza was recognised as the from the raw materials through packaging and all the way to the final EXPO 2015: leader in the areas of ‘Food’ and ‘Green Procurement’, in the presence products. Lavazza official coffee of the Commissioner for EXPO, Giuseppe Sala, and the Minister for the Environment, Gian Luca Galletti. The ‘leadership’ recognised to Lavazza and confirmed by EXPO of the Italian Pavilion and the Ministry for the Environment (with which Lavazza The work carried out by Lavazza was made possible by its collaborates in defining the standards for the quantification collaboration with partners and suppliers, which helped meet of the environmental impact of the coffee manufacturing processes), all the requirements laid down in the rules defined on the basis of confirms the soundness of an aim that considers economic, the programme, drawn up by the Ministry for the Environment environmental and social sustainability as a synergistic whole whose (Sustainable Architecture, Food & Beverage, Green Procurement, parts reciprocally feed on each other.

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Lavazza Sustainability Hub

During the Expo, the Sustainability Hub located in Cascina The Hub also hosted 5 conferences concerning the circular Cuccagna di Milano was the centre of all the Company’s economy along with Novamont and the University of endeavours in terms of sustainability. A greenhouse dedicated Sustainability, with international speakers selected from among to sustainability was built according to the canons of sustainable the most prominent names in the world of environmental architecture by Lavazza and Novamont, a company with which economics. Lavazza developed its first compostable capsule of Italian espresso.

Within the Sustainability Hub, in addition to the launch of the compostable capsule, Lavazza presented the Sustainability Report 2014 and celebrated its 120th Anniversary.

The location also hosted the presentation of the “Slow Food Planet” app, the launch of the Etigua coffee blend (for details see Chapter 4) and the presentation of the Lavazza Calendar 2016.

During the Expo, the Sustainability Hub was the centre of all the Company’s endeavours in terms of sustainability

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2015: the internationalisation process at Lavazza

In addition to being the year of Carte Noire, a company with a long The scope of the acquisitions sustainability, 2015 also provided history of quality and innovation of Merrild and Carte Noire remarkable opportunities for and ’s leader in the retail incorporated what can be referred Lavazza to grow and expand market with a market share of to as “local jewels”, with a very its business. 20% (by volume). Thanks to this strong brand awareness, and acquisition, France, where Lavazza represent milestones in the Group’s In September 2015, Lavazza was already second in terms of international growth strategy, concluded the acquisition of market share in the food service with the ambition (at a time when Merrild, a leading brand in the retail industry, became the second the coffee market is gradually sector in Denmark and the Baltic largest market for Lavazza after consolidating) of playing an countries. Italy when it comes to retail sales, increasingly important role among with more than 300 new employees the big industry leaders, while Also in September, the Group took that became part of our family. at the same time preserving the over the distribution of its products identity and the values that have by its local partner in Australia, The agreement with the Group always distinguished Lavazza. where it already held a significant (JDE), which Thanks to these recent acquisitions, market share, establishing a new led to the acquisition of Carte Noire the Company now ranks sixth in the branch in Melbourne. following approval by the French world in its industry, with over Competition Authorities and the 50% of its sales from abroad. Finally, 2015 was the year when European Commission, initiated Lavazza embarked on a path that a process of sharing and on February 29, 2016, led to the consultation with workers’ acquisition of the French brand representative associations.

Carte Noire, France’s leader in the retail market with 20% a market share of 20% (by volume)

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From coffee grounds to edible mushrooms

Since 2008 Lavazza, with partners of following a procedure tested in France by excellence such as the Politecnico di Torino, Upcycle, which allowed for every pound of the University of Gastronomic Sciences coffee grounds to create 300 grams of Pollenzo and Novamont, has been of edible mushrooms. working on analysing coffee grounds, finding that their composition can trigger Another important goal of the project was a regeneration process that gives birth to foster training by hiring disadvantaged to new materials such as polymers, inks, people assigned to the preparation of the wood, paper and edible mushrooms. substrates and the care of experimental The latter come to life from waste espresso, cultivation, under the professional Compostable capsule becoming a source of protein with high supervision of an experienced agronomist. nutritional value, as well as a low-cost food. The result was surprising: since September On March 3, 2015, the Lavazza strict observance of the scientific waste products within an industrial This is the principle that has guided 2015, 1,500 kg of Lavazza coffee grounds Sustainability Hub was the venue method that fosters innovation sector into a raw material that can be the pilot project that Lavazza launched were collected and 150 kg of mushrooms chosen for the presentation of the by testing and trials and above all, used in another production cycle. in 2015 with Novamont and in partnership (Pleurotus ostreatus) of excellent quality Italian espresso compostable capsule an ideal container for coffee that with AMSA, the Milan City Hall and the were produced (with a protein content in Mater-Bi®, manufactured in as always is excellent. The new compostable capsule, social cooperative “Il Giardinone”. higher than that contained in other The opportunity offered by the universal mushrooms cultivated according to collaboration with Novamont. therefore, not only presents exposition in Milan could not go wasted. standard methods). The innovative capsule offers a an opportunity to embrace an As described in the Sustainability concrete and tangible sign towards a eco-friendly lifestyle that does not So it was, then, that from Piazzetta del Moreover, using the “exhausted” substrate Report 2014, this object of a few sustainable business model. affect the environment, but also a Caffè in the Italian Pavilion at Expo, all after the cultivation of Pleurotus, square centimetres in diameter In fact, it can be harvested moist way to contribute to its development. coffee grounds collected by AMSA returned the mushroom scraps were in turn used as is not only an innovation in terms and undergo composting, a process to city to be handed over to the care of “Il a fertiliser for the production of salads, with Giardinone” and then be transformed into a a yield equal to twice the number of material, but harbours an in which the capsule and coffee resource, in what represents a remarkable of products on the market: an example extraordinary iconic value that aptly grounds are transformed into process of circular economy. of perfect circularity. captures Lavazza’s several centuries compost for the soil. This triggers of history, its pioneering spirit, a virtuous cycle that transforms Once delivered, the coffee grounds were mixed with spores and other natural ingredients and placed in special storage containers resistant to vertical farming,

In a few months the compostable capsule becomes compost

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Espresso conquers space Bite

Coffee calling Earth: at 12:44 p.m. of engineering company specialised the same Lavazza coffee blends May 3, 2015, the first espresso was in the design of Italian aerospace available on planet earth, has Another product born out of the enjoyed in space. A long nurtured systems and European leader in the been designed and manufactured collaboration between Lavazza and Argotec desire finally achieved thanks to preparation of healthy, nutritious to ensure the same quality of an is the Cappuccino Bite, the first cappuccino conceived to venture into space. ISSpresso, the first capsule espresso foods to be eaten in space, as part authentic Italian espresso: creamy, machine capable of working in the of a public-private partnership with full-bodied and with the right aroma Cappuccino Bite is also the first cappuccino extreme conditions of space, which the Italian Space Agency (ASI). and temperature. The beverage was that (as the name says) you bite, thanks to was installed on the international dispensed in microgravity conditions the reinterpretation of the lyophilisation space station by Samantha Operations in support of the while preserving all the properties process applied to a frothy coffee with milk Cristoforetti, an Italian astronaut of experiment were followed by of Italian espresso. and sugar. The result is a solid, foamy and light cappuccino without any flour or the European Space Agency, captain Argotec’s control centre and eggs, in compliance with the required safety of the air force involved in Futura, monitored by those of the Italian parameters for food in space. the second long-term mission of the Space Agency. The first espresso in Italian Space Agency on the ISS. space was enthusiastically received In addition, Lavazza always has taste in The ISSpresso project was brought by the crew of the Futura mission. mind besides innovation. Cappuccino Bite is therefore delicious, rewarding, to life by Lavazza and Argotec, an The ISSpresso machine, which uses an explosion of taste that can provide a nice break from the charming loneliness of space.

Because of these special properties ESA, the European Space Agency, chose 12.44 p.m. Cappuccino Bite to accompany astronauts during space missions in Europe, offering May 3 them an exceptional and original taste with each bite taken from an authentic 2015 cappuccino. the first espresso was enjoyed in space

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Lavazza Calendar

The Lavazza Calendar 2016 the of creating a complete it by all means was an appeal to all “From Father to Son”, designed and family-run manufacturing those who share the principles and in collaboration with Slow Food process. Portrayed on a truck while values of sustainability promoted and under the creative direction his father Isauil hands him a bag of by Lavazza and Slow Food, and a of Armando Testa, brings out the coffee: a gesture that symbolises the concrete show of support to “Terra rituals and customs of the new generational change. Madre Giovani – We Feed the Planet”, generation of Earth Defenders. an event dedicated to the future of Modern of the Earth who, The photographer who took food and the planet organised by thanks to the teachings of the the picture is also young, the the Slow Food Youth Network, with Fathers, feed on the planet in a fair 26-year-old Canadian Joey L. Lavazza in the vest of Official Partner. and sustainable way. In a series of 13 snapshots, he captures portraits of young men Old and new generations Like the young Dali for instance, and women along with their represented while hard at work who is 27 years old, produces chilli “Fathers” who day by day, thanks to and learning, in their natural in Mexico and is overseeing the the teachings handed down from settings, in their desire for change, Mopampa, a project designed and generation to generation, defend but always with a sense of devotion developed by her mother and which biodiversity, plants and crops without to their traditions. has allowed women to emancipate wasting resources, for the benefit of themselves economically and to the local community. enhance their role in society. The Lavazza Calendar 2016 is a Or like Anderson Ricardo Silva, who tribute to these heroes of our time. is 33, lives in Brazil and works to fulfil Presented in the year of the EXPO,

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Lavazza’s participation in COP21 together with partner Novamont brought the Italian bio-economy in the spotlight

Global Coffee Forum COP21

Participation in COP21, the for the first time in over 20 years of partnership with Shamengo, the Two days of debate and discussion about awareness about coffee and the thanks to the contribution of Lavazza and International Conference on climate mediation by the United Nations non-governmental organisation the world of coffee and its virtues. The first manufacturing process, from the bean and saw HOST – 39th International to the cup, as well as encourage further Hospitality Exhibition and Oxfam as Special change of the United Nations, Global Coffee Forum, an international event that would involve all countries. that aims to research, support and dedicated to all “Coffee-Lovers”, was held on discussion on the topic of “coffee and Partners. was another key event that closed The result of the Conference develop solutions for a future that September 30 and October 1, 2015 at the health”. Lavazza’s year of sustainability. The was the negotiation of the “Paris is more and more environmentally Auditorium of the Congress Centre Stella The two days were attended by Conference, which was held in Paris agreement”, a global agreement to friendly. This served as an Polare of Rho-Fiera Milano. On October The project, promoted by the International international guests from the world of from November 30 to December 12, tackle climate change, which sets opportunity for Lavazza to confirm 1st, the work of the Global Coffee Forum Coffee Organization (ICO), the Ministry of culture, research and entrepreneurship. 2015, 23 years after the signing of the goal of limiting the increase its commitment that sees it involved coincided with the first “International Agriculture, Food and Forestry, the Italian Coffee Day” promoted by ICO. Coffee Committee, Expo 2015 and Fiera the framework agreement for the in global warming to less than 2 in an intense activity of research The goal of the event was to raise Milano Congressi, was made possible protection of the atmosphere, was degrees Celsius (°C) compared to and innovation aimed at developing attended by about 195 countries pre-industrial levels. sustainable solutions that are and over 50,000 people, including inspired by the philosophy of a delegates of Member States, Lavazza’s participation in COP21 circular economy. observers, NGOs, media and civil together with partner Novamont society representatives. brought the Italian bio-economy in the spotlight. The two Italian Its aim was to reach a binding and companies, in fact, presented the universal agreement on climate compostable capsule and their

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1.2 Growing economic engagement in sustainability

7 million euros of investments in sustainability

To provide precise answers to the growing expectations million in 2013 to 5.8 million euros in 2014, and up of the several markets in which Lavazza operates, as to 7 million in 2015, demonstrating the strategic well as potential ones, its economic engagement in importance that sustainability has for the Group5. sustainability in the period 2013-2015 rose from 4.1 7,0 million

5,8 million

5 Lavazza’s financial commitment to sustainability refers to expenditures 2015 incurred in the following areas: CSR, membership fee due to the Institute for Scientific Information on Coffee (ISIC), consumer health and safety, 4,1 milion responsible management of the supply chain, Fondazione Lavazza, free supplies, environmental costs, sustainable coffee-pod redesign, 2014 packaging, environmental sustainability projects and eco-design.

36 2013 37 Lavazza Sustainability Report 2015

1.3 Business values, value of the business Corporate governance

The synergy between the economic a grand appearance at Expo 2015 In a desire to share its system In Lavazza, the solidity of a family-run governance supports of the provisions of the Decree, the Model and/or the Code strength that has distinguished as Official Coffee of the Italian of corporate values with internal an industrial approach geared to creating value not only in the of Ethics, as well as any specific offences of which they have Lavazza in 120 years of business Pavilion with its product proving and external stakeholders, Lavazza short-term but in the long-term as well. This method allows knowledge. the executive team, to which the owners in recent years have and its system of corporate one of the most popular symbols of condensed them in the Group’s entrusted the definition of the corporate strategies to develop To ensure they do, the Company has established a communication values (passion for excellence, quality , and focusing Code of Ethics published on the and expand corporate business, to come up with an action-plan channel for employees to report to the Supervisory Board i.e. team spirit, a sense of belonging, on Lavazza’s distinguishing traits intranet and on the corporate in the medium and long-term so that the Company may continue a dedicated e-mail address ([email protected]) transparency, integrity6 and of excellence: website (www.lavazza.it/it/ to grow significantly as a global player in the industry. made known to all staff so that they may submit reports of possible foresightedness) allow the Group to mondo_lavazza/ethics.html). breaches and access to which is limited to the sole members of The corporate governance model adopted by the Parent company the SB. This method for reporting infractions is meant to ensure have a comprehensive approach to • Innovation, research and The Code of Ethics also forms an is traditional and includes a Board of Directors, chaired by Alberto the highest level of protection to reporting person(s) from Sustainability. sustainable growth, with integral part of the Code of Conduct Lavazza and a Board of Auditors, chaired by Gianluca Ferrero. retaliation or any other form of discrimination toward them, the presentation of the first for Employees as well as all The central body in the governance system is the Board of or detriment. The Supervisory Board acts to ensure that anyone 2015 was one of the most Sustainability Report, the launch contracts with suppliers. A Supplier Directors, which has all-encompassing powers to set the who submits a report is protected against any form of retaliation, important years in the history of the first compostable capsule Code of Conduct7 is also distributed strategic focus in order to ensure the Group’s proper and efficient discrimination or detriment, or any consequence arising from the of Lavazza. After 120 years, the and the first espresso to be drank that pinpoints the values that management. In addition to the Chairman, other members of report, assuring them the utmost secrecy as to their identity and the Board include Vice-Chairmen Giuseppe and Marco Lavazza, without prejudice to the obligations of law and the protection of Company has reached the status in space; should guide relations between Managing Director Antonio Baravalle and Directors Antonella the rights of Lavazza Group companies, or persons falsely accused of one of the most credible brands Lavazza and its suppliers. Lavazza, Francesca Lavazza, Manuela Lavazza, Pietro Boroli, and/or with ill intent. worldwide; thanks to a vision, • Culture, thanks to the partnership Gabriele Galateri di Genola, Robert Kunze-Concewitz and Antonio that dialectically unites tradition with the Guggenheim Museum of Marcegaglia. The Internal Audit function carries out activities specifically and innovation. The opening New York and the network aimed at analysing and assessing the appropriateness, The task of the Board of Auditors is to monitor and ensure consistency, reliability and efficient application of internal of a subsidiary in Australia and of Venetian civic museums; compliance with the law and corporate by-laws, respect for administrative procedures (in terms of simplification, the negotiations for the two the principles of sound administration and, in particular, optimisation and fairness of the processes), with a view acquisitions of Carte Noire, a leader • Sports: Lavazza is now a partner an appropriate internal auditing system. to an efficient business management. in the coffee market in France of the 4 Grand Slam tennis and Merrild, the leading brand in tournaments; A key role in corporate governance processes is covered by the Denmark and the Baltic States, have Supervisory Board, which has independent powers of initiative and control and whose task is to supervise enforcement and projected Lavazza into the elite • Communication, with an compliance with Lavazza’s Model of organisation8, management pantheon of global corporations. international campaign involving and control, as required by Legislative Decree No. 231/2001, the main countries of the world and as well as to update the Model and by Internal Audit, which The Company also strengthened the Lavazza Calendar dedicated answers directly to the Board of Directors and is responsible for its international visibility by making to Earth Defenders. implementing an effective auditing system within the Company. The recipients of the organisational model must inform the 6 In the period 2013-2015 only penalties for fiscal matters have occurred, arising from disputes with the Italian Finance Police, inspections carried by the Italian Revenue Agency Supervisory Board of any conduct that would construe a violation or voluntary compliance, and for administrative reasons. For the three years of analysis the total amount of these penalties is approximately 78,962 Euro. 7 Lavazza’s Code of Ethics and the Supplier Code of Conduct have been drawn up with reference to: • International Labour Standards (ILO) http://www.ilo.org/global/topics/lang--en/index.htm 8 Lavazza has developed a Model of organisation and control under Leg. Decree No. 231/01 last updated in 2014, in order to incorporate and regulate possible cases of briberies • UDHR (Universal Declaration of Human Rights) http://www.un.org/en/documents/udhr/index.shtml. between individuals. This model is accessible to all employees, as it is published on the corporate intranet. Over the three-year period, all suppliers have endorsed the Supplier Code of Conduct when agreeing to the terms & conditions of purchase and/or conclusion of contracts/ purchase orders and/or by registering on Lavazza’s online supplier platform.

38 39 Lavazza Sustainability Report 2015 Ch. 1`| Luigi Lavazza S.p.A. Tradition, evolution and revolution

Luigi Lavazza S.p.A. brands sold in Italy

Single Serve Roast&Ground A MODO MIO, ESPRESSO POINT, BLUE, IN BLACK, 120 ANNIVERSARIO RETAIL, BOURBON CLASSICO, FIRMA CARMENCITA, CLUB, CREMA & GUSTO CLASSICO, CREMA & GUSTO DOLCE, CREMA & GUSTO ESPRESSO, Food Service CREMA & GUSTO ESPRESSO FORTE, CREMA & GUSTO 120 ANNIVERSARIO FS, ESPR.CREMA E AROMA FS, FORTE, CREMA & GUSTO RICCO, DEK, DEK INTENSO, BLUE VERY B MAGNIFICO, BLUE VERY B SUPREMO, ESPRESSO FAMIGLIA, GRAN AROMA BAR, GRAN CREMA BLUE ESPR. ROTONDO, BLUE ESPR. DECAFFEINATO, ESPRESSO, PAULISTA, QUALITA’ ORO, QUALITA’ ORO BLUE ESPRESSO DOLCE, BLUE ESPR. INTENSO, ESPRESSO, QUALITA’ ROSSA, SUERTE, SUPERESPRESSO, BLUE ESPR. RICCO, BLUE ESP. TIERRA INTENSO, TIERRA e XLONG. BLUE ESPRESSO VIGOROSO, DEK BAR, TOP CLASS, GRAND’ESPRESSO, GR.ESPRESSO T.SCURA, OROPURO, GRAN RISERVA, PIENAROMA RA, SUPER CREMA, GOLD SELECTION, SUPER GUSTO, GRANDE RISTOR. ROSSO, TIERRA 100% ARABICA SELECTION, KAFA, NERO SUBLIME RA, TIERRA BRASILE 100% ARABICA, TIERRA BRASILE BLEND, TIERRA TANZANIA

40 41 Ch. 1`| Luigi Lavazza S.p.A. Tradition, evolution and revolution

Partnership network +4,2% Energy, packaging and waste reduction in 2015 compared to the total industrial production costs of 2014

t O r n o c p , n u Sustainability as an opportunity to create value s : e r m p lt a O G o l n n u u S a e g F li p g r d a O e e n tr S n a s U h r u , e G A n , e im n p o N O d e e h n V l c e e w For Lavazza, sustainability also the opportunity to plan further This resulted in lower b n p n e e Y m r O t o i F f i l a r W o n k G C means making a return on investments with a sense of consumptions of energy and n iv a i li c a T M investment repeatable in the long confidence. This represents a packaging materials and less waste It e h a u t t s 2 ro e 7 s V C u term: the levers that guarantee cultural leap, a new and broader and scraps, with a cost saving u e m t n a n a F r e r A i s i I g v a n u the profit margin can be repeated way of viewing sustainability as of 4.2% in 2015 compared to the J R a e n a o l

e consistently over time must also an opportunity to create value total industrial costs of production

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n c r o o p n i f o e h particularly in industrial assets, the processing of raw materials be reinvested in the continuous a n p i n à r a s t m o a f t o - h a i o r z s r p i a s t h r t t n i r r o e i n brand equity, human capital and to the finished product, is called improvement of the Company’s d o e o e e l c d l e n  s v l i v o A i s t n d d e P P S I n l U I product and process innovation, upon to invest part of the margin it f manufacturing processes, leading a o o o a o A i p y v t o e m r r d a f o r t i t e e need to generate resources generates in Sustainability. to a gradual reduction of their h t n o s s d y e t s F e e e u C in s w F h u h ib , Agr o t d to finance the investments environmental impact. m l e i or l tf S e d pla ico f n r cn  i e te o o oli n P no C themselves. All of this generates a Between 2014 and 2015, Lavazza ori d f T n n o o a o e i p o sustainable context in which both has continued to invest heavily in

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r c u e Sl E e ow t h the Company and stakeholders improving the efficiency of t t Fo on o od an m r r Mil va p o benefit from the results, creating its manufacturing processes. IC ity of No P Univers F e h C h e t o otec e  Arg o e r ee C t & on itu o F C n st F li tio In o m R ma ce r at ai UT for n s e nfo Z c In cie re nti e S lia u st A of Scie Lif ta s llia Institute al t I t nce tion en a terna em i In nag n Ma a ol of bi European Scho lit ch y ar at se th re e o nd rig n a ins atio For innov

42 43 Lavazza Sustainability Report 2015 Ch. 1`| Luigi Lavazza S.p.A. Tradition, evolution and revolution

Lavazza Group - financial-economic trend k€ 2015 2014 2013

Direct economic value 2.323.046 1.405.637 1.361.904 During 2015, the Group continued to implement its strategic plan This contraction is due chiefly to the increase in the cost of sales to achieve organic growth that involves focusing on specific markets (in particular the cost of green coffee, owing also to the Company’s a) Revenues 2.323.046 1.405.637 1.361.904 and geographical areas, while at the same boosting inorganic growth hedging operations) and the higher spending on advertising and through the acquisition of Merrild (market leader in Denmark communication. Distributed economic value 1.477.347 1.229.406 1.246.928 and the Baltic countries) for a price of Euro 51.7 million. b) Operating expenses 1.193.834 980.152 960.836 The operating profit for the year amounted to € 802.1 million, up by Revenues amount to Euro 1,472.6 million, up by 9.6% compared to Euro 675.4 million compared to Euro 126.7 million in the previous year. c) Compensation & benefits 168.745 153.826 145.763 2014. The increase in revenue is largely due to higher sales This sizeable increase is mainly due to capital gains (Euro 822.8 million of packaged coffee (+10%) and coffee capsules (+9%). before taxes) on the sale of all the shares of Green Mountain d) Payments to lenders 25.862 14.245 66.106 The share of revenues in foreign markets increased from 49.6% in Inc. owned by Luigi Lavazza S.p.A. e) Payments to Public administration 77.654 2.566 1.621 2014 to 52.8% in 2015, thanks also to the added business of Merrild and the establishment of a new distribution hub in Australia, Important investments were made during 2015 for a total Euro 50.3 f) Investments in the community 3.064 1.621 1.185 furthering the Group’s process of gradual internationalisation. million, mainly in industrial plants located throughout Italy, in order to g) Other expenses 8.188 8.493 6.674 The EBIT dropped from € 156.4 million in 2014 to 71.7 million in 2015, upgrade them and make them more efficient and safer. This reaffirms and the percentage impact of revenues also went down from our key presence on the territory to its benefit and that Retained economic value 845.699 176.231 114.976 11.6% in 2014 to 4.8% in 2015. of the community. The table shows the economic value generated by the business and distributed to the main stakeholders, and the amount retained within the business. M€ 2015 Margins2015 2014Incidenze Margins 2013102013 IncidenzeMargins % % % % The Group retains a solid financial balance with a positive net financial The value distributed to lenders refers to dividends paid to Sales revenues 1.472,6 100,0% 1.344,1 100,0% 1.340,1 100,0% position at the end of 2015 of Euro 1,351.0 million (up by Euro 1,010.5 shareholders, as the Group funds its business almost entirely compared to the previous year) mainly due to the aforementioned with own means. EBITDA 146,7 9,9% 225,8 16,8% 223,5 16,7% sale of the shares of Keurig Green Mountain Inc. EBIT 71,7 4,8% 156,4 11,6% 123,2 9,2% The value distributed to Public administration refers mainly In the three-year period, the Lavazza Group was able to generate to the payment of income taxes. Profit before taxes 869,2 59,0% 195,2 14,5% 184,4 13,8% growing economic value. This was possible due to the increasing Operating profit 802,1 54,4% 126,7 9,4% 109,3 8,2% internationalisation and innovation capabilities of the Group, The retained economic value in the three years represents the compared to a stagnating domestic market. difference between the generated economic value and the value Net working capital 375,4 274,4 270,0 The direct economic value generated differs from sales revenues distributed. The significant increase in this value in 2015 compared as it includes dividends received and non-recurring income and to 2014 is determined by the positive effect of the aforementioned Net fixed assets 381,5 702,1 617,6 expenses. More specifically, if we look at 2015, the reason is ascribable capital gains on the sale of shares of Keurig Green Mountain Inc. Total investments 756,9 976,5 887.6 to the aforementioned capital gains on the sale of the shares of Keurig Green Mountain Inc., while for 2014, to extraordinary income because Net financial position (1.351,0) (340,5) (387,2) of the changes in the method for quantifying inventories (from LIFO to weighted average cost). Shareholders’ equity 2.107,9 1.317,0 1.274,8

Total sources 756,9 976,5 887,6 The economic value distributed to stakeholders displayed a sharp increase in the three-year period. More specifically, operating Investments 102,0 80,2 44,9 expenses include the cost of raw coffee, which is often liable Workforce 2.598 2.526 3.289 to significant fluctuations in the purchase price. In order to mitigate the effects of such fluctuations, the Lavazza Group relies on hedging ROS 5,0% 11,8% 9,3% operations aimed at stabilising its financial performance for the benefit of the entire chain of stakeholders. The increase in operating ROI 10,4% 26,8% 20,8% costs in 2015 compared to 2014 is largely due to the rise in the ROE 38,1% 9,6% 8,6% cost of raw coffee, along with the associated hedges and increased investments in advertising and communication.

44 45 Lavazza Sustainability Report 2015 Ch. 2 | Sustainability projects in producing countries

2

Sustainability projects in producing countries Fondazione Lavazza

46 47 Lavazza Sustainability Report 2015 Ch. 2 | Sustainability projects in producing countries

2.1 Fondazione Giuseppe e Pericle Lavazza

Fondazione Giuseppe e Pericle Lavazza Onlus was first established in 2004 as a tribute to the second generation of the Lavazza family.

The purpose of the Foundation members of the Lavazza family Foundation’s activities and is to promote and help develop and Professors Giovanni Zanetti, its projects is available in the solidarity projects in the field of President of the Foundation, dedicated section of the healthcare and social welfare, and Arnaldo Bagnasco and Giacomo Lavazza website. for the protection of nature and the Büchi. The Secretary of the environment, in Italy and abroad. Foundation is Mario Cerutti, Chief Fondazione Lavazza is formed Sustainability Officer of Lavazza. by five members, including two A detailed description of the

48 49 Lavazza Sustainability Report 2015

1. Promote gender balance in family relations and in the community

Project overview 2. 3. 2.2 Invest in young resources Food security, i.e. the through programmes designed promotion of activities aimed to reverse the tendency to at aiding access to food or the Projects are primarily designed to producers in setting up and the appropriation of the necessary leave the lands where coffee diversification of production to improve productivity and running their organisations inputs to farming, access to credit is produced, supporting them develop the entrepreneurial skills as cooperative associations or or Group marketing. in developing their business of producers. To achieve these companies. These, in fact, facilitate In addition to these two main in the coffee industry in their lands of origin and favouring the aims, the projects focus on two key access to wider markets, as well as aspects, projects are designed to generational change tools: spreading good agricultural a host of services that are useful achieve other objectives such as: practices and providing support to improving production, such as 4. 5. Reforestation The spread of farming methods geared at minimising environmental impacts caused by the production of coffee

The projects focus on two key tools: 1. spreading good agricultural practices 6. 2. providing support to producers in setting up and running their organisations Local implementation finally, is a hallmark of the Foundation’s projects and guarantees an authentic ownership of the projects by producer communities

50 51 Lavazza Sustainability Report 2015 Ch. 2 | Sustainability projects in producing countries 30.000 direct beneficiaries

2.3 The importance of teamwork 19 projects The Foundation’s several years of Lavazza has participated in which calls for the involvement of experience have shown that relying International Coffee Partners, international organisations, NGOs, on public-private partnerships a project involving 7 major coffee national institutions and private in a pre-competitive perspective roasters in the world that pursue actors. This approach fosters a makes it possible to boost the Sustainability projects in coffee- leverage effect that multiplies the 11 countries results of a Sustainability project. producing countries. project’s benefits: it is not only Contributing to the economic, social resources that are pooled, but also and environmental sustainability of The direct involvement and their skills and experience that coffee production brings benefits to contribution of producers is crucial boost the impact and amplify the the whole industry and generates a to International Coffee Partners. benefits gained. leverage effect that leads to scalable It is necessary, in fact, that they and impactful results. themselves be actively involved in improving their living conditions. It is precisely on the basis of All ICP projects follow a PPP logic this approach that since 2001, (Public Private Partnership), 150.000 indirect beneficiaries

857 producer organisations created and/or supported Starting in 2014, International Coffee Partners has been implementing its All ICP projects follow a PPP logic five-year strategy for 2014-2018, (Public Private Partnership), which calls whose goal is to strengthen regional for the involvement of international projects. The previous plan reaped 29.870 organisations, NGOs, national institutions the following results: hectares of coffee and private actors.

52 53 Lavazza Sustainability Report 2015 Ch. 2 | Sustainability projects in producing countries

The challenges that coffee production is facing today have benefited from the technical and scientific are many, not least those posed by climate change, support necessary to increase the resilience of their which have a considerable impact on the production production systems to climate change. In order to of premium quality coffee. It is for this reason that make such a vast know-how available to a wider since 2010, Lavazza has been a founding member audience, Coffee & Climate has published an online of Coffee & Climate, a project that aims to provide manual. coffee producers the technical instruments needed to respond effectively to climate change. The second phase in 2015-2018 plans to increase the number of projects to involve up to 70,000 producers. The first phase of the project was completed in 2015 and has seen the implementation of 4 In addition to the work done within the framework COP 21 pilot projects in , and Asia of International Coffee Partners, Fondazione Lavazza Coffee & Climate was officially presented involving approximately 4,000 producers. The latter carries out projects together with partners such as: in December 2015 at the United Nations Conference on Climate change held in Paris.

The project partners, representing approximately 50% of the world coffee business, agreed to promote a sustainable future for coffee that can respond Hanns R. Neumann Stiftung IDH effectively to climate change.

Oxfam Carcafé/Volcafé

Slow Food Save the Children

54 55 Lavazza Sustainability Report 2015 Ch. 2 | Sustainability projects in producing countries

2.4 Performance in 2015

Donations to the Foundation: Countries Brazil, Tanzania, India, Viet Nam, € 2.500.000 , Uganda, 2015 Trifinio (, € 2.000.000 Honduras, 2014 El Salvador), € 1.200.000 Peru, Haiti, 2013 Dominican Republic, , Colombia

Over 14 19 60.000 countries projects beneficiaries

56 57 Lavazza Sustainability Report 2015 Ch. 2 | Sustainability projects in producing countries

2013-2015 projects India (2)

Trifinio (2) Guatemala Honduras El Salvador Viet Nam (2)

Indonesia (1) Dominican Republic and Haiti (1)

Ethiopia (1)

Colombia (1)

Peru (1) Brazil (3) Tanzania (2) Uganda (2)

58 59 Lavazza Sustainability Report 2015 Ch. 2 | Sustainability projects in producing countries

2.5 Focus on some projects of Fondazione Lavazza Colombia Where quality coffee contributes to the peace process

Haiti and the Dominican Republic Coffee on the border with Oxfam

Uganda Starting with 2015, the Foundation has been furthering Reaching one million farmers a project in Colombia in the town of Mesetas in the Meta Department.

This land is of particular interest for two reasons: The quality of the coffee and the geopolitical importance of the area. In fact, it has been a hotbed of guerrilla warfare The first year of the project helped create mechanisms in recent decades and since 2013, as part of the national to foster dialogue and cooperation between project peace process, is part of a programme for the restitution managers, producers and the State in the Dominican of abandoned land plots to peasant families deprived of Republic and Haiti. The aim was to come up with a plan their land during the war. to renew and strengthen the coffee industry by working on Since 2015, the Foundation has been active in Uganda The project fits into the region’s economic recovery the modernisation of plantations, introducing native coffee not only as part of the International Coffee Partners programme that aims at bringing coffee farmers back varieties that are -resistant and with a top-quality cup project, but also by supporting the Sustainable Coffee to the territory. profile. At the same time, research was conducted on the Program of IDH. marketing of roasted coffee, a strategy that will help add The project also aims to improve and enhance the quality value to new production in the near future. Uganda is the second largest producer of African coffee of coffee, maintaining it on a consistent level after Ethiopia in terms of volumes. The coffee is mostly by applying sustainable farming methods. Another goal During the first year, 6 million plants were totally produced produced by small farmers, which amount to about is to encourage the exchange of best practices through and were distributed to roughly 2,000 coffee producers. 1.3 million. About 70% of the exports concern the the provision of training to existing producer associations. This enabled them to gradually upscale their businesses Robusta variety. (on average every producer is renovating approximately 30% of the entire property), with positive effects in terms In Uganda, Fondazione Lavazza works alongside IDH, of resistance to coffee rust. which has developed a national programme aimed at increasing sustainable production of coffee in Uganda through the coordination and alignment between the public and private sectors and the development of field operations that have an impact on the sustainable production of coffee.

The goal of IDH with the Sustainable Coffee Program is to offer strategic support to the development of the Ugandan coffee industry in terms both of its production and of higher export volumes, helping communities to tackle challenges such as income, food security, climate change, gender equality and the enhancement of young resources.

60 61 Lavazza Sustainability Report 2015 Ch. 2 | Sustainability projects in producing countries

The Terra Madre Giovani commitment

“Innovation, quality and sustainability. The future of coffee in the hands of young producers.

• Enabling young people to come back to agriculture and land, through education, Earth Defenders technology and access to finance The future of coffee in the hands • Promote public and private support in of young producers order for coffee to increasingly become an instrument for territorial development, involving all family members

• Let coffee production become an In October 2015, as part of Terra Madre Giovani - opportunity for adaptation to and We feed the planet, an event organised by Slow mitigation of existing effects of climate change on men and nature” Food, Lavazza held a workshop that involved young producers of from 25 countries.

The event took place within the Sustainability Hub Lavazza at Cascina Cuccagna in Milan.

The interaction and communication fostered by the workshop’s format have allowed players to identify common challenges that producers around the world are facing to safeguard the future of coffee production. The exchange and dialogue has helped participants define shared priorities based on the cardinal principles of innovation, quality and sustainability. In October 2015, as part of Terra Madre Giovani, Lavazza held a workshop that involved young producers of coffees from 25 countries

62 63 Lavazza Sustainability Report 2015 Ch. 3 | A passion for excellence

3

A passion for excellence

Day after day, we pursue excellence with passion, has consolidated its leadership in Italy and on commitment, determination and dedication. international markets. Customers and consumers, Also thanks to the contribution of our stakeholders, who are increasingly recognising the value of with whom we have built relationships based on trust the brand, synonymous with cutting-edge coffee and our shared values. technology and consistently high quality and food Thanks to the attention to their needs, Lavazza safety standards, appreciate this effort.

64 65 Lavazza Sustainability Report 2015 Ch. 3 | A passion for excellence

3.1 Lavazza’s approach to quality control and management of the manufacturing process

At Lavazza, we are well aware that Manufacturing Practices and • Implementing a new Auditing the quality of our organisational the pursuit of uniform procedures Protocol to monitor operations and manufacturing processes is to handle product claims. both at supplier premises and essential to ensure excellence in internal manufacturing plants/ coffee production on a day-to-day In 2015, Lavazza also worked on logistics centres by defining basis. the achievement and consolidation appropriate checklists, a rating of additional elements to system, a unified reporting In 2012, to enhance the impact of guarantee the quality and safety of method and a formal method our activities aimed at spreading the product9, namely by: for the submission of requests culture of quality and continuous for corrective actions (for further improvement of products and • Issuing the Lavazza Supplier details, please see the next processes to guarantee the Standard Requirements, which paragraph “Monitoring and Audits safety of consumers, we initiated provides a detailed description on suppliers”); a process of organisational of the standards Lavazza expects review. This process has included its suppliers to uphold in order • Introducing changes to the Food important steps such as: to guarantee supplies of food Products Development Practices products and materials, and items and Appliance Development. • The establishment in 2013 that come into contact with food of the Corporate Quality (both packaging and advertising Management; material). By endorsing the • Changes in 2014 to the Quality Requirements, suppliers agree to and Food Security Policy; formally guarantee and ensure full • Release the new edition of Good compliance there to;

9 Between 2013-2015, no cases of non-compliance with Laws / Regulations and voluntary codes concerning health and safety of products were identified

66 67 Lavazza Sustainability Report 2015 Ch. 3 | A passion for excellence

100% Quality controls on 100% of green coffee batches

3.1.1 Quality of the raw material

Also during 2015, Lavazza launched launched in 2015 which lays out • FSSC22000 at the site of Sri City; Lavazza coffee owes its excellence to the purchase of coffee by far In parallel with the purchasing a specific project for the centralised the new policy for obtaining and • HACCP (according to Codex) at to the Company’s complex and surpasses the requirements process, Lavazza conducts management and monitoring managing product and system Gattinara and Verres; sophisticated Quality system, established by the applicable laws research, testing and of data from the Group’s several certifications which, by applying • UTZ at Gattinara; which starts with a careful and standards. The key process experimenting with new potential production sites, in order to have a a multi-plant logic across the • Alliance at Sri City; selection of the raw material to the steps include tests on the field and suppliers in order to ensure tool that would help monitor in real spectrum, it will understand how • Confida at Settimo; coffee’s final tasting by Lavazza procedures for the approval and a stable cup profile. time the overall level of compliance to best respond to the needs of • KOSHER at Sri City. experts. validation on all batches of coffee of the products with the specific markets and customers. purchased. requirements and identify trends Significant results have been Coffee purchasing system that can then be linked to inputs and achieved in this area, further The definition of a well-structured When purchasing coffee, Lavazza claims from the market. expanding the portfolio of and organised coffee10 purchasing relies on consolidated exporters for certifications available at system helps to ensure that the most of the volumes, with which The “Quality & Food Safety production sites. More specifically, quality of the coffee is better has a long-standing partnerships Certification Framework” was also the new certifications include: and more consistent creating that guarantee reliable quality and “excellence”. Lavazza’s approach a low country-specific risk.

In 2015 significant results have been achieved, further expanding the portfolio of certifications available 10 The Company purchases green coffee from producing countries and transports it by sea. The product is then kept in stock in a number of Italian warehouses and transported to the manufacturing plants for production. The other raw materials come from different suppliers, which are largely Italian. The finished product is manufactured in three at production sites factories located in Settimo Torinese, Gattinara and Verres. Other products sold by Lavazza come from a variety of sources, with a significant component of the machines produced in . Distribution is organised with 3 major logistics centres in Italy and a central warehouse for each subsidiary. All transfers between these warehouses are performed with saturated media and relying on intermodal transport whenever possible. Secondary distribution is entrusted to specialised logistics operators.

68 69 Lavazza Sustainability Report 2015 Ch. 3 | A passion for excellence

Coffee varieties Processing methods

Coffea Arabica Robusta Once harvested, the coffee arrives at the DRY SEMI-WASHED WET processing plant where it is prepared to be

Coffea Arabica is the original species that with its several varieties Native to the Congo basin, the Robusta species is mainly grown in sold on the market. 1 1 1 (Bourbon, Catuai, Caturra, Catimorra, Mundonovo, etc.) currently Africa, Asia, Indonesia and northern Brazil both at sea level and at accounts for roughly 58% of the entire global production. Native altitudes of 600 metres. The processing methods include: to Ethiopia, it has fairly flat and elongated-shaped beans of blue- The annual production per plant is slightly higher than the Arabica green colour. It thrives in soils rich in minerals, including those coffee and resists hot and humid weather conditions quite well, Dry of volcanic origin located from 600 up to more than 2,000 metres with peaks that exceed 30°C. Semi-Washed 2 above sea level, where the climate is rather mild. Once roasted, Robusta coffee looks full-bodied, with a chocolatey Wet 2 2 It is grown mainly in South and Central America, but also taste and a lingering aftertaste. in some African and Asian countries that produce a variety Robusta beans are round-shaped, gray-green in colour and have

of excellent quality. an average content of 2.7%. 3 In general, once roasted, Arabica coffee is sweet, fairly full-bodied and with a rich and a slightly sour taste. 3 3 Average caffeine content in green coffee is about 1.4%.

4

4 4

5

1. Ciliegia 1. Ciliegia 1. Ciliegia 2. Essiccamento al sole 2. Spolpatura meccanizzata 2. Spolpatura 3. Decorticazione 3. Essiccamento 3. Fermentazione 4. Caffè senza pergamino 4. Caffè in pergamino ( acqua per 12-36 h) 4. Essiccamento 5. Caffè in pergamino

70 Harvesting methods 1. 2. Stripping: non perfectly uniform crop Picking Stripping

Yields a perfectly uniform and selected crop. Harvesters pick only Method used in some countries where the plantations are very the ripe cherries, detaching them one by one. With the picking extensive and labour has a high cost. Harvesters collect all the method, harvesters must return on the same plant several times cherries once the average ripening time is complete. It is a faster until all the cherries have ripened. method, but the downside is that unripe and already fermented grains are bunched with ripe grains in the containers, at the expense of the coffee’s overall quality.

Picking: perfectly uniform and selected crop

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Producing countries The top 4 producers in the world are: Brazil Viet Nam Colombia Indonesia

Product bags (60Kg): Product bags (60Kg): Product bags (60Kg): Product bags (60Kg): 51.9 million crops 2015/2016 30.5 million crops 2015/2016 13 million crops 2015/2016 11 million crops 2015/2016

Productivity/ha (60 Kg bags): Productivity/ha (60 Kg bags): Productivity/ha (60 Kg bags): Productivity/ha (60 Kg bags): Arabica: 22 Arabica: 24 Arabica: 14 Robusta: 8 Robusta: 33 Robusta: 43

12% 32% India Thailandia 11% Laos Malaysia Mexico Vietnam Guatemala 45% Indonesia Honduras c i New Guinea El Salvador f C i

e c Nicaragua n t a Cuba P ra l / Haiti A a m i eri s Panama ca A

a ic a fr ic A Brazil er m Colombia th A Peru Sou Ecuador Guinea Camerun Tanzania Venezuela Liberia C.A.R. Ivory Coast Congo Uganda Ghana Angola Ethiopia Togo Zimbawe Nigeria Malawi In bold: countries where Lavazza purchases coffee Benin Madagascar

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Coffee quality control

Lavazza standards

Lavazza standards are meant to ensure consistent and uniform Lavazza checks the quality of all quality that lives up to the high quality benchmarks expected by the coffee in production, applying the Company and establish a relationship of continuity with the standard procedures that meet suppliers that is based on respect. a set of strict quality control and testing principles, establishing Each standard defines the acceptable limits for the following the frequency, method for quality parameters: control and analytical parameters to be applied to green coffee • Number of product flaws • Sifter • Cup profile • Moisture samples. The Company collects • Key production area (if possible). the coffee grains from customs warehouses and checks the The standards have been defined for: following: shape, size, colour, the presence of any foreign bodies, Brazil, Viet Nam, Indonesia, Colombia, Honduras, Peru, their chemical and physical Guatemala, Mexico, Costa Rica properties and the presence of any chemical and biological contaminants, the cup profile. As part of its quality control system, in 2015 Lavazza conducted 7,113 analyses on raw coffee.

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Quality control system

Raw-material quality control is a foundation for Lavazza On arrival Quality Control System in guaranteeing the product’s excellence. The quality On arrival in Italy, the coffee is stored in customs is monitored at every stage of production: when first warehouses that meet Lavazza specifications and sourced, on arrival in Italy and in the manufacturing plant. undergoes routine audits, while physical, organoleptic Process stage Control type and hygienic analyses are conducted for each batch of At the source purchased coffee. Green Coffee Weighing At the source, staff checks the product’s moisture Destoning content, applying parameters that are by far stricter In the manufacturing plants, staff again checks than those established by law (Presidential Decree the coffee to ensure its compliance with Lavazza Removal of foreign objects No. 470/1973) and that are outlined in the “Lavazza standards and further cleans the coffee to remove any Visual inspection standards”. foreign objects possibly still contained in it. Roasting Time and temperature Water quantity and quality control for quenching Final colour of roasted coffee

Grinding Grain size Density Color mixture

Finished Product Packaging Weight check Oxygen control for cans, paper coffee pods, coffee beans Search for foreign bodies with X-ray scanner Physical, microbiological and chemical controls Panel of expert tasters

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3.1.2 Quality of the manufacturing process

Quality is one of the guiding expertise in managing these into direct contact with coffee, principles, and this is expressed types of roasting machines, using thereby ensuring total food safety at the highest level in our specific roasting cycles to bring out for all our consumers. manufacturing processes. One of the characteristic notes of each our key manufacturing processes blend. Finally, coffee is vacuum-packed or is roasting, for which we have packaged in modified atmosphere, adopted all the best technologies At every stage of the thus ensuring that the valuable known and available on the market manufacturing process, our organoleptic properties of the that combine both convection and experts check a wide range of blend are maintained until conduction heating. product and process parameters, consumption. including two of the most These different stages of significant: the colour of the blend processing allow us to develop and the particle size of the coffee organoleptic and aromatic profiles powder. that are unique to each product type and meet the specific needs of We also submit packaging our target markets. Over the years, materials to strict tests, with a Lavazza has acquired unrivalled special focus on those which come

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11 Current certifications 3.1.3 Certifications Planned for 2016 Planned for 2017 Planned for 2018-2020 Process/Systems Certifications Certifications of a religious nature

ISO:9001:2008 Halal Confida Quality Management System Muslim Religious Certification Italian Vending Products Standard

Settimo Torinese Settimo Torinese Settimo Torinese Verrès Verrès Verrès Gattinara Gattinara Gattinara Pozzilli Pozzilli Pozzilli : non applicabile

FSSC 22000 Kosher - Orthodox Union UTZ Good Inside Food Safety Management System Jewish Religious Certification Product Sustainability Standard

Settimo Torinese Settimo Torinese Settimo Torinese Verrès Verrès Verrès Gattinara Gattinara Gattinara Pozzilli Pozzilli Pozzilli: a oggi non richiesto

Product Certifications

HACCP (Ref. Codex Alimentarius) NOP HACCP System - International Food Product Sustainability Standard US Federal Regulatory Framework Standards Governing Organic Foods BIO Settimo Torinese European Regulatory Framework Governing Settimo Torinese Verrès Organic Foods Verrès Gattinara Gattinara Pozzilli: a oggi non richiesto Pozzilli Settimo Torinese Verrès Gattinara 11 Please note that the factory in Verrès was operational until July 2016. Pozzilli

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75% kilometres travelled by intermodal transport, compared to 61% in 2013

Distribution & Logistics

Lavazza’s excellence and quality opting for intermodal transport co-packers. This meant that 3,500 are also reflected in its logistics instead. This aim is also pursued pallets that previously would travel management system. by establishing solid partnerships back and forth to repackage the with our suppliers, for the purposes products, were instead entirely Lavazza coffee is distributed of streamlining transport routes repackaged in the distribution throughout Italy by 3 central and reducing mileage. More hubs. warehouses: the warehouse in specifically, when it comes to Settimo Torinese, from where the mileage travelled towards Lavazza systematically collects and the coffee is also distributed to countries other than Italy, the ratio monitors its logistics performance subsidiaries (France, Great Britain, of kilometres travelled by road through a defined set of KPIs, , Austria, Sweden, USA, compared to intermodal transport which are meant to ensure Australia), a distribution hub has gone from 39% (road) - 61% completeness and accuracy in the in Novara and a central hub in (intermodal) in 2013 to a ratio of preparation of shipping orders on a Milan, from where the coffee is 25%-75% in 2015. customer-service level. distributed on the Italian market. The manufacturing plant in If we take a closer look at individual Gattinara, instead, does not have countries, transport is almost its own warehouse. The goods from entirely intermodal for coffee these factories are transported to distributed to Sweden (99%), Great the hubs in Novara and Milan. Britain (96%) and Germany (96%).

Secondary distribution is entrusted In 2015, as part of the process of to specialised logistics operators. steadily improving the impact of distribution and logistics, As part of its logistics management a number of repackaging system, Lavazza has aimed at processes for finished food progressively reducing the number products were incorporated in the of kilometres travelled by road (at warehouses of Novara and Milan, any rate, all transport by road takes processes that were previously place on fully loaded trucks) and carried out at the premises of

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Customer Service

Lavazza and customers about food products in all countries Moreover, Lavazza’s Customer Service has started has always valued are handled according to a uniform system from to handle claims regarding Food Service and the high quality of its products start to finish (from when the claim is first filed to its Vending Machine products — Foreign distributors. and ensure claims from consumers are settlement). This standardised system will concern This extension allows us to instantly monitor the processed as quickly and efficiently as possible. the methods/tools for collecting data used both production and marketing of a Lavazza product in in terms of feedback (including feedback for Italy and abroad, thus ensuring an overall higher In recent years, there have been changes in the approach customer claims about sustainability issues) level of quality. of handling claims. Since 2013, in fact, the Company has and the set of corrective actions taken to solve The total number of product claims handled endeavoured to standardise and classify product flaws between a claim. over the three-year period are summarised the several corporate divisions involved (Lavazza Customer Service, Contact information handled worldwide will in the table (2,310). The growing trend is due Quality Management, Lab, Manufacturing plants), developing a also be uploaded and available on a central to the increased focus and new procedures unique and common language. The result was the definition and database, which will allow a comprehensive introduced to handle claims. implementation of a new procedure, starting in April 2014. analysis of the data by Lavazza’s Customer Service, in order to ensure the steady In line with the objectives presented in the Sustainability Report improvement of our quality of service. for 2014, in 2015 Lavazza also sought to standardise the system Once it is received and has been properly The goal is to ensure used to handle product claims in every country where it catalogued a claim, Lavazza Customer conducts business and to centralise data collection. Service proceeds to conduct audits in that all claims cooperation with Quality Management submitted The goal, which the Company aims to achieve and will provide feedback to the end by 2017, is to ensure that all claims consumers. by consumers and submitted by consumers The possible product flaws are customers about categorised in a number of food products business-specific forms (Retail, Year Totale Claims Home Closed System, Food Service, in all countries 2013 429 AFH) or that are shared by the are handled several business lines (reports 2014 819 of food products that are not according to a 2015 1062 coffee and regarding the type of uniform packaging). Total 2310 system

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Consumer care 0 5 10 Overall rating of the service

Customer Service, the corporate function that listens and responds to consumers, reported more than Customer satisfaction surveys in 2015 450,000 contacts in 2015 alone. Lavazza also relies on its Customer Service to process all requests In 2015, Lavazza continued reasons for abandoning telephone interviews and Web received from consumers asking conducting market research to the system. support (email assisted), to withdraw their consent to the evaluate the satisfaction of its The research showed that both within 48 hours after processing of their personal data customers and consumers, identify consumer satisfaction over the contacting our Customer service. (2013: 770; 2014: 383; 2015: 1,754). their needs and take any corrective last two machines in the range A total of 1197 interviews were It is with this aim in mind that in action necessary. (Espria and Minù) is greater than conducted (898 phone interviews 2015, the Company introduced the satisfaction over older coffee and 299 digital form-based a central monitoring system In particular, the Company machines: on a scale of 1-10, the interviews submitted online) for privacy issues in the several updated its research aimed at score of new machines was 8.50, on a sample consisting of current countries where Lavazza conducts 450.000 monitoring certain key aspects compared to a score of 8.28 for customers of Lavazza (75%) business. In cooperation with Customer Service reported in the relationship between older machines. and potential customers (25%). Legal Affairs, Lavazza conducted a more than 450,000 contacts consumers and the A Modo Mio The Company also conducted an in 2015 alone comprehensive analysis of the laws system, aspects that are crucial analysis to evaluate its customer The research showed that: on privacy in these countries and in following up the development service (call center), in order how they are implemented by the of the system on the market to quantify the level of user • The main reasons for contacting Company in each country. (machines and coffee pods). satisfaction. The analysis focused Customer service was to request on assessing both the overall technical assistance (28%) and In 2015, Lavazza conducted satisfaction over individual aspects information (27%); 600 interviews online with key with reference to the reasons that coffee-machine owners divided motivated customers to contact • The overall rating of the service by geographical areas and their the call centre, and whether received is very high: average senior status rank. Lavazza sent the problem was solved and the scores on a scale 1-10 is 9.01; them a questionnaire drawn outcome of the request. up in partnership with Ipsos • Customer service’s ability to and designed to measure the Quantitative research conducted resolve the problem/reason total satisfaction with the coffee by GNResearch on behalf of for call during the call was 74%, machine, use of the A Modo Mio Lavazza was based on information in line with the benchmark (76%). system (consumption of coffee from the hotlines and online pods generated), the trend and platforms available to users, i.e.

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Product and packaging quality

With the aim of continuing Research on sustainability to pursue product excellence and supervising all areas of consumer tastes and organoleptic preferences, Lavazza conducts “blind” sensory analysis to find out if customers enjoy the new coffee In 2015, Lavazza began conducting Starting from December 2015, almost all of the population blends offered on the market and research aimed at measuring moreover, as part of the research (over 70%). However, when to align them with consumer consumer perception when it on communication and brand people are asked about the tastes, if necessary. As part of this comes to sustainability. equity, Lavazza introduced a individual structural elements research, 300 to 1200 consumers system for the routine assessment of sustainability (such as are involved on average in the test. Lavazza focused on research in the of consumer perception about recycling, reuse, bio-degradability, compostable capsule market. The environmental awareness and the composability, etc.), their level With the aim of assessing the Company conducted a conjoint12 Lavazza brand’s environmental of awareness and knowledge popularity of the pack in terms analysis to test the potential of a sustainability. The first drops significantly. In the coffee of handiness, aesthetic appeal “compostable” product (acceptance, observations by end 2015 showed industry, the concept is geared in and information conveyed by the intention to buy) with current users that 31% of consumers believe particular to sustainable farming product, Lavazza performs pack tests as the target and with potential Lavazza’s brand is eco-friendly and harvesting and to packaging among consumers who express their customers to measure their interest and environmentally sustainable. (its reduction and disposal), with level of satisfaction over the aspects in the new product concept (ability The percentage values show a paper and glass proving the best- described above and whether they to steer their choice in the purchase significant competitive edge for performing materials. Research are agreeable to them. of a coffee machine that uses Lavazza over its competitors. also showed that Lavazza, compostable capsules). The results especially in Germany, has a show that the introduction of the Finally, in 2015, Lavazza sought good perception as a sustainable compostable capsule in the current to assess the level of knowledge company. range A Modo Mio accounts for on the concept of environmental 26% of the purchasing decisions of sustainability and its relevance current users, while for potential among populations in the customers, the added option of geographical area of France and compostable capsules to the product Germany. The research showed range accounts for an additional that in both countries the concept share of purchasing decisions of of sustainability in the broader 27.5%. sense of the term is known to

12 This is a multivariate statistical method to determine the best combination of different attributes related to a product or service in a given competitive context. This analysis allows us to extrapolate the relative importance attributed by the consumer to each of the attributes related to the product/service, allowing us to identify the ideal format for the product range offered on the market. 300-1200 Consumers involved on average in the test

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Total purchasing expenses 3.2 Responsible supply chain management by geographic area (%) 2015

Key importance of the Italian Lavazza structure the ideal product Company’s reputation. market range to offer on the market”. Lavazza’s approach to its suppliers involves their uniform and Excellence for Lavazza also means More specifically, in 2015 the transparent management and Europe responsibly managing its supply percentage of purchases from clear communication of their chain, which largely consists of Italian suppliers grew by about 8%. needs and criteria of selection and % 9,9 local suppliers. evaluation. As the numbers in the table below clearly show, in spite of Lavazza’s Approach to supplier It is with this aim in mind that increased focus on growth and management and qualification starting from 2012, Lavazza began internationalisation, the Company to restructure its purchasing continues to make most of its The aim of Lavazza in managing processes, procedures and criteria purchases of goods and services its ties with suppliers is to establish applied in the qualification, (apart from green coffee) from Italian stable and lasting partnerships assessment and monitoring of its suppliers, consultants and partners. based on mutual trust, aware of suppliers. the fact that the reliability of the “Feedback from consumers about supply chain is critical both for the the product/service that helps quality of our products and for the

Purchase of goods and services 2013-2015 (excluding green coffee) % 7,6 Italy Year Total (mln €) Mln € % Mln € % Mln € % World 2013 346,0 286,1 82,7% 44,1 12,8% 15,8 4,5% %

426,0 347,1 81,5% 47,5 11,1% 31,4 7,4% 82,5 2014 2015 454,2 374,8 82,5% 44,8 9,9% 34,6 7,6% Italy Europe World

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3.3 Monitoring and audits on suppliers

In 2015, in line with the goals The audits were conducted in terms of percentage impact of set out in the Sustainability keeping with Lavazza’s Standard the purchase turnover of audited Report 2014, Lavazza audited Requirements and applying a new suppliers compared to the annual approximately 60 suppliers of set of methods developed entirely purchasing turnover of the direct materials, machinery and in-house and for this reason highly category). subcontracting work. in tune with the needs and context of the Company’s business. For the changes expected in The audits involved both new and coming years, please refer to the old suppliers, within the framework The table below shows the results section of the Report that discusses of a joint programme between achieved, which exceeding the foreseeable trend. Purchasing and Quality for the the targets identified in the Innovation programme 110 suppliers were involved in (packaging efficiency, streamlined monitoring of suppliers. Sustainability Report 2014 (in the programme and made their logistics and simplification of In 2015, Lavazza introduced the specialised know-how available machines), which will be tested new Innovation programme that to Lavazza, helping to come and then implemented in 2016, will reap the first results in 2016. up with roughly 115 product monitoring results over the re-engineering solutions, use course of the year. Three of the The programme conceived in 2014 of alternative materials and five winning proposals have an (for more details on the programme’s technologies, streamlined impact on reducing the amount layout and format, please refer to manufacturing processes and of polluting material used in the Sustainability Report 2014: insert logistics, and the provision of production. # kpi Goals Results link to BdS 2014) aims at developing services. and introducing technical solutions The suppliers who participated 1 total suppliers of direct materials* 25% 26% suggested by suppliers to cut down Based on a technical feasibility in the programme will receive costs and improve the products study ahead of the purchase and financial awards or media coverage 1a purchase of direct materials - turnover* 60% 65% * includes: Packaging, Non-coffee and services purchased in terms factoring the economic impact, for the proposals implemented. Food Products, Corporate Advertising 2 total machine suppliers** 50% 80% of their performance, quality and 41 proposals were accepted, out materials and products manufactured by contractors 2a purchase of machines - turnover** 75% 85% sustainability. of which Lavazza chose the TOP 5 ** includes: closed-system machines, moulds, components and bar 3 warehouses n/a 94% equipment

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4

Sustainability and Innovation

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4.1 Innovation as an engine for development

Innovation has always been part of and studies that aim to diversify of all the corporate divisions and Lavazza history. In fact, it is none the offer to current and potential by pursuing a concept of “open” other than the skilful blending consumers and to incorporate innovation whilst analysing of tradition and innovation that environmental sustainability in our external sources that can provide sparks Lavazza’s development and products and processes13. ideas for improvement and new proves the key to its success. ideas to be developed. An endeavour pursued both by At Lavazza, we pursue innovation internal research and studies everyday through ongoing analysis carried out with the involvement

At Lavazza we pursue innovation everyday

13 In the three-year period, Lavazza incurred the following costs in the environmental field: 2.1 million in 2013, 2.7 million in 2014 and 3.19 million in 2015.

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Product innovation: the art of blending

Lavazza’s expertise in the preparation of quality coffee blends Slow Food areas. These are part of a cultural and social project that gained over the years, combined with research in the field of sensory aims at fostering a new awareness around coffee, with the ultimate experience, which aim to enhance the characteristics of the country goal of shortening the supply chain and of improving the quality of origin, creates the Single Origin. Products that are one-of-a- of living of coffee producers, while affirming a new paradigm of kind as single origin coffee blends of 100% Arabica’s coming from coffee production that centres on the development of the area and on geographical areas where the territorial conditions and climate give responsible consumption. the individual beans distinct aromatic notes combining sensory properties and elements of social sustainability. In fact, one of the In the Slow Food areas where Etigua comes from, Lavazza works hard components of the precious Single Origin blend is produced in areas to enhance the quality and increase the yield of the finished product, where Lavazza has introduced sustainability projects that aim to supporting and improving the conditions of local producers and improve agricultural productivity and the dissemination of good safeguarding the territory. manufacturing practices. Therefore succeeding in finding the best way to respond to the needs of the local communities. Single Origin and Etigua are two excellent examples of Lavazza’s commitment in creating unique blends that are responsible and The same philosophy underlies Etigua, a coffee blend sold to sustainable. customers in Italian and English markets since April 2015. The name hints to the origins and provenance of this unique blend made with wild coffee from the Harenna forest in Ethiopia, and the coffee of the Highlands of Huehuetenango in Guatemala, two official

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Patents deposited in the last three years Patent portfolio and broken down by category

Lavazza is wholeheartedly committed to introducing is also proven by the Company’s substantial efforts to product innovations with the aim of satisfying the disseminate and protect its intellectually property. 16 growing expectations of its customers in a prompt and Lavazza’s “patent portfolio” consists of 428 titles of 14 efficient manner. Over the years, coffee consumption has intellectual property protection (352 invention patents, 73 12 considerably increased in an ever-changing and multi- designs and models, 3 utility models) officially recognised 10 cultural environment. This implies the growing need for in Italy and abroad, and of 328 pending patent 428intellectual property protection titles 8 Lavazza to offer a more and more broader and diversified applications, including 8 new applications filed in 2015. 6 other product range on all markets. system 4 acknowledgement 2 design The ability to create value in key territories and for 328 organic 0 our stakeholders by strongly focusing on innovation pending patent applications 2013 2014 2015

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4.2 Our commitment to environmental sustainability

Global warming is one of the and redefining performance The tool used, which has obtained our sustainability approach, biggest modern-day challenges we indicators and parameters to come scientific and international Lavazza is firmly convinced that all face. There is a need to ensure up with a roadmap for a progressive recognition, is the Life Cycle close cooperation with research the welfare of all human beings environmental strategy. Assessment (LCA) that assesses institutions and partners is essential relying on the resources available, the environmental impacts of the to share a synergetic vision over pursuing sustainable development A key step in this process of different stages of the life cycle, the medium to long term. The and preserving our planet for future consolidation is implementing a from raw material to disposal of the Company believes that integration generations. Sustainability Platform that can finished product. with its stakeholders is pivotal in help systematically and efficiently achieving measurable goals in Corporate organisations, like all manage the collection and analysis Conducting a product and corporate terms of improving environmental aggregations of individuals, have a of core environmental data and LCA is a complex task that calls performance and, indeed, the only critical role in ensuring a balanced information. The definition of for thorough knowledge of all way to be successful. ecosystem, of which we all are a tangible goals in the medium to long the processes involved and their part. term, in fact, is not possible without environmental aspects resulting in Lavazza also participates actively monitoring the environmental massive data collection. in major national and international In this context, Lavazza has decided impact of the Group’s business, both committees, working to define to take on this important challenge, directly and by indirectly. The action-plan in the first year standards for calculating the specific shaping a solid path of sustainability of the Sustainability Platform is impacts by commodity sector, which that will encourage a conscious and Lavazza’s approach is based on Life focusing on the definition of all is essential to enable businesses resolute involvement by all actors in Cycle Thinking (LCT) that factors the environmental information to compete and achieve results the supply chain. the different stages of the product necessary to assess the impacts, through activities aimed at reducing life cycle, evaluating its key impacts their data-basing with the aid of the impact. The know-how acquired thus far from conception to design, including software and the redefinition of has allowed Lavazza to reinforce the the assessment of processes not specific indicators to measure structures involved in environmental under the Company’s direct control. and monitor the Corporate sustainability. The aim has been environmental footprint in order to lay out a more comprehensive to identify risks, opportunities, mapping that aptly represents the priorities for action and possible impacts of our business on global strategic actions to be taken. climate, expanding the boundaries In this process of consolidating

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4.3 Carbon Footprint

Lavazza carefully monitors environmental performance along the World Business Council for developments of the environmental the production chain. Sustainable Development (WBCSD). impacts of products and All these standards focus organisations, aware that it is In this report, in order to document exclusively on greenhouse gas imperative to adopt a common and and communicate how the various emissions and are based on the harmonised method for calculating stages of the production chain methods used to calculate the and reporting its environmental contribute to the process in terms LCA, whose international legal performance, within the framework of their environmental impact, framework is represented by the of a life-cycle approach. Lavazza has decided to use the ISO 14040 series: Carbon Footprint14 as an indicator In line with the directions and of environmental sustainability, • UNI EN ISO 14040 (2006) guidelines of the European Lavazza is aware that concern over Environmental management, Life Commission in the development climate issues from consumers and cycle assessment, principles and path of the PEF method – Product the international community has reference framework. Environmental Footprint and OEF sky-rocketed in recent years. (Organization Environmental • UNI EN ISO 14044 (2006) Life Footprint) and Recommendation In order to quantify and report cycle assessment, Definition and 2013/179/EC, Lavazza adopts greenhouse gas emissions at guidelines a multi-criteria method for the a corporate level, factoring the analysis of environmental hotspots. Company’s direct and indirect Proper identification of significant emissions as a whole, Lavazza categories and the definition of the adopted standard ISO 14064:200615 performance indicators involved and the GHG Protocol Corporate allows the Company to target more Standard – developed by the World efficient actions for improving Resources Institute (WRI) and CO2

14 Sum of greenhouse gas emissions (3.1.3.5) and removals (3.1.3.6) in a product system (3.1.4.2), expressed as CO2 equivalents (3.1.3.2) and based on a life cycle assessment (3.1.5.3) using the single impact category (3.1.5.8) of climate change, (definition contained in ISO/TS 14067/2013) 15 UNI ISO 14064- 1 Part 1: Specifications and guidelines at an organisational level for the quantification and reporting of greenhouse gas emissions and their removal

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100 As shown by the indicators, the most relevant Greenhouse gas emissions 5% 4,6% 4,3% Scope Greenhouse gas emissions considered (GHG - Green House Gases) by Lavazza impacts concern green coffee cultivation and 90 1% 1% 0,8%

the production and disposal of packaging. Coffee disposal after use 80 Scope 1 Finished Product distribution Direct emissions from the combustion of natural gas for the generation of thermal energy, for Activities linked to the manufacturing 70 Direct Emission heating and processes plants, offices and distribution of the finished Packaging Manufacturing plant emissions 60 product do not contribute significantly to the Green Coffee 63% 64% 66% 50 Direct emissions from the combustion of diesel fuel for proprietary vehicles used for moving Organisation’s total emissions. [%] goods within plants and the fleet of company vehicles 40

The following graphs represent the trend of 30 tonnes of equivalent COS emissions (direct 16% 15% 14% Scope 2 20 Emissions resulting from the consumption of electricity from the national electricity grid and indirect) both in absolute terms and in Indirect Emissions 10 relation to tonnes of processed coffee. 16% 15% 14% 0

Emissions resulting from the production of green coffee 2013 2014 2015 Scope 3 Other Indirect Emissions Emissions resulting from the production of plastic raw materials and packaging Emissions resulting from the consumption of water in production plants and at administrative headquarters Direct emissions, when compared to the decrease in 2014 of the Indirect emissions point to a substantial reduction in 2015, largely emission index per ton of processed coffee, display an essentially due to lower consumptions of electricity generated from renewable Emissions resulting from waste management and disposal stable trend in 2015, with a slight increase tied to the consumption of hydropower sources for offices. Finally, the graph below shows the Emissions resulting from the disposal of used coffee natural gas used to heat the buildings in all the Group’s operational trends of impacts that occurred upstream and downstream of the units. chain in the three-year period. Emissions resulting from the distribution of the finished product

Direct emissions - Scope 1 Indirect emissions - Scope 2

3500 0,25 The chart below shows the trend in The system’s border includes In order to improve the level of 27000 0,210 3000 0,20 0,022 the three-year period of equivalent Corporate Management, sales technological, geographic and 26000 0,205 0,200 2500 0,020 eq] eq/t] 2 2 eq/t] 2 eq] 2 0,015 [t CO CO2 emissions calculated in branches and the manufacturing temporal representation of the 2000 [t CO [t CO

25000 0,190 [t CO 0,191 accordance with the Global plants in Settimo Torinese, examined processes, changes 1500 0,010

24000 0,185 0,180 0,010 Warming Potential over a period of Gattinara (VC), Verrès (AO) and to the model calculations in the 1000 0,005 500 100 years, adopted by the IPCC in Pozzilli (IS), including flows of raw reporting three-year period have 23000 0,170 2013. coffee, raw plastics, packaging and been implemented. 0 0,000 2013 2014 2015 2013 2014 2015 distribution of the finished product. [G4-22] Total direct emissions Relative direct emissions The environmental impact is The consumer phase understood Total indirect emissions Relative indirect emissions represented as the percentage of as both the production of coffee distribution over the entire value machines and their operation was 0,7% 0,6% 0,5% Other indirect emissions - Scope 3 100 chain. excluded from the system’s border. 1% 1% 0,9% 90

80

70 65% 67% 69% 60

50 [%]

40

Coffee disposal after use 30 Finished Product distribution 16% 16% 15% Packaging 20 Manufacturing plant emissions 10 Green coffee 17% 16% 15% 0

2013 2014 2015 106 107 Lavazza Sustainability Report 2015 Ch. 4 | Sustainability and Innovation

4.4 Health & Safety, Energy and Environment Management System

In 2015, besides introducing the Report 2014 and in accordance documents associated with the Corporate Policy for Health, Safety, with standards ISO 14001, ISO Management system. There Energy and the Environment and 50001 and OHSAS 18001. will be a common area for each the Group guidelines “Occupational system process accessible to all Health & Safety, Energy and Lavazza have created a special employees for them to review and Environment”, which outline online platform to manage the use the respective documents, and the organisational structure system that launched in 2016 a private area with limited access of Lavazza’s Management and is accessible to all Lavazza used by staff in charge to manage/ Environmental performance • Water supply; system, The Company began employees. edit documents. • Waste-water volumes; implementing the Management The objectives of Lavazza’s Environmental • Product waste and its management System for Health, Safety, Energy The online platform will be Management System include the continuous (disposal, recycling, etc.); and Environment in line with the used to store and manage all improvement of environmental performance • Substances harmful to the stratospheric goals illustrated in Sustainability the procedures, reports and monitored around the clock according to ozone; individual factors of impact. • Any spills in the soil, subsoil and aquifer; This section presents data and information • Any environmental fines. regarding: Continuous improvement of our manufacturing requirements of the Management system, in 2015 • Energy consumption (electricity and heat); plants Lavazza conducted the first cycle of internal audits of its manufacturing plants, Corporate Management and the As part of the plan aimed at ensuring ongoing Innovation Centre. improvement of the environmental performance of Lavazza’s manufacturing processes and in line HSE Auditors qualified by accredited agencies and with regulatory requirements, in 2015 the Company belonging to both Corporate Management and the conducted an energy analysis of the processes manufacturing plants conducted the audits. The at its manufacturing plants. For details about this team of “Lavazza HSE Auditors” currently consists of analysis, please refer to the section on environmental 13 environmental auditors, 10 auditors dedicated to performance indicators. occupational health and safety issues and 4 energy auditors. In order to monitor improvement of environmental performance, along with the intrinsic parameters and

108 109 Lavazza Sustainability Report 2015 Ch. 4 | Sustainability and Innovation

Electricity consumption Heat consumption

Electricity consumption within the production plants depends on Heat consumed by the Company’s manufacturing plants concern the operation of the plant and equipment, production lines and natural gas only and is used to operate the plant’s equipment and ancillary services such as, for example, the generation of systems, in particular the and lines, compressed air. as well as to heat the office buildings. Energy consumption The process component is proportional to the quantity of 300.000 3 processed coffee, while the second is dependent on external 280.000 weather conditions. 2,5 Data on energy consumption Environment (EN) Food Processing The graphs show the difference in 260.000 In the three-year period, process heat consumption remained 258.760 268.315 263.896 240.000 stable, while energy used to heat buildings dropped significantly refers to Corporate Management, Sector Supplement Version 3.0 FPSS standardised consumption based 2

220.000 because of the newly upgraded thermal power stations in the the Innovation Center, the Italian Final Version”. on the assumption that the factory 1,98 1,90 1,92 manufacturing plants of Settimo Torinese and Gattinara. 200.000 1,5 manufacturing plants in Settimo in Pozzilli (IS), which was inactive for [GJ] [GJ/t] Torinese, Gattinara, Verrès and When calculating heat consumption, much of the first half of 2013 due 180.000 1 160000 Pozzilli, and the sales branches the Italian coefficients were used for to a serious fault in its systems that 350.000 4

3 140.000 located throughout Italy. The data the conversion from m to GJ rather occurred in 2012, will run at peak 0,5 3,5 300.000 includes electricity, heat and fuel than the coefficients recommended production. 120.000 297.351 291.580 290.719 consumption for the corporate by international standards (choice 100.000 0 3 250.000 vehicle fleet. made when drafting Sustainability 2013 2014 2015 2,5 [GJ] [GJ/t]

Report 2014). The reason for this Simulation at Pozzilli Group electricity consumption Electricity consumption index 200..000 2,28 The conversion factors used to is that the Italian coefficients are 2,07 2,11 2

150.000 calculate the energy indicators better suited for the type of energy The graph represents the absolute amount of electricity 1,5 refer to the “Indicator Protocols Set consumption examined. [G4-22] consumed expressed in Giga-Joules and the specific energy consumptions (or indices) compared to tonnes of packaged 100.000 1 coffee. 2013 2014 2015

In the three-year period, absolute electricity consumption was in Simulation at Pozzilli Group electricity consumption Electricity consumption index line with the production trend. Specific electricity consumption compared to 2013 dropped between 3.5 and 4% due to the large number of energy efficiency improvement works carried out, such as the upgrading of the set of compressors used in the The graph represents the absolute amount of heat consumed manufacturing plants of Settimo Torinese and Gattinara. The expressed in Giga-Joules and the specific energy consumptions (or slight increase in specific fuel consumption in 2015 compared indices) compared to tonnes of packaged coffee. to 2014 is due to special maintenance carried out chiefly at the In 2015, the consumer index experienced a slight increase due factory in Settimo Torinese. These works and added maintenance solely to higher consumption of natural gas to heat the buildings led to higher electricity consumption unrelated to coffee in all the Group’s operational units, a direct consequence of the production. colder temperatures in winter in 2015 compared to those in 2014.

110 111 Lavazza Sustainability Report 2015 Ch. 4 | Sustainability and Innovation

Total energy consumption energy analysis applicable to all its manufacturing plants that m3 of water consumed (for civil and industrial use) compared to Reused and recycled water would prove compliant with Leg. Decree 102/14 - “Implementation tonnes of packaged coffee. of EU Directive on energy efficiency 2012/27/EU” and standard The lower water consumption in 2015 is attributable to the The total energy consumption is the sum of the electricity, heat UNI ISO 50001 - “Energy management systems - requirements replacement of a number of water-cooled compressors with similar Water for industrial use is used for the humidification of coffee to and fuel consumed for the corporate vehicle fleet. and guidelines for use”. This activity made it possible to form air-cooled machines. be decaffeinated, to cool down coffee during the roasting process an accurate energy model to selectively enhance the energy and accessory machinery (e.g. compressors). In the three-year period, given the low incidence of the third monitoring systems already in use and to identify other possible Water discharge In the first two cases, the water cannot be recycled or reused addendum, the trend in absolute values proved consistent with areas for energy efficiency improvement in all operational units because it comes into direct contact with the coffee and the trend in the production of packaged coffee. under review. The total volume of wastewater discharged at the Italian evaporates. manufacturing plants and at HQ flows into the sewage system. The water used in cooling the systems is recirculated in closed The specific consumption trend highlights the effect of the Water supply circuits to ensure the lowest possible consumption of resources. energy efficiency improvements mentioned earlier and the The graph shows the absolute water discharges expressed in m3 The water is therefore not recycled or reused but recirculated consistently high levels of performance. Most of the water consumption of Luigi Lavazza S.p.A. is related to of water and the respective specific wastewater (m3) compared to whenever this is technically feasible. the production plants, specifically the coffee roasting process, the tonnes of packaged coffee. cooling of the machinery used for the production of compressed The lower water discharges in 2015 are attributable to the air, sanitation and hygiene facilities. Water consumed as part of replacement of a number of water-cooled compressors with similar the coffee decaffeination process at the manufacturing plant in air-cooled machines. Pozzilli shows particularly high levels. This detail clearly emerges 700000 4,60 4,56 from the analysis of the respective environmental indicators, which 4,55 show a significant increase corresponding to the gradual return to 4,50 600000 peak production of the manufacturing plant in Pozzilli following 4,45 the production halt which took place between 2012 and 2013. 4,40 500000

4,35 4,30

[GJ] 4,30

[GJ/t] The graph shows the specific water consumption expressed in

400000 4,23 4,25

2,00 4,2

300000 1,20 140.000 4,15 1,80

594.437 596.621 592.673 4,10 1,03 120.000 1,60 1,00 200000 4,05 0,93 1,40 0,89 100.000 2013 2014 2015 0,80 1,20 ] 3

0,75 /t] 80.000 1,00 3

[m 0,23 Simulation at Pozzilli Group electricity consumption Electricity consumption index 0,69 0,22 [m /t] 3 0,60 0,19 0,80 [m 0,62 60.000 0,67 0,65 0,55 0,60 0,40 40.000 0,27 0,40 0,25 0,27 20.000 The change in the specific index (between 1 and 2%) is 0,20 0,20 87.509 91.100 75.665

considered natural to a complexly structured business such as 0 0 Lavazza’s. 0 Total Civil use Industrial use 2013 2014 2015 Energy consumption data was analysed with reference also to

the Company’s efforts in 2015 to come up with a comprehensive 2013 2014 2015 Total water discharges Water discharge / production KPI

112 113 Lavazza Sustainability Report 2015 Ch. 4 | Sustainability and Innovation

Waste Substances harmful to the stratospheric ozone

12000 The data refers Corporate Management, the Innovation Centre in Hazardous waste index KPI Non-hazardous waste index KPI Lavazza currently has very few equipment items (heat pumps,

Settimo Torinese and the four manufacturing plants in Italy and 10000 cooling and air conditioning systems) that run on coolants that 9.361 includes: 9.661 9.326 9.754 2,0 100 contain ozone-depleting substances (HCFC). This equipment, 74,06 8000 8.536 8.571 66,17 61,95 whose maintenance is outsourced to specialised companies, is • Production waste, gradually being replaced. 1,0 50 [kg/t] [kg/t] • Waste generated by administrative and advertising activities, [t] 6000 0,71 During 2015, there were no reported leaks of coolant gases. with the exception of solid urban waste. 4000 0,25 0,25 0,0 0 2013 2014 2015 2013 2014 2015 Lavazza is strongly committed to reducing the amount of waste 2000 Significant spills in soil, subsoil and aquifer generated by its manufacturing processes by streamlining them, Hazardous waste index KPI Non-hazardous waste index KPI 92 35 35 progressively introducing more efficient management methods 0 In the three-year period, there have been no reports of significant aimed at rationalising the use of its temporary storage areas, and [R-P] [R-NP] [R Totali] We ought to point out that in 2015, 1 ton of packaged coffee spills of potentially pollutant liquid substances. by spreading awareness among its employees. generated 62.20 kg of waste, of which 61.95 kg classified as “non- 2013 hazardous “and 0.25 kg classified as “hazardous”. The graph represents the amount of waste generated and 2014 These figures clearly show that the percentage of waste classified Environmental fines expressed in tonnes, classified as “hazardous”, “non-hazardous” as “non-hazardous” accounts for more than 99% of the total waste and total waste. 2015 produced. In the three-year period, the Company did not receive any In the three-year timeline, the quantity of waste generated administrative fines or formal complaints regarding environmental dropped significantly (by about 10%). The following graph shows the percentage of recycled waste. issues. The graphs below represent the kg of waste produced (classified The lower amount of waste produced in 2015 is largely due to as “hazardous” and “non-hazardous”) per ton of packaged coffee. the less processing plastics used to manufacture coffee capsules at the manufacturing plant in Gattinara, in view of important Recycled waste (REC) changes in the process that allowed Lavazza to use and exploit 100 90 materials in production that were formerly discarded. 92,78 93,45 94,18 80 [%] 70

60 2013 2014 2015

[Rec/R Tot]

The graph shows that in the three-year period, the percentage of recycled waste increased steadily from year to year and in 2015 accounted for more than 94% of the total waste, cutting down the percentage of waste for disposal to less than 6%.

114 115 Lavazza Sustainability Report 2015 Ch. 4 | Sustainability and Innovation

Packaging – Eco-friendly design Percentage of types of packaging materials used by Lavazza

Plastic Paper and Cardboard Aluminium Steel

58% 30% 7% 5% 2015

Of the roughly 20,000 tonnes of material used for the production The plan to restructure our internal on how to dispose properly of the Company’s commitment to of primary, secondary and tertiary packaging, 60% is made reporting system to ensure a more packaging. monitoring the information and up of plastic materials and 30% of paper and cardboard. accurate monitoring of the impact data is therefore essential, along of our products starts from the It also represents a stimulating with a thorough understanding of product’s packaging. challenge, as when designing international law, so that we may For Lavazza, packaging design the product’s package, we need respond accordingly in due time is extremely important and calls to consider the applicable safety and as efficiently as possible. for efficient management of the standards and requirements of product’s use, end of life and law that have an impact on the the application of a system for packaging, besides common communication to consumers environmental issues. The

In 2015, the packaging had a lower overall environmental impact Greenhouse Gas Emissions [GHG] - Packaging linked to a re-modelling of the design to upgrade it to the state-of- the-art of the several product lines and owing to improvements in the packaging features and manufacturing processes.

A positive example of the process introduced to achieve a rational management of waste is the production of the EP Black capsule. 0,9 100.000 The capsule, manufactured using 20% of recycled polypropylene 0,85 from thermoforming scraps or wastes from other productions, allows us to make less use of virgin plastic raw material and 80.000 0,82 0,80 In 2015 the packaging had a lower consequently reduces the impact tied with its procurement. 60.000 ]

2 0,75

0,23 e/t]

0,22 2 0,76 0,19 overall environmental impact [t CO 0,75 [t CO

0,7 linked to a re-modelling of the 40.000

0,65 design 20.000

0 0,6

2013 2014 2015

GHG Packaging emissions GHG Packaging emission index

116 117 Lavazza Sustainability Report 2015 Ch. 5 | Human resources development

5

Human resources development

118 119 Lavazza Sustainability Report 2015 Ch. 5 | Human resources development

5.1 Lavazza’s approach to people

For a company to grow means training and refresher courses. training a key medium for workers to help people and their skills These courses are planned by to integrate within the Company grow with it. Lavazza transfers accurately assessing our staff’s and supports the processes of knowledge from its more training needs with the direct change under way. experienced staff to new involvement of managers and employees through a structured people from the early stages of process by organising frequent preparation. This approach makes

Workforce in Italy divided by category16

Manual Worker Office employee Senior management Manual Worker Supervisor Others Senior management Middle management Senior management Office employee Middle management 2013 Total women: 498 Total men: 1.091 Grand total 2013: 1.589

2014 Total women: 502 Total men: 1.085 Grand total 2014: 1.587

2015 Total women: 493 Total men: 1.061 Grand total 2015: 1.554 1.554people employed in 2015

Women Men

16 Please note that in this chapter (unlike what done in Sustainability Report 2014), the figures for temps have been grouped together under the worker’s given category (e.g. office employees).

120 121 Lavazza Sustainability Report 2015 Ch. 5 | Human resources development

effective communication. Training programmes were organised in parallel on specific areas such as retail sales, for which 64.456 Lavazza introduced a course on hours of training in 2015 merchandising techniques and which will continue into 2016. +182% compared to 2014

Hours of training by category and gender 5.1.1 Training and Development: a structured and shared process Grand total 2013: 19.150 Total women: 7.445 Total men: 11.705 2013 In September 2015, in line the online platform is also a tool to In 2015, Lavazza’s training with the goals employed in foster education and learning. The programme primarily focused the Sustainability Report 2014, platform allows us to manage and on a selection of core business Lavazza launched an online deliver educational content in a skill-sets: knowledge of the Grand total 2014: 22.892 training platform accessible to combined format (a mix of lessons product and its method of Total women: 7.393 Total men: 15.449 almost all of its employees. in the classroom and e-learning). preparation, project management This also includes a number of (with a core course curriculum 2014 In addition to the management, community tools for managing and an advanced one based database recording, reporting and the exchange of content and on international certification evaluation of all training sessions, information among colleagues. standards for SMEs), as well as Grand total 2015: 64.456,4 Total women: 16.842,55 Total men: 47.613,85 2015

Office employee Office employee Middle mgmt. Middle management Senior mgmt. Senior management Manual Others Temp worker Manual worker Supervisor Supervisor Temp

Women Men

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Induction process

In 2015, around 150 people at Lavazza were involved in the induction programme. More specifically, the programme focused on three types of activities with different targets and duration:

• A one-day visit to the Training Centre, the factory in Settimo Torinese and in some cases, the factory in Gattinara. Overall, 55 people took part in the programme and had the opportunity during their visits to receive training on the coffee chain (from plant to production), taste the individual varieties (to help them understand the difference between the Arabica and Robusta blends), followed by a presentation of Lavazza’s product range

• An “ad hoc” induction, which consists of a structured schedule of meetings and interviews of varying length (from 2/3 days to a week), targeting new employees at the Lavazza headquarters and at some subsidiaries (approx. 35 persons)

• Specific induction on coffee and tastings, varying from a day to a day and a half. These are specific programmes aimed at newly hired staff in the relevant corporate divisions (e.g. R&D, Marketing) and focusing on knowledge of the coffee production chain, the systems of preparation and tastings of individual varieties and blends (approx. 60 people).

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Organisational changes and training in the manufacturing plant Leading Change

In 2015, the manufacturing plant pack per year which will need to be The restructuring plan at Settimo Leading Change, a project that • Orientation to fostering individual for the professional role (skills and in Settimo Torinese underwent processed at the plant. Torinese, with the agreement began in late 2013 and aimed at and corporate growth. capabilities); reorganisation and modernisation. The plant’s redevelopment plan reached with trade unions on defining the strategy to enhance • The pillars of Leadership: The Group invested 20 million also includes intensive staff renewal of the supplementary the skills of the company’s human This process takes place at least Accountability, Innovation, euros in an extensive renovation training, in particular with regard contract for plant workers in capital, in 2015 saw the definition once a year and consists of three Integration, Leading people; plan to make the plant a to the use of the new line for 2014, is a further step towards of a standard model to measure the steps: assignment of objectives, • Performance. multiproduct hub of excellence, capsules, as well as activities defining a functional layout for performance of all employees. performance assessment and fully engaged in its industrial aimed at boosting the expertise the production lines of the Group, feedback interview. All these assessment factors are system. and independence of our technical which has opted to remain in In Lavazza, performance communicated as a management services, incorporating Lean Italy and Torino, in spite of and incorporates three elements: the The evaluation process relies on tool for managers, promoting a This process, which will be Manufacturing principles in the nonetheless consistently with its results contribution achieved and a software application (PLUS) culture based on the sharing of completed in 2016, also plans to production processes. aim to expand and globalise its the worker’s professional role. integrated into the Lavazza Learning feedback for improvement. transfer the production of the business. The Performance Management Portal, which allows users to define With the completion of the popular Danish brand Merrild, The training and skills development system is based on certain key and assess the objectives and to evaluation processes, the company recently acquired by Lavazza, programme unfolded in a detailed principles: suggest training courses for the can create a talent management to the manufacturing plant in schedule of training sessions and development of Lavazza employees. model that in future years will help Settimo Torinese. Given Merrilds test drills on the production line. • Assessment objectivity; define structured development widespread presence on the The process continued for most of • Clarity and transparency of PLUS was developed by integrating paths, career planning and reward Scandinavian markets, the 2015, owing also to a production communication; all the elements normally factored policies, in line with the strategic production is quantifiable to an halt when overhauling and • Ongoing dialogue between the when assessing employee objectives of the business. additional 6,000 tonnes of soft restructuring the equipment. actors involved; performance. For example: • Respect for the individual and recognition of the role; • The level of expertise required

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Percentage of fixed and permanent contracts 2015 5.1.2 Loyalty and transparency

The percentage of employees with a are 28% higher than the minimum these percentages displayed a permanent contract - around 98% in wages based on the CCNL (33% for growing trend in the three-year the three-year period - is consistent male employees). period). In the case of manual with Lavazza’s desire to establish The relationship between the workers, the ratio sees women 98% lasting relationships. The average gross annual salaries paid on earning 2.3% more Permanent annual salary is roughly 31% average to female workers and the than men. employees higher than the minimum wage average RAL for men is about 94% This ratio was calculated by dividing of the National Collective Labour for executives, 98% in the case of the sum total of RAL paid to women Agreement (CCNL). The average middle-management employees by the RAL paid to men for each 17 2013: 98% 2014: 98% annual wages for female employees and 96% for office employees (all employment category . Total turnover 2015

Hires and exits by position

Manual worker Women Men Supervisor Manual worker Other Supervisor Senior management Senior management Others Total 2013: 9,3% Office employee 11,4% 8,2% Middle management Office employee 9,0% 6,5% Total 2014: 7,3% 2013 Hires

13,2% 13,2% Total 2012: 11,5% Total Hires: 78 Total Exits:69 Exits

Middle management 2014 People involved in the MBO Programme 2013-2015 Total Hires: 57 Total Exits: 59

Middle management

Gender Category 2013 2014 2015 2015

Women Senior management 20 18 16 Total Hires: 86 Total Exits: 119 Middle management 12 15 17 Supervisor 33 32 27 Total 65 65 60

17 Men Senior management 52 52 54 In accordance with standard GRI-G4, below is a brief introduction to the indicators required by the guidelines: • In the three-year period, 100 employees (81 female and 19 male) benefited of parental leave. The rate of return to work and reintegration is 100%; Middle management 32 37 43 • 100% of the employees of Luigi Lavazza S.p.A. benefit of the terms of their National Collective Labour Agreements: Lavazza does not resort to forms of collective bargaining Supervisor 51 50 46 when defining the notice period, with the exception of changes in work shifts within its manufacturing plants. In these cases, the notice period established by the contract Total 135 139 143 (CCNL) is two weeks; • In the three-year period, Luigi Lavazza S.p.A. did not receive any reports of violations of workers’ rights, regarding proper regulation of the working hours, trade union rights and the procedures for managing the employment relationship, except for one case in 2013 that was dealt with a labour-related lawsuit that ended with the Court Total 200 204 203 acquitting Lavazza.

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5.1.3 Internal communication

In 2015, Lavazza introduced that relied on storytelling to tell A member of the Lavazza family “Coffee Telling”, a project that stories of leadership and of the made a closing statement involved 843 people. conduct expected of all Lavazza during each event, revisiting the The project aimed to spread employees to sustain growth. highlights of the company’s history Lavazza’s model of Leadership, and renewing the company’s focus giving everyone the opportunity to As a result of these cross- on people and the promotion of apply it to their daily tasks and to functional focus groups, projects for their development. actively contribute to change. 11 training events were organised in which all participants recounted With Coffee Telling, in fact, their own experience and took part everyone becomes an agent for in identifying the type of conduct change and is responsible for his/ expected of them. her own growth. Coffee Telling also offered the The project was developed by opportunity to celebrate the forming a number of focus groups company’s 120 years of history.

843people involved in the CoffeeTelling Programme

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Welfare

2015 was an important year for • Part-time: option for workers who In addition, all employees are now Welfare in Lavazza. Over the course are fathers or mothers to work part- eligible for scholarships for their of the year, the company introduced time for three years, with full-time children, from school age to college. the new Welfare Plan under the reinstatement at the end of the supplementary agreement signed period. at the end of 2014. The plan, which targeted 650 Corporate • Access to Welfare Portal where Management employees, covered employees can benefit from special the following aspects: deals and discounts at a network of shops and services nationwide. • Productivity bonus: option of choosing different forms to In 2015, Lavazza also extended the reward productivity, such as added integrated healthcare programme corporate welfare services and to all Corporate Management programmes. employees.

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5.1.4 Nuvola: a work in progress

Over the course of 2015, the new helmets and high-visibility vests in previous months had Lavazza headquarters was a and experienced what it is like to helped achieve. “work in progress” for everyone: be a construction worker, all within employees, citizens and councillors walking distance from their school. In 2015, Lavazza also worked hard of District 7, PA officers, students, They saw the construction site not only on the continuing work professionals in the design up close and were introduced to on site, but also in furthering an industry, security and construction building materials and machines. urbanisation and redevelopment workers and foreign delegations project at largo Brescia, which of experts interested in urban In addition, an event was was transformed from a busy transformation projects. organised for town hall employees intersection into an entirely who participated/contributed to renovated space. The project, for Specific events were organised, the permit application process which urbanisation18 costs were such as a one-day field trip to (construction site paperwork), deducted, cost an approximate visit the construction site for the with the ability to spend a day 1.7 million euros19, and involved children of a nursery next to the at the construction site. During the reconstruction of the entire site. The 25 children who took the event, the employees had the perimeter of the block around the part in the field trip wore safety opportunity to see what their work new headquarters, giving citizens a

Over the course of 2015, the new Lavazza headquarters was a “work in progress” for everyone: employees, citizens and councillors of District 7, PA officers, students, professionals

18 The Italian legislator ruled for a discount on the share of contribution to the urbanisation costs of the project if the company granted the building permit takes full charge of the project’s completion. 19 The total amount invested in the construction of the new headquarters in 2015 inclusive of urbanisation costs exceeds 51 million euros.

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quality urban space with less areas, a fountain, plants and green 1.200 m2 car parking lots. areas and a large car park for Restaurant 2 for 280 people public use with their own separate 18.500 m 2 2 The sidewalks were widened to entrance. Total surface 1.600 m 4.000 m 2 create new pedestrian areas, Museum and Historical Archive Former Electric Plant 540 m equipped for car parking with new Gourmet Restaurant urban furniture and a new LED for 50 people lighting system. Traffic was helped 2 to run smoother by rearranging 2 1.500 m Events Area the timed settings of the new 1.600 m 180 2 Archaeological area Parking for 1500 people traffic lights, while the tram tracks 15.000 m and wires were rationalised and Headquarters 240 m2 made more functional and safer. 2 Auditorium When the new headquarters are *1600 m for 220 peoplee Terrace on 3rd floor completed, citizens will have new 2 2 pedestrian spaces, safer roads, a **800 m2 2.600 m 3.500 m 400 m2 large square garden with paved Hall IAAD; 450 students Public Garden Exhibition area

Sustainable headquarters the environmental parameters (such Via Bologna), we achieve it thanks to Employees were actively involved in as temperature and lighting) so as to our strong commitment to providing a developing the project in several ways: The new headquarters will also guarantee the highest level of efficiency healthy work environment that is in line The new headquarters will also be a centre and comfort. Respect for the environment with the best practices available today. • Workshops to co-design the spaces be a centre of excellence in of excellence in terms of Sustainability. is also reflected in Lavazza’s commitment The interiors of the corporate offices, as were organised for managers to help terms of Sustainability. Lavazza Lavazza decided to file an application to reduce the use of paper by at least 50%, well as all other offices in the building, them better identify the working groups for the new building that will host the by installing a system for the electronic will be designed to ensure comfort, and their needs. This also served as an decided to file an application for Company’s administrative offices to obtain archiving of corporate documents. Lavazza, cut down on energy consumption and opportunity to map people’s work habits in LEED Gold certification (Leadership in in fact, has implemented a programme for maximise the efficient management of order to organise work spaces that adapt the new building that will host Energy and Environmental Design), the the digitalisation/scanning of documents the spaces thanks to the use of advanced to different types of job tasks; the Company’s administrative most widespread building energy and that will help minimise the need for office control systems. Most offices will be open • Visits on site were organised in July for environmental performance standard in cabinets in the new headquarters. It is space (without compromising however all employees and were attended by 203 offices to obtain LEED Gold the world and that few buildings in Italy with this aim in mind that in 2015 the the clear designation of the several of them. During the visit, employees were certification (Leadership in have obtained so far. company conducted an analysis jointly divisions) and at least 50% of the offices introduced to the nature of the project, the with Administration, Finance and Control for employees will focus on encouraging articulation of the functional areas and the Energy and Environmental The rating system involves five main aimed at understanding what types of formal and informal interaction and organisation of interior spaces. categories: sustainability, water supply documents can be scanned and which collaboration: barrier-free environments Design) management, energy and atmosphere, ones must be filed in printed format, taking that are conducive to collaboration and Moreover, a communication plan was materials and resources and indoor into account the applicable laws. interaction, according to an “evolved open defined in 2015 for all employees that will environmental quality. A sophisticated space” concept. be implemented in 2016 both in Italy and digital system in the new headquarters As for the company’s customary care at foreign subsidiaries. will ensure integrated monitoring of for employees, who in the beginning For more details on the construction site * the space and the equipment, as well of 2017 will be transferred to the new and on LEED Gold certification, the new as providing data in real time. This will headquarters (roughly 600 from the Nuvola website is now available online at allow us to independently configure offices in Corso Novara, Via Tollegno and nuvola.lavazza.it.

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138 139 Lavazza Sustainability Report 2015 Ch. 5 | Human resources development

The Nuvola numbers

More than

2000 people 100 hours of exchange 30 metres of palisades 10 visits on site for a total directly involved in meetings, and involvement of local actors who dedicated to information of 300 participants between guided tours or contacted live and work in the neighbourhood university students, professionals with regard to the Nuvola of the construction industry and construction site in 2015 safety experts, citizens, children from the school in via Ancona and experts in environmental 6 additional metres of palisades sustainability 16 testimonials actively dedicated to information about involved in the advertising and work on the urbanisation project in communication campaign about largo Brescia the Nuvola construction site About 1000 citizens Street art on the palisades of of the Aurora neighbourhood the Nuvola construction site involved directly and indirectly as part of communication campaigns 365 days a year info-mail on the territory service: [email protected] 20 meters of empty palisades assigned to two associations of writers in the neighbourhood 60 children, parents and grandparents involved in 250 letters hand- the inauguration unveiling the 500 persons involved in 8 delivered to residents, workers and banners on the urban decoration public presentations of the project merchants affected by construction drawn by kindergarten children and the construction site site work carried out between July and installed in via Pisa 50 citizens and town 2015 and January 2016 councillors of the Town-planning and Environment Committee of District 7 involved in a visit to the 20 children of the construction site kindergarten in via Ancona involved in an educational workshop on site

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5.1.5 Occupational Health and Safety

Injury frequency rate 2013-2015 Injury severity rate 2013-2015 Lavazza invests an incredible effort The company does its best to ensure system, management discusses into making sure that each worker that work equipment always meets the results of the analyses, the is informed about the corporate the regulatory requirements and enforcement of corrective actions 2013 2014 2015 2013 2014 2015 12 0.6 policies on occupational health that the best available operating and the level of implementation 10,7 0,51 and safety and that all employees methods are adopted, consistently of projects and activities for 10 0.5 are appropriately trained on how upgrading the equipment on improvement. 9,2 8 0.4 they are to perform their job tasks a par with the latest developments 0,27 6 0.3 in total safety. in technology. The trend in industrial accidents 5,9 4 0.2 monitored thanks to a set of 0,20 The tasks and responsibilities, in Starting from 2014, Lavazza has frequency and severity indices 2 0.1 terms of occupational health and introduced a standard procedure helps to define the objectives of the 0 0 safety, are clearly defined for all to analyse accidents (injuries and management, its staff and in turn at corporate business units through a near misses) aimed at identifying all organisational levels. system of delegate functions from their cause. The results of this corporate management down to the analysis are made known to all When calculating the accident The data is referred to employees working in the four Italian production plants (Settimo Torinese, Gattinara, Verrès, Pozzilli), in the manufacturing plant. employees through an internal indices, the company factored commercial branches and in the Torino. communication system that allows accidents involving internal staff Luigi Lavazza S.p.A., in accordance each manufacturing plant to check that resulted in an absence from The graph shows the trend of the Frequency Index (FI) for The graph shows the trend of the Severity Index (SI) for accidents accidents that occurred in the three-year period at manufacturing that occurred in the three-year period at manufacturing plants with the applicable laws, has an whether there are any similar work of more than 1 day, with the plants in Italy, Corporate Management, the Innovation Centre and in Italy, Corporate Management, the Innovation Center and the Occupational Health and Safety conditions or problems and thus to exception of accidents in progress the Company’s Italian sales branches. Company’s Italian sales branches. Service headed by managers and avoid or at least lower the likelihood and comparable to traffic accidents The accident frequency index represents the number of injuries The accident severity index represents the number of days of employees at its headquarters, that an accident that already or injuries involving outsourced per 1,000,000 hours of labour. absence from work due an injury every 1,000 hours of labour. manufacturing plants and branch occurred elsewhere will occur on workers. offices that assists to lower-line their premises. managers and delegates for all Accidents, days of absence due to an If we take a look at performance We are firmly convinced have led to improvements aimed corporate divisions. The results of the analysis and the injury and working hours (regular in 2015 compared to the previous that the improvement in the at increasing: progression of industrial accidents, and overtime) used to calculate the year, there has been a marked accident indices displayed in Lavazza’s employees are supplied which are monitored through a set accident indices refer to Lavazza’s improvement both in terms of the 2015 substantially benefited of • The safety of machinery, with a broad range of personal of accident indices based on the manufacturing plants and sales frequency index (-45% compared the restructuring works at the equipment and systems, protective equipment (PPE) injury’s frequency and seriousness, branches in Italy, the Innovation to 2014) and severity index ( -26% manufacturing plant in Settimo • The healthiness and house- appropriate for the specific risks are discussed during routine reviews Centre and Corporate Management. compared to 2014). Torinese and directly and indirectly keeping in workplaces, involved in their job tasks. This with Corporate Management and from activities linked with the • The number of campaigns to equipment helps minimise risks its staff. During these meetings, Performance was especially positive introduction and progressive inform, train and raise awareness whenever the technical and which Lavazza views as crucial in at the manufacturing plants in implementation of the Company’s among corporate staff, organisational safety precautions do monitoring the efficient application Verrès (AO), which in 2015 reported Occupational Health, Safety, Energy • The number of internal audits, etc. not ensure sufficient safety based on of the Occupational Health and no injuries, and in Pozzilli (IS), which and Environment system. These the applicable laws and standards. Safety, Energy and Environment has no reports of injuries since 2014. activities are still in progress and

142 143 Lavazza Sustainability Report 2015 Ch. 5 | Human resources development

Training Center Lavazza. An actual school by all means that has now become an international network with more than 50 locations in 5 continents

Lavazza excellence as a powerful training tool

Lavazza’s commitment in promoting coffee testing drills. The workshop is can test their skills in preparing a scientifically based and specialised based on an educational approach the coffee blends and grasping is also achieved with to training that prepares students to the mixing process better, the art the Company’s continued focus on enter the work-world, offering them invented by none other than the training through an increasingly an opportunity through a series of founder, Luigi Lavazza. These are synergistic collaboration with the educational sessions and creative coupled with sensory analyses, academic world. workshops and starting from tasting and roasting exercises, direct knowledge of the product and of the testimonies of small local roasters, More specifically, Lavazza’s expertise origins of the raw materials, to create and economic insights tied to the and leadership in the coffee industry new visions and interpretations market, sustainability and coffee every year interact with two realms that are highly innovative and marketing strategies. of educational excellence: Politecnico revolutionary in terms of product, di Torino and the University of consumption and communication. Both events are held at the Gastronomic Sciences in Pollenzo, Lavazza Training Centre in Torino, the first University in the world Students of the University of which for more than 30 years entirely dedicated to food and food Pollenzo, instead, every year get has been committed to training culture established by Slow Food. a chance to experience a close and furthering the education of encounter with the coffee industry, professionals in the field, in addition The 10th edition of “Coffee Design”, a through an educational journey that to conducting research and workshop for students of the faculty is now in its 11th Edition in 2015. development of new products in the of System Design and Design and By making the vast experience of world of coffee. An actual school by Communication at the Politecnico di its managers available, Lavazza all means that has now become an Torino (Department of Architecture offers students a full immersion international network with more and Design), was held in 2015. in the culture of coffee. In this than 50 locations in 5 continents. Every year, students participating in case, the theoretical parts of the Coffee Design have the opportunity programme go hand in hand with to assimilate Lavazza’s expertise in several workshops in which students

144 145 Lavazza Sustainability Report 2015 Ch. 6 | Continuous improvement. Lavazza objectives 2016-2018

6

Continuous improvement Lavazza objectives 2016-2018

146 147 Lavazza Sustainability Report 2015 Ch. 6 | Continuous improvement. Lavazza objectives 2016-2018

HR

Introduction of the “new model” for the MBO integrated Lavazza objectives 2016-2018 with the performance management system and extending the redefined MBO to all office employees.

Extension of human resource development programmes and plans (including the performance management system and the “new model” MBO) to foreign subsidiaries. Alignment of all Lavazza’s manufacturing plants to current Quality certifications (including newly purchased factories) based on a work-plan drawn up in cooperation with Operations, Quality and Coffee Buying Department.

Completion by 2017 of a standard claims handling system for claims regarding food products from all countries of the world and a centralised database.

Continuation in the process of defining and implementing Health, Safety, Energy Lavazza’s Health, Safety, Energy and Environment and Environment Management System (SG-SSEA), whose development is also one of the objectives of the Company’s strategic plan 2017-2021.

Launch in 2016 of the SG-SEEA online platform.

Dissemination and implementation of the “Occupational Health & Safety, Energy and Environment Group Guidelines”.

Monitoring of suppliers

CSR policy integration within the preliminary due diligence Miscellaneous processes whenever new business units are acquired.

The following objectives have been identified as part of the joint • Updating of the methodology used with an eye to rationalising • Implementation of this methodology at subsidiaries in relations Quality-Purchasing project described in Chapter 3: its criteria, so as to highlight more effectively any differences in with their suppliers through direct visits or with the help of performance among suppliers, including through a mechanism specialised third parties. • Continuation of the audit plan with the goal by 2018 to assess of deducting points from their overall score in proportion to the and catalogue all suppliers of direct materials and machines, seriousness of the problem encountered. In view of this update, • Greater integration of CSR aspects in the supplier monitoring which account for 80% of the Company’s annual purchases Lavazza has already identified a set of “critical questions” that system, including through specific check-lists and visits on site in both categories. make the supplier “unfit”. with the involvement of Institutional Relations & Sustainability.

• Finding solutions to problems that surfaced during audits and • Planning the frequency of secondary audits once primary audits implementation of improvement plans, with a particular focus on have been completed on all suppliers. This frequency will have to critical and/or strategic suppliers. be calibrated on the basis of the level of trustworthiness shown by the supplier during the audit.

148 149 Lavazza Sustainability Report 2015 GRI Content Index

GRI Content Index In Accordance - Core Option

The table below lists the indicators established by standard GRI-G4 and used by Lavazza for reporting purposes so as to ensure the level of adherence “in accordance-Core”. The page number of this document is written next to each GRI indicator for reference. Identified Material Aspects and Boundaries The table also includes some indicators of the supplement GRI for the production of foodstuffs (“Food Processing Sector Supplement”) duly reported by Lavazza. G4-17 p. 11

G4-18 p. 11

G4-19 pp. 14-15 GENERAL STANDARD DISCLOSURES

G4-20 pp. 14-15 General Page Number (or Link) standard G4-21 pp. 14-15 disclosures G4-22 p. 106; p. 110

Strategy and Analysis G4-23 p. 11

G4-1 pp. 8-9 Stakeholder Engagement

Organizational Profile G4-24 pp. 12-13

G4-3 p. 11 G4-25 p. 11

G4-4 p. 40-41 G4-26 pp. 12-13

G4-5 p. 11 G4-27 pp. 12-15

G4-6 p. 11 Report Profile

G4-7 p. 39 G4-28 p. 11

G4-8 p. 11 G4-29 p. 10

G4-9 p. 11; p. 44; p. 121 G4-30 p. 10

G4-10 p. 11; p. 121; p. 128 G4-31 p. 10

G4-11 p. 129 G4-32 p. 10; p. 15; pp. 150-155

G4-12 p. 68; p. 82 G4-33 p. 15

G4-13 p. 26; pp. 44-45 Governance

G4-14 p. 108 G4-34 p. 39

G4-15 p. 38 Ethics And Integrity

G4-16 p. 42; p. 55 G4-56 p. 38

150 151 Lavazza Sustainability Report 2015 GRI Content Index

GRI Content Index In Accordance - Core Option

SPECIFIC STANDARD DISCLOSURES Material Aspect: Water

Disclosure on Page Number (or Link) G4-EN8 p. 112

Management Approach G4-EN10 p. 113

(DMA) Material Aspect: Emissions CATEGORY: ECONOMIC G4-EN15 p. 107

DMA p. 43; p. 90 G4-EN16 p. 107

Material Aspect: Economic Performance G4-EN17 p. 107

G4-EC1 pp. 44-45 G4-EN18 p. 107

G4-EN19 p. 107 Material Aspect: Market Presence G4-EN20 p. 115 G4-EC5 p. 129

Material Aspect: Effluents And Waste Material Aspect: Indirect Economic Impacts G4-EN22 p. 113 G4-EC7 p. 134 G4-EN23 p. 114-115 Material Aspect: Procurement Practices G4-EN24 p. 115

G4-EC9 p. 90 Material Aspect: Products And Services CATEGORY: ENVIRONMENTAL G4-EN27 p. 107; p. 111; p. 114; p. 117

DMA p. 63; p. 97; pp. 102-104; p. 108; p. 134-136 Material Aspect: Compliance Material Aspect: Materials G4-EN29 p. 115

G4-EN1 p. 117 Material Aspect: Transport

Material Aspect: Energy G4-EN30 p. 82

G4-EN3 p. 111-112 Material Aspect: Overall

G4-EN4 p. 107 G4-EN31 p. 97

G4-EN5 p. 112 Material Aspect: Supplier Environmental Assessment

G4-EN6 p. 108; p. 111 G4-EN32 p. 38

152 153 Lavazza Sustainability Report 2015 GRI Content Index

GRI Content Index In Accordance - Core Option

SUG4-HR1 p. 38

Material Aspect: Environmental Grievance Mechanisms Supplier Human Rights Assessment

G4-EN34 p. 115 G4-HR10 p. 38

CATEGORY: SOCIAL Material Aspect: Human Rights Grievance Mechanisms

DMA p. 49; p. 84; p. 121; pp. 134-136; pp. 142-143 G4-HR12 p. 129

SUB-CATEGORY: SOCIETY SUB-CATEGORY: LABOR PRACTICES AND DECENT WORK Local Communities Material Aspect: Employment G4-SO1 p. 56 G4-LA1 p. 128-129

Anti-Corruption G4-LA3 p. 129

G4-SO4 p. 39 Labor/Management Relations Compliance G4-LA4 p. 129

G4-SO8 p. 38 Occupational Health And Safety SUB-CATEGORY: PRODUCT RESPONSIBILITY G4-LA6 p. 142-143 Customer Health And Safety Material Aspect: Training And Education G4-PR2 p. 67 G4-LA9 p. 123 Product And Service Labeling G4-LA11 p. 128 G4-PR5 p. 87-89 Material Aspect: Equal Remuneration For Women And Men Customer Privacy G4-LA13 p. 129 G4-PR8 p. 86 Material Aspect: Supplier Assessment For Labor Practices FOOD PROCESSING G4 - SECTOR DISCLOSURE G4-LA14 p. 38 CATEGORY: ECONOMIC

Material Aspect: Labor Practices Grievance Mechanisms Procurement/Sourcing Practices

G4-LA16 p. 129 G4-FP1 38

SUB-CATEGORY: HUMAN RIGHTS

Investment

G4-HR1 p. 38

154 155

INDEPENDENT REPORT ON THE LIMITED ASSURANCE ENGAGEMENT OF THE SUSTAINABILITY REPORT 2015

To the Board of Directors of Luigi Lavazza S.p.A.

We have carried out a limited assurance engagement of the Sustainability Report as of 31 December 2015 (hereinafter the “Report”) of Luigi Lavazza S.p.A. (hereafter the “Company”).

Responsibility of the Directors for the Report

The Directors are responsible for preparing the Report in compliance with the G4 Sustainability Reporting Guidelines defined in 2013 by the GRI - Global Reporting Initiative (the “G4 Sustainability Reporting Guidelines”), as indicated in the paragraph “Note on methodology” of the Report, and for that part of internal control that they consider necessary to prepare a sustainability report that is free from material misstatement, whether due to fraud or unintentional behaviours or events. The Directors are also responsible for defining the sustainability performance targets the Company, for reporting the sustainability results, as well as for identifying the stakeholders and the significant aspects to be reported.

Auditor’s responsibility

We are responsible for the preparation of this report on the basis of the work performed. We conducted our engagement in accordance with “International Standard on Assurance Engagements 3000 (Revised) – Assurance Engagements other than Audits or Reviews of Historical Financial Information” (“ISAE 3000”), issued by the International Auditing and Assurance Standards Board for limited assurance engagements. The standard requires that we comply with applicable ethical requirements, including professional independence, and that we plan and perform our work to obtain limited assurance that the Report is free from material misstatement. The procedures consisted in interviews, primarily of Company’s personnel responsible for the preparation of the information presented in the Report, analysis of documents, recalculations and other verification procedures.

The procedures we performed on the Report consisted in verifying its compliance with the principles for defining the content and the quality of a sustainability report set out in the “G4 Sustainability Reporting Guidelines”, and are summarised as follows:

PricewaterhouseCoopers Advisory SpA

Sede legale: Milano 20149 Via Monte Rosa 91 Tel. 02667201 Fax 0266720501 Cap. Soc. Euro 3.700.000,00 i.v. - C.F. e P.IVA e Iscrizione al Reg. Imp.Milano n° 03230150967 – Altri Uffici: Bari 70122 Via Abate Gimma 72 Tel. 0805640311 Fax 0805640349 - Bologna 40126 Via Angelo Finelli 8 Tel. 0516186211 - Firenze 50121 Viale Gramsci 15 Tel. 0552482811 Fax 0552482899 - Genova 16121 Piazza Piccapietra 9 Tel. 01029041 - Napoli 80121 Via dei Mille 16 Tel. 08136181 - Padova 35138 Via Vicenza 4 Tel. 049873431 Fax 0498734399 - Palermo 90141 Via Marchese Ugo 60 Tel. 0916256313 Fax 0917829221 - Roma 00154 Largo Fochetti 28 Tel. 06570831 Fax 06570832536 - Torino 10122 Corso Palestro 10 Tel. 0115773211 Fax 0115773299- Treviso 31100 Viale Felissent 90 Tel. 0422315711 Fax 0422315798 – 34125 Via Cesare Battisti 18 Tel. 0403480781 Fax 040364737 – Verona 37135 Via Francia 21/C Tel. 0458263001

Società soggetta all’attività di direzione e coordinamento della PricewaterhouseCoopers Italia Srl 156 www.pwc.com/it 157

 comparing the economic and financial information and data reported in paragraph “Lavazza Group - financial-economic trend” of the Report with those included in the Group’s consolidated financial Conclusion statements as of 31 December 2015 on which other auditors issued an audit opinion, in accordance with article 14 of legislative decree n° 39 of 27 January 2010, on 12 April 2016; Based on the work performed, nothing has come to our attention that causes us to believe that the Sustainability Report of Luigi Lavazza S.p.A. as of 31 December 2015 has not been prepared, in all  analysing, through inquiries, the governance system and the process for managing the material respects, in compliance with the “G4 Sustainability Reporting Guidelines” defined in 2013 by sustainability issues relating to the Company’s strategy and operations; the GRI - Global Reporting Initiative as disclosed in the paragraph “Note on methodology” of the  analysing the process aimed at defining the significant reporting areas to be disclosed in the Report, Report. with regard to the methods for their identification, in terms of priority for the various stakeholders, as well as the internal validation of the process findings;  analysing the processes underlying the generation, recording and management of quantitative data included in the Report. In detail, we carried out: , 21 September 2016 ‐ meetings and interviews with management of Lavazza to achieve a general understanding of the information, accounting and reporting systems in use to prepare the Report, as well as of the internal control processes and procedures supporting the collection, aggregation, PricewaterhouseCoopers Advisory SpA processing and submission of the information to the function responsible for the Report preparation; ‐ a sample-based analysis of the documents supporting the preparation of the Report, in order Signed by to obtain evidence of the reliability of processes in place and of the internal control system underlying the treatment of the information relating to the objectives disclosed in the Report; Paolo Bersani (Partner)  analysing the internal consistency of the qualitative information described in the Report and its compliance with the guidelines identified in the preceding paragraph “Responsibility of the Directors for the Report”;  analysing the stakeholders engagement process with regard to the methods used and the analysis of This report has been translated from the original, which was issued in Italian, solely for the the existing documentation concerning the significant matters arisen during the Company’s convenience of international readers. dialogue initiatives;  obtaining a representation letter, signed by the Chief Executive Officer of Luigi Lavazza S.p.A., on the compliance of the Report with the guidelines identified in the paragraph “Responsibility of the Directors for the Report”, as well as the reliability and completeness of the disclosed information.

Our limited assurance work was less in scope than a reasonable assurance engagement performed in accordance with ISAE 3000 and, consequently, it does not provide us with a sufficient level of assurance necessary to became aware of all significant facts and circumstances that might be identified in a reasonable assurance engagement.

158 159

2 di 3 3 di 3 Lavazza Sustainability Report 2015 Glossary

Glossary Accountability called “first-party audits”, are • Maintain the quality and An organisation is accountable conducted by the organisation reproducibility of natural if it is organised in such a way directly or on its behalf, for review resources; as to provide its stakeholders by the top management and • Guarantee well-being and (see stakeholder) with periodic for other internal purposes, and opportunities for growth in reports and communications on its can form the basis for a self- accordance with human and approach, objectives and results. declaration of conformity. In many workers’ rights; The level of accountability of an cases, particularly in smaller • Generate income, profit, and organisation and the content organisations, independence can stable and lasting jobs. of its reports have a significant be demonstrated by the absence The Sustainability Report is a impact on stakeholders’ perception of liability for the activities audited. voluntary document, so it is not of the organisation, which in External audits include those that subject to any legal obligation. turn affects its reputation. As are generically called “second- There is, however, a standard such, accountability provides party” and “third-party audits”. that sets out its structure and a foundation for building and Second-party audits are conducted contents, to ensure it provides the strengthening trust between a by stakeholders, such as clients, or information in which stakeholders company and its stakeholders. by other persons on their behalf. (see stakeholder) are interested. Third-party audits are conducted The GRI standard (see Global Environment (taken from by independent external auditing Reporting Initiative - GRI) is UNI EN ISO 14001:2004) committees such as those that recognised on an international The context in which an issue certificates of conformity level and used by leading organization conducts business, to ISO 9001 and/or ISO 14001 organisations around the world for including air, water, soil, natural standards, for instance. sustainability reporting20. resources, plant and wildlife, human beings and their Environmental aspect (taken Biodiversity interactions. from UNI EN ISO 14001:2004) The variability between living Any element of an organisation’s organisms within a single species Audit (taken from UNI EN ISO business or products/services that (genetic diversity), between 19011:2012) can interact with the environment. different species and between Systematic, independent and ecosystems. The Convention on documented process for obtaining Sustainability Report biological diversity, approved by audit evidence and to objectively A document drawn up periodically the European Community, affirms assess the data, in order to in which an organisation analyses the need to anticipate, prevent determine the extent to which the its social, environmental and and combat at the source the audit criteria have been met. economic performance, describing causes of any significant reduction Internal audits, sometimes its ability to: or loss of biological diversity, in

20 The EU Directive published on 6 December 2014 on “disclosure of non-financial and diversity information by certain large companies and groups” calls for listed and unlisted European companies with more than 500 employees to publish a declaration annexed to the management report, no later than 2017, containing “key information relating to at least environmental, social and employee matters, respect for human rights and the fight against corruption”. The directive is currently being transposed into national law by the EU member states.

160 161 Lavazza Sustainability Report 2015 Glossary

consideration of its intrinsic value methane (CH4), nitrous oxide through specific plants, and at for Corporate Social Responsibility”, Greenhouse effect development. as well as its ecological, genetic, (N2O), hydrofluorocarbons (HFCs), a limited scale, through house according to which CSR is “a A natural effect, amplified by the Since its foundation in 1997, social, economic, scientific, sulphur hexafluoride (SF6) and composters. process to integrate social, results of human activities, which the GRI has issued a series of educational, cultural, recreational perfluorocarbons (PFCs). The tCO2e environmental, ethical, human regulates the ability of the Earth’s editions of its reporting standards, and aesthetic values. (metric tonnes of equivalent CO2) COP21 rights and consumer concerns in atmosphere to withhold energy each representing an evolution makes it possible to quantify the Paris Conference on climate to their business operations and from the sun through a semi- of the previous one to adapt Organic greenhouse effect of these gases change held in Paris, France, from core strategy in close collaboration transparent layer consisting of to changing scenarios and to Organic farming is a method with reference to the greenhouse 30 November to 12 December with their stakeholders, with the greenhouse gases that “trap” meet stakeholders’ expectations of growing raw materials in effect produced by CO2, considered 2015 and organised by the United aim of: the sun’s rays. more effectively in terms of compliance with a set of coded equal to 1 (e.g. methane has a Nations Framework Convention • Maximising the creation of shared the information provided (see principles, like the one forbidding greenhouse potential 25 times on climate change (UNFCCC). value for partners/ shareholders Energy saving stakeholder). The new edition the use of chemicals in all stages higher than CO2, and therefore one The Conference has negotiated and for their other stakeholders A set of actions to programme, of the standard, the “G4”, which of agricultural production. The tonne of methane is accounted for a global agreement in Paris to and society at large, through a plan and adopt energy-reducing focuses on the concept of term “organic” is also used to as 25 tonnes of equivalent CO2). reduce climate change, which long-term strategic approach mechanisms, technologies and “materiality”, was released in indicate a certification standard for The measurement of the carbon will become legally binding, if to CSR and the development of practices, without reducing output mid-2013 (see materiality). agricultural raw materials, which footprint of a product or process ratified by at least 55 countries innovative products, services and or services offered. guarantees that they come from requires in particular the that together represent at least business models; Green Procurement supply chains that comply with the detection and quantification of the 55 percent of the global emissions • Identifying, preventing and Non-renewable energy sources Incorporation of environmental principles of organic farming. consumption of raw materials and of greenhouse gases. The parties mitigating their possible adverse Natural resources that tend to policies in the purchasing of For companies operating in Europe, energy during select stages of the shall sign the agreement in New impacts”. be depleted over a humanly products and services, while the technical rules establishing the life cycle. York from 22 April 2016 to 21 April quantifiable time and from which factoring the environmental characteristics of organic farming 2017, and even adopt it within Eco-design heat or electricity can be obtained. impact during their life cycle, from are laid down in EU legislation. Code of Ethics their own legal systems (through Product design that has the Examples of non-renewable energy extraction of the raw material to Moreover, supervisory bodies http://www.lavazza.it/it/mondo_ ratification, acceptance, approval lowest possible impact on sources include fossil fuels (carbon waste disposal. authorised by the Italian Ministry lavazza/ethics.html or endorsement). the environment during and oil) and the minerals used to of Agricultural and Forestry Policy manufacturing, use and disposal. produce nuclear energy (uranium). Environmental impact also exist to carry out inspections Compostability CSR (taken from UNI EN ISO on the farms and certify organic Property of biodegradable organic Corporate Social Responsibility Circular economy Renewable energy sources 14001:2004) production processes. materials (food and grass shoots, Set of policies adopted voluntarily An economy in which the waste Natural sources capable of Any disruption of the environment, manure, organic plastics, etc.) by a company to integrate social produced by a manufacturing generating thermic and electric whether negative or beneficial, Carbon footprint (source: of being convertible into humus and ecological issues with its process circulates within the energy. These sources include solar caused entirely or partly by an Ministry for the Environment compost when processed in commercial operations and economy by re-entering it energy, wind energy, biomass, organisation’s environmental and Protection of Land and Sea) composting plants. relations with stakeholders. A directly or in another process. tides and ocean currents. aspects. The carbon footprint is a measure company is socially responsible The following is the definition that expresses the total emissions Industrial composting if it goes beyond its statutory of a circular economy provided Global Reporting Initiative (GRI) ISO 9001 in equivalent CO2 of greenhouse Controlled biological obligations by investing in human by the Foundation Ellen MacArthur: A non-profit, multi-stakeholder An international standard gases directly or indirectly linked decomposition using oxygen, capital, the environment and a circular economy is “an industrial organisation recognised at setting out the requirements to a product, an organisation or a of organic waste. This process relations with its stakeholders. economy that is conceptually international level, whose mission of an organisation’s quality service. generates a material similar to This is mirrored by the definition of regenerative and that reproduces is to establish guidelines for management system. The In accordance with the Kyoto humus, named compost. The CSR in the European Commission nature by actively improving and preparing sustainability reports standard provides guidelines for Protocol, greenhouse gases composting process can be Communication of October 2011 streamlining the systems it uses and to encourage their use as a improving efficacy and efficiency include: (CO2), realised at the industrial level “A renewed EU strategy 2011-2014 to operate”. way of contributing to sustainable in making a product and providing

162 163 Lavazza Sustainability Report 2015 Glossary

services, and for enhancing performance in terms of energy that a given topic (economic, the certification from a third safety, and as expressed formally good working conditions, good customer satisfaction and loyalty. efficiency and energy use management, social or party, and/or to define a self- by its top management. H&S relations within communities, and consumption, through a environmental) has for the declaration, or as a guideline in policies provide a reference integrated waste management, ISO 14001 systematic approach. company and its stakeholders (see order to establish, implement and framework in which to conduct integrated pesticide management, International standard that stakeholder). Material issues are improve a management system for business and help define the monitoring, and the promotion of identifies the requirements of an LEED® those that reflect the organisation’s occupational health and safety. company’s objectives in terms of peace. “environmental management LEED (Leadership in Energy significant economic, social health and safety. system” capable of identifying and Environmental Design) is a and environmental impacts or Scope Climate change - and assessing the environmental system for classifying the energy substantially influence stakeholder With reference to sustainability Pollution prevention (taken Global Warming aspects of an organisation’s efficiency and ecological footprint assessments and decisions. reporting, “scope” indicates the from UNI EN ISO 14001:2004) Expression used to indicate business, products and services, of buildings in the United States, various entities (e.g. subsidiaries, Use of processes, practices, the increase in the average with the aim of continually developed by the U.S. Green Organisation and Management joint ventures, suppliers) whose techniques, materials, products, temperature of the Earth’s improving its environmental Building Council (USGBC). It Model (as per D. Lgs. 231/2001) performance is included in an services or energy sources to avoid, atmosphere and oceans due to performance and the system’s provides voluntary certification organisation’s sustainability reduce or control (separately or natural causes. It is also used as a requirements. The standard can for buildings that demonstrate An organisational system, report. As reporting is voluntary, in combination) the generation, synonym for global warming and be used to apply for certification their environmental sustainability established through an official the company can define its own emission or discharge of any is caused by anthropic contribution from agencies and/or to issue in terms of energy and the company document, designed to reporting scope; the broader pollutant or waste, in order to occurring over a time-span of 100 a self-certification, or simply as consumption of all resources prevent cases of criminal liability the scope and if all or a large reduce negative environmental years. a guideline to establish, enforce involved in the production process. established in Italian Legislative proportion of the company’s impacts. Pollution prevention may and improve an environmental Decree 231 of 8 June 2001. Under activities are included in it, the include reducing or eliminating Stakeholder and multi- management system. Life Cycle Assessment the decree, organisations are more the company is accountable at the source, modifications to stakeholder (LCA) subject to “corporate liability” (see accountability). a process, product or service, Stakeholders are groups or ISO 22000 Methodology defined by the ISO for specific kinds of offences the efficient use of resources, individuals that are expected A voluntary standard certifying 14040:2006 standard. The LCA is committed by administrators and Environmental policy (taken replacement of materials or energy to be significantly affected by safety management system in an objective process for assessing employees in the interest or for the from UNI EN ISO 14001:2004) sources, reuse, recovery, recycling, the activities, products and/ the food sector. It is applicable to the environmental effects of a benefit of the organisations. The set of intentions and reclamation and treatment. or services of the organisation all companies operating directly product, process or activity, carried guidelines of an organisation or whose actions can influence or indirectly in the food and out by identifying and quantifying OHSAS 18001 (Occupational insofar as concerns its Rainforest Alliance the organisation’s ability to agricultural sector, including energy, materials used and waste Health and Safety Assessment environmental performance and Rainforest Alliance is a successfully implement its packaging manufacturers, and released into the environment in Series) as expressed formally by its top non¬governmental organisation strategies and reach its objectives. aims to assess and demonstrate order to assess their impact and to International Standard identifying management. Environmental founded in 1986 to preserve In accordance with the AA1000SES product compliance and food identify and grasp opportunities the criteria for a “Management policies provide a framework biodiversity, improve the living standard (developed by the UK- safety, while also guaranteeing for environmental improvement. System for Occupational Health in which to conduct business conditions of farmers and promote based organisation Accountability effective control of risk factors. The assessment includes the entire and Safety”. This system should and help define the company’s sustainable farming practices and recognised as an international life cycle of the product, process or identify the dangers and risks of environmental objectives and (www.rainforestalliance. org). The benchmark), an organisation may ISO 50001 activity, including the extraction activities, products and services of goals. certification standard is based on give priority to its stakeholders International Standard specifying and processing of raw materials, an organisation in order to ensure compliance with the following or groups of stakeholders based the criteria necessary to create, production, transportation, the continuous improvement Health & Safety policy (taken nine principles: protection of on the relevance of each of maintain and improve an energy distribution, use and final disposal. of the safety performance as from OHSAS 18001:2007) local flora and fauna, protection them. Relevance is an attribute management system. This system well as the compliance with the The set of intentions and of ecosystems, protection of the determined by a joint assessment should enhance an organisation Materiality above-mentioned criteria. This guidelines of an organisation soil, protection of water resources, of the degree of dependency, to improve continuously its Materiality means the relevance standard can be used to obtain insofar as concerns health and fair treatment of workers and influence, and priority that

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each stakeholder has with the Intermodal transport or services made available to organisation, or other aspects The use of two or more employees as a way to reconcile that characterise the relationship transportation methods on a given their job and private life. between the stakeholder and the route. An example is intermodal organisation. transport on land, i.e. road-railway, Through the multi-stakeholder in which a cargo unit (container, approach, a given topic is mobile crate, and semi-trailer addressed with the involvement truck) travels a part of the route by and collaboration of entities railway and another part (or more) that have different interests in on road. the topic and therefore different requirements. Examples of these Staff turnover stakeholders could be the various Staff turnover is the ratio between entities in a production chain, staff joining the organisation and representatives of institutions, those leaving it. companies and non-profit organisations, etc. UTZ UTZ is a non-profit association Sustainability and Sustainable based in Amsterdam, founded Development in 2002 to promote sustainable The most common definition farming. The certification standard of the concept of sustainable is based on principles such as development is contained in the transparency of commercial the “Brundtland Report” of practices, the traceability of raw the World Commission on materials and compliance with ILO Environment and Development conventions (www.ilo.org). (named after its chairman Gro The name of the association Harlem Brundtland), produced in derives from Utz kapeh, which 1987. Sustainable development means “good coffee” in the Mayan indicates a development model language Quiché. “that meets the needs of the present without compromising Corporate welfare the ability of future generations System of voluntary services to meet their own needs”. provided by a company in favour Sustainability is therefore an of its employees, in response to approach (to society as well as their specific needs and economic/ to business) orientated towards social interests. The term by guaranteeing a balance between extension includes a very broad current and future needs, and range of services, such as benefits balancing economic and financial on social security and insurance requirements with social and needs (e.g. a contribution to environmental needs. a healthcare plan) and goods

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