Improving everyday life Corporate Social Responsibility report 2018 Content

Ownership structure...... 4 Our corporate social imperative...... 6 Highlights 2018...... 8 Strategy and governance...... 12 Sustainability...... 16 Customer value...... 26 Opportunities and diversity...... 40 Taxes...... 50 Risks and due diligence...... 54 Human rights...... 56 Social and employee conditions...... 57 Anti-corruption...... 58 Environmental impact...... 59 Climate...... 60 Our stakeholders...... 62 Annexes...... 66 Carl’s Jr. Carl’s in scope for the reporting Netto.dk are covered by their Carl’s Jr. are franchises and not Jr. Carl’s Salling.dk, Bilka.dk, føtex.dk and respective formats. Starbucks and Starbucks 29,19 % 51,71 % Wupti Købmand Ferdinand Købmand Ferdinand Sallings Mindefond Salling Holding A/S F. 100 % Netto Salling Group Bilka 70,81 % 48,29 % føtex 100 % Købmand Herman Sallings Fond Salling Invest A/S F. % owned by the the by % owned Salling 100 Foundations Salling

The Group operates the formats: føtex, Bilka and Netto, the Salling department stores and ande-commerce plus the franchises Starbucks the Group in Denmark. Additionally, Jr. Carl’s operates the discount format Netto in Germany, Poland and Sweden.

Ownership structure CSR report 2018 Foundations. The Foundations purposes are toFoundations. The Foundations purposes ensure that Salling Group develops continuously give someto meet our customers’ needs and to of the profits earned back to society through donations. Salling Group is owned 100% by the SallingSalling Group is owned 100% by the Salling Group is 100% Danish and Danish and 100% is Salling Group multiple units operates across

Ownership structure

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to the benefit of all whom we interact with.to the benefit of all whom we interact While this report itself is limited to 2018, our will future. We perspective on responsibility is for the continue to strive to give people the opportunity to improve their everyday life. Strive to make a positive anddifference for our customers, our employees the society we take part in. By providing safe and responsible products, by sourcing conscientiously by allowing our in a world of growing complexity, employees to utilise their full potential and last but not least give back to the society we take pride in purpose is to make being a part Salling Group’s of. everyday life better for customers, colleagues and communities. focus will always be to continue the ongoing Ourdevelopment of a sustainable business. strengthpeople-focus combined with our financial enables us to make conscious long-term decisions waste during transportation,waste during warehouses and in partour customers. As in the homes of stores, and introduced a deposit schemeof the initiative, Netto to encourage re-use, while føtexon shopping bags plastic cotton buds, disposablestopped the sale of that added plastic cutlery and tableware. Totally million plastic units. up to more than 70 In this report, we have described more specific in 2018 have contributed toactivities where we lasting change. responsibility Taking our main largest retail company, As Denmark’s

through donations of the profits earned of the profits through donations in the retail have donated 2012, the foundations group. Since DKK to projects within culture,more than a billion education, science and to the benefit sports, charity, of our employees. footprint Increasing our social also initiated aIn 2018 Salling Group transformation employees of our more than 53,000 to the UN Sustainableto focus on our contribution Development Goals (SDGs), particularly 3 (Good and 4 (Quality Education) Health and Wel-being), 12 (Responsible Consumption and Production). In 2018, we took further steps to increase our agenda,social footprint. Especially in the health nationwidewhere Salling Group became the first retailer in Denmark to introduce a voluntary display advocatingban on tobacco products, subsequently bana change in legislation to make a display mandatory and urging other retailers to follow suit. food wasteSalling Group is aiming to reduce its the onlyby 50% by 2030. The Group remains its foodretailer in Denmark to measure and publish teamed upwaste figures. In 2018, Salling Group initiativewith suppliers and NGOs to launch the ‘Danmark mod Madspild’ (Denmark Against Food aim of creating transparency about with the Waste) ambition food waste and sharing our and the UN’s with our customers, suppliers and partners. Last year Salling Group launched an ambitious strategy to reduce excess use of plastic and plastic

significant change. 2018 certainly did not mark the in many end of our transformation; on the contrary, Followingways, 2018 signalled a new beginning. the remainingthe Salling Foundations’ acquisition of Moeller – Maersk, our 19% of the shares from A. P. the wings ofGroup was once again 100% under changedthe Salling name. In 2018, we therefore Supermarkedthe name of our company from Dansk our heritageGroup to Salling Group to underline Sallingand our connection to our owners; the Foundations. The Salling Foundations were established by our founding fathers, the entrepreneurial and visionary retailer Herman and his father Ferdinand Salling Salling. The foundations’ purpose is to ensure that Salling Group develops to meet our customers’ needs – and to contribute to society

Our corporate social imperativ CSR report 2018 Eleven million people visit our stores weekly. With With Eleven million people visit our stores weekly. and it is that comes a significant responsibility, something we take very seriously. Being responsible is an integrated part of how we purposedo business. It is a mind-set. Our corporate of ‘Improving Everyday Life’ guides how we engage with our customers, colleagues, partners, suppliers, do local communities and the world around us. We this through sustainable solutions, the best customer value, job opportunities for all and through our donations via our owners, the Salling Foundations. Giving back to society For the past six years, Salling Group has undergone Improving everyday life Improving lives. people’s Being a retailer means being close to customersThe choices we make on behalf of our make a real difference in their everyday life. With size comes responsibility With size comes customers, for employees, and society local communities Our corporateOur imperative social

| 6 Netto expands testing of deposits on plastic bags – the deposit contributes towards recycling Netto opens its future discount store: special focus on fruit and vegetables Salling Group becomes partner in ‘Røgfri Fremtid’ (Smoke-Free Future) and decides to hide away tobacco in all stores June Dansk Supermarked Group to Salling changes its name Group million 47 føtex announces a stop of selling all plastic disposable tableware for the sake of the environment plastic cotton buds are removed from shelves and replaced with cardboard and paper products May April føtex sets a major target for føtex sets a major over 2,000 organic products: 2020 organic products in Salling Group signs the new Accord on Fire and Transition Building Safety in the textile industry in Bangladesh Netto wins the Rainbow Award Retail Prize for sending clear signals about being a diverse company More than half of all the clothing sold in føtex children’s is now produced with organic cotton Netto and DanChurchAid gather socially vulnerable people for Easter meals across the country Netto begins testing levying deposits on plastic carrier bags on the island of Funen March We launch the full traceability We of tuna for our private labels – our customers have the possibility to check the tuna online February

Highlights 2018 CSR report 2018 A new and improved strategy regarding responsibility is established Labelling conference for suppliers and other stakeholders health regarding food safety, and risks of misrepresentation is held Bilka increases its commitment to training mentally handi­ capped citizens by moving more sheltered workshops into the Bilka hypermarkets Vegan minced-meat alternative Vegan stores with a is launched in our huge sales impact Highlights 2018 Highlights January

| 8 tonnes 36 Netto and ‘FødevareBanken’ Netto and ‘FødevareBanken’ invite all (the Danish Food Bank) via online social organisations for excess solutions to apply 36 tonnes food for Christmas. of food were donated on that occasion 85 føtex stores throughout the country establish collaborations with local organisations regarding distribution of Christmas food December føtex almost halves its food waste in just four years – and have set a new target to halve it again November Focusing on social projects Salling the and sustainability, Foundations start distribution the of donations through local føtex stores across the country (e.g., areas, recreational playgrounds, funding of a lab for the removal and recycling of plastic from the sea, to mention a few) Food waste app developed by Netto and ’FødevareBanken’ (the Danish Food Bank) wins an international award innovation Salling Foundations Diversity Prize 2018 is awarded (prize goes to a store or department that has made a positive difference regarding diversity and inclusiveness) ‘Miljø- og Fødevareministeriet’ ‘Miljø- og Fødevareministeriet’ (the Ministry of Environment takes and Food of Denmark) Madspild’ over ‘Danmark mod Food Waste), (Denmark Against which becomes the platform for future national action planning to fight food waste October føtex, Bilka and Salling føtex, Bilka and Salling department stores hide tobacco Salling Group from public sight. retail group becomes the first tobacco in Denmark to hide aiming at a smoke-free generation in 2030 Bilka halves its food waste in just four years – and sets a new ambition to halve once again charity Bilka and the children’s ‘Børns Vilkår’ create a volunteer network throughout Denmark Netto’s customers elect Netto’s *Organic Grower of the Year* among Netto organic suppliers who have been nominated for the prize awarded by Netto Bilka is certified “Great Place to Work” Salling Group is nominated Salling Group is nominated Prize as for CSR award People’s a recognition of longstanding engagement within social responsibility Netto introduces new plastic bags from recycled plastic and raises the deposit – and gets even more bags returned føtex and Bilka launch clothes føtex and Bilka launch plastic made from recycled September Købmand Herman Sallings Mindefond awards DKK 10 million in special bonus to employees Hiding tobacco has an impact: Hiding tobacco has significantly fewer young people buy cigarettes in Netto – the goal: a smoke-free generation in 2030 is getting closer All conventional pork meat in Netto to come from pigs reared without the use of antibiotics August Salling Group launches ‘Danmark mod Madspild’ (Denmark Against Food Waste) – an open national partnership to fight food waste

stores

Danish Netto 500 Highlights 2018 CSR report 2018 Sales of the highest-level animal welfare products are increased by more than a quarter of a billion in three years Netto hides all tobacco in the Netto hides all tobacco Highlights 2018 Highlights July The heat wave in Denmark leads to overproduction of tomatoes – ”food waste ketchup” is sold in our stores with great success and in addition receives massive publicity

| 10 ACTION: ACTION: ­partnerships scale up impact to Scale up to maximise positive impact Scale up to maximise Continue focus and explore potential for Our ability to ­impact positively ACTION: ACTION: Continue focus Monitor development Ability to impact positively to impact Ability Economic and reputational impact

Combined with Salling Group’s purpose, which Combined with Salling Group’s is to make everyday life better for customers, three colleagues and communities, we defined Customer value and drivers: Sustainability, Opportunities for All. Heatmap globalFrom the analysis, it was concluded that Sallinggoals 3, 4 and 12 are the goals where make aGroup have the greatest possibility to serious impact. These three global goals will be used as the platformfor our CSR work going forward. Based on our purpose and the three drivers, we have defined six CSR focus areas for our efforts over the coming three years, tapping into our selected global goals.

the potential impact on our business economy, our reputation and our own ability to influence the individual global goals. Strategy and governance CSR report 2018 Nations’ 17 Sustainable Development Goals (SDGs). Nations’ 17 Sustainable Development based on an Three individual goals were selected ability to create the evaluation of our company’s highest level of impact. global enable us to identify those three key To goals for Salling Group to impact we identified three variables: 1. 2. 3. In the spring of 2018, Salling Group management Theadopted a new CSR strategy for 2018-2021. of the United strategy is based on a thorough analysis The Sustainable Development The Sustainable 12 are the goals that Goals 3, 4 and most can impact the Salling Group ­governance Strategy andStrategy

| 12 Each committee reports to the Executive Committee three times a year. Delivering on and setting targets for each on and setting targets Delivering as being challenged as focus area as well on existing targets we make progress expertsBeing subject matter on finding the right solutions External activation in formats and at group level Securing internal communication – in formats and HQ - and reporting the and sparring to Committee. CSR team and Executive Each committee is responsible for: is responsible Each committee • • • •

Chief Financial Officer (CFO): Anders Hagh Chief Financial Officer Executive Vice President (EVP), Netto International: Michael Løve Commercial (PD): Jeppe Dahl Purchasing Director, Executive Vice President (EVP), føtex: Thor Skov Jørgensen Poulsen Executive Vice President (EVP), HR: Peter COMMITTEES Food waste Anders Hagh, CFO Plastic Michael Løve, EVP Jeppe Dahl, PD Responsible products Health Thor Skov Jørgensen, EVP Diversity Peter Poulsen, EVP Great work life Peter Poulsen, EVP CSR Committees – Salling Group – Reporting intervalCSR Committees – Salling Group establish six CSR committees. One committee One committee six CSR committees. establish has a focus area. Each committee for each top management of Salling chairperson from the is team, CSR the Group, who, together with for driving efforts the across responsible committee will co-operate organisation. Each of each committee. with the other members lead management taking Top • • • • • UN goals E.g., Ernst & Young and DIEH E.g., Ernst & Young DanChurchAid Fairtrade, 3F, E.g., WWF, 1 2 Health 1. Nutritional food 2. Physical activity 3. Support “generation smoke-free in 2030” Great work life +75% overall satisfaction / +75% satisfaction with superior Continuous development Plastic in private 100% recyclable packaging label from 2018-2023 that criterions such as importance, real impact, will be diligence and obligation to the strategy prioritised. in the Objectives and status are explained following chapters. CSR anchored directly in top management 2018 was also the year when we chose to even furtherour CSR agenda directly in anchor top management. After the establishment of the we decided to six focus areas in the CSR strategy, , 1 , in order to ensure 2 Inclusiveness 60% of job ready persons to get a job Food waste Reduce food waste by 50% from 2014-2030 Responsible products Increase revenue from responsible products 100% supplier risk screening + DKK 500 m sale of animal welfare Focus areas Opportunities Customer value Sustainability Drivers Improving everyday life Improving purpose: Our Strategy and governance CSR report 2018 CSR Framework in The six focus areas have been prioritised positively accordance to where we can influence on new opportunities and where we can mitigate our impact on the planet. Collaboration with external partners Each focus area contains of one or more specific objectives, and they have in general been developed directly in relation to a global goal. Often in collaboration with external partners including interest groups

| 14 Sustainability As one of Denmark’s largest companies, we seek to make a difference, and we are constantly working to mitigate our impact on the climate and the environment. Thinking and acting sustainably is a natural part of running a solid, responsible business 2030 29787 2029 Total* 2028 42826 2027 2026 17303 2025 2018 2024 Netto** 2017 2023 19458 Actual 2022 2016 4016 2021 Target 2015 Bilka 2020 2014 2019 8033 2018 8119 2017 2016 føtex 2015 15122 2014 0 0 *Incl. Salling and warehouses ** More stores account for 219 tonnes in 2018 5000 5000 Food Waste in Formats and Total in Formats and Food Waste Development Food Waste 45000 40000 35000 30000 25000 20000 15000 10000 45000 40000 35000 30000 25000 20000 15000 10000 Fast Moving Consumer Goods 3 take over the initiative and develop it furthertake over the initiative and develop in on the Prevention of an upcoming ‘Think Tank are pleased to and Food Loss’. We Food Waste and have contributed to developing the concept platform action plan to reduce for a future national food waste. Bilka and føtex almost half way achieved The reduction of 1,176 tonnes that we We figures. this year equals to 3.8% in absolute reduc- are proud to say that it is a significant and Bilka Our føtex tion compared to last year. formats have been so dedicated and effective in halve (Bilka) their work that they have managed to and almost halve (føtex) their food waste in just four years. Since 2014, Bilka has reduced its food waste by 4,017 tonnes - i.e., 50%, while føtex has reduced its food waste by 7,003 tonnes, equal to 46.3%. retail group, it is inevitable 3

Sustainability CSR report 2018 As a major FMCG that we contribute to food waste. That is why we that we contribute to food waste. That target to halve have - in line with SDG 12.3 - set a our food waste by 2030. Denmark’s In 2018, together with a number of ‘Danmark leading companies, we launched the mod Madspild’ initiative (Denmark against All partners are in this initiative Food Waste). figures, as obligated to publish their food waste and at the we have already done since 2016, by same time, work towards a 50% reduction is who anyone 2030. to The partnership is open interested. Upcoming national action plan ‘Danmark mod Madspild’ was veryreceived, well and we subsequently agreed with ‘Miljø- og Fødevareministeriet’ (the Ministry of Environment and Food of Denmark) that the Ministry should

We are still on track are still We Food waste Food

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2,800,000 meals not wasted 199 tonnes of food donated for human consumption to their ‘best before’ date. In Sweden, Netto also Sweden, Netto before’ date. In to their ‘best that bring with several organisations cooperates otherwise food to use, e.g., for homeless wasted animals. people and for feeding of 2018, Sweden was affected During the summer left farmersby a heat wave, which struggling to in the drought. Aiming to help, feed their animals their stores in a project Netto Sweden involved was donated to local farmerswhere food waste for animal feed. This was a highly appreciated initiative. focus outside Denmark Stronger As of 2019, we are starting to measure food waste Poland and Sweden as well. in Netto in Germany, however, The reduction target will be different, since stores outside Denmark, due to a narrowersince stores outside Denmark, due to a assortment, have less waste compared to Danish Netto stores and therefore less to optimise. Nevertheless, to continue the fight we want formats waste in both against food new by setting is yet again to halve food targets. The new target and føtex by 2030, equal to a waste in both Bilka compared to 2014. total reduction of 75% we reduced the food waste by In Netto Denmark, despite the fact that we 1.9% in absolute figures, stores and expanded during have opened more development is below our this period. Still this expectations. Reducing food waste footprint In 2018, we collaborated with ‘FødevareBanken’ ‘Mad til Alle’ (the Danish Food Bank), Wefood, Wasting (Food for All), ‘Stop Spild af Mad’ (Stop through- Food Denmark) and local organisations out the country waste. on ways to reduce food articles have reduced packet sizes for many We in order to avoid food waste at the consumer data-driven end. This is done through closer and suppliers cooperation with our fruit and vegetable on all fruit in order to secure 24 hours lead-time The result: and vegetable convenience products. more fresh products and less food waste. Netto in Sweden – like in Denmark – seeks to reduce its food waste footprint by optimising store routines that ensure that fresh food is sold at discounted prices close to the ‘best before’ date. Each store has a dedicated space in the fresh areas that displays the current items that are close

“1,176 tonnes. This is how much we “1,176 tonnes. This is how much have reduced our total food waste and in the past year, at Salling Group effortswe will continue our determined on track to avoid food waste and stay to reach our target”, Salling Group Anders Hagh, Chief Financial Officer, Sustainability CSR report 2018

| 20 Foto: Stefan Sauer/Picture Alliance/Ritzau Scanpix All single-use tableware in plastic phased All single-use tableware in plastic phased out no later than during 2021 All plastic used for transportation to be reused or recycled by 2020 4. 5. These ambitions may grow as we learn more right now about the different kinds of plastic. But we are committed to these very ambitious targets. New design to reduce plastic 1-3 will all be served by the new packaging Target and aredesign principles that we have developed in the process of validating with external partners Wildlife (the World such as ‘Verdensnaturfonden’ Foundation – WWF) and other industry experts. The packaging principles will be applied to our expect private labels as soon as possible. We a number of changes to our packaging to be launchedand initiatives, in Netto in 2019. Two

Reduce use of plastic in packaging in all Reduce use of plastic in packaging in label products private food and near-food by 30% by 2023 private label products All food and near-food to be designed for full recyclability by 2023 30% of plastic used for food and near-food private label products to be made from recycled plastic by 2023 Sustainability CSR report 2018 Each year a large quantity of plastic harmfullyEach year a large quantity of plastic world toends up in the environment around the the detriment of both nature and wildlife. Plasticthe detriment of both nature and wildlife. packaging plays an important role in the durability But at theof food and in reducing food waste. if it is notsame time it poses a serious challenge up as waste.handled properly and therefore ends have set 5 targets to support our ambition: We 1. 2. 3.

Plastic should never end up in nature never end Plastic should Plastic

| 22 “At Salling Group, we have set an overarching føtex respectively, have already seen significant approximately 47 million plastic cotton buds ambition that plastic should never end up in progress and have helped make the plastic agenda and 25 million plastic knives, forks, cups, glasses, nature. To support that, we focus on reducing very present in the retail industry: straws and plates. the amount of plastic we use, and we will actively pursue a way of working that increases 1. Netto tests deposits for plastic bags Innovative employees show the way the financial value of used plastic”. In Netto, we became the first Danish FMCG In 2018, at our warehouse for processed food, Michael Løve, Executive Vice President, Netto International retailer to introduce deposits on plastic bags. This we had a target of reducing costs of GNFR (goods contributes to plastic being reused or recycled to not for resale). Trying to reduce not only costs but a greater extent. The deposit scheme has initially also the amount of plastic we use, we carefully been introduced on Funen and Bornholm to test examined the foil used for the manual foiling of customer reaction. Initially, we gave back DKK pallets, as well as foil efficiency. 1 per bag to customers when they returned the The study led to a new type of foil being developed bags. However, the return rates were low, so we in a cooperation between warehouse employees, increased the pay-back to DKK 2 per bag. As a GNFR buyers and external partners. The result will consequence, the return rates have grown from give us a saving in manual foil costs of 36% and 7% to 15% in average per week, and sales of save more than 72% plastic foil in manual areas plastic bags have dropped by almost 14%. We are per year. currently evaluating the customer reaction and will We are now in the process of introducing this make a final decision as to whether to roll out this new foil to all manual areas in all our warehouses scheme during the first half of 2019. We estimate anticipating lower costs, less plastic, more stable that Salling Group will eliminate the use of more pallets and more efficiency. than 1,000 tonnes of virgin plastic if the initiative is rolled out nationwide in Netto. Re-circular multi-way plastic boxes In Q4 of 2018, føtex and Bilka started to use 2. More sustainable alternatives multi-way plastic boxes for the transportation of In føtex, plastic cotton buds were phased out during fruit and vegetables instead of one-way cardboard 2018. At the end of the year, we stopped the sale and plastic boxes that ended up as waste. The of all plastic disposable tableware in føtex’s 100+ multi-way boxes go from supplier to us and back stores. Both cotton buds and plastic disposable to supplier, where they are washed and re-used. tableware were replaced with more sustainable When they have served all they possibly can, they alternatives made from, for example, wheat straws, are made into plastic granulate that can be used bamboo, sugar cane, wood or paper. By doing for other plastic products. this, we have stopped the annual sale of |

24 Sustainability CSR report 2018 Customer value­ Customers are the foundation of our business, and we are here to improve their everyday life. Salling Group is continually striving to be better at creating value for our customers. We do this by making it easier for customers to choose healthy and sustainable products in our stores “We have the power to promote have the power to promote “We working conditions on improved a bigger scale and to facilitate positive impacts in supply chain” Commercial Jeppe Dahl Jeppesen, Purchasing Director,

requirements, as well as promote collaboration requirements, as well as promote collaboration and capacity building with suppliers. working conditions improved Promote capacity A good example of collaboration and one S.P.A., building is our cooperation with Mutti of the biggest players in the Italian processed Extending our sustainability tomato industry. requirements’ scope to a lower risk country like Italy has facilitated positive impacts upstream in anticipate agricultural supply chain. We Mutti’s that these changes can promote improved working conditions on a bigger scale.

Customer value CSR report 2018 with the option to shop responsibly with the option Since launching our responsible procurement all of oursystem in 2017, we have activated almost in-scope supplier base on the platform and thereby This has increased traceability and transparency. enabled us to unveil the very global and complex and value nature of our diverse product supply- on have had particular focus inchains. We 2018 We take pride in providing our customers take pride in providing We extended mapping of many of our food commodities, such as fruit and vegetables, coffee and tea, wine, vanilla and processed tomato products Responsible products. This has allowed us to evaluate responsible procurement hotspots and thereby determine appropriate sustainability standards and

| 28 campylobacter inspection of its own minced meat its own minced meat inspection of campylobacter all beef) from as ‘Mesterhakket’ (private labelled suppliers. According to the its raw ingredient and Food Administration, Danish Veterinary so far been regarded the chicken meat had primary campylobacter cases. In the source of beef was suspected of new action plan, minced source of the disease. being an overlooked of minced meat, we took In our own inspection negative out 33 samples for testing, and all were Three – i.e., without a trace of campylobacter. – also samples of minced pork were also tested were with negative results. In addition, suppliers asked for their own analyses of campylobacter in beef. All were able to report that their self-monitoring analyses had been negative. and Veterinary the Danish Subsequently, samples of Food Administration has taken more we ‘Mesterhakket’ and all have been negative, are proud to say.

Customer value CSR report 2018 In 2018, we scaled up on sample verifications sample verifications we scaled up on In 2018, out information– i.e., taking and documentation by our suppliers – and that have been uploaded validity traceability, scrutinising these regarding and proper information on production sites. a systemic approach and have developed We in order to furtherallocated resources processes in coming years. enhance verification Capacity building effortsIn 2019, one of our aims is to increase effortaddition we are aiming to intensify our in andcapacity building by educating our agents regards training producers in ethical trade. With we will also continue to to our textile category, Bangladeshwork with fire and building safety in Accord. through our membership of the Transition Food safety are also Responsible products and production many of our stores, we In about food safety. calls for produce our own meat products, which very strict in-house control regarding particularly hygiene. In spring 2018, as a result of ‘Fødevarestyrelsens’ and Food Administration’s) (the Danish Veterinary announcement of a new plan to examine and reduce the number of campylobacter infections in Denmark, Salling Group launched a within additional product groups, e.g., non-food,within additional product groups, e.g., Inthat are likely to require special attention.

| 30 We strive to ensure a wide assortment, strive and We communicate the level of animal welfare in making it easier for customers our products, to make informed choices. is to increase the sale of products with the highest is to increase the sale of products with by 2020. animal welfare by DKK 500 million Inspiring suppliers As part of this effort, we are cooperating with our welfare suppliers to inspire them to think animal during production, and our buyers regularly participate in animal welfare training. By the end of 2018, we had 171 products in meat, eggs, cheese in our stores that are milk and poultry, recommended by the Danish Animal Welfare see good opportunities to accelerate We Society. this positive trend even further through better

Customer value CSR report 2018 At Salling Group, we want to promote animal At Salling Group, we want to promote welfare and offer the best opportunities to choose Therefore, animal welfare products in our stores. we strive to ensure a wide assortment and in our communicate the level of animal welfare to products, making it easier for our customers make an informed choice. Animal welfare partnership Central to the effort is a five-year partnership with ‘Dyrenes Beskyttelse’ (the Danish Animal Welfare Society), which is one of the most ambitious initiatives in this area in Danish retail. Our objective

We cooperate with our suppliers with our cooperate We them to integrate to inspire in production animal welfare Animal welfare Animal

| 32 Total 292 Since the last cage eggs wereSince the inremoved from our stores been2017, the focus has thatdirected towards ensuring used as ancage eggs are not Theingredient in our products. eggs togoal is for no cage be part of our own-production byand private label products the end of 2019. 92 2018 89 2017 million 500 Sales of products produced produced Sales of products of with the highest level animal welfare have 292 increased by DKK The million since 2015. in aim is an increase turnover for the category of 2020. DKK 500 million by 111 2016 0 50 animal welfare animal welfare labelled products 300 250 200 150 100 Animal welfare sales increase By the end of 2018, there were 171 animal welfare labelled products in Salling Group stores. An increase of 38% in one year. 171 animal welfare - 1 heart,animal welfare 2 hearts and 3 hearts with 3 hearts level of animal being the highest animal welfare more welfare - which make that the development is accessible and ensure consumer-driven. for the national label for For broilers, ambitions focussing on the use of animal welfare include ensuring grow more slowly, chicken breeds that space and shorterthe animals have more transport times for slaughter. Customer value CSR report 2018 selection and higher volume. We wish to ensure We and higher volume. selection for our customers attractive prices even more welfare products. when it comes to animal welfare label Expanding animal In 2018, we participated the in expanding label, so it will also national animal welfare future. The label was introducedinclude broilers in since then the proportionin pork in 2017, and label has grown steadily. of meat with the new levels of The label divides products into three

| 34 public view as the most important action retailers can take to actively support the goal of a objective that smoke-free generation in 2030. An also the Danish government has set itself, in its Cancer Plan IV. Smoke-free generation 2030 sight is The effect of placing tobacco out of that fewer young people start to smoke. Netto tobacco became the first chain at home to place After Netto hid away tobacco, out of public view. sales fell by 9%. In stores with a higher number of young customers, there was an average decline of 25%.

Customer value CSR report 2018 In 2018, Salling Group took the most importantIn 2018, Salling Group took the most Danish step in the field of health from a large became the FMCG group for many years. We away all first retail group in Denmark to hide Bilka tobacco from public view in Netto, føtex, and in Salling department stores. The decision was made based on recommendations from Kræftens Bekæmpelse (the (the Danish Cancer Society), Lægeforeningen Danish Medical Association) and Hjerteforeningen (the Danish Heart Association). All of which – with reference to a report from WHO Europe and other factors – recommend hiding tobacco away from

Hiding cigarettes in all our stores is a in all Hiding cigarettes initiatives for future health platform strong Health

| 36 “We have chosen to push forward to push chosen have an “We future, a healthier to promote agenda and the for our youngsters especially tobacco generations: placing coming to do so” is a means out of sight Executive Vice President, føtex Thor Skov Jørgensen, The decision to hide tobacco at Salling Group at Salling Group to hide tobacco The decision and link in the establishment is the first an ambitious health strategy implementation of which in its essence will focus for the entire group, nutrition, physical activity on three main tracks: and smoke-free generation initiatives Health promoting of we are working with a number Today, e.g., our participationhealth-promoting initiatives, in the salt partnership; information about healthy product alternatives; at the School sponsorship in Olympics; the promotion of well-being charity ‘Børns Vilkår’; collaboration with children’s partnership with ‘Røgfri Fremtid’ (Smoke-Free vegetables Future); increased focus on fruit and advice tips; in our stores; navigation through diet food for and donation of vouchers for healthy kindergartenin Germany. groups Customer value CSR report 2018 We turn 1.2 billion in more than DKK over We of hiding The immediate experience tobacco. a double-digit million decline tobacco has been have received in sales and lost earnings. We this step, but some have recognition for taking we are tryingalso questioned whether to “educate” our customers. want less than to point a There is nothing we We fully recognise that finger at our customers. smoke. adults have the right and freedom to recognized Nonetheless, numerous studies and dangerous research document that smoking is a to contribute habit – which is why we would like to making our children and our children’s children less likely to start smoking. 22 million fewer cigarettes In financial terms, consciously chosen we have are to accept a reduction in revenue. We and that brings along largest retailer, Denmark’s veryresponsibilities. On this specific and important area, we have chosen to push forward contribute with an agenda, so we can, hopefully, we sold 22 to a healthier future. In 2018 alone, before. million fewer cigarettes than the year probably the largest health-promoting With we initiative in many years in the retail industry, have now established a serious platform for future work with our health strategy over the coming years.

| 38 Opportunities and diversity With more than 53,000 colleagues, Salling Group is one of Denmark’s biggest employers, and we take pride in having the best-qualified managers and employees in our business. Therefore, we are committed to the continuous development of our employees and managers - We engage We diverity partners in our HR team with specialist knowledge and experience in the field who work together with municipalities and job centres. diversity coor dinators across the country who support our stores to ensure the inclusion of vulnerable groups. 130 agreements with 88 municipalities concerning em- ploying people on the margins of the labour market. According to CABI’s social calculator, Salling Group has contributed to society with DKK 61,475,000 by including people on the fringe of the labour market. 150 ­employees 35 employed under integration basic training (IGU). tigelsesindsats’ (the Centre for Active tigelsesindsats’ (the In 2018, Netto was awarded the Danish In 2018, Netto was awarded the Danish signals Rainbow Retail Prize for sending clear about being a diverse retail business that shows inclusiveness in relation to sexual orientation. In 2018, Salling Group was nominated for Salling Group was In 2018, longstanding efforts Prize for the CSR People’s workplace. The prize to create an inclusive ‘Center for Aktiv is awarded by CABI, Beskæf­ Employment Efforts). 12 local agree- ments for part-time jobs with mentoring for young people 18 of age the under

schools to get more people into work. In order to schools to get more people into work. maintain internal area, every focus in this year the is given to a Salling Foundation Diversity Award department or store that has made a special effort to promote inclusiveness in the workplace. Apprentices in Integration training the two-year In 2018, we continued our work with which, integration basic training course (IGU), employees through a paid basic course, prepares for further a sales assistant, butcher or training as The purpose of the training programme, baker. which was launched by ‘Udlændinge- og integrationsministeriet’ (the Ministry of Immigration and Integration) in 2016, is to help refugees between the ages of 18 and 40 take a step into the Danish labour market and improve their

Opportunities and diversity CSR report 2018 Salling Group is one of the country’s largest Salling Group is one of the country’s want to take responsibility in the employers. We labour market and ensure that our employee-mix reflects the society around us. An important is to create opportunities focus area finding a for people who have difficulties in local foothold in the labour market. Taking conditions and challenges as our starting point, and we have 150 agreements with job centres other partnerships 88 municipalities. across us to target Adapting to local conditions enables our offers, skills development and training, which can secure long lasting employment. During 2018, we had an average of 976 employees We hired with reduced duties or in flexible jobs. work with a wide range of organisations and

We aim to give everybody aim to an We opportunity a difference to make circumstances regardless of social Inclusion

| 42 ”At Salling Group, we strive to have a diverse and balanced workforce. In general we have succeeded in attracting a balanced workforce across our linguistic skills and understanding of Danish been employed in a job with a salary subsidy. business areas. For further development culture and the labour market. In all, 35 As of 2018, we have been participating in a pilot we have secured corporate initiatives to apprentices commenced an IGU programme project with ‘Gladfonden’ to establish ‘flex-training pursue our goals for a fully equal and in 2018. for the mentally disabled’, which over the next two balanced gender leadership population years will be tested in more of our stores. also on leadership levels from Senior Mentored part-time jobs Manager and above” In cooperation with a lot of municipalities, we Equality strengthens opportunities Peter Poulsen, Executive Vice President, HR offer part-time jobs with mentoring. This Equality is another prerequisite for being able to programme is targeted at young people under recruit the best talent. By the end of 2018, 49% the age of 18 who are in need of special support of the managers at Salling Group were women, due to suffering from challenges such as learning while women accounted for 37% of all promotions disabilities, low self-esteem, social isolation or in 2018. The proportion of women at the top other similar challenges. The programme is widely levels of management, is significantly lower; used e.g., in the municipality of Copenhagen, 16% at director level and above. Therefore, where we have mentored and employed more initiatives have been put into place to strengthen than 550 vulnerable young people in part-time opportunities for talented women to make a jobs. Experience shows that these part-time jobs career, including supporting career planning often improve the well-being of young people, and clarifying potential career paths. Currently increase their self-confidence and improve their the board of directors consists of 17% female social skills. This puts them in a better position representatives. Goal by 2021 is 40%. Target for training or work. was previously set by 2017 which we did not meet due to no new appointments nor change of Creating jobs and training gender composition. Salling Group cooperates with the national association LEV to create jobs and training places for people with cognitive disabilities. Our goal is to help more mentally disabled people to find a permanent footing in the labour market. A shop or store job typically contains training of social, personal and, not least, professional competencies. Since the cooperation was established in 2012, nearly 300 people have |

44 Opportunities and diversity CSR report 2018 Great work life

Our employees are our greatest asset. If they do well, the Group does well

Salling Group’s purpose is to make everyday in 2018, the overall result showed a satisfaction life better for customers, the communities and not level that surpasses the industry’s average. In the least for our colleagues. We want to be a 2018, Bilka, for the second time, achieved workplace with a fine collegial spirit, good certification from Great Place to Work5, which working environment and responsibilities. recognises the best jobs internationally. At the same time, we strive to ensure the best opportunities for career development and In addition to well-being and development, we continue our tradition of training the best leaders focus on creating steady improvements in health in the retail industry. and safety. In 2018, Salling Group’s non-food warehouse in Aarslev, Denmark, received a health Job satisfaction above industry’s average and safety prize (a working environment prize In order to ensure continued improvements, we awarded by ‘Arbejdsmiljørådet’ - the Danish conduct an annual satisfaction survey among all Working Environment Council) for a targeted effort our employees and ensure the structured follow-up that has reduced the number of accidents of action plans at local and higher levels. Again by almost 90% since 2013. |

46 Opportunities and diversity 5 Great Place to Work is a certification programme CSR report 2018 using employee ratings to determine certification In order to ensure a more efficient recruitment participate in bespoke professional courses and process and on-boarding for job seekers, share experiences with colleagues from other we introduced the ‘Fasthire’ system in 2018, parts of the group. More than More than 40% of which is a template-based system. Here, føtex´s store managers a range of fixed templates have been created The largest provider of apprenticeships and Bilka´s department for each chain where individual managers With more than 500 apprentices per year, can publish vacant positions and receive and Salling Group is the largest provider of managers are former process applications. The system also gives apprenticeships in Denmark. We regard our 500 Salling Group apprentices interested candidates the opportunity to create a apprentices as an important part in educating apprentices are trained profile, so we have an ever-growing candidate talented employees and future leaders. All our bank that provides our managers with excellent apprentices follow an individual training plan each year at Salling Group – more than opportunities to occupy positions for young where work in the store is combined with a stay in any other Danish company workers, for example, without having to go at our own Salling Group Academy at Bøgehøj, through a long recruitment process. In addition, Ebeltoft. We offer apprentices good opportunities the ‘MyBenefits’ portal, which all employees for their future careers within the group, both in have access to, gathers together a wide range of Denmark and abroad. The strength of the training employee benefits, such as discounts and special is underlined by the fact that roughly 40% of offers. føtex’s store managers and Bilka’s department managers are former apprentices. 5,000 Employee training centre employees undertook Practical experience, combined with professional a course at our own study, is a strong starting point for personal and training centre in 2018 professional development. That is why we run our own training centre where our employees Employee response rate of 90% and engagement rate of 78% (Barometer survey) |

48 Opportunities and diversity CSR report 2018 Netto and the Danish Food Bank the Danish Food Netto and waste app a food have developed to the nearest consumers that guides down food marked store offering service A free public products. to save money allowing consumers food waste. and to help avoiding

7

To develop effective, accountable and transparent institutions To https://storage.sallinggroup.com/media/2055/policyontax.pdf 6 7 Our approach to tax is directed by our tax policy, legislation of the countries in which we operate, and we only use business structures that are driven by commercial and legal considerations. Furthermore, we seek good relationships with tax authorities which is approved by the Board of Directors. which is approved by the Board of Directors. Commercial and legal considerations the tax continuously strive to comply with We

because, in the countries where we because, in the countries where we 6

Taxes CSR report 2018 operate, they contribute to raising more revenue operate, they contribute to raising more for governments to improve society welfare and innovation, to helping solve societal problems and to encouraging positive social and environmental behaviour. Our tax payments are a contributing factor in Our tax payments are a contributing 12 which meeting these goals, not only 3, 4 and but also goal are the goals we primarily address, 16.6,

At Salling Group, we recognise that taxes we recognise Group, At Salling to help enhance resource are a crucial Taxes public services to support, and investments the United Nation’s among others, Goals (SDGs)Sustainable Development

| 50

Property tax Property tax Excise duty 2% (imported goods only) 1% 58% 32% 2%

Environmental tax Environmental tax 6% 6% Value added tax added Value 16% 51% (output minus input VAT) Total DKK 825 million Total Total DKK 7,664 million DKK Total Total tax contribution Total 17% 9% divided into categories divided Taxes and duties borne Taxes Energy tax incl. PSO Energy tax incl. PSO Employee taxation Corporate tax Corporate tax

6.411 Excise duty 5.000 (imported goods only) 36%

7% Value added tax Value (output minus input VAT) 57% 602 Total DKK 6,839 million Total Total DKK 7,664 million DKK Total divided by countries divided 361 Total tax contribution Total 290 Taxes and duties collected Taxes Employee taxation Poland Sweden Denmark Germany tax, and taxes paid directly (taxes borne),taxes paid directly tax, and as such income tax and propertycorporate taxes. and duties collected Taxes consist of value added and duties collected, Taxes from employee wages and tax, taxes withheld included amount for value excise duties. The payment as the net VAT added tax is calculated VAT on sales minus VAT to the state, meaning excise duties in Denmark payable. Collected only included (e.g., on chocolate and alcohol) are for imported excise duties on locally goods as by produced products are paid to the authorities the manufacturing companies. and duties borne Taxes and duties borne, of corporate tax, consist Taxes energy tax, environmental tax and property tax. borneThe largest amount of taxes and duties The Danish relates to corporate income tax (58%). corporate companies in the Group paid a total tax payment of DKK 418 million. Additionally, was paid company tax totalling DKK 58 million abroad. from the Group 9 We are reporting on 2017 figures since 2018 figures are not available for all formats at the time of writing this report and countries We Contribution methodology Tax The presentation is made in accordance with the standardised Total 8 9 , F. Salling Holding A/S, which is the , F. 8 Taxes CSR report 2018 administration unit for Salling Group, is the 19th administration unit for Salling Group, in Denmark largest corporate income tax payer DKK 418 with a total corporate tax payment of Salling Holding A/S is responsible for million. F. on paying all corporate tax to the authorities Group. behalf of the Danish companies in the tax contribution Total In 2017, the total tax contribution based on mutual respect, transparency and trust, and trust, mutual respect, transparency based on in national and constructively and we engage international dialogue with governments and supportbusiness groups to of the development and tax administrations. effective tax systems companies in Denmark, have operating We and Sweden, but the largest Poland Germany, activity occurs in Denmark. corporate tax record According to the published for 2017 amounted to DKK 7,664 million, compared to amounted to DKK 7,664 million, compared both DKK 7,319 million in 2016. This includes (taxes taxes paid indirectly by our company and employee income collected), such as VAT

| 52 Corruption Theft emissions from 2 stores Environment Noise Climate CO chemicals emissions and parti- 2 cles from transportation Corruption Facilitation payments Social Employee accidents Stress and working hours Climate CO Environment ­ Use of water, etc. Corruption Inducement to gain order Environment Food waste Social Employee accidents Environment and food waste Waste emissions from 2 Consumer transportation Human rights Discrimination and equal treatment Human rights Fair living wages of truck drivers Human rights Child labour Forced labour Minimum wage Manufacturer Human rights Forced labour Child labour Transport Climate CO Distribution centre Transport Store Primary production Human rights Food safety Human rights Food safety Fair living wages of cleaning staff

Suppliers uploaded 1,715 Completed profiles 1,181 Compliant 1,088 In process 39 Improvements needed 53 Suspended (no go) 1 our employees and business partners,our employees and particularly rights;when it comes to five main areas: human social and employee conditions; anti-corruption; climate; and the environment. conductedBased on a materiality risk assessment in 2017 in cooperation with external partner we identified the risks within the Ernst & Young, we, as abovementioned five main areas where a were most likely to have a potentially retail company, changed. negative impact. The risk picture has not https://en.sallinggroup.com/responsibility/strategy-on-responsibility/csr-policies/ Full audit 10 Risk system plan action assessmet Responsible procurement Corrective Risk conduct Code of Follow-up Supplier Screening and its adopted amfori 10 New Re-audit from start two years cyclus after

In process Compliant/

Risks and due diligence CSR report 2018

due diligence due Risks andRisks BSCI Code of Conduct set a clear direction for theBSCI Code of Conduct set a clear direction expect fromway we run our business and what we As a large retailer sourcing globally, we have several globally, As a large retailer sourcing have arisks in our supply chain where we might we seek to mitigate those risks, negative impact. To focussinghave due diligence processes in place, label andprimarily on the supply chain of our private we have theown name products, since this is where most influence. policies Salling Group’s

| 54

ACTIONS IN 2018 Regular analyses and monitoring of lost time incidents from top-level down to department-level in each store and ware- house. Focus areas are typically lifting, slipping/ tripping and staff exposed to robbery. seek to match pressure We and demands, to our employees´ knowledge and abilities. Where possible, we try to support job rotation, and sedentary employees are offered sit-stand desks.

­ RISK There is a risk, in both warehouses and of stores, of sudden accidents because physical handling of boxes, slippery floors, use of forklifts, knives or other machinery and tools. There is a risk that employees can be thediagnosed with stress. Stress can affect leadhealth of staff, reduce productivity and to performance issues or employees taking time off or being on sick leave. Risk of physical attrition due to heavy lifting and moving, or too much sedentary work, which may lead to poor quality of life, more frequent sick leave and higher employee turnover. ISSUE Employee accidents Stress Physical attrition We are committed to taking care of our employees, which is why to taking care of our employees, are committed We and safety issues are taken veryworking environment seriously. Social Social and conditions employee

amfori BSCI Code of Conduct and third-party audits, including interviews with workers. Mandatory responsible procurement courses to all our procurement personnel. Third party and in-house control of food handling, hygiene, preparation and storage in our stores and distribution centres. have commenced the We dialogue with our colleagues in Sweden, Germany and Poland in order to bring them in scope for reporting on food too. safety, ACTIONS IN 2018 The nature of our supply chain comprises The nature of our supply chain comprises risks in some of the countries we source from, especially in agricultural, apparel, electronic and jewellery industries, where forced labour and wages child labour, below a minimum level set by local legislation might occur. Risk of wrong storing of food. Food safety Risk of wrong storing of food. Food food, considerations include the origins of including observance of the practices relating to food labelling, food hygiene, in food additives and pesticide residues order to avoid potential consumer poisoning. Foreign objects (e.g., glass) also forma risk Poor that constitutes a danger for consumers. of food safety can potentially affect a lot people, and in some cases food poisoning can have fatal consequences (e.g., listeria and salmonella). RISK Child labour, forced Child labour, minimum labour, wages and conflict minerals Food safety ISSUE Human rights CSR report 2018 We respect human rights and work to ensure that human rights and work to ensure that respect We to any human rights violations. we do not contribute Human Human rights

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mass 11 Round Table on Sustainable Palm Oil Round Table 11 ACTIONS IN 2018 business water footprint in map our direct We order to see where and how we can contribute will beto minimising water usage. The next step to start mapping water usage in our supply chain but– a step we had hoped to initiate in 2018 will, nevertheless, maintain did not make. We ofour ambition and explore the possibilities mapping supply chain water usage. that demand from our private label suppliers We any content of palm oil must be RSPO products for 2018 was not achieved. We We products for 2018 was not achieved. thehave demanded from suppliers not fulfilling requirement to be in place during 2019. are participating in a soy working group We under DIEH (the Danish Initiative for Ethical to set up a soy policy. Trading) have set up a plastic strategy and policy and We entered into a 5-year partnership on plastic with WWF. balance certified as a minimum for Non-Food reportedand segregated for Food. The status is The segregated target for food once a year.

RISK Risk of excessive water usage in the production of the goods we sell. sell buy, Everything we use, wear, and eat takes water to produce. Extensive water usage in areas with scarce water resources has a considerable impact on the environment and local inhabitants. Risk that products we sell may have contributed to deforestation, and as a consequence the loss of biodiversity and the enhancement of the greenhouse effect, because of content such as palm oil or soy. Plastic often ends up in the environment and especially in the oceans where it poses an extremely large threat to life under water. ISSUE usage Water Deforestation Plastic By sourcing from all over the world, we are at risk of contributing to a negative environmental impact on some to a negative environmental over the world, we are at risk of contributing By sourcing from all or produced. ingredients in our products are grown from or places where some of the of the places we source Environmental Environmental impact ACTIONS IN 2018 amfori BSCI Code of Conduct and Anti-Corruption Policy reviewed. Business Principles, Anti-Corruption Policy with zero target, well-established internal controls, responsible procurement courses for procurement personnel and review of whistle blower set-up. RISK Risk of facilitation payments, corruption Risk of facilitation and bribery in our supply chain, which is a barrier for economic and social development, particularly in developing countries, and is often synonymous with increased costs. Risk of corruption, e.g., related to accounting fraud, bribery related to obtaining building permissions or receipt of money or values for placing an order. ISSUE Facilitation payments, corruption and bribery Corruption and bribery in Salling Group Anti-corruption CSR report 2018 We strive to maintain a fair and transparent business culture maintain a fair and transparent business strive to We any kind of corruption. and will not tolerate Anti-corruption

| 58 ACTIONS IN 2018 in Opening of 2 climate neutral stores has Netto DE where R134a (refrigerant) lower times (1,430 CO2 by replaced been GWP impact). with selected suppliers, we Together created the initiative ‘Danmark mod Madspild’ (Denmark against Food Waste), where all partners committed to have cooperate on reducing food waste by been 50% by 2030. The Initiative has now taken over by the Ministry of Environment and Food of Denmark with the purpose of scaling it up. RISK Global warming potential from the use of refrigerants in cooling engines. Producing the food we waste takes land, water, labour and other valuable resources. In addition, food waste is a major source of greenhouse gases, mostly in the form of methane. ISSUE GWP Food waste ACTIONS IN 2018 the seek to control costs and assess We our impact on sustainability initiatives in choice of transport by managing mode more and more of the inbound transportation ourselves. For the outbound transport, we do not have our own trucks as we use the services of hauliers with whom we seek to reduce CO2 emissions by optimising truck loads, other logistics and driving routines, among measures. in have asked our logistic colleagues We to Poland and Sweden Netto in Germany, the examine their possibilities to measure CO2 footprint of their transport, too. RISK Risk of high release of CO2 emissions from transportation of goods to our distribution centres and further transportation from distribution centres to stores. ISSUE CO2 emissions from transport Climate CSR report 2018 Climate change is a global concernClimate change is we that we share, and climate change poses for society. recognise the risks Climate

| 60 HOT TOPICS Hygiene, food safety Food certifications Smiley agreement Food waste Noise management Waste Opening of new stores Inclusion and job readiness Sustainable sourcing Animal welfare Food waste Environment Food safety Requests for donation Fundraising Plastic Smoke-free generation FORM OF DIALOGUE Control inspections Ongoing dialogue One-to-one meetings Ongoing dialogue Partnerships KEY STAKEHOLDERS Ministry of Environment and Food of Denmark Municipalities The Danish NGOs (WWF, Society for Nature Con- servation, DanChurchAid, The Danish Cancer Society, The Danish Animal Welfare Organic The Danish Society, National Association, FSC Denmark, Børns Vilkår, Røgfri Fremtid etc.) HOT TOPICS Customer satisfaction Selection of products Food quality Diversity Responsibility Responsible products Health Employee satisfaction Employee benefits Career development Labour conditions Employee accidents CSR strategy CSR initiatives and duties on certain products Taxes Food labelling FORM OF DIALOGUE Social media Surveys Customer support centres Mail boxes in stores Store visits Employee representatives at board meetings One-to-one meetings meetings Team Satisfaction surveys Ongoing dialogue Board Meetings Governmental groups working Roundtable discussions KEY STAKEHOLDERS Customers Employees Owners – the Salling Foundations Regulators (national politicians) Our stakeholders CSR report 2018 With more than 53,000 employees and 11 million customers visiting our stores every employees and 11 million customers With more than 53,000 week, where we are present. This great play a significant role in the societies we believe that we impact calls for extraordinary our business, and therefore responsibility in the way we conduct engaging with important partners stakeholders and is of great importance to help us deliver on that parameter. Our stakeholders Our

| 62 HOT TOPICS Sustainable sourcing Labelling Product safety Animal welfare Ethical sourcing Competition and prices Ethical products Health CSR requirements Code of Conduct CSR labelled products Food waste reduction Labelling Animal welfare Palm oil Soy Labour conditions Employee safety and security FORM OF DIALOGUE One-to-one meetings Producer audits Supplier satisfaction survey Roundtable discussions organised by public authorities One-to-one meetings Ongoing dialogue One-to-one meetings Ongoing dialogue CSR networking groups KEY STAKEHOLDERS Trade and other Trade organisations (The Danish Chamber of Commerce, The & Danish Agriculture Food Council, Danish Ethical Trading Initiative etc.) Media / press Suppliers Competitors unions Trade (HK, 3F etc.) Our stakeholders CSR report 2018

| 64 Annexes

Limited assurance conclusion Limited assurance performedBased on the procedures and the nothing has come to ourevidence obtained, us to believe that Sallingattention that causes CSR Report 31st for the year ending Group’s in allDecember 2018 has not been prepared, material respects, in accordance with the reportingmaterial respects, in accordance with 71-73. approach and criteria described on pages Aarhus, 25th of March 2019 ERNST & YOUNG Godkendt Revisionspartnerselskab CVR-no. 30 70 02 28 Morten Friis Partner, State Authorised Partner, Public Accountant MNE-no.: mne32732 Carina Ohm Executive Director

Interviews relevant company professionals of and management strategy, responsible for CSR headquartersreporting located at Salling Group’s headquarters in Denmark, Netto’s in Aarslev, international offices Køge, Denmark, and Netto’s in Sweden, Poland and Germany. Checks of whether data have been collected, inassessed and quality-reviewed as prescribed manual for data collection. Salling Group’s ofAnalytical reviews, including trend analyses, data supplied by Salling Group. Evaluation of the appropriateness of accounting ofpolicies used and the reasonableness accounting estimates made by Management. Procedures: As part of our examination, we performedthe below procedures: • • • • a believe that our procedures provide We reasonable basis for our conclusion. The procedures performed in connection with our examination are less than those performed in connection with a reasonable assurance the degree of engagement. Consequently, assurance for our conclusion is substantially less than the assurance that would have been obtained had we performed a reasonable assurance engagement. Auditor’s responsibility Auditor’s is to conclude on Salling Our responsibility Group´s CSR Report on the basis of our performed our procedures in procedures. We 3000, “Assurance accordance with ISAE of Engagements Other than Audits or Reviews Historical Financial Information” and additional to requirements under Danish audit legislation obtain limited assurance for our conclusion. Godkendt Revisionspartnerselskab Ernst & Young is subject to the International Standard on Quality Control (ISQC) 1, and thus uses a comprehensive and quality control system, documented policies ethical procedures regarding compliance with and requirements, professional standards and other applicable requirements in Danish law regulations. comply with independence requirements We - Danish and other ethical standards under FSR Auditors’ Code of Ethics for Professional Accountants, which rely on general principles professional objectivity, regarding integrity, competence and due care, confidentiality and professional conduct. Annexes CSR report 2018 To the stakeholders of Salling Group the stakeholders of Salling To examined Salling Group’s As agreed, we have CSR Report 2018 (the CSR Report) for the period 1st January to 31st December 2018. 2018 CSR Report 2018 has been Salling Group’s prepared in accordance with the accounting policies described on pages 71-73. CSR Report are to conclude on whether the We the has been prepared in accordance with reporting approach and criteria described on expressed pages 71-73. The degree of assurance in the conclusion is limited. responsibility Management’s Management is responsible for Salling Group’s the preparation of the CSR Report in accordance with the reporting and criteria approach described on pages 71-73. Salling Group’s such internalManagement is also responsible for necessarycontrol as the Management considers Reportto enable the preparation of the CSR free from material misstatement, whether due to fraud or error. Independent practitioners practitioners Independent assurance limited

| 68 If a store has data during a reportingIf a store has data period, is before the reportingand the opening date start will be estimated until data date, then the store If a store closes after the acquisition is established. reporting start consumption will be reported date, rest of the until actual close and estimated for the data have period. Estimates for stores with missing averages of been prepared on the basis of yearly the reporting the same retail format stores within Estimates account for 0.9% in føtex, and country. in Netto 0.0% in Bilka, 0.0% in Salling and 3.7% for each Denmark of the total energy consumption format. In Netto outside Denmark, estimates 0.0% in Poland account for 0.0% in Germany, and 2.4% in Sweden of the total energy consumption. Data Water entities Both majority-owned and controlled year are opened and closed during the financial included in the reporting. If a store opens during a reporting period and the opening date is after the reporting start date, then the store will be reported with an annual zero consumption. If a store opens during a reporting period and the opening date is before the reporting start will date, then the store Scope of the CSR ReportScope of the CSR The CSR report significant covers the relevant and environmental issues for the social, ethical and financial year January 1st – December 31st recommendations on have received 2018. We our CSR activities and reporting from our assurance provider Ernst Young. & Boundary Setting Entities included in the performance data include majority-owned subsidiaries/formats defined as or controls, companies that Salling Group owns including web stores, i.e., Salling department and Netto stores, føtex, Bilka, Netto, Wupti.com Poland and Sweden. Real estate owned Germany, this and by Salling Group is excluded from both and Jr. future reports, the franchises Carl’s as are Starbucks. Energy Data entities Both majority-owned and controlled year are opened and closed during the financial included in the reporting. If a store opens during a reporting and the opening date is after period the reporting start date, then the store will be reported annual zero consumption. with an Reportingapproach the accounting principles are appropriate the accounting principles the CSR Report provides an accurate picture impact on society of Salling Group´s the information given in the CSR Report fulfils the established accounting policies To the best of our knowledge, we confirm the best of our that To • • • 25th of March 2019 Aarslev, SALLING GROUP CVR-no. 35 95 47 16 Per Bank President & CEO Annexes CSR report 2018 The management of Salling Group has gone The management its CSR Reportthrough and endorsed for the period January – December 31st 2018. 1st The 2018 CSR Report in has been completed in the accordance with the principles stated reporting approach described on pages 71-73. Management statement Management

| 70 amount for value The included excise duties. payment the net VAT is calculated as added tax VAT on sales minus VAT to the state, meaning payable. in Denmark (e.g., on Collected excise duties etc.) are only included for chocolate, alcohol importedon locally goods as excise duties are paid to the authorities produced products companies. Our direct by the manufacturing tax, energy tax, taxes consist of corporate environmental tax and property tax. The largest amount of taxes and duties borne relates to corporate income tax. _ report areas. KPIs, definitions and on 21 key We performance for each are listed under Reporting Criteria and Performance.

for inbound transport is 3 Where net weight for a given article weight for a given Where net is missing, weight for articlesused the average we have in account for 0,1%. Estimates the relevant category. has been calculated on the The target baseline share in 2014 in proportionbasis of our market 2014to the Danish Ministry of Environment’s waste in tonnes in Danish retail. calculations of food Outbound Transport CO2 emissions is for The calculation of and only own-controlled outbound transport only, for Denmark. Outbound transport is the transport to our stores of goods from our distribution centres (frozen in Denmark, and emission per pallet is calculated pallets for føtex and Bilka excluded) per kilometre on the basis of mileage, CO2 factor calculated and number of pallets. CO2 factor is on the basis of external Frode Laursen’s haulier Estimates calculated mileage per litre of diesel. CO2 account for 3-5% based on the calculated for the largest part our outbound transport. of Inbound Transport The calculation of m made on inbound freight by all modes of made on inbound freight by all modes road and train. transportation, air, i.e., sea, Data are collected from internal statistics and is calculated invoices from freight carriers. Train based on data/methodology for road. Footprint Tax and duties collected consist of value added Taxes tax, taxes withheld from employee wages and of 11 stores where waste is weighed all year. weighed all year. where waste is of 11 stores the been calculated on stores have The remaining amount of waste per unit of basis of the average turnover for the sample stores. SurveySupplier Satisfaction surveyThe supplier satisfaction has been with Rambøll conducted in cooperation A/S. The invited Management Consulting our list of regular suppliers respondents represent with to our Danish stores (except from Salling) whom we conduct trade term negotiations on a yearly basis. Supplier Risk Screening by means Supplier risk screening is conducted (RPS). of our Responsible Procurement System The system captures information about our private label and unbranded product suppliers’ on social production units and documentation audits and/or certificates.a The system works with all required colour rating where green means that means audit documentation is in place, yellow needed and in process, red means improvement suppliers suspended. with no colour, finally, Food Waste Food waste is calculated in tonnes and stems from our stores and distribution centres in Denmark. The calculation is based on scrapping in pieces multiplied by net weight. In the Bakery category, shrinkage has been added, which is also the category in Netto. case for the Fruit & Vegetables

average weight per container. Foraverage weight per container. Netto Sweden, waste calculation has been prepared on the basis be estimated until data acquisition is established. is established. until data acquisition be estimated data have been for stores with missing Estimates of the average use in prepared on the basis within the same retail formatcomparable stores for 6.1% in føtex, Estimates account and country. in Salling and 5.6% in Netto 0.0% in Bilka, 0.0% water consumption for each Denmark of the total format. In Netto outside Denmark, estimates 0.0% in Poland in Germany, account for 0.0 % of the total water and 14.1% in Sweden consumption. Data Waste entities Both majority-owned and controlled year opened and closed during the financial are included in the reporting. Some stores have reported based on estimates. Estimates account in Salling for 1.1% in føtex, 0.0% in Bilka, 0.0% waste for and 1.4% in Netto Denmark of the total each format. In Netto outside Denmark, estimates Poland 0.0% in account for 11.0% in Germany, for and 31.3% in Sweden of the total waste For Netto Germany, the format in each country. a total of waste has been calculated based on year in 8 80 weighing samples throughout the stores sample stores. Estimates for the remaining in Germany have been calculated on the basis of the average amount of waste per unit of turnover for the sample stores. For stores in Netto Poland, waste calculation has been prepared on the basis of the exact number of containers multiplied by an Annexes CSR report 2018

| 72 - - - - - 12 13 40 20 TARGET 17 90 78 78 16 92 976 211 2018 17 90 77 78 14 91 963 250 2017 By 2021. Target was previously set by 2017 which we did not meet By 2021. Target due to no new appointments nor change of gender composition By end 2020. 30% by 2025, 35% by 2030 and 40% by end 2035  13 12 17 90 77 77 15 96 242 2016 1,093 20 89 78 78 15 79 839 224 2015 - 20 87 77 76 17 102 250 2014 % of female representatives Barometer survey – overall score conducted by Rambøll (% of respondents) DATA & CRITERIA DATA Barometer survey – average score conducted by Rambøll (satisfaction rate) Barometer survey on questions conducted by Rambøll – scores (%) responsibility about diversity and Number of citizens outside the job market in unsalaried training to Number of citizens outside the job market (average throughout the year) clarify their ability to take up a job % of female leaders – director + % of female leaders LTIF (lost time injury related injuries with frequency) = number of work LTIF headcounts - Denmark more than one day of absence per 10.000 LTI (lost time injury) injuries with more = total number of work related LTI Denmark than one day of absence – Netto outside Diversity (board level) Employee response rate KPI Employee engagement CSR as perceived by employees CSR as perceived People in job training Diversity Employee safety Employee safety Annexes CSR report 2018 Reporting performance and criteria

| 74 ------15 14 100 -10% -10% TARGET By 2020 with baseline 2015 By 2022 with baseline 2017 14 15 6.9 0.2 2.9 4.5 5.2 7.4 76.2 16.7 4.30 27.7 10.3 24.4 20.3 90.8 2018 0.188 0.234 6.7 0.2 2.7 4.2 5.2 8.7 9.6 75.1 18.0 4.77 29.7 22.4 21.0 90.8 2017 0.199 0.239 - 6.4 0.2 2.7 4.1 5.4 9.7 73.2 20.2 4.83 27.1 10.1 21.4 15.8 90.5 2016 0.250 - - - 2.8 3.5 4.8 7.6 28.5 12.8 19.6 14.7 92.5 2015 0.250 - - - 2.8 3.5 4.2 7.9 33.3 13.3 17.0 12.7 89.3 2014 0.274 Road Rail Sea Air DK DE PL SE DK DE PL SE % split – Salling Group total 2 – Salling Group total 2 per transport mode 3 Kg CO2 per pallet (own controlled) – Denmark only Kg CO2 per pallet (own controlled) MWh/m (own controlled) M3/m DATA & CRITERIA DATA Sick hours divided Sick hours divided by working hours (overtime included) % Voluntary permanent staff turnover Voluntary staff turnover Total staff turnover Voluntary permanent staff turnover Voluntary Smiley 1 – Denmark only. % of number one smileys Smiley 1 – Denmark only. following a given by the Danish Food Authorities controlled entities control visit. Both majority-owned or year are opened and closed during the financial included M Outbound transport Energy Water KPI Employee sick leave Employee turnover (% of total headcounts) Food safety Inbound transport Annexes CSR report 2018

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- - - - 16 17 19 90 90 90 90 80 85 90 100 -50% TARGET 4 66 78 78 83 74 81 95 3.3 4.5 0,1 9.9 99.1 68.9 92.1 2018 29,787 4 70 75 74 83 72 78 97 0.4 9.9 82.5 62.2 89.1 10.5 2017 30,963 - - - - 4 68 73 71 79 71 75 88 4.5 2016 33,364 By 2018 – an ambitious target which we unfortunately did not meet. We will, however, maintain however, will, By 2018 – an ambitious target which we unfortunately did not meet. We our ambition, thus sustaining the target for four more years. have changed the risk categorisation by splitting the former yellow (in process) into: in We process (yellow) and improvements needed (red). ‘Suspended’ is outside the colour rating.  By 2030 with baseline 2014.  By 2018. 17 18 19 16 ------68 68 65 79 70 71 78 2015 35,205 ------59 57 53 76 62 48 2014 42,826 % Upl. Done ∆ ∆ ∆ Susp Recycling DK DE PL SE DATA & CRITERIA DATA in scope are people with buying % of procurement staff trained (staff Not For Resale, IT and Shop Fittings) responsibilities in Commercial, Goods % of PL and no name producers uploaded and rated green % of PL and no name producers uploaded (improvements needed) (compliant), yellow (in process) or red respectively and finally suspended Tonnes of food intended for human consumption that ends up as waste, for human consumption that ends of food intended Tonnes composting etc. – Denmark only animal feed, bio-gas, % of staff trained (staff in scope are employees in buying functions in % of staff trained (staff in scope are IT and Shop Fittings) Commercial, Goods Not For Resale, Revenue from products carrying a CSR label (e.g., Keyhole, Fairtrade, etc.). Billion DKK – Denmark only Organic, Animal Welfare On a scale from 1-5 based on the question On a scale from 1-5 based on the question with Salling Group?” “How satisfied are you with the cooperation 18 Buyers trained in responsible procurement KPI Food waste Waste Employees trained in responsible products Revenue from responsible products Supplier satisfaction rate Supplier risk screening Annexes CSR report 2018

| 78 Executive Vice President of HR, Commercial, Executive Vice President of HR, Commercial, Finance, føtex, Bilka and Netto Six regular members of which one is female, all appointed by the general meeting. In addition, there are three employee representatives elected by employees. January 2018 – December 31st 2018 1st the Danish Financial In accordance with Statements Act, articles 99a and 99b April 30th 2018 Annual report before May 31st of is published each year and covers the previous calendar The report will be available on our web- year. site sallinggroup.com H. GrandVice President of Communication, Mads or Vice– [email protected] JuhlerPresident of Public Affairs and CSR, Annette Kjær – [email protected] GOVERNANCE Main positions with CSR responsibility Composition of Board of Directors REPORT PROFILE Reporting period Reporting principles previous reportDate of the most recent Reporting cycle the reportContact point for questions regarding or its content Bangladesh Accord on Fire and Building Bangladesh Accord on Fire and Building Accord Safety – the Transition Salling Group sallinggroup.com Brabrand, Denmark Rosbjergvej 33, 8220 Netto and Wupti Salling, føtex, Bilka, Privately owned/Non-listed 53,623 changed our name from Dansk We Supermarked Group to Salling Group Salling Group supports the UN Global Compact not a signatory framework, but is, however, (BSCI) *amfori Business Social Compliance Initiative * Initiative (DIEH) *Danish Ethical Trading *Danish Chamber of Commerce (DE) *AMS Sourcing *FSC Denmark *The Consumer Goods Forum (CGF) policy is available on our website Tax sallinggroup.com

ORGANISATIONAL PROFILE ORGANISATIONAL Name of organisation Web address Web Location of headquarter Primary brands Nature of ownership and legal form number of employees Total Significant change during reporting period supply chain regarding size, structure, ownership or Externally developed charters, principles or initiatives to which Salling Group subscribes or which it endorses Membership of associations and advocacy organisations Policy Tax Annexes CSR report 2018 Company information Company

| 80 Salling Group Rosbjergvej 33 8220 Brabrand CVR. 35 95 47 16 sallinggroup.com