SUSTAINABLE AGRICULTURAL PRACTICES

The hazelnut tree fruit

SHARING VALUES TO CREATE VALUE 94 The 4 Our The Ferrero Ferrero’s Social The Ferrero Ferrero women pillarsproducts Foundation of Alba Enterprises Kinder+Sport Group and men SUSTAINABLE AGRICULTURAL PRACTICES

Ferrero has always preferred to establish direct, utilisation of natural resources in a sustainable long-term commercial relationships with way for the production of safe, healthy food and producers and suppliers of raw materials, based non-food agricultural products in a humane on dialogue and transparency. manner, while achieving economic viability and social stability” (FAO, Good Agricultural As already stressed in previous CSR reports, the Practices, June 2002). Ferrero Code of Business Conduct includes clear requirements concerning the excellent OUR MAIN INGREDIENTS quality and freshness of raw materials and me- ticulous compliance with the principles of ethics The fundamental parameters we apply in and sustainability (for the full text of the Code of selecting our agricultural raw materials are: Business Conduct, visit www.csr.ferrero.com). excellence in quality and full respect for human rights and sustainability. The Code is accompanied by a Plan for com- mon practices agreed on by all those – inside or outside the Group itself – who are involved in the supply chain. That Plan, known as the ABCDE Plan (A Business Code Dialogue En- gagement), will further strengthen the Group’s relationships with raw material suppliers, and it needs to be implemented by the end of 2013.

Through the ABCDE Plan and other measures, Ferrero will promote a commitment to support This chapter highlights the initiatives carried out good farming practices defi ned as: “the by Ferrero for each raw material, in line with the application of available knowledge to the following goals:

RAW MATERIALS GOALS TIMEFRAME STATUS

MILK 30% from integrated supply chain 2012 Achieved

To be achieved 2 years COFFEE 100% certified as sustainable 2013 ahead of schedule

100% eggs from barn hens in respect of EGGS 2014 On track animal welfare

To be achieved 1 year PALM OIL 100% certified as sustainable 2014 ahead of schedule

COCOA 100% certified as sustainable 2020 On track

Implementation of the traceability plan HAZELNUTS 2020 On track for 100% of hazelnuts

CANE SUGAR 100% from sustainable sources 2020 New

SOY LECITHIN GMO free Already in place Already in place Sustainable Minimising Corporate Social Responsibility Ferrero 95 agricultural practices environmental impactof the Ferrero Group Rocher Countries

PALM OIL

In our fi rst three CSR reports, we already pub- lished our anticipated time frame for achieving The 4 pillars 100% sourcing of certifi ed segregated sustaina- ble palm oil by 2015. We are now in a position to ensure that this goal will be reached by the end of 2014, ap- proximately one year earlier.

The diagram below shows the percentages of The Ferrero Group certifi ed segregated sustainable palm oil to be sourced, within the respective time frames. Palm oil fruit Ferrero women and men

100% >60% >80% Sustainable practicesagricultural 2012/13 2013/14 End of 2014

At present, the Group requires approximately sible to keep the organoleptic qualities of the

150,000 tons per year, which is sourced from product intact, while increasing creaminess and Minimising impact environmental Malaysia (the Malaysian Peninsula), Papua New avoiding the use of hydrogenated fats. As one Guinea and Brazil. of the few technical solutions available for avoid- ing the use of hydrogenated fats available today, The quantities sourced, as at 30 April 2013, palm oil offers organoleptic, technical and stabi- were approximately 75,000 tons, which met lising advantages, which are superior to those of C. S. R. of the Ferrero Group 50% of the Group’s requirement. This datum other oils. is thus in line with the objective of 60% set for 31 August 2013. We have worked extensively with our suppliers in order to have RSPO (the Roundtable on

This is also due to the fact that palm oil is derived Sustainable Palm Oil) certifi ed fully segregated Rocher Ferrero from the pressing of the fruit of the palm, a sustainable palm oil, which means that it can process, in some respects, similar to that with be fully traced along the supply chain from our which the olive oil is extracted by pressing olives. production plants back to the plantations of Ferrero has developed an exclusive technique origin, which are also certifi ed according to the of palm oil fractionation which makes it pos- RSPO standards. Countries 96 The 4 Our The Ferrero Ferrero’s Social The Ferrero Ferrero women pillarsproducts Foundation of Alba Enterprises Kinder+Sport Group and men

The Ferrero Group joined the RSPO (www.rspo. and development cooperation sectors. The org) in the end of 2005. The organisation is a RSPO’s task is to defi ne an international standard multi-stakeholder organisation established “to that enables the certifi cation of production promote the production and use of sustainable and transformation of palm oil according to palm oil for People, the Planet and Prosperity”. solid environmental and social sustainability criteria, to prevent the destruction of tropical The RSPO includes all the actors involved in the forests, biodiversity and respect the rights of palm oil supply chain: farmers, processing and communities that inhabit production regions. export industries, manufacturers of consumer The members of RSPO obtain a certifi cate of goods, the distribution chains, banks and sustainability only after undergoing an audit investors, NGOs active in environmental, social carried out by independent auditors.

“Research has found that +14% many fi rms that switched to of palm oil globally producing sustainable palm is certifi ed oil reaped signifi cant returns by the RSPO on their investments. In some cases, switching to sustainable production was economically transformative for the business.” WWF, CDC and FMO, 2012

Of the various systems of sourcing recognised from the plantations of origin; by RSPO, Ferrero has chosen the most in the mills where the fruit is pressed; challenging process: purchasing palm oil that during transport to the port of embarkation; is certifi ed as segregated and sustainable. in the ships in which it is carried in special tanks; The certified palm oil needs to be “segregated” at the refineries where it is processed; in order to ensure it can be traced in a at the establishments where it is to be used transparent manner. This implies that the in manufacturing the end product; sustainable palm oil is kept physically separate up to the final product, which contains from non-certified palm oil, all along the exclusively palm oil that is certified as complex supply chain, as follows: segregated sustainable. Sustainable Minimising Corporate Social Responsibility Ferrero 97 agricultural practices environmental impactof the Ferrero Group Rocher Countries

RSPO CERTIFIED PLANTATIONS

100 The 4 pillars ton

MILLER 200 200 200 ton ton ton

RSPO CERTIFIED TRANSPORTER REFINER END USER PLANTATIONS The Ferrero Group

100 ton

MILLER Ferrero women and men The internet platform “e-Trace” allows the supply chain. This guarantees that any purchase process to be transparent, indicating the or sale transaction of sustainable palm oil takes volumes of sustainable palm oil all along the place between authorised contractors. supply chain. The vendor, the purchaser and the type of fractionation agreed, in addition to the generality

Access to this platform is only possible for RSPO of the transaction, are clearly visible thanks to Sustainable practicesagricultural members who have been certifi ed for their own this system, thus allowing to trace back. Minimising Minimising impact environmental C. S. R. of the Ferrero Group

STATEMENT BY DARREL WEBBER, SECRETARY GENERAL OF THE RSPO: “RSPO welcomes the progress made by and playing a responsible role towards the Rocher Ferrero Ferrero in certifying its European production sector and its consumers at large. The steps facilities and moving towards a segregated taken by companies like Ferrero should be supply chain. Leading companies and brands commended and encouraged so that other have a crucial role to play in committing organisations are encouraged to emulate Countries towards sourcing of sustainable palm oil similar commitments.”

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OUR PARTNERS ALONG RSPO certifi ed segregated sustainable palm oil THE SUPPLY CHAIN is now available in larger volumes, which has made it possible to activate certifi cation of Thanks to the collaboration with our business Ferrero’s production lines. partners, we have been able to bring forward At the time of writing the present CSR report, all our ambitious goal to 2014. We are now able the palm oil used in the production of Nutella to purchase and use segregated sustainable in our production plants in Alba (Italy), palm oil for fractionation, necessary for its use Villers-Écalles (France) and Stadtallendorf in our products, while also complying with the (Germany) is certifi ed as sustainable and qualitative standards required by the Group’s fully segregated by the RSPO. guidelines. Our main suppliers of palm oil are:

ISF (Intercontinental Specialty Fats), RSPO member since 2004 and certifi ed by the “RSPO Supply chain Certifi cation Standard” since 2011; certifi cation carried by SGS. RSPO – 1106110* New Britain Palm Oil Ltd., a founder member of RSPO, Thanks to this certifi cation, the RSPO trademark certifi ed by RSPO since 2008; certifi cation has been issued: the production of Nutella carried by British Standards International. in the said production plants physically contains 100% RSPO certifi ed as sustainable AAK, a founding member of the and segregated palm oil. RSPO and since 2002 a member of the United Nations Global Compact. For its business with Ferrero, the certifi cation is carried out by Control Union Certifi cation.

* RSPO Certification code for Ferrero. Sustainable Minimising Corporate Social Responsibility Ferrero 99 agricultural practices environmental impactof the Ferrero Group Rocher Countries

FERRERO’S PRODUCTION PLANTS AND PALM OIL CERTIFIED AS SUSTAINABLE AND SEGREGATED The 4 pillars To show the ongoing certifi cation process for the Ferrero has contacted SGS S.A., world leader supply chain of palm oil certifi ed as sustainable in certifi cation, to independently verify the and segregated within our production plants, we management and logistics of the use of show below the plan for Nutella production in segregated palm oil at the Ferrero production the 9 production plants that currently produce plants. it in the world: The Ferrero Group

PRODUCTION PLANTS RSPO SEGREGATED PALM OIL Alba (Italy), Villers-Écalles (France), since March 2013 Stadtallendorf (Germany) Ferrero women and men Sant’Angelo dei Lombardi (Italy), from July 2013 Belsk (Poland) e Vladimir (Russia) Lightow (Australia), Poços de Caldas (Brazil), by the end of 2013 Brantford (Canada)

NEXT STEPS The Ferrero Group is drawing up a “Palm Oil Sustainable practicesagricultural Charter”, to be completed by 2015, as a During 2014 and in order to reach our 100% means of publicising its policy on the matter. objective, only segregated sustainable palm Considering that it is now possible to trace oil, purchased by Ferrero, will be sent to each the origin of the palm oil from the plantations

of our production plants for every product of origin up to the fi nished product, always Minimising impact environmental where the recipe requires it. within the context of the RSPO, Ferrero intends to communicate clearly on the aspects of sustainability activated at the plantations. By the end of 2015, Ferrero will be operating with large and small suppliers, emphasising C. S. R. of the Ferrero Group the respect of human rights, the reduction of emissions, agricultural practices and generally in order to ensure sustainability in the plantations supplying it, in the most comprehensive

way possible and involving the stakeholders Rocher Ferrero concerned. Countries 100 The 4 Our The Ferrero Ferrero’s Social The Ferrero Ferrero women pillarsproducts Foundation of Alba Enterprises Kinder+Sport Group and men

COCOA Ferrero’s commitment for sustainable cocoa

Every year, Ferrero purchases more than 100,000 tons of cocoa beans which are then transformed in our own factories. Therefore, our major priorities are to ensure not only that we source high quality cocoa, but that we help farmers acquire the necessary skills and knowledge to achieve this in a sustainable way, while also improving their livelihood.

To meet our 2020 goal of 100% sustainable certifi ed cocoa, we work closely with a number of certifi cation bodies and organisations to promote sustainability throughout our whole cocoa supply chain, starting from farmers and their communities. This goal will be achieved through independent and credible third party verifi cation of our cocoa sourcing, which will aim to ensure among other issues, that traffi cking, the worst forms of child labour and forced adult labour will not occur in its cocoa supply chain. Thanks to our long term partnership with our suppliers and involvement in numerous projects we are now well on our way towards achieving this goal, according to the following timetable:

PERCENTAGE COCOA OF COCOA VERIFIED STANDARDS & PROJECTS FOR PRODUCING ON TOTAL VOLUME YEARS DELIVERY OF VERIFICATION COUNTRIES

20% 2011/2013 Mainly from 40% 2013/2015 UTZ Certified, Ivory Coast, Rainforest Alliance, 60% 2015/2017 Ghana, Certification Capacity Enhancement, Nigeria, Source Trust and others 80% 2017/2019 Ecuador 100% 2020 Sustainable Minimising Corporate Social Responsibility Ferrero 101 agricultural practices environmental impactof the Ferrero Group Rocher Countries

OUR PARTNERS NEXT STEPS WITHIN THE SUPPLY CHAIN In addition to our sustainable sourcing activities,

Ferrero is working with schemes and certifi ca- we have started a pilot project with “Fairtrade” The 4 pillars tion manuals such as UTZ, Rainforest Alliance (www.fairtrade.net) in the Ivory Coast. Other and CCE (Certifi cation Capacity Enhancement) initiatives with new partners and new origins together with suppliers, cooperatives and part- have also been initiated. ners such as “Source Trust” (www.sourcetrust. org). Other models in supporting farmers, like SUSTAINABLE COCOA the “Maquita Foundation” (www.fundmcch. FOR FERRERO PRODUCTS The Ferrero Group com.ec) in Ecuador, continue to be of funda- mental importance in South America. The volumes of certifi ed cocoa which will be acquired by Ferrero during 2012/13, is equivalent In 2011/12 Ferrero sourced approximately 25% of to the volumes1 needed for two of our well-loved its cocoa under such activities: products, Nutella and Ferrero Rocher, in their Ferrero women and men 5% cocoa certified UTZ or Rainforest respective 5 most important markets. Alliance 4% CCE scheme and Maquita Foundation FARMERS’ LIVING CONDITIONS scheme 16% traceable Cocoa through Source Trust In the majority of the producing countries,

and other traders cocoa is usually grown on small, family-run Sustainable practicesagricultural farms (90-95% smallholders with 4-5 million For 2012/13 Ferrero will source approximately farmers worldwide according to World Cocoa 40% of its cocoa under such schemes: Foundation). Farmers today face a number 25% cocoa certified UTZ or Rainforest of challenges including a lack of good planting

Alliance material, decline in productivity of cocoa farms, Minimising impact environmental 5% CCE scheme and Maquita Foundation aging trees and insuffi cient farm management scheme skills and practices. As a result, farmers in some 10% traceable Cocoa through Source Trust areas have started to switch to other crops with and other traders higher income and technical support. Migration from rural to urban areas is also increasing as C. S. R. of the Ferrero Group the youth fi nds farming to be a less and less attractive lifestyle. Ferrero Rocher Ferrero Countries

1 Forecasts based on 2011/12 volumes.

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In order to support farmers and their Ferrero also pays additional premiums in order communities, we are working closely with our to source sustainable and traceable cocoa. suppliers to: These premiums partly go directly to farmers and partly help fund projects and services in ensure that the worst forms of child order to improve better farming practices and labour, trafficking and forced adult labour living conditions. will not occur in the cocoa supply chain. Ferrero continues its engagements and Under its Code of Business Conduct, commitments through a collective industry- Ferrero confirms its strong determination wide approach (as follows) but also through to contribute to the elimination of child specifi c projects in producing countries (see labour, starting from its worst forms, and of last part of this section). all forms of slavery, human trafficking, forced or compulsory and prison labour. Ferrero’s Code of Business Conduct is based on the principles of the ILO’s Minimum Age Convention No. 138 and the Worst Forms of Child Labour Convention No. 182. Through this Code, Ferrero is working with all its partners throughout the supply chain to be compliant with these requirements. Ferrero’s Code of Business Conduct is available on www.ferrero.com/social-responsibility/code- business-conduct/

provide farmers with the necessary skills to produce high quality and sustainable cocoa certifiable by UTZ or Rainforest Alliance.

By doing so, farmers should be able to improve agricultural practices thus increasing the quality and the yield of their cocoa but also learn new business skills and benefi t from a higher income. This in turn encourages farmers to rehabilitate their farms and also new farmers to start producing cocoa, including future generations who also benefi t from the experience of more senior farmers. Local communities benefi t from improved infrastructure and are able to invest in healthcare and education for their children. Sustainable Minimising Corporate Social Responsibility Ferrero 103 agricultural practices environmental impactof the Ferrero Group Rocher Countries

SUSTAINABLE SOURCING ORIGINS

COLLECTIVE APPROACH WCF operates at the local and global level, bridging the needs of cocoa farmers and their The 4 pillars In addition to our private partnership projects, families with the needs of the cocoa industry Ferrero continues to support a “collective and the environment. WCF works through industry-wide” approach. public-private partnerships that bring together donors, industry members, producing country 1. World Cocoa Foundation governments, research institutes and non- governmental organisations to achieve its goals. The Ferrero Group WCF supports programmes that work with farmers at the farm level, prior to sale or commercialisation of their cocoa. In this way, the Ferrero is an executive board member programmes provide farmers with the skills they of the World Cocoa Foundation (www. need to operate productive farms and make Ferrero women and men worldcocoafoundation.org), since 2006. sound business decisions.

Founded in 2000, the World Cocoa Foundation Within WCF’s fl agship programmes, Ferrero (WCF) is an international membership fi nancially supports the African Cocoa organisation representing more than 100 Initiative (ACI), which is funded by USAID member companies across the cocoa with support from the Dutch Sustainable Sustainable practicesagricultural value chain. WCF is committed to creating a Trade Initiative (IDH), along with 14 cocoa and sustainable cocoa economy by putting farmers chocolate companies. The fi ve-year programme fi rst - promoting agricultural and environmental has a total budget of $13.5 million and is active in stewardship, and strengthening development in four countries (Cameroon, Ghana, Ivory Coast,

cocoa-growing communities. and Nigeria). Minimising impact environmental C. S. R. of the Ferrero Group Ferrero Rocher Ferrero

Cocoa Farmers Countries 104 The 4 Our The Ferrero Ferrero’s Social The Ferrero Ferrero women pillarsproducts Foundation of Alba Enterprises Kinder+Sport Group and men

THE MAIN GOALS ARE:

Strengthening national public-private Enhancing public and private sector partnership (PPP) platforms for extension and farmer training services: investing in agriculture and cocoa: promoting best cocoa farming and convening public and private sector management practices in national partners to implement a comprehensive curricula and increasing the capacity roadmap toward sustainable cocoa. of in-country public and private sector National platforms will use resources agriculture training services. and expertise to drive a cohesive cocoa Foster market-driven farming input sector support system. supply services: conducting an inventory Improving cocoa productivity through of in-country certified agro-dealers and better planting material: performing an supporting expansion of more accessible inventory of national planting material and efficient channels to distribute much stock and mobilising available certified, needed inputs like fertiliser. improved varieties to cocoa farmers. 2. International Cocoa Initiative

As already mentioned in previous CSR reports, Ferrero is also a board member of the International Cocoa Initiative - ICI (www. cocoainitiative.org) Established in 2002, the International Cocoa Initiative (ICI) is a unique partnership between civil society and the chocolate industry, working together for the fi ght against child labour and forced adult labour in cocoa production. ICI’s community empowerment model has proved effective in bringing about critical change in farming practices.

ICI’s membership is currently composed of 19 companies, contributing partners and civil society organisations. The International Labour Organisation (ILO) is an advisor to the ICI Board. Sustainable Minimising Corporate Social Responsibility Ferrero 105 agricultural practices environmental impactof the Ferrero Group Rocher Countries The 4 pillars The Ferrero Group Ferrero women and men Sustainable practicesagricultural

Through awareness-raising, mobilisation and During the past year, ICI reinforced its presence community action, during 2012, ICI was able to in Côte d’Ivoire and Ghana; supported the promote, amongst other things: governments in these countries in their coordination, prevention and mitigation efforts;

324 development actions implemented by provided training on child labour to 141 cocoa- Minimising impact environmental the communities themselves company and government staff members; 192 development actions supported by piloted innovative projects on child labour local authorities and development actors monitoring and child protection profi ling; and the construction or rehabilitation of 205 started new partnerships with cocoa certifi ers. school classrooms leading to improved C. S. R. of the Ferrero Group schooling capacity for 10,050 children Shared responsibility and collective action, the installation of 1,789 new school desks at all levels of the cocoa supply chain, is now and benches contributing to improved recognised as the optimum model for delivering learning conditions for 3,578 children positive change and ensuring a safer and

the construction of 40 teachers’ houses brighter future for the children of cocoa farmers Rocher Ferrero everywhere. ICI’s activities in Côte d’Ivoire and Ghana reached more than 800,000 people in 331 cocoa-growing communities. In 2013, ICI aims to expand its work to 160 additional communities. Countries

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In addition to our engagement with WCF and forms of child labour in cocoa growing areas in ICI, we continue our global work within the Ivory Coast and Ghana, including support for “Post Protocol Activities” framework: the collection of incidence data, the provision of education and other remediation services for 3. “Framework of Action to vulnerable children, and support for sustainable Support the Implementation improvements in the livelihoods of vulnerable of the Harkin-Engel Protocol” children.

The United States Department of Labour, In order to accelerate work to achieve these Senator Tom Harkin, Representative Eliot Engel, goals, the United States Department of labour the Government of the Republic of Ivory Coast, committed 10 million dollars in 2010 to a new the Government of the Republic of Ghana and ILO-IPEC project focused against child labour International Chocolate and Cocoa industries in cocoa communities. The International have joined together in a partnership to reduce Chocolate and Cocoa Industry committed 7 the worst forms of child labour in Ghana and million dollars in new funding over 5 years and Ivory Coast by 70%, by 2020. That Framework is with the further possibility of an additional 3 a “roadmap to remediation,” and it reaffi rms our million dollars. The Governments of Ivory Coast shared commitment to work in a collaborative and Ghana committed to allocate the necessary and transparent manner to eliminate the worst human and fi nancial resources to support their Sustainable Minimising Corporate Social Responsibility Ferrero 107 agricultural practices environmental impactof the Ferrero Group Rocher Countries

National Plans of Action” in coordination with 5. German Initiative Framework stakeholders. on Sustainable Cocoa: GISCO

Ferrero’s commitment within the “Framework of The German Initiative on Sustainable Cocoa The 4 pillars Action” will be through its project “Ferrero Cocoa (GISCO), launched in June 2012, is an alliance Community Commitment – F3C” partnering of industrial and grocery trade companies, with Source Trust (see below for more details). the German Federal Government and civil society groups. Ferrero is an active member of 4. CEN – ISO Project on this initiative, which purpose is to survey and sustainable and traceable analyse the numerous projects already existing The Ferrero Group cocoa in the area of sustainable cocoa production, promote existing initiatives and support and CAOBISCO, the Association of Chocolate, Bis- further develop the “Certifi cation Capacity cuit and Confectionery Industries of Europe, Enhancement” method to ultimately support and its members, including Ferrero, are working the increased production of sustainable cocoa Ferrero women and men with CEN, the European Committee for Stand- in response to the growing demand. ardisation, to develop a global standard for sus- Ferrero is one of the founding members and tainable and traceable cocoa. has been strongly involved from the beginning in different working groups to support GISCO. This standard will serve as a strong framework to The Deutsche Gesellschaft für Internationale promote production practices which recognise Zusammenarbeit (GIZ) will take on the role of Sustainable practicesagricultural the continually evolving needs of both produc- secretariat for two years. ers and consumers. In turn, it will play an impor- GISCO is intended to foster cooperation of tant role in the collective efforts to protect chil- all actors in the sector. The aim of the broad- dren from the dangers of child labour. based initiative is to signifi cantly increase the

share of sustainably produced cocoa, based Minimising impact environmental In 2012, the CEN process established a parallel on cooperation with partner countries (e.g. process in ISO (International Standards Organi- Côte d’Ivoire, Ghana, Nigeria). The forum will sation). Ferrero supports CAOBISCO to: be commissioned to develop a common obtain full engagement of cocoa producing understanding of sustainability in the cocoa countries; sector and drawing up a corresponding C. S. R. of the Ferrero Group to recognise existing certifiers. curriculum for training measures in the producer countries. The forum will moreover CAOBISCO and its members are working hard to evaluate existing approaches aimed at ensure the standard is delivered in a timely man- strengthening sustainability in the cocoa sector

ner to meet supply chain demands without add- in general. The most effi cient measures will Rocher Ferrero ing unnecessary complexity to certifi ed cocoa then be documented and disseminated as best supply chains, prioritising above all the needs of practices. and impacts on cocoa farmers. More information is available at: http://www. bmelv.de/SharedDocs/Standardartikel/EN/

International/Sustainable-Cocoa-Forum.html Countries 108 The 4 Our The Ferrero Ferrero’s Social The Ferrero Ferrero women pillarsproducts Foundation of Alba Enterprises Kinder+Sport Group and men

6. Abidjan cocoa Declaration tween all the actors of the cocoa supply chain to move towards a more sustainable produc- The West African cocoa supply chains face a tion and in particular help smallholder farmers, number of challenges, which need to be tack- men and women, move out of poverty. led in order to reduce the prevalence of the worst forms of child labour and human rights The conference was an opportunity to bring to- violations. As part of this objective, Ferrero at- gether the key stakeholders of the cocoa sup- tended the fi rst World Cocoa Conference in ply chain – 1,200 delegates from 46 countries Abidjan, supported by the Government of Ivory attended – including governments, producers, Coast. The purpose of the conference was to suppliers, civil societies and chocolate man- highlight the importance of cooperation be- ufacturers. As an outcome of the conference, participants were invited to sign the Abidjan Cocoa Declaration, a voluntary agreement to work towards transforming the cocoa supply chain towards a more sustainable business for all parties involved.

By signing the Declaration, Ferrero reaffi rms its commitment to sourcing sustainable cocoa and ensuring that the worst forms of child la- bour and forced labour do not occur in its sup- ply chain.

SPECIFIC PROJECTS IN THE IVORY COAST, GHANA AND NIGERIA Ivory Coast Noble Resources S.A. has been one of our main cocoa suppliers in Ivory Coast for several years. In 2011/12, thanks to this partnership, 700 farmers in Ivory Coast were able to supply over 1,000 tons of UTZ Certifi ed cocoa. Three farmer groups were trained on sustainable co- coa production to improve the performance of their farms, obtain access to healthcare and education and preserve the forest habitat of their cocoa farms.

In addition, we can already announce that be- tween 2012 and 2013 the programme expand- ed to include more farmers from the cooper- Sustainable Minimising Corporate Social Responsibility Ferrero 109 agricultural practices environmental impactof the Ferrero Group Rocher Countries

atives already involved and introduced new BUILDING A SCHOOL cooperatives. In 2013, 2,914 farmers from 6 As mentioned in our third CSR report, we different cooperatives have been trained to have contributed to the building of a school in produce UTZ Certifi ed cocoa, amounting to cooperation with Noble Resources/COCAF The 4 pillars approximately 10,000 tons. IVOIRE and one of its partners, cocoa coop- erative “Coopérative Anonklon de Bianouan” For more information on Noble Resources, (COABIA), in a village of the Ivory Coast. please visit http://www.thisisnoble.com/

CARBON NEUTRAL PROJECT The Ferrero Group In 2011/12 we were able to purchase 7,500 tons of carbon neutral cocoa from Ivory Coast, helping to reduce our carbon footprint and mit- igate the effects of climate change. Together with Noble Resources, we are working to map Ferrero women and men the most effective ways to reduce and neu- tralise our carbon footprint all the way from Sinikosson School the farmers we purchase from. Together with independent third party certifi cation through COABIA is the fi rst provider of cocoa with UTZ TÜV NORD, the leading carbon certifi cation Certifi cation for COCAF IVOIRE. body, the project is now expanding in scope to Sustainable practicesagricultural reach out to more communities to supply more cocoa that is a climate-friendly and a resource effi cient product.

To achieve this, data was collected from 10 Minimising impact environmental suppliers, transport routes and warehouses. Energy use and emissions were calculated, emissions reduction initiatives implemented, Located in the east, close to the border of the footprint was verifi ed, and then the emis- Ghana, Sinikosson is a rural cocoa producing sions were offset through energy effi cient pro- community which is home to over 250 farmers C. S. R. of the Ferrero Group jects in India and China. The major emission within the COABIA cooperative. sources in our supply chain are land use and land use change, fertiliser and pesticides used The school provides education to 120 children during cultivation, fuel and electricity used by mostly from cocoa farming families and its

machinery, warehouses, processing facilities construction forms part of our overall objectives Rocher Ferrero and transportation. to improve community infrastructure in the areas from which we purchase cocoa beans.

The school opened its doors on 24 Septem- ber 2012, in time for the 2012/13 school year. Countries

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The cost for building and opening the school With Ferrero’s support, Source Trust is was equal to: 11,643,000 FCFA, of which providing farmer training on good agricultural, 6,135,000 FCFA was fi nanced by Ferrero, environmental and social practices to help 3,008,000 FCFA was fi nanced by “Noble farmers improve the yield and quality of Resources/COCAF IVOIRE” and 2,500,000 their crops. By 2016, Ferrero is committed to FCFA by “COABIA”. delivering training to 13,000 cocoa farmers from 11 districts in Ghana, which will allow farmers to achieve certifi cation under the UTZ standard. In addition to training, farmers have access to improved planting materials, including higher quality and stronger cocoa seedlings, which allows farmers to replace old and unproductive trees by newer varieties thus limiting deforestation to expand the plantations.

In collaboration with the Ghana Education Service, Ferrero supports Source Trust’s Village Resource Centres (VRC) programme, funding centres with computers and internet connectivity that can be used by schools, farmers and the wider community to develop IT skills and learning. The units are situated in rural schools with no access to IT facilities With other partners such as Touton and to provide practical IT teaching and learning Armajaro, we have sourced over 3,000 tons to the students and also serve as a platform of Rainforest Alliance certifi ed cocoa beans. for delivering training to cocoa farmers through audio-visual training materials on Ghana good agricultural, environmental and social SOURCE TRUST practices. This is also used as a tool to raise In Ghana, Ferrero works directly with farmer awareness about the worst forms of child organisations in partnership with Source Trust, labour and offers modules on prevention. a non-profi t organisation. The aim is to address agricultural, social, environmental and business To date, fi ve rural schools have benefi tted from issues through a portfolio of carefully designed Village Resource Centres – VRC -, with further interventions identifi ed through a community plans in place to deliver VRC across 11 districts. action planning process. Source Trust’s projects pave the way for long-term, sustainable cocoa production, whilst enhancing farmers’ business prospects. Sustainable Minimising Corporate Social Responsibility Ferrero 111 agricultural practices environmental impactof the Ferrero Group Rocher Countries

FERRERO COCOA COMMUNITY and 26,400 children, by 2015. COMMITMENT PROJECT IN GHANA (F3C) Ferrero’s investment will ensure that number F3C, which stands for Ferrero Cocoa Community of NPECLC fi eld-tested pilot communities will

Commitment, is a public-private partnership increase from 30 to 150, making a signifi cant The 4 pillars between Ferrero International and Source Trust contribution to Ghana’s 2009-2015 National Ghana in consultation with the Government of Plan of Action (NPA) for the Elimination of the Ghana, specifi cally to contribute towards the Worst Forms of Child Labour (WFCL) including achievement of the 2009-2015 National Plan of on its four project elements: Action for the Elimination of the Worst Forms of

Child Labour (NPECLC). 1. Promoting the development, implementa- The Ferrero Group tion, sustainability of Child Labour Moni- Ferrero is one of the fi rst private companies toring System (CLMS). to partner with NPECLC, as part of an historic 2. Sensitising communities on WFCL. partnership between the global chocolate and 3. Educating and training people as a means cocoa industry, U.S. Department of Labour, U.S. of preventing involvement in WFCL. Ferrero women and men Senator Tom Harkin and U.S. Representative 4. Providing sustainable livelihood services Eliot Engel. Ferrero has reaffi rmed its to households with children under 18 with commitment to promote responsible cocoa intent of supporting the withdrawal or farming by investing in the Ferrero Cocoa prevention of children from WFCL. Community Commitment programme which aims to reach more than 35,000 people in The F3C project is an important part of the Sustainable practicesagricultural Ghana, of which 8,800 farmers, 1,760 women general Source Trust programme in Ghana. Minimising Minimising impact environmental C. S. R. of the Ferrero Group Ferrero Rocher Ferrero Countries 112 The 4 Our The Ferrero Ferrero’s Social The Ferrero Ferrero women pillarsproducts Foundation of Alba Enterprises Kinder+Sport Group and men

GEOTRACEABILITY NOBLE RESOURCES To gain a better understanding of our cocoa Ferrero is also working with Noble Resources in supply chain and help identify the best way Ghana, where 3,200 farmers are being trained to reach out to farmers who can benefi t from in good agricultural practices in preparation the training programmes, in Ghana, Ferrero for the 2012/13 cocoa season through is committed to tracing cocoa by using the Certifi cation Capacity Enhancement (CCE) GeoTraceability farm mapping system. To date, training curriculum. 85 communities in total are 3,500 cocoa farmers have been fully mapped part of the programme to produce high quality and are supplying Ferrero with traceable cocoa. sustainable cocoa beans from the Ahafo-Ano North and South districts in Ashanti region The individual smallholder farms producing of Ghana that will improve productivity, and this cocoa are mapped using handheld develop producers business and organisational Geographical Information Systems devices skills. and a range of farm data is collected, for example, tree age and planting density, disease The training programme allows farmers to make prevalence and farming practices. This allows better use of their land and improve their quality Ferrero and Source Trust to gain important of life. Farmer business schools have been insight into the socio-economic situations set up where already trained and experienced of cocoa farmers and this information is farmers are able to train other farmers. There used to tailor agricultural and community is also a focus on gender awareness training interventions more closely to the needs of the to encourage more women to be involved in farmers and their community, and monitor the cocoa business. To increase food security, the outcomes of Ferrero’s investments in farmers are encouraged to diversify through the those interventions to ensure Ferrero delivers production of cassava and maize. improvements in productivity and livelihoods for the cocoa farmers who supply their cocoa. Female membership has increased from 23% to 27% and overall farmer incomes are increasing By 2016, 13,000 farmers will be integrated into due to the production of cassava and maize GeoTraceability system and will supply fully alongside cocoa, helping to improve overall traceable and UTZ Certifi ed beans to Ferrero. household incomes and livelihoods in the When the cocoa is produced, it is bagged and communities. Diversifi cation activities serve as barcoded at farming community level for tracing real incentives for farmers to pursue sustainable onwards along the supply chain, allowing Ferrero cocoa activities and remain committed to to track their cocoa as it travels from farming producing cocoa long term. community to their factory and ensuring traceability is maintained throughout. This experience in West Africa combines sustainable cocoa production with training to address food security and gender issues and for Ferrero it has become a model example of sustainable cocoa production. Sustainable Minimising Corporate Social Responsibility Ferrero 113 agricultural practices environmental impact of the Ferrero Group Rocher Countries

Nigeria FADU FARMERS CONVERTING TO: Sustainable Cocoa in Osun and Ondo FADU PROJECT (KOKODOLA) in Nigeria As mentioned in the third CSR Report, Ferrero is supporting the “FADU” project together The 4 pillars with leading international companies, within “The Cocoa Productivity and Quality Program (CPQP)” and under the lead of IDH (Sustainable Trade Initiative, www.idhsustainabletrade.com), with Continaf (www.continaf.com), Petra Foods

Ltd (www.petrafoods.com), Oxfam Novib (www. Group Ferrero The oxfamnovib.nl), FADU (http://fadunigeria.org/) and Solidaridad West Africa (http://www. solidaridadnetwork.org/westafrica).

The key targets and objectives are: Ferrero men and women njnj To improve cocoa production and quality njnj To address social issues and empower njnj To improve access to finance and inputs vulnerable groups njnj To raise the professionalization of the farmers njnj To set up multi-stakeholders platforms at groups national level njnj And to reach the following results: Sustainable practices agricultural

YEAR 1 YEAR 2 YEAR 3 YEAR 4

Outreach 1,500 3,500 5,500 7,500

Number of new farmers 1,500 2,000 2,000 2,000

Average ha/farmer 1.5 1.5 1.5 1.5 Minimising environmental impact Total certified Cocoa volumes 900 2,400 4,400 7,200 (MT)

The main project results in 2012 were as follows: C. S. R. of the Ferrero Group

TARGET MALE FEMALE TOTAL

Number of certified farmers 1,500 1,274 387 1,661 Hectares UTZ certified as on 2,200 n.a. n.a. 2,948 Rocher Ferrero certificate

Average yield kg per hectare 400 325 289 320

Average age of farmers 52 50 51

Average Ha/farmer 2.3 1.7 2.15 Countries

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Many training activities have been organised in the regions covered by the project with the following par- ticipation rates:

FFS PARTICIPATION 539

437 393

 men 186  women 171

62

MODAKEKE APOMU ILESHA

The targets of 2013 of the FADU project are the following:

TARGETS 2013

Number of new farmers 1st year cerfified UTZ (30% women) 2,000

Number of farmers certified 2nd year UTZ 1,500

Regeneration (ha) 3,550

Number new seedlings 38,776

Number of Demo plots (10 per zone) 30

Number of Pruning Teams (Year 1 & 2) 462

IDH Fertilizer pilot (Ha) 60

Ferrero keeps focusing on its strong commitment and, wherever possible, aims to accelerate the sourcing of certifi ed sustainable cocoa beans and set up new projects with other partners in various producing countries.

Farmers during a training session Sustainable Minimising Corporate Social Responsibility Ferrero 115 agricultural practices environmental impactof the Ferrero Group Rocher Countries

HAZELNUTS

As one of the world’s largest users of hazelnuts, as well as promoting gender equity;

Ferrero has adopted a plan to achieve 100% implement a work safety scheme that The 4 pillars traceability for its hazelnut supply by 2020. could be integrated upstream by each supplier in its supply chain to guarantee This objective implies a detailed sourcing safety, services and updated information strategy based on the implementation of a to each stakeholder. dedicated project, the Ferrero Farming Values

(FFV) plan that is based on the following Ferrero’s plan towards full traceability foresees The Ferrero Group principles: detailed programmes activated directly on the ground of the producing countries. The HBD ensure excellence in processing hazel- plantations will be the starting point to access nuts, starting from the field and the post-har- those countries where hazelnut cultivation is

vest operations. This in collaboration with promoted mainly by Ferrero. Ferrero women and men farmers and hazelnut processors will contrib- ute to respect freshness, quality and safety As already mentioned in the previous CSR standards; reports during the current reporting year, respect, and make suppliers respect, work Ferrero has paid special attention to and labour conditions in compliance with relations with its Turkish hazelnut suppliers

all applicable International Conventions, regarding high quality and safety standards and Sustainable practicesagricultural laws, regulations and local rules; a number of ethical, social and environmental avoid any use of child labour and the full issues. This process is guaranteed by frequent respect of human rights, starting from the visits by Ferrero and second party carried out at worst forms, illegal, forced or prison labour supplier level during the year. Minimising Minimising impact environmental C. S. R. of the Ferrero Group Ferrero Rocher Ferrero Countries 116 The 4 Our The Ferrero Ferrero’s Social The Ferrero Ferrero women pillarsproducts Foundation of Alba Enterprises Kinder+Sport Group and men

The Ferrero Farming Values plan for the Turkish commissioned to develop concrete actions on hazelnut supply chain involves two phases: the ground in Turkey. 1. the development of a responsible sourcing Phase 1 started, with SCS’ involvement, in 2012 standard, audit methodology and reporting with the assessment of the baseline scenario. protocols; To fully implement the principles set out in the 2. the implementation phase which responsible sourcing standard, Ferrero has will assess labour practices among adopted an approach developed on 4 pillars: hazelnut farmers and processors, and Good Agricultural Practices, encompass environmental performance Good Social Practices, and economic transparency indicators Post-Harvest Quality, through fields visits. Traceability.

Our plan for sustainable procurement, includes SCS will provide third-party verifi cation of the involvement of a leading global certifi cation Ferrero’s efforts to promote improved labour fi rm “Scientifi c Certifi cation System” (SCS management and production practices with Global Services, www.scsglobalservices.com/), participating farms.

Good Agricultural Post-Harvest Practices Quality

Good Social Practices Traceability Farming Value Sourcing Standards

“Ferrero Farming Values” (FFV) plan implies that: To maintain the highest quality of hazelnuts, Hazelnuts should be traceable at all times, we have developed unique roasting from the origin (the farmer) up to the processes and technologies in order to Ferrero factory gate, allow the aroma and the fl avour of this Traceable hazelnuts should be recognised essential ingredient to be developed to as “premium products” all along the supply the fullest degree. To know more about it, chain. see the next section “Ferrero Agricultural Enterprises for the cultivation of hazelnuts” of the present report. Sustainable Minimising Corporate Social Responsibility Ferrero 117 agricultural practices environmental impactof the Ferrero Group Rocher Countries

PUBLIC-PRIVATE PARTNERSHIP DESCRIPTION OF THE PROJECT AGREEMENT FOR TURKEY The overall purpose of this project is to contribute to the elimination of worst forms of

The International Labour Organization (ILO) child labour in seasonal commercial agriculture The 4 pillars and the Association of Chocolate, Biscuit in line with the Turkish Government’s strategy and Confectionery Industries of Europe drawn by National Plan for the elimination of (CAOBISCO) have signed a project cooperation worst forms of child labour by 2015. “Public-Private Partnership (PPP) agreement” on 22 April 2013, to contribute to the elimination The objectives of the project are to: of the worst forms of child labour (WFCL) in Enhance local capacity to eliminate the The Ferrero Group seasonal commercial agriculture in hazelnut presence of children from the worst forms harvesting in Turkey. of child labour in seasonal commercial The PPP will complement an ongoing project of agriculture in hazelnut production in Ordu; the ILO and the Government of Netherlands. Prevent at-risk children from participating

This project is being implemented jointly by the in such work through the capacity building Ferrero women and men Turkish Ministry of Labour and Social Security of public institutions linked to Ordu and the ILO in the Black Sea region province of Governorate, Ordu Municipality, Ordu Ordu. The project activities to be implemented Chamber of Agriculture, local NGOs with CAOBISCO funding will cover a 12 month and develop monitoring models and period between April 2013 and April 2014. partnerships in close collaboration with

As a member of CAOBISCO, Ferrero actively the Ministry of Labour and Social Security Sustainable practicesagricultural supports the ILO project intervention (MoLSS). programme. Minimising Minimising impact environmental

C. S. R. of the Ferrero Group Ferrero Rocher Ferrero

The hazelnut fl ower Countries

SHARING VALUES TO CREATE VALUE 118 The 4 Our The Ferrero Ferrero’s Social The Ferrero Ferrero women pillarsproducts Foundation of Alba Enterprises Kinder+Sport Group and men

SUGAR

Ferrero continues to maintain strong relations ensures no genetically modifi ed organisms with numerous agricultural cooperatives and (GMO) are used, the Group sources exclusively sugar producers established within the European GMO-free sugar. Union. In some cases, like in Germany and Italy, we have been working with the same As mentioned in previous CSR reports, suppliers for over 40 years. Ferrero participates in the multi-stakeholder The sugar bought by Ferrero can be broken organisation “Bonsucro - Better Sugar Cane down approximately as follows: 75% beet sugar Initiative” (www.bonsucro.com). Bonsucro’s and 25% refi ned cane sugar. mission is to defi ne a certifi cation scheme Community agreements in support of develop- with global indicators for sustainability in the ing countries have facilitated the development production chain of sugar cane. Bonsucro’s of sourcing from third countries and Ferrero has members, including Ferrero, aim to establish put in place selection procedures of new suppli- a certifi cation scheme to improve economic, ers in various regions of the world on the basis of environmental and social conditions all along the same strict quality criteria. the supply chain. Ferrero’s fi rst concrete contribution to this important initiative is to buy In accordance with the Group’s strategy which 5,000 Bonsucro credits, in 2012/13. Sustainable Minimising Corporate Social Responsibility Ferrero 119 agricultural practices environmental impactof the Ferrero Group Rocher Countries

The Group’s aim is to achieve 100% of refi ned accordance with the following timeframe: cane sugar from sustainable sources by 2020, in The 4 pillars YEAR % SUSTAINABLE PROCUREMENT

2012/2014 10%

2014/2016 40%

2016/2018 70%

2018/2020 100% The Ferrero Group

NEW SOUTH WALES SUGAR MILLING COOPERATIVE MANILDRA HARWOOD SUGARS

Recently the New South Wales Sugar Milling supporting those sugar cane producers who

Cooperative and Manildra Harwood Sugars implement good agricultural practices and farm Ferrero women and men announced that they became the fi rst in management, companies like Ferrero encourage Australasia to become Bonsucro certifi ed. The better farming practices, increased yields, Bonsucro certifi cation is obtained by strict audit better quality, less impact on the environment, by an independent certifi cation body as being in better social working circumstances and a more compliance with the Bonsucro Standard. effi cient way of production. Sustainable practicesagricultural

Customers who purchase Bonsucro Certifi ed Chairman of Sunshine Sugar Mr Ian Causley Sugar are assured that the product they said “The certifi cation and subsequent receive has been ethically, environmentally and agreement with Ferrero is an important part of economically manufactured in a sustainable the Cooperative’s continuous improvement

way by all involved within the supply chain from program targeting social and environmental Minimising impact environmental the farmer to the customer. improvement. We congratulate Ferrero on being the fi rst customer to participate in a process The Cooperative is now delighted to announce that is benefi cial to all facets and levels of the that a key customer, Ferrero, is supporting this community. We are proud that an Australian important sustainable initiative through the grower-owned enterprise in conjunction with our C. S. R. of the Ferrero Group purchase of 5,000 Bonsucro credits in what will partners, Australian icon Manildra Group, has be the fi rst trade in Australasia. been able to lead the way in such a responsible manner. Personally I think that having the makers Being the fourth largest confectionery group of my favourite chocolate as our fi rst Bonsucro

in the world, Ferrero has a very clear practice partner is a very positive move.” Rocher Ferrero of supporting the highest quality products and Bonsucro CEO Nick Goodall welcomed the careful selection of the fi nest raw materials sale “Congratulations to Sunshine Sugar and and through this purchase is supporting and Ferrero for demonstrating their commitment rewarding the local industry through their and support for the sustainable production of commitment to the certifi cation process. By sugarcane”. Countries 120 The 4 Our The Ferrero Ferrero’s Social The Ferrero Ferrero women pillarsproducts Foundation of Alba Enterprises Kinder+Sport Group and men

MILK

The Group sources its milk from carefully “short”: using the data to trace through selected suppliers in milk-producing areas, who a documented process, included the are constantly monitored and are extremely distance between involved entities, with a reliable. This ensures ideal freshness and the programme of documental implementation fi nest quality for a product that is so delicate and of the agricultural company; precious, especially for children. “controlled”: referring to the “Ferrero Long-term relationships with our suppliers Quality” as regards the chemicals and enable us to achieve over time a programme microbiological limits; of mutual growth and development, thereby “sustainable”: monitoring of animal welfare developing a supply chain that is short, well- indices and environmental sustainability. managed and sustainable. In particular the animal welfare indices As already mentioned in our previous CSR that Ferrero aims to put in place through reports, Ferrero’s supply chain project is ongoing a monitoring system will be divided into and setting itself ever more diffi cult challenges the following categories: animal feeding, to match its description as “Integrated Supply corporate facilities, animal health and Chain”. The main objectives are: animal behaviour. to foster loyalty and monitor and manage the entire supply chain from the field to the breeder to the producer of semi-finished products (whole and skimmed powdered milk and anhydrous butter) paying a fair price and controlling speculation; always guarantee excellent quality and traceability for our final customer.

Ferrero has achieved its objective of sourcing 30% from the “Integrated Supply Chain” by the end of 2012, as set out in previous CSR reports and the project now aims to evolve towards a “short, controlled and sustainable” supply chain by the end of 2015.

The objectives of the “Integrated and Sustainable Supply Chain” for 2013-2015 are to develop and consolidate the actions required to reach the standard defi ned under Ferrero’s protocol to acquire 30,000 tons in the three areas characterising the supply chain: Sustainable Minimising Corporate Social Responsibility Ferrero 121 agricultural practices environmental impactof the Ferrero Group Rocher Countries

COFFEE

The amount of coffee purchased by Ferrero, Over the past years, considerable progress although quite minimal compared to other has been made in training and certifying coffee The 4 pillars raw materials such as cocoa, is in complete producers, in South and Central America conformity with our values and commitments. where we source from, thus allowing us to We believe it is important to source coffee increase the amount of sustainable coffee which: purchased to the point that we will reach our meets our high quality standards target by end of 2013.

is produced sustainably and is certified as The Ferrero Group such. All coffee sourced in 2012/13 was certifi ed by UTZ. Well aware of the social and environmental issues which can occur in coffee farming, we UTZ has an online traceability system (the Good have set our goal to source 100 % certifi ed Inside Portal) where all registered members Ferrero women and men sustainable coffee by 2013 so nearly two have to administer their sales and purchases years in advance from the deadline originally of UTZ coffee. This helps us identify not only foreseen. where our coffee beans originate from, but it also serves as an additional assurance that the coffee was produced sustainably, with respect

for people and planet. Farmers are trained to Sustainable practicesagricultural adopt better farming practices, and in this way enabled to improve their livelihoods and provide a better quality of life for their families, while safeguarding the environment and securing the

earth’s natural resources. Minimising impact environmental

The UTZ Certified program provides the assurance of responsible production and sourcing that consumers expect. This will also have an impact on the local community, with C. S. R. of the Ferrero Group new infrastructures being built and the local economy being boosted. Ferrero Rocher Ferrero Countries

SHARING VALUES TO CREATE VALUE 122 The 4 Our The Ferrero Ferrero’s Social The Ferrero Ferrero women pillarsproducts Foundation of Alba Enterprises Kinder+Sport Group and men

EGGS

Ferrero mainly uses eggs for its bakery products, lasting working relationship with our suppliers which represents only a small percentage of our rather than contracting others who would total volume of raw materials. Nevertheless, already meet with our new requirements. being sensitive to issues of animal welfare and in particular the welfare of laying hens, Ferrero Thanks to this work, we are pleased to say has decided to voluntarily adopt a roadmap that by November 2012 we exceeded our programme to source its eggs sustainably as initial target with more than 44% of our total already announced in our previous CSR report. volume of eggs being sourced from hens The programme included the purchase of eggs living in barns and the quantity is steadily from cage free hens living in barns according to growing. the following timescale: For this reason, we are confi dent that we are 40% By September 2012 well on track for achieving our ultimate goal in 60% By September 2013 2014: 60% of eggs from hens living in barns by 100% By September 2014 September 2013. We continue our dialogue with some experi- With these targets in mind, we have been enced NGOs active on animal welfare. working together with our suppliers to achieve Our sourcing programme is in line with our our annual objective. This is also in line with our plan, respecting the deadlines and quantities commitment to maintain, where possible, a long highlighted above. Sustainable Minimising Corporate Social Responsibility Ferrero 123 agricultural practices environmental impactof the Ferrero Group Rocher Countries

SOYA LECITHIN

Soya lecithin is a mixture of phospholipids validated at every step of the chain. extracted from soya seeds. For every stage of the chain, documented The 4 pillars It is a natural emulsifi er, whose main function is procedures and analytical monitoring tests are to improve the working and preserving qualities defi ned and certifi ed to guarantee the NON of the fi nished product. GMO origin of the product. In addition to having a positive infl uence on some of the technical processes, soya lecithin Ferrero: also has positive nutritional advantages. Indeed Sources raw materials only from suppliers The Ferrero Group its role is essential; for example it has a positive who are able to prove that they do not use infl uence on the metabolism of cholesterol. genetically modified crops; Ferrero sources lecithin in Brazil and India and Requires the supplier to provide an analysis uses it in the production of chocolates, fondants from accredited laboratories for every and bakery products. consignment leaving their premises; Ferrero women and men The supply chain and production is as follows: Carries out 2 internal analyses of every selection of the seeds, consignment: cultivation of the soya, on a sample before dispatch; delivery to the factories for extraction, on a sample taken before unloading. standardisation of the lecithin obtained,

delivery to Ferrero’s production plants. Only when all the results (from supplier, pre- Sustainable practicesagricultural dispatch and on arrival) are negative, can As shown below, the process guaranteeing the the material be used in Ferrero’s production absence of genetically modifi ed organisms is processes. Minimising Minimising impact environmental C. S. R. of the Ferrero Group Ferrero Rocher Ferrero

Soybeans Countries 124 The 4 Our The Ferrero Ferrero’s Social The Ferrero Ferrero women pillarsproducts Foundation of Alba Enterprises Kinder+Sport Group and men FERRERO AGRICULTURAL ENTERPRISES FOR THE CULTIVATION OF HAZELNUTS

The part that Ferrero plays in the development

of the hazelnut industry is carried on according CROPS HAZELNUT

to a strategy that has been tried and tested HOW - over more than a decade in several countries of

the world. It can be summarised as follows: PLANTS AND KNOW

The purchase and management of pilot farms: the pilot farms, managed directly by LLOOCAL LLOOCAL Ferrero’s Hazelnuts Business Development FFAARMEERRS FFAARMEERRS (HBD), have the following three functions: HECTARES 1. experimentation: to ascertain the adaptability of different varieties of hazelnut to the local agricultural climate FARMING and to experiment with different DEVELOPMENT agronomic techniques; 2. demonstration: to incentivise and promote the cultivation of hazelnuts The positive results obtained so far by the with local operators; HBD projects are partly due to the nature of 3. productivity: to guarantee a significant hazelnut cultivation, which can be a valid option part of the hazelnut harvest for Ferrero not only for large agricultural enterprises but while still facilitating the sale of it at also for small and medium-sized rural farms. market prices. The cultivation of hazelnuts can produce The tree nursery business: saplings of selected excellent results with less production input varieties grown in Ferrero/HBD’s nurseries than with the cultivation of other crops. are sold to local cultivators at a fair price1. In addition to selling the saplings, Ferrero offers The main agricultural-economic features of this farmers technical assistance for cultivating cultivation can be summarised as follows: their plantations. At the height of their productivity, after Research and training: Ferrero collaborates 7-10 years of growing, hazelnut plantations with national and international research can generate profits2 of more than 1,000 institutions on various matters relating to €/ha in marginal conditions of production the technical management of the hazelnut (compared with 300-700 €/ha provided plantations. In addition there are training by annual cultivation without irrigation) and publication sessions with farmers in and more than 2,500 €/ha under intensive collaboration with international projects and cultivation. Note that a hazelnut tree can local training institutions. live on average 50 years.

1 Which only covers direct costs and standard structural costs. 2 Value of saleable produce, net of costs of agronomic assistance and business management. Sustainable Minimising Corporate Social Responsibility Ferrero 125 agricultural practices environmental impactof the Ferrero Group Rocher Countries

The quantity of water needed for hazelnut The most limiting factor in the expansion of ha- plantations is significantly less than that zelnut plantations is the long pre-production of fruit orchards (5-7 thousand cubic phase; it takes 4-5 years to achieve signifi cant

metres per year per hectare as opposed production and 7-10 years to reach the stage The 4 pillars to 8-12 thousand and more for intensively of full production (which is characteristic of all cultivated orchards). This makes the fruits and nuts that grow in shells). cultivation of hazelnuts well-adapted to areas with limited water resources or Ferrero, in addition to selling saplings at a even without irrigation and to agricultural fair price, thus reducing by more than 50%

climates that have an annual precipitation the farmers’ plant purchasing costs, intends The Ferrero Group of 700-900 mm, if adequately distributed to facilitate with national and international throughout the growing cycle of the plant. fi nancial institutions, the creation of ad-hoc credit instruments to enable the cultivators to The hazelnut tree is also less demanding make their investment on easier terms.

than other trees in terms of routine plant Ferrero women and men health checks; it requires not more than 4 treatments (intensive fruit orchards require more than eight). The same applies to nitrogen fertiliser: the hazelnut tree requires about 80 units of nitrogen fertilizer

whereas fruit trees require 120 or more. Sustainable practicesagricultural

The workforce needed to manage a hazelnut plantation varies greatly according to the agricultural model of the enterprise.

It ranges from 420 hours per hectare per Minimising impact environmental year (52 days) in situations where there is little use of machinery, as in family-run hazelnut plantations, to 175 hours per hectare (21 days) for intensive and highly mechanised cultivation. C. S. R. of the Ferrero Group

Because of its modest needs for technical intervention and longevity of the plantations, the hazelnut cultivation is

considered as having a low environmental Rocher Ferrero impact and hence suitable for cultivation in agriculturally and ecologically sensitive zones (such as hills and foothills) and can be used in the context of carbon credit

initiatives. Countries

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A FEW DETAILS OF THE FERRERO AGRICULTURAL ESTABLISHMENTS

The Ferrero agricultural establishments, called with a total of 9,000 hectares of arable land “Agri” have been operational in: that is available and for the most part already » Chile, since 1991 planted, exclusively for the production of » Argentina, since 1994 hazelnuts. More than 1,000 people work there, » Georgia, since 2007 including the seasonal agricultural workers. » South Africa, since 2009 » Australia, since 2011 Sustainable Minimising Corporate Social Responsibility Ferrero 127 agricultural practices environmental impactof the Ferrero Group Rocher Countries

Ferrero has decided to invest in these The areas of land for cultivation have been plantations in order to have access to chosen on the basis of a series of climatic, hazelnuts that are: environmental and logistical reasons, including: of excellent quality, always fresh, all over » the ideal temperatures for hazelnut growth;

the world; » the nature of the soils; The 4 pillars even in the European counter production » the biodiversity of the areas intended for season. cultivation and the absence of forests or protected areas; Since Ferrero’s products do not use either » the prior presence of specialist growers; flavours or preservatives, the availability of and of course, to criteria linked to respect for agricultural raw materials of excellent quality human rights in the relevant countries, the The Ferrero Group throughout the year, has always been a Group risks of investment there and a cost-benefit priority. analysis. Ferrero women and men

35°-45° LATITUDES

SUITABLE CLIMATIC Sustainable practicesagricultural CONDITIONS FOR HAZELNUT CULTIVATION

30°-45° LATITUDES Minimising impact environmental

The philosophy of the “3F: Food, Fibre, Fuel” The “Millennium Ecosystem Assessment” inspires the organisation of the plantations, (MA)3, commissioned by the United Nations, C. S. R. of the Ferrero Group which produce hazelnuts, wood and fuel, making defi nes the criteria for the most sustainable them independent. The hazelnut shells are also management of the natural environment. Among used to heat the buildings. The presence of these criteria, “Food, Fibre, Fuel” is named as the hazelnut plantations helps to combat soil a means for slowing down the unstoppable

erosion and landslides. degradation of terrestrial ecosystems. Rocher Ferrero

3 The Millennium Ecosystem Assessment (MA) was called for by United Nations Secretary-General Kofi Annan in 2000. Initiated in 2001, the objective of the MA was to assess the consequences of changes in the ecosystem for human well-being and the scientifi c basis for the intervention needed to enhance the conservation and sustainable use of those systems and their contribution to human well-being. The MA has involved the work of more than 1,360 experts worldwide. Their fi ndings, contained in fi ve technical volumes and six synthesis reports, provide a state-of-the-art scientifi c appraisal of the condition and trends in the world’s ecosystems. For further information see the website http://www.unep.org/maweb/en/index.aspx. Countries 128 The 4 Our The Ferrero Ferrero’s Social The Ferrero Ferrero women pillarsproducts Foundation of Alba Enterprises Kinder+Sport Group and men

THE HAZELNUT VALUE CHAIN

The graph below shows the fi ve main stages of hazelnut production.

PLANTING HARVESTING DRYING CRACKING PROCESSING

PEOPLE AT THE FERRERO AGRICULTURAL COMPANIES

The Ferrero agricultural companies employ, as at 31 August 2012, a total of 1,012 people, of whom 595 in Georgia, 372 in Chile, 34 in South Africa, 9 in Argentina and 2 in Australia. More than 77% of them are farmers.

FARMERS IN THE FERRERO AGRICULTURAL ENTERPRISES AS AT 31.08.2012

COUNTRY ARGENTINA AUSTRALIA CHILE GEORGIA SOUTH AFRICA TOTAL Agricultural agents 89% 100% 86% 70% 100% 77%

Total 9 2 372 595 34 1,012

The tables below show the breakdown of employees in the agricultural companies per gender and age.

WOMEN EMPLOYED PER PROFESSIONAL CATEGORY IN THE AGRICULTURAL ENTERPRISES AS AT 31.08.2012

Professional category Men Women Total Woman as %

Manual labourers 646 125 771 16%

White collar workers 172 31 203 15%

Middle management 25 7 32 22%

Senior management 6060%

Total 849 163 1,012 16%

As at 31 August 2012, the percentage of the highest number of personnel, women women in the workforce was 16%. Specifically represent respectively 22% and 12% of the in Chile and Georgia, the two companies with total workforce. Sustainable Minimising Corporate Social Responsibility Ferrero 129 agricultural practices environmental impactof the Ferrero Group Rocher Countries

AGRICULTURAL ENTERPRISES 120% WORKFORCE PER 100% AGE GROUPS AS AT 96% 100% 89%

31.08.2012 The 4 pillars 80%  < 30 60% 50% 53%  30 - 50 41% 40% 28%  > 50 22% 20% 11% 6% 4% 1% 0% The Ferrero Group Argentina Australia Chile Georgia South Africa

The highest concentration of employees, 41% of the current employment contracts in the about 77%, are in the 30-50 age range. Group’s agricultural enterprises are long-term. Ferrero women and men

AGRICULTURAL ENTERPRISES WORKFORCE PER TYPE OF CONTRACT AS AT 31.08.2012

Type of contract Argentina Australia Chile Georgia South Africa

Long-term 100% 50% 47% 33% 100%

Short-term 0% 50% 53% 67% 0% Sustainable practicesagricultural

Total 9 2 372 595 34 Minimising Minimising impact environmental C. S. R. of the Ferrero Group Ferrero Rocher Ferrero Countries

SHARING VALUES TO CREATE VALUE 130 The 4 Our The Ferrero Ferrero’s Social The Ferrero Ferrero women pillarsproducts Foundation of Alba Enterprises Kinder+Sport Group and men

In the year in question, a total of 58 employees to the local communities. 99.6% of the total were taken on and there was a low turnout personnel of the Ferrero agricultural com- rate of 2.4%. panies, as at 31 August 2012, had been hired Ferrero tends to give priority when taking on locally, that is, their nationality is that of the employees at the “Agri”, to people belonging country in which the business is operating.

LOCALLY HIRED STAFF AS PERCENTAGES OF TOTAL WORKFORCE 100% 99.5% 99.8% 100% 100% AS AT 31.08.2012 88.9%

80%

60%

40%

20%

0% Argentina Australia Chile Georgia South Africa

THE TRAINING GIVEN TO FARMERS

Ferrero pays a great deal of attention to the training of the farmers operating in the “Agri”, taking into account the different local circumstances and different categories of cultivators already present in the areas involved. In view of the recent production plant of the The training course in hazelnut cultivation for agricultural enterprises, Ferrero’s current Georgian farmers is structured as follows: pilot projects are concentrated mainly in Georgia and Chile. participation of differently sized agricul- tural enterprises: from a few to hundreds In Georgia, through a project with USAID of hectares; (the United States Agency for International selection of the famers taking part in the Development), called EPI (Economic Prosperity course, giving precedence to those who Initiative), Ferrero has already developed local have already cultivated hazelnuts as their training initiatives which will reach 2,000 farmers main source of income; by 2014. activating the micro-credit system at In 2012, 800 farmers benefi ted from this subsidised interest rates for farmers for programme. purchase of machinery; Sustainable Minimising Corporate Social Responsibility Ferrero 131 agricultural practices environmental impactof the Ferrero Group Rocher Countries

starting the training of specialist improve the quality, AgriChile has developed technicians who in turn will train the a programme of exchange of agricultural farmers. practices and agronomic techniques between

Ferrero’s agronomists and the local growers. The 4 pillars The Ferrero Group

This programme concludes every year with

AgriChile’s offer to purchase local hazelnuts at Ferrero women and men global market prices. The EPI training programme puts the hazelnuts farmer at the centre of the local agricultural system, thereby improving professionalism and motivation. This has enabled: Sustainable practicesagricultural

» an improvement in the quality of the ha- zelnuts, by introducing modern techniques of cultivation; » the development of initiatives for farmers

to join together in the facilitated purchase It is expected that by 2020 our investments in Minimising impact environmental of instruments and products to be used in Chile’s hazelnut industry will place this country cultivation. among the fi rst in the world in terms of cultivated land. One of the possible future developments of the programme is the extension of the C. S. R. of the Ferrero Group initiatives described above to the Georgian hazelnut growing world, which consists of a thousand dozens of cultivators.

In Chile, AgriChile is directly dealing with Rocher Ferrero about 200 growers. These are really modern agricultural entrepreneurs, each owning between 50 and 500 hectares dedicated to the cultivation of hazelnuts. To develop the local cultivation of hazelnuts and constantly Countries 132 The 4 Our The Ferrero Ferrero’s Social The Ferrero Ferrero women pillarsproducts Foundation of Alba Enterprises Kinder+Sport Group and men

OBTAINING “CARBON CREDITS”

The project “Afforestation with Hazelnut Plantations in Western Georgia” has enabled: the absorption of atmospheric CO2 emissions through the natural processes of photosynthesis, which enables the long- term storage of the hazelnut trees’ woody biomass; the recuperation of land in an advanced state of degradation along the coast of the Black Sea, which is now dedicated to plantations. AgriGeorgia has already obtained 500,000 carbon credits on the basis of the Carbon Fix Standard, following an independent validation conducted by Tüv Süd.

Further information on the project is available at the following address in several languages: www.climateprojects.info/GE-HAP.