SHARING VALUES TO CREATE VALUE FERRERO GROUP CORPORATE SOCIAL RESPONSIBILITY REPORT 2017 OVERVIEW OVERVIEW ABOUT THIS REPORT This report explains the Ferrero Group’s corporate responsibility About this Report IFC strategy and our global activities during Fiscal Year (FY) 2016/2017 (from September 1st, 2016 to August 31st, 2017). Along with the Letter from our Executive Chairman 1 objectives set out in previous reports, the issues in this ninth edition have been selected via a materiality process, based on their level of Ferrero’s Social Responsibility 2 importance to our Group, with constant input from key stakeholders. Previous reports are available online at www.ferrerocsr.com. Materiality Analysis 4 This report has been prepared in accordance with the GRI Standards: Stakeholder Mapping 7 Core option. It was drafted by Corporate Communications and Sustainability office (email: [email protected]). It was submitted for Ferrero Group’s Goals 8 the GRI Content Index Service and GRI confirmed the accuracy of the GRI Content Index. The following points of reference were also taken into consideration: – the “Ten Principles” of the United Nations Global Compact (UNGC); FERRERO GROUP – the ISO (International Standard Organisation) 26000:2010 “Guidance on social responsibility”; At A Glance 12 – the “Organisation for Economic Co-operation and Development Corporate Governance 14 (OECD) Guidelines for Multinational Enterprises”; and – the GRI and the UN Global Compact publication “An Analysis of the Ferrero’s Added Value 17 Goals and Targets”. The scope of economic data included in the report corresponds Organizations and Associations 18 with Ferrero International’s consolidated financial statement. Responsible Supply Chain Management 20 During the reporting period, the Ferrero Group Parent Company Ferrero International S.A. acquired U.S. chocolate confectionery Human Rights 21 manufacturer Fannie May Confections Brands, Inc. With regards to the qualitative and quantitative data on social and environmental aspects, the following entities were excluded from the scope of reporting: OUR CONSUMERS – the Stelliferi & Itavex Srl joint venture, which processes and sells toasted hazelnuts at different stages of processing; and Nutrition 26 – the companies belonging to Thorntons Plc. and Fannie May Confections Brands, Inc., except where specified. Innovation 30 The Piera, Pietro and Giovanni Ferrero Foundation is included. Quality 31 The report was the subject of a limited assurance engagement Responsible Communication 34 by PricewaterhouseCoopers. This social responsibility report is also accessible online at Kinder Surprise Company 40 www.ferrerocsr.com, where our previous eight CSR reports are also available. We will continue to publish reports on an annual basis. OUR PEOPLE & OUR COMMUNITY Ferrero People 56 The Ferrero Foundation 73 Michele Ferrero Entrepreneurial Project 81 Kinder + Sport 92 OUR VALUE CHAIN Create 118 Choose 126 Make 168 Store and Deliver 179 You 181 Key Data 186 SDGs 210 Previous reports are available Assurance Letter 220 online at: www.ferrerocsr.com 2 FERRERO GROUP | CORPORATE SOCIAL RESPONSIBILITY REPORT 2017 OVERVIEW FERRERO GROUP OUR CONSUMERS OUR PEOPLE & OUR VALUE CHAIN OUR COMMUNITY LETTER FROM OUR EXECUTIVE CHAIRMAN Our passion for creating the highest quality products defines our everyday activities all the way back to sourcing the very best raw materials. The ‘very best’ not only in terms of product excellence but also in terms of rigorous criteria in sustainability, which we apply all along our value chain in partnership with a multitude of stakeholders.” Giovanni Ferrero Executive Chairman – Ferrero Group We are closing a year of great achievements. It is Our people and the communities in which we operate unquestionable that it has been one of the most are also the focus of our passion and are at the heart transformative years of Ferrero’s history: first of all of our value sharing system. This system translates we have introduced a new governance model which into the empowerment of our people that have has led to the appointment of Mr Civiletti as our worked and continue to work for Ferrero and of the new Ferrero CEO in order to secure, under his strong communities in our supply chain. This also means the leadership, the achievement of the Group’s Budget and continuity of important initiatives such as the Ferrero PS3 business targets. Foundation, the Michele Ferrero Entrepreneurial Project and the Kinder+Sport program. I am especially Moreover, we have developed a new strategic planning proud that last year this latter program reached an process to set ambitious and compelling long-term important milestone, spreading the joy of moving to goals, as well as bold medium- to long-term strategies. children and young people in 30 countries. The planning cycle we are beginning is equally historic. Furthermore, the Ferrero Group has very strong Whilst we continue to foster our values, leverage our ambitions for the coming years. All of which will heritage and fully respect our contract of engagement be shaped by our absolute respect for the People with our stakeholders, we are breaking our legacy: and the Planet. we are migrating from the chocolate confectionery market to the Sweet Packaged Foods (SPF) one. This Report is testament to our renewed support for What does not change however, is the Ferrero way the United Nations Global Compact, the world’s largest of doing things. corporate sustainability initiative. For us at Ferrero, our commitment, authenticity Finally, I would like to thank each and every Ferrero and devotion to consumers, resulting in the highest employee, or Ferrerians as we call ourselves, for quality products, will always drive our actions. It has their continued support, commitment and active already delivered outstanding results for the Ferrero participation in our unique journey. Group, as demonstrated by the consolidated turnover of €10.5 billion achieved in FY 2016/17, up 1.5% from the previous year. Our passion for creating the highest quality products defines our everyday activities all the way back to Giovanni Ferrero sourcing the very best raw materials. The ‘very best’ Executive Chairman – Ferrero Group not only in terms of product excellence but also in terms of rigorous criteria in sustainability, which we apply all along our value chain in partnership with a multitude of stakeholders. FERRERO GROUP | CORPORATE SOCIAL RESPONSIBILITY REPORT 2017 1 FERRERO’S SOCIAL RESPONSIBILITY Ferrero has always been dedicated to For our Group, the term corporate social responsibility has always stood for caring for people and for the local area: namely taking on solid commitments and paying employees and former employees, consumers, families and the the utmost attention to People and the local communities in which we operate. These principles of social Planet, giving these precedence over its responsibility guided Ferrero’s first steps 70 years ago in Alba and remain unchanged to this day. financial goals. This tendency is inherent For us, the most important report has never been our annual to the Company’s DNA and is symbolically financial statement; it is in fact our corporate social responsibility represented in a letter that Michele Ferrero report that reflects our Group’s respect for People and the Planet. sent to company employees in 1957, Our approach to sustainability is currently based on our social when he took the leadership: responsibility strategy: “Sharing values to create value”. This strategy is implemented every day through our commitment to consumers, which results in the highest quality products, innovation and transparent communication. For us, the creation of shared value is a practice that affects all stages of the supply chain: it goes from caring for the people who have made and I personally pledge to dedicate everything continue to make the history of the Group, the support of local I do and all my intentions to our company, communities and the promotion of active lifestyles among youths so that it may continue its journey in the and their families, all the way to our strong commitment to sustainable farming practices and safeguarding and protecting same light that my father and my uncle the environment. gave it, assuring you that I will only feel satisfied once I am able, with concrete facts, We confirm all of the commitments of our corporate social responsibility strategy, involving People and Planet. to ensure you and your children a safe and peaceful future.” Michele Ferrero 1957 Our Executive Chairman Giovanni Ferrero continues to guide the Group in this same light: Tradition and innovation are inherent to Ferrero’s DNA. If I had to find a metaphor, I’d say that tradition is like a bow. The further back we pull the string, the further forward we can fire the arrow of modernity, of vision, of innovation.” For the purposes of determining and managing the Group’s policy Giovanni Ferrero in terms of corporate social Executive Chairman responsibility (CSR), the Ferrero Group has an office which is specifically responsible for CSR: [email protected] 2 FERRERO GROUP | CORPORATE SOCIAL RESPONSIBILITY REPORT 2017 OVERVIEW FERRERO GROUP OUR CONSUMERS OUR PEOPLE & OUR VALUE CHAIN OUR COMMUNITY PEOPLE PLANET At Ferrero, consumer focus isn’t just an abstract value, Monitoring and improving the impact of our activities throughout it’s something we put into practice every day, based on a sense the entire supply chain is a priority for our Group, which we address of responsibility that goes beyond commercial goals. This by ensuring that our main raw materials are responsibly sourced. responsibility is made into reality through our nutritional strategy, In addition, we are committed to production that respects the on-going innovation, the quality and freshness of our products, environment, by making use of the best technologies available, food safety and responsible and transparent communication. ensuring that our use of energy, materials and natural resources In addition, we show a constant interest in the lives of our is efficient and by consuming water resources responsibly and current and former employees as well as the people living reasonably.