50 2016 ANNUAL REPORT 2016 ANNUAL REPORT 51

GOVERNANCE AND RESULTSGOVERNANCE AND RESULTS

ENVIRONMENTAL REPORT GENERAL POLICY AND ENVIRONMENTAL ISSUES Environmental protection is a natural part of the industrial policy of the Group whose production units are generally located at the heart of their milk collection zones. It is inte- grated within a strategy of progress associating all the parties concerned and in particular the Group s milk producers.

The Group is attached to minimizing its environmental foot- print commencing with the management of its agricultural raw materials and extending to the delivery of its finished products. All the Group s subsidiaries are required to respect the same commitments.

The Group s approach is first based on the establishment of structured relationships with milk producers and the application of a protocol detailing best livestock husbandry practices, promoting reasoned farming practices designed to reduce farms carbon footprints and other environmental impacts, and improving the efficiency of milk collection.

As a manufacturer, the Group is committed to controlling the impact of all its operations on the environment. The main issues center on preventing pollution; reducing water, energy and packaging consumption; and making optimal use of raw materials.

Standardization of processes and operating methods, generalization of the most efficient equipment and the identification and dissemination of best practices all help reduce consumption, emissions and waste.

The concentration of wastewater rejects, the quality of their treatment, and atmospheric emissions and the treatment of waste are all rigorously controlled and managed.

A system for assessing safety and regulatory compliance at production sites helps operating units implement appropriate prevention and protection policies. The approach involves the use of ratings reflecting the quality of risk management. Since the institution of this system, the frequency of occurrence of losses has been significantly reduced.

As in previous years, the Group has recognized no provisions and provided no guarantees in respect of environmental risks.

ENVIRONMENTAL MANAGEMENT

Organization A manager is responsible for the operational deployment of environmental protection measures at every subsidiary. At subsidiaries with several production sites, the manager is generally in charge of Hygiene, Quality, Safety and the Envi- ronment (HQSE).

At head office, the Group s industrial department supports subsidiaries in the operational implementation of environ- mental protection measures, supervises their improvement plans, promotes sharing of best practices and monitors changes in their environmental indicators.

A Group-level Safety & Environmental function is charged with supporting and assisting in this approach.

In 2016, meetings bringing together the environmental managers of the Group s French sites were organized on the

subject of water, energy, waste and atmospheric emissions as a means of pooling experience and sharing best practices.

Standards and certification SAVENCIA Fromage & Dairy uses the ISO framework in man- aging its operations at subsidiaries, relying in particular on ISO 22000 and placing the accent on the issues at the heart of its activity i.e. hygiene and the food safety of its products.

As a means of anchoring the development of control over their environmental impacts, Group subsidiaries are equally encouraged to apply for ISO 14001, and 50001, certification of their environmental management systems.

The Group has also developed internal Guides to Best Prac- tices with regard to various issues with environmental impacts: raw material yields, energy management, cleaning- in-place systems and loss prevention.

The guides are generally accompanied by self-diagnosis questionnaires enabling each entity to measure its progress.

Consumer health and safety The essential part of the Group s production is performed using milk that the Group collects either directly or via associated cooperatives. Milk traceability is entire and subject to rigorous and systematic control. All suppliers of ingredients are subject to listing procedures, including the joint signature of specifications ensuring compliance with all the applicable regulatory requirements, and to regular audit.

The requirement for quality is an integral component of our business culture. The Group devotes very significant resources to achieving excellence in all areas of quality, with a level of commitment in excess of its regulatory requirements.

New products are subject to a process of approval prior to their launch in the market; manufacturing batches are qual- ity controlled prior to release and on-site audits are regu- larly performed at all locations. In addition external audits, focused on compliance with ISO 22000 dealing with food safety management are regularly undertaken.

Quality as perceived by consumers is monitored via two tools in particular: a permanent panel of consumers which contin- uously assesses our products, and sensorial analysis which enables our products to be regularly assessed by trained staff. This approach enables us to improve products relative quality with regard to their competitive environment.

Nutrition SAVENCIA Fromage & Dairy manufactures natural products using carefully selected quality raw materials. Several focuses have been defined with the aim of helping the consumer adopt a balanced diet:

The information and education of consumers: the publica- tion of precise nutritional information on each product and the development of tools for training in balanced diet tak- ing due account of the dimension of pleasure, of varying diet and of the concept of the portion consumed;

A product offering including natural products with strong nutritional value and meeting the specific requirements of all: Low-fat or lactose-free products or products enriched in calcium or vitamins. The Group also proposes a range of organic milks and of milk-free desserts for allergic babies.

SOCIAL AND ENVIRONMENTAL INFORMATION

METHODOLOGICAL NOTE

CONTEXT AND CHOICE OF INDICATORS The indicators for Corporate Social Responsibility (CSR) defined for the Group s activities are designed to provide a transparent view of the Group s non-financial performance.

Our approach to CSR reporting also meets the require- ments of the implementing decree for article 225 of France s so-called Grenelle II law dated July 10, 2010 codified as arti- cles L.225-102-1 and R.225-104 to R.225.105-2 of the French code of commercial law.

The approach to CSR reporting is now an integral part of our subsidiaries operating processes.

ORGANIZATION OF THE REPORTING PROCESS The collection of social and environmental indicators is orga- nized by the Group s operating departments, according to their respective scopes of action, relayed by local experts who provide the raw data required.

The Group s finance department is the main interlocutor for our external auditors.

SCOPE The scope of our social and environmental reporting covers 100% of the activities and employees of the Group and its controlled subsidiaries as defined by article L.233-3 of the French code of commercial law.

The short-term employees engaged as promoters in one of our subsidiaries are not included in the social data hereafter. They represent less than 0.5% of the Group s total average equivalent full-time employees.

The changes compared to 2015 have been calculated on a like-for-like basis, i.e. reflecting the data for those subsidiaries which were present in both years.

REPORTING PROCEDURES AND GUIDELINES Two sets of reporting guidelines have been prepared, respec- tively addressing the Group s indicators for environmental and social performance.

The documents serve as a reference for the independent review of the data collected, as provided for by the imple- menting decree for article L.225-102-1 of the French code of commercial law derived from the Grenelle II law.

REPORTING SYSTEMS Data is reported and consolidated via the Group s financial consolidation system which is used Group-wide.

An annual questionnaire is addressed to all applicable manu- facturing, supply chain and sales subsidiaries worldwide as a means of collecting the information required.

CONSOLIDATION AND INTERNAL CONTROL At Group level, the persons responsible for social and envi- ronmental reporting exploit the data collected in order to generate the consolidated Group indicators present in this chapter.

They equally have responsibility for the associated internal control by assessing the coherency and consistency of the indicators produced (by analysis and explanation of changes from one year to the next, the calculation of ratios designed to compare the performance of different entities etc.).

Major variances noted are specifically analyzed in conjunction with the applicable data-providers.

INDEPENDENT VERIFICATION Since 2002, the reporting process has been subject to verifi- cation by the Group s statutory auditors.

Since 2013, the whole range of the Group s social, environ- mental and societal indicators has been subject to review by one of the Group s statutory auditors designated as an independent third party as defined in the framework of the Grenelle II law.

SAVENCIA Fromage & Dairy is committed to a policy of excellence and continuing progress, taking into account the point of view of all stakeholders: employees, consumers, producers, shareholders, customers, partners and community, and to respecting the environment. Its strategy is consistent with sustainable development defined as development that meets the needs of the present without compromising the ability of future generations to meet their own needs (the Brundtland report).

As a signatory to the UN s Global Compact since 2003, SAVENCIA Fromage & Dairy undertakes to comply with its ten fundamental principles in the areas of human rights, labor, the environment and anti-corruption.