56 2016 ANNUAL REPORT 2016 ANNUAL REPORT 57

GOVERNANCE AND RESULTSGOVERNANCE AND RESULTS

Sites located in protected zones 9.4% of our sites are located in protected zones such as nat- ural parks, Natura 2000 nature protection areas or forests.

Various methods are applied for their preservation: conser- vation of forest areas by planting endemic species, reduction of greenhouse gas emissions etc.

OTHER MEASURES IN FAVOR OF THE ENVIRONMENT

Compliance and regulatory watch SAVENCIA Fromage & Dairy, our subsidiaries and individual sites pay great attention to their regulatory compliance.

A firm of outside consultants assists us in following the day- to-day changes in legislation and regulatory requirements. An ad hoc computer application, periodic bulletin and quar- terly interviews are used to help our sites keep up to date with new requirements and their practical application.

In France, as required by law, each production facility sub- mits details related to facilities classified for environmental protection. The activities concerned are classified subject to different requirements: In 2016,

43.1% of locations are subject to declaration; 44.6% of locations are subject to recording; 12.3% of locations are subject to authorization.

ACTION PROGRAMS AND CAPITAL EXPENDITURE IN 2016 The Group s programs and initiatives have been presented in the chapters dealing with consumption of water and energy and waste management.

Capital expenditure All investment in production capacity, or renewal of capacity, takes account of the environmental dimension:

19.8% of sites have committed expenditure to protecting the environment with new equipment for heating and cooling, measuring and controlling consumptions and waste, engaging in prevention and optimizing the treat- ment of waste and wastewater;

17.3% of sites have committed expenditure to reducing the risks of damage to assets and persons, in particular with regard to fire risk with the installation of fire detection and extinction systems and the reinforcement of electrical safety.

Operating expenditure 31.0% of sites have committed expenditure to protecting the environment, in particular with regard to the verifi- cation and maintenance of installations, to spreading of sludge and to treatment of waste and wastewater;

32% of sites have committed expenditure to reducing the risks of damage to assets: verification of electricity net- works and maintenance of fire detection systems.

Preventive measures designed to limit risks, or the impact of their consequences, have been deployed.

Preventive measures in 2016

Environmental protection training and awareness-raising Landscaping integration Limitation of the consequences of accidental pollution Limitation of disturbance of local residents Reduction of impacts on ecosystems

31.9% 24.1%

11.2%

17.6%15.2%

RELATIONS WITH STAKEHOLDERS The main stakeholders have been identified: consumers, employees, farmers, suppliers, local residents, regulatory agencies, city halls and fire services the needs of all of whom are assessed via on-site meetings, satisfaction surveys and audits. Group locations strive to meet all their requirements by developing relationships of trust and engaging in appro- priate communication.

Milk producers

SAVENCIA Fromage & Dairy commits strongly to its milk pro- ducers in order to encourage the development of a sustainable dairy industry.

In France, producers have joined together in producer organizations and cooperatives which assume responsibility for managing the volumes to be purchased, the applicable price and the requisite quality specifications.

Our dairy advisors are in daily contact with farmers to respond to their questions, help them resolve issues of quality and sup- port changes in their practices.

For several years, the Group s Responsible Dairy Sourcing program has thus enabled those farmers so wishing to make changes to their approach to producing milk.

Following a diagnosis of the farm, the support provided takes the form of the proposal of training in response to the needs and priorities established by the farmers themselves and devoted to themes such as cows wellbeing and nutrition, soil fertilization, protein autonomy, etc.

In 2016, the environmental diagnosis proposed to farmers has been enriched to extend to social and economic factors.

Field visits and farmers working groups are also organized.

The installation of young farmers is facilitated with the alloca- tion of a production volume, financial support, a guaranteed margin for the first three years and ongoing training. In 2016, within a particularly difficult context for farming, the Group has supported young producers with the offer of a specific bonus which has benefited about 15% of our farmers.

SAVENCIA Fromage & Dairy is equally very active within dairy industry trade bodies such as, in France, the National Dairy Industry Federation, the Centre National Interprofession- nel de l Économie Laitière, FranceAgriMer, interprofessional regional centers and laboratories, etc.

In France, at the end of 2016, close to 1,100 dairy farms sup- plying the Group had performed a diagnosis under the pro- gram.

In 2016, about 150,000 tons of CO 2 equivalent were thus

saved in comparison with 2010. The goal is to achieve a 20% reduction, by 2020, of the carbon footprint of dairy farms delivering to the Group in France.

In Germany, farmers are trained in achieving water and energy savings.

In Spain, supply contracts have been signed with all suppliers of cow s milk.

In Poland, producers are encouraged to invest in milking equipment and herd management.

In the Ukraine and Serbia, farmers are trained in farm man- agement with a particular emphasis on animal nutrition.

Improving the carbon footprint of milk collection and transport

The organization of milk collection, the exchange of dairy materials between plants and product distribution are all part of the effort to reduce greenhouse gas emissions. In France, transport subsidiaries subscribe to the CO

2 , Carriers

Commit charter.

Vehicle fleets are equipped with robust and economic tractor units. Drivers are trained in eco-driving. Electronic monitor- ing of fuel consumption and vehicle maintenance plans also help improve environmental and economic performance.

Milk collection rounds are optimized by deploying collection tanks of larger capacity.

Grouped deliveries of finished products improve loads and provide customers with better service whilst at the same time consuming less fuel so producing lower emissions.

Improving the carbon footprint of production The main actions and results are described in the paragraph devoted to the improvement of energy efficiency (page 53).

Greenhouse gas emissions for sites direct activities are mea- sured over two scopes:

Direct emissions (scope 1) comprising those related to the combustion of fossil energies, to non-energy processes (resulting from the treatment of wastewater) and to leak- age of refrigerants;

Indirect emissions (scope 2) comprising those related to the production of electricity, steam or other sources of heating or cooling purchased and consumed by sites.

The data covers all the Group s production sites and is pre- sented in accordance with a methodological change effected in 2016.

SAVENCIA Fromage & Dairy is not in a position to report on its other (scope 3) indirect emissions.

2016 classification of Scope 1 & Scope 2 greenhouse gas emissions (Like-for-like, production sites)

Scope 1 emissions Scope 2 emissions

20.6%

79.4%

Several factors contribute to site emissions, including manufacturing processes and the energy mix used by each site. Sites geographical location must also be taken into account because scope 2 emissions may vary for plants located in different countries.

The Group ensures that new equipment emits lower levels of greenhouse gases, in particular in the case of boilers and cooling equipment covered by a renewal program.

Progressing at the level of the industry SAVENCIA Fromage & Dairy is involved in defining a shared framework for the dairy industry covering the calculation of lifecycle analysis data with regard to greenhouse gases and the provision of environmental data in respect of finished products.

PROTECTION OF BIODIVERSITY Our Responsible Dairy Sourcing program contributes to the preservation of biodiversity (cf. the paragraph devoted to Improving the carbon footprint of production ).

Developing pasture and natural herd feeding are at the heart of the approach. Pastures stock carbon, prevent soil erosion, filter water, encourage biodiversity and enable natural recycling of cowpats. Properly managed, they require virtually no use of pesticides or fertilizers. Responsible Dairy Sourcing is also a matter of promoting best watering and cleaning practices in order to reduce farms water consumption.

Preventive measures in general force at our production sites include:

Reducing the consumption of cleaning products; Renovating drainage networks; Optimizing the functioning of purifying stations; Methanizing production waste in order to limit phosphor emissions.

Our sites also take initiatives to preserve or develop biodiver- sity around our installations by:

Planting vegetation on the land bordering our sites and puri- fying stations;

Restocking ponds; Providing havens for insects; Flowering fallow land and performing late-season haymaking of nearby pastures.