CORPORATE RESPONSIBILITY AND SUSTAINABILITY 2015-2016

Energy and Climate Change

HIGHLIGHTS 2015

267,577 tonnes CO2eour carbon footprint.

48%reduction in our carbon footprint vs 2007 (our baseline year).

70.35 kWhthe amount of energy it takes to produce a 1,000 litres of product, known as our energy use ratio (kWh/1,000 litres).

£66 millioninvested in manufacturing.

HOW WE’RE DOING IT

We focus our efforts on reducing emissions from three key areas:

• Manufacturing

• Transport

• Refrigeration

.

OUR COMMITMENTWe will reduce the carbon footprint of the drink in your hand by a third by delivering carbon reductions throughout our value chain by 2020.

INTRODUCTIONClimate change is one of the most serious and complex global challenges facing the world. It is also one of the most significant risks to our business. We believe that it is in the best interests of the business community to take an active and leading role in deploying low-carbon technologies, increasing energy efficiency and reducing carbon emissions.

We had already achieved awards for carbon and water in previous years, but this is the first time ever that we have received all three certifications – achieving very strong scores across all three areas, including the highest score for carbon performance in our sector and in the top 10 percent for all businesses.The Carbon Trust’s certification process is very rigorous, with businesses needing to demonstrate a real reduction in environmental impact over the assessment period, as well as demonstrating good performance in an evaluation of management and governance procedures for corporate responsibility and sustainability across each of the areas under review.

Investing in innovation and technologyIn April 2015, we pushed the button on a new £16.6 million high-speed canning line at our Sidcup site. The investment, which forms part of a £41 million injection into manufacturing upgrades and facility developments at Sidcup over the past five years, will increase on-site production with the line’s capacity increasing from 57,600 cans per hour (cph) to 110,000cph. The investment also allows Sidcup to remain CCE’s only site capable of producing 150ml cans, delivering a 330 tonne CO2 saving due to more efficient line design.Further sustainability savings have been achieved on-site through investment in shrink packers, changing the ovens used in the packing process from electric to gas, as well as introducing an energy saving kit and automatic roller shutter doors. As gas ovens consume less CO2, this change has resulted in a significant reduction in on-site emissions – around 1,243 tonnes CO2e per year. The

REDUCING MANUFACTURING EMISSIONS We joined with 80 UK businesses including Willmott Dixon, Cisco, E.on, John Lewis Partnership, SSE and BT to call on the UK Government to take decisive action to combat climate change and build a low-carbon economy. The open letter, sent to Prime Minister David Cameron and published in The Financial Times on 10 June 2015, asked the Government to:• Seek a strong global climate deal in Paris

in December 2015 which limits temperature rises below 2 degrees Celsius

• Set an ambitious fifth carbon budget to drive forward UK emissions reduction (covering the period 2028-32)

• Establish a long-term framework for investment in the low-carbon economy, giving industry much needed clarity over what is expected in terms of low-carbon development, and boost the confidence of green investors

Every month we measure performance at our six manufacturing sites to help us identify opportunities to further improve our energy efficiency. Five of our six sites are certified under the ISO 14001 environmental management standard. Two of our sites, Wakefield and East Kilbride, have also adopted the energy management certificate, ISO 50001. We monitor energy efficiency by calculating the energy use ratio, namely how much energy it takes to produce 1,000 litres of product. In 2015, our ratio of 70.35 kWh per 1,000 litres was 25 percent less than our 2007 baseline.In 2015, we were delighted to receive triple certification from the Carbon Trust when we were awarded the Carbon Trust Standards for carbon, water, and waste.The Carbon Trust Standard is the world’s leading independent certification of an organisation’s environmental impact across three key areas of sustainability: greenhouse gas (CO2e) emissions; water use; and waste management and disposal.

We continue to work with a number of industry groups and stakeholders in order to benchmark and further our progress on low-carbon vehicles and fuels. We are members of the Centre for Sustainable Freight Transport and are involved in a vehicle efficiency study with Heriot-Watt University’s Centre for Sustainable Road Freight.We also now include carbon-reduction criteria in our procurement systems and the tendering process for hauliers, as a further step to change industry practices. The trucks our hauliers use today in Great Britain are 4.6 percent more efficient on average than those used in 2007.

REDUCING REFRIGERATION EMISSIONS Our customers operate more than 172,000 pieces of cold drinks equipment including coolers, vending machines and fountains. This equipment is the largest source of carbon emissions from our core business – 72.7 percent in 2015 – so we continue to invest and explore new solutions to reduce it.We no longer place Open Fronted Unit coolers (OFUs) at customers’ premises, and in 2015, we started to phase out old OFUs which have reached the end of their useful lives, replacing them with new energy-efficient equipment.

Energy management devicesEnergy management saving (EMS) devices, such as EMS-55 or EMS-25 Plus devices used in smaller coolers, recognise when a cooler is not being opened regularly, responds by shutting off lights and adjusting the temperature, and can reduce energy consumption by up to 35 percent. In 2015, we fitted 1,078 (including vendor programming) EMS so that 70 percent of our viable cooler fleet are more energy-efficient.

More efficient lightingReplacing fluourescent lights in coolers and vending machines with Light Emitting Diode (LED) lighting can cut energy consumption by up to 80 percent. We have led the industry in retrofitting LEDs to cold drinks equipment and developing the technology from wired-in LEDs to easy-fitting ‘tube’ LEDs. Sixty percent of the viable fleet has been fitted with LEDs since the programme began.

In September 2015, we announced plans to introduce the latest in refrigeration technology to our customers. The new ICOOL range features energy management technology, LED lighting and electronically commutated (EC) fans and motors.

The ICOOL range will test technologies to monitor and manage cooler performance, saving on maintenance costs and allowing further reductions in energy usage.

HFC-free refrigerantsAll our new coolers are HFC-free and in 2015, we purchased more than 6,000 HFC-free coolers. HFC refrigerants are potent greenhouse gases that can contribute to global warming if they leak or are released when equipment is disposed of incorrectly. To prevent leakage of HFCs from existing coolers, our cooling equipment is maintained to high standards by our technical centre and field engineers. We also have systems in place for safe disposal when equipment comes to the end of its useful life.

CASE STUDYThe future of sustainable manufacturing

In 2015, CCE partnered with Cranfield University to undertake a six-month piece of research on the future of sustainable manufacturing, resulting in two white papers that provided an insight into what a factory of the future could look like in Great Britain in 2050.

We held a roundtable event attended by industry and academia, resulting in an initial white paper around six major themes that the food and drink industry would need to address in order to accelerate its journey towards sustainability. These six themes – People, Big Data, Technology, Collaboration, Value, and Resilience – were investigated further in a second white paper, released in March 2016. This research outlined the five pathways, and key actions necessary for the manufacturing industry to build towards a sustainable future.

We are playing our part – pledging to invest £56 million in our operations in Great Britain, for new lines and equipment.

new ovens are currently installed on four of Sidcup’s production lines, including the new high-speed canning line.Other major investments have included the installation of a £14.6 million high-tech canning line for 330ml can production with the capability to operate at 2,000 cans per minute and a £4.7 million investment on the 500ml PET production line which includes pre-labelling and is highly energy-efficient. We continue to invest in process innovation and energy-efficient technologies to support our efforts to conserve energy. For example, we are planning for new air compressors to be installed at Morpeth, Edmonton, Sidcup and Wakefield in 2016. Each is expected to cut energy consumption by 15 to 20 percent compared to the old equipment.

Renewable energyWe continue to invest in renewable energy sources and in 2015, we explored the possibility of buying electricity from a proposed solar farm alongside our Wakefield manufacturing operation. Following the successful installation of our first combined heat and power (CHP) system in Wakefield, we are now looking at other opportunities in Great Britain.

REDUCING DISTRIBUTION EMISSIONS Although distribution accounts for one of the smallest parts of our value chain, in order to reduce our carbon emissions, we aim to make our distribution network as efficient as possible.Ninety-seven percent of our products are made in Great Britain and are delivered directly to our customers, which helps us to reduce the road miles we drive. This way of distributing our products has been made possible through investment in our production and storage capacity at our manufacturing operations. Another way to reduce emissions is by working in close collaboration with our suppliers and customers, through programmes such as backhauling, in order to combine deliveries and collections to ensure full loads on both the outward and return journey. We currently have backhaul arrangements with 18 customers such as Tesco.For transporting raw materials and finished goods over long distances, we use multi-modal transport. Trailers are transported by rail with only short truck journeys at each end of the route. We are looking to expand this method over the next few years in GB.

CORPORATE RESPONSIBILITY AND SUSTAINABILITY 2015-2016