Sustainability concerns us allINTERSNACK SUSTAINABILITY REPORT 2016 SUMMARY

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INTERSNACK – SUSTAINABILITY REPORT 2016 SUMMARY

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Carefully managing CSR – for today’s and tomorrow’s world

Executive Board, Intersnack Group (from left to right): Henrik Bauwens, Roland Stroese, Maarten Leerdam, Johan van Winkel

OUR SUSTAINABILITY

MISSIONWe strive to act responsibly in all

we do – through the quality, safety and naturalness of our products. We care about the impact of our operations on the environment and of our supply chain on the

societies and communities our raw materials are sourced from.

34 %‘natural fl avours only’ seasoning

99 %use of RSPO segregated palm oil

100 % reduced trans fat content**

2.5 %energy savings* 12.1 %

reduction in edible waste** Since 2014** Since 2006 Maarten Leerdam Johan van Winkel

At Intersnack we have been acting responsibly towards the consumers of our products, our em-ployees, the communities we operate in and the environment for generations. This second CSR report marks another important milestone on our forward-looking journey to a sustainable future.

Since the last report two years ago, signifi cant progress has been made in saving resources by reducing our energy consumption, the size and volume of our packaging and our transport require-ments. Just how seriously we take sustainability is illustrated by our programme ‘Buying into the Future’, our commitment to and strategy for sustainable sourcing. By developing enduring supplier relationships and focusing on sustainability in the products we buy, we are helping to improve the quality of life and generating value for the people we buy from worldwide. Our responsibility to-wards consumers is illustrated by the pioneering role we have played in developing savoury snack seasonings with nothing but natural fl avours. Last but far from least, our commitment to the wel-fare of our employees is refl ected in the launch of Intersnack Work Systems (IWS), with its goal of investing in the development of all our employees and eliminating all losses across the Group.

Given the signifi cance of sustainability for the entire human race, we are striving for a successful and sustainable future for the Intersnack Group.

Henrik Bauwens Roland Stroese

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INTERSNACK – SUSTAINABILITY REPORT 2016 SUMMARY

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Effectively managing sustainabilityAt Intersnack we are fully aware of the environmental impact of our operations, the social implications of our supply chain and our investment in local communities. Our CSR programme has been running since 2008 and we saw marked improvements in our sus-tainability management performance in 2016.

Our visionAt Intersnack we are passionate about enriching people’s lives with the very best savoury snacks. We achieve this through our unique blend of international expertise and local knowledge, through our innovative approach and outstanding quality, and by striving for excellence in all areas. Our corporate vision applies not just to our busi-ness operations but also to all our CSR activities, which are founded on our core values.

Our core values Thinking responsibly: We take responsibility for all our actions – whether they relate to our consumers, the environment, our business partners or our employ-ees. For us integrity, accountability and proper risk management are essential elements of this responsi-bility. We can only be successful if we operate our business from a sustainable, long-term perspective and implement an effective CSR policy.

Acting entrepreneurially: Our independence is based on a strong customer orientation that drives our busi-

ness. We strive for leadership in our core markets. Our organisation is lean and close to the market. And we seek to achieve operational excellence in all areas. In acting entrepreneurially we live out our corporate social responsibility.

Growing together: Our ambition is to grow Inter-snack. To do this we rely on the diversity of our brands and products, and on the cultural diversity, experience and talents of our people. We sincerely believe in the importance of trust, transparency, open communication and multidisciplinary decision-making. By pulling together as a team we can be successful as a company as well as in our CSR policy.

Our Code of ConductThis code guides our employees in their business eth-ics and how to behave with integrity. It also defines our suppliers’ obligations based on the Ethical Trading Initiative (ETI). Only if we all act in line with this code can we practice what we preach in CSR.

Thinking responsibly

Actingentrepreneurially

Growingtogether

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INTERSNACK – SUSTAINABILITY REPORT 2016 SUMMARY

Managing CSRAt Intersnack we set verifiable targets, track them and have the progress verified by independent third parties. We manage CSR through internal reviews and assessment of the results achieved. We define clear, quantitative object- ives and milestones, and then break down these objectives into measures and projects before assigning corresponding roles and responsibilities. The implementation of these measures and projects is an integral part of our business operations. In managing CSR we work closely with ex- ternal sustainability partners, primarily non-governmental organisations (NGOs) operating either in the countries where our raw materials are grown or in the markets where our products are consumed.

Managing riskRisk management is a key component of CSR. That’s why we operate a comprehensive quality system to analyse all potential hazards and manage them through suitable controls. We strive to reduce critical points of potential risk to our raw materials and products. We are actively involved in national and international working groups to minimise risky substances such as acrylamide. We have an established allergen policy, internal policies to reduce flavour enhancers, saturated fatty acids, salt and artificial additives, and a non-genetically modified organisms policy. What’s more, we minimise our sourcing risk by striving to avoid overdependence on any one supplier or country. In the case of cashew nuts, where supply is growing more slowly than demand, we have increasingly implemented dedicated supply chains in order to reduce supply risks, ensure high quality standards and enhance supply chain transparency.

CORPORATE SOCIAL RESPONSIBILITY

Steering team lead

board

Steering committee

Status and progress of CSR activities and action plans, review of progress

Communications

Ethical sourcing

Social compliance

Product reformulation

Energy and CO2

Waste

Transportation

Product safety

Water

Packaging

Employees

Marketing

Meeting frequency: 3x per annum (minimum)

Subject matter experts

(depending on agenda)

HOW WE MANAGE CSR

AGENDATEAMS

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INTERSNACK – SUSTAINABILITY REPORT 2016 SUMMARY

Earnestly engaging in stakeholder dialogueParticularly since our last Sustainability Report, we have noticed our stakeholders’ growing interest in what we are doing to promote sus-tainability. �at is why we continue to invest time and e�ort in dis-covering what issues, interests and concerns our stakeholders have.

Identifying stakeholder groupsFor our last Sustainability Report we identified stakehold-ers with whom to engage through an in-depth analysis conducted by our Management Unit Germany (Nuts) in close cooperation with academic experts. Since then, there have been no fundamental changes in our stake-holder cosmos as shown in the diagram.

Determining key stakeholder topics and concernsIn the period under review a stakeholder review, was con-ducted in order to determine our stakeholders’ current interests and concerns. We engaged key stakeholder groups by conducting employee questionnaires, cultivat-ing consumer contacts through relevant media and our Management Units’ websites, maintaining direct contacts to suppliers, ensuring close ties to our financial partners, staying in close contact with our customers via our Man-agement Units, as well as collaborating with NGOs and external partners.

Maintaining our licence to operateWe address the issues concerning all the groups de-tailed in the stakeholder cosmos through ongoing dia-logue. Taking their issues, interests and concerns ser- iously and acting accordingly is not just a key component of our CSR policy, it also ensures we maintain our licence to operate.

Financial institutions

Customers

Shareholders

Employees

Management

Environment

Suppliers

Society

Consumers

Communities

INTERSNACK GROUP

INTERSNACK‘S STAKEHOLDER COSMOS

Our Group-wide CSR management is defi ned by, and divided up into, four areas of activity: consumer, environmental, social and employee responsibility. On the following pages we have outlined our eff orts to ensure the quality and safety of our products, minim-ise the environmental impact of our operations, take full account of the social implications of our supply chain, invest in local communities and promote the welfare of our employees.

Th e four pillars of CSR management

EMPLOYEE RESPONSIBILITYENVIRONMENTAL RESPONSIBILITY

SOCIAL RESPONSIBILITYCONSUMER RESPONSIBILITY

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INTERSNACK – SUSTAINABILITY REPORT 2016 SUMMARY

Taking consumers’ concerns seriouslyHealth and nutrition, product quality and safety and transparent con- sumer information – three areas where we, as a food manufacturer, have a special responsibility towards consumers and take their concerns very seriously. That is why we are continually adding health- and nutrition- related improvements to our products.

Ensuring safe and nutritious productsIn 2016, all our production volume was manufactured in plants certified by an independent auditor in accordance with internationally recognised food safety standards. All our sites have at least one food safety scheme accredited by the Glo- bal Food Safety Initiative (GFSI). In addition, we voluntarily perform food safety audits to obtain a detailed evaluation of our good manufacturing practices. All these efforts help to ensure the safety of our products, which is good for our business and equally important for our reputation as a reli- able manufacturer of safe and healthy snacks. As one of the main factors contributing to obesity worldwide is the in-creased consumption of foods rich in energy, fat, sodium or sugar, we are constantly working to give our savoury snacks an even better nutritional profile by reducing their saturated fat, trans fat, salt and added sugar content.

Introducing more and more natural flavoursNatural flavours are taking over in our product portfolio. In 2006, we launched a pilot project in Germany to develop new savoury snack seasonings that would replace the ‘na-

ture-identical flavours’ with ‘natural flavours only’. Ten years on, 60% of our seasoning specifica-tions (or 34% in volume-based terms) had reached ‘natural flavours only’ status. Moreover, we have now set up an ambitious programme to reformulate all existing seasonings within a few years.

Supporting sustainable palm oil productionAlthough palm oil is the most resource-friendly of oils, we are fully aware of the problematic aspects of palm oil cultivation, e.g. deforestation or loss of biodiversity. That is why we are a pro-active member of the Roundtable on Sustainable Palm Oil (RSPO) and fully support RSPO-cer- tified palm oil production. As such, our palm oil policy is fully in line with the WWF’s recommenda-tions. We would actually prefer to use sunflower oil in all our applications because of its low saturated fatty acid content, but there are some exceptions – peanuts and tree nuts, microwave popcorn and baked products – where for technical or sustainability reasons palm oil is the better alternative.

Communicating to our consumersCommunicating clearly to consumers the principles our business is based on is the only way to further improve our reputation for safe and healthy snacks. For us, clear communication mainly means three things: transparent product-related nutritional information on packaging; clear prod-uct labelling that complies with all legal requirements (e.g. the EU Food Information to Customers Regulation); and helpful labelling that defines what additives are generally permitted, accepted or not acceptable.

CONSUMER RESPONSIBILITY

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INTERSNACK – SUSTAINABILITY REPORT 2016 SUMMARY

Striving to minimise our environmental footprintAs a company we are working hard to minimise our environmental footprint in four key areas: reducing CO2 emissions, enhancing energy efficiency, improving resource management and implementing effective environmental management systems. In 2016, we also made significant progress in reducing the volume and size of our packaging and streamlining our logistics operations.

Conserving resourcesBetween 2014, the year of our last Sustainability Report, and the year under review, we were successful in con-serving more of our key resources. Energy consumption fell by 2.5% and CO2 emissions by 3.8%. The amount of edible waste and non-edible waste we generated was reduced by 12.1% and 3.1%, respectively. We saved most energy in the production of our baked products and crisps and we cut our power consumption, e.g. by install-ing a voltage optimisation technology. The only signifi-cant increase between 2014 and 2016 was in our water consumption (up 7.6% due mainly to a change in the product mix, increased cleaning activities and a water leakage in one of the crisps plants which has been re-paired) but we are constantly focusing on measures to reduce the amount of water needed to produce our crisps, which accounts for 84% of total water usage.

Optimising packagingOur efforts to reduce the volume and size of packaging are focused on three projects. The 3M project is all

about optimising packaging quality and reducing waste through fewer machine stops, less film waste and less product waste. The development of our own seal mater- ial for nut packaging has lead to savings of around 200 metric tons/year through standardising the film thick-ness for snacks. And by switching from virgin Kraftliner to recycled Testliner paper for corrugated box applica-tions, we have seen a 33.5% reduction in CO2 emissions in Germany alone for this specific packaging material.

Streamlining logisticsThe application of a supply chain network design ap-proach in Germany and the Netherlands is helping us to reduce CO2 emissions from our logistics operations in those countries by streamlining our logistics service and warehouse sites. Recognition of the efforts we are making in the logistics field came when Intersnack Netherlands received a Lean & Green Award in 2015 for its sustainable logistics achievements. They are com-mitted to a more than 28% reduction in CO2 emissions in logistics by the end of 2017.

ENVIRONMENTAL RESPONSIBILITY

REDUCTIONS IN KEY PARAMETERS 2016 VS. 2014

Energy consumption

CO2 emissions

Water

Edible waste

Non-edible waste

+8%

+6%

+4%

+2%

0%

–2%

–4%

–6%

–8%

–10%

–12%

–2.5% –3.8%

+7.6%

–12.1% –3.1%

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INTERSNACK – SUSTAINABILITY REPORT 2016 SUMMARY

Building on our long-held values and recognising the importance of sustainability along the entire value chain, we strive to improve work-ing conditions in the countries we source raw materials from, and ensure compliance with social and ethical standards in those countries and by our suppliers.

Implementing a sustainable sourcing strategySocial responsibility as practised at Intersnack is ex-pressed in our Sustainability Strategy, which involves focusing on sustainable sourcing, supplier development and improving conditions in our supplier regions. We promote sustainable sourcing by building awareness among suppliers, implementing social compliance stand-ards, monitoring performance and undertaking proactive partnerships. We also contribute to bettering the liveli-hoods of smallholders through improvements in crop yields, enhancing supply chain efficiency and working with partners to promote the socio-economic development of our sourcing regions.

Upholding ethical social standardsWe insist that our suppliers’ working conditions conform to the strict ETI Base Code standards and workers’ human rights are respected. Furthering social quality along our global supply chain is a key goal of our ‘Buying into the Future’ sustainability. Though recognising that the culture,

legislation and perception of well-being differs from coun-try to country, we engage in dialogue with suppliers worldwide about jointly championing human and workers’ rights in order to conduct our business to the highest possible social and ethical standards.

Improving the cashew supply chainIn the year under review, one specific social responsibility objective was improving the cashew supply chain. By closely collaborating with local partners, smallholders, cooperatives, initiatives, NGOs and government bodies, we have been able to support local growers, increase our societal commitment in production regions, eliminate intermediary traders and optimise transport routes. Through one multi-stakeholder partnership in particular, ComCashew, we have worked to improve farmers’ liveli-hoods and support market development in several African countries.

Living out our social responsibility

SOCIAL RESPONSIBILITY

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INTERSNACK – SUSTAINABILITY REPORT 2016 SUMMARY

Health and safety, people development and transparent commu-nication are the components of our corporate philosophy and culture. Put simply, it means offering our employees an attractive, safe and enjoyable working environment. That is what employee responsibility means to us.

Managing occupational safety and healthAll our companies are equally committed to providing a safe and healthy working environment for their employees. Although health and safety is managed in accordance with local legisla-tion and regulations, all our operational units have been report-ing KPIs since 2013 and 93% of our plants (excluding new ac-quisitions) had been certified to OHSAS 18001, the most important occupational safety standard, by the end of 2016. The two remaining plants are scheduled for certification in 2017.

Developing our most important assetThe people who work for Intersnack are our most important asset. That is why employee training enjoys a high priority. In 2016, our Management Unit KP Snacks, for example, launched BUDDY, an online learning, development and talent system for employees. During 2017, employees will be able to upload per-sonal development plans and access learning materials through BUDDY. And at Intersnack Germany we established a compre-hensive training programme to better prepare personnel for the challenges of the ever-changing work environment. Just two examples of how we are investing in our employees.

Communicating CSROnly by communicating to employees can we create the mindset required to implement our CSR goals. Each issue of our twice-yearly Group-wide CSR newsletter focuses on specific CSR activities and employee films running in the canteens at the Felix plant in Schwerte, Germany, have proved an effective means of informing employees about sustainability topics.

Implementing IWSIn the year under review, we started implementing Inter-snack Work Systems (IWS), a system designed to eliminate all losses across the company, invest in employee develop-ment and prevent accidents at work. An accident-free work-place is only possible if every employee is fully aware of potential risks and assumes responsibility for his or her colleagues. We are investing in the development of each and every employee because it is only through suitably qualified people that the overriding goal of eliminating production losses can be achieved Group-wide. By 2020, we aim to have introduced IWS at all our plants.

Acting as a responsible employer

EMPLOYEE RESPONSIBILITY

SUSTAINABILITY CONCERNS

YOU!Although we have already achieved a lot in

the CSR field, without you and your engage-ment for our CSR goals we will be unable to

make further progress. Intersnack’s Executive Committee and senior management are com-

mitted to sustainability, not least because they see it as a business opportunity. The

catchphrase ‘People, planet, profit’ (PPP) is now an economic reality. And that’s why sus-

tainability is vitally important for you and your job, for the people who are dear to you and, last but not least, for our entire planet.

Intersnack Group GmbH & Co. KGPeter-Müller-Strasse 340468 Düsseldorf, Germanyinfo@intersnackgroup.comwww.intersnackgroup.com PH

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