Barry Callebaut : Forever Chocolate Progress Report 2022/23

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Barry Callebaut | Forever Chocolate Progress Report 2022/23

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Ambitious Targets,

Leadership, Customer Solutions

and Operational Excellence.

Introduction

Sustainability is at the heart of Barry Callebaut. In 2016, we launched Forever Chocolate, the next chapter in our long-standing commitment to building a sustainable cocoa and chocolate supply chain.

Sharpening our sustainability targets

In May 2023, wepresented a set of sharpened targetsfor Forever Chocolate. Why have we sharpened our targets? Because the requirements of a sustainable chocolate supply chain are constantly changing and evolving. Moreover, since the start of Forever Chocolate, we have continuously generated new insights through data analysis and engagement with experts. This has given us a fresh perspective on how to continue to innovate, create meaningful impact, and drive change at scale in the chocolate supply chain, now and beyond 2025.

We are committed to driving long-term systemic change toward a sustainable cocoa supply chain, with the support of our customers and to the benefit of all stakeholders.

Defining leadership beyond targets

We have not only sharpened our targets, but also fundamentally rethought our approach in order to achieve the biggest impact. Our approach combines ambitious targets, thought leadership, customer solutions and operational excellence.

With regard to thought leadership, we are committed to leading by example and providing valuable insights through, for example, the release of our White Paperbacked by six years of vigorous data and collaboration

with Agri-Logic, IDH and Rainforest Alliance. Its findings provide actionable steps that underpin Barry Callebaut's vision for a transformative approach to improve the existing cocoa farming model in Côte d'Ivoire and, more broadly, across West Africa.

Concerning customer solutions, our customers are our priority and we have developed key flagship programs that provide innovative solutions tailored to their needs. For instance, Mondelēz International has played a vital role in developing our strategy of assisting farmers with dedicated labor teams. We are also one of Nestlé's key partners for its income accelerator programand in March 2023, we partnered on a large- scale agroforestry project in Côte d'Ivoire. In June 2023, we extended our strategic supply agreement with Unileverto continue supporting them on their goal to achieve and manage 100% sustainably sourced cocoa. In addition, we facilitated the LoveA-faircollaboration between Ben & Jerry's and Tony's Chocolonely, through which the two companies are pooling their efforts on sustainability.

As to operational excellence, this is driven by our people, who form the backbone of our organization, contributing their expertise, skills, and unique perspectives. With over 1,600 colleagues in cocoa- origin countries, we have a unique pool of expertise. As an early sustainability adopter in the cocoa and chocolate industry, we have developed considerable sustainability know-how and capabilities.

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Forever Chocolate is focusing on four pillars, addressing the material challenges in the cocoa and chocolate supply chain: Prospering Farmers, Human Rights, Thriving Nature and Sustainable Ingredients.

We report every year on the progress of these time-bound, measurable targets, and these reports are verified by an independent third- party assurance provider.

By 2025, 500,000 cocoa	By 2025, our entire supply
farmers in our supply	chain will be covered by
chain will have been lifted	Human Rights Due
out of poverty. By 2030, we	Diligence, remediating all
will have mobilized key	child labor cases identified.
stakeholders around a	By 2030, the farming
transformative cocoa	communities we source
farming model generating	from are empowered to
living income.	protect child rights.

We believe our operational excellence is a key enabler of our robust program implementation and impact- driven solutions as well as a point of differentiation for our customers.

We continue to be the preferred partner to drive impact, delivering on our Forever Chocolate ambitions, and addressing customer needs. Barry Callebaut is the largest supplier of sustainable cocoa products and chocolate. We strive to excel in every aspect of our operations across the entire supply chain and have the ability to scale up on key activities with precision.

Our key achievements in 2022/23

This, our seventh, Forever Chocolate progress report covers fiscal year 2022/23, which ended on August 31, 2023. The report highlights our achievements from the past year and delves deeper into our evolving strategy. It underlines our commitment to intensify our efforts by collaborating with customers, industry partners, and wider society, to drive real change on the ground. Simultaneously, we remain steadfast in our advocacy of policies to make sustainable chocolate the norm.

Prospering Farmers - from "training" to "support doing"

Many cocoa farmers struggle to make a living income. Their main challenge is access to investments in their farms. This is why we shifted our focus from training to providing input support. Our support ranges from subsidized soil inputs and planting material to financial support for third-party labor services and additional premiums. Improving quality yield per hectare remains key to lift smallholder cocoa farmers out of poverty and put them on a trajectory towards a living income.

By 2025, we will be forest	By 2030, we will have
positive. By 2030, we will	100% certified or verified
have decarbonized our	cocoa and ingredients in
footprint in line with	all of our products,
global efforts to cap	traceable to farm level.
global warming at 1.5
degrees Celsius. By 2050,
we will be a net zero
company.

Our Farm Services business continued to support 169,981 (-1.0%) farmers in 2022/23. Notably, our programs to support paid labor teams were considerably scaled up, reaching 19,326 (+138.3%)

hectares in Côte d'Ivoire, Ghana and, for the first year, Cameroon.

Human Rights - adding to remediation

In 2022/23 76.5% of the farmer groups that are part of our direct supply chain1 have systems in place to prevent, monitor and remediate child labor. Compared to 80.6% in prior year, this is a slight decrease due to the larger number of farmer groups we source from (+26.5%). We will now focus our efforts on strengthening community systems to better protect children whilst still continuing our aim of remediating all cases of child labor found. As part of fighting the root causes, in 2022/23, we supported 1,371 (+17.3%) Village Savings and Loan Associations (VSLAs) with the aim of improving access to livelihood resources. The VSLAs reported total new savings deposits of CHF 1.3 million helping mostly women in cocoa communities to better manage their household cash flow, and issued a total of CHF 0.7 million in small affordable loans. The loans help fund emergencies, investments for new income-generating activities or specific needs such as education.

Thriving Nature - aligning with global efforts to cap global warming

In 2022/23, we extended the area covered by our intensified agroforestry approach with a focus on long- term success through training, extended monitoring and payment for ecosystem services (PES). We newly established 18,066 hectares (76.8%) and provided PES

• In line with our core principle of partnering with other stakeholders to create tangible impact on the ground and make sustainable chocolate the norm, this KPI extends beyond our direct supply chain, covering almost 70,000 farmers from our indirect supply.

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on 3,971 previously established hectares by the end of the fiscal year. We are focusing on insetting our carbon emissions through agroforestry and other decarbonization initiatives across our factories and value chain. This shift is aligned with the emissions reduction trajectory of the Paris Agreement for 2030, and will help us become a net-zero company by 2050.

Sustainable Ingredients - stepped-up commitment to transparency

In 2022/23 our mapping efforts have covered 547,804 (+37.2%) cocoa farm plots, encompassing 78.9% (compared to 79.7% in prior year, as we expanded our supply chain in Côte d'Ivoire) of our direct supply chain2, allowing us to establish traceability to farm level for the cocoa volumes sourced from these mapped farms. With the support of our customers, we also continued to increase the proportion of products sold containing 100% verified or certified cocoa or chocolate to 51.5% compared to 49.4% in prior year.

Establishing industry-wide sustainability standards and programs is essential for the sustainable sourcing of raw materials, as certification is only the starting point. We have continued to work with suppliers and industry programs to define and implement sustainability standards for all ingredients we source. Our approach has been built on the view that sustainability impacts can be effectively scaled up only if they are embedded in and supported by government policies.

More information on these and other achievements, as well as on our approach and measured impact, is provided in each pillar chapter of this report.

Building the enabling policy environment

A fully sustainable cocoa and chocolate sector can only be achieved when all supply chain actors are committed to supporting the development of an enabling environment. In the European Union (EU), an important milestone toward this goal was reached with the entry into force of the Regulation ondeforestation-freeproducts (EUDR)in June 2023, which bans deforestation-linked goods from entering or exiting the EU. This legislation is the result of four years of advocacy efforts by Barry Callebaut, other companies, industry associations and NGOs that partnered together to call on the EU to introduce legislation imposing due diligence obligations on all companies that sell cocoa or cocoa products in the EU market. We are happy to see that our vision and accompanying advocacy work are yielding results and are supporting the development of a level playing field for all companies. At the same time, the introduction of an appropriate transition period is imperative for the successful implementation of the regulation.

In addition to the EUDR, the proposed Directive on Corporate Sustainability Due Diligence (CSDDD)will provide impetus to strengthen an enabling environment, as well as the market pull, for sustainable cocoa.

In 2022/23 we continued to actively participate in the EU-led Alliance on Sustainable Cocoa, a Multi-

Stakeholder Dialogue (previously known as the Cocoa Talks). Previously, we contributed to the development of the roadmapfor the Alliance, which was endorsed in June 2022 by the governments of Côte d'Ivoire and Ghana as well as by industry representatives. The roadmap aims to improve the economic, social and environmental sustainability of cocoa production. Since then, we continue to participate in specific focus groups of the Alliance, such as the Traceability and Standards Focus Group.

In July 2022 we signed theCôte d'Ivoire - Ghana Cocoa Initiative (CIGCI) Economic Pact, joining forces with the Ivorian and Ghanaian governments and other industry players to accelerate the transition to a living income for all farmers. In 2022/23, we actively participated in a working group on Price and Markets, aiming to deliver solutions and recommendations addressing key drivers of change. Going forward, we will also be participating in other technical working groups.

We believe that these regulatory and multi- stakeholder initiatives represent an important step forward in driving the necessary transformation of the cocoa sector, and are important building blocks for making sustainable chocolate the norm.

Our commitment to reporting on Environmental, Social and Governance (ESG) risks

Our values represent a mindset and way of doing business that is committed to generating sustainable returns over time and creating long-term value for all stakeholders. We are dedicated to running all our operations with transparency and integrity, which includes reporting on our Environmental, Social and Governance (ESG) policies and risks. Identifying and addressing the key ESG issues facing our business and our approach to tackling these issues requires regular dialogue with our stakeholders. This principle is underpinned by our approach to our non-financial reporting and our materiality assessmentpractices. A dedicated task forceis employed to oversee, coordinate and align all relevant ESG activities in order to achieve these objectives. In addition, we publicly disclose our GRI Reportsand CDP Reportsand maintain a dedicated public website covering a range of key ESG topicsthat impact our operations and supply chain. In 2023/24, we will also address the Task Force on Climate-related Financial Disclosures (TCFD).

• In line with our core principle of partnering with other stakeholders to create tangible impact on the ground and make sustainable chocolate the norm, this KPI extends beyond our direct supply chain, covering almost 70,000 farmers from our indirect supply.

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Recognition of our progress and impact

In 2023, Barry Callebaut was once again ranked #1 in the Packaged Foods category by Sustainalytics, a leading player in assessing industry efforts to manage Environmental, Social and Governance (ESG) risks in supply chains. This is the fifth consecutive year that Barry Callebaut has been recognized by Sustainalytics as an industry leader in the management of the ESG risks in our supply chain. This result once again reaffirms our leadership position, extending beyond the cocoa and chocolate sector, to our peers in the broader food and beverage industry.

In addition, CDP, an independent organization that assesses the carbon reduction plans of nearly 15,000 companies, awarded Barry Callebaut, for the second time, an 'A' in global forest stewardship for 2022, along with 24 other high-performing companies leading in corporate action and transparency on deforestation. We were also ranked a CDP Leader for the fifth consecutive year for our carbon reduction achievements and our supplier engagement efforts to reduce scope three emissions, which are emissions that extend beyond our direct supply chain.

Awards and Recognition

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Prospering Farmers

Our goal

By 2025, 500,000 cocoa farmers in our supply chain will have been lifted out of poverty. By 2030, we will have mobilized key stakeholders around a transformative cocoa farming model generating living income.

Background

Cocoa cultivation, unlike many other food crops, heavily relies on manual labor in many cocoa-growing regions. Most of the world's cocoa (almost two-thirds) comes from Côte d'Ivoire and Ghana, where it is cultivated by mostly independent smallholder farmers who supply various companies, and sometimes via several cooperatives. Cocoa farmers, along with their families, typically live in villages and travel to work on their farms. Most of the work and labor on the farm is carried out by the farmer and their families, themselves. It is common for farmers to work on multiple fields, owning some of the plots while leasing others.

Farmers face a challenge when it comes to making a living from a small farm. According to data from Agri- Logicfor the 2021/22 production season in Côte d'Ivoire, the average cocoa farmer is 50 years old. The

average household size is 10.6 people, which decreases to 7.5 people when excluding dependents who may or may not be relatives but nonetheless rely on the farm. Farms have an average size of 5.9 hectares, with approximately 3.8 hectares primarily dedicated to cocoa cultivation. There are an average of 1,347 cocoa trees3 per hectare.

Increasing cocoa yield for smallholder farmers is difficult as it requires substantial investment in labor- intensive and time-consumingpre-harvest activities and costly farm inputs, such as soil fertilizer. However, the average farmer in West Africa currently spends 70% of their time doing post-harvest activities and only 30% doing pre-harvest activities. At the same time, cocoa represents a significant portion of the earnings for these smallholder farmers, accounting for 70% to 85% in Côte d'Ivoire4 and two-thirds in Ghana5.

• According to the white paper "Farmer yield and income in Côte d'Ivoire, an analysis of Farmer Field Books (FFBs)", summarizing the key findings of six years of collaboration between Barry Callebaut, IDH, Rainforest Alliance and Agri-Logic with a focus on data collected during the cocoa agronomic season of 2021/22. Available from https://www.barry-callebaut.com/en/barry-callebaut-agrilogic-white-paper

• Pluess, J. (November 2018), Children's Rights in the Cocoa-Growing Communities of Côte d'Ivoire, Abidjan: UNICEF Côte d'Ivoire. Available from https://sites.unicef.org/csr/css/synthesis-report-children-rights-cocoa-communities-en.pdf(accessed August 5, 2021).

• Cocoa Farmers in Ghana experience poverty and economic vulnerability (2017). Available fromhttps://cocoainitiative.org/(accessed August 2, 2021)

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Our approach

At Barry Callebaut, we aim to transform the way cocoa is produced by enhancing the existing farming model in Côte d'Ivoire, West Africa, and beyond. We firmly believe that focusing on increasing production volumes from a smaller group of farmers, who can then achieve a living income through a combination of better yield, larger farms, and higher farm gate prices, is the key. Our extensive six-year study6, in collaboration with Agri-Logic, IDH, and Rainforest Alliance, confirms that poverty reduction is driven by these three crucial factors: yield, farm size, and price.

Yield - higher yield through higher investment in farms

Both the study and a trial project with one of our largest global customers under our Farm Services business have demonstrated that increased investment in pre-harvest labor, particularly for tree pruning, and greater investment in the right mix and amount of soil fertilizers can improve cocoa yields and increase farmer income. However, one of the challenges cocoa farmers face is the financial cost of this pre-harvest work. Cocoa farming is also primarily a family-operated business, and the cost of additional labor for pruning as well as soil fertilizers is often out of reach for farmers. Through our close collaboration with farmers, we acknowledge that this is not due to a lack of farming knowledge. The challenges farmers face are related to structural and agricultural issues associated with the cost of production.

From "training" to "support doing" via our Farm Services business

Based on these findings and our work on the ground with farmers, in the past fiscal year we have redefined our Farm Services business, focusing less on farmer training and instead increasing support for pre-harvest activities. Better soil management, financial support for third-party labor services and improved planting material are needed to improve cocoa farmers' quality yield per hectare.

It is critical to have an in-depth understanding of the conditions, challenges and potential of the farms and farmers we work with. At the end of fiscal year 2022/23, our extensive database covered 325,859 (+38.2%) farmers with full data. This means we have captured their socioeconomic and household data through census interviews and mapped the geographical location and the size of their farms.

The gathering of farmer data also helps us to gain a more detailed picture of farmer profiles and a better understanding of farmer needs for our Farm Services business. As part of our Farm Services business, our Farm Services specialists work with individual farmers to evaluate their farm landscape - soil analysis, age of cocoa trees, presence of alternative crops and livestock

• and categorize the agricultural skills and resources the farmer already possesses. This results in the formulation of individualized Farm Business Plans (FBPs), including a multi-year model of the potential income a specific farm can generate if managed optimally. This tailored approach is unique and is only made possible by the over 1,600 dedicated people we have working on the ground in cocoa-producing countries. In 2022/23, 128,950 (+7.4%) farmers adopted FBPs and a total of 169,981 (-1.0%) cocoa farmers in Côte d'Ivoire, Ghana, Cameroon, Brazil, Ecuador and Indonesia benefited from our Farm Services support.

Better soil management through subsidized fertilizer

Poor soil quality and the suboptimal use of agrochemicals is associated with declining cocoa yields. Supporting farmers with soil management techniques, we continued increasing the number of farmers receiving productivity packages to 63,155 (+9.0%) in 2022/23. Given the increased cost of fertilizers, we also continued to focus on subsidizing fertilizers for farmers in Ghana and Côte d'Ivoire. Funded by Cocoa Horizons customers, a total of almost CHF 1.5 million was allocated to such subsidies.

325,859 (+38.2%) farmers with full data collected (geographical mapping and farmer census).

• According to the white paper "Farmer yield and income in Côte d'Ivoire, an analysis of Farmer Field Books (FFBs)", summarizing the key findings of six years of collaboration between Barry Callebaut, IDH, Rainforest Alliance and Agri-Logic with a focus on data collected during the cocoa agronomic season of 2021/22. Available from https://www.barry-callebaut.com/en/barry-callebaut-agrilogic-white-paper

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Supporting farmers with external labor teams

In addition to the application of soil fertilizer, adequate tree pruning also plays a critical role. Farmers receive crucial support for their operations through our labor team programs. By combining soil fertilizers with effective pruning, cocoa trees can maximize their fruit production, leading to improved quality and yield.

Launched in 2021/22by Barry Callebaut, along with customers such as Mondelēz International, Nestlé, Ben

• Jerry's, and customers of the Cocoa Horizons Foundation, our labor teams program empowers farmers by assisting them with labor-intensive tasks such as pruning, weeding and correct pesticide application, and fertilizer usage. This initiative has also established professional service providers. Local community members and cocoa farmers are contracted by cooperatives to form labor teams. Equipped with the necessary tools and equipment, these teams not only provide valuable support but also gain an additional source of income.

Thanks to the support of our customers we significantly expanded the program in 2022/23, covering a vast area of 19,326 (+138.3%) hectares. This includes 15,192 hectares in Côte d'Ivoire, 3,676 hectares in Ghana and, for the first year, 401 hectares in Cameroon and 57 in Nigeria. In Cameroon we pilot- tested the labor teams in five cooperatives, ensuring that there was at least one pilot in every cocoa- producing region.

In the upcoming fiscal year, we aim to continue scaling our innovative approach providing external labor support to farmers in West Africa.

Providing improved planting material

In addition to providing support in the form of pre- harvest labor and optimized soil inputs, the age and type of trees play a significant role in cocoa yield. Barry Callebaut aims to rejuvenate cocoa farms by distributing more resilient and higher-yielding seedling varieties. Worldwide, we distributed almost 4.1 million (+4.5%) cocoa seedlings in 2022/23. From our cutting-edge nursery production facility in Brazil alone, we distributed 417,260 high-quality cocoa seedlings in 2022/23. These seedlings are carefully bred for resistance against various pests and diseases that negatively impact cocoa production.

Already capable of producing 2 million seedlings per year, our Brazilian nursery aspires to scale up to 6 million seedlings annually in the near future, to be sold at a competitive price to cocoa farmers in Brazil.

To create a thriving ecosystem for cocoa farms, a diverse range of tree species is essential. In 2022/23, we distributed almost 3.3 million (-35.3%)non-cocoa trees, not only diversifying farmer incomes but also providing beneficial shade for cocoa seedlings, removing CO2 and enhancing soil quality and biodiversity on cocoa farms. All these benefits of sustainable cocoa cultivation in an agroforestry system, as well as how we focus on long-term success through training, extended monitoring and payments for ecosystem services (PES) are described in more detail on page 17.

Farm size - the importance of larger farms and our support for land titles

Our data analysis7 shows that a larger farm can significantly increase income by allowing for greater cocoa production, but only if coupled with adequate investment.

However, encouraging farmers to pursue long-term yield improvement activities (such as soil management and planting material) can be a challenge due to limited land tenure and tree rights. In contrast to many other countries, applying for land certificates in West Africa is often an expensive and time-consuming process. To help tackle this issue, we have cooperated with with industry partners, donors and local implementers through the Côte d'Ivoire Land Partnership (CLAP)since 2019. Our joint efforts have resulted in the development of an upscaling model for land registration, granting farmers access to more affordable and faster land documentation. This initiative places significant emphasis on including marginalized groups and preventing land conflicts.

19,326 (+138.3%) hectares covered by programs to support farmers with paid labor teams to improve cocoa quality yield.

• According to the white paper "Farmer yield and income in Côte d'Ivoire, an analysis of Farmer Field Books (FFBs)", summarizing the key findings of six years of collaboration between Barry Callebaut, IDH, Rainforest Alliance and Agri-Logic with a focus on data collected during the cocoa agronomic season of 2021/22. Available from https://www.barry-callebaut.com/en/barry-callebaut-agrilogic-white-paper

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In Ghana, Barry Callebaut has co-funded the 'Cocoa Household Income Diversification Project' under the Beyond Chocolate Partnership. Through the contributions of our customers to the Cocoa Horizons program and our partners Meridia, IDH - The Sustainable Trade Initiative, ALDI SÜD, Solidaridad West Africaand the Ministry of Development Cooperation Belgium, we have successfully provided land registration documents to 500 Ghanaian cocoa farmers.

Having formal rights to the land not only increases farmers' legal tenure security, but can also resolve land disputes. Secure land rights can encourage farmers to invest in their land.

Price - Higher price through premiums and shifting the discussion to farm gate price

With regards to higher price, the findings8 show that price mechanisms can support an increase in farmer income, and that these efforts should be coupled with other factors such as yield, farm size and farm location.

At Barry Callebaut, we are actively collaborating with our customers on various premium-paying programs. We also facilitate the way farmers receive their premiums. In 2022/23 we continued scaling our digital premium payment solutions across West Africa, Indonesia and South America. Digital premium payments benefit cocoa farmers by establishing credible income records and accelerating financial inclusion. Our digital payment program has also facilitated thousands of West African farmers to obtain a national ID by working with community and government authorities.

We are also a living income implementer, encouraging and supporting our customers to follow suit. One example of this is our facilitation of Tony's Open Chain, which is bringing together like-minded living income contributors such as Ben & Jerry's.

In addition, in 2022/23 we made efforts to enhance our purchasing practices. This includes reviewing our contracts, particularly for cooperatives in Côte d'Ivoire that cater specifically to our customers, reflecting our customers' multi-year commitments. In Côte d' Ivoire, we have signed three-year contracts with 90 percent of the cooperatives from which Barry Callebaut directly sources.

Furthermore, in 2022/23 Barry Callebaut actively participated in the working group on pricing mechanisms under the Côte d'Ivoire-Ghana Cocoa Initiative (CIGCI) Economic Pact. Our aim is to shift the focus of discussion to the farm gate price, recognizing that higher farm gate prices contribute to poverty reduction. We believe that analyzing the appropriate mechanisms in a broader context of price construction, including the significance of farm gate prices and export prices, will have the greatest positive impact on farmers' incomes.

Systemic change together with all supply chain actors

Achieving a fully sustainable cocoa and chocolate sector requires commitment from all stakeholders in the supply chain. To enhance the implementation and impact of our Farm Services offerings, collaboration among sector-wide stakeholders and the public sector to drive structural change are imperative in driving poverty reduction.

Government action at origin is essential to address the issues of traceability, rural infrastructure development and proper enforcement of national policies and legislation. These interventions must be coupled with regulatory intervention in cocoa-consuming regions to drive demand for sustainably sourced cocoa.

This is why we are committing to mobilize key stakeholders around a transformative cocoa farming model that generates a living income.

Almost 3.3 million trees distributed for agroforestry projects; almost 4.1 million cocoa seedlings distributed.

• According to the white paper "Farmer yield and income in Côte d'Ivoire, an analysis of Farmer Field Books (FFBs)", summarizing the key findings of six years of collaboration between Barry Callebaut, IDH, Rainforest Alliance and Agri-Logic with a focus on data collected during the cocoa agronomic season of 2021/22. Available from https://www.barry-callebaut.com/en/barry-callebaut-agrilogic-white-paper#

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To encourage higher levels of investment in farms, land consolidation is needed to increase farm size. This should be accompanied by the creation of mainstream banking opportunities for farmers, facilitating investments in their farms, as well as the development of integrated agricultural policies that ensure adequate cocoa supply management, land titles for farmers, a registry for cocoa farmers and alternative livelihoods for cocoa farmers in protected forest areas. While the modernization of cocoa farming practices is imperative, the resulting increase in cocoa yield needs to be addressed by consolidating the number of cocoa farms. To facilitate this transition, these farm policies should also encourage the production of other essential agricultural goods that promote income diversification and alternative livelihoods for farmers. Lastly, it is crucial to optimize the pricing structure to maximize its impact on farmer incomes.

Only through the broad movement of public and private actors will we be able to drive the change that is required in the cocoa supply chain.

Our measured impact

To measure our progress towards our target to have more than 500,000 cocoa farmers lifted out of poverty by 2025, we are using as a starting point the International Poverty Line definition of extreme poverty, which is USD 2.15/day adjusted for differences in purchasing power and cost of living9. The World Bank poverty line has been revised from $1.90 to $2.15 in September 202210. This increase is not affecting us, as we adjusted our calculations for purchasing power parity regardless, adding inflation on a yearly basis, currently applying a benchmark of $2.57. We have also

slightly updated our methodology aligning with the OECD household equivalent scale.

In 2022/23, measured against the International Poverty Line threshold of USD 2.15/day, we estimate 269,762 cocoa farmers in our supply chain are no longer in poverty, compared to prior year (+26.0%). The increase can primarily be attributed to the successful harvest facilitated by favorable rainfall in West Africa during the 2022/23 crop season. Additionally, our updated methodology now also includes premiums for sustainable cocoa. Unfortunately, the negative impact of inflation in Ghana cannot be disregarded, as it resulted in a comparable percentage of farmers crossing the poverty line compared to the previous year.

Lifting cocoa farmers out of poverty is a first step. We are aiming for a longer poverty reduction perspective towards 2030, towards a living income. Our activities are designed to help farmers in Côte d'Ivoire, Ghana, Cameroon, Indonesia and Brazil move from subsistence to living incomes thanks to increased productivity, bigger farms and higher prices. We measure success by focusing on outcome over outputs. Our new Prospering Farmers ambition for 2030 will create a framework where our performance is measured on average yield, income and farm size of the cocoa farmers we source from. Delivering some of these outcomes, such as farm size, are beyond our direct influence. We are therefore committed to mobilizing key stakeholders, including governments, to unite around a transformative cocoa farming model generating a living income.

Key metric

Enabling KPIs

Our commitment to the UN SDGs

269,762 169,981

Number of cocoa farmers in our supply chain lifted out of poverty, measured against the World Bank's USD 2.15/day threshold for extreme poverty

Number of cocoa farmers supported through Farm Services activities

128,950

Farmers adopted an individualized Farm Business Plan

• World Bank Data Hub. Available fromhttps://datahelpdesk.worldbank.org/(accessed September 27, 2021).

10 World Bank Data Hub. Available from https://www.worldbank.org/en/news/factsheet/2022/05/02/fact-sheet-an-adjustment-to-global-poverty-lines(accessed July, 27, 2023).

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Human Rights

Our goal

By 2025, our entire supply chain will be covered by Human Rights Due Diligence,

remediating all child labor cases identified. By 2030, the farming communities we source

from are empowered to protect child rights.

Background

At the core of Barry Callebaut's culture and values is a respect for human rights, forming an intrinsic part of our commitment to building a sustainable cocoa and other ingredients supply chain to make sustainable chocolate the norm.

We recognize that protection of and respect for every individual's rights are fundamental and need to be provided and safeguarded at all times. Accordingly, Barry Callebaut observes the principles set forth in the Universal Declaration of Human Rights, the United Nations (UN) Convention on the Rights of the Child (CRC), the African Charter on the Rights and Welfare of the Child, the United Nations Guiding Principles (UNGP) on Business and Human Rights frameworkand the Organization for EconomicCo-operationand Development (OECD) Guidelines for Multinational Enterprises.

Our operations, programs and activities have an influence on the livelihoods of many people around the world, and on the lives of their children. Children's

rights are distinct from other human rights, because children are reliant on their families, as well as on local communities, governments and businesses, to assume responsibility for their protection and care. According to the Convention on the Rights of the Child (CRC), every child has the right to protection from harm, and this means protection from all forms of harm and abuse, not only child labor. Our work is aligned with the four core principles of the CRC: non-discrimination; devotion to the best interests of the child; the right to life, survival and development; and respect for the views of the child.

We source ingredients, especially cocoa, from regions where child labor, defined as work that deprives children of their childhood, their potential and their dignity, and that is harmful to their physical and mental development, is known to occur, for cocoa, mostly on family owned farms11. In line with the UN Guiding Principles, we believe that the solution lies not in terminating sourcing activities from these regions, but in assessing, monitoring and addressing the risk of

11 As defined by the International Labour Organization. Available from https://www.ilo.org/ipec/facts/lang--en/index.htm