Danone : Rapport annuel intégré 2023

APRIL 2024

ANNUAL INTEGRATED REPORT

2023

Danone's sustainability performance

ABOUT THE REPORT

FOR 2023, DANONE DECIDED TO GO FURTHER IN THE INTEGRATION OF BUSINESS AND SUSTAINABILITY WITHIN REPORTING, SO AS TO BETTER DEMONSTRATE HOW THEY ARE INHERENTLY LINKED WITHIN THE GROUP.

Danone's 2023 Integrated Annual Report thus provides a comprehensive overview of the Group mission, governance, objectives and performance. It reaffirms Danone's dual commitment to simultaneously achieve economic success and social progress. Danone also focuses on the sustainability issues that are material to the business, showing how they are connected to Danone's operations and broader value chain. The intention with this report is to be transparent, about how Danone is pursuing its sustainability objectives and the challenges faced in pursuing them.

METHODOLOGY AND ACKNOWLEDGEMENTS

The 2023 Integrated Annual Report was created by Danone's Sustainability Performance team, with the support and supervision of the relevant thematic expert teams, who were instrumental in ensuring its achievement, through data collection and key testimonies.

TABLE OF CONTENTS

		INTRODUCTION			DANONE IMPACT
	5 CEOFROM DANONE'S			12
	JOURNEY
7	DANONE AT	49	MATERIALITY
A GLANCE
9	DANONE'S	55	GOVERNANCE
CATEGORIES
11	RENEW	59	SHAREHOLDING
DANONE	STRUCTURE

INTRODUCTION STATEMENT FROM DANONE'S CEO,

ANTOINE DE SAINT-AFFRIQUE

DEAR READERS,

Almost 2 years after the start of Renew Danone, 2023 was a year - once again - marked by significant external challenges and volatility. We kept transforming the company with discipline, creating sustainable value with our ecosystem of partners and fulfilling our mission to bring health through food to as many people as possible.

We delivered consistently on Renew Danone, making good progress on our strategic agenda, which is starting to yield solid results. We improved the quality of our growth, achieving a positive volume mix in Q4 and 7% annual like-for-like sales growth. While keeping improving the quality of our execution, we strengthened our investments in our brands, innovations, and capabilities. We stepped up our research on the Future of Nutrition, inaugurating our new international R&I Center in Paris-Saclay. This center is already home of incredible innovations, including our new high-protein range, HiPro, created with and for our Paris 2024 athlete partners. Finally, we restored the fundamentals across the portfolio, addressed underperforming assets and exited parts of our portfolio that did not fit with our strategy, we invested in our factories.

In 2023, building on our long-standing history of climate action, we took strong sustainability commitments. Because we believe preserving and regenerating nature and ensuring thriving people

• community is a strategic imperative to deliver on both our mission and sustainable performance on all time horizons. We committed to a 30% reduction in our methane emissions from fresh milk by 2030, aligning our efforts with the Global Methane Pledge and continued to accelerate the roll-out of regenerative agriculture programs. Our sustainability journey was reframed as the Danone

Impact Journey, part of our Renew strategy. This ambitious roadmap based on 3 pillars - Health, Nature, People & Communities- defines clear KPIs to strengthen our sustainability efforts through every aspect of our business, and within our ecosystem of partners.

Our leadership in environmental transparency and performance on climate change, forests, and water security was recognized for the fifth year in a row, with a Triple A CDP rating - a score achieved only by 10 out of 21,000 companies. This is a strong recognition of our progress towards our 2030 SBTi-approved 1.5°C target and goal of net-zero emissions across the value chain by 2050.

None of these achievements could have been possible without the energy and dedication of our Danoners worldwide. A big thank you to all of them: they made it happen! We're building a true culture of performance driving us to raise the bar! And this is only the start. Finally, many thanks to our multiple partners worldwide.

Looking to the future, we are starting to project ourselves beyond 2024, in the next chapter of Renew. It will be about delivering, with the same regularity and discipline, on our strategic agenda while further strengthening and future-proofing Danone. We will keep delivering on competitive, profitable and sustainable value, collectively with our partners - farmers, entrepreneurs, suppliers, customers, but also NGOs and communities.

Looking forward to another exciting year, I hope you will enjoy reading about our main achievements and the challenges we faced pursuing them.

A HUGE THANK YOU , AGAIN, TO ALL OUR DANONERS,

AS WELL AS OUR PARTNERS WORLDWIDE.

ANTOINE DE SAINT-AFFRIQUE

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DANONE AT A GLANCE

2023 KEY FIGURES

Danone's mission is to bring "health through food to as many people as possible." This mission is rooted in Danone's Dual Project, as it was defined in 1972 by Danone's founder and then CEO Antoine Riboud during a landmark speech in Marseille. Today Danone has kept this ambition as part of Renew Danone to create both economic and societal value.

DELIVERING SUSTAINABLE GROWTH

FOCUSING ON HEALTH

89.2%

SALES IN VOLUMES OF DAIRY,

PLANT-BASED AND WATERS

PRODUCTS RATED ≥ 3.5

STARS BY HEALTH STAR RATING

Key figures related to Health are developed on pages 19-24

WORLDWIDE

#1

in fresh dairy products, in plant-based foods and beverages

LEADING POSITIONS

WORLDWIDE

#2

in packaged

waters and early life

nutrition

WORLDWIDE

#4

in adult medical

nutrition

FOCUSING ON NATURE

AAA

AWARDED BY CDP FOR

THE 5TH YEAR IN A ROW

Score obtained as part of the CDP Climate Change, CDP Water security and CDP Forests questionnaire

€27.6 BN +7%(1)

SALES

KEY FINANCIAL FIGURES

12.6% (+40 bps(2))	€3.54 +3.4%(2)	€2.6BN
RECURRING OPERATING	RECURRING	FREE CASH
MARGIN	EPS	FLOW

SALES BY GEOGRAPHIC ZONES

9.5%

ROIC

€2.10

DIVIDEND

PER SHARE

Key figures related to Nature are developed on pages 27-32

FOCUSING ON PEOPLE & COMMUNITIES

Score of

79%

IN THE INCLUSION INDEX,

(+2pts vs peers)

EUROPE		NORTH AMERICA		CHINA, NORTH ASIA,		AMEA, CIS &
		OCEANIA		LATIN AMERICA
33%	4%5%	10%	34%
		20%
€9.4bn 46%				€7.9bn 43%
	€6.9bn		€3.5bn
21%	91%	70%	23%
		Essential Dairy and Plant-Based (EDP)		Specialized Nutrition (SN)		Waters

TOP 3 COUNTRIES IN TERMS OF SALES

(IN % OF SALES):

#U. S1. A . #C H2I N A #F R A3N C E

Key figures related to People & Communities are developed on pages 35-40

CONTINUING DANONE'S PATH TOWARDS SOCIÉTÉ À MISSION AND B CORP:

SINCE 2020	82.5%
SOCIÉTÉ À MISSION
first French listed company to	SALES COVERED
adopt the "Société à Mission"	BY B CORPTM
status	CERTIFICATION

In 2023, Danone also strenghtened its collaboration with several value chain partners, including

farmers, entrepreneurs, consumers and communities, (see more in the following sections).

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DANONE'S CATEGORIES

SPECIALIZED NUTRITION (SN)

IN 2023, DANONE	#2	IN EARLY LIFE	#4	IN ADULT MEDICAL
WAS WORLDWIDE		NUTRITION		NUTRITION

ESSENTIAL DAIRY AND PLANT-BASED PRODUCTS

(EDP)

	IN 2023, DANONE WAS WORLDWIDE
#1	IN FRESH DAIRY		#1	IN PLANT-BASED FOOD
PRODUCTS		AND BEVERAGES

• In Specialized Nutrition Danone has strong leadership providing baby formula in various formats and formulations tailored to the needs of babies. Danone's expertise in biotics and over 50 years of research to understand what makes breastmilk so unique in its composition and associated benefits, has enabled Danone to offer a range of innovative, science-based products.
• DanoneexpandeditslaunchoftheAptamilpre-measuredtabs to several European countries to support babies and parents with an innovative baby formula format that can be easily prepared on-the-go.
• With the launch of Almimama, a new science-based probiotic supplement in Spain, Danone aims to support breastfeeding with a product that can help to reduce the incidence of mastitis.

• In Specialized Nutrition, Danone also supports patientswhohavespecificnutritionalneedsdue to a medical condition or disease, such as cow's milk allergy, metabolic diseases, and cancer or stroke, through its paediatric and adult medical nutrition portfolio. In China Danone launched Fortimel, its first product in the adult Foods for Special Medical Purposes (aFSMP) category in the country. The specialized pediatric medical nutrition range was expanded with Fortini + Mix
  MultiFibre,Danone'sfirstmedicalnutritiondrink with a balanced mix of real fruit and vegetable ingredients, specifically formulated for the dietary management of disease-relatedmalnutrition and faltering growth in pediatric patients.

• TOP 3 BRANDS IN SALES IN 2023

• In Essential Dairy Products, more than 60% of Danone's revenues come from high value-added functional segments such as immunity, gut health, indulgence, or performance. For example, on the high protein platform, Oikos and YoPro brands' sales kept growing at a fast pace in 2023.

• In Plant-Based, notably through the Alpro brand in Europe and Silk in North America, Danone is a leader within a category that continues to grow globally, driven by the rise of flexitarianism. Its portfolio spans across all key segments, from the established beverages segment (ingredient based with almond or oat, but also benefit-ledwith blended products) to more nascent ones such as plant-basedalternatives to yogurts, cheese or ice cream.

#2	#1
	#3
NUTRISON	APTAMIL
NEOCATE
	WATERS
IN 2023, DANONE	2 IN PACKAGED

• TOP 3 BRANDS IN SALES IN 2023

#2	#1
#3

INTERNATIONAL	ACTIVIA
SILK
DELIGHT

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WAS WORLDWIDE	#	WATERS

• In Waters, Danone is well positioned to build on the long-term trend that water will remain the healthiest option for hydration with its balanced portfolio including natural mineral water brands like evian and Volvic, and brands like Bonafont and AQUA through which it provides access to safe drinking water.
• TOP 3 BRANDS IN SALES IN 2023

#2	#1
#3

EVIAN	AQUA	MIZONE
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RENEW DANONE

In March 2022, CEO Antoine de Saint-Affrique presented Danone's new strategic plan, Renew Danone. The plan aims to enable Danone to reconnect with a sustainable profitable growth model. The delivery of the plan is facilitated by a greater alignment between purpose and performance. The Renew Danone plan is designed to restore Danone's performance, competitiveness, and value creation for the long-term.

IT IS ARTICULATED AROUND FOUR STRATEGIC PILLARS:

	01		02		03		04
	Win where we are	Expand where we	Seed the future	Manage our portfolio
			should be
Restoration of Danone's	Selective expansion	Active seeding of future	Active portfolio
competitiveness in	of Danone's presence,	growth avenues	rotation
core Categories and	in terms of segments,
geographies	channels and geographies

THE PLAN HAS FOUR KEY ENABLERS

CULTURE

CAPABILITIES

SUSTAINABILITY

COST COMPETITIVENESS

RENEW DANONE WAS DESIGNED TO CREATE THE CONDITIONS

FOR A SUSTAINABLE AND COMPETITIVE GROWTH

DANONE IMPACT JOURNEY

IN FEBRUARY 2023, DANONE REFRAMED ITS SUSTAINABILITY JOURNEY AS THE DANONE IMPACT JOURNEY, AS PART OF THE

RENEW DANONE STRATEGY.

"Our mission to bring health through food to as many people as possible began over 100 years ago when Isaac Carasso created the first Danone yogurt in Barcelona. It was a simple food, with the aim to improve health. Over the years, as people's lifestyles and tastes have evolved, Danone has continued to anticipate and innovate to meet people's needs.

We have built a unique health-focused portfolio. Across our business and our brands, health is at the cornerstone of our impact. But we know that our health impact is dependent on a healthy planet, as well as thriving people and communities. Thus, the three pillars of the Danone Impact Journey are intimately interdependent.

The Danone Impact Journey is our blueprint for defining our sustainability priorities and our transformation ambition in our value chain - from farmers and their communities, through our brands, to consumers and their families.

SUSTAINABILITY WITHOUT PERFORMANCE

HAS NO IMPACT. PERFORMANCE WITHOUT

SUSTAINABILITY HAS NO FUTURE.

Danone's ambition is to unite sustainability and performance to continue to grow our impact. We know that the long-term robustness and resilience of our business is dependent on our success in delivering health through food in the most sustainable way.

With the Danone Impact Journey, we have a clear framework to drive our actions and progress for the future."

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AT THE CENTER OF

THE DANONE IMPACT JOURNEY

Danone's mission to bring health through food to as many people as possible is at the center of the Danone Impact Journey, a thread running through all three impact areas and commitments.

THE DANONE IMPACT JOURNEY GROUNDS

DANONE'S SUSTAINABILITY PRIORITIES. IT IS

STRUCTURED AROUND ONE MISSION OF BRINGING

HEALTH THROUGH FOOD TO AS MANY PEOPLE AS

POSSIBLE, 3 PILLARS, AND 12 PRIORITIES

• EACH OF THE PRIORITIES WITHIN THE DANONE IMPACT JOURNEY

on Health, Nature, and People & Communities

• are structured around programs, with leads, teams and governance to progress towards its priorities. Decision making on Danone Impact Journey Priorities is embedded in the governance at all levels of the organization (global, zones and countries) and within all functions and categories.

The Danone Impact Journey reflects Danone's material topics across all three pillars: Health, Nature, and People & Communities. This is particularly true with the material topic of "integration of sustainability into the business", by anchoring environmental, social and societal performance into Danone's business model. In the following sections , the most material topics relating to the Danone Impact Journey priorities will be identified with this symbol.

• IN 2023, DANONE PROGRESSED IN ITS SOCIÉTÉ À MISSION JOURNEY

towards its 2025 targets across the four statutory objectives across health, planet, social and inclusiveness. Danone's progress is overseen by the Mission Committee.

The Société à Mission KPIs are aligned with the mid- to long-term objectives defined in the Danone Impact Journey.

• SINCE 2015, DANONE HAS PARTNERED WITH B LAB

to help defineameaningfulandmanageable path to certification for multinationals

and publicly traded companies while progressively certifying Danone's business and supporting the broader growth of the B Corp movement. In 2023, 82.5% of Danone global net sales were covered by B Corp certification. The Danone Impact Journey is in line with Danone's goal to achieve full

B Corp certification by 2025

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DANONE IMPACT JOURNEY 2023 PROGRESS

PRESERVE & REGENERATE NATURE

PROGRESS & LEAD ​ HEALTH THROUGH FOOD​ FOR CONSUMERS & PATIENTS

THRIVING PEOPLE & COMMUNITIES​

GOAL

Curb GHG emissions ​

in line with 1.5°C, leading​ the way on methane reduction​

Pioneer and scale regenerative agriculture, leading the way for regenerative dairy farming models​

Preserve and restore watersheds where Danone operates and drives water footprint reduction across the value chain ​

KPIs	2023 result​
CO2e reduction by 2030	-7.5%​
in line with 1.5C SBTi ​	vs 2020
Net Zero by 2050 ​	-7.5%
	vs 2020​
30% reduction in methane	-13.3%​
emissions from fresh milk ​by 2030	vs 2020
30% improvement in energy	-1.3%​
efficiency by 2025	vs 2020
30% key ingredients Danone
sources directly will come ​from	38%
farms that have begun to transition
to RegAg ​by 2025​
Zero deforestation & conversion on	84%
key commodities ​by 20251​	(2022)​
4R approach will be deployed in all	94.8%​
our production sites by 2030​
Watershed preservation/	53%​
restoration plans in ​highly
water-stressed areas by 20302​
100% reusable, recyclable or	84%​

GOAL

Offer tastier and​ healthier ​ food and drinks​

Promote healthier​ choices​

KPIs	2023 result​
≥ 85% vol dairy, plant-based,
water and aquadrinks rated ≥	89.2%​
3.5 stars by Health Star Rating
by 2025​
> 95% vol Kids dairy and	62.2%​
plant-based​≤ 10g total
sugars/100g by 2025
> 95% vol toddlers' milk (1-3yo)	99.3%​
≤ 1.25g added sugars /100kcal
by 2025​
> 95% vol sold of dairy,
plant-based and aquadrinks	40.5%​
products with on pack/online
interpretative nutritional
information by 2025​
≥ 85% vol Kids dairy fortified	83.2%​
with relevant vitamins &
minerals by 2025​

GOAL

Make Danone a force for good by fostering a unique, diverse & inclusive culture and empowering Danoners for positive impact ​

Equip and empower communities (i.e. internal, external) with skills and capabilities of the future to thrive in a fast-changing economy​

KPIs	2023 result​
All employees covered by	68%​
BCorp certification by 20253
All employees covered by	98%​
Dan'Care by 2030​
Achieve gender balance in	43%​
management globally by 2030
Drive equity and close	2.1 pts​
gender pay gap by 2025​
Maintain inclusion index	+2 pts
above peers4​	above peers​
Make future skilling programs
available to all Danoners by
2025​	On track - program
	designed in 2023
Extend future skilling programs
to key partners by 2030​

Drive the transition to​ a circular and low​ -carbon packaging system & recover as much as Danone uses​

Cut waste across ​ the value chain​

compostable by 2030
Halve the use of virgin fossil-based	-3%​
packaging by 2040, with a 30%
reduction by 2030, accelerating	vs 2020
reuse and recycled materials​
Lead the development of effective	58%​
collection systems to recover as much
plastic as Danone uses by 2040​
Halve all food waste not fit for	-19.8%
human, animal consumption or
biomaterial processing by 2030 vs	vs 2020​
2020​

Provide positive nutrition & hydration for healthier life​

Invest in nutrition and​ hydration science and research​

5 projects to address iron	2​
deficiency in children by 2025 ​
20M people with access to	12.7M​
safe drinking water by 2025
150 scientific publications in	108 ​full papers
peer-reviewed journals and/
or presentations at scientific	accepted for
conferences (from baseline of	publication
2021) by 2025​

Champion a renewed social contract by fostering a prosperous &​ inclusive ecosystem, upholding human rights and pursuing social progress​

100% employees trained on	On track -
Danone Human Rights policy	e-learning
by 20255​	designed in 2023

	On track - policy
Danone Sustainable Sourcing	will be launched
in 2024 and
Policy deployed to all suppliers
deployed in stages
by 2030
to all suppliers by
	2030

(1) Cf renewed forest policy dec 2022 | (2) 100% Danone production sites and 50% of key raw materials volume | (3) over 95% of employees covered by certification, excluding M&A | (4) Measured through DPS | (5) Enabling due diligence deployed in Danone operations​

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PROGRESS & LEAD

HEALTH

THROUGH FOOD

for consumers and patients

THIS PILLAR RELATES TO DANONE'S FOLLOWING MATERIAL TOPICS:

• Nutritional quality		• Food/ water access		• Consumer behavior
of overall product		and affordability		change
portfolio

• New consumption patterns/planetary diet

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DANONE NOURISHES PEOPLE THROUGHOUT THEIR LIVES:

• DANONE OFFERS NUTRITIOUS FOOD AND DRINKS
  tailored to all life stages addressing nutritional needs

• DANONE SUPPORTS PARENTS AND CAREGIVERS
  to provide babies and young children with the best nutritional start in life during their first 1000 days

• FOR THOSE WITH SPECIFIC MEDICAL CONDITIONS, DANONE DEVELOPS HEALTHY, TAILORED,
  AND NUTRIENT-DENSE PRODUCTS
  to optimize health outcomes and support recovery

To meet these ambitions, Danone has developed the following goals and KPIs:

GOAL

KPIs

THROUGH DANONE´S PRODUCTS, WHICH ARE CONSUMED REGULARLY BY MILLIONS OF PEOPLE ACROSS THE WORLD, DANONE CAN AND WANTS TO HAVE A POSITIVE IMPACT ON NUTRITION AND HEALTH.

Danone´s ambition is to lead and act by bringing health through food to as many people as possible. Danone is uniquely placed with its portfolio and products. Danone is spearheading research & scientific expertise in health and nutrition to help consumers and patients maintain and support their health through nutritious food and sustainable healthier eating and drinking choices. Danone

Offer tastier and healthier

food and drinks

Promote healthier choices

Provide positive nutrition & hydration for healthier life

• 85% vol dairy, plant-based, water and aquadrinks rated
• 3.5 stars by Health Star Rating by 2025

• 95% vol Kids dairy and plant-based ≤ 10g total sugars/100g by 2025
• 95% vol toddlers milk (1-3yo) ≤ 1.25g added sugars /100kcal by 2025
• 95% vol sold of dairy, plant-based and aquadrinks products with on pack/online interpretative nutritional information by 2025

≥85% vol Kids dairy fortified with relevant vitamins & minerals by 2025

5 projects to address iron deficiency in children by 2025

20 M people with access to safe drinking water by 2025

fundamentally believes in better health through better nutrition and behaviors for all.

Invest in nutrition and	150 scientific publications in peer-reviewed journals and/or
hydration science and
presentations at scientific conferences by 2025
research

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