David Paterson from Heineken PLC - Profiting from Sustainability Feedback Session, York, April 2015

Sustainable Sourcing

About HEINEKEN UK

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Our Strategic Priorities

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Source: Carbon Footprint Baseline Model – 2011 data, 23 OpCos, , weighted average, data per 15.10.2012

Agriculture 8%

Malting 6%

Brewing 17%

Packaging + end of life 31%

Distribution 9%

Cooling 29%

Legend

The LCA impact of Agriculture

Our Strategic Priorities

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BaBF Commitment | Raising Farming Standards

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Aim for sustainable sourcing of

2015 2020

• 20% of barley

• 40% of hops

• 60% of apples

Minimum 50% of main raw materials supplied

Based on Mass Balance Principle

Sustainable Sourcing strategy

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Mass Balance | Malt Not Necessarily Delivered

- Generally accepted standard for non-segregated supply chains

- Retain flexibility for appropriate quality blends

- Keep input cost stable

- Raise bar for overall farming rather than stimulate development of niche market R

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onale

HEINEKEN Claim:

Definition of sustainable volume

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“Any agricultural product in scope of the Sustainable Agriculture program, that has been: (1) cultivated in accordance with an approved Code of Practice and (2) has

been allocated to HNK by our supplier, in accordance with the mass balance approach”

Volume contractually allocated to HNK in acc with mass balance

approach

Approved Codes of Practice

SAI Principles & Practices -FSA Code of Practice 3rd party benchmark

Make it Happen | Sustainable Agriculture Initiative

Food & Drinks initiative (est. 2002), 44 members

Common approach: sharing and building solutions to create Supply Chain security

Benchmarking of local and supplier schemes against SAI standards

5 Working Groups: Beef, Coffee, Fruit, Dairy, Arable & Vegetable Crops

4 Committees: Biodiversity, Farmer Self Assessment, Farmer & Supplier Engagement, Water

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, considering membership

AFFILIATE MEMBERS

SAI Principles & Practices (P&P) | Farmer Self Assessment

SOCIETY (PEOPLE)

•Food Quality & Safety

•Rural, Social,

Economic conditions

•Working Conditions

•Training

ENVIRONMENT

(PLANET)

•Soil treatment

•Water usage and

depletion avoidance

•Biodiversity

•Energy

ECONOMY

(PROFIT)

•Farmers Income

•Food Supply

•Optimisation of

Benefits

•Diversification

FARMING SYSTEMS

•Site Selection and

Management

•Yield, Variety,

Fertiliser

•Planting Material

•Crop Management

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“Efficient production of safe, high quality agricultural products, in a way that protects and improves the natural environment, the social and economic conditions of farmers, their employees and local communities, and safeguards the health and welfare of all farmed species.”

Alignment | Assessing Existing Schemes

200+ agricultural schemes worldwide

Benchmark exercise: thorough comparison with SAI P&P

Assessment by independent expert either on behalf of business (frontrunners) or SAI

Valid alternative: SAI P&P is a certified system in itself

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VVAKkerbouw, UK-cider apples, S.C.A.R.A Société Coopérative Agricole de la Région d'Arcis

14 schemes currently approved by HEINEKEN

Reference for Sustainable Agriculture is SAI-FSA2.0; threshold is Bronze

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Sustainable Sourcing Overview

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Improved soil fertility prevents erosion, i.e. less risk of decreasing yield

French Coopération (Arvalis affiliate): wildflower meadows stimulate biodiversity less risk of diseases

12% yield increase,

£200/acre benefit as a

result of compost as

natural fertilizer

The Proof of the Pudding... | Best Practice

SAI standards inspired the German hop farmers to define a common code for sustainable agriculture.

Legendary Seven Farmers

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GROUP PORTRAIT THE FINAL SEVEN

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