PET PACKAGING MATERIAL CIRCULARITY: PERSPECTIVE FROM A GLOBAL END-USER

ICIS -13 March 2018 - Amsterdam

CONTENT OF THE PRESENTATION

• Short presentation of DANONE.

• Key elements of the revised EU Waste Legislation Proposal.

• DANONE improves the impact of PET bottles on the environment:

1. Plastic Packaging Context.2. Analysis of the packaging put on the market.3. Design for circularity.4. PET from renewable feedstock.5. Evian pledge.

• Collection of PET bottles: • Organized countries: via EPR or via Deposit Refund Schemes?• Non organized countries : a closed look at PET collection in two

emerging countries: Brazil and Russia.

• Collaboration with external partners in the packaging industry?

Fresh dairy products

Water Baby foodMedicalnutrition

50% 21% 22% 7%

No. 1 worldwide* No. 3 worldwide*** No. 2 worldwide* No. 1 in Europe**

All rankings are in value / * source: Nielsen / ** source: IMS Europe / *** source: Canadean

A GLOCAL COMPANY WITH PORTFOLIO OF PRODUCTS FOCUSED ON HEALTHY FOOD

KEY ELEMENTS OF THE REVISED WASTE LEGISLATION PROPOSAL

• A common EU target for recycling 65% of municipal waste by 2030;

• A common EU target for recycling 75% of packaging waste by 2030;

• A binding landfill target to reduce landfill to maximum of 10% of municipal waste by 2030;

• A ban on landfilling of separately collected waste;

• Promotion of economic instruments to discourage landfilling ;

• Simplified and improved definitions and harmonized calculation methods for recycling rates throughout the EU;

PACKAGING WASTE RECYCLING OBJECTIVES

Material 2014 objective (%)

2014 perf. (%)

2025 objective (%)

2030 objective (%)

Municipal waste -- 44 55 60

Packaging waste 55 min – 80 max 65 65 70

Landfilling -- -- -- 10 max

Plastic 22,5 37 50 55

Paper/board 60 82 75 85

Ferrous metal 50 70 70 80

Aluminium 50 74 50 60

Glas 60 73 70 75

Wood 15 37 25 30

EU PLATICS STRATEGY: THE POSSIBLE IMPACT ON PACKAGING

100% recyclable plastics packaging by 2030.✓ through EPR modulation fees.

✓ Reviewing the essential requirements and reviewing recycling targets for plastics by 2030 in the PPWD.

Boost the market for the secondary raw materials.✓ Voluntary agreement on recycled content of packaging

✓ VAT reduction for recycled content

Reduce fossil-based fuels feedstock and shift to local feedstock.✓ Increase R&D and use of biopolymers

Force reduction of litter & marine litter.✓ EPR and deposit-return schemes are seen as two solutions

that co-exist

DANONE'S SPECIFIC ACTIONS TO IMPROVE THE IMPACT OF PET BOTTLES ON THE ENVIRONMENT.

1. PLASTIC PACKAGING CONTEXT

GROWTH IN GLOBAL PLASTICS PRODUCTION (1950 2014 2050)

9

20501200 MT

20502014

2014311 MT

195015 MT

DANONE = A LOT OF PLASTIC PACKAGING

DAIRY

WATERS

EARLY LIFE NUTRITION

MEDICAL NUTRITION

PLASTIC PACKAGING IS KEY TO OUR MISSION AND HAS VALUABLE FUNCTIONS …

… WITH NEGATIVE EXTERNALITIES

UnsustainableGrowing negative externalities

1% 15%3. Plastic share of Carbon budget

2. Ratio Plastic to fish in the ocean 1:5 >1:1

2014 2050

1. Plastic Share of global Oil consumption 6% 20%

2. ANALYSIS OF THE PACKAGING PUT ON THE MARKET.

SIGNIFICANT PACKAGING FOOTPRINT

3. DESIGN FOR CIRCULARITY

16

Packaging Ecodesign Tool for Environmental Responsibility

(PETER)

Based on :

- Good practices internal & external

- Internal DANONE 2020 objectives

- The 4R strategy : Reduce ; Replace ; Recycle; Respect

Excel file based on technicals informations :

- Type of Packaging Material

- Type of packaging material transformation

- Logistic data

Provide :

- 7 Keys Packaging parameters

- 3 Life Cycle Indicators

- 3 packaging scenario compared

Caps & closures

Liners, seals & valves

Labels & sleeves

Adhesives

Inks

Other componentsAdditives

Barrier technologies

Colorants

Resin grade

Weight

Size & shape

RESPECT DESIGN FOR RECYCLING RULES

EUROPEAN PET BOTTLE PLATFORM

WWW.PETBOTTLEPLATFORM.EU

• Main objective :• Evaluate PET bottle manufacturing technologies

and products

• Allow new PET bottle innovations, while minimizing the economic and environmental consequences for the European PET recycling industry.

DESIGN GUIDELINES

4. DECOUPLE PLASTIC PACKAGINGFROM FOSSIL FEEDSTOCK

BIOPLASTICS : PLASTICS DERIVED FROM DIFFERENT RENEWABLE FEEDSTOCKS

Today

Cassava, corn starch, sugar cane, beet…

Feedstock potentiallysuitable for food or

feed

Industrial in 2020

Bagasse, wood chips, switch grass, straw…

Feedstock not suitablefor food or feed

Industrial in 2025

Algae -Syngas (gasifiedorganic matters or ind.

off-gases)

Feedstock not suitablefor food or feed

FOCUS ON A COMMERCIAL BIOPLASTIC : BIOPET-30%

• BioPET-30% = bio-poly(ethylene terephthalate) = drop-in solution to replace oil-based PET

• PET with bioMEG = 30% biobased mass content• Danone lanched in 2011 • Also used by our competitors = Coca- Nestle etc..

Oil BTX PTA

Poly(ethyleneterephthalate) 30% biobased

Molasses ethanol Bio-MEG

USE BIO-SOURCED MONOMERS … AND OTHER TECHNICAL SOLUTIONS.

Circular economy isfrequently the result of a combination of different techniques !

UNDER DEVELOPMENT WITH

DANONE : PEF• can replace PET in bottles application • with better barrier properties to gas (O2, CO2, water) sparkling and

oxygen sensitive products

Fructose HMF FDCA

Poly(ethylenefuranoate)

Molasses ethanol Bio-MEG

But potential conflict with PET regarding recycling (Max 5% PEF in PET)

BENEFITS OF USING BIOPLASTICS

(*) Ref. Natureworks(**) Ref. Braskem

Benefits Exemple

Savings of fossil resources

The production of 1kg PLA instead of 1kg PS saves 1,31 kg of oil-equivalent (*)

Reduction of the environmental footprint of our packaging

Carbon footprint PLA = 0,62 kgCO2e/kg vs PS = 3,25 (**)

Using a feedstock with a lower price volatility vs oil

Oil volatility in the last 10 years = 100% vs 6% for wood

Improving the acceptability to many households

Bioplastic bottle is seen by our consumer as the bottle of the future (that will replace the PET one)

5. EVIAN PLEDGE

EVIAN® 100% CIRCULAR BRANDPRESS RELEASE OF 18 JANUARY 2018

• evian will become a 100% circular brand by 2025. evian will make all of its plastic bottles from 100% recycled plastic by 2025 adopting a circular approach to plastic usage.

COLLECTION OF PET BOTTLESIN ORGANIZED COUNTRIES

EXTENDED PRODUCER RESPONSIBILTYSCHEMES (EPR)

DOOR TO DOOR …

30

BRING SYSTEM …

31

… AND USED PACKAGING COLLECTION SYSTEMS IN PUBLIC SPACES.

32

Beaches

Airports

Too muchdifferencesbetweenEU memberstates

TOO MUCH LITTER !

DEPOSIT REFUND SYSTEMS FOR BEVERAGE CONTAINERS (DRS)

DRS IS CURRENTLY IN PLACE IN 10 COUNTRIES AND UNDER CONSIDERATION IN 8 OTHER EU COUNTRIES.

UK – England and

Scotland are considering implementing DRS Probability: High

France – DRS trials in

some regionsProbability: Low

Spain – Laws under consideration in

coastal provinces Catalonia and Valencia but plans currently on holdProbability: Low

DRS systems in place in 10

countries. Most recent

implementation was in Lithuania

in 2016

Italy– DRS trials underway

for beer / mineral packaging in public spacesProbability: Medium

DRS systems under

consideration in 8 countries.

Hungary – Ongoing

pressure for DRS Probability: Medium

Bulgaria– Proposal

for Germany-type DRS system under discussionProbability: Low

Belgium – DRS to be

mandatory in 2019 ifanti-litter programs unsuccessfull: High

DEPOSIT SYSTEM CHARACTERISTICS

PLUSES

✓ 80-98% of packages put to the market are collected

✓ Extremely clean and high quality material, 100% recyclable

✓ High littering risk (incl marine littering) of beverage packages taken under control

✓ Very fast results due to monetary incentive

✓ Non- environmental friendly consumers contribute and get educated

✓ Transparent data and reporting

MINUSES

✓ Potential consumer/producer/retailer fraud, needs detailed controlling logics from day one

✓ Stakeholder (producer, retailer) management, needs very active coordination especially in the beginning

✓ Simple logic for consumer, but quite complex organisational side.

✓ Extract valuable plastic materialthat contribute to financing EPR schemes.

PLASTIC PACKAGING COLLECTED IN FRANCE

Category Quantity sorted out in 2016 (kg/hab/y.)

Clear PET bottles and flasksColoured PET bottles and flasksHDPE and PP bottles and flasksPE filmsPET pots and traysPE and PP pots and traysPS pots and tays

TOTAL sorted out

Other plastic packaging in sortingrefusal

Total plastic packaging collected

2,7 kg 0,8 kg 4,8 kg1,3 kg0,8 kg0,3 kg0,6 kg0,1 kg

6,6 kg

Between 1,5 and 2 kg

About 8,5 kg

COLLECTION OF PET BOTTLES IN NON ORGANIZED COUNTRIES

MEXICAN “PEPENADORES”

PROJECT IDEA: IMPROVING RECYCLING FLOW

Recollection firm Landfill

Waste pickersIntermediate BuyerFinal Buyer

Recollection firm Segregation Plant

Final Buyer

PROJECT IDEA: IMPROVING RECYCLING FLOW

Landfill

THE « NOVO CYCLO » PROJECT IN BRAZIL

• Supported by DANONE ECOSYSTEM FUNDhttp://ecosysteme.danone.com/

AIM:

• Professionalize waste pickers• through creating waste management centers,

• setting up sale and resale cooperatives,

• delivering management training to help them manage their own business independently.

IMPACTS:

• Social : consolidates existing jobs and creates new ones in a safer working environment. It will also raises awareness of conditions for waste pickers in the country.

• Business : Danone Brazil develops its rPET industry through the development of sustainable waste management practices.

In Brazil : 600 cooperatives working with 60.000 “waste-

pickers” on a total of 400.000 officially recognized in the

country (In reality there are more than 1 million)

RUSSIA ✓ 143 million inhabitants✓ 57 million tons solid household waste annually✓ 90% landfilling✓ 1000 lanffills = 40.000 km²✓ 5-7% recycling

DANONE PACKAGING WASTE MANAGEMENT IN RUSSIA AND OTHER COUNTRIES

Argentina

BelgiumBrazil

Canada

China

France

Germany

Indonesia

Japan

Mexico

MoroccoPoland

Russia

South Africa

SpainTurkey

UKUSA

Danone averagerecycling rate 42%

-

50

100

150

200

250

0% 10% 20% 30% 40% 50% 60% 70% 80%

Volu

mes

(kT

)

Average recycling rate (%)

• EPR in place• Formal systems

or infant EPR• No formal

collection scheme

70% OF PACKAGING VOLUMES ENTER A SYSTEM WHICH HAS LOW REGULATORY MATURITY

Hu

man

Dev

elo

pm

ent

Ind

ex (

UN

)

Formal (DRS + EPR)

Formal (EPR)

USAInformal + FormalInformal

Group 1 Group 2 Group 3 Group 4

Volumes 260 kt 600 kt 280 kt110 kt

40 kt

Fee av. - ~5 €/t 50-200 €/t -200-400

€/t

Fee - 1,5 M€/y 47 M€/y - 4,5 M€/y

Ecosystem 1 M€ (GHA+IDN) 3 M€ (ARG+BRA+MEX) 1 M€ (FR+SP) - -

5. COLLABORATION WITH EXTERNALPARTNERS.

Naturall Bottle AlliancePartnership with :

✓ Nestlé Waters

✓ Origin Materials

© 2017 Deloitte SAS 53

NATURALL BOTTLE ALLIANCE : What is our objective?

Create and launch at commercial scale PET plastic bottles to be made from100 % sustainable and renewable resources

© 2017 Deloitte SAS 54

From sustainable feedstocks to bio-PET water bottles

Feedstocks

Rice hulls, etc.

Shredded wood

Previously Used Cardboard

(Paraxylene - pX) PET resins(terephtalic acid - pTA)

Origin technology Partners

Bio-PET Water bottles

Three-year partnership to :➢accelerate the global transition to a circular economy.

➢ further embed circular economy principles both inside and outside Danone.

➢benefit extensive education and training to generate widespread understanding of the circular economy and drive behavioural change.

➢enjoy advise and support in Danone’s effort to transition brands toward circular economy.

➢ leveraging cross-sector collaboration to re-think and re-design the future of plastics,

Partnership with the Ellen Mac Arthur Foundation

HTTP://WWW.DANONE.COM/EN/FOR-ALL/SUSTAINABILITY/POSITION-PAPERS-AND-POLICIES/

DANONE new

pack policy is

now on line !

GOALS OF THE NEW PACK POLICY

• GOAL 1: Use sustainable resources

• GOAL 2: Optimize weight and move towards 100% circular by design.

• GOAL 3: Zero plastics to landfill for our industrial waste.

• GOAL 4: Innovate to ease life of consumers and engage them to sort & recycle.

• GOAL 5: Create a second life for all plastics.

THANK YOU !