Carlsberg A/S : Group 2021 ESG report

ENVIRONMENT, SOCIAL

• GOVERNANCE REPORT 2021

CARLSBERG GROUP ESG REPORT 2021

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INTRODUCTION

Welcome to the Carlsberg Group's

Environment, Social & Governance (ESG) Report for 2021

Find out how our Together Towards ZERO programme supports our business strategy and responds to global challenges.

Discover the progress we are making with our people and partners by working Together Towards ZERO to achieve our ambitions for:

Explore how we realise our commitment to responsible business to benefit our people, customers, consumers and wider society by:

Learn how we use governance and transparency to underpin our journey Together Towards ZERO by:

ZERO

CARBON FOOTPRINT

ZERO

WATER WASTE

ZERO

IRRESPONSIBLE DRINKING

ZERO

ACCIDENTS CULTURE MANAGEMENT STATEMENT

• Contributing to economies	• Governing Together Towards ZERO
• Living by our Compass	• Engaging with stakeholders
• Respecting human rights	• Identifying our priorities
• Embracing diversity and inclusion	• Contributing to the UN Sustainable
• Developing talent	Development Goals
• Engaging employees	• Supporting the UN Global Compact
• Sourcing responsibly	• Upholding data ethics
• Ensuring product quality and safety	• Disclosing detailed performance data
	• Explaining our reporting process
	and scope
	• Obtaining external assurance

Page 7

Page 9

Page 42

Page 55

ABOUT THIS REPORT

CARLSBERG GROUP ESG REPORT 2021

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FIND OUT MORE

As a responsible business, we are committed to transparent reporting. Each year, we publish three corporate reports: our Annual Report, this ESG Report and a Remuneration Report. The content of each report is tailored to the specific audience, with cross- references to the other reports where relevant. Download all the reports on carlsberggroup.com.

This ESG Report describes our approach to and performance on our most material ESG issues for the financial year 1 January to 31 December 2021.

It covers all Carlsberg Group subsidiaries in which we have a controlling stake and possess more than 50% of the voting rights. This scope includes 94 breweries and soft drinks production sites (together referred to as "breweries" in this report) and two malting plants across 31 countries. New this year are six breweries in the UK, one in Germany, one in China and one in

Belgium. See page 79 for more on our reporting scope and methodology.

This report serves as our annual communication on progress to the UN Global Compact and as our statutory statement on corporate social responsibility in accordance with sections 99a, 99b and 99d of the Danish Financial Statements Act. Our ESG actions also contribute to the UN Sustainable Development Goals (SDGs). We signpost this in relevant sections of the report and include indexes summarising our contribution to both the SDGs (see page 63) and the UN Global Compact (see page 70).

Selected data on key performance indicators is subject to limited assurance by PwC (see page 96).

ESG REPORT & SUMMARY

This full ESG Report provides detailed information on our strategy, goals, governance, performance and partnerships. The ESG Summary provides a quick read of the report highlights.

ANNUAL REPORT

Our Annual Report focuses on our financial performance. It includes sustainability information relevant to investors, including our annual TCFD climate disclosures.

REMUNERATION REPORT

Our Remuneration Report includes full disclosure of Supervisory Board and Executive Management remuneration.

WEBSITE

Carlsberggroup.com hosts our relevant reports and policies, and showcases our biggest sustainability achievements.

SOCIAL MEDIA

	carlsberggroup.com	@carlsberggroup
We share our latest sustainability stories and
updates across our markets throughout the year.	@carlsberggroup	Carlsberg Group

Introduction

CARLSBERG GROUP ESG REPORT 2021 INTRODUCTION

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MESSAGE FROM OUR CEO

"We're convinced that our commitment to sustainability has bolstered our resilience through another very difficult year."

Cees 't Hart

CEO, Carlsberg Group

At Carlsberg, we are brewing for a better today and tomorrow.

We believe that our business performance and ESG performance go hand in hand. One cannot thrive without the other. We must make sure we conduct our business in a way that is sustainable for the long term, as well as optimising financial returns in the short term.

We're convinced that our commitment to sustainability has bolstered our resilience through another very difficult year. We ended 2021 with reported revenue of DKK 66.6bn, up 10% organically on the previous year, and organic operating profit up 12.5%. Return on invested capital has now reached 10.3%.

Our robust financial performance also empowers us to take further bold action to counter accelerating global sustainability challenges.

COVID-19 is just one of the major crises the world faces. The extreme weather experienced in many regions in 2021 underlines the need for urgent action to tackle the climate emergency. The science is clear: we are at a pivotal moment and the

next ten years will be crucial to protect the future of our planet.

No one can tackle this global challenge alone - we need businesses, governments and society to come together for a better tomorrow. Carlsberg was among the first ten companies - and the first brewer - to set science-based targets that align with the goal to limit global warming to 1.5oC, and I am delighted to see more and more companies joining the movement.

Ahead of COP26, I joined other CEOs in a call for policymakers to supercharge momentum towards net-zero economies with bold commitments, policies and actions. I welcome the commitments made in the Glasgow Climate Pact to keep the 1.5oC goal alive.

Consumers also have a critical role in a low-carbon future and it is encouraging that more people want to buy from brands with strong sustainability credentials. We are harnessing the power of our brands to encourage people to adopt more sustainable behaviours through the Planet Pledge and local campaigns to inspire consumers.

ZERO carbon footprint is one of four ambitions in the Together Towards ZERO sustainability programme that underpins our SAIL'22 company strategy, and we are working hard to do our part by cutting emissions from our breweries and our value chain. We have achieved a lot over the past six years. Brewery carbon emissions per hectolitre of beer are down by 40% since 2015, and we are making good progress in reducing beer-in-hand emissions.

We have also made great strides on ZERO water waste with a 21% reduction in water use per hectolitre of beer, and on ZERO irresponsible drinking with a further 114% growth in AFB volumes since 2015.

However, these successes are tempered by a setback in our previously good progress on creating a ZERO accidents culture. This year, we endured an unacceptable rise in lost-time accidents and the terrible loss of two contractors' lives. We are making every effort to prevent further tragedies with a renewed campaign to enforce our Life Saving Rules and stamp out unsafe behaviours.

We remain steadfastly committed to upholding the principles of the UN Global Compact, and we have increased our focus on topics such as diversity, inclusion and ethical conduct with employees over the past year. To me, how we do things is just as important as the results we deliver. At the end of the day, it is about treating people with respect. And respect goes hand in hand with employee engagement, which remained strong this year, despite the challenges of the pandemic.

Employees will help us drive progress on sustainability from within, and it was a pleasure to include 138 colleagues as co-strategists in the development of SAIL'27 and our updated Together Towards ZERO programme.

The world around us is changing, and we will ensure that we change with it and stay relevant to our consumers and society at large. Our new strategy will drive business growth in the coming years and remain as ambitious as ever as we work towards, and even beyond, ZERO.

Cees 't Hart

CEO, Carlsberg Group

CARLSBERG GROUP ESG REPORT 2021 INTRODUCTION

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EXTERNAL PERSPECTIVES

The Carlsberg Sustainability Advisory Board (CSAB) of independent experts provides valuable "outside in" perspectives directly to our CEO and senior executives.

The role of the CSAB is to:

• Help us stay in sync with expectations in the outside world and remain true to our founder's aspirations through our strategy and actions.
• Provide strategic advice, critical review and feedback.
• Act as a sparring partner for ExCom and other members of the leadership team.

In 2021, discussions focused on the opportunities and challenges ahead as we develop our new business strategy and refine our Together Towards ZERO programme.

Here, the three external experts on the CSAB offer their views. See page 57 for more about the CSAB and how we respond to its insights.

"This year, the Carlsberg Sustainability Advisory Board has been invited in for deep-dive discussions with all parts of the business to challenge them

and provide ideas on how to effectively combine the business and ESG agenda. It's clear that ESG has become much more integrated into Carlsberg's business with higher awareness, commitment and ambitions than ever before.

Carlsberg has opportunities on both environmental and social impact. In the past few years, the company has focused more on the environment, with a strong focus on climate, packaging and other impacts across the whole supply chain. The company is now increasing its focus on social impact as well, looking beyond responsible drinking to other opportunities to create value and enhance social impact for people and communities across the value chain.

There is also a growing awareness that Carlsberg will need to collaborate with others to look for solutions and deliver on its ambitions."

"With its size and scale, Carlsberg has exciting opportunities to build on its progress to date and influence the value chain to help transform the

entire ecosystem it operates in - from rethinking packaging to promoting more sustainable agricultural practices. These are systemic challenges that need systemic solutions so engagement with stakeholders will become even more important as Carlsberg seeks to embrace these opportunities in the next phase of its journey Together Towards ZERO.

It's been a great experience to be part of the process of developing the company's SAIL'27 strategy. I have been very impressed by the effort and involvement at all levels of the business, which highlights how Carlsberg is prioritising the ESG agenda. Together Towards ZERO is not just a set of ambitions, it's part of the company strategy and there is a robust process behind every commitment."

"Carlsberg is positioning sustainability at the core of its business strategy and decision-making process. This will create tremendous opportunities

for the company to mitigate business continuity risks by building a sustainable supply chain and secure its position as market leader. On responsible drinking, for example, Carlsberg has already had a lot of success with alcohol-free brews.

Teaming up with others will also be essential to accelerate the pace of change and make sure Carlsberg can deliver in this decade of transition - like working with farmers to promote sustainable agriculture that will make sure crops are available for brewing in years to come.

I was deeply impressed by the way the company welcomed external insights from the CSAB in the development of SAIL'27 and how senior people from across the business are really taking ownership of sustainability topics. Integrating sustainability into the strategy process like this makes Carlsberg a role model for other companies."

Knut Haanaes	Acacia Leroy	Frank van Ooijen
Professor and Lundin Sustainability Chair, Institute for	Innovation Design Lead,	Independent sustainability and corporate
Management Development (IMD), Lausanne	Deloitte SEA Greenhouse	communications consultant