Arla Foods Annual Report 2020

Management Review Our Strategy Our Brands and Commercial Segments Our Responsibility Our Governance Our Performance Review Our Consolidated Financial Statements Our Consolidated Environmental, Social and Governance Data PERFORMANCE REVIEW (CONTINUED) INVESTMENTS In 2020, Arla invested significantly in our global supply chain and IT infrastructure. Our CAPEX investments, including right of use assets, totalled at EUR 580 million. Key CAPEX projects included continued activities related to the construction of our powder tower in Pronsfeld, Germany, a capacity increase in mozzarella production at our site in Branderup, Denmark, as well as investments in our newly acquired plant in Bahrain. These projects will continue into 2021. In 2020, we also strengthened our investment process by formalising the use of a climate-adjusted payback indicator to embed the carbon footprint of CAPEX and M&A investments into our investment approval and prioritisation process, underlining our commitment to investing in the sustainable future of dairy. MEASURING AND REPORTING OUR STRONGER PLANET AND STRONGER PEOPLE IMPACT During 2020, we continued our efforts to reduce our environmental impact and reached a reduction in CO₂e emissions from operations (scope 1 and 2) of 24 per cent compared to the baseline year 2015. Understanding and measuring our climate impact correctly is an indispensable first step towards lowering our climate footprint. In this turbulent year, Arla managed to reach two important milestones on this journey. With the concerted effort of 9,406 farmer owners, carbon emissions from 96 per cent of Arla's milk volume were measured for the first time using our Climate Check questionnaire. The external verification of the survey data began in 2020 and is expected to be finished by the end of March 2021. Read more on page 34. CLIMATE IMPACT CO₂e emission reduction, scope 1 and 2 24% Baseline: 2015 Science Based Target 2030: 30% CO₂e emission reduction, scope 3 per kg of milk and whey 7% Baseline: 2015 Science Based Target 2030: 30% Investments in property, plant and equipment including right of use assets (EURM) 263 248 383 506 580 2016 2017 2018 2019 2020 60 ARLA FOODS ANNUAL REPORT 2020 SCIENCE BASED TARGETS DRIVING AMBITIOUS CORPORATE CLIMATE ACTION

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