A key part of the sustainable growth of our business over the long term is the preservation of ecosystems for future generations.

Forests, soils and other natural habitats are essential for life, because they fuel biodiversity and have a vital function for ecosystems. These habitats play a critical role in water and carbon cycles, absorbing carbon, producing oxygen, nourishing soils, and helping to maintain and regulate water flows, quantity, and quality.  Forest destruction, mismanagement, and land use conversion not only have serious impacts on communities, but also on the ecosystems to which we are attached.

With our Mission 2025, we are also committed to protecting biodiversity by reducing emissions and water use, preserving and restoring priority areas for water, and choosing raw materials sustainably. Our goal is to leave nature in a better state than we found it in, and in doing so, foster adaptability and resilience in our core procurement and operational areas.

1. Biodiversity, protection of forests and other ecosystems

Our goal is to have a real and positive impact by 2040 on biodiversity in the areas where we operate and where our supply chain develops, and to eliminate deforestation in our supply chain by 2030.

We are committed to promoting sustainable forest management and protecting forests from illegal deforestation. New bottling operations are not carried out in or near World Heritage sites, areas protected by the International Union for Conservation of Nature (IUCN), UNESCO Human and Biosphere Reserves (MABs) or sites containing biodiversity of global or national importance. If an operation or plant is already located in or near areas with critical biodiversity, we are committed to applying the mitigation process: avoid, minimize, restore, offset. For our activities (production sites) we have conducted an analysis for the Source Vulnerability Assessment (SVA) and for the Alliance for Water Stewardship (AWS) certification, and we transparently report the number of sites adjacent to or present in areas with critical biodiversity. For all these sites we have specific biodiversity protection plans. In addition, scientific evidence and documents that are an integral part of the overall AWS documentation are published, uploaded to the official AWS website.

In June 2022, we joined the Science Based Targets Network (SBTN) Corporate Engagement Program. We will work to implement the SBTN guidelines, which provide a clear framework and concrete tools for companies to understand where and how to focus efforts so that both nature and businesses can thrive. Our efforts will start with mapping and assessing the importance of biodiversity for our raw materials and our main suppliers, to outline where the greatest impact is concentrated, and then launch specific projects. In 2017 we carried out a high-level assessment of our impact (the Natural Capital Impact Study), using 12 environmental externalities, but we need to have a much more detailed understanding of the impact we have in our supply chain.

We will engage our partners, such as non-governmental organizations, customers, communities, universities, industry, external consultants, The Coca-Cola Company, and our suppliers, to determine priorities, expiration dates, and implementation plans, and communicate them as we time.

Monitoring and Traceability:

We started mapping all our operations, raw materials and major suppliers. For our sustainability assessment, we use a risk-based approach with the support of our partners (EcoVadis). Transparency and traceability of material supply chains are established through certification and verification schemes or by ensuring that suppliers have robust supply traceability that meets our expectations (see "Due diligence, governance and reporting" below and chapter 9 "Supplier engagement, verification and insurance" of The Coca-Cola Company's Principles for Sustainable Agriculture).

2. Reducing emissions

We are leading our business towards a low-carbon future. By 2025, we have committed to:

• Reduce the rate of direct carbon emissions by 30% compared to 2017;
• Make 50% of our refrigerators in customer stores energy efficient;
• Derive 50% of the total energy used in our factories and 100% of the electricity in the EU and Switzerland from renewable and clean sources¹.

Science-based, we have set a target by 20302 to reduce our total emissions in direct operations by 55% (scope 1 and 2) and indirect emissions by 21% (scope 3).

In October 2021, we announced our NetZeroby40 commitment to achieve net zero emissions across our value chain (Scope 1, 2 and 3) by 2040.

We are investing in initiatives that bring the technology, infrastructure and activities needed to achieve the transition to net zero emissions and the restoration of biodiversity and natural capital. We are also supporting the development of transparent and effective carbon offset markets that will enable further protection and restoration of biodiversity through emissions reduction and carbon capture.

3. Water Reduction and Management

To protect and restore watersheds that foster biodiversity, we are reducing our water consumption and helping to ensure access to water in priority areas through water replenishment, wetland restoration, WASH projects and other initiatives.

By 2025, we have committed to:

• Consume 20%² less^water3 in plants located in water-priority areas;
• To help ensure the availability of water for all our communities in water-priority areas.

In addition, we will certify all our bottling plants according to international water management standards, i.e. Alliance for Water Stewardship or European Water Stewardship. Both certificates require us to assess and report the impact on biodiversity, water ecosystems and High Conservation Value Areas (HCVA) in the relevant river basins. At the local level, we carry out a Source Vulnerability Assessment (SVA) every five years in collaboration with authoritative external organisations. This detailed risk assessment feeds into our site water management plans, which support context-based goal management, climate resilience, data sharing, and reporting.

In addition, we are committed to ensuring that each of our bottling plants achieves the ISO 14001 Environmental Management System standard, which provides for an assessment of overall environmental compliance.

We also ensure, and publicly disclose, that 100% of all wastewater from our bottling plants is treated in a way that supports aquatic life before being returned to reservoirs and nature. Since 2011, this commitment has been 100% implemented in all our bottling plants.

4. Sustainable sourcing

We are committed to choosing 100% of our key ingredients in line with The Coca-Cola Company's Sustainable Agriculture Principles4 . These principles protect and foster biodiversity and ecosystems, guarantee human and workplace rights, ensure animal health and welfare, and help build thriving communities. They apply to primary production, i.e. at the farm level, and form the basis of our ongoing engagement with Tier 1 suppliers[2] to ensure a long-term sustainable supply with a lower environmental impact.

This concerns in particular the sections Forest Conservation, Conservation of Natural Habitats, Biodiversity and Ecosystems, Soil Management and Agrochemical Management.

5. Sustainable packaging

Our approach to achieving a world without waste ("our joint approach to sustainable packaging with The Coca-Cola Company") will have a positive impact on ecosystems by ensuring that our packaging does not end up in waste with consequences for oceans, waterways and marine wildlife, or damaging biodiversity through air pollution due to incineration. We are committed to:

• Make all our primary packaging recyclable (we are currently at 99.6%);
• In the EU, use 50% recycled PET and/or PET from renewable material across our portfolio, and outside the EU, at least 35%;
• Help collect the equivalent of 75% of our primary packaging by 2025 and 100% by 2030;
• Work with local authorities, environmental NGOs and innovation partners to deliver 20 zero-waste partnerships in cities and along coastlines by 2025.

In addition, many of our volunteer initiatives routinely (and increasingly) focus on cleaning beaches, lakes, and waterways in favor of biodiversity.

We aim to source all of our primary paper-based packaging materials from sustainable forest sources. All the paper blocks we use are FSC certified^*.

^{(*) Forest Stewardship Council}

6. Due diligence, governance, and reporting

We regularly measure and report on progress against our 2025 Mission commitments and all other commitments, including those related to biodiversity and deforestation. The annual results are disclosed in our annual report and GRI Content Index, audited by an independent auditor and published on our website.

To ensure full compliance, agricultural suppliers are assessed and certified against standards recognised by third parties, namely:

Prior to any merger, acquisition, investment or divestiture, we apply a comprehensive due diligence process, i.e. we have the impact on biodiversity assessed by an independent company, in order to implement our policies and standards and take the necessary corrective measures.

Steinhausen, June 2022

Coca-Cola HBC AG
Marcel Martin
Chief Corporate Affairs & Sustainability Officer

Ivo Bjelis
Chief Supply Chain Officer

^{[1] That is, energy from cogeneration plants that use natural gas.}

^{[2] Compared to the 2017 baseline.}

^{[3] Per litre of beverage produced.}

^{[4] Replacing the previous Guiding Principles for Sustainable Agriculture, this new standard reflects the latest science and the perspectives of external stakeholders.}

^{[5] The Coca-Cola System works exclusively with Tier 1 suppliers who in turn maintain direct contact with primary production.}

Coca-Cola HBC Biodiversity Impact Assessment

Biodiversity - Examples of mitigation actions