Danone // 2020 Universal Registration Document

Overview of activities, risk factors 2.6 Risk factors DANONE UNIVERSAL REGISTRATION DOCUMENT 2020 32 DESCRIPTION MANAGEMENT MEASURES medium Food safety & product quality issues Because of its activities, Danone is exposed to the risk (genuine or merely perceived or alleged) of products contaminated and unsafe for consumers, potentially leading to a sanitary crisis. This food safety riskmay arise through the actual or alleged existence of hazards in raw materials, packaging or final products (chemical and microbiological contaminants, foreign bodies or allergens), that could potentially occur all along the value chain, from suppliers to consumers. As an example, following the introduction of an upgraded formula in July 2018, Aptamil sales in the UK were affected by an adverse publicity on social andmainstreammedia regarding product quality, leading to market share loss locally. Because food science, regulations and analytical methods are evolving very quickly and because media cover can exacerbate some topics, the number of topics that may trigger food safety controversies and may be directly associated to Danone’s brands is rising. The materialization of the risks described above may lead to a decrease in the Company’s sales, significant recall costs, but also individual or collective claims, fines and/or judicial decisions, which may negatively impact the its reputation, consumers’ confidence and demand for Danone products. In order to keep the consumers safe and always protect its re- putation, Danone implements a food safety management system rooted in latest science and technologies and which enable robust anticipation, assessment and management of risks. This allows to: • have an advanced understanding of the food safety developments by monitoring the science & regulatory ecosystems, to define and apply at factory level the highest food safety standards relying on the latest science and integrating the new risks; and • work across private sectors with the scientific community and official authorities to contribute to develop scientific knowledge on the new potential issues and establish common standards and methodologies for measurement and management when applicable. This approach involvesmulti-disciplinary functions at different levels of the organization and leverages internal and external competencies and connections worldwide. For more information on Danone’s food safety policy, see section Ensuring food safety of section 5.2 Offering safe, healthy products . low Shortage of talent In 2020, Danone employed more than 100,000 employees in over 55 countries with an overall turnover of 14%. The availability, quality and engagement of Danone’s people, as well as their adaptation to fast-moving environments, play an essential role in Danone’s success. Danone’s ability to attract and retain employees with the necessary skills or talents is critical for success. This is especially true in cer- tain of Danone’s principal markets and in emerging countries or in specific capabilities (for example linked to data/digital). In addition, in the light of Danone’s Local First reorganization study announced in November 2020, there could be a risk of reduced attractiveness of Danone to talents and potential shortages in some new roles that could be created as part of the reorganization. If the Company is unable to retain or attract talents, it could affect its results. Danone relies on its human resources strategy to attract and retain talents, which revolves around four main axes: (i) employee training and development, (ii) inclusive diversity, (iii) social dialogue and (iv) health & safety of employees. To engage its employees and develop a co-ownershipmindset, Danone deployed “One Person, One Voice, One Share”, an innovative gover- nance and employee engagement model to empower employees to co-own the Company’s agenda. In addition, collective and individual measures will be deployed to accompany the change management, including on critical roles that could face talent shortages. For more information on inclusive talent development, employee compensation, talent retention and generation, see section 5.4 Building the future with Danone employees.