5. Report on non-financial matters

5.1 Environmental matters

Environmental matters  include aspects of the following topics that are material to Emmi:

• Reducing emissions
• Reducing waste
• Reducing water consumption
• Sustainable dairy
• Responsible sourcing

Emmi’s business success is highly dependent on the availability of natural resources, both now and in the future. Emmi’s sustainability model is a reflection of the company’s commitment to the environment, with targets in the areas of greenhouse gases, water and waste.

Emmi carried out an environmental risk analysis during the year under review. The most relevant environmental risks are described in this report. Emmi plans to further develop its strategies and measures for dealing with these significant environmental risks in the coming years.

5.1.1 Reducing emissions

Emmi causes greenhouse gas emissions through its use of fossil fuels in its own facilities, in logistics and through its use of climate-harming refrigerants (Scope 1) and through the energy it purchases, such as electricity or district heating (Scope 2). However, the largest share (> 90%) of greenhouse gas emissions originates in the value chain that cannot be directly influenced (Scope 3). The majority of this is down to milk production itself, in large part due to natural processes such as methane formation in the digestive system of cows. In addition, the cultivation of animal feed and the storage and use of farmyard manure are also significant sources of emissions.

Risks

Around 30% of man-made greenhouse gas emissions are attributable to food production (dairy industry around 4%). The pressure from different stakeholders and the associated reputational risks are correspondingly high. New regulations and demands for measures to reduce greenhouse gas emissions also pose significant climate risks for Emmi’s business model. The trend towards a plant-based diet, which is linked to consumers’ efforts to protect the climate, can pose both opportunities and risks for Emmi. By offering suitable alternative products, it is possible not only to avoid negative effects on the success of the business, but also to develop new, attractive pillars of business where appropriate.

Material physical climate risks, such as warmer temperatures and water scarcity, affect the availability of necessary raw materials such as fruits and nuts. Climate change may also affect milk production due to changes in the availability of animal feed.

Concept

Scope 1 emissions and Scope 2 emissions

Effective measures are based on professional management systems and reliable data. The starting point for Emmi’s climate protection measures in its own activities is the monitoring of energy consumption and greenhouse gas emissions at all production sites. In Switzerland, this is ensured at all production sites by means of ISO 14001-certified environmental management systems.

The energy consumption and emissions of the Swiss sites that lack production activities (headquarters in Lucerne) are not certified. Nonetheless, the key figures are collected and maintained in the environmental management system.

Individual production sites in Europe are also certified according to ISO 14001 (Kaiku, Emmi Dessert Italy) and a corresponding KPI management system based on this has been introduced at the other sites.

Emmi’s site in Tunisia is also certified according to ISO 14001.

The sites in the Americas do not have any comparable certification, but an analogous KPI management system has been implemented here as well.

Emmi also promotes its own production of renewable electricity and heat. By 2025, the company aims to meet at least 4% of its total electricity consumption globally with its own solar power (end of 2023: 2.8%).

Emmi purchases renewable energy for its electricity supply in the form of green energy certificates. In Switzerland and Europe, the company uses hydropower whenever possible. In Brazil and Chile, it uses wind power from Brazil, in Mexico hydropower from Guatemala and in the US domestic hydropower. At the site in Tunisia, due to a lack of security of supply, the site produces almost all of its own electricity using gas turbines. There is also no biogas or solar technology available, which means there are currently no lower-emission alternatives. Emmi will only consider connecting to a district heating network if the heat is generated using renewable energy sources or from waste heat sources.

Emmi calculates Scope 1 and Scope 2 emissions in accordance with the requirements of the Greenhouse Gas Protocol.

Scope 3 emissions

Milk production accounts for the largest share of Emmi’s Scope 3 emissions and is the area offering the greatest potential for climate protection. By 2027, all the milk purchased by Emmi is to be produced in accordance with higher sustainability standards than those applicable in the regions. Emmi defines this as milk that exceeds conventional milk from the relevant region in at least one aspect of sustainability.

In Switzerland, this objective should be met at the beginning of 2024 with the industry standard “Sustainable Swiss Milk”. Outside Switzerland, Emmi aims for joint commitments in the sector and individual agreements with milk suppliers. The principles on which these are based have been elaborated by Emmi over the past four years. Emmi has assessed eight aspects of sustainable milk based on a catalogue of criteria developed in collaboration with the School of Agricultural, Forest and Food Sciences at the Bern University of Applied Sciences and in consultation with the WWF: strategy, employment & income, milk quality, animal welfare, biodiversity, energy & materials, climate and the environment. The climate-relevant criteria are:

• Generation of renewable energy
• Energy efficiency: use of heat recovery
• Greenhouse gas emissions (kg CO₂e / kg milk)
• Average life-time daily milk yield
• Measures to reduce greenhouse gas emissions
• Measures for carbon storage

Based on the aspects in this catalogue, an assessment is made of how sustainably milk suppliers of Emmi’s subsidiaries outside Switzerland are already producing milk. This assessment will be used to set improvement targets for 2027 with the individual companies. As always, Emmi strives to achieve a comprehensive approach that aims to benefit the environment, human beings and animals.

Objectives

• by 2027: 60% reduction of own greenhouse gas emissions (Scope 1 and 2, compared to 2014) – absolute reduction target
• by 2027: 25% reduction of greenhouse gas emissions along the value chain (Scope 3, compared to 2019) – target refers to the quantity of milk produced
• by 2025: at least 4% of total electricity consumption to come from our own solar power production
• by 2027: 100% of milk suppliers to produce according to local above-average standards
• with its netZERO 2050 vision, Emmi is extending its CO₂ reduction targets to the entire value chain and is striving to achieve a net-zero path.

Emmi’s reduction targets are science-based and validated by SBTi (Science Based Target Initiative). In Scope 1 and 2, these fall within the scope of the 1.5-degree target, while the Scope 3 target corresponds to the current best practice in the industry.

Measures

Scope 1 and 2 emissions

Emmi is focusing on improving energy efficiency to reduce operational greenhouse gas emissions, for example by using state-of-the-art pumps, engines and processes to recover heat.

Replacing fossil fuels with renewable alternatives and optimising processes are further levers for reducing greenhouse gas emissions. District heating, solar energy (in particular on the roofs of the production plants we own) and wood have proven their worth as alternative energy sources. Almost 100% of the electricity purchased by Emmi has come from renewable sources since 2022 (green certificates). Emmi also promotes its own production of renewable electricity and heat, as already mentioned. To this end, the potential for using solar energy was analysed at all of Emmi’s production sites. Taking into account efficiency, costs, subsidies and local conditions, a recommendation for further action was formulated for and approved by the Sustainability Steering Committee.

Emmi also stands by its decision to no longer invest in technologies based on fossil fuels.

In the year under review, a biomass plant was installed at Emmi's production site in Loncoche, Chile, which will enable emissions to be reduced by around 5,600 tonnes per year. This currently covers the entire primary energy requirement of the plant.

Scope 3 emissions

“KlimaStaR Milch” project

In Switzerland, where Emmi processes by far the largest quantity of milk compared with the other countries in which it operates, various measures to reduce emissions in milk production are currently being promoted as part of the “KlimaStaR Milch” joint project. One of the targets, which is correlated to other project targets, is to reduce greenhouse gas emissions in milk production by 20% by 2027. In the first year of the project, it was possible to measure greenhouse gas emissions on farms and reduce emissions per kilogram of milk by 1%. Compared with other countries, Switzerland has a relatively low CO₂e value per kilogram of milk (for example, a comparison with the World Food LCA Database shows the following values: Switzerland: 1.45, Brazil: 3.72, Chile: 3.00, Germany: 1.29, Austria: 1.56, Spain: 1.55, Tunisia: 1.55, USA: 1.26). This underscores the ambitious goals of the project.

Further information on the objectives and measures of the “KlimaStaR Milch” project can be found in the following section: 5.2.2 Sustainable dairy – competition for food and land due to milk production.

Climate data for Swiss milk production

As part of the ongoing development of the “Sustainable Swiss Milk” industry standard, the evaluation of a suitable tool was launched in autumn 2023 to collect actual data on greenhouse gas emissions on farms.

Reduction of emissions in Brazil

After Switzerland, Brazil is the country in which Emmi processes its second-largest volume of milk (Laticínios Porto Alegre). A pilot project was launched there in summer 2023 to measure greenhouse gas emissions at suppliers’ dairy production facilities and to determine emission reduction measures based on this information. The aim is to collect data from 15 farms over a two-year period. The farms were divided into sub-groups in order to ensure that the overall result was as representative as possible for the different types of farms. The first round of data collection was carried out on the 15 farms in the year under review. The number of farms surveyed is low, but is nonetheless useful to gather initial empirical data. The collected data is currently being evaluated.

Klimatisch of the Swiss meat and dairy industry

The Klimatisch was created in order to solve the challenge of financing the measures and crediting the reduced greenhouse gas emissions to the various players within the sectors and to accelerate the implementation of emission reduction measures. The Klimatisch brings everyone involved in the entire value chain together with the aim of creating a joint “climate protection industry platform” that advocates fair and efficient financing of all implemented and substantiated climate protection measures on farms and strives for a centrally regulated distribution of climate protection services within the value chain.

Emmi measures progress by means of the following performance figures:

Emmi has been able to reduce its direct greenhouse gas emissions compared to the baseline year (2014) by 30% (target by 2027: 60%). On the other hand, supply chain emissions have increased compared to the baseline year (2019) by 7% (target by 2027: 25%). Consumption of the company's own solar electricity accounts for 2.8% of overall electricity consumption (target by 2025: 4%).

5.1.2 Reducing waste

At Emmi, reducing waste means reducing production waste and food waste and designing packaging that conserves resources and is recyclable. Waste occurs throughout Emmi’s value chain. Food waste is the biggest burden on the environment. Packaging waste, on the other hand, is a key focus of public debate. This section focuses on the waste generated in Emmi’s own facilities during the manufacture of products.

Risks

Waste is a significant cost factor for Emmi. It represents a consumption of resources without any benefit and generally leads to disposal costs.

Concept

When it comes to dealing with waste, Emmi’s credo is: “avoid, reduce, recycle.” This means prioritising the reduction of unavoidable waste and then finding the best solution to reduce it to the lowest possible residual amount, ideally in a closed loop.

Emmi controls waste management at its production sites by means of environmental management, with a focus on waste that is sent for incineration or landfill.

All production plants in Switzerland have an environmental management system certified in accordance with ISO 14001. Where it is not possible to recycle materials, waste is recycled for energy in waste incineration plants. Organic waste is used in animal feed or disposed of in biogas plants.

At present, some of Emmi’s production facilities outside Switzerland still lack basic control mechanisms and data. Emmi is working to close these gaps. Another challenge outside Switzerland is the lack of recycling systems in the vicinity of the sites in North and South America and Tunisia. Emmi is developing individual alternatives to conventional landfill disposal in these locations.

Objectives

• by 2027: 50% less waste (compared to 2017) in relation to saleable goods
• by 2027: 0% waste disposed of in landfills (compared to 2017)

Measures

“Zero waste to landfill” certification in Spain

Emmi’s Spanish subsidiary Lácteos de Navarra produces yogurt in Pamplona. Following discussions with its disposal service providers, the company managed to ensure that only a minimum of waste ends up in landfills: in 2022, the volume was reduced by 75% to 0.06% of the total volume of waste. Following a successful audit, Lácteos de Navarra was awarded the “2022 cero residuo” certification. Based on a new audit in 2023, 99.61% of waste is now being recycled. In concrete terms, this means that the waste is either treated in biogas plants, that re-use or recycling options have been found, or that it can be used to generate energy.

Reduction of sewage sludge in Tunisia

At Emmi’s plant in Tunisia, as at other milk-processing sites, the process wastewater has to be pre-treated. The resulting sewage sludge is currently sent to landfill. Developing an alternative disposal method for this waste is a top priority for the company. Together with an external company, Emmi analysed how process optimisations could be used to reduce the amount of sewage sludge generated. The aim was a 20% reduction by 2023 and a complete closure of the cycle in the future. The reduction target was exceeded. However, the reduction can also be attributed to the reduction in the volume produced and no solution has yet been found to close the loop. The local team is also examining possible solutions such as drying the sludge and converting it into fertiliser or drying it and using it as biomass to generate heat. Another option would be to compost the sludge. The project is challenging because the technologies required for this are not yet widely used in Tunisia.

Collaboration with external partners

In Switzerland, a pilot project for a possible collaboration with an external partner in the waste management sector was initiated in autumn 2023. Analyses were begun at all production sites in autumn 2023, where, among other things, opportunities for optimisation in the waste reduction division were examined. The evaluation of the site inspections is in progress. A final conclusion will be able to be drawn in 2024.

Emmi measures progress by means of the following performance figures:

Emmi has been able to reduce its waste intensity rate compared to the baseline year (2017) by 16% (target by 2027: 50%). Waste disposal in landfills has been reduced compared to the baseline year (2017) by 3% (target by 2027: no waste to landfills).

5.1.2.1 Food waste

Food waste occurs throughout Emmi’s entire value chain. Food waste is generated upstream from agricultural production and, at Emmi, is generated during product processing. Consumers account for the largest share of food waste. Food waste damages the environment due to greenhouse gas emissions during production, processing, transport and storage.

Risks

Due to food shortages and malnutrition in some countries, food waste is an ethical and political issue. It is also well known that food waste is associated with greenhouse gas emissions. Food waste is therefore often the subject of public debate.  A commitment to avoiding food waste is expected from a food company.

Failures or omissions in this regard harbour reputational risks. The cost of wasted food is offset by the cost of preventive or corrective measures. Depending on the situation, reducing food waste may or may not be worthwhile from a purely financial perspective.

Concept

Emmi understands food waste as unavoidable food waste. This includes all organic waste that was originally intended for human consumption, such as processed and semi-processed products as well as raw materials and by-products like whey.

One of the ways in which Emmi is pursuing its goal of minimising food waste is Emmi Operational Excellence (EOE). Through EOE, Emmi is continuously optimising its core processes in terms of effectiveness and efficiency. Unavoidable food waste should be processed into food whenever possible. The top priority, however, is to ensure that no good-quality food is thrown away.

Emmi therefore sells surplus or incorrectly packaged products at reduced prices via factory shops, makes them available to employees or donates edible food to charitable organisations.

Emmi has also signed an industry agreement to combat food waste in Switzerland with leading companies and associations in the food industry and also supports projects and campaigns against food waste in private households.

Other sites are also participating. An international concept has not yet been developed. The aim is to roll out the topic to priority sites in 2024.

The availability of data on food waste has so far only been comprehensively documented from Switzerland.

Objectives

• by 2027: 50% less food waste (compared to 2017)

Measures

Donation to “Tischlein deck dich”

The Swiss production sites donate surplus products to “Tischlein deck dich”, where they are then distributed to people affected by poverty in Switzerland.

Making use of by-products

Emmi is constantly looking for new options and partnerships to utilise by-products such as whey and oat residues in order to make new products for human nutrition. At the start of 2023, Emmi was able to utilise around 3,000 tonnes of dry whey in the form of baby food. This had previously ended up in animal feed. Innovative projects were launched in 2023 to further process the residue from the production of oat drinks for human nutrition.

“Too Good To Go” partnership

As part of the partnership with Too Good To Go, the “often good after” emblem has been displayed on further products in Switzerland to combat food waste in private households. In 2023, the logo was integrated into another 25 products, with a further 14 products planned for early 2024.

Emmi measures progress by means of the following performance figures:

Emmi has been able to reduce its rate of food waste in Switzerland compared to the baseline year (2017) by 13% (target by 2027: 50%).

5.1.2.2 Packaging

At Emmi, packaging includes all materials used to protect products from external influences and to make them suitable for transport and storage. Emmi uses various materials or combinations of materials depending on the product. Emmi aims to make as much of its packaging as possible recyclable in order to promote the circular economy. Reuse of packaging minimises its environmental impact. Packaging can negatively impact on the environment due to the use of materials that are not readily biodegradable or improper disposal by consumers.

Risks

Food packaging has to meet a wide range of requirements, some of which are not easily compatible. Consumer safety and product protection are Emmi’s top priorities. Failures in these areas are associated with significant risks of financial loss and reputational damage. The negative perception of plastics as a packaging material represents a threat to the company’s reputation. This may be in the context of the finite resource of crude oil or the climate debate, but also because of the potential health damage caused by the migration of harmful substances (e.g. plasticisers). An increasing number of new regulations banning certain packaging materials are also forcing Emmi to examine alternatives.

Concept

Since 2011, Emmi has been working on reducing the use of materials and optimising packaging, while continuing to ensure that products are protected. Optimisation is based on the waste hierarchy (Directive 2008/98/EC):

1. Prevention
2. Preparing for recycling
3. Recycling
4. Other Utilisation (e.g. energy recovery)
5. Disposal.

The circularity concept has become the focus of Emmi’s efforts. Only recyclable materials are used for new packaging and the CO₂ emissions of potential packaging systems are taken into account when selecting packaging. Emmi is primarily guided by the Directive on the reduction of the impact of certain plastic products on the environment (Single Use Plastic Directive) and the revised legislation on packaging and packaging waste (Packaging and Packaging Waste Regulation).

All packaging materials used comply with the regulations regarding food and other country-specific requirements (Commission Regulation (EU) No 10/2011).

Circularity as a collective task

Emmi needs broad alliances to achieve its vision of a recyclable packaging landscape. Such partnerships have already taken shape in Switzerland in recent years:

• Member of the board of the PRISMA association since 2018
• Member of the Drehscheibe Kreislaufwirtschaft since 2019
• Sponsor of Realcycle since 2019. Realcycle manages projects from the Drehscheibe Kreislaufwirtschaft, such as approvals for a closed loop for polystyrene packaging or the Innosuisse project for recycling polypropylene packaging. Emmi is involved in both projects as a partner and sponsor.
• Member of the Steering Committee since 2021 in the Sammlung 2025

While there are currently only a few specifications for packaging design in Switzerland and progress in the packaging sector is primarily driven by initiatives and voluntary commitments in the industry, Emmi has decided to align its business in Switzerland and throughout Europe with the increasingly stringent EU legislation on the handling of plastic waste.

Suppliers share responsibility

Emmi has in recent years undertaken a number of measures to increase the requirements for its suppliers with regard to responsible business conduct. A specific catalogue of requirements has been defined for suppliers of packaging materials. Among other things, it covers the handling of critical substances (e.g. plasticisers), nanotechnology and migration risks.

• General terms and conditions of purchase of the Emmi Group
• General requirements for suppliers of raw materials
• General requirements for suppliers of packaging materials
• Requirements for product labelling with GS1-128 for suppliers and trading partners

Objectives

• by 2027: 100% recyclable packaging
• by 2027: at least 30% recycled materials in plastic packaging

Measures

Improving recyclability

In order to improve the recyclability of yogurt pots, Emmi has significantly improved the separability of their plastic and cardboard components, which will make sorting their individual components simpler in the future.

Switchover of packaging materials

Following the switch from PE to PET of milk-based mixed drinks bottles in Ostermundigen, Emmi is now in a position to collect the bottles via PET Recycling Schweiz and place them in a closed loop.

The launch of a reusable glass milk bottle represents another step that Emmi has undertaken towards circularity together with its customer Coop, one of Switzerland’s largest retailers. Glass can be recycled at the end of its useful life. Glass remains in a completely closed loop and can be repeatedly moulded into new bottles without any loss of quality.

For Good Day TetraTop, Emmi is now using mass-balance recycled plastic. The PET milk drink bottles also contain 25% recycled PET. These measures will enable Emmi to further increase its use of recycled plastic.

Plastic savings thanks to sustainable investments

Thanks to various initiatives and investments in new filling systems and packaging tools, Emmi was able to save a further 300 tonnes of plastic and aluminium in 2023. For example, optimising the weight of the Emmi Caffè Latte cup has made it possible to save plastic without any negative impact on the consumer experience, product protection or efficiency. The switch from PE to PET for milk-based mixed drinks bottles is another example.

Emmi measures progress by means of the following performance figures:

The proportion of recyclable plastic packaging in Switzerland is 50% (target by 2027: 100%), whereas the proportion of recycled material is 3% (target by 2027: 30%).

5.1.3 Reducing water consumption

In this report, the topic of water covers water use and pollution at Emmi itself as well as in the upstream value chain and, in particular, in agriculture. In the agricultural context, water consumption and water pollution are important factors in the production of plant-based raw materials. In Emmi’s own facilities, freshwater consumption and wastewater (e.g. degree of pollution, quantity) are of particular relevance. Water is required in our facilities as an ingredient, for processes and to ensure quality and hygiene in Emmi’s own plants.

Risks

Water is particularly important for Emmi’s upstream value chain – milk production. Extreme drought or heavy rainfall affect the availability and price of feed, which can have an impact on the quality and price of milk. Water shortages also affect the agricultural production of non-dairy ingredients such as fruit, coffee beans and nuts.

Water is an ingredient for Emmi’s own facilities, for processes and for ensuring quality and hygiene. Both the purchasing of fresh water and the treatment and disposal of wastewater are associated with costs.

The WWF Water Risk Filter was applied at all production sites in 2019 in order to identify water-risk areas. This analyses the water risks at a specific location on the basis of twelve criteria. According to this analysis, the production facilities in Tunisia, California and Mexico are located in water-risk areas.

Concept

Most of Emmi’s water footprint comes from the production of agricultural raw materials. With the help of the WWF, Emmi has developed an implementation concept for risky commodities.

In this first phase of the strategic management of the focus topic of water, Emmi is focusing on water use in its own facilities, as this will have the greatest impact and is where measurable progress can be quickly achieved.

Minimising the use of fresh water in our own facilities

Emmi has two main objectives for water management at its own production facilities: firstly, the consumption of fresh water should be minimised, particularly in areas where water is scarce. Secondly, the amount of wastewater should be reduced and its contamination with waste products minimised. Emmi has accumulated 15 years of experience in professional wastewater management at its Swiss facilities for both of these key measures, which has enabled Emmi to develop proven, scalable approaches:

• In order to reduce its freshwater consumption, Emmi relies on reusing water.
• Optimising the cleaning processes makes it possible to achieve notable reductions in freshwater consumption.
• In high-risk sites, particular attention is paid to water treatment in order to keep water in the cycle for as long as possible and thus minimise the consumption of fresh water.
• Wastewater pollution is reduced by reducing product losses in the production process.
• Wastewater from production facilities is treated according to state-of-the-art processes and local requirements.

Systematic data collection

The key indicators of Emmi’s water management are freshwater consumption, wastewater quantity and chemical oxygen demand (COD) for determining and controlling wastewater quality. This data has been collected in Switzerland since 2008 and in facilities outside Switzerland since 2019. Site-specific measures are derived from this data, along with national and local legislation and guidelines. Emmi monitors their effectiveness using corresponding key performance indicators, which are assessed on a quarterly basis.

Careful use of water in milk production

Some of Emmi’s subsidiaries outside Switzerland – and their milk producers – are located in water-risk areas. Emmi has therefore also included water criteria in its catalogue of criteria for foreign milk suppliers:

• Protection of open waters
• Protection of groundwater

Objectives

Emmi will base its target of reducing water consumption in its own facilities by 2027 on values customary in the industry.

• 15% reduction of own water consumption in non-risk areas (compared to 2019) – the target relates to saleable goods produced (in tonnes).
• reduced water consumption along the value chain

Emmi believes it has an obligation to reduce water consumption even more quickly in water-risk areas and, as a result, its objectives there are correspondingly more ambitious:

• 50% reduction of own water consumption in risk areas (compared to 2019) – the target relates to saleable goods produced (in tonnes).

Measures

Regular inspections at Emmi Roth

Water leaks in production facilities are not always obvious, but their impact can be significant. Identifying and rectifying such leaks in good time is by no means a matter of course. Quarterly inspections and investigations have been carried out at Emmi Roth in collaboration with the sustainability team since 2023 to identify water leaks. This resulted in the discovery and repair of a major leak in the water softener at the Platteville, Wisconsin site and the brine tank at the Monroe, Wisconsin production site. Emmi strives to raise awareness among its employees, to actively involve them in the process and to raise their awareness of this issue, as their daily activities and proximity to the processes enable early detection of signs of leaks.

Identifying water leaks with specialists

In 2023, the subsidiary Kaiku in Spain initiated the “Ghostbuster” project, with the aim of identifying water leaks that had so far remained undetected. The sustainability team, together with the maintenance staff and with the support of a specialist team from the municipality of Pamplona, inspected the entire drinking water network and checked for leaks. Specialist equipment enabled three major leaks to be identified and subsequently repaired. Kaiku also optimised its cleaning processes in the year under review by adjusting the flushing times.

Recycling water in Emmen, Kaltbach and Suhr

Investments were made in water treatment in Emmen and Kaltbach. A reverse osmosis polisher and treatment with UV rays made it possible for water to be treated and reused for specific purposes. According to the estimate of potential, this means that around 36,400 m³ of fresh water can be saved annually in Emmen and 3,750 m³ in Kaltbach. Whenever possible, fresh water is no longer used to generate compressed air in Suhr. Using cooling water in a closed circuit allows approximately 78,300 m³ of fresh water to be saved each year.

Emmi’s focus on reducing water consumption is currently directed towards its own production facilities, therefore no measures could be implemented in 2023 to achieve the goal of “reducing water consumption along the value chain”.

Emmi measures progress by means of the following performance figures:

Emmi has been unable to reduce water consumption both in non-risk areas (target by 2027: 15%) as well as in risk areas (target by 2027: 50%) in terms of produced, saleable goods. Water consumption has increased compared to the baseline year by 4% and 12% respectively.

5.1.4 Sustainable dairy – animal welfare in dairy production

Through its sourcing of milk and selection of suppliers, Emmi influences the impact of the dairy industry on the environment. By supporting the establishment of sustainable standards and the appropriate processing of milk, Emmi is helping to ensure that sustainable dairy, in which animal welfare is promoted, becomes the norm. This report categorises sustainable dairy as an environmental and social issue. The following section focuses in particular on the environmental aspects.

Risks

Criticism of the dairy industry is primarily based on two environmental issues: greenhouse gas emissions and animal welfare. As a milk processor that does not produce its own milk – with the exception of a goat farm in California – Emmi can only influence animal welfare indirectly by imposing conditions on milk suppliers, yet at the same time bears significant reputational risks in the event of misconduct.

Concept

From the start of 2024, Emmi will only process milk in Switzerland that is produced in accordance with the “Sustainable Swiss Milk” industry standard. Of the nine basic requirements, half focus on animal welfare.

Animal welfare is also an important aspect in Emmi’s catalogue of criteria, which is used for milk suppliers outside Switzerland:

• adequate animal housing facilities
• regular access to pasture
• optimized feed rations
• adequate dehorning
• limited transport times to slaughterhouse
• restrictive use of antibiotics
• adequate productive lifespan / number of lactations
• rearing of offspring on the farm of their birth (minimum number of days)

The Emmi catalogue contains additional specific criteria for suppliers of goat’s or sheep’s milk.

Objectives

• by 2027: 100% of milk suppliers will be producing in accordance with local above-average standards

Measures

Industry standard for sustainable Swiss milk

Since February 2024, all of Emmi’s milk suppliers have met the requirements of the Sustainable Swiss Milk industry standard and the associated animal welfare requirements.

AENOR certification at Quillayes Surlat, Chile

Emmi’s subsidiary Quillayes Surlat in Chile has set itself the target of having the vast majority of its suppliers certified with the animal welfare label AENOR. Four aspects are assessed: species-appropriate feeding, appropriate husbandry, health and natural behaviour. Within these four aspects, 12 different animal welfare criteria are laid down. The farmers are audited to assess their compliance with these criteria. In the year under review, 67 farmers were certified (approximately 80% of the milk volume). This makes Quillayes Surlat the first company in South America to receive this certification for its farmers. Further suppliers will be approached next year. The aim is for certified milk suppliers to account for 90% of the volume of milk.

Emmi measures progress by means of the following performance figures:

Evaluation has started at international level.

5.1.5 Responsible sourcing – environmental aspects in the sourcing of non-dairy raw materials

Emmi takes environmental criteria into account when selecting its suppliers and raw materials. Sourcing policy thus has an indirect impact on raw material production and the associated emissions and environmental impacts. Sourcing enables Emmi to promote environmental protection in the supply chain. This section considers non-dairy raw materials.

Risks

The most significant environmental impacts occur in the upstream stages of Emmi’s value chain, particularly in the production of agricultural raw materials, which have a direct impact on the environmental sustainability of the products. Any damage to the environment caused by the production of the required raw materials – for example, the threat to biodiversity caused by deforestation to grow commercially usable products – can have a negative impact on the perception of Emmi’s products.

Concept

Emmi procures goods and services worth around CHF 3.3 billion a year. The most important items are milk and dairy products. Other relevant agricultural goods include raw materials such as sugar and fruit as well as semi-finished products. Additional items include packaging, logistics services and energy.

Responsible sourcing management

Emmi strives to live up to its corporate responsibility with regard to sourcing. To this end, Emmi developed a Group-wide sustainable procurement policy in 2022. It supplements the Group-wide sourcing guidelines that came into force in 2020, which already set out ethical, social and environmental requirements. The sustainable procurement policy describes standards and procedures for strategic sourcing.

Supplier Code of Conduct

In order to communicate their sustainability expectations to their suppliers, a Supplier Code of Conduct was introduced in 2022. The code covers all aspects of sustainability.

In the area of environmental protection, all applicable local environmental and safety requirements must be complied with and continuous improvement must be demonstrated. There are explicit guidelines on the following topics: waste and emissions, climate protection, conservation of resources, biodiversity, soil protection, deforestation and animal welfare (Emmi Supplier Code of Conduct).

New suppliers are obliged to accept the Supplier Code of Conduct and provide specific information on standards in the categories of quality, environment and social issues. In addition to all new suppliers, Emmi’s aim is for existing suppliers to recognise the Emmi Supplier Code of Conduct and implement measures to optimise their own sustainability. Each company sets itself an annual target to achieve this objective.

In the event of an identified violation of the Emmi Supplier Code of Conduct, an internal committee – consisting of representatives from Procurement, Sustainability, Quality and Legal – will decide on the further course of action. As a rule, the priority is targeted supplier development in order to improve the supplier’s current situation. In the event of persistent difficulties or a lack of willingness to cooperate on the part of the supplier, a termination of the business relationship is being considered.

Focus on agricultural commodities

The most significant impact on the environment in Emmi’s value-added chain comes from the raw materials processed. Of the non-dairy raw materials it uses, Emmi pays particular attention to coffee, cocoa, nuts, fruit and sugar. Specific assessment criteria will be developed by 2024 and tested in initial pilot sourcings in order to evaluate these raw materials in terms of their impact on the sustainability of Emmi’s products. Based on these criteria, a guideline for sourcing will be developed that will allow us to uniformly assess suppliers with regard to sustainability. One challenge is the trade-off between different sustainability criteria, ensuring perfect product quality takes priority. Secondary considerations may include whether short transport routes or low water use should be prioritised. Emmi adopts a case-specific approach that takes local conditions into account.

Objectives

• 100% of new suppliers to have signed the Emmi Supplier Code of Conduct
• by 2026: all active suppliers managed by Strategic Purchasing to have accepted the Emmi Supplier Code of Conduct
• all suppliers from critical countries of origin will be analysed once a year with regard to compliance with the Emmi Supplier Code of Conduct

Measures and performance figures

In 2023, the focus was on applying and reviewing the responsible sourcing policy that had been created. Where necessary, adjustments were made.

Emmi Supplier Code of Conduct

Of the almost 2,000 suppliers of direct materials – for production or in the form of finished products – 342 have so far accepted the Emmi Supplier Code of Conduct. Emmi is striving to further increase the number of suppliers that have accepted this Code. Implementing the Emmi Code of Conduct is proving to be challenging, as the company often has limited negotiating power due to comparatively low international sourcing volumes.

5.2 Social matters

Social matters include elements of the following topics that are material to Emmi:

• Sustainable dairy
• Responsible sourcing
• Product quality and safety
• Nutrition

Environmental aspects of the material topics of sustainable dairy and responsible sourcing are dealt with in section 5.1 Environmental matters, human rights aspects in sourcing in section 5.4 Respect for human rights.

5.2.1 Sustainable dairy – working conditions and income in the dairy industry

For Emmi, the key social aspects of a sustainable dairy industry are jobs in rural areas, decentralised settlement patterns, maintaining intact family structures and the income that the work generates.

Risks

The majority of the company’s shares are held by Genossenschaft Zentralschweizer Milchproduzenten (ZMP). As a result of this constellation, farmers, politicians and the general public have high expectations of Emmi when it comes to behaving responsibly towards its milk suppliers. The reputation of Emmi as a whole depends to a large extent on Emmi’s behaviour as a player in the Swiss dairy industry.

In many countries where Emmi buys and processes milk, milk production is an important economic and income factor for the rural population in the regions concerned. A milk price that covers the costs of production plays a key role in this. Should this not be the case in the long term, there is a risk that milk production will decline. On the other hand, milk prices that are higher than the market average may jeopardise Emmi’s competitiveness and the company’s long-term existence.

Concept

Emmi’s primary goal is to further develop the dairy industry towards a sustainable and thus future-proof system. From a social point of view, the dairy industry should provide secure jobs and viable incomes for its workers in order to maintain its attractiveness.

Emmi is aware of its shared responsibility for milk producers in its domestic Swiss market. The fact that milk in Switzerland is usually produced by family-owned farms must be taken into account. For example, by means of transparent, long-term, plannable partnerships – and, last but not least, with a milk price that is both affordable and competitive for both sides. As a member of the industry organisation Milch – a platform of the Swiss dairy industry – Emmi works in a constructive manner to further develop the Swiss dairy industry and consistently implements the decisions made by this body, such as the agreed guide prices.

Social sustainability in the “Sustainable Swiss Milk” standard

In 2016, Emmi set itself the target of only processing milk in Switzerland that meets a catalogue of sustainability requirements by 2020. In return, the company committed itself to paying an above-average milk price. The result of several years of discussions within the industry was the production standard for “Sustainable Swiss Milk” in 2019, which has been mandatory for all Swiss dairy farmers since the beginning of 2024. While the nine basic requirements of the standard focus on environmental protection and animal welfare, the additional requirements include social criteria such as the social security of the family members employed in the business, the training of apprentices and the further training of the farm manager.

Social issues in Emmi’s global criteria catalogue

By the end of 2027, Emmi only wants to process milk outside of Switzerland that is produced according to higher sustainability standards than those generally applied in the region. Due to its niche activities in many countries, Emmi relies on commitments within the industry and on individual agreements with its milk suppliers. Emmi has elaborated the basis for such agreements over the past four years. Based on a catalogue of criteria developed in collaboration with experts, it assessed eight aspects of sustainable milk. The “strategy” and “employment and income” categories analyse the social sustainability status of Emmi’s milk suppliers outside Switzerland:

“strategy” and “employment and income” criteria:

• Plans to ensure that the supplier continues to produce milk in 10 years’ time
• Legally binding employment contracts for salaried employees
• Minimum wage for salaried employees
• Profitability of the business

Dairy as a key driver for the local economy in Mahdia

Emmi runs a unique concept for the sustainable development of the dairy industry in Tunisia. Its Tunisian subsidiary, Centrale Latière de Mahdia (Vitalait), sources its milk from 25,000 milk suppliers. These are often families where the husband has a job away from home and the wife takes care of two or three cows. For these families, dairy farming represents an important additional source of income.

Objectives

• by 2027: 100% of Emmi’s milk suppliers worldwide produce according to local above-average standards

Measures

“Fondation Vitalait” supports smallholder farmers in Tunisia

In the year under review, the Fondation Vitalait, in collaboration with the Swiss Agency for Development and Cooperation (SDC), was able to extend its support services to a total of 430 farms. Farm workers in Tunisia are often young and without training. They are therefore particularly dependent on a fair income. Thanks to the Fondation Vitalait, farmers are trained in the following topics: increasing productivity (technology and feeding), environmental aspects such as water, renewable energies and achieving optimal cooling of the milk on the farm. In the reporting year, questionnaires were sent to suppliers to assess the current situation, which will allow the impact of the activities to be measured at the end of the project. Furthermore, trainers were schooled in November 2023 and will use their newly acquired knowledge to train farmers over the course of the project. The project will run until the end of August 2024, with a final conclusion to be drawn in the next financial year.

Social aspects in the criteria catalogue

Emmi’s subsidiaries Quillayes Surlat in Chile, Kaiku in Spain and Vitalait in Tunisia have applied the criteria catalogue. Together, these subsidiaries account for around a quarter of the milk volume produced by Emmi. Kaiku and Quillayes Surlat defined their targets for 2027 based on the results in the year under review. The target for Vitalait is still pending. As a result, the use of the criteria catalogue has been deprioritised.

Emmi measures progress by means of the following performance figures:

Evaluation has started at international level. Figures for Switzerland are provided in section 5.1.4 Sustainable dairy.

5.2.2 Sustainable dairy – competition for food and land due to milk production

Emmi considers milk production to be an important element in a sustainable food system. This is particularly true because farm animals kept for milk production convert indigestible plants – principally grass – into nutrient-rich food for humans. However, this argument is most likely to be used in situations where there is little or no competition for food and land.

Food competition occurs when animals use feed that would also be suitable for human consumption. This is the case, for example, when cows are fed wheat.

Competition for land arises when the feed comes from land that could have been used to grow food for people. This includes, for example, the cultivation of feed grain instead of potatoes on arable land.

Risks

The cultivation of animal feed for milk production and the use of cereals suitable for human consumption to feed animals may compete with food production for human beings. The sourcing of milk produced in competition with human food is critical, especially in areas in which there is food scarcity. This entails reputational risks for Emmi.

Concept and measures

The Swiss dairy industry is striving to achieve grassland-based, site-adapted and climate-friendly milk production that is able to meet the challenges of climate change in a manner that conserves resources. To this end, the “Resource Project for the Promotion of Climate Protection, Site Adaptation and Resource Efficiency in Milk Production” supports dairy farmers in their efforts to reduce greenhouse gases and adapt their dairy farms to their location. In the “KlimaStaR Milch” project, Emmi is working with regional partners, dairy farms, other companies in the food industry and the public sector on ways to reduce the greenhouse gas emissions associated with milk production. Solutions are also being developed to minimise competition for food and land.

Objectives and performance figures

During the six years (2022 to 2027) of the project, the following food and land competition targets are to be achieved on the approximately 240 dairy farms participating in the “KlimaStaR Milch” project:

• reduction of dairy farmers’ food competition by 20%
• reduction of competition for space by 20%

With regard to food competition, milk producers succeeded in reducing food competition by 9% in the first year of the project by reducing the quantities of concentrated feed they used and by making targeted adjustments to the feed ration. The competition for space aspect is under development; interim results are expected in 2024.

5.2.3 Responsible sourcing – social aspects in the sourcing of non-dairy raw materials

In addition to milk, Emmi also procures raw materials such as sugar, nuts, fruit and coffee. Its sourcing policy gives Emmi an indirect but relevant influence on the conditions under which these raw materials are produced. In addition to human rights, which are dealt with separately in section 5.4 Respect for human rights, the working conditions and remuneration of people involved in the production of raw materials and at the suppliers of these raw materials are of particular relevance.

Risks

Inadequate consideration of social criteria in the sourcing process entails process risks and risks to Emmi’s reputation. Emmi’s supply chain is complex and its influence on suppliers’ working conditions is therefore limited. Ensuring high social standards in the supply chain can represent an opportunity for Emmi and increase the popularity of its products.

Concept and measures

At Emmi, responsible sourcing management encompasses five aspects:

• Supplier evaluation and monitoring
• Supplier development
• Strategic sourcing criteria
• Internal structures and processes
• Transparency and traceability

As previously mentioned, the Group-wide sourcing policy encompasses specifications on ethical, social and environmental aspects of sourcing.

The Group-wide sustainable procurement guideline supplements the general sourcing guidelines with topics such as business ethics, fairness, reliability, discretion and the avoidance of conflicts of interest when working with suppliers. It describes standards and procedures for operational and strategic purchasing.

Emmi uses a Supplier Code of Conduct when working with its suppliers. The company aims to ensure that new suppliers acknowledge the code and provide specific information on various standards in the quality, environmental and social categories. In addition, they are required to accept a framework agreement as well as general requirements for raw materials or packaging in writing.

In the event of an identified violation of the Emmi Supplier Code of Conduct, an internal committee will decide on the further course of action. As a rule, the priority is targeted supplier development in order to improve the supplier’s current situation. In case of persistent difficulties or a lack of willingness to cooperate on the part of the supplier, a cancellation of the business relationship is considered.

The objectives and performance figures are the same as those in section 5.1 Environmental matters under 5.1.5 Responsible sourcing.

5.2.4 Product quality and safety

For Emmi, “product quality and safety” are the result of numerous measures along the entire value chain, starting with the selection and sourcing of suitable raw materials and packaging. When processing these raw materials, Emmi follows the principles of good manufacturing practice and meets the strict requirements of various quality standards, thus guaranteeing the safety of its food at all times. It also complies with all relevant legal and regulatory requirements and takes the needs of its customers into account.

Risks

Emmi positions itself as a manufacturer of safe and high-quality products. Protecting consumers is its top priority. Quality non-conformities can have health implications and, for example, may lead to a product recall, which can entail negative consequences for a company’s reputation and result in significant financial risks. Selling products that do not meet the highest standards can also damage our relationship of trust with our customers, or even result in them being lost.

Concept

Responsibility for global quality management is anchored in a central Group function, which defines the strategic direction and, above all, also serves to support the country organisations.

Food safety at Emmi is based globally on the HACCP concept (Hazard Analysis Critical Control Points) – a methodology consisting of hazard analysis, risk assessment and risk management in food production, distribution and logistics. This methodology is also used for the release of new process equipment and procedures.

HACCP is an integral part of a quality management system, and the certifications of the production sites are based, among other things, on individual market requirements. This means that different standards recognised by the GFSI (Global Food Safety Initiative) can be applied. In the vast majority of cases, this is FSSC 22000 (Food Safety System Certification) and the IFS standard (International Featured Standards).

All sites are certified in accordance with a standard quality management system. Where market or customer requirements dictate, certification is according to a GFSI-recognised standard (e.g. FSSC 22000, IFS, BRCGS, SQF). In addition, the quality management systems (QMS) at some production sites are also certified according to general ISO standards.

Product safety takes top priority: risk-based, continuous improvement

Emmi’s food safety, hygiene and quality standards for its product range and the environment in which these products are manufactured are risk-based and are continuously improved according to the Plan-Do-Check-Act (PDCA) cycle.

All Emmi products and processes used in the production of food are subject to a food safety hazard analysis based on the Codex Alimentarius. The HACCP system identifies all food safety hazards and then thoroughly assesses, monitors and controls them to ensure that Emmi’s products do not pose a risk to the consumer. The main hazards are microbiological contamination with pathogens, chemical contamination, undeclared allergenic substances or unwanted foreign bodies in the product.

The Preventive Programmes (PRPs), such as personal hygiene, cleaning systems, avoidance of cross-contamination (particularly with regard to allergens) and pest control are important components of the HACCP concept. These PRPs are the most important basis for ensuring food safety. If the hazard analysis and risk assessment indicate a higher risk in certain locations, additional measures are taken to control chemical, microbiological and physical hazards.

Objectives

The aim is to ensure the highest level of public health and consumer protection by continuously identifying opportunities for improvement and further developing the food safety system.

Measures

Awareness-raising measures for employees

In order to raise awareness among employees, short films on food safety topics were produced in 2023. These are shown regularly on Emmi TV.

Surveys on the quality culture were carried out in the two companies Leeb Biomilch GmbH and Emmi Dessert Italia. The results are under evaluation at the time of writing.

“Food safety sprints” in all divisions

As part of the European Food Safety Initiative (EFSI), several “food safety sprints” were carried out, in particular at the two companies Leeb Biomilch GmbH and Emmi Dessert Italia.

Such a sprint was also conducted for the first time at Emmi Dessert USA and at Emmi Roth in the USA. Here too, the results are still under evaluation at the time of writing.

Development of local quality measures

In the Chilean subsidiary, Emmi introduced  the “cost of poor quality” reporting at all sites, trained teams in the continuous improvement process, and with the  internal gap analysis tool at each production site the basis for a local quality strategy was developed.

Effectiveness test

In addition to the usual methods for testing the effectiveness of a quality management system, such as audits (internal/external) and the collection of key figures, the aforementioned food safety sprints make it possible to observe processes and materials over an extended period at the relevant site that allows a detailed insight into the effectiveness of the measures to be obtained.

Emmi uses numerous indicators to measure product quality. The most important key figures are: costs of poor quality or critical incidents in the market (withdrawals/recalls).

Other external complaints and internal deviations are investigated locally. Numerous internal process controls are carried out to inspect raw materials, semi-finished and finished goods, and packaging. Microbiological checks are carried out to ensure that the production environment fulfils the required hygienic conditions for the food production.

Emmi does not publish these key figures for competitive reasons.

5.2.5 Nutrition

Milk is a high-quality food that contains a variety of valuable macro- and micronutrients (fats, proteins, carbohydrates, minerals and vitamins) in a form that is easy for humans to digest. Milk and dairy products are fundamental components of dietary recommendations. While milk consumption is increasing in developing and emerging countries due to these properties, the consumption of animal-based foods is increasingly being questioned in industrialized countries, primarily based on environmental and animal welfare considerations, but also from a health perspective.

In some of the markets that are relevant to Emmi, such as the domestic Swiss market, there has been an increase in demand for low-processed, natural foods in recent years. The trend towards products with additional nutritional benefits – such as lactose-free dairy products, probiotic yogurt, products with a high protein content and no added sugar – is just as relevant for Emmi. Plant-based milk alternatives are also increasingly in demand.

Risks

Nutrition is part of an individual lifestyle and can also reflect personal values. A healthy diet is influenced by many individual factors. Nonetheless, the media, public and political debate about healthy eating often focuses on individual food categories. Depending on the debate, food manufacturers may therefore face opportunities or risks in terms of positioning, sales, image and reputation. Added sugar in fresh products, especially in mixed milk drinks, yogurt and quark, is fraught with risk. Opportunities currently exist for protein-rich products such as cheese, for example, after this product category was criticised in the 1980s and 1990s for its high fat content.

Parallel to the debate on healthy eating and nutrition, and in some cases overlapping with it, different diets present opportunities and risks for Emmi’s business model. For example, the vegetarian lifestyle offers opportunities for milk processors, while vegans avoid dairy products altogether. Investing in milk alternatives is one way of turning this risk into an opportunity for the company. Exploiting that opportunity involves making an economic assessment that takes into account the additional costs – e.g. for development and marketing.

Concept

When developing new products and optimising existing recipes, the focus is on the needs of consumers. Emmi is aware that its products can have an impact on healthy nutrition. However, Emmi believes that nutrition must always be seen in the context of an individual’s lifestyle.

While many nutritional topics are cyclical in nature, there is a broad consensus on sugar: excessive consumption of products containing sugar poses health risks. Emmi believes that education, product reformulations and government involvement are needed to minimise these risks and promote more balanced consumption and healthier eating habits. In its Swiss home market, Emmi is strongly committed to this issue, also at a political level.

Vegan milk substitute products have also played a role at Emmi for over 20 years. Emmi manufactures these in-house in Switzerland, Spain, Austria, Italy and the USA.

Objectives

Reduce added granulated sugar in yogurt, quark and milk-based drinks by 10% by 2024 compared to 2019 in Switzerland (“Milan Declaration”).

Measures and key performance indicators

Focus on sugar reduction

Emmi’s R&D teams always keep sugar reduction in mind both in the development of new products and in the optimisation of existing ranges. For many years now, Emmi has been gradually reducing the sugar content of existing products in order to ensure that the change in taste remains acceptable to consumers.  New products are already being developed with a low sugar content.

Interim review of the “Milan Declaration” (Switzerland)

• Yogurt: the reduction is in line with the targets set out in the Milan Declaration
• Quark and milk-based drinks (expansion of the “Milan Declaration” in mid-February 2023): potential has been identified and implementation has begun
• Emmi Caffè Latte, the target value for 2024 was already achieved in 2023

5.3 Employee issues

Employee issues encompass aspects of the following topics that are material to Emmi:

• Employee development
• Occupational health and safety
• Governance (fair and inclusive conditions and the right to participation)

In addition to the material topics updated in the run-up to the 2021/2022 Sustainability Report, this report contains information on “fair and inclusive conditions” and “the right to participation” (summarised under the topic of governance).

Employee issues in the supply chain are dealt with in sections 5.2 Social matters and 5.4 Respect for human rights.

Emmi employs more than 9,000 people worldwide. The UN Guiding Principles on Business and Human Rights and the Fundamental Principles of the International Labour Organization (ILO) form a fundamental benchmark for dealing with the workforce. This is set out in Emmi’s Code of Conduct.

5.3.1 Employee development

Employee development covers anything that helps our employees to meet the requirements of their job role now and in the future. Through the targeted development of its employees, Emmi can strengthen its human capital and secure the skills Emmi needs to achieve its strategic objectives.

Risks

Emmi relies on the availability of sufficient workers with the right specialist skills. Companies that train and develop employees not only ensure their own success, but also contribute to a functioning economic system and social prosperity.

Emmi is also aware of its responsibility to ensure the employability of all its employees.

Concept

Individual development requires an appropriate environment. Professional leadership, skills management and a working environment that promotes individual development are essential. Emmi invests in talent development programmes that encompass a range of business units and countries and ensure targeted succession planning is defined for key positions. Emmi also works consistently to ensure that all employees have development plans.

Objectives

By 2027, all employees of the Emmi Group should have a personal development plan. With this broad-based development, Emmi is not only strengthening its employees for their current areas of responsibility. This also creates the basis for being able to fill vacancies internally with people who match the job profile to perfection. In our recruitment, Emmi aims to maintain a balance between the vacancies filled with internal candidates and the vacancies filled with external applicants.

Measures

Emmi is convinced that professional management is an important framework for employee development. Emmi offers Group-wide leadership training courses, which are regularly refined and adapted to current market requirements. At the same time, good and professional management work is continuously reflected on and deepened in numerous local workshops.

With the strategic “Talent and Succession Management” initiative, Human Resources Management at Emmi works with managers across the Group to identify talented individuals and key positions, and systematically plans succession solutions.

Emmi follows a 70-20-10 development approach for all employees at every level: 70% of development takes place in the normal working day, 20% comes through targeted feedback and reflection, and 10% is carried out with internal and external training.

Effectiveness test

Emmi records the extent of training and development and the number of employees with individual development plans across the Group. Emmi also records the percentage of internally filled positions.

Employee surveys are carried out in individual companies or units. These include questions about development opportunities. The aim is to roll out these surveys as standard across the Group from 2025.

Emmi measures progress by means of the following performance figures:

One out of every two (57%) Emmi Group employees had a development plan during the year under review (target by 2027: 100%). Emmi was able to fill 26% (target by 2027: 50%) of open positions with internal candidates.

5.3.2 Occupational health and safety

At Emmi, occupational health and safety comprises the provision of safe and health-promoting working conditions. Employees should be provided with working conditions without the risk of accidents or injuries at all stages of their work, from the processing of raw materials to the transport of packaged products. Health protection implies a good work-life balance and supports mental health.

Risks

The majority of Emmi employees work in production, in production-related areas or in distribution. This work entails significant risks to physical health. Psychological stress can also occur at all workplaces. Absences or workplace restrictions due to accident or illness may impair the performance of the company. Serious incidents, demonstrable misconduct on the part of the company or accidents on public transport harbour procedural and reputational risks.

Concept

Emmi is committed to providing a safe working environment, both for its own employees and for the supervised employees of third-party companies.

At Emmi, responsibility for occupational safety is anchored locally in the country organisations. The central Group function sets the strategic direction and supports the country organisations. Health-related issues are also managed by the HR division. Measures are developed and implemented in close coordination with the occupational safety organisation.

The aim of Emmi’s occupational health and safety organisation is to protect employees from damage to their health and to ensure the company’s ability to function at all times.

A central instrument for dealing with occupational health and safety in Switzerland is a comprehensive occupational health and safety management system implemented in accordance with the principles of ISO 45001. The international companies include a number of certified companies, such as Emmi Dessert Italia, Kaiku in Spain and Vitalait in Tunisia. All companies comply with local law. Developments are tracked on the basis of a globally implemented key figure management system and, if required, necessary measures are defined with the local companies.

Objectives

Emmi’s safety philosophy is to prevent all incidents of personal injury. A significant reduction in the number of accidents is therefore the overriding long-term objective.

The objectives are defined annually for each site based on its respective situation (process risks, technical safety of the plants, safety culture, legal requirements).

Measures

With the aim of supporting the health of the employees, relevant introduction programmes as well as legally mandatory training courses are carried out. Refresher courses are held regularly for high-risk activities such as working at heights or handling forklifts.

Other courses and training sessions relate to occupational health, first aid, evacuation training, the correct use of climbing aids and behaviour in traffic. Various other training courses contribute to health promotion. For example, training courses on health-conscious leadership and training courses on how to improve your own resilience are on offer.

In what is referred to as the “Health & Safety Community”, global H&S managers and selected HR partners are presented with topics relevant to occupational health and safety. The participants discuss safety and health-related incidents in order to multiply important findings and appropriate measures as part of the continuous improvement process.

Effectiveness test

Emmi regularly evaluates its safety management with audits. In these audits, systems, procedures, processes and products are reviewed and the fulfilment of specifications and evidence is assessed. The audits are part of the continuous improvement process and are carried out by internal and external bodies.

Emmi measures progress by means of the following performance figures:

Health and occupational safety management maintains a comprehensive system of key figures to identify potential for improvement and to check the effectiveness of the measures taken.

The so-called TIFR (Total Incident Frequency Rate) is provided as a key figure on Group level. The TIFR is calculated from the total sum of all injury cases (irrespective of whether they result in downtime and limited operations, including deaths but excluding commuting accidents) in relation to a million hours worked. In 2023 the TIFR was 24.0 (previous year 24.4) and no fatalities occurred (previous year 0).

5.3.3 Fair and inclusive conditions

Emmi strives to create fair and inclusive working conditions and to offer all employees the opportunity for personal development. Fair and inclusive conditions ensure that the company is perceived as an attractive employer, can act as a role model and contribute to the promotion of inclusion in society.

Risks

Suspected or proven discrimination against employees, for example on the basis of their gender, age, nationality or religious affiliation, entails process and reputational risks and may damage the corporate culture.

Concept

The principle of fair and inclusive working conditions is set out in the Group-wide Code of Conduct and within remuneration principles for Emmi employees.

Objectives

Emmi strives for a non-discriminatory working environment in which all employees feel welcome, valued and inspired.

Measures

Various subsidiaries have been working for years to ensure fair and inclusive conditions. At Group level, Emmi developed a global position on diversity, equality and inclusion in 2023 in order to anchor these issues strategically across the Group. This binding basis is used to define and implement further awareness-raising measures locally. Emmi aligns its remuneration system with its organisational culture and invests in gender-independent and non-discriminatory remuneration models. To this end, a survey of the local conditions at the subsidiaries will be carried out in 2024 from a legal and labour market perspective.

Effectiveness test

Emmi analyses various key employee figures to identify indications of unequal treatment. The equal pay analysis required by law in Switzerland is one of these tools. As the largest legal entity, Emmi Schweiz AG is certified for equal pay for men and women in accordance with the Gender Equality Act and is within the federal tolerance limit of 5%. The subsidiaries belonging to the Emmi Group are required to review their salary structures on a regular basis and to comply with the legal requirements. This also includes corresponding equal pay analyses.

Emmi encourages all employees to report suspected misconduct or unequal treatment. Points of contact are managers, the personnel/works committees, the Emmi HR department or, if necessary, the Emmi Whistleblowers Line, which also makes it possible to report concerns or information anonymously and confidentially.

Emmi measures progress by means of the following performance figures:

The development of the proportion of women at different hierarchical levels can provide an indication of the status of equality.

5.3.4 Right to participation

The right to participation is a central principle of employment law and relates to the right of employees to take an active part in decision-making processes and shaping issues in the working environment. It aims to ensure that employees participate in company activities and that their interests and opinions are taken into account.

Risks

There may be a power imbalance between employees and employers that may have a negative impact on employees. Internal commissions, trade unions and other forms of participation have played an important role in improving working conditions and social justice for decades. Combined with other developments and over time, trade unions have improved the culture of collaboration and feedback in the company – for example through employees’ rights of participation.

Depending on the country, however, dealing with trade unions can also be a challenge for Emmi, for example in Germany, Spain or Italy. This sometimes makes direct dialogue with employees more difficult or hinders economically necessary structural adjustments of the company.

Concept

Emmi strives to create a working environment in which employees are allowed to exercise a right of participation, whether in Switzerland through the Employee Committee (Peko) or in an international context through freedom of assembly.

As part of the freedom of assembly, subsidiaries adhere to the legal requirements of the respective country when dealing with trade unions. The basic principles of the International Labour Organization (ILO) serve as a benchmark.

The implementation of employees’ rights of participation depends on the respective local conditions:

In the division Switzerland, locations with more than 50 employees have an upstream, first point of contact in the form of the employee committees. These committees are made up of employees and are elected by the workforce for a term of four years. Emmi guarantees that members will not be dismissed or suffer any other disadvantage as a result of the orderly activities they carry out within the framework of workplace participation. In Switzerland, Emmi is not party to any collective bargaining agreements (CBAs).

• In the division Europe, companies in the following countries are unionised: Benelux, France, Italy, Austria
• In the division Americas, companies in the following countries are unionised: Brazil, Chile, Spain, Tunisia

The Emmi Whistleblowers Line also enables concerns and information to be reported anonymously and confidentially.

Measures and effectiveness check

Employee surveys are carried out in individual companies or units. These enable employees to play an active role and ask questions about the divisions’ abilities, motivation and working environment. The aim is to roll out these surveys across the Group from 2025.

Emmi measures progress by means of the following performance figures:

5.4 Respect for human rights

Respect for human rights relates primarily to the following material topic for Emmi:

• Responsible sourcing

Environmental aspects of the material topic of responsible sourcing are dealt with in section 5.1 Environmental matters, while human rights aspects in our own plants are dealt with in section 5.3 Employee issues.

As a food company, human rights can potentially be affected in Emmi’s upstream supply chain in the production of agricultural raw materials. Emmi must take human rights aspects into account both in its own plants (see section 5.3 Employee issues) and in its supply chain. Respect for human rights is understood comprehensively, but with a particular focus on the exclusion of child labour.

Risks

If Emmi fails to comply with human rights along its value chain, there is a risk of fines and damage to its reputation. The greatest challenge is respect for human rights in the sourcing of non-dairy raw materials. This is due to the complexity of the supply chain and the limited influence of Emmi as a buyer. On the other hand, comprehensively sustainable sourcing also offers opportunities for appropriately labelled products in selected markets.

Concept

Respect for human rights

Compliance with human rights is governed by the Modern Slavery Act Directive and the Emmi Code of Conduct. The internal and external auditors carry out regular audits at all Emmi companies.

To ensure sustainability in the supply chain, Emmi has introduced a corresponding management system. Its central elements are the Group-wide sourcing guidelines and the Emmi Supplier Code of Conduct. Superordinate information on these two frameworks can be found in section 5.1.4 Sustainable dairy – animal welfare in dairy production. In the area of human rights, the Supplier Code of Conduct contains requirements on forced labour, freedom of assembly, working conditions, and child labour, among others.

The requirements that apply to all suppliers are supplemented by a risk management process for human rights risks in the upstream supply chain. This consists of three sub-steps:

1. “supply chain mapping”: illustration of the immediate upstream suppliers
2. risk assessment using suitable criteria and available indicators (currently: “Children’s Rights and Business Atlas” as an indicator of human rights violations in general)
3. targeted research for suppliers from countries of origin with an increased risk

The Expert Committee, consisting of representatives from Procurement, Quality, Sustainability and Legal Services, decides on the exact procedure to follow in the event of well-founded suspicions of human rights violations.

Exclusion of child labour

In the reporting year, Emmi audited key suppliers with regard to their risk classification in accordance with the “Children’s Rights and Business Atlas”. It was not possible to substantiate the suspicion of human rights violations in general or the suspicion of child labour in particular. Details can be found in the report in Appendix 7.1.

Objectives

• all new suppliers sign the Emmi Supplier Code of Conduct
• by 2026: all active suppliers managed by Strategic Procurement will have accepted the Emmi Supplier Code of Conduct
• all suppliers from critical countries of origin are checked once a year with regard to compliance with the Emmi Supplier Code of Conduct

Emmi currently lacks the option of a uniform systemic segmentation of its suppliers that would guarantee uniform application of the Emmi Supplier Code of Conduct. The company is working on making this possible in the future.

Measures

Management system introduced to respect human rights

In the reporting year, Emmi introduced a management system for human rights risks.

Review of human rights aspects in coffee production

A coffee supplier to Emmi is suspected of being involved in human rights violations in a sourcing country. As a result, Emmi carried out an in-depth investigation of the situation during the year under review, even though Emmi does not source any coffee from the affected region and the relevant legal proceedings have not yet been concluded.

Emmi sought talks with the affected supplier, requested further information concerning the facts of the case and added more detailed rules to the Emmi Supplier Code. It transpired that the supplier has its own internal procurement code. The supplier’s code fulfils the relevant requirements laid down by the Emmi Supplier Code. The parties accordingly concluded an equivalence agreement. Emmi will monitor the ongoing legal proceedings and will also continue to carefully monitor the supplier’s conduct with regard to measures relating to sustainable procurement.

Emmi measures progress by means of the following performance figures:

Reporting critical concerns

In 2023, a total of 54 whistleblower reports were received on various topics. All reports were assessed by the ethics committee and important cases were thereafter processed by a case management team. If local processing was not possible, the division or the Group was involved. Appropriate action was taken where required.

Emmi Supplier Code of Conduct

See section 5.1.5 Responsible sourcing – environmental aspects in the sourcing of non-dairy raw materials.

5.5 Combatting corruption

Combating corruption is part of the key issue of Governance for Emmi.

Emmi operates globally – including in countries with significant corruption risks. Emmi counters the risks associated with corruption – such as legal disputes or damage to its reputation – with clear rules and controls.

Concept

At Emmi, the Employee Code of Conduct provides the framework for combatting corruption. It encourages employees to report misconduct with regard to compliance with laws, guidelines and values. The points of contact are managers or the HR departments. Reports of suspected violations of the law can be submitted via the Whistleblowers Line. The Code of Conduct also addresses the fact that sourcing decisions must be made exclusively on the basis of performance references. This is also set out in the terms of employment, which employees receive on taking up their position and which must be confirmed in writing. Corruption is governed by an anti-corruption directive.

The Emmi Supplier Code of Conduct expects suppliers to conduct their business without bribery, corruption, money laundering or any form of fraudulent behaviour.

The core of the fight against corruption is the internal control system. This provides for specific controls in relevant business processes. In addition to the internal control system, financial reporting and controlling at local and Group level are ways of combatting corruption. This is where deviations can be identified and tracked. The underlying basis consists of the correctness of the financial reporting, which is regularly confirmed by licensed auditing firms at local and Group level.

Other key functions for combatting and monitoring corruption include risk management, the legal department and quality management.

Risks

Emmi’s significant business activities are largely concentrated in countries with – according to Transparency International’s Corruption Perceptions Index – low levels of corruption: Switzerland (rank 7), the Netherlands (8), Germany (9), the United Kingdom (18), France (21), Austria (22), the United States (24), Chile (27), Spain (35) and Italy (41). There are higher corruption risks in Brazil, Mexico and Tunisia, where Emmi has subsidiaries.

A general risk assessment is carried out for all Group companies on an annual basis, taking into account the ranking of all companies in the corruption index.

Irrespective of the country, the sourcing process, the sales process, human resources and the procurement and disposal of property, plant and equipment are considered business processes susceptible to corruption.

Objectives

Emmi has a zero-tolerance policy towards bribery, including kickbacks. The granting or acceptance of unjustified benefits is strictly prohibited.

Measures

Focus on business processes at risk of corruption

Emmi focuses its anti-corruption measures on business processes at risk of corruption:

Specific checks are carried out in the sourcing process, including in the following divisions: supplier selection, master data recording and maintenance, the ordering process, goods receipt, incoming invoice monitoring and supplier payment.

Specific checks are carried out in the sales process, including in the following divisions: customer acquisition, master data recording and maintenance, the ordering process, outgoing goods checks, outgoing invoicing, credit management and credit notes.

Specific checks are carried out in Human Resources, including in the following divisions: entry and exit process, master data recording and maintenance, wage and salary payment process and expenses.

Specific checks are carried out in the area of property, plant and equipment, including in the procurement and disposal processes.

Effectiveness test

Emmi has its internal control system checked at regular intervals by Internal Audit to ensure that it is effective. Individual matters are reviewed by the internal and external auditors. Any compliance findings from Internal Audit are reported to management.

Emmi measures progress by means of the following performance figures:

In 2023, a total of 13 internal audits were carried out by Internal Audit (the previous year’s figure was 10). It is important to note that these figures relate exclusively to audits planned by Group companies, corporate functions and centralised functions such as for example processes at Emmi Schweiz AG (for instance procurement). Ad hoc mandates are not included in this figure since, due to their variable nature, they may differ significantly and, in some cases, may not have any link to corruption investigations.