3. About Emmi

Emmi is the dairy leader in Switzerland. The company’s roots date back to 1907, when its predecessor organisation was founded by dairy cooperatives in the Lucerne region. The original aim was to relieve dairy farmers in Central Switzerland of the burden of marketing their milk and to ensure that they received a reliable income. This community-oriented approach is still firmly anchored in Emmi today. With its focused strategy, innovative products and brand concepts established in Switzerland and beyond, such as Emmi Caffè Latte and Kaltbach cheese, Emmi has grown into an internationally operating, listed group (EMMN) with a strong local presence in 14 countries.

With more than 9,000 employees, around 70% of whom work outside Switzerland, the Emmi Group generated sales of CHF 4.2 billion in 2023.

3.1 Emmi’s business model

Emmi’s long-term economic success is based on a focus on the evolving needs of customers and consumers. Emmi, a Swiss-based company with a successful global position, is continuously developing its business.

Based on a responsible business model, a proven strategy and targeted acquisitions, the company has evolved from a regionally anchored organisation into an internationally successful group.

Emmi’s strategy focuses on five core areas and is aimed at sustainable, profitable growth.

The five core areas are:

• the dairy leader in Switzerland,
• a strong international market player,
• an innovative leader in selected niches,
• excellent in what we do, and
• a role model in sustainability.

Building on its established strengths, it primarily addresses relevant future issues and the changing needs of stakeholders.

Emmi’s business model encompasses the global trading and processing of milk, dairy products, plant-based alternative products and other foodstuffs in selected countries. Each company in the Emmi Group has its own individual value chain (see chart below).

In essence, Emmi procures milk – either directly from dairy farmers or via corresponding organisations – processes it into dairy products worldwide at 57 of its own production sites in 11 countries and distributes these products to customers such as retailers and food service in around 60 countries. In some cases, products are sold directly to consumers.

3.2 Key figures Emmi Group

3.3 Impact of business activities on the non-financial matters

Emmi’s approach to sustainability focuses on strategically relevant topics that are material in terms of impacts, risks and opportunities. These topics were determined using a double materiality analysis. The assessment perspectives used were business relevance (“financial materiality”) and impact materiality (“impact materiality”).

This report covers all material topics that are relevant to non-financial matters pursuant to Art. 964b CO.

3.3.1 Impact on environmental matters

The environmental impacts of Emmi’s operations are estimated to be high to very high in the following material areas:

• Reducing emissions
• Reducing waste (waste food waste and packaging)
• Reducing water consumption
• Sustainable dairy
• Responsible sourcing

Emmi’s business involves potential and effective positive and negative impacts on the environment. A large proportion of the environmental impacts and corresponding risks can be attributed to the upstream stages of the value chain – in particular, agricultural production.

Climate

Emmi generates greenhouse gas emissions through its use of fossil fuels in its own facilities and in logistics, as well as 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 upstream/downstream value chain that cannot be directly influenced (Scope 3). The majority of Scope 3 emissions result from milk production itself, mainly due to natural processes such as the formation of methane in the digestive system of cows. In addition, the cultivation of animal feed and the use of farmyard manure are also important sources of emissions (nitrous oxide).

Waste

Waste is generated along Emmi’s entire value chain. Relevant waste categories include food waste and packaging. The most significant waste from an environmental point of view is food waste. The focus is not only on the negative environmental impacts of its disposal, but also on the resources wasted in the production of the products – especially milk. From a reputational point of view, however, packaging waste poses the greatest risk for Emmi, as this issue receives a great deal of public and political attention.

Water

Emmi has potential and effective negative impacts on fresh water volumes and water quality in its own facilities and its upstream value chain. Water is used as an ingredient in our production processes and to ensure quality and hygiene. As a result, wastewater from Emmi’s plants may be contaminated with organic or chemical residues or may differ too much in temperature to the water into which it is discharged. Agriculture requires large quantities of water to cultivate animal feed and raise livestock, which, depending on the availability of water in the region in question, can be problematic for people and the environment. In intensive agricultural production, the use of fertilisers and the organic waste of livestock farming can negatively affect the quality of surface and groundwater, thus harming soil and aquatic organisms.

Animal welfare

Animal welfare in dairy production depends on factors such as exercise, feeding, space and lighting conditions. Unsuitable husbandry and feeding can have a negative impact on the physical and mental health of the animals. Emmi can influence animal welfare through its sourcing of milk – in particular through binding specifications and controls – and its choice of suppliers.

3.3.2 Impact on social issues

The potential and effective negative and positive impact of Emmi’s business activities on social issues is rated as high to very high in the following material topics:

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

Emmi’s business model creates and maintains jobs in rural areas by boosting demand for dairy products. Entire families in rural areas often depend on the dairy industry for their income, which poses risks to the economic livelihood of these families. Emmi can use guidelines to ensure fair incomes and working conditions. Emmi can promote the health and safety of consumers through high-quality products.

Working conditions in agriculture

Emmi’s business model entails responsibility for jobs in the production of animal feed, milk and other agricultural raw materials, such as cocoa, coffee and fruit. All these agricultural activities are associated with the risks of low pay and adverse effects on the physical health of workers. In addition, agriculture in rapidly developing countries poses the risk of forced and child labour. Through sourcing – in particular, specifications and controls – Emmi can influence the conditions under which work is carried out in the upstream stages of the value chain.

Consumer health

Food can influence consumers’ health either directly or indirectly. Direct health effects may be caused by high food quality, but also by spoilage or contaminants. Emmi’s products may have an impact on a balanced diet as part of an individual’s lifestyle, in particular due to their nutritional composition. Excessive consumption of sugar and salt in particular poses a risk to consumers in the context of Emmi’s products.

3.3.3 Impact on employee issues

The potential and effective positive and negative impact of Emmi’s business activities on employee issues is rated as high to very high in the following material topics:

• Developing employees
• Occupational health and safety

Employers have a significant impact on the job satisfaction, performance and economic situation of their employees. By providing basic vocational training and continuing education for its employees, Emmi can contribute to the qualifications and can secure the income of its workforce in their respective region or sector.

Emmi’s business activities may have an impact on the physical and mental health of its employees. Machines (risk of injury), noise pollution and extreme temperatures pose significant risks to employees’ physical health. Regardless of the type of workplace, work can lead to psychological stress, e.g. due to the human environment, the general conditions or the work to be performed.

3.3.4 Respect for human rights

As a food company, human rights can be affected in Emmi’s upstream value chain, in particular when it comes to the production of agricultural raw materials. The impact of Emmi’s business on human rights is rated as high to very high in the following key areas:

• Governance
• Responsible sourcing (human rights aspects)
• Impact on human rights
• Agriculture and supply chain

For Emmi, the supply chain – especially the agricultural supply chain – is of particular relevance when it comes to respecting human rights. Emmi can ensure that human rights are upheld by means of appropriate sourcing specifications.

3.3.5 Combatting corruption

Combatting corruption is part of the following material topic for Emmi:

• Governance

As Emmi operates in countries considered by Transparency International’s corruption index to be associated with a high risk of corruption, some of its business activities may be affected.

Corruption in the food industry can have serious consequences for the economy, society and individuals. Corruption can endanger the availability and safety of food and thus the health of consumers. Even products that are merely of inferior quality are damaging to the industry. Corruption can hinder fair competition and lead to unfair economic benefits for some companies.