Second-Party Opinion Download

Sustainalytics is of the opinion that the Arla Foods Sustainable Financing Framework is credible and impactful, and aligns with the Sustainability Bond Guidelines 2018 and Green Loan Principles 2018. This assessment is based on the following:

USE OF PROCEEDS

The eligible categories for the use of proceeds – (i) Energy Efficiency, (ii) Renewable Energy, (iii) Eco-efficient, Circular Economy Adapted Products, Production Technologies and Processes, (iv) Environmentally Sustainable Management of Living Natural Resources and Land Use, (v) Sustainable Water and Wastewater Management, (vi) Green Buildings, (vii) Socioeconomic Advancement and Empowerment, and (viii) Access to Low-Cost, High-Nutrition Products – are aligned with those recognized by both the Green Bond Principles and Social Bond Principles. Sustainalytics considers the eligible projects will contribute to the decarbonization of dairy industry and promote more sustainable dairy farming practices, while advancing the UN Sustainable Development Goals, particularly Goal 2, 6, 7, 8, 9 and 12.

PROJECT EVALUATION/SELECTION

Arla Foods has established a Sustainable Financing Committee (“Committee”), comprised of members from Treasury team and the VP from the Corporate Social Responsibility team to manage the project evaluation and selection process. Investment Office is responsible for the initial project screening. Then, the Committee will approve the eligible projects complying with the eligibility criteria. As a final step, the Investment Committee, composed of the CEO, the CFO and the COO in Arla Foods, will approve the selected projects. Sustainalytics considers this process as aligned with best market practice.

MANAGEMENT OF PROCEEDS

Arla Foods will track the allocation of proceeds through a Sustainable Financing Register (“Register”). Pending full allocation, the unallocated proceeds will be credited to a bank account in conformity with the Company’s liquidity management and cash management policy. This is in line with market practice

REPORTING

Annual reporting will be available on the Arla Foods’ website until full allocation. Allocation reporting will include the overview of allocated, dispersed and unallocated proceeds, a list of eligible projects, descriptions and case studies of selected projects, and the share of financing and refinancing. Relevant impact metrics will also be reported which includes reduction in energy use, annual GHG emissions reduced/avoided and annual renewable energy generation. This is in line with market practice.