Sustainability Report 2020 - HelloFresh

1 Sustainability Report2020 Sustainability Report 2020A letter from our CEO international and Co-Founder Thomas GrieselLooking back on 2020, it s impossible to talk about our Sustainability achievements without acknowledging what an extraordinary year it was. Our mission is to change the way people eat forever and the world has never needed new ways to enjoy fresh homemade meals more than it does today. In 2020, we offered our customers a safe, convenient way to source fresh ingredients when they needed it most. With the growth we experienced came an even bigger responsibility, which is why we ve continued to radically focus our efforts on progressing our Sustainability agenda over the last year. One of our most significant milestones (and one I m most proud of) was becoming the first global carbon-neutral meal kit company. By offset-ting 100% of our direct carbon emissions, we became our customers eco-friendly meal kit of choice.

2 Another key aspect of our Sustainability efforts in 2020 was strengthening our supply chain. Our short supply chain helps us significantly reduce carbon emissions as well as food waste. Last year, it also enabled us to react efficiently to the dynamic conditions of the global year s Report includes a promise to broaden our monitoring efforts across all key Sustainability indicators in an effort to reduce our overall environmental impact. We ve set ourselves two very ambitious goals: lowering our production facilities carbon emissions by 60% per euro of revenue and reducing food waste at our facilities by 50% per euro of revenue from year 2019 to 2022. These targets, in two of the most important and impactful areas of Sustainability , provide the necessary framework for significantly progressing our efforts and will enable us to set standards for measuring other areas of environmental impact.

3 Our Sustainability goals aren t just limited to our impact on the planet, though. In this Report , we also highlight how we ensure the welfare of all our stakeholders, including our workforce, supply chain network, customers and local communities. To us, this means creating safe and inclusive working conditions for all, engaging in ethical trading practices, ensuring data protection and more. While these are things to which we were already committed, 2020 made it more apparent than ever that it's obligatory to set exceptionally high standards for ourselves and to hold ourselves accountable to HelloFresh grows, so does our responsibility to care for the planet, our people and our community. We take this duty very seriously, and it informs everything we do as a company. Our team of Sustainability experts in our offices around the world ensures we deliver on this promise in a way that is transparent and, most importantly, measurable.

4 I m very happy to share the most recent results of these efforts in our Sustainability Report for Griesel 2 Sustainability Report 20203 About the Sustainability Report 2020 Our Sustainability Report describes HelloFresh s Sustainability strategy and related activities, including relevant key performance indicators. It includes the combined non-financial Report provided jointly for HelloFresh SE and the HelloFresh Group in accordance with Sec. 289b (1) and (3) and Sec. 315b (1) and (3) HGB (German Commercial Code) for the fiscal year 2020. HelloFresh operates under the following brands: HelloFresh , Green Chef, EveryPlate, Factor75 and Chefs Plate. In 2020, we provided over 600 million meals to customers in 14 operates an e-commerce membership model and distinct advantages over other e-commerce companies. However, our business model offers a high degree of flexibility and as a result our customers follow different usage patterns.

5 The HelloFresh supply chain also presents an efficient and more environmentally friendly alternative to the traditional food supply chain. Detailed information on HelloFresh s business model is provided in section of our Annual Report frameworkFor the 2020 Sustainability Report , HelloFresh is not following a specific reporting standard. This Report s framework has been established through several processes, including stakeholder engagement and materiality assessments. Throughout the Report , we also reference multiple United Nations Sustainable Development Goals, with an emphasis on Goals 12, 13 and 14. In this Report we have included goals for reducing our impact on the envi-ronment. Based on the material topics, we have defined the most crucial metrics reduction of carbon emissions and food waste expressed in revenue. As our business grows in 2021 and beyond, additional metrics may become relevant and tangible.

6 We will add those metrics to future Sustainability reports. Furthermore, we will integrate the reporting standards by the EU taxonomy when the legislation comes into force in 2022. This will further ensure unity and comparability across businessesMateriality assessment We are always looking for ways to improve our transparency and dialogue with stakeholders. That is why in this Report we have presented the results of a detailed materiality assessment of Sustainability topics for HelloFresh . We have analyzed and discussed various areas of our sus-tainability efforts and their potential impact, both positive or adverse, across our core stakeholder groups. Our materiality assessment was conducted by using mixed methods, including internal data, deepened insights, interviews and workshops. Sustainability topics are also an important part of our consumer research and customer care, as well as employee satisfaction surveys and conversations with investors.

7 We have asked our customers, employees, senior management, investors and suppliers to share their opinions on topics that are relevant to them and how HelloFresh can become a more sustainable company in those areas. Additionally, we have conducted two sessions of workshops to source feedback from food industry experts from ten countries across the world, including NGOs, academia, think-tanks, Sustainability consultancies and our suppliers. We met with over 30 Sustainability experts, who shared their highly targeted feedback and suggestions on our Sustainability progress and strategy. Based on these sessions, we have managed to identify key areas for improvement, including greenhouse gas and carbon emissions, sustainable packaging, food waste, customer education, and food quality and the materiality assessment we mapped several areas that serve as highlights for this Report .

8 The three thematic chapters of this Report reflect the weight of how relevant each topic is among analyzed stakeholder groups. Hence, the most significant among all stakeholder groups was environmental issues, such as the reduction of carbon emissions, food waste, packaging, responsible ingredient sourcing and animal welfare. These topics and our efforts are shown in the Our Planet chapter. The next significant area was related to social issues, which included our response to the COVID-19 pandemic-related adversities, human rights matters, labor practices, employee diversity, and inclusion. These topics and more are detailed in the Our People , topics relating to our various external stakeholders, such as multi-level support for our local communities, our suppliers' working conditions, and prevention of corruption and other related topics, are disclosed in the Our Community conducted materiality assessment of Sustainability issues reflects not only a fair view of the information requested by our stakeholders in this Report , but also helps us shape our vision of Sustainability for months and years Report 20204 Risk management, involvement of management board and legal complianceHelloFresh has a dedicated risk management function that identifies and assesses risks that could affect our business performance and Sustainability efforts.

9 Here, we define potential risks and the actions we take to mitigate and economic cycle risks We operate in a competitive environment consisting of both direct and indirect competitors. HelloFresh strives to mitigate this risk by continuous investment and improvement of our product offering, investment into data collection and software development, invest-ment into our state-of-the-art manufacturing site network, as well as leveraging scale benefits and strengthening customer relationships. Additionally, our Senior Management team constantly monitors the competitive landscape in order to address potentially adverse changes in an appropriate manner. In case of broader economic risks, such as a global recession, HelloFresh performs scenario planning to understand what impact certain economic shifts and related customer behavior would have on our business. We then determine how this impact could be countered.

10 A great benefit of the HelloFresh business model is the largely variable cost base, which can be quickly scaled up or down based on the business safety regulatory and compliance risksAs our core offering involves the sale of fresh food directly to our customers, we are subject to a number of laws, regulations and risks relating to health and safety, as well as the correct labeling of such risk is consumer harm or product recall due to contaminated food. We have established a number of processes and practices mitigat-ing such risks, including a data-driven supplier management procedure, as well as a standardized supplier onboarding process. We also test all incoming goods at our distribution centers and adhere to strict food safety and hygiene standards during the production and repacking process. Furthermore, we have clearly defined recall plans along with crisis management manuals and escalation processes.