Supply Chain & Sourcing Heading Beef Sourcing & Deforestation Action Plan Current Situation Forests serve as important reservoirs of carbon, and the clearance of primary forest cover increases greenhouse gas emissions. Forests also provide the habitat for half of all known plant and animal species, regulate local rainfall patterns and provide livelihoods to millions of people in rural communities. Cattle ranching is considered the leading driver of deforestation and contributes to the clearance of other natural ecosystems in Latin America. It is estimated that more than 60% of deforestation in Latin America is associated with the cattle industry and approximately 80% of deforestation throughout the Amazon stems from this industry, either directly or indirectly. As part of the Sustainable in a Generation Plan, Mars set an ambitious science-based Climate Action target to reduce our carbon footprint by 27% by 2025, while advancing respect for human rights and seeking to improve the working lives of 1 million people in our supply chains. To tackle our greenhouse gas emissions, we are working to improve how food is produced throughout our extended supply chain. We estimate that four-fifths of our full value chain carbon footprint comes from agricultural and land use change emissions associated with the ingredients we source to make products. Therefore, we are working to transform key supply chains by partnering with suppliers, farmers and others to stop deforestation and produce ingredients more efficiently for a lower carbon footprint. This Beef Action Plan articulates the approach Mars is taking to implement our Global Deforestation and Land Use Change Position in our beef supply chains. It builds on our previous commitment: “By the end of 2017, 100% of our Brazilian beef purchases will be from suppliers who are in compliance with the Brazil Forest Code and who are able to demonstrate that beef is not associated with primary forest clearance [in the Amazon Biome] and expands its scope to new areas, biomes and vegetation where cattle ranching drives deforestation and converts natural ecosystems. We completed an initial risk assessment of our global beef supply chains and determined that the origin countries with the highest risk of beef-driven deforestation are in Latin America. Our Ambition & Supply Chain Solutions By 2025, our aim is to stop deforestation and conversion of natural ecosystems in Mars supply chains, up to the direct cattle supplier for our beef ingredients in Latin America – a region with high conversion hot spots. The direct cattle supplier is the final ranch that directly supplies the slaughterhouses from which we source, while other ranches further upstream in the supply chain are indirect cattle suppliers. This goal applies to the material portion of the beef supply for Mars, which includes the beef ingredients we source for pet food. Our long-term ambition is to build transparent and verified beef ingredient supply chains that gives us confidence we are preserving forests and natural ecosystems. We expect all direct beef ingredient suppliers to implement the requirements from this action plan across their supply chains to ensure that direct cattle suppliers in their supply chains are compliant. These suppliers should begin with implementing the action plan in the Mars supply chain, and ultimately move toward implementing it across all their suppliers. Mars is working first to stop deforestation in our supply chain, then engage suppliers to implement these practices throughout their business, for all the ingredients they buy and sell. Mars is a member of the Brazilian Roundtable on Sustainable Livestock, a multi-stakeholder organization that promotes the sustainable development of the cattle value chain through continuous improvement, ethics and transparency, best agricultural practices and legal compliance. Mars is a signatory of the Statement of Support of the Cerrado Manifesto, which recognizes the need to prevent further conversion of the Cerrado Biome in Brazil. We work with these groups to advance our ambition. In Latin America, we source beef ingredients from Brazil, Argentina and Mexico. In Brazil, we are implementing this Action Plan by building on our previous work to stop deforestation associated with our beef supply chain in the Amazon Biome. In Argentina we will begin a deforestation risk assessment in 2020. In Mexico we will do so in 2021. Our Expectations To achieve our ambition by 2025, we expect our direct beef suppliers in Latin America to meet the following requirements: Ensure all beef ingredients are compliant with pertinent legislation, including but not limited to: All animals used to produce beef ingredients in Brazil must come from direct cattle suppliers that comply the Forest Code, are not in the Federal Environmental Agency list of embargoes, are not in the Ministry of Economy’s Forced Labor Dirty List and are not overlaying with legally protected areas (Conservation Units and Indigenous Territories). All animals used to produce beef ingredients in Argentina must come from direct cattle suppliers that comply with The Native Forest Law 26.331 and Agricultural Employment Law 26.727. All animals used to produce beef ingredients in Mexico must come from direct cattle suppliers that comply with the General Law of Ecological Balance and Environmental Protection, the Agrarian Law and the Federal Labor Law. Maintain a deforestation cutoff date of December 2017, or earlier if previous commitment exists. This includes forests (including high carbon stock forests), and other types of natural ecosystems (including savannahs and other areas of high conservation value) that can be monitored. Demonstrate that: There is respect for rights of affected communities to give or withhold their free, prior and informed consent for cattle ranching on land they own legally, communally or by custom. Disputes over land rights disputes are resolved through a balanced and transparent dispute resolution process, which is expected to be addressed by slaughterhouses’ grievance mechanisms. Engage in the Next Generation Supplier program, our focused approach to support our direct suppliers to uphold the Mars’ Supplier Code of Conduct. This sets our clear expectations in the areas of child labor, forced labor, discrimination, compensation and benefits, working hours, freedom of association and right to collectively bargaining, health and safety, the environment and ethical business practices. Our Actions In addition to what we expect from our direct beef suppliers, Mars is taking the following actions to address deforestation: Continuing to work with our direct beef suppliers and slaughterhouses toward improving the transparency across the full supply chain, including the indirect cattle suppliers, with whom there is not currently a tested solution or approach. We will stay informed of developments in the sector regarding strategies, potential agreements and viable traceability solutions to address indirect cattle suppliers, aiming to implement them when deemed feasible. Verifying direct cattle and beef suppliers’ and slaughterhouses’ compliance with this action plan through third-party verification of their purchase control system. Frequency of verification may be determined by suppliers’ risk of policy breaches. Communicating and collaborating with officials from government, industry and NGOs to remain informed on best practices and drive collective efforts to preserve forests. Specifically, we plan to support government efforts to implement and enforce forest and natural ecosystems protection policies. What’s Next We will refresh our direct supplier and slaughterhouse information annually and disclose our direct suppliers of beef ingredients, including the total volume procured and its origins. And, as our supply chain transparency improves over time, we will share further information accordingly. We will disclose progress on the implementation of this action plan on an annual basis. Where we believe no further progress is possible, we reserve rights of refusal and to end supplier relationships that do not meet our expectations in a defined timeframe. Finally, as we implement our commitment, we will review our approach. This review will hold us and our suppliers to account, as well as enables us to share lessons and continue to ensure our approach remains appropriate and effective. 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