Sustainability Report Berglandmilch egen. Mit Schärdinger lässt sich s leben.

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1 Sustainability Report 2014 Berglandmilch egen

2 Definition of sustainability Sustainable development is development that meets the needs of the present generation without compromising the ability of future generations to meet their own needs and choose their own way of life. (Definition of the World Commission on Environment and Development (WCED) Brundtland Commission an expert commission founded in 1983 by the United Nations)

3 Overview: Karpfham Rohrbach Wels Salzburg Berglandmilch s milk delivery areas Factory of Berglandmilch Headquarters Berglandmilch egen Schubertstr. 30 A-4600 Wels Phone number: +43-(0) office@berglandmilch.at Centralized Management Berglandmilch egen Schärdinger - Platz 1 A-3361 Aschbach-Markt Phone number: : +43-(0) office@berglandmilch.at Turnover 2012: 853 Mio. Turnover 2013: 900 Mio. Homepage:

4 Preface Berglandmilch egen is a registered cooperative owned by over 13,000 Austrian family farming operations. With a turnover of approx. 900 million, Berglandmilch is the largest dairy in Austria, and export its products to over 50 countries around the globe. The following are the most significant events in the history of Berglandmilch since its foundation: Berglandmilch is founded by the following dairy cooperatives Milchunion Alpenvorland Linzer Molkerei (Dairy of Linz) Milchverarbeitung (Dairy Processing) Desserta (now Steirermilch) Molkerei im Mostviertel (Dairy im Mostviertel), and Schärdinger Landmolkerei (Local dairy) The Bäuerliche Milchunion Kärnten (BMU) joins the cooperative The Rottaler Milchwerk joins the cooperative The 1. Vereinigten Waldviertler Molkereigenossenschaft (United Dairy Cooperative Waldviertler) and the Molkereigenossenschaft für Horn und Umgebung (Dairy Cooperative for Horn and Surroundings) join the cooperative The Landfrisch Molkerei (Landfrisch Dairy) joins the cooperative

5 Tirol Milch joins the cooperative Stainzer Milch joins the cooperative Since its foundation, one of the cooperative s core objectives is the continued development of this collectively organized company by strengthening rural farming structures and preserving this means of livelihood for future generations. In addition, the emphasis also lies on a healthy development of the company by focusing on quality, innovation, and by upgrading and expanding production facilities in an environmentally-friendly manner. Finally, working for the company is also intended to form the basis for our employees family income, even in the future. This development has always been driven by the idea of sustainability, although the actual term only entered current usage in the past few years. Issues such as reducing water and energy consumption, avoiding waste, increasing quality, non-genetically modified and organic products were already core concepts for us before they were subsumed under the term sustainability. The first edition of this report, which is to be updated regularly in future, is meant to provide an overview of the issue of sustainability at Berglandmilch.

6 The environment It is not possible to process milk without consuming water and energy, nor without producing waste and utilizing packaging materials. Berglandmilch strives to permanently reduce the consumption of these resources through continuous improvements to processes and technical procedures, as well as by utilizing new technologies in order to continuously work towards the goal of sustainable environmental management. Water: The supply of drinking water at Berglandmilch production sites is provided either via the site s own water supply or via municipal providers. Over the past few years, great efforts have been made to increase the sites own water supply capacities in order to ensure the supply of drinking water at reasonable prices over the long term. In addition, Berglandmilch also pushes for the reduction of water consumption. Hence, process water is used for processes that do not require the use of drinking water. Wastewater: All wastewater generated during milk processing is either purified at the site s own facilities or at municipal treatment plants. For example, at the Wels site, a procedure has been in operation since 2006 that uses sour whey for biogas production. This improves both the wastewater situation, as well as the long-term energy generation situation. We were awarded the Austrian Energy Globe for this innovative project.

7 Energy: Electricity and gas Electricity and natural gas are the primary sources of the energy required for the production, filling, and packaging processes. In addition, geothermal energy and electricity generated from biomass is also used. Electricity: Since May 2013, Berglandmilch uses green electricity generated exclusively from hydroelectric power stations. This contributes significantly to sustainable energy production. Over the past few years, various measures have been implemented to reduce energy consumption, which has led to significant improvements. On the one hand, this has been achieved through more efficient plant and production technologies, and on the other, via a wide range of processes from energy and heat recovery. Gas: The generation of the required heat energy during milk processing (pasteurization, high temperature treatments, process heat etc.) is done primarily with the use of natural gas. By making great efforts to improve our processes through the use of more modern technologies, natural gas consumption has been reduced significantly. Furthermore, at the Tirol Milch facility in Wörgl, a biomass heating plant was put into operation that utilizes wood a renewable resource from Austrian suppliers, thereby making a long-term contribution to environmentally-friendly power generation.

8 Energy Partnership in Wörgl A model project concerned with the areas of waste heat utilization and energy optimization is currently being realized in Wörgl together with the public utility company of Wörgl. As part of this partnership, Berglandmilch supplies heat from the biomass wood chip heating and waste heat generated during the manufacturing of milk products to the local heating network of the public utility company of Wörgl. From November 2014, Berglandmilch will also be a Klima Active partner Hier ein Auszug aus den Maßnahmen zur effizienteren Energienutzung der letzten Jahre: Heating and cooling of a new office building including a data center in Aschbach without requiring additional energy (Klima Aktiv Award 2010) energy saved in the form of electri city and gas: 1,137,000 kwh/a Improving the efficacy of the compressed air supply system in Aschbach (Klima Aktiv Award 2011) energy saved: 73,200 kwh/a Provision of process heat through the reutilization of heat energy saved: 1,100,000 kwh/a Heat exchanger for process water in Feldkirchen (near Mattighofen) (Klima Aktiv Award 2012) energy saved: 400,000 kwh/a Improving the efficacy of the steam boiler system in Klagenfurt (Klima Aktiv Award 2012) energy saved: 1,372,000 kwh/a Optimization of hot water production in Voitsberg (Klima Aktiv Award 2013) energy sa ved: 1,000,000 kwh/a (see report, pages 15-16) Air-conditioning of the administrative building in Wels (Klima Aktiv 2013) energy saved: 38,300 kwh/a (see report, pages 17-18)

9 Transportation/logistics In this area, we differentiate between the supply logistics for raw milk, i.e. transportation from the farm to the processing facility on the one hand, and the distribution logistics, i.e. transportation of finished products to retailers warehouses on the other. Due to the small-sized, rural agricultural network and the geographical situation in the mountainous, and in part, alpine areas, supply logistics in Austria involves comparatively high costs. We are constantly striving to optimize milk collection routes in order to improve our carbon footprint. With regard to supply logistics, our trade partners structures result in various challenges. Here, we differentiate between those who collect the products themselves, distribution to central warehouses, and micrologistics. The constantly increasing export ratio inevitably results in greater distances and various means of transportation (trucks, trains, ships Austria, EU, overseas). Again, great attention is paid to choosing the most environmentallyfriendly option available. In order to improve internal logistics, particularly for the reduction of transportation between the production facilities and various storage facilities, a site evaluation was carried out and used as the basis for deciding on the expansion of the Geinberg logistics hub.

10 Dairy Producers Sustainability means for us not only the efficient use of the available environmental resources. Sustainability should - entirely within the meaning of the co-operative principal - also ensure that succeeding generations of Bergland dairy producers can rely on their business as consumers of the raw material, milk, that they produce. This requires not only forwardlooking planning and the timely development of future markets, but also the assurance that sufficient account continues to be taken of the agricultural concerns within the business. This is guaranteed by the fact that the management board of Berglandmilch consists entirely of farmers. Within the co-operative structure of Berglandmilch have been set up an additional supervisory board as a controlling body [body exercising control] besides the agricultural advisory board and the youth advisory board and the delegates in the other members of the co-operative to serve as informative bodies, but also as links between the co-operative and the members. The continued achievement of an attractive fresh untreated milk price for our proprietors stands at the foreground of our efforts. Only if this factor remains guaranteed can our dairy farmers enable a sustainable contribution to be made to the conservation of the rural fabric and the cultural landscape in our producing districts. The price of milk essentially depends on the international environment. A great challenge at the present time is represented by the ending of the quota regulations from April Milk Producers 2011: Milk Producers 2012: Milk Producers 2013:

11 But also by their own business operations our producers are making a valuable contribution towards sustainability. By the exclusive use of 100% GM-free feedstuffs our producers, without exception, produce GM-free raw milk. In addition, over 10% of the raw milk delivered to Berglandmilch is BIO milk, which is produced in certificated organic farms. In addition to this, the Berglandmilch dairy farmers have pledged themselves to animal health standards which go beyond the strict requirements of Austrian legislation. Milk supplied 2011: to Milk supplied 2012: to Milk supplied 2013: to The optimal support of our milk producers lies close to our hearts. We take account of this by providing many services, such as timely quality information via the internet and SMS, general information via a supplier portal (milknet), providing advice to our farmers on questions of quality and the separate collection and processing of the milk produced by project suppliers (Bio, haymilk, alpine milk, goats milk etc).

12 Employees Employees are a significant factor in achieving our goals. Hence, our employees experience and constant further development are important to us. Berglandmilch continually invests in personnel development, job security, the health of its employees, as well as their continued training. Mutual respect on all levels and a positive working atmosphere are of great importance to us. Employee statistics: Employees at subsidiaries in 2012: approx. 1,550 Employees at subsidiaries in 2013: approx. 1,600 Careers with an apprenticeship As a leading Austrian dairy company, Berglandmilch offers apprentices excellent prospects for further career development within the group as dairy specialists. Some of our former apprentices have worked their way up to become plant managers at our various sites. In the apprenticeship year of 2013/2014, a total of 26 apprentices are employed in our company. As part of their training, our apprentices are given the opportunity to get to know multiple Berglandmilch facilities in order to gain insight into the manufacturing of a wide range of dairy products.

13 QUALITY: We produce safe, sustainable, high-quality, healthy, and tasty products for our customers and consumers. In doing so, our aim is to contribute to our consumers health and wellbeing. To achieve this goal, an integrated food safety and quality management system has been implemented, which begins with our owners the farmers and accompanies our products every step of the way through production up to the point of sale. This system is continuously inspected, evaluated, and improved where necessary. Our system even exceeds the legally required minimum standards. In addition, our customers perform audits on our facilities on a regular basis. However, in case of any customer complaints despite our best preventative efforts, we have clearly-defined systems in place to process them rapidly and in a professional manner. For this purpose, our very own Schärdinger customer hotline is available at all times at +43 (0) Alternatively, the Lattella hotline at +43 (0) is also available As the largest dairy in Austria, it is our goal to be at the forefront where quality is concerned. In order to achieve this, constant further development and improvement of our existing systems is necessary in order to satisfy our customers in the future.

14 CONSUMERS: Consumer information is very important to us. Hence, we provide our customers with the greatest possible amount of information on the product itself, but also provide additional information online and via our customer hotline. Most of our customers questions pertain to the issues of genetically modified products, organic products, lactose intolerance, and of course the origin of our products. Our products are manufactured from 100% non-genetically-modified milk. All products under the Schärdinger, Tirol Milch, Lattella, and Stainzer brands are guaranteed to be produced entirely from 100% Austrian milk.

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