SUSTAINABILITY REPORT 2018www.heinontukku.fi

(Summary)

Contents

Introduction 3

CEO's review 4

Responsibility management 5

Standards supporting responsibility efforts 6

Stakeholder dialogue 7

Responsible procurement 8

Taking care of our environment 9

Highlights of 2018 10

www.heinontukku.fi

@heinontukku

@heinontukku

3Sustainability Report 2018 I Heinon Tukku

Heinon Tukku Oy is part of the Heino Group and its larg-est subsidiary. Heinon Tukku has wholesale delivery units in Espoo and Kuopio, cash-and-carry units in Helsinki and Vantaa, and sales offices in Turku, Tampere and Oulu. Heinon Tukku subsidiary Kalavapriikki Oy, which special-ises in the manufacture of fish, meat, fruit and vegetable products, is located in Kuopio.

Turnover for the Heino Group in 2018 was EUR 263 mil-lion.

Heino's corporate responsibility programme was launched in the autumn of 2018. Under this programme, we have, among other things, updated our responsibility policies and supplier requirements and their related pro-cesses. We have also enhanced our internal and external communications and continue the ambitious work in reducing our environmental impacts. Our mission is also to be an attractive workplace.

One of the responsibility programme objectives is to begin responsibility reporting. This document is a sum-mary of the report in Finnish, which can be found on our website.

INTRODUCTION

Introduction

Personnel at Heino Group

Heinon Tukku OyAnton&Anton OyKalavapriikki OyTukkuHeino OyUniq Drinks Finland Oy

Personnel at Heino Group (31.12.2018)

2017 2018

Female/MaleTotal 518

Average age493

409

2311

45

30

177 39,4

39,5

341

68 %34 %

39,6

518

4Sustainability Report 2018 I Heinon Tukku

Responsibility through actions

CEO'S REVIEW

For Heinon Tukku, sustainable development, the continuous reduction of environmental impacts, safe products, and pro-moting the well-being of people are important and conscious choices. We want to offer our customers products and logistics services sustainably, putting our energies toward minimising emissions. Indeed, this is what is expected of us.

This is all influenced by our concerns regarding climate change as well as the environmental and societal changes caused by it.

Previously, Heino's responsibility work was primarily handled through certified quality, environmental, product safety and occupational health and safety management systems. With changes in the industry and increasing customer expectations, we felt that it was time to expand our responsibility programme so that it would apply more broadly to our entire supply chain.

Our new vision is to be at the forefront of sustainable develop-ment. In the themes we have set for our responsibility vision, we want to be a reliable partner for our customers and other stake-holders, deepen responsible procurement processes, promote care for our environment, and grow as a workplace. Certified management systems will still play a role in achieving these objectives.

We have taken practical steps in the implementation of our responsibility themes. More renewable energy, requirements for the responsibility of procurement chains, and sustainable packaging solutions. In 2018, Heinon Tukku faced a number of challenges and experienced success.

I am especially proud of our following achievements:

§ Procurement is now handled in-house after our co-opera-tion with Tuko Logistics. Traceability and transparency are now our key supply chain objectives.

§ In the autumn of 2018, we became a member of amfori BSCI (Business Social Compliance Initiative), which focuses especially on social issues and promoting working condi-tions in "risk" countries.

§ The goal of our product policies is to gradually shift to the use of, for example, certified palm oil and soy.

§ On the roofs of all four of our facilities, we installed nearly 5,000 solar panels, which produce as much as 12% of our total electricity need.

§ At the end of the year, we began using a biogas delivery vehicle, whose emissions are 85% lower than an equiva-lent diesel vehicle.

§ In its product delivery, Kalavapriikki switched to cor-rugated board, which replaced all the previously used styrofoam boxes. This reduced the plastic waste of our customers by over 20 tonnes.

§ We introduced an incentive programme for all employees as well as annual performance and development reviews.

Our responsibility strategy was drafted in 2018. You are now holding the responsibility report that describes it. In the future, our responsibility programme will focus on the development of all selected areas, as we want to be at the forefront of sustainable development!

Our new vision is to be at the forefront of sustainable

development.

Petteri Pelkonen CEO, Heinon Tukku

5Sustainability Report 2018 I Heinon Tukku

Responsibility management at Heino is based on shared Group values and principles. Our principles comprehend the following areas:

§ We are an honest, reliable and fair partner.

§ We are a reliable employer, which treats its employees fairly and equally and provides a safe working environment.

§ We assume responsibility for the environmental impacts of our operations.

§ When making procurement decisions, we favour the use of products and services that comply with the principles of sustainable development.

§ We operate openly and on a customer-specific basis, striving to achieve a dialogue that promotes co-operation.

Our principles are also linked with Finnish and interna-tional initiatives and principles, to which we are commit-ted:

§ amfori BSCI Code of Conduct § UN Sustainable Development Goals § Ethical principles of the grocery trade supply

chain (The Finnish Grocery Trade Associations) § Energy Efficiency Agreement for 2017–2025 § Materials Efficiency Commitment for 2019-2021

Responsibility management

Responsible procurement

"Our procurement chain is transparent and

our selection is sustainable"

Supplier requirementsProduct choice processes

Product policiesProduct development

Expertise

A good workplace

"We are an attractive workplace"

Supervisory workCommunication and co-operationContinuous developmentSeamless internal processes

Environment

“We are at the forefront of environmental work”

EmissionsFood waste, recycling

Transports, mobilityBiodiversity

Energy-efficient facilities

Reliable partner

"We want to be the most desirable partner"

Internal and external communi-cationsResponsibility reportingOperating modelsRisk managementCo-operation

Our responsibility programme

RESPONSIBILITY MANAGEMENT

6Sustainability Report 2018 I Heinon Tukku RESPONSIBILITY MANAGEMENT

Standards supporting responsibility efforts

The certified operating system is a key tool for the practical management of our various operations. It covers a wide range of economic, social and environmental responsibility areas in the procurement and supply chain.

Our management system is certified according to the following international standards:

§ ISO 14001 – Environmental Quality Management system (since 2004), ETJ+ Energy Efficiency System (since 2016)

§ ISO 22000 – Food Safety Management system (since 2007). FSSC 22000 in Kalavapriikki (since 2016).

§ ISO 9001 – Quality Management system (since 2016)

§ OHSAS 18001 – Health and Safety Management system standard (since 2016)

§ MSC and ASC – Marine Stewardship Council standards for Chain of Custody (since 2016)

7Sustainability Report 2018 I Heinon Tukku STAKEHOLDER DIALOGUE

Stakeholder dialogue

OwnersThe Heino Group is very much a family-run business, whose owners participate in its daily management. Third, fourth and fifth-generation family members take part in decision-making on both the Group and Hei-non Tukku boards of directors. The primary objective of a profitable business is to offer security to its customers and a good place to work for its employees. It is also to require the same things of its partners as it does for itself.

Other stakeholder co-operationWe also engage in a regular dialogue with authorities, financiers, industry partners, spe-cial interest organisations and local commu-nities. Our key stakeholders also include the media, NGOs and educational institutions.

Goods suppliers and service providersContinuity and seamless co-operation are im-portant to goods suppliers and service providers. The responsibility survey also revealed that goods suppliers and service providers expect reliable partnership, the use of good commercial practices, and ensuring profitability and continuity.

EmployeesIn the employee survey on responsibility, key expectations include good supervision, a safe and pleasant work environment, and ensuring product quality and safety. Feedback and discussion channels include employee surveys, work safety committees, department meetings, and development and performance reviews.

In a survey assessing well-being in the compa-ny, we earned a Quality of Working Life index of 66% at the beginning of 2019. In internal customer satisfaction survey measuring op-erations in different departments, the result was 3.52 (Good) on a scale of 1-5.

CustomersIn addition to hotels, restaurants and cafés, Heino also has customers in public adminis-tration foodservices and employee cafeterias, with both chain customers and individual customer relationships of varying sizes. Kalavapriikki also delivers products for retail trade. Matters discussed with customer are often related to the product selection, online store and deliveries, such as delivery accuracy and the packing of shipments. The responsible operating methods are discussed particularly with our large chain customers. We receive customer feedback in meetings as well as through pulse surveys and NPS surveys. We conduct a more extensive customer satisfac-tion survey once every two years. In the last survey (2017), our customers gave us a total grade of 4.5 (Good) on a scale of 1-6.

Key stakeholder expectations and dialogue

We engage in a close dialogue with our key stakeholders, customers, employees, goods suppliers and service providers, and owners. They are also given excellent opportunities to influence Heinon Tukku operations.

8Sustainability Report 2018 I Heinon Tukku

There are some 30,000 items in Heinon Tukku's main product selection. These products come from approximately 800 carefully selected Finnish and international partners. Heino's private label Aimo was designed to facilitate the daily routines of profes-sionals in restaurants and institutional kitchens. The Aimo line contains approxi-mately 600 products, including a wide range of fish and meat products, mayon-naises and sauces, frozen baked goods, cereal products and canned goods.

In 2018, over 50% of all procurements made came from Finland and approximately 40% from Europe. An estimated 8% of the total purchases made came from risk countries. Risk countries are those with a high risk to human rights violations involv-ing working conditions. Heino's biggest risk import countries are China, Thailand, Brazil, Greece, Ecuador and South Africa. In particular, fruit, beef and poultry, canned fish and fruit, and disposable kitchenware are procured from these countries.

Supply chain product safety is ensured in accordance with the principles of Food Safety Management System ISO 22000 and, at Kalavapriikki, FSSC 22000. The goods suppliers and products of our own brands and imports, along with the raw ingredients used, are carefully assessed before making any product decision. This assessment includes, for example, the background, origin, production processes and valid product safety certifica-tions of the product supplier. In addition to this, supplier audits are conducted whenever necessary. In the autumn of 2018, we became a member of amfori BSCI, whose purpose is to promote open and sustainable business. We also adopted the BSCI Code of Conduct.

We examined the current status of our suppliers and encouraged them to commit to the principles of amfori BSCI. In early 2019, nearly 250 of our suppliers have pledged their commitment to the BSCI Code of Conduct, which obligates the suppliers to monitor their own procurement chains and commit to the principles and values of amfori BSCI or an equivalent scheme. Other certifications and audits accepted by us are the Sedex/SME-TA report, SA 8000 certification and product group-specific certifications, such as Fair Trade, UTZ and Rainforest Alliance.

Our product policies

Fish and fishing products. Species rated red in the traffic light rating system of WWF Finland's Seafood Guide are not included in the product selection. We recommend fish with MSC and ASC certification.

Meat products. We recommend that the Five Freedoms for Animal Welfare are respect-ed. The use of antibiotics should also be appropriate. In all cases, every effort is made to find a Finnish alternative to foreign meat products.

Coffee, tea and cacao will be certified by 2022.

In our own products, we will only use certified palm oil by 2020 and certified soy by 2022. Our disposable kitchenware products will only be manufactured with sustainable materials by 2022.

Responsible procurement

RESPONSIBLE PROCUREMENT

9Sustainability Report 2018 I Heinon Tukku

Environmental work management is based on our environ-mental impacts and their management or mitigation. The most significant environmental impacts of Heinon Tukku operations come from energy consumption, transports and waste. These are controlled and managed by the cer-tified ISO 14001 environmental management system.

We have been monitoring our carbon footprint since 2012. Despite our company's constant growth, we have managed to reduce our greenhouse gases almost every year. We produced a total of 4,843 CO2 e tonnes in 2018. Our operations mostly produce Scope 2 indirect emissions (electricity and heating). In 2018, these accounted for approximately 60% of our total emissions.

Efforts are made to reduce the environmental footprint of transports by optimising our delivery equipment, its capacity utilisation and travel routes.

Energy efficiency measures have long been a key part of our environmental goals. Most of the energy consumed goes to heating and cooling. Heinon Tukku maintains four of its own facilities. All of them have at least three different temperature areas, which are kept below freez-ing, refrigerated or at normal room temperature. Energy is also used for production and warehouse machines and lighting. A total of 15,184 MWh of energy was consumed in 2018. The reason for a slight increase was a hot sum-mer and an increased need for electricity due to business growth.

In materials efficiency, our primary areas of focus are waste recycling and waste management. The total volume of waste and food waste rose slightly in 2018. However, the percentage of recycled waste fractions increased, totalling 78%, with a recovery rate of 100%.

An effort was made to reduce food waste by various preventive measures, such as anticipating demand and activating the sale of expiring products. Unsold but still

edible food is first directed for charitable purposes. Other types of food loss, such as fish bones at Kalavapriikki and fruits and vegetables at cash-and-carry stores are also sent out for use as animal feed. Food waste is a key indicator and it is closely monitored. In 2018, there was a slight in-crease in food waste due to the logistical challenges posed by transitioning from Tuko Logistics. The target for 2019 is to reduce loss by 10%.

Taking care of our environment

ENVIRONMENT

10Sustainability Report 2018 I Heinon Tukku

Highlights 2018

 SOLAR POWER SYSTEMS INSTALLED IN ALL FACILITIES

During 2017 and 2018, solar power systems were installed in cash-and-carry stores in Sörnäinen, Helsinki and Koivu-haka, Vantaa as well as the wholesale delivery units in Espoo and Kuopio. The annual output of the roughly 5,000 solar panels will meet approximately 12% of the total electricity need of our facilities. In 2018, we produced 745 MWh of emissions-free electricity. This is equivalent to the annual consumption of over 40 single-family homes.

 BIOGAS DELIVERY VEHICLE

At the end of 2018, we began using a biogas-powered deliv-ery vehicle. It is an Iveco Euro 6 vehicle, which is being used for customer deliveries in the Helsinki Metropolitan Area. Its biogas-powered engine is considerably quieter than an equivalent diesel engine and almost entirely emissions-free.

The approximately 50,000 kilometres driven each year will annually produce 35 CO2 tonnes of emissions less than the most commonly used diesel engines.

The vehicle has two different temperature compart-ments: refrigerated and freezer. The refrigerator unit is nearly silent and draws its power from the engine. The biogas used in the vehicle is refined from biowaste, which we also supply to Gasum.

 RESPONSIBLE SALMON

Tukkuheino Oy is one of the owners of Finnforel Oy, which is a commercial rainbow trout farmer, selling products under brand name Saimaan Tuore. The meat from rainbow trout raised by Finnforel in their recirculating aquacul-ture plant, which uses water from Lake Saimaa, is fresh, healthy, pure, environmentally- friendly and fully tracea-ble. Selling the fish in serving sizes reduces food loss and is also the ideal size in terms of the growth/feeding ratio.

 KALAVAPRIIKKI IN KUOPIO

At the beginning of the summer, Heinon Tukku Kuopio Oy changed its name to Kalavapriikki Oy. Kalavapriikki's ex-panding product selection and KalaOnni products, which are aimed at retail trade, are a response to the growing demand for fish products. Raw fish ingredients are used as precisely as possible, with side streams being fully re-covered. Finnish pisciculture is favoured in raw ingredient procurements. The materials efficiency rate is 100%. All side fractions produced from filleting fish are used.

 GROUND SOURCE HEAT WELLS

In the ground source heating wells used at our Kuopio facility, waste heat is directed into ground source heat wells, which heat the soil. This heat can then be used later. Ground source heat wells are used to heat and cool the facility as well as improve the efficiency of refrigera-tion equipment during the summer.

 STYROFOAM BOXES ARE BEING REPLACED BY FRESHBOXES

Kalavapriikki has replaced the styrofoam boxes it previ-ously used with corrugated board boxes. The fibre-based corrugated boxes are fully waterproof and insulated for cold and heat. In addition to this, the flat-pack boxes save on transports and space. This also makes recycling easier for the customers, because they no longer have to separately dispose of the styrofoam boxes. The new cor-rugated board boxes may be recycled along with paper-board and cardboard.

HIGHLIGHTS