Corporate Social Responsibility Report

2015

Over the last few years, Vífilfell has been crafting its vision, which consists of becoming “The reference in the Icelandic Business Community for its Corporate Policy, Business Administration and Talent Management”. Our Strategy and Stretch Goals 2020 will only be delivered if a sequence of structured actions based on a priority framework, which we call Strategic Pillars, are implemented in full and in due time.

We understand that an organisation exists and operates in a certain context. In an effort to exceed our stakeholders’ expectations, we have, in parallel, reformed our corporate reputation strategy. We have mapped out the different needs of our stakeholders, being mindful that corporate reputation is influenced by our brands and categories, our people – including both staff, customers and partners, our industry, our social and environmental responsibility and our community, to build a thorough set of key initiatives that will ultimately be perceived the way we referred as our vision.

This Corporate Social Responsibility (CSR) Report is a component of our overall Corporate Reputation Strategy, included in the lever Our Social and Environmental Responsibility. The reason for this report is that we have now in place a context and framework that clearly demand for it to become publicly available. While CSR has long been a factor in our work, it has been missing a strategic foundation and a comprehensive strategy to advertise it. We hope for continued success in openly fulfilling our role as an agent of positive change in the community at large.

At its core, Vífilfell understands that only organisations that fiercely defend human rights, enforce the rules of fair labour, protect the environment, and help fight corruption, will have continued global success in future.

As such, we are already a step ahead of Global Compact principles. Recent studies about future consumption patterns consistently reinforce the concept of responsible consumerism, because we as consumers are more aware of the consequences of our consumption habits on society, public health and the environment. These studies also point to an ongoing revolution in the way consumers connect to global brands. Consumers who share our principles will connect more with our community, they will bargain with those offering services and products, and will collaborate in initiatives to improve the community.

Our Strategic Pillars, built to deliver the Vision, embed specific key lines of action that are meant to exceed the expectations of our Stakeholders, in particular Consumers and Customers, that we have been anticipating due to studying in detail the future trends in consumer behaviour.

This CSR Report marks the beginning of a commitment to communicate yearly what we have been doing in the areas of social and environmental responsibility under the Corporate Reputation Strategy. We have chosen to communicate the CSR Report according to the recommendation of Global Compact, something other Coca-Cola bottlers have been doing for quite some time. The next natural step is to apply to be part of the Global Compact worldwide list of companies and start the process of continuous improvement as per the commitment that we have embraced already.

Carlos Cruz

Letter from our CEO

2

“Vífilfell was founded in the turmoil of the World War II

in 1942 by Björn Ólafsson, Icelandic Minister of Finance

and Business Affairs.”

Vífilfell-Reykjavík

Vífilfell was founded in the turmoil of the World War II in 1942 by Björn Ólafsson, Icelandic Minister of Finance and Business Affairs. It operated in a small building in the west part of a scarcely industrialised Reykjavik. A second generation took over the responsibilities in 1970, moving the plant to Stuðlaháls 1 in 1973, and eventually to our current location in 1979.

Since its foundation, Vífilfell had been a private limited company until it was sold to Coca-Cola Nordic Beverages (CCNB) in 1999. In 2001, CCNB sold the company to Icelandic investors and a merger with Sól Víking followed suit in the same year.The merger increased Vífilfell’s product scope significantly, adding the beer and the juice of Sól Víking’s portfolio. Vífílfell further reinforced its portfolio, beginning to import and distribute wines and spirits in 2005, and coffee, in 2010,

thereby becoming a full service beverage company in the HORECA market.

In 2011 Vífilfell’s shareholders sold the company to Cobega, S.A., engaged in bottling, producing, and distributing Coca-Cola, which was founded in 1951 and based in Barcelona, Spain.Reorganisation of the company started immediately. Of particular note was the 2012 investment in a waste water treatment plant, based on the principles of sustainability and respect for the community and the environment.

In 2015, Cobega sold Vífilfell to Coca-Cola Iberian Partners in an effort to integrate with the proposed Coca-Cola European Partners, the largest independent Coca-Cola bottler in the world, which will mark a new ambitious era for this outstanding company.

3

Community

Obesity has increased worldwide and the community has been looking for an explanation for why it is happening. There is no single ingredient or food that is to blame for the obesity in our community. At the same time, we understand all calories count when it comes to weight management, including those from our drinks. We recognise that obesity is a serious and complex health problem, which is why we are firmly committed to playing our part to address this issue. Reducing the sugar and calories in Coca-Cola drinks, and providing nutritional information on our packaging, and offering smaller beverage containers for portion control, are just some of the ways we’re encouraging people to lead active, healthy lifestyles. We offer a broad portfolio of brands and categories in various package formats

which ensures that Icelandic consumers always have choice for beverages fitting different consumer occasions and needs.

Advertising to children is illegal in Iceland and Vífilfell is in full compliance with the law. On occasions where we sponsor events where children are in the majority, and when asked to provide sugary soft drinks for the event, we offer to provide water or juice options instead.We want our customers to know that our products and our production meet their high standards for quality as well as those of TCCC. To ensure this we have gained external quality audits as follows: ISO 9001, ISO 14001, ISO 18001, ISO 22000 as well as following KORE standards of TCCC and setting goals towards the future in collaboration with TCCC.

“Reducing the sugar and calories

in Coca-Cola drinks, and providing

nutritional information on our

packaging, and offering smaller

beverage containers for portion

control, are just some of the ways

we’re encouraging people to lead

active, healthy lifestyles.”

4

Participating in the society to promote well-being, solidarity and culture

At Vífilfell we have created a strategy that allows us to be close to the Icelandic community, while maintaining the values of The Coca-Cola Company. Our common DNA means that our main objectives for generating and bringing value to society coincide, thus we act responsibly and constructively in the environments in which we operate.

At Vífilfell we are firmly committed to creating sustainable economic value. In other words, at Vífilfell we go beyond financial benefit: we develop the social and environmental

dimensions related to our activity. We are aware of the power of our business’ territorial and social network, and for that reason we place emphasis on promoting the well-being and quality of life of all the stakeholders on whom we may impact. Social responsibility is a basic pillar of our business strategy. In line with this trajectory we continue to invest in supporting sports and local cultures, in addition to making a strong commitment to protecting the environment and the most disadvantaged social groups.

“At Vífilfell we are firmly committed to creating

sustainable economic value.”

Commitment to the local community

At Vífilfell we combine the size and locations of our company with our local-level commitment. Therefore, one of our strengths as an organi-zation is the capacity to enter and adapt to different local realities.The best example of our dedication to the local community is our long-term commitment to

supporting sport, social, culture, etc., activities, in which we have collaborated over the last year. Each one of these activities responds to a common objective, which is to bring value to our community and citizens, and to strengthen the local identity.

5

“Vífilfell is one of the main sponsors

of the Icelandic football association

(KSÍ) and supports all national

teams, both men’s and women’s.“

Supporting sports in order to contribute to society’s well-being

Vífilfell sponsors 8 out of 12 first division Icelandic football teams, as well as a large number of the second division teams and other football league competitions at all age groups. Vífilfell is one of the main sponsors of the Icelandic football association (KSÍ) and supports all national teams, both men’s and women’s.In addition, the company collaborates with 8 out of 10 first division teams in handball and supports the annual handball cup competition, called the Coca-Cola cup, as well as supporting The Icelandic Handball Federation (HSÍ) including support for all national teams, both men’s and women’s.We are proud sponsors of the Icelandic basketball through supporting The Icelandic Basketball Federation (KKÍ) including support for all national teams, both men’s and women’s and by founding

the annual Powerade national basketball cup completion. In basketball we are supporting 8 out of 10 first division teams as well as number of second division teams.In addition we support golf, cycling and running competitions either through brand activations or in cooperation with our customers. Among these events are the most important marathons and half-marathons organized in Iceland and tens of local events which encourage participation in sports for people of all ages.As part of our strategy to support diversity and give all people equal chance in life we are partners of The Olympic and Sports Association of Handicapped.We also support facilities such as Hlíðarfjall skiing resort in Akureyri where our brewery is located as well as two of the biggest ice-skating and ice-hockey halls.

6

Investing in the future by promoting culture

In the field of culture, we have been proactive collaborators in the country’s main music festivals. Among them, Secret Solstice, Iceland Airwaves and many smaller events and activities.

We support new talent and we seek to offer opportunities to new groups and generate traffic to nightlife venues and concert halls through our customer and brand activities.

“We support new talent and we seek

to offer opportunities to new groups

and generate traffic to nightlife

venues and concert halls through our

customer and brand activities.”

7

“The Icelandic Red Cross uses our

support to build wells for fresh and

clean water with focus on helping

young girls to get an education.”

Bringing social value

Supporting the Icelandic Red Cross to give water to Africa. Vífilfell has been a strategic partner of the Icelandic Red Cross for many years. Through a 3-year contract for the years 2014-2016 we actively collaborated in a project linked to our water brand Toppur where we contribute 3L of clean water to Africa for each 1L of water sold. The Icelandic Red Cross uses our support to build wells for fresh and clean water with focus on helping young girls to get an education. Instead of spending

most of their time in walking long distances every day to pick up water for their families this initiative gives them time to attend school and get education.The purpose of this activity has been to demonstrate our commitment to care for the environment and helping people in need, and to educate Icelandic consumers on the importance of clean water, which is a resource not everyone has ready access to, and should not be taken for granted.

Vífilfell demonstrated its social commitment during 2015 with a wide range of activities directed towards helping those who are most in need. The company has donated beverages to the charitable organisations Samhjálp and Mæðrastyrksnefnd, as well as the merchandising donations made by the different brands to all kinds of social entities.

8

United Nations Global Compact Human Rights Principles

Principle 1 - Businesses should support and respect the

protection of internationally proclaimed human rights; and

Principle 2 - make sure they are not complicit in human

rights abuses.

Assessment, Policy and goals

At Vífilfell, we are keenly aware of our responsibility towards supporting and protecting human rights, how we treat our employees, our expectations of our suppliers and how we make a sustainable impact in the communities where we live and work.

We commit ourselves to protect the health and safety of our employees, contractors, guests, and neighbours. To demonstrate our commitment to the safety and security of our people we continue to maintain our ISO 18001 certification to ensure the continual safety of our employees, visitors, and contractors.We are working towards further supporting and protecting human rights with our human resource strategy which we recently updated with the help of Attentus Consulting. We recruited a new CHRO to help us implement our updated HR strategy.

In regards to gender equality we have a gender equality policy, our board of directors complies with local laws and is 40% female, we have an equal pay policy in effect, and approximately 35% of our employees are women – a number we aim to increase. We care about anti- discrimination in Vífilfell. We have taken steps to ensure that when discrimination incidents occur, our employees know where to report it, and our anti-discrimination process starts immediately. With our updated HR strategy we have started a process to prevent discrimination in the workplace. We want anyone to be able to work at Vífilfell regardless of their gender,

gender identity, sexual orientation, religious affiliation, citizenship status, race, or class.We expect our suppliers to support and protect human rights. Because we are a bottler of Coca- Cola System we choose our suppliers for TCCC products according to TCCC Supplier Guiding Principles (SGP) and the supplier’s demonstration of compliance to the SGP ensures that they are able to meet the request and satisfaction of TCCC. The SGP requires suppliers to comply with all applicable local and national laws, rules, regulations and requirements in the following areas; child labour, forced labour, abuse of labour, freedom of association and collective bargaining, discrimination, wages and benefits, work hours and overtime, health and safety, environment and be able to demonstrate their compliance with the SGP.Our suppliers for imported goods, for other than TCCC products, do not have to agree to the same SGP on our behalf as suppliers for TCCC products. We are going to improve on that by asking new suppliers questions about their sustainability and select suppliers whose environmental, social and ethical business practices align with ours. To help us do this we have added the SGP to our Operations Manual to use as guidelines in future dealings with new suppliers which are not validated by TCCC.

We will maintain our focus on protecting human rights as part of our strategic values which all our employees undertake in their daily work.

9

United Nations Global Compact Labour Standards Principles

Principle 3: Businesses should uphold the freedom of

association and the effective recognition of the right to

collective bargaining:

Principle 4: the elimination of all forms of forced and

compulsory labour;

Principle 5: the effective abolition of child labour; and

Principle 6: the elimination of discrimination in respect of

employment and occupation.

Assessment, policy and goals

At Vífilfell we recognize our duty to uphold labour standards – including freedom of association, the right to collective bargaining, the elimination of all forms of forced, compulsory, and child labour, and the elimination of discrimination.This is a part of our promise to comply with local labour laws applicable to our relationship with our employees, our SGP from TCCC that we are going to apply to all of our future suppliers and our updated HR strategy.

We promote high labour standards among our employees; their skills, ability and knowledge are the core of our business. We make it our goal to have the right people, with the right skill set, in the right places, to drive our future growth.At Vífilfell, we know that in order to foster a culture that is diverse, inclusive, open and equitable for the people, our leaders have a responsibility to implement and sustain a culture that works for people with different backgrounds, needs and expectations.To help our employees develop the necessary skills and capabilities to qualify for their jobs we train them when they start working with us, provide a mentoring program to help them grow in their jobs and offer continual education for employees when needed. In the past we have sponsored employee education, for example MBA degrees, we also encourage our staff to finish any education they may have started and try to make it possible for them to do so while working. In particular, we have encouraged industrially trained employees to finish their journeyman qualifications. One part of our HR strategy is to remind people of their rights within their unions, where they can get funding for seminars and education, and encourage them to use those rights. Another change with our updated HR strategy is to cross-train our employees in each other jobs so that

they can switch and have more diverse tasks and provides redundancy in case of illness or vacations. Lastly we have invested the last two years analysing and implementing education and training within Vífilfell and are in the way to have a program to monitor their impact and performance so that we can provide training and seminars as needed.We want our employees and their families to have the time, opportunity, tools and resources to focus on the things that matter the most in their lives, we provide maternity leave and all other applicable types of leave in compliance with local laws and we put great emphasis on our employees to use their whole leave during the summer. According to Icelandic laws each parent of a newborn or newly adopted child receives three months parental leave each and three months that they share between them, totalling nine months’ parental leave. Summer leave is required by law to be at least 24 days and up to 30 days per employee. We encourage our employees’ use all of their annual leave.

As was explained in the previous chapter about Human Rights, we hold ourselves accountable to high standards and we demand the same for most of our suppliers through TCCC SGP. Until now, however, our suppliers who provide us with goods other than those used in relation with TCCC products have not been expected to fulfil the SGP demands. We are changing this and have already added the SGP file to our Operation Manual to use when choosing future suppliers. Our merchandise suppliers are all pre-approved by TCCC. Local suppliers have to comply with all local laws and therefore uphold satisfactory labour standards.We will continue to promote growth and stability for the company and in the community. We are dedicated to making changes and reviewing our suppliers that are not involved with TCCC products.

10

United Nations Global Compact Environment Principles

Principle 7: Businesses should support a precautionary

approach to environmental challenges;

Principle 8: undertake initiatives to promote greater

environmental responsibility; and Principle 9: encourage

the development and diffusion of environmentally friendly

technologies.

Assessment, policy and goals

At Vífilfell, our environmental policy is a priority in our strategy and integrated in the fundamental values in our business culture. We comply with the legal applicable demands to our business as well as those that we additionally subscribe to. Our environmental policy addresses our responsibility towards any effect our operations may have on the environment. We have every intention to improve our practices so that it results in a more sustainable practices. We revaluate our environmental policy annually to further assess our performance over the year. We use our policy to help us identify, document, and evaluate the environmental effect that we cause on the environment, fulfilling requirements made to us by affiliates and the government. We sustain our certifications and continuously work towards minimizing our impact on the environment, taking actions that reduce pollution and waste disposal, actions that promote recycling, actions that increase the use of natural renewable energy manufactured locally in Iceland, and actions that increase the use of sustainable energy in running our automobiles.At Vífilfell, we put efforts into our environmental stewardship. We have ISO 14001 certification and the KORE standard from TCCC. KORE is the framework of governance and management system around which the Coca-Cola system enables sustainable performance, meets customer and consumer demands, drives continuous improvement, manages risk and enhances the company’s reputation.We believe that by involving our employees and encouraging them to respect and care for

the environment we will yield the best results in our sustainability work, we encourage our employees to behave responsibly towards the environment and to enjoy the benefit of healthy outdoor activities.We proactively manage energy use in our locations. We use renewable energy for all of our manufacturing facilities and our office facilities, and we are trying to find ways to further lower our carbon footprint. We recently signed an agreement with City of Reykjavík and Festa – Icelandic Centre for Corporate Social Responsibility. The agreement is a commitment to reduce the release of greenhouse gases, reduce waste, and report the process in a measurable fashion. The agreement was made in preparation of the UN Climate Conference (COP21), held in Paris in December 2015.We are committed to ensuring proper disposal of waste, and have conducted training for all employees on handling and managing waste. Through an ongoing effort with Gámaþjónustan, our waste removal vendor, we are increasing sorting of waste in our offices, and avoiding landfill waste. Currently, we recycle 85% of our waste and want to raise that number.We recognize the increasing importance of water scarcity and availability. We are focusing on areas where we can save water, primarily in cleaning process, cooling and rinsing. In November 2014, we started actively reporting our water usage from our daily operations to specialists from Denkstatt to receive suggestions on how we can lower our water usage.

11

We are one of very few manufacturers in Iceland that treats their water before it goes into the sewage system to minimize our impact on marine ecosystem. This is done by sending our water through Hreinsa, our waste water treatment plant that we invested in for 450 million ISK in the year of 2012We expect our suppliers that have agreed to comply with TCCC SGP to have implemented an environmental strategy. The SGP expects them to comply with all applicable local and international environmental laws. From our

remaining suppliers we have not requested compliance with international laws regarding environmental strategy, but we do expect all of our suppliers to comply with their local laws. Some of our local suppliers have the Nordic Ecolabel certification.All of our products come in fully recyclable packaging and we encourage our customers to recycle. The percentage of recycled packaging from 2012 through 2014 is as follows:

%AluminumPETGlass

RRCPMUWUREURTIR

201290%87%81%

YTD85%

34,1

0,99-

201394%87%86%

201686%2,93,8

0,952,5

201489%88%85%

201787%2,63,6

0,922,3

201888%2,53,4

0,862

201989%2,43

0,771,8

202090%2,32,7

0,701,5

Numbers from Endurvinnslan ehf. (Recycling Ltd.).

These numbers are based on all sold/imported recyclable packaging in Iceland vs. returned packaging to Endurvinnslan.Unfortunately, there is no growth trend in the numbers towards recycling. In order to encourage growth, we will be collaborating with Endurvinnslan, of whose board of Vífilfell is a member. An action plan is forthcoming.At the end of November 2015 the TCCC

Our most challenging goal is EUR because our machinery has not been updated to the most advanced technology, our production cycles are small and our high cleaning standards require a lot of energy. We are working towards updating our machines and have installed two new Tetra Pak production lines at the moment, we also have plans to install a new post mix machine by Q1 2016

Quality Manager reviewed and agreed with us our production and our environmental and quality goals for the upcoming years. Below are our year to date (YTD) numbers and our goals for the next five years in the following areas; recycle ratio (RR), consumer complaints per million units (CPMU), water usage ratio (WUR), energy usage ratio (EUR) and total incident ratio (TIR).

At Vífilfell we want to continue towards a more sustainable operation and a smaller environmental footprint. By joining the United Nations Global Compact and applying their 10 principles to our operations we are reconfirming our journey towards our more sustainable future.

12

United Nations Global Compact Anti Corruption Principle

Principle 10: Businesses should work against corruption in

all its forms, including extortion and bribery.

Assessment, policy and goals

Vífilfell recognizes the need to work against corruption in all its forms and complies with all local and applicable anti-corruption laws. Extortion and bribery are not common in Iceland and according to Transparency International, Iceland is one of the least corrupted countries in the world. Despite this, we recognize that due to its small population, nepotism is pervasive, and we actively work to prevent it from occurring within our organisation. We advertise every relevant job that is available and after careful

evaluation hire the person best-equipped for the job. When outsourcing large projects, such as point-of-sales material for our summer campaigns or similar projects, we ask local companies that fit our criteria and requirements for an offer, a minimum of two every time, then pick the one that offers the best value for us. We are committed to maintaining the highest ethical standards in all of our operations and we believe that it is not only our duty but also good business.

13

Vífilfell - Akureyri

In this report we decided to discuss Vífilfell Akureyri and Vífilfell Reykjavík separately because their operations are different. Vífilfell Akureyri manufactures no TCCC products but it brews all of the beer that Vífilfell manufactures. Another factor is the difference in certifications; while Vífilfell Reykjavík has undergone several ISO standards certifications, Vífilfell Akureyri has yet to do so, therefore we felt it would give a more accurate assessment towards United Nations Global Compact principles to evaluate them separately. It should be kept in mind that both Vífilfell Akureyri and Reykjavík have to comply with the same local laws, the same quality policy, HR policy, environmental policy, occupational safety and health policy and food safety policy. Assessment of those factors in regards to the UNGC principles has been presented in the Vífilfell Reykjavík chapter, in this chapter we will assess the parts of Vífilfell Akureyri’s production that differ from Vífilfell Reykjavík.

Sól Viking, like many of its Icelandic predecessors has a story of mergers and acquisitions starting in 1939 when Aage R. Schioth founded Siglufjörður Chemical Production, which operated throughout the World War II in Siglufjörður and moved to Akureyri in 1945 where it was renamed Akureyri Chemical Production. It was known for making many different and interesting products such as vinegar acid, salt, and spices, but it was their soda manufacturing which brought them acclaim.

Through a change of ownership in 1958, it was decided to dedicate all of its output into soda manufacturing. In 1962, the company was renamed Sana, and manufactured several types of soda. The first brewery equipment was bought in 1966, expanding its production to Thule-Export beer, which was only exported, due to alcoholic prohibition in Iceland. Beer would not become legal for consumption in Iceland for another twenty-three years.

In 1970 production of Thule ceased, but with Sana’s merger to Sanitas in 1978, beer production began anew.

In 1989, the prohibition on beer was finally lifted in Iceland, and in 1994 Sanitas became Víking brewery, concentrating its manufacturing on quality beers. In 1997 Víking merged with Sól, a company known for producing juices.

In 2001 Vífilfell and Sól-Víking merged, gathering expertise and assorted products, gaining a new domain in the market of producing and distribution of beverages.

Currently, Vífilfell Akureyri concentrates on brewing quality beers, many of whom have won various awards in international competitions throughout the years.

At Vífilfell Akureyri, we manufacture our Víking beer and Thule, as well as other beers brewed under license. Approximately 30 people work at the manufacturing facilities and staff turnover is relatively low.

We care about drinking responsibly and label all of our alcohol products, both those that we manufacture in Akureyri and those that we import, with a warning to:

• do not drink and drive• do not drink alcohol while pregnant• do drink in moderation

Enjoying alcohol responsibly is part of socially accepted behaviour, but we recognize that alcohol can cause problems for people who have a problem controlling their consumption. We want to work towards enlightening people about the dangers of alcohol and guiding them to be responsible in their alcohol consumption.

Enjoying alcohol responsibly is part of socially accepted

behaviour, but we recognize that alcohol can cause

problems for people who have a problem controlling

their consumption.

14

United Nations Global Compact Human Rights Principles

Principle 1 - Businesses should support and respect the

protection of internationally proclaimed human rights; and

Principle 2 - make sure they are not complicit in human

rights abuses.

Assessment, policy and goals

We recognize our duty to support and protect human rights. We comply with all local and international laws to ensure that we support and protect human rights in our organization. This is reflected in how we treat our employees, our expectations of our suppliers and how we make a sustainable impact in the communities where we live and work.

We are committed to protect and ensure the safety of our employees, contractors, guests and neighbours. To do that we have occupational health and safety protocol that everyone has to follow within our facilities.We are working towards further supporting and protecting human rights with our HR strategy that has recently been re-evaluated,

for further reading on our updated HR strategy please see Vífilfell-Reykjavík’s Human Rights chapter.

We use the same suppliers as Vífilfell-Reykjavík when possible and they are expected to follow TCCC SGP. Our suppliers that differ from Vífilfell-Reykjavík supply us with ingredients for our brewery. We expect those suppliers to comply with local and international laws, and choose them based on the quality of their products. We have two Icelandic suppliers, the printing company Oddi that has the Nordic Ecolabel certification, and Ásbyrgi-Flóra, a wholesale located in Akureyri, both of which must comply with the same local and national laws as we do.

15

United Nations Global Compact Labour Standards Principles

Principle 3: Businesses should uphold the freedom of

association and the effective recognition of the right to

collective bargaining:

Principle 4: the elimination of all forms of forced and

compulsory labour;

Principle 5: the effective abolition of child labour; and

Principle 6: the elimination of discrimination in respect of

employment and occupation.

Assessment, policy and goals

We commit ourselves to upholding labour standards – including freedom of association, the right to collective bargaining, the elimination of all forms of forced, compulsory, and child labour, and the elimination of discrimination. To ensure this we comply with all local labour laws and keep high standards with our HR strategy.

We want our employees’ skills, ability and knowledge to be of a high standard – they are the core of our business. To drive our future growth we make it a priority to obtain and keep the right people, with the right skill set, in the right place within the organization. When our employees start their job we train

them and help them develop the necessary skills and capabilities to qualify for their jobs. If our employees have any unfinished education or training, we encourage them to finish that.

Our employees and their families should be able to enjoy the things that matter most to them. We comply with local laws that requires three months’ parental leave for each parent of a newborn or newly adopted child with an additional three months to split between them for parental leave. In addition, our employees get 24-30 days for their annual vacation. We encourage our employees to use all of their annual vacation.

16

United Nations Global Compact Environment Principles

Principle 7: Businesses should support a precautionary

approach to environmental challenges;

Principle 8: undertake initiatives to promote greater

environmental responsibility; and Principle 9: encourage

the development and diffusion of environmentally friendly

technologies.

Assessment, policy and goals

We comply with all applicable legal demands to our business and keep our environmental policy as a priority in our strategy, having integrated it in the fundamental values of our business culture. To obtain the best results in our sustainability work we involve our employees and encourage them to respect and care for the environment.

We proactively manage energy-use in our production. We mainly use renewable energy, but on rare occasions, the needs of our brewery are not met by the electrical grid. This happened once in the winter of 2014/2015 and never the year before. When it happens we have an oil tank for those emergencies so that we can keep up the production.

During the brewing process a lot of carbon dioxide (CO2) and warmth is created, which we use in our production. The CO2 is collected into a balloon and used along with the imported CO2 because the excess CO2 is not enough for all of our production. We reroute the excess warmth into another part of our brewing process where it is reused rather than being wasted. The spent grain that is left over from the brewing process is given, not sold, to local farmers for animal feed as a support to the community in the area and to minimize wastage.

We are committed to ensuring proper disposal of waste. Our recycle ratio is 94% at the end of November 2015. The reason why our ratio is so much higher than Vífilfell-Reykjavík’s ratio is because we only produce beverages in glass bottles and aluminium bottles and all of them can be recycled at our waste removal vendor. Vífilfell-Reykjavík manufactures Tetra Pak packagingwhich our waste removal vendor is currently

not equipped to recycle. We are working on remedying that with our supplier for 2016 and beyond.

We encourage our customers to recycle their packaging. The table from Endurvinnslan ehf (Recycling Ltd.) found in the Environment chapter about Vífilfell-Reykjavík includes our packaging.

We recognize the increasing importance of water scarcity and availability. Our production equipment has not kept up with recent advancements in technology, except for our brewhouse which was renewed in the year 2000. Other parts of the production could use less water. Our hot water usage depends largely on winter temperatures, as our factory is heated using geothermal water rather than electricity.

In order to minimize our environmental footprint we ask our suppliers that we don’t have in common with Vífilfell-Reykjavík to ship us their product directly to us in Akureyri, through the local harbour, rather than shipping it to the Reykjavík harbour, and then driving it from Reykjavík to Akureyri by trucks. We are aware of the travel distance of our beer production site to the main centre of consumption in the capital area and the implications of transport pollution in the environment. The part of the beer we manufacture that is exported is shipped directly from Akureyri harbour to Europe where it continues to its final destination.At Vífilfell, we want to continue towards a more sustainable operation and a smaller environmental footprint. By joining the United Nations Global Compact and applying their 10 principles to our operations we are taking reinforcing our journey towards our more sustainable future.

17

Assessment, policy and goals

We comply with all applicable anti-corruption laws and work against corruption in all its forms, including extortion and bribery. Iceland is one of the least corrupted countries in the world according to the Transparency International. The most common form of corruption that we face is nepotism and we are constantly working on preventing it. To

do so, we advertise every relevant job that we are hiring for and hire the person best-equipped for each job. Our outsourcing goes through the Reykjavík office, and is carried out according to protocol. We maintain the highest ethical standards in our operations, it is our commitment and duty to do so.

United Nations Global Compact Anti Corruption Principle

Principle 10: Businesses should work against corruption in

all its forms, including extortion and bribery.

18

Stuðlaháls 1, 110 Reykjavík

w w w.v i f i l f e l l . i s

Furuvellir 18, 600 Akureyri