Avery Dennison : ESG Report

Avery Dennison Corporation - Climate Change 2022

C0. Introduction

C0.1

(C0.1) Give a general description and introduction to your organization.

Avery Dennison is a global materials science and manufacturing company specializing in the design and manufacture of a wide variety of labelling and functional materials. The company's products, which are used in nearly every major industry, include pressure-sensitive materials for labels and graphic applications; tapes and other bonding solutions for industrial, medical and retail applications; tags, labels and embellishments for apparel; and radio-frequency identification (RFID) solutions serving retail apparel and other markets.

Avery Dennison is composed of three business segments: Label and Graphic Materials (LGM), Retail Branding and Information Solutions (RBIS), and Industrial and Healthcare Materials (IHM). We operate in more than 50 countries worldwide with approximately 36,000 employees. In 2021 our global net sales were $8.4 billion. Further information about Avery Dennison, our business, and our organizational structure can be found at www.averydennison.com.

To the extent possible, Avery Dennison has aligned our CDP responses with our practices and procedures. Due to the nature of the CDP Questionnaires, such as the drop down options provided, there may be some variability between actual and reported practices and procedures. In addition, forward-looking statements are subject to certain risks and uncertainties, which could cause actual results to differ materially from the results, performance or achievements expressed or implied thereby.

C0.2

(C0.2) State the start and end date of the year for which you are reporting data.

	Start date	End date	Indicate if you are providing emissions data for past reporting	Select the number of past reporting years you will be providing emissions data
			years	for
Reporting	January 1	December 31	No
year	2021	2021

C0.3

CDP

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(C0.3) Select the countries/areas in which you operate.

Argentina

Australia

Austria

Bangladesh

Belgium

Brazil

Cambodia

Canada

Chile

China

Colombia

Croatia

Czechia

Denmark

Dominican Republic

El Salvador

Finland

France

Germany

Honduras

Hong Kong SAR, China

India

Indonesia

Ireland

Israel

Italy

Japan

Luxembourg

Malaysia

Mauritius

Mexico

Netherlands

New Zealand

Norway

Pakistan

Philippines

Poland

Republic of Korea

Romania

Singapore

South Africa

Spain

Sri Lanka

Sweden

Switzerland

Taiwan, China

Thailand

Turkey

Ukraine

United Arab Emirates

United Kingdom of Great Britain and Northern Ireland

United States of America

Viet Nam

C0.4

(C0.4) Select the currency used for all financial information disclosed throughout your response.

USD

C0.5

(C0.5) Select the option that describes the reporting boundary for which climate-related impacts on your business are being reported. Note that this option should align with your chosen approach for consolidating your GHG inventory.

Operational control

C-AC0.6/C-FB0.6/C-PF0.6

CDP

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(C-AC0.6/C-FB0.6/C-PF0.6) Are emissions from agricultural/forestry, processing/manufacturing, distribution activities or emissions from the consumption of your products - whether in your direct operations or in other parts of your value chain - relevant to your current CDP climate change disclosure?

	Relevance
Agriculture/Forestry	Elsewhere in the value chain only [Agriculture/Forestry/processing/manufacturing/Distribution only]
Processing/Manufacturing	Both direct operations and elsewhere in the value chain [Processing/manufacturing/Distribution only]
Distribution	Both direct operations and elsewhere in the value chain [Processing/manufacturing/Distribution only]
Consumption	Yes [Consumption only]

C-AC0.6b/C-FB0.6b/C-PF0.6b

(C-AC0.6b/C-FB0.6b/C-PF0.6b) Why are emissions from agricultural/forestry activities undertaken on your own land not relevant to your current CDP climate change disclosure?

Row 1

Primary reason

Do not own/manage land

Please explain

Avery Dennison works with suppliers and does not own or manage our own land.

C-AC0.7/C-FB0.7/C-PF0.7

(C-AC0.7/C-FB0.7/C-PF0.7) Which agricultural commodity(ies) that your organization produces and/or sources are the most significant to your business by revenue? Select up to five.

Agricultural commodity

Timber

• of revenue dependent on this agricultural commodity
  60-80%

Produced or sourced

Sourced

Please explain

Our products include pressure-sensitive materials for labels and graphic applications, tapes and other bonding solutions for industrial, medical and retail applications, tags, and labels. This is reflected in the high percentage of timber-based products related to revenue. This timber-based material is sourced from paper manufacturers, as Avery Dennison does manage any forestry or agricultural operations.

C0.8

(C0.8) Does your organization have an ISIN code or another unique identifier (e.g., Ticker, CUSIP, etc.)?

Indicate whether you are able to provide a unique identifier for your organization	Provide your unique identifier
Yes, a Ticker symbol	AVY

C1. Governance

C1.1

(C1.1) Is there board-level oversight of climate-related issues within your organization?

Yes

C1.1a

CDP

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(C1.1a) Identify the position(s) (do not include any names) of the individual(s) on the board with responsibility for climate-related issues.

Position of	Please explain
individual(s)
Board-level	Board oversight over environmental sustainability is primarily conducted by the Governance Committee, which receives a report from management on sustainability topics at least once a year. The
committee	Committee discusses environmental sustainability topics at committee meetings. The Committee is responsible for reviewing and providing oversight over key environmental sustainability initiatives,
	policies, and programs, including climate-related issues and other environmental matters of interest to our stakeholders. This includes reviewing with management the impact of the business
	operations and practices with respect to matters of environmental sustainability. The Committee is also responsible for reviewing the shareholder engagement process, results, and feedback with
	respect to environmental sustainability and recommendations to the Board, as appropriate. In addition, our full Board engages business leaders on their sustainability initiatives during its regular
	review of business strategies. Our business has seen an increased focus on sustainable packaging and changing market conditions and consumer preferences. Our Board determined it was a
	strategic priority to ensure we are well-positioned to meet the increasing need and demand for more sustainable products. In July and December 2020, our Board held strategy sessions focused on
	environmental sustainability and our innovation efforts, which culminated with the launch of our 2030 sustainability goals in early 2021 and our SBTi targets being accepted in October, 2021. We
	reinvigorated our innovation program, including assessing and addressing risks related to investment in disruptive technologies. We continued to invest in initiatives focused on recyclability and
	enabling circularity and waste reduction and elimination. For example, our Sustainability Strategic Innovation Platform is investigating projects that increase material recyclability and the use of
	recycled content across the industries we serve, and innovations to reduce the environmental impact of our raw materials. Solutions that advance the circular economy support greenhouse gas
	emissions reductions across our value chain and enable the climate-related and sustainability goals of our value chain partners.

C1.1b

(C1.1b) Provide further details on the board's oversight of climate-related issues.

Frequency	Governance	Scope of	Please explain
with	mechanisms	board-
which	into which	level
climate-	climate-	oversight
related	related issues
issues are	are integrated
a
scheduled
agenda
item
Scheduled	Reviewing and	<>	The Governance Committee of our Board of Directors discusses environmental sustainability topics, which may include climate-related issues, at committee meetings. The
- some	guiding	Applicabl	Governance Committee also receives a report from management at least once a year on sustainability performance. Our full Board also engages with business leaders on
meetings	strategy	e>	their sustainability initiatives during its regular review of their business strategies. The Board is responsible for overseeing our enterprise risk management (ERM) program.
	Reviewing and		The teams leading our businesses have incorporated ERM into developing and executing their strategies, assessing the risks impacting their businesses, and identifying
	guiding risk		and implementing appropriate mitigating actions on an ongoing basis. In addition, in consultation with our Chief Compliance Officer and senior management, these teams
	management		semiannually prepare a risk profile consisting of a heat map and a summary of their key risks and mitigating strategies, which are used to prepare a company risk profile
	policies		based on identified business-specific risks. As part of the ERM process, we included sustainability trends and environmental regulation as a standalone risk. We consider
	Setting		additional climate topics as amplifiers of existing risks. In 2015, we established our 2025 sustainability goals to improve the sustainability of our products and processes and
	performance		create value for all our stakeholders. In the first six years of the 10-year horizon for our 2025 sustainability goals, we made meaningful progress towards these goals. We
	objectives		believed it was important to establish another set of ambitious targets aligned with our business strategy and stakeholder priorities. Our Sustainability Council and Company
	Monitoring		Leadership team, including our Chairman and CEO, worked together to develop 2030 goals that exemplify our strategy to lead in an environmentally responsible manner
	implementation		and leverage the capabilities of our company when we collaborate with our suppliers and customers. We established our goal to, by 2030, reduce our Scope 1 and 2 GHG
	and		emissions by 70% from our 2015 baseline and work with our supply chain to reduce our 2018 baseline Scope 3 GHG emissions by 30% - with an ambition of net zero by
	performance of		2050.
	objectives
	Monitoring and
	overseeing
	progress
	against goals
	and targets for
	addressing
	climate-related
	issues

C1.1d

(C1.1d) Does your organization have at least one board member with competence on climate-related issues?

	Board member(s) have	Criteria used to assess competence of board member(s) on climate-	Primary reason for no	Explain why your organization does not have at least one board
	competence on	related issues	board-level competence	member with competence on climate-related issues and any plans to
	climate-related issues		on climate-related issues	address board-level competence in the future
Row	Yes	Our Chairman/CEO is engaged in our climate-related initiatives and is
1		considered competent on these issues. We are currently developing criteria
		by which we can more formally evaluate competency.

C1.2

(C1.2) Provide the highest management-level position(s) or committee(s) with responsibility for climate-related issues.

Name of the position(s) and/or	Reporting line	Responsibility	Coverage of	Frequency of reporting to the board on climate-related
committee(s)			responsibility	issues
Chief Executive Officer (CEO)	<>	Both assessing and managing climate-related risks and		More frequently than quarterly
	Applicable>	opportunities

C1.2a

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(C1.2a) Describe where in the organizational structure this/these position(s) and/or committees lie, what their associated responsibilities are, and how climate- related issues are monitored (do not include the names of individuals).

Our CEO serves as the Chairman of our Board and provides strategic guidance and direction to ensure we continue to make meaningful progress on sustainability. The CEO is involved with and signs off on major sustainability actions, given their material impact on the company. Our CEO provides guidance and direction to our President and COO, who leads Sustainability for us and is responsible for continued progress towards our sustainability goals.

Our Sustainability Council is composed of a cross-divisional and group of sustainability leaders to drive accountability and continually accelerate our progress. The group meets bimonthly and regularly provides updates to our executive leadership team. Through this process we complete a quarterly sustainability scorecard provided to the Board for review of progress towards our goals. At least annually, members of the SC present sustainability trends and our sustainability strategic plan to the Company Leadership Team.

Our 2025 sustainability goals include a 3% absolute reduction year-over-year and at least a 26% overall reduction, compared to our 2015 baseline, by 2025. In the first five years of the 10-year horizon for our 2025 sustainability goals, we made meaningful progress towards these goals. We believed it was important to establish another set of ambitious targets aligned with our business strategy and stakeholder priorities. In 2020, our Sustainability Council and Company Leadership team, including our Chairman and CEO, worked together to develop 2030 goals that exemplify our strategy to lead in an environmentally responsible manner and leverage the capabilities of our company when we collaborate with our suppliers and customers. We developed our goals following the completion of our Materiality Assessment conducted in 2020. Our goals align with those topics that are determined to be the most important to our business and our stakeholders including GHG Emissions and Energy Use, Climate Resilience, Water Use, Materials Management, and Advancing the Circular Economy. We established our science-based targets, validated by SBTi, to, by 2030, reduce our Scope 1 and 2 GHG emissions by 70% from our 2015 baseline and work with our supply chain to reduce our 2018 baseline Scope 3 GHG emissions by 30% - with an ambition of net zero by 2050.

C1.3

(C1.3) Do you provide incentives for the management of climate-related issues, including the attainment of targets?

	Provide incentives for the management of climate-related issues
Row 1	Yes

Comment

C1.3a

(C1.3a) Provide further details on the incentives provided for the management of climate-related issues (do not include the names of individuals).

Entitled to incentive	Type of	Activity	Comment
	incentive	incentivized
Chief Executive Officer	Monetary	Emissions	Our CEO's compensation is determined by performance against annual strategic objectives. The Talent and Compensation Committee of our Board of Directors
(CEO)	reward	reduction	evaluates our CEO's performance against the CEO's predetermined strategic objectives. One of these strategic objectives is Innovation/Progress Toward
		target	Sustainability Goals.
			For 2021, all NEOs had an ESG objective as part of their annual goals, with their compensation impacted by performance.
Energy manager	Monetary	Emissions	Environmental/Sustainability managers have overall accountability for ensuring public reduction targets are met.
	reward	reduction
		project
		Energy
		reduction
		project
Environment/Sustainability	Monetary	Emissions	Each plant manager has strategic plans that include a number of key initiatives of which greenhouse gas reduction is one. Overall performance is measured
manager	reward	reduction	against these key targets.
		project
Facilities manager	Monetary	Emissions	Each plant manager has strategic plans that include a number of key initiatives of which greenhouse gas reduction is one. Overall performance is measured
	reward	reduction	against these key targets.
		project
All employees	Monetary	Emissions	Performance-based annual Avery Dennison "Thank You" awards for activities such as sustainable product development and implementing projects with
	reward	reduction	increased efficiency that lead to significant energy savings and progress towards emissions reduction.
		project
		Energy
		reduction
		project
		Efficiency
		project

C2. Risks and opportunities

C2.1

CDP

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