Avery Dennison : ESG Report

Avery Dennison Corporation - Water Security 2022

W0. Introduction

W0.1

(W0.1) Give a general description of 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.

W0.2

(W0.2) State the start and end date of the year for which you are reporting data.

Reporting year

Start date	End date
January 1 2021	December 31 2021

W0.3

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(W0.3) 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

W0.4

(W0.4) Select the currency used for all financial information disclosed throughout your response.

USD

W0.5

(W0.5) Select the option that best describes the reporting boundary for companies, entities, or groups for which water impacts on your business are being reported.

Companies, entities or groups over which operational control is exercised

W0.6

(W0.6) Within this boundary, are there any geographies, facilities, water aspects, or other exclusions from your disclosure?

No

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W0.7

(W0.7) 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	NYSE: AVY

W1. Current state

W1.1

(W1.1) Rate the importance (current and future) of water quality and water quantity to the success of your business.

	Direct use	Indirect	Please explain
	importance	use
	rating	importance
		rating
Sufficient	Neutral	Vital	Direct Use: As members of the paper value chain, it is often believed that we use significant quantities of water, however, we are not involved in the paper production
amounts of good			process and most of the water footprint of our products is associated with our supply chain. Our manufacturing operations primarily produce pressure-sensitive
quality freshwater			materials and a variety of tickets, tags, labels, and other converted products and use limited quantities of water. Water is not used directly as part of our manufacturing
available for use			processes. It is primarily used for cleaning, chillers and cooling towers at manufacturing sites, and general use/personal hygiene for all other locations. At two of our
			facilities, accounting for approximately 8% of our total water withdrawals, we produce materials via emulsion.
			Direct Importance Rating: Avery Dennison does not use significant volumes of freshwater in production, but understands the importance of water quality discharges
			and therefor, treats all process water on-site or at appropriate third-party sites. As a result, we consider the importance of water to our direct operations as neutral.
			Indirect Use: Water is used throughout the paper and pulp production process. Pulp is mixed with water, as well as other additives, to create a slurry that is then dried
			and pressed to produce paper.
			Indirect Importance Rating: Paper production requires a considerable amount of water. Without a regular and sufficient supply of water, there would be limited or costly
			manufacturing of paper and so water is considered vital to our suppliers. Water availability may impact paper commodity costs in the future. Therefore, we consider the
			importance of water to our indirect operations to be vital.
			We expect that in the future, our dependency on water across direct and indirect use will be substantially similar since water has yet to be a major focus area, given
			our relatively low use.
Sufficient	Not very	Neutral	Direct Use: Avery Dennison does not use recycled, brackish or produced water. Given that many of our manufacturing operations do not need high-quality water,
amounts of	important		recycled or produced water may be more frequently used in the future.
recycled,
brackish and/or			Direct Importance Rating: This water source is not applicable to our current operations. However, we are committed to reducing our water usage in areas identified as
produced water			having high water stress and risk by the WRI Aqueduct tool and may explore using different water sources such as recycled water in the future to mitigate these
available for use			stresses. Therefore, we consider sufficient amounts of recycled water not to be very important at this time.
			Indirect Use: Our paper suppliers may use recycled water as part of their processes as treatment technologies allow for quality control.
			Indirect Importance Rating: We are in the process of engaging our suppliers, through EcoVadis, to determine how our suppliers are using recycled, brackish, and/or
			produced water to inform this impact. Therefore, we consider sufficient amounts of recycled water to be neutral to our indirect operations at this time. This rating could
			change as we gain a better understanding of the role that recycled, brackish and/or produced water plays in our supply chain.

W1.2

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(W1.2) Across all your operations, what proportion of the following water aspects are regularly measured and monitored?

	% of	Please explain
	sites/facilities/operations
Water withdrawals - total volumes	51-75	Monthly water consumption is tracked at our manufacturing facilities, distribution centers, research and development sites, fast response units,
		and large offices representing 70% of Avery Dennison facilities and the most material sites from a water usage perspective. Data from utility bills
		and/or meter readings is uploaded to our internal ASPIRE environmental management system by EHS team members.
Water withdrawals - volumes by	Not monitored	As we continue to build out our internal ASPIRE environmental management system, we hope to develop the ability to reliably collect, calculate,
source		and report on this data.
Entrained water associated with your
metals & mining sector activities - total
volumes [only metals and mining
sector]
Produced water associated with your
oil & gas sector activities - total
volumes [only oil and gas sector]
Water withdrawals quality	Not relevant	We do not currently collect this information.
Water discharges - total volumes	26-50	Roughly 30% of our facilities track industrial discharge volumes, primarily facilities with manufacturing processes. Other sites estimate volumes
		(domestic discharges).
Water discharges - volumes by	Not monitored	We do not currently collect this information.
destination
Water discharges - volumes by	Not monitored	We understand the importance of water quality discharges and therefore, treats all process water on-site or through appropriate third parties.
treatment method
Water discharge quality - by standard	Not monitored	We do not currently collect this information except in geographies where we are required to by law.
effluent parameters
Water discharge quality - temperature	Not monitored	We do not currently collect this information.
Water consumption - total volume	Not monitored	Previous disclosure of water withdrawal was reported as consumption. We do not currently collect this information.
Water recycled/reused	Not monitored	We do not use recycled/reused water in direct operations.
The provision of fully-functioning,	100%	Across all sites, we provide fully-functioning WASH services for all of our employees. To ensure compliance with our standards and local
safely managed WASH services to all		regulations of our business, we conduct environmental, health and safety (EHS) compliance audits at each manufacturing site, including
workers		drinking and potable water compliance. Audits are conducted by a team of employees assisted by third-party consultants who speak the local
		language and provide expertise on local regulations.

W1.2b

(W1.2b) What are the total volumes of water withdrawn, discharged, and consumed across all your operations, and how do these volumes compare to the previous reporting year?

	Volume	Comparison	Please explain
	(megaliters/year)	with
		previous
		reporting
		year
Total	1786.21	Higher	Due to changes in our methodology, we had higher water withdrawals in 2021. The 2020 value based on a "total water usage" indicator, was a combination of
withdrawals			measured withdrawals and estimated withdrawals. We had very few sites tracking withdrawals at this time, so the value was largely based on the estimated value
			using the number of full-time employees, gallons per day, and days worked. In 2021, we began requiring sites to directly track and report withdrawals, which is why
			the values started to vary. Additionally, a few new sites were added to our portfolio.
Total		Please	We do not currently track the total quantity of water discharges, however, since we are not using water as part of our manufacturing process, a limited quantity is
discharges		select	consumed and the vast majority is discharged. We have started to track water discharges in manufacturing sites as industrial discharges, and estimate the domestic
			discharge portion for all sites. These figures will be available for reporting in next year's response.
Total		Please	We do not currently track water consumption, however, since we are not using water as part of our manufacturing process, a limited quantity is consumed and the
consumption		select	vast majority is discharged.

W1.2d

(W1.2d) Indicate whether water is withdrawn from areas with water stress and provide the proportion.

	Withdrawals	%	Comparison	Identification	Please explain
	are from	withdrawn	with	tool
	areas with	from	previous
	water stress	areas with	reporting
		water	year
		stress
Row	Yes	26-50	About the	WRI	The World Resources Institute (WRI) Aqueduct Tool allows us to directly see, by geography, how many of our sites are in areas of water stress.
1			same	Aqueduct
					We primarily use the WRI Aqueduct Tool to better understand our current and future water risks. We assess our sites annually to determine site-
					specific priorities and opportunities and analyze the data based on risk levels. The methods that we've used to mitigate water risks take into account
					all of our facilities. Water data from our global facilities is collected and analyzed based on water withdrawals and the results of the WRI Aqueduct
					assessment. To conduct this assessment, we use the WRI Aqueduct baseline water stress indicators, which are based on a global dataset developed
					by the WRI.
					A detailed methodology for risk level breakdowns is available through WRI.

W1.3

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(W1.3) Provide a figure for your organization's total water withdrawal efficiency.

	Revenue	Total water withdrawal volume	Total water withdrawal	Anticipated forward trend
		(megaliters)	efficiency
Row	8400000	1786.21	4702694.53199792	We expect that our relative efficiency will remain about the same or improve as we more closely monitor water usage in areas of
1	000			water stress and drive performance.

W1.4

(W1.4) Do you engage with your value chain on water-related issues?

Yes, our suppliers

Yes, our customers or other value chain partners

W1.4a

(W1.4a) What proportion of suppliers do you request to report on their water use, risks and/or management information and what proportion of your procurement spend does this represent?

Row 1

• of suppliers by number
  1-25
• of total procurement spend 51-75

Rationale for this coverage

For our two largest business units (LGM and RBIS), we have different programs for engaging with suppliers. In many cases, our third business unit (IHM) shares suppliers and management systems with LGM.

LGM (+IHM): We require our top suppliers, representing more than 80% of direct supplier spend, to take the annual EcoVadis survey. We focus on our largest suppliers by purchase order amounts to give us the most influence on impacting our supply chain.

RBIS: For RBIS' third party auditing program, ICAP, audits are conducted for all outsource suppliers to ensure compliance with regulatory requirements and to ensure suppliers reporting environmental certificates maintain those standards. All outsource suppliers are selected for reporting because it allows us to understand the full impact of our supply chain. Outsource suppliers are incentivized to report because if they do not take the survey, are not audited under the ICAP program or do not follow up on the corrective action plan from the ICAP audit, then our procurement team will begin the process of identify alternative sources.

Impact of the engagement and measures of success

LGM: For LGM, using EcoVadis, we require suppliers to achieve a minimum score of 45; if they fail to meet this level, we initiate our corrective actions process for continuous improvement. The EcoVadis survey contains questions regarding water use and consumption, and this data is used by our company when determining future business, the health of our supply chain, and risks and opportunities. Platinum (overall score between 75 and 100) and Gold (67 and 74) scores are high performing suppliers, and are prioritized when determining supplier risk, relationship status, future business opportunities, etc. Success of this engagement is measured by the number of suppliers who have overall Gold or Platinum scores.

RBIS: Under RBIS' third party auditing program, ICAP, all outsource suppliers must meet legal water requirements in the countries in which they operate and conduct environmental impact risk assessments annually. Also, they must ensure wastewater discharge meets water quality guidelines of sustainable water group and/or applicable laws, whichever are more stringent. The supplier must have a process flow diagram showing all areas of water usage and discharge points. Outsource suppliers that do not have those items currently are given a deadline to submit a Corrective Action Report (CAR). If the CAR is not completed, RBIS will seek another source of material. Success of this engagement is measured by the number of suppliers who meet all of the specified criteria and do not need to submit a CAR.

Comment

W1.4b

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