40 The Hershey Company | 2021 ESG Report Responsible Sourcing and Human Rights The Big Picture Our Company Cocoa Responsible Sourcing and Human Rights Environment Our People Youth Community About This Report Fostering Sustainable • Origin-level and transformation Agricultural Communities Through investments: investing in Hershey, supplier Cocoa Our Priority Ingredients and other partner-led origin-level programs focused on environmental, social and Cocoa remains Hershey’s highest In 2020, we analyzed the global environmental economic issues. priority ingredient. and social risks known in our ingredients and • Industry engagement: participating in For more details, see our Cocoa raw materials supply chains alongside spend industry-wide partnerships to enable systemic chapter, beginning on page 20. data to identify priority supply chains for change, as companies cannot solve these responsible sourcing due diligence, investment complex sustainability challenges alone. and programming. We identified five priorities: cocoa, dairy, sugar, palm oil, and pulp and paper. In 2022, we will refresh our priority ingredients This prioritization helps us target where we can risk assessment to account for 1) changes in make the biggest impact while reducing risks in our supply chain, including the acquisitions of our supply chain. Lily’s, Dot’s and Pretzels; 2) developments in After achieving many of our 2020 responsible our human rights and environmental strategies, sourcing ingredient commitments, in 2021, such as the intersection with nature and water; we established new and ambitious goals and 3) changes in sustainability risks. and strategies across our priority ingredients For a summary of our goals and and materials. KPIs related to responsible sourcing, Our responsible sourcing commitments see page 43. account for social and environmental challenges faced in the communities and ecosystems where our priority ingredients and materials come from. While working with suppliers and farmers to address these issues, we implement a variety of tools and approaches including: 1 • Traceability : improving visibility within our ingredient and raw material supply chains back to origin to understand opportunities for impact. • Supplier engagement, monitoring and verification: communicating our expectations to suppliers and strengthening their sustainability management while using third-party certification and verification schemes to monitor performance and drive continuous improvement across sustainability impact areas. 1 Traceability is not a chain of custody concept and does not alone allow Hershey to identify the specific source from where the ingredient comes in a given Hershey product.