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UNIVERS A L REGISTR ATION DOCUMENT

2020 A NNUA L FINA NCIA L REPORT

TAKING ACTION

FOR

YOU

The elements of the Annual Financial Report are identified using the pictogram

The elements of the Non-Financial Information Statement are identified using the pictogram NFPS

www.carrefour.com

CONTENTS

1 PRESENTATION OF THE

CARREFOUR GROUP 5

1.1 Group profile – Executive summary 6 1.2 Context: global challenges and development opportunities 16 1.3 Our response to the health crisis 20 1.4 Our raison d’être 22 1.5 Description of the Group’s businesses 36 1.6 The Carrefour group in 2020 43

2

CORPORATE SOCIAL

RESPONSIBILITY

AND PERFORMANCE 51 DPEF

2.1 Implementation of CSR and the food transition at Carrefour 53 2.2 Policies to mitigate the risks related to our business 65 2.3 Duty of care 111 2.4 Carrefour’s non-financial performance 126

3

CORPORATE GOVERNANCE 137

Governance summary 138 3.1 A balanced governance structure 141 3.2 The Board of Directors 148 3.3 Group Executive Committee 175 3.4 Compensation and benefits granted to Company Officers 180 3.5 “Comply or Explain” rule of the AFEP-MEDEF Code 190 3.6 Transactions in the Company’s shares carried out by Company Officers 191 3.7 Related-party agreements referred to in Articles L. 225-38 et seq. of the French Commercial Code 193

4

RISK MANAGEMENT

AND INTERNAL CONTROL 195

4.1 Risk management 196 4.2 Internal control system 214

5

BUSINESS REVIEW

AS OF DECEMBER 31, 2020 225

5.1 Business review and consolidated income analysis 226 5.2 Group financial position and cash flows 231 5.3 Outlook 234 5.4 Other information 235 5.5 Glossary of financial indicators 241 5.6 Parent company financial review 242

(^6) CONSOLIDATED FINANCIAL

STATEMENTS AS OF

DECEMBER 31, 2020 247

6.1 Consolidated income statement 248 6.2 Consolidated statement of comprehensive income 249 6.3 Consolidated statement of financial position 250 6.4 Consolidated statement of cash flows 252 6.5 Consolidated statement of changes in shareholders’ equity 254 6.6 Notes to the consolidated financial statements 255 6.7 Statutory Auditors’ report on the consolidated financial statements 341

7

CARREFOUR SA FINANCIAL

STATEMENTS AS OF

DECEMBER 31, 2020 345

7.1 Income statement 346 7.2 Balance sheet 347 7.3 Statement of cash flows 348 7.4 Notes to the Company financial statements 349 7.5 Statutory Auditors’ report on the financial statements 366

8

INFORMATION ABOUT THE

COMPANY AND THE CAPITAL 369

8.1 Information about the Company 370 8.2 Information on the capital 373 8.3 Shareholders 378

9

ADDITIONAL INFORMATION 381

9.1 Publicly available documents 382 9.2 Person responsible 382 9.3 Person responsible for the financial information 382 9.4 Persons responsible for auditing the financial statements 383 9.5 Information incorporated by reference 383 9.6 Concordance tables 384

This 2020 Universal Registration Document

follows an unprecedented year, marked by the

Covid-19 pandemic whose health, social and

economic impact reverberate to this day in all

the countries in which we operate.

Above all, 2020 was a year of commitment

for Carrefour. Our teams showed incredible

dedication in the face of immense health,

logistical and human challenges, outdoing

themselves in support of our customers. Our

entire Group rose to the occasion, maintaining

a high level of vigilance and rigor on the sanitary

front at all times. Our social and environmental

commitments never wavered. In fact, with the

current economic crisis, our role as leader of

the food transition, that is our mission to make

good quality, sustainable food accessible to all,

proves to be more important than ever.

2020 was also a decisive year for Carrefour.

In a crisis which is accelerating the ongoing

transformations in our industry, our Group

reached a watershed. Three years ago, the

2 UNIVERSAL REGISTRATION DOCUMENT 2020 / CARREFOUR www.carrefour.com

“2020 was a year of commitment for

Carrefour. Our teams showed incredible

dedication in the face of immense health,

logistical and human challenges, outdoing

themselves in support of our customers. (...)

2020 was also a decisive year for Carrefour.

In a crisis which is accelerating

the ongoing transformations in our

industry, our Group reached a watershed.

We have established an attractive

growth model based on customer

satisfaction and new consumer trends.”

Carrefour 2022 plan marked a first turning

point for our Group and set out our ambition.

After three years of flawless roll-out of our

transformation, we have established an

attractive growth model based on customer

satisfaction and new consumer trends. This

model is now delivering sustainable growth in

sales and profitability for our Group, allowing

us to generate significant financing capacity.

With 2020 now behind us, I observe that

despite the crisis, we continue to grow.

Despite the emergencies, we are achieving our

financial and extra-financial objectives. Despite

the uncertainty over the health and economic

situation, we inspire confidence. Buoyed by this

success, in 2021 we will continue to promote

the values of diversity, dignity and service on

which our Group is built. As always, we will be

there for our customers, who expect so much

from us.

Alexandre Bompard

Chairman and Chief Executive Officer

UNIVERSAL REGISTRATION DOCUMENT 2020 / CARREFOUR 3

PRESENTATION

 - UNIVERSAL REGISTRATION DOCUMENT 2020 / CARREFOUR OF THE CARREFOUR GROUP 

• 1.1 Group profile – Executive summary
  • 1.1.1 Facts and figures
  • 1.1.2 Business overview
  • 1.1.3 Operating regions
  • 1.1.4 History of the Carrefour group
    • shared value 1.1.5 Our business model, based on creating
    • plan – strategy and progress report 1.1.6 “Carrefour 2022” transformation
    • commitments and results 1.1.7 Corporate social responsibility – stronger
  • and development opportunities 1.2 Context: global challenges
  • 1.2.1 Retail’s essential role during the health crisis
  • 1.2.2 Amplified food trends
  • 1.2.3 The rise of e-commerce
  • 1.2.4 Significant price sensitivity
  • 1.2.5 Revisiting the agricultural model
  • 1.2.6 The need to preserve natural resources
  • 1.2.7 Sustained competitive pressure - 1.3 Our response to the health crisis - 1.3.1 Protection of employees and customers - professionals 1.3.2 Support for vulnerable people and healthcare - 1.3.3 Support for the growth of e-commerce - 1.3.4 Support for the local economy - 1.3.5 Price freezes - 1.3.6 Social responsibility initiatives - 1.4 Our raison d’être - and products accessible to all 1.4.1 Provide our customers with quality services - transition for all 1.4.2 Our initiatives to accelerate the food - 1.5 Description of the Group’s businesses - 1.5.1 An international omni-channel retailer - 1.5.2 Store and website operations - 1.5.3 Merchandise - 1.5.4 Financial and purchasing services - 1.5.5 Logistics and supply chain operations - 1.5.6 Property management - 1.6 The Carrefour group in - 1.6.1 Significant events of - 1.6.2 Significant events of first-quarter - 1.6.3 Summary of financial performance - 1.6.4 Summary of stock market performance - 1.6.5 Summary of non-financial performance - 1.6.6 Simplified legal chart at December 31,

6 UNIVERSAL REGISTRATION DOCUMENT 2020 / CARREFOUR www.carrefour.com

1 PRESENTATION OF THE CARREFOUR GROUP Group profile – Executive summary

1.1 Group profile – Executive summary

1.1.1 FACTS AND FIGURES

With a multi-format and omni-channel network, Carrefour is one of the world’s leading food retailers. Its 13,048 stores and e-commerce sites welcome 77 million customer households. With over 320,000 employees in nine integrated countries (France, Spain, Italy, Belgium, Romania, Poland, Brazil, Argentina and Taiwan), the Group generated 78.6 billion euros in gross sales in 2020, an increase of 7.8% like for like. Recurring operating income came to 2,173 million euros, up 16.4% at constant exchange rates and under accounting standards comparable to those applied in 2020 (1). 2020 was dominated by the Covid-19 pandemic, which turned the global economy upside down. In all its host countries, Carrefour teams made an exceptional effort to ensure the continuity of food distribution and meet new consumer expectations, in a complex and constantly changing environment. As recognised by accredited certification bodies, the Group implemented robust measures to protect the health of its employees and customers, often going above and beyond the health measures recommended by public authorities in each country. Carrefour also assumed new social responsibilities during the crisis by organising community outreach initiatives and making a commitment to providing hospital staff and the most vulnerable members of society with new services (meal deliveries, baskets of basic necessities, priority store access, etc.). The Group also supported the local economic fabric, deprived of outlets due to health measures, by prioritising local supplies, facilitating the listing of producers and opening up its stores to traders subject to administrative closure. Carrefour’s singular contribution to the national effort was recognised and applauded by consumers. In France, Carrefour was cited as the most useful brand during the period of nationwide lockdown, which began at the end of October 2020, ahead of other retail banners(2)^.

into three categories: trust, service and experience. The 5/5/ programme is about tying the Group’s actions to the 15 customer relationship and satisfaction points where it needs to focus its efforts, by making strong promises and guarantees. After contributing to commercial successes in Argentina, Spain, Taiwan and Poland since 2018, it was extended in 2020 to all Group countries. The dynamic roll-out of the 5/5/5 programme in France at the beginning of summer 2020 drove a 16-point increase in the NPS® customer satisfaction indicator for the year, with contributions from all formats, particularly hypermarkets. At Group level, the NPS® was up 12 points.

In 2020, Carrefour made customer satisfaction its number one priority. Its strategy in this area is based on “5/5/5”, an innovative programme defined in 2018 by Carrefour Taiwan CEO Rami Baitiéh and subsequently rolled out in Argentina, Spain and France. The programme leverages employees’ individual and collective engagement, both at the head office and in stores, to ensure customer satisfaction through 15 commitments divided

Carrefour also performed well in terms of price competitiveness in many countries, especially France, Brazil and Spain. Particular attention was paid to Carrefour-brand products, which accounted for 29% of sales. The health crisis and lockdowns drove sharp increases in food e-commerce and convenience store sales. Thanks to the rapid development of the Drive network and home and express delivery services and to the new start-ups integrated into the Group in 2020 (Dejbox and Potager City), the food e-commerce segment recorded growth of 70%. Carrefour continued to outperform the market in organic products, with 18% growth in its sales. In France, the Group strengthened its store network in this segment by acquiring specialist banners Bioazur and Bio c’ Bon. The health crisis confirmed the relevance of the strategic choices made in 2018 with regard to the “Carrefour 2022” transformation plan, which focuses on the food transition. Countries like Brazil and Spain, which were facing major challenges just two years ago, are now in a winning position, as illustrated by their renewed growth dynamic. Carrefour has shown great financial discipline since 2018. The Group has one of the strongest balance sheets in the industry, which is an important asset in an environment shaped by rapid changes in food retail and by the Covid-19 pandemic. The Group is more attentive than ever to moderately sized external growth opportunities that complement its existing operations. The acquisitions in 2020 of 30 Makro stores in Brazil (25 of which were completed by end-December), 224 convenience stores (Wellcome and Jasons) in Taiwan and 172 Supersol stores in Spain reflect this strategy.

(1) Recurring operating income for 2020 includes income and expenses related to Covid-19. Exceptional bonuses and similar benefits awarded to employees (128 million euros in first-half 2020) are recognised in non-recurring expenses. (2) Source: CSA Brands&You survey, November 2020.

France’s first hypermarket was opened at Sainte-Geneviève-des-Bois, in the Paris region. The first of its kind, this 2,500 sq.m. self-service hypermarket offered a vast choice of products at low prices and had 400 free parking spaces.

1959 The Carrefour Supermarchés company was created following a meeting between Marcel Fournier, owner of a novelty shop in Annecy, and the Badin-Defforey business, a grocery wholesaler in Lagnieu.

1966 The Carrefour logo was created to mark the opening of the hypermarket in Vénissieux, near Lyon. It depicted the first letter of the word Carrefour placed in the middle of a diamond with t he left half coloured red and the right half coloured blue, with black lines above and below.

1970 To finance its growth, Carrefour was listed on the Paris Stock Exchange, a first for the retail sector.

1973 Carrefour expanded internationally and explored new markets, opening its first stores in Spain under the Pryca banner, followed by Brazil in 1975.

1963

To offer its customers more affordable products, Carrefour reinvented its business and started to sell its own products. This was the beginning of produits libres (unbranded products) in plain packaging that would go on to revolutionise the consumer products business.

Carrefour developed a new relationship with the agricultural industry by creating a completely new type of partnership, “Carrefour Quality Lines”. The same year, Carrefour ushered in the era of organic products in retail with its Boule Bio organic bread.

1981 Carrefour created the PASS card, a credit card and customer loyalty card rolled into one, which was an immediate success. Just three years after its launch, 200,000 customers had PASS cards and had used them for more than four million transactions.

1982 Changes in legislation and new consumer habits encouraged international development, which led to store openings in Argentina and then, in 1989, in Taiwan.

1992

1976

8 UNIVERSAL REGISTRATION DOCUMENT 2020 / CARREFOUR www.carrefour.com

1 PRESENTATION OF THE CARREFOUR GROUP Group profile – Executive summary

1.1.4 HISTORY OF THE CARREFOUR GROUP

Carrefour initiated a major renovation programme in its stores, converting its Champion supermarkets, for example, to the Carrefour Market banner. In record time, the 1,000 French stores were rebranded to offer a wider range of products and services, a simplified customer path through the aisles, and the benefits of the Carrefour programme.

The Group strengthened its presence in many countries between 2000 and 2010, either through controlled expansion or targeted acquisitions, including in France and Romania (Hyparlo, Artima, Penny Market), Belgium (GB), Poland (Ahold), Italy (GS), Brazil (Atacadão), Argentina (Norte) and Spain (Plus).

2007

2008

2010 The Group continued its expansion of the Carrefour banners, in Brazil,for example, with the opening of 11 Atacadão stores during the year and in China, by opening 22 hypermarkets and acquiring 8 stores as part of a partnership with Baolongcang, one of the major hypermarket chains in the Hebei region in eastern China.

1993

The Group inaugurated its first stores in Italy and then, in 1995, in China.

1997 Carrefour continued to expand internationally, opening its first stores in Poland. At the same time, the Group created its “Reflets de France” brand for products based on traditional French recipes.

1996

The first partnerships with Food Banks were set up to redistribute food approaching its use-by date to those in need.

1998 As the 1990s drew to a close, the Group underwent significant change and brought together various banners. After signing an agreement in 1997 with Guyenne & Gascogne, Coop Atlantique and the Chareton group, Carrefour purchased Comptoirs Modernes in October 1998, acquiring more than 700 stores operating under the Stoc, Comod and Marché Plus banners. (^) On August 30, Carrefour submitted a friendly tender offer for the shares of Promodès, a company founded in 1961 by two Normandy families with a background in wholesale trade, the Duval-Lemonniers and the Halleys. The merger between Carrefour and Promodès, authorised by the European Commission in 2000, resulted in the creation of the world’s second-largest retailer. The new Carrefour employed 240,000 people and had more than 9,000 stores throughout the world.

1999

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Group profile – Executive summary

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3

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11 1.1.5 OUR BUSINESS MODEL, BASED ON CREATING SHARED VALUE

Through its physical and intellectual capital, Carrefour leverages its business model to create value for its stakeholders and make a positive contribution to society. Carrefour sells products and services for consumers and food services professionals. Its mission is to provide customers with quality services, products and food accessible to all across all distribution channels. In all its host regions, this process includes the direct or indirect purchasing of products, definition of specifications for the Group’s own-brand lines, organisation of supply logistics and management of physical and online stores.

Carrefour leverages its business operations to strengthen its contribution to the UN Sustainable Development Goals (SDGs) and aims to facilitate and promote the food transition for all, alongside its various stakeholders. The key ways in which the Group has a positive impact on society are presented in the infographic below and described in Section 1.4.2.5.

OUR ASSETS

f Skills of our employees

f

Responsible and multicultural approach

f

Broad geographic footprint

f Ability to adapt to production and consumption modes

Suppliers’ operations Producers’ operations

Integrated and franchised Carrefour operations Flow of goods

Creating shared value^ FINANCIAL & ECONOMIC CAPITAL^ f

€183 million

in dividends paid to parent

company shareholders f^

€962 million

in income and other taxes

f^

€1,597 million

in payroll taxes

f^

€334 million

in net finance costs

f^

€384 million

in expenses on financial

transactions HUMAN & INTELLECTUAL CAPITAL f^

€7,262 million

in wages, salaries and

payroll taxes f^

Employee

Net Promoter Score

®^ (NPS

®)

f^

8.04 hours

of training per employee per year

f^ 1,

social audits performed at our supplier

s

f^

23.2%

women among those appointed

to key positions in 2020 NATURAL &ENVIRONMENTAL CAPITAL f^

9 .1%

reduction in CO

emissions (vs. 2019) 2

f^

66.1%

of waste recovered and reused

f^

-28.7%

reduction in food waste (vs. 2016)

f^

43.7%

of tested seafood products are from

sustainable sources f^

6,154 tonnes

of packaging avoided since 2017

RELATIONAL CAPITAL f^

17 million

fans on social media

f^ Net Promoter Score

®^ (NPS

®)^ up

12

points

in 2019

f^

€60,135 million

in purchased merchandise

and services f^

753

Carrefour Quality Lines

f^

1,

Carrefour organic product listings

f^

77 million

meals donated to food aid charities

f^

47

projects supported by the Carrefour Foundation

Processingfacilities

Orderfulfilmentcentres

Homedelivery

Servicestations

Shoppingcentres

Cash & Carry

CATERING PROFESSIONALS

Drive

Warehouses Head offices and Carrefour Lab

OUR CHALLENGES f^ New eating behaviours

f

Consumer behaviours transformed by digital technology

f^ Duty to provide affordable healthy food

f

Revisiting the agricultural model

f

The need to preserve natural

resources

f More intense competitive pressure

Capital and resources

Our ambitionis to become leader ofthe food transition for all

HUMAN & INTELLECTUAL CAPITAL f^ 322,

employees worldwide

f^ 300

job families

f^ Worldwide agreement signed with the UNIGlobal Union f^ Act for Change managerial programme NATURAL &ENVIRONMENTAL CAPITAL f^ Fossil and renewable energies f^ Use of different materials, such as plastic,cardboard, etc. f^ Use of natural resources from oceans, forests,land and other ecosystems f^ Water consumption FINANCIAL & ECONOMIC CAPITAL f^ 13,

stores and

2,

Drive outlets worldwide

f^ Over

30

host

countries

f^ €78.

billion

in gross sales

f^ €2,

million

in other income (finance

companies, real estate development, leases) f^ €

million

in financial income

RELATIONAL CAPITAL f^ 77 million

customer households

f^ 1 worldwide e-commerce site f^ 49 million

loyalty cardholders

f^ 13

international partnerships f^ 2,

production facilities in Europe

f^ 27,

CQL partner producers

f^ Strategic partnerships and alliances f^ €7.5 million

budget allocated by the Carrefour

Foundation

Pedestrian

Drive

Stores

Services

-^ Banking and

insurance

-^ Travel agency^ •

Vehicle hire

Productionfacilities

CONSUMERS Convenience storesand Services (Relais Colis, La Poste,ticket booking)

PRESENTATION OF THE CARREFOUR GROUP

Group profile – Executive summary

PRESENTATION OF THE CARREFOUR GROUP Group profile – Executive summary

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11 1.1.7 CORPORATE SOCIAL RESPONSIBILITY – STRONGER COMMITMENTS

AND RESULTS

Carrefour made progress on the construction of its sustainable value creation model in 2020. Ranked the leading French retailer and in the top 5 global retailers by the Dow Jones Sustainability Index (DJSI) World for the fourth consecutive year, the Group saw its CSR and Food Transition index rise to 115% in 2020, from 114% in 2019.

Carrefour performed particularly well on the following points during the year:

■ 6,154 tonne reduction in packaging since 2017. Forecasts

prompted the Group to revise its objectives during 2020: Carrefour is now doubling its packaging reduction target to 20,000 tonnes by 2025, including 15,000 tonnes of plastic;

■ 9.1% reduction in CO 2 emissions in 2020 (vs 2019), thanks in

large part to improved energy efficiency and reduced use of non-natural refrigerants in stores. Carrefour raised its climate targets in 2020. It is now aiming to reduce energy and refrigerant-related CO 2 emissions by 30% by 2030 and 55% by 2040 (vs 2019). The Group’s targets have been approved by the Science Based Target initiative and include a 20 megatonne reduction in its product footprint (scope 3) by 2030;

■ reduction in food waste: Carrefour confirms its objective of

halving food waste by 2025 (vs 2016), with a reduction of 29% achieved in 2020 (vs 2016).

Carrefour’s pioneering role in the food transition is influencing all parties involved in the industry. The Group was the first retailer to ask its biggest suppliers to sign the Food Transition Pact, which includes commitments in relation to nutrition, controversial substances, packaging and the climate. As a result, 24 multinationals have joined forces with Carrefour to take joint action in these areas. In addition, the Group’s Chairman and Chief Executive Officer Alexandre Bompard has become a co-sponsor of the Forest Positive Coalition of Action, which was launched by Carrefour within the Consumer Goods Forum to speed up efforts to eliminate deforestation in food supply chains. The proprtion of women in management positions within the Group increased in 2020 (+0.4 points for Senior Directors, +0.5 points for Directors). Lastly, Carrefour obtained GEEIS certification in all countries in 2020 with a view to promoting professional equality and diversity. In the exceptional context of the Covid-19 pandemic and as part of a socially-responsible corporate approach, Alexandre Bompard decided to waive 25% of his fixed compensation for a two-month period corresponding to the acute phase of the health crisis. The Group’s Executive Committee members' compensation was also frozen for all of 2020, and they were asked to forgo 10% of their fixed compensation for a period of two months. All of the members of the Board of Directors decided to reduce the amount of their compensation due in respect of the directorships for the year in progress by 25%. The corresponding amounts will be allocated to fund community service initiatives for Group employees in France and internationally. Lastly, Carrefour’s Board of Directors decided on April 20, 2020 to reduce the recommended 2019 dividend by 50%.

16 UNIVERSAL REGISTRATION DOCUMENT 2020 / CARREFOUR www.carrefour.com

1 PRESENTATION OF THE CARREFOUR GROUP Context: global challenges and development opportunities

1.2 Context: global challenges and development

opportunities

Societal change and the pressure of environmental restrictions are fuelling a sweeping transformation of business models inherited from the 20th^ century. Several shifts are taking place in the retail industry. Consumers are looking for food options that are good for their health, for producers and for the planet. It is now crucial to understand and adapt to their new eating behaviours, the digital transformation of their consumption habits, and their demands for just and fair prices. Worldwide, society is challenging production-oriented agriculture, the

industrialisation of harvest methods, product processing and distribution, and the disregard for seasonality. It has therefore become more urgent than ever to rethink the food industry model in order to protect the planet’s limited natural resources and meet new consumer expectations. The health crisis that impacted the whole world in 2020 is likely to speed up these deeply rooted structural changes.

1.2.1 RETAIL’S ESSENTIAL ROLE DURING THE HEALTH CRISIS

In the first half of 2020, the Covid-19 pandemic had a severe impact on the global economy and created an unprecedented environment. In an attempt to slow the spread of the virus, lockdowns lasting several weeks were imposed on 3.4 billion people, or 43% of the global population. Considered essential in a crisis, the food retail industry continued to operate. Food retailers found themselves on the front lines, ensuring the supply of basic necessities to communities in lockdown. The industry demonstrated its responsiveness, adapting extremely rapidly to new health regulations and guidelines and to drastic changes in consumer behaviours. As soon as lockdown measures were announced, retailers worldwide faced the same situation: a surge in sales of consumer goods. In France, an increase of 223% was recorded on Monday, March 16, 2020(1). Retail industry players therefore had to deal with higher customer traffic in a worsening health situation, as well as a peak in demand caused by consumers stocking up on groceries as a precautionary measure.

To ensure the safety of their employees and customers while maintaining continuity of service, retailers demonstrated their agility by rapidly implementing numerous changes, including social distancing and other protective measures, the disinfection of premises and equipment and modified opening hours. They also expanded their delivery and Drive services to make their products accessible to as many consumers as possible. The situation put pressure on the supply chain. Entire sections of the supply chain were forced to adapt to sudden changes and unprecedented issues in terms of order planning and management, including production shutdowns, supply shortages and shipping problems. Retailers had to swing into action to absorb the impact of these difficulties and to implement the necessary measures to enable consumers to continue obtaining essential supplies safely, thereby fulfilling a key public service: feeding the population. These efforts were recognised by consumers, who rewarded retailers with high confidence levels. In terms of image, the retail industry came out of the first lockdown stronger. It also capitalised on the lessons learned during the second wave of the pandemic in the autumn, resulting in better management of supply shortages during the second lockdown.

1.2.2 AMPLIFIED FOOD TRENDS

The food transition is one of the major challenges of the 21 st^ century. At a global level, the dual objective is to meet strong growth in demand while providing the whole population with access to a healthy diet. Today, more than 3.2 billion people suffer from poor nutrition, whether they are undernourished in developing countries or overnourished in developed countries(2)^.

vegetarian, flexitarian and other alternative diets. As a result, 64% of consumers worldwide follow a diet that limits or prohibits consumption of certain ingredients and 70% say that they make dietary choices to help prevent health issues (3). Consumers’ purchasing decisions are based on a multitude of expectations that extend beyond health issues to cover production conditions, including: more local and circular consumption to reduce waste; fair prices on products to ensure adequate compensation for farmers; and concern for animal welfare.

People have become highly aware of this imbalance. Over the past few years, this awareness has brought about new behaviours and an emphasis in developed countries on quality over quantity, organic products, taste and authenticity, as well as a rise in

(1) Source: “ L’Europe de la distribution alimentaire face à la crise ” [The impact of the crisis on the food retail segment in Europe], LSA, April 22, 2020. (2) Summary report from the EAT-Lancet Commission, “Healthy Diets from Sustainable Food Systems”, 2019. (3) Source: Nielsen Global Ingredients and Dining Out Trends, a survey conducted in 2016 among 30,000 consumers in 63 countries.

18 UNIVERSAL REGISTRATION DOCUMENT 2020 / CARREFOUR www.carrefour.com

1 PRESENTATION OF THE CARREFOUR GROUP Context: global challenges and development opportunities

1.2.4 SIGNIFICANT PRICE SENSITIVITY

Reconciling the duty to provide healthy food with affordability is a global issue. In a survey conducted in 2018 in 28 countries across all continents, access to healthy, high-quality food and in adequate amounts for all came out as the third and fourth priorities, respectively (1)^. Worldwide, malnutrition began to climb again in 2015 after a decade of decline. More than 820 million people, equal to 10.8% of the world's population, were undernourished in 2018 (2)^. In France, the portion of the population with “low” purchasing power stood at 31% in 2019, and the budget item under the most pressure was food (3). The Covid-19 pandemic has exacerbated pre-existing difficulties. Following the introduction of lockdown measures, seasonally adjusted GDP fell by 14.1% in the European Union in the second quarter of 2020, and annual inflation on food products came to 3.1% in June (4)^. In Spain and Italy, countries whose economies were already fragile before the crisis, nearly one out of every two people believes that their purchasing power has declined (5).

In France, GDP declined by 8.3%, while overall inflation was 0.5% for the year. In September, 60% of households feared financial difficulties, 46% felt they had to be careful about non-essential spending and 22% were unable to meet their monthly budget. More than eight out of ten people in France had the impression that prices had increased during lockdown, even though, on average, consumer goods did not experience any price inflation in 2020. In fact, household purchasing power per unit of consumption is estimated to have declined by 2% in 2020(6)^. The crisis therefore heightened consumers’ sensitivity to price increases on food products. In the post-lockdown period, price remained the number one selection criterion for 43% of the French population(7)^. The crisis also threatens to deepen the food divide: in May 2020, four in ten French people said they had already been affected by the economic consequences of the health crisis. It was particularly felt by the most financially precarious and people whose business activity had decreased or stopped, while 75% of high-income people in France did not feel the impact(8).

1.2.5 REVISITING THE AGRICULTURAL MODEL

The UN has forecast that the global population will reach 8.5 billion by 2030 and 9.7 billion by 2050, versus 7.7 billion in

2019. That equates to a rise in population of 2 billion people over the next 30 years (9). In light of this projected demographic growth, the FAO (the Food and Agriculture Organization, an agency of the United Nations) asserts that, in order to guarantee food safety for all, global food production will need to increase from the current 8.4 billion tonnes to 13.5 billion tonnes per year(10), i.e_._ , a 60% increase between now and 2050.

produce food is an impossible solution. In fact, current farming methods deplete soil fertility and productivity is expected to drop 30% by 2050 according to the FAO. Alternative production techniques are needed to offset these imbalances. For example, agroecological practices extend land production potential. Even though their contribution to global production remains relatively limited, these techniques are becoming increasingly widespread.

Intensive and industrial farming methods have, however, reached their limits. Today, humans use more than 70% of the Earth’s ice-free land. One-third of arable land is used to grow feed for livestock and 60% of the grains produced worldwide are fed to animals. About 80% of deforestation is due to agriculture, especially to clear land for soy cultivation in order to feed livestock and for oil palm trees (11)^. Therefore using more land to

Faced with the dual challenge of keeping up with growing demand while meeting increasingly stringent environmental standards, the agricultural industry must adapt. It should now be able to count on increased support from consumers in this regard. The Covid-19 pandemic has highlighted the importance of local production, bringing consumers closer to their local agricultural industry. In September 2020, 77% of French people said they had confidence in farmers – a record high and an increase of 7 points compared to January 2020 (6)^.

(1) Source: “The challenge of our resources”, ELABE study for Veolia conducted in January 2018 of 14,000 people in 28 countries. (2) Source: SOFI report (FAO, WHO, WFP, UNICEF), July 2019. (3) Source: Eighth edition of the Cofidis CSA annual survey, September 2019. (4) Source: European Retail: Future Outlook, IGD, August 2020. (5) Source: Observatoire Cetelem, September 2020. (6) Source: Kantar, Consumer Day 2020, “ Entre crise sanitaire et crise économique, quels enjeux pour les marchés PGC ” [Impact of the health and economic crisis on consumer goods markets], September 2020. (7) Source: “ Les grandes tendances structurantes et les signaux faibles ” [Major structural trends and low-level warning signs], ProtéinesXTC, November 2020. (8) Source: Ninth edition of the Cofidis CSA annual survey, June 2020. (9) Source: World Population Prospects 2019, United Nations, published in June 2019. (10)Source: FAO http://www.fao.org/sustainability/background/en/ (11) Source: ELAB study, “Which foods in 2049?”, November 2019.

UNIVERSAL REGISTRATION DOCUMENT 2020 / CARREFOUR 19

PRESENTATION OF THE CARREFOUR GROUP

Context: global challenges and development opportunities

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11 1.2.6 THE NEED TO PRESERVE NATURAL RESOURCES

Demographics, urbanisation and human activity are causing large-scale climate change that threatens the Earth’s natural balance. The Intergovernmental Panel on Climate Change, or IPCC, estimates that the global surface temperature could rise between 1.1°C and 6.4°C within this century. Every year, 13 million hectares of forest area, home to 80% of the Earth’s biodiversity, is lost, especially in tropical regions.

understand the impact of intensive farming on the planet. As such, they want to reset the imbalances resulting from the globalisation of food systems, calling for a less wasteful, more resource-efficient and locally focused model. The Covid- pandemic has not weakened this collective awareness of environmental issues. In fact, it has highlighted the benefits of more responsible consumption. Against the backdrop of the health crisis, purchasing local products is perceived positively by consumers for various reasons, notably because it contributes to reducing CO 2 emissions (1)^.

Fully aware of the risks at stake, most citizens across the world agree that we need to act quickly and respond to these environmental, energy and food challenges. Consumers better

1.2.7 SUSTAINED COMPETITIVE PRESSURE

The retail industry is focused on creating a more differentiated offering that is more closely aligned with consumers’ needs and with their changing expectations, eating behaviours and buying habits. This has resulted in: expansion of convenience formats, closer ties between physical stores and e-commerce, strengthened by a portfolio of services (Drives, Click & Collect, express delivery, etc.), and the deployment of a more quality-focused offering, aligned with increased concern about health, social and environmental issues.

In this configuration, businesses that thrive the most are built on operating efficiency: ability to replicate an operating model on a large scale, an automated and highly responsive supply chain, and stringent cost management to boost price competitiveness.

For example, hard and soft discounters maximise volumes for a limited assortment of goods, and their quality is improving. They roll out their model on an industrial scale and show growth in most of the countries where they operate, stepping up competitive pressure.

On the other hand, online retailers have drastically changed the playing field by introducing new digital services, significantly increasing the number of products available and getting consumers accustomed to being able to access the products and services they want anytime, anywhere and in just a few clicks. New consumer expectations have given rise to a third category of food retail operators: distribution networks and chains that specialise in the highest quality food options, such as organic products, fresh produce, local and regional products and vegan products. The availability and accessibility of these product offerings are enhanced by online sales and digital and convenience services, which are strategically linked to a network of physical stores or operated by pure play online retailers.

(1) Source: Observatoire Cetelem, September 2020.