Powerful global trends are shaping our future

[Pages:23]HOW OUR PURPOSE DRIVES OUR PERFORMANCE

Powerful global trends are shaping our future

The world's population is growing rapidly, we are living longer and consuming more. According to UN projections, within a decade there will be 8.5 billion people on earth and almost 10 billion by 2050, compared to 7.7 billion today. Already, more than half are in the global middle classes; every second, five more people join their ranks, most of them in Asia.

Accelerating urbanisation, climate change, rising technology and global shifts in economic power present enormous risks and tremendous opportunities. They also pile pressure on the planet's resources.

As a commercial business, we seek to deliver long-term shareholder value through high performance and growth. We do that best by operating sustainably, through a broad-based strategy that meets the needs and concerns of all our stakeholders.

We act responsibly, focusing on value creation that advances social and environmental as well as economic objectives. We aim to be transparent and inclusive in our approach.

In all our categories, our brands meet economic objectives by serving social needs. What makes us distinctive is that many of our brands authentically serve a large social cause. Dettol, Lysol, Harpic, Durex, Mucinex, Enfamil and Move Free, among many others, are fighting at the frontlines to give our consumers a better life.

Our Company is inspired by the fight to ensure that access to high-quality hygiene, health and wellness is a right, not a privilege. We don't just sell products we design solutions that meet fundamental human needs.

Connecting with stakeholders RB's strategy is driven by a strong sense of purpose. Our stakeholder relationships extend our ability to deliver on our purpose.

Our purpose is encapsulated in a simple statement. We exist to protect, heal and nurture in the relentless pursuit of a cleaner, healthier world.

Every word here matters. `Protect, heal and nurture' relate to our three major categories. `Relentless pursuit' captures RB's entrepreneurial and can-do spirit. And it is all in service of `a cleaner, healthier world'.

And fuelling that relentless pursuit are critical insights from consumers, customers, colleagues and partners.

Driving sustainable growth The major societal trends provide tailwinds that support and strengthen our brands. Take urbanisation and global warming: denser populations living in warmer places need more effective hygiene ? and hygiene is a foundation of health. The increasing pressures on public health systems are fuelling demand for self-care solutions. Growing populations need more nutrition. And, with more people on the planet, sexual well-being is a higher priority. Underpinning the growth opportunities in all our sectors is the proliferation of technology, which is transforming not just what people buy but how they buy.

CASE STUDY

RB REJOINS THE DOW JONES

SUS TA I N A B I L I T Y INDEX (DJSI)

In 2019, RB was readmitted to the DJSI. This acknowledges the work we have been doing and the improvements we have made over the last two years. DJSI is a leading global standard for measuring and advancing corporate sustainability. The index assigns a total sustainability score to all major listed companies, based on a rigorous, rulesbased methodology, to identify the top 10 percent of performers in each industry. RB's increased overall score of 82 percent, with notable improvement in supply chain management, packaging and human rights performance, merited our inclusion this year. The DJSI World Index is made up of the top 10 percent of the world's 2,500 largest companies listed on the S&P Global Broad Market Index based on environmental, social and economic criteria.

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Reckitt Benckiser Group plc (RB) Annual Report and Financial Statements 2019

STRATEGIC REPORT

GOVERNANCE

FINANCIAL STATEMENTS

CONSUMERS

PEOPLE

PARTNERS

Read more page 20

Serving our consumers

RB's consumer-centric philosophy puts the people buying our brands at the heart of our thinking. We learn by listening closely to what they tell us. Their interests and priorities dictate our decision-making and drive innovation. With all our brands, we focus on the things that people say matter most to them and design products that make a positive contribution.

Read more page 28

Empowering our people

Highly skilled people will enable success and are in demand everywhere ? we want to attract, develop and retain the very best. Engaged, inclusive teams spur growth and performance ? we want ours to feel good about what they do and their Company's place in the world. A cohesive, purposeful culture leads to better brand offerings for consumers and more value for Shareholders and investors.

Read more page 32

Forging links with our partners

Our hyperconnected world is redefining traditional boundaries. We stay competitive by adapting and evolving our business model. As part of that we forge alliances and invest in partnerships.

We link our brands and business to causes with a shared purpose and with multiple actors and influences. We join forces to share capabilities and advance common interests. Partnerships can inspire disruptive thinking, accelerate innovation and help develop solutions to complex global problems.

CUSTOMERS

COMMUNITIES

ENVIRONMENT

Read more page 24

Connecting with our customers

Our key customers are retail experts. Their insights reflect consumer priorities and feed our innovation pipeline. We work with them to design and develop safe, effective products that consumers want to buy, and that advance broad social objectives. Our connections with customers cement alliances that support our products and align with our purpose.

Read more page 36

Read more page 40

Investing in communities

As a purpose-led company, we want to do well by doing good. Our investments in communities focus on three areas ? sexual health and rights, maternal and child health, water and sanitation. They aim to have a lasting impact and change lives for the better. We deliver those programmes in partnership with organisations on the ground.

Safeguarding the future

The world faces urgent environmental challenges and we need to make rapid progress on multiple fronts. We all have a responsibility to confront these issues and make a difference where we can.

We are determined to play our part. Our focus is on major themes that connect most directly with what we do, including plastics and packaging, water scarcity, climate change and deforestation. We consult widely and collaborate with partners to devise and deliver programmes that reduce and remove our adverse impacts and help safeguard the environment. As a responsible business, improving sustainability is integral to our purpose. It is in the longterm interests of every stakeholder.

Reckitt Benckiser Group plc (RB) Annual Report and Financial Statements 2019

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MAPPING WHAT MATTERS TO OUR STAKEHOLDERS

Mapping what matters to our stakeholders

RB identifies and assesses actual and potential impacts which involve us, either through our own activities or through our business relationships. We address impacts holistically, across our entire value chain, from sourcing and manufacturing through to the marketing, sales and consumer use of our products.

We consult with a range of stakeholders in different ways. We convene multi-stakeholder forums, hold top-level meetings with customers and are active in trade associations. Our 2018 Culture Pulse survey solicited internal feedback from employees. Stakeholders tell us what matters most to them and we use this information to identify areas of actual and potential risk and to adapt and improve our approach.

The perceptions and priorities of internal and external stakeholders determine what matters most to our business. We conduct a rigorous consultation process, which draws on expertise within the Group and involves extensive engagement with potentially affected groups and other relevant stakeholders. The latest study was completed in 2019.

Our strategies, initiatives and targets are informed by the feedback received from the groups relevant to our business operations, including consumers, customers, suppliers, governments, nongovernmental organisations (NGOs), industry peers, educational institutions, communities and our employees.

Our materiality assessment We completed a comprehensive assessment of the most material issues across our business in 2019. This built on work done in 2016 and lays the groundwork for the next phase in our sustainability journey, beyond our current 2020 targets.

Our materiality assessment follows a rigorous three-stage methodology. We first identify salient issues, then engage with internal and external stakeholders on those issues. Finally, we analyse and validate the results to derive a materiality matrix that tracks the importance to external stakeholders and the business of our 20 most salient issues. All of these are considered important by both internal and external stakeholders.

We reached out to well over 200 external stakeholders worldwide. Consumers, suppliers, experts, NGOs and investors were among those that helped to frame our thinking on ethical, governance, environmental and social priorities. Internally, insights gained from a diverse set of colleagues across the organisation teased out regional and functional variations in their responses to our salient issues.

Analysing stakeholder responses Internal and external stakeholders were asked to rank the relative importance of a series of different issues. Their responses were affected both by specific concerns (environmental NGOs for instance typically assign higher weightings to environmental issues) and their sense of RB's engagement with the issue (a significant issue may be ranked lower if RB is thought to be managing it effectively). Issues in the

topright quadrant are considered the most important, both internally and externally.

Analysis of the feedback revealed some notable shifts in the materiality landscape since our 2016 assessment. Innovation, water, packaging materials and talent retention and acquisition have all become significantly more important to both internal and external stakeholders.

Meanwhile, climate change, corporate tax, employee health and safety and data security and privacy have moved down the priority list. This does not suggest these are less consequential; it reflects instead the significant efforts already underway in these areas. We are committed to maintaining this momentum. Indeed, for some such as the environment and climate change, we need to do more.

Product quality and safety and packaging are the top priorities for both internal and external stakeholders. In other areas, their priorities diverge. External stakeholders cite supply chain labour rights and climate adaptation as big issues. Internally, business ethics, cyber security and privacy, talent attraction and employee development are top-ten concerns. Examining the materiality of clusters of issues and of subsets of respondents yields further insights which guide our strategic and operational priorities. For instance, public health challenges were rated as a higher priority issue by respondents from developing markets.

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Reckitt Benckiser Group plc (RB) Annual Report and Financial Statements 2019

STRATEGIC REPORT

GOVERNANCE

FINANCIAL STATEMENTS

Priorities to the stakeholder

Materiality matrix

Our 20 most salient issues

Climate adaptation Energy use

Tax and economic contribution

Packaging & waste

Traceability & responsible supply + biodiversity & land use impacts

Water consumption & quality

Product quality & safety

Fair wages & working practices + supply chain labour rights

Global health & development + public health challenges Innovating for social & environmental impact

Business ethics & governance

Ethical marketing & sales practices Employee health and wellbeing Diversity and gender equality

Talent attraction and employee development

Demographic change

Cybersecurity & privacy

Priorities to business

Clustering material issues The materiality matrix maps the relative importance for internal and external stakeholders of our 20 most salient issues. There are overlapping issues in three distinct areas; connected with land use, labour rights and health. For each of these, we have clustered two sets of responses to arrive at a single materiality rating. The clustered issues are as follows:

Key Economic & governance Human Rights

? Traceability & responsible supply AND biodiversity & land use impacts

? Fair wages & working practices AND supply chain labour rights

? Global health & development AND public health challenges

Issues are clustered by taking the maximum ranking for each component by each respondent. For example, where a respondent scores biodiversity & land use impacts at 2/5 and gives traceability & responsible supply 4/5, the clustered issue is assessed at 4/5.

Environmental Social

Reckitt Benckiser Group plc (RB) Annual Report and Financial Statements 2019

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MAPPING WHAT MATTERS TO OUR STAKEHOLDERS CONTINUED

CASE STUDY

BUSINESS AVENGERS

THE SUSTAINABLE DEVELOPMENT GOALS

September 2019 saw the launch of the Business Avengers. Seventeen global companies, including RB, representing over USD500 billion in revenue and 900,000 employees, were unveiled as champions of the 17 UN Sustainable Development Goals (SDGs), one for each SDG. RB was named the official business champion for SDG 3 ? Good health and well-being.

Collectively, the Business Avengers group will promote a decade of delivery from 2020 with the aim of encouraging private sector companies to redouble their efforts to achieve SDG targets by the 2030 deadline. 2020 is a year of action, to inspire and engage others to meet the thirteen targets within SDG 3. We will report on our initiatives and progress in next year's Annual Report and on the website.

Sustainable Development Goals In 2015, UN Member States adopted the 17 Sustainable Development Goals as part of the 2030 Agenda for Sustainable Development. With limited progress since then, in 2019 the UN Secretary-General called for a decade of action by all stakeholders, asking civil society, academia, the media and the private sector to deliver the 2030 Goals.

At RB, we want to do all we can to help meet this challenge. We recognise the importance and interdependence of all the Global Goals. We have identified four SDGs (see page 17) where we believe our impact is most significant. We are committing management time and resources to make tangible progress in each.

The challenges and commitments highlighted by the SDGs are interrelated. It is the poorest communities ? where hunger, disease and poor sanitation are most prevalent ? that will suffer the worst effects of climate change. Equally, the solutions to poverty, inequality, climate change and other global challenges are interlinked. Education is often cited as a way to help people climb out of poverty, but solutions need to take account of the fact that women and girls have less access. RB examines these interconnectivities

and favours projects and initiatives that advance the SDG agenda as a whole, ahead of those that simply target specific SDGs.

We are clear too that advancing the sustainability agenda makes commercial sense for us. Achieving the goals supports a thriving society which benefits us all. At a specific level, our commitment to reducing the amount of energy we use or carbon we generate in our facilities or through the footprints of our products, their ingredients, packaging, use and disposal, helps tackle the impacts of climate change and support sustainable consumption. It progresses several SDGs, including SDG6, SDG7, SDG12 and SDG13, and at the same time, improves operational efficiency. To take another example: we are advancing SDG5, SDG8 and SDG10 by tackling gender and diversity issues in the workplace, but in doing so we are also motivating our people and promoting talent; thereby, fuelling productivity. Across the board, through our brands and our business, we are improving our effectiveness by pursuing responsible practices that incorporate the SDG agenda. In doing so, we are playing our part in delivering the SDGs.

At RB, we're clear about our purpose: the relentless pursuit of a

cleaner, healthier world. And it all starts

with conversations. We're listening and

engaging with colleagues, customers,

partners and stakeholders to plot

the right path.

Laxman Narasimhan Chief Executive Officer

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Reckitt Benckiser Group plc (RB) Annual Report and Financial Statements 2019

STRATEGIC REPORT

GOVERNANCE

FINANCIAL STATEMENTS

Aligning with the United Nations Sustainable Development Goals (SDGs) RB's approach is to support the delivery of the Global Goals but in doing so to focus primarily on those areas where we can have the greatest impact. While our activities affect a number of the SDGs, we have identified four as the most relevant for our business:

SDG 2: Zero hunger In infant nutrition we focus on the first 1000 days of life. Our products keep mothers healthy and nourish their babies. In line with World Health Organisation ("WHO") guidelines, we promote exclusive breastfeeding in the first six months. Protecting people against malnutrition and stunting is a key theme for our social impact investment programme.

SDG 3: Good health and wellbeing This goal is closely aligned with our purpose and as the Business Avenger for SDG3, we are championing swifter progress in the private sector. Many of our brands play a role in promoting health and wellbeing. They include Durex, Dettol, Gaviscon and Mucinex, as well as Lysol and our Mortein insecticide products.

SDG 5: Gender equality Promoting gender equality is in our employment policies and in our social impact programmes Our employment policies drive gender equality in our teams. We have mentoring schemes for female employees, gender-balanced shortlists and proportionality targets at senior management level. We also now report internationally on our gender pay gap. We have set up social impact projects to encourage girls to stay in school in South Africa and equip women in rural communities with independent income.

SDG 6: Clean water and sanitation Our Harpic, Dettol and Lysol brands are closely associated with programmes emphasising the importance of good sanitation and hygiene. In partnership with our `morethanatoilet' campaign is providing microfinance that allows people in India, Bangladesh and Indonesia to get access to clean water and fit flushing toilets in their homes and villages.

CASE STUDY

HUMAN RIGHTS STAKEHOLDER FORUM

In December, we organised a major Human Rights Stakeholder Forum in London with our partner the Danish Institute of Human Rights (DIHR). Our CEO and key members of RB's leadership team gathered with external stakeholders to discuss ways to strengthen and reinforce RB's approach to human rights across the entire value chain. Additional insights were provided by a leading human rights policy campaigner along with human rights specialists from law firms, NGOs, global retailers and peer companies.

The workshop sought to develop our senior leadership's understanding of existing and emerging global human rights issues and to highlight any relevant policy dilemmas for RB. It is part of a broader engagement programme reaching out to stakeholders on key human rights topics. Further sessions are planned with relevant experts and RB personnel to address DIHR recommendations on specific topics.

Reckitt Benckiser Group plc (RB) Annual Report and Financial Statements 2019

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OUR SUSTAINABILITY PERFORMANCE

Delivering performance through our KPIs

Delivering social purpose is deeply ingrained at RB. We have been providing people with quality products for health, hygiene and the home for over 200 years.

In 2012, our `better' strategy made this explicit and put the business and its brands on a purpose-led path and defined our targets for 2020. In 2016, we linked the strategic objectives to the UN's Sustainable Development Goals. Key sustainability themes coalesced with long-term economic performance under the three maxims of better business, better society, better environment. It was an important staging post on our sustainability journey.

The better business, better society, better environment programme set out sustainability commitments and identified focus areas for measuring performance. Our better business commitments focused on our organisation and culture, key brands and priority markets and on improving earnings quality. We published better society commitments for purpose-led brands, human rights, product stewardship, social impact investment and product innovation. Our better environment commitments included reducing greenhouse gas emissions, water and waste, and responsible sourcing. We underscored these objectives with key performance indicators which measure progress against our 2020 targets.

The KPIs capture metrics that reflected our aims and ambitions at the time. As our approach has matured, we have gained a broader perspective on our sustainability challenges and opportunities. During 2020, we will be renewing and extending our non-financial KPIs with metrics and targets that will drive our business and brands by putting sustainability at the heart of our purpose.

1 Represented in our Senior Management Team, Global Leadership Team, and Executive Committee including our CEO and CFO.

2 Restatement of 2016 LWDAR from previously reported figure of 0.071 to 0.084 after recalculation during 2019 reporting for inclusion of commercial offices.

3 Excluding our Infant and Child Nutrition (IFCN) business ? See RB Insights ( responsibility/insights) and RB Reporting Criteria Basis for Preparation ( responsibility/policies-and-reports) for details.

4 Calculated for 12 months ending 30th September 2019. 5 2019 year end zero waste to landfill performance includes IFCN sites. 6 Manufacturing and warehousing only.

ORGANISATION

Gender diversity

KPI: Percentage of female senior managers in our global workforce1.

2016 2017 2018 2019 Target to 2022: 40%

20% 24% 25% 26%

SOCIETY

Purpose-led brands KPI: Total number of people informed through health and hygiene messaging and campaigns since 2013.

2016

365m

2017

568m

2018

765m

2019

956m

Target to 2025: Inform 1 billion people through health and hygiene educational programmes and behaviour change communications

ENVIRONMENT

GHG emissions per unit of production3,6

KPI: The percentage reduction in Greenhouse gas emissions per unit of production, against our 2012 baseline.

2016 2017 2018 2019 Target to 2020: 40% reduction

22% 31% 35% 42%

Carbon footprint per dose of product3

KPI: The percentage reduction in our total carbon footprint per dose of product sold against our 2012 baseline.

2016

0%

2017

2%

2018

4%

2019

6%

Target to 2020: 33% reduction

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Reckitt Benckiser Group plc (RB) Annual Report and Financial Statements 2019

STRATEGIC REPORT

GOVERNANCE

FINANCIAL STATEMENTS

Lost Work Day Accident Rate (LWDAR)2

KPI: Number of incidents resulting in at least one lost day of work per 100,000 hours worked.

2016

0.084

2017

0.121

2018

0.084

2019 Target: Continued decrease of LWDAR rate

0.076

Social impact investment

KPI: Total value of cash contributed, employee time in working hours and in-kind product donations valued at cost to the business

Product innovation3,4

KPI: Total Net Revenue from more sustainable products.

2016 2017 2018 2019 Target to 2025: ?20m per year

?5.2m 2016 ?10.5m 2017 ?14.4m 2018 ?12.2m 2019

Target to 2020: 33% of Net Revenue.

13.2% 18.2% 18.5% 24.6%

Water use per unit of production3,6

KPI: The percentage reduction in total water consumption per unit of production, against our 2012 baseline.

Sending zero waste to landfill5

KPI: The percentage of our factories achieving zero waste to landfill, including both hazardous and non-hazardous waste.

2016

32% 2016

97%

2017

37% 2017

100%

2018

38% 2018

93%

2019 Target to 2020: 35% reduction

37%

2019 Target to 2020: 100%

96%

Integrating sustainability During the last eight years, interest in sustainability has been increasing at an accelerating rate. This trend looks set to continue. Our own approach has also matured.

Initially, our focus was on getting the fundamentals right and making sure we were meeting our compliance and reporting obligations. With our 2020 targets we looked forward, thinking about how we needed to improve environmental and social sustainability against the backdrop of climate change and the wider Millennium and subsequent Sustainable Development Goals.

Over time, this evolved into a more holistic approach which took account of stakeholders' interests and allowed for deeper engagement. For example, within our supply networks, our initial concentration on tier-one suppliers extended, increasingly considering raw material suppliers and source origins. This increased engagement applies throughout our value chain, not just to our suppliers but also with our customers, distributors and consumers. Our greater engagement reflects the growing recognition that businesses operate in complex networks and ecosystems and, increasingly, that their impacts and interests intersect and overlap.

From climate change, to human rights in our supply chains, to plastics in the environment, we strive to play our part and aim to lead where we can be most effective. These are big issues, and on our own we have limited impact. We therefore embrace partnerships and joint action which can amplify our efforts and deliver meaningful change.

Only by integrating sustainability objectives into our business practices and model can we consistently address the major challenges we all face. Internally, there is a growing recognition that sustainable practices also spur innovation and drive long-term growth. This lends momentum to the work we are currently undertaking to revitalise our sustainability strategy and embed it more directly in our purpose and business.

Water impact per dose of product3

KPI: The percentage reduction in water used during the product's life cycle, adjusted to reflect water scarcity, per dose of product sold against our 2012 baseline.

Manufacturing waste per unit of production3

KPI: The percentage reduction in manufacturing waste per unit of production, against our 2012 baseline.

2016

6% 2016

20%

2017

8% 2017

21%

2018

-4% 2018

26%

2019 Target to 2020: 33% reduction

4% 2019 Target to 2020: 30% reduction

27%

Reckitt Benckiser Group plc (RB) Annual Report and Financial Statements 2019

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