TRANSFORMING TO A RAW MATERIALS SUPPLIER

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1 OVERVIEW CIRCULAR ECONOMY TRANSFORMING TO A RAW MATERIALS SUPPLIER The markets in which we operate are structurally set for long term growth, stimulated by environmental need, customer demand and increasing regulation. Renewi is uniquely placed to meet the needs of the growing circular economy with our wasteto-product model. Three drivers to aid the development of the circular economy The circular economy is a growing business model in which the concept of waste is obsolete. The waste produced by society is seamlessly reconverted back into secondary raw materials so as to prevent contamination and preserve scarce virgin materials. There are three reinforcing drivers that are combining powerfully and increasingly to build a new and vibrant circular economy. Clear environmental need These are: Clear environmental need Greater customer demand Increasing regulation Together, these drivers are setting the landscape for future manufacturing, creating an urgent need both for producers to maximise the use of sustainable or secondary raw materials and for polluters to reduce their waste. The Benelux, our core market, is one of the most advanced areas in the world with regard to setting the agenda for recycling, sustainability and developing a circular economy. We believe that by positioning ourselves to succeed in the Netherlands and Belgium, we will generate skills and capabilities Increasing regulation Greater customer demand that will over time be applicable in other geographies as they adopt UN and EU targets for sustainability. The following sections explain the compelling basis for future structural growth in more detail. Environmental need We are working every day on creating a world without waste. This does not mean that there will be no waste in the future. Today we collect and treat over 14 million tonnes of waste and extract value from these materials. We consider it our job to make sure that nothing gets wasted in this process. The major challenges of our generation are climate change, environmental pollution and scarcity of raw materials, water and food. There is a clear pull from societies around the world to address these challenges in order to preserve a prosperous and secure future. In September 2015, the UN adopted 17 Sustainable Development Goals (SDGs) to end poverty, protect the planet and ensure prosperity for all as part of a new sustainable development agenda with specific targets to be achieved over the next 15 years. At a more local level, we routinely and increasingly observe social trends over environmental issues such as plastics in the ocean, as seen recently following David Attenborough s Blue Planet II series, and in recent years by widespread support for initiatives such as The Ocean Cleanup project led by Boyan Slat, a Dutch entrepreneur. Renewi has sponsored the latter, through its current and legacy businesses, for the past few years. Renewi works to prevent global contamination by taking in over 14 million tonnes of waste every year from companies and households, some of it contaminated or even hazardous. 20 RENEWI plc Annual Report and Accounts 2018 For investors:

2 RENEWI ACTIVELY SUPPORTS ITS CUSTOMERS TO ACHIEVE THEIR RECYCLING TARGETS We recycle or recover 90% of this waste: around 65% of it becomes a secondary raw material and the remainder is transformed into fuel to produce green heat or energy. By doing so, Renewi directly works to meet the needs of five of the UN s SDGs, including: Responsible consumption and production; Sustainable cities and communities; Climate action; Affordable and clean energy; Clean water and sanitation. Its work indirectly further supports even more of these goals. Sustainability is at the core of what we do every day. We turn waste back into valuable materials. It is therefore unsurprising that Renewi is listed on the FTSE4Good Index and has recently been able to refinance almost its entire borrowings as Green Loans and Bonds. Customer demand Companies inevitably respond to societal trends such as the demand for greater sustainability because their customers and employees demand it. We see a growing number of major OEMs and consumer brands making new commitments to reduce their carbon footprint, increase their recycling rates and use more secondary raw materials. Particular areas of focus at the moment include the cradle to cradle circular use of metals and plastics, the reuse rather than destruction of some components out of discarded products, and the optimisation and effective use of out-of-date food. Overall, there is an increasing demand for the recycled, or secondary, products that Renewi creates from its operations. Renewi actively supports its customers to achieve their recycling targets, secure secondary raw materials, and even to create a completely circular solution in which their products are collected, recycled and the raw materials supplied back to the start of their manufacturing process. Renewi is working with clients such as Miele, Philips, Akzo Nobel, Owens-Illinois and an increasing number of others to help them give new life to their old materials. Regulatory push Regulation will drive further structural growth to recycling rates and the circular economy. The Paris COP21 agreement on climate change, the UN s Sustainable Development Goals and the European Union s Circular Economy Package are all examples of how leading policy makers are setting an agenda to stimulate the markets in which we operate. Indeed the evolution of the recycling market in Europe is mainly due to the implementation of EU or national directives and legislation. We are now already experiencing an increasing drive towards a full circular economy through stretching recycling targets within the waste framework directive across the EU, the implementation of a landfill ban, the packaging directive and most recently the Circular Economy Package. Our biggest market, the Netherlands, has a stated goal to be a full circular economy by 2050, being 50% circular by In practice this means, for example, that construction companies will need to use 50% secondary raw materials from 2030, and government tenders already reward bidders who can achieve this aim early. The government is also seeking to increase recycling rates more generally with a stated ambition to increase the household waste recycling rate from around 50% today to around 75% as soon as Legislation has also been tightened with measures such as taxes on incineration to stimulate recycling and divert waste from incineration. Landfilling waste has for a long time been strictly regulated in the Netherlands only waste that cannot be recycled or incinerated can be landfilled. In Belgium, there is also ever stricter environmental and recycling legislation. The VLAREMA legislation that was introduced in Flanders in 2014, promoting separated waste collection and recycling, is being tightened. OVAM, the Flemish regulator, is increasing pressure on waste companies and waste producers to ensure effective source separation of waste so that it can be most effectively recycled. For customers: Annual Report and Accounts 2018 RENEWI plc 21

3 OVERVIEW CIRCULAR ECONOMY CONTINUED UNDERPINNING LONG TERM STRUCTURAL GROWTH The three drivers of environmental need, customer demand and regulation are combining powerfully to drive structural growth in the segments of the market in which Renewi operates. Specifically, we can expect to see: Increasing recycling rates within the waste market driving higher volume growth for our recycling activities than the overall waste trend; More stringent legislation on source separation over time helping larger and more sophisticated waste collectors who are better able to manage multiple waste input streams and offer one stop solutions to customers; Growth in the use of secondary raw materials in construction supporting the production of materials by Netherlands Commercial (wood, paper) and ATM (soil) as well as the new innovative products under the Forz product name developed by Mineralz; Growth in the use of secondary raw materials throughout Europe in packaging glass production and insulation products (glass wool) supporting volume growth in our Maltha business; More OEMs seeking partnerships to source stable and high quality metal and plastic secondary raw materials into their production processes, in the volumes companies such as Renewi process; Growth in available volumes of sludges, source segregated organics and out of date food materials for organic processing; and ` ` Increased investment and partnership opportunities in innovation to convert and reprocess waste to create more valuable secondary materials, such as waste-to-chemicals, organic waste-to-food etc. 22 RENEWI plc Annual Report and Accounts 2018 For investors:

4 WITH SUSTAINABILITY AT THE VERY CORE OF OUR BUSINESS, WE MAKE SUSTAINABILITY TANGIBLE FOR OUR CUSTOMERS AND FOR SOCIETY BY CREATING VALUE FROM WASTE Renewi connects the value chain In the circular economy we do not believe that it will be enough simply to be an efficient provider of waste collection and basic treatment services. Nor do we believe in the longer term in the investment of very large amounts of our capital in incinerators that destroy the valuable resources hidden in waste. We believe in turning waste into product, making us uniquely placed to meet the needs of this growing market. We have an unrivalled breadth of collection and treatment services in order to meet the needs of the waste producers. This gives us access to over 14 million tonnes of used materials from which to create the required products to meet the needs of buyers of secondary raw materials. We have unique insight into what is needed to connect the value chain, which we then deploy in selectively assessing and filtering the large number of innovation opportunities that we identify or our partners bring to us. We are committed to innovating in sustainability, with a business model that is set up both to identify and select winning opportunities. The knowledge and experience that we have from our operations at both ends of the value chain can also be used during the early stages of the design of new products or to optimise manufacturing processes. We also have a unique network of relationships and partnerships with governments, regulators, municipalities, companies and investors that we believe will over time position Renewi as the partner of choice for sustainability initiatives. With sustainability at the very core of our business, we make sustainability tangible for our customers and for society by creating value from waste. As an example of this network, Renewi was a founding partner of the Circular Coalition, a group of around 30 large companies in the Netherlands. Partners agreed to share knowledge and experience in a bid to accelerate the transition towards a circular economy. This has been done in the past year through a series of masterclasses focusing on topics that include circular procurement, business modelling and product design. A small but very tangible outcome was the cooperation with Renewi, KPN and KNSB to produce the medals for the Dutch speed skating championships from precious metals mined by the recycling of old mobile phones (see page 50 for more details). Renewi is now developing a Circular Coalition 2.0 that will focus on pilot projects around specific material flows or with a specific geographical area. OUR GROWTH JOURNEY Value Our vision is to be the leading waste-toproduct company. This differentiates Renewi as a company that does more than act as a collection service for waste generators to one that focuses on extracting value from waste, rather than on its disposal through mass burn incineration or landfill. We have a clear growth journey ahead to deliver sustained growth and attractive returns in three waves: WAVE 1 Deliver integration WAVE 2 Improve margins DIGITALISATION 2020 Milestone WAVE 3 Strategic expansion Time Wave 1: Deliver integration including committed annual cost savings of 40m in 2019/20. Wave 2: Improve margins through our own self-help initiatives of commercial effectiveness, continuous improvement and off-take management. Wave 3: Strategic expansion by investing in innovation, broadening our products and services and investing in the growing circular economy. Underpinning these actions is a further initiative on digitalisation, which is initially focused on driving efficiency through automation, robotics and digitalising interfaces with customers and suppliers. For customers: Annual Report and Accounts 2018 RENEWI plc 23

5 OVERVIEW CIRCULAR ECONOMY CONTINUED INNOVATION PORTFOLIO The i of Renewi stands for Innovation and it is one of our core values Innovation at Renewi is about improving how we do things and improving our range of products and services. Our vision to be the leading waste-to-product company already differentiates us from our competitors. By converting waste into product we are at the leading edge of sustainability with a focus on extracting the maximum value from waste. We seek to go beyond simply recycling: we aim to produce high quality secondary raw materials with a better environmental footprint than virgin raw materials and at a competitive price. Innovating our existing processes Innovation starts with our own operations in terms of being better every day. We demand an open mindset of ourselves throughout our integration journey and in our general way of working. We are seeking to take the best of both legacy companies as we build our new Renewi operating model, and then to improve further. This requires our people to let go of familiar ways of doing things, in order to move to one aligned and common way of working. This bold and open approach to change is supported by our irenew change management programme that is being deployed in areas undergoing the greatest degree of change. Continuous improvement (CI), or LEAN, is a way of thinking as well as a well-recognised set of practical tools by which organisations become more efficient every day. Our legacy Shanks business was already rolling out LEAN in its main operating facilities before the merger. A system of such tools and processes will now be rolled out across the whole of Renewi, coordinated by Bas Blom, the Managing Director of our Monostreams Division. Tactical use of CI has already delivered improvements in certain facilities such as the bulky waste sorting line at Hemweg, Amsterdam. The opportunities remain significant and are a core part of Wave 2 of our strategy to improve margins. Innovating new products and services The emerging circular economy is a dynamic environment that will require agility and a commitment to innovation in order to maximise the opportunity. Wave 3 of our core strategy is strategic expansion and innovation is at the heart of this growth. We are building our portfolio of innovation projects, even while we focus on integration. We have an innovation portfolio of more than 100 potential opportunities, many of them capital-light where we deploy our expertise and our access to waste to support other innovators or customers. We are an enabler to help partners bring new technologies to market using our large base of waste as an input and our experience of how to bring the waste up to the required quality levels to operate in a stable process. All projects must ultimately meet our key filters of sustainable competitive advantage and target financial returns. Innovation within Renewi often takes place within the divisions and close to our customers and partners. It is coordinated by a small but experienced central team which both supports these divisional projects and focuses on some longer term and potentially more transformational projects. EXAMPLES IN OUR INNOVATION PORTFOLIO PRODUCT PARTNER SIZE STATUS Duivense Tegel A sustainable tile made from residual household waste for paving Bio-plastics Pilot bioreactor to produce bio-plastics from organic waste r-abs Plastics Recycled plastic into new Senseo coffee machines Collect a cup Process to separate paper and cardboard from plastic in cups Purified Metals Company (PMC) Removing asbestos from steel Betonindustrie De Hamer and AVR Paques and Delft University of Technology Large Large Philips Small In production Wepa (paper mill) Small In production In production for one incinerator and in negotiation with others Early stage trials PMC Small PMC facility due to open in 2020 Size: Expected EBIT per annum Small < 0.5m, Medium 0.5-1m, Large > 1m 24 RENEWI plc Annual Report and Accounts 2018 For investors:

6 For customers: Annual Report and Accounts 2018 RENEWI plc 25