2013 Corporate Citizenship Report

Platteville Farm, Colorado Table of Contents Table of Contents

Description Pages Description Pages

Table of Contents 2 Environmental Stewardship Cont.

Waste & Recycling 34 Introduction – Letter from Marc Peperzak, Chairman & CEO 4 Farm Waste 34 Plant Waste 36

2012 Overview 7 Biodiversity 36 Soil Health 37 37 Aurora Organic Dairy At-A-Glance – Mankind Meets Cowkind 9 Energy & Greenhouse Gas Emissions 39 Farm Enteric Emissions Farm Utility Emissions 39 About Aurora Organic Dairy 10 Plant Emissions 40 Our History 10 Product Packaging 40 Timeline 10 Transportation & Distribution 41 Company Overview 11 12 Healthy, Nutritious Food Our People 43 13 Governance & Oversight Introduction 43 13 Commitment to Organic Diverse Workforce 43 Employee Satisfaction 44 Delivering Values & Value 15 Comprehensive & Competitive Benefits 45 Company Values 15 Validus Worker Care Certification 45 Supply Chain 16 Employee Engagement Goals 46 Production 16 Community & Philanthropy 47 Milk Logistics & Utilization 16 Milk Processing 16 Contact Information 49 Farm-to-Plant Feedback Loops – High Quality Standards 17

Sustainable Scale Organic Dairy Production 19 Appendix Sourcing 20 Global Reporting Initiative (GRI) G3 Indicators - C Level with Food Processing Supplement 50

Stakeholders 22

Animal Welfare 23 Introduction 23 Strong Foundation for Animal Care 24 Animal Welfare Policies & Procedures 24 Validus Animal Welfare Certification 26 Animal Welfare Goals 26

Environmental Stewardship 28 Foundation for Sustainability 29 Corporate Citizenship Working Groups 29 Lifecycle Assessment of an Integrated Organic Dairy Company 30 Sustainability Reporting Boundary 31 Custom Sustainability Tracking Tool 32 Water 32 Processing Plant Water 32 Farm Water 33

Aurora Organic Dairy 2 Aurora Organic Dairy 3 2013 Corporate Citizenship Report

I have been involved with organic milk production since 1993, and responsibility, and include manager-level staff from throughout the in 2003 I decided to convert all of my company’s to organic. organization. These groups are responsible for goal-setting, and their Introduction It still impresses me the extent to which organic dairy products work helped to form the basis for this report. have made inroads with consumers and retailers across the country. The path has not always been straight and smooth. Despite the In 2008, when we began to review and track the energy we use fact that the federal organic laws are scale neutral, because of and the GHGs we emit, we determined there were significant our size, certain groups have challenged some of AOD’s practices opportunities in our operations to reduce our impact on the related to organic dairy production. These challenges culminated environment. Armed with data, we increased our awareness of our in a class action lawsuit, which was originally filed in late-2007. environmental impact areas and identified opportunities for greater Aurora Organic Dairy settled the case in 2013, on behalf of itself efficiency. Our company-wide GHG emissions per half-gallon of milk and its customers, without admitting any wrongdoing and receiving sold increased by 2% and our energy use per half gallon of milk sold confirmation from the federal courts that our company at all times declined by 0.5% in 2012 compared with 2011. A 10% reduction maintained valid organic certificates for our dairy products. With the in our farms’ overall energy use in 2012 offset a 3% increase at lawsuit fully behind us, we can continue to help develop and lead the processing plant to drive the slight reduction in energy use per the organic dairy industry. One of the ways we do this is through our half-gallon of milk sold in 2012. While this is our benchmark year commitment to sustainability and social responsibility. for goal-setting, and our results in 2012 were achieved without major initiatives in place, we believe our focus on data tracking, and As a demonstration of our steadfast commitment to corporate structure we put into place in 2012 will allow us to reach our short- citizenship, we have developed our first-ever Corporate Citizenship and long-term goals into the future. Report. This report contains data on our comprehensive life cycle assessment (LCA) for energy use, Greenhouse Gas (GHG) emissions, 2013 Company Goals water use, landfill waste and recycling programs. We started this

Platteville Dairy Farm, Colorado work in 2008 with the University of Michigan’s School of Natural Resources and Environment. Each year, for three years, groups of INTRODUCTION 2012 OVERVIEW AURORA ORGANIC ABOUT AURORA DELIVERING STAKEHOLDERS ANIMAL WELFARE ENVIRONMENTAL OUR PEOPLE graduate students came out to Colorado to study our facilities and % % DAIRY AT-A-GLANCE ORGANIC DAIRY VALUES & VALUE STEWARDSHIP gather data to complete the first ever LCA of a large-scale integrated 3 3 organic dairy company. We have built on that work by developing Reduction in Reduction in Dear friends of Aurora Organic Dairy, a custom data tool to track our sustainability performance within our operations boundary, and now have five years of data on GHG GHG emissions energy use As our Company has evolved, so have our focus and commitment emissions, energy use, water and solid waste by facility, which can to sustainability and social responsibility. At Aurora Organic Dairy be used as part of our strategic decision-making processes. Per half-gallon of milk sold in 2013 vs. 2012 baseline (AOD), we pride ourselves on the many initiatives we have put into place to tread more lightly on the planet, to treat our people and Due to the fact that this is a large body of work, as the data we track Our one-year goals are modest, as we are just now wrapping our animals with respect, and to give back to the communities that within our operating boundary is primary data covering our cattle arms around our data collection process and internal structure support our business. populations, feed purchases and utilities usage, in this first report, for sustainability goal-setting. We made great strides in 2012 to establish company-wide teams devoted to developing plans to Livestock and food production systems have been criticized as we opted to cover what we control within the LCA. While the LCA being large sources of environmental impact worldwide. Because covers the entire life cycle of a half-gallon of milk, our first Corporate reduce our environmental impact, and to improve our worker and we own our milk processing and 85% of our supply, Citizenship Report is focused on our farms and plant because animal well-being. We provide information about these initiatives and their various projects in each chapter of this report. and closely manage any outside milk we purchase, we can study we own those assets and can set goals for improvement. Where the environmental impacts closely. This includes measuring our appropriate, we do discuss the LCA results, and we intend to add greenhouse gas emissions, energy use, solid waste and water use Thus far in 2013, we have opened a new dairy farm in Gill, Colo., more life cycle stages - such as transportation - to our data tracking in an effort to conserve our resources at every stage, and encourage which is part of our High Plains Dairy complex. This farm allows and goal-setting activities in the future. our suppliers to do the same. us to convert our farthest dairy – the Pepper Dairy in Dublin, Texas – into a heifer-rearing facility, and brings the majority of our milk True sustainability encompasses more than the certified organic In addition to these sustainability indicators, at Aurora Organic Dairy, supply to Colorado, thereby reducing the transportation distance label. It’s a commitment to a broader, more far-reaching philosophy we believe corporate citizenship and sustainability reach beyond and associated emissions in our raw milk distribution. Additionally, of biodiversity, conservation and the wise use of the earth’s limited environmental factors. In this report, we have included a complete in 2013, our processing plant is undertaking a major expansion, natural resources. As a life-long dairy operator, it is my personal view of our business, and we have described how our focus on people, which will bring a cold storage facility on site, and will increase the vision to conserve our resources so that we leave as much – if not animals and communities also contributes to our ability to continue plant’s utilization. By having a cold storage facility at the plant, we more – of the earth’s bounty for future generations. to grow responsibly. In 2012, we formalized our commitment by significantly reduce the transportation emissions of shuttling milk to Marc Peperzak, Chairman & CEO establishing internal groups that cover both sustainability and social our third-party cold storage facility in Henderson, Colo.

Aurora Organic Dairy 4 Aurora Organic Dairy 5 2013 Corporate Citizenship Report

As a values-based organization, we follow key principles to direct our We plan to use this Corporate Citizenship Report as a benchmark to business decisions and development. We balance our need to be a measure our progress. We will update this report at least every other sustainable business – a profitable business – against the decisions we year, and will report against the goals we have outlined here. 2012 make in the areas of sustainability and social responsibility. We know Overview we are not perfect, but we do work to build a cultureof continuous Since we converted the Platteville Dairy farm to organic in 2003, improvement. At the end of 2012, we employed approximately 500 it has been Aurora Organic Dairy’s mission to bring organic milk people. These employees work hard every day to develop better ways to mainstream America with the highest quality and freshness, of doing things, and to continually improve our business. We would more affordable pricing and improved availability for consumers. not be able to set realistic sustainability goals – nor would we achieve We do this through our efficient use of resources and through our them – without the commitment of our people. commitment to make better the many lives we touch.

Sincerely,

Marc Peperzak, Chairman & CEO

Little Calf Ranch, Eaton, Colorado

IODCIO 2012 OVEVIEW AOA OAIC AO AOA DEIVEI SAEODES AIA WEAE EVIOEA O PEOPE DAI AAACE OAIC DAI VAES & VAE SEWADSIP

Aurora Organic Dairy 2012 Highlights

18% employee growth AOD Farms Total Herd Growth

600 30000

495 4,120 500 418 25000

400 2,725 339 360 2,220 300 20000 2,320

300 2,860

200 15000 # OF EMPLOYEES

100 # OF COWS 10000 0

5000

‘08 ‘09 ‘10 ‘11 ‘12 15,560 13,685 15,400 17,560 20,920 YEAR 0

‘08 ‘09 ‘10 ‘11 ‘12 YEAR

Includes on-site young stock and heifers Total cows, dry cows and springers ONE new farm added in Colorado in 2012

Aurora Organic Dairy 6 Aurora Organic Dairy 7 2012 Corporate Citizenship Report 2013 Corporate Citizenship Report

IODCIO 2012 OVEVIEW AOA OAIC AO AOA DEIVEI SAEODES AIA WEAE EVIOEA O PEOPE DAI AAACE OAIC DAI VAES & VAE SEWADSIP

2% increase in CO2e emissions per 75% of Plant’s water is pre-treated MANKIND MEETS COWKIND Aurora Organic Dairy At-A-Glance half-gallon of milk sold in 2012 and returned to sanitation district As of September 2013

People 525 Employees 7% Home Office 80.0 2.0 64.2 65.0 61.4 48.8 23% Plant 1.85 66.6 48.5 1.81 46.1 1.81

1.75 1.75 70% Farm

53.3 We ended 2012 with 495 employees. This employee count was taken in September 2013. e

2 40.0 1.5 Organic Dairy Farms

kg CO 26.6 11,200 organic cows & calves MILLION GALLONS Colorado Little Calf Ranch & Dairy Farm on these 4 farms 1.25 13.3 High Plains Dairy Complex Gill, CO High Meadow Free-Stall Barns with exercise lots* 0.0 Dairy Farm 1.0 High Plains 3,745 organic pasture acres Dairy Farm ‘10 ‘11 ‘12 Average Normalized Ray-Glo Loose Housing* ‘09 ‘10 ‘11 ‘12 YEAR Dairy Farm GHG emissions YEAR (kg CO2e/half gal eq milk sold) Plant Water Consumption 900 organic feed crop acres

Pretreated and Returned Platteville *Data based on monthly averages Dairy Farm 1,460 organic cows & calves Platteville, CO

Loose Housing*

630 organic pasture acres

Yuma, CO 2,000 feed crop acres in transition

Texas Coldwater Dairy Farm 8,080 organic cows & calves 50% of Plant Waste Stratford, TX Loose Housing & Free-Stall Barns with exercise lots*

Recycled in 2012 3,810 organic pasture acres

100% of Farms certified for Pepper Dairy Farm 1,475 organic cows & calves Animal Welfare by Validus Dublin, TX Free-Stall Barns with exercise lots*

We ended the year 2012 with 20,920 mature cows. These herd numbers were taken in September 2013. All received top rating of “Excellent” 1,470 organic pasture acres *Tie-Stall Barns are NEVER used on 0.5% decline in energy use per Aurora Organic Dairy farms

half-gallon of milk sold in 2012 Animal Welfare Certification Validus Animal Welfare Certification

1.75 All AOD farms are certified by Validus and have “excellent” ratings. 1.61 1.66 1.64 1.63 99% Score for Milk Quality in 2012 1.5 Organic Feed Annual Safe Quality Food Audit Scores Independent Farmers Feed Pasture – maximum score=100% We support approximately Rations Include: certified All organic livestock older 150 independent farmers organic pasture forages than 6 months pasture who manage more than from grazing, alfalfa hay, regularly during the grazing

MJ ENERGY 50,000 acres of organic grass hay, silages, corn, season. On average, pasture 1.25 farmland to grow barley, wheat, soy bean provides at least 30% of dry 100 feed crops. meal, soy hulls and matter intake for a minimum 99% 99% 99.2% organic approved vitamin of 120 days over the course 98.8% and mineral supplement. of the grazing season.

98 1.0 Milk Plant Platteville Milk Plant 96 Platteville, CO ‘09 ‘10 ‘11 ‘12 Average Normalized YEAR Energy Use (MJ/Half gal eq milk sold) 94 Testing • Temperature Quality • Multiple Quality Awards from • Acidity Achievements World Dairy Expo and All Star QUALITY SCORE % Quality tests conducted • Antibiotics Dairy Association (see pg. 19) include: 92 • Bacteria • Extended HTST Shelf Life • Somatic Cell Count • Ultra Pasteurized Shelf Life • Flavor • Food Safety: SQF Level 3

90 Plant expanded to add 40% Organic Products Retail Ingredients

capacity in late 2011 ‘09 ‘10 ‘11 ‘12 • Half-gallon milk • Bulk milk • Gallon milk • Bulk YEAR • Salted and unsalted • Nonfat dry milk powder

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Aurora Organic Dairy 8 Aurora Organic Dairy 9 2013 Corporate Citizenship Report

As we grew, we added organic dairy farms and expanded our plant to keep up with the burgeoning consumer demand for organic dairy products. We have also started to acquire land to grow our About Aurora 2005 Aurora Organic Dairy converted a Texas dairy – now the Organic Dairy Pepper Dairy – to 100% organic dairy production own organic feedstuffs for our dairy cows to increase the vertical integration of our operations. 2006 High Plains Dairy in Gill, Colorado was developed as the company’s greenfield model for an organic dairy farm. Company Overview 2007 Coldwater Dairy in Stratford, Texas was built to model the High Plains dairy facility Our integration of organic milk production and processing, as well as

2008 Aurora Organic Dairy began tracking its environmental our dedication to private brand success, offers a unique proposition impact and grew its commitment to sustainable to retailers. This highly controlled supply chain enables store practices brand marketers to offer organic dairy products with the greatest traceability, most consistent standards and highest quality available. 2010 Little Calf Ranch in Eaton, Colorado was established to raise organic-born calves

2011 In addition to the organic pasture surrounding its dairy farms, AOD began purchasing land to grow organic feed crops for its dairy cows

2012 Little Calf Ranch Dairy in Eaton, Colorado was built

2013 High Meadow Dairy in Gill, Colorado opened as part of Milk Plant, Platteville, Colorado the High Plains Dairy complex

IODCIO 2012 OVEVIEW AOA OAIC AO AOA DEIVEI SAEODES AIA WEAE EVIOEA O PEOPE DAI AAACE OAIC DAI VAES & VAE SEWADSIP Feed Grower, Longmont, Colorado

Our History Hyrum, UT Butter Processing (third-party) Timeline At Aurora Organic Dairy, our mission is to bring organic milk to mainstream America with the highest quality and freshness, 1978 Aurora Dairy Corporation founded in Jerome, Idaho Little Calf Ranch High Plains Ft. Morgan and Dairy Farm Dairy Farm Powder Processing more affordable pricing and improved availability for consumers. (third-party) BOULDER HQ High Meadow Yuma Feed Crops Our Company was founded and continues to be led by CEO and 1980 Company central office established in Boulder, Colorado Dairy Farm Platteville Dairy Farm Chairman, Marc Peperzak. Marc Peperzak has been in the dairy Phase I of the Platteville, Colo. Dairy farm developed Platteville Milk Plant industry for more than 30 years. He, organic dairy industry pioneer, 1980s- Aurora Dairy operated dairy farms in Florida, Georgia, Texas, Mark Retzloff, and their management team helped to establish the 1990s Utah Idaho and Colorado leading U.S. organic dairy brand in the 1990s. Colorado Kansas 1992 Aurora Dairy began producing organic milk for start-up After nearly three decades as a leading conventional dairy Horizon Organic Dairy. Marc Peperzak was a founder of producer, in 2003, we became exclusively dedicated to producing Horizon Organic Dairy, along with Mark Retzloff Coldwater Dairy Farm and processing organic dairy products. We leveraged our 30 years of dairy production and processing experience, combined with 2003 The Company committed to being exclusively an organic dairy our expertise in the organic dairy industry, to become the leading producer and converted the Platteville farm to 100% organic production producer and processor of store-brand organic milk and butter for U.S. retailers. We built our organic-dedicated milk processing 2004 Aurora designed and built its organic milk processing plant facility in Platteville, Colo. in 2004, and began shipping store- in Platteville adjacent to the Platteville farm, and shipped Winnsboro, TX brand organic milk to our first retail customer later that year. organic milk to its first private brand retail customer Butter and Powder Processing (third-party) Texas Pepper Dairy Farm

Aurora Organic Dairy 10 Aurora Organic Dairy 11 In 2012, our operations included central offices in Boulder, Colo., five Healthy, Nutritious Food which is the executive committee. The Board of Directors meets in organic dairy farms in Colorado and Texas, a calf ranch in Colorado, person quarterly to share company updates and reports, provide and an on-farm organic milk processing plant near Platteville, Colo. With an exclusive focus on organic dairy products, we provide strategic oversight, approve budgets and business plans, and discuss In 2012, we added one new farm to our operations, the Little Calf healthy, nutritious food for American consumers. The Dairy Food important matters to the company, such as expansion, customer Ranch Dairy Farm in Eaton, Colo. and to date in 2013, we have Group is an integral part of the USDA’s “My Plate” food and nutrition updates, new product development and sustainability initiatives. added a farm, the High Meadow Dairy Farm, in Gill, Colo. plan for children and adults. Numerous health benefits have been The CEO, as Board Chairman, and executive management team use associated with milk and consumption, and milk these quarterly meetings to provide recommendations and direction contains high levels of calcium, phosphorus, magnesium, protein and to the Board, but no formal mechanism for employee communication other vitamins. Dairy products support healthy bones and teeth, and with the Board currently exists. when consumed as part of a balanced diet, milk and dairy products have numerous other health benefits. For more information about the health and nutritional benefits of milk and dairy products, please visit http://www.milk.co.uk/page.aspx?intPageID=73.

We process milk in four different contents: non-fat, 1%, 2% and whole to meet consumer preferences, with the lower fat content milk being lower in saturated and unsaturated . We also offer milk with added Omega 3 fatty acids for consumers who want to increase their intake of Omega 3 in their diets.

Platteville Dairy Farm, Colorado Aurora Organic Dairy Milk Sales by Fat Level In terms of marketing the nutritional benefits of milk and dairy Commitment to Organic Pepper Dairy Farm, Dublin, Texas products, as a private brand supplier, we are not responsible for 17% – Fat Free marketing or advertising activities on behalf of our retail customers. 26% – Whole Since 2003, we have been 100% committed to organic dairy However, we do include the nutrition facts panel and ingredients list production and processing, with a focus on serving the private brand on every product’s packaging, as well as the code date for freshness. market. We wanted to reach more people with the benefits of organic Additionally, we provide our retail customers with the facts about our 38% – 1% dairy products (please refer to diagram on page 14) at a more production, processing, quality and animal welfare standards so that affordable price. This led to our integrated business model in which they can include this information in their marketing activities. When 19% – 2% we manage both organic milk production and processing, and we we develop product packaging for our customers, we adhere to all have since further integrated by growing some of our own feed crops. standards required by the Food & Drug Administration (FDA) and the U.S. Department of Agriculture’s (USDA) Our organic dairy farms in Colorado are certified organic by the to ensure labeling requirements are met. To help ensure broader We work with a select dairy farm that provides us with additional As the chart reveals, 1% milk is the highest-selling fat level, which Colorado Department of Agriculture, and our Texas farms and consumer access to the nutritional and health benefits of organic raw organic milk, the majority of which is processed and packaged means the majority of consumers choose a lower fat content in the milk processing facility in Platteville, Colo. are certified by Quality for our customers in our Platteville processing facility. This farm dairy products, in 2012 we donated 28,000 gallons of organic milk they purchase for their families. Assurance International (QAI). Each facility undergoes an annual meets our standards for quality milk production and animal welfare milk to hunger relief organizations in the communities where organic inspection audit and certification to ensure its organic protocols (please refer to Milk Sourcing Policy on page 21 of this we do business. As shown on the nutrition facts panel for 1% milk on the following systems plans are consistent with the requirements of the USDA report). On average, our own farms produce 85% of the milk page, one cup of 1% milk has 100 calories, 25 calories from fat, National Organic Program regulations. We currently manage we bottle. 1.5 g of saturated fat, 0 g of trans fat, 10 mg of cholesterol, 12 g approximately 22,000 mature organic cows across our five farms. Governance & Oversight of sugar and carbohydrates, and 8 g of protein. We are required by We process ultra-pasteurized organic white fluid milk in half-gallon law to add vitamins A and D to non-fat, 1% low-fat and 2% reduced For a dairy cow to produce certified organic milk, she must be and plastic gallon jugs. Additionally, we work with third- We are a privately held company that is majority owned by private fat milk. These vitamins are found naturally in milk and are fat raised and treated in accordance with the USDA National Organic party manufacturing facilities to manufacture the cream from our equity partners. As such, we do not publicly disclose financial and soluble. A certain amount of the vitamins are lost when the fat levels Program’s rigorous standards. Dairy animals must be managed milk into organic store-brand butter for our retail customers. We also ownership information. Our total annual sales in 2012 increased by provide non-fat milk to third-party facilities to make organic non-fat in milk are reduced. Vitamin D is also added to the whole milk we organically for at least one year prior to producing certified organic 29% compared with 2011. dry milk powder, which is primarily used for milk solids fortification. process to maintain a consistent level of vitamin D in the milk. It is milk. During the one-year transition, the cow’s feed – including Customers also purchase raw organic bulk milk from us to process common for dairy processors to add vitamin D to milk in the U.S., as pasture during the grazing season – must be organic, and she must In terms of Governance, our Board of Directors is comprised of five into other products, such as aseptic, single-serve . it has become a consumer expectation and it ensures the milk has never be treated with unapproved substances, such as antibiotics or men: one company director, Marc Peperzak, Chairman of the Board; These products are packaged for our customers’ store brands. We consistent levels of vitamin D, which can vary due to several factors synthetic growth hormones. three directors from our private equity partners; and one outside currently do not sell to any international markets, as we only serve affecting dairy herds, including seasonality, diet, stage and organic industry director. There is one committee of the Board, the United States, and our milk is sold in all 50 U.S. states. exposure to sunlight.

Aurora Organic Dairy 12 Aurora Organic Dairy 13 2013 Corporate Citizenship Report

In addition to transitioning an animal to organic over one year, a calf born from a mother cow that is treated organically for the last third of gestation is born organic. These organic calves are then Delivering Values raised according to organic protocols at our farms – or we work with & Value independent heifer-rearing farms – to raise our animals organically until they are ready to birth a calf and begin their lactation cycle. Organic dairy cows must receive at least 30% of their dry matter intake from pasture for a minimum of 120 days during the grazing season.

Organic cows cannot be treated with any antibiotics or synthetic substances prohibited by the USDA National Organic Program, growth hormones (rBGH or rBST). At Aurora Organic Dairy, we focus including synthetic pesticides, herbicides, fungicides and fertilizers. on preventing illness and disease, and maintaining a high level of Additionally, organic crops cannot be irradiated or treated with cleanliness throughout our facilities to help ensure the herds sewage sludge, or come from genetically modified or treated seed stay healthy. stock. Certified organic farms manage soil fertility using cultivation practices, crop rotations and compost. Crop pests, weeds and For crops and pasture to be certified organic, the land must undergo diseases are controlled using physical, mechanical and biological a three-year transition period. During this time, farms cannot use means compliant with organic standards.

Organic Dairy Production

Platteville Dairy Farm, Colorado Feed that is certified organic Organic livestock receive at least Organic cows consume organic is produced without synthetic 30% of their dry matter intake feed and pasture. They are never IODCIO 2012 OVEVIEW AOA OAIC AO AOA DEIVEI SAEODES AIA WEAE EVIOEA O PEOPE DAI AAACE OAIC DAI VAES & VAE SEWADSIP pesticides, herbicides, fungicides from organic certified pasture for treated with antibiotics and are or fertilizers. No toxic sewage a minimum of 120 days during never given synthetic growth sludge. No GMO seed stock or the grazing season. hormones, or other unapproved GMO treated seed is allowed. substances. Company Values

We Believe …

Cow Care ​ Stakeholders The health and well-being of our dairy animals are our top priority. The needs of our stakeholders are as important as our own.

Organic Satisfaction Organic agriculture removes the use of synthetics from food We must earn our customers’ business every day by delivering production, reduces our impacts on the environment and provides relevant, high-quality products at an exceptional value. consumers a healthful choice they want. Innovation Integrity New ideas and entrepreneurship from stakeholders and Strong relationships are built on trust forged by openness talent across our organization drive industry leadership. and honesty. Returns People Financial health and return to shareholders are necessary Employee satisfaction and development are keys to our success. to sustain our business and mission.

Aurora Organic Dairy 14 Aurora Organic Dairy 15 Supply Chain In 2009, we started raising 100% of the female calves born on our Our Platteville processing plant only handles organic milk, and we To ensure the quality is maintained throughout the milk supply dairy farms as organic-born replacement animals for our herds. We only produce and process milk for our customers’ retail store brands. chain, our milk is quality tested seven times from our raw milk tanks To achieve our mission of bringing organic milk to mainstream have established calf ranches to raise these animals, and continue to Since we are 100% dedicated to organic, we eliminate any concerns at the farms through transport and processing. Our quality lab at the America, Aurora Organic Dairy was established as a self-sufficient, work with independent farmers who assist with growing heifers until with commingling of conventional and organic milk at our processing Platteville processing plant conducts many of these tests to ensure integrated company that produces and processes our milk in a the animals are ready to come back to our farms as dairy cows. plant. Our organic-dedicated processing removes the competition for the highest quality milk is processed for our customers, including: company-owned milk plant. This means we own and manage many organic manufacturing time that exists in conventional milk plants of our assets – from crops to cows to cartons. This not only allows that also process organic milk. Since we are 100% dedicated to • Temperature us to focus on efficiencies, but it also ensures the highest quality Milk Production private brand organic dairy, we are able to provide our customers’ • Acidity retail brands with the priority and care they deserve. and product traceability throughout the entire supply chain. We are • Antibiotics proud of this model, and believe it is central to producing the highest The milk production stage of our business includes five organic dairy • Bacteria quality organic dairy products. farms and a total herd of approximately 22,000 mature organic dairy cows. The cows are fed a diet of organic feed and pasture, and • Somatic Cell Count Farm to Plant Feedback Loops: High Quality Standards are raised in accordance with organic protocols, as described above. • Composition We milk the cows two or three times each day and they produce As both a farm milk producer and processor, we monitor our quality • Flavor high-quality raw milk, nearly all of which is shipped directly to our every step of the process, from the organic feed and pasture our Platteville milk processing facility to be processed and packaged cows consume, to our milk production, processing and distribution. In 2011, to make further improvements in our milk quality and for our retail customers’ store-brand labels. For products other than This integration allows the Company to have improved visibility, to ensure the milk tankers coming to our Texas farms are properly white fluid milk, we ship the milk or cream to third-party plants management, information and control over the entire milk production sanitized, we invested in truck washes at our Coldwater and for processing. and bottling process, which improves our ability to share feedback Pepper dairy farms in Texas. All tankers are washed at our plant with the farm production and milk logistics teams, and respond after unloading the raw milk, and those clean tankers go directly Milk Logistics & Utilization quickly to control quality. to our Colorado farms for reloading. To ensure high standards for cleanliness and to protect the quality of our milk, prior to loading farm milk into the truck from the dairy farm bulk tanks at the Texas While we do not own our own fleets, we manage a complex system Independent feed grower, Wellington, Colorado farms, the tankers are completely washed with a clean in place (CIP) of logistics and utilization to ensure the milk is shipped from farm system, both when they leave the plant, and when they arrive at the Our integrated organic dairy model starts with certified organic to plant, and quickly processed to maximize quality and freshness. Texas farms. feed crops. We currently manage more than 9,000 acres of organic A team of logistics coordinators manages the raw milk transport pasture land used to graze our dairy cows during the grazing season, from our farms to our processing plant, which is delivered in milk and in 2011, we began to purchase or lease farmland to grow tankers. From there, we determine the best way to optimize our additional organic feed crops for our animals. With pasture and feed milk supply into the various high-value uses for our raw milk, and crops acquired to date, we currently grow approximately 15% of our to meet customer demand for the products we manufacture, which is referred to as “balancing” in the dairy industry. Once the milk organic feed for our cows. It is our goal to grow more of our own feed, The raw milk we produce is the highest quality as a result of the is processed and packaged, another team of logistics coordinators and in 2012 we acquired 3,000 acres of farmland for this purpose. discipline on our dairy farms. All of our farm management protocols fulfills orders for milk, butter and milk powder, which are shipped It is our long-term goal to grow 50% of our organic feed needs. were designed to ensure the highest quality raw milk is delivered from our milk plant and third-party manufacturing facilities to to our processing plant. This includes the quality of the feed and customers across the country. pasture our cows consume, high standards of animal well-being and FROM CROP TO COW TO herd health, routine sanitation throughout the farms, and our milking parlor protocols, which include extensive training for employees to Feed* Farms Milk Processing Milk Processing ensure high levels of cleanliness and animal care when the cows are being milked. All of these activities result in high-quality raw milk The milk bottling stage of our business starts when the raw milk being shipped to our plant for processing. is unloaded into silos at our Platteville processing plant. The milk Milk Plant Quality Lab, Platteville, Colorado is processed, pasteurized then homogenized into the different fat content and packaging requirements of each retail customer (please

Environmental Organic Employee refer to processing flow chart on page 18). Milk processing at our Practices Welfare Platteville milk plant also involves the comprehensive quality and

Long-Term food safety testing that is completed by our on-site quality lab, Animal Process & Sourcing Welfare Quality Control Relationships described below.

*Feed comes from company-owned and leased farms and pasture, as well as independent farmers

Aurora Organic Dairy 16 Aurora Organic Dairy 17 Quality Monitored from Cow-to-Carton 6. Processing filler is tested for temperature, flavor, composition Our milk processing plant is audited and certified as a Safe Quality and bacteria. Food 2000 Level 3 (SQF Level 3) manufacturing plant. This certification goes beyond what is required in food manufacturing, 7. Packaged product is tested for package integrity, date code Quality Awards and is a voluntary program to ensure the highest quality and food information, flavor and temperature. Dairy Cow safety standards. Aurora Organic Dairy’s milk processing plant in Platteville, Colorado, has been honored with several milk quality awards since it was 8. All packaged milk is kept and product code life is tested for constructed in 2004. seven days past the code date. This test includes flavor and SQF Level 3 certification measures a manufacturing facility’s smell. On average Aurora Organic milk has a shelf life of adherence to rigorous food safety and quality protocols, and requires • 2012 World Dairy Expo First & Third Place for ultra- Chiller between 62 and 82 days. both a comprehensive Hazard Analysis and Critical Control Points pasteurized milk. (HACCP)-based food safety program and a thorough food quality • 2008, 2012 All Star Dairy Assn. Award for Best Fluid Milk program. SQF is internationally recognized and meets the standards Plant* • 2009, 2010, 2011, 2012 All Star Dairy Assn. Award for of the Global Food Safety Initiative. It is one of the world’s leading Exceeding Industry Quality Standards Dairy Farm Bulk Tank Cow-to-Carton food safety and quality management systems, designed to meet the needs of retailers and suppliers worldwide. The program provides *32 member organizations participated and Aurora Organic Dairy Since our quality process enables rapid, on-going feedback independent certification that a supplier’s food safety and quality received the highest combined score in the milk category, as determined throughout our supply chain, our farms and processing plant are management system complies with international and domestic food by third-party plant audits, sensory testing and milk micro-testing. better informed and equipped to control product integrity. This, safety regulations. This enables suppliers to assure their customers Milk Tanker Truck coupled with our high standards of herd health and comfort, organic that food has been processed, prepared and handled according to nutrition, and sanitation in all milk handling systems, translates into the highest possible standards, at all levels of the supply chain. superior milk quality, freshness and . Quality Audit Results Sustainable Scale Organic Dairy Production Milk Silo Our attention to quality from cow-to-carton is also reflected in Annual Safe Quality Food Audit Scores – maximum score=100% the numerous audits our milk plant and farms undergo at regular At Aurora Organic Dairy, we believe organic dairy products should intervals. To ensure high levels of food safety, our processing plant is 100 – and can – be available and affordable for all consumers who audited quarterly by the Colorado Department of Public Health and 99.2% 99% 99% 98.8% choose them. This mission was the inspiration for our integrated Environment; and our plant is audited by the FDA every two years to Processing business model, and drives our support of commercial scale earn its Interstate Milk Shippers license. These are requirements for all 98 organic dairy farming. We believe our scale allows us to positively dairy plants to ensure food safety and quality. impact more acres of feed crops and pasture, more dairy cows 96 and more people through our practices. If we As an organic dairy producer and processor, each of our farms and efficiently produce organic milk for the store brand market, more Packaging plant are audited and certified each year by our USDA-accredited consumers benefit from the quality and healthfulness of organic organic certifiers, Colorado Department of Agriculture for our 94

QUALITY SCORE % dairy products, at a more affordable price. Colorado Farms, and Quality Assurance International for our Texas farms and processing plant. Additionally, our farms go through a 92 comprehensive animal welfare audit by an independent third-party Eight Steps to High-Quality Milk animal welfare certifier, Validus (please refer to Animal Welfare section of this report for more information on Validus Animal Welfare 90 1. Raw farm milk from bulk tank is tested for bacteria, somatic certification), and our plant is also audited by Validus each year. cell count, composition, flavor, temperature and freezing point. ‘09 ‘10 ‘11 ‘12 YEAR

2. Milk tanker transport – milk tankers are washed prior to Aurora Organic Dairy is also frequently inspected and audited by reloading, and milk is held in the tanker for no more than other key stakeholders, including retail customers and insurers. 96 hours. These audits ensure we meet their standards in a variety of areas, 3. Plant receiving is tested for temperature, antibiotics, total including employment practices, codes of conduct, ethical sourcing, acidity, flavor, bacteria and composition. safety and quality.

4. Each plant storage silo is typically emptied every 24 hours and Our cow-to-carton vertical integration and ability to uniquely control is tested for flavor, bacteria, temperature and composition. the milk quality throughout the supply chain provides our customers with confidence in the quality and safety of our products. High Plains Dairy Farm, Gill, Colorado 5. process is tested for composition and flavor. Milk Plant Quality Lab, Platteville, Colorado

Aurora Organic Dairy 18 Aurora Organic Dairy 19 The organic regulations are scale neutral. For a producer or with our contracted heifer growers, who are certified organic and, as Organic Milk Sourcing processor to be organic, the USDA National Organic Regulations such, are required to follow the National Organic Program standards. must be followed and that operation must be organic certified When we source animals from a third party, we visit the facility prior Any farms that supply raw organic milk to us – in addition to feeding by a USDA accredited certifier, regardless of size or scale. We to purchasing the animals to inspect the animals and the environment their dairy cows organic certified feed and pasture – cannot use estimate that we support 50,000 acres of organic farmland that in which they are being raised. If we are satisfied with the condition of synthetic hormones for growth promotion or antibiotics in their herds, independent organic farmers use to grow feed crops for our dairy the animals and their surroundings, we will purchase from this vendor. according to the USDA National Organic Program regulations. In cows. This is in addition to the 9,000 acres of organic pasture Any concerns related to organic protocols or animal welfare practices our opinion and from an environmental perspective, these organic land we manage around our farms. These are acres that are not will result in termination of a vendor’s contract. practices reduce our suppliers’ overall negative environmental impact. treated with synthetic pesticides, herbicides or fertilizers. The 22,000 cows in our mature herd are fed off this land, and they As an 100% organic dairy company, all milk we buy from outside are treated with high standards of animal welfare, as confirmed Plant Sourcing Policy producers must be certified organic. We have also set expectations by our third-party animal welfare certifications by Validus. They about certain operating and herd management practices that Local farmers on location at are not treated with antibiotics or synthetic growth hormones, High Plains Dairy Farm, Gill, Colorado Our milk processing plant also adheres to a rigorous Dairy Supplier mimic our own for consistent quality and husbandry standards. and they are given freedom of movement with our year-round Policy, which is annually reviewed and updated by our Director of Outside organic milk producers that provide us with a consistent outdoor access. Sourcing Quality. In order to meet all Aurora Organic Dairy internal, regulatory, supply of raw milk are required to sign a supply agreement to customer and organic specifications, all potential suppliers of raw ensure transparency. We require annual verification that any farmer Finally, our people - the nearly 500 employees that make up the Like all organic dairies, organic feed sourcing is one of the greatest materials, packaging and ingredients must meet the criteria of our supplying milk holds a current USDA . We also Aurora Organic Dairy family – are provided with equal benefits challenges in our business. Not only is the overall demand for Dairy Supplier Policy. travel to our vendors’ locations multiple times each year to tour across all functional areas, they are given opportunities for career organic feed increasing in the U.S., but swings in commodity pricing, their facilities, review their quality results and inspect the practices growth, many of our farm employees are provided with subsidized and our need for the highest quality mix of grains and forages for our The Policy requires that suppliers must undergo a comprehensive we require. We maintain an open dialog with outside producers housing, and they work in an environment that respects people, dairy cows means organic feed sourcing can be challenging for any food safety audit by our Director of Quality or a reputable third about the changing costs of production and we make pay price the planet and animals. All of Aurora Organic Dairy’s operations dairy farmer. While we have worked with local farmers to develop party. It also requires the supplier to meet all of the Plant’s required adjustments when necessary. In 2012, all milk suppliers were specifications, provide certificates of analysis of each lot of goods are audited and certified by USDA National Organic Program more local organic feed sources, many of these organic feed crops compliant with this Milk Sourcing Policy. Any concerns related supplied, records of all supplier inspections and a Continuing accredited certifiers, and our products have been continuously are grown elsewhere and sourced from independent farmers with to organic protocols or animal welfare practices will result in Commodity Guarantee on all goods. Suppliers are reviewed annually certified as organic, bearing the USDA Organic Seal, since 2004. whom we have long-term relationships. termination of a vendor’s contract. to ensure compliance with this policy, and in 2012 all suppliers met All forages, grains and pastures we feed our dairy cows must be our policy. Unapproved suppliers cannot be used to supply goods to SOURCING certified organic. This means no synthetic pesticides, herbicides Aurora Organic Dairy. or fertilizers can be used on the crops, and no genetically modified Farm Sourcing Policy (GMO)/GMO-treated seed stock can be used. We require verification This policy is a requirement of our SQF Level 3 certification, and that the farmers supplying feed hold valid and current USDA organic helps to ensure we consistently receive materials that meet all Our farm management team adheres to a Sourcing Policy for all certifications, and that their organic certifier is currently accredited internal, regulatory & customer requirements. It also protects from farmers who grow the forages and grains we feed our dairy cows, by the USDA. We work with these farmers to make sure the highest variations in our milk process, provides another layer of assurance livestock producers who provide replacement cows to our farms, quality feed is available for our dairy cows, and we travel to many of that we have consistent quality by only using approved sources and other independent farmers who provide on-farm services. our vendors’ locations to perform a vendor review, which includes a for materials. In 2012, all major suppliers were in compliance with this policy. tour of facilities. As organic producers, 100% of the farmers who supply our feed do not use synthetic pesticides, herbicides, fertilizers or GMOs/ We make it a priority to work with as many local farmers and GMO treated seed stock. This helps to ensure we source the suppliers as possible to reduce the transport distance and cost Milk Plant, Platteville, Colorado highest quality materials and services to manage our farms for for feed, cattle and supplies, and to contribute to vibrant optimum milk quality, and animal and employee comfort. local economies.

We have high expectations for all farmers who supply products and services to our company. We require products to be the Organic Cattle Growing and Sourcing highest quality and that suppliers are USDA organic certified. We expect competitive rates, open and transparent communications, In 2009, we began raising our own organic calves, and continue to and reliable service. Our first preference is to work with farmers work with three primary organic heifer growers to ensure we have who are local to the communities where we have farms. enough organic dairy cows for replacement animals and to populate new organic dairy farms. We maintain long-standing relationships

Aurora Organic Dairy 20 Aurora Organic Dairy 21 2013 Corporate Citizenship Report 2013 Corporate Citizenship Report

Stakeholders Animal Welfare

High Plains Dairy Farm, Gill, Colorado

IODCIO 2012 OVEVIEW AOA OAIC AO AOA DEIVEI SAEODES AIA WEAE EVIOEA O PEOPE DAI AAACE OAIC DAI VAES & VAE SEWADSIP

Stakeholders Science & Research Groups

Suppliers At Aurora Organic Dairy, we have identified eight stakeholder groups Trade & Industry Groups as being important to our direct and indirect operations. Depicted in Platteville, Colorado Dairy Farm the graphic on the right, key stakeholders include: Employees Financial Investors IODCIO 2012 OVEVIEW AOA OAIC AO AOA DEIVEI SAEODES AIA WEAE EVIOEA O PEOPE Policymakers & Regulators DAI AAACE OAIC DAI VAES & VAE SEWADSIP • Employees – Direct employees at our farms, processing plant, home office, and their families. Retail Customers • Financial Investors – Shareholders and lenders. Organic Dairy Consumers for the care and comfort of our organic dairy cows by requiring that • Retail Customers – National and regional grocery operators Introduction across the U.S. each of our farms obtain and maintain a certification by Validus, a USDA process-verified independent animal welfare auditor. • Organic Dairy Consumers – End consumers who choose organic The humane treatment of animals is the cornerstone of farm dairy products for their families. commitment to corporate citizenship and sustainability, active operations at Aurora Organic Dairy. From our milking facilities to our • Suppliers – Organic feed and livestock producers, packaging collaboration with our stakeholders helps us to: pastures, to our barns, we pride ourselves on maintaining exacting As organic dairy farmers, we fundamentally understand that high- and transportation companies, dairy equipment manufacturers standards for animal welfare. We maintain industry-leading protocols quality milk comes from healthy cows, and we place the highest and other service providers. • Ensure our relationships are managed to sustain over the priority on science-based disease prevention and on keeping our • Policymakers & Regulators – Certifiers, regulators, legislators, long-term, and our development of strategy is well informed. cows healthy and stress-free. We strive to ensure that each cow on as well as local, state and federal government agencies. • Learn from our external resources to better anticipate and our farms is well-nourished and properly treated. Healthy and well- Trade & Industry Groups* – , dairy and retail • mitigate risks. nourished cows are less susceptible to illness. grocery industry associations. • Enhance the Company’s reputation and success in executing • Science & Research Groups – Universities, academics and our sustainability and corporate responsibility initiatives. We focus on preventing disease through routine animal monitoring third-party research groups. and ensure our cows have year-round outdoor access with ample

Throughout this report, we have included stories and examples of room to exhibit their natural behaviors. Our herds eat nutritionally At Aurora Organic Dairy, we believe these stakeholders are critical how we maintain active engagement with each of these audiences, dense organic pasture and feed, and are cared for by well-trained, to our business success, and we are committed to maintaining as well as our efforts to continually seek feedback from our experienced Animal Husbandry Caregivers. an open dialogue with each group. We have a responsibility to key stakeholders. regularly connect with our stakeholder groups to ensure positive Our approach to animal care makes a real difference in our products. communication and to maintain relationships that mutually benefit In 2012, Aurora Organic Dairy was an active member and financial supporter of the Organic Healthy, well-nourished cows produce better-quality organic milk. the parties involved. In most cases, a member of our executive Trade Association and the International Dairy Foods Association, and provided financial support to The Organic Center and the Just Label It campaign. The Company also retains One indicator of dairy cow health is the somatic cell count (SCC) of leadership team interacts with these groups frequently to understand memberships with the Private Label Manufacturers Association, the Grocery Manufacturers the milk produced. The higher the count, the higher the level Association and the Food Marketing Institute. the demands and value of the relationship. As it relates to our High Plains Dairy Farm, Gill, Colorado

Aurora Organic Dairy 22 Aurora Organic Dairy 23 of bacteria in the udders, and the lower the quality of the milk. Our facilities were designed to provide our dairy cows with the Five • Synthetic growth hormones are never used on our dairies. • Animals are provided with sufficient space for comfort and High standards of animal welfare improve the well-being of the Freedoms, which help to protect the animals from unnecessary • We monitor our animals daily for early signs of lameness, and to display natural behaviors. cows, resulting in a better immune system, which reduces mastitis suffering. The Five Freedoms were developed in 1965 by Professor individualized treatment for lame cows is performed as needed. • Calves are housed individually for the first 60 days of life to incidence in the herd, and ultimately results in better milk quality. Roger Brambell in the UK to address concerns about intensively • Treatment for very sick – or downed – animals requires that an provide dedicated care and attention, and for disease prevention. (Ingvartsen, K.L., and K.M. Moyes. 2013. Nutrition, immune farmed animals. The resulting Five Freedoms define the ideal states experienced employee carefully transfer the animal to a clean • Our facilities are maintained with sanitary conditions to prevent function and health of dairy cattle. Animal. 7:112-122.) With high for livestock animals, which have been adopted by many in the dry area. At all times the animal must be provided with clean disease and infestations. levels of cleanliness, the average somatic cell counts of our dairy veterinary and livestock communities. They include: bedding, fresh food and water, protection from the elements • Our facilities are maintained in good condition to prevent injury cows in 2012 was approximately 190,000, which is favorable • Freedom from hunger and thirst and continuation of treatment. If organic-approved treatments to our animals. compared to industry averages, and is a key indicator of good • Freedom from discomfort are not successful, the animal is removed from the herd and • All walkways are kept clean and slip-resistant. cow health. • Freedom from pain, injury or disease treated with antibiotics to reduce suffering and to save the • Our milking parlors are kept clean with good airflow. • Freedom to express normal behavior animal’s life. That animal will then be sold to the conventional • Our milking parlors are designed for optimum cow and dairy industry. • Freedom from fear and distress employee comfort. Rubber mats are used on most walkways Strong Foundation for Animal Care • If an animal is suffering and cannot be brought back to health and lanes to maintain foot, leg, and hoof health and comfort. Our farm management team is made up of large animal veterinarians via organic or conventional methods, euthanasia is performed As an 100% organic dairy company, our farms cannot rely on and Husbandry Caregivers trained on key animal welfare criteria. to eliminate pain and suffering. Vendor Animal Care Requirements antibiotics and many other medicines used in the conventional dairy Our dedicated animal care specialists constantly monitor our • Animal monitoring is constant and is always focused on industry to treat disease. Therefore, a comprehensive animal care • We provide an Animal Care Standards memorandum to all cows and manage the smallest details of their health – from early continuous improvement. and welfare program, high cleanliness standards and employee vendors to communicate our high standards of animal welfare identification of illness, to nutritional consistency and tailored stage- training programs to identify animals that may be ill, are all and the expectation they will follow the same procedures. In of-life appropriate diets. With such depth and experience in animal paramount to a successful organic dairy farm. In the absence of some cases, vendors come to our facilities to perform various husbandry, our cows are provided with the most modern scientific synthetic inputs, a strong animal care program is critical in organic tasks, and while they are on our facilities, we monitor their and medical advances in organic livestock management. dairy production. behavior and treatment of our animals. For those that house our animals, we visit them regularly and are in constant We host internships for veterinary and animal science students communication with them regarding the care of our animals. Aurora Organic Dairy cows live in the temperate climates of Colorado from around the world, and have close research relationships with and Texas. The typical mild, dry weather patterns allow our cows • If a vendor coming onto our facilities does not follow these leading agriculture and veterinary schools, including Colorado State to be routinely outside in the fresh air and sunshine, and they are standards, we will terminate the relationship. University, Western University and the University of Florida, to help outdoors virtually every day, even during winter months. • Our management team has completed internal audits of each further the knowledge base of organic herd health and management. farmer’s facility to determine that the animals are being cared In 2012, we hosted 16 internships across our five organic for properly. In 2012, five such audits were completed. If any We have designed our dairy farms and facilities to put animal health dairy farms. and care at the forefront of our operations. Our farms are equipped concerns remain after the audit, we provide a written report to with open housing and free-stall barns where our cows can come the facility outlining action items that need to be addressed. If and go as they please. We believe that animals should be allowed to a vendor is found to be out of compliance with our Animal Care Animal Welfare Policies and Procedures Little Calf Ranch, Gill, Colorado exhibit their natural behaviors, whether they are grazing on pasture standards, we will follow-up with their management to rectify or resting in their housing facilities. the situation. Repeat offenses will result in termination of the Our comprehensive animal care policies and procedures include Animal Feed and Facilities relationship. the following protocols: • Animals are provided with clean feed and water. • Heifer growers who supply our farms with replacement animals • No synthetic pesticides, herbicides or fertilizers are used on are visited at least twice a year to ensure high standards of Animal Health and Management the feed or pasture provided to the animals. We require valid animal welfare. • Since 2008, no branding – hot or freeze branding – is organic certifications from all feed suppliers. • We require a signed Cattle Hauling Agreement from any performed at our dairies, ever. • Animals are not without feed and water for more than one hour company that hauls cattle for Aurora Organic Dairy, which • No tail docking is performed at our dairies. at a time (typically during the milking routine). stipulates safe handling and transport procedures for our • Prods – electric or otherwise – are not used at our dairies, • A nutritionist reviews the herds every six weeks and adjusts the animals. No animal that is too weak will be allowed to travel. except in the case of an emergency, and must be under the feed ration as needed for the health of our animals. • If we sell our dairy animals to the beef industry, we tour all supervision of the dairy manager. • As per the organic regulations, at all of our dairy farms, cows meat processing plants to verify humane euthanasia and proper • All surgical procedures require the use of a local anesthetic, are required to receive no less than 30% of their dry matter animal care when the animals are housed at their facility. including dehorning procedures. intake (DMI) from organic certified pasture for a minimum of • To eliminate the need for dehorning at our dairy farms, in 2013 120 days during the grazing season. we began purchasing polled bull semen, so that new calves • Animals are provided with a comfortable, dry place to lie down. born on our farms will have a greater likelihood to be born • Animals are provided with shade and protection from the

High Plains Dairy Farm, Gill, Colorado without horns. elements, as needed.

Aurora Organic Dairy 24 Aurora Organic Dairy 25 To ensure these animal care policies and procedures are followed As part of the Validus certification process, auditors annually visit • Develop additional Aurora Organic Dairy Animal Care employee at each Aurora Organic Dairy farm, every dairy farm employee goes each of Aurora Organic Dairy’s farms to conduct a comprehensive education materials. This program started in 2013, and is through a comprehensive training program that starts when they inspection of animal welfare practices. The criteria evaluated include, expected to be introduced to all farm employees in early 2014 Furthering the Organic Dairy Industry are hired. Thorough refresher trainings are conducted at least once but are not limited to, lameness, cleanliness, body condition, with presentations, brochures and an animal care video, a year, with various aspects of the program being reviewed with behavior, facilities, protocols and management. Aurora Organic Dairy to increase employee animal care training programs at all At Aurora Organic Dairy, it is our goal to contribute to a thriving organic dairy industry for generations to come. As pioneers in employees each month. Upon hire, each employee is also shown an consistently receives the highest possible audit rating of “excellent” dairy farms. the organic dairy community, we helped to develop many of the animal care video to communicate the importance of animal welfare from Validus at all of our organic dairy farms. In 2012, 100% of • Develop a plan to reduce lameness in the herd, and a plan to production, processing and animal welfare protocols used in the at Aurora Organic Dairy farms, and to demonstrate proper animal our dairy farms were certified by Validus, and 100% received an reduce injury-related down cows. In 2012, the Animal Welfare organic dairy industry today, and we believe it is our responsibility care and safety procedures. excellent rating. team established data tracking programs to collect historical to continue to contribute to this industry we helped to establish data and to continue to monitor lameness trends on a monthly and grow over the last 20 years. Each dairy employee receives a copy of our Animal Welfare Policies basis. This work has resulted in a benchmark for lameness, One of the ways we do this is through academic research. Our and Procedures – distributed in both English and Spanish. Dairy and has gone through a third-party review of all dairy herds farms frequently participate in academic and science-based under Aurora Organic Dairy management. The next step in this managers or supervisors review the procedures with each employee, research on animal health and treatment in an organic dairy who is then required to sign the Animal Care Policies and Procedures work is to develop plans for employee training and facilities’ system, including studies related to decreasing the mortality rate manual to acknowledge understanding. 100% of our farm employees modifications to achieve the benchmark, and then reduce the of organic-born calves, animal housing, and organic-approved are trained on animal welfare when they are hired. Non-compliance incidence of lameness in the herd by 20% in 2015. methods for common dairy cattle health issues, such as mastitis, microbes, uterine flush and others. Additionally, we have with the Company’s Animal Care Rules will result in termination participated in studies related to pasture and soil fertility to unless the employee was protecting his or her safety, or the safety Little Calf Ranch, Eaton, Colorado improve the quality of pasture and feed crops in the regions of another employee or animal. Animal Welfare Goals we farm.

Due to the fact that Animal Welfare is a cornerstone of our farming operations, we have established a team of farm management Juan Velez has spent 30 years in the dairy industry and helped to employees – as part of our Corporate Citizenship goal-setting process – develop many of the animal care and welfare protocols common in devoted to animal welfare. In 2012, the team established two primary the organic dairy industry today. He is a frequent speaker on animal goal areas to continue to improve our farms’ animal welfare practices: health and well-being at veterinary and organic industry conferences worldwide, and lectures an animal science class at Colorado State 1. Work with Aurora Organic Dairy’s heifer suppliers to become University’s College of Agriculture’s Organic Program. It is through Validus certified for high animal welfare standards. his deep commitment to respect and care for animals that Aurora Organic Dairy has a comprehensive, industry-leading animal welfare For the first goal, the farm management team has committed to program. providing advisory oversight to two of our three heifer grower farms to become Validus certified in 2013. This work is in progress and is While we pride ourselves on having industry-leading animal welfare Platteville Dairy Farm, Colorado expected to be complete by the end of 2014. We expect the third programs at Aurora Organic Dairy, we do not want to become heifer grower to be Validus certified by 2018. Little Calf Ranch Dairy, Eaton, Colorado The Company’s five-year goals to continue to improve animal welfare complacent when it comes to the care and treatment of our dairy standards will be based on the research and monitoring of its herd cows. That is why we have a third-party animal welfare audit and Validus Animal Welfare Certification 2. Research and determine additional animal welfare best and data, feedback from Validus audits and identified areas of certification with Validus, and why we continue to contribute to and practices to achieve by 2017. opportunity. stay abreast of the latest research and information regarding the To ensure we maintain and continue to strengthen our commitment humane treatment of animals. The result of research to address the second Animal Welfare goal to animal welfare, each of our organic dairy farms and our included the following outcomes: processing plant are voluntarily audited and certified by Validus. • Develop a program that will eliminate the need for dehorning “I have devoted my career to dairy cattle Validus is an independent firm that is also USDA process-verified for procedures at the dairy farms. In 2013, the farms implemented and to improving the herd health protocols their animal welfare certification www.validusservices.com. a change in the herd health protocols that require sourcing of organic dairy cattle,” said Juan Velez, MV., semen from polled bulls (bulls that have a high probability of M.S., DACT, Executive Vice President of Aurora The Validus Animal Welfare Review certification program includes producing offspring without horns) for artificial insemination. Organic Farms. “Animal welfare and herd a comprehensive assessment of each farm’s animal care practices, In mid-2013, this standard was applied to the farm’s breeding health are critical to the high-quality milk along with opportunities to strengthen our rigorous standards. The programs, which will ultimately result in more polled calves we produce at Aurora Organic Dairy.” requirements to certify our milk through Validus also include an being born at the dairy farms. annual audit and certification of our Milk Plant.

Aurora Organic Dairy 26 Aurora Organic Dairy 27 2013 Corporate Citizenship Report

Foundation of Sustainability Corporate Citizenship Working Groups

Environmental As an organic-dedicated company that was founded by pioneers We established Corporate Citizenship working groups in 2012 to Stewardship in the organic dairy industry, Aurora Organic Dairy had a strong address the key areas of our operations and to establish meaningful foundation of sustainability and corporate citizenship when we sustainability goals across our diverse business. The work of these committed to 100% organic milk production in 2003. Our focus groups is overseen by our Steering Committee, which is comprised of on efficiency throughout the supply chain also creates a culture key decision-makers across the organization, including the following of conservation throughout our organization. We work to use our positions: CEO, CFO, President of Manufacturing & Distribution, resources wisely, and invest in technology and systems that allow President of Farming Operations, Executive Vice President of Farming us to conserve and reuse waste, water, energy and other resources Operations, Processing Plant General Manager, Director of Human whenever possible. Resources and Director of Communications & Sustainability. This group meets periodically to review and approve the goals and projects As an integrated dairy farm and processing company, Aurora Organic that are set by each of the following working groups, as well as to Dairy’s sustainability initiatives encompass the following areas: track each group’s progress toward the achievement of goals:

Agriculture (includes crop farming and dairy farming activities) • Nurturing soil health for organic feed crops and pastures • Farm Energy & Fossil Fuel GHG • Managing waste at each facility • Enteric and Manure Management Emissions • Tracking and reducing energy expenditures and carbon emissions • Farm Water Use • Using renewable resources whenever practical • Farm Waste • Conserving water resources and reusing water • Land Management • Animal Welfare Coldwater Dairy Farm, Stratford, Texas whenever possible • Continually improving the support provided to animals Processing (milk plant operations) IODCIO 2012 OVEVIEW AOA OAIC AO AOA DEIVEI SAEODES AIA WEAE EVIOEA O PEOPE and people DAI AAACE OAIC DAI VAES & VAE SEWADSIP • Plant Energy & Fossil Fuel GHG The Company’s long-term goal is to significantly reduce our carbon • Plant Water Use footprint, water use and landfill waste throughout the complete • Plant Solid Waste Environmental Stewardship lifecycle of operations – from seed to shelf. • Plant Shrink (milk loss)

As long-time dairy producers, Aurora Organic Dairy’s founder and In 2012, we set a one-year goal of reducing Greenhouse Gas (GHG) Logistics (milk hauling and distribution) management team have a heightened awareness of the impact of emissions within our operational boundary by 3% per half-gallon • Logistics Fossil Fuel GHG livestock on the environment. The impact of livestock has been widely of milk sold, and a five-year goal of reducing GHG emissions by publicized as contributing to many of today’s environmental concerns, “At Aurora Organic Dairy, we believe it is 15% per half-gallon of milk sold. In other areas, such as enteric Social Responsibility (employee initiatives and community support) such as global warming, land degradation, air and water pollution, our responsibility to take care of the earth’s fermentation emissions from the dairy cows, water use and solid and loss of biodiversity. According to the Food and Agricultural resources so that we leave as many – if not more waste, in 2012 we committed to analyzing our operations data, and Each of these core groups is made up of staff from throughout Organization of the United Nations (FAO), in their 2006 Report titled – natural resources for future generations,” investing in resources to better track our usage into the future to the organization, and each has set long- and short-term goals to “Livestock’s Long Shadow,” livestock was estimated to be responsible said Marc Peperzak, CEO and Chairman develop opportunities for improvement. reduce the Company’s impact on the environment, conserve natural for 18% of greenhouse gas emissions. However, the report also of Aurora Organic Dairy. resources, and continually improve the health and well-being of our concluded that the livestock sector’s potential contribution to solving “We want to provide an example of more people, animals and communities. Overall, the Steering Committee environmental problems was equally as large as its potential negative Company-wide GHG and Energy Goals From baseline of 1.8 kg CO2e in 2012 and working groups are comprised of 35 management- and executive- impact. Updated research suggests the opportunity for industry environmentally and socially responsible improvement is greater than originally estimated. practices so that we work together to reduce level staff from throughout the Aurora Organic Dairy organization. the livestock industry’s negative environmental This information prompted the U.S. Dairy Industry to develop impact. This is why environmental stewardship Our focus initially is on Aurora Organic Dairy operations and how working groups and goals around sustainability and greenhouse gas is one of our core values. It not only benefits the % % we can positively affect our environmental impact as an organization, reduction, and Aurora Organic Dairy participates in that process. health of our business, but is also better for our 3 15 which is how we define our operational boundary. Our longer-term Additionally, it has motivated our work as an integrated organic dairy people, animals and the planet.” reduction in reduction in goals include a focus on suppliers and sourcing from our various company to examine all parts of our business, and our supply chain, emissions by emissions and vendors. While we have included sustainability requirements with to first understand our areas of greatest impact, and then determine end of 201 energy by 201 regard to some of our sourcing initiatives in the past, our goal is to opportunities to reduce our overall negative impact on the environment. incorporate a more defined and systemic approach in the future.

Aurora Organic Dairy 28 Aurora Organic Dairy 29 Lifecycle Assessment of an Integrated AOD LCA System Boundary GHG Emissions by Lifecycle Stages mention of additional issues connected to the company’s business Organic Dairy Operation units, but over which direct control may not exist. As a result, our In 2012 overall emissions for the entire supply chain – shown here Due to the fact that the LCA uses both primary data from our boundary for measuring and goal-setting around environmental As an organic company, we intuitively knew our environmental and included in our LCA – were 3.82 kg of CO2e per half-gallon operations, and secondary data for those life cycle stages that are stewardship is based on product stages owned or controlled by impact was potentially less because of organic practices to promote of packaged milk sold by Aurora Organic Dairy. The major GHG not within our operational control, we do not plan to update our LCA Aurora Organic Dairy. This approach influenced our sustainability soil health and to reduce the use of synthetic farming inputs. contributors include farm operations (42% of total), feed production annually. Rather our data tracking will be focused on our company- decisions and goals. A list of relevant GRI reporting topics is However, there had been no comprehensive environmental studies (18% of total) and milk processing and packaging (15%) (please owned and managed operations, as well as to incorporate the impact contained in the Appendix of this report. on the organic dairy industry. We also knew our integration was an refer to chart, next page for full breakdown of LCA stages). of transportation into our system boundary in 2014. advantage to gain primary data and knowledge about the production, Aurora Organic Dairy Sustainability Reporting Boundary distribution and processing stages of an organic dairy operation. In The initial LCA showed that our Boulder corporate office contributed Full LCA System Boundary 2008, we set out to conduct a lifecycle assessment (LCA) of our less than 1% to our environmental impact areas through the entire business to better understand the areas of impact and opportunity, product lifecycle. Due to its small, immaterial impact, the emissions, and to share this information with the dairy industry as a whole. energy, water and waste associated with the corporate office are not Feed Production included in our ongoing sustainability tracking and reporting. Our first step was to determine the energy use and carbon emissions Culled Cows & Bull Calves (Co-product) of our operation. We funded a three-year study with the University of Breakdown of GHG emissions by Lifecycle Stage Feed Production* Farm Operations Milk Processing Michigan’s Center for Sustainable Systems whereby a full LCA of our Manure Storage Off-Site Farm Operations business was developed and updated for the years 2008 - 2010. The *AOD grown pasture and feed, which currently accounts Off-Farm Heifers 4% End of Life for approximately 15% of the feed our cows consume first report (http://deepblue.lib.umich.edu/handle/2027.42/62094), 2% Retail 18% Feed Production issued in April 2009, was the first-ever lifecycle assessment of an Powder Production integrated organic dairy company in the U.S. 7% Consumer Where appropriate, we do mention those product stages not within Milk Processing 12% Milk Storage & Distribution our control where we have goals or have had influence to positively To complete the LCA and subsequent updates, primary data from Butter Production impact overall sustainability performance. Even though we do have (Co-product) our farms and processing plant were used to build a LCA model for longer term goals to further engage our suppliers in sustainability benchmarking the greenhouse gas emissions and energy consumption activities, our first priority is to focus on what we can control Cold Storage 15% Milk Processing & Packaging across the entire milk production system, from organic feed production within our business operations. Because we do not own our own to transport of packaged milk to product end of life disposal. trucking fleets, distribution and logistics data are not part of the 42% Farm Operations measurements in this report. However, we do understand the impact *3.82 kg CO2e per Incorporating the data gathered from the three-year University of half-gallon of of this aspect of our business, and plan to track and report on this Distribution Centers packaged milk sold. Michigan study, and adding 2011 and 2012, we now have a five- lifecycle stage as part of our sustainability reporting boundary in year LCA for energy use and GHG emissions for our entire operation. future reports. The prior years’ data has been audited and updated to ensure year- Transport Milk Refrigerated Liquid Packaged AOD Sustainability Reporting Boundary to-year compatibility. Feed production Retailers Our AOD sustainability reporting boundary is a sub-set of the LCA Normalized Data Tracking Farm operation stage and is limited to the operations within our direct control. While Milk processing we plan to work with outside LCA sustainability experts to update Aurora Organic Dairy is a dynamic company that continues to expand “Armed with data, our custom sustainability Distribution stage Consumer our LCA every two-to-three years, the process has revealed to us to meet growing consumer demand for high-quality organic dairy & End of Life that our primary data is much more reliable than what is available products. As a result of our growth and changing operations, it is tracking tool will allow the general managers at Retail and end of life each of our facilities to track trends in energy from secondary sources, and that we can better control and have difficult to compare one year to the next when it comes to setting goals use, greenhouse gas emissions, water, solid Within LCA System Boundaries a positive impact on what is within our boundary of operations. and measuring our progress toward achievement of our sustainability Additionally, the LCA only considers the environmental impact initiatives. Therefore, we have determined the best way to measure, waste and recycling,” said Sonja Tuitele, Director of Aurora Organic Dairy’s ongoing sustainability tracking and goal setting initiatives are only focused on company-owned stages, of GHGs and energy use, and we believe other environmental track and report on our sustainability initiatives is to normalize Communications & Sustainability. “It will also allow which include the Farm operation and Milk processing stages. us to measure the impact of our goals by facility indicators, such as water and solid waste, are also important to our environmental impact data. This allows management to better and as a company overall.” measure and conserve to be a truly sustainable company. understand the impact of their decisions and to set sustainability goals. Additionally, it allows our stakeholders to transparently track our We have also followed, where possible, the Global Reporting progress towards goals without the impact of growth, expansion and Initiative (GRI) G3 C-Level guidelines to inform our data collection changes in business strategy. and reporting priorities. GRI assigns primary importance to reporting data directly within the company’s control and then suggests making

Aurora Organic Dairy 30 Aurora Organic Dairy 31 All of the farm data presented in this report is normalized against a As part of our Lifecycle Assessment work with the University of Processing Plant Water Use We continue to investigate whether any of the pretreated water half-gallon of raw milk produced on Aurora farms. Due to the variation Michigan, we studied our water use at our plant and dairy farms. that flows through the plant can be used at our adjacent dairy farm in our product processing at the manufacturing stage from year-to- The study focused on water outputs from the milk production Our milk processing plant sources 100% of its water from the in Platteville, Colo. We believe this is an opportunity to increase year, we have normalized plant and cradle-to-carton data per half lifecycle, and distinguished two types of water outputs: Little Thompson Water District in Colorado. Water consumption at our rate of reused or recycled water in our operation, but requires gallon of milk sold, or finished goods sales. We use this normalized the milk processing plant consists of water that is evaporated for additional permitting and water rights. Additionally, as we continue data to set and track against our sustainability goals. 1. Water consumption – water that is evaporated, transferred to cooling purposes, while water utilization consists of water that is to expand our plant’s capacity in 2013, we will pursue equipment used in the plant and then pretreated before being returned to the a different watershed, or incorporated into the final product. that allows us to further conserve our plant’s water resources. local sanitation districts. 2. Water utilization – water that is returned to the watershed Custom Sustainability Tracking Tool from which it is withdrawn. We have been tracking our water use since 2009. Our plant uses Farm Water Use municipal water and usage is tracked from monthly invoices. Most Drawing from our three-year LCA data, in 2012 and 2013, we We estimate 95% of our total farm water consumption is related of the water is treated at our waste water pretreatment facility, and contracted with an outside sustainability expert to create a custom Water consumption at the farms consists of water used to irrigate to pasture and crop irrigation. When we add crop or pasture is returned to the local sanitation district for additional treatment sustainability tracking tool for our business. The tool contains five pastures and other feed crops, provide drinking water to the cows land to our farming system, we require that it is irrigated land. and use. Our processing plant in 2012 used an average of 9.7 years of data – from 2008 through 2012 – that covers electricity, and sanitize our farm facilities. This water comes from a variety of The majority of our pasture is irrigated, and all of our feed crop million gallons of water each month. Approximately 75% of that sources, including ditch water, well water and water we purchase natural gas, propane, diesel, water, waste, recycling, cow data water – or 7.3 million gallons – was pretreated and returned to the acreage in Colorado is irrigated. We understand our use of from local municipalities. We either purchase water or use well water and milk processing volumes, among other key data points. This local sanitation district to be used again. The water consumption irrigation is sizeable and affects local water resources. As a result, for milking parlor sanitation, cow drinking water and water used to is all primary data taken from purchase reports, invoices and our at the plant is largely related to evaporation from cooling systems we are incorporating better tracking and measurement at our mix in with the cattle feed. Any water that is not used by the cows internal tracking, and it allows us to calculate our energy use, GHG and steam loss from the high temperatures required during the farms so that we can make the most efficient use of our scarce is collected into our lagoons and used for irrigation. Additionally, we emissions (from utilities and animals), water and waste, by facility milk pasteurization process. water resources (please see below for more information). own rights to access ditch water and water from reservoirs, which and by month. This information informs each of our working groups helps to ensure our pastures and feed crops are irrigated. to help them determine opportunities and set goals to improve the Plant Water Use Long-Term Company-wide Goal company’s overall sustainability performance. Water usage at the farms is largely based on estimates, which we from 2012 baseline 80.0 have been tracking - to the best of our ability - since 2009. However, 64.2 65.0 61.4 48.8 due to the fact that the irrigation equipment and pumps from lakes 66.6 48.5 46.1 and lagoons are not metered, the data we have gathered to date is “Having primary data about our business, and % 53.3 based on estimates from irrigation logs, feed ration records, and the being able to track that data monthly, arms average number of cows at different life stages and their typical daily 15 40.0 Aurora Organic Dairy management with real- water intake. Based on our data estimates, and the water lifecycle eduction in Water time information about our progress toward our 26.6 assessment conducted by the University of Michigan in 2010, we

Consumption MILLION GALLONS sustainability goals,” said Scott McGinty, President of know that the greatest water consumption in our operation occurs by 201 13.3 Aurora Organic Dairy. “Not only can we track each on our farms with approximately 95% of our total farm water consumption going to pasture and crop irrigation. facility’s monthly performance, but we can use 0.0 this data for future planning and budgeting toward Water conservation is a top sustainability priority for Aurora sustainability initiatives.” Organic Dairy. Our five-year company-wide goal is to reduce 2010 2011 2012 Sources & Uses of Farm Water YEAR water use by 15% per half gallon of milk sold. We believe we can achieve this goal through better knowledge of our true water use, Plant Water Consumption Sources Uses employee training, equipment resources, and strategies to improve Pretreated and Returned Water PLATTEVILLE & HIGH PLAINS DAIRIES our water usage. We are also in the process of researching our PLATTEVILLE & HIGH PLAINS DAIRIES lagoons and holding ponds to reduce evaporation and water Access to clean, fresh water is becoming an increasingly important Plant Water Goals seepage, and plan to explore crop research to determine which MUNICIPAL DRINKING global environmental concern. At Aurora Organic Dairy, we operate WATER crops improve the water holding capacities of our pasture and our farms and processing plant in arid regions of the western United In 2013 our working group devoted to plant water set a goal to crop soils. Information we have gathered in the early stages of this States, and much of the livestock feed we purchase for our dairy cows reduce plant water use by 3% per half gallon of milk sold, and research supports the use of perennial systems. While our initial PLATTEVILLE & HIGH PLAINS DAIRIES is also grown in the arid West. As water resources become increasingly to reduce our plant water use per half gallon of milk sold, by water study focused on the entire milk lifecycle, from crops-to- scarce, and as we continue to experience drought conditions due to 15% in five years. Plant water use per half gallon of milk sold in DITCH IRRIGATION consumer, we are focusing on the product stages that are within changing weather patterns, we realize the importance of securing and 2012 declined by 7% compared with 2011. This reduction was our control of operations in this report. conserving our water resources. Having strategies to measure, track achieved through higher plant utilization and efficiency – we sold COLDWATER & PEPPER DAIRIES COLDWATER & PEPPER DAIRIES and conserve water will also minimize the financial and operational more gallons of milk with the same facility and resources in 2012 risks of competition for fresh water resources. compared to 2011. While our total water use increased in 2012, COLDWATER & PEPPER DAIRIES WELL PARLOR our normalized water use per unit of milk sold declined. WASH UP

Aurora Organic Dairy 32 Aurora Organic Dairy 33 Farm Water Use by Source to begin to measure exact water flow at some of our key measuring 7% Other points. We will track this data on a monthly basis, and plan to 2% Bags The following represents what we estimate to be the sources continue to invest in and install metering equipment on lagoons, 3% Nitrile Gloves Udder Wipes of our farm water: lakes and other primary flow locations. With this data, we will be In 2009, as part of our LCA of solid waste at our dairy farms, able to better understand our water use, as well as the opportunities 3% Silage Plastic* we learned that disposable paper udder wipes made up the to conserve this scarce natural resource. 11% Municipal Water 5% Twine largest percentage of our farms’ landfill waste. Three towels, on average, were being used each time we milked a cow to ensure the udders were properly sanitized before and after the Waste & Recycling 65% Disposable Udder Wipes milking. This process reduces the incidence of mastitis and 49% Well Water 15% Filter Socks other udder infections, and contributes to better quality milk. *Seasonal impact The U.S. Environmental Protection Agency (EPA) defines solid We estimate we would be using more than 52.5 million paper waste as: “any garbage refuse, sludge from a wastewater treatment towels each year at our current size, based on the average 40% Ditch Water plant, water supply treatment plant, or air pollution control facility With regard to recycling and/or reducing solid waste, our number of milking cows in our system in 2012. We worked and other discarded material, including solid, liquid, semi-solid, or with the University of Michigan to conduct a LCA of three farms operate in rural areas and, therefore, to the best of our contained gaseous material resulting from industrial, commercial, different types of udder wipes: the disposable paper variety understanding, do not have sufficient options for recycling. In mining and agricultural operations, and from community activities” we were already using, cotton and synthetic microfiber, which 2012 we started a twine recycling program at our Colorado dairy Plant Shrink Rate We estimate 11% of the water we use is purchased from (EPA, 2008). For Aurora Organic Dairy, this means landfill waste were both washable and reusable. operations and have recycled more than 3,100 lbs. of this material 6% municipalities, and is used primarily for cow drinking water, and from packaging, materials used at our facilities and the manure in 2012. While this service is not currently available to our Texas 5.1% milking parlor sanitation. The water used for milking parlor washes produced by our dairy cows. It does not include any hazardous 4.3% farms, we will continue to research options for greater material Reusable vs. Disposable Udder Wipes a on annua uag waste, as we do not typically handle or transport hazardous waste 4% 3.7% 3.8% flows to our lagoons and is reused for irrigation water, but we do not 3.4% recycling and reuse at all farm locations. Currently, we are unable have data on water flow to or from lagoons, which makes it difficult as part of our operation. Paper Cotton Microfiber to recycle plastic waste from all farm locations, but have had some to calculate water reuse rates, although we make every attempt to success with cardboard recycling at select farms. We reduced our 2%Energy (GJ) 5,600 2,900 1,000 reuse water whenever possible. Through our LCA work with the University of Michigan, we have overall landfill waste in 2012 by switching from disposable paper examined the solid waste generated at every stage of the milk GHG (kg CO2e) 314,000 19,000 7,000 dairy wipes to reusable, washable microfiber wipes (please refer to 0 Since approximately 95% of our farm water use goes to irrigation production life cycle. For the purpose of this report, we will focus side box on Udder Wipes for more details). Solid Waste (lbs) 4,240 530 18 for organic pasture and crops, we are taking a closer look at water on the product stages that are within our control. We have used ‘08 ‘09 ‘10 ‘11 ‘12 sources and how we might rely on less-scarce natural resources. purchase records and estimates from waste disposal companies Water Use (m3) 34,441 93,300 2,000 As described above, all irrigation water in Colorado is ditch water to determine our greatest impact areas for solid waste, as well as Farm Waste Goals *Energy, GHG, waste and water use for each type of udder wipe consider the opportunities to either reduce the source of the waste, or increase amount expended to create, dispose of and - in the case of reusable material - and is not from municipal sources. This is water that comes wash each wipe. exclusively from snow melt or other precipitation and, therefore, recycling activities. Based on information from our waste disposal vendors, purchase does not drain any local water tables. In Texas, our farms do rely reports and information from our dairy general managers, we on well water for irrigation. We estimate that 49% of our total farm estimate that we generated approximately 195 tons of landfill The analysis included the energy, water and soap required to water use in 2012 came from well water, and this was largely water Farm Waste waste in 2012 from our five dairy farms, combined. This is up from wash the reusable cotton and microfiber towels, and the results used to irrigate pastures around our Texas dairy farms. The source approximately 150 tons of landfill waste from all the farms in 2011, clearly demonstrated that, from an environmental perspective, of this well water is the Ogallala Aquifer, which is one of the largest The largest component of waste at our farms is the manure which is largely due to the construction and opening of the new the microfiber reusable towels were superior to the other two groundwater aquifers in the U.S., and provides irrigation water produced by our dairy cows, as well as livestock bedding materials Little Calf Ranch Dairy Farm in 2011. While the conversion from options. As a result of this study, in 2010 we tested the use of the microfiber towels at one milking parlor to ensure they for approximately 27% of the irrigated land in the U.S. While our (i.e. untreated wood chips, sand and organic straw). We reuse disposable, paper udder wipes to reusable cloth wipes at our larger did not have an impact on cow health or milk quality. Once nearly 100% of the manure from our livestock with the majority dairies has helped to reduce this waste, we continue to identify two Texas farms’ impact is small relative to the number of acres we determined the microfiber towels performed up to our – approximately 75% – of this manure being managed with opportunities to recycle and reuse more materials. irrigated by the Ogallala Aquifer, we are cognizant of the fact that the standards, we have switched from the disposable paper wipes depletion rates of the aquifer have been increasing, and that this is composting principles. These practices allow us to recycle nutrients to the reusable microfiber wipes at our Coldwater, High Plains As a result of our research and analysis in 2012, we have set a one- back to our fields as high-quality organic fertilizer. This is discussed and Little Calf Ranch Dairies, and also began using them at our an environmental risk in our business. year goal to research and establish recycling programs at our farms in in the manure management section of this report below. new High Meadow Dairy in Gill, Colo. when it opened in 2013. 2013. Our five-year goal is to divert 25% of our farm solid waste by We estimate we have removed 20.9 million disposable paper either reducing our waste or increasing recycling. In 2012, we have towels from landfills in 2012 compared to 2010 prior to testing Farm Water Goals From a solid waste perspective, when we first examined our waste analyzed our farm waste, recycling and compost streams, and have the reusable wipes. By converting to reusable microfiber towels, streams at our farms in 2010, we found that disposable dairy wipes identified waste reduction opportunities. Our goals for farm waste we have also reduced our annual solid waste by nearly 70 tons, made up a significant portion of our solid waste. Additional landfill To better understand our water use at the farms, we have made reduction in 2013 are focused on better tracking and measurement and have saved significant amounts of energy, GHGs and water significant progress in tracking our sources and uses of water. In waste from the farms included (in no particular order): nitrile milking of farm waste, and identification of waste reduction opportunities in the process. This initiative has also been a significant cost- 2012 we mapped the measuring points for our farm water use, gloves, filter socks, bags formerly containing calf feed and minerals, through operational procedures or increased recycling. While there are savings for our farms. and improved our ability to track and measure our irrigation water. twine (used to bale hay and straw), plastic used to cover silage pits, no feasible recycling opportunities near our Texas farms, we believe In 2013 we have funded the purchase of water metering equipment and used medical supplies and containers. there are opportunities to increase recycling at our Colorado farms.

Aurora Organic Dairy 34 Aurora Organic Dairy 35 2012 Plant Solid Waste the plant, which means we will continue to focus on our recycling At our High Plains Dairy in Gill, Colo. we have more than 225 acres 2012 Breakdown of AOD Energy Use Within Reporting Boundary* efforts, but will also reduce the overall source of the waste by better of water reservoirs and adjacent marsh areas. These waterways are operations, employee training and management. Our long-term goal used to channel water to our irrigation systems, but they also provide is for our plant to be a zero-waste facility by recycling and reusing all a natural habitat for migratory birds throughout the year. Finally, the 423 Tons – Landfill Waste of the waste we produce. St. Vrain River runs through our Platteville, Colo. Dairy farm. Trees <1% Corporate Office nestle nearby the river, which provide natural habitat for local wildlife.

430 Tons – Recycled Materials Biodiversity As we increase the acreage we farm, we continue to explore additional opportunities to enhance the biodiversity of our farms, 32% Plant At Aurora Organic Dairy, we advocate for the ecological diversity of such as planting trees to support more natural species and to plants, animals and other living things through organic farming and improve pasture productivity. Our Land Management team has management practices. The USDA National Organic Program organic set a one-year goal to develop criteria for land management and 68% Total Farms Plant Waste regulations acknowledge the importance of biodiversity and require acquisition, which would include criteria for purchasing land that that we utilize production practices that “…maintain or improve the maintains the natural biodiversity of the area. Our processing plant generates approximately 423 tons of landfill natural resources of the operation including soil and water quality” waste annually. However, based on the type of waste and our plant’s (7CFR 205.200 – General). We support sustaining biodiversity proximity to urban recycling programs, our plant has greater access on our organic farms in this manner so that we do not deplete our Soil Health to recycling opportunities than many of our farms do. Based on our natural resources. LCA of solid waste conducted by the University of Michigan, we Soil management and health are also important elements of our 2012 Breakdown of AOD GHG Emissions Within Reporting Boundary* determined that the majority of our landfill waste from the plant was As it relates to the organic crops we grow for feed and pasture, we overall farming operations. We currently farm more than 12,000 gable-top half-gallon milk cartons, which made up an estimated are committed to 100% organic production, which prohibits the use acres of organic pasture and feed crops, and expect this number to 95% of our solid landfilled waste. In late-2012 we expanded of synthetic pesticides, herbicides and fertilizers. We believe that in grow into the future as we further vertically integrate our business. 1% Corporate Office our relationship with our solid waste vendor who installed new the context of organic farming, biodiversity is supported, and each We have hired soil experts on our farm management team who help equipment enabling them to recycle the gable-top half-gallon milk species plays a vital role in that particular system. For example, to ensure our crop rotations produce the best feed for our cows while cartons that were previously difficult to sort and recycle. We estimate the active grazing of livestock and the application of manure on our enhancing the health of the soils. 12% Plant Emissions once this recycling opportunity is fully utilized, we will be able to pastures and fields promotes microbial and fungal activity within divert 300 tons of solid waste from landfills each year. the soils, which further support the development and maintenance Organic agriculture builds the health of soils because it relies on of earthworms, dung beetles and other species. Earthworms aerate practices, such as crop rotation and enhanced soil fertility, to reduce 9% Farm Utilities Emissions and provide nutrients to the soils, encourage microbial diversity, and pests rather than synthetic inputs. Additionally, the application of Plant Recycling help to minimize surface water erosion through their subterranean manure and compost from our dairy cows increases the fertility of 78% Farm Enteric Emissions activities. These factors support seed, root and plant development in pasture and crop soils. We continue to research different organic The processing plant recycles more than half of the waste it the fields and pastures. Dung beetles, on the other hand, biologically farming methods and crop rotations to increase the health and *Excludes off-site cold storage, generates each year. This includes cardboard, milk cartons, labels, control organisms that reside within the manure sub-biota such as fertility of our soil. distribution & transportation plastic stretch wrap, office paper, pallets, plastic from our gallon fly larvae and internal parasites; thereby, helping to minimize the blow mold and plastic from barrels. Based on reports from our spread of disease, aerate the soils and recycle nutrients. recycling vendor, we recycled nearly 860,000 lbs., or 430 tons, Energy & Greenhouse Gases of these materials in 2012. This is an increase from 351 tons of Wildlife that may be seen on our farms – depending upon their As our company grows to meet the continued increase in consumer materials from the plant being recycled in 2011. geographic location – include but are not limited to: geese, ducks, Tracking our energy use and greenhouse gas emissions is an important deer, antelope, burrowing owls, hawks, falcons, eagles, badgers, initiative for Aurora Organic Dairy. We understand the need to demand for organic milk, our total company energy use and GHG skunks, raccoons, coyotes, prairie dogs, snakes, pigeons, various minimize our impact in these areas to reduce our negative affect on emissions have increased. In 2012, our total company (Scope 1 and Plant Waste & Recycling Goals bird species and armadillos. At our Pepper Dairy in Dublin, Texas we climate change and on our use of the Earth’s finite resources. 2) GHG emissions increased by approximately 18%, and our energy have nearly 250 acres of woodland pastures, which – in addition to use increased by approximately 15% on an absolute basis. This We have made significant progress toward improved waste shade and shelter for our livestock – provide natural wildlife habitat In 2012, our total operations’ energy use was approximately was driven by increased milk production with the addition of a new management at our milk processing plant. In 2012, our Plant Waste for deer, birds and armadillos. 135,744,500 MJ and our GHG emissions were 149,090 MT of 2,500-cow dairy in 2012, and increased plant capacity from our working group team established a one-year goal of achieving a 50% CO2e. With distribution, transportation and cold storage outside of late-2011 expansion of the plant. recycling or diversion rate, and we believe we are on track to exceed We installed nesting boxes in 2013 at our Coldwater Dairy in our reporting boundary, our direct energy use and GHG emissions that goal in 2013 (recycling rate is determined by the following: Stratford, Texas to encourage native owl populations to settle in breakdown are represented below. Additionally, we do not produce Current Plant Value = (MT recycled)/(MT recycled + MT landfill)). the area. We have also planted trees at this dairy location and look any ozone-depleting emissions, as all refrigeration is free of Our five-year goal is to achieve a 75% recycling or diversion rate at forward to future development of these types of projects there. Chlorofluorocarbons (CFCs) and, therefore, does not contribute to ozone depletion.

Aurora Organic Dairy 36 Aurora Organic Dairy 37 Absolute Energy Use – Total Company 2012 Results Per Half-gallon of Milk Sold compared to 2011 The following represents the groups that contribute to the overall From 2011 to 2012 our farms, combined, reduced normalized

company energy and emissions reduction goals: GHG emissions (MT CO2e/half gallon of raw milk produced by Aurora cows) by 6%. We believe that, as our herd matures, the 300,000,000 • Farm enteric emissions cows produce milk more efficiently, which causes the reduction in 225,000,000 % % • Farm utility emissions GHG emissions per gallon of raw milk the cows produce.

135,744,500 • Plant emissions

150,000,000 117,804,230

106,142,160 2 0.5 89,028,690 The nature of our business is to produce organic milk. This requires MJ ENERGY 75,000,000 Increase in eduction in cows that naturally emit greenhouse gasses when they produce milk. CO2 emissions energy use 0 Farm Enteric Emissions Therefore, we are challenged to address enteric emissions as the largest contributor to our negative environmental impact. In 2012, ‘09 ‘10 ‘11 ‘12 Farm emissions make up the large proportion of our overall company we set goals around research to determine the best management YEAR emissions. With approximately 22,000 cows in our mature herd, we practices for the reduction of enteric emissions on organic dairy have a large population of livestock, which naturally emit methane, farms. Based on this research, we will establish goals and – if Absolute GHG Emissions Average Normalized GHG emissions (MT CO2e/half gal eq milk sold) carbon dioxide and nitrous oxide (called enteric emissions) as part opportunities exist for organic dairy producers – we will modify our of their natural processes. Emissions from livestock include enteric feed and farm supplies based on this research. As our herd matures, emissions and manure management. Together, they are the single milk production per cow typically increases, which will cause the 200000 0.0030 largest contributor to Aurora Organic Dairy’s GHG emissions, making emissions per half gallon of raw milk to decline. 0.0025 0.001807 0.00181 149,062

160000 0.00175

0.00185 up 78% of total company GHG emissions within our operating

126,014 0.0020 e e 120000 111,593 2 2 0.0012 100,367 boundary in 2012. 0.0015 As an organic dairy producer, we use 95% of the manure we produce

80000 68,005 MT CO MT CO 0.0010 on our farms to fertilize pasture and crop fields. Approximately 75% 40000 0.0005 Enteric fermentation is the process a cow goes through when of the manure is composted, 20% of the dry manure is applied to 0 0.0000 she digests her feed. Cows’ stomachs contain bacteria that break fields, and the remaining 5% is loss. This approach, compared with down carbohydrates in the feed. The rumen – one of a cow’s four liquid manure systems, significantly reduces the amount of GHG ‘08 ‘09 ‘10 ‘11 ‘12 ‘08 ‘09 ‘10 ‘11 ‘12 stomachs – supports microbial fermentation, which allows ruminants YEAR YEAR released during the manure management stage. We will continue the ability to digest cellulose. Methane gas (CH4) is released as a to compost the majority of manure produced at our farms, and will by-product of this digestion, and CH is 25 times more potent as a 4 explore additional ways to reduce the emissions related to manure If we examine the GHG emissions expended per half gallon of organic Average Normalized Energy Use (MJ/Half gal eq milk sold) contributor to global warming than CO . 2 management at each of our locations. milk sold in 2012, our CO2e emissions increased by approximately

2%, which is a lower increase than our absolute emissions because 2012 Farm Emissions in MT CO2e (excludes utilities) 1.75 1.66 we have realized the benefit of efficiencies and removed the impact 1.61 1.64 1.63 Farm Utility Emissions of expansion by normalizing the data. Likewise, our energy use per 1.50 10% Manure Management (CH4) half gallon sold declined by 0.5% in 2012 relative to 2011. We Farm utility emissions make up approximately 8% of the company 1.25 established our sustainability goals and associated projects against MJ ENERGY total, and include electricity, propane, natural gas and fuel used our 2012 benchmark data. We believe our improved data, metrics 1.00 15% Managed Soils (N20) to run our farm machinery and equipment. We use our custom and goal-setting processes around sustainability will contribute to sustainability tracking tool to manage data from each of our farms future declines in GHG emissions and energy use per half gallon of ‘09 ‘10 ‘11 ‘12 and from more than 20 utility vendors, and can view our monthly milk we sell. YEAR 20% Manure Management (N20) utility use by fuel type, by farm and by month. This allows our general managers to track their usage and to determine if energy 55% Enteric Fermentation (CH ) When we set out to develop goals for our Energy and GHG emissions 4 reduction strategies are effective. targets in 2012, we knew that 2013 would be a challenging year, as we have opened an additional 3,000-cow dairy farm in 2013, and Companywide Goals to Reduce Energy Use From 2011 to 2012 our farms, combined, reduced normalized plan another major plant expansion. As such, our one-year goal in & GHG Emissions To measure the environmental impact of enteric fermentation, we energy use (MJ/half gallon of raw milk produced by Aurora cows) 2013 is to reduce our Energy use and GHG per half gallon of milk sold measure and track monthly cow populations by age and lactation by 10%. While we did not have major energy reduction initiatives by 3%. Our five-year goal is to reduce Energy use and GHG per half As an energy-intensive business, we have set our companywide goals cycle, as well as feed intake and percentages of various types in place during this timeframe, we believe the increased awareness gallon of milk sold by 15% by 2017, using 2012 as our benchmark for the reduction of energy and GHG emissions, and have tasked of feed and pasture consumed throughout the year. This data is among employees regarding conservation and reducing our use of year. To achieve these goals, we have established several projects and each of our working groups to establish product stage goals that will analyzed using emissions formulas from the IPCC Guidelines for various energy sources helped to contribute to this decline. contribute to the achievement of the company objectives. priorities from the work of our Corporate Citizenship groups. National Greenhouse Gas Inventories www.ipcc-nggip.iges.or.jp/ public/2006gl. We have tracked five years of this data, and continue Our one-year goal is to reduce farm utility emissions by 3% in 2013, to use our custom sustainability tracking tool to input this data and and we are on track to achieve this goal. Longer term, we have set a determine our non-utility farm emissions. goal to reduce our farm utility emissions by 10% by 2017. To first

Aurora Organic Dairy 38 Aurora Organic Dairy 39 understand the opportunities for energy savings, in 2012, each of Our processing plant GHG emissions make up approximately 12% Supply Chain Impact Farm, which is part of our High Plains dairy complex. This allows us our farms participated in electricity and fuel usage audits with utility of the company total, and are largely related to electricity use. The to turn our Pepper Dairy into a heifer-rearing facility and discontinue providers. We have reviewed the results of those audits and have plant’s energy use in 2012 was 32% of the company total. Average We understand there is significant impact to energy and GHG milking cows at this location, which will reduce the overall distance – established action plans to update lighting, fans and other energy- plant emissions in 2012 were .00011 MT of CO2e per half gallon emissions in the feed-growing stage of our dairy system. Longer and GHG emissions – from raw milk transported to our plant. saving equipment. For those items that are nominal, we will replace of milk sold, which is 7% higher than in 2011. This increase was term, we expect to have greater control over this feed production equipment in 2013. For other items, such as more energy efficient primarily due to higher GHG emissions from natural gas in 2012 stage because we are buying more land to grow more of our own Once the milk is received at the plant and processed for our retail fans, weather stripping, HVAC upgrades, solar screens on windows, compared to 2011. Our 2013 plant expansion will allow us to feed. We will continue to identify additional opportunities – both customers, pallets of packaged milk are transported in refrigerated lighting sensors, energy efficient lighting, duct work, space heaters, tractor-trailer trucks to cold storage facilities in Colorado and increase plant utilization, thereby reducing the emissions per half- downstream and upstream – to positively influence the independent heat-recovery for water heaters, insulation and electrical systems, California. From there, packaged milk is distributed in refrigerated gallon of milk sold, as the equipment is state-of-the art and energy farmers and companies who support our business. we will budget and implement upgrades in 2014. It is noteworthy tractor trailer trucks to our customers’ distribution centers across the efficient, and the plant continues to improve its overall efficiency. that our newer farms – such as Coldwater, High Plains and Little U.S. To determine the impact of distribution on our overall GHG and Calf Ranch, identified fewer opportunities for energy savings in Transportation & Distribution energy LCA, distribution routes and truck fill rates and weights their audits than older facilities, such as the Platteville and Product Packaging were analyzed. Pepper Dairies. Our milk is sold in all 50 U.S. states. Therefore, transportation and The majority - 80% - of the milk we process at our Platteville Milk distribution are important aspects of our sustainability tracking and Transportation Flow Chart Breakdown of Farms’ Total Energy from Utilities Plant is packaged in half-gallon milk cartons made by Tetra Pak. goal-setting initiatives. While these activities are out of the reporting These milk cartons are made mainly from paperboard and have boundary for this year’s report, they represent an area of focus for 2% Gasoline a protective polyethylene coating. Tetra Pak works with its paper future data tracking and reporting. The primary areas we track for the Feed Transport suppliers to ensure forests are being responsibly managed. For more environmental impact of transportation and distribution are related information about Tetra Pak’s sustainability initiatives, go to to energy use and GHG emissions from: raw milk transportation 43% Diesel www.tetrapak.com/environment/pages/default.aspx. from our farms to our plant, and finished goods distribution from our plant to our cold storage facility and customers’ distribution centers. Half-gallon milk cartons are increasingly being recycled by consumers Farms Distribution and cold storage make up approximately 12% of our total 38% Electricity through single-stream municipal recycling centers. Currently, according lifecycle GHG emissions per half gallon of packaged milk we sold. We to the Carton Council (www.recyclecartons.com), 45.6% of U.S. 1% Natural Gas are also aware of the need to measure the impact of feed transport, households have access to milk carton recycling through municipal but do not currently and regularly track this stage of distribution. 16% Propane programs. Their goal is to provide access to carton recycling programs Raw Milk Storage to 60% of U.S. households, and in the areas that sell the greatest Distribution & Transportation Energy Use In 2013 and 2014 we will also begin an employee education and amount of Aurora Organic Dairy milk, such as the Northeastern U.S. training program to ensure each of our farm employees understands and California, household access to milk carton recycling averages the importance of saving electricity. We will post materials in between 62% and 69%, depending on the municipality. 2% DC Transport to Retail Raw Milk Transport break rooms and provide training to employees to encourage them The remaining 20% of the milk we bottle is processed into gallon to conserve gas when using farm equipment by not allowing the plastic jugs made of high density polyethylene (HDPE). We use virgin 2% Product Distribution to Cold Storage equipment to idle, and by turning off lights and fans when they are HDPE pellets to manufacture our jugs on-site to ensure high integrity 9% Raw Milk to Plant not being used. We believe that changing human behavior will not in the packaging and a sterile environment for the milk. Any clean Milk Processing only save energy, but will help to establish a culture of sustainability excess HDPE material created in the gallon blow molding process is throughout the organization. added back to the pellets and reused. Waste that cannot be reused for gallon jugs is recycled into heavy duty plastics, such as piping, lumber 39% Feed Transport 48% Product Distribution to DC and bins. Plant Emissions Finished Goods Transport In terms of packaging reclamation, the gallon jugs are HDPE No. Our Platteville, Colo. processing plant was designed and constructed 2 plastic, bear the recycling symbol and can be recycled at any While we do not own the fleets that transport these goods, we track in 2004 with state-of-the-art and energy efficient features. Many of municipal recycling center that accepts No. 2 plastic containers. In the impact of distribution on our overall product supply chain. the sustainability features of the plant meet specifications for LEED Distribution Centers 2010, 94% of the U.S. population had access to recycling centers Raw milk is transported in milk tankers from our farms in Texas, and certification, including the use of heat exchangers, low wattage that accept HDPE No. 2 plastic for recycling. However, it is estimated Colorado to our processing plant in Platteville, Colorado. Milk from lighting, energy efficient insulation to prevent heat and cold loss, that only 28% of this and PET plastic are being recycled (Moore our Platteville farm travels the shortest distance, ¾ mile, and milk among others. As a result, there are not as many opportunities to Recycling Associates. Plastic Recycling Collection: National Reach from our Pepper Dairy in Dublin Texas, travels the longest distance, reduce our plant’s overall energy use and emissions. By running more Study. http://plastics.americanchemistry.com/national-reach-study). approximately 800 miles. The greatest number of milk tankers travel Retailers milk through the plant for each 24-hour period in 2012, our energy from our Coldwater Dairy in Stratford, Texas and our High Plains use per half gallon of milk sold increased only 3%, despite processing Dairy in Gill, Colorado, as these are the largest farms that produce the a higher volume of product in the year. greatest quantity of milk. In 2013 we built the High Meadow Dairy

Aurora Organic Dairy 40 Aurora Organic Dairy 41 2013 Corporate Citizenship Report

Transportation & Distribution Goals Our objectives going forward continue to be focused on our transportation contractors. We have researched the use of Our Corporate Citizenship management team devoted to Supertankers and Compressed Natural Gas (CNG) or Liquified Our transportation and distribution has explored ways to reduce Natural Gas (LNG) trucks for milk hauling from the Colorado farms People the environmental impact of this product stage on our overall to the processing plant. Our research to date has revealed that the sustainability performance. Due to the fact that we do not own or greatest short-term opportunity is to collaborate with a third-party manage our fleets, this work is focused on the management of our hauler to purchase a CNG truck. CNG engines are up to 30% cleaner than diesel engines and considerably reduce GHG emissions. If this third-party haulers to reduce CO2 equivalent emissions and fuel use to gain efficiencies. This group has set goals for 2013 that include: hauler follows through with the purchase, we expect to begin using to better measure and track ton miles to determine the greatest areas CNG trucks for raw milk hauling from our Colorado farms to the of opportunity for efficiencies, and to establish an overall logistics plant in early 2014. We have also explored the use of intermodal analysis to optimize route planning and loads. (rail) transport and have found it is not feasible due to increased transit times to our customers. Since we began tracking our GHG and energy LCA in 2009, to encourage our third-party haulers to be more sustainability minded, Longer term, we plan to continue to identify ways we can encourage we have required that all new third-party finished goods haulers our milk haulers to be more efficient and to reduce overall emissions supporting our business be EPA Smart Way certified. We also and energy use, and will also examine the feed haulers to determine provide financial incentives to our raw milk haulers to encourage opportunities to reduce their environmental impact. fuel savings. www.epa.gov/smartway

Milk Plant Quality Lab, Platteville, Colorado

IODCIO 2012 OVEVIEW AOA OAIC AO AOA DEIVEI SAEODES AIA WEAE EVIOEA O PEOPE DAI AAACE OAIC DAI VAES & VAE SEWADSIP

Introduction We attract and retain people with unmatched knowledge and expertise, providing competitive wages and industry-leading The nearly 525 employees in Colorado and Texas that make up benefits. From our animal care specialists to plant operators, Aurora Organic Dairy (as of Summer 2013) embody the principles quality assurance scientists to logistics managers, we are of hard work, commitment to excellence and dedication to organic incredibly proud of the innovative and hard-working team we stewardship. At the end of 2012, we employed 495 people. have built at Aurora Organic Dairy.

We have a strong commitment to our employees, which is demonstrated in the unique and comprehensive benefits we provide at all levels within the organization. Additionally, we receive feedback from our employees in company-wide employee surveys, which tell us what we’re doing well, and areas where we can improve our engagement and communication with staff.

Diverse Workforce

As an integrated company that manages our own organic dairy farms and processing plant, we employ a diverse and growing workforce. In fact, our total full-time employee base has grown 46% from the end of 2008 to the end of 2012. High Meadow Dairy Farm, Gill, Colorado

Aurora Organic Dairy 42 Aurora Organic Dairy 43 Annual Employee Growth 24 women across the company hold management-level positions, Among the highest response rankings for the 2012 survey are in Aurora Organic Dairy and an additional 19 women are in professional job categories. the areas of job satisfaction, relationships with co-workers, having subsidizes housing for nearly New Boulder Office This compares to 46 men in management positions and 10 men in a safe work environment and being proud of saying they work 130 farm-based employees. 520 495 professional job categories. for Aurora Organic Dairy. In each of these categories, employees This not only benefits While the majority of our AOD 440 418 responded with higher-than-average rankings. It is important to note our employees and their employees work at our farms and in our We believe our commitment to employees, comprehensive benefits that, due to the rapid growth of the company, 46% of 2012 survey families, but also helps us processing plant, our Boulder central 360 360 339 that reach all levels in the organization and opportunities for participants were working for the company when the 2010 survey to attract and retain workers office employees represent approximately 300 advancement drive employee retention. More than 24% of our was conducted. The employee satisfaction committee will continue to our farms, which are 7% of our total workforce. This group of # OF EMPLOYEES 280 largely management and administrative employees have been with the Company for more than 5 years, to identify ways to address opportunities to continue to improve typically located in remote, even though the bulk of our workforce – more than 90% – are support functions has grown over the 200 employee satisfaction, and to ensure newly hired employees have rural areas. Our purchase or in job categories that typically have high turnover (agriculture years to support our growing organic access to the information and tools to make them effective in rental of employee housing milk production and processing facilities. and manufacturing). While a large percentage of our employees ‘08 ‘09 ‘10 ‘11 ‘12 their jobs. also supports the local In early 2013, we moved our offices YEAR are agricultural employees, there are no significant variations in communities and economies from their original location to another employment numbers due to seasonality. where we operate. building in downtown Boulder, Colo. Of our 495 employees at the end of 2012, all but 3-5 were Comprehensive & Competitive Benefits full-time employees. The few part-time employees we hire each Boulder is important to us, as it is the Validus Worker Care year are seasonal to help on our farms with the grazing season. Employee Satisfaction epicenter of the organic and natural Aurora Organic Dairy offers comprehensive and competitive benefits Certification Approximately 70% of our employees are employed in agricultural products industry, and is where we for all levels within the organization. As a company that has jobs and work at our dairy farms in Colorado and Texas. Our milk In 2010 we conducted our first comprehensive employee survey, and have built our foundation throughout agricultural workers, manufacturing workers and office/managerial processing plant in Colorado employs approximately 23% of our repeated the survey in 2012. Our response rate was incredibly high In 2012, we expanded our our history. The move allowed us to workers, we offer benefits that are unique in each of these sectors. accommodate our growing staff and total workforce in manufacturing jobs, and the remaining 7% of our both years – 91% participation among all AOD employees in 2010, certification with Validus Years ago, it was the vision of founder, Marc Peperzak, to provide to design the Aurora Organic Dairy workforce is made up of administrative and management support and 90% in 2012. To ensure employees were comfortable providing beyond animal welfare and central office to be more reflective of our functions, which are based in our Boulder, Colo. central office. honest feedback and to reach all employees – many of whom do not the same benefits to each level of worker, which helps attract and were the first dairy company company. retain good employees. These benefits are available to all full-time have access to e-mail – the survey was administered by a third-party to become Validus Worker employees, which makes up the vast majority of Aurora Organic who visited each of our facilities to individually interview employees Care certified. Similar to We incorporated both ergonomic and Employee Distribution Dairy’s workforce. in either Spanish or English, depending on their preference. For their rigorous animal welfare sustainability features into the new office employees with e-mail accounts and access to computers, the requirements, the Worker to support our commitment to employee survey was administered electronically. satisfaction and to environmental 70% Farm Employees Aurora Organic Dairy’s comprehensive full-time employee benefits Care audit and certification stewardship. We’ve used natural include (depending on eligibility): provides an important, materials, such as reclaimed wood and When we compared employee survey results between the two • Multiple choices for medical coverage for all full-time employees unbiased third-party audit natural concrete. The lighting is energy years, in most cases, employees’ responses improved in 2012. 23% Plant Manufacturing Employees • Dental coverage available to all full-time employees of our farms to ensure efficient and many of the workspaces In the key areas of: Working Conditions, Work/Life Balance, • 401k with a company match available to all employees employees are legally hired, have sensors that automatically turn the Training & Development, Satisfaction, Leadership, Compensation, • Paid Time Off and paid holidays for all employees fairly compensated and lights off when vacant. All the faucets Communication and Benefits, employee survey scores were higher and toilets are low-flow to conserve • Farm employee housing subsidized by the Company treated, provided a safe in 2012 than in 2010. In each of these areas, the Company scored water, and we reduced our landfill waste 7% Administrative/Management for remote and rural locations working environment and above average relative to other companies that have administered when we moved to the new offices by offered appropriate training similar surveys by the third party. • Competitive wages using plastic, reusable crates. • Life insurance to ensure competency in their job. In addition to diversity in company roles and functions, our employee Areas of opportunity that were revealed in 2010, such as • Short-term disability (optional) coverage base is ethnically diverse. Approximately 60% of our total workforce understanding of compensation, the value of employee benefits • Tuition support is non-white. This group predominantly speaks Spanish as a native and leadership communication, were addressed by our Employee • Scholarships for family members of AOD employees In order to achieve certification, each farm must undergo a language. As a result, we seek to hire bilingual managers, and translate Satisfaction Committee in early 2011 via enhanced communications comprehensive audit that includes management and employee relevant employee communications into Spanish to ensure our and training programs. As a result, employee feedback in these areas interviews, document review and a full inspection of the dairy farm employees feel welcome and supported, and have the understanding of improved in the 2012 survey. The only area where the Company to ensure all employee materials are up-to-date and available, and our company procedures and other pertinent information. scored below average in the employee survey was related to the work conditions meet the criteria of the certification. We are employee-to-manager communication. While this response improved proud of our farms, as each achieved a score of above 90%. In order Aurora Organic Dairy is also a culture that embraces gender diversity. slightly from 2010 to 2012, it is still below the overall average to become Validus Worker Care certified, an operation must have Our total workforce is 21% women. Eight out of the 21 members for all companies that include this question in their employee each of its facilities audited and certified with a minimum score of of our Executive Leadership Team are women, and women hold satisfaction surveys. 80% and no critical failures. management positions on both our Farm and Plant teams. In fact,

Coldwater Dairy Farm, Stratford, Texas

Aurora Organic Dairy 44 Aurora Organic Dairy 45 While we hope to identify a similar worker care certification program for our processing plant, we undergo several Code of Conduct audits at our plant each year. These audits are required by our retail customers, Promoting from Within and cover areas such as plant safety/evacuation procedures, proper With Aurora Dairy’s more than three decades in the dairy storage of chemicals, proper use of Personal Protective Equipment, production business, we have several members of our farm and worker welfare measures, such as job satisfaction, hours, pay management team who have been with the company for 20 – and overtime rates. These audits include individual interviews with even 30 or more – years. Others have risen up from their time as randomly selected employees. Consistently, our processing plant interns at our farms. One dairy farm general manager has been with Aurora Dairy Corporation since the 1970s, working his way scores in the category of “above and beyond” in several areas, up from a herdsman to become a manager of a complex organic including benefits, health, dental and life insurance, matching 401K, dairy production system. Another joined the company in 1999 as paid time off policies, holiday pay, scholarship program for employee a milker, and is now general manager of a 1,000-cow dairy farm. family members, community donations and support of community non-profit organizations. In addition to Code of Conduct audits, the Additionally, many of the people in critical plant management SQF Level 3 audit and certification the plant undergoes each year positions have been with the company since 2003 and 2004, and helped to design and develop our milk processing facility covers worker safety and welfare. from the ground up. Farm interns at our High Plains Dairy in Gill, Colorado

Employee Engagement Goals Supply Chain Relationships Supporting a Vibrant, Growing Organic Dairy Industry

As part of our company-wide Corporate Citizenship commitment, We recognize the importance of our relationships with the people Since the organic agriculture program at Colorado State University’s we have a group of diverse management employees from each upon whom our business depends. This goes beyond the Aurora College of Agriculture was established in 2006, Aurora Organic part of the company that is devoted to employee and community Organic Dairy family and extends to vendors and the more than Dairy has provided scholarship funding for the students who have engagement. In 2012, this group’s main objective was to conduct 150 independent farmers in our network who provide us with feed, committed to a career in organic agriculture. Since 2006, we have the employee satisfaction survey, which was completed towards the forages and animal husbandry services. Working with farmers and funded more than 100 Colorado State University organic agriculture end of 2012 and is discussed above. The group also established businesses in our communities helps to ensure greater participation scholarships totaling $110,000 in donations. These scholarship a goal to launch a new employee handbook by the end of 2013, in organics and contributes to the vitality and vibrancy of our funds have been dispersed among more than 60 students who which will provide comprehensive information about the Company communities for generations to come. have an interest in working in the organic agriculture sector after and employee benefits. This is one of the tools that will improve graduation. We have also financially supported experiential learning communication about the value of our benefits for employees. and teaching assistant funding, and have provided donation dollars Community & Philanthropy to cover the cost of field trips to organic farms and production facilities as part of the Colorado State University organic agriculture In addition to bolstering our local communities through our support program. We believe these additional donations provide valuable of local vendors and independent farmers, Aurora Organic Dairy hands-on learning experiences for the students. In total, Aurora gives back to the communities in which we do business. We actively Organic Dairy has donated nearly $135,000 to the Colorado State donate funding and organic milk to local schools and food banks, University organic agriculture program, and in 2012 we donated and we provide monetary support, as well as donations of dairy $20,000. Additionally, our management teams at each of our cows and calves to local Future Farmers of America (FFA) and facilities lend their expertise through teaching and lecturing at local 4-H programs. In 2012 we donated more than $255,000 in cash colleges and universities. Milk donation to Community Food Share, Louisville, Colorado and more than $100,000 - or 28,000 gallons of milk and 2,520 lbs. of butter – to non-profit organizations and food banks in the Creating real-world learning opportunities on our farms through can gather, use computer work stations and enjoy recreation time communities where we operate. We host tours of our facilities, our successful internship program is one of the most rewarding with each other in an otherwise rural area. This project continues and our employees often lend their expertise by speaking at local ways we support the future of the organic dairy industry. Our to be underway, and a potential site for a community center has community organizations and youth agricultural programs to educate farms offer a comprehensive hands-on internship program that has been identified. Longer term, the Company would like to add a Platteville, Colorado our communities about our business and organic dairy production. become recognized globally. We have hosted more than 60 interns community center near its Coldwater farming facility in Stratford, Additionally, our employees receive free organic milk each pay day, at our farm locations, and they have come from more than 14 Texas. And, we will continue to address opportunities revealed in Another goal for this group was to research and plan the construction and we provide free organic milk to more than 40 neighboring countries and four continents. In fact, several members of our farm our 2012 employee satisfaction survey to drive improvement in our of an employee community center near our growing High Plains homes that surround our organic dairy farms. management team started as interns at our farms. In 2012, we communications with our employees. farm complex in Gill, Colo. This will be a place where our more hosted 16 interns at our farms for hands-on learning about organic than 100 employees working at the High Plains farming complex dairy production systems.

Aurora Organic Dairy 46 Aurora Organic Dairy 47 2013 Corporate Citizenship Report

In 2011, we launched our Barney Little Scholarship program (please see side box), which provides college and technical school tuition Aurora Organic Dairy support to the family members of our employees who demonstrate Barney Little Contact an interest in organic dairy farming, processing or management. In Scholarship Fund 2012, we granted $16,500 in scholarship funds to children and In 2010 we established the grandchildren of our employees. And, to date, we have provided Barney Little Scholarship Fund. more than $60,000 in scholarships to the children, grandchildren The fund was created in memory and family members of our employees. The funds are raised at our of a long-time Aurora Dairy Aurora Organic Dairy annual golf tournament, which is financially employee, Barney Little, who supported by our vendors. dedicated his career to the organic dairy industry.

Barney worked with Marc Conclusion Peperzak for more than three decades, and it was his passion We believe our people and the people who support our company for organic dairy production and industry are incredibly important to the future of organic dairy. methods and high standards Without each of our employees, more than 150 independent of animal welfare that helped farmers, the vendors who support our business, and our customers, support the company’s we would not have the resources to further the future of the organic commitment to 100% organic dairy production in 2003. Barney dairy industry, and contribute to vibrant communities. We appreciate left this world in 2010, but his their support of our organization, and plan to continue to build our memory lives on in our support support of them. of the future of the organic dairy industry through the Barney Little

Scholarship Fund. IODCIO 2012 OVEVIEW AOA OAIC AO AOA DEIVEI SAEODES AIA WEAE EVIOEA O PEOPE DAI AAACE OAIC DAI VAES & VAE SEWADSIP

Contact

We believe we have put forth a tremendous effort to establish data tools to better track and manage Aurora Organic Dairy’s sustainability performance and progress towards our goals. We are pleased to share our first Corporate Citizenship Report with our various stakeholders, and look forward to your feedback, reactions and questions regarding the information contained in this report. Please direct all inquiries to:

Aurora Organic Dairy Office of Sustainability 720.564.6296 [email protected]

Aurora Organic Dairy 48 Aurora Organic Dairy 49 Appendix - GRI G-3 Index - C Level with Food Processing Supplement Appendix - GRI G-3 Index - C Level with Food Processing Supplement

GRI# Description Pages GRI# Description Pages*

Strategy & Analysis Environmental Performance Indicators

1.1 CEO Statement 4 EN-3 Direct Energy Consumption 37-42

EN-4 Indirect Energy Consumption 37-42

Organizational Profile EN-10 Percentage Water Recycled & Reused partial - plant 33

2.1 Organizational Name 4 EN-16 Direct/Indirect Scope 1 GHG Emissions 37-42

2.2 Primary Brands, Products & Services 9 EN-17 Other Relevant GHG Emissions 37-42

2.3 Organizational Structure 10 EN-18 Initiatives to Reduce GHG 37-42

2.4 Location of Headquarters 11 EN-19 Ozone-Depleting Emissions 37

2.5 Countries Where Operating 12 EN-22 Waste Disposal 34-36

2.6 Nature of Ownership 13 EN-23 Significant Spills none

2.7 Markets Served 12 EN-24 Transported Hazardous Waste none

2.8 Scale of Organization 9 EN-27 Packaging Reclamation 40-41

2.9 Significant Changes During the Reporting Period one new farm added - page 11 EN-28 Noncompliance with Environmental Laws none

2.10 Awards Received During Reporting Period 19 Food Processing Sector Disclosures

Report Parameters FP-1 Suppliers Compliant with Sourcing Policy 20-21

3.1 Reporting Period 2012 FP-2 Responsible Production Standard Purchases 20-21

3.2 Date of Most Recent Report none FP-3 Percent time lost due to labor disputes none

3.3 Reporting Cycle (The report covers a one-year period, but going forward will be published biannually) biannual FP-4 Healthy, nutritious affordable food 12

3.4 Contact 49 SO-5 Lobbying activities none

3.5 Process for Defining Report Content 29, 31 FP-5 Food Safety Management Standards 17-19

3.6 Boundaries 31 FP-6 Sales Volume by Nutritional Attribute 12

3.7 Specific Limitations 30-31 FP-7 Increased Nutritious Ingredients 12-13

3.8 Basis for Reporting on Joint Ventures N/A FP-8 Consumer Communication on Nutritional Info. 13

3.10 Restatement of Info. from Past Reports N/A

3.11 Significant Changes from Past Reports N/A Animal Welfare Disclosures

3.12 Table Indexing Disclosures 50-52 FP-9 Total Animals by Species 9

FP-10 Animal Welfare Policies & Practices 24-26

Governance, Commitment & Engagement FP-11 Total Animals by Housing Type 9

4.1 Governance 13 FP-12 Policies on Antibiotics & Hormones 25

4.2 Governance Chair 13 FP-13 Transportation & Slaughter Standards 25

4.3 Unitary Board Structure 13

4.4 Feedback Mechanisms 13

4.14 Stakeholder Engagement 22

4.15 Basis for Stakeholder Assignment 22

Economic Performance Indicators

EC-1 Direct Economic Value Generated (As a privately held company, we do not disclose financial results) 13 *In some cases the referenced pages may only include EC-3 Coverage of the Organization’s Defined Benefit Plan Obligations 45 a partial discussion of the referenced GRI indicator. EC-4 Government Support none With each report, we will upgrade our reporting content.

Aurora Organic Dairy 50 Aurora Organic Dairy 51 Appendix - GRI G-3 Index - C Level with Food Processing Supplement

GRI# Description Pages

Product Responsibility Performance Indicators

PR-1 Life Cycle Stages Assessed for Health & Safety 12-13

PR-2 Incidents of Health & Safety Non-compliance none

PR-3 Labeling Information Required by Product Type 12-14

PR-6 Marketing Compliance 12-13

LA-1 Total Workforce 7

eport Application evel C C+ B B+ A A+

eport on eport on all criteria Same as reuirement 11 listed for evel C plus for evel 21 210 12 Profile 1 10 12 1 Disclosures 1 1 1 1 1 1 OP

ot euired anagement Approach anagement Approach Disclosures for each Disclosures for each anagement Indicator Category Indicator Category Approach

Disclosures OP SADAD DISCOSES SADAD eport Eternally Assured eport Eternally Assured eport Eternally Assured eport

eport on a minimum of eport on a minimum of eport on each core and Performance 10 Performance Indicators 20 Performance Indicators Sector Supplement Indicator Indicators & including at least one from at least one from each of with due regard to the each of Economic Social Economic Environmental ateriality Principle by Sector Supplement and Environmental uman ights abor either a reporting on the

Performance OP Society Product Indicator or b eplaining Indicators esponsibility the reason for its omission

This report follows the GRI G3 C Level standard *Sector supplement in final version

Aurora Organic Dairy 52