Hudson’s Bay Company 2015 corporate social RESPONSIBILITY REPORT table 14 OF CONTENTS 10

3 25 Corporate Sourcing Overview Ethically

4 7 36 Investing in Engaging Our Community Our People 27 21 40 Contributing Reporting to a Sustainable Parameters Environment

39

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EXECUTIVE MESSAGE

2015 was a truly remarkable year for Hudson’s Bay Company. Most As we progress on this exciting journey, plastics and cardboard recycling programs. notably, 2015 marks the year that North America’s oldest company HBC’s commitment to corporate social Our cardboard recycling initiative alone emerged as a major force in the global retail market. Through the responsibility has never been more saved the equivalent of more than 132,000 important. HBC is a proud member of the trees and more than 2 million litres of water. acquisition of GALERIA Kaufhof in Germany, and online retailer UN Global Compact and, as such, remains Additionally, we are working aggressively Gilt early in 2016, HBC has entered a new phase of global leadership, focused on aligning our operations with toward achieving a 10% greenhouse gas in both business and corporate social responsibility. the UNGC’s Ten Principles on human reduction by 2020. rights, labour, the environment and anti-corruption. Together, we are taking We’re incredibly proud of our strategic action to make the world a better accomplishments in the past year. place, with an emphasis on collaboration Through a culture that fosters trust, and innovation. integrity and respect, we continue to follow a guiding principle of doing While we drive our global expansion the right things for the right reasons. and adopt new programs worldwide, We look forward to fulfilling our role as we continue to execute on socially a leading corporate citizen on the world responsible practices already integrated stage, and making a meaningful impact as into our North American operations. we move toward a brighter future. 2015 saw HBC named one of Canada’s Best Corporate Citizens by Corporate Sincerely, Knights magazine. Our iconic Red Mittens campaign raised an astonishing $1.9 million for our Canadian athletes this year alone, while HBC and its various foundations donated more than $8 million to over Jerry Storch Richard Baker 1,000 charitable organizations in Canada Chief Executive Officer Governor and and the United States. Executive Chairman

HBC also took measures to improve our environmental impact, increasing Jerry Storch Richard Baker our waste-diversion rate with enhanced

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WHO WE ARE

Hudson’s Bay Company is one of the fastest-growing department store retailers in the world, based on our successful formula of driving the performance of high-quality stores and our all-channel offerings, unlocking the value of real estate holdings and growing through acquisitions. Founded in 1670, HBC is the oldest company in North America. HBC’s portfolio today includes 10 banners, in formats ranging from luxury to premium department stores to off-price fashion shopping destinations, with more than 460 stores and 66,000 employees around the world.

In North America, HBC’s leading banners include Hudson’s Bay, Lord & Taylor, Saks Fifth Avenue, Gilt, and Saks OFF 5TH, along with Find @ Lord & Taylor and Home Outfitters. In Europe, its banners include GALERIA Kaufhof, the largest department store group in Germany; Belgium’s only department store group, Galeria Inno; as well as Sportarena.

HBC has significant investments in real estate joint ventures. It has partnered with Simon Property Group Inc. in the HBS Global Properties Joint Venture, which owns properties in the United States and Germany. In Canada, HBC has partnered with RioCan Real Estate Investment Trust in the RioCan–HBC Joint Venture.

HBC trades on the Toronto Stock Exchange under the symbol “HBC”. The Company is led by Richard Baker, 39th Governor of Hudson’s Bay Company, and Gerald (Jerry) Storch, Chief Executive Officer, Hudson’s Bay Company.

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WHERE WE ARE

Total number of stores as Total number of associates as HUDSON’S BAY GALERIA KAUFHOF of December 2015: of December 2015: 90 STORES 103 STORES LORD & TAYLOR GALERIA INNO 464 50 STORES 16 STORES 65,000 HOME OUTFITTERS SPORTARENA 61 STORES 16 STORES

SAKS FIFTH AVENUE CORPORATE LOCATIONS 38 STORES Includes home offices, distribution centres, call centres SAKS FIFTH AVENUE OFF 5TH 90 STORES

18 3 10 15 3 2 1 2 9 2 16 2 10 1 34 4 31 2 5 1 1 2 1 1 1 2 1 1 4 2 12 1 4 3 1 6 1 1 4 1 3 2 12 2 1 1 1 2 1 1 1 1 2 3 4 1 1 1 6 2 5 5 3 1 1 1 4 2 1 2 1 1 1 1 2 1 2 32 3 1 3 2 4 1 1 1 1 12 2 10 2 1 1 1 1 2 4 1 1 9 3 1 1 1 1 10 2 8 2 8 1 5 1 2

1 15 14 5 Hudson’s Bay Company 2015 CSR Report 5 CORPORATE INVESTING IN CONTRIBUTING TO A SOURCING ENGAGING REPORTING OVERVIEW OUR COMMUNITY SUSTAINABLE ENVIRONMENT ETHICALLY OUR PEOPLE PARAMETERS

TOP CSR NEWS – 2015

THE 7TH EDITION OF HUDSON’S BAY’S HBC AND ITS VARIOUS FOUNDATIONS ICONIC RED MITTENS RAISES MORE THAN DONATE MORE THAN $1.9 MILLION $ FOR CANADIAN ATHLETES THROUGH THE 8 MILLION CANADIAN OLYMPIC COMMITTEE AND CANADIAN PARALYMPIC COMMITTEE TO OVER 1,000 CHARITABLE ORGANIZATIONS IN NORTH AMERICA

HBC RECOGNIZED AS

ONE OF CANADA’S PLASTICS RECYCLING HBC BECOMES SAVES EQUIVALENT OF

THE FIRST 50 BEST 4, 563 m3 OF NORTH AMERICAN RETAILER TO JOIN THE BUSINESS SOCIAL LANDFILL COMPLIANCE INITIATIVE (BSCI), CORPORATE TO BEGIN IN 2016 SPACE CITIZENS AS WELL AS 4,390,188 kWh BY CORPORATE KNIGHTS MAGAZINE OF ENERGY

CARDBOARD RECYCLING ACHIEVES EQUIVALENT OF SAVING THE HBC FOUNDATION FUNDS ALL FOUR DISTRIBUTION 132,737 TREES ONE YEAR OF CENTRES IN CANADA ACHIEVE AND 2,061,323 ZERO RESEARCH LOST-TIME INJURIES LITRES OF WATER BY BREAST CANCER RESEARCHER DR. PAMELA GOODWIN THROUGH BCRF

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Giving back is ingrained in the HBC culture, and we believe it is essential to do what we can to make a difference in the communities where our customers and associates live and work. HBC is dedicated to fostering strong and healthy communities and creating positive change through a dynamic range of charitable programs, both locally and around the globe. INVESTING IN OUR COMMUNITY

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2015 HBC AWARD IN RETAIL MANAGEMENT

“The strength of the Retail Management program is deeply connected to the generosity of retail industry partners, related associations and individuals. Students in the Retail Management program continue to establish new standards of excellence in academic performance, volunteerism, internships, international exchanges and retail industry work experience. HBC’s ongoing commitment to students in the Retail Management program positions our graduates to excel in their retail careers and serve as business leaders of tomorrow.”

– Dr. Steven Murphy, Dean, Ted Rogers School of Management and Dr. Hong Yu, Director, Ted Rogers School of Management

HBC is proud to help aspiring retail outstanding potential to succeed in the professionals reach their career goals. retail industry, excelled in leadership and In 2015, the HBC Award in Retail contributed to the quality of student Management at the Ted Rogers School life. Our 2015 HBC Award recipients of Management at Toronto’s Ryerson were Emily Richard, Erica Vezina, Jasmin University recognized six exemplary Ebrahimi, Christine Clarkin, Pauline students who were actively involved in Iannello and Isabella Santen. their school community, demonstrated

Hudson’s Bay Company 2015 CSR Report 8 HUDSON’S BAY

CORPORATE INVESTING IN CONTRIBUTING TO A SOURCING ENGAGING REPORTING OVERVIEW OUR COMMUNITY SUSTAINABLEGIVING ENVIRONMENT ETHICALLY OUR PEOPLE PARAMETERS

THE HBC FOUNDATION DAY

The Hudson’s Bay Company (HBC) OFFICIAL CHARITABLE PARTNERS Foundation is a leading registered charitable organization dedicated to improving the lives of Canadians, through organizations and initiatives that contribute to healthy families, strong communities and sport excellence. Since 2005, the HBC Foundation has donated more than $88 million in cash and in-kind donations to charitable organizations across the country.

In 2015, the HBC Foundation donated more than $4.4 million in cash and in-kind to 300 charitable organizations across Canada.

FOCUSING CANADIAN DONATIONS ON THREE KEY AREAS

KEY AREA AMOUNT DONATED

Healthy families $ 1,158,428

Strong communities $ 2,578,282

Sport excellence $ 663,541

Total $ 4,400,251

NATIONAL CHARITY VERSION (EXCL. VANCOUVER MKT.) - ONE DAY ONLY.indd 1 6/29/15 12:50 PM

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THE HBC FOUNDATION continued

“It is an honour to join forces with Hudson’s Bay alongside Caroline and CANADIAN OLYMPIC As the nation’s most iconic symbol of Shannon for the 7th edition of the Red Mittens. The funds raised from the FOUNDATION & CANADIAN Canadian Olympic pride, the Red Mittens PARALYMPIC COMMITTEE are the source of millions of dollars in direct Red Mittens go directly to Canada’s athletes and are crucial in ensuring athlete funding. Through the course of the Hudson’s Bay proudly launched the that they have the resources they need to be the best they can be.” year, the Red Mittens generated more 7th Annual Red Mitten Campaign than $1.9 million for the Canadian Olympic – Marie-Philip Poulin, two-time Olympian, two-time Olympic gold medallist in September, with the Red Mitten Foundation, contributing to an ongoing ambassadors: Canadian Olympic athletes donation value of more than $28 million Shannon Szabados, Marie-Philip Poulin “The 7th edition of the Red Mittens was a resounding success and we can since forming the partnership in 2006. thank Hudson’s Bay’s continued dedication to Canada’s athletes and and Caroline Ouellette. Shannon’s, Marie-Philip’s and Caroline’s starring roles for that. The Canadian Olympic Foundation and Committee are proud to partner with Hudson’s Bay again and thank them for furthering the dreams of Canada’s athletes.”

– Tricia Smith, President, Canadian Olympic Committee

THE RED MITTENS GENERATED MORE THAN $1.9 MILLION FOR THE CANADIAN OLYMPIC FOUNDATION

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THE HBC FOUNDATION continued

“We are immensely grateful for the continued support and commitment THE BREAST CANCER from the HBC Foundation. As a dedicated partner in the fight against RESEARCH FOUNDATION breast cancer, the HBC Foundation raises critically important For the second consecutive year, the contributions that allow BCRF-funded researchers like Dr. Goodwin to HBC Foundation supported the Breast Cancer Research Foundation (BCRF) advance the development of effective new treatments for breast cancer.” with a $250,000 donation to fund the – Myra Biblowit, President of the Breast Cancer Research Foundation work of Dr. Pamela Goodwin for one year. Dr. Goodwin is a world leader in breast cancer research and the Director of Mount Sinai Hospital’s Marvelle Koffler Breast Centre. Funds were raised through the sale of a limited-edition blanket wrap Through the generosity of HBC and others, available at Hudson’s Bay stores and BCRF will be awarding $48.5 million thebay.com, along with in-store beauty in grants to 240 of the world’s leading events, “Donate Your Rewards Points” scientists across the globe in 2015 and 2016. campaigns, and other engaging in-store and home office sales initiatives.

To date, the HBC Foundation has TO DATE, THE HBC FOUNDATION contributed more than $706,000 to BCRF. HAS CONTRIBUTED MORE THAN Hudson’s Bay, Lord & Taylor and Saks $ Fifth Avenue were among 44 corporate 706,000 organizations that were publicly recognized TO THE BREAST CANCER by BCRF, collectively funding over RESEARCH FOUNDATION 500,000 hours of breast cancer research in 2015.

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THE HBC FOUNDATION continued

“We are grateful for the support of the HBC Foundation through this SICKKIDS FOUNDATION CANADIAN RED CROSS wonderful holiday initiative. The Winter Lounge has become a celebrated The HBC Foundation proudly partnered HBC’s philanthropic efforts extend across annual tradition at SickKids that’s appreciated not only by our patients with The Hospital for Sick Children (SickKids the globe to support humanitarian relief and their families, but also our staff. It’s a cherished space that gives those Foundation) for the third year to create an work during times of crisis. When the enchanting Winter Lounge for children and devastating earthquake hit Nepal in April, who stay at the hospital over the holidays a lovely area to celebrate with families spending time at the hospital over HBC donated $50,165 to the Canadian their families and loved ones.” the holiday season. In December, a section Red Cross (CRC) Nepal Region Earthquake of the hospital’s atrium was transformed into Fund to support relief efforts. The donation – Seanna Millar, Vice President, Corporate Partnerships, SickKids Foundation a holiday haven, providing patients and their helped provide essential items such as families with a dedicated space to feel at food, water, household items and life-saving “As a grandparent of a child who has been at SickKids for more than three home during the holidays. health services to the many refugees and months, I just wanted to thank you for the absolutely beautiful Winter migrants affected by the crisis. Hudson’s With the goal of spreading good cheer Lounge HBC has created. Our granddaughter is hospital bound and Bay and Home Outfitters customers and putting smiles on the faces of patients were encouraged to lend their support by unable to get outdoors for the foreseeable future. The setting you have during the holiday season, HBC home donating their HBC Rewards points. HBC created provides a wonderful ‘getaway’…. Thank you so very much!” office associates rallied to purchase and converted all collected points to cash and donate enough 2015 Heritage Charity donated to the CRC. – Mark Gryfe Bears for every child staying at the hospital throughout the month of December. With the troubling Syrian refugee crisis “After recently returning from the region, I have seen first-hand how continuing to escalate, the HBC Foundation hosted a Donate Your Reward Points Canadian contributions are providing much-needed help and hope for customer campaign. Approximately $11,000 refugees who are struggling to survive. Thanks to the generosity of HBC, was raised by HBC customers through the the Red Cross is able to provide support, compassion and care for those online campaign, and the HBC Foundation who need it most.” donated an additional $39,000 for a total of $50,000 to the Canadian Red Cross – Conrad Sauvé, president and CEO of the Canadian Red Cross Refugee Crisis Appeal.

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THE HBC FOUNDATION continued

HBC ANNUAL CHARITY GOLF THANKS TO OUR TOURNAMENT & SPA ASSOCIATE SUPPORTERS HBC’s signature Charity Golf Tournament HBC associates embody the spirit of giving & Spa event brings together hundreds of as some of our most loyal HBC Foundation vendors, partners, associates, volunteers and supporters. In 2013, we launched an celebratory guests each year for a great day Associate Giving Program, enabling of golf and pampering while raising much- Canadian associates to donate directly needed funds for very worthy causes. to the Foundation through automatic payroll deductions. The generosity of HBC This year’s event continued to be the single associates generated an impressive $27,651 biggest fundraiser for the HBC Foundation, in 2015. Donors’ names are listed on the raising more than $600,000 for the back page of this report. event’s beneficiaries: Canadian athletes and Dress for Success New York. Since its inception in 2001, the HBC Charity Golf HBC FOUNDATION HAS Tournament & Spa has raised $9.5 million RAISED MORE THAN to support various charitable organizations. $600,000 FOR CANADIAN ATHLETES AND DRESS FOR SUCCESS NEW YORK

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HUDSON’S BAY COMPANY HISTORY FOUNDATION

The Company donated its corporate archives to the Manitoba Archives and the Hudson’s Bay Company Museum Collection to The Manitoba Museum in 1994. Together, the two collections were valued at approximately $68 million. The Hudson’s Bay Company History Foundation (HBCHF), a private charitable foundation controlled by HBC, was established at that time to provide funds for the continued preservation, promotion and public access to both collections in perpetuity.

HBCHF is also committed to advancing COUNTRY OF ADVENTURERS knowledge of, and interest in, the Company’s With a celebrated history that spans role in Canadian history. This is accomplished nearly four centuries, Hudson’s Bay through support of the HBC Education Company is proud to be recognized as Program – in particular, the HBC Heritage Canada’s oldest company. In 2015, the website, hbcheritage.ca. HBCHF also HBCHF launched an exciting series of provides support to Canada’s National historical television narratives paying History Society, a not-for-profit organization homage to the company’s past, when whose objective is the promotion of greater HBC was once known as “The Company interest in Canadian history. of Adventurers of England Trading into In 2015, HBCHF donated approximately Hudson’s Bay”. The History Foundation, $2.6 million in financial support to whose mission is to advance people’s these groups. knowledge of and interest in Canadian history, created the series to celebrate the remarkable achievements of some the nation’s greatest adventurers and explorers.

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LORD & TAYLOR GIVING

At Lord & Taylor, we aim to make a positive impact by supporting local and national fundraising organizations and initiatives that share our vision of strengthening communities. Lord & Taylor donated more than $2 million to over 300 charitable organizations across the U.S. in 2015. Our fundraising efforts are focused on three key areas: cultural events, wellness and education.

FOCUSING DONATIONS special appearances, children’s activities ON THREE KEY AREAS and other engaging event elements to ensure a memorable day of shopping while KEY AREA AMOUNT DONATED benefiting an important cause. Civic & cultural events $ 496,957 Two Charity Days were held in 2015: a Wellness $ 1,424,394 May 2 event benefited local organizations Education $ 160,316 supporting women’s health and wellness, including WomenHeart: The National Total $ 2,081,667 Coalition for Women with Heart Disease. A total of $415,775 was raised from the CHARITY DAYS single-day event. An October 3 Charity In 2015, Lord & Taylor adopted Day benefited organizations supporting Charity Days, a series of events held in cancer research, including the American all 50 Lord & Taylor stores and online Cancer Society. All Lord & Taylor stores at lordandtaylor.com. Customers were hosted an inspiring fashion presentation encouraged to make a $5 donation to featuring cancer survivors as models benefit non-profit partners. In exchange, to celebrate their beauty and strength, they received a special savings pass and two raising $504,575. single-use coupons to spend that day. In addition, stores offered refreshments,

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LORD & TAYLOR GIVING continued

“Lord & Taylor recognizes that affordable housing is a major concern SHOP SMART DO GOOD HABITAT FOR HUMANITY in our city and this partnership demonstrates a commitment to the In 2015, Lord & Taylor continued to build CHARITY DAY sustainability and health of local neighborhoods. It means that more on the success of our Shop Smart Do On November 12, Lord & Taylor’s New Yorkers will have access to the life-changing opportunity Good fundraising initiative, an event held New York City flagship store and Habitat in seven Lord & Taylor stores twice a year. for Humanity NYC joined forces to real affordable home ownership provides.” Open to all local non-profit organizations kick off the holiday season with a charity – Karen Haycox, Chief Executive Officer of Habitat for Humanity New York City that wish to sign up and sell $5 tickets, the shopping day. Coinciding with the highly event allows the participating organizations anticipated unveiling of Lord & Taylor’s to keep the full amount generated from iconic holiday window display, the charity ticket sales. shopping day raised $171,135 through $5 ticket sales and donations from vendor In return for their ticket purchase, donors partners. The funds were earmarked for receive a storewide savings pass along with building a house in 2016 from the ground two single-use coupons. In 2015, the total up in Queens, NY, for a family in need. raised by participating organizations was $510,990. The seven participating Lord & Taylor locations were Boca Raton, FL; SINCE 2006, THIS PROGRAM Garden City, NY; Manhasset, NY; Fashion Center in Paramus, NJ; Scarsdale, NY; HAS RAISED OVER Stamford, CT; and Westfield, NJ. $9 MILLION Since 2006, this program has raised IN SUPPORT OF LOCAL over $9 million in support of local non- NON-PROFIT ORGANIZATIONS profit organizations.

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SAKS GIVING

Saks Fifth Avenue is as dedicated to its communities as it is to its IN 2015, MORE THAN customers. In 2015, more than $2 million was donated to over $ 400 charitable and non-profit organizations in the U.S. through 2 MILLION both corporate and store donations. WAS DONATED TO OVER 400 CHARITABLE Saks Fifth Avenue stores support charitable THE ENTERTAINMENT AND NON-PROFIT ORGANIZATIONS IN THE groups that are relevant and connected to INDUSTRY FOUNDATION U.S. THROUGH BOTH CORPORATE AND their local markets, generally benefiting our STORE DONATIONS Saks Fifth Avenue’s Key To The Cure key focus areas of arts and culture, civic (KTTC) initiative is an annual nationwide organizations, education, health and wellness, charity shopping weekend featuring a minority groups and children’s charities. much-coveted annual T-shirt design. FOCUSING DONATIONS ON A percentage of charity shopping SIX KEY AREAS weekend sales and 100% of KTTC T-shirt sales are donated to local and national KEY AREA AMOUNT DONATED women’s cancer organizations through Arts & culture $ 353,793 The Entertainment Industry Foundation

Civic organizations $ 214,860 (EIF). 2015 marked Saks Fifth Avenue’s 17th annual KTTC campaign, which Education $ 138,445 has raised more than $37 million since Health and wellness $ 1,107,417 1999 for women’s cancer research and treatment organizations throughout the Minority groups $ 52,768 U.S. The shopping weekend took place Children’s charities $ 154,117 from October 15 to 18 at all Saks and Saks Miscellaneous $ 159,600 Fifth Avenue OFF 5TH stores, as well as on saks.com. Total $ 2,181,000

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SAKS GIVING continued

ST. JUDE CHILDREN’S BREAST CANCER RESEARCH HOSPITAL RESEARCH FOUNDATION GIFTS that GIVE BACK Saks Fifth Avenue has proudly supported Saks Fifth Avenue is a strong supporter of St. Jude Children’s Research Hospital the Breast Cancer Research Foundation through its annual Father’s Day campaign (BCRF), at both the corporate and local since 2012. In 2015, Saks hosted a special store level. At the corporate level, Saks promotion from June 14 to 21, donating 5% Fifth Avenue supported spring and fall of all Saks Men’s Collection purchases, up BCRF events for a total donation of to $25,000, to St. Jude’s. $20,000. The Saks Fifth Avenue Boston store also hosted BCRF’s Boston Hot Pink NEW YORK STORE HOLIDAY Party to benefit the charity. PERCENTAGE BACK WEEKEND From December 3 to 5, Saks Fifth Avenue’s SAKS HOSTED A SPECIAL New York flagship store hosted a special Saks will donate 5% of Saks Fifth Avenue Collection men’s PROMOTION FOR A WEEK, purchases to St. Jude Children’s Research Hospital.®* event that gave a percentage of sales to the American Red Cross, The Society % NOW THROUGH SUNDAY, JUNE 21 of Memorial Sloan Kettering and Autism DONATING 5 Speaks. Each charity received $25,000 OF ALL SAKS MEN’S for a total donation of $75,000 over COLLECTION PURCHASES, the weekend. UP TO $25,000, *SAKS FIFTH AVENUE WILL DONATE 5% OF SAKS FIFTH AVENUE COLLECTION MEN’S PURCHASES FROM 6/14/15 TO 6/21/15, UP TO $25,000. EXCLUDES TAXES, RETURNS, SHIPPING AND HANDLING CHARGES. TO ST. JUDE’S 151-1168A

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CORPORATE OFFICE INITIATIVES

“Peel Children’s Aid Foundation is a very proud recipient of ongoing support from HBC. We have been supported over the past 10 years and value the HBC commitment. The Hudson’s Bay Company has shown that they are living their corporate social responsibility values by giving volunteer hours, financial investment and in-kind support to our communities’ most vulnerable children, youth and families in Peel Region.”

– Renae Addis, Executive Director, Peel Children’s Aid Foundation

PEEL CHILDREN’S AID TOYS FOR TOTS DRIVE ANGEL TREE New York corporate office associates Throughout the holiday season, Brampton helped spread holiday cheer across the city corporate office associates partnered with by partnering with Toys for Tots to provide Peel Children’s Aid to share in the spirit of holiday gifts to disadvantaged children and the holidays. An “Angel Tree” decorated youth in the local community. Associates with children’s wishes was on prominent in each U.S. corporate office location display during the month of December, purchased new and unwrapped gifts for and associates were encouraged to grant donation to the organization. a child’s wish by purchasing and donating gifts on their wish lists.

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CORPORATE OFFICE INITIATIVES continued

“A gift from The Shoebox Project helps to boost self-confidence and NEW YORK CARES reduce social isolation, and it’s an important reminder for a woman WINTER COAT DRIVE OVER 23,500 living in poverty that despite her circumstances, she remains a valued Associates at the Saks corporate office WOMEN ACROSS 123 and respected member of her community. This year, because of the in New York were excited to partner with COMMUNITIES RECEIVED A New York Cares throughout the month of overwhelming generosity of countless Canadians, over 23,500 women UNIQUE AND THOUGHTFUL December to help some of the city’s most GIFT FOR THE HOLIDAYS across 123 communities received a unique and thoughtful gift for the vulnerable residents stay warm. Donation holidays. For many women, this was the first gift they had ever received.” boxes were placed at the doors of each floor of the building and associates were – Lesley Hendry, Executive Director, encouraged to donate new or gently The Shoebox Project for Shelters, Supported by Dream used winter coats to benefit someone in need. Through the generous donations of associates at HBC and other organizations in the building, 100,000 coats were collected and distributed through New York Cares.

THE SHOEBOX PROJECT The Brampton corporate office rallied together to give back and support women in need through The Shoebox Project. Associates created special shoeboxes filled with small gifts for women at YWCA Women’s Shelter in Toronto. Fifty shoeboxes were created and delivered to a local women’s shelter.

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As part of the world’s largest corporate sustainability initiative – the UN Global Compact – HBC and its banners work hard to integrate sustainable environmental processes into all aspects of our business, both at home and worldwide. CONTRIBUTING TO A SUSTAINABLE ENVIRONMENT

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WASTE DIVERSION

HBC believes in active environmental stewardship to sustain our In 2015, we created a uniform recycling HBC SAVED THE EQUIVALENT OF planet for generations to come. Environmental initiatives are program and invested in additional 4,562 m3 OF integrated into regular business processes and we support the three equipment to ensure that all DCs have the tools to be successful. We also increased environmental principles articulated in the UN Global Compact: the number of backhauls from stores – LANDFILL businesses should support a precautionary approach to environmental more trucks are hauling waste material SPACE challenges (principle 7), undertake initiatives to promote greater (such as cardboard and plastic wrap) back AND 4,390,188 kWh environmental responsibility (principle 8), and encourage the to the DC for recycling. OF ENERGY THROUGH development and diffusion of environmentally friendly technologies HBC introduced organics recycling in PLASTICS RECYCLING IN 2015 (principle 9). We are expanding our programs in the areas where Western Canada. We conducted an audit of we have the greatest impact – namely, waste, water consumption, store-generated waste, which led to changes energy efficiency and greenhouse gas (GHG) emissions. We set in the pick-up frequencies for all waste and OUR CARDBOARD reduction targets for waste diversion and GHG emissions, and track recycling streams. RECYCLING EFFORTS SAVED performance against them. THE EQUIVALENT OF DIVERSION IMPROVEMENTS Diverting waste from landfill is a priority at efforts of our people and a strong emphasis OVER 2014 132,737 TREES all stores, offices and distribution centres on education and communication. (DCs). HBC achieved a 62% diversion Overall increase in recycling of AND 2,061,323 rate in 2015, which was 10% better than As well, it was our first full year working with 1,407 MT or 16.4% a single waste and recycling partner for all OF the previous year, thanks to the sustained Decrease in waste sent to landfill of LITRES WATER banners in Canada and the U.S. We believe 943 MT or 12.2% that this helped us improve performance through better data analytics and new Increase in amount of organic recycling 80% 67 % (GOAL) diversion practices that were introduced by 142 MT or 1,047.7% 62% % to staff at all levels. Our 2016 goal is to 60% 51% 52 Increase in amount of plastic increase our diversion rate by 5%. recycling (including hangers) by 40% 215 MT or 33.7% * HBC’s diversion rate is based on combined data Increase in amount of cardboard recycling 20% from Hudson’s Bay, Lord & Taylor, Home Outfitters, Saks Fifth Avenue and Saks Fifth Avenue OFF 5TH, by 994 MT or 19.92% as reported by our third-party vendor GreenSpace 0 2013 2014 2015 2016 Waste Solutions.

Hudson’s Bay Company 2015 CSR Report 22

80% 67 % 62% (GOAL) 60% 51% 52%

40%

20%

0 2013 2014 2015 2016 CORPORATE INVESTING IN CONTRIBUTING TO A SOURCING ENGAGING REPORTING OVERVIEW OUR COMMUNITY SUSTAINABLE ENVIRONMENT ETHICALLY OUR PEOPLE PARAMETERS

GREENHOUSE GAS EMISSIONS

HBC is working toward a goal of reducing company-wide absolute GHG Our third-party energy consultant, Water consumption increased by 49%, emissions by 10% by 2020, using a 2014 baseline. Our GHG emissions total Schneider Electric, prepared our 2015 based on the data received. Waste was not for 2015 was 195,475 tonnes of CO e, which was down 2% from the previous GHG Emissions Report, for water included in the 2015 inventory, but was 2 consumption and fuel efficiency. We included last year as an additional service year. In 2016, we aim to lower our overall energy usage by 5 to 10%. use this report to ensure that we are in Carbon Disclosure Project reporting. Greenhouse gases are atmospheric gases HBC reports its emissions from direct continually evaluating opportunities to that contribute to the greenhouse effect by (Scope 1) energy use, indirect (Scope 2) reduce the environmental footprint of absorbing infrared radiation produced by the energy use and biogenic carbon dioxide in our physical operations. solar warming of the earth’s surface. These accordance with the GHG Protocol and Our overall natural gas usage was down gases are produced during the use of energy ISO14064. Direct emissions arise from approximately 10% over the 2014 level, in our day-to-day operations and include sources owned or controlled by HBC, such despite the doubling (109%) of Saks’ carbon dioxide (CO ), methane (CH ), as fuel-burning equipment (which uses 2 4 consumption. Possible reasons for the nitrous oxide (NO ) and water vapour. To natural gas or propane) in stores or our 2 Saks increase include a rise in the number understand and manage our environmental owned trucking fleet. Indirect emissions of Saks sites and corresponding usage, footprint, we track our greenhouse gas are associated with power that HBC and under-reporting in previous years. emissions, water consumption and fuel has purchased and consumed, such as Additionally, natural gas data was provided efficiency using 2014 as our baseline year to electricity, steam and chilled water. for two DCs, which likely contributed to track year-over-year progress. the increased usage.

GHG EMISSIONS (TONNES CO2e) SCOPES 1 AND 2 GHG EMISSIONS (TONNES CO2e) 2013 values are taken from HBC’s Greenhouse Gas 2013 2014 2015 (GHG) Emissions, Water Consumption and Fuel SCOPE SOURCE NAME 2013 2014 2015 Efficiency report, published February 13, 2014, with the 136,872 200,241 195,475 exception of steam and chilled water, whose emission Inventory Total (Scopes 1 + 2) 136,872 200,241 195,475 factors were updated. HBC set 2014 as a new baseline 1 Scope 1 total 36,117 31,057 28,620 year due to portfolio changes – namely, the closing of Zellers and integrating of Saks banners in 2013 as well 2 Scope 2 total 115,125 169,184 166,855 as updates to reporting methodology.

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ASSOCIATE PROGRAMS

CARPOOLING TTC METROPASS HBC encourages year-round commuting DISCOUNT PROGRAM options to help reduce our collective We offer subsidized transit passes through impact on the environment while the Toronto Transit Commission (TTC) supporting our mission to become a at one of our distribution centres, two greener company. We have been an home offices and five store locations in the enthusiastic member of Smart Commute Greater Toronto Area (GTA) to encourage since 2008, participating in annual events public transit use. Associates save the such as Carpool Week, Smart Commute equivalent of one month of free travel for Week and Bike to Work Day, and we have every 10 months. In 2015, nearly 800 implemented reserved parking spaces for associates purchased metropasses each carpoolers. Smart Commute encourages month through the program. people to try out smart travel options such as walking, cycling, public transit, carpooling and teleworking. We have IN 2015, SMART COMMUTE conducted a number of surveys to track HELPED HBC ASSOCIATES associate commuting and measure the ELIMINATE impact of the Smart Commute program. In 2015, it helped HBC associates eliminate 10,321 trips, avoid approximately 10,321 TRIPS, 106,400 kilograms of GHG emissions AVOID APPROXIMATELY and save more than $278,000 in commuting costs. 106,400 kg OF GHG EMISSIONS AND SAVE MORE THAN $278,000 IN COMMUTING COSTS

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SOURCING ETHICALLY HBC sources products from around the world and we believe that our responsibility to the people making these goods extends beyond basic due diligence. In 2015, we shifted our focus toward capacity-building initiatives that can create substantial positive change for our partners throughout our supply chain.

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HBC SOCIAL COMPLIANCE PROGRAM SUMMARY

In 2015, HBC conducted 1,089 audits in 51 countries, with the majority of factories being located in China, Italy, India, Vietnam and Portugal. Our social compliance program extends to all private label and branded import vendors.

For factories in medium- to high-risk countries, as determined by a country’s adherence to best labour and human-rights practices, we require the factory to participate in an audit, either through our nominated agency, Intertek Testing Services, or our overseas agent, Li & Fung Ltd. In addition, factories may submit a third-party audit report by one of the following accredited organizations or standards:

1. Social Accountability International (SA8000) 2. Fair Labor Association (FLA) 3. Worldwide Responsible Accredited Production (WRAP) 4. International Council of Toy Industries (ICTI) 5. Business Social Compliance Initiative (BSCI) 6. Supplier Ethical Data Exchange (SEDEX) 7. Initiative Clause Social (ICS) 8. ITS Workplace Compliance Assessment (WCA) 9. Better Work

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HBC SOCIAL COMPLIANCE PROGRAM SUMMARY continued

A third-party report is accepted if the audit has been undertaken within the last 12 months and the factory has received a passable grade. In 2015, the number of acceptable alternate audit reports that were submitted to HBC increased. Additionally, branded vendors who have a strong internal social compliance program that adheres to the standards set out in HBC’s Supplier Code of Conduct are allowed to submit substitute documentation. We have defined branded vendors as those vendors who produce goods or merchandise under their own brand name and not for an HBC private label or product line.

We strongly believe that factories that We measure the impact of our social adhere to a standard set of best practices compliance program against six of the are able to allocate more resources toward United Nation’s Sustainable Development building production capacities, investing in goals: end poverty in all its forms innovation and maximizing their operational everywhere; end hunger, achieve food efficiencies. These factories are better suited security and improved nutrition and to meet HBC’s needs and become long- promote sustainable agriculture; ensure term strategic partners. healthy lives and promote well-being for all at all ages; achieve gender equality and As HBC continues to grow, our supply empower all women and girls; promote chain has become more complex. Our inclusive and sustainable economic growth, focus throughout 2015 and going forward full and productive employment and is on building strong, collaborative, long- decent work for all; and ensure sustainable term relationships. consumption and production patterns. Each year, we review our impact in each of these areas and identify opportunities to improve.

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WHERE WE SOURCE

THE AMERICAS WESTERN ASIA, BRAZIL MIDDLE EAST & CANADA AFRICA DOMINICAN REPUBLIC BANGLADESH ECUADOR EGYPT HONDURAS ISRAEL PERU JORDAN UNITED STATES KENYA PAKISTAN EUROPE TUNISIA AUSTRIA TURKEY BELGIUM BULGARIA SOUTH-CENTRAL CZECH REPUBLIC FRANCE ASIA GERMANY CAMBODIA GREECE CHINA HUNGARY INDIA ITALY INDONESIA LITHUANIA MALAYSIA MOLDOVA NEPAL NETHERLANDS PHILIPPINES POLAND SRI LANKA PORTUGAL THAILAND ROMANIA VIETNAM SLOVAKIA SPAIN ASIA-PACIFIC SWITZERLAND AUSTRALIA UKRAINE HONG KONG UNITED KINGDOM JAPAN REPUBLIC OF KOREA SINGAPORE TAIWAN

HBC’s private label merchandise was predominantly sourced from China, India, Vietnam, the U.S. and Italy in 2015. These countries represented 84% of the private label factories with whom we worked, which was relatively unchanged from 2014. We anticipate this matrix to remain static in 2016 due to global macro- economic conditions affecting sourcing trends.

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2015 FACTORY AUDIT RESULTS

The number of factories audited increased from 433 in 2014 to 1,041 in We also recognize the critical role we must play in raising awareness and educating 2015 due to a combination of factors, but primarily the following: TOP ISSUES (a) HBC started auditing branded import vendors; (b) the continued our merchants and vendors around best practices. For example, we believe that expansion of Saks OFF 5TH in the U.S.; and (c) the onboarding of raising our merchants’ awareness about the Hardlines (home) Saks Fifth Avenue Canada and Saks OFF 5TH Canada vendors. link between late purchase order placement • Social benefits below and excessive overtime factory hours can local law Audits were conducted in 51 countries want to move a significant majority of our help decrease this occurrence. with over 200 vendors being setup and factories from “subject to improvement” to • Inadequate or lack of fire approved for Saks Canada alone. “approved for production” status. We believe our efforts on multiple fronts and/or building construction will enable us to meet our 2016 targets, certifications The performance of our private label To achieve this goal, we will continue to work which are to have at least 25% of factories factories has remained relatively unchanged closely with our business partners (including • Inadequate or malfunctioning “approved for production”, 75% of factories year over year. While we recognize that our our overseas agent Li & Fung, our vendors, emergency exits “subject to improvement” and zero factories supply chain has become more complex NGOs and other key stakeholders) to • Lack or misuse of personal not approved for production. due to our growth, we firmly believe that it make meaningful, positive contributions to protective equipment is our responsibility to maximize the positive the well-being and quality of life of factory OVERALL, THE MAIN FACTORY impact of our global footprint and thus are workers. Through continued engagement, Softlines (apparel) ISSUES HAVE REMAINED committed to improving our private label capacity building and training programs, we • Inadequate or malfunctioning factory performance. In 2016, we believe we will see marked improvements in RELATIVELY emergency exits factory performance over the next year. AUDIT GRADES UNCHANGED • Working over 60 hours OVER THE LAST THREE YEARS per week 100% 89% 86% 2014 • Social benefits below 2015 local law 80% • Lack or misuse of personal 60% protective equipment 40% Note: Recent table content was incorporated into • Employment terms 20% 10% 10% the 2015 factory audit results section. Because the % % 1 4 number of audits conducted was so much higher in 0 2015 than in 2013, inclusion of 2013 results was not APPROVED FOR APPROVED FOR PRODUCTION, NOT APPROVED FOR PRODUCTION SUBJECT TO IMPROVEMENTS PRODUCTION very helpful and was removed.

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AUDIT GRADES

100% 89% 86% 2014 2015 80%

60%

40%

% % 20% 10 10 1% 4% 0 APPROVED FOR APPROVED FOR PRODUCTION, NOT APPROVED FOR PRODUCTION SUBJECT TO IMPROVEMENTS PRODUCTION CORPORATE INVESTING IN CONTRIBUTING TO A SOURCING ENGAGING REPORTING OVERVIEW OUR COMMUNITY SUSTAINABLE ENVIRONMENT ETHICALLY OUR PEOPLE PARAMETERS

CAPACITY BUILDING INITIATIVE

Building on the impact of an earlier initiative, Li & Fung, our overseas agent, introduced a full-scale pilot program in 2015 aimed at helping factories achieve sustainable compliance and minimize audit fatigue.

In 2014, 61 HBC factories participated Li & Fung’s four-tier capacity-building in a series of training sessions, led by Li & program enrolled three factories Fung, aimed at helping improve the health employed by HBC in China and India. and safety conditions in factories that One of our participating private label were consistently missing expectations home factories, located in Gujarat, India, and were being repeatedly re-audited participated in a three-day program in without any marked sign of improvement. December 2015. The first day of the As no universally accepted process for program focused on identifying key undertaking, measuring and issuing audit champions for compliance within the grades exists, factories can be audited 1,940-person facility and completing a numerous times within a short time span pre-screening assessment. On the second by different retailers without sufficient day, champions were trained in the areas “This type of training is exactly what we wanted. We are in the process of setting time to make meaningful remediation of labour (working age, benefits, wages up an extension to our current operations and now we have a guidebook in and progress. By building worker skills and and hours), health and safety (fire safety place and a checklist ready with exact expectations from our customers. ” identifying the underlying root causes management, PPE and proper factory of issues through the new pilot program, signage), and environmental protection. – Manager, Training & Compliance, China Li & Fung anticipates minimizing the number of required audits and helping While post-pilot impact assessments will factories focus their resources on long- be conducted in mid-2016, initial feedback term solutions built on internationally from the factory has been encouraging and recognized standards, such as the indicates that the training has given factory International Labour Organization and the workers the tools and resources to meet UN Convention on Human Rights. increasing production demand.

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MERCHANT TRAINING ACROSS OUR BANNERS

A key pillar in maintaining a strong vendor base is ensuring our buyers understand and support HBC’s social compliance program. In 2015, through continued merchant training, we were able to help our merchants secure early social compliance buy-in from their vendors.

For example, as we prepared for the Throughout 2016, we will hold more expansion of Saks into Canada, we hosted training sessions, one-on-one discussions merchant training sessions for Saks and meetings to ensure our merchants OFF 5TH buyers to ensure merchants keep best sourcing practices top of mind understood the specific social compliance when engaging their vendors. and quality assurance requirements for private label and branded offshore A KEY PILLAR IN MAINTAINING import vendors. The sessions stressed the A STRONG VENDOR BASE IS importance of starting social compliance ENSURING OUR BUYERS conversations early in order to secure vendor buy-in, provide adequate time for UNDERSTAND social compliance audits to be undertaken and minimize costly order delays. AND SUPPORT HBC’S SOCIAL COMPLIANCE PROGRAM

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STRENGTHENING SUPPLIER RELATIONSHIPS

In 2015, we continued to strengthen our supply chain partnerships by strategically consolidating our vendor base. A cross-functional team, SPOTLIGHT: SHARADHA TERRY PRODUCTS comprising Sourcing, Quality Assurance, Social Compliance, and Product Design and Development measured each vendor and factory Sharadha Terry Products, which has produced luxury bath towels against set performance criteria. Criteria included social compliance since 1992, has made a strong commitment to operating in a socially rating, capacity for on-time delivery, planned business growth, responsible manner and is a strategic partner to HBC. The vendor’s commitment to environmental performance and quality assurance. ambitious commitment to employee and community development Our belief is that factories with strong factories remain socially compliant and and environmental conservation has positioned it as an important social compliance are able to deliver on competitive as our needs evolve to meet exporter in India. For example, Sharadha has installed state-of-the-art quality and cost and are better positioned changing market trends. waste water treatment plants that eliminate harmful discharges into to be long-term strategic partners for the water supply and has made significant efforts in rethinking and HBC. By consolidating our vendor base, We are happy to report that we are not only are we helping factories plan their seeing an increase in sustainability redesigning its product material, production and packaging in order production cycles according to demand, and environmental mandates from our to produce less waste, save water and reduce energy consumption. In but we are also better able to ensure these strategic vendors – from using bio-based, addition to its environmental efforts, Sharadha invests in its workers – non-toxic materials in their production process to manufacturing energy-saving the facility provides group medical insurance to each of its employees LED goods across their product lines and free education for workers’ children. and implementing wind energy turbines at their facilities. This shift is a clear indication to us of changing priorities and increased awareness within the industry.

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EMPOWERED FEMALE FACTORY WORKERS

In April 2015, we received the final impact Improved worker–management relations % assessment from the 12-month female and job satisfaction: 93% of workers 89 OF FEMALE empowerment program that we sponsored agreed that their relationships with their with BSR HERHealth. The program aimed managers had improved. WORKERS to improve the well-being of 245 female BELIEVED THEY WERE MORE CAPABLE OF Empowered female workers: 89% of female workers in a Guangdong, China, factory ACHIEVING THEIR PRODUCTION TARGETS ON workers believed that they were equipped through a series of training sessions on TIME AFTER PARTICIPATING IN THE FEMALE reproductive health and hygiene. with better problem-solving skills and 96% felt more empowered to make decisions EMPOWERMENT PROGRAM The final impact assessment concluded that about their education. the program contributed to: In the six months following the program’s end, Increased awareness of pre-natal and the factory reported reduced absenteeism, maternal health care: 56% of female increased attendance and decreased workers were able to correctly identify turnover when compared year over year. various pregnancy abnormalities, a We firmly believe that empowering female 46% improvement from the baseline. workers is key to long-term, sustained success throughout our supply chain. Increased attention to overall health: 91% of female workers reported that they sought medical help from health care service providers during HERproject implementation, which was 74% higher than the baseline data.

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ALLIANCE FOR BANGLADESH WORKER SAFETY

HBC has remained a committed and active member in the Alliance for Bangladesh Worker Safety. To date, 13 factories utilized by HBC have undergone initial inspections and are in the process of remediation.

The Alliance is committed to providing Despite these setbacks, seven factories training to workers and management in fire utilized by HBC advanced to the third safety awareness and best practices so that of four training phases. We are looking everyone in the factory is equipped with forward to the possibility of having these basic fire safety knowledge and skills. The factories undergo final inspections in 2016. Alliance Basic Fire Safety Training program Of the factories still in phase two, we have is implemented through a train-the-trainer been working closely with our vendors approach. Factory training representatives to ensure that remediation activities are are trained by nominated third-party prioritized in the coming year. trainers. An in-factory training action plan is developed and factories submit weekly progress reports to the Alliance. Spot 13 FACTORIES checks occur to ensure that training is being UTILIZED BY HBC HAVE completed as planned. Part of the training UNDERGONE INITIAL is focused on security guard training. In INSPECTIONS AND ARE IN THE 2015, all but one of our factories underwent PROCESS OF REMEDIATION security guard training.

While progress has been made in fire safety and structural remediation, challenges remain. The lack of technical expertise available in Bangladesh, including structural and electrical engineers, and the high costs associated with remediating many of the outstanding issues have been major factors in delays.

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BUSINESS SOCIAL COMPLIANCE INITIATIVE

HBC became the first North American retailer to join the Business Social Compliance Initiative (BSCI), to begin in 2016. BSCI is a European-based initiative committed to improving working conditions in the global supply chain.

By holding all participants to the same HBC CULTURAL VALUES standards, BSCI helps create consistency In 2015, HBC launched newly defined across the social compliance process. cultural values and behaviours. We Through its RSP (Responsibility) model, continue to be dedicated to promoting BSCI encourages cross-collaboration a culture of collaboration and providing between retailers, vendors, factory unique development opportunities that workers and other key stakeholders. BSCI align with our values and beliefs. As the participants can share the responsibility of Company continues to grow, it is essential helping their factories move toward social that everyone be aligned around a common compliance and best practices. Throughout cultural framework: a set of core beliefs 2016, we will work closely with our network that each HBC associate lives by and to ensure we are providing the necessary supports, regardless of role, responsibility tools to help our factories maximize or location. their production potential and worker development.

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ENGAGING OUR PEOPLE Throughout our history, our people have made HBC successful, which is why engaging our associates is a top priority for the Company. From leadership development courses to wellness programs, we motivate our associates to succeed by arming them with resources and tools to flourish in their careers.

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PROFESSIONAL DEVELOPMENT

HBC offers its associates a variety of ways to develop their skills and Hudson’s Bay and Lord & Taylor Executive IN 2015, MORE THAN grow in their careers. Through HBC University, associates participate Training Programs: in instructor-led in-class training sessions or virtual classroom This program has two tracks – the Store STUDENTS Operations Executive Training Program 120 tutorials. Online courses have the greatest reach, providing associates PARTICIPATED IN THE provides participants working toward the with access to courses and tutorials aimed at enhancing abilities position of department store general INTERNSHIP PROGRAM, WITH in areas such as product knowledge, system training, personal manager the opportunity to learn the MANY RETURNING FOR FULL- development and business strategy. fundamentals of driving store profitability, TIME OPPORTUNITIES UPON and the Merchandising Executive Trainee GRADUATION Internships are an integral part of HBC. Executive Development Programs: Program is geared toward individuals Each banner offers an opportunity to Structured executive development interested in the position of buyer or learn more about different functions, programs are offered at several banners planner. Each program is taught by such as Merchandising, Digital, Store in Canada and the U.S., enabling new instructors who ensure participants have a Operations, Supply Chain & Logistics, graduates to start their careers at HBC. combination of classroom instruction and Finance, Marketing, Human Resources With a focus in merchandising or store on-the-job experience. and more. In 2015, more than 120 operations, participants learn about the students participated in the internship business while developing critical leadership Store Leadership Development Program: program, with many returning for full-time skills and business acumen. This is a tiered program aligned to opportunities upon graduation. our Winning Ways behaviours. Store Saks Fifth Avenue Executive Excellence participants are provided instructor- We have a number of high-quality Program: This is a 12-week program led training as well as developmental leadership and executive development designed to provide participants with experiences to prepare them for the next programs: a foundation in buying and planning. level in their careers. Participants come Participants are involved in classroom from across the HBC enterprise, which Leadership Journey: We launched this training focused on developing their provides them with insights and perspectives multi-tiered development program in leadership and business skills as well as from outside their respective banners. 2015 to give associates the opportunity learning on the job from a designated to network and develop their skill set. The coach and mentor, and gaining exposure to program was built on the foundation of our senior leaders within the organization. values and “Winning Ways” behaviours.

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HEALTH AND SAFETY

We believe that all injuries are preventable. HBC strives to provide a important information and helpful tips HEALTH & SAFETY COMMITTEE safe working and shopping environment through hazard recognition, to associates in maintaining safe working Each HBC location has a functioning assessment and control; regular communication; active associate and shopping environments. We have Health & Safety Committee that meets started to enjoy the benefits of a single involvement; continuous improvement of systems, procedures and regularly, completes a monthly inspection third-party administrator, which allows us training; and immediate reaction to incidents. Our vision of zero injuries is of its workplace and provides safety to analyze the root causes of accidents recommendations to the management team. based on the premise that safety in the workplace is the joint responsibility and make necessary recommendations of the Company, management, associates and business partners. across banners. The corporate and With support from the Human Resources store-level Accident Prevention team has team, the corporate Health & Safety Our four defining objectives are as follows: Contribute to positive cash flow: One expanded its role to include store safety Committee offers the following of the many benefits of good safety audits, active participation on health and complimentary programs to associates: Prevent all injuries: We take care to prevent performance is reduced costs related to safety committees, and proactive safety first-aid certification, fire safety training, incidents and require all HBC associates to workplace injuries. We strive to achieve the awareness with associates. workplace violence prevention and report any injuries, near misses or hazards lower workers’ compensation insurance disaster prevention. while working. premiums that come with fewer injuries. Two additional programs have been instituted Furthermore, in Canada, we continue to in the U.S. to further improve associate Promote the early and safe return to work IN CANADA, pursue incentive programs, including awareness. A new associate awareness program: This program is intended to help OUR LOGISTICS NETWORK program, implemented by Asset Protection injured associates by promoting recovery The Workers’ Compensation Board of (#MakeItPossible) has a risk/safety section while allowing them to keep their work Alberta’s Partners in Injury Reduction and ACHIEVED that includes a smartphone application (app). routine and income consistent. Early return Ontario’s Workplace Safety and Insurance The app provides links to helpful safety- to work reduces recovery time and helps Board’s Safety Groups program. RECORD-SETTING related information and allows associates maintain associate engagement. In Canada, the number of safety incidents to report unsafe conditions, which can lead SAFETY increased in 2015 compared to 2014. Keep up to date on health and safety to associate awards points and monetary PERFORMANCE IN 2015, Despite our efforts to eliminate or control acts, regulations and standards: Through awards. The second program focuses AND ALL FOUR DISTRIBUTION hazards, the total number of claims rose our yearly system review, we continually accountability at the local level, by creating CENTRES HAD by 27%, lost-time claims increased by 40% NO LOST-TIME improve programs and practices to comply a profit and loss chargeback to a location for and days lost grew by 62%. INJURIES with regulatory requirements. each accident claim incurred. The program makes local teams more directly invested in In the U.S., we continue to focus on safety programs and accident prevention at accident prevention and awareness. Our their locations and has already seen success monthly safety newsletter provides in many of our stores.

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WELLNESS PROGRAMS

DOGS AT WORK In 2015, HBC’s Canadian corporate offices were selected to test pilot “D@WG” (Dogs at Work Group) programs. The launch day welcomed more than 100 furry friends to our offices. The pilot was a great success and we have since instituted a program that lets associates bring their dogs to work on the last Friday of every month.

SECRET SANTA While building strong local communities, we placed particular emphasis on our own HBC family this past holiday season. In December, we introduced a “Secret Santa” initiative to help Canadian associates who were facing difficulties. Associates were able to nominate themselves or their colleagues as candidates who could benefit from a helping hand. HBC was able to assist 143 associates with monetary donations, with a collective value of $23,400.

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ABOUT THIS REPORT

In defining the content of this report, we SCOPE OF OPERATIONS: REPORT CONTENT No trees were harmed in the production of referred to the principles of the Global this report. In line with our commitment to NUMBER OF STORES We report on the four areas of our the environment, the 2015 CSR Report is Reporting Initiative (GRI) to ensure a operations that have a substantial impact on available exclusively online on our corporate focused and thoughtful approach. our internal and external stakeholders: 90 website at hbc.com. HUDSON’S BAY We have limited the scope of this report I. Investing in Our Community to Hudson’s Bay Company’s five North II. Contributing to a Sustainable American banners: Hudson’s Bay, Home Environment Outfitters, Lord & Taylor, Saks Fifth Avenue 50 LORD & TAYLOR III. Sourcing Ethically and Saks Fifth Avenue OFF 5TH. HBC’s IV. Engaging Our People European banners, GALERIA Kaufhof, Galeria Inno and Sportarena, have been excluded from this report. 61 HOME OUTFITTERS SECTION PAGE MEASUREMENT REPORTING PERIOD: Corporate Overview Number of HBC stores in each banner by 5 JANUARY 1 TO 38 province/state DECEMBER 31, 2015 SAKS FIFTH AVENUE 5 Number of HBC associates Date of last report: June 2015 Reporting cycle – annual 90 Investing in Our Community 9 HBC Foundation donations Contact for questions regarding corporate SAKS FIFTH AVENUE OFF 5TH 15 Lord & Taylor donations social responsibility: 17 Saks donations [email protected] In Canada, we operate banner stores in six provinces: Alberta, British Columbia, Contributing to a Waste-diversion rates 22 Manitoba, Nova Scotia, Ontario, Quebec Sustainable Environment and Saskatchewan. 23 GHG emissions In the United States, we operate stores in 29 states. Sourcing Ethically 28 Countries where HBC sources 29 Supplier audit results

29 Top issues

Hudson’s Bay Company 2015 CSR Report 40 In 2015, HBC associates gave generously to the Julie Hluchaniuk Amanda Lepiane Angelina Preeper Fatima Sousa HBC Foundation, contributing $27,651 through our Liane Howieson Gail Lesway Susan Price Leah Spagrud Melina Huang Elsa Li Gurpreet Puri Maria Stewart Associate Giving Program for a variety of community Christopher Humby Viviana Lourenco Jo-Anne Pusateri Lisa Stoner causes. We applaud and thank them for their generosity. Parmjit Hundal Janine Lovsin Christina Rabindranauth Lyse St-Onge Asif Husain Yuchen Luo Shelley Rayment Dianne Storozuk Sara Jankovic Simon Lysnes Sean Renaud Lucian-Andrei Szabo Brandon Ashcroft Amy Charette Jayden Falola Laurie Jardine Dave Macneil Mayette Revale Peggy Szeto Cynthia Askeland Hilda Charpentier Melanie Fennema Zofia Jasniak Ana Maharaj Kylee Riemenschneider Allison Tapp Elizabeth Ayres Maurice Chelli Crisostomo Fernandez Heather Jensen Maaz Mahmood Angela Rowan Suzie Thibault Musarrat Bajwa Simone Chibani David Figenshaw Jennifer Johnston Jaspreet Mangat Shelley Rozenwald Mary Thomas Alexia Bakogiannis Marjorie Connor Joanne Figueroa Janice Jones-O’Neill Asma Marsaoui Cora Russo Stephanie Thornbury Bev Ballentine Raelene Coss Darren Fisher Alice Joseph Terry Mathews Cherie-Ann Saadati Kelly Tobar Samantha Banyard Sarah Cotton-Boulais Kevin Flores Morales Jayshree Joshi Carolyn Mayea Sabita Sabita Chuan-Jia Tran Tuula Baxter Lorraine Coupland Ida Fontana Isabel Kalaycioglu Meredith Mcclurg Kurbanali Saju Gilbert Turgeon Chantal Beaumier Louise Cuillerier Natalie Forgeron Hemani Kamdar Karyn Mcdowall Laura Sampson Kendra Turner Phyllis Beckford Eulalia Da Costa Lucie Forte Pinto Kannampally Christopher Mejia Baljinder Sandhu Axel Ugarte Carmen Bennett Maria Luisa Dacasin Amine Fouari Stephanie Karpowicz Jasmine Miller Kulbir Sandhu Hannah Uzelac Karen Benzaquen Noreta Daculan Diana French Sharon Kenefick Louis Mitchell Edilyn Santos Ray Valencia Desiree Blackmore Meera Dail Victor Fu Suzette Kervin Allison Molnar Saswati Sarkar Jean-Jacques Vallee Susan Blanchard Maria Dasilva Shane Fukala Suleman Khan Marie Mome Suzanne Savory Tammy Vallis Emm-Jay Bofill Nina David Sonja Gallagher Khorshid Khatir Paula Morelli Joann Sawyer Ashley Waldron Joanne Boland Kim Davison Meghan Gervais Rahena Khatun Anwar Morrison Rowena Schultz Charlton Wallace Laila Bolek Maureen Davson Karen Gill Najoua Khemiri Marilyn Mullin Brenna Schwartz Shaunacy Waller Floyd Annette Bondy Carol Dawes Tejinder Gill Gail King Amber Murphy Mary Senekovic Dylan White Veronike Bouchard Tom De La Fosse Felicia Gopi Jasett King Anna Ng Vanessa Seneriches Margie White Tiffany Bourré Sanda Dekic Johanne Gougeon Leslie Klett Diamond Nguyen Eva Seto-Fung D. Sylvia Wiebe Guillaume Bousquet Diane Delano Susan Grant William Knight Mai Nguyen Matthew Sewak Natalie Williams Rupinder Brar Patti Dell Sheila Green Galyna Konteft Minh Nguyen Thomas Shafer Mark Wingrove Sandra Brassington Alhousseyni Diallo Lily Wong Guenther Kristina Koornneef Jenifer Nice Fatemeh Shams Janet Witt Jane Brown Julia Dilena Rita Gunn Servonne Ku Suzanne Niles Debbie Shane Alison Wood-Gittoes Kevin Brownrigg Stefanie Ditommaso Michael Gustafson Swastika Kumar Nenutzcah Pantino Stella Sharkey Menghua Xu Theresa Bucci Genevieve Dominique Tsewang Gyalpo Nathalie Labbe Veronica Paragas Mary Ellen Shaw Paul Yun Sang Tessa Campbell Roch Dubreuil Shakeeba Haidari David Labrecque Priyal Parmar Sarbpreet Shergill Todd Zator Monica Caringi Michael Duplessis Hala Halabiya Levis Daniel Labrie Ajay Patel Junxiao Shi Wenlian Zhang Lyndsay Casey Sandrine Dupouts Carol Hammond Abderrazak Lakhdar Theresa Patterson Kamrun Shipon Seunghyun Cha Sima Eghbal Hiranthi Marie Laporte Owen Pechey Mark Sidler Claude Chagnon Colleen Ellarby Hapuarachchilage Mai Chun Law Christy Penn Rita Silauri Elizabeth Chambers Jessica Ellsworth Dana Hasbini Marie-Josee Leblond Victoria Perez Amaya Kanwaljeet Singh Amy Chan Ossama Elmazini Sabrina Hazel Stephane Ledoux Roberta Perri Brian Sit Pauline Chan Yasmin Eltantawy Georgina Hemmerling Glen Lee Bella Pomminville Stephanie Smith En Hua Chang Lisa Falkingham Jill Hendry Marie-Jeanne Leoni Nicole Potvin Megan Smith Landon