Wal-Mart Stores, Inc. | 2016 Global Responsibility Report

Preserving natural , especially and

The natural world has come under increasing stress from the demands of a growing global for , clothing, shelter, and livelihoods, among other things. Because our survival as a species depends on natural resources, society faces a collective imperative to preserve them. While retail does not directly use significant natural resources relative to other industries, product supply chains certainly do. The Index points to forests, water and as scarce natural resources that are particularly at risk due to farming and of consumer products. Forests Walmart aspires to preserve natural resources through conservation and restoration by working with suppliers, industry forums, nonprofit organizations, farmers and governments in business and philanthropic initiatives. We are collaborating to improve farming, manufacturing and sourcing practices to reduce environmental and social impact on forests, water and land. We are also supporting direct conservation. Reshaping supply chains requires collective action, and sustained progress will require all of us to accelerate and increase our efforts. In addition to being critically important for society, working on this matters to our business in other ways – for supply security, commodity costs and even reputation. Our customers, associates, Water suppliers and other stakeholders care about preserving nature for themselves as well as future generations. The following section describes our progress in three of our strategies to preserve natural resources:

• Getting to zero net deforestation

• Promoting a quality water supply

• Conserving land

Land Preserving natural resources, especially forests and water: Progress against commitments As of Fiscal Year End 2016

Initiative Commitment Progress

By December 31, 2015, any palm oil used in Walmart Achieved, based on supplier reports; continuing efforts private brand products around the world must be to improve. sustainably sourced, in accordance with the principles of Getting to zero net the Roundtable on Sustainable Palm Oil (RSPO). deforestation Source only sustainable beef that is free of Amazon Achieved 100 percent participation of Walmart Brazil’s beef deforestation by the end of 2015. suppliers in their Beef Risk Monitoring System, helping to see that no beef sold at Walmart Brazil contributes to the deforestation of the Amazon Rainforest.

Gain increasing visibility over the next 10 years into key Received supplier Sustainability Index responses covering Promoting a quality metrics regarding yields, water usage and GHG in food 77 percent of Walmart food business, giving us more water supply supply chains. transparency into our supplier's ability to track and report water usage.

To conserve one acre of habitat for every acre of Protected >1 million acres (over 10 acres for every acre Conserving land land occupied by Walmart U.S. through 2015. Walmart has developed since 1962) through support to Acres for America.

Wal-Mart Stores, Inc. | 2016 Global Responsibility Report

Preserving natural resources – forests

world. As part of our participa- mass balance (18 percent), tion in the Consumer Goods identity preserved (1 percent), Forum, (CGF) we are resolved to and GreenPalm certificates achieve zero net deforestation (71 percent). We currently by 2020. We are also a signatory accept all forms of RSPO-certified to the New York Declaration on sustainable palm oil, with the Forests, which calls for halving expectation that our markets the rate of loss by 2020. and suppliers will move to more Through these commitments, mass balance and segregated Walmart is striving to reduce sustainable palm oil as it becomes deforestation associated with accessible across the industry. palm oil, soy, beef and pulp and paper, and we have set goals We are exploring how we related to our sourcing of each. can deliver greater impact in keeping with our 2020 CGF commitment. We’re looking at Getting to zero net ways to move toward physical deforestation certified sources of sustainable palm oil, as well as how we can support an industry-wide Forests comprise an important movement with our national element of our planet’s ecosys- brand suppliers as the industry tems, offering habitat for animal transitions to 100 percent and and absorbing traceability. carbon from the atmosphere. Palm oil But forests – especially delicate In 2010, Walmart committed Beef and diverse tropical rainforests – to sustainably source any This year based on supplier- are particularly vulnerable palm oil used in its global reported data, we achieved to agriculture and industry. private brand products. We our goal that we would source According to Conservation are pleased to report that we beef that is free of Amazon International, nearly half of the have achieved this goal. Based deforestation by the end of world’s forests have already on data reported by suppliers, 2015. One hundred percent of been lost, and continuing 100 percent of our private Walmart Brazil’s beef suppliers deforestation accounts for brand palm oil was sourced are now participating in our 11 percent of annual global sustainably by the end of Beef Risk Monitoring System, greenhouse gas emissions. 2015, in accordance with the which tracks, monitors Recent studies also demon- certification standards of the and promotes responsible strate that certain agricultural Roundtable on Sustainable ranching and sourcing of commodities – notably palm Palm Oil (RSPO). In FY2016 palm beef. Walmart Brazil uses the oil, soy, cattle and timber – bear oil was sourced through a mix monitoring program in their responsibility for the majority of segregated (10 percent), purchase orders to source beef of deforestation around the that does not contribute to We are exploring ways to Additionally, the singular focus deforestation and that does not deepen transparency within by the Soy Moratorium on originate from conservation our beef-monitoring system by preventing deforestation in the units, indigenous or extending our reach to other Amazon has led to conversion embargoed areas. As of January sensitive biomes, as well as by of other sensitive 2016, the System currently establishing further traceability. in Brazil, such as the Cerrado. includes more than 52,000 The moratorium also does not registered farms and analyzes include provisions for social more than 200,000 types of issues, such as the protection data to inform our orders, to of indigenous lands or worker better clarify that no beef health, safety and livelihood. comes from deforested areas. Walmart will continue to work to promote the extension of Despite this progress, we the Soy Moratorium through recognize that there are still engagement with our supply major risks of deforestation chain, while also attending to within our beef supply. These Soy its unintended consequences in include: The CGF has identified soy as the Amazon region. one of the commodities for its • Indirect purchases. Before cattle members to source through arrive at the slaughterhouse, it deforestation-free channels. is possible that they might be Walmart is working collectively traded from high-risk ranches through CGF and with our to “approved” ranches or supply chain to achieve this slaughterhouses. target. Along with other retailers and suppliers operating • Administrative loopholes. in Brazil, we supported the Soy Ranchers who contribute Moratorium and supported to deforestation can simply its extension during the last Pulp and paper re-register their operations renewal cycle in 2014. Before In accordance with our under different names to the moratorium was enacted, 2020 commitment to zero access clean supply chains. 30 percent of Brazilian soy net deforestation, we’re came from deforested areas. encouraging our paper • Leakage. The cattle Since the moratorium, that and packaging suppliers to agreements cover only amount has fallen to about provide credible assurance activity in the Brazilian 1 percent. Recent analysis by that products are sourced Amazon, which leaves other the University of Wisconsin- sustainably. sensitive ecosystems in Brazil Madison shows that, while and neighboring countries no longer clearing forest to open to deforestation. plant soy, some farmers have merely switched to other crops.

Wal-Mart Stores, Inc. | 2016 Global Responsibility Report

Preserving natural resources – water

Promoting a quality we estimate that more than the efficiency of our water 20 percent of our operations use in our facilities around the water supply around the world are, or will be, world. For example, Wal-Mart located in regions facing high de México, one of our largest Compared with other industries levels of water stress. We are operations, plays a leading – like , manufacturing actively working to preserve the role in water in and agribusiness – that extract quality and quantity of water our company. We have water and consume large quantities available by focusing on: initiatives in operation and of water, retail uses relatively under development in multiple little water directly. At the same • Improving efficient water use locations, and, in 2015, we time, the products we sell – in our own operations increased our number of on-site especially food – can require to 1,040. Saving water in the significant water to produce. • Supporting and These plants helped us treat garden center For example, nearly 70 percent efficient use in supply chains and reuse 32 percent (1.8 million of the world’s consumption of cubic meters) of our wastewater During peak growing season, goes to agriculture, Water use in our operations for and . Walmart’s garden centers hold according to the United Nations. Walmart’s approach to Additionally, our Japanese an average of 12,000 plants, each The world’s water systems are promoting a quality water business, Seiyu, reduced water of which requires 15-20 seconds increasingly depleted, and supply includes maximizing consumption in 2015 by 30 to properly water. With so much time and water going into irrigation, we looked for a way to cut both, and discovered one in the irrigation mats produced by WaterPulse. After a pilot program Ducks Unlimited: Improving on U.S. rice farms to replace our hose-based system revealed that we could cut our committed to wetland and wells fitted for precision water previous daily water usage of waterfowl conservation. With a delivery. DU will also introduce the 20,000-30,000 gallons – as much $1 million grant from the Walmart practice of using “alternative wet as the volume of an average Foundation, DU will work with 200 and dry” (AWD) cycles, where backyard swimming pool – down rice farms – representing 75,000 the rice crop is irrigated in pulses. to 400 gallons a day. In July 2015, acres of land – over two years to Research indicates that these Walmart announced plans to adopt water conversation and practices can lead to a reduction in implement these irrigation mats practices. water use and GHG emissions. in all garden centers. These include improving irrigation Additionally, DU will utilize this grant Founded by sportsmen in 1937, through installing water control to fund analysis of the cost-benefit Ducks Unlimited (DU) has been a structures at drainage points and of conservation investments. leading nonprofit organization developing irrigation pumps and percent, compared with 2010, promoting water availability, through a variety of strategies especially in water-stressed ranging from installing water- regions. Additionally, fertilizer saving nozzles and runoff from agriculture into handles for store kitchens, to waterways accounts for a major defrosting frozen items in the source of pollution affecting refrigerator. Throughout our fish and wildlife , other facilities, we are continuing as well as making water more to explore and implement difficult to treat for human innovative methods for consumption. Walmart is promoting efficient water use. working with suppliers to improve and Enhancing water efficiency fertilizer usage in the supply in our supply chain chain. (See pg. 66 for details Since agriculture accounts for of our work on row crops and approximately 70 percent of fertilizer use.) global freshwater consumption each year, water efficiency in agriculture is central to

The roof way to conserve water Conserving water in California

launched this project to advance Despite its role as the largest part of our annual evaluations. the scientific understanding of grower of produce and nuts in Through this annual evaluation eco-roof performance in the the U.S., the state of California process, we are able to challenge greater Portland area, especially suffers from frequent droughts suppliers who are water-intense regarding rainfall runoff and long-term water stress. This to become more efficient and management, reality threatens the livelihoods we are able to strengthen our and habitat creation. The design of growers there, as well as relationships with suppliers who for the eco-roof resulted from the availability of key items for are good water stewards. Since collaboration led by Walmart, P+R our customers. Last year, our California will continue to be an Photo credit: PACLA Photo Architects, Roofmeadow, Portland Global Food Sourcing team essential source of produce and State University, the Audubon worked with our produce nuts in coming years, sustainable At 40,000 square feet, the Hayden Society of Portland and the and nut suppliers in California water management is critical Meadows Walmart store in Portland Bureau of Environmental to strengthen the suppliers’ to supporting the well-being Portland, Ore., currently has the Services. The project received a water stewardship efforts. We of California communities and largest, most intensively monitored Sustainable Gold Award from the established a process to review maintaining a secure supply of eco-roof in the United States, as International Council of Shopping Supplier Index performance high-quality produce and nuts confirmed by Roofmeadow, an Centers for excellence in and water stewardship plans as for our customers. eco-roof consultant. Walmart innovation and creativity. Wal-Mart Stores, Inc. | 2016 Global Responsibility Report

Preserving natural resources – land

Conserving land

In addition to our efforts to reduce deforestation and promote water con- servation, Walmart has been a leader in land conservation for the past 10 years. Land conversion is largely driven by food production and the demand to feed the growing population. To help prevent land conversion, we are working with suppliers and nonprofits to create more transparen- cy to farm yields and to work on contin- uous improvement. (see pg. 98 for more information).

Through a collaboration with the National Fish and Wildlife Foundation (NFWF), in 2005 Walmart helped establish the Acres for America program to conserve lands of national significance, protect critical fish The Green River in western Wyoming flows through ranchland permanently protected by Acres for America, a conservation program funded by Walmart and led by the National Fish and Wildlife Foundation. and wildlife habitat and benefit people (Photo credit: Rita Donham, Wyoming Aero Photo) and local economies. The priorities of the program have included: America program has conserved more • Provided nearly $4 million in emergency than 10 acres of vital habitat for every acre response funding to protect fish and • Conserving critical habitats for birds, fish, of land Walmart has developed since the wildlife that were immediately threatened plants and wildlife company was founded in 1962. Not only by the Gulf of Mexico oil spill in 2010 and has our goal been achieved, but also, it Hurricane Sandy in 2012 • Connecting existing protected lands to has been exceeded by a factor of 10. In unify wild places and protect migration its first 10 years, the Acres for America • Restored urban lands and habitats routes program has: and connected youth to the outdoors by investing more than $1.5 million in • Providing access for people to enjoy the • Protected more than 1 million acres – an community-based projects located in outdoors area comparable in size to Grand Canyon New York, Chicago, Los Angeles, San National Park Diego, Denver, Bridgeport, Portland (Ore.), • Projecting the future of local economies Albuquerque and Washington, D.C. that depend on forestry, ranching and • Connected over 10 million acres of recreation protected lands to support - In November 2015, we announced with NFWF scale conservation and wildlife a 10-year, $35 million renewal of this program The program’s original goal was to migration to continue its exceptional work for another permanently conserve one acre of wildlife decade. habitat for every acre of land developed by • Funded 67 projects in 35 states, the Walmart stores – approximately 100,000 District of Columbia and Puerto Rico acres total. As of today, the Acres for Conserving critical habitats in the U.S. cres or erica proects Acres for America projects In 2015, Acres for America Conservancy, while the others will issued six grants to conservation be overseen by the Conservation organizations that range from Fund, the Trust for Public Land and $250,000 to more than $1 the Georgia Department of Natural million each. These grants will Resources. fund projects that support the reintroduction of elk in West “As we embark on a new, decade- Virginia, the conservation of long commitment to conservation important wildlife habitats on between NFWF and Walmart, this ranch lands in Montana and slate embodies what this effort Colorado, as well as tracts of can accomplish,” said Jeff Trandahl, forest in Georgia, Arkansas and executive director and CEO of Massachusetts. In total, these NFWF. “The acres that these six projects will conserve wildlife grants will protect contain some habitat across more than 118,000 of the best habitat in the country acres. Three of the grants will and will help maintain recreational, be administered by the Nature forestry and ranching economies.”

Notes from the field: Challenges to preserving natural resources

Transparency in the time, but we’re working to themselves. But there is often years, with water rates likely supply chain understand common issues, considerable pressure on all increasing and regulations Like other retailers, Walmart help suppliers better understand parties, including governments, growing tighter, Walmart is does not typically have a Walmart’s expectations for to develop 100 percent of well-positioned to effectively relationship with the producers safe working conditions available land for production. manage costs and operational of many agricultural commodities, and share best practices for Such pressure can make efficiencies. Further, our use of which makes visibility and sourcing procedures. behavioral change difficult smart technology and industry transparency difficult. Because throughout the sector. best practices helps us reduce of this difficulty, the source Pressure to develop land water usage and adopt new of products within the global To have an impact on the farm Water pricing measures that make sense for commodity supply chain is often requires working with our The significant underpricing our operations going forward. limited, making it challenging suppliers, commodity traders, of water in many geographies to pinpoint where issues may producer associations and, in lowers the financial payback of arise. Improvements will take some instances, the growers water projects. In the coming