A Sustainable Future
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KROGER’S 2019 ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) REPORT A Sustainable Future 2019 We imagine a better future for SUSTAINABILITY people and the planet — a world REPORT with Zero Hunger | Zero Waste. 2019 SUSTAINABILITY Contents REPORT About About This Zero Hunger | Kroger Report Zero Waste Operations Letter from Our Zero Hunger Chairman & CEO Governance Zero Waste 2020 Sustainability Engagement Goals Zero Heroes Report Overview ESG Index Our Customers & Communities Our People Our Planet Our Products Customer Satisfaction Talent Attraction Zero Waste Better-for-You & Digital Innovation & Retention Products Food Waste Health & Nutrition Associate Health Sustainable Product Energy & Emissions & Safety Packaging Food Access Water Responsible Sourcing Community Engagement Supply Chain Accountability Food Safety GRI Index 2018 Awards PAGE 1 \\ THE KROGER FAMILY OF COMPANIES 2019 SUSTAINABILITY REPORT Our Customers Our People Our Planet Our Products & Communities PAGE 2 \\ THE KROGER FAMILY OF COMPANIES 2019 SUSTAINABILITY REPORT About Kroger GRI 102-1, 102-3, 102-5 BECOMING KROGER In 1883, Barney Kroger invested his life savings of $372 to open a grocery store at 66 Pearl Street in downtown Cincinnati. The son of a merchant, he ran his business with a simple motto: “Be particular. Never sell anything you would not want yourself.” This credo served Kroger well over the next 136 years as the supermarket business evolved into a variety of formats aimed at satisfying the ever-changing needs of shoppers. The Kroger Co. is a publicly held corpora- tion (NYSE: KR). Still based in Cincinnati, Kroger operates nearly 2,800 stores under two dozen banners, ranking as one of the world’s largest retailers. SEE OUR FACT BOOK FOR MORE DETAILS AND READ MORE ABOUT KROGER’S HISTORY HERE. At Kroger, we serve over 11 million customers a day through food inspiration and uplift. PAGE 3 \\ THE KROGER FAMILY OF COMPANIES \\ ABOUT KROGER 2018 2019 SUSTAINABILITY Highlights REPORT REVENUE: ASSOCIATES: $121.2 Billion 453,000 GRI 102-2 WE SERVE MORE THAN 60 MILLION HOUSEHOLDS A YEAR AT: The Kroger Family of Companies Today 2,764 1,537 253 SUPERMARKETS FUEL CENTERS FINE JEWELRY STORES MANUFACTURING DISTRIBUTION PRESCRIPTIONS PLANTS: CENTERS: FILLED LAST YEAR: SUPERMARKET BANNERS IN 35 STATES & THE DISTRICT OF COLUMBIA, PLUS OTHER POPULAR 22 BRANDS AND SERVICES FOR OUR CUSTOMERS 36 44 200 Million PAGE 4 \\ THE KROGER FAMILY OF COMPANIES \\ ABOUT KROGER 2019 Supermarket SUSTAINABILITY REPORT Divisions & Manufacturing Facilities T Y P E O F MANUFACTURING PLANT BAKERY DAIRY GROCERY GRI 102-2, 102-4, 102-6, 102-7, 102-45 OUR OPERATIONS At the Kroger family of companies, we are dedicated to country. We offer customers more than one million unique products to satisfy individualized needs and Our Purpose: to Feed the Human Spirit™. We serve more wants. We serve more than 60 million households annually. than 11 million customers daily through a seamless digital shopping experience and our retail food stores, serving Our retail supermarkets typically feature expanded fresh departments, natural and organic items, health America through food inspiration and uplift. Through and beauty care, general merchandise and pet care offerings. Many also include a fuel center. In addition Our Brands Kroger’s Zero Hunger | Zero Waste plan, our vision is to to national brand products, customers love , available in stores and online, including the popular end hunger in our communities and eliminate waste Kroger®, Private Selection®, Simple Truth®, Simple Truth Organic®, HemisFares®, Heritage Farm®, Comforts across our company by 2025. We operate 2,764 retail for Baby®, Big K®, Luvsome® and Pet Pride® items. supermarkets in 35 states and the District of Columbia — The Kroger family of companies includes specialty retailers Vitacost, Home Chef, Murray’s Cheese, The 1,537 of which have fuel centers. Little Clinic and Kroger Specialty Pharmacy. We also operate 253 fine jewelry stores and a jewelry retail We manufacture much of the food for sale in our super- website, Fred Meyer Jewelers. markets at 36 food production plants and manage a All of the company’s operations are in the United States. These entities are all included in our financial logistics network with 44 distribution centers across the statements, unless otherwise noted in our Annual Report. PAGE 5 \\ THE KROGER FAMILY OF COMPANIES \\ ABOUT KROGER 2019 SUSTAINABILITY REPORT GRI 102-7, 102-8, 102-41 OUR ASSOCIATES As of the end of fiscal 2018, the Kroger family of companies employed a total of 453,223 people in the United States. Associates serve in a broad range of roles and work environments, from our supermarkets to manufacturing plants, distribution centers and offices. We encourage movement across business units and divisions and offer career development opportunities. About 51% of our associates are women and 49% are men. About 92% of associates work in our retail supermarkets. Approximately 66% of associates are covered by collective bargaining agreements negotiated with local unions affiliated with one of several different international unions. There are 363 such agreements, usually with terms of three to five years. Our objective in every negotiation is to find a fair and reasonable balance on compensation packages that provide solid wages as well as good quality, affordable health care and retirement benefits while also keeping our family of companies competitive in the market. We continue to communicate with local unions that represent many of our associates about the importance of growing our 92% business and profitability, which will help us create more jobs and career opportunities as well as enhance job security for our associates. of our associates currently work EMPLOYMENT TYPE in our retail 2018 Full-Time Part-Time Total Demographics Employees Employees supermarket divisions. Female 85,299 145,458 230,757 Male 91,133 131,333 222,466 Total 176,432 276,791 453,223 PAGE 6 \\ THE KROGER FAMILY OF COMPANIES \\ ABOUT KROGER 2019 SUSTAINABILITY REPORT GRI 102-9, 102-10 SUPPLY CHAIN Kroger maintains a global supplier base, with thou- as information technology and software; recycling and waste management; cleaning and sanitation; and sands of domestic and international suppliers of health and wellness resources for our associates and customers. raw materials, ingredients and items for Our Brands, as well as national brand suppliers of other Our global supply chain is constantly evolving to meet the diversity and breadth of products that the products we carry on our shelves for customers. Kroger family of companies manufactures and sells. Based on a number of factors — such as changing We actively manage environmental, social and gov- and expanding product and service offerings like Pickup and Kroger Ship, opening and closing stores, ernance (ESG) topics of importance as part of our customers’ tastes and demands, internal reorganizations, social compliance requirements and audits, Responsible Sourcing Framework, Vendor Code of and more — our Procurement, Marketing and Compliance teams proactively manage a continuously Conduct and Statement on Human Rights. changing supplier base. Given the diversity and breadth of products that we manufacture and sell, our supply chain — our suppli- ers and our suppliers’ suppliers — operate in coun- tries around the world. Our direct suppliers provide GRI 102-11 commodity inputs to Our Brands products, both PRECAUTIONARY PRINCIPLE directly to our Kroger-operated manufacturing busi- ness that produce 32% of all Our Brands units and The precautionary approach was introduced by the United Nations in Principle 15 of “The Rio Declaration on to the manufacturing partners that produce the Environment and Development.” It states: “In order to protect the environment, the precautionary approach remaining Our Brands products under our strict shall be widely applied by States according to their capabilities. Where there are threats of serious or irre- specifications. versible damage, lack of full scientific certainty shall not be used as a reason for postponing cost-effective measures to prevent environmental degradation.” Our suppliers provide major commodities, individ- ual ingredients and finished inputs for Our Brands In our own operations and in our business with suppliers, we use multiple risk management protocols to as well as product packaging. Indirect sourcing reduce risk to our associates, customers and the communities we serve. Our environmental commitments suppliers provide other products and services such are based on the best information available regarding risks, impacts and opportunities to our business. PAGE 7 \\ THE KROGER FAMILY OF COMPANIES \\ ABOUT KROGER 2019 SUSTAINABILITY GRI 102–12 REPORT EXTERNAL INITIATIVES The Kroger family of companies is committed to responsible management of our environmental performance and sustainability strategy. We align with several external initiatives to structure our sustainability strategy and to accelerate progress on our goals and commitments. These initiatives also provide third-party credibility to our work and a means to communicate our progress to our investors and other stakeholders. These include but are not limited to: ENTITY OR PRINCIPLE DESCRIPTION CDP Global disclosure system through which Kroger voluntarily reports climate and water impacts and management strategy to key investors Dairy FARM (Farmers Assuring Responsible Program that assures quality and responsible management for dairy farms, cooperatives and processing