Sustainability

Our customers, associates, and shareholders expect us to engage in the communities we serve, minimize our impact on the environment and create positive economic value.

Here is a fun and easy way to see the highlights of our report.

Social Environment Economic

Fighting Hunger

Fighting Hunger

In the same spirit that Barney Kroger helped neighbors during the Great Depression of the 1930s, Kroger has continued our commitment to bring food and hope to struggling families and individuals. A founding partner of Feeding America, the nation’s largest domestic hunger agency, we have worked with the network of more than 80 local food banks for 30 years. Kroger is among the top tier of donors to Feeding America.

Last year, our family of stores contributed more than 66 million pounds of food and other products to food banks serving the communities where we operate. This food and the funds raised equals 160 million meals for our hungry neighbors. Families across the country receive this assistance through food banks, soup kitchens and emergency pantries.

Kroger annually partners with our customers and vendors in the nationwide cause marketing program, Bringing Hope to the Table, that generated more than $3 million in funds and $1 million in food donations for local food banks in 2011. With the help of customers and associates, our stores raised an additional $6 million to assist hungry families during the holiday season. These donations of food and funds were all directed to the local communities in which they were contributed.

Sustainable Seafood

Sustainable Seafood

Sustainability of wild caught fish and the environmental impacts of farm-raised fish are topics that are important to our customers and our seafood buyers. At Kroger, we recognize the importance of responsibly sourced seafood and are taking steps to ensure that the variety of fish we enjoy today is also available for future generations.

In 2009, Kroger began a partnership with the World Wildlife Fund. This partnership and the resulting assessment work help us make determinations about which source fisheries are already sustainable. At Kroger, our goal is to source 100% of our top 20 wild-caught species from fisheries that are Marine Stewardship Council (MSC) certified, in MSC full assessment, or engaged in a WWF fishery improvement project by the year 2015.

Today, 65% of our top 20 wild caught fresh and frozen species is either MSC certified or in MSC full assessment. Additionally, our goal is to source 75% of the top 20 species by volume from MSC certified fisheries by 2015.

At the close of 2011, all farm raised corporate brand seafood achieved the Global Aquaculture Alliance’s Best Aquaculture Practice (BAP) level 2 certification. Global Aquaculture Alliance is a non-profit trade association dedicated to advancing sustainable aquaculture for farm raised seafood facilities. For more information, please visit http://www.gaalliance.org/

Kroger values transparency and we will continue to inform our customers about the dynamic seafood sustaina-bility landscape as well as improve and promote it. If you would like to learn more about our seafood sustaina-bility policy, please visit our website at http://sustainability.kroger.com/sustainability_sustainable_seafood/

Cow Power

Supplier Spotlight: Fair Oaks Farms, Indiana

One of Kroger’s milk supplier’s, Fair Oaks Farms, is successfully addressing the social, environmental and economic elements of a working dairy farm in northern Indiana. By embracing transparency and a desire to responsibly improve dairy operations, Fair Oaks Farms has opened its doors to the public for a one-of-a-kind educational Dairy Adventure; successfully reduced its impact on the environment; and increased its overall milk production. Now that’s a triple bottom line. Here’s how:

Over the past five years, Fair Oaks Farms has reduced their overall carbon footprint of a gallon of milk by 51% compared to the estimated national average.*

Did you know that 59% of the greenhouse gas produced on an average dairy farm is from the cow belching? Fair Oaks has reduced this production of methane by feeding the cows a unique blend of feed ingredients.

No-till farming techniques combined with precision agriculture technology has reduced NO2 emissions from the soil by 50% compared to traditional farming practices.

Renewable electricity produced from the methane in the manure, eliminates this greenhouse gas and provides 100% of the electrical needs for the dairies and on-site milk processing facilities.

One of the end products of anaerobic digestion is an excellent organic fertilizer that meets 50% of the dairies’ needs (an anaerobic digester is a sealed vessel in which bacteria digest organic matter without oxygen).

In addition to reducing the carbon footprint on farming operations, Fair Oaks Farms has reduced the amount of fresh water used in its facilities 67% by recycling water from the anaerobic digesters.

As a result of their partnership with Kroger, Fair Oaks Farms will soon take its sustainability commitment to new lengths. The dairy currently delivers milk to three of Kroger’s’ manufacturing plants in trucks fueled by Compressed Natural Gas (CNG). Fair Oaks will soon begin powering all of those CNG vehicles with cleaned, renewable natural gas generated from the manure produced on the farm. Collaboration with the Kroger plants was critical to ensure the appropriate receiving operations were in place to accommodate the trucks. This amazing feat will establish a first-of-its-kind “closed loop” system of producing and delivering the highest quality, freshest milk to Kroger’s milk processing facilities.

*US Dairy Innovation Center Lifecycle Analysis

Health

Wellness Initiatives

Kroger also provides ways for all associates to improve their health. Several divisions launched “I CAN DO THAT” wellness challenges. Nearly 2000 associates from 33 divisions participated in a Biggest Loser challenge sponsored by General Mills. These associates pledged to lose 47,652 pounds during the January–June challenge period. The Smith’s Division had 5000 participants who, collectively, lost 26,000 pounds during the challenge.

Kroger is equally committed to promoting our associates’ emotional health. We offer an employee assistance plan (EAP) which provides telephone and face-to-face support for associates coping with personal and family issues and a variety of on-line resources. Associates on the company health plan have access to free tele-phonic coaching with Anthem nurses, dieticians, and social workers.

Importantly, our associates generally pay less for their health care benefits than other individuals working in our industry. Kroger focuses on managing both the associate cost and the total cost of health care benefits. In 2011, we spent more than $1.5 billion to provide health care for our associates, their families and retirees.


Reducing Energy

Kroger continues to work aggressively in all areas of our business to reduce energy consumption.

Since 2000, we have reduced overall energy consumption in our stores by 31%. That is enough electricity to power every single-family home in Columbus, Ohio for one year.

Company-wide, including all of our facilities, we have saved more than 2.34 billion kilowatt hours, which equals 1.47 million metric tons of greenhouse gas emissions. That equates to taking more than 292,000 cars off roads for one year!

Our new and remodeled stores use the latest technology to make a big difference in energy efficiency. Today, one of our new stores will consume 30% less energy than a store built in 2000. This translates into a significant reduction in operating costs. Here are a few of the ways we are achieving these goals:

LED Lighting: Nearly all of our stores have transitioned to LED lighting in our glass door frozen cases. We are also installing LED lighting on our fresh meat cases as well as in our back room coolers and freezers. These lights use 75% less energy than fluorescent lights. Future uses of LED lighting will include fuel center canopies, track lighting and service cases.

Motion Sensors: Newer stores are using motion sensors in many of our service departments, back rooms, and in other areas. These sensors turn lights on when a customer approaches an aisle and shut them off when the aisle is empty.

Skylights: Harvesting natural light through a pattern of skylights in our new stores is another energy efficient technique. These skylights provide daylight to enhance the shopping experience for our customers while helping us reduce our energy consumption.

Control Systems: Each store uses a specially designed computer system to monitor and control energy usage in the store’s refrigeration, heating and cooling units, and lighting systems.

Our 339,000 associates are engaged in reducing energy consumption in the workplace in numerous ways. Their actions make a real difference in our efforts to reduce energy. See page 17 to learn about FAST behaviors.

Transportation Efficiency

Transportation Efficiency

We measure transportation efficiency improvements by cases shipped per gallon used. In 2011, we improved our fleet efficiency by 9.75% compared to 2010. Kroger has increased its transportation efficiency by 25.5% (from 2008 baseline). Our goal is to improve our fleet efficiency by 40% by 2014! We believe we can achieve this goal by reducing the number of miles our fleet travels, ensuring our equipment operates at peak performance, and implementing a variety of fuel-saving strategies.

Kroger has been a partner in the U.S. Environmental Protection Agency’s SmartWay™ program since its launch in 2004.

This innovative program promotes cleaner, more fuel efficient transportation practices. As part of this SmartWay™ program, Kroger increased its 2010 score from .75 to 1.0. This achievement recognizes our continuing efforts to improve our fleets’ fuel economy and elevates Kroger into the second highest tier within Smartway’s™ Freight Logistics and Environmental Tracking (F.L.E.E.T.) model. To learn more about Smartway™, visit http://www.epa.gov/smartway

Improving our “cube efficiency”, increasing miles per gallon, & reducing empty miles
(loading trucks to capacity)

In 2011, we increased our cube per load by 1% compared to 2010. We will continue to increase our case per pallet and load our trucks more efficiently. Overall, we have improved our cube efficiency by 6.6% since we began measuring it in 2008. (Cases were up 16.3% from 2008.) We are on track to meet our goal of improving our cube efficiency by 15% by 2014.



Diversity is one of Kroger’s core values and we have actively sought diversity among our vendor partners for more than 25 years. Minority- owned, and women-owned business enterprises (MBEs and WBEs); along with other diverse-owned businesses, provide products, services and perspectives that align with our business strategies and help us better understand both our customers’ needs and trends in the marketplace. We value our business relationships with these M/WBEs because they continue to facilitate employment opportunities in our local communities and their products and services produce positive sales results.

Supplier Diversity Champions

Each Kroger division and buying group has supplier diversity champions committed to ensuring that our supplier diversity goals and initiatives are communicated throughout the organization. These champions hold a variety of positions within the company and their valuable insights support our continued growth.