Letter from the
Chairman and CEO

Making a difference for associates, communities and the planet

Our growing family of associates do their best to serve our customers and communities every day. Whether it's recommending a product, helping a customer take groceries to their car, rescuing food to help local food banks, recycling or volunteering, these everyday actions add up to make a big difference—the Kroger difference.

We are proud to bring you the 10th edition of the Kroger sustainability report. We have come a long way these past 10 years and, as we continue to grow, we are challenging ourselves to do better for our customers, our associates and the planet.

Our goal is to be a positive force for change in our communities and to conscientiously drive sustainability and innovation into the supply chain. To do this, we engage with our customers, associates, suppliers, NGO's, investors, and other stakeholders to gain diverse perspectives around multiple issues; we conduct consumer research and risk analysis so that we focus on what's most important to our customers and our business.

What follows are key examples of the work our more than 431,000 associates accomplished in 2015.

Social Impact

In our communities, hunger remains our greatest priority. We are deeply committed to fighting chronic hunger. In 2015, Kroger donated food and funds equivalent to 276 million meals. Our commitment to helping our neighbors is a point of pride for our associates and our company.

Kroger also supports causes that are close to our customers' hearts. Kroger annually donates $3 million for breast cancer research. Thousands of associates volunteer and support races throughout their local communities.

Kroger partners with the USO, America's leading organization to help our military and their families. We have donated nearly $15 million since 2009 and are the largest cumulative donor to the USO in the organization's history.

As our business expands, we are creating new jobs and new opportunities for current associates. We added 9,000 jobs in 2015 and have created more than 74,000 jobs over the past eight years—including 35,000 jobs for veterans.

Supply Chain Impact

As one of the world's largest food retailers, we have opportunities to positively influence the food system from the farm to the table. We are increasingly focused on creating and maintaining a sustainable supply chain for many commodities and products. We are pleased to announce progress on multiple initiatives:

We have achieved our goal to source 100% certified sustainable palm oil for our corporate brand products by the end of 2015.

We reached 86% of our wild-caught sustainable seafood goal last year and continue to make progress toward our goal of 100%.

We are driving accountability throughout the supply chain through collaborations with World Wildlife Fund for wild-caught seafood, the Rainforest Alliance for corporate brand roses, paper products, coffee, and many others. By developing and supporting transparent supply chain practices,we will positively impact communities far beyond the walls of our stores.

Environmental Impact

Every day our stores, distribution centers, manufacturing facilities and offices strive to reduce our impact on the environment. We are improving our environment in countless ways, big and small.

One of our top priorities is our move to "zero waste." Whether by keeping waste out of landfills, reducing packaging, recycling plastic bags, donating safe, perishable foods to food banks, or creating renewable energy from food waste, we are improving recycling rates and finding cost-effective and responsible alternatives for our waste.

In 2015, 1,190 stores participated in food waste recycling initiatives including animal feed programs and composting. 31 of our 37 manufacturing plants are designated "zero waste" facilities, keeping more than 98% of waste generated out of landfills.

Customers and associates together recycled more than 38 million pounds of plastic (bags & shrink wrap) in stores.

We continue to be vigilant in maintaining and improving upon the more than 35% energy consumption reduction we have achieved since 2000. That's like taking 336,791 cars off the road for one year.

Looking Forward

In 2015, these efforts have earned us the ENERGY STAR Partner of the Year award, three EPA Food Waste Recovery awards for Leadership, Innovation, and Education and Outreach. Kroger has been listed on the North American Dow Jones Sustainability Index for the third year in row.

Most recently, we were honored by the Rainforest Alliance as Supply Chain Partner of the Year for our HomeSense line of paper products. This ensures that the paper pulp comes from forests that are sustainably managed.

We've done a lot but we're constantly striving to do more and do better. To learn more about what we're committing to next, you can view our sustainability goals for 2020 at sustainability.kroger.com.

Kroger has an unwavering commitment to moving ourselves and our industry forward in the area of sustainability. Every day our 431,000 associates work together to serve the more than 8.5 million customers that enter our stores. We strive to make their lives easier, healthier, brighter and a little bit lighter. And continue to make a difference.

Thank you,

Rodney McMullen
Chairman and CEO