Letter from the
Chairman and CEO

Our Commitment for a Brighter Future

The Kroger Family of Companies we know today has grown over time, gradually expanding from one small store on the banks of the Ohio River nearly 135 years ago. Through the years, we’ve added other founders’ names to the list that starts with Barney Kroger: John S. Dillon, Chuck & Don Fry, Lloyd King, Fred Meyer and George Ralphs, to name a few. Their unique stories—and our shared legacy of community and social responsibility—are more important today than ever.

Today, our retail stores and operations stretch from coast to coast. We welcome nearly 9 million Customers through our doors every day, and we are passionate about offering a great shopping experience and a great value.

We are also committed to making the world a better place. Because we know people are hungry for more than just food, our purpose is to Feed the Human Spirit. Our Associates want to make a difference in the lives of our Customers and Communities, to lift up others, and to offer the food and inspiration we need to be our best.

Throughout our history, our company has focused on making sure people have wholesome food and nourishment. We know that meals matter, and we imagine a world with zero hunger and zero waste. As a founding member of Feeding America, the nation’s largest domestic hunger relief organization, we are working hard to leverage our people, our assets, our technology and other resources to accelerate our work in these critical areas. Thanks to the amazing generosity of our Customers, Associates and partners, Kroger is focused on feeding hungry families in our Communities and preventing food from going to waste. We lead our industry in fresh food donations—through our Fresh Donations program—rescuing fresh meat, produce, dairy and bakery items from the waste bin.

We are pleased to share with you Kroger’s latest sustainability report. This is our opportunity to share with you the work we do to fulfill our purpose—to improve people’s lives, protect our planet and act responsibly as a global citizen.

What follows are key examples of the work our more than 443,000 Associates and our many partners accomplished in 2016.


Community Engagement

Helping our Associates, Customers and Communities thrive is incredibly important. Fighting hunger has been our top priority since our earliest days, and in 2016 we donated more than 330 million meals in foods and funds to feed the hungry. This includes 69 million pounds of fresh food—over 57 million meals—and other products contributed by our stores to local food banks.

Our Associates are truly our greatest assets. Together, we live our purpose and serve our Customers every day. In 2016, Kroger created 12,000 new jobs, and once again scored 95 out of 100 on the Human Rights Campaign’s Corporate Equality Index. We focus on creating a supportive work environment that helps thousands of Associates have a path to a career and brighter future. We also offer many award-winning health and wellness programs and benefits.

Through company donations as well as support from our Customers and Associates, we also directed more than $7 million toward breast cancer research, detection and treatment to help those affected get the support they need, something that our Associates and Customers care deeply about.

Kroger also partners with the USO to help our military service men and women and their families. Through our Honoring Our Heroes campaign, we donated nearly $4 million to the USO in 2016, including contributions from our Customers and Associates. We also hired more than 9,500 veterans in our family of stores last year—a total of over 36,000 since 2009.


Supply Chain

Our Customers and stakeholders are increasingly focused on the environmental and social impacts of the food they eat. They want to know the source of their food and feel good about their choices. As one of the world’s largest food retailers, we foster sustainability and transparency in our supply chains in many ways.

We are a trusted partner to organizations such as the World Wildlife Fund, the Rainforest Alliance and The Sustainability Consortium among others to improve our sourcing practices and foster positive change across supply chains. In 2016, our efforts focused on high-impact commodities like seafood, cocoa, coffee and more. We’re making meaningful progress on our sustainable seafood goals—86% of the wild-caught seafood we procure is from sustainable sources. We are also sourcing 100% certified sustainable palm oil in manufacturing Our Brands, and 18% of the eggs we sell are now cage-free.

We continued to expand our assortment of natural and organic products, giving Customers even more choices. Today, 2,100 Kroger-operated stores offer Natural Foods departments or sections for packaged foods, and most carry organic products in the produce department. Our own Simple Truth and Simple Truth Organic product lines reached sales of $1.7 billion in 2016, confirming that our Customers love these items.

By developing and supporting more transparency in our supply chain, we believe we positively affect Communities far beyond the walls of our stores.


Environmental Benefits

Protecting health and the environment is important for Kroger, and our Associates care deeply about doing their part. One of our top priorities is to be a “zero waste” company. We follow the EPA’s food recovery hierarchy for keeping waste out of landfills—including source reduction, fresh food donations, recycling and more. In 2016, we achieved an overall record 78% recycling rate in our retail, distribution, manufacturing and construction activities.

We also offer ways for Customers to help the environment too. Together, we recycled 39 million pounds of plastic bags and shrink wrap last year. Our Customers purchased more than 38 million reusable bags. And we launched product packaging innovations like a new, lighter-weight one-gallon milk jug that uses 10% less plastic and will save 5 million pounds of plastic every year.

We continue to be vigilant in maintaining and improving on the nearly 35% reduction in electricity use we have achieved in our stores since 2000. We are pleased to continue our long-term reduction trend in our normalized carbon footprint—a 4% reduction since 2006—and we have made great strides in reducing refrigerant emissions in our stores, with a nearly 10% reduction last year.


Looking Forward

Kroger Associates working together with our Communities have created incredibly positive social and environmental progress. However, we still want to do more and do better for our Communities and the planet. Through partnership, innovation and engagement, we are driving positive change in the lives of our Customers, Associates and Communities. Our commitment is unwavering. We invite all of our Customers, Associates, partners and other stakeholders to join us in working toward a future with zero hunger and zero waste.

Last year, we announced a series of bold 2020 Sustainability Goals to increase responsible sourcing and improve eco-stewardship. These goals include expanding our 100% sustainable seafood commitment in partnership with the World Wildlife Fund, optimizing 100% of Our Brands packaging, transitioning toward a 100% cage-free egg supply chain, and achieving our zero waste goal, among others. Thanks to the commitment of our Associates, Kroger earned a spot on the Dow Jones Sustainability Index for the fourth consecutive year. I invite you to learn more about our sustainability initiatives by reading this report.

Sincerely,

Rodney McMullen
Chairman and CEO

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