As a large retailer, offering thousands of products to customers across the country, we recognize that a large portion of our social and environmental impacts as an organization lie in our supply chain.
For Kroger, developing and adhering to responsible procurement practices can have wide-reaching benefits, including high quality manufacturing standards; positive social impacts like increased supplier diversity, protection of human rights (including with regard to the mining of conflict-free minerals and gems); support for regional sourcing; environmental stewardship; and improved supply chain traceability.
Our Responsible Sourcing Framework provides a summary of all our major policies and commitments and a description of how we track our suppliers’ information and performance against these commitments. The Supply Chain Accountability section of our 2018 Sustainability Report provides additional discussion on how Kroger reviews and improves our suppliers’ alignment with relevant sourcing commitments.
High-Impact Commodities: For the past few years, Kroger has been a member of The Sustainability Consortium (TSC), a multi-stakeholder non-profit organization that designs and implements measurement and reporting systems that improve product sustainability. TSC's technical experts have been a valuable resource to Kroger as we continue to evaluate and prioritize high-impact commodities in our supply chain.
In late 2017, we leveraged TSC's tools, expertise and guidance to conduct a data collection and engagement pilot with several cocoa suppliers. The objectives of this project were to gain increased visibility to key social and environmental impacts in our cocoa supply chain and to inform our sourcing strategy moving forward. In addition, the effort contributed to TSC's ongoing development of product- and commodity-specific metrics to assess supply chain impacts.
Kroger Vendor Code of Conduct
Our customers trust that the products we bring to market are sourced from reputable suppliers who provide safe and fair working conditions for their workers. Kroger shares this concern for human rights, as articulated in our Statement on Human Rights. All suppliers that provide products for our company, including Our Brands products, must maintain safe and fair working environments for their workers at these facilities and meet all other requirements of our Vendor Code of Conduct. We have a zero tolerance policy for human rights violations like child and forced labor, discrimination and violations of law. If suppliers (or their suppliers) do not live up to our Code, we will not do business with them.
This Vendor Code of Conduct, which takes into consideration the U.S. Department of Labor regulations and the Fair Labor Standards Act, is reviewed regularly to ensure it stays aligned with industry best practices, addresses investor concerns and emerging issues, and is approved by the Audit Committee of the Kroger Board of Directors.
As discussed further in the Supply Chain Accountability section of this report, Kroger validates and confirms the expectations outlined in our Code of Conduct through onsite Kroger Social Responsibility Audits.
Animal Welfare Requirements
Kroger has a long-standing commitment to responsible business practices, including the humane treatment of animals, as articulated in our Animal Welfare Policy. We require our suppliers to adopt industry-accepted animal welfare standards that we endorse, and we monitor our suppliers for compliance with these standards. We align with the Food Marketing Institute's (FMI) industry-adopted and industry-aligned animal welfare standards for the following animal proteins: beef, pork, chicken, turkey and eggs. For nearly a decade, Kroger has convened our own independent panel of animal science experts to make recommendations on how we can work with the industry to improve animal welfare.
Animal welfare requirements for dairy: Kroger requires that all milk and dairy product suppliers that supply our dairy processing plants and grocery assortment, are enrolled in The National Dairy FARM Program: Farmers Assuring Responsible Management™.
Sow gestation crate-free housing: For several years Kroger has urged pork suppliers to move away from gestation crates. Our goal is to source 100% of fresh pork from suppliers who have transitioned all their self-operated and contracted farms away from gestation crates by 2025.
Cage-free eggs: We realize the importance of animal welfare in our supply chains and as a result, we established a goal to transition to a 100% cage-free egg supply chain by 2025. By 2017, 21% of the eggs we sell met or exceeded cage-free requirements.
Responsibly Sourced Milk and Dairy
Kroger is both a retailer and processor for many dairy products. We operate 19 milk processing plants across the U.S. that produce a variety of products, including fluid milk, fresh cream, yogurt, ice cream, cottage cheese, and sour cream. Kroger is committed to producing and selling the highest quality, freshest, most sustainable dairy products available.
100%
of farms supplying milk and other dairy products to our processing plants are enrolled in the FARM program
We have invested in many initiatives from the farm to the store that make Kroger a leader in providing the freshest milk possible. Kroger has strict quality metrics for incoming milk. From the time we receive it we keep it cold and moving through the plant, adhering to strict quality standards. These efforts allow us to provide a 10-day freshness guarantee, making us a leader in the industry.
Kroger requires that the dairy co-ops that supply us are enrolled in The National Dairy FARM Program: Farmers Assuring Responsible Management™, which provides consistency and uniformity of best practices in animal care and quality assurance in the dairy industry. Kroger continues to source 100% of farm milk, butter, cheese and other dairy ingredients we process from dairy farms that are enrolled in the FARM program and are committed to continuous improvement through this program.
Our dairies processed more than 518 million gallons of milk and more than 228 pounds of cheese for our customers in 2017. We receive our milk from 8 dairy cooperatives that represent local dairy farmers from across the United States.
Offering sustainable wild-caught and farm-raised fish is important to our customers and our company, particularly because we are one of the largest seafood purchasers in the world. Our seafood buyers recognize the importance of responsibly-sourced seafood and are taking steps to ensure that the variety of fish we enjoy today is available for future generations.
In 2009, Kroger began a collaboration with World Wildlife Fund’s (WWF) seafood team to guide our sustainable seafood initiative, particularly for wild-caught seafood. Through this partnership, Kroger has been able to identify targets, work towards achieving sustainable purchasing practices, and stay abreast of developing trends in sustainable fisheries management.
Our goal is to source
100%
sustainable wild-caught seafood by 2020
Committed to source
100%
sustainable farm-raised seafood by 2020
Our goal is to source
100%
of shelf-stable Our Brands tuna from ISSF-participating companies
Sustainable Seafood Goals
For wild-caught seafood, our commitment is that, by 2020, Kroger will source:
100% of all our wild caught seafood species in our Seafood Department from fisheries that are Marine Stewardship Council (MSC)-certified, in MSC full assessment, in comprehensive Fishery Improvement Projects (FIPs), or certified by other Global Sustainable Seafood Initiative (GSSI)‐recognized programs; and
As of 2017, Kroger is sourcing 87% of our wild-caught fresh and frozen species by volume under these criteria
Kroger will preferentially source MSC-certified wild-caught seafood and, by 2020, will source at least 90% of its volume from fisheries that are MSC-certified.
As of 2017, 75% of our total volume is coming from MSC-certified fisheries.
For shelf-stable tuna, Kroger is committed to:
Sourcing 100% of sustainable shelf-stable Our Brands tuna from companies that participate in the International Seafood Sustainability Foundation (ISSF) tuna conservation program.
In 2017, Kroger continued to source 100% of shelf-stable Our Brands tuna from ISSF member companies.
For farm-raised seafood, our commitment is that:
By 2020, 100% of farm-raised seafood in our Seafood Department is certified to sustainable seafood certifications and programs recognized by the Global Sustainable Seafood Initiative (GSSI).
For the following species—tilapia, salmon, pangasius, mussels and trout—more than 90% of the farm-raised fish in Kroger's Seafood Department is certified to the BAP Two-Star level or greater.
Supporting Fishery Improvement Projects
An important part of Kroger’s sustainable seafood initiative is our support of Fishery Improvement Projects (FIPs). Comprehensive FIPs offer a step-wise approach for fisheries to reach the MSC standard. This collaborative effort brings together fishers, the private sector, government, researchers and NGOs to improve the environmental performance of a fishery. By working with WWF to support comprehensive FIPs, Kroger is helping improve the health of the world’s oceans and ensure the long-term viability livelihoods of fishers around the globe.
To date, we have supported 27 FIPs and 1 aquaculture improvement project (AIP) since 2009 through sourcing, letters to key stakeholders and/or direct funding.
While most cons- umers associate lobster with Maine, many of the lobster tails sold in America come from warmer waters, including those of the Bahamas. Since it began in 2010, the Bahamas lobster Fishery Improvement Project (FIP) has succeeded in measurably strengthening the fish stocks and bolstering good management practices. It is a case study in the value of collaborating across the supply chain from surf to supermarket. The FIP entered into full assessment in 2017—meaning it is being evaluated for certification against the standards of the Marine Stewardship Council.
Purchasing Decisions About At-Risk Species
Sometimes, despite efforts to make fisheries more sustainable, there is consensus in science that a species should not be fished at all and needs time to recover. In those cases, we will not source these species from areas at risk. Therefore, Kroger is committed to not source shark, marlin, skates, rays, parrot fish, monk fish, hoki, bluefin tuna, Atlantic cod, Greenland halibut, Argentinian red crab and Jonah crab. We listen to and learn from NGOs with expertise and experience in these areas. We rely on expertise and science to guide our sourcing decisions. We are proud of the work we are doing because of our partnerships and informed buying processes.
Responsibly Sourced Palm
We recognize the devastation that deforestation can have in tropical environments, particularly from the four commodities of palm, beef, soy, and pulp and paper. The majority of Kroger's supply in these categories is from domestic sources, thus minimizing deforestation impacts. For example, our beef is from U.S. cattle farms, except for a small portion that comes from Canada and Uruguay (for Simple Truth Organic® Beef and Grinds).
We aim to source
100%
CSPO for Our Brands products
The exception is palm oil, which has become the world’s leading oil crop and today accounts for roughly one-third of the global vegetable oil production. This oil has grown in popularity within the food industry as a cooking oil, shortening, margarine, milk fat replacer, and as a cocoa butter substitute.
As a result, in 2013, Kroger adopted a company policy about the use of palm oil in Our Brands products. We are committed to source 100% Certified Sustainable Palm Oil (CSPO) for Our Brands products. At the end of 2015, we achieved our goal and we continue to work with Suppliers to maintain the integrity of this commitment.
Sustainable Flowers and Plants
Kroger seeks to adopt sustainable practices in our floral and garden sections and products. We understand that customers increasingly want to know where and how flowers and plants are grown, harvested and transported.
Sustainably-grown flowers: As America's largest florist, Kroger began our partnership with the Rainforest Alliance in 2014 to advance our sustainable sourcing goals and promote fair labor practices in our supply chain.
BLOOM HAUS™ is the premium sustainable Our Brands floral line. All BLOOM HAUS™ flowers carry the Rainforest Alliance Certified™ seal, ensuring the product is grown on farms that meet social and environmental standards designed to protect forests, soil, water, wildlife, and the communities and people who live and work in those forests and farms. The green frog seal assures customers that the flowers they are purchasing have been grown and harvested using environmentally- and socially-responsible practices.
During the coming years, we aim to have as many as possible of our flowers be sustainably grown.
Neonicotinoids: Kroger recognizes the global honey bee population is vulnerable, with research indicating that a cause may include the use of pesticides containing neonicotinoids. Due to this anticipated risk to the honey bee population, we are committing to eliminate the sourcing of live plants in our stores and garden centers that have been treated with pesticides containing these neonicotinoids by the year 2020, via our recently-released policy. Kroger's commitment is inclusive of outdoor plants known to be pollinated by honey bees or known to attract honey bees. As of 2017, 95% of our suppliers indicate they are not using neonicotinoids.
Product Quality and Safety
Kroger is committed to managing our products to ensure quality and safety. We set high quality and performance standards for all Our Brands products, whether we make them ourselves or use a third-party supplier. Our regulatory compliance and quality assurance programs define product and supplier requirements, such as quality specifications, testing protocols and reporting and label requirements to ensure that we supply safe, high-quality products for our customers.
Over the last several years, the Our Brands team has also responded to customers' requests to remove certain ingredients from our products. We have worked to reformulate alternatives for our baby products, and they are now free from triclosan, quaternium-15, phthalates and parabens, and they include chlorine-free pulp. And by the end of 2014, Our Brands body washes and antibacterial soaps were triclosan-free. This area continues to evolve and Our Brands will respond, as further demonstrated by our Simple Truth brand, which is free from over 100 artificial ingredients.
Bisphenol A: Kroger recognizes that Bisphenol A (BPA) is of concern to some customers. Kroger has been working to limit the presence of BPA in the Our Brands portfolio, as outlined in our statement on BPA. After first removing BPA from Our Brands infant and toddler products, Kroger is now focused on removing BPA from the linings of canned goods. By 2017, we had converted 92% of applicable Our Brands canned goods to Non-BPA liners.
Conflict Minerals
Kroger supports the conflict mineral provision in the Dodd-Frank Wall Street Reform and Consumer Product Protection Act and has published a Conflict Minerals Policy. Kroger expects suppliers who manufacture Our Brands products, which may contain 3TG (gold, tin, tantalum and tungsten), to source minerals responsibly from facilities outside of Democratic Republic of Congo (DRC) or from facilities that have been certified to be “conflict free” if mined in the DRC. Suppliers must perform due diligence in managing all sourcing systems.
Responsible Jewelry and Gems
Fred Meyer Jewelers helps turn our customers' life occasions into celebrations, and we do it responsibly. We engage with the Responsible Jewelry Council (RJC), an international non-profit organization bringing together more than 700 companies across the supply chain, and our suppliers to raise industry standards and improve sourcing practices. The RJC works to improve consumer confidence in the jewelry industry by creating auditable standards. Certification builds trust between companies in the industry and our customers. By maintaining our certification, we demonstrate our commitment to responsible practices in a way that is visible to our customers and business partners.
Supplier Diversity
Diversity is one of Kroger's core values, which is why we actively drive diversity in our associate ranks, as well as in our vendor partners.
In 2017, we spent over $2.6B on purchases from diverse suppliers, an increase of 12.8% vs. the previous year.
Minority-owned and women-owned business enterprises (MBEs and WBEs), along with other diverse businesses, provide products, services and perspectives that align with our strategies and help us better understand our customers' needs and trends in the marketplace. We value our business relationships with these M/WBEs because they provide employment opportunities in our local communities, and their products and services are often unique and generate positive sales results.
Billion Dollar Roundtable: Since 2006, Kroger has spent more than $1 billion annually on purchases from minority and women-owned business enterprises. As a result, Kroger is a member of the Billion Dollar Roundtable, a prestigious forum of 27 corporations that have achieved $1 billion or more in annual spending with M/WBEs. We achieved this goal by partnering with over 900 M/WBE companies in 2017.
Million Dollar Club: In 2017, the United States Hispanic Chamber of Commerce (USHCC) once again included The Kroger Co. in its "Million Dollar Club." This club recognizes corporations that are leaders in integrating Hispanic-owned business enterprises (HBEs) into their supply chains. Corporate Honorees that were recognized spent between $25 million to upwards of $1 billion with Hispanic-owned companies in 2017.
OMNIKAL Omni50 List: Kroger ranked 16th on the 17th annual list of America's Top 50 Inclusion Corporations in 2017. OMNIKAL (formerly DiversityBusiness.com) announced the Omni50 Award Winners, which are the top 50 U.S. corporations awarding the most business to the growing, culturally diverse vendor/supplier marketplace. This is Kroger’s seventh year on the list.
America's Top Corporations for Women's Business Enterprises: During 2017, The Kroger Co. was honored to be selected as one of America's Top Corporations for Women's Business Enterprises (Bronze Distinction) by the Women's Business Enterprise National Council (WBENC).
Fred Meyer Jewelers helps turn our customers' life occasions into celebrations, and we do it responsibly. We engage with the Responsible Jewelry Council (RJC), an international non-profit organization bringing together more than 700 companies across the supply chain, and our suppliers to raise industry standards and improve sourcing practices. The RJC works to improve consumer confidence in the jewelry industry by creating auditable standards. Certification builds trust between companies in the industry and our customers. By maintaining our certification, we demonstrate our commitment to responsible practices in a way that is visible to our customers and business partners.
