About this ReportLetter from Our ChairmanStatement from Our Board of DirectorsAbout AutohomeAnnual K.
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Bilibili 2023Environmental,Social and Governance ReportManagement s Letter02Highlights 03Honors&Awar.
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Bringing Happiness to MorePeople through Our ServicesNYSE:ZTOSEHK:2057.HKZTO Express(Cayman)Inc.2023Environmental,Socialand Governance ReportAbout the Report 2 Introduction 2 References 2 Scope and boundary 2 Data source and reliability commitment 2 Confirmation and approval 2 Access and contact information 2Chairmans message 4About ZTO Express 5Honors&Awards 2023 8ESG Management 9 ESG Management Structure 9 Stakeholder Engagement 9 Assessment of Materiality Issues 11Appendix I:Summary of Key Performance 91Appendix II:Index of ESG Indicators 95Topic OnePromoting High-Quality Development to Fulfill the Mission of the Times13Learning the Thoughts and Grasping the Pulse of the TimesShouldering Responsibilities and Being a Pioneer of the Times1315Topic TwoResponding to Climate Change,Establishing a Green Postal RouteResponding to Climate ChangeEnergy Conservation and Carbon ReductionPackaging Material Usage19242717Sincerity and TrustIn Search of Long-Term Stability and HarmonyLaying a Solid Foundation for Business OperationsStrengthening Environmental Management818780Uniting HeartsSharing WarmthEnsuring Employees Rights and InterestsEmpowering Employee DevelopmentCo-building Prosperous and Beautiful VillagesCommunity Welfare Enthusiast5565747654Linking the WorldUniting All，Reaching BeyondContinuing the Gene of InnovationPrioritizing Customer ExperienceCreating a Chain of ResponsibilityContributing to the Development of the Industry3137475130ZTO EAbout the reportIntroductionThis report is the seventh Environmental,Social and Governance Report(hereinafter referred to as this report or ESG report)released by ZTO Express(Cayman)Inc.As used in this report,ZTO Express,the Company and we refers to ZTO Express(Cayman)Inc.and its subsidiaries.The purpose of this report is to provide factual disclosure of the Companys ESG performance and fulfillment practices with respect to shareholders,customers,partners,employees,the environment,communities and other key stakeholders.Unless otherwise stated,this report covers the financial year from January 1,2023 to December 31,2023(the reporting period).ReferencesThis report is prepared with reference to the Appendix C2:(Environmental,Social and Governance Reporting Guide)to the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited(hereinafter referred to as the ESG Guide of HKEX),the GRI Sustainability Reporting Standards released by the Global Sustainability Standards Board(hereinaf-ter referred to as the GRI Standards),the China Guidelines for Corporate Social Responsibility Reports(CASS-ESG5.0)issued by the Chinese Academy of Social Sciences,and the SDG Compass.The preparation of this report is subject to the following principles:Materiality:The materiality of the ESG issues is determined by the Board,and stakeholder communication,identification of materiality issues,and materiality issues matrix have all been disclosed in this report.Quantitative:The measurement standards,methodologies,assumptions and/or calculation tools of the key performance indicators in this report,as well as the source of the conversion factors used,have been explained in the reports explanatory notes.Balance:This report presents the Companys performance during the reporting period in an unbiased manner,avoiding selections,omissions,or presentation formats that might improperly influence the decisions or judgments of readers of the report.Consistency:Unless otherwise stated,the statistical methods and scope used in the disclosure of data in this report are consistent with those used in previous years.To facilitate readers reference,an index of ESG indicators is provided in Appendix II of this report.Scope and boundaryUnless otherwise stated,the scope of the policies and data provided in this report are consistent with those referred to in the annual report.Data source and reliability commitmentThe data and cases in the report are mainly obtained from the statistical reports and relevant files of the Company,and reviewed by various departments.The Board undertakes that the report does not contain any false records or misleading statements and that Board is responsible for the authenticity,accuracy and completeness of the report.Confirmation and approvalThis report was approved by the ESG Committee and the Board of Directors of the Company.Access and contact informationReaders may access the electronic version of this report on the Investor Relationship section of the Companys official website at .If you have any comments or suggestions on the Companys environmental,social and gover-nance disclosures and performance,please contact us through the following means:Address of ZTO headquarters:1685 Huazhi Road,Huaxin Town,Qingpu District,ShanghaiPostal Code:201708 Tel：95311 E-mail：Bringing Happiness to MorePeople through Our ServicesAbout the report0201ZTO E2023 ESG ReportThe year 2023 marked the commencement of a brand-new phase in the second twenty-year development of ZTO Express.This year was also crucial for the strategic layout and development process of the Company.Standing on the new starting point forged by common efforts,we shoulder more significant responsibilities and tasks,embracing more ambitious mission and ideal.For this reason,we can only be more enthusiastic,down-to-earth and perseverant;strive our best to bring ZTO Express to new heights and live up to the ardent expectations of our customers and all walks of life.As we move forward,we are deeply aware that ESG is not only a part of corporate social responsibility,but also a strategic direction and core driving force to ensure long-term sound and sustainable development.In 2023,we actively put ESG concepts into practice.On the basis of solid corporate governance,we will continue to foster green transformation and safeguard the development of our employees.We also seek to give back to society with efficient services and caring humanistic care,continuously improve our ESG performance.In terms of adhering to the leadership of the Party,we recognize the fundamental significance of political leadership for the long-term development of our enterprise.In this regard,we have been promoting harmony and integration within the enterprise through in-depth promotion of Party building activities,education and publicity,rigorous promo-tion of constructing a clean Party,strengthening of the ideological education of employees,and giving full play to the pioneering role of Party members.All of these have promoted internal harmony and integration within the enterprise and provided a solid guarantee for the enterprises healthy development.In response to global climate change,we are well aware of the far-reaching impact of climate change on society and the economy.Therefore,in 2023,we strived to reduce the carbon footprint of ZTO Express and build a more sustainable logistics system through numerous means.We proactively identified and responded to the risks of climate change,built a green logistics model,strengthened energy efficiency and greenhouse gas emission management,and continuously optimized the green packaging system.We are committed to building a more sustainable logistics ecosystem.In terms of product innovation,we are determined to develop more intelligent,convenient,safe and reliable logistics solutions to enhance user experience.Through the introduction of advanced technologies such as artificial intelligence and big data analysis,we optimized the logistics operation process and improved delivery speed and accura-cy.This is not only a response to changes in market demand,but also a way for us to leverage our highly efficient logistics operation model and seek to maximize the use of resources for achieving our long-term goal of sustainable development.In terms of employee care,we have further strengthened the protection of employees rights and interests,paying more attention to the spiritual needs of employees and enhancing their sense of achievement and happiness.By constant enrichment and improvement of the system that protects employees rights and interests,provision of diversi-fied vocational skills training and clear and unimpeded career advancement paths,we seek to create an attractive work environment that capitalizes on the growth of our employees.In addition,we actively participate in public welfare activities,such as fulfilling our corporate social responsibilities and make active contributions to society through supporting education in remote areas and assisting disadvantaged groups.In terms of corporate and environmental governance,we have strengthened the level of corporate governance to ensure the rationality of corporate decision-making and compliance of corporate operations.This was done by enhancing the diversity of the board,optimizing the risk management process and strengthening the construction of a code of business ethics.At the same time,we continue to improve the level of green development by introducing more advanced eco-protection technologies and building a green office environment to put the concept of sustainable develop-ment into practice.We will strive to live up to our reputation.In the future,we will follow the development trend of the industry,continue to deepen the practice of ESG in all aspects,and work hand in hand with all employees,users as well as all walks of life to promote high-quality development of the enterprise,and to take practical action to fulfill our social responsibility.Chairmans MessageChairman of the Board of Directors and ChiefExecutive OfficerLai MeisongChairmans Message0403ZTO E2023 ESG Report99% Network coverageof thecounty-level citiesVillage-level cities coverage rate 96% Last-mile postsZTO service outlets 31,000 110,000Line-haul vehicles10,000 9,200 High-capacity trailer trucksAbout ZTO Express中通快递上海某某网点Founded on May 8 2002,ZTO Express has since evolved into a large logistics conglomer-ate integrating multiple services including domestic and international express delivery,less-than-truckload(LTL),cloud warehousing,cold chain,finance,and commerce(Tuxi).On October 27,2016,ZTO Express was listed on the New York Stock Exchange(NYSE).On September 29,2020,the Company was listed on the Main Board of The Stock Exchange of Hong Kong Limited(HKEX)under chapter 19C of the Hong Kong Listing Rules,becom-ing the first Chinese express delivery company listed in both the United States and Hong Kong,China.On May 1,2023,the Company s voluntary conversion of its secondary listing status to primary listing on the Main Board of HKEX became a dual primary-listed on the HKEX and the NYSE.ZTO Express is the worlds largest express delivery company in terms of parcel volume.In 2023,ZTO Express handled 30.2 billion parcels,representing a year-on-year growth of 23.8%.The Companys market share reached 22.9%,maintaining its position as the industry leader for eight consecutive years.ZTO Express has the largest network with the most extensive,the most intensive and the deepest coverage among the private opera-tors in China.As of the end of 2023,ZTO Express operated more than 31,000 outlets,99 domestic sorting hubs,464 sets of automated sorting equipment,approximately 6,000 direct network partners,over 10,000 line-haul vehicles,including about 9,200 high-ca-pacity trailer trucks,and more than 3,900 line-haul routes,as well as a network reaching more than 99%of the county-level cities,and covering over 96%of the village-level cities.302Parcel volumebillion99Domestic sorting hubs31,000 ZTO service outlets 99% County-level cities coverage6,000Direct network partners10,000 Self owned line-haul vehiclesParcel volume30.2billionYoY growth rate 23.8%6,000Direct network partnersAutomated sorting equipment464setsDomestic sorting hubs99About ZTO Express0605ZTO E2023 ESG ReportHonors&Awards 2023Core PhilosophyDuring the reporting period,the Company received the following awards:The 21st National Youth Civilization2022 Shanghai Safety Demonstration Unit2022 Qingpu District Service Industry Top Ten2023 Shanghai Excellent Learning Enterprise and InstitutionThe First Hangzhou Charity Award for Institutional DonationsTop 500 Private Enterprises in China in 2023(341st)Top 100 Private Enterprises in Chinas Service Industry in 2023(80th)2022 Contribution Award for Keeping Traffic Safe and Smooth2022 Special Contribution Award for Express Industry of CITES2022 National Advanced Logistics EnterpriseScience and Technology Progress Award of CFLP in 20232023 Top 50 Logistics Enterprises in China(9th)2023 Shanghai May Day Labor Award2023 Leading Enterprise of Shanghai Productive Service IndustryHonor of Charity Donation and Love for Humanity 2022 Hurun Brand List(70th)2023 Chinas Top 500 Brand Value(196th)Ministry of Transportation and CommunicationsState Post BureauState Post BureauPing An Shanghai Construction Coordination GroupShanghai Qingpu District Peoples GovernmentShanghai Qingpu District Talent Work Leading GroupPeoples Government of Hangzhou,Zhejiang ProvinceAll-China Federation of Industry and CommerceAll-China Federation of Industry and CommerceChina Express AssociationChina Express AssociationChina Communications and Transportation AssociationChina Communications and Transportation AssociationChina Federation of Logistics and PurchasingChina Federation of Logistics and PurchasingShanghai Federation of Trade UnionsShanghai Productive Service Industry Promotion AssociationShanghai Charity FoundationHurun Research InstituteBrand FinanceName of Honor(incomplete list)Award institutionManagement philosophyFair,efficiency and results-orientedOperation philosophyIntegrity,transparency and win-win resultsDevelopment philosophyStable,strong,ambitious and change-seekingTalent philosophyTalents are the driving forceSafety philosophySafety is benefitService philosophyAll for outlets,and all for customersCorporate missionBringing Happiness to More People through Our ServicesCorporate visionBecome a sustainable century-old enterprise with dignity and respectCore valuesShared Success,Trust and Accountabili-ty,Innovation and EntrepreneurshipCorporate spiritPersistence,focus and perseverance2023 Exemplary Case of Deep Integration and Development of Supply Chain Management Service and Manufacturing Industry2022 National Postal Express Industry Youth Production Safety Demonstration Post2018-2019 National Civilized Unit of Transportation Industry(Review)2022 Top Ten Public Welfare Enterprises of the Year of Public Welfare ShanghaiShanghai Municipal Civil Affairs Bureau,Shanghai Public Welfare New Media Center,etc.Shanghai Municipal Commission of Economy and Informa-tion Technology,Shanghai Municipal Postal AdministrationShanghai Municipal Office of Learning Society Construction and Lifelong Education Promotion Committee2022 Outstanding Talent Team Award for Innovation and Entrepreneurship in Qingpu District2022 National Advanced Logistics Enterprise Innovation and Growth AwardCore Philosophy/Honors&Awards 20230807ZTO E2023 ESG ReportWe firmly believe that a sound Environmental,Social and Governance(ESG)management system is the internal foundation for the Company to effectively fulfill our environmental and social responsibilities.ZTO Express is committed to continuously improving its ESG governance system,promoting the long-term and sustainable development of its business,and creating lasting value for all stakeholders.ESG ManagementThe Company continues to improve its ESG governance by establishing a top-down ESG governance structure and management mechanism.The Board of Directors,as the highest decision-making body for ESG governance at ZTO Express,holds ultimate responsibility for the Companys ESG initiatives.Under the Board of Directors,the ESG Committee1 is responsible for assisting the Board in formulating and reviewing the Companys ESG management policies,governance structures,operational management,and performance evaluation.It also regularly reports on the performance of ESG-related initiatives to the Board and provides recommendations while overseeing the implementation of corresponding improvement plans.The ESG Committee establishes an ESG working group as a comprehensive coordination body,responsible for preparing prelimi-nary work for ESG Committee decisions.The group collaborates with various departments,units,and subsidiaries of the Company to fully implement ESG initiatives.It regularly reviews and summarizes the progress and effectiveness of ESG-related efforts and report to the ESG Committee.ESG Management StructureUnderstanding the concerns of stakeholders helps us to develop sustainable development plans and future business policies.We adhere to the principles of openness,transparency,and collaboration,actively engage in stakeholder communication,and maintain close relationships with all parties through diverse channels to ensure that their demands are fully understood and effectively addressed.By engaging with stakeholders,we seek to understand their priorities and expectations regarding ESG issues and gather feedback and suggestions on the Companys ESG performance.Stakeholder EngagementZTO Express ESG Governance StructureStakeholder CategoryTopics of InterestCommunication ChannelsGovernment andregulatory agenciesShareholders and investorsCustomers and consumersEmployeesFranchise OutletsSuppliers and ContractorsPartnersCommunitiesMedia Compliance Rural revitalization Green development Support for community development Operational risk management Regulating corporate governance Data privacy and security Investor rights and interests Secure delivery and transportation Product and service optimization Data privacy and security Compensation and benefits Secure delivery Health and safety Career development Customer satisfaction Support for outlet development Supply chain ESG management Progress of industry Business integrity Community development Rural revitalization Support for community development Rural revitalization Technology innovation Submission of official documents Thematic session Regular announcement Reception of government research team Shareholders meeting Release of corporate earnings Press release,announcement and road show Satisfaction survey Regular communication and talks Customer survey Employee communication Staff training Employee activity Outlet assessment Outlet visit Supplier assessment Supplier visits Open and transparent bidding process Industry exchange Field survey Charity campaign Volunteer service Press release Media communication Social responsibility and sustainability disclosureBoard of DirectorsESG CommitteeSupervision and management of ESG strategy,policy formulationDecision-markingOrganizationRelevant Functional DepartmentsImplementation of ESG policies and objectivesExecutionESG Working GroupImplementation and coordination of specific ESG actions,facilitating the implementation of related ESG initiatives1For more information on the functions of the ESG Committee,please refer to the Revised and Restated Authority Scope of the ESG Committee.ESG Management1009ZTO E2023 ESG ReportZTO Express Materiality Issues MatrixProcess of Identification and Assessment of Material IssuesLowImportance to the sustainable development of ZTOHighHighZTO Express regularly evaluates ESG issues related to its sustainability from two dimensions:the importance to ZTOs sustainable development and the importance to stakeholders,based on feedback from stakeholders and global sustainability trends.In accordance with the Hong Kong Stock Exchanges Environmental,Social,and Governance Reporting Guide,combined with GRI standards,SASB,capital market rating agencies,and industry peers focus issues,and considering industry characteristics and corporate culture,we have identified 21 important issues highly relevant to the Company.During the reporting period,we reviewed and evaluated the material topics.We continued to monitor and allocate resources to manage all issues that affect the Company and stakeholders.The specific material topics matrix is as follows.Assessment of Materiality Issues Occupational health and safetyDiversity and inclusionData and privacy safetyDelivery safety Compliance and business ethics Energy management and GHG emissionReduction of pollution Product service and innovatioWin-win cooperationCorporate governanceRisk management Water resources managementWaste managementCommunity participationUse of packaging materialsResponse to climate changeStaff training and development Employee rights,interests and benefitsSupply chain managementQuality customer service Rural revitalization and common prosperityIdentifying Potential Materiality IssuesWe identified 21 material topics for the Comapnys business based on regulartoy requirements,peer practices,media analysis,and capital market concernsMateriality Issues MatrixWe scored and ranked all topics in terms of their materiality for the Company and for stakeholders and formed our materiality matrixSkaeholder EngagementWe formulated a stakeholder engagement plan under which we conducted in-depth interviews and distributed ESG materiality surveys to governments and regulators,shareholders and investors,employees,consumers,and the public to understand key ESG topics of concern to stakeholersConfirmation of Materiality IssuesWe then submitted the materiality matrix to management for confirmation of the identified topics and their degree of materiality01020304Importance to stakeholdersESG Management1211ZTO E2023 ESG ReportZTO Express firmly believes that Party building is a cornerstone for enterprises to effectively exert the political and organizational advantages of the Party organization and achieve steady forward development.Over the years,we have innovatively cultivated the Happy ZTO Express Party building brand to use political leader-ship and the power of trust to irrigate the growth of the enterprise.We have always adhered to the Partys leadership in our work.In the new era,we have been modifying our thinking,taking up responsibilities,and cultivating a good corporate culture.We strive our best to maintain a high degree of ideological consistency with the CPC Central Committee,in the action of the unity of knowledge and practice,the courage to innovate,the courage to take responsibility,to hand over new answers of the times.01TOPICPromoting High-Quality Developmentto Fulfill the Mission of the TimesLearning the Thoughts and Grasping the Pulse of the TimesThe Party Committee of ZTO Express insists on in-depth study and implementation of Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era and the spirit of the 20th National Congress of the CPC.Through thematic education,Party members and cadres were encouraged to deeply understand the decisive significance of the Two Establishments,consciously enhance the Four Awareness,firmly establish the Four Matters of Confidence,achieve the Two Safeguards,and always maintain a high degree of consistency with the CPC Central Committee in ideology,politics,and actions.Through the development of three meetings and one lesson,each branch of our Party committee carries out the theme of the Party day and other forms of learning plans and Party building activities.The participants learned to inherit and carry forward the Partys fine traditions and good style,actively organize various types of voluntary activities such as peoples services,civilization publicity,environmental remediation,and carry out activities such as fire drills,distribution of cold wave warming materials,open day for elemen-tary school students to experience the new technology of logistics in ZTO Express and a Party branch taking concrete actions.The general requirements of thematic education learning ideas,strengthening the Partys characters,emphasizing application and achieving new contributions ensuring that the overall requirements are truly comprehended and effectively implemented.April 2023,the Party Congress of the Party Committee of ZTO Express was held at the headquartersTopic One:Promoting High-Quality Development to Fulfill the Mission of the Times1413ZTO E2023 ESG ReportShouldering Responsibilities and Being a Pioneer of the TimesAs an industry leader,ZTO Express strives to take action and take responsibilities in the development of the industry.Led by a high sense of responsibility and mission,ZTO constantly works on self-improvement in quality and ability,sets a good example for the industry,strives to become a global first-class integrated logistics service provider,provides practical solutions to problems in the industry,and acts as a real pioneer of the times.The ZTO Express Series of Red Lessons was named by the Shanghai Zhejiang Chamber of Commerce as the second excellent Party building brand best practice cases.Meanwhile,the Party building brand project Innovative Cultiva-tion:To pass the voices of the Party to the nerve endings won the Ten Character-istic Programs for Grassroots Party Building,One Branch One Brand,of Qingpu District,Huaxin Town.Loyalty and Dedication to the Party,Responsibility and Bearing to ZTO Express July 1st Party Day Activity at ZTO Express Headquarters2023 Shaanxi Management Center Warmth in Winter CampaignTopic One:Promoting High-Quality Development to Fulfill the Mission of the Times1615ZTO E2023 ESG ReportPanorama of Green DeliveryRoutes for ZTO ParcelsSlim TapeOnly 45mm in width 100%purchasingratio used across the networkto reduce resource wasteFully Biodegradable BagsGreen biodegradable and recyclableRecycled Express BoxesRecycled and resource-saving 360,000 boxes in the whole networkcan be recycled 8 times on averageElectronic Waybillnew waybill saves 80%of paperused compared with the old ones100%usage rateto reach complete coverageRecyclable Transit BagReusable for over 100 timescumulative input volume of44.15 million bags across thenetwork an increase by 37%compared with the year beforeGreen TransportationGreen PickupPackaging Recycling BinsSorting,recycling and reusing cartons andother packaging materials150 million cartons were recycled in 2023Unmanned Vehicle DeliveryHuman-machine coordinationtechnology and efficiency to provide userswith more convenient servicesGreen Delivery VehiclesGreen delivery at the endpoint through electricand hybrid electric vehiclesusing fuel cell to achieve energy savingand emission reductionDrone DeliveryReducing the burden of ground transportationlowering energy consumption per unit and solving the last mile delivery problemin mountain villages Optimized Transportation RoutesAbout 3,900 routes for mainline transportationusing algorithms to increase loading ratesreduce frequency and minimizepollution emissions New Energy VehiclesLNG-powered vehicles areused in some areasfueled by liquefied natural gasto be more eco-friendlyPhotovoltaic FacilitiesClean energy from grid-connected powergeneration,green and energy-saving34%year-on-year growth of photovoltaicpower generation in 2023High-capacity Trailer TrucksAbout 9,200 self-owned high-capacity dumptrucks to enable upgraded capacityreduced weight and improved energy efficiencyGreen SortationIntelligent Sorting Equipment464 sets of automated sorting equipment for small and large parcels more efficient,low energy consumption low noise,low pollutionGreen Last-mile Delivery02TOPICResponding toClimate ChangeEstablishinga Green Postal RouteCorresponding SDGs Responding to climate change Energy management and greenhouse gas emissions Packaging material usage Waste management Actively identify and undertake climate actions,strengthen energy management,increase investment in clean energy and equipment upgrades,and reduce greenhouse gas emissions Promote green packaging,improve resource utilization efficiency,reduce waste,and guide green and low-carbon express consumption patternsTopics addressed in this chapterOur actionsCurrently,climate change not only poses severe challenges to the sustainable development of enterprises and society but constitutes a pressing global issue that requires urgent counteractions.ZTO Express is committed to building a green logistics system,implementing green operations in various scenarios such as transportation,warehousing,and office work.The Company also continues to optimize packaging,and help achieve Chinas goal of carbon peaking and carbon neutrality as it endeavors to address and mitigate the impacts of climate change.Topic Two:Responding to Climate Change,Establishing a Green Postal Route1817ZTO E2023 ESG ReportAs a responsible enterprise,we are deeply aware of the impact of climate change on operations.Following the framework of the Task Force on Climate-related Financial Disclosures(TCFD),we incorporate climate change into our corporate governance and strategic framework,strengthen the identification and management of climate change risks and opportunities,and regularly review the effectiveness of low-carbon development to support the achievement of Chinas goal of carbon peaking and carbon neutrality.Additionally,the Company has established policies and systems such as the Firefighting and Emergency Evacuation Drill System and Flood Control Emergency Plan to reduce the impact of physical risks on the Companys normal operations.Responding to Climate ChangeThe Companys Board of Directors is responsible for climate change-related risks and opportunities,and authorizes the ESG Committee to oversee the related work,including risk identification,assessment,and management.At the same time,the ESG Committee reports to the Board of Directors annually on relevant ESG matters,including climate risks.We link board compensation performance with the Companys climate change performance,continuously enhancing the Companys level of climate change management.Climate Change ManagementsWe conduct climate scenario analysis based on the Shared Socioeconomic Pathways(SSP)assumptions adopted by the Intergov-ernmental Panel on Climate Change(IPCC),taking into account the objective conditions of Company operations and potential external environments that may be encountered in the future,such as natural ecosystems and socioeconomic environments.Factors identified include temperature rise,sea level rise,extreme weather events,climate policies,and changes in energy technol-ogies.We choose SSP1 and SSP3 pathways for climate scenario analysis.Climate Change Strategy2Source:IPCCAR6 Climate Change 2021:The Physical Science BasisCategorySSP1SSP3Natural 2SocioeconomicEnvironmentTemperature RiseSea Level RiseExtreme WeatherChanges inEnergy TechnologyHeavy Precipitationon LandNew EnergyTransportationClimate PolicyBy 2040,there will be a 1.5 rise in temperature above pre-industrial levels(1.5 rise by 2100)By 2040,there will be a 0.1-meter rise in sea levels compared to the present(0.4-meter rise by 2100)With a temperature rise of 1.5-2.0,precipitation intensity is projected to increase by 10.5%-14%The frequency and intensity will increase to some extentSeveral countries,regions,and economic entities are expected to introduce progressively stricter low-carbon policies and regulations,committing to long-term net-zero emissions or carbon neutrality goals,aiming to manage global environmental issuesThere will be a reduction in fossil fuel usage,with a shift towards renewable energy sourcesThe proportion of new energy vehicles is expected to rapidly increase,becoming the primary direction for transportation vehiclesMajor countries have already initiated climate policy actions,but some countries and regions lack carbon neutrality goals and do not have detailed near-term actions or planned targetsNon-fossil fuels still account for a certain proportion of primary energy consumptionThe proportion of new energy vehicles is gradually increasing,while traditional energy vehicles are undergoing orderly transitionBy 2040,there will be a 1.6 rise in temperature above pre-industrial levels(3.9 rise by 2100)By 2040,there will be a 0.1-meter rise in sea levels compared to the present(0.6-meter rise by 2100)With a temperature rise of 2.0-4.0,precipitation intensity is projected to increase by 14.0%-30.2%The frequency and intensity will significantly increaseWe analyzed the potential impacts on operations under SSP1 and SSP3 scenarios,identifying potential physical risks and transition risks in different scenarios.Climate Change Risk and Opportunity AnalysisUnder the SSP3 scenario where there is a high level of greenhouse gas emission and a significant increase in the proportion of extreme weather events,ZTO Express will face more challenges from physical risks.We have identified and analyzed the potential impacts under acute and chronic physical risks.Risk Identification and Response for ZTO Express Operations Under the SSP3 ScenarioMain Impact DescriptionDimensionsof ImpactAcuteHeavyPrecipitationand FloodsExtremeHeat/ColdWeatherRisingAverageTemperaturesRising SeaLevelsTyphoonsChronic Increased risk of flooding and damage to sorting hubs and outlets in low-lying areas Impact on transportation timeliness,increasing the risk of parcel damage and loss Severe damage to Company facilities and vehicles Impact on employee commuting and courier delivery Potential damage to power facilities affecting the normal operation of operational sites Potential impact on water and electricity usage in operation and office premises,disrupting normal operations Increased risk for drivers and outdoor workers Increased energy consumption to maintain constant temperature in operation and office premises Damaged operating routes affecting transport and delivery Increased risk of damage to outlets due to typhoons Adverse effects on employee health due to hot weather Increased demand for cooling equipment Infrastructure damage Increased operating costs Threat to personnel health Decrease in revenue Increased operating costs Threat to personnel health Decreased revenue Infrastructure damage Threat to personnel health Increased opera-tional costs Reduced operational stability of assets and transportation routes in high-risk coastal areas Infrastructure damagePhysical RiskTopic Two:Responding to Climate Change,Establishing a Green Postal Route2019ZTO E2023 ESG ReportIn the SSP1 scenario where there is a tightening of macro policies under low emissions scenarios and a wave of societal low-carbon transformation,ZTO Express will face more challenges from transition risks.Based on four dimensions of policy and regulations,market,technology,and reputation,we identified and analyzed the potential impacts of transition risks.Transition RisksWhile climate change brings risks,ZTO Express firmly believes that the trend towards low-carbon and green development also presents various opportunities for corporate transformation and growth.During the reporting period,the climate change-related opportunities identified,and the corresponding measures are as follows:Opportunities from Climate ChangeOpportunitiesResource EfficiencyImprove resource efficiency through more efficient operations and production methods to reduce greenhouse gas,pollutant,and waste emissions;practice sustainable development and circular economy concepts to reduce medium to long-term operating costs for the CompanyTypes of EnergyIntroduce more renewable energy sources in the production and operation processes,to enhance our ability to cope with changes in energy supply;obtain supportive policy incentives,gain advan-tages in the carbon market,and reduce medium-to long-term operating costsProducts and ServicesContinuously innovate green and low-carbon products to ensure provision of products and services that align with green consumption principles and acquisition of competitive advantages in the industryClimate ResilienceImplement low-carbon transition measures such as process optimization and adjustment of product types to enhance resilience and overall risk resistance capabilityPolicy and Regulations With the continuous enhancement of regulatory compliance requirements,the Compa-ny needs to actively engage in low-carbon transition,data management,and information disclosure Layout energy structure transformation,shifting from fossil energy to clean energyMarket As the green consumption trend further develops,the Company needs to increase invest-ment in low-carbon transition,such as equipment upgrades and low-carbon technology developmentTechnology To respond to compliance and market demands,the Company needs to increase invest-ment in low-carbon technology research and development,including process optimiza-tion,developing green and circular low-carbon packaging,reducing packaging waste,and minimizing the use of non-biodegradable materialsReputation An increasing number of stakeholders are paying attention to the climate response performance of listed companies.If the Company fails to take appropriate measures to address climate-related issues,it may affect the Companys reputation Risk Identification and Response for ZTO Express Operations Under the SSP1 ScenarioTopic Two:Responding to Climate Change,Establishing a Green Postal Route2221ZTO E2023 ESG ReportWe will continue to drive internal low-carbon transformation,clarify low-carbon development goals,conduct annual performance assessments,and ensure adequate achievement of established goals.Climate Change Indicators and TargetsWe realize that optimizing energy use is one of the important pathways to reduce greenhouse gas emissions from operations.During the reporting period,we constantly explored opportunities for energy conservation and efficiency improvement through management upgrades and technological innovations.We also continuously tracked and comprehensively improved energy efficiency by analyzing the implementation of energy management goals.Additionally,we vigorously promoted the optimization of energy structure and actively adopted clean energy to increase the proportion of clean energy used.In the field of photovoltaic power generation,in 2023,the companys photovoltaic installation area was approximately 370,000 square meters,with an actual power generation of 40,150 megawatt-hours,an increase of 34%compared to the previous year,of which 26,010 megawatt-hours were for self-use.ZTO Express strictly adheres to relevant laws and regulations in the locations where it operates,such as the Environmental Protec-tion Law of the Peoples Republic of China and The Energy Conservation Law of the Peoples Republic of China.Through establish-ing and improving internal energy management systems and process requirements,the Company sets and continuously tracks energy targets to enhance energy efficiency awareness among employees through training and promotional activities.For outsourced logistics suppliers,the Company is committed to improving their environmental performance and aims to jointly create a green operating system by considering the following criteria:whether warehouse resources have photovoltaic facilities,whether vehicle emissions meet China V standards or above,and whether there are new energy vehicle resources for delivery.Energy Conservation and Carbon ReductionEnergy SavingAssessment ProcessCalculatingIdentifyingListingProposingImprovingReviewingTrackingAnalyzingCalculating the achievement status of equipment usageRectification and improvement of equipment optimizationIdentifying centers with high abnormal rates and unmet achievements,listing them as centers requiring optimizationProposing equipment optimization plans and measuresBased on the centers requiring optimization,listing the data items with higher abnormal rates of equipment operationAnalyzing operational data of equipmentReviewing the effectiveness of the optimization centers improvements to ensure normal operation of equipment usage dataContinuously tracking the usage data of optimization center equipmentGHG Emissions Goal of ZTOIndicatorGHG emissions intensity per parcel(kg CO2e/parcel)TypeBase YearGoal in 2028Intensity202820%reductionZTO Express is committed to building a green,circular,and low-carbon express logistics system.We are driven by technological innovation,guided by the principle of green and low-carbon development,aspiring to lead the sustainable development of the logistics industry.We focus on the low-carbon transformation of transportation,the clean and intelligent sortation,and the improvement of network operation quality and efficiency.We aim to achieve a 20%reduction in GHG emissions intensity per parcel produced by the Company by 2028,and work together with value chain partners to steadily advance on the path of green,low-carbon,and high-quality development.ZTO Expresss Commitment to Energy Conservation and Emission ReductionDeepening research and development of low-carbon technologiesContinuously increase investment in research and development of low-carbon operational technologies;achieve end-to-end greening and intelligent transformation of parcel transportation by increasing the usage of green packaging,expanding the scope and proportion of new energy usage,etc.Enhancing consumer awareness promotionProvide rewards and awareness promotion to consumers to help them understand daily recycling methods of express packaging materials and reinforce consumers understanding of emission reductionExploring voluntary emission reductionActively explore the feasibility of voluntary emission reduction projects and methodologies in the express delivery industry递联四海 汇万物 通天下2623Topic Two:Responding to Climate Change,Establishing a Green Postal Route24ZTO E2023 ESG ReportNote 3:Energy consumption is calculated with reference to the National Standard of the Peoples Republic of China GB/T 2589-2020General Rules for the Calculation of Comprehensive Energy Consumption.Note 4:Greenhouse gas emissions are calculated with reference to the 2006 IPCC Guidelines for National Greenhouse Gas Inventories,and the Guide to Greenhouse Gas Accounting and Reporting for Enterprises in Other Industries(for Trial Implementation)issued by the National Development and Reform Commission of the Peoples Republic of China,and the electricity conversion factor(average emission factor of Chinese power grid in 2022:0.5703 kg/kWh)is derived from the Notice on the Management of Greenhouse Gas Emissions Reporting by Enterprises in the Power Generation Industry in 2023-2025 issued by the Ministry of Ecology and Environment.In 2023,ZTO Expresss Hefei Sorting Hub continued its commitment to clean energy.We increased investment in solar panel installation on unused rooftops,adding 20,000 square meters of solar power generation facilities.This expansion resulted in an annual electricity generation of 2.2 million kilowatt-hours,providing a continu-ous supply of green electricity to the factory area.Additionally,we upgraded and replaced existing inefficient and high-energy-consuming power supply and usage equipment,and optimized sorting operation process to enhance equipment efficiency,achieving an annual electricity saving of approximately 500,000 kilowatt-hours.Active involvement in clean energy and equipment upgradesEnergy ConsumptionUnit2023 DataTonm3Megawatt-hourMegawatt-hourMegawatt-hour732,619.73648,856.31444,2841,120,62340,15026,01083,763.42681,557Total energy consumptionDirect energy consumptionDieselNatural GasRenewable energy generationRenewable energy usageIndirect energy consumptionPurchased electricityTransparent tapeWaybillOthersGreenhouse gas emissions4Metric Tons CO2eMetric Tons CO2eMetric Tons CO2eMetric Tons CO2eMetric Tons CO2eMetric Tons CO2e1,402,275388,6922,15154,53798,2771,945,932365101507Energy consumption density3Tons of Standard CoalEquivalent per RMB10,000Tons of Standard CoalEquivalent per RMB10,000Tons of Standard CoalEquivalent per RMB10,000kg CO2e per RMB10,000of revenuekg CO2e per RMB10,000of revenuekg CO2e per RMB10,000of revenue0.1690.0220.191Greenhouse gas emission intensityDirect emissions(Scope 1)Indirect emissions(Scope 2)Total greenhouse gas emissionsDirect energy consumption densityIndirect energy consumption densityOverall energy consumption densityOther indirectemissions(Scope 3)Direct emissions(Scope 1)Indirect emissions(Scope 2)Total greenhouse gas emissionsTons of StandardCoal EquivalentTons of StandardCoal EquivalentTons of StandardCoal Equivalent递联四海 汇万物 通天下2625Topic Two:Responding to Climate Change,Establishing a Green Postal Route26ZTO E2023 ESG ReportZTO Express Green Packaging TrainingZTO Express strives to reduce resource consumption and waste from the source.We have formulated the Regulations on Supervi-sion and Management of Value-added Services and the ZTO Express Parcel Packaging Operation Specification to clarify packag-ing principles,tools,and criteria for selecting packaging materials.We require minimizing the use of packaging materials as much as possible while meeting market demand.Additionally,we continuously invest in packaging material selection and recycling,such as through exploring various research and application scenarios for green and recycled packaging materials.These scenarios include efficient refrigerant development,high-insulation bag development,reuse of discarded corrugated cardboard,and development of circular folding turnover baskets to minimize the environmental impact of packaging and packaging waste to the greatest extent possible.As of the end of the reporting period,the proportion of our e-commerce parcels without secondary packaging reached 93.34%,the proportion of procurement and use of standardized packaging materials reached 91.83%,and the proportion of parcels sealed according to specifications reached 95.15%.We also used recyclable packaging for over 25.22 million parcels and recovered over 146.52 million corrugated cardboard boxes in good condition for reuse.Packaging Material UsagePackaging Procurement VolumeUnitData from 2023kgkgkgkgkgkgkg per Million RMB777,89529,132,7493,624,12033,976,125111,685442,0301,681.91Transparent TapeWaybillWaterproof BagEnvelopeCartonOther PackagingPackaging Material DensityIn the transit process,we work to gradually increase the proportion of environmentally friendly bag usage.We have deployed recyclable environmentally friendly bags with RFID electronic tags in the sorting hubs.While traditional woven bags can only be used about twice,these bags can be reused more than 100 times.With the use of RFID electronic tags,we can collect information on package transfers,losses,and destinations.This not only reduces waste and pollution but also improves the efficiency of operations in the transit center to achieve green,circular,and intelligent processes in the transit process.Additionally,to enhance the efficiency of the circulation of environmentally friendly bags,the Company has developed a dedicated network distribution and recycling system.This system facilitates the circulation and reuse of environmentally friendly bags between primary outlets and subordinate outlets.It enables tracking and inventory management of bags distributed from primary outlets to subordinate outlets.Moreover,it utilizes empty vehicles in central trunk transportation to transfer environmentally friendly bags to enable rational sched-uling and tracking management of these bags.Increase the recycling capacity of environmentally friendly bagsTo continuously strengthen the internal dissemination of knowledge regarding green packaging,we have designed and launched a series of specialized training courses on green packaging.These courses promote green packaging norms,advocate against excessive packaging,and emphasize resource conservation to prevent environmental pollution.Furthermore,through such forms as spot-checks and surveys on packaging at various outlets,we conduct closed-loop assessments of the training results to ensure practical implementation of green packaging governance measuresTopic Two:Responding to Climate Change,Establishing a Green Postal Route2827ZTO E2023 ESG ReportLinking the WorldUniting All，Reaching BeyondZTO Express focuses on its core express delivery business,committed to meeting the growing demand for a better life through innovative products and high-quality services.With the Shared Success network partner model and centralized management of its own Zhongtian system,it builds a differentiated underlying franchise network.By leveraging core express infrastructure and resource integration capabilities,ZTO Express gradually constructs a comprehensive logistics ecosystem,fulfilling its corporate mission of Bringing Happiness to More People through Our Services through practical actions.Quality customer service Data and privacy safety Product service and innovation Delivery safety Supply chain management Win-win Cooperation Actively integrate technology and services to ensure customer privacy security and enhance customer service experience Embrace digital transformation and upgrades to meet diverse customer needs through innovative quality products and services Expand direct linkage to the last mile,strengthening frontline network construction Implement Green Procurement Principles to enhance supply chain ESG management Collaborate with upstream and downstream partners to achieve win-win cooperationCorresponding SDGsTopics addressedin this chapterOur actionsLinking the World Uniting All，Reaching Beyond3029ZTO E2023 ESG ReportZTO Express continues to deepen scientific and technological innovation.With our advanced R&D management mechanism,we actively carry out independent research and development,integrate digital technology into the whole scenario of express delivery business.We also aim to improve the operational efficiency of the whole chain with technological innovation to meet the diversi-fied needs of customers.Scientific and Technological innovationFocusing on providing consumers and customers with transformed and upgraded logistics solutions,ZTO Express continues to increase R&D investment,improve the R&D innovation mechanism,accelerate the commercialization of achievements,and help realize high-quality and rapid delivery of innovation achievements on the business side.ZTO Express has built a one-stop production and research work platform(DevOps)from the decentralized construction of various departments to unified construction of the enterprise.This platform integrates the whole process functions of production and research,such as demand management,defect management,task management,version iteration management,project manage-ment,test management,goal management,application and cluster management,release management.This helps to smooth the communication of information of various links,realize open and efficient collaboration,and improve the energy efficiency of R&D.R&D Innovation ManagementZTO Express actively practice the concept of Internet Logistics,empower our business with digitalization,realize data service business processes,drive business decisions.Through self-developed technology products and technological innovation,we promote the application of digital transformation in the collection,transfer,transportation and delivery of the whole cycle of express delivery and open up the digital closed loop of logistics.Technological Innovation to Enhance Operational EfficiencyZTO Express One-Stop Work Platform for Production and Research ProcessesZTO Express has always insisted on innovation as the driving force.We constantly seek to improve the R&D management system,enable innovative industrial layout and product development,and utilize digitalization and intelligence for current transformation and upgrading to create a necessary path of intelligent logistics and better escort the development of customers businesses.Continuing the Gene of InnovationVersiondevelopmentConstructionTestRegressionTest acceptancePre-releaseLaunchLaunch fortestDevelopment&restorationRequirements/DefectsBranchDevOps ProcessRequirement managementRequirementsIterationKanbancollaborationQuality follow-upBranch formingCode commitCode scanningCode walkthroughCode mergingDevelopment managementTest use caseTest programDefectmanagementData statisticsQuality analysisTest managementIterativebranchingConstructionTestingDeploymentMonitoringOperation&maintenance/PipelineRequirementsConstructionIntegration testingPre-releaseLaunchCode commitDevOpsNetwork-wide data tracking reports and express tracking to provide vendorswith visualized express informationThrough data integration,scene aggregation and closed-loop operation,ZTO Express provides customers with inbound and outbound tracking services,realizing real-time waybill tracking status inquiries and operations.At the same time,we also provide express tracking for dozens of roles such as customer service personnel(headquarters,managed areas,outlets),functional personnel at all levels of outlets,couriers,network managers at all levels,and provides basic information and abnormal data around the dimension of the waybill as the basis for decision-making for users to handle the problems.The inbound and outbound waybill folow-up mechanism provides outlets with operation processing tools for waybill folow-up scenarios,including SMS sending,contacting the recipient for return,contacting the courier,making up track operation,forming a closed-loop order follow-up operation scenarios for customer serviceClosed-loopOperationInbound and outbound waybill folow-up mechanism summarizes and aggregates common abnormal scenarios of outlets,covers all waybill folow-up scenarios of outlets,provides real-time data Kanban,reduces query and export operations for outlets,enhancing waybill folow-up management efficiency of outletsScenario AggregationInbound and outbound order follow-up servicesKey Contents of Express Parcel TrackingThrough system data integration,we provide real-time order follow-up data query from the first viewpoint of the outlets,support the summary and detailed query of the data-based express status of each level and dimension of the outlets(outlets,contracted areas,couriers,customers,stores),and help the outlets to improve the efficiency of order follow-up operationData IntegrationProvide all the scanning track records of the waybill,and comprehensively display the scanning equipment number,scanning time,scanning personnel,weight,current outlet and the outlet to be sent to,the corresponding parcel number,vehicle number information,etcTracking QueriesUsers can view the order information of the waybill and the privacy of users has been desensitize across the network without affecting business operationsOrder InformationProvide access to the product value-added records of the waybill and a portal for quick registration of items to be intercepted,making it convenient for users to registerProduct Value-addedRecords3231Linking the World Uniting All，Reaching BeyondZTO E2023 ESG ReportProduct Matrix of ZTO Expresshas been comprehensively upgradedWe continue to optimize our product structure,improve and upgrade our diversified product matrix,accelerate the layering of our products and the construction of our ecosystem.At the same time,we continue to further expand our project of Entering Villages and Plants and Going Global and accelerate the construction of the last-mile terminals.During the reporting period,we launched and upgraded a number of high value-added products to better meet diversified customer needs.Product Innovation AOI Grouping in parcel collection and delivery:Intelligent measures to optimize work efficiencyAOI grouping for collection:The system orders assigned to the collector are mixed in a list,resulting in low efficiency of parcel collection.To address this problem,press developed and promoted the use of AOI grouping for parcel collec-tion.AOI can be understood as the smallest collection and delivery area,couriers can not only plan a reasonable route to pick up the parcels according to the grouping,but also correct the grouping to improve the efficiency of the order search and pickup,indirectly improving the business volume of the outlets.AOI grouping for delivery:To solve the problem of low efficiency in the sorting,grouping and signing of parcels,ZTO Express designed AOI four-segment code fence,which will make fine grouping of parcels delivered to the door by couriers according to the address,and improve the efficiency of sorting,delivery and signing!Now available in 7 pipe areas,100 outlets.Express Butler System to provide convenient services for different typesof vendorsTo improve the customer service experience of small and medium-sized vendors and large vendors,ZTO Express continues to upgrade and optimize the function of Express Butler System.For small and medium-sized vendors,the Express Butler System can realize intelligent AI group chat after-sales service and automatic parcel interception upon refunding to enable timelier,more automated processing of the after-sales needs of vendors.In addition,express butler for small and medium-sized vendors also contains the on-line waybill self-service recharge function to allow vendors to perform waybill recharge anytime and anywhere.For large vendor groups,express butler provides an independent order docking interface capability,supporting vendors in docking orders through an encrypted interface,and sending back the waybill numbers through the Express Butler System.This not only ensures the safety of the vendor customer data throughout the whole process,but also assists vendors in completing a closed-loop handling of order manage-ment,waybill printing and shipping within their self-developed systems,greatly enhancing the vendors work efficiency.In terms of after-sales service,the Express Butler System provides large vendors with external interception,return and modification interface,support-ing them to initiate interception,returns,modification and other after-sales work orders within their self-developed online stores via the interface.This significantly enhances the service experience for large vendors with self-development systems.ZTO Express strictly abides by the requirements of the Trademark Law of the Peoples Republic of China,Copyright Law of the Peoples Republic of China,Patent Law of the Peoples Republic of China,and Law of the Peoples Republic of China Against Unfair Competition,etc.We have revised the Intellectual Property Management System to incentivize employees to actively participate in the creation and application of intellectual property rights,ensure the quality of patent applications,and promote technological innovation and core competitiveness improvement.During the end of reporting period,we have obtained 192 patents,260 software copyright,712 trademarks,and invested more than RMB2.7 million in intellectual property rights.Intellectual Property Protectionintellectual property rights2.7millionpatents192software copyright260trademarks712ZTO Express Feikuai Half-day delivery by air and landZTO Express HaokuaiPromising pre-delivery call,door-to-door delivery and overtime compensationZTO Express StandardPre-delivery callOrdinary ParcelCompetitive price3433Linking the World Uniting All，Reaching BeyondZTO E2023 ESG ReportUnder the guidance of the Belt and Road initiative,ZTO Express Laos has seized the opportunity to integrate and optimize operational resources,and leveraged a mature and comprehensive local service network.With its F2B2C one-stop cold chain service capabilities and the China-Laos-Thai-land comprehensive railway transportation advantages,it has developed into a comprehensive logistics service company integrating cross-border cold chain,general cargo transportation,local express delivery,freight transportation,warehouse distribution and railway transportation.ZTO Express has developed into a comprehensive logistics service company integrating cross-border cold chain,general cargo transportation,local express,freight forwarding,warehousing and distribution,and railroad transportation between China and Laos.As of the end of the reporting period,ZTO Express Laos has opened more than 200 outlets,covering 17 provinces in Laos,contributing to the economic and trade development of China,Laos and ASEAN,while helping to speed up and upgrade RCEP economic and trade cooperation.Connecting Transnational Friendship to Share Economic and Trade DevelopmentAggregate advantageous resources to collaboratively build a new pattern ofliquor logistics and supply chainZTO Express relies on its own resource advantages to build a standardized intelligent liquor supply chain service system by further collaboration with Moutai Logistics.The collaboration also explores the liquor supply chain system model,helps the liquor industry chain transform and upgrade to intelligence and refinement,and improves efficiency and service experience.Expand the full supply chain of agricultural products and explore new opportunitiesin the logistics of pre-prepared dishesThe distribution of pre-prepared dishes prioritizes the most critical demands of freshness and timeliness.ZTO Express relies on the national warehouse and distribution network to strengthen the digital urban distribution platform and self-developed prefabricated vegetable processing management system.This promotes efficient completion of the integrated management of picking,processing,warehousing,distributing and marketing of agricultural raw materials,guaranteeing the freshness and safe delivery of every pre-prepared dishes,and assisting the latest development of the pre-prepared dish industry.The Belt and Road initiative,based on the principles of mutual consultation,construction,and sharing,seamlessly aligns with the development strategies of various countries.The logistics sectors integration and cooperation are rapidly evolving.Leveraging its strong ground service network and global resource integration capabilities,ZTO Express is building a comprehensive logistics system centered around courier services to accelerate the development of a globally accessible and independently controllable international logistics network.Going Global for a World Without BordersProducts and Services of ZTO Global LogisticCross-border export:We provide export delivery service,covering more than 220 countries and regions around the worldCross-border import:We provide full chain import product services from overseas to mainland ChinaContainer shipment and warehousing:Our global container line provides overseas Chinese with transshipment from China to all over the world;customizable,safe and fast serviceCross-border ServicesWe have local transportation network in 6 ASEAN countries,South Korea and 5 African countries to provide cross-bor-der import and local delivery servicesOverseas Local ServicesWe provide local warehousing and delivery services,as well as import and export forwarding services in Hong Kong,ChinaLocal Services in Hong Kong,Macao and Taiwan We provide special product services such as payment collection for customers,cash on delivery and time-sensi-tive parcel delivery to meet the logistics needs of different scenariosSpecialty ProductsZTO Express actively embed itself in the upstream and downstream industrial chain of many industries,customize personalized services for customers,and provide a package solution integrating transportation,packaging,warehousing,embedding in the supply chain,and after-sales service,making ZTO Express an indispensable link in the industrial chain of many industries.Products Enable Multi-industry DevelopmentExpand the spare parts logistics supply chain to install the accelerator forcustomers integrated developmentHow to efficiently and accurately manage a large number of different types of automotive spare parts and ensure their timely delivery to service centers across the country is a typical challenge in spare parts supply chain management of the automotive industry.Relying on the resource advantages of the two large networks of express and express transportation,ZTO Express enhances the flexibility and responsiveness of the customers spare parts logistics network,and ensures that orders are processed in the most appropriate network through the seamless connection between the two networks to improve the transportation efficiency of the entire spare parts supply chain.This cooper-ation model reduces logistics costs by about 10%for customers,while the delivery time reaches the expected service level,and the efficient service meets the business needs of terminal 4S stores and dealers.3635Linking the World Uniting All，Reaching BeyondZTO E2023 ESG ReportZTO Express conscientiously implements the Postal Law of the Peoples Republic of China,the Safety Supervision and Management Measures of Postal Industry,the Operational Regulations for Work Safety of Express Delivery and other laws and regulations.We strictly implement the three systems to ensure the safety of delivery.In 2023,the Company carried out special control measures for prohibited goods,batteries,and real-name information for delivery,continuously improving the safety management of express delivery.Implementing the Three SystemsZTO Express regards customer service as one of the core competitiveness of the Company.we always adhere to the customer-cen-tered service concept,guarantee the safety of delivery,comprehensively construct the customer service system,enhance the service consciousness of customer personnel,and wholeheartedly provide customers with professional express logistics services.Prioritizing Customer ExperienceZTO Express strictly implements the three systems of real-name pickup,open-box inspection and security check.This aims to strengthen the safety management mechanism of delivery,focus on safe delivery,and promote safety control by scientific and technological means for ensuring the safety and smoothness of delivery channels.Safe DeliveryTargets and Achievement of Delivery SafetyGoal-setting:Focus on the control of high-risk prohibited goods to reduce the occurrence of major safety incident occurred;deploy 52 intelligent security check machines and intercept 31,500 orders during the ordering phase;develop and promote online systems such as penal-ties for prohibited goods,interviews for penalty orders,electronic signing of commitment letters,and blacklisting of prohibited item customersRectification initiatives:Self-examination and self-correction by outlets;warning interviewsAchievements:0 delivery safety accidents in 2023 and 0 key accident incidents caused by prohibited goodsIn order to solve the problems of fire accident losses caused by illegal item pickup,slow information transmission at outlets,poor control effect of major conferences,and outlets inability to collect parcels,ZTO Express carried out a special enhancement program during the reporting period to improve the perceived efficiency of outlets/centers and to enhance the safety of express delivery.Specialized Program to Enhance Delivery SafetyIn terms of delivery control,the Company carries out grading and quarterly control of prohibited goods,and implements the Safe Delivery Special Program to prohibit the inflow of prohibited goods into the ZTO delivery network,such as drugs,firearms and explosives,reactionary propaganda products,dangerous chemicals,infringing and counterfeit goods,counterfeit and substandard medicines,invasive species,counterfeit money,wild animals and plants.Prohibited Goods Graded and Quarterly Control to Ensure Delivery SafetyScreening from the source of customers,graded and segmented control after inflow,and implementation of accountability at all levelsSafe DeliveryEmpowering business through technology,transforming from offline to online,developing many system functions in collaboration with the Technology and Information Centre,realizing process visualization through further standardization of processes,achieving review of results,improving work efficiency and realizing closed-loop workflow managementEnhancement ofoutlet experienceEnsuring the safety of parcel pickup and increasing pickup volume through professional market visits,low-risk cargo filing,and customized solutionsBusinessAssistance1）Control of high-risk prohibited goods during the hot season(May-October):Strictly control illegal pickup and delivery of flammable and explosive high-risk prohibited goods during the hot season,and strengthen the control of large-scale lithium batteries,accumulators,second-hand batteries and other battery products2）Control of fireworks and firecrackers(November-January):Strengthen the control of fireworks and firecrackers express,focusing on the investigation and handling of illegal pickup and delivery of fireworks and firecrackers1）0 major accidents caused by prohibited goods2）No incidents notified by the Administration for pickup and delivery of prohibited goodsQuarterly ControlEffectiveness3837Linking the World Uniting All，Reaching BeyondZTO E2023 ESG ReportInitiatives to improve service qualityZTO Express is committed to building a complete,comprehensive and scientific customer experience monitoring capability,continu-ously optimizing our service model through service intelligence and efficiency.We focus on improving customers logistics experience,accurately and efficiently meeting diversified demands of customers,and continuously improving customer experience.Optimization of Management InitiativesZTO Express has established an efficient customer service system and created a multi-channel feedback mechanism.In 2023,ZTO Express continued to expand customer feedback channels and collect customer demands.We currently have multiple feedback channels such as the 95311 official channel,online robot,and the official applet,and has upgraded some of the feedback channels to facilitate customer feedback and problem solving by means of three-party group chats,eco-interoperability,directional push comments,processing process optimization,and exception control.At the same time,the Company relied on service quality evaluation system indicators to reduce the impact of service anomalies.In 2023,the all-channel connection rate of ZTO Express was 96.07%,an increase of 2.56%compared with 2022,and the complaints per 10 thousand orders was 1.99,a decrease of 2.45%compared with 2022.ZTO Express actively understands customers expectations and evaluations in terms of service,and continuously improves service quality and meets customers needs through customer feedback and analysis of satisfaction survey results.Customer FeedbackThe Company always attaches importance to stabilizing and developing the relationship with customers,strictly abided by the Law of the Peoples Republic of China on the Protection of Consumers Rights and Interests.We adhere to the service concept of all for outlets,all for customers,constantly improve the customer service mechanism,upgrade the quality of service,and contin-ue to make efforts in pursuing the excellence in the quality of service.High-quality ServiceThe percentage of customers using online services/platforms out of the total customer basePercentage of total revenue generated from online channels out of the total revenueOnline Strategy and Online Customers20212022202390.39492.192.495/90.8919492Customer SatisfactionCustomer Satisfaction（in the last four years）Customer satisfaction coverage in 2023Customer satisfaction target in 20232020202120222023Data logic:internal research samples were taken to cover the data of each region in China for calculation96%For non-third-party inbound parcels handled by couriers,the Company provides location-based photo signing functionality,promotes C-end and platform applications,uploads the photos of signed receipts for customers to view,and connect the platform to the application.This makes it easy for customers to look for the parcels,and reduces the proportion of the complaints caused by the problem of not knowing where the parcels areInterconnection of customer channelsEffectively integrating customer service resources of the whole network,connecting the three nets of outlets,provinces and districts,and headquarters;realizing the intelligent routing of telephone and online services;pursuing digital synergy,and reducing the waiting time of customers.We make use of this network for multi-channel interoper-ability to enable continuous iterative integration;work to achieve a closed loop and cycle based on the public and private domains;enable continuous innovation and development,transforming standardized,normalized,and process-oriented services into systematic,customized,and caring-oriented servicesCreate a quality newsletter for couriersFocusing on improving the quality of couriers pick-up and delivery service,the joint technical team builds a newsletter on the quality of parcel pickup and delivery.This newsletter will be pushed to couriers on a daily basis to provide data analyses,highlight on types of impacts,and to provide them with the corresponding guiding suggestions to improve their servicesClosed-loop order exception reportingIntelligent system for closed-loop monitoring of the cancellation of customer orders by couriers and outletsIntegrated service quality monitoring visitsBased on data from visits to outlets and online feedback,make rectifications according to the business optimization suggestions from internal customers under the coordination of outlet research and business linkageImplement location-based photo signingVisualized parcel delivery using Zhangzhongtong improves the delivery efficiency of couriers,and helps them to accurately deliver parcels and improve the service levelEstablish an anomaly information sharing and management platformConstruct data capture rules for parcel stalling and push the upstream to provide stalling reasons,which are used to meet the data application of stalling scenarios of different dimensions,and ultimately achieve the purpose of information sharing and efficient communicationEnhance quality of delivery by couriers4039Linking the World Uniting All，Reaching BeyondZTO E2023 ESG ReportTools for improving service qualityWe formally promoted over 6000 assessment outlets,99 centers,and 34 manage-ment area lines.Managers can intuitively view the performance results of corresponding service quality within the analysis system,as well as the processes and root cause factors,direct and indirect influencing factors,and provide rectifica-tion recommendationsHolographic QualityAnalysis SystemFrontline staff receive multi-dimensional guidance and empowerment in the department such as business skills,policies and rules,management skills.The head office and provincial districts and outlets are highly synergistic and cooperate to comprehensively cover the needs of frontline employeesCourier LearningPlatformWe sorted necessary service courses for the last-mile delivery service,which mainly included How to maintain service quality Best practices in the last-mile cooper-ation mode Common complaints and feedback How to maintain good service etiquette and Handling of work ordersLast-mile DeliveryService Learning PlatformCustomer Service at 89%,up by 8.89%compared with 2022Couriers at 93.49,up by 3.32%compared with 2022“The Fast PassDaily QuizThe Company provides customer service training to enhance the overall customer service handling capacity and promote the development of frontline personnel,integrate frontline customer service personnel across the network to collectively improve the service experience of ZTO Express.During the reporting period,the Company carried out a series of empowerment training activities,such as regulation training,early warning outlet training,induction training,on-the-job training(mentality,skills,business,management,communication),with a total of 178 sessions and 3,510 trainees.In addition,the Company insists on innovational drive and continue to improve customer service level by building empowerment tools for employees and couriers.Empowering by Customer Service TrainingZTO Express continues to improve our mechanism for information security management mechanism.During the reporting period,ZTO Express Information Security Committee was established to take charge of the overall information security and privacy protection work of the Company,with Executive Vice President Zhu Jingxi serving as the director of the Committee.Members of the Committee included Group Vice Presidents,heads of ecosystem companies,heads of functional centers at the headquarters,and heads of provincial and municipal control centers.The Company sets targets for information security and privacy protection management annually and reviews the progress regularly.Our privacy policy also applies to our partners.We also integrated the privacy policy into the risk management process,and conducted internal and external audits of privacy policy compliance.Information Security Management MechanismZTO Express strictly abide by the Data Security Law of the Peoples Republic of China,the Network Security Law of the Peoples Republic of China,the Personal Information Protection Law of the Peoples Republic of China,the Regulations on the Security Protection of Critical Information Infrastructure and other relevant laws and regulations of the country and the industry.We developed systems such as the Data Security Management System of ZTO Express Group,and the Measures of ZTO Express Group for the Management of Information Security Incidents to consolidate and improve our information security management system,and safeguard the security of information data and privacy.Guaranteeing Information and Data SecurityTargets in 2023Progress in 2023Updated the Measures for the Administration of Personal Information Protection and the Measures for Security Impact Assessment of Personal InformationRealized 100%coverage of privacy waybill in our own channels,and the utilization rate of privacy waybill in the whole network reached 76%Updated the ZTO Account and Privilege Management Measures to strengthen account securityStrengthening the personal information protection systemClearly informed customers of their privacy rights in the ZTO Express Privacy PolicyProvided options for customers to cancel their accounts,update their informa-tion,and delete it,and specified how long the information will be stored and how it will be protectedEnhancing transparency in customer privacy protectionLaunched full traffic detection system and Baohe security agent to improve office network securityImplemented a pooled processing security logging and alerting system to improve emergency response to security incidentsStrengthening information security infrastructure and monitoringMaintained and updated the security operations management platform to ensure effectiveness and adaptabilityConducted periodic information security risk assessments to provide timely alerts and response to security risksOptimizing information security risk monitoring and management processes4241Linking the World Uniting All，Reaching BeyondZTO E2023 ESG ReportThe Company constantly improves risk control processes in the management and operation processes.We enhance the quality and efficiency of overall information security management through system structure optimization,technology upgrade and process improvement.Relying on the security operation and management platform,the Company carries out real-time monitor-ing and analysis of the information system infrastructure,application programs,network environment and employees operation behaviors.We also utilize technical means such as intrusion detection system,security event management system and log analysis system to carry out real-time monitoring and analysis of the information system,and timely detects and warns of possible security risks,and take different countermeasures according to different levels of security events.Meanwhile,the Company regularly reviews and updates the monitoring and risk control system to ensure its effectiveness and applicability of the system.To further improve the information security risk prevention and control capability,the Company organizes at least one red and blue confrontation drill every year,which is a simulated hacker attack in cooperation with a third-party professional security company.In addition,our Security Emergency Response Center cooperates with third-party security companies and ethical hackers to simulate hacker attacks on ZTO systems from time to time to improve our ability of defending against cyber-attacks.Moreover,we have set up public contact information and mailboxes for employees and the public to report any information securi-ty incidents.In the event of information security and privacy leakage incidents,we will penalize the employees involved in accordance with the relevant system.Depending on the severity of the circumstances,the employees involved will be given warnings,notified and criticized,demoted and suspended without remuneration,or dismissed from the Company.Measures for Information Security and Privacy ProtectionCarried out external monitoring,security warning cycles,intelligence sharing with external companies,vulnerability intelligence collection,public opinion monitoring,identification of social issues,dark web monitoring and other measuresIntercepted high-risk logins or two-factor authentication based on factors such as events,environment,frequency to ensure query security.Log each query and conduct regular log audits to track and deal with identified problemsCompleted activation of the full traffic detection system in the office network,strengthen-ing the attack and intrusion detection capabilities of the office networkCompleted centralized processing of alarm aggregation and detection for ZFE,Nginx,Waf,etc.,improving emergency response capabilities for security incidentsRiskmonitoringDeveloped a privacy vulnerability assessment and scoring system to collect privacy issues and make rectificationsCarried out security vulnerability assessment;completed emergency repair of vulnerabili-ties and achieved closed-loop processingVulnerabilityassessmentDeveloped Security Incident Management Measures to standardize the processes of incident grading,corresponding measures and reviewDeveloped a main emergency response process and regularly carried out emergency response to incidents in the aspects of command support and incident handlingHandling andrespondingto securityincidentsPersonnelverificationCouriers need to conduct personnel registration before registering an account.The account requires identity authentication and can access customer information only after completion of registrationSystemspecificationsEstablished a unified personnel and delivery system No export function provided for customer information;identity information is hiddenThe Company formulated management processes such as the Emergency Response Plan in Information Security Incident,Emergency Response Plan in Information Leakage Incident(Privacy Incident Exercise Plan)and Information Security Incident and Vulnerability Reporting and Disposal System.We conduct tests of the emergency response plan and incident response procedures at least every six months to ensure that emergency response and disposal work is carried out in a prompt,efficient and orderly manner to minimize cybersecurity risks.In addition,the Company have formulated a series of data privacy and security policies to provide a guiding basis for privacy protection.Timely notify data subjects in the event of policy changes or data breach Implement leading data protection standards Obtain user data in a lawful and transparent manner,with the explicit consent of the data subject where necessary Limit the collection and processing of user data to the stated purposes only Policy contains explicit terms covering the collection,use,sharing and retention of user data(including data transferred to third parties)Require third parties with whom data is shared to comply with company policies Company Data Privacy and Security Policy apply to all businessesKey Commitments in Data Privacy and Security Policy 4443Linking the World Uniting All，Reaching BeyondZTO E2023 ESG ReportZTO Express have established an information security training system to regularly conduct information security education,training and examinations throughout the Company and the entire ecosystem to help employees expand their knowledge of information security and enhance their security awareness.In 2023,we updated our Information Security Training System and linked the results of the training examinations to performance appraisals,ensuring that all employees participate in the annual information security training.Information and Privacy Security TrainingTraining ActivitiesScopeOutcomesStaff from Technology and Information Center 35 minutes of training time per capita Information Security Awareness TrainingStaff across the entire network&ecosystemtCumulative number of partici-pants:22,830Information Security Enhancement Month Special ActivitiestStaff across the entire network&ecosystemCumulative number of trainees:10,383Special Phishing TrainingtAll staff in the CompanyPublished 22 posts throughout the year,with over 700,000 viewsInformation Security Promotion Column in the service account of ZTO Information Security Department All staff in the CompanyRead 12w timesService account of ZTO Information Security Department pushes content about information security awareness,privacy security protection,etc.Effectiveness of Information Security and Privacy Protection in 2023The Companys core business systems for design and development,application systems,IT infrastructure,operation and maintenance services have passed ISO 27001,ISO 27701,GB/T 22080 information security system certification and ISO 9001 quality management system certification.They have been awarded the United Kingdom Accreditation Service(UKAS)and China National Accreditation Service for Conformity Assessment(CNAS)marks of recognition.We conduct an internal audit of the operation of the information security and privacy management system once a year,and hire a third-party certification and auditing organization to conduct an external audit annually.The Company experienced no information security breaches or other cybersecurity incidents,with a total of zero information security breaches and zero customers,clients and employees affected by the breaches 100%of customers informed of privacy policy 100%of data control services(including personal data access,correction,deletion,etc.)provided by customers 100%coverage of policy which only allows use of personal data upon customers consent 4645Linking the World Uniting All，Reaching BeyondZTO E2023 ESG Report中通快递上海某某网点ZTO Express strives to leverage its scale advantages and coordinate various links upstream and downstream to achieve comple-mentary advantages,continuously empowering partners,and jointly promoting the construction of a sustainable value chain in the express delivery industry.Creating a Chain of ResponsibilityZTO Express adheres to the principle of sustainable and healthy development at the last-mile,continues to expand the number and scale of end markets,as well as constantly improves service levels and standardization construction.We proactively assist outlets in accelerating the adjustment and optimization of operational management models,increasing direct linkage to the last mile to reduce costs,and working hand in hand with partners for mutual success.Outlets Support and DevelopmentLast-milepostsdevelopmentEnhancingoutletmanagementcapabilitiesCoveringevery cornerDelivery Efficiency:Encourage outlets to effectively strengthen post station management,improve delivery efficiency,and optimize direct delivery costsPost Station Services:Improve service quality meeting individualized needs,expanding market share of express delivery products,accelerating end-point construction to strengthen post services,and deepening and empowering outlet capabilitiesTerminal Management:Establish data visualization management for delivery map services,further reducing operating costs through information management tools,promoting quality upgrades in the last-mile,and providing better services to customers and consumersStation Construction:Further optimize the products and services of existing outlets,constant-ly exploring new models for post development,utilizing our own advantages and existing resources to meet consumer demands,improve service capabilities,and ensure healthy and sustainable development of end-pointsImplement monitoring of business development,service quality,and other data at the level of three-segment codes,enable outlets to quickly identify service personnel corresponding to abnormal three-segment codes,provide more targeted improvement suggestions,and enhancing efficiency and service levels in parcel handling and deliveryProvide outlets with an intensive tool,the Violation Handling System,which integrates violation data scattered across various systems and conducts detailed analysis.Functional departments and outlets themselves can use the System to identify issues and uncover potential operational risks at outlets.By providing data tools to outlets,their work is elevated to a new stage of intelligence and efficiencyMaintain the stability of outlets,ensure stable service and enhance customer experience,ignite the intrinsic motivation of couriers,accelerate the realization of direct chain management under the franchise model,better support the development of outlet terminals and the upgrading of outlet operating models,and boost the enthusiasm,stability,and income of outlet personnelZTO Express regularly conducts training empowerment activities to standardize the compliance operations of outlet,improve the capabilities and qualities of outlet-related personnel,and ensure the efficiency of outlet management and service.In 2023,ZTO Express started the Blue Bee Index project and developed the Blue Bee Index points system.It displays various data of couriers from the four major categories of timeliness,service,compliance,and safety,implementing supervision over the compliance of operations at various stages for front-line couriers.This helps and motivates couriers to improve their service capabilities and service quality.By the end of the reporting period,more than 2,700 couriers nationwide have successfully rectified,with a success rate of 56.20%for index rectification.The training for couriers primarily utilizes online training video courses.The curriculum comprises nine modules,covering safety awareness,parcel pickup,delivery,recipient acknowledgment,BlueBee guarantee,and other aspects.These modules encompass safety situations in the daily work of couriers,methods for handling emergencies,comprehensive training in parcel handling skills,and knowledge of policies ensuring the rights and interests of couriers.By the end of 2023,the overall learning completion rate has exceeded 92%Promoting Essential Courses for New CouriersAn online system has been developed to control training permissions for newly hired couriers across the network.This measure aims to further improve service quality,standardize parcel handling operations,and enhance customer experienceControl of Training Permissions for Newly Hired Couriers4847Linking the World Uniting All，Reaching BeyondZTO E2023 ESG ReportZTO Express seeks to improve its supplier management mechanism,establish a supplier information management system,and enhance suppliers technical support and innovation capabilities.During the reporting period,the Company enhanced the Huihua Procurement System,realizing digital procurement,further improving the efficiency of supply chain management.ZTO Express adheres to the concept of win-win cooperation and continuously expands channels for communication and coopera-tion with suppliers.We share excellent ESG practices with suppliers and regularly conduct training on business ethics,quality improvement,and safety production to enhance their comprehensive capabilities.In 2023,the Company conducted a two-hour training session on supplier ESG-related topics.Supplier TrainingKey Performance Indicators2023(Suppliers)7,3947,332621,63232712Total number of suppliersMainland ChinaOverseas regionsNumber of newly hired suppliersTotal number of Tier 1 suppliersTotal number of Tier 1 critical suppliersZTO Express strictly adheres to relevant national laws and regulations,formulating such systems as the Supplier Dynamic Manage-ment System,Procurement Management System and Detailed Rules for Implementation,and the Transit Equipment Tendering and Bidding Management Measures to outline the entire lifecycle management process for supplier introduction,evaluation,and exit.To enhance the ESG management capabilities of suppliers,the Company has established Supplier Guiding Principles which is applicable to all suppliers and clearly define requirements for suppliers in terms of human rights,environment and business ethics,the responsibilities of supervision and decision-making for such lie with the Companys top management.Additionally,the Company provides ESG promotion and training for procurement and other supplier management personnel,and integrates elements such as quality management,business ethics,labor rights,and green environmental protection into supplier admission and evaluation processes.Supplier ESG ManagementZTO Express actively seeks sustainable development paths for the express delivery industry,integrating environmental and social responsibilities into various aspects of supply chain management.Through partner empowerment and collaborative communica-tion,we drive the entire upstream and downstream of the industry chain to achieve sustainable transformation.Enhancing Supplier ESG ManagementSupplier Management ProcessWithdrawalAll Suppliers undergo continuous review to ensure alignment with the Supplier Guiding Principles and avoid potential conflicts with ESG requirements.If a supplier engages in behaviors that violate the established policies,they are immediately categorized as ineligible and are removed from the database of qualified supplierAdmittanceThe business department,legal department,and procurement department review admission applications of suppliers based on their respective responsibilities.They consider environmental protection policies,social responsibility performance,and other ESG factors as bonus criteriaContracts include clauses related to business ethics,occupational health and safety,child labor,forced labor,employee rights,environmental protection,etc.Specific measures for handling violations are outlined to mitigate supplier management risksWhen selecting important suppliers,the Company not only considers their business relevance,such as product quality and services,certification qualifications,but also evaluates their environmental management performance,occupational health and safety,employee rights,business ethics and compliance,and other environmental,social,and governance(ESG)aspects.The Company also pays attention to specific risks related to the suppliers industry and commodities,enhancing supply chain management resilienceEvaluationA combination of daily project management and regular annual assessments is utilized.Procurement personnel conduct desk evaluations,questionnaire surveys,or on-site assessments of suppliers based on requirements such as the Supplier Guiding Principles.The content includes child labor,business ethics,environmental management,maximum working hours,minimum living wage,corporal punishment,and harassment.Suppliers are classified and managed according to their evaluation results.Corrective action plans are developed for issues identified during assessments,and guidance is provided for implementing improvement measures.When it comes to comprehensive capacity building and specific ESG management performance improvement for suppliers,the company provides in-depth technical support and training to enhance their capabilities and ESG performanceIf a supplier fails to meet the Companys minimum ESG requirements within a specified time frame,cooperation is terminatedDimensions ofsupplier ESG management focusEnvironmentSocietyManagementTaking a serious stance against supply chain corruption,requiring procurement staff to sign a commitment to integrity,and using contracts signed by suppliers to bind both parties to compliance issues,thereby preventing unfair competition practicesA comprehensive quality management system certified by ISO 9000 quality management systemImprove the Green Procurement System Policy,establish a corporate green procurement standard working system,clarify the green procurement process,specify green procurement requirements for products,office supplies,etc.,and collaborate with suppliers to improve their environmental performance.Select suppliers with the Green Product Certification for Express Packaging certificate5049Linking the World Uniting All，Reaching BeyondZTO E2023 ESG ReportZTO Express showed active participation in standard reviews and feedback,assumed a leading role in exchange activities to facilitate and empower healthy development of the express logistics industry.In 2023,the Company participated in the formula-tion of one industry standard and the review of nine standards.Contributing to the Developmentof the IndustryIn cooperation with the meteorological department of Zhejiang Province and the Public Service Center of the China Meteorological Administration,ZTO Express explored the development of standards in the field of commerce and logistics meteorological services in the Belt and Road.The Company provided data on how weather impacted express delivery and other information for decision-making,organized a questionnaire survey group,and worked with the relevant departments to complete the development of the industry standard High Impact Weather Types and Risk Levels for Highway Logistics.Industry Standards ZTO Co-developedZTO Express actively explores cutting-edge applications,collaborates with relevant enterprises and research institutions,leverages their respective strengths to achieve resource sharing,complementary advantages and coordinated development.We accelerate the commercialization of cutting-edge technological achievements,create demonstration projects for emerging industry applica-tions to empower development of the express delivery industry.Autonomous driving vehicles can not only significantly improve logistics efficiency and safety,reduce logistics delivery costs,but also achieve more flexible and convenient delivery services to promote transition to smart logistics.ZTO Express has signed a strategic cooperation agreement with NEOLIX,to jointly promote large-scale application of autonomous driving technology in the delivery field.As of the end of the reporting period,the first batch of autonomous driving vehicles had commenced operation in cities such as Yancheng and Hefei on a regular basis through the cooperation between the two parties.Next off,we seek to further expand the scale of autonomous driving vehicle deliveries and the cities where they are deployed.Promoting Large-scale Application of Autonomous Driving Vehicles in the Delivery FieldZTO Express reached a strategic cooperation with Nanjing University of Aeronautics and Astronautics,Urban Air Traffic Research Institute that focuses on the emerging industry of drone logistics.Centering around key issues and core technologies in drone logistics,the cooperation features scientific project application and joint research and conduct demonstration applications of drone logistics to promote the application and rapid development of the emerging industry of drone logistics.Regarding the use of large unmanned transport aircrafts,we have signed a strategic cooperation agreement with Yitong UAV System to jointly explore large-scale commercial operation of such aircrafts based on the application scenarios of the Company.Focusing on the Drone Industry to Boost Rapid Development of Drone Logistics5251Linki
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TABLE OF CONTENTSThis report covers The Home Depots environmental,social and governance(ESG)progress in our fiscal year 2022.CEO LETTER3OVERVIEW5About Home Depot6Our ESG Value Chain82022 Ratings&Recognition9Our ESG Goals and Progress102022 ESG Highlights14Our Approach to ESG18FOCUS ON OUR PEOPLE25Diversity,Equity&Inclusion27Associate Safety33Associate Engagement35Learning&Development38Benefits40The Homer Fund45OPERATE SUSTAINABLY46Carbon Emissions Reduction50Sustainable Forestry56Circularity58Water Conservation65Responsible Chemistry67Promoting Customer Eco Actions70OverviewFocus on Our PeopleOperate SustainablyStrengthen Our CommunitiesOur BusinessReporting FrameworksUnless otherwise noted,we report on activities that fall in our fiscal year(FY)2022,which started on January 31,2022 and ended on January 29,2023.STRENGTHEN OUR COMMUNITIES77Community Partnerships79Supplier Diversity83Veteran Support85Trades Training:Our Pathto Pro Programs87Disaster Relief&Response90RESPONSIBLE BUSINESS PRACTICES92Code of Conduct93Responsible Sourcing andHumanRights94Corporate Governance97Government Relations99Corporate Taxes102Data Security&Privacy104ESG PERFORMANCE DATA ANDREPORTING FRAMEWORKS107ESG Transparency108Global Reporting Initiative(GRI)Standards111Sustainability AccountingStandards Board(SASB)Disclosure Matrix118Task Force on Climate-RelatedFinancial Disclosures(TCFD)Framework121EEO-1 Report123Resources124About This ReportThe Home Depot publishes our annual ESG Report to share our ESG activities with our stakeholders in a timely,transparent manner.We include details on our approach,our policies and practices,our metrics,targets and goals,and our stakeholder engagement.Reporting Period and ScopeUnless otherwise noted,we report on activities that were taken during our 2022 fiscal year,which started on January 31,2022 and ended on January 29,2023.Unless otherwise noted,this report focuses on The Home Depots in-store and online operations within the U.S.,which represented more than 90 percent of sales in our 2022 fiscal year.This report also includes data from our Canada and Mexico operations.HD Supply Holdings Inc.data is included where noted throughout this report.This report also contains information on The Home Depot Foundation,The Homer Fund and Team Depot volunteers.Reporting StandardsThe Home Depot has reported with reference to the Global Reporting Initiative(GRI)standards for our 2022 fiscal year.This report also contains disclosures that align with Sustainability Accounting Standards Board(SASB)Multiline and Specialty Retailers&Distributors and Building Products&Furnishing industry standards,the recommendations of the Task Force on Climate-related Financial Disclosures(TCFD)framework,and the United Nations Sustainable Development Goals(SDGs).OverviewFocus on Our PeopleOperate SustainablyStrengthen Our CommunitiesOur BusinessReporting FrameworksForward-Looking Statements:All statements in this report that are not historical constitute“forward-looking statements”as defined in the Private Securities Litigation Reform Act of 1995.These forward-looking statements may relate to,among other things,our goals,commitments and programs,and projections of future results,including our ability to meet our goals;our business plans,strategies,initiatives and objectives and their expected execution and impact;management of relationships with our associates,potential associates,suppliers and service providers;cost and availability of labor;costs of fuel and other energy sources;international trade disputes,natural disasters,climate change,public health issues,cybersecurity events,military conflicts or acts of war,and other business interruptions that could disrupt operation of our facilities,our ability to operate or access communications,financial or banking systems,or supply or delivery of,or demand for,the Companys products or services;the impact of regulatory changes;the impact of acquired companies on our organization;and our assumptions,expectations and projections regarding any of the foregoing.Forward-looking statements are based on currently available information and our current assumptions,expectations and projections about future events.They are not guarantees of future performance and are subject to future events,risks and uncertainties many of which are beyond our control,dependent on the actions of third parties,or currently unknown to us as well as potentially inaccurate assumptions that could cause actual results to differ materially.These risks and uncertainties include,but are not limited to,those described in the“Risk Factors”section and elsewhere in our most recently filed Annual Report on Form 10-K,and also in subsequent reports we file with the Securities and Exchange Commission.We encourage you to review these filings.Forward-looking statements speak only as of the date they are made,and we do not undertake to update these statements other than as required by law.You are advised,however,to review any further disclosures we make on related subjects in our filings with the Securities and Exchange Commission and in our other public statements.Note on Materiality:Materiality,as used in this report,and our ESG priority assessment process,is different than the definition used in the context of filings with the Securities and Exchange Commission.Issues deemed material for purposes of this report may not be considered material for SEC reporting purposes.CEO LETTERGROWING WITH PURPOSEWere committed to investing in our people,running a responsible business and taking action where we have the greatest impact.When the first Home Depot opened its doors 44 years ago,our founders not only disrupted retail,but also gave us a blueprint on how to run the company and make decisions.We talk about it as ESG today,but weve lived these principles since the beginning through our culture and values.While our business has changed since 1979,our values remain the same.We know that when we invest in running a responsible,sustainable company,we make our business stronger,more agile,and more resilient.That encourages good business practices and enables us to consistently deliver industry-leading results.In alignment with our values,we organize our approach to ESG in three key pillars Focus on Our People,Operate Sustainably,and Strengthen Our Communities.As a company of doers,were focused on making progress.Were pleased to announce several new goals and the progress weve made on behalf of our associates,our communities,and our world.Focus on Our PeopleTo provide the best customer experience in home improvement,were focused on creating the best associate experience in retail.To that end,weve invested billions of dollars in wage and benefit enhancements over the past several years,including approximately$1 billion in annualized wage investment we announced at the beginning of this fiscal year.And while we will continue to invest in competitive wages and benefits,we also focus on the tools,training,and development opportunities that make working at The Home Depot rewarding.By 2028,we will provide 10 million hours of training to frontline associates and 2.5 million hours of leadership training.And over the next five years,well create 75,000 career advancement opportunities for our frontline associates.Operate SustainablyAs the worlds largest home improvement retailer,we recognize our unique position to leverage our scale to enact positive change throughout our business operations and supplier relationships.Were proud to announce our new emission reduction targets,which were developed in accordance with the rigorous science-backed standards of the Science Based Targets initiative(SBTi)and have been submitted to the SBTi for approval.Submitting our targets to SBTi,a globally recognized organization,provides accountability and helps demonstrate our commitment to reducing our emissions in line with the latest climate science.We aim to reduce our Scope 1 and 2 emissions by 42%by the end of 2030 and reduce Scope 3 Use of Sold Products emissions by 25%by the end of 2030,both from a 2020 base year.OverviewFocus on Our PeopleOperate SustainablyStrengthen Our CommunitiesOur BusinessReporting Frameworks2023 THE HOME DEPOT ESG REPORT3“We talk about it as ESG today,but weve lived these principles since the beginning through our culture and values.”Ted Decker,Chair,President&CEOThe Home Depots most significant environmental impact comes from the products we sell,and our biggest opportunity to create change is providing customers with product selections that reduce their carbon impact.We recently announced that by the end of 2028,85%of U.S.and Canadian sales of push mowers and handheld outdoor lawn equipment will be powered by rechargeable battery technology.This transition from gas to battery power will reduce over 2 million metric tons of greenhouse gases annually from residential lawn equipment exhaust.We also pledge to help customers save$600 million in energy costs and reduce water usage by 100 billion gallons over the next three years(by year-end 2026).That is equivalent to the water used in 62.5 million showers.Strengthen Our CommunitiesWe strengthen our communities by giving back,both financially and through our associates time and efforts.Weve seen the dramatic effects of natural disasters on our communities.Were dedicated to helping people rebuild and recover quickly from these devastating events.In 2022,The Home Depot Foundation committed more than$7 million to disaster response and relief.The Home Depot Foundation and Team Depot also continued to support our communities.In 2022,the Foundation surpassed its commitment to train 20,000 skilled tradespeople,six years ahead of schedule.Following this accomplishment,the Foundation invested an additional$3.7 million to address the skilled trades gap.Supporting veteran communities remains core to The Home Depot Foundations efforts.By the end of 2022,the Foundation had invested over$450 million in veteran causes,with Team Depot donating more than 1.4 million hours of sweat equity to veteran service projects since 2011.More details on our goals are available on page10.I want to thank our associates and supplier partners for the progress weve made and continue to make as a company.Thank you for the many ways you help us do our part and live our values.TED DECKERChair,President&CEOOverviewFocus on Our PeopleOperate SustainablyStrengthen Our CommunitiesOur BusinessReporting Frameworks2023 THE HOME DEPOT ESG REPORT4“We know that when we invest in running a responsible,sustainable company,we make our business stronger,more agile,and more resilient.”OVERVIEWAbout Home Depot6Our ESG Value Chain82022 Ratings&Recognition9Our ESG Goals and Progress 102022 ESG Highlights 14Our Approach to ESG18OverviewFocus on Our PeopleOperate SustainablyStrengthen Our CommunitiesOur BusinessReporting FrameworksWe have three key pillars of focus for our Environmental,Social and Governance(ESG)strategy:Focus on Our People,Operate Sustainably,and Strengthen Our Communities.We believe our efforts in these areas give us a competitive advantage and create long-term value for our associates,customers,communities and other stakeholders.ABOUT HOME DEPOTWere proud to be the worlds largest home improvement retailer.In more than 2,300 stores across North America,we aspire to excel in service to our customers,associates,communities and shareholders.Thats what leadership means to us.2022:Our Business2022:Our Performance2,007stores in the U.S.Over470,000orange-blooded associatesGrew sales 4.1%to over$157 billionOpened6new stores182stores in CanadaMore than2,000,000products sold onlineDiluted earnings per share were$16.69,an increase of 7.5%compared to fiscal 2021Total company comparable store salesincreased3.1%and U.S.comp salesincreased 2.93stores in MexicoTypical store has104,000sq ft of indoor retail spaceOur Home Depot FamilyOverviewFocus on Our PeopleOperate SustainablyStrengthen Our CommunitiesOur BusinessReporting Frameworks2023 THE HOME DEPOT ESG REPORT6Our Eight Core ValuesThe Home Depot FoundationA 501(c)(3)public charity that provides funding and partners with other nonprofits around three focus areas:U.S.veterans,trades training and disaster relief.Read more about The Home Depot Foundation here.The Homer FundA 501(c)(3)charity exclusively for our associates and their families,with the majority of contributions coming from fellow associates.Read more about The Homer Fund here.Team DepotOur associate volunteer force improves the homes and lives of veterans and helps communities affected by natural disasters.Read more about Team Depot here.OverviewFocus on Our PeopleOperate SustainablyStrengthen Our CommunitiesOur BusinessReporting Frameworks2023 THE HOME DEPOT ESG REPORT7Doing the Right ThingBuilding Strong RelationshipsExcellent Customer ServiceGiving BackRespect for AllPeopleTaking Care of Our PeopleEntrepreneurial SpiritCreating Shareholder ValueRespect for all People Maintain a nondiscrimination and zero tolerance harassment policy Foster mutual respect Welcome all associates as team membersDoing the Right Thing Make responsible decisions Take action at the right time Understand our impactsBuilding Strong Relationships Build trust and lasting relationships Care for our people and connections Foster courage,talent and integrityGiving Back Help our communities thrive Support important causes Share our time,energy and resourcesExcellent Customer Service Offer products and services Provide low-cost product selection Share knowledge with customers Maximize product benefitsCreating Shareholder Value Pursue long-term value and growth Deliver investment returns to ourinvestors Engage with our shareholdersEntrepreneurial Spirit Serve customers with innovation Continuously improve our business Spread best practices throughout thecompanyTaking Care of our People Listen and respond to our associatesneeds Create opportunity from within Provide helpful benefits and training Build a supportive team cultureOUR ESG VALUE CHAINOverviewFocus on Our PeopleOperate SustainablyStrengthen Our CommunitiesOur BusinessReporting Frameworks2023 THE HOME DEPOT ESG REPORT8The Home Depots ESG strategy builds on the culture and values that we were founded on more than 40 years ago.Our ESG strategy is embedded in the operations of our business and we believe our Core Values and ESG priorities make our business stronger,more agile,and more resilient,which has led to value creation for our business,shareholders and otherstakeholders.We focus on our three key pillars of ESG to help us prioritize the areas in our value chain where we can have the greatest impact.Focus on our People Operate Sustainably Strengthen our Communities We are also committed to governance best practices to ensure responsible business practices around topics such as human rights,political involvement,and data security&privacy.UpstreamRAWMATERIALSPRODUCTMANUFACTURINGSUSTAINABILITY Sustainable Forestry Supplier Diversity Program Strategic Supplier SustainabilityGoals Responsible Chemistry Circularity and Sustainable Packaging Energy-and Water-Saving ProductsOur OperationsSOURCING ANDDISTRIBUTION ASSOCIATESSTOREOPERATIONSSTORE SUPPORTCENTERS Efficient Distribution Centers and Warehouses Optimized Transportation Responsible Sourcing Diversity,Equity and Inclusion(DEI)and Pay Equity Competitive Wages and Benefits Learning and Development Associate Engagement Team Depot The Homer Fund Carbon Emissions Reduction Energy and Water Efficiency Associate Safety Hazardous Materials Disposal Corporate Governance Data Security and Privacy Government Relations Corporate Taxes Business Code of Conduct and EthicsDownstreamCUSTOMERSEND OF LIFECOMMUNITIES Eco Actions Program/Products Tool and Equipment Rental Recycling Responsible Waste Management The Home Depot Foundation Team Depot2022 RATINGS&RECOGNITIONLeading third-party sustainability rating organizations monitor and report on our progress.Below are some key ratings for our Company in 2022.Assesses action on climate change;scorewas based on 2021 data,the latestavailableAnalyzes corporate environmental,socialand governance(ESG)progressMeasures ESG risk and performance ofpublicly traded companiesMeasures resilience to long-term,financially relevant ESG risksIdentifies The Home Depot as addressing our environmental impacts and ensuring good environmental managementESG risks are low compared to the industryOn a scale of 0-5;we rank betterthan the industry averageof 2.4Second-highest rating;positions us as an industry leader in key ESG areasHere are some of the organizations that recognized our efforts in 2022 to build a better workplace,business and world.ENERGY STAR Retail Partner of theYearNational Retail Federation No.4 Top RetailersGartner No.40 Top Supply ChainsFortune Worlds Most Admired Companies No.1 in Specialty Retail No.20 OverallEPA(Environmental Protection Agency)SmartWay High Performer WaterSense Partner of the Year Award Safer Choice Partner of the Year AwardForbes No.52 Worlds Best Employers No.100 Best Employers for VeteransHuman Rights Campaign(USA)Corporate Equality Index(CEI)Score:90Military Friendly Company Spouse Employer Supplier Diversity ProgramHuman Rights Campaign(MX)Corporate Equality Index(CEI)Score:100EPAs Green Power Partnership National Top 100 No.8-Retail No.64-OverallCanadas Best Diversity Employers 13th Consecutive YearCorporate Social Responsibility Award for Labor Equality&Nondiscrimination MexicoOverviewFocus on Our PeopleOperate SustainablyStrengthen Our CommunitiesOur BusinessReporting Frameworks2023 THE HOME DEPOT ESG REPORT9OUR ESG GOALS AND PROGRESSThe Home Depot sets goals to drive ESG progress,benefiting our associates,customers,suppliers and communities,as well as our Company.Having achieved a number of our goals,we are announcing new goals and continue to progress against existing goals to further our ESG progress.Active GoalsFocus on PeopleGLOBAL IMPACT:LEADERSHIP AND DEVELOPMENT(PAGES 38-39)Goal Date1Invest 10 million hours of training to frontline associates and 2.5 million hours of leadership training to leaders supporting their career growth and skill development by 20282028Create 75,000 career advancement opportunities for front-line associates over a five-year period2028Operate SustainablyGLOBAL IMPACT:CLIMATE AND ENERGY REDUCTIONCARBON EMISSIONS REDUCTION(PAGES 50-55)Goal DateCommit to science-based targets to reduce Scope 1 and 2 emissions 42%by 2030,from a 2020 base year22030Commit to science-based targets to reduce Scope 3“Use of Sold Products”emissions 25%by 2030,from the 2020 base year203090%of forklifts in our major U.S.distribution centers will be hydrogen-powered by 20293202985%of U.S.&Canadian sales in push mowers and handheld outdoor lawn equipment(combined)in store and online(combined)will be in rechargeable battery technology by 20282028Produce/procure 100%renewable electricity equivalent to the electricity needs for all Home Depot facilities worldwide by 20302030GLOBAL IMPACT:OUR PRODUCTS AND THE PLANETRESPONSIBLE CHEMISTRY(PAGES 67-69)CARBON EMISSIONS REDUCTION(PAGES 50-55)WATER CONSERVATION(PAGES 65-66)CIRCULARITY(PAGES 58-64)Motivate top-tier strategic suppliers to have a business-relevant publicly stated sustainability goal by 202542025Help customers save$600 million in energy costs by 2026,with a start year of 20232026Help customers reduce water use by 100 billion gallons by 2026,with a start year of 20232026All private brand patio and home decor products will exclude added PFAS chemicals by 202552025All private brand fiber packaging for new SKUs will be compostable,recyclable,or recycled content6By start of 2027Reduce or convert to more sustainable materials 200 million pounds of plastic used in products by 2028,with a start year of 20202028Exclude expanded polystyrene(EPS)foam and polyvinyl chloride(PVC)film from private-brand packaging62023Strengthen Our CommunitiesGLOBAL IMPACT:SUPPLIER DIVERSITY(PAGES 83-84)AND VETERANS(PAGES 85-86)Goal DateAchieve$5 billion in annual total combined spend across our Tier 1 and Tier 2 diverse suppliers2025The Home Depot Foundation plans to contribute$500 million to veteran causes with a focus on housing2025The Home Depot Foundation plans to invest$50 million to train skilled tradespeople,including veterans2028OverviewFocus on Our PeopleOperate SustainablyStrengthen Our CommunitiesOur BusinessReporting Frameworks2023 THE HOME DEPOT ESG REPORT10Achieved GoalsFocus on PeopleGLOBAL IMPACT:LEADERSHIP AND DEVELOPMENT(PAGES 37,38-39)Goal DateExpanded associate resource groups to include more associates and increase engagement and participation2021Invested more than 1 million hours per year over five years in training and development to help our front-line associates grow their careers2022Created career advancement opportunities for 50,000 front-line associates over a five-year period2023Operate SustainablyGLOBAL IMPACT:OUR PRODUCTS AND THE PLANETRESPONSIBLE CHEMISTRY(PAGES 67-69)CARBON EMISSIONS REDUCTION(PAGES 50-55)WATER CONSERVATION(PAGES 65-66)CIRCULARITY(PAGES 58-64)Goal DateRemoved ortho-phthalates from vinyl flooring2016Reduced formaldehyde levels in laminate/engineered flooring2017Implemented additional requirements regarding tropical deforestation standards2018Eliminated certain chemicals in carpet2018Eliminated certain chemicals in insulation2018Eliminated neonicotinoids from live goods,except where legally required201920%reduction in U.S.store kilowatt-hour electricity use,compared to 2010 levels2020Helped reduce customers greenhouse gas emissions by 20 million metric tons(since 2017)2020Helped customers save$2.8 billion on utility bills through energy-efficient products(since 2017)2020Helped reduce consumers water use by 250 billion gallons(since 2017)2020Eliminated certain chemicals in paint2020Eliminated certain intentionally added chemicals from residential household cleaning products2022Procured/produced 335 megawatts of renewable or alternative energy capacity72025Strengthen Our CommunitiesGLOBAL IMPACT:SUPPLIER DIVERSITY(PAGES 83-84)AND VETERANS(PAGES 85-86)Goal DateLaunched a Tier II supplier diversity program that measures and encourages our Tier I suppliers spending with diverse suppliers2022The Home Depot Foundation trained 20,000 skilled tradespeople,including veterans20281Unless otherwise specified,“Goal Date”refers to the end of the fiscal year noted.2Our new Scope 1 and 2 emission reduction goal submitted for SBTi approval supersedes our previous Scope 1 and 2 emission reduction targets announced in 2018.3This goal excludes bulk distribution centers(BDCs).4Applies to top strategic suppliers by U.S.and Canada core direct spend.5Applies to private brand patio and home decor products sold in U.S.and Canada stores.6Applies to private brand products sold in U.S.and Canada stores and online.7The language of this goal is being clarified from our previous goal announced in 2020 to indicate the intent of producing or procuring 335 MW of energy capacity.Achievement of this goal was validated in 2023.OverviewFocus on Our PeopleOperate SustainablyStrengthen Our CommunitiesOur BusinessReporting Frameworks2023 THE HOME DEPOT ESG REPORT11How Our Goals Align with the U.N.Sustainable Development GoalsTheU.N.Sustainable Development Goals(SDGs)call for action to end extreme poverty,fight inequality and injustice,and protect our planet.The plan,outlined in 2015,focuses on 17 areas in which nations,governments,businesses and citizens can work to achieve measurable results by 2030.The Home Depot shares many of the same goals,which are articulated in our Core Values.Eleven SDGs align with our sphere of influence.Good Health andWell-Being We offer a range of healthy-life benefits at no cost to associates.(Page 40)We prioritize our associates and customers health and safety through training,preventative programs,equipment enhancements and communication.(Page 33)We implemented new tools to improve safety in 2022 and recognized 266 stores that did not have an OSHA recordable incident for 365 days on a rolling 12-month basis.(Page 33)The Home Depots Eco Actions program identifies environmentally preferred products.(Page 70)GenderEquality Our Womens Link associate resource group promotes professional development for female associates across our organization.(Page 37)We partner with the Womens Business Enterprise National Council to promote gender diversity among our suppliers.(Page 83)In 2022,associates who identified as female earned approximately 102%compared to what male associates earned on an adjusted basis.(Page 28)We offer six weeks paid parental leave to our eligible associates who are having a baby,adopting,or fostering a child.This benefit is available to both mothers and fathers.Birth mothers are eligible for an additional six-week paid maternity benefit.(Page 41)We provide a specialized delivery service for breast milk to our associates who are breastfeeding and must travel for work.(Page 41)Clean Water andSanitation In U.S.stores,we offer products such as bathroom vanity faucets and toilets that bear the U.S.EPAs WaterSense label.(Page 66)We estimate that our customers saved over 33 billion gallons of water in 2022 by properly using our water-saving products.(Page 66)We set a new goal to help customers reduce water use by 100 billion gallons by 2026,with a start year of 2023.(Page 10)We have smart irrigation systems at over 500 U.S.stores.On average,there is an approximately 29%reduction in water used,compared to traditional systems.(Page 65)Affordable and Clean Energy We recently joined RE100 and U.S.EPAs Green Power Partnership.(Page 52)At the end of fiscal year 2022,we were operating rooftop solar farms atop 86 U.S.stores and six distribution centers.We also leverage fuel cell-generated power at 217 stores and supply chain facilities(Page 52)Through our expanded wind and solar farm partnerships,we expect to purchase enough electricity to power the equivalent of more than 900Home Depot stores.(Page 52)In 2022,we partnered with Sunrun and Sunnova to offer solar panels and battery storage solutions to our customers.(Page 71)Our partnership with the U.S.EPAs ENERGY STAR program in 2022 enabled customers to purchase products capable of reducing their electricity use by 3.8 billion kilowatt hours,saving$554 million on energy costs.(Page 55)We set a new goal to help customers reduce energy costs by$600 million by 2026,with a start year of 2023.(Page 10)Decent Work andEconomic Growth We employ over 470,000 associates internationally,and our supply chain has an economic impact on millions of workers globally.(Page 6)We recently invested approximately$1 billion on an annualized basis in our frontline,hourly associates(Page 36)More than 90%of our U.S.store leaders started as hourly associates.(Page39)We have pledged to invest 10 million hours of training and create 75,000 career opportunities for our frontline associates.(Page 10)We conducted over 3,100 factory audits and follow-up visits in 2022,focusing on worker health,safety and well-being in our suppliers operations.(Page 95)OverviewFocus on Our PeopleOperate SustainablyStrengthen Our CommunitiesOur BusinessReporting Frameworks2023 THE HOME DEPOT ESG REPORT12Industry,Innovation and Infrastructure Investments by The Home Depot Foundation have introduced more than 132,000 people to skilled trades and trained over 39,000 participants since 2018.(Page 87)We expanded our PathtoP platform in 2022 to serve jobseekers by posting job announcements and connecting tradespeople with Pro customers.(Page 89)Expanding on the$50 million investment in 2018,The Home Depot Foundation committed an additional$3.7 million towards trades training opportunities to youth,high school students,underserved communities and separating U.S.military service members.(Page 87)We have repeatedly been recognized by the EPAs SmartWay program for improving freight efficiency and contributing to cleaner air throughout our supply chain.(Page 54)Reduced Inequalities We disclose our gender and racial/ethnic minority pay equity for our U.S.workforce-102%and 99%,respectively,on an adjusted basis for 2022-and we commit to publishing a racial equity assessment report in 2023.(Page 28)Our Tier II supplier diversity program,launched in 2021,supports our goal to achieve$5 billion in annual spend with diverse suppliers by 2025.(Page83)Our Retool Your School grant program has invested over$5 million in grants to HBCUs since 2009,and we recently committed to increase our annual commitment to HBCUs to$4 million.(Page 82)We partner with organizations that provide our diverse suppliers with certification and education,as well as capital and networking opportunities.(Page 83)Our Corporate Governance and Code of Conduct policies detail our commitment to workplace diversity,equity and inclusion.(Page 97)Sustainable Cities and Communities By the end of fiscal year 2022,The Home Depot Foundation had invested over$450 million in veteran causes,with over$100 million dedicated to veteran homelessness since 2011.(Page 85)The Foundation committed more than$7 million in 2022 to disaster response.(Page 90)The Homer Fund granted$2.2 million through 4,500 grants to support our associates affected by natural disasters in 2022.(Page 45)In 2022,we sold approximately$10.4 billion and approximately$2.0 billion in energy-and water-saving products,respectively,to our customers.(Page 110)Responsible Consumption and Production We support circularity through recycling,repairing and reusing materials to reduce waste.(Page 58)Our Eco Actions program identifies environmentally preferred products.(Page 70)We challenge our suppliers to offer products with the lowest-possible environmental impact and to pursue third-party certifications.(Page 70)We pledge to motivate our top-tier suppliers to have a business-relevant publicly stated sustainability goal by 2025.(Page 10)We have eliminated certain added chemicals from our paint,cleaning,live goods,and carpet and other flooring products.(Page 67)We have several new goals related to sustainable packaging and eliminating chemicals of concern.(Page 10)Climate Action We pledge to produce or procure renewable electricity equivalent to the electricity needs for all Home Depot facilities worldwide by 2030.(Page 51)We achieved our goal to produce or procure 335 megawatts of renewable or alternative energy capacity.(Page 51)We have set updated targets to reduce our Scope 1 and Scope 2 emissions by 42%by 2030 and added a new target to reduce our Scope 3“Use of Products Sold”emissions by 25%by 2030,over 2020 levels.(Page 51)Across our U.S.stores,we have cut electricity use over 52%since 2010.(Page 52)We pledge that 85%of U.S.&Canadian sales in push mowers and handheld outdoor lawn equipment will be in rechargeable battery technology by 2028.(Page 51)We commit to 90%of forklifts in our major U.S.distribution centers being hydrogen-powered by 2029.(Page 53)Life on Land Our Wood Purchasing Policy,first adopted in 1999,helps ensure our suppliers and manufacturers support sustainable forestry.(Page 56)We commit to participating in the CDP Forests Survey and publishing a sustainable forestry report in 2023.(Page 56)We have pledged to exclude EPS and PVC film from our private-brand packaging by the end of fiscal year 2023.(Page 58)In 2022,we eliminated over 7.3 million cubic feet of EPS and over 81 million square feet of PVC from our supply chain.(Page 58)We diverted over 320,000 metric tons,or 30%,of our nonhazardous waste from landfills in 2022.(Page 64)OverviewFocus on Our PeopleOperate SustainablyStrengthen Our CommunitiesOur BusinessReporting Frameworks2023 THE HOME DEPOT ESG REPORT132022 ESG HIGHLIGHTSOur Core Values guide how we focus on our people,operate sustainably,and strengthen our communities and provide a benchmark for measuring progress.These highlights reflect progress made in 2022.The Home DepotFocus On Our PeopleMore than90%of our U.S.store leaders started as hourly associatesApproximately36%of our U.S.newhires were women and 58%were ethnically/racially diverseAchieved our goalto invest 1 million hours per year over five years in training and development to help our front-line associates grow their careersNamed to Forbes 2022 ListofBestAmerican CompaniesforVeteransOperate SustainablyWe reduced our Scope 1 and 2 carbon emissions by approximately92,000 metric tons,equivalent to taking more than 20,000 cars off the road for a yearWe decreasedelectricity consumption52%in our U.S.stores since2010We set science-based targets to reduce our emissions acrossScopes 1,2&3(category 11)by the end of 2030We redesigned350 private-brand packagesto reduce size and materials.This helped us eliminate 81M square feet of PVC film enough to cover Central Park twiceWe set a goal that 85%of our U.S.&Canadian sales in push mowers and handheld outdoor lawn equipment will be battery powered by the end of2028Strengthen Our CommunitiesAs of the end of 2022,The Home Depot Foundationhad contributed more than$450 milliontowards veteran causes since 2011In 2022,we drove$3.4 billion of spend withdiverse suppliersThe Home Depot Foundationgranted$82 millionintotal during 2022Since 2009,ourRetool Your School grantprogram has helped fund over 180 projectsbenefiting 70%ofHBCUsSince 2011,Team Depot has volunteered 1.4 millionservicehours to veterancausesOverviewFocus on Our PeopleOperate SustainablyStrengthen Our CommunitiesOur BusinessReporting Frameworks2023 THE HOME DEPOT ESG REPORT14CanadaThe Home Depot began operating in Canada in 1994.Today we operate 182 stores across all 10 Canadian provinces.Focus On Our PeopleWe are committed to providing an environment thats inclusive to all people.We combine our individual talents,skills and experiences to enrich the lives ofour associates,customers andcommunities.The Home Depot was again ranked one ofCanadas best diversity employers in 2022 for the 13th consecutive year.34,500associateswore the orange apron in Canada in 2022728,000hours of associatetraining in 20224associate resource groupsrepresent and support our ethnically diverse,disabled,LGBTQ2 and women associates in Canada1,982,000coursestaken by associatesin2022Home Depot Canada ARGsOur associate resource groups(ARGs)are led by associates and sponsored by executive leaders.In2022,we hosted several ARG events virtually to celebrate diversity,raise cultural awareness and foster professional development.We also hosted 21 DEI roundtable conversations,each sponsored by an ARG and the DEI team.Orange Mosaichas a mission to act as a resource for The Home Depot and our associates by encouraging intercultural understanding through celebration,education,and providing culturally specific insight to drive individual and business growth.Orange Womens Networksmission is to promote professional growth for women at Home Depot through networking,development activities and community outreach.Orange Pridehas a mission to celebrate lesbian,gay,bisexual and transgender(LGBTQ2 )associates and allies by creating an inclusive environment built on the foundation of acceptance,community and understanding.Orange Abilitysmission is to foster an inclusive environment at The Home Depot where people of all different abilities are able to achieve success and reach their full potential.OverviewFocus on Our PeopleOperate SustainablyStrengthen Our CommunitiesOur BusinessReporting Frameworks2023 THE HOME DEPOT ESG REPORT15In 2022,The Home Depot Canada Foundations Orange Door Project invested CA$3.1 million to youth charitable organizations supporting their renovation,prevention,and employment&life skill programs targeting youth homelessness.DID YOU KNOWCanadaOverviewFocus on Our PeopleOperate SustainablyStrengthen Our CommunitiesOur BusinessReporting Frameworks2023 THE HOME DEPOT ESG REPORT16Strengthen Our CommunitiesThe Home Depot Canada Foundation is committed to preventing and ending youth homelessness in Canada.Through community partnerships,we aim to break down the systemic barriers that youth face,and help them achieve healthy pathways out of homelessness.By 2030,The Home Depot Canada Foundation plans to invest CA$125 million in creating new paths for youth at risk of or experiencing homelessness.We are proud of the progress we achieved in 2022:The Home Depot Canada Foundations strategic partnerships help support its mission of preventing and ending youth homelessness in Canada:360kids Support Services(Markham,ON)A Way Home Canada(Toronto,ON)Canadian Alliance to End Homelessness(Calgary,AB)Choices for Youth(St.Johns,NFLD)Covenant House Vancouver(Vancouver,BC)Dans la rue(Montreal,QC)Friends of Ruby(Toronto,ON)Evas Initiatives(Toronto,ON)Mission Bon Accueil(Montreal,QC)Ndinawemaaganag Endaawaad Inc.(Winnipeg,MB)Phoenix Youth Programs(Halifax,NS)Raising the Roof(Toronto,ON)Resource Assistance for Youth(Winnipeg,MB)Trellis(Calgary,AB)Youth Empowerment and Support Services(Edmonton,AB)Youth Services Bureau(Ottawa,ON)Youth Without Shelter(Etobicoke,ON)Invested CA$10M towards our overall pledge to invest CA$125 million by 2030 to help prevent and end youth homelessness.InvestedCA$2 millionin TradeWorxpartners,an investment in organizations across Canada to empower youth with the skills and certifications in the trades,helping them secure resources and attain permanent housing.Supported 200 organizations and granted approximately CA$10 million.Invested CA$3 millionin our regional partnerships,supporting innovative programming to prevent and end youth homelessness.Operate SustainablyHere are a few ways we improved sustainability in 2022:We recycled over14,000 metric tons of cardboard&plastic from our stores and distribution centers.We collected 410,000 pounds of household electronics,power tools,cellphones and other rechargeable batteries for responsible recycling via our customer take-backprogram.We completed LED exterior retrofits at36 storeshelping to reduce our stores energy consumption.Sustainable ShreddingThe Home Depot Canada provided over 167,000 pounds of shredded paper for recycling in 2022.Heres how that helped the planet:Avoided nearly 1 million poundsof CO2emissionsKept nearly 6,700 pounds of solid waste out of landfillsPreserved over 2,000treesSaved over 158,900 gallons of waterSource:Iron Mountain using calculations by PaperCalculatorConserved nearly 247,600kilowatt hours ofelectricityCHECK IT OUTOver the last 10 years,our stores in Canada have decreased electricity use by 45.8%.See how this contributes to our total company goals to operate more sustainably.MexicoDuring 2022 The Home Depot Mexico celebrated 21 years of operating,with 133 stores across all 32 states.Focus On Our PeopleIn 2022,we employed approximately 17,900 associates who proudly wear the orange apron.100 scholarshipswere awarded to children of associates.1.2 millionhoursof career training courses were completed by associates.400 associatesreceived Orange Fund grants.Operate SustainablyIn 2022,we joined the rest of the organization in finding new ways todrive sustainability across theorganization.803,000 wooden pallets reusedEco Options catalogoffered1,800 productsRecycled more than1 millionpounds of plasticStrengthen Our CommunitiesOur Company donated53 millionpesos(US$2.9 million)in merchandise to nonprofitorganizations.Our customers donated31 million pesos(US$1.7 million)during our Round Up fundraising drives for charitable causes.Our associates completed over400Team Depot projects focusedon schools,public areas,community centers,and assistance to people in need.2022 RecognitionsWe are honored to be recognized by thefollowing organizations for our leadership in corporate social responsibility:NOM 025 Certificacin de la Norma Mexicana en Igualdad Laboral y no DiscriminacinWe renewed the certification that aimsto set indicators for workplaces that demonstrate the adoption and compliance of labor equality and non-discrimination practices.Its main objective is for companies to integrate,implement and execute within their management and human resourcesprocesses.Empresa Socialmente ResponsibleLiving our values has allowed us to be recognized for our corporate social responsibility efforts for the 16th time in a row,including best practices in all our programs and focusing on maintaining sustainable relationships with our stakeholders to continueproviding the bestservice.Distintivo de Equidad 2023The Home Depot Mexico received the highest possible score in the HRC EQUITY MX index,which recognizes companies as one of the Best Places to Work for the LGBTQ community-reflecting our commitment to inclusivity.Distintivo ntrale 2022During 2022 Home Depot was recognized with the certification ntrale 2022 for the companys constant commitment to inclusion for our associates and for working and strengthening the implementation of projects that benefit thehiring and retention of associates withdisabilities.*Home Depot Mexico data based on calendar yearOverviewFocus on Our PeopleOperate SustainablyStrengthen Our CommunitiesOur BusinessReporting Frameworks2023 THE HOME DEPOT ESG REPORT17In 2022,approximately 34%of our newhires in Mexico were women.DID YOU KNOWOUR APPROACH TO ESGWe believe the significant ESG matters for our Company are embedded in how we run our business,align closely with our corporate culture and strategy,and support value creation for our business and shareholders.From our Board of Directors to our senior management team to our over 470,000 associates,we strive to create a responsible and sustainable company.Our ESG JourneyOur culture and values guide every decision we make and are key to our success.In alignment with these values,we have been an ESG-focused Company since we were founded.We have developed and formalized our approach to ESG and have enhanced our transparency and reporting.Founded inAtlanta,GACreatedEcoOptions toHighlight More Sustainable ProductsPublicly Published First SustainabilityReportSet FirstProductChemicalStrategyPublished First Racial,Ethnic and Gender Diversity Report for U.S.WorkforceRebranded EcoOptions websiteto Eco Actions toInclude SupplierSustainability andCustomer EducationBegan Providing Our EEO-1 Data PubliclyLaunched Tier II Supplier Diversity ProgramSubmitted Scope1,2&3(category 11)Emissions Reduction TargetsSBTi1978199920072010201220162017201820192020202120222023Adopted FirstWood PurchasingPolicyEstablished TheHomer FundParticipated in OurFirst CDP ClimateChange SurveyFirst Disclosed Energy Use and GHGEmissions Reduction TargetsThe Home DepotFoundation Pledged$250 Million toVeteran Causesby 2020The FoundationPledged anAdditional$250Million to VeteranCauses by 2025,Bringing its TotalInvestment to Half aBillion DollarsThe Foundation Pledged$50 Million to Train 20,000 Skilled Tradespeople by 2028Set Targets for Scope 1and 2 Carbon EmissionsReductions of42%by 2030 and 50%by 2035DisclosedESG Activitiesas Informed bySASB and TCFDFrameworksCommitted to Participate in CDP Forests Survey and Perform Sustainable Forestry Assessment ReportCommitted to Perform Racial Equity AssessmentDisclosed OurGender and Racial/Ethnic PayEquityfor U.S.WorkforceOverviewFocus on Our PeopleOperate SustainablyStrengthen Our CommunitiesOur BusinessReporting Frameworks2023 THE HOME DEPOT ESG REPORT18Oversight of ESGTo facilitate the coordination of our ESG efforts across our business,we have two management-level cross-functional committees.In addition,our Board provides oversight of our ESG strategy,activities and reporting,principally through our Nominating and Corporate Governance(NCG)Committee,with support from our Leadership Development and Compensation(LDC)and Audit Committees.The Board of Directors:Receives an annual report on our corporate social responsibility and sustainability strategy and activities,including a discussion of our ESG efforts,communications and reporting Periodic review of ESG oversight structure Receives quarterly reports from Committee chairs on ESG matters discussed at the Committee level,as well as quarterly updates on safetyAs part of its periodic review of the management and oversight structure of ESG matters,in 2022,the Board updated the oversight of our ESG activities,shifting oversight of our responsible sourcing program and related supply chain risks from the Audit Committee to the NCG Committee.Going forward,our Board will continue to assess its oversight structure and make adjustments as appropriate.See Corporate Governance to learn more about our broader governance structure and practices.OverviewFocus on Our PeopleOperate SustainablyStrengthen Our CommunitiesOur BusinessReporting Frameworks2023 THE HOME DEPOT ESG REPORT19Board CommitteesNCG COMMITTEE Has primary responsibility for oversight of ESG matters generally and their alignment with business priorities Reviews and makes recommendations to the Board,as appropriate,regarding our ESG practices and operational initiatives Oversees responsible sourcing program and related supply chain risks Oversees corporate political activity Receives reports on ESG shareholder engagement,investor feedback and general ESG-relateddevelopmentsLDC COMMITTEEAUDIT COMMITTEE Oversees human capital management matters:compensation and benefits associate engagement,development andtraining DEI(including pay equity)Receives quarterly updates on DEI initiatives Oversees customer and associate safety Oversees risks related to data protection andcybersecurity Oversees the financial and controls aspects ofESGManagement CommitteesESG GOVERNANCE COMMITTEE Provides management-level oversight and coordination of ESG efforts Chaired by a member of our senior leadership team and composed of representatives across several business functions including Communications,Corporate Governance,DEI,Finance,Government Relations,Human Resources,Internal Audit,Investor Relations,Legal,Sustainability and Tax Meets quarterly,with working group members meeting more frequently as needed Identifies key ESG-related issues and ensures our ESG strategies support the business and long-term value creation SUSTAINABILITY COUNCIL Chaired by Chief Sustainability Officer and composed of representatives from different areas of business,such as Merchandising,Operations,Supply Chain,Energy Management and Packaging Meets twice a year-informed by those discussions,the Chair of the Sustainability Council provides updates to the Board on a periodic basis as requested Communicates stakeholder feedback internally Discusses the progress of Company sustainability initiatives and future opportunitiesESG Priority AssessmentWe understand our unique responsibility to create positive economic,environmental and social impacts as the largest home improvement retailer in the world.We identify and address ESG issues and opportunities through our operational lens and stakeholder engagement.Our approach to advancing our ESG priorities is informed by our stakeholders feedback,which we actively pursue through various engagement channels.We believe the feedback we receive from stakeholders provides us different perspectives on our business and helps us to be more agile in an ever-changing business environment.Stakeholder EngagementWe have identified key groups of internal and external stakeholders with whom we engage to ensure our ESG programs benefit the people and communities we serve.These groups include our Associates,Customers,Academia,Suppliers,Communities,Investors,NGOs and Governments.Our ongoing stakeholder interactions may be formal or informal,as detailed in our ESG Priority Assessment Framework on page 22.The purpose of our stakeholder interaction is to help inform and validate our own priority assessment.By requesting feedback and engaging in dialogue with our stakeholders,we are better able to gauge the impact of our business,refine our ESG priorities,measure our progress and design ways to drive improvements.By better understanding our impact and collaborating with stakeholders,we position our Company to set objectives that allow us to contribute to building a better business,workplace and world.OverviewFocus on Our PeopleOperate SustainablyStrengthen Our CommunitiesOur BusinessReporting Frameworks2023 THE HOME DEPOT ESG REPORT20Our stakeholders can easily access relevant ESG disclosures and information about our Companys oversight and management of ESG matters on our Investor Relations page:ESG Investors.Our annual ESG report incorporates the input and efforts of our ESG Governance Committee,shareholder feedback and recommendations from otherstakeholders.AcademiaWe access independent research studies on our industry to incorporate the latest insights into our business.We partner with universities to develop programs that support our priorities and help educate the next generation of business leaders.“Collaborate with us on customer trends and habits to aid our research.”AssociatesWe survey our over 470,000 associates to measure their job satisfaction and emotional response to their work.We encourage our associates to raise concerns with their immediate managers.If needed,they also have the option of anonymously reporting concerns to our AwareLine or HR Service Center Hotlines.“Empower us to be contributing team members of a values-based organization.”CommunitiesIndividuals and organizations from around the globe reach out to us with questions or concerns about our operations or products.We also support the communities where we operate through The Home Depot Foundation and Team Depot through their disaster response efforts,trades training initiatives and veteran community support.“Support me and my neighbors by making a positive difference in our community.”CustomersWe receive constant feedback from our customers through the more than a billion and a half transactions across our stores and digital channels annually.We use customer satisfaction surveys to understand the issues affecting our customers.Our Help and Customer Service Center routinely manage our customers needs.“Be a global-impact conscious company,and provide products that help me reduce my homes environmental impact.”GovernmentsWe participate in the political process in a bipartisan,transparent way and encourage our associates to do so,as well.We work to optimize the impact of the government on our business through advocacy,relationship building,and political activity,support for relevant trade associations,and by operating a bipartisan employee-funded political action committee.“Create partnerships with local,state and federal officials that help bridge industry innovation to public policy advancement.”InvestorsWe engage with shareholders on a year-round basis involving senior management,subject matter experts,our investor relations team and our corporate governance team.As we have for several years,in 2022,we engaged with over 40%of our institutional shareholders to discuss ESG topics.“Tell us your primary risks and how you handle oversight of them.”NGOsWe meet with nongovernmental organizations(NGOs)interested in our business practices.We also take part in industry efforts to raise awareness about the ESG responsibilities we all share.“Work with us to elevate our causes to action and progress.”SuppliersWe collaborate with our vendors and suppliers in an effort to lessen the environmental impact of the products we sell.We also focus on increasing our spend with diverse suppliers to help build inclusive and sustainable business opportunities for them and to meet the needs of our broad customer base.“Give us an outlet to market innovative,sustainable products and a way to gather timely customer feedback.”STAKEHOLDERSHOW WE ENGAGESTAKEHOLDER PERSPECTIVESOverviewFocus on Our PeopleOperate SustainablyStrengthen Our CommunitiesOur BusinessReporting Frameworks2023 THE HOME DEPOT ESG REPORT21ESG Priority Assessment FrameworkThe Home Depot prioritizes,assesses and responds to our ESG priorities through an iterative process,outlined below.STEP 1STEP 2STEP 3STEP 4STEP 5STEP 6STEP 7Identify PotentialESG IssueTrigger ESGAssessmentEngage RelevantInternal BusinessTeamsGatherInformation and RecommendationsDevelop SolutionEstablish OngoingPlanContinue ProgressExamples:Chemicals Circular Economy Fuel Cells Climate Change Human Capital Invasive Plants Organics Pollinator Health Deforestation Recycled Content Renewable Energy Worker Well-BeingCATALYSTS Corporate Communications Diversity,Equity&Inclusion Government Relations Human Resources Information Technology Investor Relations Legal Merchandising Operations Real Estate&Construction Supply Chain SustainabilityHome Depot ExpertsEducate Concerned StakeholdersPriority Issues Identified by TheHome DepotqFact-Finding,Data Collection,Scientific ResearchShare FindingsModify Current PathIssues Identified by Concerned StakeholderspTrack and ReportSet Improvement GoalsConcerned StakeholdersMonitor and Review PeriodicallyTest AlternativesExit ProgramOverviewFocus on Our PeopleOperate SustainablyStrengthen Our CommunitiesOur BusinessReporting Frameworks2023 THE HOME DEPOT ESG REPORT22ESG Priority TouchpointsKEY IMPACTED STAKEHOLDERS:AssociatesSuppliersNon-governmentalOrganizations InvestorsCustomersGovernmentsAcademics&EducatorsLocal CommunityESG PRIORITY TOUCHPOINTSIMPACTSKEY IMPACTED STAKEHOLDERSFocus on Our PeopleAssociate DevelopmentTraining,education,promotion,supportAssociate Well-BeingSafety,health,wages,hoursDiversity,Equity&InclusionAssociate engagement,workforce diversity,talent acquisition,associate resource groupsGovernanceEthics,culture,data privacy and security,risk managementOperate Sustainably|OperationsEnergy UseCarbon emissions,productsHazardous MaterialsWaste,disposalWasteRecycling,landfill,incinerationWater UseResponsible consumptionOperate Sustainably|ProductsEco ActionsWater Conservation,Energy Efficiency,Responsible Chemistry,Sustainable ForestryEnd of LifeCircularity,waste,recyclingTransportationCarbon emissionsOverviewFocus on Our PeopleOperate SustainablyStrengthen Our CommunitiesOur BusinessReporting Frameworks2023 THE HOME DEPOT ESG REPORT23AssociatesSuppliersNon-governmentalOrganizations InvestorsCustomersGovernmentsAcademics&EducatorsLocal CommunityESG PRIORITY TOUCHPOINTSIMPACTSKEY IMPACTED STAKEHOLDERStrengthen Our CommunitiesSupplier DiversityInnovation,mentoring,business growth,networkingCommunity SupportDiverse,equitable and inclusive communities,trades training,veterans and military families,disaster responseResponsible BusinessData Security&PrivacyPrivacy rights,data protection,cybersecurity,transparencyGovernment RelationsLaws,regulations,lobbying,trade groupsResponsible SourcingThird-party worker safety,health,wages,hours,unforced laborOverviewFocus on Our PeopleOperate SustainablyStrengthen Our CommunitiesOur BusinessReporting Frameworks2023 THE HOME DEPOT ESG REPORT24Diversity,Equity&Inclusion29Associate Safety35Associate Engagement37Learning&Development40Benefits42The Homer Fund47FOCUS ON OURPEOPLEOverviewFocus on Our PeopleOperate SustainablyStrengthen Our CommunitiesOur BusinessReporting FrameworksWe focus on our people by striving for an environment centered onThe Home Depots Core Value of respect for all people,where diversity,equity and inclusion are celebrated and associates have opportunities to grow.We believe our over 470,000 associates are our greatest asset,and they differentiate us in themarketplace.Diversity,Equity&Inclusion27Associate Safety33Associate Engagement35Learning&Development38Benefits40The Homer Fund45FOCUS ON OUR PEOPLEThe Home Depot is a people-centered business where our customers benefit from positive interactions with our associates.Led by our Core Value of Taking Care of Our People,we aim to create a welcoming and safe work culture where our associates can openly contribute their ideas and build long-term careers.Our associates are vital to building a strong internal culture centered on delivering the excellent customer experience that differentiates us.“We know that our associates are a key differentiator,and they are essential in helping us sustain the customer experience we strive for.In order to provide the best customer experience in home improvement,we must focus on cultivating the best associate experience in retail.”ANN-MARIE CAMPBELL,EVP,U.S.Stores&International OperationsAfter starting with The Home Depot 38 years ago as an hourly cashier in South Florida,Ann-Marie still comes to work with a focus and drive to inspire the next generation of HomeDepot associates in her role as Executive Vice President of U.S.Stores and International Operations.While her story is exceptional,many of our associates have grown with our Company and built lasting careers by starting in frontline positions.OverviewFocus on Our PeopleOperate SustainablyStrengthen Our CommunitiesOur BusinessReporting Frameworks2023 THE HOME DEPOT ESG REPORT26The three key pillars guiding our approach to achieving a strong customer experience are people,purpose andculture.PEOPLEPURPOSECULTUREWe provide an environment where people are inspired to come to work every day to serve our customers.Whether its an associate on the floor of one of our stores or an associate who helps make sure online transactions run smoothly,each person is critical to creating a customer experience that attracts people to shop with us.Our purpose is a relentless focus on our customers,so we can grow our business.As abusiness,the only waywe can continue to create new opportunities for our associates is to grow the Company.We work to create an environment where people can be their best selves and know they have opportunities to grow.Thistype of culture allows associates to develop theircareers and create a great life for themselves and theirfamilies.We develop our people strategy with the awareness that our associates are a trusted resource,necessary for our customers to access our full suite of products and services.This is why we commit to investing in our associates wages and benefits,while providing tools,training and development opportunities that make their work simpler and more fulfilling.Throughout our programs we prioritize the well-being of our associates through our Diversity,Equity and Inclusion(DEI)programs,our associate safety practices and our engagement activities.Our investments in our people are also made through a business lens-they are designed to increase job satisfaction and tenure,which in turn raises customer satisfaction and lowers our operating expenses.DIVERSITY,EQUITY&INCLUSIONWe strive to ensure the composition of our associates and suppliers includes and equitably represents our customers and the communities we serve.Our Diversity,Equity&Inclusion(DEI)program seeks continual improvement through strategic action,review of practices and reporting of our initiatives.These actions support our business objectives by promoting associate satisfaction and retention,community partnerships,and innovation across our value chain.Guided by our Core Value of Respect for All People,we also seek to foster equitable pay and promotion opportunities within our Company.DEI ValuesWe are committed to promoting DEI within our organization and among the communities we are proud to serve.We know that Doing the Right Thing each and every day for our associates,customers,suppliers,service providers and the communities we serve is critical to our ongoing success.We believe this commitment has been a competitive advantage and key to our long-term success,which is why we continue to build a culture of understanding,acceptance and appreciation.We believe that all people should be treated with dignity and respect.Our Core Values and focus on DEI shape the expectations outlined in our Business Code of Conduct.We define diversity,equity and inclusion as:Diversity:Composition of people,such as their similarities and differences(e.g.,gender,race/ethnicity,sexual orientation)Equity:Norms,practices and policies in place that ensure just and fair opportunities and outcomes,allowing individuals to reach their full potential Inclusion:How we embrace and enable our associates to feel safe,respected,engaged,motivated and valued for who they are and their contributionsKey Areas of FocusAs the largest home improvement retailer in the world,we leverage our conviction,capabilities and tools to make a difference for all our stakeholders.We know this work is an ongoing journey in an ever-changing environment,which is why we continue to prioritize listening and learning from our associates and community partners,provide equal opportunities for all associates and business partners,and hold ourselves accountable to look for new ways to makeprogress.We focus on three key areas to create meaningful change through thoughtful actions that align with all eight of our Core Values.ASSOCIATE ENGAGEMENTIncrease diverse representation throughout our organizationCreate an environment where every associate feels included and valued for who they areEnsure equal opportunity in recruitment,hiring,training,development and advancementCOMMUNITY PARTNERSHIPSWork with organizations that strive to close the wealth gapPartner with organizations that advance education for allSUPPLIER DIVERSITYIncrease our penetration and spend with diverse suppliersDevelop diverse suppliers by providing mentorship and shared resourcesOverviewFocus on Our PeopleOperate SustainablyStrengthen Our CommunitiesOur BusinessReporting Frameworks2023 THE HOME DEPOT ESG REPORT27DEI HighlightsOur dedicated DEI team supports departments across our organization to promote our DEI strategy.Over the years they have found ways to engage more of our associates around important DEI topics.Additionally,they have developed new programs to expand our impact among our communities:Increased associate engagement by expanding our associate resource groups(ARGs)beyond our Store Support Center(corporate facility).We leverage our associate engagement platform,Viva Engage(formerly Yammer),to provide ARG access to all our U.S.and Canadian associates and reach more associates with C.A.R.E.talks,a series of diversity discussions that Champion Awareness,Respect and Equity for all associates.Launched a Tier II supplier diversity program to help us measure and encourage our Tier I suppliers to spend more with diverse businesses.Expanded the scope of diverse supplier spend goal to include both Tier I and Tier II suppliers.Expanded our existing Retool Your School program to further strengthen our commitment to historically black colleges and universities(HBCUs).This expansion includes more programming and a broader reach.In addition,we are working to enlarge our network of external partner organizations to enhance the career development of our female,minority,LGBTQ and veteran associates.Learn more about how we work with our community partners across the nation and how spending with diverse suppliers benefits our Company and our communities on pages 79-84.OverviewFocus on Our PeopleOperate SustainablyStrengthen Our CommunitiesOur BusinessReporting Frameworks2023 THE HOME DEPOT ESG REPORT28Our People:Pay EquityThe Home Depots commitment to Doing the Right Thing and Taking Care of Our People extends to our pay practices.To ensure that we are paying our associates fairly,our long-standing practice has been to conduct an annual analysis of our pay and compensation practices for our U.S.associates,who comprise approximately 89%of our workforce,in consultation with expert third-party firms following industry-leading standards.Our review of our U.S.associates total W-2 compensation for calendar year 2022 includes base pay,cash bonuses and stock,and adjusts for relevant factors such as tenure,position,location and hours worked.Our findings showed that associates who identified as female earned approximately 102%of what male associates earned,and associates who identified as members of a racial or ethnic minority earned approximately 99%of what non-minority associates earned.Not adjusting for those factors,our analysis showed that the median annualized W-2 pay for U.S.associates who identified as female was 99%of the median for men,and the median pay for racial/ethnic minority associates in the U.S.was 96%of the median for non-minority associates.The Leadership Development and Compensation Committee of the Board of Directors,which is tasked with providing oversight of our human capital management strategy and our diversity and inclusion efforts,receives regular updates on these findings.We will continue to strive to ensure equal pay across our organization.Home Depots U.S.pay equity resultsWOMEN RELATIVE TO MENRACIAL/ETHNIC MINORITY ASSOCIATES RELATIVE TO NON-MINORITY ASSOCIATESUnadjusted Pay Equity99justed Pay Equity102%We do not tolerate discrimination or harassment against any existing or potential associate regardless of race,color,sex(gender),sexual orientation,gender identity or expression,age,religion,national origin,disability,protected veteran or other uniformed service status or any other characteristic.CHECK IT OUTWilbert Slowman reflects on his journey from part-time cashier to store manager and how his Navajo Heritageand strong family ties continue to inspire him.DOING THE RIGHT THING Derek Bottoms,a 20 year associate of The Home Depot and current Chief Diversity Officer and Vice President of Associate Relations,describes how the Company supports its associates,communities and suppliers by advancing DEI initiatives.WHAT DOES DIVERSITY,EQUITY AND INCLUSION LOOK LIKE AT THE HOME DEPOT?More than 40 years ago,The Home Depot was built on eight Core Values,including Doing the Right Thing,Respect for All People and Taking Care of Our People.These Core Values,combined with a focus on DEI,extend to all our associates,customers,suppliers and the communities where we operate.This focus has helped us build the best team in retail,which continues to give us a competitive advantage and has been key to our long-term success.And while I hold the role of Chief Diversity Officer within the Company,our mission to build a culture of understanding,acceptance and appreciation cannot be done by any one person or a single team.Real change only happens if we have the commitment of every associate.This is why we have worked over the years to broaden our DEI,outreach both inside and outside the four walls of our business.Most recently,our efforts have included a focus on expanding our associate resource groups(ARGs)from only our Store Support Center(SSC)associates or corporate associates,to all associates across our stores and supply chain facilities through various associate engagement platforms.We also committed to increase the amount we spend with diverse suppliers and quadrupled our commitment to historically black colleges and universities(HBCUs)through an expanded range of community projects and career resources for students through our Retool Your School program,which includes an externshipcomponent.WHY DOES THE HOME DEPOT FOCUS ON DIVERSITY,EQUITY AND INCLUSION?We know that diversity across our associates can bring a range of perspectives,experiences and skills to the Company,which can help foster creativity,innovation and better decision-making,ultimately leading to a better associate experience and better outcomes for our customers and the business.In addition,based on my experiences with the Company,I know firsthand the importance of mentorship and ensuring everyone has access to the same opportunities.Creating a supportive environment for all associates,no matter their race,gender,age,ethnicity or any other unique identifier,can lead to increased employee engagement,satisfaction and long-term career opportunities,just as Ive experienced.We are also committed to cultivating a supplier base that creates long-lasting growth and mutual business success,while reflecting the diversity of our customers and communities.We believe having a diverse supplier base strengthens our business and communities.HOW DID THE HOME DEPOT CONTINUE TO PROGRESS ITS DEI MISSION IN 2022?Its an honor to work with so many great associates who embody our vision to build a more diverse,equitable and inclusive organization.Through their hard work,we continued to prioritize our commitment to create an environment where every associate feels included and valued.Some of the highlights from 2022 that Im most proud of include:Expansion of ARGs across the enterprise Launching the DEI icon on our“hdPhones”to drive associate engagement and create awareness of our DEI and associate resource group Viva Engage(our associate engagement platform formerly known as Yammer)communities for our store associates Refreshing our DEI learning curriculum,including updates to our required annual training plans as well as content to drive DEI awareness and support ongoing learning anddevelopment Increased associate engagement by 300%in our DEI Viva Engage community ranking our DEI community in the top 20 of over 1,100 U.S.Viva Engage communities Induction into the Billion Dollar Roundtable for Supplier Diversity following the full establishment of our TierIIProgram“Our mission to build a culture of understanding,acceptance and appreciation cannot be done by any one person or a single team.Real change only happens if we have the commitment of every associate.”OverviewFocus on Our PeopleOperate SustainablyStrengthen Our CommunitiesOur BusinessReporting Frameworks2023 THE HOME DEPOT ESG REPORT29MISSION STATEMENTThe Home Depot ignites the doer in all of us to build a culture of understanding,acceptance and appreciation.VISION STATEMENTThe Home Depot is building a more diverse,equitable and inclusive organization,within our enterprise and the communities we are proud to serve.Grounded in our Core Values,we have the conviction,capabilities and tools to make a difference for our associates,community partners and suppliers.DEREK BOTTOMSChief Diversity Officer and Vice President of Associate RelationsSPOTLIGHTBuilding aDiverse WorkforceOur diverse workforce strengthens our competitive advantages and reflects the customers and communities we serve.A comparison against U.S.Department of Labor data shows that our U.S.workforce is more ethnically diverse than the nations working population.In 2022,we also expanded the number and percentage of women and minorities at the manager level and above.These charts reflect the demographics of The Home Depots U.S.workforce from 2020 through 2022.Certain percentages may not sum to 100%due to rounding or some associates choosing not to self-identify by race/ethnicity orgender.U.S.Working Population202220212020202220212020THD U.S.Workforce1,2202220212020202220212020OverviewFocus on Our PeopleOperate SustainablyStrengthen Our CommunitiesOur BusinessReporting Frameworks2023 THE HOME DEPOT ESG REPORT30THD U.S.Workforce by Race/Ethnicity1202220212020Source:Latest available data from the U.S.Bureau of Labor Statistics;2022 data is estimatedTotal Number of U.S.Associates:2022:418,900 2021:437,000 2020:441,000Underrepresented Minority Groups 38%White 62%Underrepresented Minority Groups 37%White 63%Underrepresented Minority Groups 36%White 64male 47%Male 53male 47%Male 53male 47%Male 53%Underrepresented Minority Groups 48%White 50%Underrepresented Minority Groups 48%White 50%Underrepresented Minority Groups 47%White 52male 38%Male 62male 38%Male 62male 38%Male 62%n49.7%Whiten22.2%Hispanicn18.2%Blackn3.3%Asiann4.8%Othern1.8%Undisclosedn50.0%Whiten22.3%Hispanicn17.9%Blackn3.1%Asiann4.9%Othern1.7%Undisclosedn51.5%Whiten21.8%Hispanicn17.0%Blackn2.9%Asiann5.0%Othern1.7%Undisclosed1)Includes data for HD Supply Holdings Inc.2)Gray bars indicate percentage undisclosedU.S.Managers and Above1,2,3(excludes officer level)202220212020202220212020Total Number of U.S.Managers and Above:2022:25,700 2021:24,600 2020:19,100U.S.Managers and Above by Race/Ethnicity1,2U.S.Officers2,3202220212020202220212020Total Number of U.S.Officers:2022:1372021:1262020:127U.S.Officers by Race/Ethnicity2OverviewFocus on Our PeopleOperate SustainablyStrengthen Our CommunitiesOur BusinessReporting Frameworks2023 THE HOME DEPOT ESG REPORT31n60.4%Whiten15.6%Hispanicn14.4%Blackn4.0%Asiann4.6%Othern1.0%Undisclosedn61.7%Whiten15.3%Hispanicn13.9%Blackn3.7%Asiann4.6%Othern0.8%Undisclosedn63.7%Whiten13.5%Hispanicn12.9%Blackn4.8%Asiann4.2%Othern0.9%Undisclosedn73.0%Whiten7.3%Hispanicn8.0%Blackn8.0%Asiann2.2%Othern1.5%Undisclosedn72.2%Whiten9.5%Hispanicn10.3%Blackn5.6%Asiann2.4%Othern0%Undisclosedn74.0%Whiten9.4%Hispanicn10.2%Blackn3.9%Asiann2.4%Othern0%UndisclosedUnderrepresented Minority Groups 39%White 60%Underrepresented Minority Groups 38%White 62%Underrepresented Minority Groups 35%White 64male 35%Male 65male 34%Male 65male 32%Male 68%Underrepresented Minority Groups 26%White 73%Underrepresented Minority Groups 28%White 72%Underrepresented Minority Groups 26%White 74male 29%Male 69male 30%Male 70male 29%Male 71%1)Includes manager-level positions and above at stores,distribution centers and other field locations,as well as at our Store Support Center;excludes officers.2)Includes data for HD Supply Holdings Inc.3)Gray bars indicate percentage undisclosed202220212020202020212022Board of Directors*202220212020202220212020Total Number of Directors:2022:13 2021:112020:12Board of Directors by Race/Ethnicity202220212020*For additional information on our board composition,visit the Corporate Governance section of our website.OverviewFocus on Our PeopleOperate SustainablyStrengthen Our CommunitiesOur BusinessReporting Frameworks2023 THE HOME DEPOT ESG REPORT32n69.2%Whiten15.4%Hispanicn15.4%Blackn72.7%Whiten9.1%Hispanicn18.2%Blackn75.0%Whiten8.3%Hispanicn16.7%BlackUnderrepresented Minority Groups 31%White 69%Underrepresented Minority Groups 25%White 75%Underrepresented Minority Groups 27%White 73male 31%Male 69male 18%Male 82male 25%Male 75%ASSOCIATE SAFETYOur people are our most important assets.By focusing on workplace safety training and risk reduction,we help keep our associates and customers injury-free.The Home Depot is committed to providing a safe environment for our associates who work in our stores and across our global supply chain network,while also creating a safe shopping experience for our customers who visit our stores.We accomplish this by creating a strong culture of safety from day one,which includes the expectation that our associates follow all Occupational Safety and Health Administration(OSHA)standards and Company safety procedures.Key to driving our culture of safety is our commitment to our Companys Core Values,specifically Taking Care of Our People.Our strong safety culture starts from the top with engaged leaders,who then empower associates to create an environment that promotes and encourages an atmosphere where all associates prioritize the safety of everyone.OverviewFocus on Our PeopleOperate SustainablyStrengthen Our CommunitiesOur BusinessReporting Frameworks2023 THE HOME DEPOT ESG REPORT33Our commitment to safety goes to the highest level of our organization:our Board of Directors.At each quarterly Board meeting,our directors receive an update on our safety initiatives and metrics.Beyond Taking Care of Our People,we are also mindful of the financial,operational and reputational impacts from safety incidents.Active Board oversight helps ensure we remain accountable and transparent.AwarenessFocusing on the store associate experience is a key factor behind the success of our safety communications platform.In 2022,our platform received over 3.5 million completed quizzes focused on quarterly campaigns that delivered timely and relevant content to our associates to help keep them safe every day.The required training,InFocus content and leadership engagement provided to associates focuses on our most common or more serious safety incidents such as overexertion,slips,trips and falls,among others.Our robust platform continues to be one of the most used channels of communication,reaching our associates monthly.This year,we enhanced our InFocus All-Star program to align All-Star safety milestones with our Company-wide Homer Awards given to associates for their exceptional customer service and living our Core Values.Our supervisors grant bronze,silver,gold and platinum awards as part of our enhanced All-Star program,which recognizes associates that achieve safety excellence in the workplace.This program provides additional benefits such as monetary rewards,leaderboard tracking and surveys to provide insights on safety conditions in their locations.Our goal with this program is to increase safety awareness by focusing on continuous improvement and ingraining safety into everyday conversations to help foster open discussions.We welcomed over 90,000 new All-Stars this year to further drive our Safety Takes EveryONE awareness campaign that we launched in2021.In 2022,as a result of our awareness campaign,we proudly recognized 266 stores that achieved Club 365 status,which demonstrates a stores outstanding milestone of reaching 365 days on a rolling 12-month basis without an OSHA recordable incident.These stores received a store celebration,apron patches and an award plaque in recognition of this meaningfulachievement.EngagementEngagement is a fundamental piece of our safety strategy.We know our highest-risk associates are our new hires,so we begin every new hire orientation withsafety.In 2022,our goal was to keep associates engaged not only through traditional learning but also through a multitude of additional methods.Our Safety Takes EveryONE experience encourages associates to engage with key areas of the store,reinforcing safety topics along the way and engaging in friendly competition with other stores across the country.Lower than the average rates for our industry:RECORDABLE INCIDENT RATE(per 200,000 hours)*Work-related injury that typically warrants medicalcare beyond store-provided first aidLOST TIME INCIDENT RATE(per 200,000 hours)*More significant injury that results in time away from work*Recordable and lost time incidents rates for U.S.store associates.Associates are encouraged to look out for each other,prioritize safety first and speak up if unsafe acts are occurring-“See Something,Say Something”is a principle embedded in our culture,and demonstrated by leaders who lead by example.TechnologiesOur Store Support Center and field teams work side-by-side to achieve engineering solutions that lower risks and enhance equipment safety for ourassociates.This year,we implemented several new tools that improve safety for our associates,including:Portable loading docks to better assist with large and heavy product loading for customers Powered pallet jacks to move heavy pallets without the physical stress required to operate a manual pallet jack Safety lights for sit-down forklifts that better identify our Zone of Safety when lift equipment is in use.Interlocking seatbelts that must now be engaged for the forklift to operateWhether with awareness,tools or technologies,our focus is on continuous improvement to lower injury rates and keep our associates and customers safe every day.OverviewFocus on Our PeopleOperate SustainablyStrengthen Our CommunitiesOur BusinessReporting Frameworks2023 THE HOME DEPOT ESG REPORT342020202120222020202120224.034.254.081.071.231.16The Home Depots incident rates were lowerthan the averages for our industry,according to the latest annual data from the U.S.Bureau of Labor Statistics.DID YOU KNOWASSOCIATE ENGAGEMENTAssociate engagement,the emotional connection associates have to our Company and our goals,is vital to The Home Depots culture and success.Voice of the AssociateSurveyOur highly engaged associates care about their work and the performance of The Home Depot.We are passionate about maintaining an engaging and inclusive workplace,and we do so by proactively engaging with our associates,while also listening and responding to their feedback.In 2022,we again conducted our Voice of the Associate(VOA)survey which includes all our associates and provides an in-depth look at our associates engagement and satisfaction with their job,their leaders,and The Home Depot.At The Home Depot,we dont conduct surveys just to listen,but also to take action.Our survey provides the opportunity for leaders to review their teams feedback and respond to associate concerns.Many leaders discuss findings directly or use VOA committees typically comprised of a diverse group of associates from a location or team to gain a deeper understanding of survey feedback and ensure action plans are effective.We also collect additional associate insights at different life cycle stages through onboarding and exit surveys.This feedback helps us to continuously improve as an enterprise.We believe that associate engagement is vital to our culture and to our success.While we are proud to have many emotionally engaged associates,this is an ongoing process,and we are committed to continually identifying associate concerns and opportunities to make The Home Depot a great place to work.Engagement PlatformIn 2022,our voluntary associate engagement platform Viva Engage helped associates to build community with one another at a local level and atlarge.Whether through on-site desktops or on-the-go mobile devices,more than 450,000 associates across the U.S.and Canada have access to Viva Engage.As our associates continue to drive engagement,now with more than 800 active communities in the network,the digital hub links associates across North America.It serves as a central hub to recognize associates for living our values,promote Company news,cultivate connections between front-line and corporate associates and fuel the orange-blooded spirit thats part of what drives our culture.OverviewFocus on Our PeopleOperate SustainablyStrengthen Our CommunitiesOur BusinessReporting Frameworks2023 THE HOME DEPOT ESG REPORT35In 2022,Home Depots Viva Engage network held three of the top 10 most thriving communities out of approximately 3,200 around the world,according to SWOOP Analytics.DID YOU KNOWCompensation Enhancements andSuccess SharingThe most important investment we can make is in our people.This is why we announced that we would be investing an additional approximately$1 billion in annualized compensation for frontline,hourly associates starting in the first quarter of 2023.This investment,which now means our starting rate is at least$15 an hour,will position us favorably in the market,allowing us not only to attract the most qualified talent,but also to retain the exceptional associate base that is already inplace.Our philosophy of Taking Care of Our People and motivating them to deliver a superior customer experience also shapes our profit-sharing program for our non-management associates.Success Sharing provides semi-annual cash awards for performance against our sales goals.The program has granted awards totaling nearly$2.0 billion to associates over the last four years.The performance of our associates in 2022 enabled 100%of stores to qualify for Success Sharing in both the first and second half of the year.This resulted in Success Sharing bonus payments to our non-management associates of approximately$409 million for fiscal 2022.In addition,we increased our merit budgets for our associates in 2022 to between 3.0%and 4.0%,and we continued our practice of making matching contributions under the FutureBuilder 401(k)Plan.Technology ToolsWe also know that competitive wages and benefits are just one piece of the associate experience.This is why weve also invested over the years in providing our associates with more helpful tools,training and development opportunities as we strive to create the best associate experience in retail.We invest in our associates development and we continually aim to make the associate experience simpler and more effective.Initiatives like OrderUp,which simplified our order management process from dozens to one simpler and more intuitive system,or the recent rollout of our new hdPhone,which increases accessibility to real-time support,are just a couple of the investments aimed at improving the associate experience.OverviewFocus on Our PeopleOperate SustainablyStrengthen Our CommunitiesOur BusinessReporting Frameworks2023 THE HOME DEPOT ESG REPORT36Associate Resource GroupsOur associate resource groups(ARGs)promote our culture of inclusion and support diversity and help drive associate engagement.Our associate resource groups are led by associates and sponsored by executive leaders.They drive associate engagement and promote inclusion across our Company through fostering professional development,raising cultural awareness,celebrating diversity,and offering community outreach opportunities.They are a powerful resource for our associates to connect on important issues and serve as a valuable link to support our DEI initiatives.We have seven U.S.ARGs,each of which supports the Companys business objectives and policies,particularly those related to developing our associates,creating diversity awareness and engaging diverse community partners.In 2022,our ARGs continued to further support the career development of associates who voluntarily lead these groups.We also remained focused on growing membership across our ARGs since expanding Company-wide access to all associates,including in stores and distribution centers.We hosted approximately 40 virtual ARG events in 2022 to celebrate diversity,raise cultural awareness and foster professional development.Going forward,we will continue to expand the outreach efforts of our ARGs.Military-Affiliated AssociatesAfrican American AssociatesHispanic and Latino AssociatesAssociates with DisabilitiesLGBTQ AssociatesAsian and Pacific Islander AssociatesWomen AssociatesOverviewFocus on Our PeopleOperate SustainablyStrengthen Our CommunitiesOur BusinessReporting Frameworks2023 THE HOME DEPOT ESG REPORT37SPOTLIGHTC.A.R.E.TALKSWe launched Caring Conversations in 2020 in response to the unrest in our communities.The virtual events for all associates included panel discussions where senior Company leaders shared candid stories about race and ethnicity,and experts from outside our Company educated associates about civil rights,laws,voting and more.Caring Conversations have evolved into C.A.R.E.Talks,a series of diversity discussions that Champion Awareness,Respect and Equity for all associates.These discussions include external speaker series,panel discussions and small group listening sessions,and we occasionally partnered with our ARGs on elevating keynote speakers in this format.IN 2022,C.A.R.E.TALKS INCLUDED A VARIETY OF SPEAKERS:Dr.Jennifer Ho,director for the Center for Humanities&the Arts and professor in the department of ethnic studies at the University of Colorado Boulder and author of“Consumption and Identity in Asian American Coming-of-Age Novels”and“Racial Ambiguity in Asian American Culture,”spoke about Asian American history,society and her experiences.Colonel Greg Gadson,a 25-year career Army officer,New York Giants Honorary Captain,and“Battleship”Actor spoke about refusing to be defined by his combat injuries,shared the lessons he learned and applied them to his life,career and family.Jay Brown,Senior Vice President of Programs,Research&Training,and Shawnie Hawkins,Deputy Director of the Workplace Equality Program,spoke about the current state of affairs for the LGBTQ community and intersectional ally-ship in theworkplace.LEARNING&DEVELOPMENTOur learning and development programs aim to expand skills and capabilities so that associates canmaster their current roles and prepare for future ones.Our associates are essential in helping us sustain the customer experience we strive to offer.To provide the best customer experience,we must invest in cultivating the best associate experience.In fiscal 2022,we announced several changes to better support our associates learning and development,which in turn,increases theirengagement.We started the year with a new store leadership structure where we created new management positions in our stores focused on the customer experience,increasing the number of managers on the floor at any given time.This new structure frees up time for other store leaders to devote to associate training and development.The result is an improved customer and associate experience,with new career paths for our associates.We also strive to build a learning-rich workplace where associates and leaders can prepare to succeed,feel motivated to serve our customers well and access opportunities to grow.Our effective leadership and career development solutions enhance our orange-blooded culture,so associates are competent,confident and engaged.We work to ensure every associate who wants to grow their career with The Home Depot has the information,tools and support they need.In 2022,we continued to respond to the unique,ever-changing and challenging landscape by servingup relevant content and leveraging multiple learningplatforms.E-learning:Media-rich,self-directed learning offers focused,interactive activities and actionablefeedback.Instructor-led experiences:Immersive training at our Atlanta Store Support Center and field locations focuses on business acumen,technical skills and leadership skills for new leaders in critical positions.Virtual Instructor-led Experiences:Engaging virtual training allows two-way communication,group activities and skills practice,which provides consistent and timely development to multiple audiences totaling 136,000 completions across the Company in the U.S.Mobile Learning:On-demand content and activities inside the work stream improve learningretention and guide associates in assistingcustomers.OverviewFocus on Our PeopleOperate SustainablyStrengthen Our CommunitiesOur BusinessReporting Frameworks2023 THE HOME DEPOT ESG REPORT38HELPING OUR ASSOCIATES GROWMentorship is one way that we help associates grow.In 2022,our mentoring program included over 500 mentors serving over 2,000 mentees.Home Depot University(HDU),now in its 13th year,is also critical to the growth of our associates,developing values-based leaders who take care of each other,our customers and communities.Online Resources:Our library of online,on-demand resources includes videos,courses,book summaries,reference materials and performance support tools for associates to continue their development journey.Technology:We leverage existing learning platforms and add new ones to reach more associates.We provided more mobile learning opportunities for associates adapting to evolving procedures,protocols and customer needs.We embedded how-to training inside operational systems for easily accessible,needs-based performance support.We support associate training at all levels of the career journey.New-in-Role:A blend of instructor-led training,e-learning,on-the-job activities,leader involvement and new associate coaches supports a successful assimilation.Ongoing Development:Continuous development of technical and leadership skills is delivered in multiple ways and made up of both universal and role-specific content.This development ensures associates at every level continue to evolve their skills to meet the demands of a rapidly changing and increasingly complex environment.Advanced Development:Programs prepare select associates to lead effectively at the next level.These programs prepare experienced leaders for the challenges theyll face as they move to higher-level roles.In addition,we continue to strengthen our connection to our customers by expanding training opportunities for them.Customer Training:Homeowner 101 and Do-It-Yourself live virtual workshops help meet customers evolving home maintenance and improvement needs.Approximately 39,000 customers attended workshops in 2022.Trades Training:Our Path to Pro training program is designed to provide knowledgeable and qualified candidates to our loyal Pro customers in need of skilled labor.Approximately 800 customers interested in a career in the trades completed the Path to Pro training program to help solve the skilled labor shortage and support our Procustomers.More than90%of our U.S.store leaders startedas hourly associatesOverviewFocus on Our PeopleOperate SustainablyStrengthen Our CommunitiesOur BusinessReporting Frameworks2023 THE HOME DEPOT ESG REPORT39Associates achieved over 34 million course completions in 2022.CHECK IT OUTHear how a 20-yearassociate was able toovercome obstacles withsupport from her team.DID YOU KNOWBENEFITSOur people make The Home Depot successful,and its our responsibility and privilege to take care of them.We believe supporting the well-being of our associates is an instrumental part of one of our Core Values,Taking Care of Our People.We also believe that our associates are our greatest asset,and we strive to provide them with the benefits that they need to take care of themselves and their families.Our benefits are designed to help our associates care for their families and their own mental and physical well-being,manage challenges at home and at work,and tap into resources to improve their health and happiness.Our benefits hub,guides our associates to the right resources,wherever they are on lifes journey.For example,the money module is the place to go for help with personal finance education or retirement planning.The wellness module provides guidance on everything from ways to improve their health to discounts on food.Financial Programs&ToolsFutureBuilder 401(k):Associates can save for the future while taking advantage of tax savings.Eligible associates who contribute to the plan get up to 3.5%of eligible compensation in matching contributions from the Company.Employee Stock Purchase Plan(ESPP):Twice-a-year plans provide a 15%discount on Home Depot stock.Associates who enroll may set aside up to 20%of eligible pay(up to$21,250 annually)to purchase stock.Personal finance education:All associates have access to a suite of online webinars,activities,tools and resources designed to help them increase financial knowledge and build their confidence to help relieve money-related stress.Alight Financial Advisors:Associates have access to independent advisory services to help them gauge whether theyre on track for retirement.Insurance:To prepare for the unexpected,associates have access to policies for medical care,disability,life,home,auto and pet health insurance.Perks at Work:Associates have access to special discounts on a wide variety of everyday goods and services from nursery items to mobile phone service,gym memberships,computers,vacations andmore.Associate AssistanceCARE/Solutions for Life:Our free and confidential assistance program helps associates manage personal and work-life challenges.Licensed counselors and medical professionals are available by phone 24/7/365 to associates and their household members,including spouses,domestic partners,other relatives and roommates.Program team members assist with specific interventions to meet the everyday needs of our workforce from childcare to eldercare,marital concerns,bereavement,emotional stress,legal or financial concerns and more.In addition,CARE/Solutions for Life is also available to assist our management teams with responding to traumatic events in the workplace or community.Take Care of You:Our hub of apps and resources to help associates seek balance in their day-to-day life,maintain a positive outlook and find ways to keep the mind and body healthy.OverviewFocus on Our PeopleOperate SustainablyStrengthen Our CommunitiesOur BusinessReporting Frameworks2023 THE HOME DEPOT ESG REPORT40Family SupportPaid Parental Leave:Associates with at least one year of service who are having a baby,adopting or fostering a child can take six weeks of paid parental leave.This benefit is available to both mothers and fathers.Birth mothers are eligible for an additional six-week paid maternity benefit,or eight weeks for a Cesarean section.Years Ahead:Associates have access to resources to plan care for their elders,including referrals to memory and hospice care facilities and independent and assisted-living communities.Adoption Assistance:The Home Depot reimburses certain adoption-related expenses to assist eligibleassociates.RethinkCare:Resources and training help associates support their children with developmental disabilities or challenges with learning and behavior in line with best practices.The comprehensive program provides access to easy-to-follow videos,custom learning plans,a training center and one-on-one sessions with licensed experts.Milk Stork:Associates who are breastfeeding and must travel for work can use this specialized delivery service to send breast milk home to their babies.Back-Up Care:Weve partnered with Bright Horizons to offer eligible associates back-up care for disruptive situations:Lack of an available regular caregiver/stay-at-homespouse Childcare or adult/eldercare gaps in coverage School or regular childcare center closures Transitions back to work following a leave ofabsence Assistance for a child or adult/elder relative facing illness or other urgent issues Recovery from surgery for associates or theirspousesSittercity:An extensive database of background-checked babysitters,nannies,elder companions,pet sitters and housekeepers is available to associates.MetLife Legal Services:This voluntary legal assistance benefit provides consultation and document review for issues from adoption to wills,powers of attorney,divorce,nursing home agreements and more.Educational AssistanceEdAssist:Associates have access to academic and college financial advisers to assist them in reducing the time,cost and stress of pursuing their educational goals.This program also includes access to tuition discounts at more than 200 educational institutionsnationwide.Orange Scholars:The Homer Fund offers scholarships to qualified dependents of hourly associates based on financial need,academic performance,community involvement and leadership.Financial need is given the highest consideration-learn more on page 45.College Coach:Offers counselors and online resources to assist associates with college bound children through the admissions process and help create financial strategies for educational costs.OverviewFocus on Our PeopleOperate SustainablyStrengthen Our CommunitiesOur BusinessReporting Frameworks2023 THE HOME DEPOT ESG REPORT41Healthy LifeTake Care Of You:This free-to-associates wellness hub provides resources to help associates keep it all in balance and focus on their mental and physical health and well-being.Flu prevention:Free flu shots are available to associates to protect both their and our customers health during cold and flu season.Health screening:Associates have access to biometric screenings through annual onsite screening events at many Home Depot locations around the country,with their personal physicians or at a Quest Diagnostic Patient Service Center.Tobacco cessation:Personalized,one-on-one coaching and support are available at no cost to associates to help them mentally and physically prepare to quit using tobacco products.24/7 Care:Associates and family members they care for including elderly parents have access to Teladoc virtual doctors for minor illnesses support from home anytime,including after hours,on weekends and during holidays.Teladoc also provides behavioral health services,allowing associates and their family members to schedule a virtual visit with a therapist or psychiatrist.Health care support team:Included Health helps associates navigate health care for themselves and their family members.Associates have 24/7 access to a Health Care Support Team,where they can find in-network doctors,get help tackling a complicated bill,or receive a medical second opinion.The program is free to associates.AccessHope:The Cancer Support Program through AccessHope connects associates and their
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2023Impact ReportPfizer 2023 Impact Report2IntroductionGovernanceSocialEnvironmentAppendixESG PerformanceIntroductionGovernanceSocialEnvironmentAppendixESG PerformanceWhere to find more information2023 Annual Documents2023 Annual Review2023 Annual Report on Form 10-K2024 Proxy StatementIntroductionGovernanceEnvironmentSocialESG PerformanceAppendix04-A Letter from Our Chairman&CEO05-A Message from Our Lead Independent Director06-2023 Progress and Highlights07-Our Approach to ESG08-ESG Priorities09-Our Stakeholders10-Spotlight Stories13-Governance of ESG14-Ethics,Transparency,Quality23-Accountability26-Climate Change29-Sustainable Medicines32-Innovation and Global Health34-Equitable Access and Pricing38-Our People44-Governance45-Environment47-Social55-Global Reporting Initiative(GRI)Index71-Sustainable Accounting Standards Board(SASB)Index76-Task Force on Climate-Related Financial Disclosures(TCFD)82-About This ReportIn this ReportPfizer 2023 Impact Report3IntroductionGovernanceSocialEnvironmentAppendixESG PerformanceIntroductionGovernanceSocialEnvironmentAppendixESG PerformancePfizer is a global biopharmaceutical company focused on advancing our Purposebreakthroughs that change patients lives.Its our ambition to change a billion lives a year by 2027.Our Purpose Blueprint guides our strategy,and our core ValuesCourage,Excellence,Equity,and Joyguide our decision-making and how we do business.This report provides an overview of Pfizers Environmental,Social and Governance(ESG)priorities and goals,aimed at contributing to long-term value creation and a sustainable,responsible,and patient-centric business model aligned to our Purpose.The updates included cover the fiscal year from January 1,2023 to December 31,2023.For more information,please see About This Report on page 82.IntroductionPfizer 2023 Impact Report4IntroductionGovernanceSocialEnvironmentAppendixESG PerformanceIntroductionAs Pfizer embarks on our 175th year of operations as one of the worlds most trusted and innovative healthcare companies,we are determined to outdo yesterday by remaining committed not only to advancing our Purpose,but to being a good corporate citizen.I am proud to present Pfizers 2023 Impact Report.It reflects our dedication to being a force for good in the world by acting with integrity,holding ourselves to high standards,being accountable to our commitments,and addressing shortcomings candidly and with specific plans for improvement.We are mindful of the impact a company of our size and scale has on the planet and are working hard to be sure it is a positive one in every respect.In working to create a more sustainable future for all,we recognize that we are operating in an ever-changing world,and that our stakeholders expect us to step up and take action against that which threatens human health and the health of our planet.Whether that comes in the form of extreme weather events caused by climate change,social unrest,inequality,or other external factors,we at Pfizer believe we have an obligation to bring our resources to bear to help solve such problems.Pfizers track record in the environmental,social and governance(ESG)space is strong.We look forward to continuing to build on it.Simply,our company has a conscience.We take seriously our obligation to conduct ourselves in a way that makes the world a better place.Discovering,manufacturing,and delivering innovative vaccines and medicines is only part of what we contribute to society.This Impact Report and our accomplishments give me great pride.I am excited about what we will accomplish going forward.As always,I am deeply grateful to my colleagues,partners,and stakeholders for their shared commitment to our Purpose.Together we can achieve great things and make a meaningful difference in the health of people and our planet.A Letter from Our Chairman&CEODr.Albert Bourla Pfizer Chairman&Chief Executive OfficerPfizer 2023 Impact Report5IntroductionGovernanceSocialEnvironmentAppendixESG PerformanceIntroductionI would like to express my gratitude on behalf of the Board of Directors for your interest in Pfizers ESG priorities and goals.Pfizers commitment to its Purpose Breakthroughs that change patients livesis crucial for the companys long-term value creation and its dedication to a sustainable,responsible,and patient-centric business model.How Pfizer advances innovation to positively impact patients,global health,and society remains important to stakeholders and is a key focus for the Board as we oversee the companys progress in achieving its ESG goals.The Governance&Sustainability Committee(G&S Committee)of the Board is responsible for overseeing Pfizers ESG strategy,risk management,reporting,and practices.Additionally,and as detailed in this Impact Report,our other Board Committees oversee specific elements of ESG associated with their respective areas of responsibility and risk oversight.Throughout 2023,the G&S Committee received regular updates from the Chief Sustainability Officer and other leaders about Pfizers progress towards advancing its ESG priorities and public commitments to climate sustainability and colleague diversity,equity,and inclusion.The Committee then shared this information with the Board.The Committee was also kept informed about potential changes within the dynamic external ESG landscape,stakeholder expectations,and new ESG reporting requirements.I know that all of us on the Board take pride in serving on the Board of a company that recognizes the importance of long-term sustainability and is committed to advancing innovation responsibly and acting with integrity as it delivers on its Purpose.We are pleased to share Pfizers progress on these efforts in this report and appreciate your interest.A Message from Our Lead Independent DirectorShantanu NarayenLead Independent Director Pfizer 2023 Impact Report6IntroductionGovernanceSocialEnvironmentAppendixESG PerformanceIntroduction2023 Progress and HighlightsNet Zero StandardAiming to achieve by 2040,which is 10 years earlier than expectations of the standard“Worlds Most Ethical Companies”and“Ethisphere”names and marks are registered trademarks of Ethisphere LLC.Recognized at the Leadership Level for our CDP Climate Change Disclosure13.9%Reduction in Scope 1&2 greenhouse gas(GHG)emissions from 2019 baselineSee footnotes within the ESG Performance section for more details.Science Will WinSeagen Inc.integration to bring the best of the outside in as we focus on delivering transformative cancer therapies4 out of 12 members of the Board of Directors are women3 out of 12 members of the Board of Directors are ethnically diverse44.8%Representation for women at VP levels globally30.5%Representation for U.S.minorities at VP levelOver 40K Pfizer leaders have ESG KPIs factored into their compensation38%Pfizer New Molecular Entity and novel biologic applications approved by the FDA between 2019-2023 designated as Breakthrough TherapiesNamed one of the Worlds Most Ethical Companies by Ethisphere for the third year in a rowPfizer 2023 Impact Report7IntroductionGovernanceSocialEnvironmentAppendixESG PerformanceIntroductionWe apply science and our global resources to bring therapies to people that extend and significantly improve their lives through the discovery,development,and manufacturing of medicines and vaccines.With senior leader support and collaboration at all levels,we aim to improve health outcomes,build trust,create shared value,and make a positive impact on society for years to come.Our Approach to ESG:Connected to Our Purpose and StrategyTrust is EverythingScience Will WinCourageExcellenceEquityJoyDisruption Calls for InnovationTime is LifeExecution Makes the DifferenceOur Core Business PrinciplesESG priority areas0102030405Our ValuesProduct innovationReducing cycle times,increasing success rates,and getting more breakthroughs into the hands of patients sooner.Climate changeTaking action to reduce our greenhouse gas emissions and mitigate risks associated with a changing climate.Equitable access and pricingExpanding affordable access to our breakthrough medicines and vaccines,and protecting people from the burden of infectious and other diseases.Product quality and safetyMaintaining a quality culture to ensure the highest priority is placed on the safety,efficacy,and reliability of our products,the safety of our patients and consumers,the quality of data supporting regulatory submissions,and interactions with our stakeholders.Diversity,equity,and inclusionCreating opportunities to advance diversity,equity,and inclusion across our workforce,those with whom we do business,and society at large.Business ethicsExercising strong corporate governance and risk management practices to promote the long-term interests of our stakeholders.Pfizer 2023 Impact Report8IntroductionGovernanceSocialEnvironmentAppendixESG PerformanceIntroductionESG PrioritiesPfizers ESG priorities were identified through an ESG priority assessment conducted in 2020.As part of the process we identified 30 key topics,which were mapped into six ESG priority areas.These priority areas are aligned with our Blueprint Strategy and are incorporated into our Enterprise Risk Management(ERM)process.EnvironmentSocialGovernancePrioritizeClimate changeColleague diversity,equity,and inclusionEquitable access and pricingProduct innovationBusiness ethicsProduct quality and safetyManageEnvironment and healthProduct end-of-lifeHealth,safety,well-beingHealthcare infrastructurePatient-centered designClinical trialsData privacyHuman rightsIP protectionSupply chain transparencyTransparencyMonitorPharmaceuticals in the environment Waste managementWater scarcity and dischargeDisease preventionEmployee developmentGlobal community investmentPartnershipsRetention and attractionBoard diversityLaws and regulations complianceLobbyingReliable supplyRight incentivesTopics that we give the most prominence toPrioritizeManageMonitorTopics that we actively manage as a businessTopics that we monitor for a change in relative importancePfizer 2023 Impact Report9IntroductionGovernanceSocialEnvironmentAppendixESG PerformanceIntroductionIn 2023,we continued to engage a variety of stakeholders to inform our decision-making processes and provide us with insights as we work to advance our business responsibly.Patients and CaregiversPatients are our North Star.We work with patients and their caregivers to understand their needs and help ensure that our medicines and vaccines work to address them.As part of this,we engage with patients and patient advocacy groups to listen,learn,collaborate,and help address areas of unmet patient need and to incorporate their perspectives before we launch our medicines and vaccines.Shareholders and InvestorsOur shareholders,other stakeholders,and market analysts have a vested interest in Pfizers operations and the short-,medium-,and long-term success of the company.We engage investors on relevant issues,such as ESG,tax,patient access and affordability,and remuneration,through ongoing one-on-one conversations,surveys and questionnaires,and targeted communications,including ESG-related content on our Investor Insights website.ColleaguesWe want all our colleagues to develop,grow,and succeed,and we believe that everyone deserves to be seen,heard,cared for,and respected.We engage with colleagues to understand their perspectives and needs,conduct regular surveys to understand colleague satisfaction and other aspects of corporate culture,and invest in programs to help colleagues manage their mental and physical well-being.Governments,Policymakers,and RegulatorsWe engage policymakers and regulators to understand the external challenges and regulatory landscapes affecting patients,communities,and our commitment to our Purpose.Through ongoing two-way dialogue with policymakers and targeted one-on-one engagement with industry bodies,we guide our medicines from the laboratory to patients.PartnersThe scale of our ambition requires us to work in coordination and collaboration with external partners.We engage with foundations,multilateral organizations,non-governmental organizations,and coalitions on issues including access to medicines and vaccines,environmental concerns,transparency,and business ethics.We engage suppliers to understand their needs and support their efforts to reduce their environmental footprints.We work alongside global health and public health organizations to expand access to our medicines and vaccines,including on-the-ground support for health and education initiatives,and partner with academic and industry research alliances to help increase the number of future breakthroughs for patients.We also educate medical organizations about the latest research on our medicines and vaccines,our pipeline,and ways to access our products.Our StakeholdersPfizer 2023 Impact Report10IntroductionGovernanceSocialEnvironmentAppendixESG PerformanceIntroductionIn December 2023,Pfizer completed its acquisition of Seagen Inc.,a global biotechnology company that discovers,develops,and commercializes transformative cancer medicines.This acquisition is one of the largest investments in Pfizers history,with the goal of delivering breakthroughs that improve the lives of people with cancer.Seagen is a world leader in AntibodyDrug Conjugates(ADC)technology,which is emerging as a powerful tool across a broad range of cancers designed to preferentially kill cancer cells and limit off-target toxicities.With the addition of Seagens four in-line medicines,Pfizers industry-leading Oncology portfolio now includes over 25 approved medicines and biosimilars across more than 40 indications,including nine medicines that are either blockbuster or have the potential to be blockbuster.As a result,Pfizers Oncology pipeline has doubled in size with programs spanning multiple modalities,including ADCs,small molecules,biospecifics,and other immunotherapies1.Moving forward,Pfizer will leverage its leading protein engineering and medicinal chemistry capabilities to advance Seagens ADC technology,unlocking potential novel combinations and next-generation biologics.Driven by science and a passion for improving and extending patients lives,well continue to work with great urgency towards our common Purpose to deliver transformative cancer medicines and bring new hope to people living with cancer everywhere.We continue to pursue breakthroughs in other areas as well.Innovating for patients is in our DNA,and were proud of key 2023 developments,including in the areas of vaccines against respiratory syncytial virus(RSV)and meningococcal disease,as well as treatments aimed at ulcerative colitis and alopecia areata.Spotlight StoriesThe stories that spotlight our extensive efforts in our priority areas.A New Chapter in the Battle Against CancerOur company Purpose guides our environmental sustainability priorities,with a focus on climate impact mitigation,conservation of resources,and the reduction of waste arising from our operations.We recognize the profound societal and public health impacts that may result from environmental issues,such as the potential for increased adverse impacts on human health and decreased access to critical medicines and vaccines due to disruptions in value chains caused by the greater frequency of severe weather.In furtherance of our commitment to achieving the voluntary Net Zero standard by 2040,ten years earlier than the timeline described in the standard,and to achieve our goal of sourcing 100%renewable energy by 2030,in 2023 we executed renewable eletricity virtual power purchase agreements(VPPAs)to cover the equivalent of Pfizers purchased electricity for its manufacturing,research and development(R&D),and commercial sites in the European Union.This solar capacity,together with the North America VPPA signed in 2021,will play a key role in advancing our ambitious climate goals.Advancing Net Zero for Patients and Planet1 As of December 14,2023.Pfizer 2023 Impact Report11IntroductionGovernanceSocialEnvironmentAppendixESG PerformanceIntroductionArtificial Intelligence(AI)is transforming life sciences and has the potential to improve healthcare for patients across the globe.It has the power to uncover and activate meaningful insights to revolutionize the pharmaceutical and healthcare industries.We recognize that AI can be a powerful technology in support of our mission to create breakthroughs that change patients lives,including by potentially accelerating R&D of new medicines and vaccines and enhancing the manufacturing and delivery of therapies to patients.We have the obligation to use AI ethically,responsibly,and purposefully to benefit our patients,customers,colleagues,and society.Pfizers AI strategy is designed to enable us to responsibly and rapidly bring breakthroughs to patients.Like everything we do,trust and integrity are core to our adoption of AI.This is the basis of our AI risk management program,overseen by a cross-functional AI Council,which includes AI principles,corporate policy,risk assessment,and enterprise controls.Our strategic risk management approach and governance empower us to ethically and responsibly harness the power of AI in service of patients.We are pioneering the use of AI in pharmacovigilance the area of science in which scientists and medical professionals monitor medicine and vaccine-related safety issues.For example,we are testing the ability of AI to assess and categorize reports people file when they experience an“adverse event”(such as an unexpected side effect)in conjunction with a Pfizer product.This enables us to collect and analyze large amounts of data,presenting it to trained experts to view and act upon more quickly to better meet patients needs.Spotlight StoriesOur work reflects the enduring belief that better health is possible for everyone,everywhere.As such,our commitment extends to partnering with stakeholders to provide access programs and services,innovative technologies,educational materials,and more to support the patient journey.Patient Advocacy Organizations are our crucial partners in the advancement of patient-centered healthcare.We believe that with the right tools and resources,we can better support patient communities globally.Building on our longstanding engagement with Patient Advocacy Organizations,in 2023,we were proud to launch a new initiative:the Patient Advocacy Leadership Collective.Co-created with patient advocacy leaders worldwide,we developed the Patient Advocacy Leadership Collective platform to support patient advocacy organizations around the world by empowering them with knowledge and skills through offering evidence-based tools and resources that elevate their work with patient communities.The Patient Advocacy Leadership Collective offers programs that can aid growth and development for patient advocacy organizations to deliver upon their mission to support patients and their families.Responsible Artificial Intelligence Innovation for Patient ImpactForging the Patient Advocacy Leadership CollectivePfizer 2023 Impact Report12IntroductionGovernanceSocialEnvironmentAppendixESG PerformanceIntroductionGovernanceSocialEnvironmentAppendixESG PerformanceOur Purpose and values guide our ethical decision-making and how we deliver breakthroughs.Pfizer prioritizes integrity,safety,and quality as we advance innovation for patients and seek to improve global health.Our Board of Directors is actively engaged in the governance and oversight of our ESG strategy,which is aligned with our Purpose Blueprint strategy.13-Governance of ESG14-Ethics,Transparency,QualityEthical Decision-MakingLaws and Regulations ComplianceOpen Door Culture and InvestigationsSafety and QualityCounterfeit MedicinesSupply Chain TransparencyIntellectual PropertyClinical TrialsData Privacy and ProtectionHuman Rights and the Right to HealthPolitical Contributions and Lobbying Activities23-Accountability Right Incentives Board of Directors and Board Committees Board Leadership Structure Board Diversity and IndependenceHow our approach to governance issues supports the Sustainable Development Goals(SDGs)Good Health and Well-BeingWe aspire to ensure health and well-beingfor all through equitable access to medicinesand vaccines.Gender EqualityWe aim to end discrimination against women,ensure equal opportunities for leadership,and access to reproductive health.Responsible Consumption and ProductionWe aim to achieve environmentally sound life cycle management and adopt sustainable practices.Climate ActionThrough our goals we are taking urgent action to help combat climate change and its impacts.Peace,Justice,and Strong InstitutionsWe operate to uphold justice,promote the rule of law,and develop ethical,transparent,and representative decision-making.More information on the SDGs here.GovernancePfizer 2023 Impact Report13IntroductionGovernanceSocialEnvironmentAppendixESG PerformanceGovernanceOur ESG efforts align with our commitment to achieving our Purpose and supporting the communities in which we live and work through ethical decision-making based on our core values:Courage,Excellence,Equity,and Joy.Values-based decision-making promotes accountability and helps ensure that integrity,quality,safety,and ethics are integrated in all we do.Pfizers governance of its ESG prioritiesaligned with our Blueprint strategyis critical to help enable impact,innovation,and transparent reporting.Our ESG governance is built on the principles of oversight by our Board of Directors,commitment by and accountability of leadership,and colleague engagement across the company.Additionally,we leverage diverse perspectives from internal and external stakeholders to inform our ESG strategy and priorities.ESG at Pfizer is governed by our Sustainability Steering Committee,chaired by our Chief Sustainability Officer,which has responsibility for considering and adopting potential goals,commitments,and targets with input from experienced subject matter experts and advisors.The Committee advises on key issues and guides the integration and implementation of Pfizers non-financial,ESG reporting.This Committee is overseen by the Executive Sustainability Committee,chaired by the Executive Leadership Team member leading Corporate Affairs(this leader reports directly to the Chairman and CEO),with escalation to the Governance&Sustainability Committee(G&SC)of the Board of Directors,as appropriate.The Board of Directors is engaged in and supports ESG at Pfizer.The G&SC is primarily responsible for oversight of our ESG strategy,reporting,policies,and practices.The G&SC regularly receives updates from management on Pfizers progress as measured against the companys ESG strategy,metrics,and goals.The G&SC also receives updates on the regulatory environment that may impact our ESG strategy and reporting requirements.The G&SC has oversight of human capital management,including succession planning;culture;diversity,equity and inclusion;pay equity;talent management;political and lobbying activities;climate change program;reputational risk factors;and Board diversity.Other Board Committees oversee elements of our ESG program associated with their respective areas of responsibility.For example:The Audit Committee has primary responsibility for overseeing Pfizers ERM program and reviews and receives briefings on priority issues that fall under ERM and ESG,including company culture(compliance related concerns,workplace behavior,harassment,and retaliation).The Compensation Committee oversees the executive compensation program(which includes an“ESG Scorecard”to align funding of our annual short-term incentive plan for over 40,000 eligible global colleagues and leaders,in part,to select social and environmental key performance indicators(KPIs),please see Right Incentives for more information),including approving compensation of our executive officers.The Compensation Committee also has oversight of human capital management,which may include executive diversity,pay equity,inclusion,recruiting,retention,career development,and succession planning(in collaboration with the G&SC).See Pfizers 2024 Proxy Statement for further details on the executive compensation program.The Regulatory and Compliance Committee oversees the compliance program,ethics and integrity(including company culture),product quality and safety,the quality and compliance governance framework,and risk management,in addition to overseeing healthcare-related regulatory and compliance risks in connection with the development,manufacture,supply,and marketing of products and risk mitigation efforts.We encourage all colleagues to contribute to achieving our ESG goals by understanding our priorities and advancing business in a sustainable,responsible way in their day-to-day activities.We integrate ESG by partnering closely with colleagues in our priority areas to establish ESG goals and define action plans to achieve those goals.Governance of ESGPfizer 2023 Impact Report14IntroductionGovernanceSocialEnvironmentAppendixESG PerformanceGovernanceAt Pfizer,trust is everything.Our patient-centric Purpose and culture of quality,integrity,and safety are of paramount importance as we innovate and continue to deliver breakthroughs.Our leaders set the tone for our strong culture of integrity and encourage colleagues raising concerns to speak up without fear of retaliation.Ethical Decision-Making Values-based decision-making promotes accountability and helps ensure that integrity,quality,safety,and ethics are foundational to all we do.Our Code of Conduct(the Blue Book)and related policies,procedures,and training are designed to support compliance and adherence to our values-Courage,Excellence,Equity,and Joy.Policies governing colleague interactions with healthcare organizations,physicians,patients,and other stakeholders are contained in the White Guide for U.S.headquarters-based colleagues and the Orange Guide for U.S.field-based colleagues.Pfizer also maintains a Global Policy on Interactions with Healthcare Professionals,including ethical marketing.We incorporate ethics and business integrity expectations into internal performance management frameworks and assessments,which are designed to foster colleague accountability,including leadership.Our“Integrity in Hiring”initiative implemented in select markets in 2023 incorporates ethics and compliance into the hiring process through interview questions and evaluations.TRANSPARENCY We are committed to the principle of transparency.We uphold high ethical,scientific,and medical standards in our R&D activities and are committed to disclosing financial and other interests and relationships that may create apparent or perceived conflicts of interest.These include areas such as funding for educational activities,the status of our U.S.pharmaceutical post-marketing commitments,our pipeline of experimental medicines,the registration and reporting of clinical trial results,corporate political contributions in the U.S.,U.S.federal and state lobbying activities,and disclosures of medical grants.Pfizer also reports to the Centers for Medicare and Medicaid Services(CMS)payments and other transfers of value made to U.S.-licensed physicians and U.S.teaching hospitals.Laws and Regulations Compliance Our ethics and compliance program is structured around eight fundamental elements,which form the framework for effective compliance and quality risk management.Quality,integrity,and proactive risk management drive our efforts to enable innovation for patients and global health.Pfizers integrity and compliance expectations represent a shared undertaking and put responsibility on all colleagues.Pfizer is committed to conducting business responsibly and acting ethically,in accordance with all applicable laws and regulations.We expect the same commitment to integrity and compliance from suppliers,as well as from consultants,agents,representatives,and other third parties acting on our behalf,as well as those acting on their behalf(e.g.,subcontractors)in connection with work for Pfizer.Pfizers Chief Compliance,Quality&Risk Officer reports to the CEO and is a member of the Executive Leadership Team.This structure is designed to ensure direct access to leadership,sufficient resourcing,and independent execution of responsibilities.Our program is supported by full-time colleagues as well as a network of colleague“compliance champions,”who serve as both models and resources helping to drive business-led quality and compliance ownership worldwide.The Regulatory and Compliance Committee of the Board of Directors oversees our quality and compliance governance framework,which supports the programs independence and risk management.This Committees oversight of healthcare quality and compliance covers the following areas in pursuit of advancing integrity and Pfizers Purpose:business ethics;quality and integrity in the discovery,development,manufacturing,and delivery of vaccines and medicines;responsible product marketing;third-party risk management;and compliance with anti-bribery/anti-corruption,transparency,product promotion,and other applicable laws and regulations.The Quality and Risk Committees for our core functional areas provide an innovative framework to advance business-led,proactive risk management and drive clear accountability for acting with integrity.These committees report up to our Executive Compliance Committee,the highest-levelEthics,Transparency,QualityPfizer 2023 Impact Report15IntroductionGovernanceSocialEnvironmentAppendixESG PerformanceGovernanceinternal compliance oversight body,which is composed of Pfizers executive leadership and the Head of Corporate Audit,and chaired by the CEO.This Committee has a remit similar to that of the Regulatory and Compliance Committee of the Board.We regularly engage independent third parties to assess our ethics and compliance program against standards established by governments and industry best practices.In 2023,we engaged a third party to conduct an independent compliance program review to assess program effectiveness and identify opportunities for continuous learning and enhancement.Our internal audit function has a systematic and regular audit process that annually assesses our operations.Additionally,in coordination with the Legal and Compliance Divisions and the Quality and Risk Committees,internal audit works with key stakeholders across the company to conduct our ERM process that annually identifies,assesses,and manages risk priorities.Those priorities extend to cover quality,compliance and ethical standards,responsible marketing,and antibribery/anti-corruption.We are committed to integrating integrity and quality into everything we do,as well as to deterring non-compliance and driving ethical behavior.Our robust,proactive quality and compliance governance framework is built around the elements of effective quality,compliance,and risk management,including,for example:Culture:Leaders are committed to and accountable for fostering a culture consistent with our values,including psychological safety to support colleagues in speaking up or raising concerns without fear of retaliation and promoting continuous improvement.We hold managers accountable and expect them to play a key role in cultivating this speak-up culture and reinforcing that acting with integrity is everyones responsibility;we provide managers with supporting materials and templates that can be customized for local,market-specific use.Policies:Clear,easy-to-understand policies and procedures provide guidance,including our principles-based Code of Conduct(available publicly in over 30 languages)and our whistleblower policy to protect colleagues who raise concerns,as outlined in our Code of Conduct.Training:Colleagues and certain third parties receive risk-based,role-specific training on our Code of Conduct and other key areas,including ethical standards,responsible marketing and advertising practices,information security,safety reporting responsibilities,and anti-bribery/anti-corruption,upon hire and regularly thereafter(in general every one to two years).Our ethics and compliance training programs use multi-modal components to address different learning styles,maximize engagement,and reinforce salience of training content.Our training program encompasses a role-based scope of topics and depth of knowledge assessments to help drive training effectiveness.Communications:Messaging about integrity,including communications reinforcing expectations from leadership,culture campaigns,and creative use of various media,reinforces our focus on always doing things the right way and speaking up with questions or concerns.Our communications plans are designed to cultivate a culture of integrity throughout the company,including by addressing global,functional,and regional priorities,and existing and emerging training,culture,and communication needs.Ethics,Transparency,Quality-continuedPfizer 2023 Impact Report16IntroductionGovernanceSocialEnvironmentAppendixESG PerformanceGovernance Risk Assessment&Mitigation:Enterprise-level and tailored quality and compliance risk assessments,including in the area of anti-bribery/anti-corruption,are conducted regularly(on a market-by-market basis and within and across our core functions).These assessments inform our annual ERM process aimed at identifying,assessing,prioritizing,and mitigating priority and emerging risks.It enables enhanced oversight and appropriate resourcing to proactively manage risks.We seek to identify and address risks as early as possible,preventing non-compliance proactively,where possible.Monitoring:Live,continuous monitoring across key risk areas is designed to detect and remediate any potential non-compliance and identify opportunities for program enhancement,risk mitigation,and continuous learning.Third Party Management:Robust controls and processes are designed to evaluate and mitigate risk related to third parties we work with,including a formal global anti-bribery/anti-corruption diligence process that includes screening,auditing,training,confirmation of policies(including bribery/corruption prohibitions),and monitoring of third-party agents and intermediaries,and other risk-based compliance controls designed to ensure ethical business practices and compliance with applicable laws and regulations,including anti-bribery/anti-corruption laws.ANTI-BRIBERY AND ANTI-CORRUPTION(ABAC)Our international anti-bribery and anti-corruption policies and procedures are designed to ensure compliance with the U.S.Foreign Corrupt Practices Act(FCPA)and applicable international anti-bribery laws.Pfizer policy,also known as“My Anti-Corruption Policy and Procedures”(MAPP),prohibits all forms of bribery and corruption,whether by colleagues or our business partners.Colleagues and business partners must never offer,promise,authorize,or provide a payment or benefit that is intended to improperly influence a government official,healthcare professional,or any other person,including commercial entities and individuals,in exercising their responsibilities.Learn more about Pfizers ABAC program here.Open Door Culture and Investigations Leaders and management are dedicated to fostering a culture in which all colleagues can ask questions,raise concerns,and report potential misconduct without fear of retaliation.We measure colleague comfort and awareness about raising concerns,including awareness of our whistleblower policy,through our confidential enterprise Pfizer Pulse Engagement Survey sent to all colleagues annually.The survey results are used to focus leadership communications,training,and other proactive efforts to foster our Purpose-driven culture and encourage speaking up.Many channels exist for raising questions and reporting concerns,including the Compliance Helpline(third-party public hotline available by phone or web,in over 30 languages,with anonymous reporting where allowed under local law),the Compliance Division(through email,phone,fax,mail,and directly to colleagues),management,and other channels supported by our Open Door Policy(which includes our whistleblower policy).This policy encourages colleagues to present ideas,ask questions,and raise concerns.Retaliation against anyone who seeks advice,raises a concern,reports misconduct,or provides information in an investigation is strictly prohibited by our policy that protects whistleblowers.In addition,our Ombuds Office is an available resource to support colleagues with information and guidance to help them resolve work-related issues.Pfizer takes reports of known or suspected violations of company policies and applicable law seriously;our goal is to respond appropriately and promptly to all questions and reported concerns.We aim to identify and address any potential inappropriate conduct as early as possible,prevent future recurrences,and inform continuous improvement.We investigate all referable compliance issues(RCIs)significant potential,suspected,or actual violations of law or policy.For RCIs where there is a substantiated violation,we institute individual discipline where appropriate,including measures such as coaching,warnings,and termination.Our compliance investigations process also includes analysis of the root cause of substantiated RCIs.After investigation,we work with accountable stakeholders to implement corrective and preventative actions.We monitor the effectiveness of these actions,adjust as needed,and track and report on progress.Pfizer has a process to escalate certain significant matters to the Executive Compliance Committee and the Regulatory and Compliance Committee and Audit Committee of the Board.Ethics,Transparency,Quality-continuedPfizer 2023 Impact Report17IntroductionGovernanceSocialEnvironmentAppendixESG PerformanceGovernanceSafety and QualityPatient health and safety are foundational to everything we do.We are committed to ensuring that our products are developed,manufactured,and supplied to high standards of quality,safety,efficacy,and are assured through the deployment of our robust Quality Management System(QMS).Patient-Centric Focus Patient health and safety comes first in our work from early-stage R&D through the full product lifecycle.Our patient-centric approach to R&D begins in the lab with data modeling to determine potential therapies.Our clinical trials(page 21)are designed around patient safety with equitable and inclusive participation.Our global supply network manufactures and delivers products pursuant to our robust policies and procedures designed to ensure safety and quality in accordance with Pfizers Global Quality Standards and relevant regulations,including Good Manufacturing Practices(GMP).Our policies and procedures are based on industry best practices and reflect Pfizers own high standards.Each of our internal manufacturing,supply,and distribution operations,as well as our external vendors,hold relevant manufacturing licenses/certifications indicating compliance with GMPs.Our quality performance is actively monitored through an integrated management system to identify and mitigate risks.Throughout each products lifecycle,we continuously monitor and evaluate all relevant safety and quality information,including complaints and adverse events.This monitoring enables proactive,data-driven actions related to patients,consumers,healthcare professionals(HCPs),investigators,institutional review boards/independent ethics committees(IRBs/IECs),Data Monitoring Committees(DMCs),and health authorities and regulators in accordance with both internal and external standards.Quality Management System(QMS)Pfizers QMS,as defined in our Corporate Quality Policy,provides an integrated framework through which Pfizer achieves its quality and safety standards.This framework is based on industry-recognized quality management principles.The QMS is designed and built to adhere to applicable standards and requirements of health authorities and global regulators,such as:International Organization for Standardization(ISO)13485;Good Practices(GxP)such as Good Laboratory Practices(GLP),Good Clinical Practices(GCP),Good Manufacturing Practices(GMP),Good Distribution Practices(GDP),and Good Pharmacovigilance Practices(GPvP);and International Council for Harmonisation(ICH)of Technical Requirements for Pharmaceuticals for Human Use guidelines.The QMS covers pharmaceuticals,vaccines,medical devices,and in-vitro diagnostic products,in addition to focusing on:Research and development of products Clinical trial design and execution Regulatory submissions Manufacturing,packaging,and distribution and supply of products,including raw materials procurement Pharmacovigilance(PV)and post-market surveillance Commercial and medical affairs activities This framework embeds quality management throughout the organization and is enabled by a governance structure with clear policies,communications,and escalation pathways.Our QMS is continuously monitored to drive innovation and agility,while helping to ensure the timely identification and appropriate actioning of quality,safety,and compliance issues.Quality and Integrity Culture Pfizer places great emphasis on maintaining a culture of quality and integrity.Throughout the year,colleagues at all levels contribute to the development and implementation of Quality&Integrity(Q&I)culture initiatives,which serve to reinforce the importance of product quality and safety while also fostering a culture of integrity.An example of one such initiatives is the appointment of Q&I Championsindividuals nominated to act as culture ambassadors.These champions encourage open communication,proactive risk management,and speak-up behavior at all levels.Q&I Champions foster this culture through colleague empowerment,peer-to-peer assistance,education,and open dialogue.Our quality and integrity culture is actively monitored,improved,and sustained through our QMS.Ethics,Transparency,Quality-continuedPfizer 2023 Impact Report18IntroductionGovernanceSocialEnvironmentAppendixESG PerformanceGovernanceTraining and Qualification Our comprehensive global training and qualification policies and procedures are designed to ensure compliance with our scientific,ethical,legal,and regulatory obligations,as well as our own high standards.Requirements are in place to help ensure all individuals(based on role and responsibility)who perform work for or on behalf of Pfizer have the appropriate education,training,and resources to work in compliance with applicable laws,regulations,and Pfizer policies.Training compliance is actively monitored and formally documented.Risk and Issue Management Pfizers Risk Management Framework is a systematic,continuous,end-to-end process for identifying and mitigating quality and compliance risks.It provides criteria to conduct risk assessments grounded in defined thresholds for escalation,which are routinely tracked and monitored.The framework enables timely notification to management of critical issues and significant trends,and implementation of corrective and preventative actions.Third Party Management Pfizers global QMS framework is designed to ensure that third-party partner materials and services meet our exacting product quality standards,spanning the full product lifecycle including R&D,clinical research,manufacturing,and distribution.Pfizer recognizes the strategic importance of Contract Manufacturing Organizations(CMOs)and Contract Research Organizations(CROs).As such,Pfizer has dedicated teams to maintain the necessary policies and effectively identify and mitigate associated risks.Processes are in place for the management and oversight of external parties who carry out work on Pfizers behalf to assure control of outsourced activities and compliance with applicable laws,regulations,and Pfizer policies.We are committed to selecting companies that are responsible,ethical,and reliable partners.The performance of these partners is monitored,including through regularly conducted audits.Audit outcomes are used to drive continuous improvement in both performance and compliance.Please see page 19 for more information on Supply Chain Transparency.Audits and Inspections As part of our independent audit program,we regularly assess the effectiveness of our QMS.Pfizers internal audit processes are conducted in accordance with all applicable regulatory requirements,standards,guidelines(e.g.,ISO&ICH),and governing GxPs,to help ensure patient safety,product quality,and applicable licenses and certifications are maintained.The audit program spans preclinical,clinical,pharmacovigilance,regulatory,medical,manufacturing and logistics,suppliers,and postlaunch activities,including responsible marketing and ethical product promotion.The program also covers regulated processes and information technology controls.Our audits are designed to provide assurance that we are compliant with regulatory requirements worldwide and our own standards.This helps ensure that we proactively identify and remediate risks to compliance.Finally,we routinely undergo GMP,GCP,and PV inspections from regulatory agencies worldwide.Continuous Improvement(CI)At Pfizer,we pursue innovation and continuous improvement in our work across the enterprise,including through CI initiatives such as:Implementation of a next-generation digital quality management system Increased efficiency and effectiveness of Pfizers quality lab practices and safety systems Increased use of advanced analytics and AI in Pfizers manufacturing and supply chain networks Improvement of our quality and risk management systems and tools to adapt to changes in the external environment and internal strategy Continuous enhancement initiatives for medical devices and combination products focused on user requirements,integration of cutting-edge technology,and alignment with Net Zero initiativesWe have a comprehensive quality and compliance governance process in place through which product quality and safety indicators are reported on,evaluated,and actioned as appropriate.We are committed to transparently communicating key product quality and safety indicators including the following metrics.GCP-Good Clinical Practices GMP-Good Manufacturing Practices PV-Pharmacovigilance VAI-Voluntary Action Indicated(U.S.FDA)OAI-Official Action Indicated(U.S.FDA)Note:Does not include Seagan Inc.data1 Count of internal audits includes all Pfizer audits performed of a Pfizer clinical/GMP/PV facility and/or process Count of third-party audits includes all Pfizer audits performed of an external clinical/GMP/PV vendor,clini-cal site,or contract manufacturing organization(CMO)3 Count of inspections includes all GCP/GMP/PV inspections of Pfizer listed below:GCP:Investigator sites,sponsor,vendors/CROs that are involved with a Pfizer product or process GMP:Pfizer Global Supply(PGS)sites,PharmSci sites,Pfizer Country Offices(PCOs),Distribution/Logistics Centers(LC),SLS(Labs),Quality Centers PV:Sponsor,vendors that are involved with a Pfizer product or process4 Data includes both regulatory warning letters as well as enforcement actions(e.g.,seizure,injunction,criminal prosecution and/or criminal fines for food,drug,and cosmetic act violations)5 Definition of Recall ClassificationsEthics,Transparency,Quality-continuedSafety and Quality KPIs2023#Internal Audits across GCP/PV/GMP176#Third Party Audits across GCP/PV/GMP2995#GCP/GMP/PV FDA Inspections350#GCP/GMP/PV Inspections from All Other Health Authorities3160#Unique Health Authorities Completing Inspections63#FDA inspections that resulted in an enforcement action40#GMP Inspections resulting in VAI status20#GMP Inspections resulting in OAI status0#GCP Inspections resulting in VAI status2#GCP Inspections resulting in OAI status0#PV Inspections resulting in VAI Status0#PV Inspections resulting in OAI Status0#FDA Recalls54%of batches distributed with no recalls(U.S.Market)99.9%#Class I Recalls3#Class II Recalls0#Class III Recalls1Pfizer 2023 Impact Report19IntroductionGovernanceSocialEnvironmentAppendixESG PerformanceGovernanceCounterfeit Medicines Counterfeit medicines pose a significant risk to patient health and safety.To protect our patients,we take a proactive approach to product safety by investing in an enterprise strategy to combat counterfeit threats through patient education,legislative advocacy,surveillance,and interdiction1.Additionally,we are building a coalition with healthcare providers and associations,policy leaders,regulatory agencies,distributors,insurers,pharmacies,patient advocacy groups,and other pharmaceutical companies to combat the risk counterfeits pose to the health of patients and communities.This is formalized in our DETECT,DISRUPT,DETER,and IMPACT framework in our campaign against counterfeit Pfizer medicines.Pfizer has continued to strengthen its partnerships with external stakeholders,a transformative factor in the ongoing battle against counterfeit medicines.On August 10,2023,the U.S.Customs and Border Protection(CBP)and the U.S.Chamber of Commerce renewed a memorandum of understanding(MOU)to enhance intellectual property rights enforcement through information sharing.The MOU,initially signed in 2021,now renewed for a period of five years,represents a groundbreaking framework for collaboration between the public and private sectors in combating counterfeits.Pfizer played a leading role developing this initiative and participated in the data sharing pilot program,yielding patient-protecting law enforcement results.Pfizer routinely provides training to policy makers and law enforcement,supporting their ability to identify counterfeit drugs and combat counterfeiting.In 2023,we scaled the“No Fakes for Health Sake”educational campaign to markets outside the U.S.The campaign,which aims to raise awareness of the dangers of counterfeit medicines among patients,healthcare providers(HCPs),pharmacists,policy makers,and government officials,is available in multiple languages to further maximize its reach.Our“Counterfeit Medicines:A Serious Threat to Patient Safety”toolkit serves multiple stakeholders who join the fight against counterfeits.Resources on how to safely buy medicines online are available at our corporate website at P addition to our traditional anti-counterfeit efforts,Pfizer helps address illicit online prescription drug offers through advanced internet monitoring anddisruption programs.We search and systematically disrupt online pharmacy and social media groups dispensing counterfeit versions of Pfizer medicines and vaccines with enhanced digital tools that keep pace with the sophisticated and rapidly evolving tactics employed by counterfeiters to target patients.We employ technological advancements and innovations to help ensure our efforts are adapting to the evolving landscape in this fight against counterfeit medicines.If a counterfeit product is identified in the legitimate supply chain,a formal process is in place to alert the appropriate authorities and relevant trading partners.Additionally,we collaborate with distributors and repackagers to monitor distribution channels and improve surveillance.Pfizer evaluates and invests in packaging and information technologies to align with global serialization regulations and challenges associated with counterfeiting,theft,and diversion.The unique Product Identifiers developed for serialization will enable the tracking and tracing of product movement through the supply chain,from the manufacturing site to patient dispensation(including Government Systems and Trading Partners)and will allow authorized trading partners to verify the authenticity of our medicines with a simple scan.Supply Chain Transparency We set high standards for responsible supply chain management,guided by robust governance processes.This helps ensure the safety and quality of the medicines and vaccines we produce and aligns with our core value of Equity.Compliance with laws is our baseline expectation,and we also establish other risk-based assessment criteria to help assure our suppliers are responsibly managing environmental,health,and safety(EHS)risks and maintaining a robust supply chain.Our established risk-based evaluation of suppliers,including contract manufacturers,assesses EHS and sustainability performance.Evaluations include engagement with suppliers to help support their efforts to improve EHS,sustainability,and labor and human rights performance.We apply a risk-based approach to determine where to complete our evaluations and apply our efforts where we believe there is opportunity to make the greatest potential impact and drive improvement.Our collaborations with our suppliers are focused on compliance with laws,improving sustainability of operations,and alignment to our Supplier Conduct Principles and the Pharmaceutical Supply Chain Initiative(PSCI)Principles for Responsible Supply Chain Management.Please see our Responsible Sourcing page for additional details.These reviews also integrate evaluation of human rights considerations aligned with SA 80002.Pfizer maintains a focused human rights diligence program as described in our Modern Slavery Statement,which outlines our management approach in our supply chain and our operations.Pfizer is currently focusing on targeted high-risk areas as identified by the Global Slavery Index and is taking steps to address these risks as described in our Statement,including implementation of our corporate labor and human rights standard.If we identify areas with higher risk,our process outlines additional due diligence actions to help us avoid being complicit in supporting modern slavery.Through a combination of remote and on-site audits,we assessed EHS performance for 109 supplier facilities in 2023,resulting in 878 observations.We require our suppliers to develop action plans in response to our audits and implement improved controls,as needed.Pfizer is a founding member and active participant in the PSCI.Pfizer colleagues currently sit on the PSCI board and lead PSCI working committees.In 2023,Pfizer colleagues also supported PSCI capability-building initiatives by serving as speakers at supplier conferences.RELIABLE SUPPLYWe take action to help ensure the safe,secure,and compliant warehousing and transportation of Pfizer products.An important component of our commitment to patient safety is the reliable supply of medicines and vaccines.Our policies and expectations for those across our supply chain is that they adhere to relevant local and federal regulations,in addition to conforming to our own strict standards and expectations of compliance excellence.Ethics,Transparency,Quality-continued1 In this context,“interdiction”refers to the seizure,raids,and arrests to prevent counterfeits from reaching their targeted audience.2 SA 8000 is an international certification standard that encourages organizations to develop,maintain and apply socially acceptable practices in the workplace.Pfizer 2023 Impact Report20IntroductionGovernanceSocialEnvironmentAppendixESG PerformanceGovernanceSUPPLIER DIVERSITY IS IN OUR DNAPracticing inclusive sourcing is aligned to our Equity value.We are committed to having a supplier base that represents the diverse patients we serve.We believe that by working with diverse suppliers,we gain a fresh,innovative perspective that ultimately helps us better serve our patients.Our supplier diversity program focuses on providing equitable opportunities as well as mentoring and spending with diverse and small owned businesses.The program prioritizes identifying strategic partners,fostering mentorship and connection between suppliers,practicing inclusive sourcing,and much more.In 2023,we mentored five diverse-owned suppliers who provide services in different industries,including digital marketing,executive training,and recruiting from the disabled community.Two of these mentees were included in sourcing opportunities.Looking ahead to 2024,we plan to continue this initiative across additional industries.In addition to mentoring diverse-owned suppliers,we engage in diverse supplier outreach and education activities throughout the year,including hosting webinars and supplier diversity events.Through this intentional approach to supplier diversity,we aim to help drive economic impact,which helps influence positive health outcomes in local communities where our patients and colleagues live.Intellectual Property(IP)Pfizers ability to drive science forward and deliver breakthroughs that change patients lives is fueled by the protections provided by the intellectual property system.The patent system plays a crucial role in incentivizing innovation,promoting competition,and encouraging collaboration and partnerships,which are essential to scientific progress.By requiring the disclosure of inventions,the patent system facilitates the exchange of knowledge and ideas.It is this combination of incentives and disclosure that empowers companies like Pfizer to invest significant time,effort,and resources into the discovery,research,and development of groundbreaking medicines that have the potential to transform lives.We are committed to the responsible use of our intellectual property,as reflected in the“IP Principles for Advancing Cures and Therapies”(IP PACT).Recently,Pfizer updated our Patent Policy Position with the aim of enhancing transparency and offering greater clarity regarding our approach to patent filing and enforcement.Our patent filing decisions are based on a number of factors,chief among them whether the invention reflects a genuine innovation that will ultimately support the needs of patients.To learn more about our patent practices and commitment to access to medicines,please see our Patent Policy Position.We recognize the unique socioeconomic challenges facing Least Developed Countries,as defined by the UN Committee for Development Policy,and have a policy of patent nonenforcement in those countries.This policy extends to our entire portfolio of vaccines and medicines.We have also engaged in a voluntary licensing agreement with the Medicines Patent Pool to help facilitate the production and supply of generic versions of our oral COVID-19 treatment.Our efforts here are just one part of how were working to provide equitable access to medicines to the most vulnerable populations.Please see pages 34 and 37 for more information on our Health Equity activities and page 35 for information on our Healthcare Infrastructure initiatives.In the most recent Access to Medicine Index,Pfizer was recognized as performing“above average”in sharing IP assets with third-party researchers.We also continue to be a sponsor of the Inventor Assistance Program,a World Intellectual Property Organization(WIPO)initiative in cooperation with the World Economic Forum that matches developing country inventors and small businesses of limited financial means with patent attorneys that provide pro bono legal assistance to secure patent protection.Ethics,Transparency,Quality-continuedPfizer 2023 Impact Report21IntroductionGovernanceSocialEnvironmentAppendixESG PerformanceGovernanceClinical TrialsOur work in clinical trials is fundamental to achieving our Purpose.Patient health and safety is at the heart of this including how we design,run,and communicate our clinical trial research.Our leadership is committed to ensuring quality and ethical conduct in clinical trials,as is also reflected in our policies and processes.Our conduct is guided with the help and oversight of a variety of groups,including patient organizations,institutional review boards and ethics committees,regulatory authorities,data and safety monitoring boards,and medical and industry association guidelines governing ethical clinical trial conduct and research integrity.In keeping with our core value of Equity,our teams continue to find new ways to remove barriers to clinical trial participation and improve the experience of clinical trial participants,such as using digital tools,local healthcare providers and settings,and other approaches to make clinical trials more flexible and accessible.This includes adhering to the“plain language results summary”initiative wherein we share information about clinical trial results and descriptions in a more understandable and accessible way to a general audience.In 2023,we unveiled a new initiative to share certain individual-level clinical trial data with study participants,which has never been done systematically before.These plain-language study results summaries and individual-level clinical trial data can be accessed by trial participants through an opt-in clinical trial alumni website at .Additionally,Pfizer provides a number of avenues that allow the general public to learn more about participating in a clinical trial as well as get connected to clinical trial sites near them through a convenient Find-a-Trial search tool on PfizerClinicalT.Pfizer also launched PfizerL,the first industry-sponsored research registry,which aims to make it easier for interested individuals to find Pfizer clinical trials,helping to address longstanding challenges associated with clinical trial recruitment,and advances Pfizers mission of bringing medicines to patients faster.This novel approach allows interested individualseither healthy volunteers or those with medical conditionsto share information about themselves to potentially be matched to an available Pfizer clinical trial with the help of a PfizerLink Navigator.All Pfizer-sponsored interventional studies respect study participant rights and patient privacy.Required training for both Pfizer employees and contracted research sites includes a focus on ethical topics.Studies are conducted in accordance with our high ethical standards,applicable laws and regulations,and principles derived from relevant international standards,including:The Council for International Organizations of Medical Sciences(CIOMS)International Ethical Guidelines The International Council for Harmonisation of Technical Requirements for Pharmaceuticals for Human Use(ICH)E6 guideline for Good Clinical Practice PhRMAs Principles on Conduct of Clinical Trials and Communication of Clinical Trial Results The Declaration of Helsinki The U.S.Belmont Report More information on Pfizer policies related to clinical trials can be found here on our research integrity and transparency page at P.You can also learn more about our clinical trial work at P and by searching“Pfizer”on Clinical Trials.gov.DIVERSITY IN CLINICAL TRIALS Race,ethnicity,age,and gender all impact how people respond to treatment,so it is essential that clinical trial studies reflect the diversity of the potential recipient population.Pfizer has taken many steps over the years to help ensure diverse representation in clinical trials,including reinforcing the importance of diversity in trials among our clinical study teams.We have also shared our own knowledge and learnings with others because we recognize that no single entity can solve the longstanding challenges alone.In 2023,Pfizer published a framework that we use to set enrollment goals to help ensure participant diversity in sponsored clinical trials in the U.S.Weve made a commitment to diverse representation in our clinical trials and that starts with setting metrics by which to hold ourselves accountable.Data Privacy and Protection We are committed to the responsible,transparent,and secure use of personal data entrusted to us by patients,customers,colleagues,and others.Our privacy practices are governed by our Global Privacy Committee,a cross-functional governance body composed of senior-level leaders who provide oversight and guidance that informs company practices.Additionally,our Global Privacy Office maintains an enterprise-wide policy and standards that guide the collection,maintenance,and protection of personal data and consider the legal and regulatory requirements where we do business.We also mandate regular colleague and contractor training on global privacy principles in accordance with our commitment to respect and safeguard personal data.We do all of this to help ensure that we are respecting the right to privacy of individuals and responsibly collecting and managing the data we collect.Additionally,Pfizers Privacy Principles outline our approach to the management,collection,and appropriate uses of personal health data.These principles also cover what we do to help ensure proper safeguards are in place to protect what has been entrusted to us.Similarly,Pfizer is committed to the responsible use of artificial intelligence.For more information please see our Policy Position on Artificial Intelligence for how we are setting a clear path for the company to use this technology.Ethics,Transparency,Quality-continuedPfizer 2023 Impact Report22IntroductionGovernanceSocialEnvironmentAppendixESG PerformanceGovernanceHuman Rights and the Right to Health Pfizer is committed to conducting business in an ethical and responsible manner.This includes respecting internationally recognized human rights throughout our operations,from lab to patient and our diverse global supply chain of numerous local and global third-party vendors.Please see page 19 for more information on Supply Chain Transparency.Throughout 2023 and beyond,we continue to focus on the right to health as our most salient human rights issue,with availability,accessibility,and affordability as key focus areas.Other salient human rights are the principle of nondiscrimination;the right to privacy;freedom from slavery and forced labor and other abuses,including child labor;the right to enjoy just and favorable working conditions;the right to a safe workplace;and the right to a healthy environment.In line with the UN Guiding Principles on Business and Human Rights,our approach to human rights focuses on risk that could have the most severe impact on people:our patients,our colleagues,the workers of our business partners,and the communities in which we operate.We strive to keep our policies up-to-date with our work and the evolving external environment.Our latest update reflects our efforts to protect personal data,the right to privacy,and our principles for the responsible use of artificial intelligence.Read more about Pfizers commitment to human rights on our website.Political Contributions and Lobbying Activities We understand the impact public policy has on our ability to meet patient needs and provide value to our shareholders.As such,we actively participate in dialogue around public policy with lawmakers and stakeholders to advocate and educate,in addition to explaining our perspectives.We believe that public policy engagement is an important and appropriate role for companies to be engaged with in open societies when conducted in a legal and transparent manner.Our public policy activities focus on helping to build a constructive discourse in the political and regulatory environment while supporting policiesand policymakerswho are aligned with our Purpose and position us to better deliver on these same ideals.It is important to note that Pfizers policy precludes the company from making direct independent expenditures in connection with any U.S.federal or state election.Additionally,all corporate political contributions are published in the Pfizer Political Action Committee(PAC)and Corporate Political Contributions Report in compliance with Pfizers corporate policy.Please see the latest report here.Pfizer is a member of various industry and trade groups that represent both the pharmaceutical industry and the business community at large to bring about consensus on broad policy issues.In addition to trade group positions on healthcare policy issues,we realize these organizations may engage in a broad range of other issues that extend beyond the scope of what is of primary importance to Pfizers business.If concerns arise about a particular issue,we convey our concerns,as appropriate.We believe there is value in making sure our positions on issues important to patients,Pfizer,and our industry are communicated and understood within those organizations.Pfizer issued a report outlining the public policy positions of Pfizer and key trade associations across six areas of key public policy and ESG significance for Pfizer.The report also compares Pfizer and the trade associations positions and describes the degree of alignment and areas of misalignment.Pfizers corporate political contributions and lobbying activities are focused on promoting the interests of the patients we serve and our company,without regard to the personal political preferences or affiliations of any of our colleagues,officers,or board members.The companys corporate political contributions and lobbying activities are subject to robust internal procedures designed to align these efforts with our public policy priorities,applicable law,and patient-centric agenda.The company has an extensive training and reporting program in place designed to ensure compliance with applicable laws and regulations as well as Pfizers internal standards.Please see here for information on our anti-bribery and anti-corruption program and here for a summary of our Anti-Bribery and Anti-Corruption Policy.RESPONSIBLE TAX PRACTICESFulfilling our tax responsibilities is not only a legal obligation,but also an important contribution to the communities in which we operate and part of fostering trust.We are committed to abiding by all tax laws in the countries in which we operate and paying all taxes due.We have a zero-tolerance approach to non-compliance with tax laws.Our Compliance Helpline is available for internal and external parties to raise concerns.Oversight and responsibility for tax matters lies with our Global Tax Department,reporting to our Chief Financial Officer.Our robust policies and proceduresoverseen by our Board of Directors and Audit Committeeare designed to comply with all applicable laws and regulations,and are regularly reviewed and updated to reflect changing tax landscapes.Consistent with our commitment to sustainable values,we prioritize tax governance,compliance,planning,risk management,and transparency.We maintain constructive relationships with governmental authorities,recognizing the importance of engaging in open and transparent dialogue and acting with integrity.Additional information about Pfizers taxes is disclosed in the notes to our consolidated financial statements,which are subject to independent audit.Ethics,Transparency,Quality-continuedPfizer 2023 Impact Report23IntroductionGovernanceSocialEnvironmentAppendixESG PerformanceGovernanceRight Incentives We aspire to drive positive social and environmental change in our role as a responsible corporate citizen.Our ESG strategy is designed to leverage compensation as a key motivator to hold ourselves accountable.For the 2023 performance year,the Compensation Committee of the Board selected three social and environmental KPIs for the ESG Scorecard to tie to our annual short-term incentive compensation:1.Percentage of VP and higher roles held by women(globally)2.Percentage of VP and higher roles held by minorities(U.S.)3.Greenhouse Gas Emissions The goals set for 2023 as part of the Global Performance Plan(GPP)Program were also based on our publicly announced longer term goals in these areas.In addition to being objectively measurable and auditable,we believe these ESG Scorecard KPIs are holistic drivers of our future success as a company and are aligned with our strategy.The ESG Scorecard KPIs were factors in evaluating the funding of our GPP Program for over 40,000 eligible global colleagues and leaders.We plan to continue this approach for the 2024 performance year.Incorporating ESG into our compensation program amplifies our commitment to long-term value creation and sustainability.In addition,ESG factors beyond the three ESG Scorecard KPIs may also be included in an individual executives performance goals.For additional details on the GPP Program,refer to the Pfizer 2024 Proxy Statement.Please see page 41 for more information on our Pay Equity efforts.Board of Directors and Board CommitteesThe Board of Directors is elected annually by the shareholders.The primary responsibility of the Board is to represent shareholders and to enhance long-term shareholder value.The Board elects the Chairman of the Board,the Chief Executive Officer,and other members of the senior management team and acts as an advisor and counselor to senior management and ultimately monitors its performance.The function of the Board to monitor the performance of senior management is facilitated by the presence of a majority of independent,non-employee Directors who have substantive knowledge of the companys business.The Board has determined that all of our current Directors(other than Dr.Albert Bourla)are independent.Pfizers Board Committees are integral to the overall functioning of the Board.The Board has six committees:Audit Committee Compensation Committee Executive Committee Governance&Sustainability Committee Regulatory and Compliance Committee Science and Technology Committee The committees charters can be viewed on our corporate website at:Board Committee Charters.Board Leadership Structure In December 2023,following a thorough review by the Governance&Sustainability Committee,the independent Directors evaluated the Boards leadership structure taking into consideration the companys performance under the current operating and governance environment,executive leadership changes,and investor feedback.The Committee,with input from the other independent Directors,determined that it would be in the best interest of the company and its shareholders for Dr.Bourla,Pfizers CEO,to continue serving as Chairman of the Board in 2024.The Board concluded that Dr.Bourlas deep scientific,industry,and regulatory expertise,along with his extensive company knowledge,helps enable him to effectively lead the Board and execute company strategies.The combined role,coupled with the strong Lead Independent Director,enables the Board to exercise its independent oversight and be responsive to challenges and opportunities as they arise.AccountabilityPfizer 2023 Impact Report24IntroductionGovernanceSocialEnvironmentAppendixESG PerformanceGovernanceBoard Diversity and Independence Our Board is composed entirely of independent directors other than our Chairman and CEO,Albert Bourla,and is diverse.Diversity is defined by gender,age,race,ethnicity,background,professional experience,and perspectives.Each Director provides a unique perspective,experience,and skill set,which creates an effective and well-functioning Board.To help ensure effective refreshment and proactively manage eventual vacancies on the Board,the Governance&Sustainability Committee and the full Board consider a diverse pool of qualified director candidates when seeking new Directors.Since 2020,three new Directors have joined Pfizers Board,bringing the Boards average tenure to eight years.Shareholders and other stakeholders may communicate with any of our Directors,including the Lead Independent Director and the Audit Committee Chair,as follows:By email:https:/ mail:Office of the Corporate Secretary,Pfizer Inc.,66 Hudson Boulevard East,New York,NY 10001-2192.Board TenureAverage Tenure 10 Years6 to 10 Years0 to 5 YearsBoard DiversityFemaleEthnically Diverse3 of 12 Directors4 of 12 Directors354968 yearsBoard CompositionKey Skills and ExperienceBusiness Leadership and OperationsInternational BusinessMedicine and ScienceHealthcare and PharmaFinance and AccountingRisk ManagementAcademiaHuman Capital ManagementGovernment and Public PolicyTechnology and Cybersecurity66654433Accountability-continuedTotal Number of Directors on the Board12Pfizer 2023 Impact Report25IntroductionGovernanceSocialEnvironmentAppendixESG PerformanceIntroductionGovernanceSocialEnvironmentAppendixESG PerformanceThe health of our global environment impacts everyone.At Pfizer,we are committed to reducing our environmental footprint.Our company Purpose guides our environmental priorities,with a focus on impact reduction,conservation of resources,and the minimization of waste arising from our operations.Environment26-Climate ChangeReducing Emissions from Our OperationsProactive External EngagementUnderstanding How Climate Change Could Impact Our BusinessAccelerating Action Across Our Supply Chain29-Sustainable MedicinePharmaceuticals in the EnvironmentWasteWater StressBiodiversityHow our approach to environmental sustainability supports the Sustainable Development GoalsIndustry,Innovation,and InfrastructureWe promote resilient and sustainable infrastructure,scientificresearch and innovation.Responsible Consumption and ProductionWe aim to achieve environmentally sound life cyclemanagement and adopt sustainable practices.Climate ActionThrough our goals we are taking urgent action to help combatclimate change and its impacts.More information on the SDGs here.Pfizer 2023 Impact Report26IntroductionGovernanceSocialEnvironmentAppendixESG PerformanceEnvironmentWe recognize global climate change as one of the defining issues of our time,requiring collective action to mitigate the potential risks it poses.Such risks include the potential for increased adverse impacts on human health and decreased access to critical medicines and vaccines due to disruptions in value chains caused by the greater frequency of severe weather.Pfizer is continuing its near-term commitment to reduce company greenhouse gas(GHG)emissions by 46%compared with a 2019 baseline,aligned with a 1.5C trajectory,and to drive action by encouraging suppliers to also set science-based GHG emissions reduction goals.We have further committed to reduce GHG emissions by working to achieve the voluntary Net Zero Standard by 2040,ten years earlier than the timeline described in the standard.By 2040 Pfizer aims to decrease its company GHG emissions by 95%and its value chain emissions by 90%from 2019 levels by reducing the energy demand of our operations,transitioning away from fossil fuels,sourcing renewable electricity,and engaging suppliers to catalyze equivalent action.We are also pursuing Science Based Targets initiative(SBTi)validation of our Net Zero target.Pfizer was one of the initial signatories to the U.S.Department of Health and Human Services(HHS)climate pledge.The pledge,launched in 2022,calls on stakeholders in the U.S.healthcare systemincluding hospitals,health systems,payers,suppliers,and pharmaceutical companiesto reduce GHG emissions and build a more climate resilient healthcare infrastructure.By signing,we committed to reduce GHG emissions,publicly report our progress,and develop a climate resiliency plan.Climate ChangeTargetProgressReducing Scope 1 and 2 GHG emissions by 46%from a 2019 baseline by 2030Scope 1 and 2 GHG emissions in 2023 were 3.5%lower than 2022.Emissions for 2023 were 13.9%lower than the 2019 baseline.Sourcing 80%of electricity from renewables by 2025,and 100%by 2030Pfizer sourced 10%renewable electricity in 2023.Pfizer has entered into virtual power purchase agreements(VPPA)covering North America and the EU.These projects,expected to come online in 2025,will cover approximately 68%of Pfizers electricity needs(as measured against 2023 electricity consumption).Reducing emissions from upstream transportation and distribution by 10%and from business travel by 25%by 2025 from a 2019 baselineEmissions associated with upstream transportation and distribution were 31%lower than in 2022 and 22%higher than the 2019 baseline.We continue to look for opportunities to move product shipments from air to ocean and are working with our logistics providers to transition to low emission fuels and vehicles where possible.Travel-related GHG emissions were 55%lower than the 2019 baseline.We have implemented tools to help business travelers make informed decisions about travel options.This includes using digital tools to limit travel and using preferred carriers that are advancing GHG reduction targets.Working to accelerate change across our supply chain,driving 64%of our suppliers of goods and services by spend to also set science-based GHG emission reduction goals by 2025Currently 51%of our suppliers by spend have or have committed to develop science-based GHG emissions reduction targets.Environmental data included in this report may include certain estimates and assumptions given data availability at the time of publication.Our finalized 2023 data with additional details will be published on Pfizers Environmental Sustainability page.Does not include Seagan Inc.data.Pfizer aims to achieve a 95%reduction in company(Scope 1 and 2)GHG emissions and a 90%reduction in value chain(Scope 3)emissions by 2040,compared to our 2019 baseline.Our near-term targets are outlined below:Pfizer 2023 Impact Report27IntroductionGovernanceSocialEnvironmentAppendixESG PerformanceEnvironmentReducing Emissions from Our OperationsAs part of our efforts to reduce our overall environmental footprint globally,our manufacturing and R&D sites are aligning their environmental sustainability masterplans with our 2040 Net Zero ambition.We seek opportunities to design new facilities or renovation projects with reduced environmental impact(such as energy consumption,water usage,and waste management)so we can reduce resource demand.For example,a new utilities building at our Kalamazoo,Michigan,location received LEED certification;a new manufacturing building at our site in Newbridge,Ireland,was awarded LEED Silver;and our New York headquarters received LEED Platinum certification.In 2023,Pfizer adopted the My Green Labs(MGL)Certification program at our Cambridge,Massachusetts,site to facilitate engagement of laboratory-based colleagues in environmental stewardship with the aim of accelerating GHG emissions reductions in our R&D operations.The MGL Certification program has been recognized by the UN Race to Zero campaign as a key measure of progress toward a zero carbon future.A total of 19 laboratories across five of Pfizers research sites in Cambridge,Massachusetts,Boulder,Colorado,Groton,Connecticut,Pearl River,New York,and Andover,Massachusetts,received MGL Certifications in 2023.Pfizer invests in no-/low-carbon technologies at our sites and through power purchase agreements(PPAs)that enable sourcing of renewable energy.In 2023,we signed virtual PPAs(VPPAs)for four new solar projects in Spain that will collectively cover all of Pfizers purchased electricity in the European Union.These EU VPPAs,along with the North America VPPA we signed in 2021,are key steps in our plan to achieve our RE100 goal of 100%renewable energy by 2030 and the voluntary Net Zero Standard by 2040.When the North America and EU VPPA solar projects come online,they are expected to cover approximately 68%of Pfizers global electricity needs as measured against 2023 electricity consumption.Pfizers fleet of vehicles,the majority of which are used by our commercial teams to facilitate education and engagement with healthcare providers,accounted for approximately 0.5%of our total Scope 1 and 2 GHG emissions in 2023.Pfizer is working to advance fleet sustainability through transitioning to battery electric vehicles(BEV)and,where feasible,other low-emission vehicle options,and by supporting fuel management and efficient driving choices for internal combustion vehicles until they can be retired.Our transition to BEV has started in nine markets,with 437 BEVs currently in use and an additional 40 BEVs ordered.We plan to expand BEV implementation to additional markets in 2024 and beyond.Proactive External Engagement Tackling climate change requires action from all parties across all sectors,and Pfizer urges governments both in the U.S.and abroad to establish ambitious climate policies to stabilize global temperature rise at 1.5C.For additional information on Pfizers climate action program,please see our:Climate Change Position Statement 2023 CDP Climate Change ResponseUnderstanding How Climate Change Could Impact Our Business We are committed to transparency in evaluating the risks and opportunities that climate change may present to our business.To meet this commitment,we incorporate the Task Force on Climate-Related Financial Disclosures(TCFD)framework into our ERM governance process and voluntarily report climate-related risks and opportunities.See our TCFD Report on page 76.Climate Change-continuedPfizer 2023 Impact Report28IntroductionGovernanceSocialEnvironmentAppendixESG PerformanceEnvironmentAccelerating Action Across Our Supply ChainRecognizing that our Scope 3(value chain)GHG footprint is approximately four times that associated with our direct operations,Pfizer has been driving action throughout our value chain to help address the complex threat of climate change.Procurement of goods and services,which is essential to producing medicines and vaccines,is the most significant contributor to our Scope 3 emissions.We therefore expect all our suppliers to commit to ambitious,science-based GHG reduction targets and have integrated environmental criteria in our supplier sourcing,contracting,and performance management processes.In 2023 we conducted a virtual supplier summit to communicate our expectations and provide resources to assist suppliers in progressing climate action.To support suppliers in their decarbonization journey,we encouraged energy PPA education through the Energize program and offered sponsorships for the Activate program,a collective initiative that targets sustainability/GHG emission improvements at active pharmaceutical ingredient(API)suppliers including Contract Manufacturing Organizations.As a result of our engagement efforts,51%of our suppliers of goods and services by spend have committed to science-based emission reduction targets,an increase of 22%compared to 2022.We have also continued to make progress in reducing emissions associated with upstream transportation and distribution.We worked internally to educate over 1,500 logistics colleagues on environmental sustainability principles and to improve data and analytics across all markets where Pfizer operates.We continued to transition shipments from air to ocean where possible and engaged with our third-party logistics providers to identify and invest in opportunities to use low emission fuels and vehicles to deliver our medicines to markets around the world.We began working with one of our transporters to pilot the use of electric trucks to decarbonize shipments in some U.S.markets and are working to decarbonize all full truckload shipments within Europe.SUPPLIER ENGAGEMENT RECOGNITIONPfizer has been recognized by CDP as a Supplier Engagement Leader for six consecutive years for our work to reduce environmental risks in our supply chain.Climate Change-continuedPfizer 2023 Impact Report29IntroductionGovernanceSocialEnvironmentAppendixESG PerformanceEnvironmentPfizer has a long history of using the concepts of green chemistry and promoting them across the industry.Through scientific innovation we strive to design more efficient processes that can reduce the environmental impact of our medicines throughout the product life cycle.To expand on this,we are integrating sustainable product design principles within our R&D processes.We aim to positively impact our environmental performance by systematically conserving energy,reducing water and raw materials usage,driving out waste,and embracing circular solutions where possible.The principles also serve to educate and inform our colleagues,define key metrics and performance targets,and encourage innovation through collaboration and partnerships.In 2022,we began conducting representative life cycle assessments(LCAs)for small molecules,large molecules,vaccines,and devices to help identify those aspects of the development process that present the greatest opportunity for impact reduction.We progressed a number of LCAs in 2023,including the first for an mRNA vaccine,to add to our understanding of the impact of our products.The data generated from these assessments is shared with our scientists,researchers,and engineers to help support sustainable innovation and impact reduction.In 2023,Pfizer joined a consortium with seven other pharmaceutical peers to establish a consistent framework for conducting LCAs of pharmaceutical products,aimed at defining environmental product category rules for medicines,potentially for a publicly available standard.Pharmaceuticals in the Environment Pharmaceuticals in the environment and antimicrobial resistance(AMR)continue to be important environmental issues for our industry.Pfizer is committed to limiting discharge of APIs to wastewater from our manufacturing processes using environmental risk assessment methodologies and emission control practices and technologies.As an active member,Pfizer follows the best practices in the AMR Industry Alliances(AMRIA)Antibiotic Manufacturing Standard.We are working toward our goal of achieving the industry published targets(Predicted No Effect Concentrations)for antibiotics by 2025 and are piloting innovative wastewater management and treatment practices at several sites to advance our management of wastewater discharges.In 2023,Pfizer continued to participate in the development of the certification program designed to demonstrate implementation of AMRIAs Antibiotic Manufacturing Standard through an independent third-party certification body.In collaboration with BSI Standards Limited,Pfizer participated in assessments to pilot the certification process at one of our API manufacturing sites and one of our contract manufacturer antibiotic drug product sites.These assessments indicated compliance with the AMRIA Standard and both sites were recommended for certification.Additionally,learnings from these pilots were used to shape the certification program,which officially launched in June 2023.Pfizer is pursuing opportunities with our internal network,suppliers,and contract manufacturers to implement certification of our antibiotic products.Our efforts to promote adherence to voluntary discharge limits across our supply chain were recognized in a report published by the Access to Medicine Foundation that assesses steps that pharmaceutical manufacturers are taking to curb the development and spread of AMR(AMR Report on Responsible Manufacturing,August 2023).WasteCentral to our sustainable medicines program is the minimization of waste across our sites globally.We pursue process improvements in our research,development,and manufacturing operations through next-generation design projects and the implementation of green chemistry and other sustainability practices.Pfizer sites are expected to consistently seek opportunities to reduce,reuse,repurpose,and recycle materials such as packaging and plastics.We use an internal performance metric based on hierarchy of control principles(avoid,reduce,reuse,recycle,dispose)to drive waste handling decisions and promote minimization.In 2023,we introduced an initiative to minimize waste sent to landfill from our manufacturing sites.We demonstrated our objective of landfill avoidance by sending the approximately 8.6 million kilograms of waste resulting from the July 2023 tornado that impacted our Rocky Mount,North Carolina,site to waste-to-energy facilities.Since 2019,we have reduced the quantity of waste from routine operations sent to landfill by over 5.4 million kilograms.Pfizer participates in the Pharmaceutical Product Stewardship Work Group(PPSWG)in the U.S.and MEDSdisposal in Europe to help enable proper disposal of unused medicines.Sustainable MedicinesPfizer 2023 Impact Report30IntroductionGovernanceSocialEnvironmentAppendixESG PerformanceEnvironmentWater Stress The availability of and access to clean water is a basic human need globally that must be addressed locally.Pfizers Water Stewardship position statement describes our commitment to being good stewards of the water we use to make medicines and vaccines,particularly in water-stressed areas.To this end,we completed water stress assessments at all Pfizer sites to identify water quality,scarcity,and availability risks across our network and are developing action plans for sites with elevated risk scores.These plans include elements such as quantifying water use,implementing mitigation plans and establishing water conservation targets,protecting water quality,improving wastewater treatment where necessary,evaluating recycling practices,and engaging with surrounding communities.We will measure progress at our internal sites while engaging with our key suppliers in water-stressed areas to encourage them to develop and implement similar action plans.BiodiversityPfizer is evaluating our potential impacts and dependencies on nature and biodiversity to further our understanding and address growing stakeholder expectations.In 2023,we completed biodiversity risk assessments for our manufacturing and R&D sites and are developing mitigation plans for sites located in sensitive areas as defined by the World Wildlife Fund Biodiversity Risk Filter tool to minimize the impacts of our operations on local habitats and native species.Several of our sites have active biodiversity teams who work with local communities on a variety of habitat restoration and conservation activities appropriate to the local surroundings,including dedicating areas to biodiversity improvements and preservation.In 2023,we introduced an internal initiative to increase native biodiversity on sites undergoing significant construction or renovation,including by working with local ecologists and consultants to create biodiversity and habitat improvement strategies.Sustainable Medicines-continuedPfizer 2023 Impact Report31IntroductionGovernanceSocialEnvironmentAppendixESG PerformanceIntroductionGovernanceSocialEnvironmentAppendixESG PerformanceAt Pfizer,our Purpose is rooted in achieving social good.We know that when we succeed,our breakthroughs can potentially have life-changing effects.We aim to address illnesses from widespread infectious diseases to conditions with historically unmet need.Pfizer is mindful of the urgency of our mission,as the world fights against the spread of deadly new diseases and struggles with inequities in health outcomes among populations.Our goal is to leverage partnerships and programs to allow quick and widespread access to our breakthrough medicines and vaccines around the world.Social32-Innovation and Global HealthProduct InnovationOur Innovations are Guided by Patient Needs34-Equitable Access and PricingHealthcare InfrastructureGlobal Health System StrengtheningProduct Donations Patient Centricity38-Our PeopleColleague EngagementGrowth and DevelopmentHealth,Safety,and Well-beingColleague WellnessDiversity,Equity,and Inclusion(DEI)PartnershipsEnterprise Colleague Resource GroupsPay EquityOpportunity Parity External RecognitionHow our approach to social issues supports the SDGsGood Health and Well-BeingWe aspire to ensure health and well-being for all at all ages through equitable access to medicines and vaccines.Gender EqualityWe aim to end discrimination against women,ensure equalopportunities for leadership and access to reproductive health.Decent Work and Economic GrowthWe promote inclusive and sustainable economic growth,employment,and decent and safe working environments.Reduced InequalitiesWe empower and promote the social and economic inclusion of all,irrespective of age,sex,disability,race,ethnicity,origin,religion oreconomic or other status.Partnerships for the GoalsWe are working to create new partnerships to help attain relevantsustainable development goals.More information on the SDGs here.Pfizer 2023 Impact Report32IntroductionGovernanceSocialEnvironmentAppendixESG PerformanceSocialAs the global health landscape continues to evolve,so do we,making innovation one of our greatest tools as we aim to uncover new combinations,designs,and advances to help address an array of challenges.But medicinal solutions are only part of the equation:getting vaccines and therapies to patients who need them,regardless of location,requires innovation in delivery systems.Pfizer focuses on both aspects of innovation by investing in the right people and partnerships.Pfizer colleagues continue to break barriers in the discovery and delivery of treatments and solutions with a relentless focus on providing for underserved and vulnerable communities around the world.Our strategic public and private partnerships allow for reach and scale when key players are brought together.Product Innovation At Pfizer,we measure ourselves by our pursuit of breakthroughs that change patients lives.This means prioritizing innovation and accelerating our efforts to bring solutions to those who need them.Our acquisition of Seagen Inc.helps position us to accelerate the next generation of breakthrough treatments for people with cancer.Looking ahead,our current pipeline as of January 30,2024,consists of 1121 programs in development(from Phase 1 through registration)and reflects how we empower our scientists to work efficiently and with an emphasis on quality.Reduced cycle times,while continuing our focus on safety and quality,can help get our breakthroughs to patients faster,potentially addressing more unmet needs.In 2023,we achieved an end-to-end success rate of 17%from first-in-human(FIH)to approval at a new molecular entity(NME)levelwhich is nearly 10 times our 2010 performance.Our Purpose Blueprint sets forth a new ambition to change a billion lives a year by 2027.This ambition focuses on the patient and how many lives we can impact.Our core business principles recognize that Time is Life,encouraging us to develop medicines at lightspeed,and that Trust is Everything,continuing to prioritize quality,safety,and integrity.DIGITAL INNOVATIONGreater social impact is the result of our focus on excellence and productivity as we get more life-changing medicines into the hands of patients at a faster rate.Pfizer responsibly leverages digital,data,artificial intelligence,and machine learning as a complement to human insights to accelerate innovation in the interest of patients at every stepfrom discovery to clinical development,manufacturing,distribution,and commercializationand to enable our clinical,logistics,and other experts across the business to spend more of their efforts developing and delivering breakthroughs that change patients lives.Innovation and Global Health1 Includes Seagen Inc.data.Pfizer 2023 Impact Report33IntroductionGovernanceSocialEnvironmentAppendixESG PerformanceSocialOur Innovations are Guided by Patient Needs We are focused on advancing science and innovation for patients in therapeutic areas including the following:OncologyPfizer has deep scientific and biologic understanding in oncology,the study and treatment of cancer,which impacts millions of lives every year.Pfizers acquisition of Seagen Inc.demonstrates our commitment to discovering and developing medicines that significantly improve and extend the lives of people with cancer.As an example,we are proud to focus on treatment for multiple myeloma(MM),an aggressive and currently incurable blood cancer that affects plasma cells made in the bone marrow.MM is the second most common type of blood cancer,with over 35,000 new cases diagnosed annually in the U.S.and 176,000 globally.Vaccines Pfizer is working to deliver breakthroughs in vaccines against invasive pneumococcal disease in infants and children and against respiratory syncytial virus(RSV).RSV is a contagious virus that can be dangerous for infants and older adults and can cause severe respiratory infections.Alopecia Areata We look forward to seeing how our work may transform the lives of those who live with severe alopecia areata,an autoimmune disease characterized by patchy or complete hair loss on the scalp,face,or body.This d
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ourPART NERSourCO F FE EourCOMMUNI T I E SourPLA NETMM X X IIENVIRONMENTAL&SOCIAL IMPACTreportSTAR BU C KS 2 02 2GLOBALourPART NERSourCO F FE EourCOMMUNI T I E SourPLA NETMM X X IIENVIRONMENTAL&SOCIAL IMPACTreportSTAR BU C KS FISCAL 2 02 2GLOBALGlobal Environmental&Social Impact Report 2subsection title 2023 Starbucks Corporation.All rights reserved.SECTION TITLEGlobal Environmental&Social Impact Report 2 2023 Starbucks Corporation.All rights reserved.our fiscal 2022 reportINTRODUCTIONWhen Starbucks opened in 1971,our vision for success was to be a different kind of company.Starting in fiscal year 2022(FY22),we embarked on an ambitious journey to reinvent ourselves,building on more than 50 years of global impact.This journey includes making key investments in Environmental,Social and Corporate Governance(ESG)strategies that help us uplift our partners and customers,give back more than we take from our planet,create responsible growth for our company and operate in a manner that supports the resilience of our business.Our commitment to transparency,intentionality and accountability underpins all our efforts to share extensive data on our progress against our ambitious ESG goals,business practices,work in sustainability and our commitment to the communities we serve.Since 2001,we have proactively published this annual update on key ESG programs and progress.Investing in our PartnersBuilding a More Sustainable,Equitable and Resilient Future for Coffee,our Communities and our PlanetLeadership and Governance123THREE PRIORITIES GUIDE OUR ONGOING EFFORTS:As always,we are approaching our ESG priorities with the same creativity and consistency our partners(employees)bring to their work every single day.Through our ESG efforts,we are working to modernize and transform the Starbucks experience in our stores and recreate an environment that is welcoming and safe for all where we uplift one another with dignity,respect and kindness.MM X X II 2023 Starbucks Corporation.All rights reserved.Global Environmental&Social Impact Report 3table of contentsSECTION ISECTION IIIREPORT APPENDIXSECTION IIINVESTING IN OUR PARTNERSLEADERSHIP AND GOVERNANCESUPPORTING DOCUMENTS AND DATA TABLESBUILDING A MORE EQUITABLE,SUSTAINABLE AND RESILIENT FUTURE FOR COFFEE,OUR COMMUNITIES AND OUR PLANET44856235 Partner Experience 17 Partner Engagement 22 Fiscal 2023 Highlights25 Our Communities 31 Our Planet 38 Coffee and Our Supply Chain 45 Fiscal 2023 Highlights 46 Starbucks Accolades55 About This Report57 Goals Summary Scorecard 64 Our Planet:Data 68 SASB Reporting 72 Human Rights74 Occupational Health and Safety Standard 77 External Auditor Assurance LettersGlobal Environmental&Social Impact Report 4 2023 Starbucks Corporation.All rights reserved.SECTION IINVESTINGPARTNERSin ourGlobal Environmental&Social Impact Report 5 2023 Starbucks Corporation.All rights reserved.partner experienceMM XXI IAt Starbucks,we like to say that we are not in the coffee business serving people,but in the people business serving coffee.Here,our employees who we call partners are the heart of the Starbucks experience.Starbucks took significant action in FY22 to improve our partner experience through increased wages,additional training,equipment upgrades and expanded benefits.Our wage increases,training program expansion and equipment upgrades for U.S.retail partners in FY22 totaled$1 billion.Starbucks effort to improve our partners experience is founded on a deep commitment to advance inclusion,diversity and equityand the belief that we are at our best when we create inclusive and welcoming environments.INVESTING IN OUR PARTNERSGlobal Environmental&Social Impact Report 6 2023 Starbucks Corporation.All rights reserved.partner experienceINVESTING IN OUR PARTNERSStarbucks is proud to offer a wide range of benefits that allow our partners to choose the plans and programs that best support their individual needs and goals.In the U.S.,benefits provided to all eligible part-and full-time partners include comprehensive health coverage,annual Bean Stock grants,retirement savings matching,Lyra for mental health,commuter benefits,Spotify Premium,paid time-off,paid parental leave,fertility benefits and more.PROUDLY SERVING THE BEST BENEFITS IN THE U.S.FOR HOURLY RETAIL WORKFUTURE ROAST 401(K)Starbucks matches 100%of the first 5%contributed each pay period(regardless of whether the contribution is 401(k)pre-tax,Roth after-tax or a combination of both)STARBUCKS COLLEGE ACHIEVEMENT PLANPartners can earn their first bachelors degree online with 100%tuition and fees covered upfront through Arizona State Universitys online degree programsFAMILY EXPANSION REIMBURSEMENTFinancial assistance for partners who are growing their families through adoption,surrogacy or intrauterine insemination(IUI),up to$40,000 per partnerMEDICAL,DENTAL AND VISIONComprehensive medical,dental and vision coverage with choices for partners,their spouse or domestic partner and childrenBEAN STOCKYearly grant of restricted stock units,which vest over two yearsSTUDENT LOAN MANAGEMENTAccess to resources to help better manage student debtPAID PARENTAL LEAVEPaid leave for birth and non-birth parentsMENTAL HEALTH BENEFITFree mental health therapy for partners,their spouse or domestic partner and childrenGIVING MATCHStarbucks matches up to$1,000 per year per partner in volunteer hours and financial donations to qualified non-profit organizationsINCENTIVIZED SAVINGS PROGRAMIncentivized savings plan for short-term goals and unplanned financial challengesDACA FEE REIMBURSEMENTReimbursement for government-mandated DACA renewal feesPARTNER AND FAMILY SICK TIMEPaid sick time for partners to care for themselves and their familiesGlobal Environmental&Social Impact Report 7 2023 Starbucks Corporation.All rights reserved.partner experienceINVESTING IN OUR PARTNERSOur benefits reflect our mission and commitment to put our people first including more than 250,000 U.S.partners representing diverse communities.We offer the highest-rated benefits in the U.S.for hourly employees1 inspired by direct collaboration with partners.As an industry leader in compensation and pay equity,were constantly expanding benefits and opportunities.We proudly offer our world-class benefits to eligible part-time and full-time partners across retail,manufacturing and enterprise(corporate),including:Comprehensive health coverage(medical,dental and vision).A highly competitive 401(k)program with company match.Bean Stock Starbucks continues to be one of the only retailers to offer a stock program that includes part-time retail hourly partners.As part of the$1 billion in investments to improve our U.S.partner experience,our industry-leading core benefits package expanded and evolved in FY22 to meet their needs with plans for continuous improvement and updates in progress.We also offer global Starbucks partners relevant benefits that help address unique needs in different parts of the world.In 2017,Starbucks China introduced a first-of-its-kind program to provide critical illness insurance for parents of eligible partners.Just last year,it launched“14th Month Pay,”a pioneering initiative giving retail partners an additional months salary as a bonus on top of the 13th month pay they are eligible for,to be paid out at the end of every financial year.Partners can also select from a wide array of innovative flexible benefits such as HPV vaccinations and pawternal care for new pets.Starbucks China partners also enjoy opportunities to pursue their coffee passion and career aspirations through initiatives such as talent exchange and barista championships.Key initiatives launched in the U.K.and Europe,Middle East&Africa(EMEA)regions include pay increases,maintaining a premium to national living wage,free food on shift and an extra holiday.Partners in these regions also received a“share of success”bonus in FY22,amounting to 4.3 million in bonus payments.Tata Starbucks Limited,a joint venture,became the first food and beverage company in India to establish a company-wide,five-day work week for all partners.The company also embraces flexibility through its connected workplaces program,where its non-retail support partners work in hybrid,field support and remote roles,and store partners can experience both part-time and full-time roles.Tata Starbucks also provides meaningful opportunities and comprehensive benefits for partners including providing a graduation support program to all full-time and part-time Tata Starbucks partners.The company offers many health and wellness programs including free mental and emotional counseling to partners and their family members,and an optional company-subsidized parental insurance program.In 2021,Tata Starbucks inaugurated the Two-Wheeler Mobility Support Program to help partners purchase a two-wheeler vehicle for professional or personal use,enhancing their independence and commuting experience.1 As ranked by Aon,a leading global professional services firm,against other major retail employers.“Core to offering innovative benefits that truly make a difference in partners lives is us working together with our partners to evolve those benefits and co-create Starbucks future.I firmly believe that when we invest in our partners,we invest in the success of Starbucks.”SARA KELLY,EXECUTIVE VICE PRESIDENT AND CHIEF PARTNER OFFICERGlobal Environmental&Social Impact Report 8 2023 Starbucks Corporation.All rights reserved.partner experienceINVESTING IN OUR PARTNERSTotal Compensation and Retirement In FY22,Starbucks announced that the company:Increased minimum starting pay rate for all U.S.hourly partners to$15/hour.Achieved an average national pay rate for all U.S.hourly partners of nearly$17/hour.Provided Starbucks shares via the Bean Stock program to more than 230,000 partners in 21 markets.We are invested in the total health of our partners including their financial health.In FY22,we announced that the minimum starting rate for all U.S.retail hourly partners is$15/hour.On average,Starbucks hourly partners earned nearly$17/hour nationally,which has improved to$17.50/hour in FY23.Our eligible tenured hourly partners received at least a 5%raise for two to five years of service,and at least a 7%raise after five years.We help our partners save for emergencies,the future and retirement in an ever-changing economy.In FY22,we announced the addition of two new programs to help partners manage their savings and income.The Starbucks Financial Resilience Toolkit includes topics ranging from budgeting and short-term savings to long-term savings and retirement tips and guidance.We know that many of our partners have student debt,so a new program provided by Tuition.io provides partners with payment strategies,student loan management coaches and links to take action.The Starbucks Financial Resilience Toolkit and the Tuition.io initiatives join our robust savings and retirement benefits.Starbucks Future Roast,our signature 401(k)savings plan,allows partners to contribute pre-tax or Roth after-tax dollars,with a Starbucks match for contributions.In partnership with Fidelity,all eligible U.S.partners can now participate in My Starbucks Savings,a way to save for the unexpected,including a Starbucks match of$25 and$50 credits at key savings milestones up to a total of$250 per partner.We know that our partners are the foundation of our success,so we want them to share in that success through Starbucks stock ownership.Bean Stock began in 1991,on the same day Starbucks opened its 100th store.The landmark program that awards partners with company stock was the first of its kind in the retail industry.During FY22,more than 230,000 partners in 21 markets received Bean Stock,including Austria,Great Britain,Italy,Switzerland,Japan,China,Canada and the United States.Partners in North America can also take advantage of the Starbucks Stock Investment Plan(S.I.P.),a quarterly stock purchase plan that allows Starbucks partners to buy Starbucks stock at a 5%discount.Global Environmental&Social Impact Report 9 2023 Starbucks Corporation.All rights reserved.partner experienceINVESTING IN OUR PARTNERSPartner Experience Innovation CenterLaunched the Partner Experience Innovation Center to reimagine and improve the partner experience.Retail partners create thousands of meaningful moments each day for our customers,all around the world.At the same time,we know that our partners have endured a challenging few years from a global pandemic upending our day-to-day lives,to facing the ongoing impacts of a strained supply chain.In FY22,we announced approximately$1 billion in investments in wages,benefits,training and equipment to radically improve the U.S.retail partner experience the result of dozens of collaboration sessions across the country where hundreds of retail partners and leaders met to co-create the future of Starbucks.The newly-formed Partner Experience Innovation Center(PEIC)was created to reimagine the partner experience and build trust with our partners by addressing their biggest challenges.When we meaningfully invest in an experience that enables our partners to thrive,they become more engaged and better connected with our customers,which drives our business performance.Thriving partners are a catalyst to building a stronger Starbucks business and brand.Global Environmental&Social Impact Report 10 2023 Starbucks Corporation.All rights reserved.partner experienceINVESTING IN OUR PARTNERSInclusive HealthcareWe will always work to ensure that our partners have access to quality healthcare and the support services they need.In FY22,we added to our extensive healthcare benefits with a healthcare reimbursement program to ensure that all partners can receive reimbursement for travel expenses for abortion or gender-affirming procedures when they cannot legally access services in their state of residence and do not have a provider within 100 miles of their home.In FY22,we also broadened the Starbucks Family Expansion Reimbursement program,which assists partners with the costs of growing their families through adoption,surrogacy or fertility treatments.These efforts in FY22 build on our long-standing commitment to ensuring that our partners have access to quality healthcare regardless of where they live or what they believe.In 2018,Starbucks broadened its health insurance options for transgender partners beyond gender reassignment surgery(which had been covered since 2013),to include procedures that had previously been considered cosmetic.All U.S.partners who welcome a new child by birth,foster or adoption can access paid parental leave.Starbucks also provides all U.S.partners and qualified family members access to 20 free sessions a year with a mental health therapist or coach through Lyra Health,and free access to Headspace.We also offer all U.S.partners the option to work with Starbucks Advocates a team of individuals dedicated to working directly with partners year-round who are knowledgeable about healthcare coverage and available to help partners with complex health benefits questions.Starbucks College Achievement PlanNearly 2,150 partners graduated from college using Starbucks College Achievement Plan(SCAP),with more than 23,000 partners participating in the program in FY22.As part of our commitment to help our partners succeed in career and life even beyond Starbucks we offer 100%upfront tuition coverage for a first-time bachelors degree to eligible partners in the U.S.through SCAP,in partnership with Arizona State University(ASU).SCAP participants have access to more than 140 bachelors degree programs,and since the start of the program more than 9,100 partners have used SCAP to graduate from college.Starbucks also offers the Pathway to Admission program,an expansion of the SCAP benefit.Through this program,Starbucks and ASU provide an admissions pathway for partners who do not initially qualify for admission.Through Pathway to Admission,partners can take up to 10 college-level courses to earn their admission into the university,with credit conversion costs fully covered.Partners who are Veterans can extend an additional SCAP benefit to a qualifying family member.Global Environmental&Social Impact Report 11 2023 Starbucks Corporation.All rights reserved.partner experienceINVESTING IN OUR PARTNERSTraining and educational resources are designed to recruit and retain talented people and affirm Starbucks as one of the very best employers in retail globally.The way we hire,develop and advance our partners is a critical pillar in our journey to ensure that all of our partners have the opportunity to thrive at and beyond Starbucks.Barista First 30&Continuous Learning JourneyBaristas in the U.S.receive 42 training hours.As part of our$1 billion investment in improving the retail partner experience,we evolved the Starbucks training program known as Barista Basics into Barista First 30,a 42-hour training program to be completed in the first 30 days of employment that covers all the foundations of being a Starbucks partner from mission and culture to the skills needed to serve customers in our stores.Barista First 30 nearly doubles the number of training hours provided in the previous program and is followed by a continuous learning journey that coincides with the 90-day check-in and 180-day milestone.Our newly designed shift supervisors training program includes nearly 30 hours of training that provides the essential knowledge needed for the role.Taken together,our training ensures that Starbucks store partners can provide a great experience for customers while gaining the skills and information they need to thrive in their roles.In FY22,we also invested in coffee education through the Coffee Master Program.Starbucks partners are certified as Coffee Masters after completing coursework and an exploration of Starbucks coffees in Starbucks Coffee Academy.The Coffee Master program acknowledges partners knowledge and skill with the special designation of the black apron after they finish the robust curriculum.Partners who complete the Coffee Master program are eligible to attend Origin Experience trips trips to coffee-growing regions to experience coffee farms and meet farmers,suppliers and community members.More than 4,500 partners have completed Coffee Masters and earned the black apron since the re-launch in June 2022.In FY23,nearly 1,500 partners completed Coffee Masters,with an additional 1,000 partners enrolled in the program.Talent Attraction&Development More than 160,000 baristas were hired in the U.S.More than 60%of U.S.retail leadership roles were filled from internal partners.Starbucks has a long history as a leading company to attract and develop diverse talent.Starbucks is working side-by-side with partners to ensure that we remain at the top of our field for talent acquisition and development.In FY22,the total partner turnover in North America(U.S.and Canada)was nearly 65%,significantly lower than industry2 turnover rates.2 Defined by the“Bureau Labor Statistics Food and Accommodations Services”TRAINING&DEVELOPMENTGlobal Environmental&Social Impact Report 12 2023 Starbucks Corporation.All rights reserved.partner experienceINVESTING IN OUR PARTNERSWe are dedicated to creating a culture of warmth and belonging,where everyone is welcome and respected.Our work to advance inclusion,diversity and equity at Starbucks has already led to important policies,programs and initiatives.There is still more to be done,and we are committed to taking further actions toward tangible and lasting change.INCLUSION,DIVERSITY AND EQUITYGlobal Environmental&Social Impact Report 13 2023 Starbucks Corporation.All rights reserved.partner experienceINVESTING IN OUR PARTNERSWe are on a journey to advance racial and social equity for our partners,our community and our society.We are building on the work in our prior Civil Rights Assessments,conducted by Covington&Burling,to meet racial,ethnic and gender diversity representation goals across the company.Our goal is to achieve racial and ethnic diversity of at least 30%at all corporate levels and at least 40%at all retail and manufacturing roles by 2025.We also aim to achieve at least 50%women working across all corporate levels,55%women working across all retail roles and 30%women working in manufacturing roles.As disclosed in our 2023 Proxy Statement:Our Board of Directors has 38%person of color representation(three out of eight members)and 25%representation of women(two out of eight members).Goals and FY22 results3:3 Demographic percentages represented in this section have been rounded.regional vice president31c%regional director32P%district manager33a%store manager39h%shift supervisor47qrista53s%Representation of POC and women in retail rolesGoal:At least 40%People of Color(POC)representation and 55%women in all retail roles(regional vice president,regional director,district manager,store manager,shift supervisor,barista)by 2025 ROLE POC WOMEN senior vice president 27W%vice president30U%director27Y%manager31U%individual contributor38U%Representation of POC and women in enterprise rolesGoal:At least 30%POC representation and 50%women for all enterprise roles(senior vice president ,vice president,director,manager,individual contributor)by 2025 ROLE POC WOMEN director29%manager30)%individual contributor433%Representation of POC and women in manufacturing rolesGoal:At least 40%POC representation and 30%women in all manufacturing roles(director,manager,individual contributor)by 2025 ROLE POC WOMENRepresentation of age in total workforce Under 30:820-50:15ove 50:3%Under 30:180-50:61ove 50:20%Under 30:170-50:52ove 50:32%RETAIL CORPORATE MANUFACTURINGRACIAL&SOCIAL EQUITY GOALS&REPRESENTATIONGlobal Environmental&Social Impact Report 14 2023 Starbucks Corporation.All rights reserved.partner experienceINVESTING IN OUR PARTNERSInclusion&Diversity Mentorship ProgramWhat began as a pilot in 2021 has quickly become a sought-after learning and development opportunity for partners.Designed to support partners who have been historically marginalized,including Veterans,women,LGBTQIA2 partners and those living with disabilities,the Starbucks Inclusion&Diversity Mentorship Program connects partners to senior leaders,providing 1:1 sessions and ongoing guidance.Global Equity in Pay4Starbucks has achieved and maintained 100%pay equity for women and men and people of all races performing similar work in the U.S.and maintained 100%gender equity in pay in Canada.In 2018,Starbucks achieved pay equity for all partners in the U.S.performing similar work and has maintained equity every year.In FY22,Starbucks once again maintained 100%pay equity for women and men and people of all races performing similar work in the U.S.As of the end of FY22,median pay ratio in the U.S.was 100%for women and partners of all races.We also maintained gender equity in pay in Canada and are working to leverage knowledge and lessons learned in markets where we have achieved pay equity to develop applicable principles for our global markets and share with other leading employers.We continue to work with licensed partners to prioritize pay equity for all partners in all markets.Supporting LGBTQIA2 PartnersStarbucks scored 100%on the Human Rights Campaign Corporate Equality Index for the 12th year in a row.Starbucks is committed to building a culture where everyone is welcome and continue our deep and long-standing commitment to remaining a top employer for LGBTQIA2 people.In FY22,we joined more than 170 organizations and the Human Rights Campaign in urging the U.S.Senate to pass the Respect for Marriage Act,which was signed and passed in December 2022,and we joined other businesses in an advocacy statement to address and oppose policy actions or legislation that discriminate against the LGBTQIA2 community.Our efforts were recognized in 2022,and Starbucks was listed once again as a Best Place to Work for LGBTQIA2 Equality by the Human Rights Campaign.The Starbucks Foundation donated more than$700,000 to support nonprofits serving LGBTQIA2 communities in FY22.We are working to implement our vision of an inclusive and equitable company for all through our work directly with our partners like our expanding benefits for our transgender partners to access gender-affirming care,regardless of where they live.At the same time,we are working to ensure our partners are supported through inclusive policies around the country.(79%response rate)36%(50%response rate)22%(43%response rate)11%RETAIL CORPORATE MANUFACTURING%of U.S.workforce:LGBTQIA2 (self-identification)“In every community we serve,Starbucks is committed to building a culture where all feel welcome.While each of our markets is unique,what unites us as partners is our values our commitment to diversity,equity and inclusion,and our shared goal of creating places of belonging for our partners and customers.”MICHAEL CONWAY,GROUP PRESIDENT,INTERNATIONAL AND CHANNEL DEVELOPMENT4 The geographic scope of this data point includes all company-operated stores in North America(which is inclusive of the U.S.and Canada).Global Environmental&Social Impact Report 15 2023 Starbucks Corporation.All rights reserved.partner experienceINVESTING IN OUR PARTNERSInclusive&Accessible DesignWe know that when we design with and for people who have lived experience with disability,it improves the experience for all partners,customers and communities.Thats why Starbucks is committed to designing,testing and scaling more inclusive design standards and experiences across our store portfolio,starting in the U.S.and then expanding standards globally,with the goal of ensuring that physical and digital Starbucks environments will meet an elevated standard of accessibility by 2030.These standards will provide customers with more options to enjoy both their in-store and digital Starbucks experiences by creating more ways to communicate both visually and audibly and by offering more tools to help customers navigate physical store environments.To advance these standards,Starbucks is testing technology solutions in select store locations including:Speech-to-text technology that provides a live visual display of speech for partners and customers to reference when placing or picking up an order.Order readiness notifications through a customer order status board that visually provides an update and confirms when an order is ready.These efforts build on other accessible design improvements over the last year.Since 2021,Starbucks has offered free Aira service,which connects people who are blind or have low-vision to trained,professional visual interpreters who provide instant access to visual information about the customers surroundings through a smartphone app.Starbucks also offers multiple formats of the menu including large-print and Braille menus in all stores in the U.S.and Canada.Globally,Starbucks operates 16 Signing Stores that provide a space for the Deaf and hard of hearing community to connect through sign language and celebrate Deaf culture.Disability Inclusion Starbucks scored 100%on the Disability Equality Index.Starbucks is recognized as one of the DEI Best Places to Work for Disability Inclusion.Over 1 billion people have a disability across the globe,and it is a strength.And at Starbucks,we believe it is our responsibility to raise the bar when it comes to creating a more inclusive environment for our partners and customers living with apparent and nonapparent disabilities.Together with our community partners,we are increasing accessibility resources and supporting the development of evolving employer practices on Access and Disability Inclusion.As a member of Disability:INs Inclusion Works program,a national forum for peer employers,Starbucks remains committed to Disability:INs pledge,Are You In committing to advance disability inclusion in the workplace.(88%response rate)14%(60%response rate)11%(60%response rate)13%RETAIL CORPORATE MANUFACTURING%of U.S.workforce:People with disability(self-identification)Global Environmental&Social Impact Report 16 2023 Starbucks Corporation.All rights reserved.partner experienceINVESTING IN OUR PARTNERSRefugee SupportMore than 1,100 refugees hired in the U.S.,Canada and EMEA in FY22,bringing the total of refugees hired to more than 4,000 since 2017.More than$1.3 million donated to support nonprofits serving refugee communities from The Starbucks Foundation.We have a longstanding history of creating opportunity and investing in the people who are a part of the communities where we do business.While we did not meet our 2022 goal of hiring 10,000 refugees globally,we remain committed to the refugee community and staying transparent with partners,customers and stakeholders on our progress.Our support goes beyond employment opportunities.In FY22,The Starbucks Foundation has awarded more than$1.3 million to support nonprofits providing humanitarian assistance and other programs to help refugees find safety and rebuild their lives.This includes support to more than 200 grassroots nonprofits across the U.S.and Canada that provide resources and services for refugees and where Starbucks partners are engaged.Veterans&Military Families5Hired an additional 4,580 Veterans and military spouses.Our goal is to hire 5,000 military Veterans and military spouses annually,and in FY22 we hired more than 4,500 Veterans and military spouses across U.S.Starbucks roles.These intentional hiring commitments are intended to welcome new partners from communities that may experience barriers to employment.Our support for Veterans and their families includes our partnerships with nonprofit organizations like Blue Star Families,which helped foster connections in over 200 military communities nationwide.In partnership with Operation Gratitude,we donated more than 5,000 comfort items to our nations Veterans and caregivers in military treatment facilities nationwide.And because coffee is at our core,Starbucks donated more than 6.8 million cups of coffee to our Veteran and military communities in FY22.We also support our military partners and their families with Military Family Stores.Please refer to Our Communities for more information on these specialized stores.5 In FY21,we reported that 7,720 Veterans and military spouses hired in FY21 across the U.S.We have identified an error in our data collection process that led us to incorrectly report the data for FY21.The correct data point is:4,704 Veterans and military spouses were hired in FY21 across the U.S.The data collection error was identified and corrected for our FY22 reporting.Global Environmental&Social Impact Report 17 2023 Starbucks Corporation.All rights reserved.partner engagementMM XXI IBeing a Starbucks partner means aspiring to become part of something bigger:inspiring positive change in the world and growing in career and in community.To make that vision a reality,we invest in our partners well-being,professional learning and community and civic engagement.INVESTING IN OUR PARTNERSGlobal Environmental&Social Impact Report 18 2023 Starbucks Corporation.All rights reserved.partner engagementINVESTING IN OUR PARTNERSPartner Surveys643%of U.S.store partners,54%of Canada store partners,and 86%of North America non-store partners completed the Partner Experience survey.Starbucks has a long history of direct engagement with our partners,and we make it a priority to routinely create the space for open and honest two-way conversations.We have established a cross-functional Support Partner Experience team,made up of partners across business units.This team focuses on key areas of opportunity that partners have shared and will host design sprints on specific topics shared in collaboration sessions.The partner surveys leverage a census approach,with all U.S.company-operated partners invited to participate and paid time for hourly partners,including retail partners,to complete the survey.The feedback from these surveys is used to inform the partner experience.6 The geographic scope of this data point includes all company-operated stores in North America.Global Environmental&Social Impact Report 19 2023 Starbucks Corporation.All rights reserved.partner engagementINVESTING IN OUR PARTNERSStarbucks Global Academy is a free,open-access platform for Starbucks partners,customers,suppliers and community members worldwide to access top-quality educational content centered around Starbucks areas of passion and expertise.Developed in collaboration with Arizona State University,the Starbucks Global Academy offers learners the opportunity to expand their understanding of key Starbucks initiatives and select coursework from a collection of more than 100 carefully selected courses.To Be Welcoming7More than 21,000 people enrolled in the course with more than 12,000 completions.Our dedication to equal opportunity involves creating a workplace where diversity is celebrated and establishing a workplace culture that promotes inclusiveness.In 2018,we partnered with Arizona State University to develop the To Be Welcoming anti-bias program for our partners.In 2020,we made this 15-course curriculum available to the public for free.We exceeded our goal of enrolling 100,000 cumulative learners in FY22,reaching nearly 109,000 enrollments and more than 45,000 total course completions.Because the course is open to partners,customers and community members,our program helps individuals across our community engage with challenging subjects through research-based content.We are excited to report that 81%of people who have completed the course since 2018 are Starbucks partners and 19%are non-partner learners.Greener Apron7More than 15,500 partners enrolled in the course with nearly 9,000 completions.The Greener Apron course is open to partners and the public and equips learners with the information they need to learn about sustainability and the skills and tools to become changemakers at work,at home and in their communities.In FY22,the course was updated in partnership with the World Wildlife Fund and Intersectional Environmentalists to be shorter and more relevant and accessible to partners.Since its launch,nearly 52,000 people have enrolled in the course,with nearly 25,000 completions.Community Champions Course7Developed and launched new,open-source Community Champion Fundamentals course on Starbucks Global Academy.Starbucks empowers our partners,customers and communities to take action and make a difference at home and around the world as Community Champions.Community Champions serve their communities in big and small ways to make a positive impact for people and the planet.In FY22,we created a new Community Champion Fundamentals course on Starbucks Global Academy to help partners and community members understand how to identify community needs and then align those needs with their own passions and motivators for doing good.Starbucks Coffee AcademyNearly 150,000 enrollments and more than 96,000 course completions.The Starbucks Coffee Academy offers an in-depth review of the coffee industry and Starbucks pioneering role in responsible sourcing,roasting,blending,brewing and crafting.The modular learning format is open to everyone,and enables learners to select their coffee education journey.Since its launch,more than 285,000 people have enrolled in Starbucks Coffee Academy with more than 160,000 course completions.Third Place Development SeriesFour sessions designed and implemented,with nearly 3,000 people enrolled and more than 300 course completions.Starbucks seeks to create a third place a warm and inviting place where people can convene and connect.Through videos and discussion prompts,the Third Place Development Series intends to spark insights and confront biases as we strive to create more inclusive practices in our communities.Starbucks collaborates with external experts to discuss important issues and create a welcoming space for all to form meaningful connections and challenge our own biases through diverse lived experiences.Since its launch,nearly 3,000 people have enrolled in the course with more than 300 completions.STARBUCKS GLOBAL ACADEMY7 The geographic scope of this data point includes globally company-operated markets and licensed markets.Global Environmental&Social Impact Report 20 2023 Starbucks Corporation.All rights reserved.partner engagementINVESTING IN OUR PARTNERSPartner Networks8Partners are engaged in 12 Partner Networks and 114 regional chapters across the U.S.26 Partner Networks are available globally.Our Partner Networks launched in 1996 with the Pride Alliance partner affinity group.These partner-led groups bring together partners and have been celebrated across the global business community as a leading example of employee-led thought leadership.Through shared power,shared accountability and shared success,Partner Networks have helped us define the systems and programs that have proven critical to advancing a culture of equity and belonging.EST.2007Welcome,engage and empower Veterans,military spouses and advocates in cultivating a strong community that embraces Veterans in the workplace and enriches the Starbucks Experience.EST.2006Celebrate the Latinx culture,develop partners and positively impact our customers and communities.EST.2013Develop a global community contributing to the growth of the India market,celebrate Indian culture and support the growth of partners from the region.EST.2020Preserve and celebrate Indigenous cultural values and interweave communities by teaching and understanding our heritage.EST.2007Share the heritage of the African diaspora to develop partners,advise our business and enrich Starbucks contribution to our customers and communities.EST.2006Foster a community of awareness,inclusion and accessibility for partners with apparent and non-apparent disabilities.EST.2015Support and empower the next generation of Starbucks leadership.EST.1996Strive to cultivate an equitable,dynamic and supportive environment for LGBTQ partners,allies and customers.EST.2007Foster meaningful connections and elevate the impact of Pan-Asian partners and allies within Starbucks and the community.EST.2018Welcome,empower and advocate for refugee partners and allies while strengthening and enriching their global Starbucks Experience.EST.2021Educate,engage and empower partners to drive sustainable change.EST.2008Ignite the power of women to make an impact through partners,allies and community.U.S.PARTNER NETWORKS8 The geographic scope of this data point includes globally company-operated markets and licensed markets.Global Environmental&Social Impact Report 21 2023 Starbucks Corporation.All rights reserved.partner engagementINVESTING IN OUR PARTNERSCivic Engagement ResourcesIn FY22,more than 600 people,including customers and partners,accessed voter registration and election information(via Fuel Our Democracy)while more than 17,000 partners used civic education resources via Starbucks Partners Vote.To fulfill our commitment to civic engagement,Starbucks offers various tools and resources to our partners,enabling them to exercise their right to vote in every election.We provide voter education resources to help partners create a voting plan,and facilitate conversations between managers and partners to ensure that partners can participate in elections.Giving Match9Nearly$1.5 million donated to nonprofit organizations.Through the Starbucks Giving Match program,Starbucks recognizes and supports partners individual contributions of eligible financial donations and volunteer time to qualified nonprofit organizations.All active Starbucks full-and part-time partners can request up to$1,000 in matching funds per fiscal year,using any combination of volunteer hours and financial donations to qualified nonprofit organizations.At the end of FY21 and into FY22,our policy was enhanced to allow more access and equity to partners by reducing the minimum volunteering threshold from five hours to one hour($5 per hour in Giving Match)and more recently,by reducing the financial giving minimum threshold from$25 to$5.This change reflects Starbucks desire to support all of our partners in volunteering and giving whether their contributions are big or small.Because of increased partner engagement and utilization of the Giving Match,Starbucks donated nearly$1.5 million to nonprofit organizations in the U.S.and Canada in FY22 representing a nearly 50%increase in Giving Match donations from FY21.9 The geographic scope of this data point includes all company-operated stores in North America.Global Environmental&Social Impact Report 22subsection title 2023 Starbucks Corporation.All rights reserved.SECTION TITLEGlobal Environmental&Social Impact Report 22 2023 Starbucks Corporation.All rights reserved.INVESTING IN OUR PARTNERSAchieved an average national pay rate for all U.S.hourly partners of more than$17.50/hour,with a range of$15 to$24/hour.Partner Investment:Origin ExperienceFrom January through March 2023,800 Starbucks partners(employees)from the U.S.and Canada were selected to travel to Hacienda Alsacia the Starbucks research and development farm in Costa Rica for Origin Experience.Starbucks Origin Experience is an optional development incentive for eligible partners Coffee Masters who represent a variety of roles within the company,from barista to manufacturing to operations leaders to learn,see and experience the hard work,dedication and passion that goes into producing the coffee we serve every day in our stores.Partners see first-hand examples of how Starbucks is leading in the industry and hear from experts in agronomy,processing,buying,farmer support,quality and more throughout a learning visit during Costa Ricas coffee harvest season.Continued Commitment to Our HometownTo help alleviate the burden on partners of trying to address some of the challenges facing Seattle,Starbucks continued its commitment to a unique public-private partnership in Seattle Partnership for Zero.Starbucks will offer some of its downtown stores to be a safe,clean and welcoming space where Partnership for Zero System Advocates case managers with lived experience being homeless can connect with those needing to navigate social services,fill out paperwork and get on the path to permanent housing.Expanding Mentorship Across Starbucks Building on the initial success of Starbucks mentorship program,we announced the expansion of mentorship opportunities to include over 400 U.S.based retail partners,bringing the total number of participants to 1,395.fiscal 2023 highlightsGlobal Environmental&Social Impact Report 23 2023 Starbucks Corporation.All rights reserved.SECTION IIFUTURE FOR COFFEE,OUR COMMUNITIES AND OUR PLANETbuilding a more equitable,sustainable and resilientGlobal Environmental&Social Impact Report 24 2023 Starbucks Corporation.All rights reserved.FUTURE FOR COFFEE,OUR COMMUNITIES AND OUR PLANETWe believe it is our responsibility to build a more sustainable,equitable and resilient future for coffee,our communities and our planet.We are working to create the future we dream of through the lens of humanity,with a deep commitment to globalhuman rights,responsible and ethical sourcing,community leadership from our partners and a focus on giving more than we take from the planet.Global Environmental&Social Impact Report 25 2023 Starbucks Corporation.All rights reserved.MM XXI IEvery day,across the globe,Starbucks works to enhance the well-being of all who connect with the brand,through actions and programs rooted in opportunity and inclusion.Our work is informed by our partners,who live and work in the communities we aim to support.From service projects to spreading messages of hope,together we are working to nurture the limitless possibilities of human connection.FUTURE FOR COFFEE,OUR COMMUNITIES AND OUR PLANETour communitiesGlobal Environmental&Social Impact Report 26 2023 Starbucks Corporation.All rights reserved.our communitiesFUTURE FOR COFFEE,OUR COMMUNITIES AND OUR PLANETOUR STORESCommunity Stores10In the U.S.,seven Community Stores opened in FY22,bringing our total U.S.Community Stores to 28.In Asia,eight Community Stores opened in FY22,bringing our total international Community Stores to 19 stores.Starbucks Community Stores are spaces that aim to help uplift communities in locally relevant ways.The stores are inclusive of several store models from serving under-resourced and historically under-resourced communities,to empowering farmers,youth and women and creating impact in partnership with local nonprofit organizations.These store concepts led by partners who directly connect to the initiative or cause of that store provide intentional and dedicated programming and experiences that support economic opportunity in communities,create pathways to opportunity for Starbucks partners and amplify the positive impact of Starbucks partners and the Third Place.In FY22,15 new Community Stores opened across the nation and around the world.There are 28 Community Stores in the U.S.and 19 outside of the U.S.These stores have provided approximately 175 job opportunities in underserved communities in FY22,bringing overall employment in Community Stores to nearly 700 job opportunities to date.Community Stores also serve as a community gathering space.In FY22,our Community Stores provided four new community rooms,adding to our total of 28 community spaces across all Community Stores.Our goal is to open 100 Community Stores by the end of 2025 in the United States.Military Family StoresOpened 33 Military Family Stores,bringing our total Military Family Stores to 111 stores.Starbucks Military Family Stores serve as a central gathering place for active military personnel,Veterans,their families and surrounding communities.These stores,located near major military bases,provide a sense of connection and support for military families who are often far from their loved ones.Additionally,the stores collaborate with Veterans Service Organizations to link local Veterans and their families with important resources and services.At the end of FY22,111 total Military Family stores were open and serving our Veterans and their families.While we did not meet our goal to open 132 stores by 2022,we will continue to update on our progress annually and anticipate reassessing this goal in the coming fiscal year.Signing StoresFive new Signing Stores opened globally,bringing our total to 16 Signing Stores.Starbucks Signing Stores are staffed by store partners who are proficient in sign language.These stores provide a space for the Deaf and hard of hearing community to connect and celebrate Deaf culture through sign language.Starbucks opened 5 Signing Stores in FY22,and currently operates 16 Signing Stores worldwide.10 The geographic scope of this data point includes globally company-operated markets and licensed markets.Global Environmental&Social Impact Report 27 2023 Starbucks Corporation.All rights reserved.our communitiesFUTURE FOR COFFEE,OUR COMMUNITIES AND OUR PLANETThe Starbucks Foundation11Provided$17.5 million in grants to nonprofit organizations.Established in 1997,The Starbucks Foundation is a distinct Section 501(c)(3)charitable organization under U.S.law and receives funding primarily from Starbucks Corporation.With the mission to strengthen humanity by transforming lives across the world,The Starbucks Foundation provided$17.5 million to over 3,000 nonprofit organizations to enable community resiliency and prosperity in FY22.The Starbucks Foundation makes strategic investments from the first 10 feet in coffee-growing communities to the last 10 feet in neighborhoods where coffee is served,with hyperlocal grants in partnership with partners and licensees,to youth-focused initiatives and in disaster response and resiliency efforts.In addition to the grants made in these key areas,The Starbucks Foundation invested in programs creating a positive impact for people and communities,such as water,sanitation and hygiene(WASH)access,refugee support and to organizations delivering services in our hometown of Seattle.Origin Grants11Achieved our goal of empowering 250,000 women and girls in coffee,tea and cocoa-growing communities,three years ahead of schedule.Announced new goal to positively impact 1 million women and girls in coffee,tea and cocoa-growing communities by 2030.Women play a vital role in their families,on farms and in communities,and they are disproportionately affected by challenges like the climate crisis.To support this effort,The Starbucks Foundation Origin Grants promote womens leadership,advance economic opportunities and provide access to WASH in coffee-,tea-and cocoa-growing communities for women and girls.The Starbucks Foundation exceeded its original goal of empowering 250,000 women and girls by 2025 and now aims to empower 1 million women and girls by 2030.Since announcing its original aspiration in 2018,the Foundation has positively impacted nearly 340,000 women and girls in origin communities.In FY22,the Foundation awarded nine grants totaling nearly$3 million in seven countries,including its first-ever origin grants focused on women farmers in Brazil and Mexico.Neighborhood Grants12Awarded$4.5 million in Neighborhood Grants bringing our total invested in hyperlocal nonprofits to more than$10 million,thanks to more than 45,000 nominations from partners since program launch.The Starbucks Foundation provides Neighborhood Grants to nonprofit organizations nominated by Starbucks partners from the U.S.&Canada to help build sustained impact and inspire increased partner volunteerism in our communities.In FY22,the Foundation received nominations from nearly 30,000 partners and awarded$4.5 million through nearly 3,000 Neighborhood Grants to hyperlocal organizations making a difference in the communities where our partners live and work.Since the launch of the Neighborhood Grants program,the Foundation has awarded more than$10 million to nonprofit organizations.Youth Equity Grants251,715 youth impacted and$1.2 million provided in grants.In FY22,The Starbucks Foundation achieved its commitment to invest$5 million in organizations serving young people of color in the U.S.Over the last two years,The Starbucks Foundations Youth Equity Grants have supported organizations delivering diversity,equity and inclusion initiatives,youth mentorship and leadership development programs,and life skills for youth through national-and local-level programs.In partnership with organizations like Big Brothers Big Sisters of America,City Year,Covenant House and YWCA USA,the Foundations grants have supported more than 375,000 youth since 2020.11 The geographic scope of this data point includes globally company-operated markets and licensed markets.12 The geographic scope of this data point includes all company-operated stores in North America.Global Environmental&Social Impact Report 28 2023 Starbucks Corporation.All rights reserved.our communitiesFUTURE FOR COFFEE,OUR COMMUNITIES AND OUR PLANETGlobal Community Impact Grants13Awarded over$3.2 million to nearly 90 nonprofits across 42 markets.In March 2022,The Starbucks Foundation announced a goal to invest$30 million by 2030 in a new Global Community Impact Grants portfolio designed to drive locally relevant impact in the communities where Starbucks operates around the world.To realize and scale the initiative,The Starbucks Foundation invites Starbucks licensees that operate Starbucks stores across its three international regions Asia Pacific;EMEA;and Latin America&the Caribbean to nominate local nonprofit organizations for grants and coinvest alongside the Foundation to drive additional impact around the world at the local and regional level.In FY22,The Starbucks Foundation grants and corresponding donations from licensees totaled over$3.2 million to nearly 90 nonprofits across 42 markets.In Indonesia,The Starbucks Foundation and PT.Sari Coffee Indonesia,which operates Starbucks stores in Indonesia,have worked with Prestasi Junior Indonesia since 2019 in support of teaching youth about entrepreneurship through experiential learning.In 2021,more than 450 volunteers were mobilized to conduct experiences with 1,250 students in six cities.Now one of the first recipients of a Global Community Impact Grant in 2022,Prestasi Junior Indonesia will continue to deepen impact through a creative youth entrepreneurship program that will support youth in gaining business skills and building their own micro-enterprises over the coming school year.Disaster Response13Awarded$3.75 million in grants and activated more than$400,000 in customer donations.As part of our mission to uplift communities affected by disaster,The Starbucks Foundation provides grants to help communities prepare for and respond to disasters,as well as build long-term community resilience.This includes national and global support to the American Red Cross and World Central Kitchen,along with local investments based on community needs identified in partnership with Starbucks partners and community-based nonprofits.In FY22,the Foundation responded to support impacted communities,ranging from the Jackson,Mississippi water crisis to the Uvalde,Texas shooting,and engaged customers to join us in supporting hurricane relief efforts in North America and the Caribbean and humanitarian relief efforts for Ukraine.13 The geographic scope of this data point includes globally company-operated markets and licensed markets.Global Environmental&Social Impact Report 29 2023 Starbucks Corporation.All rights reserved.our communitiesFUTURE FOR COFFEE,OUR COMMUNITIES AND OUR PLANETStarbucks FoodShare and Hunger Relief14 Nearly 13 million pounds of food in the U.S.has been diverted from waste streams and donated to hunger-relief organizations which is the equivalent of nearly 11 million meals.15 More than 1 million pounds of food in Canada has been diverted from waste streams and donated to hunger-relief organizations which is the equivalent of more than 1 million meals.More than$10 million re-invested into hunger relief efforts in communities.Since 2016,Starbucks has been committed to supporting hunger relief through its innovative Starbucks FoodShare food donation program in partnership with Feeding America,Second Harvest Canada and other hunger-relief organizations.Since then,Starbucks has invested more than$60 million into hunger relief efforts in the U.S.,and in FY21 made a commitment to reinvest$100 million by 2030 in hunger relief initiatives.Since Starbucks FoodShare was launched in the U.S.in 2016,60 million pounds of food have been diverted from waste streams and donated to hunger-relief organizations which is the equivalent of 50 million meals.Starbucks FoodShare in Canada launched in 2019,and cumulatively through the end of FY22,nearly 2 million pounds of food have been diverted from waste streams and donated to hunger-relief organizationswhich is the equivalent of nearly 2 million meals.Programs to support hunger relief are also operating in international markets including the Dominican Republic,India,Japan,Mexico,New Zealand,Philippines,Singapore,Thailand and the United Kingdom.In FY22,we furthered our commitments to help increase equitable access to nutritious food.Since 2021,$3.3 million,including$1.6 million in FY22,has been invested with 16 Feeding America partner food banks to implement initiatives that address equity in food access by supporting households with individuals who are Black,indigenous,and people of color residing in communities experiencing high food insecurity rates.These 16 food banks are in metropolitan areas with Starbucks Community Stores.In FY22,Starbucks made a$1 million investment with No Kid Hungry to support sustainable and scalable solutions for schools and community organizations feeding children.The investment is aimed at increasing equitable access to nutritious food in high need and historically underserved communities.14 The geographic scope of this data point includes globally company-operated markets and licensed markets.15 According to the USDA,1.2 pounds is equivalent to one meal.Global Environmental&Social Impact Report 30 2023 Starbucks Corporation.All rights reserved.our communitiesFUTURE FOR COFFEE,OUR COMMUNITIES AND OUR PLANETCommunity Resilience Fund$21 million invested through the Community Resilience Fund.In 2021,Starbucks established the Community Resilience Fund with the goal to invest$100 million in the expansion of small businesses and the development of community projects in communities of color.In December 2021 and January 2022,Starbucks invested$21 million in the first seven Community Development Financial Institutions(CDFIs)to receive funding from the Community Resilience Fund.The funds initial investments are centered around 12 metropolitan regions and their surrounding areas in the United States,including Atlanta,Detroit,Houston,Los Angeles,Miami,Minneapolis,New Orleans,New York City,Philadelphia,the San Francisco Bay Area,Seattle and Washington,D.C.Outreach Worker ProgramOutreach workers across eight cities made more than 12,000 customer engagements and more than 1,800 referrals to a stabilizing program and resources.The Outreach Worker program was introduced as a pilot in FY20 to connect partners with local street outreach and social workers who are skilled in directing individuals to stabilizing programs and resources.The program partners with local nonprofit organizations that specialize in connecting individuals facing homelessness,mental health issues and substance use disorders to relevant resources specific to their city.During FY22,the Outreach Worker program scaled to Denver and San Diego,in addition to continuing operations in Chicago,Los Angeles,New York City,Philadelphia,Seattle and Washington,D.C.In FY22,Starbucks announced nearly$500,000 in investments to advance solutions that support those experiencing chronic homelessness in our hometown-the greater Seattle region.These efforts include partnering with the We Are In Coalition to support Partnership for Zero,led by the King County Regional Homelessness Authority(KCRHA),expanding support for nonprofits providing dignified access to basic needs including bathrooms,showers and laundry services for individuals experiencing chronic homelessness,expanding its commitments to the chronically homeless population by supporting Plymouth Housing and extending its investment in Northwest Harvest as part of our Starbucks FoodShare program.Community ChampionsGlobally,more than 43,000 partners took action as Community Champions,volunteering more than 143,000 hours in support of more than 5,000 nonprofit organizations.As Community Champions,Starbucks partners make a difference in the communities where they live and work.Community Champions cultivate connections in and out of stores and create a positive impact for people and the planet through volunteerism,donations,acts of kindness and by learning more about ways to make a positive impact in their community.Starbucks provides partners with tools to engage as Community Champions,build local relationships with nonprofits and empowers partners to grow their impact through resources like a newly launched Community Champion course on Starbucks Global Academy,which is also open to the public.Every U.S.and Canadian partner can access the Community Champion Portal,an online platform that serves as a one-stop-shop for volunteering,giving,requesting a Giving Match,learning about community engagement opportunities and tracking contributions.Partners are taking action as Community Champions in 28 Starbucks markets outside of the U.S.,up from five global markets reported in FY21.In the U.S.,nearly 17,000 partners took action as Community Champions,volunteering more than 71,000 hours in support of nearly 4,000 nonprofits.Outside of the U.S.,more than 26,000 partners took action as Community Champions,volunteering more than 72,000 hours in support of more than 1,000 nonprofits.Global Environmental&Social Impact Report 31 2023 Starbucks Corporation.All rights reserved.MM XXI IStarbucks strives to give more than we take from the planet and to cut our climate,water and waste footprints by half by 2030.We do so with a stronger than ever commitment to a more sustainable,resilient future for our planet and for our communities.We are proud to partner with global organizations like Conservation International,the World Wildlife Fund and the United Nations.Feedback from these groups is essential to our journey towards a sustainable future.To support ongoing collaboration across sectors,Starbucks is a founding member of Transform to Net Zero(TONZ),established in FY20.The initiative works to accelerate the transition to a net zero global economy no later than 2050 by developing and delivering research,guidance and roadmaps to guide businesses in achieving net zero emissions.FUTURE FOR COFFEE,OUR COMMUNITIES AND OUR PLANETour planetGlobal Environmental&Social Impact Report 32 2023 Starbucks Corporation.All rights reserved.our planetFUTURE FOR COFFEE,OUR COMMUNITIESAND OUR PLANETClimate 50solute reduction in scope 1,2 and 3 greenhouse(GHG)emissions representing all of Starbucks direct operations and value chain.Water 50%of water withdrawals will be conserved or replenished across Starbucks direct operations,stores,packaging and agricultural supply chain,prioritizing action in high-risk water basins while supporting watershed health,ecosystem resilience and water equity.Waste 50%reduction in waste sent to landfill from stores(including packaging that leaves stores)and direct operations,driven by a broader shift toward a circular economy.2030 GOALSGlobal Environmental&Social Impact Report 33 2023 Starbucks Corporation.All rights reserved.our planetFUTURE FOR COFFEE,OUR COMMUNITIES AND OUR PLANET2030 GoalsDriven by the passion of our partners,we have set ambitious goals to give back more than we take from the planet and to cut our climate,water and waste footprints in half by 2030,working from a FY19 baseline.We are continuously working towards this bold promise in collaboration with our stakeholders partners,suppliers,non-profit organizations,industry partners,government,farmers and customers.We are proud to partner with global organizations such as Conservation International and the World Wildlife Fund to accelerate collective action for environmental stewardship.Through membership in the United Nations Water Resilience Coalition(WRC),were helping preserve freshwater globally and as a founding member of Transform to Net Zero(TONZ)were collaborating across the private sector to drive the transition to a net zero global economy no later than 2050.Grounded in Starbucks Mission and Values,our climate goal was validated as science-based by the Science Based Targets Initiative(SBTi)in FY21.We govern our sustainability commitments through the Starbucks Global Environmental Council,which is comprised of senior leaders from across Starbucks whose compensation is linked to the achievement of our ambitious goals.We also receive input from our Board of Directors and seek advice from external advisors who are experts and leaders in the sustainability field.FY22 ResultsStarbucks is committed to cutting our climate,water and waste footprints in half by 2030.We set ambitious goals because our commitment to building a more sustainable and resilient future for our planet and our communities is stronger than ever.As we reflect on progress toward our 2030 goals,we are at a crucial point on our journey to becoming a resource positive company.We remain dedicated to collaborating with industry experts to advance scalable solutions across our global business,innovating to drive solutions at scale and working with our partners to engage our customers and communities in our efforts.Compared to our FY19 baseline,GHG emissions increased 6%*,water withdrawals increased by 15%and operational waste sent to landfill increased 5%.At this stage in our sustainability efforts,increases in GHG emissions,water,and operational waste are expected as we see our business grow.We have seen positive progress in our waste diversion rate from 26%in FY19 to 28%in FY22,driven by increased in-store recycling.Broadly,to drive progress towards our 2030 targets,we continue to identify,test,and scale innovative solutions across our global operations,while increasing engagement with our value chain partners and developing our measurement systems.Please find Starbucks comprehensive environmental data and reporting on page 64.*Progress against our GHG emissions target has been restated since original publication on April 20th,2023 due to revised calculations regarding nitrous oxide consumption data.Global Environmental&Social Impact Report 34 2023 Starbucks Corporation.All rights reserved.our planetFUTURE FOR COFFEE,OUR COMMUNITIES AND OUR PLANETUsing our test-and-learn approach,we set five key strategies to meet our 2030 goals that are rooted in science,grounded in Starbucks Mission and Values and informed by our stakeholders,along with comprehensive research and trials:Renewable Energy and Clean Technology16In FY22,Starbucks in the U.S.and Canada maintained 100%renewable energy for company-operated retail operations.Starbucks U.K.company-operated market has achieved the same since FY18.Renewable energy powered 72%of company-operated facilities globally.Starbucks U.K.company-operated market has achieved the same since FY18.For the first time in FY22,Starbucks achieved 100%renewable energy for all North America company-operated facilities,including offices and manufacturing facilities.We remain committed to our effort to expand renewable energy projects in Starbucks markets.Starbucks continues to support the growth of green energy through long-term electricity contracts,direct ownership and by contracting for renewable energy certificates from new projects.In FY22,Starbucks completed its investment in 20 new community solar projects in New York,which are supplying solar energy to more than 24,000 households,small businesses,nonprofits,churches,universities and Starbucks stores.By 2030,Starbucks aspires to lead the retail industry in decarbonization solutions,including electric vehicle charging and onsite solar availability at stores and in adjacent locations.For example,in FY22,Starbucks launched a pilot-program with Volvo Cars to electrify the driving route from the Colorado Rockies to the Starbucks Support Center in Seattle,providing a string of familiar,reliable,clean and safe places to recharge themselves and their battery-powered vehicles.Volvo-branded electric vehicle chargers,powered by ChargePoint,will be available at up to 15 Starbucks stores,roughly every 100 miles on the route,with the first EV chargers online at the Provo,Utah store.Shift away from single-use to reusable packaging Invest in regenerative agriculture,reforestation,forest conservation and water replenishment in our supply chainInvest in better ways to manage our wasteInnovate to develop more sustainable stores,operations,manufacturing and deliveryExpand plant-based menu options13524STRATEGIES FOR CHANGE16 The geographic scope of this data point includes globally company-operated markets and licensed markets.Global Environmental&Social Impact Report 35 2023 Starbucks Corporation.All rights reserved.our planetFUTURE FOR COFFEE,OUR COMMUNITIES AND OUR PLANETGreener Stores17More than 3,500 Greener Stores are certified,including four internationally.The Starbucks Greener Stores Framework,which was announced in 2018 and developed in partnership with the World Wildlife Fund,aims to drive the transformation of retail towards stores with lower environmental impact.The framework includes performance-based standards that cover the entire lifecycle of a store and aim to reduce carbon emissions,water usage and landfill waste.With a goal to build and operate 10,000 Greener Stores globally by 2025,Starbucks verified 3,508 Greener Stores in FY22.In FY22,our work also focused on continuous improvement in the program,launch of innovation measurements and global expansion.Building on the success of our first Greener Store opening outside of North America in Shanghai,in September 2021,we opened Japans first Greener Store in Tokyo in November 2021,which will help inform Starbucks Greener Stores expansion across Japan,and the first Starbucks Greener Store opened in Chile in June 2022.As part of our commitment to open-source educational materials,Starbucks launched the Greener Store Practitioner course on Starbucks Global Academy in FY22 to make the Greener Stores program more accessible to retailers around the world.The course features educational content on sustainability that is broadly applicable and shares the fundamental structure of Greener Stores.Starbucks will translate the course into multiple languages through 2024 and is committed to sharing insights through the Starbucks Global Academy platform as we work to continue to grow and scale the program globally.Starbucks has opened 52 Greener Stores in Latin America and the Caribbean,five in Europe,the Middle East and Africa,five in Asia-Pacific,18 in Japan and eight in China.The Greener Store of the Year is awarded annually to celebrate stores that work to meet the Greener Store parameters for essential energy,water and waste reduction efforts,along with key initiatives to support partners in their work and communities.The Starbucks Greener Store of the Year in FY22 was the Beverly and Atlantic store in Los Angeles,which features 100%renewable energy coverage,landfill diversion programming,solar panels water recycling and sustainable materials in its design.17 The geographic scope of this data point includes globally company-operated markets and licensed markets.This figure has been updated to reflect stores certified as of the end of FY22.A previous version of this report erroneously included stores certified in FY23,which will be published in the FY23 Global Environmental and Social Impact Report.Global Environmental&Social Impact Report 36 2023 Starbucks Corporation.All rights reserved.our planetFUTURE FOR COFFEE,OUR COMMUNITIES AND OUR PLANETReducing Single-Use Plastics&Packaging Waste18Starbucks continues its efforts to shift away from single-use plastics.In FY22,Starbucks expanded its test-and-learn strategy to help make reusables more convenient for customers.The company piloted reusable or returnable cup programs through 20 tests across North America,EMEA and China Asia-Pacific.These tests focus on multiple reusable cup programs or operating models including Starbucks“Borrow-A-Cup”program,100%reusable operating models,financial incentives and promotions,new customer experience upgrades and an emphasis on personal cups and for-here ware.While COVID-19 challenged Starbucks aspirations to increase the use of personal reusable cups in stores,the company remains on track to meet its goal of ensuring customers have the option to use their own personal reusable cup for every Starbucks visit in the U.S.and Canada including in caf,drive-thru and mobile order and pay.Recycling is a key component to reducing single-use plastics and remains a priority for the company.To support that effort,Starbucks works with recycling and municipal stakeholders across the country to advance recycling access for our packaging.Through the NextGen Consortium with Closed Loop Partners,the Foodservice Packaging Institute and The Recycling Partnership,we are increasing access to recycling and our work to find a more sustainable cup solution continues.In FY22,Starbucks launched an improved and more sustainable hot cup that is easier to recycle,and beginning in FY22,customers in the U.S.can now recycle their hot cups in Columbus,Cleveland,Dayton,Memphis,Houston and Buffalo.Starbucks is also working to add waste services to stores where possible,ensuring we have recycling services where they are commercially available.As a founding member of the NextGen Consortium,Starbucks has been working to address single-use food packaging alongside leading food and beverage companies globally.In FY22,Starbucks and McDonalds announced a joint$10 million investment in the NextGen Consortium to identify,accelerate and scale commercially viable,circular foodservice packaging solutions.Starbucks committed an additional$5 million with NextGen Consoritum in FY22 to innovate to a more sustainable hot cup.The consortium works together to do research and development for more sustainable single-use cup options while also working with waste infrastructure stakeholders to advance the recovery of foodservice packaging.Starbucks has invested$15 million with NextGen Consortium since 2018.In FY22,Starbucks also launched a new Starbucks Partner Waste and Recycling App,developed by partners as part of the Greener Stores Innovation Challenge,to help partners navigate complex and unique store recycling guidelines.The app puts everything partners need to know to reduce waste and recycle in one place,and features store-specific information and notifications,a sorting guide and the option to create store-specific signage to help partners and customers reduce waste.As we work with stakeholders and continue to learn,we are working to ensure our waste goals align with our industry-leading standards and meet the expectations of our partners,customers stakeholders.18 The geographic scope of this data point includes globally company-operated markets and licensed markets.Global Environmental&Social Impact Report 37 2023 Starbucks Corporation.All rights reserved.our planetFUTURE FOR COFFEE,OUR COMMUNITIES AND OUR PLANETForest Conservation&Restoration560 hectares of forest restored and 1,000 hectares of forest protected in Peru and Colombia.Land-use change and deforestation are among the greatest climate risks facing the coffee industry.We are committed to pursuing zero net deforestation across our coffee supply chain.Building on initiatives launched in FY21 with Conservation International in Huila,Colombia and San Martin,Peru,Starbucks continued its efforts to protect and restore critical forests that coffee communities depend on in FY22.Working with more than 16 coffee farming communities,Starbucks and Conservation International supported training and education for farmers on more sustainable practices and helped farmers monitor carbon and water impacts on and around their farms.The goal of these projects is not only to achieve carbon neutrality,but also to enhance freshwater ecosystems and biodiversity.Our support of farmers extends into the community as we work together to build capacity of local plant nurseries,advance community and stakeholder engagement,and work to improve the water quality in surrounding water sheds.Starbucks Farmer Support Centers also play an important role in coffee communities to promote biodiversity and support restoration activities.For example,the Colombia Farmer Support Center distributed 38,000 native trees to farms in FY22.These trees are critical to restore conservation areas,support improved shade management systems,and to protect water resources.We also engaged customers in Colombia by offering a promotion that donated a portion of the sales of packaged coffee to purchase tree seedlings for local coffee farmers.Through this promotion,1,500 native trees were donated to farmers located in Nario,Colombia.Plant-Based MenuOur goal is to provide our customers with a variety of food and beverage choices in addition to sustainable dairy,and we have collaborated with plant-based innovators so that today nearly all stores across our markets offer plant-based food and beverage menu items.Our customers can customize any beverage on the menu with a variety of plant-based dairy alternatives,including soymilk,coconutmilk,almondmilk,and oatmilk.There is currently no additional charge for customizing beverages with plant-based dairy alternatives in our Company-operated markets in the United Kingdom or Japan or licensed markets in France,Belgium,the Netherlands or Luxembourg.In the United States,adding a splash of any plant-based dairy alternative to Brewed Coffee,Iced Coffee,Cold Brew,and Americano beverages is offered to our customers free of charge.Water StewardshipIn FY22,we provided nearly$2 million to support new and ongoing water stewardship projects.As part of Starbucks holistic water strategy,we are investing in water replenishment and WASH projects in high-risk basins,to help support watershed health,ecosystem resilience and water equity.As part of this strategy,our goal is to empower 5 million people with enhanced water access,sanitation and hygiene through community-driven solutions with a focus on women,girls and marginalized groups.In FY22,we provided nearly$2 million to support new and ongoing water replenishment and WASH projects in Brazil,Colombia,China,Ethiopia,Guatemala,Mexico,Peru and several projects in the United States.Because collective action is critical to supporting sustainable watershed health and restoration,we continue to prioritize partnerships and projects through the United Nations Water Resilience Coalition(UNWRC)where Starbucks serves as a leadership committee member.In this capacity,Starbucks is working closely with other peer companies and key NGO partners including Water.org,WaterAid,The Nature Conservancy,and the World Wildlife Fund to accelerate progress in critical basins around the world.Grants from The Starbucks Foundation support nonprofit organizations working to expand access to clean water,hygiene and sanitation around the world.In FY22,The Starbucks Foundation supported programs to help expand household and community water access in coffee-growing communities,water towers installed by Starbucks partners in 10 countries in Asia and Latin America,mobile shower programs that bring hygiene and sanitation services along with other wraparound services to individuals experiencing homelessness in U.S.cities.Global Environmental&Social Impact Report 38 2023 Starbucks Corporation.All rights reserved.MM XXI IFrom the merchandise on our shelves,to the furniture in our stores and the aprons worn by our baristas,Starbucks cares about the way in which these products are made and about the workers who make them.Our sourcing teams work directly with a diverse set of suppliers who share our commitment to ethical sourcing and social and environmental standards.We are committed to conducting business responsibly and supporting the communities where we operate,from sourcing beans to delivering coffee to your cup.Helping people thrive helps ensure the long-term sustainability of the premium products we provide.Whether its arabica coffee,tea,cocoa or manufactured goods,were committed to offering ethically purchased and responsibly produced products of the highest quality.FUTURE FOR COFFEE,OUR COMMUNITIES AND OUR PLANETcoffee and our supply chainGlobal Environmental&Social Impact Report 39 2023 Starbucks Corporation.All rights reserved.coffee and our supply chainFUTURE FOR COFFEE,OUR COMMUNITIES AND OUR PLANETCOFFEEEthical Sourcing Performance(C.A.F.E.Practices)98.2%of coffee ethically sourced and verified through C.A.F.E.Practices.More than 31,000 people trained in best practices in agronomy and social responsibility as per C.A.F.E.practices program through 10 Farmer Support Centers globally.More than 43,000 bags of coffee traced using the Digital Traceability tool with more than 122,000 unique visitors accessing the tool.Launched in 2004 in collaboration with Conservation International,Coffee and Farmer Equity Practices(C.A.F.E.Practices)is a verification program that assesses the supply chain based on economic,social and environmental criteria,aimed at promoting sustainable,profitable and transparent coffee-growing practices while ensuring the welfare of coffee farmers,workers,their families and communities.Since 2004,the program has grown to include the participation of more than 400,000 farmers in over 30 countries.Starbucks recently made several operational changes to strengthen the programs verification approach,including increasing the frequency of audits and incorporating unannounced audits.Our goal is to source and verify 100%of Starbucks coffee through C.A.F.E.Practices.In FY22,we achieved 98.2%ethically sourced coffee as verified through C.A.F.E.Practices.Despite the easing of challenges brought on by the pandemic to verify and transport coffee,we did see minor pandemic-related impacts continue in FY22 though significant improvements were seen from the previous year.In FY21,95%of coffee was verified through C.A.F.E.Practices.Farmer Support Centers19Starbucks operates 10 Farmer Support Centers(FSCs)as part of our work to assist farmers in coffee-producing countries and support the implementation of C.A.F.E.Practices across Starbucks coffee supply chain globally.These centers offer free training directly to farmers and to technical specialists through a train-the-trainer approach,benefiting over 31,000 people worldwide in FY22.Farmers receive the latest insights from Starbucks agronomists,including techniques that support farmer profitability and sustainable growing practices.To help demonstrate farming best practices,in FY22,FSCs launched a program called Model Farms,which serve as learning locations for the community to learn and teach sustainable practices.In partnership with suppliers and farmers,Starbucks FSCs have established more than 70 Model Farms.In FY22,the FSCs also developed an open-source manual on coffee quality to increase access to information on important practices after harvesting the coffee cherries to maintain quality.Starbucks FSCs are also supporting deployment of our environmental sustainability projects,like providing fertilizer recommendations based on soil analysis reports for optimized use of fertilizers and providing training related to new processing equipment to significantly reduce the water used during coffee processing.Digital Traceability20We know where our coffee comes from from the farmers who grow our coffee to the baristas who serve it with care and we want to share that journey with our customers.In 2020,Starbucks introduced its Digital Traceability tool in North American retail stores,giving coffee enthusiasts an opportunity to learn the stories of the people and places who grow and share the coffee we enjoy.Since the launch of our tool in 2020,nearly 400,000 unique users have visited our site to trace their coffee.Through digital traceability we aim to empower partners and customers with information about the people and places behind every cup.19 The geographic scope of this data point includes globally company-operated markets and licensed markets.20The geographic scope of this data point includes all company-operated stores in North America.Learn more about ethically-sourced coffee and our work with Conservation International.Global Environmental&Social Impact Report 40 2023 Starbucks Corporation.All rights reserved.coffee and our supply chainFUTURE FOR COFFEE,OUR COMMUNITIES AND OUR PLANETSUSTAINABLE FUTURE FOR COFFEECarbon Neutral Green Coffee by 2030 Nearly 14,000 additional soil samples were processed across six priority countries.To date,contracted more than 1,300 eco-wet mills.To protect the resiliency of the coffee supply chain,the people that make it possible and the planet we all share,Starbucks set goals to achieve carbon neutral green coffee and conserve water usage in green coffee processing by 50%by 2030.In FY22,we worked to refine the methodology we use to calculate the carbon and water footprint of green coffee.This work is foundational to begin reporting progress in the years to come and connects directly with industry efforts,including the Sustainable Coffee Challenge.Precision agriculture in coffee farming has great potential to reduce our on-farm carbon footprint.Starbucks is working to identify innovative ways to better understand the specific nutrients and fertilizer needed to grow high-quality coffee while reducing carbon emissions.In FY22,we continued to provide financial support to promote soil analysis as a mechanism for farmers to understand soil nutrition requirements,replacing generic fertilizer recommendations with a specific recommendation for producers.Building on our efforts last year,13,811 additional soil samples were processed across six priority countries.Wet mills are used in C.A.F.E.Practices supply chains to separate the fruit of the coffee cherry from the coffee bean.By using eco-wet mills,Starbucks has an opportunity to conserve water by ensuring farmers have access to more environmentally-friendly machines,which also standardizes quality and increases processing efficiency for farmers.In FY22,Starbucks contracted additional centralized eco-mills,expanding the scope of the effort to additional countries including Honduras and Uganda.The preliminary results have demonstrated up to 90%water savings is possible in coffee processing using the new equipment.In FY22,we have been carefully studying and working with our suppliers to evaluate any impact that changes to processing may have on quality.Results are showing that eliminating traditional fermentation and the use of water saving equipment is not impacting coffee quality in the countries where we are deploying new equipment.Climate-Tolerant Coffee TreesMore than 9.5 million climate-tolerant coffee trees distributed globally through Starbucks 100 million tree commitment.Starbucks committed to a 10-year,100 million-tree initiative to boost the quality and output of coffee crops in El Salvador,Guatemala and Mexico by 2025.Starbucks has distributed nearly 70 million trees that are resistant to rust,a disease linked to climate change.We are working to help farmers improve their farms and increase their output and income.Since making the commitment in 2016,we have learned a lot along the way about deploying a program at this scale.One opportunity we identified was the material the containers are made of that are used to grow the seedlings,so in 2019,we began exploring the use of reusable and environmentally friendly pots for the coffee trees.Thanks to extensive research and piloting,in FY22 more than 1 million trees were produced using paper pots,and 1.6 million trees were produced in reusable tubes.Both the paper pots and reusable tubes protect seedling roots and are more efficient for transporting trees to farms.Global Environmental&Social Impact Report 41 2023 Starbucks Corporation.All rights reserved.coffee and our supply chainFUTURE FOR COFFEE,OUR COMMUNITIES AND OUR PLANETIn addition to the 100 million tree commitment,Starbucks is focused on growing,transporting and distributing the next generation of coffee trees with an eye on sustainability for the entire sector:In FY21,we set a new target to distribute over 45 million coffee trees to C.A.F.E.Practice-verified farmers in Colombia by 2023.Working alongside the Colombian Federation of Coffee Growers(FNC),we provided more than 19 million seedlings in FY22.We have also provided financial support to ensure nutritional needs for seedlings are met when planted for early growth and tree success.Starbucks focus on sustainability for coffee trees goes beyond our supply chain to the entire coffee industry.We are developing and sharing research about coffee tree hybrids that provide resistance to pests and disease,increase productivity and have a good cup profile to help farmers adapt to climate change and support farmer profitability.Under our open-source strategy,we are donating more than 3 million seeds per year from our core collection at Hacienda Alsacia to farmers globally to help the coffee sector adapt to the impacts of climate change while we increase crop productivity and income for many coffee farming families.Childcare Centers for Farming FamiliesFive new childcare centers opened in Guatemala.Childcare centers help provide safe spaces for local and migrant workers children to continue their education during the coffee harvest season in Guatemala.For the 2022-2023 harvest season,we opened five new centers,bringing the total number of childcare centers supported by Starbucks in Guatemala to 14.Global Farmer Fund21Three new loans issued bringing total to$65.8 million in loans deployed since FY18 and$80.8M since inceptionThe Starbucks Global Farmer Fund was established to enhance the resilience of the supply chain and secure a long-term source of coffee by addressing the unfulfilled business financing needs of farmers.Farmers often cannot access traditional banking options for business loans due to excessive interest rates and an inability to meet minimum qualifications.The loans offered through our Global Farmer Fund enable farmers to plant new trees,enhance their infrastructure and bolster their financial stability in the face of changes in climate and markets.Our goal is to supply$100 million in farmer loans by the end of 2025.In FY22,we issued three new loans including a climate note to support farmers to adapt to the impacts of climate change and another directed to women in agriculture,both through Root Capital.21 The geographic scope of this data point includes globally company-operated markets and licensed markets.Global Environmental&Social Impact Report 42 2023 Starbucks Corporation.All rights reserved.coffee and our supply chainFUTURE FOR COFFEE,OUR COMMUNITIES AND OUR PLANETResponsible Sourcing for Tea99.7%of tea sourced by the global tea sourcing team was verified as responsibly sourced.Our tea suppliers and tea gardens are audited against rigorous human rights and environmental standards.In FY22,the global tea sourcing team sourced 99.7%of its tea from Rainforest Alliance Certified tea gardens.In FY22,all of our tea suppliers were in the process of transitioning to the new Rainforest Alliance certification standard focused on greater impact,increased transparency and stronger assurance that farms are working towards a more responsible and sustainable future of tea.We are committed to transparency of our tea supply chain,and in FY22 we released a complete list of the tea gardens that supply our tea.In addition to buying certified tea,Starbucks invests directly in tea communities in projects that support gender empowerment,water,sanitation and hygiene(WASH),youth education and environmental sustainability,each responding to specific needs in tea communities.In FY22,we supported eight projects in Argentina,China,Indonesia,Kenya and Rwanda.We also believe that by working with others in the tea industry we can have greater impact.Starbucks has been a member of the Ethical Tea Partnership(ETP)for more than a decade.ETPs mission is to create a fairer,better and more sustainable tea industry for workers,farmers and the environment.Through the ETP platform,we engage with the global tea sector,international brands and buyers.Responsible Sourcing for CocoaThe companys global cocoa sourcing team directly purchased 12 million kilograms of Rainforest Alliance certified,segregated cocoa beans from Cte dIvoire.Our approach to sourcing cocoa responsibly is built on a foundation of traceability,responsible purchasing practices and a commitment to supporting resilient livelihoods for cocoa producers and their families,including reducing and collectively working towards eliminating the risks of child labor and cocoa-driven deforestation.We pay a sustainability premium per metric ton of cocoa sourced to implement activities with cocoa producers,cooperatives and communities.For example,in FY22 nearly 11,000 cocoa producers were trained in Good Agricultural Practices and more than 2,800 cocoa producers were informed,trained and/or consulted on the new forest code,law enforcement,forest protection and restoration.Four cocoa communities now have an active forest restoration and protection program to promote forest protection and restoration.By conducting deforestation risk assessments we are supporting no further conversion of any forest land for cocoa production.Over 70,000 multi-purpose trees were distributed for on-farm planting to promote sustainable livelihoods and income diversification for cocoa producers.We supported 30 Village Savings and Loan Association groups to promote financial inclusion and innovation to deepen farmers access to working capital and investments funds for production and farm renovation.Addressing the salient challenges across the cocoa industry requires aligned collective action.In FY22,Starbucks became a signatory member of the Cocoa&Forest Initiatives(CFI)framework to help end deforestation in Ivory Coast and a member of the International Cocoa Initiative(ICI)and the Swiss Platform for Sustainable Cocoa(SWISSCO)to evolve and strengthen our approach to responsibly-sourced cocoa.By engaging in these sector initiatives,we are committed to working with stakeholders to advance effective solutions and strengthen our contribution to the cocoa sector.In FY22,The Starbucks Foundation made its first grant to support cocoa communities in Cte dIvoire.The grant to CARE aims to reach 2,000 women in cocoa communities in Cte dIvoire with economic opportunities,increasing their access to resources and markets and integrating gender,nutrition,hygiene and sanitation.In FY23,we will continue to support all these efforts that support a more equitable,sustainable and resilient future for cocoa,communities and our planet.Global Environmental&Social Impact Report 43 2023 Starbucks Corporation.All rights reserved.coffee and our supply chainFUTURE FOR COFFEE,OUR COMMUNITIES AND OUR PLANETResponsible Sourcing for Manufactured Goods and Services Maintained 97%transparency in factories assessed globally.Increased annual factory assessments to 306 from 213 in FY22.Our ethical sourcing program includes our standards for manufactured goods and services,including beverages,food,merchandise,equipment and furniture.We partner with manufacturing factories in 40 countries globally and hold our suppliers and ourselves accountable for more than 87,000 workers through stringent worker welfare conditions.Commitment to continuous improvement is the cornerstone of our program,and on-site factory assessments to identify potential or actual violations to our standard have been a key part of our strategy since 2006.As factories focused on COVID recovery,we increased our factory assessments from 213 in FY21 to 306 in FY22.We are proud that our third-party auditors confirm that we maintained 97%transparency in factories we have audited around the world,as defined by having full access to factory records,documents and operations.Please refer to our data tables at the end of this report to review the number and type of non-compliant items identified in FY22.Supplier Diversity and Inclusion22Nearly$900 million spent with Tier 1 diverse suppliers.23The Starbucks Supplier Diversity and Inclusion program drives inclusion of qualified businesses with a focus on suppliers of all sizes and categories.In January 2022,we expanded our commitment.In FY22,Starbucks spent nearly$900 million with Tier 1 direct diverse suppliers.In addition,our spending with diverse suppliers supports more than 7,200 jobs in the U.S.and Canada.Over the last two years we have expanded our program to include Tier 2 supplier24 program participation.We will continue to work with all suppliers in our program to exponentially affect increased economic impact and representation of diverse-owned suppliers in our supply chain.We know that our commitment to diversity and inclusion includes the way we communicate with our customers.In FY21,we committed to allotting 15%of our paid media budget to minority-owned and targeted media companies.We are proud to share that we exceeded our goal in FY22,investing 18%of our paid media budget to reach diverse audiences.22 The geographic scope of this data point includes all company-operated stores in North America.23 Tier 1 suppliers are companies from whom Starbucks directly purchases a given product or service.24 Tier 2 suppliers supply goods and services to other suppliers.Global Environmental&Social Impact Report 44 2023 Starbucks Corporation.All rights reserved.coffee and our supply chainFUTURE FOR COFFEE,OUR COMMUNITIES AND OUR PLANETANIMAL WELFARECage-Free EggsIn our North American company-operated stores 100%of eggs are cage-free,inclusive of branded products supplied to our licensee business partners in North America.In our EMEA and U.K.company-operated markets,99.9%of eggs are cage-free.25In Asia markets where Starbucks operates,such as China and Japan,cage-free egg production is limited and supply is not yet widely available.We remain committed to increasing cage-free egg supply in all company-operated stores globally,in partnership with industry stakeholders.Antibiotics100%of poultry raised without routine use of medically important antibiotics.Starbucks engaged with our suppliers and set a goal to serve only poultry raised without the routine use of medically important antibiotics in all company-operated U.S.stores by 2020.We met that goal in 2018 and proudly continue to serve poultry raised without the routine use of medically important antibiotics.Broiler ChickensWe are actively reviewing our broiler chicken commitment to identify the best path forward for implementation within our supply chain.Over the next year,we will be setting baseline targets for implementation,which will be included in the FY23 GESI report.Sow Housing22%of pork is group-housed for U.S.and Canada.26Group housing significantly reduces a sows time in a gestation stall.We aim to phase out the excessive use of gestation stalls for mother pigs(sows)in our supply chain by 2030.This includes stalls where the pigs are unable to move freely.This commitment extends to all Starbucks branded products,including those supplied to our licensee business partners in the U.S.and Canada.To reach our goal of phasing out the excessive use of gestation stalls,we will specify 100%“group housed”pork as a requirement of our pork suppliers in the U.S.and Canada and take steps to ensure a“group housed”pork supply by 2024.Sustainable Dairy Piloted aspects of Starbucks new Sustainable Dairy Program across the U.S.,China,and U.K.-company-operated markets.Invested$2 million in the U.S.Dairy Net Zero Initiative as part of its$10 million commitment.As a company that works with and relies on the farming community every day,it is Starbucks responsibility to help drive solutions that support both people and our planet and that help ensure a sustainable future of dairy.In FY22,the United States,China and U.K.company-operated markets piloted key aspects of a new Sustainable Dairy Program to help refine and scale an approach to sustainable dairy and environmental stewardship for the betterment of people,planet and animals.These markets focused primarily on baselining GHG emissions on several dairy farms within their supply chains and piloted key aspects of a new on-farm holistic standard.Insights from these pilots will be applied in FY23 and FY24 as the program rolls out to several global markets.As Starbucks continues to offer more plant-based options on our global menus,dairy remains an important option for many customers.However,dairy is a significant contributor to our carbon and water footprints.To meet our 2030 planet goals,we are working to source dairy in a responsible and sustainable way.Starbucks is dedicated to providing farmers access to environmentally and economically sound practices and technologies,covering everything from feed production to cow care and energy efficiency.Starbucks has invested$4 million in the U.S.Dairy Net Zero Initiative since joining in FY21.2725 Cage-free egg data is as of November 2022.26Sow housing baseline dat
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F I SC A L 20 23STARBUCKS GLOBALreportM M X X I I IO U RP A R T N E RE N V I R O N M E N TA LFA R M E RC O M M U N I T YC U S T O M E RS H A R E H O L D E RP R O M I S E S2023 Global Impact Report 22024 Starbucks Corporation.Starbucks has always been a different kind of company.Were on a journey to unleash the limitless possibilities of human connection.In fact,our new mission,launched in 2023,is centered on this With every cup,with every conversation,with every community,we nurture the limitless possibilities of human connection.In pursuit of this mission,we established ambitious promises to all our critical stakeholders.These represent the mutual success we commit to,together.As this report details,when Starbucks is at its best,we promise:To bridge to a better future for our partners.To uplift the everyday for our customers.To help ensure the future of coffee for all for our farmers.To contribute positively to each of our communities.To give more than we take from the environment.To generate enduring long-term returns for our shareholders.Our mission,these promises,and our values all underscore our commitment to a new era of Starbucks,which will go even further to serve our partners and the world around us.For more than 20 years,we have reviewed our performance with the Starbucks Global Impact Report.We approach this work with the same commitment to transparency,intentionality,and accountability our partners bring to their work every single day.M E SSAGE FROM LAXMAN2023 Global Impact Report 32024 Starbucks Corporation.As we report on the companys environmental and social impact in FY23,we are proud of the progress we have made.More than ever,we can be a force for positive action.From investing in our partners through world-class benefits and programs to making it easier for our customers to use reusable cups and working with farmers to support a healthy coffee future,we see an opportunity to evolve and modernize the core of who we are as a brand and a business.And an opportunity to better meet the needs of today and of our future.With gratitude and optimism,LaxmanLaxman Narasimhan chief executive officerThis report provides an overview of our environmental and social impact strategies and annual progress during fiscal year 2023(FY23).While this report is not an exhaustive summary of our efforts,it helps demonstrate the integration between our business and our promises to our most important stakeholders:partners(employees),the environment,farmers,communities,customers,and shareholders.This report also includes data tables that reflect our progress against our goals.A comprehensive view of our progress and reports since 2001 is available here.OU R 2023 GLOBAL IMPACT REP ORT2023 Global Impact Report 42024 Starbucks Corporation.TA B L E OF CO NTENTS2023 Global Impact Report 5our partner promiseour environmental promiseour farmer promiseour community promiseour customer promiseour shareholder promise61217212528Progress Report Data Tables 34Environmental Footprint Data Tables 47Human Rights Data Tables 52Environmental,Social and Governance Priorities 55About This Report 59External Verification Assurance Letters 61 G LO B A L I M PACT R E P O RT2023 Global Impact Report 62024 Starbucks Corporation.F I SC AL 202 3B R I D G E T O A B E T T E R F U T U R EpromisePARTNERourS TA R B U C K SS TA R B U C K S G LO B A L I M PACT R E P O RT2023 Global Impact Report 72024 Starbucks Corporation.F I SC AL 202 3OU R PA RTN E R PROMISEAt our best,we are building a bridge to a better future for our partners(employees)through thoughtful and intentional investments rooted in partner feedback and experiences.We are furthering our mission,promises and values by creating an elevated partner experience around the world.We are committed to being a leading retail employer and to uplift,inspire and engage our team members by supporting their careers and lives from industry-leading benefits to our expansive training and development programs to our commitment to inclusion,diversity and equity.Investing in our partners is what drives our success.Creating opportunities for partners to grow is important to the foundation of the Starbucks brand and builds long-term value for all our stakeholders.And our top priority is to ensure partners feel supported and empowered through robust safety trainings,clear policies and procedures and by creating safe and welcoming stores.In FY23,Starbucks took meaningful action to expand our partner offerings.We continued to invest in world-class benefits,programs and initiatives that reflect partner feedback and best support their individual well-being and goals.To build a more consistent and high-quality work experience,we support internal growth,ensuring our partners have flexibility and training to develop their careers,supported by their managers.We want our partners to bring their authentic selves to their work,so we strive for a diverse and inclusive workplace that fosters a strong sense of belonging.Put simply,we help partners access quality healthcare,attend college,contribute to their communities,plan for retirement,save for emergencies,support their families and more.Our promise is to offer a bridge to a better future that supports each partners individual journey at Starbucks and beyond.Together,we are creating the future of Starbucks,building on a long,rich heritage that has endured for more than 50 years.2024 Starbucks Corporation.2023 Global Impact Report 8OU R PA RT N E R P ROM I S EBridge to a better futureFor decades,Starbucks has offered U.S.retail hourly partners the best benefits and perks in the industry.For eligible part-time and full-time partners in company-operated U.S.stores,this includes comprehensive medical,dental and vision coverage for partners and their families,industry-leading gender-affirming care,Family Expansion Reimbursement Assistance,free therapy sessions through Lyra Health,100 percent upfront tuition coverage for those seeking first-time bachelors degrees,equity in the company through annual Bean Stock Awards and reimbursement of the biennial fee required for Deferred Action for Childhood Arrivals(DACA)recipients to stay in the DACA program.The comprehensive benefits package provided by Starbucks goes well beyond the industry average*and is set apart by its accessibility to a broad subset of its retail hourly workforce including anyone working an average of 20 hours a week.We also offer global Starbucks partners locally-relevant benefits that help address unique needs in different parts of the world.In 2017,Starbucks China introduced a first-of-its-kind program to provide critical illness insurance for parents of eligible partners.In 2022,it launched“14th Month Pay,”a pioneering initiative giving retail partners an additional months salary as a bonus on top of the 13th month pay they are eligible for,to be paid out at the end of every financial year.Last year,in Japan,we increased wages and continue to offer unique healthcare benefits for partners.Key initiatives in the U.K.and Europe,Middle East&Africa(EMEA)regions include free food on shift and an extra holiday.Across our global markets,our licensed and joint venture partners also provide locally-relevant benefits,including in India,which became the first food and beverage company to establish a company-wide,five-day work week for all partners.The company also provides meaningful opportunities and comprehensive benefits for partners including providing a graduation support program to all full-time and part-time partners.The company offers many health and wellness programs including free mental and emotional counseling to partners and their family members,and an optional company-subsidized parental insurance program.In 2021,the Two-Wheeler Mobility Support Program was inaugurated in India to help partners purchase a two-wheeler vehicle for professional or personal use,enhancing their independence and commuting experience.Benefits&CompensationWe have made significant ongoing investments of more than$1 billion since FY22 to uplift the overall partner and store experience.This investment includes bringing the average hourly pay at Starbucks in FY23 to nearly$17.50/hour nationally with a range of$15-23/hour,compared to a federal minimum wage of$7.25/hour and industry average hourly wage of$13.53/hour.*Factoring in the value of Starbucks benefits,that number can rise by up to$10 for a total compensation,with benefits,of approximately$27/hour,if our partners choose to participate in all of our benefits.Higher wages,expansion of hours and increased benefits have resulted in an increased hourly total cash compensation of nearly 50 percent since FY20,and a positive shift in hourly turnover rates,which are now below pre-pandemic levels.By the end of FY25,Starbucks in the U.S.expects to double hourly income as compared to FY20 through more hours and higher wages.*According to the results of a recent Benefit Index analysis conducted by Aon,Starbucks continues to deliver more valuable benefits for retail hourly partners than any of the more than 50 other U.S.companies included in the study,inclusive of Fortune 200 and Fortune 500 companies.*Fast Food and Counter Workers mean hourly wage,U.S.Bureau of Labor Statistics,May 2022.COMPENSATIONFY23Average hourly wage for U.S.hourly partners($/hour)17.42%U.S.hourly partners earned above minimum wage100%TURNOVERFY23FY22Total employee turnover(U.S.and Canada)58e%B R I D G E TO A B ET T E R FU TU R E2024 Starbucks Corporation.2023 Global Impact Report 9The reason we are an industry leader in benefits and compensation is because these investments are informed by the feedback and ideas we receive from our partners.In our constantly evolving economic and social landscape,we prioritize direct engagement with our partners and routinely create the space for open and honest two-way conversations.We have established a cross-functional Support Partner Experience team,made up of partners across business units.This team focuses on key areas of opportunity that partners have identified and deploy regular engagement surveys.The team also hosts design brainstorms on specific topics shared in collaboration and learning sessions.The partner surveys leverage a census approach,with all U.S.and Canada company-operated partners invited to participate and paid time for retail partners,including hourly partners,to complete the survey.The feedback from these surveys is used to inform the overall partner experience and create opportunities for partners to grow.PARTNER ENGAGEMENT SURVEYSFY23%partners completed the Partner Experience SurveyU.S.store partners65nada store partners53%North America non-store partners92%We offer several signature programs that support our partners growth,development and long-term success.For example,through the Starbucks College Achievement Plan(SCAP),partners can earn their bachelors degree online from Arizona State University(ASU)with 100 percent tuition coverage.In FY23,our largest Starbucks SCAP class graduated from ASU,and since the launch of the program,more than 10,000 partners have graduated with their bachelors degree through SCAP.More than 23,400 partners participated in the program during FY23.The bridge to a better future includes our partners financial health.Starbucks employees are called“partners”for a reason we offer every eligible partner the opportunity to share in our financial success through equity stock,company match for retirement funds and access to financial wellness programs to help manage student loan debt and save for short-term needs and long-term planning.Our competitive Future Roast 401(k)retirement plan includes a generous company match,and we offer partners discounted company stock(S.I.P.)as well as participation in our equity reward program,Bean Stock.In addition,we help partners save for the unexpected with help from My Starbucks Savings,with cash incentives for eligible partners at key savings milestones.Benefits&CompensationOU R PA RT N E R P ROM I S EBridge to a better future2024 Starbucks Corporation.2023 Global Impact Report 10Talent Attraction,Development&TrainingOur training and educational resources are designed to demonstrate Starbucks as one of the very best employers in the global retail industry.We are proud to attract,hire,develop and retain partners who are passionate about furthering our mission,vision and values.To ensure that our partners can thrive at work,we provide extensive training programs including on the job training hours that support partners from the moment they join our team.For example,the Barista First 30 program is a 41.5-hour training program that partners complete in the first 30 days of employment.This training covers all the foundations of being a Starbucks partner,from mission and culture to the skills needed to serve customers in our stores.Continuous learning opportunities include 90-and 180-day check-ins that empower partners to succeed.Another big,recent investment is the return of our Coffee Master program for retail partners in North America.In the last year,more than 10,000 partners have earned the coveted Black Aprons,which signifies their deep passion and knowledge for coffee,and their completion of the Starbucks Coffee Academy course.Coffee Masters in North America who meet all eligibility requirements can apply for an Origin Experience trip in Costa Rica.Other Origin Experience opportunities include Rwanda and Indonesia.During these trips,partners can fully immerse in the story of coffee“at the first ten feet”on the farms.We focus on providing our partners with the training,experiences,resources and autonomy that they need to succeed,and we are proud that in FY23,69%of U.S.retail leadership positions were filled by partners advancing in their careers within Starbucks.TRAINING AND DEVELOPMENTFY23#training hours for baristas(“Barista First 30”)(hours per barista)41.5%U.S.retail leadership roles filled from internal partners 69%OU R PA RT N E R P ROM I S EBridge to a better future2 0 2 3 G L O B A L I M P A C T R E P O R T2024 Starbucks Corporation.2023 Global Impact Report 11We pride ourselves in living our mission and values with a clear approach:real inclusion and belonging requires intent and is not defined only by metrics.Were on a journey to create environments globally where everyone is welcome and feels a sense of belonging.Our culture has been built on the efforts of a long line of partners who dared to make Starbucks a different kind of company.Through their commitment to their communities and one another,partners have demonstrated anything is possible when we nurture the limitless possibilities of human connection.We continue to make improvements and changes that are necessary to ensure Starbucks remains a diverse,inclusive,equitable and accessible company.In the U.S.,our goal is to achieve racial and ethnic diversity of at least 30 percent at all corporate levels and at least 40 percent at all retail and manufacturing roles by 2025.We also aim to achieve at least 50 percent women working across all corporate levels,55 percent women working across all retail roles and 30 percent women working in manufacturing roles.We are proud of the positive strides weve made but know we cannot lose momentum and must move faster to accelerate the changes necessary for Starbucks to remain a company where everyone belongs.Inclusion,Diversity&EquityREPRESENTATION IN RETAIL ROLES(U.S.)FY23RolePOCWomenregional vice president38R%regional director37Q%district manager36%store manager42h%shift supervisor48qrista54s%Goal:At least 40%People of Color(POC)representation and 55%women in all retail roles(regional vice president,regional director,district manager,store manager,shift supervisor,barista)by 2025REPRESENTATION IN ENTERPRISE ROLES(U.S.)FY23RolePOCWomensenior vice president 33G%vice president33X%director29%manager32U%individual contributor41V%Goal:At least 30%POC representation and 50%women for all enterprise roles(senior vice president ,vice president,director,manager,individual contributor)by 2025REPRESENTATION IN MANUFACTURING ROLES(U.S.)FY23RolePOCWomendirector14%manager28%individual contributor473%Goal:At least 40%POC representation and 30%women in all manufacturing roles(director,manager,individual contributor)by 2025REPRESENTATION ON BOARD OF DIRECTORSJANUARY 2024%board members identifying as POC55%board members identifying as female27%OU R PA RT N E R P ROM I S EBridge to a better future TW E N TYTW E N TY T H R E E2023 Global Impact Report 122024 Starbucks Corporation.STA R BU CKSG I V E M O R E T H A N W E TA K EpromiseENVIRONMENTALourP R O G R E S S U P D AT E TW E N TYTW E N TY T H R E ESTA R BU CKSP R O G R E S S U P D AT E2023 Global Impact Report 132024 Starbucks Corporation.OU R E N V I RO NMENTAL PROMISEAt Starbucks,we promise to give more than we take from the planet.Our comprehensive approach is built on our commitment to build a more sustainable,equitable and resilient future for coffee,farmers,communities and our planet.Across our company,we are testing and scaling innovative solutions to support partners,farmers and communities in the face of global climate change.Our work to fulfill our promise includes driving key investments to help farmers adapt to climate change impacts and conserving or replenishing water.Our global footprint requires a global approach that leverages the expertise and experiences of our partners,farmers,customers and stakeholders.Its why we continue our decades-long work with industry experts,leveraging their insights to create and propel scalable solutions across our global operations,like in our efforts to support the long-term health of the dairy industry.Its why we are continuously working towards our bold promise to our planet in collaboration with suppliers,non-profit organizations,industry partners,government,farmers and customers.And its why we take the lead of our partners who carry forward our promise to the planet every day in our stores by helping to make every single Starbucks store more sustainable by addressing our climate,water and waste footprints.To support ongoing collaboration across sectors,Starbucks is a founding member of Transform to Net Zero,established in FY20.The initiative works to accelerate the transition to a net zero global economy no later than 2050 by developing and delivering research,guidance and roadmaps to guide businesses in achieving net zero emissions.These efforts showcase our decades-long commitment to find solutions to mitigate the impacts of climate change and ensure a sustainable future of coffee for all.2024 Starbucks Corporation.2023 Global Impact Report 14OU R E N V I RO N M E N TA L P ROM I S EGive more than we takeOur vision for the future is to become resource positive.From storing more carbon than we emit,to reducing and conserving more freshwater than we use and eliminating waste,we set targets to cut our climate,water and waste footprints in half by 2030,compared to a FY19 baseline.Our goals:Climate:50solute reduction in scope 1,2 and 3 greenhouse(GHG)emissions representing all of Starbucks direct operations and value chain.Water:50%of water withdrawals will be conserved or replenished across Starbucks direct operations,stores,packaging and agricultural supply chain,prioritizing action in high-risk water basins while supporting watershed health,ecosystem resilience and water equity.Waste/Packaging:50%reduction in waste sent to landfill from stores and direct operations;customer packaging to be 100%reusable,recyclable or compostable.As part of our work to refine and update our 2030 goals in FY23,we added specific targets for packaging,including updating 100%of Starbucks customer packaging to be reusable,recyclable or compostable.2030 GoalsWe set ambitious goals because were committed to creating a more sustainable and resilient future for the planet and the communities we serve.We are focused on identifying and testing innovative solutions that we can scale across our global operations and engaging with our value chain while improving our measurement systems.During the same time period(FY19 to FY23),Starbucks total net revenues have increased by 36%.*PROGRESS TOWARD 2030 CLIMATE,WATER AND WASTE/PACKAGING GOALS ClimateWaterWaste/Packaging8%increase in total emissions compared with FY19 baseline9crease in total water withdrawal compared with FY19 baseline13%increase in waste sent to landfill compared with FY19 baseline14%of customer packaging is reusable,recyclable or compostable(20crease in emissions per$of revenue*compared with FY19 baseline)(33crease in water withdrawal per$of revenue*compared with FY19 baseline)(16crease in waste sent to landfill per$of revenue*compared with FY19 baseline)Sustainable Future of CoffeeA healthy supply of coffee requires a healthy planet,but climate change is making it increasingly difficult for farmers to grow high-quality coffee.To help ensure the sustainable future of coffee,we are focusing on reducing our carbon footprint and conserving water at“the first ten feet”starting on coffee farms.We do this by equipping farmers with precision agronomy tools that help reduce carbon and greenhouse gas emissions.We are also promoting and distributing climate-resistant coffee tree varietals,while protecting and restoring at-risk forests in key coffee landscapes.See Our Farmer Promise for more information about this work.*Calculated as total emissions per$of consolidated net revenues,expressed as the percentage change from FY19 to FY23.*Calculated as water withdrawal per$of consolidated net revenues,expressed as the percentage change from FY19 to FY23.*Calculated as waste sent to landfill per$of consolidated net revenues,expressed as the percentage change from FY19 to FY23.*Source:Starbucks 2023 10-K,Starbucks 2019 10-K.G I V EMO R E T H A N W E TA K E*In FY23,we launched a new hot cup in the U.S.that includes 30 percent post-consumer recycled fiber and will continue to roll out this hot cup across U.S.stores.2024 Starbucks Corporation.2023 Global Impact Report 15Cups&PackagingStarbucks is on a mission to lead the charge in reducing single-use packaging,and were taking bold steps,leveraging our test-and-learn approach to redefine convenience for our customers.Our vision is clear:we aim to empower our customers to make environmentally conscious choices during every Starbucks visit around the world,whether theyre enjoying their coffee in the caf,zooming through the drive-thru or using mobile order and pay.Making it easier for customers to use reusable cups is one of the ways Starbucks plans to reduce single-use cup waste in our stores.Were working towards a future where every Starbucks customer can order and enjoy a beverage served in a reusable cup either one they bring or one we provide.Starting in 2024,customers in all Starbucks stores across the U.S.and Canada will be able to use their personal reusable cup wherever they order,including in caf,drive-thru or mobile order and pay.Inspired and informed by partners around the world,Starbucks has also conducted reusable cup tests in more than 25 markets around the world with more planned in the year ahead.In FY23,Starbucks tested a 100 percent reusable and returnable cup model in 12 stores in California.This program provides customers with a store-issued returnable cup to enjoy their drink wherever they wish,then return the cup to a kiosk at participating Starbucks locations.The cup will be professionally washed and sanitized,ready to be used again.In addition to testing and implementing models for reusable cups,we are making progress to improve the sustainability of our single-use cups.In FY23,we launched a new hot cup in the U.S.that includes 30 percent post-consumer recycled fiber.Less paper is used to make the cup,and less plastic is used to line it.From recycling to reusables,our sustainability journey has been driven by bold aspirations and a comprehensive approach.Weve set an ambitious goal for our customer facing packaging to be 100%reusable,recyclable or compostable;sourced from 50%recycled materials;and made using 50%less virgin fossil fuel derived sources by 2030.Our ambitions,business and goals for reducing waste are global.To bring about sustainable change for our planet,we have joined the Business Coalition for a Global Plastics Treaty.The Coalition,led by World Wildlife Fund(WWF)and the Ellen MacArthur Foundation,is supporting the development and negotiations of a United Nations Global Plastics Treaty to accelerate progress around the world.PROGRESS TOWARD SUSTAINABLE PACKAGINGFY23%of customer packaging that is reusable,recyclable or compostable14%of customer packaging made from recycled or renewable materials24%change in virgin fossil fuel derived materials in customer packaging from FY19 baseline 11%post-consumer(PCR)fiber in hot cups(U.S.)*30%OU R E N V I RO N M E N TA L P ROM I S EGive more than we take2024 Starbucks Corporation.2023 Global Impact Report 16Greener StoresA Starbucks store is certified as a“Greener Store”when it meets robust standards,as verified by a third-party auditor,across eight environmental impact areas:water stewardship,partner engagement,energy efficiency,waste diversion,renewable energy,responsible materials and sites and communities.The standards were developed in partnership with World Wildlife Fund(WWF)and SCS Global Services.In FY23,we certified 6,091 Greener Stores.We are proud to announce significant international expansion of our Greener Store program in 2023,with the aim to have 10,000 Greener Stores across our global business in 2025.The inaugural global Greener Stores of the Year is awarded across our six regions to celebrate stores exceeding in innovation and environmental impact.The 2023 regional winners will be announced in the Spring of 2024.Our promise to support our planet goes beyond our own business.Thats why we launched the Greener Store Practitioner course on the Starbucks Global Academy to make the Greener Stores program accessible to retailers and the general public around the world.The course features educational content on sustainability that is broadly applicable and shares the fundamental structure of Greener Stores.Starbucks will translate the course into multiple languages through 2024 and is committed to sharing insights through the Starbucks Global Academy platform as we continue to scale the program globally.Renewable electricity projects at our Greener Stores represent just one way we are working to support the growth of green energy.We work to spur development of new renewable electricity and energy storage facilities through direct investment and long-term contracts that ensure project financing.We also purchase renewable energy certificates from new and existing facilities.For example,in October 2023,Starbucks announced a partnership with NineDot Energy in New York City in support of the states goal to deploy 1,500 megawatts of battery storage by 2025.The projects will deliver cleaner air to the citys communities by displacing generation from peaking power plants.In FY23,Starbucks also expanded its roster of onsite solar and hosted electric vehicle charging stations that provide familiar,reliable,clean and safe places to recharge for our customers and their battery-powered vehicles.PROGRESS OF GREENER STORES PROGRAMFY23#Greener Stores certified in North America5,488#Greener Stores certified in international regions603#total Greener Stores certified globally6,091Goal:Build and operate 10,000 Greener Stores globally by 2025.PROGRESS ON RENEWABLE ELECTRICITY USE*FY23%renewable electricity use globally(company-operated facilities globally)77%*In previous years,we reported this metric as“renewable energy”.Weve updated to“renewable electricity”to clarify its original scope.OU R E N V I RO N M E N TA L P ROM I S EGive more than we take G LO B A L I M PACT R E P O RTSTA R BU C KS2023 Global Impact Report 172024 Starbucks Corporation.E N S U R E T H E F U T U R E O F C O F F E E F O R A L LpromiseFARMERourF I S C A L 2 0 2 3 G LO B A L I M PACT R E P O RTSTA R BU C KSF I S C A L 2 0 2 32023 Global Impact Report 182024 Starbucks Corporation.OU R FA RM E R PROMISEWe work with more than 450,000 farms that grow the highest quality Arabica coffee in the world.Our promise to farmers is that we will always work to ensure a sustainable future of coffee for all,underscoring the decades-long commitment that weve made to coffee farmers and farming communities.As we move to become a truly global company,we have a unique opportunity to enhance lives by promoting ethical and sustainable practices globally.Driven by our industry-leading Coffee and Farmer Equity Practices(C.A.F.E.Practices)verification program,with over 450,000 participating farms,we help support farmers and their families and ensure that our supply chain promotes sustainable and transparent growing practices.Coffee farmers and farming communities are already feeling the impacts of climate change and our warming planet.We are proud to invest in regenerative agriculture,reforestation,forest conservation and water replenishment to support a healthy coffee future.With that in mind,Starbucks is focused on helping farmers get the financing they need to support their businesses and families in rapidly changing conditions.We also provide coffee trees that can help farmers adapt to the impacts of climate change and increase their productivity over the long-term.We are also working to conserve and restore the forests that are critically important to agriculture systems.At our best,we promise to ensure a sustainable future of coffee for all through a comprehensive approach that centers and respects our farming communities and the planet we share.2024 Starbucks Corporation.2023 Global Impact Report 19OU R FA RM E R P ROM I S EEnsure the future of coffee for allEthical Sourcing of CoffeeGlobal Farmer SupportWe are proud to have developed one of the coffee industrys first set of ethical sourcing standards in 2004 in collaboration with Conservation International.C.A.F.E.Practices is a verification program that measures farms against economic,social and environmental criteria,all designed to promote transparent,profitable and sustainable growing practices while also protecting the well-being of coffee farmers,their families and their communities.C.A.F.E.Practices helps Starbucks work with farmers to create a long-term supply of high-quality coffee while positively impacting the lives of coffee farmers and their communities.Starbucks future is directly linked to the livelihoods of farmers,their families and their communities,so we take seriously our responsibility to care for the people who are part of the coffee journey.Starbucks operates ten Farmer Support Centers in coffee-producing countries around the world.Our agronomists work with farmers to learn and implement the latest findings and best practices in agronomy,quality and social responsibility.Through the Farmer Support Centers,farmers gain access to updated water conservation methods,new varietals of disease-resistant coffee trees and advanced soil management techniques,including promotion of coffee shade canopy.Working one-on-one with farmers in the field,supporting co-ops and suppliers,Starbucks agronomists build upon traditional growing methods to help the next generation of farmers improve the quality,productivity and profitability of their crops while supporting the implementation of C.A.F.E.Practices across Starbucks coffee supply chain globally.Since first offering financing in 2000,the Starbucks Global Farmer Fund has supported the business financing needs of farmers to help ensure a sustainable,long-term source of coffee.Farmers often cannot access traditional business loans because of excessive interest rates and stringent minimum qualifications.The loans offered through our Global Farmer Fund enable farmers to plant new trees,enhance their infrastructure and bolster their financial stability in the face of changes in climate and markets.Our goal is to supply$100 million in farmer loans by the end of 2025.FARMER SUPPORT CENTERSFY23#Farmer Support Centers10#people trained with advanced agronomy techniques56,000#Model Farms(cumulative as of FYE)120ETHICAL SOURCING OF COFFEEFY23%Starbucks coffee ethically sourced and verified through C.A.F.E Practices99.7%GLOBAL FARMER FUNDFY23$loans deployed from the Global Farmer Fund since inception(as of FYE)($millions)80.8$loans deployed from the Global Farmer Fund since FY18(as of FYE)($millions)65.82 0 2 3 G L O B A L I M P A C T R E P O R T2024 Starbucks Corporation.2023 Global Impact Report 20Sustainable Future of CoffeeWater stewardship and soil health are important parts of our strategy.To achieve this,we are supporting the transition to sustainable eco-wet mills to separate the fruit of the coffee cherry from the coffee bean while conserving water and increasing efficiency for farmers.We are also working alongside farmers to gain deeper knowledge about soil nutrition requirements by promoting soil sample analysis and tailoring recommendations about soil nutritional needs.These efforts have the potential to reduce on-farm carbon emissions and increase the productivity of crops.Climate-resistant coffee trees are a critical part of our effort to help farmers adapt to climate change.Since making the commitment to distribute 100 million coffee trees by 2025,Starbucks has now distributed more than 80 million of the next generation of climate-resistant coffee trees in El Salvador,Guatemala and Mexico.Additionally,in Colombia,we provide coffee seedlings to farmers and have delivered more than 53 million seedlings as of FY23.By 2030,Starbucks is aiming to achieve carbon-neutral green coffee and conserve water usage in green coffee processing by 50%.Our work in FY23 focused on refining the methods we use to calculate the carbon and water footprint of green coffee.This foundational work is crucial for accurately tracking our progress in the years ahead.Protecting and restoring forests addresses a serious threat to coffee farms and communities around the world.In FY23,Starbucks continued its efforts to protect and restore forests that are impacted by land-use change and deforestation.These agroforestry efforts will help remove carbon and support a carbon neutral pathway while also benefiting freshwater ecosystems and coffee communities.Sustainable agricultural practices include preserving and enhancing biodiversity.To further advance our transparency,we will conduct a material biodiversity impact assessment with respect to our coffee supply chain,to be completed by the end of our 2025 fiscal year and performed in accordance with the Taskforce on Nature-related Financial Disclosures framework.SUSTAINABLE AGRICULTUREFY23#soil samples processed(cumulative as of FYE)30,800Goal:Achieve Carbon-Neutral Green Coffee by 2030.#eco-wet mills contracted(cumulative as of FYE)1,500Goal:Conserve water usage in green coffee processing by 50%by 2030.OU R FA RM E R P ROM I S EEnsure the future of coffee for all 2 0 2 3 R E P O RTP RO G R ES S U P DATE2023 Global Impact Report 212024 Starbucks Corporation.C O N T R I B U T E P O S I T I V E LYpromiseCOMMUNITYourS TA R B U C K SP RO G R ES S U P DATES TA R B U C K S 2 0 2 3 R E P O RT2023 Global Impact Report 222024 Starbucks Corporation.OU R COMMU NITY PROMISESince the beginning,Starbucks has been about more than coffee.We are a people company,driven by our belief in the limitless power of human connection.Thats why we have made a promise to contribute positively to every community we serve,through our 38,000 stores across 86 markets around the world.Our new mission to nurture human connection recognizes that connecting with each other is a fundamental human need.Study after study indicates high rates of loneliness as a public health concern,and theres a desperate need for togetherness.This promise comes to life in our communities through our partners who know their neighborhoods best,and our customers who bring their knowledge and ideas as community members.We support every partner to take action as a champion in their communities,from serving and giving to learning and advocating-recognizing that our partners are local community leaders who contribute positively and meaningfully to thousands of communities around the world.We remain committed to addressing food insecurity and hunger.We build purpose-defined stores that reflect the communities we serve and help uplift communities through unique programming and in-store features.We support small businesses by increasing access to capital and working with diverse suppliers across our supply chain.And we invest in The Starbucks Foundation to drive impact around the world.2024 Starbucks Corporation.2023 Global Impact Report 23OU R COMMU N I TY P ROM I S EContribute positivelyCommunity Champions&Giving Match Our Stores in the CommunityOur partners are Community Champions who bring our Community Promise to life in and around our stores.Through civic engagement,volunteerism,community events,donations and more,Starbucks partners work in big and small ways to make a positive impact for people and the planet.The Starbucks Community Champion courses on the Starbucks Global Academy help anyone interested in making a difference in their communities develop an action plan for good.We aim to multiply the positive contributions our partners make in their communities.One way we do this is through the Starbucks Giving Match program in the U.S.and Canada,which amplifies eligible financial donations and volunteer time partners make to community organizations.All active Starbucks full-and part-time partners can request up to$1,000 in matching funds per fiscal year,using any combination of volunteer hours and financial donations to qualified nonprofit organizations.Community Stores sit at the heart of our mission to nurture the limitless possibilities of human connection.These stores are purpose-defined to better support our partners,our customers and our communities in ways that meaningfully drive lasting connection.To enhance the well-being of all who connect within our stores,our goal is to reach 1,000 Starbucks Community Stores globally by 2030.Community Stores provide economic opportunity,empower farmers,youth and women as well as create relevant community programming.For example,our Military Family Stores aim to uplift the everyday for active military personnel,Veterans,their families and surrounding communities.These stores are located on or near major military bases and help provide a sense of connection and support for military families who are often far from their loved ones.In Starbucks Signing Stores,we work to ensure that our efforts to uplift the everyday and the Starbucks Experience are inclusive for our partners and customers.These stores are run by store partners who are proficient in sign language and provide a space for the Deaf and hard of hearing community to connect and celebrate Deaf culture through sign language.In India and Saudi Arabia,female-led stores are a part of our ongoing work to provide opportunities for women.These stores reaffirm the companys ongoing commitment to promoting an inclusive and diverse workforce by empowering women leaders.OUR STORES IN THE COMMUNITYOPENED IN FY23TOTAL OPEN AS OF FY23#Community Stores(U.S.)1139#Community Stores(international markets)1635#Military Family Stores(U.S.)17130#Signing Stores(globally)420Food Waste Reduction&Hunger ReliefStarbucks is committed to reducing food waste within its operations and supporting hunger relief in communities.Starbucks FoodShare food donation program was launched in the U.S.in 2016 and Canada in 2019,in partnership with Feeding America,Second Harvest Canada and other hunger-relief organizations.As part of our promises to give more than we take and contribute positively to the communities we serve,we divert food from waste streams and donate it to help alleviate hunger.We also work around the world to support innovations in food waste reduction and scalable sustainable solutions that increase equitable access to nutritious food in high need and underserved communities.2024 Starbucks Corporation.2023 Global Impact Report 24Economic OpportunityWe are working to advance economic opportunity in our communities by working with a diverse range of suppliers across our business,increasing access to capital for small business owners and elevating public-private partnerships that address economic disparities.Since 1998,Starbucks has created an environment where diverse suppliers have equal opportunity to compete for our business.Our sourcing teams engage with a diverse set of suppliers who share our commitment to advancing ethical sourcing and social and environmental standards.The Starbucks Supplier Diversity and Inclusion program drives inclusion of qualified businesses with a focus on suppliers of all sizes and categories,including small businesses.In 2021,Starbucks invested$100 million to launch the Community Resilience Fund to advance racial equity and environmental resilience in neighborhoods with historically limited access to capital.As of FY23,we have contributed over$40 million to the fund.We are working with Community Development Financial Institutions(CDFIs)and other mission-driven financial institutions because of their deep experience serving underserved communities.The Fund provides access to long-term loans intended to support small businesses and neighborhood projects,including those addressing the inequitable impacts of climate change.In 2022,Starbucks continued to leverage the power of public-private partnerships and joined the Economic Opportunity Coalition to address economic disparities and accelerate economic opportunity in historically marginalized communities by developing and collaborating on new services,programs and products that will support deploying resources where they are most needed.The Starbucks FoundationEstablished in 1997,The Starbucks Foundation is a distinct Section 501(c)(3)charitable organization under U.S.law and receives funding primarily from Starbucks Corporation.The Starbucks Foundations mission is to strengthen humanity by transforming lives across the world,with a focus on enabling community resiliency and prosperity,and uplifting communities affected by disaster.Through this work,the Foundation supports domestic and international nonprofit organizations that deliver impact to coffee growing regions,in Starbucks local hometown of Seattle and in neighborhoods around the world where Starbucks partners live and work.In coffee-,tea-and cocoa-growing communities,Foundation grants address critical needs such as access to water,sanitation and hygiene and economic opportunities.The Neighborhood Grants and Global Community Impact Grants programs accelerate hyper-local impact by inviting Starbucks partners across North America and Starbucks international business partners to nominate locally-relevant charities for grants,while inspiring additional support through local connections,volunteerism and co-investment.Youth grants support underrecognized youth by investing in programs focused on diversity,equity and inclusion;mentorship and career readiness opportunities;and addressing the current state of social and emotional health in young people.And when disaster strikes,from the earthquake in Trkiye to wildfires in Maui,The Starbucks Foundation supports immediate relief and longer-term recovery needs while also investing in resiliency efforts to ensure communities are prepared in advance of the next storm.Learn more about The Starbucks Foundations work.THE STARBUCKS FOUNDATIONFY23$total grants awarded($millions)24OU R COMMU N I TY P ROM I S EContribute positively O U R P RO G R E S S U P DAT ESTA R BU C KS F I SC A L 2 0232023 Global Impact Report 252024 Starbucks Corporation.U P L I F T T H E E V E R Y D AYpromiseCUSTOMERour2 0 2 3 O U R P RO G R E S S U P DAT ESTA R BU C KS F I SC A L 2 0232 0 2 32023 Global Impact Report 262024 Starbucks Corporation.OU R CU STOMER PROMISEFrom the original third place to the newest Starbucks stores,were all about connecting and meeting our customers where they are.Our promise to our customers is to uplift the everyday,providing a superior coffee and customer experience every time they visit us.We celebrate our customers by offering a variety of drinks and food choices that are as unique as every customer we meet.Our global stores serve menus that reflect and respect the people we serve and their beverage traditions.We are building inclusive and accessible design elements in our stores that help every customer enjoy their Starbucks experience.And we are witnesses to countless moments of kindness through the windows of more than 38,000 stores around the world.We share these moments to uplift the everyday,and to help build a kinder,braver world.U P L I FT T H E E V E RY DAY2024 Starbucks Corporation.2023 Global Impact Report 27OU R C U STOM E R P ROM I S EUplift the everydayUplifting the Every Day Through Kindness Third PlaceInclusive&Accessible Design We aim to not only celebrate coffee,but also to foster positive connections in our communities.We have the privilege to see our partners,customers and communities connect over everyday moments of kindness in ways both big and small.To help communities recognize kindness that is all around them,while also reinforcing Starbucks commitment to creating a culture of belonging where everyone is welcome,Starbucks invited customers and partners to uplift the everyday through stickers,cards and kind notes in store and via an augmented reality experience.Our mission and promises come to life in our stores,a third place where everyone is welcome,feels a sense of belonging and where we can uplift one another over coffee.Our priority is to create environments in our stores that are safe,welcoming and kind for our partners and customers.Through the Third Place Policy,we ask everyone in our stores to treat others with respect and dignity,free of bias and discrimination.As a company,we routinely review the partner and customer experience in our stores,to ensure the store is thriving,partners are feeling supported,and that we are meeting customer and community needs.Starbucks is committed to developing,testing and scaling inclusive design standards and experiences with and for people who have lived experience with disability.We are working to expand this effort across our store portfolio,starting in the U.S.and then globally,with the goal of ensuring that physical and digital Starbucks environments will meet an elevated standard of accessibility by 2030.Because we are in the business of fostering human connection,we are regularly creating more ways for customers and partners to communicate both visually and audibly,while also offering more tools to help customers and partners navigate our physical store environments.For example,since 2021 Starbucks has offered the Aira service free of charge to our customers who are blind or have low vision.Customers can use the app to connect with trained visual interpreters who provide visual information about their surroundings.Starbucks also offers multiple formats of the menu including large-print and Braille menus in all stores in the U.S.and Canada.TW E N TYTW E N TY T H R E EG LO BA L I M PACT REP ORT2023 Global Impact Report 282024 Starbucks Corporation.G E N E R AT E L O N G-T E R M R E T U R N SpromiseSHAREHOLDERourS TA R B U C K S TW E N TYTW E N TY T H R E EG LO BA L I M PACT REP ORTS TA R B U C K S2023 Global Impact Report 292024 Starbucks Corporation.OU R S HA RE HOLDER PROMISEOur six promises guide our work at every level of the company.It is our partner promise to help bridge to a better future;for our customers,we promise to uplift the everyday;for our farmers,we promise to ensure the future of coffee for all;for our community,we promise to contribute positively;for our environment,we promise to give more than we take.In doing all these things,we generate long-term returns for our shareholders.Each of the six new promises is interrelated and interchangeable,ensuring mutual success for all.2024 Starbucks Corporation.2023 Global Impact Report 30OU R S H A R E H O L D E R P ROM I S EGenerate long-term returnsCorporate GovernanceStakeholder EngagementOur Environmental and Social Impact goals are closely tied to our companys overall strategy.Our Board of Directors assesses our impact agenda as part of their broader review and oversight of our business and strategy.In November 2023,we announced the formation of a new Environmental,Partner and Community Impact Board Committee(Impact Committee).The Impact Committee will support the Board in fulfilling its oversight responsibilities required to respond to shifting regulations and standards,and drive accountability across the environmental,partner,community impact,farmer and customer promises.The Impact Committee also has oversight of internal and external reporting tools and assessments,including the annual publication of this report,and initiatives to strengthen partner engagement and revitalize partner culture.In conjunction with the Board and its other committees,the Impact Committee will oversee certain applicable risks.More information about Corporate Governance on environmental and social topics is available online and in our Proxy Statement.In FY23,we continued implementing our executive compensation programs,which were updated in 2021 to emphasize our focus on environmental sustainability and building diverse teams.To align with our goal of giving back more to the planet,the FY23 annual bonus program allocated 7.5 percent of the overall bonus payout for senior vice presidents and above to results that indicate we are fulfilling our promise to the planet.Another 7.5 percent was tied to creating an inclusive environment across our company,emphasizing the importance of diversity in our workforce for our global success.In FY23,we engaged in a comprehensive third-party evaluation to identify and prioritize key environmental,social and governance topics most important to the company and external stakeholder groups.This process aimed to guide Starbucks in focusing our strategy to advance our mission,promises and values.To do this,we conducted surveys and interviews across global stakeholder groups to assess the importance of environmental,social and governance topics for Starbucks.Rooted in our commitment to transparency,we are sharing our environmental,social and governance priorities publicly with our stakeholders.Understanding and addressing these key issues are integral to meeting the expectations of our stakeholders and ensuring alignment between our business performance and environmental,social and governance impacts.While there is work being done across all topics,these results will help inform our program strategies and ESG reporting priorities going forward.Global Human RightsFor decades,Starbucks has committed to respecting and protecting human rights.In 2004,Starbucks joined the U.N.Global Compact the worlds largest corporate sustainability initiative that commits signatories to implement sustainability principles and support U.N.goals.We also remain committed to the U.N.Guiding Principles on Business and Human Rights;OECD Guidelines for Multinational Enterprises;International Bill of Rights;ILO Core Labor Standards;Womens Empowerment Principles;Childrens Rights and Business Principles;and Framework Principles on Human Rights and the Environment.In 2020,Starbucks released our Global Human Rights Statement,which informs the decisions we make that impact our relationships with each other,our customers,our business partners and our communities.In FY23,Starbucks completed an independent,third-party Human Rights Impact Assessment.Starbucks engaged Article One,a specialized strategy and management consultancy with expertise in human rights,responsible innovation,and sustainability,to conduct the Human Rights Impact Assessment of Starbucks policies,procedures and initiatives related to human rights.The results of that assessment are available here.This assessment represents the next step in our journey to identify and assess salient human rights risks and make key investments to support our partners,farmers,communities and the environment.As we have in the past,we look forward to continuing to update our stakeholders on our human rights journey and human rights due diligence program in the years to come.2024 Starbucks Corporation.2023 Global Impact Report 31Working Directly with our PartnersStarbucks is actively collaborating with all partners to fulfill our Partner Promise to build a bridge to a better future.As a company,we respect our partners right to organize,freely associate,engage in lawful union activities and bargain collectively without fear of reprisal or retaliation.Importantly,we are committed to engaging in good faith collective bargaining for each store where a union has been appropriately certified and have shared our aim to reach ratified contracts for union-represented stores in 2024.As part of our commitment to our partners,all managers are provided training to help deepen their understanding of labor issues,National Labor Relations Act(NLRA)requirements and the rights of our partners to engage in protected activitiesand are supported by a nationwide labor relations team established in 2022 to reinforce best-practices and ensure our adherence to company policies and compliance with applicable labor and employment laws.As of the end of FY23,343 U.S.stores had certified union representation.To provide timely and accurate information and resources on labor activities,we launched the website,which is designed to assist anyone seeking up-to-date information and resources related to labor initiatives.In FY23,Starbucks Board of Directors retained an independent third-party expert to complete an assessment of its adherence to the principles of Freedom of Association and the Right to Collective Bargaining.The assessment found that Starbucks has shown consistent progress since organizing began,and that strategic investments in a stronger governance process,more on-the-ground support,a dedicated labor relations team and more bespoke management training have had a tangible impact on the Companys adherence to commitments made.The full results of the assessment are available here.OU R S H A R E H O L D E R P ROM I S EGenerate long-term returns2024 Starbucks Corporation.2023 Global Impact Report 32Ethics&ComplianceStarbucks Ethics&Compliance program aligns with our mission and values by fostering an environment dedicated to ethical leadership and business conducted with integrity.We created our Ethics&Compliance program to ensure it is a trusted resource for partners.Our training and communications approach begins with onboarding new partners tailored to their role and level.Quarterly training for all partners covers various Ethics&Compliance topics and risk areas,such as Anti-Harassment,Anti-Discrimination,Insider Trading and Conflicts of Interest.In FY23,we launched more than 60,000 online courses to our corporate partners in 20 countries,which included ten different risk areas.All corporate partners receive training annually on our Standards of Business Conduct and Harassment Prevention.As part of retail onboarding,all partners discuss and review the Standards of Business Conduct and Speaking Up resources in a one-on-one meeting with their manager.Upon hire,all new retail management partners also receive Anti-Harassment training,which must be completed in the first 30 days.Retail managers in the U.S.and Canada receive annual online renewal training of risk-relevant topics and in 2023 achieved a 99%completion rate on a custom Harassment Prevention course.We also newly launched training to partners in our Farmer Support Centers in seven different countries.Starbucks Global Anti-Bribery Standard and related policies and procedures provide critical guidelines regarding doing business with third parties,government officials,and state-owned/controlled companies,and set forth clear expectations regarding bribery and corruption.We reinforce this through regular partner communications,and last year we provided online training to partners globally.Partners are empowered to ask for guidance and voice concerns when they experience or see conduct that is inconsistent with our Standards of Business Conduct,company policies or Mission and Values.An independent third party manages our Ethics&Compliance Helpline and Webline,both of which allow partners and others to ask questions and voice concerns 24 hours a day,seven days a week,with interpreters available.Reports may be made anonymously and are treated in a confidential manner.We are committed to providing safe,confidential and accessible channels to all individuals connected to Starbucks,while maintaining a strict Anti-Retaliation Policy in compliance with our Global Human Rights Statement.Starbucks captures concerns raised and assigns cases to be investigated by or with the oversight of an Ethics&Compliance investigator.The Ethics&Compliance investigations team strives to bring cases to closure within 45 to 60 days,based on complexity.In FY23,Ethics&Compliance completed investigations of 4,731 inquiries and concerns received primarily through our Helpline and Webline.Of the investigations completed,45 percent were substantiated as a violation of standard or policy.When an investigation is complete,Ethics&Compliance shares findings with the individual(s)who reported the concern.Depending on the findings of the investigation and the severity of any substantiated wrongdoing,there are a number of possible outcomes to an investigation,including coaching,retraining,written documentation or separation from employment.Ethics&Compliance topics are regularly reinforced through leadership messages,our online community and other cross-functional channels.Regular reports are made to the Audit and Compliance Committee of the Board of Directors,including formal sessions multiple times each year.OU R S H A R E H O L D E R P ROM I S EGenerate long-term returns2023 Global Impact Report 332024 Starbucks Corporation.G LO B A L I M PACT R E P O RTS TA R B U C K SFISCAL 2 0 2 32023 Global Impact Report 342024 Starbucks Corporation.progress report data tables2024 Starbucks Corporation.2023 Global Impact Report 35OU R PA RT N E R P ROM I S EBridge to a better futureprogress report data tablesBenefitsCOMPENSATIONFY23FY22Average hourly wage for U.S.hourly partners($/hour)17.4217.00%U.S.hourly partners earned above minimum wage1000%STARBUCKS COLLEGE ACHIEVEMENT PLAN#partners graduated with college degree(during FY)2,100Goal:Graduate 25,000 Starbucks partners from Arizona State University(ASU)by the end of 2025.#partners graduated with college degree(since program inception,as of FYE)9,100#partners participating(as of FYE)23,40023,000Training&DevelopmentTALENT ATTRACTION,DEVELOPMENT&TRAININGFY23FY22Total number of baristas hired in the U.S.160,000%of U.S.retail leadership roles filled from internal partners 69%Total employee turnover(U.S.and Canada)58e%#training hours for baristas(Barista First 30)(hours per barista)41.542#partners selected to travel to Hacienda Alsacia for Origin Experience900800STARBUCKS GLOBAL ACADEMYCoffee Masters#enrollments7,0002,500#course completions(earned the Black Apron)(during FY)6,8001,500#course completions(earned the Black Apron)(since inception,as of FYE)4,500STARBUCKS GLOBAL ACADEMY|CONTINUEDFY23FY22Community Champion#course enrollments1,600#course completions15,30015,000#course completions9,2009,900Starbucks Coffee Academy#course enrollments153,50094,90096,900Third Place Development Series#course enrollments2,6003,000#course completions300To Be WelcomingGoal:100,000 total enrollees in To Be Welcoming to cultivate inclusion,diversity and equity awareness.#course enrollments21,000We exceeded our goal of enrolling 100,000 cumulative learners in FY22,and remain committed to offering the course to partners,customers and community members through the Starbucks Global Academy.#course completions25,60012,000%enrollees who are partners61 24 Starbucks Corporation.2023 Global Impact Report 36OU R PA RT N E R P ROM I S EBridge to a better futureprogress report data tablesPartner EngagementPARTNER ENGAGEMENT SURVEYSFY23FY22%partners completed the Partner Experience SurveyU.S.store partners65Cnada store partners53T%North America non-store partners92%PARTNER NETWORKS#Partner Networks(globally)3226#Partner Networks(U.S.)1312Active regional chapters(U.S.)116114CIVIC ENGAGEMENT RESOURCES#partners using civic education resources(via Starbucks FuelOurD site)17,000Inclusion,Diversity&EquityRACIAL&SOCIAL EQUITY GOALS&REPRESENTATION*FY23FY22Representation of women in retail roles(U.S.)Goal:At least 55%women in all retail roles(regional vice president,regional director,district manager,store manager,shift supervisor,barista)by 2025.regional vice president52c%regional director51P%district manager60a%store manager68h%shift supervisor71qrista73s%Representation of POC in retail roles(U.S.)Goal:At least 40%People of Color(POC)representation in all retail roles(regional vice president,regional director,district manager,store manager,shift supervisor,barista)by 2025.regional vice president381%regional director372%district manager363%store manager429%shift supervisor48Grista54S%Our commitments to achieving diverse representation in our retail,manufacturing and corporate roles and equity in pay across race and gender in the U.S.and globally in company-operated markets reinforce our promises to build bridges and create environments where all are welcome.There is still more to be done,and we are committed to taking further actions toward tangible and lasting change.*Use our interactive tool to view additional demographic data of Starbucks partners.2024 Starbucks Corporation.2023 Global Impact Report 37OU R PA RT N E R P ROM I S EBridge to a better futureprogress report data tablesRACIAL&SOCIAL EQUITY GOALS&REPRESENTATION|CONTINUEDFY23FY22Representation of women in enterprise roles(U.S.)Goal:At least 50%women for all enterprise roles(senior vice president ,vice president,director,manager,individual contributor)by 2025.senior vice president 47W%vice president58U%director60Y%manager55U%individual contributor56U%Representation of POC in enterprise roles(U.S.)Goal:At least 30%POC representation for all enterprise roles(senior vice president ,vice president,director,manager,individual contributor)by 2025.senior vice president 33%vice president330%director29%manager321%individual contributor418%Our commitments to achieving diverse representation in our retail,manufacturing and corporate roles and equity in pay across race and gender in the U.S.and globally in company-operated markets reinforce our promises to build bridges and create environments where all are welcome.There is still more to be done,and we are committed to taking further actions toward tangible and lasting change.RACIAL&SOCIAL EQUITY GOALS&REPRESENTATION|CONTINUEDFY23FY22Representation of women in manufacturing roles(U.S.)Goal:At least 30%women in all manufacturing roles(director,manager,individual contributor)by 2025.director14%manager27)%individual contributor333%Representation of POC in manufacturing roles(U.S.)Goal:At least 40%POC representation in all manufacturing roles(director,manager,individual contributor)by 2025.director14)%manager280%individual contributor47C%Our commitments to achieving diverse representation in our retail,manufacturing and corporate roles and equity in pay across race and gender in the U.S.and globally in company-operated markets reinforce our promises to build bridges and create environments where all are welcome.There is still more to be done,and we are committed to taking further actions toward tangible and lasting change.Representation of age in total workforce retail(U.S.)under 308205016ove 502%3%Representation of age in total workforce enterprise(U.S.)under 30905070aove 5022 24 Starbucks Corporation.2023 Global Impact Report 38OU R PA RT N E R P ROM I S EBridge to a better futureprogress report data tablesRACIAL&SOCIAL EQUITY GOALS&REPRESENTATION|CONTINUEDFY23FY22Representation of age in total workforce manufacturing(U.S.)under 301705057Rove 50262%board members identifying as POC558%board members identifying as female27%GLOBAL EQUITY IN PAYGoal:100%gender and racial pay equity in the U.S.*%gender pay equity in the U.S.(for similar work)1000%racial pay equity in the U.S.(for similar work)1000%gender median pay ratio in the U.S.960%racial median pay ratio in the U.S.1000%Goal:100%gender equity in pay globally for company-operated markets.%gender pay equity in global company-operated markets(for similar work)In FY23,in our global company-operated markets,we have achieved gender equity in pay in Canada,Japan,Switzerland and Austria.SUPPORTING LGBTQIA2 PARTNERSRepresentation of U.S.workforce self-identifying as LGBTQIA2 retail76%enterprise%manufacturing%Score on the Human Rights Campaign Corporate Equality Index1000%DISABILITY INCLUSIONFY23FY22Score on the Disability Equality Index1000%Representation of U.S.workforce self-identifying with disabilityretail%enterprise%manufacturing%REFUGEE SUPPORTGoal:Hire 10,000 refugees globally by 2022.#Refugees hired in U.S.,Canada and EMEA(during FY)1,100#Refugees hired in U.S.,Canada and EMEA(cumulative as of FYE)5,5004,000While we did not meet our goal of hiring 10,000 refugees globally,we remain committed to the refugee community and staying transparent with partners,customers and stakeholders on our progress.Our support goes beyond employment opportunities to include funding to support humanitarian assistance,resources and services that help refugees find safety and rebuild their lives.VETERANS&MILITARY FAMILIESGoal:Hire 5,000 Veterans and military spouses annually in the U.S.#Veterans and military spouses hired2,8001.11%Goal:Starbucks customer packaging will be sourced from 50%recycled materials by 2030.%of customer packaging made from recycled or renewable materials24#%Goal:100%of Starbucks customer packaging will be reusable,recyclable,or compostable by 2030.%of customer packaging that is reusable,recyclable or compostable14%Goal:50%reduction in virgin fossil fuel derived sources for customer packaging from FY19 baseline by 2030.%change in virgin fossil fuel derived materials in customer packaging from FY19 baseline11 24 Starbucks Corporation.2023 Global Impact Report 40OU R E N V I RO N M E N TA L P ROM I S EGive more than we takeprogress report data tablesPLASTICS ELLEN MACARTHUR FOUNDATION GLOBAL COMMITMENTFY23FY22Goal:Take action to help eliminate problematic or unnecessary plastic packaging by 2025.Reducing plastic packagingWe have deployed several initiatives to reduce our waste footprint as part of the Ellen MacArthur Foundation Global commitment.Building on Starbucks elimination of traditional plastic straws across retail stores globally in FY21,Starbucks completed the roll-out of straws made from polyhydroxyalkanoate(PHA),a non-fossil fuel derived plastic that is home compostable,in the U.S.in FY22.In Canada,Starbucks rolled out wood cutlery and paper straws in FY22 and continued research and development to bring new products to market in FY23-25.Goal:Take action to move from single-use towards reuse models where relevant by 2025.Moving from single-use towards reuse modelsGoal:Take action for 100%of plastic packaging to be reusable,recyclable or compostable by 2025.%of plastic packaging reusable,recyclable or compostable27%Goal:Use 10%recycled content across all plastic packaging by 2025.%post-consumer recycled content used in plastic packaging4%4%Goal:20%reduction of virgin plastic packaging by 2025(compared to FY19).%change in virgin plastic packaging materials from FY19 baseline3%-1%Greener StoresGREENER STORESFY23FY22Goal:Build and operate 10,000 Greener Stores globally by 2025.#Greener Stores certified in North America5,4883,508#Greener Stores certified in international regions6034#total Greener Stores certified globally6,0913,512RENEWABLE ELECTRICITY USE*Goal:100%renewable electricity for global operations by 2020.%renewable electricity use globally(company-operated facilities globally)77q%U.S.company-owned facilities powered by renewable electricity1000nada company-owned facilities powered by renewable electricity1000%EMEA company-owned stores powered by renewable electricity1000%Japan company-owned facilities powered by renewable electricity100%*In previous years,we reported this metric as“renewable energy”.Weve updated to“renewable electricity”to clarify its original scope.2024 Starbucks Corporation.2023 Global Impact Report 41OU R FA RM E R P ROM I S EEnsure the future of coffee for allprogress report data tablesCoffeeFARMER SUPPORT CENTERSFY23FY22#Farmer Support Centers1010#people trained with advanced agronomy techniques56,00031,000#Model Farms(cumulative as of FYE)12070CLIMATE-RESISTANT COFFEE TREESGoal:Provide 100 million trees to farmers by 2025.#climate-resistant coffee trees distributed globally(millions)11.15333.6*CHILDCARE CENTERS FOR FARMING FAMILIES#new childcare centers opened(during FY)5*5GLOBAL FARMER FUNDGoal:Supply$100 million in farmer loans by the end of 2025.$loans deployed from the Global Farmer Fund(cumulative as of FYE)($millions)80.880.8$loans deployed from the Global Farmer Fund(since FY18)(as of FYE)($millions)65.865.8SUPPLIER LISTSList of coffee suppliersList of tea suppliersList of cocoa suppliersTo advance our transparency,for the first time,Starbucks has published its coffee,tea and cocoa supplier lists.The lists represent suppliers that supplied to Starbucks during FY23.DIGITAL TRACEABILITYFY23FY22#bags of coffee traced using online traceability tool43,000#unique visitors accessing online traceability tool122,000ETHICAL SOURCING OF COFFEEGoal:Committed to source and verify 100%of Starbucks coffee ethically through C.A.F.E.Practices.%Starbucks coffee ethically sourced and verified through C.A.F.E.Practices99.7.2%Average#farms participating in C.A.F.E.Practices450,000400,000CARBON REDUCTION IN GREEN COFFEEGoal:Achieve carbon-neutral green coffee by 2030.#soil samples processed(cumulative as of FYE)30,800 14,700We continue to refine the methodology we use to calculate the carbon and water footprint of green coffee.This work is critical to our goals and connects directly with industry efforts to reduce carbon and water use in coffee processing.WATER CONSERVATION IN GREEN COFFEEGoal:Conserve water usage in green coffee processing by 50%by 2030.#eco-wet mills contracted(cumulative as of FYE)1,300We continue to refine the methodology we use to calculate the carbon and water footprint of green coffee.This work is critical to our goals and connects directly with industry efforts to reduce carbon and water use in coffee processing.FOREST CONSERVATION&RESTORATIONHectares of forests protected300200#native trees distributed by Global Farmer Support Centers156,20038,000*FY22 value has been restated.*FY23 value represents new centers operating during FY23.2024 Starbucks Corporation.2023 Global Impact Report 42OU R FA RM E R P ROM I S EEnsure the future of coffee for allprogress report data tablesOther Goods&ServicesRESPONSIBLE SOURCING FOR TEAFY23FY22Goal:Committed to 100%responsibly sourced tea.%tea sourced by the global tea sourcing team that is Rainforest Alliance certified99.7.7%As our sustainability journey continues,99.7%of Tea(Camelia Sinensis)sourced by our global tea sourcing team was from Rainforest Alliance Certified tea gardens,while investing directly in projects in tea communities that support gender empowerment,water,sanitation and hygiene(WASH),youth education and environmental sustainability.RESPONSIBLE SOURCING FOR COCOAGoal:Committed to responsibly sourced cocoa.Total weight of Rainforest Alliance certified and segregated cocoa beans sourced directly from Cargill and indirectly through OFI(metric tons)21,79012,000*We are proud to increase the amount of responsibly sourced cocoa in our supply chain in FY23.We remain committed to supporting resilient livelihoods for cocoa producers and their families,and collectively working towards eliminating the risks of child labor and cocoa-driven deforestation.Read more about Starbucks cocoa sustainability efforts here.RESPONSIBLE SOURCING FOR MANUFACTURED GOODS&SERVICES#factory assessments conducted400300#factories in program1,500%transparency into factories assessed95%#factory workers 87,000SUSTAINABLE DAIRY$invested in U.S.Dairy Net Zero Initiative(during FY)($millions)22$invested in U.S.Dairy Net Zero Initiative(cumulative as of FYE)($millions)64Starbucks is committed to invest$10 million in the U.S.Dairy Net Zero Initiative.ANIMAL WELFAREFY23FY22Goal:100ge-free eggs and egg products in company-operated stores globally.ge-free eggs(U.S.and Canada company-operated stores,inclusive of branded products supplied to licensee business partners)1000ge-free eggs(EMEA and U.K.company-operated stores)99.9.9%In Asia markets where Starbucks operates,such as China and Japan,cage-free egg production is limited and supply is not yet widely available.Starbucks remains committed to increasing cage-free egg supply in all company-operated stores globally,in partnership with industry stakeholders.Goal:Serve only poultry raised without the routine use of medically important antibiotics in all company-operated U.S.stores by 2020.%poultry raised without routine-use of medically important antibiotics (U.S.company-operated stores)99.90%Goal:We anticipate meeting our stated goal of 100%group-housed pork by 2024 for Starbucks-branded products in the U.S.and Canada,including those supplied to our licensee business partners in the U.S.and Canada.Starbucks is phasing out the excessive use of gestation stalls for the sows(mother pig)in our supply chain by 2030.%pork defined as“group housed”(U.S.and Canada company-operated stores,inclusive of branded products supplied to licensee business partners)76%We are committed to making progress in service of our animal welfare-friendly practices and aspirations and will continually reevaluate our sow housing commitment with key stakeholders in support of our 2030 goal.Goal:We are committed to improving conditions for broiler chickens and are working with our suppliers,licensees,and others in the industry to help ensure that by 2024 the chicken we buy for our U.S.stores is produced in alignment with Global Animal Partnership(GAP)standards as assessed by a third-party auditor.Broiler chickensWe are actively reviewing our broiler chicken commitment to identify the best path forward for implementation within our supply chain.*Reported value for FY22 includes volumes sourced directly from Cargill.2024 Starbucks Corporation.2023 Global Impact Report 43OU R COMMU N I TY P ROM I S EContribute positivelyprogress report data tablesThe Starbucks FoundationOVERALL GRANTSFY23FY22$total grants awarded($millions)2417.5ORIGIN GRANTSGoal:Empower 1 million women and girls in coffee,tea and cocoa growing communities by 2030.#women and girls in origin communities positively impacted(cumulative as of FYE)474,000340,000$grants awarded in support of women and girls in origin communities($millions)710,0006,000$hyperlocal grants awarded to nonprofits nominated by Starbucks partners ($millions)5.14.5#nominations by Starbucks partners39,00029,000YOUTH GRANTS#youth impacted(cumulative as of FYE)375,000$grants awarded to U.S.organizations serving youth nationally($millions)31.2GLOBAL COMMUNITY IMPACT GRANTSFY23FY22Goal:Award 25,000 hyperlocal grants to support nonprofits by 2030 through the Neighborhood Grants and Global Community Impact Grants portfolios.#hyperlocal grants made to nonprofits(cumulative as of FYE)1903.9*3.2#international markets reached 4642DISASTER PHILANTHROPY$grants awarded to promote resilience and uplift communities impacted by disaster($millions)4.61.11.3These donations reflect support for refugee communities which are included in the overall grant total.$donations to support LGBTQIA2 communities700,000700,000These donations reflect support for LGBTQIA2 communities which are included in the overall grant total.*This value includes donations from licensee business partners amounting to$900,000.2024 Starbucks Corporation.2023 Global Impact Report 44OU R COMMU N I TY P ROM I S EContribute positivelyprogress report data tablesCompany Programs for Community SupportCOMMUNITY STORESFY23FY22Goal:Open 100 U.S.Community Stores by 2025.#Community Stores in the U.S.opened in FY117#Community Stores in the U.S.opened cumulatively as of FYE3928#Community Stores in International Markets opened in FY168#Community Stores in International Markets opened cumulatively as of FYE3519MILITARY FAMILY STORESGoal:Open 250 Military Family Stores by 2025 with 100 of these new stores on military bases(U.S.).#Military Family Stores opened in FY1733#Military Family Stores opened cumulatively as of FYE130*111SIGNING STORES#Signing Stores globally opened cumulatively as of FYE2016FOOD WASTE REDUCTION&HUNGER RELIEFGoal:Reduce food waste by 50%by 2030.%company-operated stores in the U.S.with FoodShare food donation program available1000%company-operated stores in Canada with FoodShare food donation program available 1000%weight of food diverted from waste streams in the U.S.(millions lbs)9.413#meals donated in the U.S.(millions)(1.2 lbs=1 meal)7.81.31#meals donated in Canada(millions)(1 lb=1 meal)1.31Goal:Reinvest$100M into hunger relief efforts by 2030.$invested in hunger relief efforts in FY($millions)11.610$invested in hunger relief efforts cumulatively since FY16(as of FYE)($millions)60.9COMMUNITY RESILIENCE FUNDGoal:Invest$100 million in 12 cities by 2025.$invested in the Community Resilience Fund(cumulative as of FYE)($millions)4021OUTREACH WORKER PROGRAM#cities(cumulative as of FYE)88#customer engagements12,000#referrals to stabilizing programs2,6001,8002024 Starbucks Corporation.2023 Global Impact Report 45OU R COMMU N I TY P ROM I S EContribute positivelyprogress report data tablesCOMMUNITY CHAMPIONS PROGRAMFY23FY22#partners engaged as Community Champions(U.S.and Canada)*17,00017,000#community events participated in(U.S.and Canada)5,400153,80071,000#partners engaged as Community Champions(international)21,30026,000#community events participated in(international)1,000#partner volunteer hours(international)72,000GIVING MATCH PROGRAM$donated by Starbucks to nonprofit organizations through the Giving Match program($millions)1.810.9$spend with Tier 1 diverse suppliers-cumulative since 2000,as of FYE($billions)108,6007,200$labor income:total direct,indirect and induced economic impact from supplier diversity program($billions)1.5Goal:Allocate 15%of paid media investment to minority-owned and targeted media companies.%of paid media investment with minority-owned and targeted media companies22%*In the U.S.and Canada,engaging as a Community Champion is defined as taking action by participating in a community event,volunteering time or making a personal financial donation to a nonprofit.2024 Starbucks Corporation.2023 Global Impact Report 46OU R S H A R E H O L D E R P ROM I S EGenerate long-term returnsprogress report data tablesCOMPANY POLICIES&RESOURCESFor additional company policies and resources,please visit the ESG Reporting Hub.ETHICS&COMPLIANCEFY23FY22%completion of Harrassment Prevention training by retail management(U.S.and Canada)99%#completed investigations of inquiries and concerns4,700%investigations substantiated as a violation of standard or policy45%WORKING DIRECTLY WITH OUR PARTNERS#union represented stores(U.S.)343232 G LO B A L I M PACT R E P O RT2023 Global Impact Report 472024 Starbucks Corporation.S TA R B U C K SF I SCAL 20 23environmental footprint data tables2024 Starbucks Corporation.2023 Global Impact Report 48environmental footprint data tablesAnnual update of environmental performance:1,2,3 The following metrics represent detailed reporting of Starbucks environmental performance in FY19,the baseline year for our 2030 environmental targets,FY22,and FY23.Methodological updates and data improvements reflected in the FY23 metrics were applied to the FY19 and FY22 results,which will differ from the data previously reported.ENERGY CONSUMPTION(MWh)FY19FY22FY23Total Energy Consumption,direct operations42,528,2462,590,5982,695,583Total purchased electricity,direct operations1,938,962 1,993,9362,095,815Percent renewable71qw%Total fuel consumed,direct operations5589,284 596,662599,768GREENHOUSE GAS EMISSIONS(MTCO2e)6,7FY19FY22FY23Scope 18376,745 404,148401,722Scope 2market-based324,451 294,242285,989location-based 806,148 789,425835,477sub-total scope 1 2 market-based emissions701,196698,390687,7111 The scope of these data is global unless otherwise noted;Direct operations refers to an operational control boundary,inclusive of company owned stores,corporate offices,and manufacturing and distribution facilities;This includes global wholly-owned and partially-owned subsidiaries over which Starbucks has management and operational control.Direct operations excludes licensed stores.2 We have updated the methodologies used to develop our environmental inventories;These updates included improved data quality and availability,changes to emissions and water factors,and other methodological changes.3 Where possible,reported data aligns with our fiscal year.In some cases,for example utility bills,the data aligns to the nearest month rather than the exact fiscal year end and start dates.4 In gigajoules,total energy consumption in FY23 equals 7,544,934 GJ,and total fuel consumed in FY23 equals 2,159,164 GJ.5 Fuel types consumed include natural gas,stationary diesel and gasoline,propane,aviation fuel,and mobile vehicle fuel.6 Starbucks calculates greenhouse gas emissions in accordance with The Greenhouse Gas Protocol:A Corporate Accounting and Reporting Standard(The GHG Protocol)and uses global warming potential(GWP)values from the Intergovernmental Panel on Climate Change(IPCC)Fourth Assessment Report(AR4);Some Scope 3 GHG emission factor sources utilize IPCC Fifth Assessment Report(AR5)GWP values.More detailed climate-related disclosures are available in Starbucks CDP Report.7 FY23 data have been third-party verified by Burns and McDonnell;Their report is available on page 62.8 Global refrigerant emissions exclude emissions associated with global offices and non-retail facilities outside the United States and Canada.2024 Starbucks Corporation.2023 Global Impact Report 49environmental footprint data tablesGREENHOUSE GAS EMISSIONS(MTCO2e)6,7|CONTINUEDFY19FY22FY23Scope 391 Purchased goods and services10,117,630,1137,830,6337,580,0452 Capital goods144,036168,238188,8553 Fuel-and energy-related activities176,953175,861195,1534 Upstream transportation and distribution640,946683,336659,6925 Waste generated in operations262,850275,811299,0986 Business travel1229,34313,29226,5667 Employee commuting615,170707,180579,5578 Upstream leased assets13Not relevant9 Downstream transportation and distribution293,096510,801542,48010 Processing of sold products167,793162,823175,81511 Use of sold products59,77257,81746,07512 End-of-life treatment of sold products175,345167,255170,09013 Downstream leased assets14Not relevant14 Franchises2,355,2772,928,4683,084,93915 Investments213,820304,167343,722subtotal scope 3 emissions 12,764,51413,985,68113,892,085Total emissions(scope 1 2 market-based 3)13,465,71014,684,07114,579,796Percent of total GHG emissions from fluid dairy purchases1518%Percent of total GHG emissions from green coffee purchases1615%Percent change in total emissions from FY19 baseline8%9Scope 3 emissions utilitize Scope 2 location-based emissions values.10 Category 1 emissions include land use change(LUC)emissions for purchases of coffee,tea,cocoa,dairy,food,and other beverage ingredients.11 Category 1 emissions include the emissions from the goods and services purchased by Starbucks Corporation;Purchases made by licensees for key commodities are included in category 14 as recommended by the GHG Protocol.12 Category 6 emissions increased between FY22 and FY23 as global business travel began to rebound to pre-pandemic levels.13Starbucks upstream leased assets are considered de minimis.14Starbucks downstream leased assets are considered de minimis.15 Total GHG emissions from fluid dairy purchases are inclusive of fluid dairy categorized in scope 3 category 1 and category 14,and include estimated LUC GHG emissions associated with these purchases.16 Total GHG emissions from green coffee purchases are inclusive of estimated LUC GHG emissions associated with these purchases included in scope 3 category 1.2024 Starbucks Corporation.2023 Global Impact Report 50environmental footprint data tablesWATER WITHDRAWALS(MEGALITERS)7FY19FY22FY23Total water withdrawal5,634,3375,113,174 5,132,983 Direct operations17,1822,853 23,818 24,021 Percent water withdrawn from high-risk basins19Not calculated290%Indirect:licensed stores1717,52522,245 24,484 Percent water withdrawn from high-risk basins19Not calculated45F%Indirect:packaging and agricultural commodities purchased20,215,593,958 5,067,111 5,084,478 Percent change in total water withdrawal from FY19 baseline-9%OPERATIONAL WASTE(THOUSAND METRIC TONS)7,22FY19FY22FY23Total weight of non-hazardous operational waste1,163 1,236 1,367Direct operations generated238459161,018Percent organic52SR%Percent diverted2428)1%Indirect:generated in licensed stores25318 320 349 Percent organic56WX%Percent diverted2420!%Percent total non-hazardous operational waste,diverted2426( Water withdrawal from stores is calculated using both primary data and estimations;Where primary data are not available,water withdrawal is estimated by applying an average water withdrawal factor derived from withdrawal at U.S.and Canada company-owned stores.18 Starbucks withdraws water strictly from local water utilities or similar relevant entities,and as such,all of our water withdrawals are categorized as sourced from third-party water.19 Refers to water withdrawals from facilities located in regions of high or extremely-high baseline water stress as defined by WRI Aqueduct tool,which was used to conduct our global water risk assessment.20 Water withdrawal from packaging and agricultural commodities is estimated using country-level or regional water scarcity data from the World Food Lifecycle Database(WFLDB).Reporting of this category aligns with our GHG inventory,scope 3,category 1.21 Water withdrawals for green coffee are based on direct water withdrawals and water consumption factors from WFLDB.22 We are not reporting on waste discarded by customers out of our stores and instead have expanded our reporting of packaging materials.23Reporting of this category aligns with the GHG inventory,scope 3,category 5.24 We measure waste diverted away from landfill or incineration as waste materials recycled,remarketed,composted,donated,or sold to be processed into animal feed.25 Licensed store non-hazardous waste generation is estimated based on company-owned store information;This does not include construction and demolition waste or electronic waste;Reporting of this category aligns with the GHG inventory,scope 3,category 14.2024 Starbucks Corporation.2023 Global Impact Report 51environmental footprint data tablesPACKAGING MATERIALS(THOUSAND METRIC TONS)26FY19FY22FY23Total weight of packaging material 319330345Percent of packaging made from recycled or renewable materials25)(%Percent of materials recyclable,compostable or reusable48GI%Direct:total weight of packaging materials purchased by Starbucks Corporation27208220226Indirect:total weight of packaging materials purchased by licensees for Starbucks retail operations28110109119Total weight of plastic packaging materials29125130137Total weight of virgin plastic packaging materials118117122Percent change in virgin plastic packaging materials from FY19 baseline3%Percent of plastic packaging that is reusable,recyclable or compostable3030%Percent of post-consumer recycled content used in plastic packaging 3%4%4%Total weight of customer packaging31145167172Total weight of customer packaging-paper707778Total weight of customer packaging-plastic758992Total weight of customer packaging-other32011Percent of customer packaging that is reuseable,recyclable,or compostable10%Percent of customer packaging made from recycled or renewable materials19#$%Percent change in virgin fossil fuel derived materials in customer packaging from FY19 baseline3311& Data represent packaging materials used in our direct operations and licensed stores and all other packaging materials purchased by Starbucks Corporation.This aligns with our GHG Inventory and Ellen MacArthur Foundation Global Commitment reporting boundaries.Starbucks branded products sold outside of our stores is part of a licensed model of the Global Coffee Alliance with Nestl,while our global ready-to-drink businesses operate under collaborative relationships with PepsiCo and others.The Starbucks branded packaging used by Channel Development business partners are part of their commitments and reporting.27 Reporting of this category aligns with packaging materials reported in the GHG inventory under scope 3,category 1.28 Reporting of this category aligns with packaging materials reported in the GHG inventory under scope 3,category 14.29 FY19 and FY22 inventories have been recalculated to align with methodology changes and data quality improvements made as part of the FY23 inventory;These results may differ from what has been previously submitted to Ellen MacArthur Foundation Global Commitment and WWF ReSource Plastic and we anticipate restating these metrics in our 2023 reporting to these organizations.30 In assessing the recyclability of our portfolio,Starbucks has aligned with the New Plastics Economy 2022 Recycling Rate Survey results.31Customer packaging is packaging designed to accompany a customer transaction.32 In reporting for this category,“other”material includes aluminum,steel,glass,textile,and wood.33 Starbucks defines virgin plastic packaging material as any plastic material that is neither biobased nor made with recycled content.G LO B A LI M PACT R E P O RT2023 Global Impact Report 522024 Starbucks Corporation.S TA R B U C K SFISC AL 2 0 2 3human rights data tables2024 Starbucks Corporation.2023 Global Impact Report 53human rights data tablesZERO-TOLERANCE INDICATORFY23FY22#Nonconformities related to wage practices8989#Nonconformities related to traceability requirements4268#Nonconformities related to child labor5954#Nonconformities related to labor intermediaries413#Nonconformities related to transparency requirements21#Nonconformities related to banned pesticides5623#Nonconformities related to forced labor,abuse,or unethical recruitment practices513#Nonconformities related to deforestation127Total#nonconformities269268%of FY22 nonconformities that have been remediated or closed by the end of the fiscal year880%*The FY22 remediation%has been restated to align with fiscal year dates.%of FY23 noncomformities that have been remediated or closed by the end of the fiscal year34%CoffeeStarbucks ethical sourcing program for coffee,C.A.F.E.Practices,requires each supply chain to undergo reverification regularly.Today the program represents more than 450,000 farms around the world.A nonconformity as reported in this table is a breach of any one of Starbucks zero tolerance indicators.Multiple nonconformities could be identified in a single location.The number of participating entities change year to year,which may impact the number of reported nonconformities on an annual basis.For each zero tolerance non-conformity brought to our attention through C.A.F.E.Practices,we require swift action by our suppliers and our on-the-ground,third-party partners to pursue corrective actions,including,where appropriate,providing remedy for the impacted individuals.Due to the seasonal nature of coffee production,some zero tolerance indicators may only be closed during the harvest period when the majority of temporary workers are present and therefore fully closing these indicators may require waiting until the next coffee harvest.In the event a zero tolerance indicator cannot be resolved in a timely and comprehensive manner,a supply chain will be considered Non Compliant and not eligible for C.A.F.E.Practices approval until resolution is possible.2024 Starbucks Corporation.2023 Global Impact Report 54human rights data tablesZERO-TOLERANCE INDICATORFY23FY22#Nonconformities related to wage practices2021#Nonconformities related to transparency requirements66#Nonconformities related to access denial into facilities for audits and inspections21#Nonconformities related to health and safety,including direct and immediate endangerment00#Nonconformities related to environmental impact20#Nonconformities related to forced labor16#Nonconformities related to child labor51#Nonconformities related to abuse and harassment00Total#nonconformities3635%of FY22 nonconformities that have been remediated or closed by the end of the fiscal year80&%*The FY22 remediation%has been restated to align with fiscal year dates.%of FY23 noncomformities that have been remediated or closed by the end of the fiscal year42%Manufactured Goods&ServicesOur ethical sourcing program includes our standards for manufactured goods and services,including beverages,food,merchandise,equipment,furniture and logistics providers.Our program includes on-site factory assessments to identify potential or actual violations.Commitment to continuous improvement is the cornerstone of our program and we work with our suppliers to remediate identified violations.G LO B A L I M PACT R E P O RT2023 Global Impact Report 552024 Starbucks Corporation.S TA R B U C K SF I SCAL 20 23environmental,social and governance priorities2024 Starbucks Corporation.2023 Global Impact Report 56environmental,social and governance prioritiesIn FY23,we engaged in a comprehensive third-party evaluation to identify and prioritize key environmental,social and governance topics most important to the company and external stakeholder groups.This process aimed to guide Starbucks in focusing our strategy to advance our mission,promises and values.To do this,we conducted surveys and interviews across global stakeholder groups to understand the importance of environmental,social and governance topics for Starbucks.The assessment was conducted in addition to Starbucks Enterprise Risk Management(ERM)program.While stakeholders viewpoints on the relative importance of environmental,social and governance issues may be informed in part by risks for Starbucks to manage,the purpose of this assessment is to identify priority topics on which Starbucks should focus.While Starbucks believes that the environmental,social and governance issues described in this Impact Report are important,we currently do not believe that such issues are material to our financial results and results of operations,except to the extent referenced in our Annual Report on Form 10-K and subsequent 10-Q filings.This Impact Report also contains human capital measures or objectives that may be different from or are in addition to the human capital measures or objectives that Starbucks is required to disclose in its Annual Report on Form 10-K.For a discussion on human capital measures or objectives that Starbucks focuses on in managing its business,please see the“Human Capital Management”section in our most recent Annual Report on Form 10-K.Understanding and addressing these key issues are integral to meeting the expectations of our stakeholders and ensuring alignment between our business performance and environmental,social and governance impacts.While there is work being done across all topics,these results will help inform our program strategies and reporting priorities going forward.Our PrioritiesClimate strategy and resilienceEnvironmentally-responsible sourcing practicesGreenhouse gas emissions and energy efficiencyPackagingWasteWater stewardshipCommunity support and engagementDiversity,equity and inclusionHuman rights within Starbucks operationsHuman rights within Starbucks supply chainNutrition and transparencyPartner attraction,development and culturePartners(OHS),community and customer safetyPartner relationsProduct quality and safetyCorporate governanceCybersecurity and data privacyEthics and complianceResearch,development and innovationTransparency and stakeholder communication2024 Starbucks Corporation.2023 Global Impact Report 57environmental,social and governance prioritiesEnvironmental TopicsTERMDEFINITIONClimate strategy and resilienceForecasting and adapting to physical transition risks and opportunities posed by climate change(such as disruptions to supply chain,physical risk,price of carbon and natural resource availability)and to help ensure a sustainable future for coffee.Environmentally-responsible sourcing practicesEngaging with suppliers,including coffee farmers we source from,to manage planetary impacts within the supply chain,including:coffee,fairly produced materials(consider including specific topics-e.g.,cocoa,timber),reforestation,regenerative agriculture,waste reduction,and carbon footprint.Greenhouse gas emissions and energy efficiencyManaging energy efficiency throughout the value chain through processes and operations and utilizing renewable energy;managing,measuring and reducing greenhouse gas emissions across production,operations,facilities and supply chains.PackagingImproving the sustainability of packaging by transitioning to packaging that is reusable,recyclable,compostable,or contains recycled content.This also includes partnering with suppliers and industry organizations to develop innovative solutions to reduce or eliminate single-use packaging and improve end-of-life treatment and adapt to local packaging and circularity regulations.WasteManaging the waste generated as a result of our operations,and use of products,maximizing the recycling and reuse of materials,and reducing food waste in our operations.Water stewardshipWater stewardship is a set of practices to be used by businesses,utilities,communities,and others that promotes and fosters the sustainable and equitable management of freshwater resources.Water stewardship practices range from water use efficiency at an organizations own operations,to engagement with suppliers,to long-term multi-stakeholder river basin projects,and beyond(UN CEO Water Mandate).Social TopicsTERMDEFINITIONCommunity support and engagementFostering relationships and promoting social vitality in communities by investing in community-based initiatives such as corporate giving and community service.Managing relations and engaging with communities that are impacted economically,socially and/or environmentally by our operations in an effort to provide benefits to local communities,including minority groups.Diversity,equity and inclusionAttract and retain a diverse workforce and create an inclusive workplace culture to foster a sense of value and belonging for all partners,including those who have been historically excluded or underrepresented(on the basis of race/ethnicity,gender&gender identify,LGBTQIA2 ,Veteran status,disability status,socioeconomic background
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Environmental Progress ReportCovering fiscal year 2023ContentsEnvironmental InitiativesApple 2030 11 Journey to Apple 2030 12 Approach 15 Design and materials 24 Electricity 32 Direct emissions 35 Carbon removalResources 39 Approach 40 Product longevity 45 Material recovery 48 Water 52 Zero wasteSmarter Chemistry 58 Approach 59 Mapping 61 Assessment 63 InnovationIntroduction 3 Reflections from Lisa Jackson 4 Report highlights 5 Goals and progressEngagement and Advocacy 67 Approach 68 Listening to a range of voices 69 Achieving change together 73 Supporting communities worldwideData 77 Greenhouse gas emissions 78 High quality carbon certificates 79 Carbon footprint by product 81 Energy 82 Resources 83 Normalizing factorsAppendix 85 A:Corporate facilities energy supplement 94 B:Apples life cycle assessment methodology 96 C:Assurance and review statements 107 D:Environment,Health and Safety Policy 109 E:ISO 14001 certification 111 Report notes 112 End notes2024 Environmental Progress Report 2Engagement and AdvocacyEnvironmental InitiativesDataAppendixIntroduction ContentsReflectionsApples commitment to climate action has never been more clear.Thanks to the hard work of teams across our company,weve reduced our emissions by over 55 percent since 2015.Weve crossed key milestones on our environmental journey.And were rising to the generational challenge of climate change by working with companies and communities that span the globe.Apple 2030 is our commitment to be carbon neutral for our entire footprint by the end of the decade.Well get there by innovating at every stage of the product lifecycle from how theyre made,to what theyre made from.That starts with bringing new clean energy online across our supply chain.Today,more than 320 suppliers have committed to using renewable electricity for Apple production.With over 16 gigawatts already online,theyre avoiding more than 18 million metric tons of greenhouse gas emissions.Our teams and suppliers are a part of so many communities,so Apples work to protect the planet takes us around the world.Thats why were partnering directly with communities and local organizations to support environmental solutions where theyre needed most.In 2023,that meant expanding our Power for Impact program to bring clean energy to underserved communities in Nepal and Colombia,and supporting programs that increase access to safe water and sanitation in India.Were also building our products with more recycled and renewable material than ever work that helps to drive down our carbon footprint.Our customers play an important role in this effort.When you participate in the Apple Trade-In program,youre helping to bring us closer to the day our products will be made without taking anything from the Earth.The proof is in our products.Last year,more than 20 percent of the materials we shipped in Apple products came from recycled sources.MacBook Air is our first product made with more than 50 percent recycled material,and were making important strides across all of our products.The iPhone 15 lineup,Apple Watch Series9,and Apple Watch Ultra 2 use 100 recycled cobalt in their batteries.More than 99 percent of the tungsten in our products comes from recycled sources.And were driving innovation around the world to improve the way our industry recycles and recovers materials.Were also finding new and better ways to get Apple products into peoples hands.Its not just trains,planes,and automobiles increasingly,were shipping Apple products on the open seas,because ocean freight can reduce emissions by as much as 95 percent compared to air transport.And we continue to restore our planets ecosystems like the Atlantic Forest,which stretches from Brazil to Paraguay that play a key role in removing carbon from the atmosphere.What does all this work add up to?Progress.And that progress is sorely needed,because the impacts of climate change are all around us.Its frontlines are not in boardrooms or government buildings theyre in communities.And we owe it to our global community to rise to the challenge of climate change with all the innovation,empathy,and commitment we can muster.Lisa Jackson VP,Environment,Policy and Social Initiatives2024 Environmental Progress Report 3Engagement and AdvocacyEnvironmental InitiativesDataAppendixContentsIntroduction ReporthighlightsIntroduced our most significant product emissions reductions to-dateInnovations in design and clean energy drove dramatic reductions in greenhouse gas emissions for the fall Apple Watch lineup the most significant from our business-as-usual scenario.2 This included 100 percent clean energy for manufacturing and product use,30 percent recycled and renewable material by weight,and 50 percent shipping without the use of air transportation.3Read more on page 9.MacBook Air is the first Apple product made with 50 percent recycled contentThis includes 100 percent recycled aluminum in the enclosure,100 percent recycled rare earth elements in all magnets and,in another first for Apple,100 percent recycled copper in the main logic board.Read more on page 16.More than 320 suppliers committed to renewable electricityAs of March 2024,more than 320 suppliers have committed to sourcing renewable electricity for Apple production,representing 95 percent of our direct supplier spend.Weve accelerated progress with a mandate in our Supplier Code of Conductforall direct suppliers to transition to renewable energy in the manufacturing of Apple products.Read more on page 27.Launched Grid ForecastIn the contiguous United States,we introduced Grid Forecast,a new tool in the Home app on Apple devices.This tool shows customers when cleaner electricity is available from the grid,empowering them with information to help reduce greenhouse gas emissions.Read more on page 30.Reduced our overall emissions by more than55 percentWe reduced our overall greenhouse gas emissions across scopes 1,2,and 3by more than55 percent compared with our 2015 baseline year not including offsets.1 In that same time period,revenue grew by 64percent.We estimate that weve avoided31 million metric tons of emissions through reduction efforts like transitioning our supply chain to renewable electricity and sourcing recycled content.Read more on page 14.Increased our use of recycled materialsWere making steady progress on our journey toward using only recycled and renewable materials in our products.In 2023,22 percent of the materials we shipped in Apple products came from recycled sources.4 This includes,99 percent of tungsten,71 percent of aluminum,52 percent of cobalt,25 percent of gold,and 24 percent of lithium in our products.5Read more on page 17.Advocated for reporting transparencyAs part of our commitment to greenhouse gas emissions disclosures,we endorsed the landmark California Climate Corporate Data Accountability Act(CA SB 253)to improve transparency and drive progress in the fight against climate change.Read more on page 71.2024 Environmental Progress Report 4Engagement and AdvocacyEnvironmental InitiativesDataAppendixContentsIntroduction GoalsProgressHighlightsBecome carbon neutral for our corporate operations.AchievedWe achieved carbon neutrality in 2020 by expanding energy efficiency initiatives,sourcing 100 percent renewable electricity for Apple facilities,and investing in high-quality carbon credits to offset the remaining hard-to-decarbonize corporate emissions.Achieve carbon neutrality for our entire carbon footprint by 2030 reducing related emissions by 75 percent compared with 2015.6OngoingSince 2015,weve reduced emissions by over 55 percent across our value chain.Transition our entire value chain,including manufacturing and product use,to 100 percent clean electricity by 2030.7OngoingAs of March 2024,more than 320 suppliers have committed to use 100 renewable energy for their Apple production.These suppliers account for 95percent of Apples direct spend for materials,manufacturing,and assembly of our products worldwide.8GoalsProgressHighlightUse only recycled and renewable materials in our products and packaging,and enhance material recovery.OngoingIn 2023,22 percent of the material we shipped in our products came from recycled or renewable sources,and we also added titanium to our priority materials list in 2023.9Transition to 100 percent recycled cobalt,tin,gold,and rare earth elements in select components and applications by 2025.10OngoingIn 2023,56 percent of the cobalt shipped in Apple-designed batteries came fromrecycled sources.11Remove plastics from our packaging by 2025.12OngoingOur product packaging shipped in 2023 contains only 3 percent plastic down from 21 percent in 2015.13Goals and progressEmissionsMaterialsResourcesGoalsProgressHighlightReplenish all our corporate freshwater withdrawals in high-stress locations by 2030.14OngoingWeve partnered on freshwater replenishment projects resulting in 31.2 million gallons of volumetric water benefits.Certify all Apple-owned data centers to the Alliance for Water Stewardship(AWS)Standard by 2025.15OngoingWeve certified five data centers since 2021,and 20 suppliers since 2017 to the AWS Standard.Expand and grow supplier participation in the Supplier Clean Water Program,prioritizing high water stress locations and driving participants to an average 50 percent water reuse rate by 2030.16NewThrough our program,weve supported an average 42percent reuse rate across our 242 participating supplier facilities.Eliminate waste sent to landfill from our corporate facilities and our suppliers.OngoingOur corporate facilities waste diversion rate increased to 74percent,driven by progress atour data centers.Throughout 2023,100percent of established final assembly sites maintained zero-waste-to-landfill operations.2024 Environmental Progress Report 5Engagement and AdvocacyEnvironmental InitiativesDataAppendixContentsIntroduction Overview Apple 2030 Journey to Apple 2030ApproachDesign and materialsElectricityDirect emissionsCarbon removal Resources ApproachProduct longevity Material recovery WaterZero waste Smarter Chemistry ApproachMappingAssessmentInnovationEnvironmental InitiativesFocus on the futureMore than 38 percent of manufacturing electricity for iPhone 15 Pro and iPhone 15 Pro Max is sourced from our supplier clean energy projects.2024 Environmental Progress Report 6Engagement and AdvocacyDataAppendixIntroduction ContentsEnvironmental InitiativesApple 2030Apple 2030 is our commitment to be carbon neutral for our entire carbon footprint.Our journey to 2030 is focused on first reducing ourscope 1,2,and 3 greenhouse gas emissions by 75 percent compared with 2015,and investing in high-qualitycarbon removal solutions for the remaining emissions.Design and materialsElectricity17Direct emissionsCarbon removalResourcesWe aim to make durable,long-lasting products and enhance material recovery.And were committed to stewarding water resources andeliminating waste sent to landfills.Product longevityMaterial recoveryWaterZero wasteSmarter ChemistryThrough chemistry innovation and material selection,we design our products to be safer for anyone who assembles,uses,or recycles them and to be better for the environment.MappingAssessmentInnovationEnvironmental Initiatives2024 Environmental Progress Report 7Engagement and AdvocacyDataAppendixIntroduction ContentsEnvironmental InitiativesApple 2030ResourcesSmarter ChemistryApple 2030The time for changeThe significant emissions reductions associated with the Apple Watch lineup mark a milestone toward our 2030 goal.2024 Environmental Progress Report 8Engagement and AdvocacyDataAppendixIntroduction ContentsEnvironmental InitiativesApple 2030Journey to Apple 2030ApproachDesign and materialsElectricityDirect emissionsCarbon removalResourcesSmarter ChemistryAn ambitious goal for 2030:We committed to be carbon neutral for our entire carbon footprint by the end of the decade.Our journey to 2030 centers on reducing our scope 1,2,and 3 emissions first upstream and downstream by 75 percent before balancing remaining emissions with high-quality carbon removals.Weve already reduced emissions by more than 55percent since 2015,even as revenue grew by 64percent during that same eight-year period.Were focused on decarbonizing the three largest sources of emissions materials,electricity,and transportation across our value chain.Were prioritizing efforts to drastically reduce these emissions with initiativesfocused on achieving the broadest impact before applying offsets.For emissions that cant be further reduced,we primarilylook for high-quality,nature-based credits.We invest in carbon sequestration and removal projects to help us achieve carbon neutrality.Decarbonizing our supply chain is essential to achieving Apple 2030.Weve focused on innovative approaches to significantly expand renewable energy across our supply chain and manufacture ourproducts with recycled and renewable materials.2024 Environmental Progress Report 9Engagement and AdvocacyDataAppendixIntroduction ContentsEnvironmental InitiativesApple 2030ResourcesSmarter Chemistry Apple 2030ResourcesSmarter Chemistry Decarbonizing our value chainElectricityElectricity for manufacturing and charging devices represents the largest source of Apples emissions across all product lines.Achieving carbon neutrality for our entire carbon footprint requires a transition to 100 percent clean energy and significant energy reductions throughout our supplier facilities.We launched the Supplier Clean Energy Program in 2015 to advancerenewable energy throughout our manufacturing supply chain.As of March 2024,more than 320 global suppliers representing 95 percent of Apples direct manufacturing spend have joined the program.These suppliers have committed to using 100 percent renewable electricity for all their Apple production by the end of this decade.The success of this initiative has led to the next phase of our efforts toward achieving a carbon neutral supply chain by 2030.To rapidly scale and accelerate the progress of the Supplier Clean Energy Program,Apple updated the Supplier Code of Conduct to require all direct suppliers to transition to renewable energy in the manufacturing of Apple products.The codification of this requirement is the next step in our decarbonization journey and a sign of our commitment to integrate supply chain decarbonization into our core business decision-making.We hope that our approach can serve as a model that other companies can follow.Were also working to address emissions from product use through investments in renewable energy so that every watt of electricity associated with our customers product use is matched by clean electricity.Were prioritizing product efficiency to reduce the electricity use of our products.Weve also introduced Grid Forecast,a tool in the Home app that informs U.S.-based users when their power grid has cleaner energy available for use.And with iOS 16,we launched the Clean Energy Charging feature in the United States,which looks at the sources of the electricity during expected charge times and optimizes for when the grid is using cleaner energy sources like solar or wind.MaterialsWeve advanced toward our2030 goal by using recycled and renewable materials,which often have a lower carbon footprint than primary materials.And we announced that,by 2025,we plan to use 100 percent recycled cobalt in all Apple-designed batteries,100 percent recycled tin soldering,100 percent recycled gold plating in all Apple-designed rigid and flexible printed circuit boards,and 100 percent recycled rare earth elements in all magnets across new products.18Weve pioneered the use of many recycled materials in our products through world-class product engineering,extensive design qualifications,and supply chain engagement.Our focus is on materials that will yield significant environmental and social impacts,even when those materials come with notable challenges to building circular supply chains.To read more about our efforts to create circular supply chains,see the Prioritizing our efforts section.We intentionally design products to minimize the use of primary(non-recycled)materials and maximize recycled content as feasible.And year over year,we innovate and improve manufacturing processes to use materials more efficiently anddecrease manufacturing scrap.In 2023,manufacturing our products accounted for 59 percent of our gross carbon footprint.This includes emissions from fuel combustion;heating,ventilation,and air conditioning(HVAC);refrigeration;use of fluorinated gases;and other physical or chemical processes(excluding transportation).These emissions sources vary widely and require use of diverse technologies and solutions to abate.Our approach is to identify process emissions across our supply chain,like the use of fluorinated gases in display and semiconductor manufacturing,and launch targeted programs to address these emissions in partnership with our suppliers,governments,and industry stakeholders.We continue to launch supplier programs targeting emissions from manufacturing operations and facilities used to produce Apple products,like the Supplier Energy Efficiency Program launched in 2015 to help our suppliers optimize their energy use.TransportationIn 2023,transporting our products to customers accounted for 9 percent of our gross carbon footprint.To address the emissions from transportation,were shifting more product volume to shipping modes that are less carbon intensive than air transport,such as ocean or rail.Shipping the same Apple product by ocean generates 95 percent fewer emissions than shipping it by air,based on our carbon footprint methodology.Were investigating a transition to low-carbon sustainable aviation fuels(SAF)to reduce the carbon footprint of air shipment.Were also addressing transportation-related emissions through product and packaging design that drives reduced packaging mass and volume,creating boxes that use space more efficiently.Carbon removalsPrioritizing emissions reductions across our entire value chain is critical to limiting climate change to 1.5C.Still,not all emissions can be avoided or reduced with existing solutions.And some existing solutions will require greater industry and government efforts to scale before broader commercial adoption becomes feasible.As we focus on eliminating the majority of emissions across the value chain,were also addressing emissions we cant reduce by looking forhigh-quality carbon credits from nature-based projects.The nature-based projects we select focus on carbon sequestration,like planting forests and restoring mangroves,and have additional benefits that improve climate adaptation and resilience.Transparency and integrity are critical to the carbon projects that we fund.The credits from these investments must be additional,permanent,measurable,and quantified with systems in place to avoid double-counting and must avoid leakage.To read more about our work in carbon removals,see Carbon removal and read our white paper,Apples Carbon Removal Strategy.2024 Environmental Progress Report 10Engagement and AdvocacyDataAppendixIntroduction ContentsEnvironmental InitiativesWhere weve beenWhere were going2023 activities2015201820202025202220232030AchievedCarbon neutrality for our corporate operations and announced 2030 targets22%of the material shipped in products came from recycled or renewable sources1970% reduction in average product energy use since 200820%reduction in emissions from transporting products compared to202212.8Mdevices and accessories sent to new users for reuse from programs like Apple Trade In and AppleCareGoalTransitionto 100%fiber-based packaging by 202520320 suppliers are committed to using 100%renewable energy for all Apple-related production by 2030LaunchedSupplier Clean Energyand Energy Efficiency Programs established to partner with global suppliers to reduce the energy used to manufacture Apple productsJourney to Apple 2030Achieved100%renewable electricitygenerated or sourced for our corporate operationsApple 2030To be carbon neutral for our entire footprint by 2030Codified100%renewable energymandate added to our Supplier Code of Conduct applicable to all direct suppliers for the manufacture of Apple productsGoalUse100%recycled cobalt in all Apple-designed batteries21100%recycled tin soldering and 100%recycled gold plating in all Apple-designed rigid and flexible printed circuit boards22100%recycled rare earth elements in all magnets across all products232021LaunchedRestore Fundto advance nature-based carbon removal projects2024 Environmental Progress Report 11Engagement and AdvocacyDataAppendixIntroduction ContentsEnvironmental InitiativesApple 2030ResourcesSmarter Chemistry ApproachApple 2030We have an ambitious commitment and a science-based plan to reach our Apple 2030 goal.Were focused on achieving reductions wherever possible,using approaches that offer clear evidence for a way forward while seeking to catalyze industry-wide change.This begins with working to achieve carbon neutrality across our entire carbon footprint by 2030,setting ambitious targets to reduce our emissions by 75 percent.We prioritize carbon reductions,but for emissions that cant be mitigated using existing solutions we invest in high-quality carbon removal projects.Our goal to be carbon neutral extends to our entire carbon footprint and is consistent with the Intergovernmental Panel on Climate Changes(IPCC)recommendation for global carbon neutrality.24Were also committed to working toward reaching a 90 percent reduction in emissions from our 2015 baseline by 2050.Attaining deep decarbonization will require a collective,worldwide effort.Entire industries and economies must decarbonize.And while reaching a 90 percent reduction in emissions is outside Apples or any one companys control,were committed to takingactions that support this goal.Design and materialsDesigning products and manufacturing processes to be less carbon intensive through thoughtful material selection,increased material efficiency,greater product energy efficiency,the use of recycled and renewable materials in our products and packaging,and enhanced material recoveryElectricityIncreasing energy efficiency at our facilities and in our supply chain,and transitioning the electricity in our entire product value chain including manufacturing and our customers product use to 100 percent clean electricity by 2030Direct emissionsReducing direct greenhouse gas emissions in our facilities and our supply chain through process innovation,emissions abatement,and shifting away from fossil fuelsCarbon removalIn parallel with our emissions reduction efforts,scaling up investments in carbon removal projects,including nature-based solutions that protect and restore ecosystems around the world75 percent emissions reduction25 percent of footprintAPPLE 2030 ROADMAPAddressing Apples carbon footprint through four pillarsWeve made significant progress by cutting emissions across our value chain by more than55percent since 2015.This started with our transition to sourcing 100percent renewable electricity at our offices,retail stores,and data centers,which we achieved in 2018.And in 2020,we achieved carbon neutrality for our corporateemissions.252024 Environmental Progress Report 12Engagement and AdvocacyDataAppendixIntroduction ContentsEnvironmental InitiativesApple 2030ResourcesSmarter Chemistry Environmental progress can and should be good for business.We underpin our climate strategy with strong business principles and innovation while harnessing the power of markets to replicate our solutions at scale aiming to create the impact necessary to meet global reduction targets.Were also working to accelerate the global transition toward decarbonization while exploring the next generation of solutions and advocating for stronger policies.These efforts include fostering new and strengthened collaborations in public and private partnerships and investing in technological advancements.Weve issued$4.7 billion in green bonds to model how businesses can drive investments to reduce global emissions.*Error bars:Were continuously refining our methodology to improve our carbon footprint estimate.But theres inherent uncertainty in modeling product-related greenhouse gas emissions,as illustrated by the error bars in this graphic.Historical emissions Avoided emissions Gross emissions Emissions offset Emissions range from modeling uncertainty*Projected emissions(illustrative only)Projected gross emissions Projected emissions offsetMillion metric tons CO2e per fiscal yearGross emissionsCarbon offsets/removalNet emissions38.438.4 201525.125.12019203040200Goal To be carbon neutral for our entire footprintGoal 75%reduction in gross emissions from 2015 APPLES PROGRESS TOWARD CARBON NEUTRALITY16.115.60.52023Clear principles guide this work.Our emissions reduction targets are aligned with what current climate science shows is necessary to help limit warming to 1.5 C.We calculate our footprint across our value chain to include both direct and product-related emissions from sourcing materials through end of life.We use the results of our detailed carbon accounting to adjust our Apple 2030 roadmap,which lays out our plan to become carbon neutral.And were committed to disclosing our carbon footprint as well as our climate strategy and progress.This means sharing both challenges and successes.Our annual Environmental Progress Report,as well as our response to the global disclosure nonprofit CDP,provide details on our progress.Transparency and disclosure are essential not only for sharing our climate strategy and progress but also for sending clear signals and inviting others to work with us.And progress needs to include low-income and historically marginalized communities that too often bear the brunt of climate change.Were pursuing ways to directly support these communities in our climate programs.To learn more about our work,read our feature on our Power for Impact program and our feature on our Impact Accelerator program.To see our progress toward our 2030 goal,see our Journey to Apple 2030 timeline.In our latest Annual Green Bond Impact Report(PDF),we share progress on the projects funded in 2023.Read our latest response to the CDP Climate Change 2023 questionnaire(PDF).2024 Environmental Progress Report 13Engagement and AdvocacyDataAppendixIntroduction ContentsEnvironmental InitiativesApple 2030ResourcesSmarter Chemistry In 2023,we estimate that our environmental programs avoided 31million metric tons of emissions across all scopes.Initiatives that weve been growing for years continue to yield clear results,including sourcing 100 percent renewable energy for our facilities,transitioning suppliers to renewable energy,and using low-carbon materials inproducts.26While our revenue has grown by more than64percent since 2015,our gross emissions have decreased by more than55 percent.*Net greenhouse gas emissions represents our total gross footprint minus carbon offsets.Percentages shown for each emissions category represent the share of Apples gross footprint.Totals add up to more than 100 percent due torounding.*Low-carbon materials represents emissions savings from transitioning to recycled materials in our products and using low-carbon aluminum,as described on page 33.Clean energy represents savings from clean energy procured by Apple or its suppliers.Business operations includes business travel,commute,work from home,upstream impacts from scope 1 fuels,and third-party cloud services.Avoided emissions Gross emissions Emissions offset15.6 Million Metric TonsNet Greenhouse Gas Emissions*59)%9%1%1%1%3%EmissionsOffsetsProduct footprintProduct use clean energy:0.05 million metric tons avoidedLow-carbon logistics:0.2 million metric tons avoidedSupplier energy efficiency:1.7 million metric tons avoidedLow-carbon materials*:5.8 million metric tons avoidedSupplier clean energy:18.5 million metric tons avoidedDirect emissions abatement:2.7 million metric tons avoidedCorporate footprintCorporate energy efficiency:0.08 million metric tons avoided Use of renewable electricity:2.0 million metric tons avoidedApples comprehensive carbon footprintProduct manufacturing(Scope 3)Product use(Scope 3)Product transport(Scope 3)End-of-life product processes(Scope 3)Direct emissions(Scope 1)Electricity(Scope 2)Business operations(Scope 3)TOTAL EMISSIONS2024 Environmental Progress Report 14Engagement and AdvocacyDataAppendixIntroduction ContentsEnvironmental InitiativesApple 2030ResourcesSmarter Chemistry Design and materialsWere designing our products to be less carbon intensiveby prioritizing the use of recycled content and low-carbon materials and focusing on the energy efficiency of our software and hardware.Were working toward a future where every Apple product will be created from and contribute to circular supply chains.The design and material choices we make across our products will support reducing ourcarbon footprint.ApproachInnovation drives our efforts around circularity from the materials we source and the product design choices we make to the recycling and recovery innovations we pursue.We prioritize the materials and components that account for significant portions of our greenhouse gas emissions.This meansthat the choices we make product by product can scale toward reducing our overall footprint.These priorities inform our work to design for material efficiency and increase our use of recycled and renewable materials.We aim to create products that use circular supply chains to one day end reliance on mined resources while meeting our rigorous standards for quality,durability,performance,and environmental and social protections.We strive for efficiency in sourcing and utilizing materials,relying on recycled and renewable materials for our products and packaging,and reducing scrap.And we also maintain strict standards for responsibly sourcing materials from primary,recycled,and renewable sources.Another part of what makes our goals possible is the recycling innovations were developing to enhance material recovery.We hope our actions inspire others to support building circular supply chains.Design and materials addresses emissionsfrom:Product manufacturing (Scope 3)Product use (Scope 3)Product transport (Scope 3)Working to positively influence the markets where we work,advocating for policy that enables circular supply chains,impacting communities worldwide,and inspiring others tofollow suit these are the opportunities that drive us through the challenging work of creating circular supply chains.Prioritizing less carbon-intensive materials and componentsFocusing on those that account for significant portions of our greenhouse gas emissionsDesigning products for material efficiencyIncorporating carbon emission profiles of the materials that go into our productsIncreasing the use of recycled and renewablematerials Ensuring their use across our productsDriving product energy efficiencyReducing energy use across our products2023 progress22%recycled or renewableOf the materials contained in products that were shipped to stores and customers,22 percent came from recycled or renewable sources.58%less energyiMac uses 58 percent less energy than the ENERGY STAR requirement.*95%recycled titaniumWe introduced titanium to our priority materials list,and inour fall models of Apple Watch Ultra 2,when paired with Alpine Loop or Trail loop,we used 95percent recycled titanium in the case.*Energy consumption and energy efficiency values are based on the ENERGY STAR Program Requirements for Computers,including the max energy allowance for iMac.For more information,visit www.energystar.gov.ENERGY STAR and the ENERGY STAR mark are registered trademarks owned by the U.S.Environmental Protection Agency.For more information on the power consumption of iMac,read the Product Environmental Report.2024 Environmental Progress Report 15Engagement and AdvocacyDataAppendixIntroduction ContentsEnvironmental InitiativesApple 2030ResourcesSmarter Chemistry Using recycled materials to lower our product carbon footprintWere reducing the carbon footprint of our products through the materials we select.Our strategy is to transition to materials that are manufactured using low-carbon energy and recycled content.Weve prioritized the materials and components that make up a large part of our product carbon footprint to move us closer to our goal of carbon neutrality.And to accelerate collective efforts,we signed on as a founding member of First Movers Coalitions near-zero emissions primary aluminum commitment for 2030(see more on page 70).Our use of aluminum exemplifies Apples comprehensive approach:Were transitioning to recycled content,and where we havent yet,were moving to low-carbon suppliers and exploring technological innovations to decarbonize like ELYSIS aluminum,which was smelted without generating greenhouse gas emissions(see page 33).Weve continued to introduce 100 percent recycled aluminum in the enclosures of Apple products:Mac Studio now uses 100 percent recycled aluminum in its enclosure joining Apple Watch Series 9,Apple Watch SE,iPad,MacBook Air,Mac mini,the Siri Remote,and MacBook Pro.In addition,the new iMac contains 100 percent recycled aluminum in the stand.And with iPhone 15,weve increased recycled content by using 75 percent recycled aluminum in the enclosure.Were addressing carbon impact by how we source recycled aluminum,too.Our first priority is to recover any of our own scrap at high quality.Then,we look to other postindustrial and postconsumer sources for high-quality recycled aluminum because recycled aluminum manufacturing emits less carbon than newly mined materials.These emissions reduction efforts have reduced our aluminum-related emissions by 68 percent since 2015 and now represent less than 9percent of our product manufacturing footprint,compared with 27 percent in 2015.In 2023,weexpanded our use of certified recycled cobalt,steel,gold,and aluminum materials that typically have significant carbon footprints.We introduced 100 percent certified recycled cobalt for the first time in the battery of Apple Watch and iPhone.27And we increased the content of certified recycled gold across all product lines from 4percent in 2022 to approximately25 percent in2023.This includes everything from the gold plating on multiple printed circuit boards to new applications such as the USB-C connector on iPhone 15.68%Switching to recycled and low-carbon aluminum has decreased our greenhouse gas emissions associated with aluminum by 68percent since 2015.TRANSITIONING TO RECYCLED CONTENTMac Studio now uses 100 percent recycled aluminum in its enclosure2024 Environmental Progress Report 16Engagement and AdvocacyDataAppendixIntroduction ContentsEnvironmental InitiativesApple 2030ResourcesSmarter Chemistry Prioritizing our effortsWere making progress toward our goal of sourcing only recycled or renewable materials in our products:In 2023,22 percent of the materials contained in products that were shipped to stores and customers came from recycled or renewable sources.28And were on track to meet our key material goals.By2025,we plan to:Use 100 percent recycled cobalt in all Apple-designed batteries.29 Use 100 percent recycled tin soldering and 100 percent recycled gold plating in all Apple-designed rigid and flexible printed circuit boards.30 Use 100 percent recycled rare earth elements in all magnets across all products.31Our efforts focus on 15 materials that weve prioritized based on a broad range of environmental,social,and supply chain impacts.(These are outlined in detail in our Material Impact Profiles white paper.32)Some of the materials prioritized through this process include lower-mass but higher-impact materials like gold.Our priority materials include aluminum,cobalt,copper,glass,gold,lithium,paper,plastics,rare earth elements,steel,tantalum,tin,titanium,tungsten,and zinc,and they account for87 percent of the total product mass shipped to our customers in 2023.Maintaining our standards for recycled and renewable materials is essential to ourjourney to create a circular supply chain.Our Recycled and Renewable Material Specification sets requirements based on international standards for recycled content and responsible resource management.By requiring certification to these standards,were able to confirm that a material has been recycled or comes from a renewable source one that can continually produce without depleting the earths natural resources.We approach materials from new sources with the same rigor,evaluating each one for the safety of the materials chemistry.This process allows us to scale our use of materials that are better for the environment and safer for use in our products.Recycled material is certified by third parties to a recycled content standard that conforms with ISO 14021.Total recycled content numbers also include supplier reported recycled content checked by Apple but not third-party certified.Our teams are overcoming obstacles to creating closed loop supply chains,including material performance and traceability.This is possible through our work with a diverse group of partners.For example,we were able to design an alloy containing100 percent recycled aluminum that meets our rigorous design performance standards.And weve improved our ability to track key materialswithin our supply chain.Barriers to our progress remain including challenges within our control and those outside our direct influence.Addressing these requires a collective response.Through collaboration within the material space,we can achieve impact felt beyond our business.The supply chains were helping create serve more than just our product needs they help promote the availability of competitively priced,quality recycled and renewable materials across geographies.Key challenges to developing circular supply chainsTraceabilityInformation about the source of materials whether mined,recycled,or renewable might not be readily available.Technical propertiesThe properties of a certain recycled or renewable materials may differ from the primary material.This needs to be accounted for during product design and manufacturing.For example,select recycled plastics differ in properties from other plastics.The composition of other recycled materials can also be impacted by some level of contamination during the recycling process.Availability and accessThe supply of recycled and renewable materials can be constrained by the limited availability of recoverable material or production of renewable content.When supply exists in some locations around the world,new suppliers need to be incorporated into supply chains for the material tobe accessed.ScaleMaterials for a single component can come from hundreds of different suppliers,requiring exponentially more effort as we scale the use of high-quality recycled or renewable materials across components and products.Regulatory barriersTransboundary movement regulations created to establish critically important community and environmental protections can have the unintended consequence of inhibiting material recovery and movement to recyclers or refiners for use in new products.To learn about our support of policies that enable circular supply chains while improving social and environmental protections,readthe Policy advocacy feature.2024 Environmental Progress Report 17Engagement and AdvocacyDataAppendixIntroduction ContentsEnvironmental InitiativesApple 2030ResourcesSmarter Chemistry AluminumRegulatory barriers Technical properties Scale In 2023,71 percent of the aluminum in products we shipped to customers came from recycled sources up from 67 percent in 2022.33 Because recycled aluminum can have 1/40 the carbon footprint of aluminum from primary sources,this supports our pursuit of low-carbon design.34 Learn more about ELYSIS aluminum,which was smelted without generating greenhouse gas emissions(seepage 33).In 2023,52 percentof the cobalt shipped in our products more than double the amount shipped in 2022 came from certified recycled sources on a mass balance basis,including post-industrial scrap and post-consumer scrap from end-of-life batteries.In2023,we used 100 percent recycled cobalt in the magnets within the magnetic power module of the 15-inch MacBook Air with M2 chip.In 2023,Apple committed to using 100 percent recycled cobalt in all Apple-designed batteries by 2025.35Material and key challengesProgressCopperTechnical properties Supply chains Scale In 2023,we introduced 100 percent recycled copper in the fin stack of the heat sink for 16-inch MacBook Pro,which helps regulate thermal performance.For iPhone,we introduced 100 percent recycled copper foil in the MagSafe inductive charger,and were exploring how to use recycled copper in other thermal applications.In 2023,we introduced 100 percent recycled copper wire in the Taptic Engine in our iPhone 15 lineup,Apple Watch Series 9,and Apple Watch Ultra 2.Copper is a key material in printed circuit boards.Since first introducing 100 percent recycled copper foil in iPad(10th generation)in October 2022,weve used 100 percent recycled copper foil in the main logic boards in the iPhone 15 lineup,Apple Watch Series 9,Apple Watch Ultra 2,and in October 2023,16-inch MacBook Pro.Material and key challengesProgressGlassTechnical properties Availability and access Scale The display panel and trackpad glass ofMacBook Air with M3 contains 15 percent recycled glass.GoldRegulatory barriers Traceability Scale In 2023,our use of recycled gold increased to about 25 percent across all product lines up from 4 percent in 2022.We also expanded our use of 100 percent certified recycled gold to the plating of multiple printed circuit boards and the USB-C connector in iPhone 15 a first for Apple.Were committed to using 100 percent recycled gold plating in all Apple-designed rigid and flexible printed circuit boards by 2025.36 All gold in Apple products is responsibly sourced,whether its primary or recycled.For more information,see our Conflict Minerals Report.LithiumRegulatory barriers Availability and access Scale In 2023,24 percent of the lithium,allocated using mass balance,shipped in our batteries came from certified recycled sources,including post-industrial scrap and post-consumer scrap from end-of-life batteries a first for Apple.PROGRESS ACROSS OUR 15 PRIORITY MATERIALSTantalumRegulatory barriers Availability and access Supply chains Were actively investigating recovery approaches from end-of-life electronics to develop further use of recycled material for capacitors.SteelRegulatory barriers Technical properties Scale We work with our supply chain partners to recover high-purity steel from our manufacturing scrap and our products at end of life.In 2023,we continued the use of 90 percent recycled steel in the battery tray of the 15-inch MacBook Air with M2 and expanded the use of this material in the 13-inch MacBook Air with M3 in the battery tray,keyboard feature plate,and trackpad beam plate.Rare earth elementsRegulatory barriers Availability and access Scale More than 75 percent of the total rare earth elements that Apple shipped in products in 2023 came from certified recycled sources.Compared with earlier products,our latest devices contain greater percentages of recycled rare earth elements:100 percent in iPhone 15,37 99 percent in our Apple Watch lineup,and 98 percent in our MacBook lineup.Were committed to using 100 percent recycled rare earth elements in all magnets across all products by 2025.38PlasticsTechnical properties Availability and access Scale Were transitioning from fossil fuelbased plastics to renewable or recycled alternatives.In 2023,we included renewable plastic in the Apple Watch Series 9 speaker a first for Apple and we use 25 percent recycled plastic in multiple components.For Mac Pro,over 20 components are made with 35 percent or more recycled plastic.Tin Scale In 2023,we used 40 percent recycled tin on average across all product lines up from 38 percent in 2022.In previous years,we expanded the use of recycled tin to many flexible printed circuit boards across many products.As we continue to scale use across even more components,we seek to engage an exponentially increasing number of suppliers in this effort.Weve also committed to using 100 percent recycled tin soldering in all Apple-designed rigid and flexible printed circuit boards by2025.39TungstenRegulatory barriers More than 99 percent of the tungsten used in 2023 came from recycled sources,up from 95 percent in 2022.In 2023,all released iPhone 15 models featured 99 percent recycled tungsten across the entire device,and all released Apple Watch models featured 100 percent recycled tungsten across the entire device.40 Our disassembly robots,Daisy and Dave,and our recycling machine,Taz,helped recover and recycle the tungsten from the Taptic Engine.TitaniumAvailability and access Scale In 2023,Apple Watch Ultra 2,when paired with Alpine Loop or Trail loop,contained95 percent recycled titanium in the enclosure.ZincTechnical properties Supply chains Mac Studio contains 100 percent recycled copper and zinc in the brass prongs of the power cord plug and AC inlet.Forinformation about our progress with paper,see our feature on packaging.PaperCobaltRegulatory barriers Availability and access Scale2024 Environmental Progress Report 18Engagement and AdvocacyDataAppendixIntroduction ContentsEnvironmental InitiativesApple 2030ResourcesSmarter Chemistry Increasing recycled content in our productsWere progressing toward our goal of relying solely on responsibly sourced recycled or renewable materials for our products and packaging.The source of the materials we rely on matters to us wevalue materials that dont deplete the earths resources.In 2023 we accomplished the followingfirst-time material achievements:In Apple Watch Ultra 2,when paired with Alpine Loop or Trail loop,we used 95 percent recycled titanium in the enclosure.Across our iPhone 15 lineup,we used 100 percent recycled gold in the USB-C connector and in the wire of all cameras.Across our iPhone 15 lineup,we used 100 percent recycled copper wire in the Taptic Engine and 100 percent recycled copper foil in the main logic board and MagSafe inductive charger.In the iPhone 15 lineup,Apple Watch Series 9,and Apple Watch Ultra 2,we used 100 percent recycled cobalt in the battery.41These and other innovations helped us increase our use of recycled and renewable content to 22percent of all the material shipped in products in 2023.422017 201920212023TitaniumCobaltCopperZincSteel Gold Tungsten*Rare earth elementsAluminum Tin Plastic Apple WatchDesktopLaptopiPadiPhone Apple WatchDesktopLaptopiPadiPhone Apple WatchDesktopLaptopiPadiPhone Apple WatchDesktopLaptopiPhone Products launched by calendar year/All products launched inthe calendar year include certified recycled content.Some products launched in the calendar year include certified recycled content.No products launched in the calendar year include certified recycled content.In calendar year 2023,we did not launch new models of iPad.Recycled content is not applicable.*Material is considered“not applicable”if its found only in trace amounts dispersed acrossmodules.RECYCLED MATERIALSOur transition to certified recycled materials by product line2024 Environmental Progress Report 19Engagement and AdvocacyDataAppendixIntroduction ContentsEnvironmental InitiativesApple 2030ResourcesSmarter Chemistry Responsible sourcing of materialsWe require our suppliers to source our materials responsibly,for both primary and recycled materials.Our Standards for Responsible Sourcing of Materials are based on leading international guidance,including the United Nations Guiding Principles on Business and Human Rights and the Organisation for Economic Co-operation and Development(OECD)Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas.In 2023,100 percent of the identified tin,tantalum,tungsten,gold(3TG),cobalt,and lithium smelters and refiners in Apples supply chain completed assessments to verify compliance with our standards.We work with third-party audit programs at an industry-wide level to identify environmental and social,and governance risks at the smelter,refiner,and mining levels.We map other materials in our products such as mica,copper,graphite,and nickel and,before production,evaluate suppliers ofnew materials for compliance with our requirements.We also map,conduct additional due diligence,and facilitate third-party audits on other materials used in our products,such as graphite,nickel,and copper.As we build supply chains for recycled materials,we partner with the smelters and refiners that are able to meet and maintain our standards.Industry collaborationAs we focus on responsible sourcing and the use of recycled content,we continue to drive progress in our broader industry through multiple initiatives.These include our role on the steering committee of the Responsible Minerals Initiative(RMI).This coalition is one of the most commonly used resources for companies working to address mineral sourcing issues in their supply chains.We are a supporter of the First Movers Coalition for Aluminum,whose focus is to aggregate demand signals forlow-carbon technologies and materials.Using recycled and renewable materials helps lower our carbon footprint,moving us closer to our climate goals.To fulfill the transition to these materials,were working with policymakers to support international standards that enable the use of these materials globally.Apple is committed to setting strict standards for responsible sourcing of the materials used in our products.For more information,read our People and Environment in Our Supply Chain 2024 Annual Progress Report and our Conflict Minerals Report.Improving material and manufacturing efficiency Making our manufacturing processes more efficient creates less waste and helps us make the most of the materials that we source.Were also designing our products and packaging so that they require less material in the first place,helping reduce emissions from transporting and processing materials.For example,in 2023,we redesigned all packaging for Apple Watch Series 9 and Apple Watch SE models to introduce a new compact design that allows for 25 percent or more devices per shipment.And as we progress toward our 2030 carbon neutrality goal,were investigating new materials and new ways to manufacture efficiently.Weveprioritized improving the carbon footprint of the integrated circuits that we use in our products as theyre carbon intensive.Weve also continued our work with the sustainable semiconductor technologies and systems research program of imec,a world-leading research and innovation hub in nanoelectronics and digital technologies.We have two goals in this collaboration:to improve the carbon footprint models associated with leading nodes of integrated circuit production,and to use these models to identify carbon reduction opportunities forthe entire integrated circuits industry.Were also exploring opportunities for improved efficiency across our product manufacturing processes.In 2023,we continued to invest in research and development projects aimed at creating less waste in processing materials,reducing machining time and associated energy use,more efficiently transforming material into near-net shapes,and maximizing the recovery and reprocessing of manufacturing scrap.Once these improved processes are successfully developed,we plan to work with our suppliers as they deploy them at scale at their facilities.2024 Environmental Progress Report 20Engagement and AdvocacyDataAppendixIntroduction ContentsEnvironmental InitiativesApple 2030ResourcesSmarter Chemistry Driving product energy efficiency Product energy use accounts for 29 percent of our gross carbon footprint and for this reason,we work to reduce our products energy usage.We approach this challenge in the earliest phases of design,taking a holistic view of each product from how efficiently the software operates to the power requirements of individual components.With each generation of products,we strive to improve energy efficiency.For example,the transition to Apple silicon on Mac devices continues to drive these improvements,including:Our pro chips released in 2023 enabled more Mac devices to run with improved energy efficiency.Mac mini with M2 made progress in reducing energy use in 2023.And Apple TV 4K is designed to minimize its impact on the environment,using nearly 30percent less power than the previous generation while achieving more powerful performance.43 The efficiency gains of the A15 Bionic chip eliminate the need for an internal fan,resulting in a more compact design and contributing to a 25 percent reduction in carbon footprint over theprevious generation.Weve cut overall product energy use across all major product lines by more than 70percent since 2008.44And Apple products are consistently rated by ENERGY STAR,which sets specifications that reflect the 25 percent most energy-efficient devices on the market.In 2023,all eligible Apple products continued to receive an ENERGY STAR rating for superior energy efficiency.45 And in 2023,all eligible Apple products met requirements for EPEAT registration,another environmental rating system for electronic products that considers energy efficiency and a number of other environmental topics.46Apple TV 4K Designed to use nearly 30percent less power than the previous generation while achieving more powerful performance50iPhone 15 Uses 47 percent less energy than the U.S.Department of Energys requirements for battery charger systems49PRODUCT ENERGY EFFICIENCYWeve cut overall product energy use across all major product lines by more than 70 percent since 200847Mac miniUses 72 percent less energy than the ENERGY STAR requirement482024 Environmental Progress Report 21Engagement and AdvocacyDataAppendixIntroduction ContentsEnvironmental InitiativesApple 2030ResourcesSmarter Chemistry FEATUREReducing plastic and waste through packaging innovationWere closing in on our goal to remove plastics from our packaging by transitioning to 100 percent fiber-based packaging by 2025.51Along our journey,weve addressed many packaging components that typically rely on plastic,including large product trays,screen films,wraps,and foam cushioning.Weve replaced each with fiber-based alternatives and implemented innovative alternatives to the small uses of plastics across our packaging like labels and lamination.At the same time,were taking steps to ensure that our packaging is recyclable and that the fiber we source comes from recycled sources or responsibly managed forests.In 2023,we accomplished the following:Released multiple product lineups with over 95percent fiber-based packaging,including iPhone15,Mac,iPad Pro,Watch,and Beats.52 Released our first 100 percent fiber-based packaging in our fall Apple Watch lineup.Shipped Apple Vision Pro with 100 percent fiber-based packaging in 2024.Weve also continued our work to address the remaining plastic in the smaller parts of our packaging,like labels and lamination,with the packaging innovations focused on printing directly on boxes and using overprint varnish.This year,weve expanded our efforts to include MacBook Pro,MacBook Air,Mac Studio,Mac Pro,and Mac mini.In 2022,we introduced these innovations for iPhone,iMac,iPad,and Apple Watch.That same year,we also introduced digital printing directly on the back of boxes for iPhone 14 and iPhone 14 Pro to eliminate the need for labels.53 We did this by developing a custom high-resolution printer that can print on demand at manufacturing facilities where our products are packaged.And in 2023,we broadened our approach to include all newly released iPhone,iPad,Apple Watch,and MacBook models.18%less plastic since 2015*100P%0 152023 48%Recycled fiber 31%Responsibly sourced virgin fiber 21%Plastic 62%Recycled fiber 35%Responsibly sourced virgin fiber 3%PlasticPACKAGING FIBER AND PLASTIC FOOTPRINT*(METRIC TONS)Our goal is to transition to 100 percent fiber-based packaging by 2025*In 2022,we expanded our packaging goal boundary to better reflect our impact,resulting in an increase of about 36 percent of our total packaging mass,relative to fiscal year 2021.We include retail bags,all finished goods boxes(including plastic content in labels and in-box documentation),packaging sent to our customers as part of Apple Trade In,AppleCare packaging for whole units and service modules(with the exception of plastics needed to protect items from electrostatic discharge),and secondary packaging of Apple products and accessories sold by Apple.Our goal boundary does not include the inks,coatings,or adhesives used in our packaging.In addition to our packaging footprint,we also calculate the fiber used at our corporate facilities.In fiscal year 2023,this number was 1100 metric tons.*By 2025,we plan to remove plastic from our packaging by transitioning to 100 percent fiber-based packaging.Our goal to remove plastic from packaging includes retail bags,all finished goods boxes(including plastic content in labels and in-box documentation),packaging sent to our customers as part of Apple Trade In,AppleCare packaging for whole units and service modules(with the exception of plastics needed to protect items from electrostatic discharge),and secondary packaging of Apple products and accessories sold by Apple.Our goal does not include the inks,coatings,or adhesives used in our packaging.We plan to remove plastic from the packaging of refurbished Apple products to 100-percent fiber based by 2027,once old product packaging designs are phased out.We will continue selling existing inventory of AppleCare packaging for whole units and service modules that contain plastics for vintage and products at end of life until it is consumed.This change will enable us to avoid waste generated by re-packaging goods in new 100 percent fiber-basedpackaging.Responsible sourcing of fiber is defined in Apples Responsible Fiber Specification(PDF).2024 Environmental Progress Report 22Engagement and AdvocacyDataAppendixIntroduction ContentsEnvironmental InitiativesApple 2030ResourcesSmarter Chemistry Apples packaging design guidelines factor in packaging recyclability,requiring the use of fiber-based materials that can break down to pulp as part of mixed-paper recycling streams,alongside materials like cereal boxes.54We test our packaging to standards developed by independent industry and research organizations including Western Michigan University,the U.S.Forest Services Forest Products Laboratory,and the Confederation of European Paper Industries and we continue to monitor evolving international packaging standards.Apple Watch Ultra 2,Alpine Loop,and Trail Loop packaging is 100 percent fiber-based,a milestone toward our commitment to have plastic-free packaging by 2025.100%Apple Watch Ultra 2,Alpine Loop,and Trail Loop packaging is 100 percent fiber based,a milestone toward our commitment to remove plastic from packaging by 2025.As we continue to reduce plastic in our packaging,we make sure that our wood,bamboo,and bagasse fibers are certified by standards such as FSC,PEFC,and Bonsucro.And since 2017,all the wood fiber used in our packaging comes from either certified recycled sources or responsibly managed forests.Through partnerships with The Conservation Fund and World Wildlife Fund,weve protected,and improved forest management practices on,more than one million acres of working forests in the U.S.and China.In 2023,these forests generated enough responsibly sourced fiber to balance all the virgin fiber in our packaging while contributing to the globalsupply of responsibly sourced fiber.552024 Environmental Progress Report 23Engagement and AdvocacyDataAppendixIntroduction ContentsEnvironmental InitiativesApple 2030ResourcesSmarter Chemistry ElectricityOur energy efficiency efforts extend across our work,from initial design through manufacturing and beyond.Achieving efficiency across our footprint is essential to meeting our 2030 carbon neutrality goal.Weve achieved 100 percent clean electricity across our operations,and were working toward the same for our manufacturing supply chain and use of Apple products.By using clean electricity in place of fossil fuels,were contributing to cleaner air and lowering greenhouse gas emissions.ApproachWe continue to focus on energy efficiency in our operations and bringing new renewable electricity projects online worldwide.In the long term,we believe that these projects provide more cost-effective energy.Managing energy use and efficiency potentialDesigning,operating,and maintaining our facilities to reduce our operational impact,and auditing across our operations and supply chain to drive efficiency by conserving and reducing energy useUsing 100 percent renewable electricity for our corporate operationsContinuing to generate and source the electricity for our data centers,retail stores,and offices,as we have since January 2018Transitioning our supply chain to renewable energyMaking progress toward transitioning our entire manufacturing supply chain,as well assupporting suppliers in adopting renewable energy technologies and helping drive environmental action in our suppliers regionsFocusing on product useIncreasing our products energy efficiency to drive down emissions from product use,and taking steps to address the emissions that remainSeeking renewable sources with positive impactPrioritizing energy supply options that achieve positive environmental and social benefits2023 progress36MkWhIn 2021,Apple deployed a proprietary server design focused on energy and computing efficiency that added an additional 36 million kilowatt-hours.1.7MMTCO2eMore than 100 supplier facilities participated in our energy efficiency program,achieving more than 2billion kilowatt-hours of electricity savings and over 2,200,000 MMBtu in additional energy savings,which together avoided nearly 1.7 million metric tons of CO2e.100%clean energyCodified our 100 percent clean energy mandate in the Supplier Code of Conduct,requiring all direct suppliers to transition to renewable energy for the manufacturing of Apple products.Energy efficiency and renewable electricity addresses emissions from:Indirect emissions(Scope 2)Product manufacturing (Scope 3)Product use (Scope 3)2024 Environmental Progress Report 24Engagement and AdvocacyDataAppendixIntroduction ContentsEnvironmental InitiativesApple 2030ResourcesSmarter Chemistry Data centers:Data centers are traditionally energy intensive,requiring significant resources to cool heat-generating servers and IT equipment.Thats why were continuously monitoring and improving the controls for our cooling systems.This retrospective view often enables us to increase the cooling capacity of our existing facilities,thereby maximizing the number of servers within our data center footprint.In2023,we continued to see energy savings at data centers.A proprietary server design we deployed in 2021 that focused on energy and computing efficiency resulted in an additional36 million kilowatt-hours per year in energy savings.New facilities:When designing new facilities,or renovating existing facilities,we evaluate each major system to ensure were managing our energy footprint.We select LED fixtures and install sensors and photocells to reduce light levels based on occupancy and the level of natural daylight.We install high efficiency heating and cooling systems and transformers to reduce energy consumption from our plug loads.We take special attention to ensure were designing safe,productive spaces,while still prioritizing energy savings.We also prioritize efficient compressed dry air systems and variable air volume fume hoods for our R&D spaces.Retail stores:We continue to prioritize energy efficiency and develop comprehensive energy models for stores so that we can ensure our design is aligned with our energy efficiency targets.Weve also decarbonized even further by phasing out natural gas so that were not reliant on fossil fuels.Measurement and accountability:Measurement is critical to maintaining building energy performance.We have a well-developed system of energy tracking and benchmarking,which includes data from utility meters that continuously monitor 15-minute electricity and daily natural gas energy consumption.This method helps us identify opportunities for performance improvement.This early knowledge enables us to restore building system efficiencies andactively manage our energy footprint.In 2023,our energy efficiency program avoided41 million kilowatt-hours of electricity,which includes savings from the efficient servers,and 100,500therms of natural gasthrough adjustments made to 6.7 million square feet of new and existing buildings.56 Together,these recent initiatives will avoid an additional 27,000 metric tons of CO2e per year.Combined with ongoing energy savings from past years,and accounting for effective useful lifetime of legacy savings,we saved over 75,000 metric tons of CO2e in 2023.57Operating Apple facilities efficientlyOur data centers,retail stores,and offices all source 100 percent renewable electricity,and we remain focused on implementing energy reduction measures across our facilities.We assess natural gas and electricity usage at each of these site types as well as research and development facilities auditing how we perform and using best practices for energy management to reduce our loads.And we design our new buildings around occupants and lab users specific needs,enabling us to use our facilities efficiently and productively.Existing buildings:We have significant opportunities to save energy in retrocommissioning buildings that Apple already occupies or operates,including energy-intensive facilities like data centers.Weaudit the performance of buildings around theworld,then deploy energy efficiency measures.Retrocommissioning focuses on building controls tooptimize energy use and operational efficiency.Were prioritizing reducing natural gas usage and replacing natural gas equipment with electrical.Werefocused on reviewing and benchmarking ourmost natural gasintensive buildings to look forreduction and fuel switching opportunities.Apples Reno data center,opened in 2012,takes advantage of the mild climate by cooling its servers with outside air whenever possible.2024 Environmental Progress Report 25Engagement and AdvocacyDataAppendixIntroduction ContentsEnvironmental InitiativesApple 2030ResourcesSmarter Chemistry Improving energy efficiency inour supply chainThe manufacturing of Apple products accounts for59 percent of our gross carbon footprint.To address this impact,we collaborate closely with our suppliers to prioritize energy reductions.Together,we work to use clean energy as efficiently as possible at every point in our supply chain,supporting the creation of more efficient factories all over the world.The Supplier Energy Efficiency Program,launched in 2015,helps our suppliers optimize their energy use.Implementing energy efficiencies reduces the energy intensity of manufacturing,which translates to reduced greenhouse gas emissions.We provide technical and planning support to suppliers as they build more energy-efficient systems.We support our suppliers by helping them recognize optimization opportunities and identify solutions through energy assessments.To assist with implementation,we connect suppliers to extensive education and training opportunities including technical assistance resources and help them access external funding for energy efficiency projects.Our suppliers have successfully implemented a range of energy efficiency projects,from installing light sensors and implementing free cooling systems to making boiler and HVAC system energy improvements.1.7MWe estimate that suppliers in our Supplier Energy Efficiency Program avoided nearly 1.7millionannualized metric tons of supply chain greenhouse gas emissions in 2023.Clean electricityMaintaining 100 percent renewable electricity forApple facilitiesOur retail stores,data centers,R&D facilities,and offices around the world currently source 100 percent renewable electricity.Weve focused our efforts to source renewables around several key pillars:Creating new renewable energy projects Undertaking projects that deliver clear benefits tolocal communities Supporting renewable energy innovationsCreating new projectsApple-created renewable sources account for about 91 percent of the renewable electricity that our facilities use currently around 1.6gigawatts.New renewable electricity projects require investment.Apple projects include the following funding approaches:Direct ownership(8 percent of Apple-created projects)We build our own projects including solar,biogas fuel cells,and low-impact hydro projects to provide renewable electricity,where feasible.Equity investment(4 percent of Apple-created projects)We invest capital in new solar PV or wind projects in some markets,matching the renewable energy generated with our energy use.Long-term renewable energy contracts(88 percent of Apple-created projects)Through long-term power purchase agreements,virtual power purchase agreements,and other forms of long-term commitments,we help support new,local,and primarily solar PV and wind projects in line with our renewable energysourcing standards.We launched the Asia Green Fund in 2019 to help provide technical expertise and finance capital-intensive energy efficiency projects.As green financing mechanisms remain integral to the Supplier Energy Efficiency Program,were exploring new approaches that connect suppliers to external funding for energy efficiency projects while scaling the program and accelerating reductions.In 2023,more than 100 supplier facilities participated in our energy efficiency program,achievingmore than 2 billion kilowatt-hours of electricity savings and more than 2,200,000 MMBtu in additional energy savings.Together,we estimate that this avoided nearly 1.7 million metric tons of CO2e,representing a25 percent increase since 2022.To address gaps in our renewable energy needs beyond whats provided by Apple-created projects,we directly purchase renewable electricity through available utility green energy programs about 5 percent of our total corporate load in 2023.Colocation and distribution facility vendors supply about 3 percent of our total load of renewable energy.And in certain situations,we purchaserenewable energy certificates(RECs).58These RECs,which account for about 2 percent of our total load,share the same power grid as the Apple facility they support,where available.These purchases are subject to the same standards as our Apple-created renewable energy projects.AppendixA provides additional details on Apples renewable energy solutions.91%Apple-created renewable sources account for about 91 percent of the renewable electricity that our facilities use.Supporting social impactOur Power for Impact program,which launched in 2019,continues to help provide local communities with needed energy resources.With funding from Apple,local communities and organizations benefit from access to cost-effective renewable energy.Apple is currently supportingmore than 20 renewable electricity projects around the world,including in the Philippines,Thailand,and South Africa.Read more about Power for Impact on page 31.2024 Environmental Progress Report 26Engagement and AdvocacyDataAppendixIntroduction ContentsEnvironmental InitiativesApple 2030ResourcesSmarter Chemistry Transitioning our suppliers torenewable electricityThe electricity that our manufacturingsuppliers use represents the largest single source of greenhouse gas emissions throughout our manufacturing supply chain.Thats why our efforts to facilitate our entire supply chains transition to 100 percent renewable electricity are essential to reaching our 2030 carbon neutrality goal.Our Supplier Clean Energy Program(CEP)helps enable suppliers transition to renewable electricity by advocating for policy changes,providing information and access to renewable energy procurement options,and creating engagement opportunities with renewable energy experts.By engaging in this program,our suppliers can implement best practices in advocating for and procuring renewable energy across their corporate operations,including those associated with Apple production.The program also equips them to share lessons learned with other partners throughout their value chains,extending benefits beyond the scope of Apple.PROCUREMENT MECHANISMSSupplier renewable energy procurement mechanismsOur suppliers are implementing clean energy solutions using a variety of contracting mechanisms.In 2023,suppliers relied mostly on renewable energy certificates(RECs)to meet their CEP commitments,largely due to the expansion of Chinas Green Energy Certificate(GEC)and the recognition of GECs as a primary instrument for tracking renewable energy consumption.Apple views the strategic use of well-designed REC programs as an important interim solution to longer-term procurement options like power purchase agreements(PPAs),which are becoming increasingly available across the globe,and is working closely with its supply chain on their longer-term transitions.37%Solar19%Other technology44%Wind1%Onsite renewable electricity25%Renewable power purchases8%Direct investments 66%Renewable energy certificatesTECHNOLOGIESSupplier renewable energy technologiesWe work with our suppliers to select projects with the greatest potential for impact and with a clear carbon,ecological,and social benefit.“Other technology”includes clean energy sources such as some forms of biomass,geothermal,and small-scale,low-impact hydro.592024 Environmental Progress Report 27Engagement and AdvocacyDataAppendixIntroduction ContentsEnvironmental InitiativesApple 2030ResourcesSmarter Chemistry As of March 2024,more than 320 suppliershave committed to use renewable electricity for their Apple production.These suppliers make up 95 percent of Apples direct spend for materials,manufacturing,and assembly of our products worldwide.And this representsmore than21gigawatts of clean energy commitments,of which 16.5 are already operational.To rapidly scale the Supplier Clean Energy Program and accelerate progress to Apple 2030,weve since formalized the Clean Energy Program in the Apple Supplier Code of Conduct,requiring our entire direct manufacturing supply chain to use 100 percent renewable electricity for all Apple production before 2030.In 2023,the 16.5 gigawatts of renewable energy procured by suppliers and online in Apples supply chain generated 25.5 million megawatt-hours of clean energy,avoiding 18.5 million metric tons of greenhouse gas emissions a 6.5 percent increase over 2022.How suppliers are respondingDespite growing momentum and advocacy for renewables,transitioning to 100 percent renewable electricity presents challenges:technical and regulatory barriers,the need for capital investment,and a lack of access to high-quality and cost-effective solutions.Long-standing energy policies and infrastructure that incentivize the use of fossil fuels like coal can make it difficult to bring new renewable energy online in certain regions.In some cases,our suppliers are prompted to rely on less impactful interim solutions,like one-time purchases of energy attribute certificates from existing renewable energy projects.These options represent an annual cost for buyers and often offer little opportunity for cost savings or a return on investment.To overcome these challenges,suppliers are using new purchasing methods,creating renewable energy businesses,and even participating in some of the worlds largest and most innovative renewable energy deals.Suppliers are also adapting to changing renewable energy markets by finding new solutions,including first-of-their-kind procurement structures in geographies that are introducing more corporate procurement options.In China,this includes the Green Power Trading program,which allows cross-provincial agreements that provide suppliers with more options.South Korea has expanded its options for green power,including power purchase agreements and the ability to purchase renewable energy certificates.Japan has also introduced new renewable energy options,including virtual and physical power purchase agreements and price-competitive nonfossil certificates that have the potential to scale access to renewable energy across the market.While weve seen progress in key markets,we continue to advocate for policies that enable renewable energy to compete fairly with fossil fuels and subsidized power rates,opening more avenues for our suppliers to transition to sourcing 100 percent renewable electricity(see page 71).How we support our suppliersGalvanizing internal championsWeve been able to quickly scale the Supplier Clean Energy Program by involving teams across Apple in supplier engagement,including supplier-facing Apple employees.We empower these employees with the tools to help speed a suppliers transition to 100 percent renewable electricity.Data and transparency drive this process.We track the electricity use and renewable procurement of all our direct suppliers,including those who are just beginning to learn about renewable electricity and those well on their way to using 100 percent renewable electricity.We help our suppliers measure progress and gain access to solutions.Weve also continued to develop internal trainings and an engagement process for Apple employees and suppliers.By connecting our suppliers with resources and providing transparency on supplier progress,our teams are scaling impact across our supply chain.GigawattsFY22FY23FY21FY20FY19FY18FY17FY164816202412SUPPLY CHAIN CLEAN ENERGY PROGRESSRenewable electricity operational and committed in gigawatts(GW)Operational Committed2024 Environmental Progress Report 28Engagement and AdvocacyDataAppendixIntroduction ContentsEnvironmental InitiativesApple 2030ResourcesSmarter Chemistry Supporting supplier capacityWe share the knowledge weve gained through our own transition to 100 percent renewable energy with our suppliers,supplementing their efforts to identify and pursue opportunities to decarbonize as their businesses evolve.For this reason,we invest heavily in providing education and training across our supply chain through platforms such as our Clean Energy Academy,which includes advanced and customized trainings and workshops with leading experts.In 2023,nearly 300 supplier facilities in China mainland and Taiwan participated in our Clean Energy Academies,which were attended by renewable energy developers and other industry guest speakers.The academies offer updates on available energy procurement options in suppliers markets,help suppliers prepare to participate in upcoming renewable energy pilots,and provideimplementation guidance from local experts.This program supplements our Clean Energy Portal,available to all supplier facilities,which provides training materials,resources,and country-specific information to guide suppliers in their transition to 100 percent renewable electricity.Also in 2023,we announced plans to support the creation of a first-of-its-kind public training platform that will be available to businesses across many different industries,giving companies of all sizes inApples supply chain and beyond access to the resources and advocacy networks weve cultivated for nearly a decade.Weve partnered with the Clean Energy Buyers Institute(CEBI)and other corporations to launch the inaugural Clean Energy Procurement Academy a shared training curriculum and delivery process which will equip companies with the technical readiness to advance clean energy procurement,address scope 3 emissions,and decarbonize global supply chains.Additionally,we support the creation and growth of renewable energy industry associations that our suppliers can join to learn about local opportunities,such as the Japan Climate Leaders Partnership and Clean Energy Buyers Association.Expanding access to renewable electricityTo support our suppliers transition to renewable electricity,we help them find high-quality solutions so they can decide how best to address their specific needs.The China Clean Energy Fund:This fund enables Apple and our suppliers to invest in renewable energy.As of March 2024,the fund has invested in more than 1 gigawatt of renewable electricity projects.Power purchase agreements(PPAs):Apple will continue to support the global development of high-quality programs for generating and trading renewable energy certificates.We also connect suppliers with opportunities to buy renewable energy directly from project developers and utilities as those models emerge around the globe.Direct Investments:To cover emissions from suppliers we dont contract with directly,we invest in additional renewable electricity projects.To date,weve directly invested in nearly 500 megawatts of solar and wind projects in China and Japan to address our upstream electricity emissions.Advocating for policy changeEffective government policies and rules can remove significant barriers to low-carbon solutions and enable solutions to rapidly scale.Suppliers need clean energy investments that make financial sense to effectively transition to renewable energy.But carbon-intensive energy sources,like coal and gas,often have a price advantage because of subsidies and the ignored costs of externalities,such as greenhouse gas emissions.Across the regions where our suppliers operate,we engage with policymakers to support renewable energy thats cost-effective,accessible to companies,and sourced from high-quality projects with a material impact on local markets.For example,were encouraging governments not to subsidize or expand carbon-intensive infrastructure.We also encourage them to keep pace with the speed of technological innovation,consider the life cycle emissions of energy solutions,and support new energy solutions that effectively reduce global emissions.Additionally,Apple supports government efforts in beneficial electrification and the build-out of necessary transmission infrastructure,all while considering cost-effectiveness.Public investments in decarbonization should be properly supported by funds generated from establishing a price on carbon pollution.Collaborating with groups like the Asia Clean Energy Coalition(ACEC),Clean Energy Demand Initiative(CEDI),and RE100 which bring together the worlds most influential businesses through commitments to use renewable electricity weve identified country-level policy barriers to procuring renewable electricity.By engaging in these initiatives and others,such as local working groups,we use local and international expertise and capacity to collate the challenges faced by member companies and advocate for critical policy shifts that support grid decarbonization.In Japan,for example,Apple collaborated with other renewable energy users and called for enhancing the Non-Fossil certificate(NFC)scheme to enable transparency in tracking.In China,Apple and suppliers have participated in meetings and events to share their experiences with renewable energy procurement,and discussed ways to improve policies and increase the availability of cost-effective solutions.1 GWAs of March 2024,the China Clean Energy Fund has invested in more than 1 gigawatt of renewable electricity projects,with nearly 100 percent of those investments online.2024 Environmental Progress Report 29Engagement and AdvocacyDataAppendixIntroduction ContentsEnvironmental InitiativesApple 2030ResourcesSmarter Chemistry flexibility for a portion of the emissions so that we can target grids with higher carbon intensity.This approach allows us to balance focusing on areas where our customers use our products and maximizing the social and environmental benefits of additional renewable energy.For example,while California is a large market for Apple,we might build new renewable energy projects in other locations with lower clean energy percentages on their grids,where the same renewable energy capacity can have a more significant impact.Were developing large-scale solar and wind projects around the world as part of this work.Radian Solar,and plans for additional projects in the US,Europe and India are underway.In Europe,we plan to engage in projects that range between 30 and 300 megawatts,with an initial request for proposals issued in 2022.Engaging with our customersWere building features to make it easier for customers to decide when to draw cleaner electricity from the grid.In 2023,we launched Grid Forecast,a new tool in the Home appon iPhone,iPad,Mac,and Apple Watch that shows when cleaner electricity is available from the grid.Apple uses data that combines grid,emissions,and weather information into one easy-to-follow signal.This can help people make more informed decisions about when to run large appliances and charge electric vehicles or Product useThe electricity that our customers use to charge and power their Apple devices represents29 percentof Apples gross carbon footprint.Increasing the energy efficiency of our productsis the most direct action we can take to drive down emissions from product use,and were taking steps to address the emissions that remain.As we address emissions tied to the electricity that our products use globally,our guiding principles focus on three areas:exploring innovative solutions to minimize greenhouse gas emissions from product use,including energy efficiency(see page 25);building renewable electricity projects aimed at maximizing carbon reductions and social impact;and engaging with our customers to educate and provide opportunities to support decarbonizing the grid.We also account for the portion of the grid that is already clean,where residual grid mix data is available.Clean energy projectsAs we expand our strategy to include product use,were considering a number of factors when selecting projects.We are working to match the expected electricity consumption of our products with 100 percent clean electricity,starting with our fall Apple Watch lineup.Although well source the majority of our clean electricity from the region in which its used,were maintaining geographic devices throughout the day.In the contiguous United States,Grid Forecast is availablefor Apple Watch,and it can be added as a widget or a watch face complication.As additional data becomes available through ongoing industry collaboration,Apple will continue refining Grid Forecast to maximize impact.To learn more about Grid Forecast,visit our Grid Forecast support page.Clean Energy Charging,which became available in the U.S.in fall 2022 with iOS 16,enables customers to help decrease the carbon footprint of iPhone.The feature looks at electricity sources to select the charge times when the grid is using cleaner energy sources,optimizing charging and reducing greenhouse gas emissions.Learn more about Clean Energy Charging here.Beyond the work that we do on our products,we collaborate with others to continue advancing climate-smart decision-making for customers across their household energy usage,as well as for our employees and partners.As an example,Apple has joined the CoolClimate Network,a research partnership of the University of California,Berkeley,that motivates and empowers individuals and organizations to make low-carbon choices.Apple is investing in renewable energy worldwide including this large-scale solar project in Brown County,Texas to help address the electricity customers use to charge their Apple devices.2024 Environmental Progress Report 30Engagement and AdvocacyDataAppendixIntroduction ContentsEnvironmental InitiativesApple 2030ResourcesSmarter Chemistry FEATUREIncreasing access to clean energy around the worldPower for Impact is driven by the idea that access to renewable energy creates opportunities within communities while benefiting our climate.Apple launched the initiative in 2019 to provide underresourced communities with renewable electricity while supporting economic growth andsocial impact.The program funds renewable energy projects that are mutually beneficial local communities and organizations get access to cost-effective energy,and Apple retains the environmental attributes of each project.We currently support 20 renewable projects in countries around the world,including:Colombia:Apple helped bring a rooftop solar power system online at the Hospital Infantil Santa Ana.The money saved on energy bills allows the hospital to purchase more equipment and medications.In addition,Apple helps to fund a rooftop solar installation at Ciudad Don Bosco,a nonprofit that provides educational and social services for under-resourced youth.We recently expanded our support by providing funding for phase II of the project.Democratic Republic of the Congo:Apple provides access to renewable energy for the Malaika School,which empowers Congolese girls and their communities through education,agriculture,water projects,health outreach,sports,and vocational training.To support Malaika students and teachers,this solar initiative builds on other Apple collaborations,including virtual Today at Apple sessions on coding with Swift,photography,filmmaking,and design,as well as other events with Apple Retail teams and Diversity Network Associations.Israel:Apple supports the Nitzana Educational Eco-Village a community for underserved youth with a 260 kilowatt solar system to help lower electricity costs.The savings help enhance educational experiences for youth from various backgrounds.Apple also supported the expansion with another 64kilowatt solar system installed in February 2023.Nepal:Apple funded a solar and battery storage system at a nonprofit hospital that serves children throughout Nepal.This system will offer limited backup power during grid outages.Nigeria:Apple helped fund a remote minigrid project that provides energy access to community members and replaces fossil fuels for some businesses.In addition,Apple also funds a solar power system to provide power to public healthcare centers in the state of Ondo,with excess energy serving households in the surrounding region.Philippines:Apple helped fund a new rooftop solar installation at an educational institution in Bataan.This helps reduce electricity cost for the institution and free up funds for scholarships to high-achieving,under-resourced students.South Africa:Apples first PFI project in South Africa helped bring electricity to over 3,500 households that previously lacked access to local street lighting.In addition,Apple will help fund two more projects in South Africa at schools for children with disabilities.Along with five other operational projects across South Africa,these installations will reduce electricity costs,and the savings help fund operating costs and expand programs to support underserved groups.Thailand:Apple helped establish a solar energy system to replace polluting diesel fuel for a remote fishing village that relies on refrigerators to maintain the quality of its fish products.We increased local renewable energy production and battery storage to improve reliable access to electricity.Vietnam:Apples work to support a program in Vietnam will provide solar electricity for 20 schools around the country,with aspirations to help showcase renewables and sustainable development.At five schools,solar energy systems have been installed and are operational.Zambia:Apple will help fund a microgrid and battery storage system to provide power for hundreds of households that are currently without electricity.Theproject will reduce reliance and costs associated with imported diesel and gasoline for generators,and it will increase the amount of power available tocommunity organizations and businesses.Power for Impact is expanding access to clean,affordable power in different parts of the world.Apple will continue to focus on uplifting communities as it pursues its environmental goals.2024 Environmental Progress Report 31Engagement and AdvocacyDataAppendixIntroduction ContentsEnvironmental InitiativesApple 2030ResourcesSmarter Chemistry Direct emissionsSome materials that are integral to our products result in significant emissions.The same is true for certain manufacturing processes and the transportation of our products.We seek technological solutions and supplier engagement to abate emissions from these sources.ApproachWere committed to reducing direct greenhouse emissions in our facilities and across our supply chain.We engage multiple approaches to achieve this,from looking to technical advancements that can help address emissions to changing how we make and transport ourproducts.Seeking technological solutionsPursuing low carbon technologies to address carbon-intensive processesAddressing fluorinated greenhouse gasemissionsPartnering closely with key manufacturers as they work to prevent these gases from being released into the atmosphereShifting transport modes for productshipmentMoving to shipping modes that are less carbon intensive than air transport such as by ocean whenever possibleReducing employee commute emissionsExploring ways to reduce our carbon footprint from employees commuting to workDirect emissions abatement addresses emissions from:Direct emissions (Scope 1)Product manufacturing (Scope 3)Product transport (Scope 3)Business travel (Scope 3)Employee commute (Scope 3)2023 progress2.7MMTCO2eOur display suppliers abatement efforts reduced more than 2.7 million annualized metric tons of CO2e.*100 attendeesApple hosted an inaugural virtual training focused on reporting and abating scope 1 emissions,with more than 100 attendees.20%less emissionsIn 2023,we reduced emissions from transporting products by 20 percent compared with 2022.*Based on data reported to Apple by its suppliers.Data has not been independently assured by Apple or a third-party.The low-carbon aluminum breakthrough builds on the significant progress Apple has made in reducing the carbon impact of aluminum and other metals found in its products.2024 Environmental Progress Report 32Engagement and AdvocacyDataAppendixIntroduction ContentsEnvironmental InitiativesApple 2030ResourcesSmarter Chemistry Rethinking how aluminum is madeAs part of Apples commitment to reduce our products environmental impact through innovation,we partnered with aluminum companies and the governments of Canada and Quebec to invest in ELYSIS.This joint venture to commercialize patented technology that eliminates direct greenhouse gas emissions from the traditional smelting process.Since our collaboration began in 2018,weve helped accelerate the development of this technology by facilitating the joint partnership and providing initial funding and ongoing technical support.In 2022,Apple shipped iPhone SE devices that used ELYSIS aluminum,building on our 2019 purchase from the first-ever commercial batch of aluminum resulting from the joint venture.The commercial-purity aluminum in these products is the first to be manufactured without creating any direct greenhouse gas emissions during the smelting process.ELYSIS has continued to make progress within its Industrial Research and Development Center in Quebec to produce commercial-purity primary aluminum at industrial scale.Addressing fluorinated greenhouse gas emissionsOne of the largest contributors of direct emissions in our supply chain is the use of fluorinated greenhouse gases(F-GHGs).F-GHGs are notably used in the electronics manufacturing of semiconductors and flat-panel displays,and their global warming potentials(GWPs)are thousands of times more than those of CO2.While the use of F-GHGs in certain manufacturing processes today is difficult to avoid,emissions can be reduced by switching to alternative low GWP gases,optimizing production processes to use and emit fewer F-GHGs,and installing gas abatement tools.Were collaborating closely with our supply chain partners as they work to prevent these gases from being released into the atmosphere.Since the launch of our engagement efforts in 2019,we have been working with ourlargest manufacturers of displays and semiconductors to achieve a high standard of F-GHG abatement.In 2023,our display suppliers efforts resulted in avoided emissions of more than 2.7 million metric tons CO2e,annualized.60 Further,through engagement in sector-specific industry coalitions,were working to accelerate climate action across the whole semiconductor value chain.The innovative direct carbon-free smelting process of ELYSIS has the potential to reduce the climate impact of the production process of aluminum one of the worlds most widely used metals.2.7MIn 2023,our display suppliers efforts resulted in avoided emissions of more than 2.7 million metric tons CO2e,annualized.2024 Environmental Progress Report 33Engagement and AdvocacyDataAppendixIntroduction ContentsEnvironmental InitiativesApple 2030ResourcesSmarter Chemistry our packaging to be more compact all packaging for Apple Watch Series 9 andApple Watch SE models introduced a new smaller shape that allows for 25percent or more devices per shipment.Were collaborating with our suppliers to explore technical innovations for transport,including alternative fuels and electric vehicles.For example,in2022,we supported the development of an analysis with Carbon Direct,a carbon management firm,that identified pathways for developing sustainable aviation fuel(SAF).And in 2023,we socialized our learnings with our partners,including suppliers and industry groups.Read the summary of our findings in the“Promising production pathways and opportunities to scale”section of the Sustainable Aviation Fuel Primer report.We also trialed the limited use of SAF on two flights that shipped select iPad models in 2023.In 2023,we continued to partner with carriers that offer low-carbon deliveries using electric vehicles(EVs),such as e-bikes and cars,reducing our impact in customer communities.By prioritizing vendors that offer low-carbon options,were signaling the value of these options and incentivizing further decarbonization.Transporting productsIn 2023,we reduced emissions from transporting products by 20 percent compared with the previous year.We also more than doubled product tonnage transported by ocean.On average,ocean shipping emissions are approximately 95 percent lower than air transport emissions.61We aim to continue to increase the use of ocean shipping for our products.For example,for select Apple Watch models,including watches and bands,well ship at least 50 percent of the combined weight using non-air modes like ocean shipping over the lifetime of the product,cutting total transportation emissions nearly in half.62 And in 2023,we shifted select models of MacBook Pro and MacBook Air to use ocean shipping from our manufacturers,creating more opportunities for a lower-carbon mode of shipping forour product launch.Through forward-thinking logistics,were consolidating our products in the shipments from our factories to facilitate more ocean shipping at sea ports in our Asia Pacific markets.And since 2022,these efforts have helped us increase ocean shipments by more than 10 percent in this region diverting shipments from air transport.Weve also reduced unnecessary space aboard aircrafts and trucks by using smaller,custom pallets,creating more efficient shipments.Additionally,were redesigning Improving employee travel and commuteWere focused on finding new ways to reduce the carbon footprint from our employees commuting to work.For example,were helping our employees transition from single-occupancy vehicles to mass transit,coach services,and campus bicycles.To incentivizethe use of electric vehicles,we provide more than 3,330 EV charging stations and more than 1,
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