Kroger 2015 Annual Report Download - page 67

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The Board of Directors Recommends a Vote Against This Proposal for the Following Reasons:
Like the proponents, the Board also recognizes the importance of ensuring that those seeking to do
business with us respect basic human rights. However, the Board opposes this proposal because we are
already working to ensure an ethical supply chain for the products sold in our stores and we have a zero
tolerance policy for human rights violations. Furthermore, we regularly consider our policies and practices
and we have recently taken several important steps to drive into our supply chain greater responsibility
and accountability:
• In 2015, after consultation with a number of stakeholders, we updated our Vendor Code of Conduct
(the “Code of Conduct”), which is available at www.thekrogerco.com. The new Code of Conduct
makes it clear that our suppliers and their suppliers are expected to live up to our standards as set
forth in the Code of Conduct. To the extent they do not live up to such standards, we will not do
business with them.
• In 2015, we created a social responsibility center of excellence (the “Center of Excellence”) to
schedule, review and monitor social responsibility audits, assess risks such as those described
above and develop a reporting structure that informs our business decisions. The Center of
Excellence is also tasked with recommending ways to continually improve social accountability in
our supply chain.
• In 2015, our annual sustainability report included a more in-depth report on our social responsibility
activities, which is available at sustainability.kroger.com.
• Since 2012, we have more than doubled the number of social responsibility audits we have
conducted and we expect this program to continue to grow.
o This past year, our work revealed several facility failures. Many of these facilities have
significantly improved through corrective action plans, but we are no longer doing business with
a few.
• In 2016, we made the Kroger Social Responsibility Audit Checklist (the “Audit Checklist”) available
online. The Audit Checklist is required for Kroger suppliers that our social responsibility team
identifies as higher risk due to variables such as country, product and/or industry.
o In commodities and/or regions that are higher risk, like farmed shrimp in Thailand, we not only
request supplier audits but also work with third party environmental and social certification
programs to further eliminate risk in the supply chain.
• In 2016, Kroger will also conduct a third party review of commodities in our supply chain to further
assess both environmental and social risks.
We expect our program to continue to evolve and develop based on input from suppliers,
customers, government, non-governmental organizations and developments within the industry. We
believe that these efforts represent significant and positive steps forward for our Company’s social
responsibility program.
Kroger is already actively implementing, monitoring, and continually improving our policies and
practices, addressing a number of the areas discussed by the proponent. We believe that preparation of
an additional report would not be an efficient use of our shareholders’ resources. We urge you to vote
AGAINST this proposal.
Item No. 5 Shareholder Proposal
We have been notified by one shareholder, the name and shareholdings of which will be furnished
promptly to any shareholder upon written or oral request to Kroger’s Secretary at our executive offices,
that it intends to propose the following resolution at the annual meeting: