Conference call hosted by Sanford Bernstein February 24, 2015 Company Sustainability: A Roadmap for Investors following U.S. Packaged Food Companies & Restaurants Nancy Himmelfarb NJH Sustainability Consulting himmelfarb.com Conference call hosted by Sanford Bernstein February 24, 2015

Sustainability Pressures & Trends in Food Local Pesticide-free MSC-certified Fair Trade Hormone-free Humane TRANSPARENCY Low Carbon Footprint Cage-free Natural Animal Welfare Approved Non-GMO Antibiotics-free Organic

Today’s Agenda Importance of company sustainability Key sustainability rankings Rankings of U.S. packaged food companies and restaurants Roadmap for investors

Why Company Sustainability is Important CARROTS STICKS Financial Risks Improved Financial Performance Activist Pressures Consumer Support & Reputation Enhancement Political Pressures Investor Interests

Why Company Sustainability is Important Sustainability Efforts Lead to Better Financial Performance & Returns Actively managing and planning for climate change => 18% higher ROI Investing across U.S. companies that performed better than average on GHG emissions => 73% better return over the past 5 years than the S&P 500 Investing in carbon reductions => 50% lower volatility of earnings over the past decade & 21% stronger dividends Systematic sustainability management => higher share price 632% 5-year total return 130% pop on IPO Sources: CDP S&P 500 Climate Change Report 2014; http://www.newsweek.com/understanding-newsweeks-2014-green-rankings-253545; FactSet data.

Why Company Sustainability is Important Sustainability Efforts Drive Consumer Support and Reputation Enhancement “Firms with better CSR reputations have a much higher ability to foster desired supportive behaviors among consumers.” “Foodservice companies that respond proactively and creatively to critical consumer demands [around sustainability] will reap significant reputational benefits, enhanced profit opportunities and greater shareholder value.” “One of the more significant indicators of public confidence in a company is its commitment to sustainability and its efforts to communicate and deliver on that commitment.” “Locally sourced meats and seafood,” “locally grown produce” and “environmental sustainability” are top 3 culinary food trends for 2015. Sources: 2014 CSR RepTrak Study; Technomic (“Building a Better Foodservice Business through Sustainable and Responsible Practices”), Feb. 2014; Hill & Knowlton (“Companies Build Public Trust Through Sustainability Reporting, New Research Shows”), June 2014; http://www.restaurant.org/Downloads/PDFs/News-Research/WhatsHot2015-Results.pdf

Why Company Sustainability is Important Sustainability Efforts Drive Consumer Support and Reputation Enhancement If a Company Supports Social or Environmental Issues: 96% of global citizens will have a more positive image of the company 94% will be more likely to trust the company 93% will be more loyal to the company 91% likely to switch brands to support a good cause (if similar price/quality) 92% would buy a product with a social and/or environmental benefit 67% have done so in past 12 months 90% would boycott a company for irresponsible business practices 55% have done so in past 12 months What Millenials Crave at Restaurants: 30% eat foods that are certified organic Will spend more on ethically sourced meats & farm-to-table experiences 80% want to know more about how their food is grown Sources: http://www.conecomm.com/2013-global-csr-study-release; http://www.conecomm.com/stuff/contentmgr/files/0/fdf8ac4a95f78de426c2cb117656b846/files/2013_cone_communicationsecho_global_csr_study.pdf; http://www.taher.com/millennials-crave-restaurants#.VOjxTVPF_0o

Why Company Sustainability is Important Environment Is an Economic Threat TOP GLOBAL RISKS Water Crises (#1 in terms of potential impact) Extreme Weather Events (#2 in terms of likelihood) “The common denominator between water wars, climate change, social unrest and other direct and indirect consequences of environmental damage is economic risk.” Sources: Global Risk Report (2015 Edition), World Economic Forum, Jan. 19, 2015; http://www.greenbiz.com/article/environment-economic-threat-business-risk-sustainability

Why Company Sustainability is Important Activists Pressure Food Companies on Sustainability

Why Company Sustainability is Important Sustainability is on the Political Agenda Worldwide NOW COMING UP Council of the European Union Directive 180+ laws and regulatory standards in 45 countries on sustainability reporting Sustainable Stock Exchange Initiative NASDAQ & NYSE Moody’s and S&P look at ESG risks 61 senators voted GHG pollution is causing climate changes UN Guidance for Companies on Respecting Human Rights to Water and Sanitation Sustainable Development Goals UN Climate Change Conference Carbon pricing initiatives Governments Companies More required ESG disclosures

Why Company Sustainability is Important Investors Have Specific Interests in Sustainability USES DRIVERS Investment decisions Shareholder proposals Proxy voting guidelines Engaging with companies Advocacy (Ceres-led INCR) Risk mitigation (73%) Avoiding firms with unethical conduct (55%) Enhancing performance returns (52%) 88% of investors see sustainability as opportunity for competitive advantage and something to pay more attention to 78% see it as a differentiator in determining industry leaders Sources: Price Waterhouse Coopers, “Sustainability goes mainstream: Insights into investor views,” May 2014; http://www.unpri.org/press/investors-see-benefit-of-sustainability-but-at-odds-with-business-leaders-on-measuring-its-value/

Sustainability Rankings: The Best Ones & What They Cover Myriad of Sustainability Rankings More than 100 ratings, rankings and indices focused on sustainability

Sustainability Rankings: The Best Ones & What They Cover Understand and Rate the Raters Scores 500 largest publicly-traded U.S. companies on their environmental performance based on a weighted average of 8 quantitative KPI scores (U.S. 500 list); also issues Global 500 list Scores Russell 1000 companies based on weighted average of 8 rankings (Environment Rank and Climate Change Rank each weighted separately at 19.5% and 16%, respectively, of total) Scores publicly-traded companies worldwide with market cap of at least $2B based on an average of up to 12 equally-weighted KPI scores (KPIs based on GICS Industry Group) Scores Interbrand’s annual (100) Best Global Brand companies based on a combination of perception score and Deloitte’s environmental performance data, to develop list of top 50 green brands

Sustainability Rankings: The Best Ones & What They Cover Understand and Rate the Raters Ranks companies worldwide based on survey of 887 experts from 87 countries, asking “what specific companies are leaders in integrating sustainability into their business strategy?” Ranks companies worldwide based on criteria in 5 core categories, with sustainability included in “Corporate Citizenship and Responsibility” (20% weighting) Ranks companies worldwide, regionally & by country, using a “best-in-class” approach based on responses to proprietary sector-specific questionnaires (58 versions) and other data Ranks companies worldwide based on responses to CDP questionnaires Carbon Disclosure Leadership Index Carbon Performance Leadership Index (A List) Water program Forests program

Sustainability Rankings: Comparing KPIs Covered Key Performance Indicator *As of June 4, 2014. For Global 100, KPIs may vary for different GICS Industry Groups Source: Corporate Knights Capital (internal document distributed for education purposes only)

2014 Rankings: U.S. Food & Beverage Companies and Restaurants Rank /Company Rank/Company 6 McCormick 153 ConAgra Foods 37 General Mills 156 Campbell Soup 41 Molson Coors Brewing 163 PepsiCo 42 Brown-Forman 187 McDonald’s 46 Hershey 268 Bunge 53 Constellation Brands 283 Starbucks 78 Altria Company 304 Hormel Foods 90 Mead Johnson Nutrition 308 Yum! Brands 115 Dr Pepper Snapple Group 366 Chipotle Mexican Grill 371 Tyson Foods 132 Keurig Green Mountain 399 Monster Beverage 137 JM Smucker 425 Lorillard 139 Kellogg 428 Burger King Worldwide 143 Mondelez International 147 Coca-Cola Rank/ Company 9 Coca-Cola Co 46 General Mills 54 PepsiCo 72 Conagra Foods 83 Brown-Forman 84 Yum! Brands Inc. 85 Molson Coors Brewing Company 89 Hormel Foods Corp. Sources: http://www.newsweek.com/green/americas-greenest-companies-2014; http://thecro.com/content/cr%E2%80%99s-100-best-corporate-citizens-2014

2014 Rankings: U.S. Food & Beverage Companies and Restaurants Rank/Company 49 General Mills 77 Campbell Soup Rank/Company 9 Danone 18 Nestle 20 Coca-Cola 30 Pepsi 37 Starbucks 38 Kellogg’s 43 McDonald’s 50 Heineken Percent of expert identification/Company 33 Unilever 4 Nestle 3 Coca-Cola Food & Beverage Manufacturers Foodservice Aramark/ USA Ingredion, Inc/ USA Kellogg/ USA PepsiCo/ USA Sources: http://www.rankingthebrands.com/The-Brand-Rankings.aspx?rankingID=210&nav=category; http://www.globescan.com/component/edocman/?view=document&id=103&Itemid=591; http://www.rankingthebrands.com/The-Brand-Rankings.aspx?rankingID=107&year=895; http://ethisphere.com/worlds-most-ethical/wme-honorees/

2014 Activist Rankings: U.S. Food & Beverage Companies and Restaurants Relatively high score for General Mills Low score for General Mills Sources: http://www.behindthebrands.org/en/company-scorecard; http://forest500.org/forest-500/companies?f%5B0%5D=field_industry_sector%3A30

2014 Rankings: U.S. Food & Beverage Companies and Restaurants Praise for Select Companies PepsiCo – stakeholder engagement Coca-Cola – water stewardship Starbuck’s – investor dialog General Mills – sustainable agriculture Brown Forman – disclosure April 2014 Source: http://www.theguardian.com/sustainable-business/blog/best-practices-sustainability-us-corporations-ceres

Limitations: The Investor Viewpoint Investors Have Reasons for Not Fully Considering Sustainability Issues Lack of common reporting standards Poor transparency & reporting by U.S. listed companies financial quantification of risks & opportunities (82%) comparability of information (79%) relevance and implications of sustainability risks (74%) Source: “Sustainability goes mainstream: Insights into investor views”, Price Waterhouse Coopers, May 2014

Sustainability Reports Are a Key Resource Investor Roadmap Sustainability Reports Are a Key Resource De facto international reporting framework G4 Guidelines materiality assessment more specific disclosures in DMA New sustainability accounting standards for U.S. public companies “material” sustainability issues and related metrics Sector/industry Services/Restaurants Consumption I/Processed Foods Reporting framework focused on integrated thinking ESG tied to bottom line “value creation” Guiding Principles and Content Elements no prescribed KPIs or disclosures

Flash Point Issues: Looking Beyond Ratings & Reports Investor Roadmap Flash Point Issues: Looking Beyond Ratings & Reports Checklist GHG & energy metrics Water metrics Materiality assessment all sustainability impacts material to the business & stakeholders Ethical sourcing (entire supply chain) Transparency, accountability & integration

Key Questions to Ask Companies Investor Roadmap Key Questions to Ask Companies Topic Questions Green rankings Is company listed among key green rankings? If so, explain company’s score/ranking(s). If not, explain. Sustainability report Does company publish a sustainability report in accordance with GRI (G4) or SASB standards? An integrated report? If not, explain. GHG metrics What are company’s quantitative goals for GHG emissions cuts? Impacts? Deforestation policy? Water metrics What are company’s quantitative goals around water use & water quality? Impacts? Materiality assessment & metrics tracking Does company conduct an annual materiality assessment of sustainability impacts & management’s approach, including performance data and return on investment? Ethical sourcing What are company’s supply chain management policies and procedures? Are they third-party verified? What are impacts on animals and communities?

NJH Sustainability Consulting Contact Information Nancy Himmelfarb NJH Sustainability Consulting www.himmelfarb.com nancy@himmelfarb.com