SUSTAINABILITY/

Our sustainability efforts with growers focus on two critical areas: maintaining a safe food supply and encouraging prudent use of agricultural inputs such as fertilizers, pesticides, energy and water.

Since 2002, we have required all suppliers of Sysco brand fresh, ready to eat produce to comply with Good Agricultural Practices (GAP), a voluntary food safety program administered by the U.S. Department of Agriculture. Our GAP requirements now encompass all fresh, ready to eat produce distributed through our system, regardless of brand. Our workshops and expertise have helped many of our suppliers raise their standards of food safety and reduce risk of microbial contamination.

Sysco‘s Sustainable Agriculture/Integrated Pest Management (IPM) program, which aims to reduce inputs, waste and cost, is a critical element of our sustainability efforts focused on growers of Sysco brand canned and frozen fruits, vegetables and potatoes. Many growers embrace the program wholeheartedly when they see the benefits for the environment and their communities. In January, we held our bi-annual Sysco Sustainable Agriculture/IPM Conference and Training for suppliers, growers, auditing agencies and other interested parties.

Water use is an important component of our IPM program. For example, we now ask growers and processors to measure water used in irrigating and processing fruits and vegetables. In the 2010 growing and processing season, our suppliers reported that 41 million tons of processing water was recycled for use in irrigation. Our IPM program also benefits water quality by promoting the responsible use of agricultural inputs.

We continue to strengthen this program by challenging growers to increase the number of acres and crops under the IPM program and to provide more reporting data. In prior years, we required data only on the three largest crops for each supplier. In the 2011 growing year we have asked our current suppliers to expand their data reporting to the full range of approximately 40 basic and specialty crops that we purchase. This change affects about one-third of our suppliers and will be reflected in the fiscal 2012 report. While the total number of acres in the program decreased this year, that decline reflects a change in our purchasing practices rather than a rollback of IPM efforts. On the other hand, the number of suppliers has grown significantly as we enroll small specialty crop producers in the program. Our 81 suppliers represent 167 processing locations and more than 4,000 growers around the world.

Suppliers in the IPM program track pesticide use both by pounds per acres and by toxicity. Depending on weather, new pests and other factors, pesticide use can fluctuate considerably from year to year. After a dramatic drop in 2009, total pesticide use in 2010 is similar to levels reported in 2008, suggesting that 2009 represented unusually light pest conditions. This factor is also reflected in a 2010 decline in pesticides avoided. In addition, we see a strong trend toward use of least toxic pesticides, which includes products that are typically used at higher rates per acre.

Our suppliers reported that they avoided the use of more than 6.7 million pounds of fertilizer in 2010, nearly double the amount of avoidance reported in 2009. Growers are using more soil testing, changing how fertilizers are applied, and using cover crops and crop rotation as some of the strategies to reduce use of fertilizer.

We also ask our suppliers to report how much vegetative waste they reuse by putting it back into the fields, composting it, using it as cattle feed or otherwise diverting it from disposal in landfills and waste-water treatment plants. The amount of resources reported as reused in the 2010 pack season exceeded 6 million tons.

Suppliers also reported recycling more than 485,000 tons of metal, glass, paper and plastics. This is a 70 percent increase from the previous year, reflecting more availability of avenues for recycling.

For the first year, we are reporting on fuel conservation from suppliers‘ field and processing operations. Our initial report shows more than 250,000 gallons of fuel saved by increasing energy efficiency of irrigation pumps and tractors, adopting more efficient tillage practices, and switching to biodiesel and ethanol.

“As we develop our local food segment, we can never lose sight that food safety must be our
first priority. Sysco, in partnership with the
Produce Marketing Association, is taking an industry leadership role to inform small local farmers on minimum GAP growing and
harvesting requirements.”
Craig Watson
VICE PRESIDENT, AGRICULTURAL SUSTAINABILITY AND RECIPIENT OF A 2011 JAMES BEARD
LEADERSHIP AWARDThe local food movement that began in college dining facilities and “white tablecloth” restaurants is expanding to a broader range of casual restaurants and institutional foodservice providers. As a result, our local foods initiatives, begun two years ago, now reach a growing number of customer segments and geographic markets. For our customers, local foods are part of a new set of values and a way to differentiate themselves as more of their diners view local foods as a way to eat healthier and support their communities. “Knowing the story behind your food” is a concept that resonates with a broad audience.

Responding to this powerful attraction, we now have well-developed local foods programs in at least 27 local Sysco operating companies and moderately developed programs in another 21 operating companies. To help advance this initiative across more of our local markets, we have launched a mentoring program and marketing tools where operating companies with well-developed programs partner with operators who wish to successfully integrate these programs into their business.

For Sysco, our combination of local market presence and national reach has proven advantageous in fusing local foods programs with our existing operations. At the local level, we work with both customers and local vendors to identify needs and make connections, while from the corporate level we focus on standards, tools, and resources. We hold our local farm suppliers to the same high food safety standards as our other suppliers. In an ongoing effort that is unique within the foodservice industry, we have partnered with the Produce Marketing Association to offer Good Agricultural Practices workshops in six cities, reaching hundreds of small farmers to ensure local food sources meet our quality standards. In addition, our national produce group, FreshPoint, works with small family farms to help connect them with aggregators and others who can assist them with obtaining appropriate insurance and meeting other requirements.

While local food is most often described in terms of seasonal produce, as our initiatives mature we are diversifying to encompass products such as local artisanal cheeses, brownshell eggs, and poultry.

Our animal welfare efforts have matured into a solid program that continues to address the priorities identified by our animal welfare advisory committee. We are focused on improving the performance of our suppliers and expanding animal welfare requirements beyond harvest facilities.

Following industry best practices, we use a three-pronged approach to ensure that suppliers of Sysco brand meat, poultry and eggs treat animals in a humane manner. We require that they complete ongoing self-assessments of their animal care programs; we contract with third-party auditors; and we conduct our own audits with a team certified through the Professional Animal Auditor Certification Organization, Inc. (PAACO).

For Sysco branded fresh meat facilities where animals are harvested, we have added transport requirements to the animal welfare audit standards to verify that effective systems are in place to address animal welfare as trucks arrive at meat plants and livestock is unloaded. In addition, Sysco is participating in an industry initiative with stakeholders from trade groups, suppliers, retailers, and other foodservice companies to further enhance animal care standards.

We are also beginning to look further back in the dairy supply chain. While we buy from dairies, not directly from farmers, we are working to establish standards and auditing practices that address how dairy animals are treated on the farm or at milking facilities. In this effort, we are collaborating with our advisory council, with existing groups such as the National Dairy FARM Program: Farmers Assuring Responsible Management™, a coalition formed in 2009 to support best practices in animal care and quality assurance in the dairy industry, and with integrated Sysco suppliers, to establish credible animal welfare standards and measurable audit criteria.

Shell eggs are another area where we seek to increase our understanding of sustainability best practices. We are supporting a three-year research project with The Coalition for a Sustainable Egg Supply that involves experts from industry, Michigan State University and the University of California at Davis to assess the full cycle of sustainability impacts in shell egg production. The study encompasses environment, food safety, worker safety and food affordability. The first phase of the study compares impacts of cage production, cage-free production, and enriched colonies.

We continue to move forward on the issue of sustainable seafood. Our first step was a global sourcing assessment, completed in 2010, which helped us understand the concerns and standards of the many interest groups involved in this issue. As our next step, we have chosen to focus on the Marine Stewardship Council‘s Principles and Criteria for Sustainable Fishing, which encompasses the only internationally recognized set of environmental principles to assess fishery management and sustainability. The MSC was co-founded by the World Wildlife Fund (WWF), with whom we have been engaged for several years on this issue.

As part of a multiple-stage commitment to the WWF, in September 2011, we pledged to assess our current seafood supply and to develop ways to improve the sustainability of our seafood-buying practices and standards by 2015. In addition, we will be working with WWF on Mahi Mahi and Spiny Lobster fishery improvement projects in South and Central America. The objectives of these projects will be to work toward sustainable management of the fisheries to benefit all stakeholders.

Our social responsibility assessments of suppliers in Latin America and Asia have proven effective in monitoring performance and promoting improvement. We currently have 132 enrolled suppliers, operating 179 processing locations. Since rollout of the program, 240 assessments have been completed. Facilities are scored in a rating system from “green” (highest) to “red” (lowest). Among facilities that have undergone a second-round assessment, the number receiving “green” ratings increased by 150 percent from the initial round. Intermediate scores also increased, while the number of facilities receiving a “red” rating declined by 24 percent.

Completion of a social responsibility assessment is part of our supplier approval process. We also work closely with UL-STR, an international provider of responsible sourcing certification systems, to review our assessment data to identify trends and opportunities to generate feedback for our supplier community.

Sysco and UL-STR provided training opportunities in Thailand, China and the United States for existing suppliers as part of our initial social responsibility program roll out. As part of our goal of continuous improvement, training is offered for existing suppliers and suppliers seeking to be approved as a Sysco brand supplier. Supplier training is designed to improve understanding of and sustainable compliance with Sysco's Supplier Code of Conduct and local, national and international law, including facilitating the process of identifying root causes, developing management systems solutions, and managing implementation to achieve compliance. Training on the Supplier Code of Conduct includes training concerning the Core Conventions of the International Labour Organization referenced in the Code including those covering basic human rights, restrictions on child labor, freedom of association and discrimination on the basis of race, gender, religion, ethnicity, nationality or political beliefs.

In Guatemala, we are continuing the economic development project we began last year in partnership with the global non-profit Oxfam and the Sustainable Food Laboratory. This project helps build the capacity of small broccoli farmers including installing wells and drip irrigation systems to improve productivity and building seedling greenhouses, compost factories and other infrastructure. Sysco Quality Assurance professionals are teaching more than 2,300 farmers Good Agricultural Practices to ensure food safety. For us, the project is an opportunity to partner with global organizations and to learn more about how to work with smallholders.

In 2010, the state of California adopted the Transparency in Supply Chains Act of 2010 (SB 657). This law, which took effect on January 1, 2012, requires large retailers and manufacturers doing business in the state of California to disclose their efforts to eradicate slavery and human trafficking from their supply chains. Although Sysco Corporation, as a wholesale foodservice distributor, is not subject to the Act, Sysco condemns slavery, human trafficking, child labor and all forms of forced labor. Sysco has adopted a Supplier Code of Conduct that applies to all suppliers of Sysco and addresses (1) human rights; (2) child labor; and (3) forced labor. In addition to the Supplier Code of Conduct, Sysco's suppliers are subject to periodic social audits, as discussed above, that audits these and similar issues. The complete version of Sysco's Supplier Code of Conduct can be found by clicking here.