2011/2012 keystar ®corporate social responsibility update foods' keystar... · keystar®...

2011/2012 KEYSTAR®CORPOR ATESOCIAL RESPONSIBIL IT Y UPDATE

The information that follows provides perspective on Keystone Foods, our CSR position and contributions within the business units of our global corporate parent, the Marfrig Group. Keystone Foods is a business unit of Seara Foods, as shown in the organization chart below.

Keystone Foods manufactures and processes a wide range of proteins, including poultry, beef, fish and pork. Our products include individually quick frozen offerings, such as beef and pork patties; partially fried items such as breaded chicken nuggets and patties; fully cooked products including chicken wings, chicken breast fillets, beef and chicken fajita strips, diced chicken and bone-in chicken pieces.

The Marfrig Group is one of the world’s most diversified global food companies, with a broad portfolio of businesses involved in the production and distribution of fresh, processed and prepared beef, pork and poultry products, as well as frozen, precooked potatoes, vegetables, sliced meats and sausages, fish, ready-to-eat meals and pastas. The Marfrig Group provides a wide variety of products and services to clients in food distribution and the fast food industry. The organization also includes a finished and semi-finished leather business.

Keystone Foods and the Marfrig Group –

Global Reach Delivering a World of Quality Protein Products

1 CSR aT KeySTone FoodS

Marfrig Alimentos S.A.

Seara Foods Marfrig Beef

Brazil Argentina Uruguay Chile

Organization Chart

Key Facts About Keystone Foods and the Marfrig Group

KEYSTONE FOODS• Over 13,000 employees around the world

• Global footprint includes 31 facilities in 10 countries across North America, Europe and Asia-Pacific region

• We proudly serve more than 28,000 quick-service restaurants, as well as major food service locations, industrial food companies, and retail outlets in nearly every corner of the globe

• Globally, we process 1.8 billion pounds of poultry, over 420 million pounds of beef, nearly 20 million pounds of fish, and almost 10 million pounds of pork each year

• The Marfrig Group acquired Keystone Foods in 2010

The Marfrig Group Around the WorldBusiness Units, Facilities, and Offices Around the Globe.

THE MARFRIG GROUP• 140 production units, commercial offices

and distribution centers in 17 countries on five continents

• 90,500 employees

• One of the top five protein producers in the world

• The Marfrig Group is a publicly-traded company based in Brazil with annual sales of approximately $11 billion

2GUIded By oUR VaLUeS

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Table of ContentsKeystone Foods and the Marfrig Group – an overview ..............................................1-2

Letter From Leadership .................................................................................................. 4

a Snapshot of CSR Today at Keystone Foods .............................................................. 5

Sustainable Business Management – The Marfrig Group .............................................. 6

2011/2012 CSR Achievements at a Glance ................................................................... 7

Teaming Up With Customers, and Suppliers NGOs ...................................................... 8

Economic Impact and Performance Indicators .............................................................. 9

Reducing environmental Impact – energy, Climate and air Quality ............................. 10

Reducing Environmental Impact – Water and Wastewater .......................................... 11

Reducing Environmental Impact – Solid Waste ........................................................... 12

enhancing Corporate Stewardship Through environmental Programs and Management ......................................................................................... 13

Teaming With External Stakeholders to Optimize CSR Best Practices ....................... 14

Inspiring – and Sharing With – Our People .................................................................. 15

Giving Back to Our Communities and the World ......................................................... 16

Continuous Health and Safety Improvement ............................................................... 17

Advancing Food Safety, Food Defense and Animal Welfare ........................................ 18

Industry Recognition and Recognizing Our People ..................................................... 19

2011/2012 KEYSTAR® CORPORATE SOCIAL RESPONSIBILITY UPDATE

Guided By Our Values

CSR aT KeySTone FoodS

Keystone Foods’ Corporate Mission, Vision and Values

MISSIONWe are proud to partner with the kitchens of the world’s select consumer brands to create innovative food and logistics solutions that delight customers, enrich people’s lives and contribute to our legacy of excellence.

VISION• We will expand our product and

process offerings to align with key customers’ needs.

• We will invest in long-term strategic partnerships with branded Industry leaders who value excellence in: quality, food safety, innovation, corporate social responsibility, talent, and facilities in support of their core business.

• We will aggressively manage our reputation and market our brand to attract select customers to our core capabilities.

• We will use our continually evolving enterprise systems to help us imagine, develop and refine breakthrough solutions.

CORE VALUES• We demonstrate uncompromising

integrity and ethics.

• Our people are the source of our success.

• We are passionate about our customers.

• We deliver absolute quality.

• We harness innovation to drive mission-critical solutions.

• We balance environmental stewardship, social responsibility and profitable growth.

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“Together with our employees, customers, suppliers and communities, we are nourishing people’s lives and helping to create a better world.”

Thank you for taking time to review our 2011/2012 KEYSTAR® Corporate Social Responsibility Update.Corporate Social Responsibility – or CSR – has always been part of our dna at Keystone Foods – well understood and embraced by our employees and management, and integral to the company’s culture. Recently, we refined our CSR shared purpose statement to read: “Together with our employees, customers, suppliers and communities, we are nourishing people’s lives and helping to create a better world.” Moving forward, our KeySTaR® CSR initiatives are an important part of our Engage for Excellence program and will create even more positive outcomes as we add greater energy and impact to our efforts. We will do more good for more people, communities, and causes around the world, while we create greater value and support global sustainability.

You can learn much more about our refined CSR vision and accomplishments in the pages that follow, and can feel confident that Keystone Foods’ CSR program will continue to build on our tradition of pursuing excellence in the workplace and food safety and quality, as well as our obligation to provide true leadership in Corporate Social Responsibility.

Perspective on This Year’s CSR UpdateThis report encompasses the time period from January 2011 through the first two quarters of 2012. During these months, significant developments have occurred that impacted our business and reflect on our CSR initiatives.

The divestiture of Keystone Foods’ distribution business to the Martin- Brower Company in April 2012, has allowed the company to focus our time, attention and resources on further developing our global proteins business with more diversity in the fastest growing markets.

Similarly, the addition of a european facilities division – via the acquisition of Moy Park/Walsh Family Foods – furthers our poultry processing capabilities, as well as other prepared food operations, positioning our company well for profitable growth and expansion in 2012 and beyond.

During 2012, Keystone Foods became part of the Marfrig Group’s Seara Group in order to capitalize on inherent synergies, provide greater strategic focus, and better serve our customer base. The Marfrig Group produces an annual CSR report representing global results from all business units, including Keystone Foods. It is available online at www.ir.marfrig.com.br. The CSR update you are reading reflects initiatives and results primarily of Keystone Foods.

By refining our CSR philosophy and implementing this enhanced, energized vision, we can better leverage our strengths as a company – working to sustain the planet, contribute to our communities, support our people, and create greater value. Please see the next section to learn more about our new shared purpose statement.

Through innovative ideas and proven programs, KeySTaR® and CSR will continue to evolve, grow and flourish at Keystone Foods, because it is truly an integral part of who we are and what we do.

John Coggins Bill Andersen Ceo, Keystone Foods Coo, Keystone Foods

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A Snapshot of CSR Today at Keystone Foods

Our Refined Shared Purpose StatementOur refined shared purpose statement demonstrates how KEYSTAR® (our name for our aggregated CSR programs) is guided by our values. It also demonstrates how we will move forward – managing business processes to produce an even greater overall positive impact for society, our people, and our planet, while providing enhanced value for all.

Supporting our People

CreatingValue

Sustainingthe Planet

Contributing toCommunities

• Energy conservation

• Waste reduction

• Water savings initiatives

• Program validation

• Sustainable sourcing

• Compliance

• Global and local philanthropy

• Employee volunteerism

• Corporate stewardship

• Local engagement

• Employee leadership development

• Workplace safety

• Health & wellness

• Diversity & inclusion

• Safe, quality products

• Animal welfare

• Stakeholder engagement

• Transparency and accountability

• Competitive advantage

KEYSTAR®– Part of Keystone Foods’ Corporate CultureKeySTaR® continues to be a defining element of Keystone Foods’ culture and reflects our commitment to CSR, providing worldwide business units with clear goals and objectives, as well as the framework in which to achieve them. KeySTaR® provides guiding principles and the means to balance environmental stewardship, social responsibility and profitable growth. For Keystone Foods, CSR is all about how business processes can be better managed to produce an overall positive impact on society for everyone concerned.

KEYSTAR® and Keystone Foods – Contributing to a World of GoodThrough the various divisions of Keystone Foods – and the many divisions of its parent, the Marfrig Group – KeySTaR® contributes greatly to our overall CSR efforts around the globe. as a vital part of the Marfrig Group organization, KeySTaR® leadership collaborates with our own groups and the Marfrig Group’s many divisions in areas including personnel safety, global animal welfare standards, global food safety and quality standards and reporting.

We also participate in partnerships with organizations such as the World Wildlife Fund in their Global Roundtable for Sustainable Beef. There are routine conference calls and visits between various CSR and sustainability leaders throughout the world to promote best practice sharing, and encourage the general exchange of information to better assure that we are truly a global company addressing CSR issues and opportunities in a unified manner.

The Marfrig Group and Keystone: Growing CSR TogetherKeystone Foods, as part of the Marfrig Group, works closely with other Marfrig Group divisions to advance the CSR cause. Together, we empower global and local CSR strategies, initiatives, and results.

In May 2012, the Marfrig Group Sustainability Leaders participated in Keystone Foods’ Global Engineering and CSR Conference. They also worked with US counterparts to collaborate on CSR strategy and programs.


Sustainable Business Management – The Marfrig Group

Creation of Value Over the Long TermCORPORATE GOVERNANCE • COMMUNICATION • EDUCATION • ETHICS

ECONOMICRisk Management and opportunities

Long Term Vision

Cost Management

new BusinessENVIRONMENTALClimate Change

natural Resources

energy

Waste Materials

Biodiversity

Life Cycle

PRODUCTnutritional Value

Quality

Food Safety

SOCIALSocial Responsibility

Marfrig Institute

diversity

Health & Safety

TECHNOLOGYInnovation

Pioneering

Research and development

engineering

SUPPLY CHAINSustainable agriculture

Relationship with Suppliers

Animal Welfare

SUPPLIERS

PARTNERS

CLIENTS AND CONSUMERS

EMPLOYEES

SHAREHOLDERS

SOCIETY

each business division, such as Keystone Foods, focuses on actions for sustainability in accordance with its local operational requirements. as part of our commitment to sustainable business management, Marfrig takes into account corporate governance, communication, education and ethics, all targeted at the creation of value over time. our initiatives are inclusive of suppliers, partners, clients, employees, shareholders and society, as we partner with others for sustainable production and the preservation of biodiversity.

all Marfrig businesses live by a single code of ethics that permeates industrial, commercial and administrative units and provides us with a singular purpose of shared social and environmental values.

The Marfrig Group develops and implements innovative actions and wide-ranging policies to foster corporate social and environmental responsibility in its supply chain, aiming to ensure the long-term sustainability of our business. Marfrig has defined its sustainability strategy in six strategic dimensions that include strong pillars – all connected with core businesses.

2011/2012 CSR Achievements at a Glance

Moving in the Right DirectionsGlobally, we continue to improve on key CSR areas of focus, achieving reductions of up to 43% in Total Waste to Landfill intensity since 2008. And although our goals for 2015 are ambitious, they are truly achievable based on accomplishments, trends, and forecasts.

Reducing Emissions, Use and WasteKeystone Foods continues to achieve positive movement, significantly reducing greenhouse gas emissions!

Measuring More of Our Carbon FootprintImproving our carbon footprint has always played a large role in Keystone Foods’ day-to-day operations. Since formalizing our KeySTaR® program in 2008, Keystone Foods has taken a more systematic approach towards carbon reduction. By following the Greenhouse Gas (GHG) Protocol, as defined by the World Resources Institute and the World Business Council for Sustainable development, we have measured and continue to reduce our carbon footprint.

Initially we measured Scope 1 and 2 emissions. Scope 1 emissions are those from sources owned by the company. Scope 2 emissions are those generated to produce electricity. Realizing that our environmental impact reaches beyond the systems in which we directly impact, Keystone Foods has now begun to measure Scope 3 emissions, including emissions generated by employees traveling to work, trucks delivering raw materials and finished product, energy used to produce raw materials, and the many other activities related to our operations. While Scope 3 measurement is a daunting task, Keystone began that measurement program in 2010 with employee travel and delivery of finished product. The result of these efforts is quantified in the chart on the right.

Goal area 2011 Comparison*

2012 Goal*

2015 Goal*

energy Usage Intensity 4% 7% 16%

Water Usage Intensity 14% 8% 25%

Waste to Landfill Intensity 43% 11% 54%

600000

500000

400000

300000

200000

100000

0

0.300

0.250

0.200

0.150

0.100

0.050

0.0002008 2009 2010 2011 2012

(projection)

Total GHG Emission (Metric Tons CO2E)

GHG Emission Intensity (MT CO2E/MT production)

2008 – 2012 YTD Global Greenhouse Gas Emissions

Scope 2010 Metric Tons 2011 Metric Tons

1 246,880 224,810

2 238,580 250,620

3 24,270 22,316

Total 509,730 497,747

*2008 is baseline year


Scope 2010 Metric Tons 2011 Metric Tons

1 246,880 224,810

2 238,580 250,620

3 24,270 22,316

Total 509,730 497,747

Teaming Up With Customers, Suppliers, and NGOs

Through interactive and ongoing collaboration with customers and suppliers, we share our successes and ideas and learn from each other’s best practices. These partnerships improve Keystone Foods’ CSR program and support both customers and suppliers, helping to cement relationships for long-term success and socially responsible growth.

These collaborations also help Keystone Foods manage risk in our supply chain for protection of our brand, as well as safeguarding our customers. Partnerships up and down the value chain serve to aid us in understanding risks we might face, and in developing plans to mitigate these risks, turning a potential issue into a valuable opportunity for the benefit of all involved.

Customer Engagement and EducationPartnering with customers and suppliers on CSR projects delivers mutually beneficial results. Through close collaboration in a number of areas, we are able to better support our customers’ and suppliers’ organization, build stronger relationships, and generate a greater volume of positive, socially responsible outcomes.

Helping Customers Support NGOsKeystone Foods works with a number of Non-Governmental organizations (nGos) where we have mutual interests with the NGOs and our stakeholders and customers. For example, Keystone Foods is a member of the World Wildlife Fund Global Roundtable on Sustainable Beef, in support of programs to improve the sustainability of the beef supply around the world.

We take an active role in many industry groups such as the american Meat Institute, the Grocery Manufacturers Association, The US Egg and Poultry Association, Institut national de la Recherche agronomique, and many others. our people also serve on various committees to evaluate and resolve issues in the industry.

Sustainability Subject Matter ExpertsThanks to our experience, knowledge and willingness to become involved in solutions, our people serve as subject matter experts in areas ranging from energy and environmental management to animal welfare.

Keystone Foods’ subject matter experts are often asked to speak at industry conferences like the International Poultry Exposition, the Food and Beverage environmental Conference, the FMA Progressive energy and environment Congress, the Conference Board, the GMa Sustainability Conference, and others. We are also pleased to be asked to serve as subject matter experts in support of efforts of The Sustainability Consortium.

Ongoing, Open Supplier EngagementBy always continuing the CSR dialogue, we’re able to keep working closely together to create more beneficial results, as we did in 2011 with key hatchery equipment supplier Syteng Automation Systems. Syteng works closely with Keystone Foods’ Camilla, Ga and eufaula, aL facilities.

Keystone Foods US Proteins’ hatchery managers, live operations manager, and technical team first met with Syteng with the objective of engaging a supplier to collectively discuss opportunities for improvement in equipment design for animal and employee welfare areas.

Through this interaction with a key supplier on employee and animal welfare, positive outcomes emerged. Syteng is incorporating improvements into their equipment design that will benefit Keystone Foods’ people and operations, and those of all Syteng’s broiler industry customers. This is valuable innovation delivering significant advantages for all concerned.

Keystone Foods/APMEA team members accepting the McDonald’s 2011 APMEA Sustainability Award.


Positive Economic Impact and Key Performance Indicators

It is a core belief of Keystone Foods that CSR not only gives back, but also pays back. Our KEYSTAR® initiatives promote respect for our company in the marketplace, and this enhances our sales, corporate image, and employee loyalty while reducing our carbon footprint and delivering other advantages for all of us and our world. From a bottom-line perspective, CSR activities focused on sustainability help to lower costs and improve efficiencies, translating into dollar savings. Reduced costs, improved performance, mitigated risks – all advantages that smarter CSR delivers.

Real-World Results: Saving $500,000 in Albany, KY With Energy From BiogasA project at Keystone Foods/Equity Group Kentucky used a dedicated boiler system to capture biogas, a by-product created from the breakdown of biodegradable material in the wastewater treatment plant.

Project highlights include: • Dedicated boiler system captures biogas via

anaerobic digestion

• More energy created in-house to heat water for production

• Results:

– 290,000 gallons of liquid propane offset

– 1,700 metric tons of CO2 not released

– $500,000 in annual savings

– President’s KeySTAR® award

ENVIRONMENTAL IMPACT OF KENTUCKY BIOGAS INITIATIVE EqUAL TO TAKING 338 PASSENGER VEHICLES OFF THE ROADS FOR ONE YEAR

x338 TOTAL

The Biogas Team in Albany, KY near a boiler utilized in their project.

ENERGY INTENSITY WATER INTENSITY LANDFILL INTENSITYENERGY INTENSITY WATER INTENSITY LANDFILL INTENSITYENERGY INTENSITY WATER INTENSITY LANDFILL INTENSITY

$

$

$

2005 – August 2011 Global Total Energy Intensity1.000

0.950

0.900

0.850

0.800

0.7502005 2006 2007 2008 2009 2010 2011

2005 – August 2011 Global Total Water Intensity2.300

2.100

1.900

1.700

1.5002005 2006 2007 2008 2009 2010 2011

2005 – August 2011 Global Total Landfill Waste Intensity0.006

0.005

0.004

0.003

0.0022005 2006 2007 2008 2009 2010 2011


Reducing Environmental Impact – Energy, Climate and Air qualityEfficient use of natural resources is critical for our business and CSR efforts. Regulatory and societal pressures related to environmental impact continue to grow so we continually strive to position Keystone Foods for sustainable growth. These efforts make good business sense and common sense – they’re simply the right things to do for our business, our customers, and our environment.

A Targeted, Measured ApproachGlobally established targets and measures are defined by the KEYSTAR® team and local management, with both accountable for local results that contribute to achieving global objectives. Responsibility for driving resource efficiency focuses on those with key CSR responsibilities. This approach, consistent with our decentralized business model, allows each division to identify opportunities with the greatest possible returns for their operations and customers.

Positive achievements in energy conservation resulted from audits, KEYSTAR® team efforts, and projects that reduced Keystone Foods’ overall consumption. In 2008, we established a five-year plan to reduce our energy consumption by 7% for every ton of product produced. By 2011, we reduced our energy intensity (the amount of energy used per weight of product produced) by 4.7%, gaining ground on this target.

Water Consumption and Reduction Targeted With Pilot ProgramIn 2012, Keystone Foods initiated a study to improve water savings with testing planned to begin the second half of 2013. development of a water accountability tool will allow each plant – worldwide eventually – to document and map manufacturing processes to assess how they relate to water use. once a water model has been created for each facility, project team members will collaborate to identify the greatest areas of opportunity for the plant. This pilot project rollout aligns with the Marfrig Group’s water footprint initiative that is focused on measuring water use throughout the supply chain.

The water model processes will incorporate basic principles of Lean manufacturing and Pareto concepts, to help prioritize where savings can be most impactful and beneficial. The water consumption and reduction program is planned for rollout in all global facilities during 2013/2014.

Selecting a US Energy Services Provider for Standardization and Savings• In the US Proteins divisions, Keystone Foods sought an integrated energy service provider that would handle the

energy service needs of all of our US facilities. This synergy would help drive cost reductions and improve best practice sharing among locations. a single source energy supplier would also help standardize best practice manufacturing guidelines related to energy, including equipment selection, behavioral practices, etc.

• Integrated solutions would also help with energy supply procurement, risk mitigation, and utility bill management.

• Since selecting and partnering with our energy service provider, their experts are helping us to set both short and long term goals for energy reduction in consumption, grow engagement at all levels of Keystone Foods, understand the financial hurdles involved, and capture a project’s total financial impact in terms of sustainability.


Reducing Environmental Impact – Water and WastewaterSound water management remains a key priority for our business but it requires careful balance. Keystone Foods aims to use water prudently, while never compromising our standards of hygiene or food safety. To ensure we’re well prepared for tomorrow, we’re seeking out and implementing best practice solutions for water management today. These efforts include ongoing audits, conservation teams working to discover new ways of optimizing use, innovative reduction projects, and other endeavors.

Real-World Results: Reducing Water Consumption by 52% in Australia• Replaced interlocking belts with flat belts on

production line at Keystone Foods/Australian Food Corporation

• Cleaning times reduced, resulting in savings of about 152,000 gallons of water per year

• Replaced inefficient water taps – cut water use by 78,200 gallons/year

• Turned off misting during non-production periods, saving another 3,400 gallons annually

• Stopped using water in defrosting of flatbed freezers

• Overall water consumption reduced by 52% over three years

Keystone Foods/Australian Food Corporation (AFC) has been certified as an ecoBiz Partner by the Queensland Government Environmental Protection Agency. The water consumption reduction project was just one of several impact-reduction environmental initiatives undertaken by AFC since 2007. Above, the Honorable Kate Jones MP, Minister for Climate Change and Sustainability, Queensland Government, holds an eco-efficiency recognition certificate with Damian Gilpin, Systems Compliance Officer for AFC.

Advanced Water Savings in China• In 2007, Keystone Foods/McKey China installed heat transfer

equipment on their refrigeration systems

• Large water hoses were also replaced with smaller diameter hoses

• 551 cubic meters (145,000 gallons) of water were saved in 2008 over 2007 levels, gaining recognition by the Shenzhen government

• In 2009, an Advanced Water Saving enterprise designation was awarded by Guangdong province in recognition of ongoing water saving efforts and accomplishments

The Advanced Water Saving Enterprise recognition certificate awarded to Keystone Foods/McKey China by the Guangdong provincial government.

Saving Over 42,000,000 Gallons of Water in Camilla, GABy implementing an extended operations plan at Keystone Foods/Camilla GA, the number of weekends worked were reduced, permitting more preventative maintenance at the plant and enhancing overall performance. Based on changes made, the operation reduced annual water use by an impressive volume of over 42,000,000 gallons per year.


Reducing Environmental Impact – Solid WasteWe constantly strive to reduce or eliminate waste while working with our customers and suppliers to address waste in the entire supply chain. Reducing the amount of waste hauled to landfill reduces our costs, and also adds value for our customers – building stronger relationships with the communities in which we live and work.

We’ve demonstrated excellent progress in this area and it is one of the major KPIs (Key Performance Indicators) that we track globally. Between 2008 and the end of 2011, we reduced waste to landfill by about 8,758 metric tons, or approximately 480 truckloads, assuming 20 tons per load.

Defining Our Zero Waste to Landfill VisionThis graphic demonstrates our Zero Waste to Landfill goal. This inverted pyramid demonstrates the ultimate accomplishment: eliminating waste at the source (e.g. less packaging, less process waste, etc) and also shows the least desirable impact: putting waste into a landfill.

There are varying definitions of Zero Waste to Landfill. At Keystone Foods, we maintain a strict definition where zero means that none of the waste generated in our operations goes to landfill. Keystone Foods defines two levels of Zero Waste –

1. Basic Zero (0) Waste to Landfill, permitting incineration with NO waste to landfill

2. Level Zero (0) Waste to Landfill, requiring any incineration to be converted to produce useful energy for use or in our communities.

In the Level Zero (0) designation, even the ash from the waste to energy process must find some beneficial use, such as use as a concrete additive. We are also examining the use of community anaerobic digesters to produce energy from our waste and that of others and exploring how processes such as this can transform remaining materials into useful compost.

Real-World Results: Reusing or Recycling 100% of Generated Waste in France• Keystone Foods/McKey France reviewed and identified

all waste streams

• Changed disposal practices, implemented waste sorting, pursued traceability and partnered with contractors

• In 2009, 26 waste categories identified and sorted which represented 87% of the generated waste

• Since 2010, diverted approximately 153 tons of unrecyclable waste from landfill by incinerating to produce heating energy

• In 2012, local composting solution found for waste meat, saving around 20,000 km of transportation per year

• Reduced waste-related carbon footprint by 83%

• Significantly cut hauling costs, resulting in additional savings

Waste sent to Landfill

Vol s

ent

to L

and

fill

350

300

250

200

150

100

50

02003 2004 2005 2006 2007 2008 2009 2010 2011

Keystone Foods/McKey France had continuously reduced waste to landfill year over year, then almost eliminated this waste starting in 2010, thanks to dedicated reuse and recycling initiatives.

Source Reduction

Reuse

Composting

Recycling

Waste-to-Energy

Incineration

LandfillIncreasingly Favorable


ENERGY INTENSITY WATER INTENSITY LANDFILL INTENSITY

Enhancing Corporate Stewardship Through Environmental Programs and Management

A well-planned, intelligently executed Environmental Management System (EMS) protects and advances a company’s reputation. It builds the fortification and defenses necessary to address environmental risks, ensures ongoing communication within the company, and delivers value by benefitting the bottom line. These are just a few of the advantages that our environmental Management System provides.

Key Environmental InitiativesISO and other key certifications demonstrate commitment and performance, meeting key environmental guidelines. all Keystone Foods protein plants in the Asia Pacific and European regions are 14001-certified. In the United States, Keystone Foods/North Baltimore, OH received ISO 14001 certification in 2012. Today, the other US facilities are on the path to a more uniform eMS program.

We regularly conduct environmental compliance audits at all facilities and are implementing an integrated management system that encompasses environmental, quality, health, safety and food safety. This 100% Web-based system is now fully operational in the US and australia, and is being rolled out worldwide. It offers powerful advantages for document control, task management, audit tracking, custom reporting, and dashboard analytics.

Real-World Results: Optimizing Wastewater Processes and Minimizing WasteKeystone Foods reaches out to experts in wastewater treatment to develop new benefits.

Goals: better manage wastes, remain compliant, be cost efficient, and develop sustainable solutions.

Results include better chemical optimization and new sustainable processes, such as the Camilla, GA wastewater treatment project, the Albany, KY wastewater plant project, and significantly reduced utility costs.

Planting trees at Keystone Foods/McKey China.

Educating on the environment at Keystone Foods/McKey Thailand.

Keystone Foods employees at austrailia Foods Company planting vegetables

Cleaning up trails at Keystone Foods’ US headquarters in Pennsylvania.

Earth Day Activities at Keystone Foods


Earth Day Activities at Keystone Foods

Teaming With External Stakeholders to Optimize CSR Best Practices

When it comes to smarter CSR, we understand that every organization that works with Keystone Foods in a variety of ways is likely to contribute excellent ideas. Suppliers, industry organizations, and trade groups bring differing perspectives and knowledge bases to CSR, and we can both learn from them and help them improve. It’s an inclusive, holistic approach to CSR that gets everyone involved, benefits everyone, and focuses on continuously sharing best practices. Throughout each year, we make internal and external presentations to our customers and the industry to share our expertise and learn from the best.

Engaging Our Suppliers to Learn More and Achieve CSR ConsistencyThe growth of Corporate Social Responsibility standards involves sharing best practices and bridging gaps between various continuous improvement programs. It requires engagement from employees, key stakeholders, customers and suppliers. These best practices are shared through communication tools such as publications, newsletters, and surveys in order to understand the strengths of a company.

In 2010, a questionnaire was sent to 30 of Keystone Foods’ suppliers. Topics included sustainability, human rights, business practices and ethics, safety, social welfare, and supply chain. With a 70% response rate, the answers received

were enlightening and insightful. The results of the survey were analyzed to compare differences and conformities between each company’s governance. The KeySTaR® team discovered similar patterns between most suppliers that reaffirmed the quality of our products.

By establishing a baseline for best practices through the Keystone Foods supply chain, we were able to identify a select number of suppliers to engage on a more detailed level.

The purpose of the survey and supplier meetings was to further engage and develop each company’s CSR program.

The meetings involved a detailed review of the questionnaire, as well as project sharing in various categories such as food safety, sustainability, risk management, and human resources. Both Keystone Foods and the suppliers identified specific actionable items to further understand each other’s goals in CSR.

US Program (2010) – COMPLETE

• Collaborate With Purchasing Group

• Communicate Strategy & Approach, Survey, Data Collection, Analysis, ReportingPHASE 1

Expand to Europe (2011) – COMPLETE

• Survey & ResultsPHASE 2

Next Steps (2012):

• Continuing in APMEA

• Developing Cooperative Program With US SuppliersPHASE 3

after rolling out a CSR survey to Keystone Foods’ suppliers in the US in 2010, the program was expanded to europe in 2011 and is now underway in APMEA.

Farmers who supply Keystone Foods participated in a supplier event, discussing modern farm resource conservation and reuse.

CSR Supplier Survey and Timeline


Inspiring – and Sharing With – Our People

Our reputation is built on a tradition of attracting and retaining the best talent in the industry. We strive to achieve the highest level of internationally recognized human rights standards in every region in which we operate, without exception. We also work diligently toward continuous improvement in the areas of career development, diversity, employee safety, and engagement with the company’s goals and culture.

We focus on local engagement via a number of methods, including our CSR Outreach Program that schedules visits with local teams throughout the year to understand the needs of our employees and help improve their overall well-being. KEYSTAR® leaders visit facilities globally to share best practices and learn. From gatherings like these, enhanced employee recognition programs and increased development opportunities emerged. The result: more engaged and productive employees who are encouraged to be leaders in the company.

Local Engagement ProgramsWe feature a number of programs designed to share knowledge and achievements and develop best practices. These include –

Internal AwardsGlobal KeySTaR® business unit/employee awards are presented annually to reward outstanding CSR efforts related to sustainability, results, leadership, engagement, social responsibility and other key parameters.

APMEA Leadership Development Program

• Leadership Development Program created in APMEA region

• Introduced to prepare key managers for higher level positions within the business, create a pipeline of developed managers for succession planning, and fill existing gaps within the company that lacked a development program

K-WIN (Keystone Women’s Inclusion Network)

• Supports the professional development of women at Keystone Foods

• Created as a global program with support of senior management

• Goals include contributing to company business goals by supporting professional development of women, while encouraging them to further business skills and accomplish professional goals

• K-WIN membership continues to grow in all regions

• K-WIN initiatives have included –

– Community outreach with Ronald Mcdonald House Charities

– Language skills development

– Professional networking events

– Gender and diversity training

Keystone Foods Leadership and Customer guests with 2011 KeySTAR CSR Award Winners.


Giving Back to Our Communities and the World

We donate over one million dollars a year across our supply chain. Giving consists of financial support, food, and other resources. And that doesn’t begin to include the incredibly valuable contributions of time, knowledge and funds from the world of individuals that epitomize the heart of Keystone Foods.

Charitable ContributionsHere are just a few examples of the contributions of Keystone Foods and our people around the world. We regularly give our funds and time to many non-profit organizations, including but not limited to –

• Ronald McDonald House Charities

• March of Dimes

• American Heart Association

• United Way

• Local Chambers of Commerce, schools, fire departments, churches, and schools

• Blood drives around the world

• Earth Day activities at each Keystone Foods facility

Raising Over $46,000 for American Cancer Society in Kentucky

• Keystone Foods/Equity Group KY employed fundraising, payroll deductions and donations to raise $46,000+ for the American Cancer Society

Supporting Literacy In Georgia

• Keystone Foods/Camilla, GA has held a charity golf tournament for 17 years to support various local worthy causes, including emergency services

• In 2011, proceeds were used to purchase 3,660 books to support reading literacy programs

• Camilla has also offered free cancer screenings for high-risk, low-income members of the community and delivered holiday gifts to foster children in Mitchell County

Community ContributionsKeystone Foods consistently demonstrates value to the communities where we work and live. We invest in these communities by strengthening our relationships and supporting opportunities for our employees to engage with their communities. For example –

Fighting Floods in Thailand

• Keystone Foods/McKey Thailand’s CSR team worked with Sodexho to deliver and set up over 400 sandbags to help with flood protection at the local Wat-Mongkol Nimit school

• The K-WIN team also donated three boats to local police for use in rescue purposes

Aiding Australian Flood Relief

• Devastating January 2011 flooding in Queensland created millions of dollars of damage to businesses and homes, including to those of Keystone Foods’ employees

• Keystone Foods contributed over $120,000 to a flood relief effort to aid these victims

Gadsden, AL Tornado Assistance

• During a hurricane in the region, tornadoes impacted the Keystone Foods/Gadsden AL facility area

• Gadsden employees held a school supply drive, contributing bags of supplies – as well as coats – to help area children return to school


Local Engagement and Participation

HISTORICAL RECORDABLE RATE

2008 2009 2010 2011

7.00

6.00

5.00

4.00

3.00

2.00

1.00

2.392.16

6.10 6.10

5.50

5.90

U.S. INDUSTRY BENCHMARK

KEYSTONE GLOBAL OSHA RECORDABLE RATE

YEAR % BELOW AVG.

2008 60.82%

2009 64.59%

2010 54.55%

2011 56.78%

2012 53.05%

2.50 2.55

2012

2.77

5.90

Continuous Health and Safety Improvement

We are committed to providing a safe and healthful work environment for every person at Keystone Foods. Our world-class injury prevention record has been achieved through management and employee dedication, development and tracking of goals and objectives, allocation of resources, and proactive communication.

The chart above demonstrates our world-class recordable rate when compared to industry averages. Keystone Foods has remained, on average, 59% below the US industry benchmark since 2008.

Recordable Rate = (Number of Recordable Injuries X 200,000 Hours) / (Number of Hours Worked)

Employees of Keystone Foods/US Proteins receiving an award for excellence in Safety & Health at the national Safety Conference for the Poultry Industry.

Keystone Foods/Australian Food Corporation holds an annual training day to demonstrate management commitment and employee involvement to occupational safety and health. In addition, each employee receives instructor-led, hands-on training, as in this session on fire extinguisher use.

Keystone Foods/MacFood Malaysia is committed to ensuring that staff is prepared and trained in the event that first aid or CPR is required to help a co-worker. Employees attended training in April 2012 and practiced important life-saving techniques on CPR mannequins.

Ammonia Safety Trainingammonia training is being conducted for employees on the emergency Response Team at Keystone Foods/MacFood Malaysia. The objective is to train employees on the safety precautions and proper emergency response procedures in case of an ammonia release.


2008 2009 2010 2011

7.00

6.00

5.00

4.00

3.00

2.00

1.00

2.392.16

6.10 6.10

5.50

5.90



YEAR % BELOW AVG.

2008 60.82%

2009 64.59%

2010 54.55%

2011 56.78%

2012 53.05%

2.50 2.55

2012

2.77

5.90


2008 2009 2010 2011

7.00

6.00

5.00

4.00

3.00

2.00

1.00

2.392.16

6.10 6.10

5.50

5.90



YEAR % BELOW AVG.

2008 60.82%

2009 64.59%

2010 54.55%

2011 56.78%

2012 53.05%

2.50 2.55

2012

2.77

5.90

Process Safety Management (PSM) in the USFive US plants use ammonia to freeze products we produce. These refrigeration systems must comply with OSHA’s PSM regulations. PSM is a preventative program designed to eliminate or mitigate the consequences of chemical releases. engineering works with and supports these plants by reviewing their programs and assisting during external audits and regulatory reviews. Keystone Foods has an excellent safety record related to these systems.


Advancing Food Safety, Food Defense and Animal Welfare

Continuously Improving Food Safetyas a leader in food safety, we realize the importance of advancing our industry and protecting the brands we serve. We share our expertise with customers, suppliers, partners and even the competition, since we consider food safety to be a non-competitive issue.

All Keystone Foods’ facilities are independently certified to standards set by the Global Food Safety Initiative.

We created the Keystone Foods Global Food Safety & Quality Council as a forum for food safety discussions, and as a place to share best practices from around the world. As a result, we’ve established our own benchmarks and standards beyond those of federal and regulatory agencies.

Understanding the Importance of Food DefenseIn today’s world, being prepared to reduce the impact of potential system attacks and catastrophic events is critical. We understand that the resiliency of food systems is crucial, so we do everything possible to reduce exposure to natural hazards, errors or failures in the food system.

Enhancing Animal WelfareWorking with industry experts, in tandem with the most current international standards, Keystone Foods has developed comprehensive and specific best management practices for employees to help ensure that acceptable animal health and welfare standards are implemented at every stage throughout our processes. Compliance with these standards is verified through first-, second-, and third-party audits.

We aspire to continually improve key performance indicators for animal welfare across the supply chain. In support of this key objective, our animal welfare policies and procedures reflect the most current science. We continuously evaluate emerging technologies to identify, evaluate and implement improvements.

52% Improvement in Out-of-Cage Wing Damage Since 2008Keystone Foods/Camilla GA enhanced their animal welfare program while substantially increasing the amount of sellable wing product. By implementing a tiered incentive program for employees and rewarding employees for achievement, a 52% reduction in out-of-cage wing damage was achieved between 2008 and 2011, along with a 29% improvement in pre-pick wing damage, resulting in over $175,000 in annualized savings.

Reducing Pig Vocalization in ThailandAt Keystone Foods/McKey Thailand, an animal transfer system made from smooth metal rollers allowed pigs to travel in pairs from the pen to the stunning room. Just before stunning room entry, each pig was moved to a single-file placement. This streamlining reduced vocalization, an indication of stress and agitation. Animals now walk calmly to restrainers prior to being individually stunned. Results: higher standards of animal welfare and a much smoother, less stressful experience for animals and employees.

Camilla Cage Check Wing Damage 2008-2011

% W

ing

Dam

age

Camilla Pre-Pick Wing Damage 2008-2011

% W

ing

Dam

age

2.0%

1.8%

1.6%

1.4%

1.2%

1.0%

0.8%

0.6%

0.4%

0.2%

0.0%

01/0

6/08

04/0

6/08

07/0

6/08

10/0

6/08

01/0

6/09

04/0

6/09

07/0

6/09

10/0

6/09

01/0

6/10

\04/

06/1

0

07/0

6/10

10/0

6/10

01/0

6/11

04/0

6/11

07/0

6/11

10/0

6/11

2.6%2.4%2.2%2.0%1.8%1.6%1.4%1.2%1.9%0.8%0.6%0.4%0.2%0.0%

01/0

6/08

04/0

6/08

07/0

6/08

10/0

6/08

01/0

6/09

04/0

6/09

07/0

6/09

10/0

6/09

01/0

6/10

04/0

6/10

07/0

6/10

10/0

6/10

01/0

6/11

04/0

6/11

07/0

6/11

10/0

6/11

Camilla Cage Check Wing Damage 2008-2011

% W

ing

Dam

age

Camilla Pre-Pick Wing Damage 2008-2011

% W

ing

Dam

age

2.0%

1.8%

1.6%

1.4%

1.2%

1.0%

0.8%

0.6%

0.4%

0.2%

0.0%

01/0

6/08

04/0

6/08

07/0

6/08

10/0

6/08

01/0

6/09

04/0

6/09

07/0

6/09

10/0

6/09

01/0

6/10

\04/

06/1

0

07/0

6/10

10/0

6/10

01/0

6/11

04/0

6/11

07/0

6/11

10/0

6/11

2.6%2.4%2.2%2.0%1.8%1.6%1.4%1.2%1.9%0.8%0.6%0.4%0.2%0.0%

01/0

6/08

04/0

6/08

07/0

6/08

10/0

6/08

01/0

6/09

04/0

6/09

07/0

6/09

10/0

6/09

01/0

6/10

04/0

6/10

07/0

6/10

10/0

6/10

01/0

6/11

04/0

6/11

07/0

6/11

10/0

6/11


Industry Recognition and Recognizing Our People

Global Recognition for Our AccomplishmentsWhen Keystone Foods receives recognition and awards – from the local to global levels – it validates our efforts and serves as a matter of pride for our employees, letting us know that we truly are making a difference in meaningful ways. Here are just a few of the awards and recognitions that we have recently received –

Recognizing All That Our People and Facilities Accomplishour people contribute mightily to the accomplishments of Keystone Foods. To build employee pride and recognize these achievements, we have created a number of ongoing awards and recognition for CSR and beyond.

2011 LEED Certification Keystone Foods/West Chester, PA, R&D Center

One of the first LEED-certified R&D centers in the food industry, meaning that this facility is at the forefront of key environmental initiatives such as reduced energy use, sustainability, recycled materials and others.

LEADERSHIP IN SUSTAINABILITY2009 McDonald’s Supply Chain Sustainability Award Keystone Foods KEYSTAR®Program (US)

2011 McDonald’s Supply Chain Sustainability Award Keystone Foods KEYSTAR®Program (APMEA)

LEADERSHIP IN ENVIRONMENTAL PRACTICES2009 American Meat Institute (AMI) Sustainability Awards Camilla, Georgia and North Baltimore, Ohio (US)

2011 LEED Certification West Chester, PA, R&D (US)

2011 AMI Environmental Awards Equity Eufaula (US)

2011 US Poultry & Egg Association’s 2011 Clean Water Awards Equity Gadsden (US)

LEADERSHIP IN INNOVATIONMcDonald’s Global Fish Board Recognition for Leadership in the Development of Tilapia and Other Fish Innovations Jefferson, WI (US)

2011 McDonald’s Supplier Award McKey Thailand

2011 Burger King Supplier Award McKey Thailand KEYSTAR CSR AWARD WINNERSThe KEYSTAR Awards recognize best practices at our facilities. In March 2012, the awards were presented at the Keystone Foods’ Global Management Meeting. President’s Award USA Proteins, Kentucky – Biogas utilization project. President’s Silver Award USA Proteins, Camilla, GA – Reduction in wing damage and animal welfare improvement. Facility Award McKey China – Outstanding reductions in energy use, water use, and solid waste combined with a strong commitment to social responsibility. Facility Silver Award MacFood Malaysia – Key reduction projects including new lighting systems, recycling improvements, composting initiatives, charitable donations and community outreach.

LEADERSHIP IN SAFETYAMI Award of Honor Equity Georgia, Equity Kentucky (US)

AMI Award of Merit Equity Eufaula, Equity Alabama (US)

AMI Award of Commendation Equity Ohio (US)

AMI Certificate of Recognition Equity North Carolina (US)

Joint Poultry Industry Safety Council Award of Honor Albany, KY, Camilla, GA (US)

Joint Poultry Industry Safety Council Award of Merit Gadsden, AL, Eufaula, AL (US)

2011 McDonald’s Supply Chain People First Award for Safety

LEADERSHIP IN WATER CONSERVATIONRecognition for Eco-efficiency by the United Nations Environment Programme (UNEP) Working Group for Cleaner Production Australia Food Corporation (AFC)

LEADERSHIP IN ENVIRONMENTAL MANAGEMENTISO 14001 Certification (2010) APMEA Manufacturing

ISO 14001 Certification (2012) US Proteins – Beef, North Baltimore, OH (US)

AWARD WINNING


For more information on the Marfrig Group, please visit: http://ir.marfrig.com.br/

For previous KeySTaR updates, please visit: www.keystonefoods.com

If you have any feedback or questions regarding this CSR update, please contact us.

By Mail: Keystone Foods LLC

Five Tower Bridge 300 Barr Harbor Drive, Suite 600

West Conshohocken, PA 19428-2998

By E-mail: [email protected]

This copyrighted material represents the proprietary work product of Keystone Foods LLC. No other use, reproduction, or distribution of this material or the approaches it contains is authorized without the prior express written consent of Keystone Foods LLC. Copyright 2012 Keystone Foods.

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