2012 Corporate Responsibility Report

2012 Inc

500/5000 Fastest Growing Private Companies in America Award

1500

25%

employee volunteer hours in 2012

83%

®

Stanley

MiGo ®

73%

79%

Aladdin

reduction in tonnes of CO2e per unit of production from 2011 to 2012 at PMI Joinease.

®

91%

waste diversion rate at PMI Joinease in 2012

PMI brands

33%

5+

of employees have worked at PMI for 5+ years

increased the percentage of recyclable products in their lines

2

Every member

of the PMI team plays an active role in a greater American, European, Asian and thus world community. Our environmental and social decisions matter, and at PMI, we care about giving back to our global community. This is why PMI is committed to the principles and values in our Corporate Pillars, including Social Consciousness and Environmental Stewardship. These initiatives are global, corporate and embedded into our brands, and we see them evidenced in our reduced environmental impact, innovative new products and the strong reciprocal relationships we enjoy with our global customers and manufacturing partners.

We believe it is our responsibility to support and to facilitate the development of energy reduction initiatives in all aspects of our business operations, especially those in China. In 2012, our joint-venture factory improved the energy efficiency of its operations by 25% from the previous year— while also increasing production by 37%. This reduction is significant, and we will strive to emulate it in our contract factories. PMI cares about our potential impact on climate change. From the availability of raw materials to the transportation of finished goods, each step of our value chain is evaluated for its vulnerability to climate change and proactive action taken to mitigate potential issues.

In 2012, we delivered to consumers the Sustain® cup, a breakthrough product that is affordable, reusable, and recyclable, designed to replace single-use disposable beverage containers. In 2013 we will see the expansion of this new product line. A reclamation system for our Sustain® products that will enable new cups to be made from reclaimed material is also currently in development. Our Corporate Pillars exist to remind us of the integrity that is woven into the PMI fabric and of our deep commitment to Principal over Profit. This includes our integration of sustainability into our overall business strategy and across our value chain with products that create strong emotional bonds with our consumers.

Our priority is the health and safety of the workers in our factories and our encouragement of community engagement in areas in which we operate. It is in this spirit that we drive to seek out partnerships that provide collaboration regarding social and environmental innovation in all aspects of PMI business. The following pages share our progress as we continue on this journey. I’m proud of our accomplishments and pleased to share this with you. Robert M. Harris Founder & CEO

3

SCOPE

PMI’s 2012 CSR Report examines the environmental and social impacts associated with the manufacturing of PMI products and PMI global business operations, including the offices and employee travel and commuting. The 2012 scope includes the environmental and social data from 5 of PMI’s 14 manufacturing partners, including Factory C that was added this year. PMI tracks and monitors its impact against 15 Key Performance Indicators, the areas PMI believes are most material to business operations. In 2012, PMI re-calculated the greenhouse gas emissions generated from electricity use at its Chinese factories, starting from 2009. Updated emission factors from the World Resources Institute* were used in the calculations to increase the footprint accuracy. Global Warming Potentials from the IPCC 4th Assessment were also used in the greenhouse gas analysis. PMI’s contract factories base environmental impact on production levels. The percentage of a contract factory’s production that is PMI product is the percentage of resource use PMI claims. PMI takes 100% responsibility for the environmental impact of its joint-venture factory, PMI Joinease. * Ranping Song, Jingjing Zhu, Ping Hou, Hongtao Wang. 2013. “Getting Every Ton of Emissions Right: An Analysis of Emission Factors for Purchased Electricity in China.” Working Paper. World Resources Institute, Beijing.

Key Performance Indicators INNOVATION

CULTURE/PEOPLE

SOCIAL RESPONSIBILITY ENVIRONMENTAL STEWARDSHIP

Percent of fully recyclable products Percent of products made from recycled material Percent of products designed for disassembly Diversity - North American Offices Corporate Philanthropy Volunteer Hours Code of Conduct (COC) Compliance Worker Retention - Factories Injuries - Factories Energy Use Greenhouse Gas (GHG) Emissions Water Use Water Recycling Waste Waste Recycling

GRI Index

Contents

PMI’s 2012 CSR follows the Global Reporting Initiative’s 3.1 reporting tool, adhering to the operational control GHG and resource accounting method, with a reporting period of January 1, 2012 to December 31, 2012.

Letter from the CEO.....................................5

When evaluating this report against the GRI guidelines, PMI self-declares an Application Level B. For PMI’s 2012 GRI Index and 2012 Corporate Responsibility Report please visit: visit: pmi-worldwide.com.

Environmental Stewardship..............8

For more information on the Global Reporting Initiative Framework and the GRI 3.1 Guidelines, please visit: globalreporting.org. For questions about PMI’s 2012 CSR, please contact Valerie Bone, Director of Corporate Responsibility, at: [email protected]

PMI People & Offices.....................................6 Social Responsibility..........................................7

Environmental KPI’s............................................9 Product Stewardship.................................. 11 Community Engagement.................... 13 Awards/Looking Forward.................. 15

4

Pacific Market International, LLC (PMI) Business Strategy Innovation

Culture/People

As a brand-focused company, PMI is driven by product innovation that excites its customers and consumers.

Shared core values and collaboration among PMI’s team of talented people contribute to the unique organizational culture and create accelerated personal and business growth and success.

Commitment to Excellence PMI is committed to world-class supply chain standards and operating excellence in all business aspects including sales, product development and marketing.

PMI’s Strategic Pillars Social Consciousness

Environmental Stewardship

PMI’s ethical behavior and responsible business conduct ensures employees are treated with dignity and respect. PMI provides a safe and healthy work environment and gives back to the communities in which it operates.

An industry leader in using environmentally responsible manufacturing methods, materials and human interactions, PMI strives to sustain natural resources, eliminate waste, and reduce its carbon footprint.

PMI believes every employee can make a difference and drive profitability by setting, measuring and accomplishing goals according to these Strategic Pillars.

5

Amsterdam

Bentonville

Manila

Shanghai

Seattle

2012

PMI People & Offices

23308

22335

Electricity consumption (kWh) 519,327

71162

46302

GHG emissions (tonnes of CO2e) 193.94

PMI’s continued business success is the result of the company’s global team and the PMI Strategic Pillars (see page 5 of this report) that influence daily business decisions.

56.08

22.55

9.14

16.27

34,048

–

51,674

50,915

–

297

–

–

103

–

Water Use (liters)

PMI’s ethics are deeply rooted in human values. PMI factories are safe and healthy places to work, delivering positive impact to the communities in which they operate. Although PMI tracks KPIs (Key Performance Indicators) for its offices (as shown on this page), the company focuses on supply chain KPI performance with the primary goal of carbon footprint reduction and waste reduction (shown later in this report).

2,289,995

Waste to Landfill (kg) 4,819

–

Waste diverted from landfill 11,087

–

CULTURE/PEOPLE

DIVERSITY IN NORTH AMERICA % minority representation

% female

% male

% female managers

% male managers

Seattle

Shanghai

Manila

London

Amsterdam

Bentonville

Total

Employees per office

2009

17%

52%

48%

50%

50%

2009

88

50

14

12

0

0

164

2010

15%

54%

46%

58%

42%

2010

86

61

18

1

0

3

169

2011

15%

51%

49%

56%

44%

2011

84

54

18

0

3

3

162

2012

14%

45%

55%

54%

46%

2012

90

59

23

0

3

3

178

6

Social Responsibility

Summer School for Employees’ Children At one of PMI’s partner factories, most employees are migrant workers. For much of the year, these employees’ children remain with grandparents, back in their hometown. Summer vacation is time for parents and children to be together, and many employees’ children come to stay at the factory community. PMI’s partner factory is invested in providing its employees’ children with a safe and meaningful summer vacation, especially during the day while their parents work at the factory.

Business partnerships that champion great factories are why PMI factories have some of the highest employee retention rates in China. Since 1998, PMI has worked with its factory partners on social and environmental improvements that deliver increased worker health and retention benefits. PMI also encourages and supports its factories in creating social programs in both the company facilities and the surrounding communities. As PMI’s factory base continues to increase globally, PMI will continue to expand its Corporate Social Responsibility initiatives in collaboration with industry partners.

RETENTION RATES

2012

PMI JO 95.5%

Factory A Factory B Factory C 94.8%

92.5%

93.6%

SUB 1 95.0%

PMI’s focus on Environmental Health and Safety (EHS) positively affects the company’s entire supply chain. When PMI employees have safe and healthy work environments, they are able to make high quality products that are safe and enjoyable for consumers to use. This, in turn, helps PMI consumers maintain a healthy lifestyle.

INJURY RATES

2012

PMI JO 0.01%

Factory A Factory B Factory C 1.8%

0.05%

1.5%

A summer school was started in 2010 where the factory employees’ children, ages 6 to 12, can attend for free. The summer school takes in about 90 children and benefits over 100 employees, covering 8 departments. Five or more university students, all majoring in education, are invited to take care of and teach the children. The summer school also prepares wonderful stationery, reference books and gifts for all the children. The school program includes a nutritious lunch and various educational courses, thus providing these children with meaningful summer days while their parents work. With their children attending the summer school, employees can work at ease knowing that their children are well taken care of and close by. This free benefit to employees at PMI’s partner factory has created a stronger sense of community and has increased worker retention.

SUB 1 0.1% 7

Environmental Stewardship PMI’s Corporate Social Responsibility Program, established 5.0

Tonnes of CO2e

in 1998, has, since 2009, incorporated a comprehensive KPI based system to track the environmental performance of partner factories producing PMI product. Additionally, increasing stakeholder interest in climate change issues led PMI to complete a life-cycle analysis of one of its products, and to invest in carbon-accounting software to help track and report the company’s corporate greenhouse gas emissions to the Carbon Disclosure Project.

PMI Joinease Carbon Intensity 4.0 3.0 2.0 1.0 0

PMI is committed to working with socially responsible and environmentally conscious factories. All of PMI’s factories are ISO 9001 certified for quality system excellence and many are ISO 14001 certified for environmental management systems. ISO 14001compliance provides a healthy work environment for factory employees, and it facilitates the measurement and improvement of a factory’s environmental performance.

2009

2010

2011

2012

PMI Joinease’s operational greenhouse gas emissions intensity in tonnes of C02e per 10,000 units of production between 2009 and 2012.

PMI Joinease Energy Reduction

Thermal blanket wrap on an injection mold machine.

New energy efficient water-cooling tower

In 2012, PMI set a 10% emissions intensity reduction goal for its PMI Joinease factory. PMI Joinease greatly exceeded this goal by investing in a number of energy reduction initiatives, including lighting retrofits, thermal blanket wraps for 100 of the factory’s 162 injection mold machines, and a new energy efficient water cooling tower. These initiatives allowed PMI Joinease to reduce its greenhouse gas emissions by 25% per unit from 2011. This efficiency was achieved while the factory increased production by 37% during the same time period.

GHG Emissions

Scope 1 & 2 Scope 3

2011

2012

7889 2622

7905 5724

% change from 2011 to 2012 0.20% 118.32%

PMI’s 2011 and 2012 Scope 1, 2 and 3 greenhouse gas emissions in tonnes of CO2e. Scope 3 emissions increased during this time period primarily due to the addition of Factory C, a large contract supplier, to the company’s scope of measurement. 8

Environmental Factory Key Performance Indicators PMI engages its suppliers on environmental performance through strategic Key Performance Indicators (KPIs) covering issues including energy and water consumption, greenhouse gas emissions and waste diversion. PMI bases its impact on the company’s production levels at its contract Energy Intensity: MMBTU / 10,000 units

PMI JO

Factory A

Factory B

Factory C

SUB 1

2011

6,417.27

9,563.65

8,731.63

-

349.74

2012

4,766.57

17,690.69

5,061.31

12,533.61

473.77

% change 2011-2012

-25.7%

85.0%

-42.0%

-

35.5%

PMI JO

Factory A

Factory B

Factory C

SUB 1

2011

4.21

7.34

6.74

-

0.24

2012

3.13

11.59

3.00

8.49

0.30

-25.5%

57.9%

-55.5%

-

26.0%

PMI JO

Factory A

Factory B

Factory C

SUB 1

2011

28,723.35

139,587.86

109,607.45

-

6,749.11

2012

22,871.35

180,581.55

70,729.58

229,334.84

5,883.45

% change 2011-2012

-20.4%

29.4%

-35.5%

-

-12.8%

PMI JO

Factory A

Factory B

Factory C

SUB 1

GHG Intensity: Tonnes of CO2e per 10,000 units

% change 2011-2012

Water Intensity: Liters per 10,000 units

Water Recycling Intensity: Liters per 10,000 unit 2011

3,803.59

63,337.83

12,039.58

-

-

2012

4,432.53

-

5,543.97

-

-

% change 2011-2012

16.5%

-100.0%

-54.0%

-

-

factories. The percentage of a contract supplier’s production that is PMI product is the percentage of resource use PMI claims. PMI takes 100% responsibility for the environmental impact at its joint-venture factory, PMI Joinease. Factories are compared against themselves on a per 10,000 units of production basis, which allows performance to be tracked independent of growth. PMI pilots environmental initiatives at PMI Joinease and then replicates successful efforts at contract factories to achieve similar environmental performance improvements.

Hazardous Waste Intensity: KG per 10,000 units

PMI JO

Factory A

Factory B

Factory C

SUB 1

2011

1.56

5.22

9.77

-

3.43

2012

1.41

51.00

4.57

77.11

3.17

-9.6%

877.2%

-53.2%

-

-7.6%

PMI JO

Factory A

Factory B

Factory C

SUB 1

2011

28.22

544.59

1,956.24

-

591.32

2012

18.01

1,153.17

915.51

16.98

771.98

-36.2%

111.7%

-53.2%

-

30.6%

PMI JO

Factory A

Factory B

Factory C

SUB 1

282.83

2,152.56

1,013.22

-

591.32

% change 2011-2012

Non-Hazardous Waste Intensity: KG per 10,000 units

% change 2011-2012

Waste Recycling: KG per 10,000 units 2011 2012 % change 2011-2012

201.76

1,191.16

475.23

353.31

771.98

-28.7%

-44.7%

-53.1%

-

30.6%

*Calculations are based off of the US EPA’s Greenhouse Gas Equivalencies Calculator. http://www.epa.gov/cleanenergy/energy-resources/calculator.html

9

PMI Joinese Waste Reduction PMI Joinease, PMI’s joint venture factory in southern China, has worked to reduce

waste generation in all aspects of its operations. Several years ago, PMI Joinease started looking at its waste stream as an opportunity for improvement. The first step was to increase the material efficiency of production, thereby reducing the amount of raw materials needed and scrap material produced. As a second step, PMI Joinease invested in an on-site waste sorting facility where employees sort scrap materials to be recycled, sold and landfilled to increase the diversion rate. In 2012, PMI Joinease achieved a 91% waste diversion rate at its facility. The factory’s focus on material efficiency and waste minimization has decreased raw material and disposal costs and created a new revenue stream from the sale of recyclable waste. Waste diversion, which provides both top and bottom-line results, continues to be a priority for PMI Joinease.

Learn more about the environmental initiatives at PMI Joinease, and see the video on our corporate social responsibility page: www.pmi-worldwide. com/who-we-are/social-responsibility/default.aspx

91%

waste diversion

Above: The recycling and material sorting area at PMI Joinese. 10

Product Stewardship Environmental Stewardship lives at the heart of PMI’s corporate strategy. As PMI continues to minimize its environmental impact (including its contribution to climate change), new steps will be taken in how PMI collaborates with employees, suppliers, and customers. In order to manage PMI’s commitment to environmental issues with the same rigor given to PMI social programs, continued focus will remain on innovation to bring scalable product solutions to market while ensuring PMI pursues environmental improvement in its factories.

In 2012, the percentage of recyclable PMI brand products greatly increased. PMI also began using Life Cycle Assessment (LCA) software in 2012 to evaluate the environmental impact across its products’ lifecycles. Going forward, PMI will conduct LCAs of additional products and utilize the results in its product design process. These in-depth analyses will allow each of the PMI brands to further incorporate sustainability into its brand strategies. The table on this page shows each brand’s performance across three product KPIs.

SUSTAINABLE PRODUCTS Built for Life

Delightfully Different

Assured Quality, Reassured Choice

2011

2012

2011

2012

2011

2012

Percent of our in-line product collection that is fully recyclable products

21%

83%

15%

73%

n/a

79%

Percent of our in-line product collection that is made from recycled material

15%

13%

16%

20%

n/a

n/a

9%

4%

0%

4%

n/a

0%

Percent of our in-line product collection that is designed for dissasembly

11

The Sustain® Story Journey of a Breakthrough Product Guided by the Environmental Stewardship embedded in PMI’s corporate strategy, an internal PMI task force was formed to create a breakthrough product that would enable consumers to reduce their environmental footprint. Starting as a system concept, the cup that we know today as Sustain® was delivered in 2012.

The graph below shows the environmental impact of a Sustain® 16 oz. cup relative to a single use 16 oz. paper cup. Carbon footprint, human health, ecosystem quality, resources and water use are all measured across each product’s lifecycle, from cradle-to-grave. Results show that the more times a Sustain® cup is used, the impact, relative to a paper cup, decreases. The environmental break-even point occurs at around 10 uses of the Sustain® 16 oz. cup, enabling consumers to easily and significantly reduce their impact.

Impact of a Sustain® 16 oz. cup relative to a single use 16 oz. paper cup

PMI performed an internal Life Cycle Assessment (LCA) of the Sustain® 16 oz. cup with the support of Quantis software. The LCA found that, after 30 uses, the Sustain® cup has a 50% less environmental impact than 30 equivalent single-use paper cups.

500% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Carbon Footprint 450% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Human Health 400% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Ecosystem Quality 350% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Resources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 300% Water Use . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .......................... 250% 200% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 150% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Break even point 100% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0%

0

5

10

15

20

25

30

Number of times a Sustain® cup is used 12

Community Engagement PMI’s impact goes beyond its offices and suppliers and into the communities in which the company operates. PMI gives back to these communities where its employees work and play by donating 1% of pre-tax profits to organizations that support causes relating to children, education and the environment. In addition to company-led donations, PMI sponsors programs that empower employees by involving them with those cause-supporting organizations about which they are passionate. Employees are given one paid volunteer day per year, and PMI donates quarterly to an organization that is nominated and voted on by PMI employees through the company’s Grassroots Giving Program.

VOLUNTEER HOURS: Seattle = 771 Bentonville = 32 Shanghai = 485 Manila = 164 Amsterdam = 48

NUMBER OF ORGANIZATIONS PMI MADE FINANCIAL DONATIONS TO:

Total =

Total =

1500 HOURS

NUMBER OF UNITS OF PRODUCTS DONATED: Seattle = 3,800 Shanghai = 663

PMI Global Philanthropy focuses on children, education and the environment.

International Red Cross Disaster Relief Fund World Affairs Council Conservation Alliance Big City Mountaineers Make a Wish Foundation Walton Foundation WA Green Schools

54

ORGANIZATIONS

Total =

4,463 PRODUCTS AMCHAM Shanghai

Organizations PMI supported in 2012: Conservation International

Seattle = 36 Bentonville = 3 Shanghai = 10 Manila =4 Amsterdam = 1

Seattle University - Albers School of Business & Economics: China Study Program ACRS (Asian Counseling Referral Service) Pike Place Market Foundation Big Brothers Big Sisters Northwest Harvest Treehouse – Back to School Childcare Resources

Hands on Hands Shanghai Wanhangdu Road Primary School Shanghai Chongming Forest Park - China Philippine Red Cross GMA Kapuso Foundation - Philippines Haribon Foundation for Conservation of Natural Resources - Philippines RSCC – Reception & Study Center for Children – Philippines 13

Community Engagement Seattle

Shanghai

PMI Joinese

Manila

Bentonville

Amsterdam PMI’s Amsterdam office donated 2 clean-water wells that were built in the Ugandan communities of Kahanami and Kitonezi. This was a result of PMI’s partnership with the “Trinkwasser” NGO.

PMI Seattle team volunteers at Conservation Alliance Backyard Collective event

PMI Shanghai Team donates MiGo brand products and volunteer time to educate local school children regarding the environment.

PMI Manila Team supports the Haribon Foundation

PMI Joinease contributed to the rebuilding of an essential bridge in their town and the expansion of a local school. PMI Bentonville collects food for the Northwest Arkansas Food Bank.

14

“ What you get by achieving your goals is not as important as what you become by achieving your goals.” 

Looking Forward

—Henry David Thoreau

2012 Awards 2012 Seattle Met Magazine “Best Places to Work” Award

2012 Communitas Award for Social Responsibility and Supply Chain Partnership

2012 Inc 500/5000 Fastest Growing Private Companies in America Award

PMI believes its products transform the way people experience food and beverage. PMI also believes it can drive global change based on how PMI products are created. As both a brand (Aladdin®, Stanley,® MiGo®) and a supplier, PMI faces some tough challenges in championing both Environmental Stewardship and Social Responsibility in each area of its business practices. However, PMI will face these challenges undaunted, as it has for the past fifteen years, in the company’s ongoing journey to seek innovative improvement in all aspects of business. Collaboration with other brands and customers is essential to successfully increase PMI’s ability to improve its factory sustainability and product

footprint. Customer partners provide leverage and incentive while peer brand collaboration provides leverage and scope increase. The voice of PMI’s customers and consumers is essential to the growth of the company’s environmental and social initiatives. PMI is proud to be a member of both the IHA (International Housewares Association) and the OIA (Outdoor Industry Association), and is proud to collaborate within these industry organizations on social and environmental improvement. In 2013, PMI will continue to reduce its environmental footprint while championing social compliance. 15

The best way to predict the future is to create it.

—Peter Drucker

PMI Seattle - Headquarters

PMI Amsterdam

www.pmi-worldwide.com

2401 Elliott Ave., 4th Floor Seattle, WA 98121 Tel: 206.441.1400 Fax: 206.441.2823

Herengracht 124-128 1015 BT Amsterdam The Netherlands Tel: +31.20794.4840

www.stanley-pmi.com

E-mail: [email protected]

PMI Bentonville 206 SW 8th St., Suite 116 Bentonville, AR 72712 Tel: 479.715.0311

PMI Shanghai Delightfully Different

Built for Life

Shanghai Int’l Shipping Building, Rm. 11B 720 Pu Dong Ave. Pu Dong New District, Shanghai, China 518111 Tel: 86.21.50366.350

PMI Manila 7F Pearlbank Centre Building 146 Valero St., Salcedo Village Makati City 1227 Philippines Tel: 800.251.4535 Fax: 615.370.0546

www.aladdin-pmi.com www.migo.com For questions regarding this report, please contact Valerie Bone at: [email protected] To read our Code of Conduct, visit our website at: www.pmi-worldwide.com