Frontier's Sustainability Report Operations

OPERATIONS

Company objectives included in Operations are: Energy, Emissions/Climate Change, Waste, Paper and Water. We report here on the Operations activities of our three manufacturing facilities and warehouses, all in Iowa.

Facilities Overview

Our headquarters in Norway, Iowa, is home to our corporate offices, our Customer Service and Sales Departments, and to Manufacturing for our Frontier and Simply Organic products. In addition, Frontier Direct, our wholesale distribution unit, operates from this location. The original building in this complex was remodeled in 2010 to provide a new entryway and to house our Co-op Café, Human Resources Department and Research and Development Lab. The remodel was awarded Silver Leed status in 2011.

Frontier CEO, Tony BedardThe sustainably managed 56-acre Norway site includes 14 acres of connected building space and parking lot, a restored wetland, a small wildlife pond, a restored barn (our green barn is a rural landmark), and several stands of trees. Our restored tallgrass prairie will be 22 years old in 2014. All of the landscape is managed organically, and the buildings and parking lot are greenscaped — that is, they are planted with hardy native trees and shrubs that need minimal care and no watering. The parking lot is designed to handle most rainwater run-off through bioswales that flow into the wetland.

Our Aura Cacia plant, located in Urbana, Iowa, is a remodeled coffee facility and sits on 4.9 acres. The facility is home to Aura Cacia Headquarters and Operations, including Bottling, Blending, Research and Development, Quality Assurance, and Order Fulfillment. Plans for expansion at this site are in place to start in the spring of 2014.

We purchased a warehouse building in 2011 in North Liberty, Iowa, to repurpose as raw material storage and a processing facility for our herbs and spices. This added space has allowed us to operate more efficiently, safely and has also allowed us to focus on our food safety initiatives.

Energy

Our energy objective is to efficiently use only directly or indirectly sourced green energy.

To offset our increasing power demands over the last five years, we have undertaken a number of energy efficiency projects – relighting, installation of a cool roof, upgrades to air conditioner units, and building envelope improvement. Despite these efforts, our energy continues to grow.

We report our total energy used in BTU’s in the table below. We convert kilowatt-hours of electricity and therms of natural gas to BTU’s in order to have a common unit of measure for the total energy we use. Total energy used was the highest we’ve seen in the last five years. While disappointing, it was not a surprise that energy use grew 19% over last year because of the significant expansion we made in operations and processes. We continued to add new packaging and processing equipment, expanded the operation on second- and third-shifts and, most notably, used our extra capacity on our steam pasteurization equipment for both our own additional needs and to do toll procesing for others in the industry as well.

Energy Use  2009  2010 2011 2012 2013
Total BTU’s (000’s) 12,437,650 13,818,942 19,318,693 20,546,604 24,154,844
% Electricity 65% 67% 61% 64% 64%
% Natural Gas 35% 33% 39% 36% 36%
BTU’s/Unit Produced 578 546 672 839 686
BTU’s/Square Foot 71,072 76,032 67,732 72,037 84,688

An initiative we have for 2014 is to create a heat-recovery system to offset some of the energy used with our second pasteurization process. We have added engineering resources to help us accomplish this task along with other energy sustainable projects in 2014 and beyond.

We continue to focus on identifying areas for energy savings. Replacing dock seals, caulking seams, eliminating unused vents and sealing air returns are on our list of preventative maintenance programs.

In terms of energy used per unit produced, the increase in tolling work we did with our pasteurization process reduced that metric though we did see an increase in BTU’s per square foot. The steam pasteurization process is a high-energy use process, but is the only viable natural alternative available to us.

Emission/Climate Change

Frontier’s climate change objective is to reduce greenhouse gas emissions and offset 100% of remaining direct and indirect emissions.

Translating our goal to the GHG Protocol (Greenhouse Gas) language, our intention is to offset Scope 1 and Scope 2 emissions.

Emissions grow in tandem with energy use, so with our increased energy demand usually comes increased emissions. Company growth (see Energy above) led to increases in overall energy consumption and, therefore, in total emissions in 2010. But, even as we had a very busy year, we were able to increase our carbon emission efficiency so that pounds of CO2 per unit of production went down.

Tons Scope 1 & 2 Greenhouse Gas Emissions 2009 2010 2011 2012 2013 % Offset Net Emissions

Direct (Primarily Natural gas)

212 229 449 518 518 100% 0
Indirect (Electricity) 1,699 1,961 2,361 2,721 3,199 100% 0
Total Emissions (CO2e) 1,911 2,190 2,811 3,239 3,717 100% 0
Pounds CO2e/Unit 0.178 0.173 0.196 0.291 0.247 -- --
Pounds CO2e/Square Foot 21.8 23.9 19.7 24.1 30.5 -- --

We continue to offset all of our direct or Scope 1 (fuels burned on site) and indirect or Scope 2 (electricity) emissions by purchasing Green-e certified, renewable energy certificates from Bonneville Environmental Foundation (BEF). Bonneville is a non-profit, established in 1998 to create innovative, value-added ways to support the development of renewable energy. Our offsets primarily support wind-generated power.

We have focused more of our efforts towards reducing our Scope 1 and 2 emissions and therefore, have put less effort into monitoring our scope 3 emissions. We continue to make changes to better those scope 3 emissions such as sourcing packaging closer to our plants and bringing some capabilities in-house – much like we did with making our own biodegradable packaging peanuts rather than having them shipped in. We will continue down this path, but our main focus will be with our Scope 1 and 2 emissions.

Waste

Our resource use and waste objective is to achieve zero waste sent to landfill and to maximize the efficient use of materials.

We have been recycling much of our waste for many years, but it was just seven years ago that we started to really measure and track what we recycled.

In 2013, we sent 119 tons to the landfill marking the 2nd year in a row where we have reduced tons sent to the landfill. In fact since 2011, we have reduced tons of waste sent to the landfill by 34%. A major reason of the reduction is our recycling efforts have really paid off. Since we started measure in 2007, only 41% of our waste was recycled. In 2013 that rose to over 71%.

We also recycled a large amount of material that we are not able to weigh and count in our totals. For example:

• pallets that we reuse in warehousing and shipping
• drums that we reuse in blending and processing
• cardboard boxes that we use in shipping

Waste 2009 2010 2011 2012 2013
Tons Land Filled 163 160 181 135 119
Tons Recycled 314 334 379 364 416
Tons Composted 26 2.1 1 26 46
Total Tons Waste 503 487 560 525 581

A big plus for us was getting back into composting our waste. After losing our ability to compost in 2011, we again have a program up and runningand were able to compost 46 tons in 2013. This was a concerted effort by many people to get this program back to where it needs to be. It not only reduces our waste stream, but also benefits local farmers in the area.

Due to LEAN initiatives we have instituted in all plants, we should continue to see an overall reduction of waste. Training of employees on waste reduction continues to be a strong component of our LEAN program and our recycling efforts.

The chart below represents our major categories of recycled waste over the last five years. The number one and two categories are pallets and cardboard. Cardboard also provides the highest level of recycling revenue for us. Excess pallets also provide income. Other items we recycle provide no income, or, in the case of glass and poly-lined bags, actually cost us to recycle.

Recycled Waste (tons) 2009 2010 2011 2012 2013 Total
Pallets 121 132 108 147 207 715
Cardboard 119 125 174 117 115 650
Compost 26 2 1 25 46 100
Glass 26 30 17 26 28 127
Paper 11 3 10 8 4 36
Clear Film 6 13 16 14 12 61
Plastics 7 2 2 1 1 13
Kraft Bags 18 16 22 29 19 104

Paper

We track paper because it is one of the most recycled and recyclable supplies we use - one that everyone can impact. Our goals are to reduce our paper use wherever we can and to use 100% recycled content in our paper. One hundred percent of our copy paper in 2014 was 100% recycled content. Our annual wholesale catalog and all the monthly sale catalogs use 100% recycled content.

Copy Paper & Printed Materials 2009 2010 2011 2012 2013
Copy Paper Used (tons) 6.8 7 8.1 8.0 2.0
Printed Material Paper Used (tons) -- -- 130 63 60

The major factor in our reduction in paper use has been in moving from a bi-annual wholesale catalog to just an annual catalog. This, along with providing the catalog and other materials in electronic formats, has reduced our paper usage from 2011 levels of 130 tons to 2013 levels of 60 tons.

Water

The majority of the water used is driven by the operation of our steam pasteurization units. Now fully operational and operating on three shifts, the amount of water used to generate the steam is significant. There really is no other natural pasteurization process in the industry other than the use of steam and vacuum pressure. Furthermore, it is the only allowable pasteurization system to be used for certified organic products. Other pasteurization alternatives, such as gamma irradiation and ethylene oxide treatment, pose other significant risks beyond just their use of natural resources.

Water 2009 2010 2011 2012 2013
Gallons Used 1,671,700 1,587,500 2,165,000 3,424,000 5,079,000
Gallons Per Employee 6,405 5,121

6,787

10,071 15,027

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Our energy objective is to efficiently use only directly or indirectly sourced green energy.

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