Animal Welfare Update This document provides an overview of Costco s global status on animal welfare.

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1 Animal Welfare Update 2017 This document provides an overview of Costco s global status on animal welfare.

2 Mission Statement on Animal Welfare Costco Wholesale is committed to the welfare, and proper handling, of all animals that are used in the production of food products sold at Costco. This is a long-standing commitment, and we pledge our diligence in working with industry and academia in the pursuit of new and improved technologies and methods to further enhance animal well-being. This is not only the right thing to do it is an important moral and ethical obligation we owe to our members, suppliers, and most of all to the animals we depend on for products that are sold at Costco. At Costco, we subscribe to and support the Five Freedoms of Animal Well Being. Originally articulated by a committee of the British government in the 1960s (the Brambell Committee), it has been more recently espoused by Dr. Temple Grandin, a recognized expert on animal welfare. The five freedoms are: Freedom of fear Freedom from discomfort (right environment, shelter and a place to rest) Freedom from thirst and hunger Freedom to exhibit natural behavior Freedom of pain and suffering

3 Costco s Global Animal Welfare Program Animal welfare is part of Costco s culture and responsibility, which call on us to serve as stewards of the animals, land, and environment entrusted to us. Costco is committed to a global approach to Animal Welfare and is working towards a uniform program in all countries we operate in while respecting that each country may have their own regulatory and social requirements in place. Examples of Costco Global Animal Welfare Recognized Standards

4 Highlights Eggs In line with our goal to continue to improve animal welfare standards and transparency, Costco introduced the Costco Hen House Audit in the US. This audit tool promotes a sense of responsibility & accountability and provides a means for barns to be evaluated annually. Suppliers are required to audit each house twice a year using the Costco Hen House platform. The results are automatically transmitted to Costco upon completion. The app based system gives pictorial examples for how to score each question when needed. The app also requires the supplier to submit photo documentation for each question along with the answer when applicable. The goal for 2018 is to begin moving the platform out in other global markets. Per our commitment, Costco US continued to increase its organic and cage free egg supply to 84% as of October In calendar 2017 we have exceeded over two billion cage free eggs sold. Costco continues to make progress globally.

5 Highlights Supply Chain Questionnaires As a result of the gap analysis done by the Animal Welfare Task Force last year a series of in-depth Supply Chain Animal Welfare Questionnaires are in the process of being finalized. These questionnaires will be used to ascertain Costco s Global Supplier Animal Welfare Program Status. These questionnaires will go out in early 2018 and will be directed to primary suppliers. Secondary ingredient and product suppliers will begin in The results of these questionnaires will be used to develop true global standards that will be uniformly applied for beef, pork, poultry, dairy, and eggs. These standards will include implementation targets for all countries and measurement tools for progress against the standards. Costco respects that each country may have their own regulatory and social requirements in place and this will be taken into account. Down and Feather Traceability Costco has made a commitment to responsible down sourcing. Costco now requires a certification to be present with all Costco production of down and feather products. Costco accepts certifications from IDFL (International Down and Feather Lab), Downpass, or RDS (Responsible Down Standard). Compliance to these standards ensures ethical sourcing of down and feathers through the verification of supplier traceability systems, general animal welfare, risk assessment and other important best practices. No Animal Testing Costco is committed to begin sourcing items that are not tested on animals. This has been true of Kirkland Signature items but we will move this process to sourcing of branded items as well.

6 Animal Welfare Task Force The Costco Animal Welfare Task Force is made up of members from fresh meat buying, corporate and regional buying, animal welfare auditing, and food safety. Members are from Canada and the United States. This past year the Animal Welfare Task Force worked on the following areas: - Worked to develop Supply Chain Animal Welfare Questionnaires. - Continuing to benchmark with other industry groups to review best practices. - Costco is participating on the Coalition for Responsible Antibiotic Use being led by the Center for Food Integrity. - Review of each animal welfare incident involving any Costco supplier. - Any incident involving a Costco Supplier is reviewed by the Animal Welfare Task Force. Audits of these facilities are immediately conducted and all supplier corrective actions are reviewed by the Task Force and actions are taken accordingly.

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