Sharing Goodness for - 2019 SUSTAINABILITY REPORT - The Hershey Company

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Sharing Goodness for - 2019 SUSTAINABILITY REPORT - The Hershey Company
Sharing Goodness for

2019 SUSTAINABILITY REPORT
Sharing Goodness for - 2019 SUSTAINABILITY REPORT - The Hershey Company
THE BIG PICTURE         GOVERNANCE AND APPROACH    BUSINESS   PLANET   PEOPLE   CHILDREN AND YOUTH   COMMUNITIES            OUR PERFORMANCE

MAKING MOMENTS OF GOODNESS
Welcome to our 2019 Sustainability Report.
This year we celebrated 125 years of making
more moments of goodness, the purpose that
inspires Hershey to provide quality brands
that people love.
Behind these moments of goodness is a deep
sense of pride in our long-standing values
of integrity, excellence, togetherness and
making a difference. These values underpin
our belief that operating responsibly, ethically
and sustainably is imperative to fulfilling
our purpose. As we care for our people
and progress on our commitments to our
communities where we source, manufacture
and distribute our products, we’re ensuring
consumers can feel even better about the
special moments made with our brands.
As we reflect on the past 125 years and
plan for the next, The Hershey Company is
proudly driven by our founder’s legacy and
by our company’s purpose. We believe this
combination is the recipe for success. There
are many more moments to be made!

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Sharing Goodness for - 2019 SUSTAINABILITY REPORT - The Hershey Company
THE BIG PICTURE           GOVERNANCE AND APPROACH             BUSINESS          PLANET      PEOPLE          CHILDREN AND YOUTH    COMMUNITIES            OUR PERFORMANCE

WHAT’S INSIDE?

04 THE BIG PICTURE                           09	GOVERNANCE                                 13   BUSINESS                         36 PLANET
05	A Message From Michele Buck                  & APPROACH                                 15	No Compromise on Food Safety      37	Managing Our Impact on
07   Our Sustainability Strategy             10   Being a Responsible & Ethical Business    17	Marketing Responsibly                 Climate Change
08 Our 2019 Goodness Highlights              11   Material Issues                           19	Responsible Sourcing              39	Protecting Our Water Supply
                                             12   Staying Secure, Transparent & Resilient   20	Embedding Human Rights            40	Working Towards Zero Waste to Landfill
                                                                                            25	Cocoa For Good                    41	Exploring Sustainable Packaging
                                                                                            26	Working With Cocoa Communities    42	Planting Tomorrow’s Forests
                                                                                                to End Child Labor

43 PEOPLE                                    50 CHILDREN & YOUTH                            56	COMMUNITIES                       61   OUR PERFORMANCE
44   The Hershey Employee Experience         51   The Heartwarming Project                  57	Values With Impact: How We Make
47	Better Together—Diversity & Inclusion    53   Nourishing Young Minds                        a Difference
    at Hershey                               55	Our Shared Goodness Legacy—                58   A Spirit of Volunteerism
49   Prioritizing the Safety of Our People       Milton Hershey School

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Sharing Goodness for - 2019 SUSTAINABILITY REPORT - The Hershey Company
THE BIG PICTURE          GOVERNANCE AND APPROACH   BUSINESS   PLANET   PEOPLE   CHILDREN AND YOUTH   COMMUNITIES            OUR PERFORMANCE

the big picture
Built By Purpose
From the moment Milton Hershey
founded our company and sought to
make chocolate—previously a luxury
good—accessible to the masses, we
worked to make more moments of
goodness in people’s lives.
Over a century later, we’re invited into
people’s moments of goodness every
day. We’re there for holiday gatherings
and campfires; for break-ups and
make-ups; for road trips and school
trips. It’s a pretty special place to be.
Operating sustainably is what wraps
each moment in something we can all
feel good about.

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Sharing Goodness for - 2019 SUSTAINABILITY REPORT - The Hershey Company
THE BIG PICTURE          GOVERNANCE AND APPROACH                  BUSINESS         PLANET        PEOPLE          CHILDREN AND YOUTH            COMMUNITIES             OUR PERFORMANCE

A MESSAGE FROM MICHELE BUCK
                                                                                                 making a positive impact on society’s most     impact human rights across our business.
                                                                                                 pressing issues. This Sustainability Report
                                                                                                                                              The Hershey Company has more than
                                                                                                 seeks to address those questions.
                                                                                                                                              125 years of experience managing
                                                                                                                                                         through tough, fast-moving and
                                                                                                “It is no longer enough to consider what                 unprecedented moments—
                                                                                                 our company is able to do for the world. two World Wars, economic
                                                                                                                                                         depressions and recessions,
                                                                                                 Now we must answer: what does the                       and other momentous events.
                                                                                                 world need from Hershey?”                               Each time, we planned. We took
                                                                                                                                                         action. We learned and adapted.
                                                                                                 Our products rely on a global supply chain   And we kept our focus on making the best
                                                                                                 and agricultural ingredients. Climate        decisions for our employees, our partners,
                                                                                                 change poses a significant, increasing       our stockholders, our communities and the
                                                                                                 pressure on these resources and the          consumers we serve.
                                                                                                 communities where we source them. This
                                                                                                                                              Today, we draw on that same spirit to
                                                                                                 is why we committed to the Science Based
                                                                                                                                              keep our company resilient through new
                                                                                                 Targets Initiative in January 2019 and are
                                                                                                                                              challenges that are disrupting economies
                                                                                                 well on track for the January 2021 deadline
                                                                                                                                              and societies. I remain confident in the
                                                                                                 to announce our target.
                                                                                                                                              strength and resiliency of our business
                                                                                                 We continue to make good progress within     over the long-term, and in our remarkable
                                                                                                 our Cocoa For Good strategy, but we          leaders and employees who are executing
                                                                                                 know there is a long way to go to resolve    our strategies, reacting to current changes
2019 was a special year for The Hershey           focus on what is most important—the health     some of the most pressing issues facing      and capitalizing on the opportunities this
Company. As we celebrated our 125th               and safety of our colleagues, family and       cocoa-growing communities, including         change presents.
anniversary, we had the opportunity to            friends and our commitment to continue         child labor. In 2019, we began publishing
                                                                                                                                              We love making the brands that become
explore our rich heritage and the legacy of       making those moments of goodness               on our website the findings from our
                                                                                                                                              part of people’s moments big and small.
our founder, who instilled in our business        in people’s lives even when physical           Child Labor Monitoring and Remediation
                                                                                                                                              Going forward, it’s this purpose that inspires
core values that connect us to one another        connection is limited.                         Systems (CLMRS) work. We will continue
                                                                                                                                              us to win so that we can continue to make
and to the world. The energy within Hershey                                                      this practice as we expand CLMRS to cover
                                                  Our company is wrapped in a deep legacy                                                     more moments of goodness.
was tangible as you experienced the                                                              100 percent of our cocoa supply chain in
                                                  of caring for our people and communities.      Ghana and Côte d’Ivoire in the coming years.
connectedness, passion, positivity and the
                                                  But it is no longer enough to consider what
deep pride and appreciation we have for                                                          Last year, we published our first
                                                  our company is able to do for the world.
each other and this special company.                                                             comprehensive human rights policy that
                                                  Now we must answer: what does the world
As I write this note, the world is experiencing   need from Hershey?                             outlines our commitment to respect human
                                                                                                 rights throughout our value chain. We’ve
an unparalleled and rapidly evolving global
                                                  We continuously meet with a variety            also begun deploying a new human rights
                                                                                                                                                Michele Buck
pandemic. In this unprecedented time, our                                                                                                       Chairman, President and CEO,
                                                  of stakeholders—consumers, retailers,          training program to help ensure everyone
people and our business remain grounded                                                                                                         The Hershey Company
                                                  investors, governments and NGOs—all            across our organization understands our
in our purpose to make more moments of
                                                  asking how we, and other companies, are        values and how they personally can
goodness. This grounding has allowed us to

5                                                                                                                                                 THE HERSHEY COMPANY | 2019 SUSTAINABILITY REPORT
Sharing Goodness for - 2019 SUSTAINABILITY REPORT - The Hershey Company
THE BIG PICTURE         GOVERNANCE AND APPROACH                 BUSINESS             PLANET   PEOPLE         CHILDREN AND YOUTH           COMMUNITIES            OUR PERFORMANCE

SHAPING SHARED GOODNESS
OUR CHALLENGES
As we continue to grow and broaden our brand portfolio, our business faces a
variety of challenges. We use our expertise, along with that of external partners,
to address these challenges so that we can continue to delight consumers and
communities around the world.

MEETING CHANGING                                COMBATING CLIMATE CHANGE                      ADDRESSING POVERTY                          STAKEHOLDER EXPECTATIONS
CONSUMER NEEDS                                  Our products rely on a global supply chain    AND SUPPORTING FARMER                       A wide variety of stakeholders, including
Consumers’ preferences are changing—            and agricultural ingredients. Climate         LIVELIHOODS                                 consumers, retailers, investors,
from seeking healthier options that satisfy     change poses a significant and increasing     Our complex global supply chain spans       governments, NGOs, and even our
different snacking occasions, to wanting        pressure on agricultural commodities and      communities with high levels of poverty     employees are increasingly expecting
greater transparency across the supply          the communities where we live, work and       and inequality. The raw ingredients         companies to use their operations as a
chain and products made with responsibly-       source our ingredients.                       we source come from different               force for good by making an impact on
sourced ingredients.                                                                          countries with unique laws, environmental   some of society’s most pressing issues.
                                                                                              conditions and concerns, labor standards
                                                                                              and pricing models.

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Sharing Goodness for - 2019 SUSTAINABILITY REPORT - The Hershey Company
THE BIG PICTURE                       GOVERNANCE AND APPROACH             BUSINESS                    PLANET   PEOPLE           CHILDREN AND YOUTH               COMMUNITIES              OUR PERFORMANCE

OUR SUSTAINABILITY STRATEGY
                                                                                                                                                We’re Focused On                      SDGs Supported
                                                       kable Peop
                                               r Remar            le to
                          a       ti n
                                       g   O u
                                                                          Sh
                                                                               a re                            Shared                           • Sustainable sourcing
                                                                                                                                                • Respecting human rights
                      tiv
                Ac                                 Supporting
                                                                                       Go
                                                                                            o                  BUSINESS                         • Choice and transparency

                                                  Bright Futures

                                                                                            dn
                                                                                                es
                                                                                                               Shared

                                                                                                      s
                                                                                                                                                • Reductions in greenhouse
                                                                                                                                                  gases (GHGs), total waste,

                                                                                                               Planet
                                                                                                                                                  packaging waste and
                                                                                                                                                  water use
                                                                                                                                                • Addressing climate change
                             ct

                                                                                                                                                  across our value chain
                   ental Impa

                                                                                      Driving owth
               Reducing Our

                                                                                       With Purpose
                                               Our Shared                                    Gr
                                                                                                               Our Remarkable                   • Championing diversity
                                                                                                                                                  and inclusion

                                           GOODNESS PROMISE
             ironm

                                                                                                               People                           • Developing great talent
         Env

                                                                                                                                                • Building careers

                                                 I
                                                                                                               Children                         • Helping children succeed
                                                                                                                                                • Improving access to
                                              Acr mproving Lives
                                                 oss O
                                                      ur Communit
                                                                 ies                                           and Youth                          nutrition for children
                                                                                                                                                • Building meaningful
                                                                                                                                                  connections

                                                                                                               Shared
                                                                                                                                                • Investing in the places
                                                                                                                                                  where we live and work

                                                                                                               COMMUNITIES                      • Employee engagement
                                                                                                                                                  and volunteerism

                                                                                                               To find out more about Hershey’s work as it relates to the SDGs, visit our SDG Index

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Sharing Goodness for - 2019 SUSTAINABILITY REPORT - The Hershey Company
THE BIG PICTURE             GOVERNANCE AND APPROACH                BUSINESS               PLANET         PEOPLE          CHILDREN AND YOUTH              COMMUNITIES                 OUR PERFORMANCE

OUR 2019 GOODNESS HIGHLIGHTS

             $610 80+                                                                                                                                       Where We
                                                                                                                                                            are Headed
             milli n
                                                                    brands

       $7.98         15           in dividends paid to
                                  shareholders                      manufacturing                                            $8,347,912                                     Finalizing science-based
                                                                                                                                                                            targets to reduce GHG
                                                                    facilities globally                                      of community                                   emissions
       billion in sales
                                                                                                                             product donations

                                                                                           775,386
                                                                                                                                                                            Expanding certification

    68,988
                                                                                                                                                                            for our key ingredients

                                                                                                                                                                            Investing $500 million to

                                                                                                                                56M
                                                                                                                                                                            improve farmer livelihoods

                                                   90%
     children being                                                                        kids directly
                                                                                                                                                                            in our cocoa-growing
     monitored under our                                                                   benefiting from
                                                                                                                                                                            communities by 2030
     Child Labor Monitoring                                                                Heartwarming
     and Remediation System                        certified sustainable cocoa*            Project investments                  sachets of ViVi
                                                                                                                                distributed since 2016
                                                                                                                                                                            Embedding robust
                                                                                                                                                                            human rights programs
                                                                                                                                                                            across our value chain

                                                                                                         1,936,167                                                          Growing diversity and
                                                                                                                                                                            inclusion through focused

    50%                          411,802                                47%
                                                                                                         trees planted for                                                  initiatives that develop and
                                                                                                         reforestation in                                                   energize our people
                                                                                                         West Africa, the
    diverse board members        hours of employee learning             of facilities sending            U.S. and Mexico
                                 and development                        zero waste to landfill                                                           *As of January 2020, Hershey achieved 100% certified
                                                                                                                                                           sustainable cocoa.

8                                                                                                                                                          THE HERSHEY COMPANY | 2019 SUSTAINABILITY REPORT
Sharing Goodness for - 2019 SUSTAINABILITY REPORT - The Hershey Company
THE BIG PICTURE        GOVERNANCE AND APPROACH        BUSINESS   PLANET   PEOPLE   CHILDREN AND YOUTH   COMMUNITIES            OUR PERFORMANCE

Governance
& Approach
Operating with integrity is one of our core values
and a key driver for how we build trust with our
consumers. We invest significant time, resources
and expertise in developing and maintaining
processes and policies that keep us competitive,
prepared and financially resilient. We continuously
explore evolving best-practices and assess what we
can implement to further strengthen our approach.

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Sharing Goodness for - 2019 SUSTAINABILITY REPORT - The Hershey Company
THE BIG PICTURE         GOVERNANCE AND APPROACH              BUSINESS         PLANET        PEOPLE   CHILDREN AND YOUTH            COMMUNITIES             OUR PERFORMANCE

BEING A RESPONSIBLE & ETHICAL BUSINESS
WHY IT MATTERS                                To manage these responsibilities, the Board            GOVERNING SUSTAINABILITY
Hershey prioritizes upholding ethical         maintains five committees that conduct
                                                                                                     Our sustainability governance model includes a multi-level operating
business conduct and being transparent.       in-depth reviews of significant issues:
                                                                                                     structure to ensure we are aligned on the most important issues facing
Through our commitment to live our            Audit, Governance, Compensation and
                                                                                                     the company and equipped with the right resources to drive progress.
values, we have developed robust policies     Executive Organization, Finance and Risk
                                                                                                     Accountability for managing sustainability across the enterprise sits with
and procedures to act responsibly across      Management, and Executive.
                                                                                                     the Vice President of Corporate Communications and Global Sustainability
our operations and supply chain. We           The Board oversees environmental, social               who reports to our Chief Supply Chain Officer.
regularly review our approach to align with   and governance (ESG) at Hershey and the
the changing regulatory landscape.            ESG team briefs the full Board of
                                              Directors at least annually, or more                   GLOBAL                 Led by the Senior Director of Global Sustainability
HOW WE DO IT                                  frequently as needed.                                  SUSTAINABILITY         and Social Impact, this team is composed of leaders
                                                                                                     TEAM                   from across the business who manage the strategy,
Our Code of Conduct guides our approach       As of December 2019, the Board had 12                                         implementation and reporting of our global
to ethical issues and our commitment          directors, each over the age of 50 and each                                   sustainability progress. The Global Sustainability
to complying with relevant local and          with significant professional experience.                                     team is in regular communications with external
international regulations and policies.       Diverse directors made up 50 percent                                          stakeholders who provide valuable perspectives
The Code details Hershey’s approach           of our board, including five women.                                           and insights into our program decisions and focus.
to anti-corruption, antitrust and
whistleblower protection and is published     For more information on our Board,
in 10 languages. All our directors and        committees and approach to executive                                          Composed of vice presidents from across key
                                              compensation, please see our Proxy                     SUSTAINABILITY
employees receive annual training on the                                                                                    business functions who routinely meet throughout
Code and verify that they’ve read and         Statement.                                             STEERING
                                                                                                                            the year to review progress, discuss challenges and
agree with the principles it outlines.                                                               COMMITTEE
                                                                                                                            opportunities and approve key decisions related to
                                                                                                                            our global sustainability programs.
OUR BOARD
The Board of Directors oversees our
strategies (including our Shared Goodness                                                            EXECUTIVE              Includes our CEO and her direct reports who
Promise strategy), significant decisions                                                             COMMITTEE              conduct semi-annual reviews of the Shared
and business performance. This includes                                                                                     Goodness Promise sustainability strategy, data,
overseeing our compliance with legal                                                                                        progress and the emerging sustainability challenges
and regulatory requirements, our                                                                                            and opportunities.
Enterprise Risk Management (ERM)
program and the key risks it identifies,
                                                                                                     BOARD OF               Briefed at least once annually on our Shared
the integrity of our financial statements,
                                                                                                     DIRECTORS              Goodness Promise progress and apprised
and management succession planning and
                                                                                                                            of the most important emerging sustainability
compensation policies.
                                                                                                                            trends, risks and opportunities.

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THE BIG PICTURE         GOVERNANCE AND APPROACH                   BUSINESS                                   PLANET                                         PEOPLE           CHILDREN AND YOUTH                  COMMUNITIES               OUR PERFORMANCE

MATERIAL ISSUES
We conduct a materiality                As a result of this analysis, we

                                                                                                                                     Major
assessment every few years to           identified a total of 29 issues,
ensure that Hershey focuses on the      with 11 being our most material:
issues where we have the greatest       • Child labor
impact and works to effectively                                                                                                                                                                           Food safety
                                        • Climate change

                                                                                Influence on stakeholder decisions and assessments
engage with these issues to make                                                                                                                                                                                                         Responsible sourcing
a difference. Our last materiality      • Consumer engagement on                                                                                                                                                            Human rights             Child labor
assessment was done in 2018.              sustainability                                                                                                                                                                    Responsible and ethical business
                                                                                                                                                                                                         Ecosystems                       Farmer livelihoods
                                        • Ecosystems
OUR MATERIALITY PROCESS
                                        • Farmer livelihoods                                                                                                                                                                   Climate change
We align our materiality                                                                                                                                                   Consumer engagement on sustainability
methodology with the Global             • Food safety                                                                                                                             Women’s empowerment                          Packaging
Reporting Initiative (GRI) Standards.   • Human rights                                                                                                                                             Water                              Nutrition, ingredients
This includes interviewing or                                                                                                                                                         Responsible marketing                           & product transparency
sending questionnaires to internal      • Nutrition, ingredients and                                                                                                                                              Employee experience
and external stakeholders,                product transparency                                                                                                                                Innovation           Diversity and inclusion
                                                                                                                                                                             Supporting communities             Financial health
including Hershey managers              • Packaging
                                                                                                                                                                                       The future of retail          Workplace health and safety
across different functions (legal,      • Responsible and ethical business                                                                                                                                  Waste
ethics & compliance, supply chain,                                                                                                                                 Global competitiveness
sustainability, government relations,   • Responsible sourcing                                                                                                    Data protection and privacy
communications, packaging,                                                                                                                                                                                    Transparent policy and lobbying
                                        For a list of definitions, please see
nutrition and environmental                                                                                                                                                                 Business continuity/disaster recovery
                                        our GRI Index.
health & safety), investors, NGOs,                                                                                                                     Animal welfare       Air pollution
think tanks, suppliers and industry     We also recognize that investors                                                                                                        Energy
associations.                           and other stakeholders are
                                        interested in what Hershey is doing
We also conducted an employee
                                                                                                                                     Significant

                                        on topics identified as material
materiality survey. More than 1,200
                                        by the Sustainable Accounting
randomly selected employees rated
their top 10 most material issues       Standards Board (SASB). Hershey
and how Hershey was performing          now reports on SASB standards and                                                                          Significant                                                                                                 Major
against them.                           the results can be found here.                                                                                                       Impact on economy, environment and society

                                                                                                                                                                                                                                                   Key

                                                                                                                                                                                                                                                      Material
                                                                                                                                                                                                                                                      Important

11                                                                                                                                                                                                                  THE HERSHEY COMPANY | 2019 SUSTAINABILITY REPORT
THE BIG PICTURE         GOVERNANCE AND APPROACH               BUSINESS         PLANET        PEOPLE         CHILDREN AND YOUTH             COMMUNITIES            OUR PERFORMANCE

STAYING SECURE, TRANSPARENT & RESILIENT
DATA PROTECTION & PRIVACY                      Company funds are used to periodically        BUSINESS CONTINUITY &                         Every three years the Global Security
We respect the privacy of our consumers,       support or advocate for issues, legislation   DISASTER RECOVERY                             Team uses the Crisis Management process
our customers, our coworkers and others        or referenda of importance to Hershey and                                                   to assess our manufacturing and sales
                                                                                             As a large organization with a global
with whom we conduct business, and             our stockholders. These funds, classified                                                   facilities as well as our distribution centers
                                                                                             supply chain and multiple manufacturing
we handle their personal information           under the U.S. Internal Revenue Code as                                                     and co-manufacturing partners, checking
                                                                                             operations, it’s vital for Hershey to be
with care. “Personal information” is any       non-deductible lobbying expenditures,                                                       the preparedness of their physical security,
                                                                                             prepared for the unexpected. We use a
information that could be used to identify     are paid primarily to industry trade                                                        processes and communications. These
                                                                                             comprehensive, adaptive approach through
someone, either directly or indirectly, such   associations, lobbying entities and our                                                     are performed in conjunction with local
                                                                                             planning and integration of Enterprise
as a name, employee ID, email address          internal government relations personnel. In                                                 stakeholders—such as fire departments
                                                                                             Risk Management, Crisis Management,
or phone number. There are data privacy        accordance with the Lobbying Disclosure                                                     and police services—to map the highest
                                                                                             and Business Continuity to ensure we can
laws that prescribe how to responsibly         Act of 1995, our company files quarterly                                                    risks, including fire, natural disasters,
                                                                                             respond effectively to crises and minimize
collect, store, use, share, transfer and       lobbying reports, which outline the                                                         power outages and others.
                                                                                             downtime from disruptions.
dispose of personal information, and we are    company’s federal-level advocacy work.
                                                                                                                                           Additionally, the Global Security team works
committed to complying with those laws         We also publish a report of advocacy          In any crisis, people’s safety is our first
                                                                                                                                           with and trains local crisis management
wherever we operate.                           expenditures on the Investors section of      priority. Our CEO is the leader of the
                                                                                                                                           teams to conduct risk-based, tabletop
                                               our website annually.                         Company Crisis Management Team
                                                                                                                                           exercises to identify and remedy any gaps.
                                                                                             (CCMT) with overall accountability for
LOBBYING & TRANSPARENT
                                                                                             crisis planning, response and recovery. Our   We have also worked to improve the
POLICY                                                                                       CCMT is charged with handling a range of      security of our IT systems. In 2017, we
As per our Code of Conduct, Hershey                                                          incidents, and each site has a local team     invested $28 million to implement a four-
does not make political contributions                                                        with clear decision rights and escalation     year Data Center Migration program, which
and only engages in corporate political                                                      thresholds.                                   will include a complete transformation of
activities through the Hershey Political                                                                                                   our data center footprint with two new,
Action Committee (PAC). Funds raised                                                                                                       bicoastal data centers.
through the PAC, which is made up of
voluntary employee contributions, are used
to support elected officials—regardless of
political affiliation—who have demonstrated
a willingness to consider Hershey’s
perspective on matters impacting our
business. All contributions are disbursed
pursuant to our internal contribution
guidelines and in accordance with
applicable election laws.

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THE BIG PICTURE        GOVERNANCE AND APPROACH   BUSINESS   PLANET   PEOPLE   CHILDREN AND YOUTH   COMMUNITIES            OUR PERFORMANCE

business
A Recipe for Excellence                                                                            Progress highlights
and Integrity
Hershey’s vision is to become an
innovative snacking powerhouse,
providing consumers with a portfolio of
                                                                                                   90%
                                                                                                   of cocoa was certified and sustainably
iconic brands spanning from sweet to
savory. As we pursue our vision, we will                                                           sourced in 2019, and 100% as of
never change our commitment to live                                                                January 2020
our values of excellence and integrity

                                                                                                   #7
—always working to the highest standards
of product safety and championing
consumer trust and transparency.
Our operations span continents and
our supply chain includes large scale                                                              in Morning Consult’s Most Trusted Brands
manufacturing as well as small family                                                              Consumer Survey
farms. This global reach gives us an

                                                                                                   100%
opportunity to change thousands of
lives for the better. From working to
eliminate child labor and fostering
economic resilience in cocoa communities
to driving environmentally sound                                                                   of our wholly owned facilities are Global
agriculture practices and protecting                                                               Food Safety Initiative (GFSI) certified
human rights in a complex supply chain,
we’re crafting safe, delicious products
consumers can love—and trust.

13                                                                                                   THE HERSHEY COMPANY | 2019 SUSTAINABILITY REPORT
THE BIG PICTURE          GOVERNANCE AND APPROACH                  BUSINESS   PLANET   PEOPLE   CHILDREN AND YOUTH   COMMUNITIES            OUR PERFORMANCE

QUALITY INGREDIENTS, PRODUCT NUTRITION & TRANSPARENCY
We craft snacks that work for every occasion—from energy-boosting
options that support a healthy lifestyle to indulgent treats for special
moments. We use quality ingredients and leading manufacturing
standards and provide user-friendly nutritional information on our
packaging to offer trusted snacks that are safe and delicious.

     Sweet                                                                                                                                              Savory

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THE BIG PICTURE         GOVERNANCE AND APPROACH              BUSINESS         PLANET        PEOPLE           CHILDREN AND YOUTH               COMMUNITIES                OUR PERFORMANCE

No Compromise on Food Safety

Robust food safety is non-negotiable to       DRIVING FOOD SAFETY                           2019

                                                                                            100%
us, and we are proud that consumers trust     BEYOND HERSHEY
our products. Hershey has some of the
                                              Hershey sources 100 percent of ingredients
highest food safety production standards
                                              from suppliers approved through the
in the industry. We go beyond compliance
                                              Hershey Supplier Quality Management           of Hershey wholly owned facilities are GFSI certified
with national and international standards,
                                              Program, which is defined and executed
and every part of our manufacturing                                                         Globally, 87% of our suppliers are GFSI certified
                                              in compliance with applicable GFSI and
process is subject to rigorous oversight                                                    (note: this is based on the number of suppliers not volume)
                                              regulatory requirements. Hershey has also
and auditing.
                                              been working with suppliers to help them
We maintain a Product Excellence              achieve certification under a recognized
Program (PEP), which is informed by           GFSI Standard and has made great progress
the Quality Management System for             toward the goal of sourcing 100 percent
Food Safety, Regulatory Compliance            of our ingredients from GFSI-certified
and Product Quality procedures. PEP           suppliers, with 87 percent of our suppliers
is focused on identifying, reducing and       globally having achieved certification.
eliminating risk throughout all stages of     In addition, throughout 2019, leaders
product production including product          working in our supply chain completed
design, the supply chain and distribution.    a three-part interactive Food Safety
                                              Awareness program.
Our Quality and Regulatory Compliance
(QRC) team continually reviews and            We also focus on food safety education
evaluates emerging regulations and            within the community. In May 2019,
industry practices to ensure PEP is           members of the QRC team led Turn it Teal
meeting the latest requirements and           initiatives in support of the National Food
thinking. PEP’s elements currently            Allergy Awareness Week. This included
meet or exceed current Global Food            public education events and lighting-up
Safety Initiative (GFSI) standards and        company and town landmarks in teal, the
keep Hershey compliant with global            official color of food allergy awareness.
food safety regulations. All Hershey          Approximately 1,500 members of the public
owned manufacturing facilities are            joined in education events and activities.
GFSI certified, which is an independent
verification of the strength of our food
safety and quality systems. In addition, we
require 100 percent of our manufacturing
facility employees to undergo food safety
and quality training annually.

15                                                                                                                                                  THE HERSHEY COMPANY | 2019 SUSTAINABILITY REPORT
THE BIG PICTURE         GOVERNANCE AND APPROACH                BUSINESS             PLANET       PEOPLE         CHILDREN AND YOUTH              COMMUNITIES             OUR PERFORMANCE

Offering Innovation, Choice & Transparency

                                             22%
Today’s consumers are seeking healthier                                                          The Council provides guidance with regard                       2019 PROGRESS
options and wanting greater transparency                                                         to product claims, labeling, marketing                          2019  PROGRESS
                                                                                                                                                                 Percentage of our portfolio
about what is in the food they are eating.                                                       and advertising early in the innovation                         with a live SmartLabel™
                                                                                                                                                                 Percentage    of our portfolio
As a consumer-focused company, we seek                                                           process to ensure products are compliant                        landing
                                                                                                                                                                 with     page
                                                                                                                                                                      a live     with detailed
                                                                                                                                                                              SmartLabel™
                                             increase in sales growth for sugar-free chocolate
to meet these changing preferences with                                                          and address consumer needs. In providing                        product,   ingredient
                                                                                                                                                                 landing page          and
                                                                                                                                                                                 with detailed
choice and transparency.                                                                         guidance, the Council touches upon a                            allergen information
                                                                                                                                                                 product,   ingredient and
                                                                                                 wide variety of topics including nutrition,                     (excluding
                                                                                                                                                                 allergen     multi-product
                                                                                                                                                                           information
Through our work with SmartLabel™, we                                                                                                                            assortments    and Krave Jerky)
                                                                                                                                                                 (excluding multi-product
                                                                                                 ingredients, sustainability, responsible
offer consumers greater transparency         taking some of our most iconic brands, and                                                                          assortments and Krave Jerky)
                                                                                                 sourcing and product certifications.                            2017       100%
through a convenient digital platform that   creating new options that offer choice to
enables access to ingredient information     consumers looking to control sugar, fat             As we work towards our vision to become an                      2018
                                                                                                                                                                 2017       90%
                                                                                                                                                                            100%
on 90 percent of our U.S. products.          and portion sizes. For example, our iconic          innovative snacking powerhouse, our work                        2019
                                                                                                                                                                 2018       90%
                                             Reese’s Peanut Butter Cups now also come            on innovation, choice and transparency helps                    2019         90%
                                                                                                                                                                 *The drop in SmartLabel™
We continue to grow our snacking
                                             in thins and sugar-free versions.                   us meet our consumers’ standards and take                         compliant products is due
spectrum and have evolved from being                                                                                                                               to recent acquisitions
                                                                                                 part in every snacking occasion.
solely a confectionery-based company to      To further this work, we maintain a Food
also offering brands focused on fueling      Claims Review Council in the U.S. that acts
healthier lifestyles, like SkinnyPop, One    as a collaborative, cross-functional team of                                                                        Percent of products with
Bars and Oatmega. In addition, we’re         regulatory, nutrition and legal partners.                                                                           easy-to-read
                                                                                                                                                                 Percent        front-of-pack
                                                                                                                                                                          of products  with
                                                                                                                                                                 calorie labels front-of-pack
                                                                                                                                                                 easy-to-read
                                                                                                                                                                 calorie labels
                                                                                                                                                                 2017       100%
                                                                                                                                                                 2018
                                                                                                                                                                 2017       100%
                                                                                                                                                                 2019
                                                                                                                                                                 2018       100%
                                                                                                                                                                 2019       100%

                                                                                                                                                                 Number of wholly owned
                                                                                                                                                                 manufacturing
                                                                                                                                                                 Number of whollyandowned
                                                                                                                                                                                      joint-
                                                                                                                                                                 venture operations
                                                                                                                                                                 manufacturing   and and
                                                                                                                                                                                      joint-
                                                                                                                                                                 contractoperations
                                                                                                                                                                 venture  manufacturing/
                                                                                                                                                                                      and
                                                                                                                                                                 co-packing  that attain food
                                                                                                                                                                 contract manufacturing/
                                                                                                                                                                 safety certification
                                                                                                                                                                 co-packing           recognized
                                                                                                                                                                             that attain  food
                                                                                                                                                                 by the certification
                                                                                                                                                                 safety GFSI          recognized
                                                                                                                                                                 by the GFSI
                                                                                                                                                                 2017       88%
                                                                                                                                                                 2017       88%of The Hershey
                                                                                                                                                                           88%
                                                                                                                                                                           Company-owned
                                                                                                                                                                           88% of The Hershey
                                                                                                                                                                           facilities (15 of 17) and
                                                                                                                                                                           Company-owned
                                                                                                                                                                           one  joint(15
                                                                                                                                                                           facilities  venture
                                                                                                                                                                                          of 17) and
                                                                                                                                                                           one
                                                                                                                                                                           84%joint   venture
                                                                                                                                                                                 of our contract
                                                                                                                                                                           manufacturing   facilities
                                                                                                                                                                           84% of our contract
                                                                                                                                                                           globally—100%   of our
                                                                                                                                                                           manufacturing facilities
                                                                                                                                                                           U.S.  and Canadaof our
                                                                                                                                                                           globally—100%
                                                                                                                                                                           co-manufacturing
                                                                                                                                                                           U.S. and Canada
                                                                                                                                                                           facilities
                                                                                                                                                                           co-manufacturing
                                                                                                                                                                 2018      facilities
                                                                                                                                                                            100%
16                                                                                                                                                THE HERSHEY COMPANY | 2019 SUSTAINABILITY REPORT
                                                                                                                                                                 2018       100%of Hershey wholly
                                                                                                                                                                           100%
                                                                                                                                                                           owned facilities globally
THE BIG PICTURE           GOVERNANCE AND APPROACH               BUSINESS        PLANET        PEOPLE          CHILDREN AND YOUTH            COMMUNITIES            OUR PERFORMANCE

MARKETING RESPONSIBLY
WHY IT MATTERS                                   party licensed characters in advertising     principles we are held to in the U.S.         organizations and programs, including
Hershey is committed to the responsible          primarily directed to children under                                                       elementary and secondary schools. That
                                                                                              By agreement, we allow selected third
marketing of its products. Our strong            12. Hershey submits an annual self-                                                        said, we do not advertise our products
                                                                                              parties to display our well known brands on
values guide our behavior in aspects of our      assessment to CFBAI that provides detailed                                                 to children in elementary schools and
                                                                                              a variety of high-quality food and non-
brand-building work, and we apply these          information on its compliance procedures,                                                  we do not license our brands for use on
                                                                                              food items to be sold in various outlets
values to consumer communications. We            ads distributed in children’s media and                                                    educational material or materials intended
                                                                                              throughout the world. We are also proud
know that parents play a crucial role in         advertising plans. In Canada, we have                                                      for use primarily in elementary schools.
                                                                                              of the positive role our products play
teaching children healthy eating habits and      signed a pledge with the Canadian CFBAI
                                                                                              in raising funds for a wide range of
the appropriate role of treats and snacks        that commits us to similar standards and
in a balanced diet. We support this parental
gate-keeping role, particularly in connection
with children under the age of 12.

HOW WE DO IT
Hershey’s marketing efforts are guided
by principles that stress responsible
practices, particularly in relation to
children. Hershey is a member of the U.S.
Children’s Food and Beverage Advertising
Initiative (CFBAI), which is a voluntary self-
regulation program created to improve
the landscape of food advertising directed
to children under the age of 12. Under our
individual CFBAI pledge, we commit to not
engage in advertising primarily directed
at children under 12. For measured media,
like television, radio and print, that
means we do not purchase advertising
on programming for which 30 percent or
more of the annual audience on average
is composed of children under 12.
For unmeasured media, we use a
multifaceted analysis to determine whether
the media is child-directed, including
factors such as an assessment of the
target audience and the overall impression
of the advertising or site’s content.
We are also committed to not using third-

17                                                                                                                                            THE HERSHEY COMPANY | 2019 SUSTAINABILITY REPORT
THE BIG PICTURE           GOVERNANCE AND APPROACH   BUSINESS           PLANET       PEOPLE   CHILDREN AND YOUTH           COMMUNITIES                   OUR PERFORMANCE

WHERE WE SOURCE OUR INGREDIENTS

                      Canada                                                                                      Hershey actively works
                      Flour
                                                                                                                  to responsibly source raw
                                                                                              Eastern             ingredients and materials
     USA                                                                                      Europe              for our delicious snacks. This
                                                                                              Soy
     Almonds                                                                                                      map highlights the origins of
     Beef                                                                                                         several of those resources.
     Dairy
     Flour
     Peanuts
     Pulp and paper
                                                                                                                                                      Philippines
     Soy
                                        Belize                              Ghana
                                                                                                                                                      Coconut
     Sugar                              Sugar
                                                                            Cocoa
                      Mexico                                                                                                                                            New
                      Sugar                                                                                                                                             Zealand
                                                                                                            Malaysia                                                    Dairy
                                                               Côte d’Ivoire                                Palm oil
                              Ecuador                          Cocoa
                              Cocoa                                                                                    Indonesia
                                                                                                                       Palm oil
                                                    Brazil
                                                    Cocoa
                                                    Sugar

                                                                                                                           Disclaimer: The map does not include all geographic
                                                                                                                           locations, ingredients or sourced materials.

18                                                                                                                           THE HERSHEY COMPANY | 2019 SUSTAINABILITY REPORT
THE BIG PICTURE          GOVERNANCE AND APPROACH              BUSINESS         PLANET      PEOPLE   CHILDREN AND YOUTH                        COMMUNITIES                     OUR PERFORMANCE

RESPONSIBLE SOURCING                                                                                RESPONSIBLE SOURCING COMMITMENTS AND
                                                                                                    PROGRESS 2019
                                                                                                    Cage-Free        By 2020, source 100% certified                     75%
WHY IT MATTERS                                In the past year, we also updated our                 Eggs             cage-free eggs for the U.S. and                                       Target 100%
                                              Supplier Code of Conduct to incorporate                                Canadian* markets from cage-free
Every year, Hershey buys thousands of                                                                                farms that are in accordance with the
tons of cocoa, sugar, dairy, nuts and other   our new human rights and environmental
                                                                                                                     American Humane Certified program
ingredients and raw materials from all        policies. This involved engaging multiple
over the world. Each presents unique          external stakeholders including suppliers,
sourcing challenges, since environmental,     peer companies, Verité (a leading human               Cocoa**          By 2020, source 100% certified                     90%
social and labor practices vary by region.    rights nonprofit) and other NGOs and                                   and sustainable cocoa through:                                        Target 100%

Regardless, we strive everyday to             associations focused on labor rights and                               • Fair Trade USA
safeguard human rights and use our scale      human rights.                                                          • Rainforest Alliance (UTZ)
to implement sound agricultural practices     We work with credible sustainability                                   • Suppliers’ standards meeting the
and protect the people and ecosystems         certification organizations from UTZ,                                    international ISO/CEN criteria
behind the ingredients that make our          Rainforest Alliance, Fair Trade USA,
iconic, delicious snacks.                     Bonsucro and the Roundtable on                                         By 2020, source 100% certified
                                                                                                    Coconut                                                             75%
                                              Responsible Palm Oil (RSPO) to make                                    coconut through Fair Trade USA                                        Target 100%
HOW WE DO IT                                  sure environmental and social conditions
All suppliers are expected to abide by        along our supply chain meet a high
our Supplier Code of Conduct. We also         standard. Hershey uses independent
                                                                                                    Palm             By 2020, achieve 100%                             100%
maintain several commodity-specific           sustainability standards because they                                  RSPO-certified mass balance                      RSPO
requirements for suppliers including our:     inform best practice in our industry                                   palm oil and 100% traceability                     99.8%
                                              and are trusted by consumers and                                                                                        traceable to the mill
• Sustainable Sugar Sourcing Policy           other external stakeholders.
                                                                                                                                                                        50%
• Responsible Palm Oil Sourcing Policy                                                                                                                                traceable to the plantation
• Pulp and Paper Sourcing Policy                                                                                                                                                           Target 100%

• Farm Animal Welfare Position
In early 2019, we published our Human                                                               Pulp and         By 2020, source 100% virgin fiber                  100%
                                                                                                    Paper            pulp and paper products in the U.S.
Rights Policy, after conducting an in-                                                                                                                                                     Target 100%
                                                                                                                     and Canada from third party-certi-
depth assessment of our most salient                                                                                 fied suppliers (Forest Stewardship
human rights issues. We also launched                                                                                Council, Programme for the
our Environmental Policy in 2019. Both                                                                               Endorsement of Forest Certification
policies guide Hershey’s activities within                                                                           or Sustainable Forestry Initiative)
our supply chain and throughout our
direct operations.
                                                                                                    Sugar            By 2020, source 100% certified                     65%
                                                                                                                     and sustainable sugar                                                 Target 100%

                                                                                                    *During our 2019 financial year, Hershey committed beyond our existing U.S. and Canada goal by
                                                                                                     adopting a commitment to source 100% cage-free eggs globally by 2025.
                                                                                                    **Goal achieved as of January 2020.

19                                                                                                                                                THE HERSHEY COMPANY | 2019 SUSTAINABILITY REPORT
THE BIG PICTURE          GOVERNANCE AND APPROACH                 BUSINESS          PLANET         PEOPLE              CHILDREN AND YOUTH            COMMUNITIES             OUR PERFORMANCE

EMBEDDING HUMAN RIGHTS
WHY IT MATTERS                                  global procurement professionals across
Hershey was founded on the principle            Hershey and is strongly encouraged for
of doing well by doing good. For more           leaders in functions like manufacturing,
than 125 years, we have operated our            legal and human resources, as well as
business understanding that we are integral     certain commercial functions.
members of the communities where we             To further inform our human rights                                                           Access to water
live and work. The remarkable and diverse       actions and approach to human rights due                                                      and sanitation
people employed by Hershey and the              diligence, we also partnered with Verité
individuals who work along our value chain                                                                             Access to grievance                        Child labor
                                                on a methodology to identify and assess
are some of our most important resources.                                                                                 mechanisms
                                                current and future human rights risks
Guided by an approach that identifies,          across our key ingredients’ and materials’
assesses and prioritizes the most significant   value chains and geographic footprint.
human rights risks in our value chain, we       Using a set of indicators from more than
use our direct business relationships and       12 external data sources—including U.S.
leverage to enable all to exercise and enjoy    Departments of State and Labor reports,
                                                                                                        Forced labor and             SALIENT ISSUES                          Climate change
their fundamental human rights.                                                                         human trafficking
                                                the UN Multidimensional Poverty Index,
                                                UN Migrant stock data, the International                                           Identifying and addressing the
HOW WE DO IT                                    Trade Union Confederation (ITUC) Global                                             most pressing human rights
In early 2019, we released our first            Rights Index and the UN Gender Inequality                                           issues across our value chain
enterprise-wide Human Rights Policy. It         Index—we identified risks and opportunities
is publicly available in six languages on our   to guide programming over the next few
                                                                                                             Land rights/                                                       Deforestation
website and was launched to employees by        years. As a result of this partnership, we
our CEO at a company-wide town hall. The        now have a replicable framework for                           acquisition
policy follows the guidance of the United       conducting human rights due diligence
Nations Guiding Principles on Business and      across our facilities and supplier base.
                                                                                                                                                                   Women’s
Human Rights (UNGPs) and was developed          Read more about our work with                                               Living wage                            rights and
with input from diverse stakeholder groups      Verité here.                                                                and income                           empowerment
including Hershey employees, labor                                                                                                               Safety
organizations, investors, governments, and      Finally, we recognize that addressing                                                          and health
nonprofit and civil society actors.             human rights issues requires partnership
                                                and coordination. Our partnerships with
During 2019, we also integrated human           nonprofit organizations and pre-competitive
rights into our learning and development        industry collaborations play a critical role in   WATCHING ISSUES
program and new employee orientation.           informing our strategies. In 2019, we co-led
This process included creating an e-learning    an AIM-PROGRESS working group focused
module that covers the UNGPs, Hershey’s         on identifying strategies for training buyers
salient human rights issues, high-level         and procurement professionals on human
considerations for human rights and             rights topics. A more comprehensive list of
purchasing practices, and guidance on           our human rights partnerships and efforts is      Children’s rights      Environmental
being an internal champion for human            available here.                                                         health and justice
rights. This training is mandatory for all

20                                                                                                                                                     THE HERSHEY COMPANY | 2019 SUSTAINABILITY REPORT
THE BIG PICTURE         GOVERNANCE AND APPROACH               BUSINESS         PLANET        PEOPLE   CHILDREN AND YOUTH   COMMUNITIES            OUR PERFORMANCE

OUR PROGRESS                                   WHAT’S NEXT
Using the human rights due diligence           During 2020, we will continue to engage
tool we developed with Verité, we              with key stakeholders to elevate our work
evaluated all of our Tier 1 raw material and   to promote human rights across Hershey’s
packaging suppliers as well as our co-         entire value chain. This will include:
manufacturers, co-packers and licensees.       • Launching our newly-revised
We then developed a prioritized list for         Responsible Sourcing Tier 1 Supplier
further supplier due diligence as part of        program, including communicating our
our newly-revised Responsible Sourcing           new Supplier Code of Conduct and
Tier 1 Supplier program. We also mapped          implementing our new social compliance
and collected data on all our direct labor       and human rights due diligence program
service providers globally to begin work
on new standards and expectations around       • Training 100 percent of our procurement
responsible recruitment.                         professionals on human rights by
                                                 2021 using our new human rights
                                                 e-learning platform
                                               • Developing and communicating more
                                                 specific expectations for labor service
                                                 providers in our value chain and piloting
                                                 different approaches to verification,
                                                 including approaches that directly engage
                                                 and gather feedback from workers.

21                                                                                                                           THE HERSHEY COMPANY | 2019 SUSTAINABILITY REPORT
THE BIG PICTURE          GOVERNANCE AND APPROACH     BUSINESS   PLANET   PEOPLE   CHILDREN AND YOUTH   COMMUNITIES            OUR PERFORMANCE

     PROMOTING
     DIVERSITY
     WITHIN OUR
     SUPPLY CHAIN
     Hershey actively
     supports an inclusive marketplace
     through our supplier diversity program
     that creates business opportunities for
     qualified and diversely-owned enterprises.
     Besides enabling us to represent and
     better understand our consumers, diverse
     supply chains drive innovation and fresh
     thinking and reflect our diverse employee
     base, cementing their pride and sense of
     engagement in working for our company.
     To promote and educate on supplier
     diversity across our business, we operate
     a Supplier Diversity Roundtable with
     representatives from each procurement
     area, as well as our Manufacturing Alliances.
     We also have access to a searchable supplier
     database to help identify diverse suppliers.
     Additionally, our procurement contracts
     request that our suppliers utilize diverse
     suppliers and report their diverse spend
     attributable to Hershey. To ensure
     compliance, we track quarterly the internal
     reporting of diverse spend of both Tier 1
     suppliers (those directly supplying us with
     goods and services) and Tier 2 suppliers
     (those who supply our Tier 1 suppliers).
     Currently, we track spending with minority,
     women, veteran, LGBTQ and disability-
     owned businesses. Hershey annually
     reports this performance through our
     DiversityInc submission.
     In 2019, we developed a new Supplier
     Diversity Strategy, which we will be
     launching in 2020, paving the way for
     further growth and development in addition
     to internal and external engagements.

22                                                                                                       THE HERSHEY COMPANY | 2019 SUSTAINABILITY REPORT
THE BIG PICTURE          GOVERNANCE AND APPROACH                 BUSINESS         PLANET     PEOPLE   CHILDREN AND YOUTH   COMMUNITIES            OUR PERFORMANCE

           P
            artnering for Sugar Sustainability
     Since 2016, Hershey has partnered with our supplier American Sugar Refining and
     Belize’s Sugar Industry Research and Development Institute to continue our Learn
     to Grow program for Belize’s sugar cane farmers. The program uses a field farmer
     model to help farmers learn about and implement sustainable growing practices.
     During the past three years, more than 1,600 farmers have participated in the
     program and benefited from increased yields while lowering their environmental
     impact. We’ve been so pleased with the results that in November 2019 we launched
     a Learn to Grow sugar program in Mexico.
     We’ve also been expanding our approach to responsible sugar in other ways.
     We continue to purchase Bonsucro Certified Mass Balance sugar in the U.S.,
     Canada and Brazil, as well as a small volume of Fair Trade USA sugar. In addition,
     we ensure that all the facilities we source sugar from in the U.S. have an up-to-date
     ethical trade audit from SEDEX, a leading nonprofit focused on improving ethical
     performance in corporate supply chains.

23                                                                                                                           THE HERSHEY COMPANY | 2019 SUSTAINABILITY REPORT
THE BIG PICTURE         GOVERNANCE AND APPROACH               BUSINESS         PLANET       PEOPLE         CHILDREN AND YOUTH             COMMUNITIES            OUR PERFORMANCE

PARTNERING FOR BETTER PALM OIL
WHY IT MATTERS                                correction plans that address root
Hershey recognizes that palm oil has          causes. If the palm oil companies fail to
impacts on forests, biodiversity and          comply with specified human rights and
producer communities that make it a           environmental standards, we will instruct
challenge to grow and source responsibly.     our suppliers to discontinue working with
While we buy a relatively small amount of     them. Through Earthworm Foundation’s
palm oil, we are committed to the highest     Engagement for Policy Implementation
standards in responsible and sustainable      tool, we continue to deepen engagement
palm oil sourcing. This is why, in 2014,      with suppliers to better understand and
Hershey committed to sourcing 100             support commitments and progress toward
percent responsibly grown palm oil that       achieving an NDPE palm oil supply chain.
protects forests and peatlands and is free
from labor exploitation. We want to help      OUR PROGRESS
embed the highest standards in palm oil       In 2019, we remained committed to
production, enabling the industry to fight    purchasing 100 percent RSPO, mass-
environmental degradation and provide         balance palm oil. For all palm oil and palm
safe, fair and dignified work to thousands.   kernel oil purchased in 2019, we maintained
                                              99.8 percent traceability to the mill year
HOW WE DO IT                                  over year and increased traceability to the
To deliver our Supplier Code of Conduct       plantation to 47.4 percent.
and our commitment to No Deforestation,       We improved our plantation traceability in
Peat and Exploitation (NDPE) in our           2019 by increasing engagement with our
Responsible Palm Oil Sourcing Policy,         suppliers to report on their traceability
Hershey engages with partners such as         data and reallocating business to suppliers
Earthworm Foundation to work toward a         that are more committed to traceability
fully-traceable palm oil supply chain and     and reporting progress. In 2020, we
invest in transformation projects in key      continue to work on increasing traceability
                                                                                            to the Leuser Ecosystem and the Rawa          WHAT’S NEXT
sourcing areas.                                                                             Singkil Wildlife Reserve. APT endeavors to    In 2020, Hershey will join the APT Steering
                                              to plantations.
                                                                                            cultivate long-term collaboration between     Committee and co-fund several other
To increase transparency on NDPE              Hershey is a proud supporter of               the industry, local NGOs and government       Earthworm Foundation-led projects in
issues found within our supply chain, we      Earthworm Foundation’s Areas for Priority     to develop transformation activities in the   key sourcing regions including East Riau,
developed a public grievance procedure        Transformation (APT) project in the Aceh      region, which has since seen a 60 percent     Indonesia and in Malaysia to strengthen our
and log. This formally discloses how          Tamiang and Southern Aceh regions of          reduction in deforestation between 2016       palm oil supply chain.
we engage our suppliers so that they          Indonesia, areas of rich biodiversity near    and 2019.
can push for meaningful and decisive                                                                                                      For more information please visit our palm
                                                                                                                                          oil facts page.

24                                                                                                                                          THE HERSHEY COMPANY | 2019 SUSTAINABILITY REPORT
THE BIG PICTURE          GOVERNANCE AND APPROACH            BUSINESS          PLANET        PEOPLE          CHILDREN AND YOUTH         COMMUNITIES            OUR PERFORMANCE

                                                           COCOA FOR
                                                             GOOD

COCOA FOR GOOD                                  At a Glance—Cocoa for Good Explained
In 2012, Hershey committed to sourcing          We’re working to make cocoa-growing
100 percent certified and sustainable           communities stronger for generations
cocoa by 2020, which we achieved at             to come. To do so, we have a clearly                PRACTICES                                    PARTNERS
the start of the year. In 2018, we further      defined program:                            We focus on four key areas of impact       We work with partners and support
strengthened our cocoa sustainability                                                       that we believe are all interconnected:    initiatives that correspond to our
efforts with our Cocoa For Good program                                                                                                impact areas.
that holistically addresses systemic social                                                 •N
                                                                                              ourishing Children: We provide
and environmental issues in our cocoa                   PURPOSE                              better nutrition at school and provide    In 2019 our partners included:
supply chain.                                                                                training to support improved child
                                                To support the people in the                                                           •N
                                                                                                                                         ourishing Children: Global
                                                                                             nutrition at home.
Child labor, poor nutrition and                 communities where Hershey sources                                                       Alliance for Improved Nutrition
                                                its cocoa and support our business          •E
                                                                                              mpowering Youth: We work with            (GAIN), Hellen Keller Foundation,
deforestation are all symptoms of poverty.
                                                objectives to source cocoa that              communities to combat child labor,         International Cocoa Initiative
Through Cocoa For Good, Hershey aims
                                                is socially and environmentally              improve the quality of education and       (ICI), Project Peanut Butter, The
to disrupt the cycle of poverty while
                                                responsible.                                 equip youth with life and business         Sustainable Trade Initiative (IDH) and
also addressing each of these symptoms
                                                                                             skills and resources to break the cycle    Transforming Education in Cocoa
directly. The program works to increase
                                                                                             of poverty in their communities and        Communities (TRECC)
the profitability of cocoa farming as well as
                                                                                             become tomorrow’s leaders.
diversify incomes at the household level,             PRINCIPLES                                                                       •E
                                                                                                                                         mpowering Youth: Aflatoun
educate families on the value of savings,       • We listen and engage with                •P
                                                                                              rospering Communities: We                and Inades, CARE International,
empower communities, foster women’s               communities on the ground,                 economically empower women and             CocoaAction, ICI and TRECC
leadership and improve the quality of             incorporating constructive feedback        provide training and financial support
                                                                                                                                       •P
                                                                                                                                         rospering Communities: Bill &
nutrition and access to education.                and supporting people-led change.          to cocoa farmers and their families to
                                                                                                                                        Melinda Gates Foundation, CARE,
                                                                                             grow their business and diversify and
Cocoa For Good is backed by Hershey’s           • We partner with like-minded                                                          CocoaAction, ICI and USAID
                                                                                             stabilize household income.
commitment to invest $500 million by              organizations to drive change at scale.                                              •P
                                                                                                                                         reserving Ecosystems: Cocoa &
                                                                                            •P
                                                                                              reserving Ecosystems: We teach
2030. In 2019, 21 percent of our global         • We track our performance and                                                         Forests Initiative (CFI), Impactum,
                                                                                             more environmentally-responsible
cocoa needs were sourced from specific            share our successes and learning                                                      Nature Conversation Resource
                                                                                             agricultural practices and promote
farmer groups where Hershey invests in            opportunities.                                                                        Centre, Pur Projet and USAID
                                                                                             agroforestry and shade-grown cocoa
Cocoa For Good programming.
                                                                                             to tackle deforestation.

25                                                                                                                                       THE HERSHEY COMPANY | 2019 SUSTAINABILITY REPORT
THE BIG PICTURE             GOVERNANCE AND APPROACH            BUSINESS          PLANET       PEOPLE           CHILDREN AND YOUTH                COMMUNITIES            OUR PERFORMANCE

                                                              COCOA FOR
                                                                GOOD

WORKING WITH COCOA COMMUNITIES TO END CHILD LABOR
                                               Hershey does not tolerate child labor          At Hershey, we strongly believe children           structures and community-based groups
     WHAT IS                                   within our supply chain and is working         should not be deprived of their childhoods         to identify child labor and to monitor and
     CHILD LABOR?                              to eliminate it from occurring within          due to economic circumstances. This belief         remediate when cases are found.
     Hershey uses the                          cocoa communities. We also recognize           drives our approach toward eliminating
                                                                                                                                                 Reporting results is a critical component
     International Labour                      that in our cocoa-growing communities          child labor within cocoa communities.
                                                                                                                                                 of building local capacity to deliver a
     Organization (ILO)                        child labor is driven by poverty and is
                                                                                                                                                 robust CLMRS program. Under CLMRS,
     definition:                               an incredibly complex issue. In many           HOW HERSHEY SUPPORTS THE                           both members of local farmer groups and
                                               communities, child-friendly work on the        PREVENTION, IDENTIFICATION AND
     Child labor is often defined as work                                                                                                        our suppliers’ staff become facilitators
                                               farm or in the household is an important       REMEDIATION OF CHILD LABOR
     that deprives children of their                                                                                                             that receive training and build skills to
                                               part of young people’s learning and
     childhood, their potential and their                                                     In 2018 and 2019, we introduced CLMRS              detect and report instances of child labor.
                                               development. However, a lack of stable
     dignity, and is harmful to physical                                                      through our suppliers on Cocoa For Good            At the same time, a community-level child
                                               income and education opportunities in
     and mental development.                                                                  farms and in their local communities in            protection committee is equipped to do
                                               rural areas often leads to children putting
                                                                                              Côte d’Ivoire and Ghana.                           the same. As trusted community members,
     However, not all work done by             in long hours at home and on family farms,
                                                                                                                                                 both these groups are in the best position
     children, such as helping their parents   which is often the family’s sole source of     CLMRS is the leading method of detection
                                                                                                                                                 to raise community awareness, identify
     around the home and assisting in a        income. This, in turn, puts children at risk   and remediation of child labor among
                                                                                                                                                 cases of child labor and implement the
     family business, should be classified     of performing inappropriate or hazardous       children ages 5 to 17 years old and was
                                                                                                                                                 most appropriate child safeguarding
     as child labor.                           farm work.                                     developed through the International Cocoa
                                                                                                                                                 practices to remediate those cases.
                                                                                              Initiative (ICI). It leverages both supply chain
     The worst forms of child labor put
     children at the greatest risk and are
     the highest priority for elimination.
     Child labor is also distinct from
     forced labor, which is defined by
     the ILO as:
     Situations in which persons are
     coerced to work through the use of
     violence or intimidation, or by more
     subtle means such as accumulated
     debt, retention of identity papers or
     threats of denunciation to immigration
     authorities.
     As of 2019, Hershey’s Child Labor
     Monitoring and Remediation Systems
     (CLMRS) found no evidence of
     forced labor in Hershey’s cocoa
     supply chain.

26                                                                                                                                                 THE HERSHEY COMPANY | 2019 SUSTAINABILITY REPORT
THE BIG PICTURE              GOVERNANCE AND APPROACH                     BUSINESS          PLANET        PEOPLE            CHILDREN AND YOUTH                   COMMUNITIES              OUR PERFORMANCE

                                                                       COCOA FOR
                                                                         GOOD

                                                                                                                                                                                  2019 PROGRESS
                                                                                                                                                                                  Detection and Reporting*
                                                                                                                                                                                  2019 PROGRESS
                                                                                                                                                                                  Children monitored*

                                                                                                         68,988
CLMRS remediation varies depending on                    As we work to eliminate child labor, we                                                                                  Detection
                                                                                                                                                                                  2018       and Reporting*
                                                                                                                                                                                          33,956
the kind of labor children are found to be               support remediation initiatives that address                                                                             2019         68,988
doing. In 2018–2019, CLMRS reviewed                      entire families. In many instances, something                                                                            Children monitored*
and assessed 68,988 children who were                    as simple as providing family farms with a                                                                               2018         33,956
living in cocoa-growing communities.                     wheelbarrow (434 provided in 2019), clean       5–17-year-olds currently being monitored by CLMRS                        2019      68,988
                                                                                                                                                                                  Children identified doing
Of the children assessed by the monitoring               cook stoves (276 provided) or better tools,                                                                              inappropriate work and in
system, 6.7 percent were found to be                     like the Pelle Bongo knife to ease cocoa pod                                                                             process of remediation*

                                                                                                         29,744
doing inappropriate work on family                       breaking (665 provided), can have a positive                                                                             Children identified doing
                                                                                                                                                                                  2018      2,948           (33% girls)
farms and were supported by our                          impact. By improving the farmer’s ease and                                                                               inappropriate work and in
                                                                                                                                                                                  2019      4,616 (33.4% girls)
CLMRS programs.                                          efficiency of completing tasks around the                                                                                process of remediation*
                                                         farm, the need for children to lend a hand
Most instances of inappropriate child labor                                                              farmers and 330 supplier personnel trained on child labor issues         2018         2,948            (33% girls)
                                                         with more hazardous tasks is reduced.
involve tasks such as carrying heavy loads                                                                                                                                        Children identified
                                                                                                                                                                                  2019      4,616 (33.4%ingirls)
like firewood or water, coming into contact                                                                                                                                       forced labor
with agrochemicals or clearing away bushes.
                                                                                                                                                                                  2018         0
                                                                                                                                                                                  Children identified in
                                                                                                                                                                                  2019      0
                                                                                                                                                                                  forced labor
                                                                                                                                                                                  *We are continuing to expand our
                                                                                                                                                                                  2018
                                                                                                                                                                                  CLMRS program0 to cover a greater
                                                                                The report is verified                                                                            portion of our supply chain
                           Any child involved in                                                                                                                                  2019         0 The current increases in
                                                                                                                                                                                  year-over-year.
                           hazardous activity is identified                                                                                                                       children monitored and children identified
                                                                                                                                                                                  *We are continuing to expand our
                                                                                                                                                                                  doing inappropriate work is reflective of
                           and information about his/                                                                                                                             CLMRS program to cover a greater
                                                                                                                           The data is used to design actions                     the continued growth of the program.
                                                                                                                                                                                  portion of our supply chain
                           her situation recorded in a                                                                                                                            year-over-year. The current increases in
                                                                                                                           in support of children identified
                           centralized database                                                                                                                                   children monitored and children identified
                                                                                                                                                                                  doing inappropriate work is reflective of
                                                                                                                                                                                  the continued growth of the program.

                  Community                                                                                                                    Children and their families
                  facilitators visit                                                                                                           receive remediation                Capacity Building
                  every farm assigned                                                                                                          support from supply chain          Monitoring & Remediation
                  to their cooperative                                                                                                         facilitators and the ICI           Agents and Community
                                                                                                                                                                                  Capacity    Building
                                                                                                                                                                                  Liaisons (PAID)
                                                                                                                                                                                  Monitoring
                                                                                                                                                                                  2018        & Remediation
                                                                                                                                                                                            368
                                                                                                                                                                                  Agents and Community
                                                                                                                                                                                  2019      542
How CLMRS is                                                                                                                                                                      Liaisons (PAID)
helping kids be kids
                                                                                                                                                                                  2018         368
                                                                                                                                                                                  2019
                                                                                                                                                                                  Community542Child Protection
                                                                                                                                                                                  Committee members or
                                                                                                                                                                                  Equivalent (VOLUNTEER)
                                                                                                                                                                                  Community
                                                                                                                                                                                  2018     673Child Protection
                                                                                                                                                                                  Committee members or
                                                                                                                                                                                  2019     830
                                                                                                                                                                                  Equivalent (VOLUNTEER)
                                                                                                                                                                                  2018         673
                                                                                                                                                                                 2019
                                                                                                                                                                                 Number     of830
                                                                                                                                                                                               farmers trained   on
27                                                                                                                                                                THE HERSHEY COMPANY   | 2019 SUSTAINABILITY REPORT
                                                                                                                                                                                 child labor issues
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