Pgbs0142 CSR Kraft Foods

Working to Build a Better World
Kraft foods responsibility report
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Every day, around the world
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were working to make a delicious difference.
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Working to build a better World

through actions large and small, global and local, were doing whats right and holding ourselves accountable. by doing our part and acting with care today, were helping to build a better world for tomorrow: a world where theres enough food for all. Where everyone has access to it. and its nourishing, affordable and delicious. a world where the air and water are cleaner. Where the land is managed wisely. and where natural resources are treated with respect. a world where ethics and profit are not mutually exclusive. and where everyone is treated fairly. Were making good progress, but there is much more to be done. and we cant do it alone. this is a journey and we need your help. We invite you to read about our efforts in the pages that follow and accompany us on our journey.
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Message from our Chairman and Chief executive officer
i always tell our employees that regardless of your role, you must make a positive difference. that means the company must be better off for your having been there. i feel the same about our organization as a whole. as the worlds second largest food company, there are many ways we can make a difference. and were actively pursuing them. from increasing sustainable agriculture to reducing product packaging to providing affordable nutrition. Were doing our part and leading the way. as a public company, Kraft foods must delight our consumers and our customers so that we can deliver value for our shareholders. but successful companies, like Kraft foods and Cadbury, makers of brands people have loved for more than a hundred years, know it takes more than delivering the numbers, quarter after quarterdespite how important that is. to build and sustain brands people love and trust, one must focusnot only on today but also on tomorrow. its not easybut balancing the short and long term is key to delivering sustainable, profitable growthgrowth that is good for our shareholders but also good for our consumers, our employees, our business partners, the communities where we live and work, and the planet we inhabit. this report is designed to provide the core information we think youd want to know about the seven key areas that embody our economic, social and environmental responsibilitywhat we do, why we do it and how were getting on. you can print it if youd like. but, to save trees and keep it relevant and timely, were releasing it online. Weve also grouped the information in sections so that you can easily search for exactly what you wantwhether its our progress on reducing waste or our position on advertising to children. at present, this report covers only our legacy Kraft foods business. but, following our acquisition of Cadbury in february, were working hard to integrate our businesses and consolidate our information. and well update this report as we move along. so, keep checking back. inspiring trust takes hard work. our track record has and will continue to demonstrate our commitment.
Kraft foods Chairman and Ceo irene rosenfeld rolls up her sleeves at the Community foodbank of new Jersey, U.s., alongside employee Mark barash and more than 12,000 other employee volunteers worldwide during Make a delicious difference Week in 2009.
irene b. rosenfeld Chairman and Chief executive officer, Kraft foods april 2010
Message froM oUr ChairMan and Chief exeCUtive offiCer
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our efforts and results are captured under the following seven headings:
Sustainability Hunger and affordable nutrition Health and well-being Food safety and quality Workplace and culture Compliance and integrity Corporate governance
7 8 23 28 33 At-a-Glance Sustainability Hunger and affordable nutrition Health and well-being Food safety and quality 37 41 44 46 Workplace and culture Compliance and integrity Corporate governance Assurance Statement
seven areas of ConCentration
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at-a-glance
Were the largest purchaser of coffee and cacao beans from rainforest alliance Certified farms.
Kraft Foods coffee and cacao bean buying volumes (metrictons)
coffee cacao
2005 2006 2007 2008 2009
Weve cut our packaging by over
Weve cut greenhouse gas emissions and energy use, respectively, by
34,055
7,100
174million pounds
*
p 17% p 15%
* *
(nearly 79,000metrictons)
greenhouse gases
energy use
p 32%
in the U.s. alone, between 1999 and 2009, weve provided over
Weve reduced water consumption by

*
p 30%
Weve reduced our waste by
Weve cut
*
50million miles
(80 million kilometers) from our global transportation network.
1 billion servings of food.

at-a-glanCe
Women make up 35% of management worldwide.

Currently, 43% of our salaried employees are women.
Over 5,000 better-for-you products launched since 2005.

roughly 30% of our portfolio.
*statistics regarding waste, packaging, greenhouse gases, energy, water use, and transportation are indexed to net sales and based on a 2005 baseline.
this seCtion Was last Updated JanUary 2010.
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Kraft foods responsibility report sUstainability Hunger and affordable nutrition HEALTH AND WELL-BEING food SAfETY And QuAliTY Workplace and culture
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compliance and integrity corporate governance
MaKing sUstainability a Way of doing bUsiness
sustainability is about meeting the needs of the present without compromising the ability of future generations to meet their own needs. its about conducting business in a way that is environmentally, socially and economically responsible. its about living today, while being mindful of tomorrow. as a food company, were especially dependent on the earth for the raw materials we use every day to make quality products for our consumers. and we need to do our part to ensure that the earths resources are properly managed. the demands being placed on the planet are growing. experts project that the worlds population is going to reach 9.0billion by 2050. and standards of living are expanding in much of the developing world. this all puts incremental strain on the planet. in some areas, experts find that natural resources are being depleted faster than the earth can replenish them. Clean water and arable land are becoming more and more scarce. Change is necessary. and we realize we have a role to play. We are changing the way we conduct our business both directly and indirectly to become more sustainable.
Development that meets the needs of the present without compromising the ability of future generations to meet their own needs.
United nationssponsored brundtland Commission report
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the environmental, societal and economic challenges that face our planet require collaboration and cooperation. so were working with peer companies, governments, nongovernmental organizations, farmers, suppliers, consumers and others to find innovative solutions.
reduce energy-related carbon dioxide emissions in our manufacturing plants by 25percent reduce water consumption in our manufacturing plants by 15percent reduce waste at our manufacturing plants by 15percent eliminate 150million pounds (68,000metrictons) of packaging material. as weve increased our sustainability efforts, weve become more transparent. Measuring our impact on the environment helps us evaluate our progress and determine where to consider improvements and adjustments. thats why we ask independent, third-party companies to verify our progress. our environmental performance indicators (epis) for our manufacturing facilities are verified by Environmental Resources Management (ERM), a global environmental management and technical consulting firm. We also use environmental management systems in our facilities worldwide. these systems comport with widely recognized standards and guidelines issued by the U.s. environmental protection agency and the ISO 14001 Environmental Management standard.
Six areas of focus

c
ti on
nuou
s i m p rove
me
nt
TRANSPORTATION/ DISTRIBUTION
AGRICULTURAL COMMODITIES
WASTE
design
PACKAGING
WATER
ENERGY
sustainability is a companywide priority. to guide us, weve developed the sustainability Wheel. it represents our focus areas and serves as the framework and our intention for building sustainability into everything we do. Were concentrating on the issues most relevant to our business and the areas where our support can make a difference: agricultural commodities, packaging, energy, water, waste, and transportation and distribution. We use the wheel to measure and reward improvement, and to continually advance our efforts throughout our system. to keep us on track, we set aggressive goals. Measuring against total production and using 2005 as our base year, by year-end 2011, we plan to: reduce energy use in our manufacturing plants by 25percent
Sustainability Wheel
six areas of focus design sustainability in upfront Continuously improve going forward
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agriCUltUral CoMModities
We are all responsible for ensuring the long-term health of our planet. As the leading purchaser of coffee and cocoa from Rainforest Alliance Certified farms, Kraft Foods is doing its part by helping farmers earn a good living as they conserve wildlife habitats and the vital natural resources on which we all depend.
Tensie Whelan president, the rainforest alliance
in 2009, the environmental management systems for 134 of Kraft foods manufacturing facilities around the world met the requirements of iso 14001, and were working toward 100percent compliance throughout our network. the iso 14001 standard is a premier benchmark for management tools to help minimize negative environmental impacts. iso 14001 certification goes beyond compliance, aligning locations to the same overall sustainability goals and sets the stage for their continuous improvement.
one of our principal collaborators is the Rainforest Alliance. We started working with the rainforest alliance in 2003 on coffee and that year purchased nearly 2,500metrictons (more than 5.5million pounds). since then we have increased our purchases twelvefold. in 2009, we bought more than 34,000metric tons (more than 75million pounds) of coffee from rainforest alliance Certified farms. thats a 15percent increase over 2008. the rainforest alliance Certified coffee we bought in 2009 helped support 300,000 farm workers tending 60,000 hectares (148,000 acres) in 12 countries in africa, Central america, south america and southeast asia. We currently have nine coffee brands in north america and europe that carry the rainforest alliance Certified seal, and customers have responded enthusiastically. in the UK, our Kenco brand generated double-digit revenue growth. and in sweden, sales of instant and espresso coffee doubled for one of our away from home customers.
Growing our commitment to sustainable agriculture

for Kraft foods, sustainability starts at the farm. sustainable agriculture promotes the long-term viability of crops, the preservation of fertile soil, the economic well-being of farmers and farming communities, and the health of ecosystems. Were working with partners around the world to increase our support of sustainable farming.
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in 2005, we expanded our work with rainforest alliance to cocoa. in 2007, we purchased our first certified beans to use in a portion of our Cte dOr premium chocolate line. We launched Cte dOr products carrying the rainforest alliance Certified seal in 2009. Were working toward using rainforest alliance Certified beans across our Cte dOr and Marabou linesequal to 30,000metrictons (over 66million pounds) annuallyby 2012. in 2009, we increased our purchased volume by 110percent versus 2008, to 7,100metrictons (16million pounds). today, we are the largest buyer of coffee and cacao beans from rainforest alliance Certified farms. to earn certification, farms must meet rigorous standards set by the Sustainable Agriculture Network, an international coalition of leading conservation groups. the standards address water pollution, soil erosion, pesticide use, wages and conditions for workers, wildlife and more. in early 2009, we joined other industry, government and nongovernmental partners in two Bill & Melinda Gates Foundation initiatives that will invest $90million over five years to advance sustainable production of cocoa and cashews in West africaand improve the lives of farmers in the process. the Cocoa Livelihoods Program is managed by the
World Cocoa Foundation with $40million in cash and related support to increase the incomes of small-scale farmers in Cameroon, Cte divoire, ghana, liberia and nigeria. the African Cashew Initiative is managed by Deutsche Gesellschaft fr Technische Zusammenarbeit GmbH (GTZ) and provides around $50million in cash and related support to train producers and link them with local processing facilities in benin, burkina faso, Cte divoire, ghana and Mozambique. the program also promotes the value of byproducts and builds incentives for local african processing capacity. through both the cocoa and cashew initiatives, we hope to help break the cycle of poverty for 200,000 cacao farmers and 150,000 cashew farmers. and the results are starting to materialize. in 2009, we purchased 32 container loads (1.1million pounds/ 500metrictons) of cashews that were grown and processed in sub-saharan africa. since 2004, weve been an active member of the World Cocoa foundation, a membershipbased, nonprofit foundation. With nearly 70 members, the World Cocoa foundation promotes a sustainable cocoa economy through socioeconomic development and environmental stewardship in cacao-growing communities in latin america, southeast asia and West africa.
fourteen Kraft foods brands carry the rainforest alliance Certified seal.
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Soon, 9billion people will seek to improve their lives in the context of a single planet. And every business in every industry will be forced to grapple with finding ways to meet their needs while using less water, carbon and land. We work with companies like Kraft Foods that are willing and able to influence the future of the planet by working to positively advance the way agricultural commodities are produced, bought and sold.
Carter Roberts president and Ceo, World Wildlife fund, U.s.
Were also one of several companies that have joined the World Cocoa foundation and United States Agency for International Development (USAID) in creating a program called ECHOES an acronym for empowering Cocoa households with opportunities and education solutions. eChoes strengthens cacao-growing communities in Cte divoire and ghana by training young people in vocational agriculture. students learn sustainable farming methods as well as life and leadership skills. Many of the young adults go on to start new, modern farms. the ultimate goal of the program is to serve as a replicable model throughout West africa. as part of the eChoes program, weve helped train more than 5,200 students and more than 7,100 teachers to promote sustainable cacao farming. in addition to the initiatives outlined above, were helping to make farming more sustainable by engaging with our partners in a variety of ways. in 2009, we joined other members of the World Economic Forum in an initiative called the New Vision for Agriculture. the initiatives objective is to address the historical underinvestment in agriculture. it seeks to expand the public-private collaboration that is crucial to accelerating growth in sustainable
agriculture and to providing nutritional and affordable foods. the new vision for agriculture reflects a shared belief that sustainable agriculture is a critical factor in solving multiple problemsincluding hunger, poverty and environmental degradation. partners in the initiative intend to release recommendations in early 2011 that will identify regions of concentration, opportunities for investment of public funds, and a shift toward helping the people in the countries that receive such funds to help themselves. Were also working with nongovernmental organizations like the World Wildlife Fund and Conservation International to assess the sustainability of certain raw materials such as coffee, cacao and cashews. theyre looking at africa, asia and latin america, where we buy most of our ingredients. based on the assessments, were evaluating options for sustainable product sourcing.
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CARE is pleased to be working alongside Kraft Foods to improve the lives of people living in poor communities. Through savings, education, entrepreneurship and innovative technologies, thousands of cocoa farmers are benefiting from more sustainable cocoa farming systems. Together, Kraft Foods and CARE are making a real difference in the lives of many rural families around the globe.
Helene D. Gayle MD, MPH president and Ceo, Care
We partner with CARE, one of the worlds Were a member of the Sustainable leading humanitarian agencies, to create new Agriculture Initiative (SAI) platform created opportunities for cacao farmers in brazil and by the food industry to advance sustainable ghana. in brazil, the program is targeting farming for a variety of commodities. sai over 220 cacao-farming families with training platform has harmonized the definition and education for improving cacao of sustainable agriculture in a clear set of production. the program is also fostering principles and advises, informs and trains farmers entrepreneurial skills and helping personnel of member companies to promote them diversify their sources of income. in knowledge sharing and use of best practices. ghana, the partnership is helping 2,500 We are a founding member and financial young farmers increase their cacao yields supporter of 4C Association, originally thereby increasing their household incomes known as the Common Code for the Coffee as well as reducing childrens responsibilities Community. this coalition of producers, on cacao farms so they can go to school and trade, industry and nongovernmental thrive. together, we are helping to provide organizations aims to help farmers lower opportunities for cacao-growing families their costs, improve quality and efficiency, opportunities that will help to lift them, and and gain access to markets and credit. their communities, out of poverty. in europe and the United states, were We contribute to a World Wildlife fund developing ways to source wheat for our program that preserves biodiversity and biscuit and snack businesses in a more protects wildlife while improving the incomes integrated way that aims to reduce of farmers in regions of sumatra, indonesia, environmental impact. where we source some of our coffee. We support the World Cocoa Foundations Sustainable Tree Crops Program of the international institute of tropical agriculture, which encourages the use of fewer pesticides, improves farm conditions and productivity, and promotes socially responsible production methods.
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Addressing key issues in the supply chain

COCOA LABOR ISSUES Kraft foods is involved
in substantial efforts to address forced labor and the worst forms of child labor in cacao farming. While we dont own or control any farms, we remain committed to working with others to address this issue.
by working together with our partners, we are improving the quality of life for thousands of children and adults in cacao-farming communities in West africa; providing greater access to education; boosting farm family incomes; encouraging responsible labor practices; and helping at-risk and potentially exploited children. used in a large variety of products worldwide, and demand is growing. this is contributing to deforestation in the tropics given current general practices. Constructively addressing the issue requires cooperation from producers (including farmers, cooperatives and postharvest processors), the food industry, governments and civil society. for our part, we purchase only the fats derived from palm oil. our suppliers primarily source from indonesia and Malaysia, with smaller quantities coming from brazil, Colombia, Mexico and West africa. our purchases amount to less than 0.5percent of worldwide production.
PALM OIL AND DEFORESTATION palm oil is
since 2001, weve worked with U.s. government officials, the governments of Cte divoire and ghana, and our peer companies. our efforts are focused on economic development, promoting responsible labor practices and education. in 2002, to further our commitment, we cofounded the International Cocoa Initiative (ICI), an independent foundation aimed at ending abusive labor practices on cacao farms. engaging with cacao-farming communities about child labor and hazardous work practices to develop a change in attitude is a slow process, especially in places where poverty is prevalent. this dialogue is central to getting cacao communities to commit to a long-lasting change. by working community by community, the iCi is raising awareness and seeing a reduction of hazardous child labor in cacao farming in Cte divoire and ghana.
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following serious allegations concerning the environmental practices of one of our palm oil suppliers, we suspended direct purchases from the supplier. this decision will stay in effect until the supplier and any affiliates clearly demonstrate they sustainably source palm oil and comply with local laws. We support the goals and efforts of the Roundtable for Sustainable Palm Oil (RSPO), and we buy from its members. however, we believe more needs to be done to enforce guidelines and address deforestation. the rspo needs to reach broad consensus on its certification standards, in particular with regard to climate change impacts of palm oil production. We continue to discuss options with our suppliers to purchase palm oil that meets the standards and principles of responsible production. We are also working with the World Wildlife fund to gain a better understanding of the issue and our options. We will begin to purchase certified palm oil through GreenPalm certificates in 2010. as certification advances, we will continue to review our purchasing strategies.
ANIMAL WELFARE a growing concern,
especially in european Union (eU) countries and the U.s., is animal welfare. in the eU and the U.s., we require our facilities and those of our direct suppliers that manage live animals to meet industry standards and government regulations on animal welfare. in Canada and the U.s., we adhere to species-appropriate standards developed by trade organizations for beef, pork, chicken, eggs and turkeys. suppliers must demonstrate compliance through annual audits conducted by a third party. in the eU, our suppliers have to comply with established animal welfare regulations as a condition of exporting goods to eU countries.
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paCKaging
Packaging
Examples of our products that have reduced packaging:

Kenco coffee refill pouch 97percent less packaging compared to the glass jar, formerly the products sole container. Oscar Mayer Deli Creations 30percent less paperboard; 1.2million fewer pounds (544metrictons) of packaging. Milka chocolate bars 60percent less packaging weight from fewer layers; 5.7million fewer pounds (2,600metric tons) in europe and rolling out the process in latin america. Kraft Mayo new shape reduced plastic by 20percent. and because the new jar is stronger, less corrugated board is necessary for transport. Maxwell House, Yuban and Nabob coffees Coffee cans went from steel to composite paperboard that weighs 30 percent less, uses 50 percent recycled content and is expected to eliminate 8.5 million pounds (3.9 million kilograms) of packaging.
besides improving our designs, were also using more sustainable materials. in north america, packaging is one of the first and last experiences the majority of people can recycle more than consumers have with our products. smarter 70percent of our packaging (by weight). Most packaging cuts waste, conserves natural is made from renewable paper. Were also resources and gives users a more satisfying printing some packaging using soy- and other experience. our decisions about sourcing, vegetable-based inks. design and end of life for our packaging have a direct impact on how our consumers interact for consumers, governments and trading with our packagingfrom cart to can. partners, having a universally accepted definition focus and collective effort across our global business units allowed us to exceed our goal of reducing packaging by 150 million pounds (68,000 metric tons) two years ahead of our commitment to do so by 2011 versus a base year of 2005. by the end of 2009, we had cut more than 174million pounds (nearly 79,000metrictons) of packaging from our supply chain. Key to our results is our packaging eco-Calculator . its a tool we provide our packaging developers to help them create more efficient, sustainable solutions, using data from the U.s. environmental protection agency, department of energy and packaging industry groups. the eco-Calculator measures the percentage of postconsumer recycled material, the amount of energy and carbon dioxide emissions required to create the package, and the efficient use of material and void space in the package.
for sustainable packagingalong with metrics to measure progressis important. thats why were co-leading the Global Packaging Project sponsored by the Consumer Goods Forumwith the goal to define sustainable packaging and align the industry on consistent metrics and measures.
global packaging reduction with Weight eliminated since 2005 (mm/lbs)

-174 mm/lbs
2005
2006
2007
2008
2009
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paCKaging
REUSING AND RECyCLING recyclable packaging has little benefit if consumers dont recycle. Were helping to increase recycling rates around the world.
in 2008 and 2009, we partnered as the official food sponsor with RecycleBank, a company that rewards consumers for recycling. at the end of 2009, recyclebank had saved more than 420,000metrictons (9.3millionpounds) of materialthe equivalent of 4.3million trees and 280,000gallons (over 1million liters) of oil from which plastic is made. in addition to our work with recyclebank, were also collaborating with industry packaging organizations in australia, europe, latin america and elsewhere to boost recycling rates.
TURNING TRASH INTO USEFUL PRODUCTS
the system works through a series of collection brigades. the brigades are typically run out of community centers, schools and youth groups. the collection teams are compensated by Kraft foods for each package they collect and send in. the money the organization receives is used to buy equipment and supplies for the collecting organization or is donated to their charity of choice. Were the largest sponsor of terraCycle collection brigades around the U.s., with more than 39,000 Kraft foods-sponsored locations and 7million people estimated to be collecting waste. encouraged by that success, weve expanded the program to include brazil, Canada, Mexico and the UK, making us the largest sponsor of terraCycle collection brigades in the world.
globally, 12 Kraft foods brands have partnered with terraCycle to help turn nonrecyclable packaging into fun, usable goods.
seventypercent of our north american packaging is recyclable. for the remaining 30percent that cant be recycled, were working to find alternatives to address the end of life of the packaging. one alternative is to use it a second time, or upcycle. in 2007, we partnered with TerraCycle, a company that collects postconsumer packaging and turns the waste into merchandise. so far, weve diverted over 2,700metrictons (6million pounds) of materials from landfills.
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energy
Reducing energy to help combat climate change

Kraft foods faces an increasingly complex landscape related to climate issues. as a food company, we are concerned about potential effects climate change may have. so, were looking across our supply chain at both direct and indirect impacts. for direct impacts, we are focusing on our manufacturing and transportation operations. for indirect impacts, we are focusing on our agricultural commodity purchases.
between 2005 and the end of 2009substantial progress toward our goal of achieving a 25percent reduction by 2011. We did so by implementing changes in our operations on a global basis, physical changes through investment, and behavior modifications of time and effort. We are investing in new technologies for lighting, heating, refrigeration, processing and packaging, and its paying off.
BETTER WORLD SNAPSHOT

our manufacturing plants account for 92percent of our electrical consumption. by reducing electricity use, we save fossil fuel burned to generate power and the resulting greenhouse gases.
We are also looking to reduce our consumption of fossil fuels by tapping into alternate sources. sometimes we have a viable alternate energy source right in our factories. at our plants in lowville and Campbell, new york, we identified our focused and pragmatic approach allows a new fuel source and solved the perennial us to concentrate on where we can be most problem of how to dispose of the whey that is effective. We actively participate in the Carbon a by-product of our cheese making. by treating Disclosure Project (CDP) and have done so the whey in an anaerobic digester, we produce since 2005. since the beginning of our enough methane to replace about 30percent participation, we have formally reported scope 1 of the natural gas our plants use annually. and scope 2 emissions. in 2009, we started (thats enough bio-methane to heat 1,000 reporting on a portion of scope 3. you can view homes in the northeast.) Using the whey also our carbon-emissions profile at the Cdp website. eliminates the need to truck it for disposal, saving diesel fuel and carbon dioxide emissions. our goal is to cut energy use in manufacturing an additional benefit of reclaiming the whey plants by 25percent by 2011. Weve reduced it is cleaner wastewater. Were exploring ways by 15percent by the end of 2009. and weve to convert whey to energy across our dairyreduced energy-related emissions by 17percent products network.
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energy
at other plants, were using coffee grounds to generate energy. Were also reclaiming heat from ovens to heat water, experimenting with wind turbines on factory roofs, and simply remembering to turn out the lights. and we have a goal to eliminate chlorofluorocarbons in manufacturing by end-of-year 2010 and hydrofluorocarbons by 2020. We invest in energy savings in our office buildings, too. our corporate headquarters campus in northfield, illinois, U.s., recently earned the Energy Star rating from the U.s. environmental protection agency. it is ranked in the top 8percent among office buildings in the U.s. and uses 33percent less energy than similar commercial buildings. the Kraft foods building in Zurich, switzerland, is known as the lightcube, for its use of glass, automated shades and its weather station. this building uses 50percent less energy for lighting and 60percent less for ventilation than comparable facilities. buildings in australia, brazil and the philippines also have strong efficiency records.
Kraft foods is one of the signatories to The Copenhagen Communiqu on Climate Change. the Communiqu aligns directly with our view that the United nations climate framework agreement makes sense for society generally and will ultimately benefit our business. through measures large and small, we are closing in on our goal of cutting a quarter of our energy use.
global Manufacturing energy Consumption (gj/ton) with % Change since 2005

-15%
Known as the lightcube, our building in Zurich is one of our most energyefficient facilities.
2005
2006
2007
2008
2009
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Water
Watching our water use

More people making more demands on the planets water supply have made water a focus around the world. Were doing our part to treat water as the limited resource it is. Weve reduced water consumption in our manufacturing facilities by 32percent since 2005, surpassing our goal of cutting 15percent by 2011. We met our goal by reusing water, improving processes, maintaining equipment and educating employees. and were not stopping therewere continuing to identify new opportunities for reducing our water use. our plant in port Melbourne, australia, where we make our Vegemite spread, is a great example. over a four-year period, we consolidated Vegemite manufacturing processes and made innovative changes to our production processes, resulting in a 58percent reduction in water use. We also reduced wastewater discharge by more than 65percent. (energy consumption dropped by 52percent, too.) Wastewater streams from the production of Vegemite spread are now recovered, treated and used in local road building, saving about 1million liters
(264,200gallons) of potable water per month. new initiatives at the plant aim to cut water consumption by another 39percent, diminish wastewater by an additional 55percent, and reduce carbon dioxide emissions by 1,450 metric tons (3.2million pounds). at our Cieszyn, poland, chocolate facility, we reduced water use by 39percent compared to 2005 through continuous improvement efforts. and in germany, we reduced water at our hemelingen coffee plant in 2009 by 19percent compared with the previous year through improvements to the cleaning process.
global Manufacturing Water Consumption (m3/ton) with % Change since 2005
-32%
2005
2006
2007
2008
2009
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Waste
Cutting waste
philadelphia and lehigh, pennsylvania, as well as our distribution center in bethlehem, Weve reduced net waste from our manufacturing pennsylvania. there, employees separate plants by 30percent from 2005 levels, exceeding recyclables, organics and waste. they strive to our goal of a 15percent reduction by 2011. our recycle or reuse what would otherwise go to strategy is simple: generate less and find new landfill; residual waste goes to an energy facility uses for the waste that is produced. solid waste where it is burned as fuel. Were looking at generated from manufacturing accounts for ways to replicate these successes at our more than 99percent of total waste generated facilities worldwide. by Kraft foods. We currently recycle or reuse about 90percent of all our manufacturing waste. in some cases, were using manufacturing by-products as energy sources. global Manufacturing Waste in 2007, we launched a pilot program with Sonoco, a global packaging and recycling company, to substantially reduce waste in our plants. our ultimate objective: to send zero waste to landfills. six of our north american facilities have achieved this goal so far. they include our plants in Mississauga and scarborough, ontario, Canada; and several in the United statesnew Ulm, Minnesota;
generation (kg/ton) with % Change since 2005
-30%
2005
2006
2007
2008
2009
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transportation/ distribUtion
Shipping and storing product more efficiently

as members of the U.s. environmental protection agencys SmartWaySM Transport Partnership, weve reduced truck idling, lowered our corporate speed limit, equipped our trucks with fuel-saving technology and adopted other strategies that enable our trucking operations and those of our freight carriers to use less fuel and emit fewer greenhouse gases. in 2009, we were one of just five consumer products companies to earn the smartWay excellence award.
10,000 truck shipments and cut nearly 2,000metrictons (4million pounds) of emissions by shipping wheat to our toledo, improving our global transportation and ohio, flour mill by waterway rather than road. distribution network so that we move products in brazil, in just six months of shipping by and raw materials more efficiently saves truck water we reduced 125 truck shipmentsnearly fuel, cuts carbon dioxide emissions and reduces 250,000 miles (390,000 kilometers) and traffic. since 2005, improved internal processes 300metric tons (more than 600,000 pounds) along with our collaborations with customers of carbon dioxide emissions. and suppliers have saved more than 50million road miles (80million kilometers)the the right technology can make a difference, equivalent of driving from Madrid to beijing too. Using the Oracle transportation Managemore than 8,500 times. ment system to manage and optimize truck movements and minimize empty miles in our sometimes the answer is right under our U.s. operations saved us more than 500,000 feet. like our underground refrigerated-storage miles (800,000 kilometers) in 2009. facility built into the natural limestone caves at springfield, Missouri, U.s. not only do the naturally cool caves require 65percent less energy than conventional storage facilities, their large size and central location enable us to consolidate inventory and transport our products to our customers more efficiently. BETTER WORLD annual savings: 180,000gallons (680,000 SNAPSHOT liters) of fuel, 4million pounds (1,800 metric since 1993, weve shipped coffee beans to tons) of carbon dioxide emissions, and more our berlin, germany, roasting plant by rail rather than 1million miles (1.6million kilometers) of than truck. thats reduced fuel consumption by truck travel. 60percent, eliminated 100,000 truck transports, another solution is to use other, more efficient modes of transportation. in north america, weve saved more than 1million miles, replaced
cut 1.8million miles (2.8million kilometers) and eliminated carbon dioxide emissions by two-thirds, or 2,300tons (2,000metrictons)
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SUSTAINABILITY
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HEALTH AND WELL-BEING food SAfETY And QuAliTY Workplace and culture
hUnger and affordable nUtrition
compliance and integrity
corporate governance
fighting hUnger and proMoting affordable nUtrition
as a food company, we believe we can make the greatest difference by sticking to our core competency and focusing our giving and efforts on food and nutrition. our giving worldwide primarily falls into one of three areas: fighting hunger and malnutrition, promoting healthy lifestyles and responding to disasters. in order to maximize the impact of our efforts around the world, we work collaboratively with peer companies, governments and nongovernmental organizations to help improve the lives of those in need. as a member of the global community, were committed to real, measurable change.
Working to end hunger and malnutrition
Our four-pronged approach to addressing hunger and improving nutrition

1. 2. 3. 4. providing direct aid developing/marketing affordable nutrition products supporting sustainable agriculture advocating effective policy
hunger is the worlds leading health threat.* one in six people worldwidemore than 1billion dont have enough to eat. as one of the worlds largest food companies, were in a unique position to help.
*World food programme, http://www.wfp.org/hunger
this seCtion Was last Updated May 2010.
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Whether its a hard-to-reach rural area or an urban neighborhood without a grocery store, the Kraft foods Mobile pantry program is making a difference for families living in our countrys food deserts. in 2009, our company and foundation pledged $4.5million over three years to feeding america, and the mobile pantry program is bringing more foodand better nutritionto children and families who need it most. the fleet of up to 25 trucks brings fresh produce, protein and dairy products into communities where access to food is challenging. theyll deliver up to 50million meals over three years.
Were fighting hunger and malnutrition in 10 countries. We do so by offering aid, developing products that make good nutrition affordable, supporting sustainable agriculture, and advocating for sound public policy. Kraft foods and the Kraft foods foundation team with leading humanitarian organizations that can best use what we bring to the table: food and financial resources, expertise in food technology and production, nutrition, and an efficient global supply chain.
PROVIDING AID We have a long history of providing aid to hunger-relief organizations worldwide. Kraft foods* has donated nearly $1billion in cash and food to select organizations since 1990. and, in the U.s. alone, between 1999 and 2009, weve provided over 1billion servings of food.
fresh foodnotably fruits, vegetables, proteins and dairy productsis the number one category distributed by the nations food banks today, thanks to leadership from Kraft foods and its foundation. fresh food had been absent from the diets of the working poor, due to cost, despite its help in overcoming disease complicated by calorie-dense, nutrient-poor diets. seeing an opportunity, we* worked in partnership with feeding america to build the capacity of food banks to ensure these communities would receive more fresh, nutritious food. in addition, our executive vice president of operations and business services now serves as chairman of feeding americas board to help set its strategy. and, our employees provide supply chain consulting in hopes of yielding substantial productivity savings. outside of north america, our partners include CARE, the Charities Aid Foundation, the European Federation of Food Banks, INMED Partnerships for Children, International Federation of Red Cross, Save the Children and the World Food Programme, among others.
www.feedingamerica.org
in the U.s., our partner is Feeding America. Weve helped feeding america increase the amount of fresh, nutritious food dispensed by its 200 food banks nationwide. Weve supported nutrition classes for families in need, donatedmillions of pounds of food, and provided refrigerated food trucks. Most recently, we* funded mobile pantries that help deliver food to neighborhoods without easy access to grocery stores.
*some contributions were made by the Kraft foods foundation.
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in 2009, the foundation committed to provide $3million to save the Childrens meal distribution and nutrition education programs in indonesia and the philippines. in 2010, our foundation began partnering with inMed partnerships for Children to launch a school-based nutrition program for children in brazil. it will provide $2.25million over three years to help children ages 5 to 14 learn about good nutrition, physical activity, basic hygiene and sanitation. Children will also tend gardens to grow fresh produce for their schools and the surrounding community. additionally, the program will train school food workers in food safety and nutritious cooking; teach mothers of schoolchildren the basics of nutrition and gardening; implement low-cost, low-tech water purification; and screen and treat children for intestinal parasites and anemia.
MAKING NUTRITION AFFORDABLE sometimes
solutions to hunger lie in innovative products. in 2009, just over 14percent of our revenue in developing countries (excluding coffee sales) came from fortified products sold at an affordable price.
Biskuat biscuits are enriched with nine vitamins and six minerals, wheat and milk to give children of indonesia energy to win the challenges of the day.
in indonesia, for example, our Biskuat (strong biscuits in bahasa) brand of biscuits enables parents to provide essential nutrients to their children at an affordable price. Biskuat biscuits are fortified with nine vitamins and six minerals, and sell for about 4 cents (Usd) for a full serving of five biscuitsan affordable sum in a place where most people live on less than $4 per day. the biscuits are available at roadside stands and easily fit in a typical pocket. We sell a similar biscuit in Malaysia under the Tiger brand and, in China, we sell our Jia Gai biscuits. in asia and latin america, our Tang orange-flavored drink is fortified based on in 2009, 10 disaster zones received humanitarian regional needs. and Eden-brand cheese sold aid, including the victims of typhoon Ketsana in in the philippines provides micronutrients appropriate for residents there. the philippines, flooding in the U.s. states of georgia and north dakota, wildfires in australia and Canada, and earthquakes in Costa rica, italy and, in 2010, haiti. the foundation also supported disaster relief efforts in Chile. in total, we* have contributed nearly $12million in cash and products for global humanitarian aid since 2000.
*some contributions were made by the Kraft foods foundation.
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acting locally as well as globally. in addition to major global initiatives, were also working to make a difference neighborhoodby-neighborhood. during our Make a delicious difference Week in 2009, over 12,000 of our employees in 33 countries volunteered in their communities. they helped feed families facing hunger, promoted healthier lifestyles and touched the lives of about 600,000 people in need.
because consumers who dont have a lot of money need food that lasts, many of our products in developing markets are nonperishable and shelf-stable. one example is the Tang drink, which has a shelf life of two years. Were exploring how we can give more of our products longer shelf lives without relying on processing and preservatives. in addition to the nutritional products we already market, were developing and sharing technologies for new ones. among them: tasty, affordable, everyday foods that can reduce the risk of parasitic infection, a risk faced by upwards of 2billion people worldwide. through a long-term partnership, we have developed proprietary technology that is more effective than current solutions. We hope it will be a powerful new tool in the fight against hunger and malnutrition. support public policy that ensures changes intended to end hunger and malnutrition are lasting and comprehensive. for example, we advocate for consistent use of nutritional panel information to better educate consumers. We support basic nutrition education for at
ADVOCATING FOR EFFECTIVE POLICy We
risk groups. and as a supporter of the Friends of the World Food Program, we advocate for a series of policy and funding changes intended to build food-producing capacity in developing nations. in addition, we support an approach to biofuels that values food and fuel equally. and we encourage public investment in an agricultural food supply chain that produces better yields, less waste and more calories per hectare.
CONNECTING HUNGER AND SUSTAINABLE AGRICULTURE according to the United
nations, 70percent of the worlds hungry people are engaged in agriculture. poverty, government instability, lack of infrastructure and natural disasters are underlying factors in struggling agricultural economies. so its not surprising that the countries with the most success in reducing hunger are those whove made the greatest investments in agriculture. the link between hunger and agricultural practices is just one reason why we are increasing our support of sustainable agriculture. read more about our commitment in the Sustainability section of this report.
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the project will research and identify local nutritional needs and cultural preferences. it will four founding partners in project laser beam, also consider such underlying causes of hunger a five-year (20092014), multimillion dollar and malnutrition as income distribution, access project, which is intended to speed the eradito markets, behavior and food accessibility. cation of child hunger and malnutrition by once the research is complete, well work with addressing underlying social and economic our partners and others to implement shortcauses. project laser beam is a unique collabora- term interventions and identify long-term tive initiative with the World food programme, sustainable solutions to the problems. the Global Alliance for Improved Nutrition, national and local governments, and industry. the company and foundation will contribute cash to the project, as well as our employees expertise on affordable nutrition, sustainable agriculture, manufacturing and distribution.
APPLyING LASERLIKE FOCUS TO CHILD HUNGER AND MALNUTRITION We are one of
As the numbers of the hungry increase, we need private companies like Kraft Foods to join us in the fight against hunger. Its a fight too big for any one player, but together we can find new ways to dramatically reduce malnutrition.
Josette Sheeran executive director, World food programme
project laser beams primary goal is to create a sustainable, scalable and replicable model for ending hunger and malnutrition. beginning in bangladesh and eastern indonesia, the project will address five root causes of hunger and malnutrition among children by seeking to: 1. increase micronutrient intake 2. increase treatment of severe acute malnutrition 3. improve hygiene and parasite control 4. strengthen household food security 5. promote exclusive breastfeeding and complementary feeding.
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health and Well-being food SAfETY And QuAliTY Workplace and culture
Hunger and affordable nutrition
helping people MaKe better ChoiCes
Were here to help people achieve health and well-being through everyday foods they love foods that taste delicious and support their desire for healthy lifestyles. We follow four simple principles: 1. offer better-for-you options 2. provide consumers clear nutrition information to make better choices 3. advertise responsibly to children 4. promote physical activity and healthy lifestyles. our approach is in line with our commitment to the World Health Organization and our goal to create foods that are wholesome and delicious. in all of our health and wellness initiatives, our advisory council of globally recognized experts provides perspective on best practices and emerging science to help guide our efforts.
Were listening to consumers, and creating better choicesfor example, we reduced sugar in Capri Sun by 25%, eliminating more than 120 billion calories from our portfolio.
health and Well-being
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Making it better for you

Some better-for-you choices available around the world
100 Calorie Packs for multiple products U.S., Canada and Europe each serving comes in easy-to-manage portions. Jai Gai biscuits China one serving provides 10percent of daily calcium. Express crackers Argentina popular product comes in made-without-salt version. Pacific whole-grain biscuits China one serving provides 10percent of daily dietary fiber. PHILADELPHIA Cream for Cooking Australia dairy-based cooking product has 60percent less fat than regular cooking cream. BelVita Breakfast biscuits Europe Made with whole-grain cereals, provides fiber and a selection of vitamins and minerals. Tiger Biskuat biscuits Indonesia biscuits enriched with nine vitamins and six minerals.
as of 2007, we had eliminated or substantially reduced trans fats across our entire product people around the world are telling us they want line. in 2008, we signed onto the Pan American to eat healthier. so were developing products Health Organizations Trans Fat Free Americas that provide them with more choices. Whether Agreementa regionwide commitment among its managing calories, limiting fats, increasing stakeholders to reduce the amount of trans fat the intake of key nutrients or adding more in foods. whole grains to their dietswe offer choices to fit a persons needs at various life stages. Weve also been reducing sodium for a number since 2005, weve reformulated or launched more than 5,000 better-for-you products around the world, roughly 30percent of our portfolio. Were always working to make our food more nutritious without compromising deliciousness. our nutrition standards help guide our reformulation efforts. in some products, weve increased nutrients like fiber and calcium. in others, weve cut fat, sugar and salt. in the U.s., we reduced the amount of sugar in our Capri Sun beverages by 25percent, eliminating more than 120billion calories. Were using healthier oils, low-fat dairy, whole grains, and fruits and vegetables. of years and will continue those efforts. in europe, for example, we reduced sodium across our Dairlylea brand by nearly 30percent since 2002. and our popular Vegemite brand has reduced sodium levels by 20percent since 1977. starting in 2010, we plan to reduce sodium in our north american productsour largest portfolioby an average of 10percent over the next two years.
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We launched our health 4 schools nutrition and exercise program for schoolchildren in the UK in 2004. in 2009, our foundation expanded this program to russia by partnering with CAF Russia and CAFAmerica. by granting $1.3million over three years, we will reach more than 10,000 russian families. the foundation is exploring similar programs in australia, China and five countries in europe.
We continue to invest in health and wellness research and technology. over the years, we have expanded research efforts through partnerships with leading institutions, including baylor University, University of toronto, tufts University and technical University of Munich. in europe, we participate in a number of research framework programs sponsored by the european Commission, like Diogenes, EATWELL, EuroPrevall and HEALTHGRAIN. to date, we have more than 100 patents covering products and the technology to make foods healthier. in 2009, we spent $477million on research and development, with a portion of that spend going to health and wellness product and technology development.
Promoting healthy lifestyles

around the world, we support organizations and initiatives that encourage food literacy and physical activity. in the barrios of Caracas and barquisimeto, venezuela, we work with the nonprofit CEDEINTEGRAL to offer Kraft foods academies, where professional chefs teach residents interested in restaurant work how to prepare food safely and nutritiously. students leave the academies with skills enabling them to open their own businesses or find work in the restaurant industry. the academies have served more than 150 people since 2008.
since 2005, Kraft foods and Boys and Girls Clubs of Canada, through its Cool Moves program, have helped thousands of children and youth across Canada realize the benefits of a nutritious diet and regular, healthy activity. and in the U.s., we teamed with the National Latino Childrens Institute to develop Salsa, Sabor y Salud, the nations first healthy lifestyle program designed specifically for latino families. in 2010, our foundation renewed its commitment to this program. since 2002, more than 100 community organizations have offered the program, reaching nearly 32,000 people. through a national partner, the program is expanding to reach even more families. We also support the Fuel Up to Play 60 initiative that encourages kids to be more active and make better food choices. We are a founding member of the Healthy Weight Commitment Foundation, a multiyear effort to help reduce obesityespecially childhood obesityin the U.s. launched in 2009, the focus is on helping people achieve energy balance in three critical areas: marketplace, workplace and schools.
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Providing clear nutrition information
Were committed to front-of-pack labeling that delivers meaningful information at a glance to make informed decisions, people need the and fits local needs. in australia and europe, right information delivered clearly and simply. our products include energy front-of-pack With the exception of single-ingredient information based on gdas. in the U.s., we are products like coffee, we provide nutrition actively engaged in government and industry labeling on all products in all markets efforts to create standardized front-of-pack worldwideeven where its not required. labeling systems. overall, we support efforts among the industry to develop common following the recommendations of the Codex nutrition criteria that will help consumers Alimentarius, a set of globally recognized, widely make better choices. used food standards, we provide information on eight key nutrientsenergy (calories), protein, We also provide nutrition information online carbohydrates, sugars, fat, saturated fat, fiber and via toll-free consumer call centers. our and sodiumwhere space permits. in europe, healthy living websites in several countries for example, weve implemented Guideline Daily offer lifestyle tips and recipes. and in the U.s., Amounts (GDAs) nutrition labeling on our our Good Eating, Good Living diabetes website packages. this system shows how much of a helps people who care about this condition. particular nutrient is contained in a portion, as well as how much of a persons total daily requirements it represents.
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Advertising responsibly to children

how we market our products is just as important as the products themselves. in 2005, we became the first company to announce global principles for advertising to children: We dont advertise to children under age 6 (a longstanding policy). for children 6 through 11, we advertise only better-for-you products that meet stringent nutritional criteria. We dont advertise in primary or secondary schools. our practices have been the model for several voluntary advertising-to-children efforts. We work with groups around the world to improve advertising-to-children practices. as a founding member of the International Food & Beverage Alliance, we made a global commitment to the World Health Organization to advertise only products that meet specific nutrition criteria to children under age 12. Weve made similar pledges in the U.s., australia, brazil, Canada, Mexico, russia, south africa and europe.
Market responsibly.
Kraft foods Code of Conduct, rule 2
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HEALTH AND WELL-BEING food safety and qUality Workplace and culture
setting neW standards for safety and qUality
ensuring the safety and quality of our food is our number one priority. it is at the core of our heritage; and it is part of our culture. Consumers have trusted our brands for more than 100 years. Maintaining that trust starts with quality foods that people can feel good about serving to their families. and we need to make sure we earn that trust each and every day.
Adhering to strict standards

We employ a comprehensive quality-chain management system to ensure that our food is safe and high-quality. its based on ISO 9001:2000, an internationally recognized family of strict quality management standards. in addition, we supplement the iso standards with safety and quality standards developed specifically for our business. We also work with governments and industry partners around the world, sharing learnings and best practices. for example, in 2001, we announced a new ingredient technology that helped inhibit the growth of Listeria in processed meats. to expedite industry knowledge and use of this food safety innovation, we shared the ingredient technology with the entire meat industry.
Make food that is safe to eat.

food safety and qUality
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our quality management system ensures that employees, suppliers and distributors around the world know our standards and expectations and meet them. Weve developed 72 employee education programs covering everything from sanitation to allergen control to packaging design. before we buy ingredients or raw materials from any supplier, anywhere in the world, we conduct an audit of their facilities to make sure they meet our supplier quality expectations (sqe).
driven by our philosophy of continuous improvement, we regularly look at ways we can improve our supply chain to strengthen food safety. recently, we began screening for potential chemical contaminants in raw materials across the supply chain worldwide. ingredient samples are tested on a scheduled basis and analyzed by a Kraft foodsapproved lab. suppliers cannot ship the ingredients to our facilities until test results confirm they meet our specifications for safety.
is 100percent perfect. thats why we are driven by a philosophy of continuous improvement. equally as important as audits are our tools and programs for helping suppliers improve their food safety and quality systems. We hold lessons-learned sessions, offer food safety and quality forums, and provide on-site quality consultations. in 2009, we hosted five supplier quality and food safety forums covering asia, Central and eastern europe, european Union, Middle east and africa, and north america.
suppliers are regularly audited thereafter every 18 months for suppliers handling cheeses, ready-to-eat meats, fruit and vegetables, and at least every three years for all suppliers. Where suppliers handle food at high risk for contamination, or where quality control is more challenging, we conduct the audits ourselves. in other cases, we work with third-party auditors. regardless of who performs the audit, its critical that they be properly trained, managed and adhere to common criteria. suppliers that fall short of our standards must take prompt, verified corrective action. if they dont, we stop doing business with them.
Taking action when needed
despite our vigilance, threats to safety and quality may arise. When something goes wrong, we respond quickly and decisively. Weve trained our special situations Management teams senior-level managers from across the company who are experienced in handling these types of situationsto take immediate steps to protect consumers when there is a food safety issue. We have a real-time, automated early-alert system and processes to fast-track information to our internal quality and consumer managers as well as our special situations Management as a global leader on food safety, we have well-defined safety and quality expectations for teams. Weve also trained employees in our our suppliers. We also recognize that no system manufacturing plants so they know exactly what steps to take in a time of crisis.
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Weve helped build better food-production infrastructure in Kyrgyzstan and developed products sold by an organization in benin. Weve expanded the offerings at a vietnam cooking school for low-income residents, helped to improve and extend safe distribution in vanuatu, and helped an ecuadorian charity raise money by selling artisan chocolates. since 2001, weve sent more than 160 of our inhouse scientists, engineers and other experts on 56 missions with the United nations volunteer program. our employees share their expertise with nonprofits and small businesses focused on sustainable agriculture, food production and community development. the result? a difference thats both delicious and lasting.
Alerting consumers to allergens

Many consumers have food allergiessome of them quite serious. When managing food allergens, we address concerns at critical points throughout our production and our supply chain. We account for all the possible sources of major food allergens and clearly identify them on our labels in common terms.
with us in these increasingly important contact channels. We have nearly 90,000 fans of our facebook page, over 5,800 twitter followers, and more than 3 million views of videos on our youtube Kraft foods channel. our consumer information analysts represent the voice of the consumer to the organization. in europe, latin america and north america, they provide over 1,000 monthly and quarterly analyses of consumer input to all brands and across multiple functions (e.g., Marketing, quality, research & development). this valuable information helps us better deliver on consumer needs.
Responding to our consumers

it is important that consumers have multiple ways to contact us about our products. thats why we have consumer contact points in all countries where our products are sold, including 10 major global contact centers. Contact details are on all websites through frequently asked questions (faqs) and Contact Us functionality. We continue to make ourselves more accessible to consumers by increasing our presence in the social media consumer space. in 2009, Kraft foods facebook and twitter accounts were created to enable consumers to communicate
www.unv.org
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Weighing the use of genetically modified ingredients

We believe genetically modified ingredients can play a role in food production. We also know consumers worldwide have different points of view about genetically modified ingredients. thats why when we choose to use genetically modified ingredients in our products, we consider a number of factors, including: fact-based scientific consensus about safety Consumer acceptance local regulatory approval for use our own strict safety and quality criteria. We follow all local regulatory requirements regarding the use and labeling of genetically modified ingredients. We also support appropriate regulation of genetically modified foods and ingredients to ensure the safety and integrity of the food supply and the protection of the environment.
We are confident that genetically modified ingredients are safe based on the conclusions reached by a majority of scientists and regulatory organizations, including the Food and Agriculture Organization of the United Nations, the U.S. National Academy of Sciences and the World Health Organization. though scientists have reached consensus, consumers have not. for example, in the U.s., most consumers are not concerned about genetically modified foods. so we use them in most of the products we make there. but in europe, most people dont want genetically modified ingredients, so we dont use them there. in countries where we dont use genetically modified ingredients, we require that our suppliers provide documentation on the origin and preservation of all ingredients.
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HEALTH AND WELL-BEING food SAfETY And QuAliTY WorKplaCe and CUltUre
a great plaCe to WorK
they make our products. drive our trucks. Manage our company. and much more. around the world, more than 100,000 Kraft foods employees determine our success every day. treating them well is, above all, the right thing to do. its also key to our long-term industry leadership. providing a workplace that is safe, inclusive and rewarding is a proven strategy for keeping good people and inspiring them to do great things. and thats the best way we know to grow a great company.
Keeping workers safe

safety is a top priority. We strive for zero accidents in the workplace by addressing all causes of injuries. Weve made progress. We have reduced our lost-time accident rate by 27percent since 2005. We also expect employees to follow all safety laws and guidelines (including reporting injuries), operate equipment properly, and never use alcohol or illegal drugs in the workplace. in 2009, 27 plants worldwide completed a full year of operation without a lost-time accident. these facilities were presented with a plaque for helping us fulfill our vision of being a safety perfect organization. facility managers made the presentations at plantwide celebrations, where all employees were recognized for this achievement.
Treat people fairly.

WorKplaCe and CUltUre
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our safety policy sums up our position: safety and health improvement are both an individual and team responsibility. each of us must be dedicated to conducting all activities with the highest concern for employee safety and health. each of us should participate in a local safety program and actively seek to achieve an accident/injury-free work environment. accordingly, were committed to: Meeting or exceeding all applicable safety and health regulations Continuously improving the safety of our work environment by investing in our people and our facilities Creating and maintaining a world-class safety culture to achieve an accident-free work environment.
We regret to report that we lost four employees to fatal accidents in 2009. two Kraft foods sales representatives died in a commercial airline crash near buffalo, new york, U.s.; a truck driver lost control of his vehicle while on the road in south Carolina, U.s.; and a manufacturing employee in poland died from injuries after falling from a ladder. We thoroughly investigate all on-the-job accidents to find the cause and to see if we need to revise our safety procedures.
lost-time accident reduction since 2005.*
0.86
-27%
2005
2006
2007
2008
2009
*this chart shows the number of lost time accidents per 100 full-time equivalent Kraft foods employees per year.
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Treating people with respect

Were building an increasingly diverse workforce. We wont permit discrimination or harassment based on age, race, disability, national origin, religion, sex, sexual orientation or any other legally protected status. being inclusive is critical to our success. it enables us to be the employer of choice for talented people. by mirroring consumers worldwide, we do a better job of meeting their needs. our global diversity and inclusion strategies provide direction to our employees worldwide, while helping each region make diversity relevant to its own priorities and opportunities. for example, hourly employees represent about 61percent of our workforce and salaried employees account for 39percent. Companywide, we require diversity and inclusion training for every employee at key stages in their careers. eleven diversity-focused employee councils around the world help us promote diversity and drive business objectives. the relationships we build through community involvement connect us with a broad range of consumers and attract diverse talent. in 2009, we linked the representation goals of each business unit to executive compensation to make our leaders accountable for diversity outcomes.
Building great talent

like building great brands, building the skills and talent of our people is a top priority at Kraft foods. our performance management process creates a clear connection between employees development, our business strategies and individual performance required for the companys success. it is fundamental to becoming a high-performing organization. for 100percent of employees, Kraft foods identifies skill gaps and manages the development of its employees capabilities through a formalized performance management process entitled Managing and appraising performance, or Map.

Were working across our company globally to hire, develop and retain more women who earn the same as their male peers. Currently, 43percent of our salaried employees are women, and women make up more than 35percent of our management team.
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Kraft foods rigorous and consistent approach to all elements of performance management goal setting, ongoing informal and formal performance feedback, development and assessmentprovides a strong framework for managers and employees as they translate company strategies into the work they do every day. We are committed to providing a performance management process that: sets clear expectations expects full accountability engages employees and managers in continuous feedback, both informal and formal fosters meaningful development. Were clear about what our employees need to do to succeedand we help them do it. our leadership Competency Model, along with our values and leadership behaviors, provides the organization with a common language that describes expectations of all employees regardless of level, location, function or business. We also provide employees with a web-based toolkit (translated into 28 languages) that helps them develop each competency.
through an annual global succession planning process, we focus on differentiation, development, diversity and depth. our succession plan drives consistency in the application and assessment of employee development practices and ensures that leaders accurately differentiate talent in order to drive key development actions.
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HEALTH AND WELL-BEING food SAfETY And QuAliTY Workplace and culture CoMplianCe and integrity
sUstaining a legaCy of trUst
We take the publics trust seriously. the good faith of consumers, partners, regulators, shareholders and suppliers is something we renew daily, by doing what we say well do.
Our Code of Conduct

in 2009, we updated our Code of Conduct, the cornerstone of our commitment to doing business with integrity. We revised the Code to be concise, clear and unequivocal, and made it available in 33 languages. by stating 10 simple and wide-ranging rules, the Code links our business performance with our core values and draws strict ethical boundaries. it makes plain, for everyone who works at Kraft foods, what we believe is the right and fair way to do business. every day. revising our Code of Conduct reflects our belief that ensuring compliance and integrity is a never-ending process. Were continually making sure our standards are high, expectations are clear, and that we have the tools and processes in place for meeting them. We regularly perform assessments of key legal and compliance risks across our entire company.
One thing is certainwhen gaining a business advantage means violating the rules or ignoring our Values, we dont do it.
Kraft foods Code of Conduct, introduction
CoMplianCe and integrity
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Helping employees do the right thing

our chief compliance officer and five regional compliance officerswith support from other members of the Compliance & integrity and legal groupshelp employees understand our ethical standards. trainingin-person and onlineeducates workers worldwide about our ethics and compliance practices. in 2010, were asking exempt employees at all levels to take our Code of Conduct online training and complete an acknowledgment form. this is double the number from our previous campaign in 2008.
suspected to be fictitious invoices, improper payments and fake premiums, he stood up for what was right and protected our company. the second award recipient was a quality supervisor in our Champaign, illinois, U.s., plant, who consistently demonstrated ethical courage when faced with a number of difficult challenges. he is a role model among his coworkers.
Ensuring people feel safe to speak up

Under our speaking Up policy, we expect employees to ask questions and raise concerns about business practices when they see something they think might be wrong. there may be times when employees are not comfortable speaking with their supervisors, compliance officers or human resources contacts, or simply wish to remain anonymous. Consistent with applicable local law, we have established a toll-free telephone HelpLine operated by an independent company, as well as a corresponding WebLine, so that our employees can confidentially and, if they wish, anonymously report instances of suspected wrongdoing or ask questions about compliance matters. the helpline and Webline are available globally and allow employees to discuss their concerns in their own languages.
If our Code of Conduct doesnt cover a specific situation, our employees draw on our Values to guide them:
We We We We We We We inspire trust. act like owners. keep it simple. are open and inclusive. tell it like it is. lead from the head and the heart. discuss. We decide. We deliver.
in addition, we offer in-depth courses to employees based on their responsibilities. topics include food safety, antitrust issues, antibribery issues and responsible marketing. to support ongoing improvement, we continuously measure and evaluate the effectiveness of our ethics programs. in 2009, we launched a new ethics in action program to recognize employees who act with ethical courage and lead with integrity. one award went to an accounts payable manager in shanghai, China. When faced with what he
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anyone outside of our company who suspects wrongdoing by Kraft foods employees or involving Kraft foods business can contact the helpline, Webline or our Compliance & integrity group at Kraft-Compliance@kraft.com.
Holding suppliers to high standards

We select suppliers and consultants around the world based, in part, on whether their ethical standards align with ours. Most major companies have supplier requirements regarding corporate responsibility. yet most companies are both suppliers and customers, leading to a proliferation of codes of conduct and assessment requests. We helped create a far simpler and better approach. Kraft foods is a founding member of the program for responsible sourcing (progress) sponsored by aiM in europe and the grocery Manufacturers association in the United states (AIM-PROGRESS). this industry initiative allows a supplier to provide common information so each customer can independently make business decisions in accordance with its own corporate responsibility standards. We are currently rolling out progress to our suppliers and business partners. this is an ambitious global effort that will take several years to complete.
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Corporate governanCe
ensUring aCCoUntability
Were a publicly held company. We strive to be open and accountable to all of our stakeholders everywhere. so weve put structures and processes in place to ensure the ethical and efficient governance of our company.
ABOUT OUR BOARD a 12-member Board of
Directors governs our company in a manner consistent with Kraft foods Corporate Governance Guidelines. eleven of our 12 directors are independent under the new york stock exchange listing standards.
The Board of Directors has five standing committees

1. 2. 3. 4. 5. Audit Finance Human Resources and Compensation Nominating and Governance Public Affairs
in 2007, the board determined that the chief executive officer would be the only employee director, and all board committees will consist entirely of independent directors. they also established the lead director position an independent director who serves as the liaison between the chief executive officer and other directorsto increase the boards effectiveness, promote open communication among independent directors, provide independent board leadership on behalf of shareholders, and chair meetings of the independent directors.
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SUSTAINABILITY
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While the board does not have a written policy regarding diversity when identifying nominees for directors, it endeavors to assemble a board composed of individuals with diverse views, backgrounds and professional experience. for example, of the 12-member board, 30percent are women, one of whom is a person of color. the representation of women on our board exceeds the fortune 500 average of 15.2percent, which was reported in 2009 by Catalyst. all non-employee board members are expected to adhere to our Code of Business Conduct and Ethics for Non-Employee Directors. this Code addresses such issues as legal and regulatory compliance and conflicts of interest.
ExECUTIVE COMPENSATION given the
SPEAKING UP Kraft foods monitors public
policy and participates in the public discussion on issues affecting our company. some examples of issues include food safety and security, nutrition, biotechnology, environmental responsibility, food labeling, marketing and packaging. and, when we engage with governments, we follow the rules and do it with transparency. for example, we voluntarily publish a list of all Kraft foods U.S. political contributions on our Corporate governance website.
HOW TO REPORT FINANCIAL WRONGDOING
increased focus on this topic in recent years, in 2009 and early 2010, the boards human resources and Compensation Committee conducted a thorough analysis of compensation practices and made several adjustments to Kraft foods executive compensation programs. beginning in 2010, the mix of grants to senior management, including the named executive officers, will be as follows: 50 percent performance shares, 25 percent stock options, and 25 percent restricted stock. this mix will place more of an emphasis on performancebased compensationperformance shares and stock options.
We encourage those outside our company and our employees to report concerns about our fiscal controls, auditing matters or anything else that appears to involve malfeasance of any kind. please report such concerns to Kraft-FinancialIntegrity@kraft.com.
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independent assurance statement by erM

Kraft Foods, Working to Build a Better World, Responsibility Report Environmental Resources Management (ERM) was retained by Kraft Foods to provide an independent review and assurance statement for Kraft Foods 2009 Responsibility Report. Scope of Work The assurance process was conducted in accordance with AA1000AS (2008). We were engaged to provide moderate level, Type 2 assurance, covering: evaluation of adherence to the AA1000AS (2008) principles of inclusivity, materiality and responsiveness (the Principles), and the reliability of specified sustainability performance information. Assurance Work Performed We tested the effectiveness of processes used to adhere to the AA1000AS Principles through interviews with selected senior management at executive and functional levels and of relevant management responsible for day-to-day management of sustainability. ERM interviewed key individuals who were responsible for the development and implementation of Kraft Foods response to the following topics: Sustainability Hunger and Affordable Nutrition Health and Well Being Food Safety and Quality Work Place and Culture Compliance and Integrity Corporate Governance
Environmental Resources Management
One Continental Towers 1701 Golf Road, Suite 1000 Rolling Meadows, IL 60008 (847) 258 8900
http://www.erm.com
In addition, ERM reviewed the corporate environmental performance indicator (EPI) datasets, visited a sample of seven sites, and interviewed people at eight additional sites to review site data capture and reporting. The assurance sites were selected from each business region to provide a representative sample of the significant contributors to the six key EPIs and to include sites that were assessed to have the most significant year-on-year changes. The processes were tested at site level by tracking samples of data from input and calculation to consolidation, internal checking, and reporting. EPI data was reviewed for the calendar year 2009 from manufacturing plants only and for the following six EPIs: water consumption, water discharged, energy used in stationary sources, carbon dioxide emitted from stationary sources, solid waste generated and waste recycling rates.
assUranCe stateMent
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Responsibility and Methodology ERMs responsibility was to express our assurance conclusions within the agreed scope. We delivered our work in accordance with ERMs assurance methodology, which is based on AA1000AS, the Global Reporting Initiative (GRI) Sustainability Reporting Standards and the International Standard on Assurance Engagements (ISAE) 3000. We planned and performed our work to obtain all the information and explanations that we believe were necessary to provide a basis for our assurance conclusions as to whether the reported information and data set out in our scope of work was appropriately reported (moderate assurance). The accuracy and completeness of this information is subject to inherent limitations given their nature and methods for determining, calculating and estimating such data. ERM Conclusions On the basis of the moderate level of assurance work undertaken, we conclude that nothing came to our attention to suggest that the Report does not properly describe Kraft Foods adherence to the AA1000AS Principles or its performance. In terms of data accuracy, nothing has come to our attention to suggest that data has not been properly collated from information reported from manufacturing plants. We are not aware of any errors that would materially affect the data reported. Observations Without affecting our assurance opinion, we also provide the following observation: Kraft Foods has made good progress in integrating sustainability issues into their business processes and adopting a life-cycle approach to sustainability issues. This life-cycle approach is being applied to focus future efforts to reduce impacts associated with their products. ERM Competence and Independence ERM operates strict conflict of interest checks for the team members working on the matter and has confirmed our members independence to work on this engagement with Kraft Foods. The members of the assurance team have not provided consulting services to Kraft Foods outside the review of EPI data and the Responsibility Report. The assurance team has the required combination of education, experience, training, and skills for this engagement. Environmental Resources Management Rolling Meadows, Illinois, USA June 2010
assUranCe stateMent
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Help improve our reporting

Were excited to share this report with you. now wed like to hear from you. tell us what you liked, what you didnt, and what else youd like to see. Please take this brief surveyit takes just a few minutes, and your contribution will help us improve our performance and how we report it. www.kraftfoodscompany.com/responsibility

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Working to Build a Better World

Kraft foods responsibility report

Kraft foods responsibility report

Every day, around the world

Kraft foods responsibility report

were working to make a delicious difference.

Kraft foods responsibility report

Working to build a better World

Kraft foods responsibility report

Message from our Chairman and Chief executive officer

Message froM oUr ChairMan and Chief exeCUtive offiCer

Kraft foods responsibility report

seven areas of ConCentration

Kraft foods responsibility report

Weve cut our packaging by over

Weve cut greenhouse gas emissions and energy use, respectively, by

Weve reduced water consumption by

Weve reduced our waste by

1 billion servings of food.

Women make up 35% of management worldwide.

Over 5,000 better-for-you products launched since 2005.

this seCtion Was last Updated JanUary 2010.

MaKing sUstainability a Way of doing bUsiness

this seCtion Was last Updated JanUary 2010.

Six areas of focus

this seCtion Was last Updated JanUary 2010.

Growing our commitment to sustainable agriculture

this seCtion Was last Updated JanUary 2010.

this seCtion Was last Updated JanUary 2010.

this seCtion Was last Updated JanUary 2010.

this seCtion Was last Updated JanUary 2010.

Addressing key issues in the supply chain

this seCtion Was last Updated JanUary 2010.

ANIMAL WELFARE a growing concern,

this seCtion Was last Updated JanUary 2010.

Examples of our products that have reduced packaging:

global packaging reduction with Weight eliminated since 2005 (mm/lbs)

this seCtion Was last Updated JanUary 2010.

this seCtion Was last Updated JanUary 2010.

Reducing energy to help combat climate change

BETTER WORLD SNAPSHOT

this seCtion Was last Updated JanUary 2010.

global Manufacturing energy Consumption (gj/ton) with % Change since 2005

this seCtion Was last Updated JanUary 2010.

Watching our water use

global Manufacturing Water Consumption (m3/ton) with % Change since 2005

this seCtion Was last Updated JanUary 2010.

this seCtion Was last Updated JanUary 2010.

Shipping and storing product more efficiently

BETTER WORLD SNAPSHOT

this seCtion Was last Updated JanUary 2010.

Kraft foods responsibility report

hUnger and affordable nUtrition

compliance and integrity

fighting hUnger and proMoting affordable nUtrition

Working to end hunger and malnutrition

Our four-pronged approach to addressing hunger and improving nutrition

*World food programme, http://www.wfp.org/hunger

hUnger and affordable nUtrition

this seCtion Was last Updated May 2010.

Kraft foods responsibility report

hUnger and affordable nUtrition

compliance and integrity