SUSTAINABILITY REPORT 2017

SUSTAINABILITY REPORT

2017

2017 SUSTAINABILITY REPORT HIGHLIGHTS

B CORP AWARDS

"Best for the World" Honoree and

"Built to Last" Award

95%

TRASH BIN ACCURACY in production

OVER 2,000,000 LBS OF

ORGANIC HERBS

30%

of our herb purchases were primarily wildcollected from forests and fields

37.5%

of our herb purchases were Fair or Ethical

trade herbs

75%

of our herbs were primarily sourced from their geo-authentic growing region

99.6%

of our herb purchases were certified

organic

76.8%

DIVERTED WASTE MATERIALS from landfill (90% goal)

`16 / `17

IMPROVED WORKER SAFETY RATIOS second year in a row

100%

RENEWABLE POWER at Sebastopol factory

$1.24M

23%

FAIR TRADE POUNDS increase over FY2016

55%

100%

TM employees make a LIVING WAGE

IN SOCIAL BUSINESS INVESTMENT: Fair Trade Premiums and Global

Supply Chain Community Investment

TEABAG PRODUCTION without staples

A LETTER FROM OUR CEO, BLAIR KELLISON

Fiscal year 2017 marks Traditional Medicinals' 43rd year in business. It was an outstanding year for the company, and I couldn't be prouder of our team and the results we accomplished, including record investments in sustainability. It's a core principle at TM that growth leads to an expansion of our purpose-driven, social business model. So as our company grows, so too does our positive impact, allowing more people to earn fair wages and have a greater quality of life, while converting more of the planet to responsible, organic farming practices.

As a private organization, we have the luxury of having a very long-term planning horizon. As a result, we are able to replace a typical company's focus on quarterly earnings with a focus instead on expanding our sustainability efforts to stay out in front of our ever-growing organization.

TM provided 100% of employees a verifiable Living Wage for the second year in a row, and further increased its lowest (and other) hourly wages in anticipation of California's 2019 $15/hour minimum wage requirement. Worker safety metrics also increased for the second year in a row.

Thank you for your interest in our annual Sustainability Report. We hope our success inspires others to incorporate more sustainable practices into their business which benefit our stakeholders in the global community. We look forward to finding ways to improve so that we may continue this good work for at least another 43 years.

In 2017, we focused on expanding our sustainable sourcing of herbs. We purchased over 2 million pounds of herbs from six continents, 99.6% of it certified organic, and over 500,000 pounds of Fair Trade- or FairWild-certified herbs. Ethical trade initiatives in India and China added another 200,000 pounds for a total of over 750,000 pounds of fair- and ethically traded herbs. Fair Trade premium contributions to producer community development funds totaled over $110,000 in FY2017.

-- Blair Kellison CEO

In 2017, TM's solar panels and a local geothermal plant supplied 100% local, renewable electricity for our factory production. Our new administrative offices in Rohnert Park have 3.5 Megawatts of solar panels, which offset 42% of our power purchases. TM again offset all metered gas usage with carbon offsets from our organic, Fair Trade green tea supplier's regenerative farming practices.

Traditional Medicinals continued to invest in operational efficiency through new hires and continuous improvement training that launched projects to reduce downtime, landfill output, and safety issues. TM's growing production capacity supported 14.3% sales growth, with an only a 2% increase in packaging procurement.

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REPORTING THE GOOD WORK WE DO

We are not just in the business of tea. We are in the business of changing lives, changing communities, and changing the quality of herbal remedies. Since our inception in 1974, we have infused sustainability into every aspect of our operations, from sourcing and packaging to distribution and voluntary certifications. Our community engagement philosophy requires hard work and accountability. By partnering with our stakeholders, we can help preserve and steward the environment, look out for our people, and protect the future of our planet.

In 2017, we moved our administrative team to new offices in Rohnert Park, CA, allowing us to expand our operations in our Sebastopol, CA factory to keep up increased production from the rising demand for our herbal products. When we first moved into our factory in 1987, we were only producing a couple hundred cases per day. Thirty years later, with operations in this same location, we are now able to produce 20,000 cases per day. As the largest Fair Trade herbal tea company in North America, we've had to learn how to grow steadily and sustainably. Today, our factory runs on 100% renewable clean energy, and we continue to work towards our Zero Waste goal.

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Communicating Our Sustainable Mission and Practices

Being accountable for the good work we do requires a strong communications platform and reporting system. Consistent with our purpose to connect people to the power of plants, Traditional Medicinals prioritizes the three pillars of sustainability: environmental stewardship, social equity, and economic development. Recognizing the importance of transparency in measuring impact, we embrace accountability through all parts of our process, from the fields where our herbs grow to our manufacturing facility and offices in Sonoma County, CA.

Our Key Sustainability Stakeholders

To meet our high standards in our herbal wellness products and working relationships, we partner with several third-party agencies and certification bodies, which keep us accountable and help us reach new heights in quality and social business standards.

Embodying the Three Pillars of Sustainability

This report highlights our most interesting achievements and lessons from FY 2017. For a more in-depth look at our commitment to sustainability, we invite you to download the 2017 Traditional Medicinals Benefit Appendix on our website.

PLANET

Environmental Stewardship

PEOPLE

Corporate Social Responsibility

PROFIT

Sustainable Business Profits

A woman harvesting senna from one of the Revive! Project? communities in India's Thar Desert.

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