HOSTESS BRANDS, INC. CORPORATE RESPONSIBILITY REPORT 2020/2021
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HOSTESS BRANDS, INC.
C ORP OR AT E RESP ONSIBIL I T Y REP ORT
20 20/20 2 1
1
HOSTESS BRANDS I. INTRODUCTION II. GOVERNANCE III. SOCIAL IV. ENVIRONMENTAL APPENDIX DISCLAIMER FO R WA R D L O O K I N G S TAT E M E N T S This report contains statements reflecting our views about the future performance of Hostess Brands, Inc. and its subsidiaries (referred to as “Hostess Brands” or the “Company”) that constitute “forward-looking statements” that involve substantial risks and uncertainties. Forward-looking statements are generally identified through the inclusion of words such as “believes,” “expects,” “intends,” “estimates,” “projects,” “anticipates,” “will,” “plan,” “may,” “should,” or similar language. Statements addressing events and developments that we expect or anticipate will occur are also considered forward-looking statements. All forward-looking statements included herein are made only as of the date hereof. These statements inherently involve risks and uncertainties that could cause actual results to differ materially from those anticipated in such forward-looking statements. These risks and uncertainties include, but are not limited to: our ability to maintain, extend or expand our reputation and brand image; failing to protect our intellectual property rights; our ability to leverage our brand value to compete against lower-priced alternative brands; our ability to correctly predict, identify and interpret changes in consumer preferences and demand and offering new products to meet those changes; our ability to operate in a highly competitive industry; our ability to maintain or add additional shelf or retail space for our products; our ability to continue to produce and successfully market products with extended shelf life; our ability to successfully integrate, achieve expected synergies and manage our acquired businesses and brands; our ability to drive revenue growth in our key products or add products that are faster-growing and more profitable; volatility in commodity, energy, and other input prices and our ability to adjust our pricing to cover any increased costs; the availability and pricing of transportation to distribute our products; our dependence on our major customers; our geographic focus could make us particularly vulnerable to economic and other events and trends in North America; consolidation of retail customers; increased costs to comply with governmental regulation; general political, social and economic conditions; increased healthcare and labor costs; the fact that a portion of our workforce belongs to unions and strikes or work stoppages could cause our business to suffer; product liability claims, product recalls, or regulatory enforcement actions; unanticipated business disruptions; dependence on third parties for significant services; inability to identify or complete strategic acquisitions; our insurance not providing adequate levels of coverage against claims; failures, unavailability, or disruptions of our information technology systems; departure of key personnel or a highly skilled and diverse workforce; and our ability to finance our indebtedness on terms favorable to us; and other risks as set forth under the caption “Risk Factors” from time to time in our Securities and Exchange Commission filings. The impact of COVID-19 may also exacerbate these risks, any of which could have a material effect on the Company. This situation is changing rapidly and additional impacts may arise that the Company is not aware of currently. All subsequent written or oral forward-looking statements attributable to us or persons acting on the Company’s behalf are expressly qualified in their entirety by these risk factors. The Company undertakes no obligation to update any forward-looking statement, whether as a result of new information, future events, or otherwise. H O S T E S S B R A N D S , I N C . / C O R P O R AT E R E S P O N S I B I L I T Y R E P O R T 2 0 2 0 / 2 0 2 1 / D I S C L A I M E R 2
HOSTESS BRANDS I. INTRODUCTION II. GOVERNANCE III. SOCIAL IV. ENVIRONMENTAL APPENDIX
TABLE OF CONTENTS
I. INTRODUCTION
• Letter From the Chairman of the Board 5
• Letter From the President & CEO 6
• Company Overview & Milestones 8
• Our Vision Mission Values 9
• Pillars For Sustainable Profitable Growth 10
• Materiality 11
• Our Priority ESG Areas of Focus 12
II. GOVERNANCE
• Board of Directors Composition 14
• Board Oversight of Risk Management & Sustainability 15
• Corporate Responsibility & Oversight 16
• Operating Ethically 17
• Executive Compensation 18
III. SOCIAL
• Food Safety & Quality Program 20
• Worker Health & Safety 21
• Our Response to COVID-19 22
• Diversity, Equity & Inclusion 24
• Recruitment, Retention & Development 26
• Hostess Behaviors 27
• Living Our Values 28
I V. E N V I R O N M E N TA L
• Water Management 31
• Energy Management 33
• Supply Chain Management 35
AFTERWORD 36
APPENDIX
• SASB Standards 38
H O S T E S S B R A N D S , I N C . / C O R P O R AT E R E S P O N S I B I L I T Y R E P O R T 2 0 2 0 / 2 0 2 1 / TA B L E O F C O N T E N T S / 3
I. INTRODUCTION • L E T T ER FR OM T HE CH A IRM A N OF T HE B OA RD • L E T T ER FR OM T HE PRESIDEN T & CEO • C OMPA NY OV ERV IE W & MIL ESTONES • OUR V ISION MIS SION VA LUES • PIL L A R S FOR SUSTA IN A BL E PR OFI TA BL E GR OW T H • M AT ERI A L I T Y • OUR PRIORI T Y ES G A RE AS OF FOCUS H O S T E S S B R A N D S , I N C . / C O R P O R AT E R E S P O N S I B I L I T Y R E P O R T 2 0 2 0 / 2 0 2 1 / I . I N T R O D U C T I O N / 4
HOSTESS BRANDS I. INTRODUCTION II. GOVERNANCE III. SOCIAL IV. ENVIRONMENTAL APPENDIX
I. INTR ODUCTION
LETTER FROM CHAIRMAN OF THE BOARD
On behalf of the Board of Directors of Hostess Brands, We are a young company entrusted with a beloved
Inc., thank you for your interest in our company. We are 101-year-old consumer brand, and we recognized an
committed to operating our business in a sustainable opportunity to build on the strong foundation we have
manner for all stakeholders as we strive to supply the established. We resolved to align our activities from
highest quality products to our consumers and retail the Board level to the bakery floor and beyond. Our first
partners. Corporate Responsibility Report is a tangible effort in our
journey of transparency and accountability.
Our Mission is: To inspire moments of joy by putting
our Heart into everything we do. We strive to live up to Senior management under the direction of our CEO and
this mission in a responsible manner while delivering CFO formed an Environmental, Social and Governance
industry leading results for our stockholders. Committee and set about examining all aspects of our
business. We asked our Nominating and Governance
Last year, we met as a Board with our senior management Committee to have direct oversight of our ESG efforts.
team and challenged ourselves with several questions, The committees and senior management adopted
among them: how can we become better corporate a program to report pursuant to the Sustainability
citizens; how can we transform our operations to be Accounting Standards Board (“SASB”) standards. We
more sustainable; how can we operate with a higher and hired an outside consultant to advise our new ESG
more consistent standard of fairness and responsibility Committee, talked with our stockholders and set about
for our employees and communities, and how can we reviewing risks and opportunities material to our As a Board, we recognize that we are at the beginning
better align our stakeholder interests with our societal company. of the journey of corporate responsibility, but I hope you
responsibilities? will find this first report informative as we integrate these
Over the past couple of years, the Board has focused on efforts across our daily lives. Thanks for your continued
our governance practices, and we are proud that we are interest in Hostess Brands.
WE ARE A YOUNG COMPANY now composed entirely of independent Board members
except for our CEO; we face election each year before Best,
ENTRUSTED WITH A BELOVED our stockholders; since last year we have added three
101-YEAR-OLD CONSUMER BRAND, diverse Board members; we have revised our Code of
AND WE RECOGNIZED AN OPPORTUNITY Ethics to better address certain areas of concern from
a sustainability viewpoint; we have tied our incentive
TO BUILD ON THE STRONG FOUNDATION
compensation for our management team to include J E R R Y D. K A M I N S K I
WE HAVE ESTABLISHED. attainment of sustainability goals and, as noted above, Chairman of the Board
we added ESG oversight to a committee of the Board. Hostess Brands, Inc.
H O S T E S S B R A N D S , I N C . / C O R P O R AT E R E S P O N S I B I L I T Y R E P O R T 2 0 2 0 / 2 0 2 1 / I . I N T R O D U C T I O N / 5
HOSTESS BRANDS I. INTRODUCTION II. GOVERNANCE III. SOCIAL IV. ENVIRONMENTAL APPENDIX
I. INTR ODUCTION
LETTER FROM THE PRESIDENT & CEO
The Hostess® brand was founded over 100 years ago with Voortman® Cookies, the leading Sugar Free cookie and
a simple idea to provide affordable snacks to everyone. wafer business in North America. Today, over 80% of the
During the height of the depression, Twinkies® were Company’s sales are either portion controlled or in a
launched to elevate the spirits of the masses when a lift Better For You option.
was desperately needed.
Much like the iconic squiggle on Hostess’ CupCake, our
journey at the new Hostess Brands has not been a straight
line, although the brands created so many years ago have HOSTESS IS BECOMING
endured. At investor day in September 2019, I made a
commitment to all stakeholders to build a Sustainable AN ESG REPORTING
Profitable Growth Company. Our team has been focused
on continuing to build on the strong foundation to enable
continued sustainable growth. This initial ESG report
COMPANY IN 2021.
is a small but meaningful milestone on this perpetual
commitment of transparency, focus and continuing
improvement along this journey. In early 2020, we established an ESG operating structure
to ensure our corporate responsibility initiatives were
At Hostess Brands, we imagine a world where the integrated into our daily operating cadence. To ensure
everyday is worth celebrating. This Vision, although we maintained the integrity of this structure, we formed
lofty, anchors our actions for our Customers, Consumers, an ESG Committee, led by our Chief Administrative
Suppliers, Investors, Communities and our Hostess Officer, reporting to me and our CFO. Board oversight
A N D R E W P. C A L L A H A N Heroes, the hardworking men and women we employ who of implementation of our ESG initiatives was placed
make Hostess Brands what it is. Quite simply, at Hostess with the Nominating and Governance Committee by the
Brands, we inspire moments of joy by putting our HEART full board. This structure ensures our overall goals are
into everything we do. Our Heart is on our logo and it is integrated and guided by our corporate responsibility
in our actions. Putting our Heart into everything includes commitment.
maintaining a responsibility to our consumers. Since
2018, we have transformed our portfolio to meet
the evolving needs of consumers in a responsible way.
In early 2020, we completed the acquisition of
H O S T E S S B R A N D S , I N C . / C O R P O R AT E R E S P O N S I B I L I T Y R E P O R T 2 0 2 0 / 2 0 2 1 / I . I N T R O D U C T I O N / 6
HOSTESS BRANDS I. INTRODUCTION II. GOVERNANCE III. SOCIAL IV. ENVIRONMENTAL APPENDIX
I. INTR ODUCTION
LETTER FROM THE PRESIDENT & CEO, (CONT.)
Our commitment and values were tested in early 2020 as we were faced with the
COVID-19 pandemic. Our quick and decisive actions to keep our team and community
safe, make meaningful portfolio decisions to support our customers and consumers
and act to communicate with transparency and integrity has strengthened our
culture. Many of these changes will become permanent such as our “Hostess Hero”
award, community outreach efforts, facility filtration system upgrades, and increased
sterilization protocols. You can see more of our COVID-19 actions in 2020 on pages 22
and 23 of this report.
MOVING FORWARD, WE HAVE AND WILL CONTINUE TO EMBED ESG DRIVEN
PROCESSES INTO OUR OPERATING PROCEDURES TO ENSURE WE MAINTAIN FOCUS
AND CONTINUE TO MAKE PROGRESS AGAINST OUR ESG INITIATIVES WITH KEY
ORGANIZATIONAL DECISIONS WE MAKE. FOR EXAMPLE, WE HAVE OR WILL:
· Added sustainability and environmental impact assessments into all capital requests;
· Instituted supplier scorecard reports on environmental impact and fair labor practices;
· Conducted an employee fair wage analysis and implemented a $15 minimum wage for
all employees;
I am proud of the commitment we are making to build our business responsibly and
· Established Diversity, Equity and Inclusion hiring targets at all levels; creating shared values for our Company and society. We are just getting started and will
continue to be guided by our values as we drive sustainable, profitable growth.
· On a quarterly and annual basis, recognize employees for exemplary demonstration of
our Behaviors; Thanks for your confidence and interest in Hostess Brands,
· Integrated Corporate Responsibility Goals in our annual compensation plans for the
Leadership Team;
· Elected an Independent Chairman and assembled a completely independent board A N DY C A L L A H A N
other than myself. President and Chief Executive Officer
H O S T E S S B R A N D S , I N C . / C O R P O R AT E R E S P O N S I B I L I T Y R E P O R T 2 0 2 0 / 2 0 2 1 / I . I N T R O D U C T I O N / 7
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I. INTR ODUCTION
COMPANY OVERVIEW & MILESTONES
HE ADQUARTERS, PRIMARY
DISTRIBUTION CENTER ANNUAL NET
+-3,000 E M P L OY E E S 5 B A K E R I E S I N U. S .
AND CANADA
kansas AND L ARGEST BAKERY
$1 billion+ REVENUE
FA C I L I T Y L O C AT I O N
Andy Brian Jerry Kaminski,
Hostess Brands, Inc. Callahan Purcell Rachel Cullen and Independent Olu Beck & Hugh G.
becomes publicly becomes becomes Ioannis Skoufalos joined Director, appointed Dineen added to the
traded company CEO CFO Board of Directors as Board Chairman Board of Directors
2016 2018 2019 2020 2021
Increased the Company’s De-classified board Achieved 12th
Gretchen Crist BFY product line with and eliminated Surpassed $1B of consecutive
added to Board the acquisition of super-majority net revenue for quarter of net
of Directors Voortman® Cookies requirements first time revenue growth
Moved primary distribution
center to Kansas saving millions
of truck miles and substantial
decrease in emissions
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HOSTESS BRANDS I. INTRODUCTION II. GOVERNANCE III. SOCIAL IV. ENVIRONMENTAL APPENDIX
I. INTR ODUCTION
OUR VISION MISSION VALUES
20 20 TAUGH T US TO EMBR ACE A ND A PPRECI AT E T HE L IT T L E T HING S IN L IFE .
T H AT’S W HY W E A RE PR OUD TO SH A RE OUR V ISION MIS SION A ND VA LUES
W HICH E XPRES S OUR FOCUS ON HEL PING PEOPL E CEL EBR AT E T HE
“E V ERYDAY” BY CRE AT ING MOMEN TS OF JOY.
V ISION W E I M A G I N E A W O R L D W H E R E E V E R Y D AY M O M E N T S A R E W O R T H C E L E B R AT I N G.
MIS SION W E I N S P I R E M O M E N T S O F J OY B Y P U T T I N G O U R I N T O E V E R Y T H I N G W E D O.
VALUES: WHAT DO WE BELIEVE?
PEOPLE: NIMBLENESS: INTEGRITY:
WE rise together because every member of our diverse WE overcome challenges and take advantage of WE hold ourselves accountable to do the right thing
team has ownership and common purpose. Our team opportunities by being quick to asses, decide and act. for all stakeholders. Trust is the key ingredient to our
members are the Heart of Hostess. recipe for successful relationships and reputation.
TENACITY: INCLUSIVITY: QUALITY:
WE depend on our resilience and resolve to achieve the WE are inclusive of ideas, individuals and differing WE do what it takes to deliver a great experience,
ambitious goals we set. points of view. Everyone’s contributions are necessary from the quality of our products to a day in the life
for us to succeed. of our team members.
H O S T E S S B R A N D S , I N C . / C O R P O R AT E R E S P O N S I B I L I T Y R E P O R T 2 0 2 0 / 2 0 2 1 / I . I N T R O D U C T I O N / 9
HOSTESS BRANDS I. INTRODUCTION II. GOVERNANCE III. SOCIAL IV. ENVIRONMENTAL APPENDIX
I. INTR ODUCTION
PILLARS FOR SUSTAINABLE PROFITABLE GROWTH
IMPROVE CULTIVATE LEVERAGE
GROW THE GROW THROUGH THROUGH AGILITY TALENT & STRONG
CORE INNOVATION & EFFICIENCY CAPABILITIES CASH FLOW
PROFITABLY drive core ACCELERATE growth OPERATE at lowest FOCUS on investing GENERATE strong cash flows
growth by expanding the through innovation based responsible cost and in talent, insights and from efficient operating
Hostess® and Voortman® on consumer insights and resource usage. information to create model to sustain profitable
franchises while also industry-leading capabilities. industry-leading growth objectives through
strengthening customer capabilities to support the disciplined uses of cash.
relationships. next phase of growth.
ESG PRIORITY: ESG PRIORITY: ESG PRIORITY: ESG PRIORITY: ESG PRIORITY:
• PRODUCT QUALITY • BFY VS CORE MIX; • REDUCTION OF • DIVERSE BOARD; • ESG ASSESSMENT ON ALL
CONSISTENCY; • PORTION CONTROLLED; ENVIRONMENTAL IMPACT; • EXPAND DE&I INITIATIVES; CAPITAL.
• REDUCED PRODUCT • REDUCTION OF HIGH • LOW WATER USAGE; • ESG KPI’S FOR
WASTE; FRUCTOSE CORN SYRUP; • REDUCTION OF LEADERSHIP TEAM AND
• FACILITIES • REDUCTION OF ARTIFICIAL GREENHOUSE GASES; BOARD.
QUALIFICATIONS AND FLAVORS AND ARTIFICIAL • SUPPLIER ESG SCORE
CERTIFICATIONS. COLORS. CARD EXPANSION.
OUR PILLARS FOR GROWTH = SUSTAINABLE GROWTH AND SUSTAINABLE OPERATIONS FOR ALL STAKEHOLDERS
H O S T E S S B R A N D S , I N C . / C O R P O R AT E R E S P O N S I B I L I T Y R E P O R T 2 0 2 0 / 2 0 2 1 / I . I N T R O D U C T I O N / 10HOSTESS BRANDS I. INTRODUCTION II. GOVERNANCE III. SOCIAL IV. ENVIRONMENTAL APPENDIX
I. INTR ODUCTION
MATERIALITY
H O W W E C O N D U C T E D O U R M AT E R I A L I T Y A N A LY S I S
• During 2020, we worked with internal and external experts to review the impact
of major environmental, social and governance issues on our business and shape our
strategic responses to them.
• Data and processes that guided our assessment include:
- Engaged and collaborated with our Board of Directors on prioritization of
ESG matters;
- Retained external experts, including environmental and ESG consultants,
and engaged with various investment groups to gain knowledge and understanding;
- Utilized Enterprise Risk Management (ERM) program for identifying, measuring,
monitoring and managing risks;
- Performed an analysis of stakeholder and regulatory issues;
- Obtained proprietary consumer insight data;
- Reviewed publicly available data on societal issues, including statistics and reports,
from authorities and peer companies;
– Reviewed internal records and processes; and
– Reviewed various standards and guidance including SASB and GRI standards.
OB JECT I V E : IDEN T IF Y K E Y STA K EHOL DER S
M AT ERI A L SUSTA IN A BIL I T Y IN T ERESTS
TO INFORM A ND A L IGN W IT H C OMPA NY
IN T ERESTS W HICH CA N DRI V E LONG -T ERM
VA LUE CRE AT ION.
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I. INTR ODUCTION
OUR PRIORITY ESG AREAS OF FOCUS
W H AT W E H E A R D & W H AT W E B E L I E V E A R E K E Y A R E A S O F FO C U S
Having conducted our Materiality Assessment, we were informed of many of the
following areas of interest by key stakeholders and added certain areas we believe are
important to the Company’s long-term growth and sustainability:
1 . GOVERNANCE 3. DIVERSITY, EQUITY & INCLUSION
• We heard that governance and oversight by the Board of ESG related matters, • The past year raised awareness as to Diversity, Equity, and Inclusion in terms
ethics, risk management and Board diversity should be a continuing focus. of company health and long-term sustainability. We heard and recognize that
Diversity, Equity, Inclusion, retention and equitable behavior is foundational to
our success.
2. HEALTH AND SAFETY 4 . ENVIRONMENTAL
• We heard that our stakeholders were interested in how the Company responded • Many of our stakeholders have been clear that they expect companies to
and is continuing to respond to the COVID-19 pandemic and that worker health manage environmental matters and specifically, water usage. We are focused on
and safety is paramount to success. Further, food safety is critical to long-term and understand the long-term need to have responsible sourcing of materials
stability and growth. and ingredients.
H O S T E S S B R A N D S , I N C . / C O R P O R AT E R E S P O N S I B I L I T Y R E P O R T 2 0 2 0 / 2 0 2 1 / I . I N T R O D U C T I O N / 12II . GOVERNANCE • B OA RD OF DIRECTOR S C OMP O SI T ION • B OA RD OV ER SIGH T OF RISK M A N AGEMEN T & SUSTA IN A BIL I T Y • C ORP OR AT E RESP ONSIBIL I T Y & OV ER SIGH T • OPER AT ING E T HICA L LY • E XECU T I V E C OMPENSAT ION H O S T E S S B R A N D S , I N C . / C O R P O R AT E R E S P O N S I B I L I T Y R E P O R T 2 0 2 0 / 2 0 2 1 / I I . G O V E R N A N C E / 13
HOSTESS BRANDS I. INTRODUCTION II. GOVERNANCE III. SOCIAL IV. ENVIRONMENTAL APPENDIX
II. GOVERN A NCE
BOARD OF DIRECTORS COMPOSITION
In November of 2021, we will celebrate our 5 year anniversary as a public company.
In that short time, we have assembled a diverse and independent group of Board
members with deep experience and knowledge in all aspects of overseeing and
ALL BOARD MEMBERS ARE INDEPENDENT
operating a consumer products business. EXCEPT FOR ANDREW CALLAHAN,
PRESIDENT & CEO.
EACH OF OUR DIRECTORS STANDS FOR
VIE W INFORM AT ION ON OUR CURREN T
ELECTION BEFORE OUR STOCKHOLDERS
B OA RD MEMBER S
EACH YEAR.
DIRECTOR DIVERSITY
*OUR DIRECTORS INCLUDE THREE FEMALE
DIRECTORS, ONE BLACK/AFRICAN-AMERICAN
DIRECTOR, ONE DIRECTOR BORN OUTSIDE DIVERSE*
67
THE U.S., ONE FIRST GENERATION AMERICAN
DIRECTOR, ONE DIRECTOR WHO SELF %
IDENTIFIES AS LGBTQ AND TWO
MILITARY VETERANS.
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II. GOVERN A NCE
BOARD OVERSIGHT OF RISK MANAGEMENT & SUSTAINABILITY
Our Board oversees long-term sustainable growth through focus on long-term
strategy, financial monitoring and business ethics. The Board also has oversight of risk
management, human rights and accomplishment of key business strategies. CYBER SECURIT Y CASE ST UDY
Our three operating committees, Audit, Talent and Compensation and Nominating
and Governance, each play a part in this oversight. H O S T E S S B R A N D S H A S A G G R E S S I V E LY P U R S U E D S A F E G U A R D I N G
T H E C O M PA N Y F R O M C Y B E R S E C U R I T Y T H R E AT S .
Our Audit Committee oversees our financial statement audit and Enterprise Risk
Management, as well as our Code of Ethics violations and whistleblower hotline activity.
We take a layered approach to cybersecurity to protect our facilities
Our Talent and Compensation Committee oversees executive and senior level and critical systems, as no single tool can protect an enterprise entirely
compensation with an eye toward attracting and retaining excellent talent to fuel from the range of threats in today’s world. Our defenses include a
combination of both active and passive measures that are layered across
sustainable growth for the Company. Further, the Talent and Compensation Committee
the breadth of our locations. Hostess Brands employs a portfolio of tools
oversees succession planning.
and services, from industry leading vendors, working in support of each
other to segment, control, measure, and analyze the activity of users and
systems on our enterprise networks.
Our blueprint considers the systems and data we manage internally and
OUR NOMINATING AND GOVERNANCE COMMITTEE externally used in our business routines with our consumers, customers,
vendors, and team members. Through our program we continually
HAS TAKEN ON THE ROLE OF OVERSIGHT OF THE monitor against existing and emerging threats to actively protect our
COMPANY’S ESG INITIATIVES, IN ADDITION TO environments to ensure continued operation and adhere to privacy
standards.
OVERSEEING GOVERNANCE ISSUES AND FINDING
AND RETAINING NEW BOARD MEMBERS WITH Hostess Brands takes the protection of data seriously with collection
and maintenance of data which would affect our consumers, customers,
KNOWLEDGE, BACKGROUND AND EXPERIENCE business partners, and team members. Hostess Brands strives to meet all
IN THE AREAS NEEDED TO DRIVE THE BUSINESS guidelines for the protection of personal and confidential data;
in accordance with regulations such as GDPR and CCPA.
FORWARD AND PROMOTE A DIVERSE BOARD.
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II. GOVERN A NCE
CORPORATE RESPONSIBILITY & OVERSIGHT
OUR ESG GOVERNANCE STRUCTURE
H A S T W O O B J EC T I V E S : • Oversight of Risk Management.
BOARD OF DIRECTORS • Connect ESG to Corporate Strategy.
1. SUPPORT ALIGNMENT OF
P R I O R I T I E S A N D A D VA N C E M E N T
T O WA R D S G O A L S;
• Oversees Corporate Responsibility and ESG matters.
NOMINATING & GOVERNANCE • Fulfills Board search and retention initiatives for Board
2 . C O N N EC T P R I O R I T I E S F R O M
BOARD TO BAKERY FLOOR. COMMITTEE membership.
• Directs and implements corporate responsibility strategy
CHIEF EXECUTIVE OFFICER for the Company.
• Oversees ESG initiatives and reporting for the Company
CHIEF ADMINISTRATIVE OFFICER; and serves as Chair of the Company’s internal ESG
ESG LEAD Steering Committee.
• Consists of senior managers representing all functions
ESG STEERING COMMITTEE who provide input to strategy and goals.
• Functional leads responsible for executing against goals.
SUSTAINABILITY INITIATIVES LEADS
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II. GOVERN A NCE
OPERATING ETHICALLY
All of our employees are expected to operate in an ethical manner, and in compliance
with all applicable laws and company policies. The Board of Directors has adopted a
Code of Ethics and a Whistleblower Policy. These policies apply to and are available
V IE W OUR BUSINES S E T HIC S P OL ICIES
to all employees of the Company from the first day of their employment, and each
employee agrees in writing that he/she has received such policies and agrees to be
bound by them.
The Board has empowered the Nominating and Governance Committee to oversee the
V IE W T HE NOM/GOV C OMMIT T EE CH A RT ER
Company’s ESG efforts and initiatives, and it’s Charter has been amended to reflect this
oversight responsibility.
The Audit Committee reviews reports received through the Whistleblower hotline. At
least quarterly, the Audit Committee receives a report on any complaints or inquiries V IE W OUR W HIST L EBLOW ER P OL ICY
from the Company’s General Counsel.
THE WHISTLEBLOWER HOTLINE IS AVAILABLE 24/7 TO ALL
EMPLOYEES.
IN 2020, THERE WERE 8 REPORTS ON THE HOTLINE. ALL OF
THOSE REPORTS HAVE BEEN INVESTIGATED AND CLOSED.
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II. GOVERN A NCE
EXECUTIVE COMPENSATION
The Talent and Compensation Committee is responsible for designing and
implementing our executive compensation program.
Our compensation philosophy has been established to allow us to attract and retain
talented senior leaders that can drive business success and create stockholder value.
Key aspects of the executive pay strategy are to:
• Target an overall compensation level that is competitive in the market (the long-term
intent is generally to pay compensation approximating market median for target pay);
• Emphasize pay for performance with clear objectives and strong alignment between
results and pay delivered;
• For senior executives, provide a significant focus on long-term performance
achievement that is aligned with stockholder outcomes; and
• Administer all compensation programs in a manner that is consistent and without bias.
PERFORMANCE-BASED COMPENSATION MIX
The Committee reviews management pay on a total compensation basis with a
stronger focus on pay for performance and creation of stockholder value for members W E H AV E FO U R E L E M E N T S O F T O TA L C O M P E N S AT I O N :
of senior management. 1 . BASE SAL ARY
2 . S H O R T-T E R M I N C E N T I V E S
3 . L O N G -T E R M E Q U I T Y I N C E N T I V E S
4. O T H E R C O M P E N S AT I O N B E N E F I T S ( I N C L U D I N G R E T I R E M E N T P R O G R A M )
(A full discussion of our Executive Compensation may be found in the Company’s Proxy.)
V IE W T HE PR OX Y HERE
Our annual incentive plan contemplates specific goals to be achieved by each
management team member. Among the goals for 2021 for all senior management
members is implementation of various ESG related metrics across the Company and
completion of various ESG inspired initiatives.
H O S T E S S B R A N D S , I N C . / C O R P O R AT E R E S P O N S I B I L I T Y R E P O R T 2 0 2 0 / 2 0 2 1 / I I . G O V E R N A N C E / 18III . SOCIAL • FOOD SA FE T Y & QUA L I T Y PR OGR A M • WORK ER HE A LT H & SA FE T Y • OUR RESP ONSE TO C OV ID -19 • DI V ER SIT Y, EQUIT Y & INCLUSION • RECR UI T MEN T, RE T EN T ION & DE V ELOPMEN T • HO ST ES S BEH AV IOR S • L I V ING OUR VA LUES H O S T E S S B R A N D S , I N C . / C O R P O R AT E R E S P O N S I B I L I T Y R E P O R T 2 0 2 0 / 2 0 2 1 / I I I . S O C I A L / 19
HOSTESS BRANDS I. INTRODUCTION II. GOVERNANCE III. SOCIAL IV. ENVIRONMENTAL APPENDIX
III. SOCI A L
FOOD SAFETY & QUALITY PROGRAM
A L L O F O U R O P E R AT I N G FA C I L I T I E S H AV E G F S I B E N C H M A R K E D Through a collaborative effort between our R&D, Manufacturing and Procurement
C E R T I F I C AT I O N S A N D M A N Y O F O U R I N G R E D I E N T S A R E S O U R C E D F R O M Groups, the Company is replacing its use of palm based glycerin with soy-based glycerin.
SUPPLIERS WHICH ARE GFSI BENCHMARK CERTIFIED. We will convert to soy-based glycerin (instead of palm-based glycerin) by July of 2021.
We use approximately 4.3 million pounds of glycerin per year.
WE HAVE 5 OPERATING PL ANTS IN NORTH AMERICA • 100% OF OUR HIGH RISK INGREDIENT SUPPLIERS HAVE AGREED TO OUR
WE HAVE 2 PRIMARY FRESH DISTRIBUTION CENTERS SUPPLIER EXPECTATIONS MANUAL AND HAVE PROVIDED GFSI BENCHMARKED
CERTIFICATIONS.
All of these facilities and distribution centers are or will be audited annually. Our U.S. • EACH YEAR, WE AUDIT AT A MINIMUM OUR HIGH AND MEDIUM RISK SUPPLIERS.
facilities and distribution centers are audited using BRC Global Standards for food OVERALL, WE AUDITED OVER 97% OF ALL OUR INGREDIENT SUPPLIERS,
safety and our Canadian facility is audited under the Food Safety System Certification REGARDLESS OF THEIR RISK PROFILE AND 100% OF OUR PACKAGING SUPPLIERS.
(FSSO) 22000 scheme. Our Canadian facility will be audited under BRC’s standard
certification scheme on a go-forward basis to harmonize all of our facilities under one • O N LY 12 I N G R E D I E N T S O R A B O U T 3% O F A L L I N G R E D I E N T S P U R C H A S E D
certification scheme. R EQ U I R E R S P O C E R T I F I C AT I O N .
Of the 6 BRC Certified facilities, we received 4 AA certifications and our average We use palm oil in the production of some of our products, some of which is RSPO
certification grade was A . We strive to have each of our facilities receive a grade of certified.
A or above.
Our operations, including the manufacturing, processing, HARPC & HAACP
Each of our facilities maintains Hazard Analysis Risk Based Preventive
formulating, packaging, labeling and advertising of products, Controls (HARPC), also known as a food safety plan, which is reassessed
are subject to regulation by various federal agencies, including annually by the management team at each facility. The food safety plan
the Food and Drug Administration (the “FDA”), the Federal includes a supplier approval program + other food safety controls. Each of our
Trade Commission (the “FTC”), and the Environmental facilities also maintains a Hazard Analysis Critical Control Points (HACCP)
plan, which identifies critical control points per production line. These plans,
Protection Agency (the “EPA”), as well as the Canadian which reduce food safety events and are also reviewed by our 3rd party
Food Inspection Agency (“CFIA”) and Health Canada for our auditors during the annual site assessments. Our employees are trained on
Canadian operations. each program.
H O S T E S S B R A N D S , I N C . / C O R P O R AT E R E S P O N S I B I L I T Y R E P O R T 2 0 2 0 / 2 0 2 1 / I I I . S O C I A L / 20HOSTESS BRANDS I. INTRODUCTION II. GOVERNANCE III. SOCIAL IV. ENVIRONMENTAL APPENDIX
III. SOCI A L
WORKER HEALTH & SAFETY
By any measure, 2020 was a trying year for people across the world. Millions of jobs
were lost; millions of people lost their lives. COVID hung over every decision every day.
We instituted additional safety protocols, processes, and sanitation measures to protect
WORKER SA FE T Y CASE ST UDY
our employees during COVID-19. Even with these additional protocols, some people
could simply not get comfortable being at the facility and as a result, the Company Over the last couple years, Hostess Brands has focused on
modified its leave policies to accommodate those who would not come to work while
making the workplace as safe as it can be. WE are committed
preserving their jobs for the long term. While all this was happening, the Company
continued its three year remarkable trend of reducing workplace accidents and lost time to continuing our progress to further reduce safety issues in
to rates far better than industry standards. the future. This focus and our commitment to worker safety is
paying off with our Total Recordable Injury Rate (TRIR) and
W E A C C E P T E D T H E C H A L L E N G E O F 2020, A N D W E B E L I E V E O U R VA LU E S Lost Time Incidence Rate (LTR) improving year over year and
CARRIED US THROUGH. better than industry benchmarks.
2019 GOAL ACTUAL 2020 GOAL ACTUAL
T R IR 4.20 3.79 T R IR 3.60 1.89
LT R 1.46 1.60 LT R 1.80 0.55
INDUSTRY TRIR = 5.4 / LTR = 2.1* INDUSTRY TRIR = 5.4 / LTR = 2.1*
* BLS (US Bureau of Labor Statistics) * BLS (US Bureau of Labor Statistics)
H O S T E S S B R A N D S , I N C . / C O R P O R AT E R E S P O N S I B I L I T Y R E P O R T 2 0 2 0 / 2 0 2 1 / I I I . S O C I A L / 21HOSTESS BRANDS I. INTRODUCTION II. GOVERNANCE III. SOCIAL IV. ENVIRONMENTAL APPENDIX
III. SOCI A L
OUR RESPONSE TO COVID-19
OUR COVID RESPONSE TO
OUR EMPLOYEES: 3 KEY PRINCIPLES
1. KEEPING YOU, YOUR FAMILIES, AND YOUR
COMMUNITIES SAFE, IS OUR #1 PRIORITY
2. SERVING OUR CUSTOMERS AND CONSUMERS
3. STAYING NIMBLE AND INFORMED
For over 100 consecutive days at the beginning of the COVID
Crisis, a Core Team consisting of our CEO, CAO, SVP Quality,
SVP Manufacturing, CHRO, VP, Technology, General Counsel
and VP/HR Manufacturing met to consider the needs of
our employees and how to operate effectively and safely in
the COVID environment. This Core team continues to meet
multiple times a week and this has become a permanent part
of our response not only to COVID challenges but to health
and safety concerns of our employees, hiring, retention and
diversity issues and the impact of a changing environment on
quality and manufacturing.
H O S T E S S B R A N D S , I N C . / C O R P O R AT E R E S P O N S I B I L I T Y R E P O R T 2 0 2 0 / 2 0 2 1 / I I I . S O C I A L / 22HOSTESS BRANDS I. INTRODUCTION II. GOVERNANCE III. SOCIAL IV. ENVIRONMENTAL APPENDIX
III. SOCI A L
OUR RESPONSE TO COVID-19, (CONT.)
ACTIONS TAKEN TO E ASE UNCERTAINT Y AND PROVIDE COVID SUPPORT AND
ASSUR ANCE AS TO SHORT TERM AND LONG TERM HE ALTH AND SAFE T Y
• We provided unpaid Leave of Absences to any employee not comfortable coming to • We enhanced our in-facility cameras to facilitate contact tracing.
work during the pandemic.
• We posted signs and placards in numerous locations with hygiene standards as
• We provided $100/month to all hourly employees in our facilities and warehouse recommended by the CDC.
locations for April, May, and June of 2020, recognizing they may be facing additional
financial pressures at home with spouses or others not being able to work. • We adjusted line runs to optimize social distancing.
• We froze increases to the cost of medical coverage for our plan year running • We installed plastic barriers to create physical separations between workers,
June, 2020 through May, 2021, providing cost certainty for our employees. consistent with social distancing guidance from the CDC.
• We provide on-site meals periodically to employees knowing they have many • We regularly communicated with our employees that their safety is paramount and
concerns to manage in their home lives. sought suggestions from them as to what else we could do, and implemented many of
these suggestions.
• We instituted IR Temperature Scanning at all production and warehouse facilities.
• We instituted a Mandatory Mask Policy in all facilities.
• We enhanced cleaning and sanitizing schedules of all work areas and common areas.
• We installed multiple additional hand sanitizer stations and created additional wash
stations at locations throughout our facilities.
• We coordinated vaccination events at many of our facilities in cooperation with local
health and government agencies.
• We kept in constant contact with local officials to enhance / educate our responses and
actions with our employees.
H O S T E S S B R A N D S , I N C . / C O R P O R AT E R E S P O N S I B I L I T Y R E P O R T 2 0 2 0 / 2 0 2 1 / I I I . S O C I A L / 23HOSTESS BRANDS I. INTRODUCTION II. GOVERNANCE III. SOCIAL IV. ENVIRONMENTAL APPENDIX
III. SOCI A L
DIVERSITY, EQUITY & INCLUSION
OUR EMPLOYEES ARE OUR GREATEST ASSET AND WE BELIEVE THAT A US GENDER SUMMARY*
DIVERSIFIED WORKFORCE IS CRITICAL TO THE LONG-TERM SUCCESS OF THE
COMPANY. WE STRIVE TO ENSURE OUR WORKFORCE REFLECTS THE RACIAL, FEMALE MALE
ETHNIC AND OVERALL DIVERSITY OF THE COMMUNITIES IN WHICH WE OPERATE.
% T O TA L
We are an Equal Opportunity Employer, providing annual diversity training to 43.5% 56.5%
employees and requiring annual signed confirmation of our policies protecting the
workplace from discrimination and harassment. % MANAGEMENT
Despite our efforts and the progress we have made with regard to DE&I over the 26.0 % 74.0 %
last several years, we recognize that there is much more to be done. AS A VALUES
CENTERED AND DRIVEN COMPANY, WE UNDERSTAND OUR ROLE IN BRINGING % NON-MANAGEMENT
EQUITY TO THE WORKPLACE.
46.6 % 53.4%
*Note: Does not include Voortman®; US only
US DIVERSITY SUMMARY
% TOTAL % MANAGEMENT % NON-MANAGEMENT
H O S T E S S B R A N D S , I N C . / C O R P O R AT E R E S P O N S I B I L I T Y R E P O R T 2 0 2 0 / 2 0 2 1 / I I I . S O C I A L / 24HOSTESS BRANDS I. INTRODUCTION II. GOVERNANCE III. SOCIAL IV. ENVIRONMENTAL APPENDIX
III. SOCI A L
DIVERSITY, EQUITY & INCLUSION, (CONT.)
DE &I CASE ST UDY
IN THE LAST TWELVE MONTHS:
• 47% of our hires at the Director or higher • We launched an employee survey aimed at
levels were diverse or female. When understanding how our employees reacted to
recruiting, we ensure we ask any third party the social unrest of 2020.
which recruits for us to ensure that we
are being presented with a broad group of • We launched expanded diversity and
candidates who are ethnically diverse. inclusion education and training for all
employees.
• We expanded our focus on DE&I by adopting
a Statement on Diversity, Equity, Inclusion • We formed a DE&I team representing both
and Belonging. management and hourly employees across
all Company locations to advise management
VIEW THE DIVERSITY, EQUITY & INCLUSION on issues and actions the company can take
STATEMENT HERE to build cultural awareness and improve our
work environments through planning and
• We partnered with a third party consulting executing various celebrations of key dates
firm to develop and conduct ongoing and heritage months, including MLK Day,
workshops to focus our 40 most senior Hispanic, Women’s History and LGBTQ Pride
management team members on self Months, among others.
discovery and cross cultural competence.
(Program expanded to a larger group
in 2021)
H O S T E S S B R A N D S , I N C . / C O R P O R AT E R E S P O N S I B I L I T Y R E P O R T 2 0 2 0 / 2 0 2 1 / I I I . S O C I A L / 25HOSTESS BRANDS I. INTRODUCTION II. GOVERNANCE III. SOCIAL IV. ENVIRONMENTAL APPENDIX
III. SOCI A L
RECRUITMENT, RETENTION & DEVELOPMENT
E M P L OY E E S A R E O U R M O S T I M P O R TA N T A S S E T A N D R E TA I N I N G A N D
D E V E L O P I N G E M P L OY E E S I S C R I T I C A L T O T H E C O M PA N Y’ S S U C C E S S .
During 2020, because of demand for our products, employment increased materially
in two of our facilities, one by over 15% and one by over 40%, and hiring during COVID
proved challenging. Staffing up and maintaining the workforce was difficult in the
COVID employment environment.
THE RESULT WAS OUR OVER ALL VOLUNTARY TURNOVER R ATE INCRE ASED BY
ABOUT 3% TO ALMOST 20% DURING 2020.
HOWE VER, AT OUR L ARGEST, MOST EFFICIENT FACILIT Y, TURNOVER DECLINED
BY 4% YOY.
W E H AV E I N S T I T U T E D S E V E R A L I N I T I AT I V E S I N O U R FA C I L I T I E S T O
AT T R A C T, D E V E L O P A N D R E TA I N A Q U A L I T Y W O R K FO R C E .
• For the last quarter of 2020, we established a more stable work force at our facilities
by enacting various measures as noted below and the effects of working during
COVID-19 became less of a challenge for employees.
• We instituted additional frontline supervisor training in the 2nd half of 2020, resulting
in more consistent management of our teams.
• We have revamped selection processes to have a better chance of long-term success,
including using a video of “realistic job previews” and use of additional screening tools
earlier in the application process, which we believe will reduce the incidence of poor
job fit and related turnover.
• We continue to hold various roundtable discussions at each facility, with associated
action planning for identified issues.
• Training and development of employees is a key area of focus going forward with an
eye toward creating a more stable, informed and fulfilled workforce.
H O S T E S S B R A N D S , I N C . / C O R P O R AT E R E S P O N S I B I L I T Y R E P O R T 2 0 2 0 / 2 0 2 1 / I I I . S O C I A L / 26HOSTESS BRANDS I. INTRODUCTION II. GOVERNANCE III. SOCIAL IV. ENVIRONMENTAL APPENDIX
III. SOCI A L
HOSTESS BEHAVIORS Our Behaviors Define Our Culture
Living the Hostess Behaviors is Key!
COMMITMENT C R E AT I V I T Y
I am dedicated to doing what it takes I actively seek new ideas and ways of
to deliver Hostess’ goals while meeting working to make us better and outperform
the expectations of my teammates, our competitors.
• Commitment
consumers, communities and external
stakeholders.
P O S I T I V E E N E R GY
• Creativity
C O L L A B O R AT I O N
I am tirelessly passionate and positive
about Hostess Brands, the quality of our
food and our people.
• Collaboration
I am inclusive of all individuals and
functions across Hostess. I communicate,
align objectives and foster teamwork
for the best outcome for my teammates
and Hostess.
• Ownership
OWNERSHIP
I am empowered and accountable to act
on a problem or opportunity.
• Positive Energ
I focus on outcomes.
CONFIDENTIAL – FOR INTERNAL USE ONLY
H O S T E S S B R A N D S , I N C . / C O R P O R AT E R E S P O N S I B I L I T Y R E P O R T 2 0 2 0 / 2 0 2 1 / I I I . S O C I A L / 27HOSTESS BRANDS I. INTRODUCTION II. GOVERNANCE III. SOCIAL IV. ENVIRONMENTAL APPENDIX
III. SOCI A L
LIVING OUR VALUES
O U R E M P L OY E E S A R E O U R M O S T I M P O R TA N T A S S E T S . S O M E O F T H E WAY S W E D E M O N S T R AT E O U R C O M M I T M E N T
T O O U R E M P L OY E E S :
We are committed to providing a workplace free of harassment and discrimination.
• WE have instituted paid Family Leave Program for all employees, which provides,
We are committed to a culture as a company that embraces our Key Behaviors of among other things, paid time off for both parents after the birth or adoption of a child.
Commitment, Collaboration, Creativity, Positive Energy and Ownership while ensuring • WE provide extensive, competitive health and wellness plans, life and accident plans
our people feel comfortable bringing their whole selves to work. and retirement programs to all employees.
• WE have instituted several new programs to address Diversity, Equity and Inclusion
In 2020, we, like the vast majority of other companies, had our normal operating at our company.
methods challenged. Our values were tested. • WE froze our employee’s health care contribution rate at 2019 levels for the 2020-2021
policy year to help all employees navigate the challenges of COVID.
W E’ R E P R O U D O F H O W W E R E A C T E D. • WE have Day 1 wages beginning at a minimum of $15 per hour with a progressive wage
scale and numerous opportunities for advancement.
• MORE than half of our workforce is unionized, and we have good, collaborative
relationships with all unions.
• WE have special days periodically at our facilities where we provide lunches to our
workforce; we regularly recognize outstanding effort and ideas at our plants through
one time special bonuses; we provide gift cards to all employees during end of the year
holidays.
• WE have created Heart of Hostess awards to recognize those who go above and beyond
and epitomize our Hostess Behaviors; these awards are given at company-wide
meetings.
• WE have created a Hostess Hero award for those people who, over the course of the year,
have not only demonstrated their commitment to Hostess Behaviors but have truly set a
new standard of excellence.
• WE believe in setting performance goals for our workforce and rewarding achievement
of such goals. As a result, and to facilitate development of our workforce as the ultimate
goal, we have an Annual Incentive Plan for all salaried workers.
• WE have an annual “Top Shop” award that provides a cash reward for every employee
in the facility that performs the best over the course of the year in meeting various
facility goals.
H O S T E S S B R A N D S , I N C . / C O R P O R AT E R E S P O N S I B I L I T Y R E P O R T 2 0 2 0 / 2 0 2 1 / I I I . S O C I A L / 28HOSTESS BRANDS I. INTRODUCTION II. GOVERNANCE III. SOCIAL IV. ENVIRONMENTAL APPENDIX
III. SOCI A L
LIVING OUR VALUES, (CONT.)
S O M E O F T H E WAY S W E D E M O N S T R AT E O U R C O M M I T M E N T T O O U R
COMMUNITIES:
• We have and continue to partner with the American Red Cross to provide Voortman®
and Hostess® products to thousands of people who donate blood across the country.
• We regularly make donations to various charitable based organizations to provide help
and support for various causes in the communities where our facilities are based.
• We have instituted various programs that will occur throughout the year to coincide
with broader cultural events such as Black History Month and Woman’s History
month. Any outside speakers are asked to pick a charity to which the company will
make a donation to recognize the speakers efforts.
Heart of Hostess
TO ENSURE WE KNOW WHAT IS IMPORTANT TO OUR
EMPLOYEES, WE CONDUCT PERIODIC ENGAGEMENT
SURVEYS, ROUNDTABLE MEETINGS WITH GROUPS
OF EMPLOYEES AND ACTION PLANNING PROCESSES
WHICH TRACK PROGRESS AGAINST IDENTIFIED
THEMES AND INQUIRIES. MANY OF THESE ACTIONS
ARE EMPLOYEE DEVELOPED AND LED; ALL
EMPLOYEES MAY LEAD, REGARDLESS OF JOB TITLE.
H O S T E S S B R A N D S , I N C . / C O R P O R AT E R E S P O N S I B I L I T Y R E P O R T 2 0 2 0 / 2 0 2 1 / I I I . S O C I A L / 29
CONFIDENTIAL – FOR INTERNAL USE ONLYIV. ENVIRONMENTAL • WAT ER M A N AGEMEN T • ENER GY M A N AGEMEN T • SUPPLY CH A IN M A N AGEMEN T H O S T E S S B R A N D S , I N C . / C O R P O R AT E R E S P O N S I B I L I T Y R E P O R T 2 0 2 0 / 2 0 2 1 / I V. E N V I R O N M E N TA L / 30
HOSTESS BRANDS I. INTRODUCTION II. GOVERNANCE III. SOCIAL IV. ENVIRONMENTAL APPENDIX
IV. EN VIR ONMENTA L
WATER MANAGEMENT
At Hostess Brands, we are focused on conserving water in our operations. Only our N O R M A L I Z E D WAT E R U S A G E * H O S T E S S T O TA L WAT E R U S E *
Chicago facility, which consumes about 20% of our water, is in a high water stress
area. Over the last year, we have initiated several water savings initiatives at all of our (in cubic meters water per metric ton produced) (in millions of cubic meters)
facilities, which resulted in a material decline in water consumption. We have been
especially aggressive at our Chicago facility. After an internal water review in December
of 2019, WE WERE ABLE TO REDUCE WATER USAGE BY 38.5% from 2019 water usage 3.835
results. This represents a decline of almost 19,000,000 GALLONS consumed.
0.614
WE ARE CONTINUING TO REVIEW ALL OPPORTUNITIES TO (-12.0%) (-11.8%)
REDUCE OUR WATER CONSUMPTION. 3.374 0.542
2019 2020 2019 2020
*Excludes in-store bakery facility sold in 2019 and
Voortman® Cookies Limited facility purchased in 2020
for comparison purposes.
8 0 % OF OUR WAT ER SUPPLY C OMES
FR OM OT HER T H A N HIGH OR E X T REMELY
HIGH WAT ER ST RES S A RE AS.
H O S T E S S B R A N D S , I N C . / C O R P O R AT E R E S P O N S I B I L I T Y R E P O R T 2 0 2 0 / 2 0 2 1 / I V. E N V I R O N M E N TA L / 31HOSTESS BRANDS I. INTRODUCTION II. GOVERNANCE III. SOCIAL IV. ENVIRONMENTAL APPENDIX
IV. EN VIR ONMENTA L
WATER MANAGEMENT, (CONT.)
WATER SAVING S CASE ST UDY
In 2020 and 2021 thus far, we have achieved
significant water use savings by installation
of efficient “pan washers.” Note: after pan
washer additions are complete, over 80%
of the pan washers operated by Hostess
LOCATIONS OF NEW PAN WASHERS & ESTIMATED ANNUAL
PERCENT REDUCTION OF WATER USE FOR EACH FACILITY*
480 Estimated Gal/Hour
for OLD Pan Washer
195
Brands will be of the water saving variety Estimated Gal/Hour
(Colussi or Auto-Bake). C O LU M B U S , G A 5.1%* for NEW Pan Washer
2,052,000gal
INDIANAPOLIS, IN 17.5%*
EMPORIA , KS 3.4%*
Estimated Annual Savings of
Water For Each New Pan Washer
Estimated Annual Savings of Water
EST IM AT ED
5.7%*
C ORP OR AT E SAV ING S
8,208,000gal
*Estimated percentage reductions
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IV. EN VIR ONMENTA L
ENERGY MANAGEMENT
At Hostess Brands, we are committed to doing our part to reduce greenhouse gas ABSOLUTE TOTAL ENERGY USE * NORMALIZED TOTAL ENERGY USE *
emissions and reduce energy usage. We have become more efficient in our energy usage
and have taken steps to make energy use a priority at our facilities. (in millions of gigajoules) (in gigajoules per metric ton food produced)
A M O N G T H E S T E P S W E’ V E TA K E N I N 2 0 2 0 :
4.9184
0.7592
(-6.4%)
• All capital expenditure projects will include an assessment of health, safety and
(-3.6%)
environmental impact.
• We moved our principal distribution center to Edgerton, Kansas and substantially 4.6035
reduced the truck miles needed to transport our products. 0.7389
• We changed out lighting in our facilities from fluorescent to LED lighting throughout
and reduced energy use from lighting by up to 30%. 2019 2020 2019 2020
• We opened a new headquarters and R&D lab in Lenexa, Kansas and installed LED
*Excludes in-store bakery facility sold in 2019 and
lighting throughout, installed bottle fill stations, provided all employees with reusable Voortman® Cookies Limited facility purchased in 2020
bottles and cups, and installed all new carpeting made from recycled materials. for comparison purposes.
• Energy goals have been established in each of our facilities tied to the Company’s
Annual Incentive Plan and our merit process.
ABSOLUTE TOTAL GHG EMISSIONS * NORMALIZED GHG EMISSIONS *
Note: All energy charts and information have been reviewed and validated by NSF (in metric tons CO2e) (in metric tons CO2e per metric ton product)
Sustainability, an independent consulting firm.
63,439 0.3979 (-3.7%)
OV ER T HE L AST T WO YE A R S, OUR (-3.0%)
0.3831
EL ECT RICIT Y A ND GAS C O ST PER P OUND 61,531
OF FINISHED PR ODUCT H AS
DECRE ASED BY 11.1%. 2019 2020 2019 2020
*Excludes in-store bakery facility sold in 2019 and
Voortman® Cookies Limited facility purchased in 2020
for comparison purposes.
H O S T E S S B R A N D S , I N C . / C O R P O R AT E R E S P O N S I B I L I T Y R E P O R T 2 0 2 0 / 2 0 2 1 / I V. E N V I R O N M E N TA L / 33HOSTESS BRANDS I. INTRODUCTION II. GOVERNANCE III. SOCIAL IV. ENVIRONMENTAL APPENDIX
IV. EN VIR ONMENTA L
ENERGY MANAGEMENT, (CONT.)
HOSTESS BRANDS CDP Hostess Brands compiles information
G R A D E S FO R 2019 A N D regarding its environmental and
2020 FO R C L I M AT E A N D other ESG practices and provides this
WAT E R information to CDP on an annual basis.
HOSTESS NORT H A MERICA*
C L I M AT E 2019 C C
WAT E R 2019 C B-
C L I M AT E 2020 D B-
WAT E R 2020 C B
CDP scale A-D- *North American average for Consumer Packaged Goods companies
EL ECTRICIT Y
% OF HOSTESS BRANDS TOTAL ENERGY
PROVIDED BY GRID ELECTRICITY: 33%
% OF HOSTESS BRANDS TOTAL ENERGY
FROM RENEWABLE ENERGY: 4%
H O S T E S S B R A N D S , I N C . / C O R P O R AT E R E S P O N S I B I L I T Y R E P O R T 2 0 2 0 / 2 0 2 1 / I V. E N V I R O N M E N TA L / 34HOSTESS BRANDS I. INTRODUCTION II. GOVERNANCE III. SOCIAL IV. ENVIRONMENTAL APPENDIX
IV. EN VIR ONMENTA L
SUPPLY CHAIN MANAGEMENT
As a packaged food company that ships millions of pounds of product across
North America, we are keenly aware of our potential impact on the environment from
energy consumed to packaging used and discarded. We are constantly seeking ways to
RECYCL ING CASE ST UDY
reduce our environmental footprint.
During 2020, through collaboration between our Operations, Quality
In 2019, the Company made the decision to move its main distribution center from and Procurement teams and outside vendors, we were able to identify
Chicago to a location more centrally located to its operations and, most importantly, material reductions of certain packaging and plastic trays.
much closer to its largest manufacturing facility in Emporia, Kansas. By moving our
distribution center from Chicago to Edgerton, Kansas, we reduced our truck mileage
by approximately 2.3 million miles annually and thereby materially reduced the PA C K A G I N G R E D U C T I O N O F F I L M A N D PA P E R PA C K A G E
environmental impact of our trucking operations.
We resized packaging and this will decrease the number of pounds
of non-recyclable packaging by approximately 232,000 lbs, a 7.38%
S O M E R EC YC L I N G FA C T S :
reduction on an annualized basis.
• Over 80% of our plastic film is recyclable.
• 100% of our folding cartons are recyclable.
• 100% of our cardboard is recyclable. R E D U C T I O N O F P L A S T I C T R AY S
• About 40% of the cardboard purchased is made from recycled content.
• About 85% of the packaging we use and sell to our customers and The total weight of our plastic trays used for our CupCakes was
consumers is recyclable. reduced by 7.4% or about 53,000 lbs.
H O S T E S S B R A N D S , I N C . / C O R P O R AT E R E S P O N S I B I L I T Y R E P O R T 2 0 2 0 / 2 0 2 1 / I V. E N V I R O N M E N TA L / 35AN AFTERWORD IF YOU WERE EXPECTING THE END, THIS IS NOT THE PLACE. QUOTING CHAIRMAN JERRY KAMINSKI, “WE RECOGNIZE THAT WE ARE AT THE BEGINNING OF THE JOURNEY OF CORPORATE RESPONSIBILITY.” THIS MENTALITY IS ENGRAINED IN OUR CULTURE AS WE DELIVER SUSTAINABLE PROFITABLE GROWTH FOR ALL STAKEHOLDERS. THIS JOURNEY IS GROUNDED IN OUR MISSION TO INSPIRE MOMENTS OF JOY BY PUTTING OUR HEARTS INTO EVERYTHING WE DO. I AM PROUD OF HOW HOSTESS RESPONDED AND ACTED WITH INTEGRITY AS A CORPORATE CITIZEN AND AS AN EMPLOYER DURING THE COVID PANDEMIC. HOSTESS’ VALUES ANCHORED OUR RESPONSE DURING THIS TIME OF UNCERTAINTY AND THESE SAME VALUES WILL BE THE DRIVING FORCE BEHIND OUR SUSTAINABLE, LONG-TERM GROWTH FOR ALL STAKEHOLDERS GOING FORWARD. HOLD US TO THEM. THANKS, AGAIN, FOR YOUR INTEREST IN HOSTESS BRANDS. ANDY CALLAHAN PRESIDENT AND CEO H O S T E S S B R A N D S , I N C . / C O R P O R AT E R E S P O N S I B I L I T Y R E P O R T 2 0 2 0 / 2 0 2 1 / A F T E R W O R D / 36
APPENDIX H O S T E S S B R A N D S , I N C . / C O R P O R AT E R E S P O N S I B I L I T Y R E P O R T 2 0 2 0 / 2 0 2 1 / A P P E N D I X / 37
HOSTESS BRANDS I. INTRODUCTION II. GOVERNANCE III. SOCIAL IV. ENVIRONMENTAL APPENDIX SASB STANDARDS H O S T E S S B R A N D S , I N C . / C O R P O R AT E R E S P O N S I B I L I T Y R E P O R T 2 0 2 0 / 2 0 2 1 / A P P E N D I X / 38
SASB STANDARDS INDEX 2021
HOSTESS BRANDS CORPORATE RESPONSIBILITY REPORT
UNIT OF
TOPIC ACCOUNTING METRIC CATEGORY SASB CODE RESPONSES
MEASURE
Gigajoules (1) 4.6035 GJ
Energy (1) Total Energy Consumed, (2) percentage (GJ),
Quantitative FB-PF-130a.1 (2) Approximately 33% grid electricity
Management grid electricity, (3) percentage renewable Percentage
(%) (3) Approximately 4% renewable energy
Thousand
(1) Total water withdrawn, (2) total water (1) 0.542 m3 in 2020
cubic meters
consumed, percentage of each in regions
Quantitative (m³), FB-PF-140a.1 (2) Approximately 80% of our water consumed comes from other than High or Extremely High Baseline Water stress areas;
with High or Extremely High Baseline
Percentage Approximately 20% of our water comes from a High Baseline Water stress area; 0% of our water consumed comes from
Water Stress
(%) Extremely High Baseline Water stress areas.
Number of incidents of non-compliance
Water Management The incident of non-compliance: 1. Incident is regarding wastewater treatment at our Chicago facility which was ongoing and
associated with water quantity and/or Quantitative Number FB-PF-140a.2
periodic, but it's being actively managed with a short term solution implemented and a long term solution identified.
quality permits, standards, and regulations
We have consistently reduced our water usage over the past 2 years and have implemented projects which included significant
Description of water management risks and
Discussion & capital spending to install equipment to reduce water usage going forward. (See pages 31 and 32 of this report). Water
discussion of strategies and practices to n/a FB-PF-140a.3
Analysis management risks are constantly being reviewed by both senior leadership and local facility leadership and will be a focus area
mitigate those risks
of our ESG Initiatives group and our ESG Committee going forward.
(1) Non-conformance rate: Each of our facilities have GFSI benchmarked certifications, 6 through BRC and our Canadian
Global Food Safety Initiative (GFSI) audit plant through FSSO. Each are audited annually. Of our 6 BRC facilities, 4 received a AA grade and our Canadian facility
(1) non-conformance rate and (2) associated received an Excellent score. We stive for a minimum of an A grade at each facility. We received 3 major and 45 minor non-
Quantitative Rate FB-PF-250a.1
corrective action rate for (a) major and (b) conformances during the audits conducted in previous 52 week period. Our non conformance rate for major was 0.42; our
minor non-conformances non-conformance rate for minor non-conformances was 6.42.
(2) 100% of the non-conformances were corrected at the applicable facilities.
Percentage of ingredients sourced from Tier
All of our ingredients are sourced from suppliers who are expected to have GFSI certified facilities. 100% of our High Risk
Food Safety 1 supplier facilities certified to a Global Percentage
Quantitative FB-PF-250a.2 Ingredient Suppliers have agreed to our Supplier Expectations Manual and have provided GFSI benchmarked certifications.
Food Safety Initiative (GFSI) recognized (%) by cost
We audited over 97% of our suppliers over the past year.
food safety certification program
Number,
(1) Total number of notices of food safety (1) Total notices of food safety violations received: 10
Quantitative Percentage FB-PF-250a.3
violation received, (2) percentage corrected (2) 100% of the noticed violations were corrected
(%)
Number,
(1) Number of recalls issued and (2) total (1) Total number of recalls issued: 2
Quantitative Metric FB-PF-250a.4
amount of food product recalled (2) Total amount of product recalled: 206,000 cases of product
tons (t)
Revenue from products labeled and/or The Company does not currently measure this type of revenue. However, in the trailing 12 month period ending March 31,
Reporting
marketed to promote health and nutrition Quantitative FB-PF-260a.1 2021, sales of Voortman Sugar Free Wafers and Cookies exceeded $80 million in retail sales and represent in excess of 6% of
Currency
attributes the total net revenue of the Company.
The Company has established processes and procedures focused on maintaining the safety and quality of our products for our
Health & Nutrition consumers including raw material and manufacturing certifications. We are actively expanding our better-for-you product
Discussion of the process to identify and
manage products and ingredients related to Discussion & portfolio with the Voortman sugar-free product line and our R&D and Marketing teams are commited to developing new
n/a FB-PF-260a.2 products which do not contain High Fructose Corn Syrup, Artificial Flavors or Artificial Colors.
nutritional and health concerns among Analysis
consumers The Company has not recevied any significant complaints or been engaged in any signficant lawsuits related to nutrional and
health concerns associated with products and/or ingredients.
H O S T E S S B R A N D S , I N C . / C O R P O R AT E R E S P O N S I B I L I T Y R E P O R T 2 0 2 0 / 2 0 2 1 / S A S B S TA N D A R D S / 39You can also read
