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Supply Chain Transparency

Disclosure - California Transparency in Supply Chains Act of 2010

Safeway, a leader in the grocery industry, actively pursues growth through leadership in environmental, socially responsible and ethical business practices. Corporate social responsibility is core to Safeway's operating philosophy, and that commitment drives our dedication to People, Products, Community, and the Planet. That commitment extends to our supply chain, and our suppliers play a critical role in ensuring that we manage our business in a responsible manner.

In 2010, the California Transparency in Supply Chains Act (also referred to as SB 657) was signed into law, and statutes enacted under the Act it will go into effect on January 1, 2012. The Act requires disclosure of particular efforts to eradicate slavery and human trafficking.

Safeway is committed to conducting its business in a lawful and ethical manner and expects its suppliers to conduct themselves in the same manner. Safeway has implemented various policies and procedures in its efforts to prevent slavery and human trafficking in its supply chains. This disclosure will describe some of those efforts.

Safeway, assisted by a third-party consultant, is in the process of surveying its merchandise supply chains in order to evaluate and to address risks of slavery and human trafficking inherent in those activities. This survey will form the basis for additional anti-slavery, anti-human trafficking efforts by Safeway, including targeted supplier requirements and third-party audits.

Safeway has long used contractual provisions prohibiting the use of involuntary labor and child labor, and requiring compliance with applicable labor and employment laws, in the production of merchandise sold by Safeway. Safeway has a stringent Supplier Code of Conduct ("Code") that sets out specific standards and requirements for any supplier doing business with Safeway, which includes provisions to protect workers. Among other things, the Code requires our suppliers to allow factory inspections for contractual compliance, as well as for compliance with laws and regulations dealing with child or forced labor and unsafe working conditions.

In its efforts to confirm compliance with such contractual provisions and to document compliance with the California Transparency in Supply Chains Act, each of Safeway's over 5,000 merchandise suppliers has been asked to certify that the materials incorporated into the merchandise they supply Safeway comply with applicable laws regarding slavery and human trafficking. Suppliers are also required to ensure that any subcontractor used in the manufacturing or distribution of any merchandise sold to Safeway complies with the same standards.

Any supplier that is not able to provide the foregoing certification will be required, as a condition to continuing to supply merchandise to Safeway, to submit an action plan to achieve such certification within a reasonable period of time. Those suppliers that fail to comply will be subject to increasing levels of discipline, up to and including termination of their relationships with Safeway.

In an effort to verify supplier responses and to help Safeway identify areas of increased risk of slavery and human trafficking, we are requiring that our suppliers complete a survey id entifying measures they have taken, or intend to take, to prevent these abuses.

Safeway has reviewed the risks of slavery and human trafficking presented by various parts of its supply chain and has inspected the factory premises of suppliers of Safeway-branded merchandise for evidence of non-compliance with slavery and human trafficking laws. In addition, Safeway has, on a risk-based basis, engaged third-party auditors to review compliance of certain suppliers with international social accountability standards.

Responsible Safeway employees have been advised of Safeway's prohibitions against the use of slavery and human trafficking in our supply chains. Safeway is currently developing, and will implement, training requirements. Employees with sourcing responsibilities will be required to complete such training on an on-going periodic basis.

Our company maintains internal accountability standards and procedures for employees and/or contractors failing to meet company standards regarding slavery and trafficking. These internal accountability standards are enforced by management, and notice of accountability for violation of internal standards and procedures is provided to employees and/or contractors. We expect all employees and contractors to comply with these standards.