2023 Natural Grocers Environmental, Social, and Governance Report

Natural Grocers has a legacy of being a values-driven company. Our commitment to building a healthy, sustainable future for our customers, good4u Crew members, and communities is authentic. Our Crew works hard to ensure our stores, operations, and supply chain reflect these values.


Environmental, Social, and Governance


Natural Grocers by Vitamin Cottage, Inc. 12612 West Alameda Parkway Lakewood, Colorado 80228 naturalgrocers.com

This ESG report contains certain forward-looking statements based on our current assumptions and expectations, including statements regarding our ESG targets, goals, commitments and programs and other business plans, initiatives and objectives. These statements are typically accompanied by the words “aim,” “hope,” “believe,” “estimate,” “expect,” “intend,” “plan,” “aspire” or similar words. All such statements are intended to enjoy the protection of the safe harbor for forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. We cannot assure you that future developments affecting us will be those that we have anticipated. Our actual future ESG results could differ materially from any expectations, targets, goals, or commitments, including as described in this report, as the result of changes in circumstances, assumptions not being realized, or other risks, uncertainties and factors. Such risks, uncertainties and factors include the risk factors discussed in Item 1A – “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended September 30, 2023, and subsequent quarterly reports on Form 10-Q filed with the Securities and Exchange Commission (“SEC”), as well as, with respect to our ESG targets, goals and commitments outlined in this reporting or elsewhere, any challenges, assumptions and dependencies identified in our reporting. We urge you to consider all of the risks, uncertainties and factors identified above or discussed in such reports carefully in evaluating the forward-looking statements in this ESG report. We cannot assure you that the results reflected or implied by any forward-looking statement will be realized or, even if substantially realized, that those results will have the forecasted or expected consequences and effects. We undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by applicable securities laws. You are advised, however, to consult any disclosures we may make in our future reports filed with the SEC. Our reports and other filings with the SEC are available at the SEC’s website at www.sec.gov. Our reports and other filings with the SEC are also available, free of charge, through our website at http://Investors.NaturalGrocers.com. Except as expressly incorporated by reference in this report, any information or document made available on our website does not constitute a part of this report.

© Natural Grocers by Vitamin Cottage, Inc. 2024. All Rights Reserved.



Table of Contents

05 Letter from Our Co-Presidents 06 Our Company 10

Product Standards & Environmental Sustainability

22 28



30 SASB 32

Appendix – Product Standards





Letter from Our Co-Presidents We are pleased to present the Natural Grocers by Vitamin Cottage, Inc. Environmental, Social, and Governance (“ESG”) Report for the fiscal year 2023 reporting period.

Supporting the Environment and Human Health Our company’s greatest opportunity to positively impact environmental sustainability and human health is offering over 20,000 high-quality natural and organic products at affordable prices, and free nutrition education. We prioritize products sourced from vendors that embrace regenerative and sustainable agricultural practices, which support the quality of soil, water, air, biodiversity, and carbon capture. We are committed to meat and animal standards that nurture the welfare of animals and farming communities. We offer pricing that makes regenerative, sustainable, healthful choices more affordable for our communities and Crew. We were founded on the conviction that nutrition is the foundation of good health. Like our product standards, our approach to nutrition education is evidence-based and research-backed. In fiscal year 2023, we invested more than $6 million to provide free nutrition education to our customers, Crew, and communities. New Product Standards Implemented in Fiscal Year 2023

We believe that we are the first national retailer to offer private label eggs from regenerative certified farms. The Regeneratively Grown TM certification uses a scientifically rigorous process to measure soil health, the effectiveness of regenerative farm practices, and impact over time. In addition to regenerative and organic certifications, our Natural Grocers ® Brand eggs are American Humane Certified TM . In 2018, we were the first national grocery chain to offer 100% organic and Fair Trade Certified™ private-label coffee. In support of organic farming practices and transparency, in fiscal year 2023 we extended the certified organic requirement to the entire coffee category. Fiscal year 2023 was a record-setting year in terms of revenue and profit for Natural Grocers. Our success demonstrates that a business model dedicated to offering high-quality, affordable natural and organic products can help deliver positive social and environmental impact, while creating value for stakeholders. We hope to inspire other companies to follow our lead.

We are the only national grocery retailer in the United States committed to delivering: 100% certified organic produce 100% non-GMO bulk products 100% pasture-raised dairy 100% free-range eggs 100% humanely raised and sustainably sourced meats Products may not contain artificial colors, flavors, preservatives or sweeteners, or partially hydrogenated or hydrogenated oils

Kemper Isely, Co-President

Zephyr Isely, Co-President



Our Company Company Overview We are an expanding specialty retailer of natural and organic groceries, body care and dietary supplement products. We focus on providing high-quality products at Always Affordable SM prices, exceptional customer service, nutrition education and community outreach.

Our Crew as of 09/30/2023

FY23 Net Sales $1.1 billion

Body Care, Pet Care & Other 9%

3,235 3,800 938 373

Full Time

Part Time

Dietary Supplements 21%

Grocery 70%

Crew in Stores Crew in Corporate, Bulk Packaging Facility and Distribution Center

Geographic Footprint as of 09/30/23: 165 stores in 21 states

Financial Sustainability 20 consecutive years of positive daily average comparable store sales growth EPS growth of 240% since our initial public offering in 2012 Commitment to returning value to our stockholders: issued dividend payments of more than $4 per common share since we instituted a cash dividend four years ago












8 12 6








Natural Grocers ® has a legacy that demonstrates a just, sustainable, and equitable food system is possible. We hope to inspire other companies around the world to follow our lead and to realize that it is possible to offer high-quality organic and natural products at affordable prices.

All data in the Natural Grocers Fiscal Year 2023 (“FY23”) ESG Report reflects results for the fiscal year ending September 30, 2023 unless identified otherwise.



Our Five Founding Principles Our Five Founding Principles are the expression of our core beliefs. In the 68 years since we opened our doors, they have driven, and continue to drive, every aspect of our business practices.

1 2 3 4 5

QUALITY: Every product on our shelves must go through a comprehensive screening and approval process. Our standards are designed to provide our customers with the highest quality natural and organic groceries, health-promoting supplements, natural body care products, wholesome Natural Grocers ® branded products, and only 100% USDA Certified Organic produce. This is how we seek to support our customers’ health and encourage a thriving, regenerative environment. ALWAYS AFFORDABLE SM PRICING: We work hard to secure affordable pricing on wholesome, natural foods and supplements. This is how we ensure that our customers have access to the high quality natural and organic products that help the planet thrive as well. NUTRITION EDUCATION: Empowering our neighbors, family, Crew, and communities to take charge of their health through science-based nutrition education and to choose products with a lighter and more sustainable environmental footprint is how we care for our Crew, our community, and the planet we all share. CREW: We are passionate about ensuring that our Crew members can live a healthy, balanced life. Supporting them with free Nutrition Education programs, competitive pay, attractive benefits, and access to high-quality, affordably priced products is how we keep our commitment to healthy Crew members who help make our company great. COMMUNITY: We support our communities to help shape a better world for all, through free Nutrition Education classes and health coaching sessions, bag-free checkouts, sourcing local products, and our donation and fundraising programs.


Always Affordable SM Pricing

Nutrition Education Crew


Co-founder MARGARET ISELY at our early Lakewood, CO location — 1962



ESG Strategy Natural Grocers ® has a legacy of being a values-driven company. Since our founding in 1955, we have been inspired by our Five Founding Principles, which today many would recognize as sustainability principles.

Our Five Founding Principles are interconnected with Environmental, Social, and Governance elements. We strive to hire Crew who share an affinity for our values. Our Crew are guided by our Five Founding Principles and are dedicated to ensuring that our stores, operations, and supply chain reflect these values.

Environment We believe that our company’s greatest opportunity to positively impact environmental sustainability is through our commitment to high product standards. We prioritize products that are produced with regenerative and sustainable agricultural practices, which support the quality of soil, water, air, as well as biodiversity. We are committed to dairy, egg, meat, and seafood standards that nurture the welfare of animals and our communities. We strive to offer pricing that makes regenerative, sustainable, and healthful choices more affordable for our communities and Crew. Social

QUALITY NUTRITION EDUCATION AFFORDABILITY Product Standards, Safety, Marketing, and Education

SOCIAL • Equity, Inclusion, and Diversity • Pay and Benefits • Talent Development and Retention • Employee Re€ations


• Soil, Water, and Air Quality • Biodiversity • Climate • Waste and Recycling


In FY23 we invested more than $6 million to offer free nutrition education services, provided by our Nutritional Health Coaches, to positively impact community health and wellness. We are committed to supporting our Crew’s physical, emotional, and financial well-being through free nutrition education, compensation above minimum wage, robust discounts and store credit, and comprehensive benefits. We support non-profit groups committed to the health and well-being of our communities and the environment. Governance

GOVERNANCE • Ethics • Public Policy Practices • Risk Management • Data and Cybersecurity

We are committed to strong corporate governance: we believe it builds trust and serves the long-term interests of a diverse set of stakeholders. In FY23 we added a fourth independent member to our Board of Directors.



Photo by: Egg Innovations™ Pasture-raised chickens on an Egg Innovations farm.

Egg Innovations produces our Natural Grocers ® Brand eggs, including the certified regenerative eggs released in FY23. Egg Innovations was founded in 1999 with a mission to raise hens in ethical free-range and pasture-raised environments as nature intended.



Product Standards & Environmental Sustainability We have a long-established belief that nutrition is the foundation of good health. Our product standards and nutrition education are evidence-based and research-backed. Our company continues to work within the industry to drive higher product standards.

We continue to demonstrate industry leadership in product standards and are the only national grocery retailer in the United States delivering: 100% certified organic produce More than 50% organic across all products Bulk products are 100% non-GMO and 65% certified organic More than 65% non-GMO across all products 100% pasture-raised dairy 100% free-range eggs 100% humanely raised and sustainably sourced meats 60% certified to environmental or social sustainability sourcing standards Products may not contain artificial colors, flavors, preservatives or sweeteners, or partially hydrogenated or hydrogenated oils

Product Standards Overview

Our company has a legacy of rigorous product standards and culture of continuous improvement of these standards. We make every effort to base our standards on the latest relevant scientific evidence to support the sustainability and health of the food system, our Crew, and our communities. We offer our customers an average of approximately 21,000 Stock Keeping Units (SKUs) of natural and organic products per store, including an average of approximately 6,700 SKUs of dietary supplements. We believe our extensive product offering enables our customers to fulfill, with few exceptions, all of their grocery and dietary supplement needs in our stores. We prioritize products and producers with regenerative agriculture practices, and embrace meat and animal standards that nurture the welfare of animals and farming communities. Details about our product standards can be found in the appendix under Product Standards.



We believe that our company’s greatest opportunity to positively impact environmental sustainability is through our rigorous product standards.



We carry only 100% certified organic produce to

eliminate the possibility of contamination from the chemicals applied to conventional produce.

Product Safety At Natural Grocers ® , we take food seriously and we strive to sell only the highest quality products. All stores are certified annually as organic handlers. We carry only 100% certified organic produce to eliminate the possibility of contamination from the chemicals applied to conventional produce. We work hard to ensure that the food in our stores is handled with care. Once received, our products are maintained and stored in accordance with applicable food safety practices. Our bulk products are pre-packaged and we refrigerate many bulk nuts, seeds, and flours to ensure quality, cleanliness, and freshness. We operate technology for all coolers that streamlines temperature tracking in our stores. Our Crew complete all required food safety certifications and follow company procedures for ensuring product stays fresh and safe for our customers. Any item that falls outside of food-safe guidelines is removed from the sales floor and disposed of appropriately. Things We Won’t Carry and Why Quality matters for human health, economic health, and the planet’s health. At Natural Grocers, quality is measured as much by what we don’t sell as by what we do. Since the 1990s, we have maintained a growing list of ingredients which we won’t sell in our stores and why. Our Quality Standards Team stays abreast of the latest research to evaluate product issues and concerns, and review specific ingredients, resulting in ongoing modifications to this list. As our commitment to quality remains constant, our list of Things We Won’t Carry and Why is ever-evolving. The list is updated on our website regularly at: Things We Won’t Carry and Why



Product Marketing and Education Communicating Standards In-Store

Natural Grocers ® provides customers with point-of-purchase information regarding our Egg Ranking System and our Meat & Seafood Ranking System. In the latter, we communicate through our Bronze, Silver, and Gold ranking tags, a brief Ranking Chart to detail the species-specific standards, and a QR code sign that links to our website standards page with full details. This messaging allows customers to make informed dietary and nutritional choices at the point of purchase.

Natural Grocers stores maintain detailed information tags on individual products and general store signage that identify our affordable pricing, product standards, dietary concerns, and local sourcing.

Stakeholder engagement with the “Meet Your Farmer” film series

This documentary film series tackles complex or lesser understood topics, including humane poultry processing, regenerative agronomy, and land management. These documentaries also highlight solution-oriented best practices and equip viewers to make informed decisions about the environmental impact of their food choices. Each film asks us to question the status quo of food production, while evoking a positive message of hope and transformation. The short documentary Ghosts of the Great Plains was nominated for the Heartland Emmy Award in 2020.



BRONZE SUSTAINABLY FARMED HUMANELY RAISED NO antibiotics, hormones or growth promotants NO animal by-products NO cloned or genetically NON-GMO alfalfa (ruminants) NO synthetic colorants (seafood) modified animals BRONZE + GOLD INCLUDES BRONZE, BRONZE + & SILVER STANDARDS CERTIFIED ORGANIC and/or other regenerative farming practices (poultry, pork) WILD CAUGHT & SUSTAINABLY CERTIFIED (seafood, boar) 100% U.S. DOMESTIC (ruminants, poultry, pork) INCLUDES BRONZE STANDARDS DEEPLY BEDDED PENS (pork) SILVER INCLUDES BRONZE & BRONZE + STANDARDS SUSTAINABLY SOURCED (seafood) FREE RANGE (poultry) 100% GRASS FED (ruminants) CERTIFIED ORGANIC and/or other regenerative farming practices (ruminants, seafood) NON-GMO feed BRONZE + INCLUDES BRONZE STANDARDS DEEPLY BEDDED PENS (pork) OUR STANDARDS Our prices make quality affordable; our Standards ensure a healthy tomorrow. From Bronze to Silver to Gold, we believe our Quality Standards are the best around. Bronze ensures all the products we sell are humanely raised and sustainably farmed and/or sourced. This means antibiotics, hormones, growth promotants, and animal by-products are prohibited and that humane animal care, ample space, and environments that encourage natural behaviors are required. Silver and Gold include all Bronze requirements and, since Bronze covers animal welfare and crucial environmental practices, our Silver and Gold Standards focus on bold regenerative farming and fishing practices that safeguard a healthy planet for future generations. BRONZE SUSTAINABLY FARMED HUMANELY RAISED NO antibiotics, hormones or growth promotants NO animal by-products NO cloned or genetically modified animals


A STORY OF QUALITY PRIORITIZING OUR PLANET IS THE WAY WE DO FOOD We believe the wellbeing of our communities and our planet prospers when our food is humanely raised and sustainably sourced. We can create a healthy future by what we choose to put on our plates. That’s why we partner with local farmers, ranchers and fishermen and women who protect our waterways, regenerate our grasslands, reverse soil erosion and preserve habitats for future generations. When the health of all living things is the foundation for farming practices, we promote economic viability and environmental harmony. Our meat and seafood departments are unique. We only offer selections produced in ways that nurture the health of animals, our communities and the planet. We emphasize freshness, preventing food waste, local products and transparency not fancy display cases and ambiguous standards. Instead of display counters, with previously frozen products, we just have the best selection at the best prices—with sustainability as our guiding principle. In addition to the assortment of highest quality cuts, grinds, bacons, and sausages in our fresh cases, we carry both traditional and exotic varieties of meat and seafood in our frozen section. Find protein with a purpose when you shop our wide variety and boring will never describe your menu again—unless it’s boar you’re after. A healthier tomorrow begins today. MEAT & SEAFOOD EXOTIC VARIETIES HIGHEST QUALITY SELECTIONS AFFORDABLE PRICES, LOCAL PRODUCTS AND MORE VARIETY


OUR STANDARDS SILVER INCLUDES BRONZE & BRONZE+ STANDARDS NON-GMO feed NON-GMO alfalfa (ruminants) NO synthetic colorants (seafood) FREE RANGE (poultry) 100% GRASS FED (ruminants) CERTIFIED ORGANIC and/or other regenerative farming practices (ruminants, seafood) SUSTAINABLY SOURCED (seafood) 3 cloves organic garlic 1 tablespoon Natural Grocers Brand Organic Coconut Aminos 1/4 teaspoon salt ½ teaspoon Natural Grocers Brand Bulk Organic Red Chili Flakes 2 tablespoons Natural Grocers Brand Bulk Organic Shredded Coconut 1 pound frozen peeled and deveined tail-on organic shrimp ½ cup Natural Grocers ® Brand Organic Original Coconut Milk Zest and juice of 1 organic lime (about 1 teaspoon zest and 1/4 cup juice) INGREDIENTS

Total Time: 45 min.

Serving Size: 4


Examples of in-store product attribute education messaging, in this case for our Meat and Seafood standards:

GOLD INCLUDES BRONZE, BRONZE+ & SILVER STANDARDS CERTIFIED ORGANIC and/or other regenerative farming practices (poultry, pork) 100% U.S. DOMESTIC (ruminants, poultry, pork) WILD CAUGHT & SUSTAINABLY CERTIFIED (seafood, boar) 2. In a blender, combine the coconut milk, lime juice and zest, garlic, coconut aminos, salt, and chili flakes and blend until well combined and uniform in texture. Drain the shrimp, place in a shallow bowl, and cover with coconut lime marinade. Marinate at room temperature for the next 30 minutes or longer in the refrigerator. 3. Drain the shrimp and discard the marinade. Arrange the shrimp on another baking sheet in a single layer and sprinkle coconut shreds on top. Place in the oven and roast until shrimp are opaque and tinged pink, 6–9 minutes. Watch the shrimp closely to ensure they do not overcook. Remove from the oven and serve. FIND THESE RECIPES & MORE @ naturalgrocers.com/recipe-finder 1. Preheat oven to 400º F. Place frozen shrimp in a bowl of cold water while making the marinade.



Regenerative Agriculture and its Impacts “The nation that destroys its soil destroys itself.” - Franklin D. Roosevelt.

The regenerative farming philosophy marries pre-industrial farming best practices with years of scientific and applied research. Regenerative farming systems improve how the ecosystem functions, which provides overall environmental benefits, increased yields, and resistance to climate instability. It also provides greater economic value and quality of life advantages for farming and ranching communities by making the land productive and sustainable. By returning the land to its original natural state, the soil and above-ground biomass are able to operate as designed and may address possible climate change impacts by sequestering carbon within the soil itself.

Regenerative Farming Techniques Include: • Cover crops fix soil nutrients, such as nitrogen, improving soil structure, and protecting it from erosion and nutrient loss, which helps with fertilization and fosters a robust pollinator habitat. • Crop rotation reduces pests and minimizes disease cycles that may limit harvest output. The resulting reduction in harmful insects can lead to the reduced use of, or elimination of, pesticides, which increases the health of wildlife and the purity of water runoff. • Reduction or removal of chemical pesticides reduces or eliminates their impact on soil, animal, plant, and end consumer health. • Livestock land management practices such as rotational pasture grazing and co-grazing are vital to providing a more natural habitat for the animals, insect presence, and biodiversity, improved plant growth, and better soil. • Integration of trees and shrubs contributes to land health by increasing habitats for insects, pollinators, and wildlife, breaking down waste and processing it for the nutrient cycle. • Low or no till practices maintain soil stability, which reduces erosion, increases water and nutrient retention, and increases the microbiological quality of the soil.

Carbon Capture Potential We believe that regenerative agriculture is an important practice with the potential to mitigate climate change. In agricultural systems, the amount and length of time carbon is stored is determined predominately by how the soil resource is managed. 1 The results are observable and measurable. The Rodale Institute’s 2020 white paper Regenerative Agriculture and the Soil Carbon Solution concluded that global adoption of regenerative agricultural practices provides a mechanism to sequester more than the current annual atmospheric carbon dioxide (CO2) emissions generated by human activity. 2 Additionally, the white paper identified examples where, depending on the soil conditions and regenerative practice used, the soil carbon sequestration rate was rapid in the early years after implementation, which enables it to be a tool for near-term improvements. • 100% certified organic produce • More than 50% organic across all products • 100% pasture-raised dairy • 100% free-range eggs • 100% humanely raised and sustainably sourced meats Our product standards that support regenerative farming:

1 Ecological Society of America https://www.esa.org/esa/wp-content/uploads/2012/12/carbonsequestrationinsoils.pdf 2 Moyer. J, Smith. A(PhD), Rui. R(PhD), and Hayden. J(PhD). (2020). Regenerative Agriculture and the Soil Carbon Solution. Rodale Institute.



In 2000, after working in conventional food marketing for 20 years, Thousand Hills™ owner and Chief Regenerative Renegade, Matt Maier moved back to the family farm to raise grass-fed beef. Witnessing the degradation of his childhood land and environment, he vowed to make a positive impact. Since their founding in 2003, Thousand Hills Lifetime Grazed has been focused on its mission of nourishing soil, plants, cattle, and people by holistically grazing cattle for their lifetime. Thousand Hills prides itself on offering 100% grass-fed beef without any confinement feeding, GMO plants, grain by-products, antibiotics, or artificial hormones. Its cattle are always grazing on the land and managed holistically, which regenerates soil and grasslands. Its cattle are raised in open pastures for their lifetime so they can express natural, instinctive behaviors and remain safe from the pain and stress of confinement feeding. Thousand Hills is committed to demonstrating leadership in the 100% grass-fed meat industry with regenerative agricultural practices. Thousand Hills has fully embraced regenerative agriculture, which seeks to move past sustaining to regenerating natural resources through holistically managed grazing. Its approach to regenerative agriculture is based on key land management practices that look holistically at the ecosystem to build soil health, increase clean and safe water runoff, improve biodiversity and ecosystem resiliency, increase carbon sequestration, and improve the nutritional value of meat—all while helping rural economies to thrive. The Thousand Hills home farm in Clearwater, MN is certified as one of 20 North American Savory Institute Hubs. The

Savory Institute is a leading non-profit organization that uses a decentralized network of regional Hubs, educators, and land verifiers to help create regenerative outcomes through applied Holistic Management of farmland. Thousand Hills’ inclusion in this program reflects their demonstrated commitment to holistic, regenerative grazing practices. In addition, all Thousand Hills products have the American Grassfed Association certification and Land to Market verification, and is in the process of obtaining the Audubon’s Conservation Ranching certification. These rigorous third-party certifications communicate and quantify the value of Thousand Hills’ stewardship. Thousand Hills has expanded its influence by working in cooperation with 60 like-minded family farms nationally. With this scale Thousand Hills is able to regeneratively farm over 600,000 acres in the United States and provide exceptional grass-fed beef products to all Natural Grocers locations. It is estimated that 220 million tons of topsoil is lost each year through US corn production efforts. Thousand Hills estimates that for each pound of beef it produces through regenerative practices, it is able to regenerate 300 square feet of topsoil. Thousand Hills estimates that its network of family farms generates 50,000 tons of topsoil each year. Thousand Hills’ experience demonstrates that there is significant opportunity to improve soil and the ecosystem by converting cows’ feed from corn to grass, and converting land from corn production to pasture. For additional information about Thousand Hills and their

commitment to regenerative agriculture, please visit their website: https://thousandhillslifetimegrazed.com/regenerative-agriculture/ Better land, better animals, better food for healthier thriving people are all part of the blueprint for Thousand Hills.



Egg Standards

We do not sell eggs from caged hens. Period.

In the United States, ‘cage-free eggs’ likely does not mean what the average consumer thinks it means. The United States Department of Agriculture’s definition of cage-free is that hens are not caged during the laying cycle; the hens may be caged when not producing eggs, and there is no requirement for the hens to spend time outdoors. The cage-free labeling requirements do not address farm ecological practices, nor humane standards of care such as space requirements per hen in the barn.

Our Egg Standards are More Strict In 2016 we established our own egg standards and were the first major US grocery chain to offer an exclusively free-range egg supply chain. Our egg ranking system has three tiers. Our minimum standard, Bronze, is higher than most U.S. grocers offer. Bronze: Minimum of 2 sq. ft. of outdoor access per hen (the amount a sizeable panel of animal welfare scientists and veterinarians determined to be necessary to allow for chickens to exhibit their natural behaviors) Silver: Enhanced outdoor access space with a minimum of 20 sq. ft. per hen and/or at least 6 hours of outdoor space per day; non-GMO Gold: Outdoors all day long with a minimum of 108 sq. ft. of outdoor space per hen; certified organic More info is available at: Egg standards

Now Offering Natural Grocers ® Brand Regenerative Eggs

In 2023 we partnered with Egg Innovations™ to expand our offering to include regenerative certified eggs. We believe that we are the first national grocery chain to offer private-label organic pasture-raised and organic free-range eggs from regenerative certified farms. The Egg Innovations “chicken-first system” provides over 1,000 acres of rangeland on which the hens can engage in their natural behaviors. While the hens are turning over soil, eating insects, and adding fertilizer, they are also helping to increase soil carbon sequestration. The Regeneratively Grown™ verification uses a scientifically rigorous process to measure soil health, the effectiveness of regenerative farm practices, and progress over time. In addition to regenerative and organic certifications, our eggs are American Humane Certified™. More info about our private-label regenerative eggs is available at: Natural Grocers ® Brand Eggs



Natural Grocers ® is excited to partner with Egg Innovations™ for our newly introduced private-label eggs from regenerative certified farms. Egg Innovations was founded in 1999 with a mission to raise hens in ethical free-range and pasture-raised environments as nature intended, while also being a successful business.

This vision from John Brunnquell, Ph.D., a third-generation farmer, reshaped the egg category. Egg Innovations’ leader meticulously thought through every detail of a chicken’s life, including the barn design, to build a system that enables the chickens to engage in their natural behaviors. From that intense study, a fine-tuned process for raising hens was put into practice and eventually adopted on a larger scale. Since then, Egg Innovations has expanded to 50 family-owned farms and more than 1,000 acres of pastureland dedicated to egg-laying hens for regenerative farming. Egg Innovations’ approach to regenerative egg farming includes restoring and maintaining soil health, increasing biodiversity, and creating a symbiotic relationship between chickens and the environment. Egg Innovations owns the hens and provides management oversight of every pasture, to promote the healthiest hens and the healthiest farmland. This

ownership and oversight allows Egg Innovations to implement sustainable practices, promote higher biodiversity, eliminate all synthetic pesticides on farms, construct multi-tier vegetation on pastures, and utilize ground covers. These practices are intended to benefit the animals and the land itself. By pioneering the first regeneratively certified farms in the industry, Egg Innovations is yet again innovating the way eggs are produced in the United States. Egg Innovations is the first egg producer to commercialize regenerative farming of free-range and pasture-raised laying hens on this scale. Egg Innovations’ advances in regenerative agriculture are ingrained in its mission and culture. For additional information about Egg Innovations and their commitment to regenerative agriculture, please visit their website: https://egginnovations.com/.



Protecting Biodiversity Biodiversity is vital for the processes that support all life on our planet. Without a diverse range of animals, plants, and microorganisms, the ecosystems on which we rely will collapse. The health and resilience of our planet’s ecosystems are foundational to healthy and nutritious diets, and critical to the protection of food security. We support biodiversity by being a marketplace for products sourced from vendors that prioritize practices that nurture the health of animals, our communities, and the planet. We educate customers on sustainable and humane practices by communicating our high meat, seafood, and dairy standards in our stores. We also believe good things happen when we all work together. We raise funds to transition parks and playing fields to organic management practices. And, during our Earth Day event we ask customers to pledge to never to use chemicals that harm beneficial insects. By integrating biodiversity supportive practices into our product standards and offerings we further contribute to the preservation and sustainability of our natural environment. We aim to not only offer high-quality natural products, but to also contribute to the protection and restoration of biodiversity.

Climate Change Governance: We believe that climate change has the potential to impact our operations and supply chain. The potential long-term effects of climate change are physical, such as possibilities of extreme weather or the impact of rising temperatures on food production, and transitional, such as regulatory or technological changes. Our Board oversees the challenges of climate change. Our Executive Management Team directs climate-related activities and considers climate-related issues when reviewing strategy and expenditures. In FY23 we established an ESG Steering Committee which is comprised of leaders from throughout the organization and has a mission to advance our ESG initiatives. Our Founding Principles are consistent with addressing climate change. Climate change mitigation: We recognize that our actions impact the climate. We continue to invest in and improve on operational efficiencies with the potential to reduce emissions that may contribute to climate change. Our rigorous product standards align with regenerative farming techniques intended to support carbon sequestration. By featuring these products in our stores, we seek to potentially reduce the impacts of climate change.



Water Many areas in which we operate are water-constrained, and therefore we are mindful of our usage. Our unique store format reduces our water consumption compared to conventional grocers that offer deli, meat, and seafood counters, as well as salad bars. We also utilize water-saving equipment and landscaping in our store designs. We believe that our rigorous product standards are more supportive of water systems. For example, land farmed regeneratively improves soil quality, including water retention. Land farmed organically does not use chemicals that pollute our water (and air). In contrast, conventional agriculture can generate water pollution from chemicals, pathogens, and antibiotics; they release high levels of phosphorous and nitrogen that lead to destructive algae blooms in waterways.

Greenhouse Gas Emissions Scope 1 emissions reflect direct emissions from owned or controlled sources, including natural gas and refrigerant emissions. To reduce climate impacts, we focus on the efficiency and maintenance of our facilities and equipment. Scope 2 emissions reflect indirect emissions from the generation of purchased electricity, which is used to power our buildings. We seek to reduce our energy costs and carbon footprint by using efficient lighting, refrigeration systems, heating, ventilation, air conditioning (HVAC), and well-insulated buildings. Our refrigeration systems include LED lighting and pull-down covers. By design, our store format does not include a deli counter, meat counter, seafood counter or salad bar. Our unique store format reduces our refrigerant usage and electricity demand, and thus reduces our Scope 1 and Scope 2 emissions. We are working toward publishing greenhouse gas emissions data in future ESG reports.

CO 2 Refrigerant Technology CO2 refrigerant technology is designed to save energy and provide enhanced environmental protection compared to conventional refrigeration technologies. The CO2 refrigerant has an Ozone Depletion Potential of 0 and a Global Warming Potential of 1, which is far less than those of the more common refrigerants CFCs and HCFCs. In FY23, we installed a CO2 refrigeration system in a second store. Though more expensive and complex to install than traditional systems, CO2 refrigerant technology is just one more way our company prioritizes the health of our communities and our planet.

Transportation The majority of inbound transportation is handled by third parties: approximately 68% of our total purchases in FY23 were from United Natural Foods Inc. and its subsidiaries (UNFI). Our trucking fleet comprises three vehicles that serve partial deliveries to 36 stores in the Denver region.



Waste and Recycling We are focused on opportunities for waste avoidance and diversion within our operations to increase our operations’ environmental sustainability.

In Our Stores: Avoidance:

• We significantly reduce food waste compared to conventional grocers by not offering self-service bulk bins, deli counter, meat counter, seafood counter, or salad bar. • We have automated the ordering process for most departments, which reduces over-ordering and waste. • We have technology that streamlines temperature tracking for all coolers in our stores. Diversion: • Each store partners with local food banks to donate products regularly. In FY23 we donated more than $5 million of in-kind food and product. • We practice recycling, composting, and cardboard upcycling to divert waste from landfills, including recycling shipping pallets and the plastic used to wrap them. • Our Natural Grocers ® Brand Products use recyclable, biodegradable and/or compostable packaging whenever possible. Our bulk packaging is free from Bisphenol A (BPA) and phthalates. • We partner with the How2Recycle organization to educate consumers on recycling strategies and how to minimize recycle bin contamination.

In Our Bulk Packaging Facility and Distribution Center: Avoidance: • Corrugated boxes used in bulk packaging contain 48% recycled content and are recyclable. • Automated production processes incorporate post consumer recycled (PCR) film that is made from 40% recycled material. • Through process changes and automation, our bulk packaging facility and distribution center reduced plastic stretch wrap use by approximately 50% compared to the prior system. • Our bulk facility’s closed production loop utilizes engineered wood pallets made from recycled wood that are reused within the facility driving operational and environmental benefits.

Since 2020 our produce department has offered two alternatives to conventional plastic produce bags: 1) plant-based, household compostable plastic bags, and 2) 100% recycled, recyclable, and compostable paper bags. This has prevented more than 50 million conventional plastic produce bags from entering the waste stream and impacting the environment.



Our bag-free checkouts have

prevented more than 500 Million single-use plastic bags from entering the environment

Bags: As part of FY23 events, such as Earth Day, we gave customers more than 600,000 free, reusable bags (a value of more than $0.6M)

Bag-Free Checkout since 2009

Over the past 14 years we estimate our policy has prevented more than 500 million single-use plastic bags from entering the waste stream and impacting the environment. Additionally, for each customer who brings their own shopping bag, we donate 5 cents to a local food bank, which has amounted to more than $2 million in donations since the program’s inception. Customers have the option to use their own bags, or a cardboard box that we upcycle from receiving.

Boxes: At checkout, customers can use either their own bags or cardboard boxes that were originally used to ship product to our stores.




Affordability Always Affordable SM Prices is one of our Five Founding Principles. We believe a healthy and balanced lifestyle should be achievable for everyone. To this end, we are dedicated to providing affordable pricing on the best natural and organic products available. PRICING STRATEGY: We have an Always Affordable Price designation on almost all products, while also providing special sale pricing on hundreds of additional items. We believe our pricing strategy enables our customers to shop our stores on a regular basis for their groceries, dietary supplements, and household essentials. MEAL DEALS: Each month we feature promotions and recipes that highlight a variety of affordable and nutritious family meals. ACCOUNTABILITY: Periodically we conduct studies to compare the pricing of core items to those of our primary competitors to ensure that we are true to our commitments.

COST EFFICIENCIES: As we continue to expand our store base, we believe there are opportunities for increased leverage in fixed costs, such as administrative expenses, as well as increased economies of scale in sourcing products. We strive to keep our product and operating costs low, which allows us to continue to offer attractive pricing for our customers.

We believe that everyone deserves access to fresh, organic produce, healthy groceries, and trusted dietary supplements. We also believe that free Nutrition Education empowers our communities and Crew members to improve their well-being. Our smaller format store model successfully serves urban, suburban, and rural communities, including communities identified by the USDA Economic Research Service as having low income and low access. We offer a wide variety of natural, organic and lifestyle-specific products, at affordable prices, to which many communities we serve would not have local access otherwise.

Food Access



Nutrition Education Nutrition Education is one of our Five Founding Principles. We are the only national grocery chain to support a full-time Nutritional Health Coach (NHC) position in all stores, whose primary responsibility is providing free nutrition education to our customers, Crew, and the surrounding community.

43,000 PEOPLE The impact of our Nutritional Health Coach Program, just in the last five years: optimized their health through our free health coaching services More than 7,000 free in store nutrition classes held More than 118,000 attendees educated and empowered In fiscal year 2023, our investment to provide free nutrition education was more than $6 MILLION

NUTRITIONAL HEALTH COACHES Our NHCs are a core element of our Nutrition Education program. NHCs must have earned a degree or certificate in nutrition or a related field from an accredited school, complete continuing education, and be thoroughly committed to fulfilling our mission. NHCs do not have a sales commission component to their compensation and therefore are focused on providing education. Our NHCs are available for complimentary one-on-one nutrition health-coaching sessions and Personalized Shopping experiences to educate and empower customers to make informed choices, optimize their eating plans and achieve their health goals. Each NHC develops community relationships with local stakeholders, working to improve individual and community health through collaborative partnerships and education. Outreach includes educational activities such as classes, lectures, seminars, health fairs, and store tours. To maximize their impact, we facilitate their focus on these in-store and community outreach educational events, as well as health-coaching sessions. We believe that our NHCs’ commitment to relationship-building opportunities in our communities, and with our customers, positively impacts community health and wellness. Additionally, our NHCs are an onsite resource of training and education for our Crew members. The NHCs train our Crew to use a compliant educational approach to customer service without attempting to diagnose or treat specific conditions or ailments. More information at: Nutritional Health Coaches RECIPES: To meet the needs of our customers, who have a wide range of dietary preferences (i.e., gluten-free, vegan, vegetarian, Paleo, keto, etc.), we develop recipes in-house and currently have over 400 recipes available on our website. EDUCATIONAL MATERIALS: Consumers have access to over 450 health-related articles discussing diet, lifestyle, and product ingredient information.

More than 12,000 community outreach events



Community Events and Sponsorships Community is one of our Five Founding Principles. We believe it is vital to give back to our communities by supporting the efforts of non-profit groups that promote the health and wellbeing of our communities and the environment.

LOCAL FOOD BANKS In the early days of our first store, co-founder Margaret Isely kept a community food cabinet from which she would share the ingredients for a nutritious meal with families in need. Since then, food bank fundraisers have become a lynchpin of company-wide donations and fundraisers throughout the year. A list of our food bank partners is available at: Food bank donations FREE CUSTOMER NUTRITION EDUCATION We are the only national grocery chain to support a full-time Nutritional Health Coach (NHC) position in all stores, whose primary responsibility is providing free nutrition education to our customers, Crew, and the surrounding community. (For more details, see the Nutrition Education section of this report.) SUPPORTING OUR CREW Our Heroes in Aprons Fund provides short-term financial assistance to qualifying Crew members or their immediate family members who experience unanticipated hardships. Funds are raised through company donations and customer fundraisers. COMMUNITY PARTNER SPOTLIGHT: BEYOND PESTICIDES Since 2019, Natural Grocers ® has teamed up with Beyond Pesticides, a 501(c)3 nonprofit advocacy and grassroots organization that aims to protect public health and the environment by leading the transition to a world free of toxic pesticides. Part of that partnership includes fundraising campaigns for Earth Day in April and Organic Month in September. The resulting Ladybug Love Your Neighborhoods campaign raises awareness and directly contributes funds to reduce the use of synthetic pesticides and fertilizers, and to promote organic practices in public spaces, making them safer for the community and pollinators.


Since 2019, Natural Grocers has partnered with Jack and Jill of America for a groundbreaking initiative born of our shared values and commitment to the communities and families we both serve through education and empowerment. The annual fundraising initiative provides funding that directly supports students attending Historically Black Colleges and Universities (HCBU) who are in good academic standing and on track to graduate but are faced with the ever-growing problem of tuition debt.

In fiscal year 2023 we supported our communities with more than:

$5 MILLION of company in-kind food and product donations

$6 MILLION of free nutrition education services

$0.8 MILLION in monetary donations for company donations and customer fundraisers



Made with FlippingBook - Online Brochure Maker