Sustainability at Darden by 202design

Sustainability at Darden COMPLETE GRI CONTENT May 2010

Contents Executive Message..........................................................................................................................2 Our Philosophy and Strategy .........................................................................................................5 Governance Approach ....................................................................................................................9 Sustainability Reporting ...............................................................................................................12 The Sustainability of Our Restaurants .........................................................................................14 The Sustainability Features of Our New HQ...............................................................................20 Case Study: A New Era for Darden .................................................................................................25 Engaging with Our Employees ....................................................................................................27 Food Safety, Health and Wellness, and Animal Welfare ..............................................................35 Promoting Sustainability in Our Supply Chain ...........................................................................45 Case Study: Growing Safe and Sustainable Produce in Mexico..........................................................48 Our Approach to Seafood Sustainability......................................................................................52 Case Study: Sustaining the North Atlantic Lobster Fishery ................................................................60 Case Study: Our Work in Two Lobster Fisheries ................................................................................62 Reducing Our Energy Use ...........................................................................................................64 Reducing Our Water Use .............................................................................................................72 Reducing Our Waste ....................................................................................................................77 Case Study: Our Restaurant Green Teams.........................................................................................82 Managing for Long-Term Success ...............................................................................................84 Our Collaborative Partnerships ....................................................................................................87 Our Communities ........................................................................................................................91 Case Study: Food Donations .............................................................................................................92 GRI Index ....................................................................................................................................94

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Executive Message At Darden, strong values are just as important as business acumen and operations skills, and we have a strong track record of doing what’s right. We are focused on creating a great company – one that makes a positive difference in people’s lives. For our employees, doing what’s right means building talent and providing opportunities that will allow them to achieve their personal and professional dreams. And outside the walls of our restaurants, it means serving our communities and doing our part to sustain the Earth’s natural resources. Sustainability plays a big part in our overall business strategy as we strive to make a difference on issues ranging from seafood sustainability to energy efficiency, from water use to how we treat our employees. Our company has identified a wide range of sustainability opportunities and challenges, and we’re committed to addressing them responsibly and with an appropriate sense of urgency. Our scale – and our relationships with our employees and business partners, governments and nongovernmental organizations – gives us many points of leverage to make improvements. Our approach to sustainability is built on four principles: Focus on Resources: We see energy, climate change and water resources as interlinked issues. The basic ingredients for our business come from healthy oceans and healthy agricultural ecosystems. Climate change is expected to affect oceans and land-based agriculture in part by influencing weather patterns and the availability of water, which raises the risk of supply disruptions. These changes – along with the increased discussion of greenhouse gas regulations – have the potential to increase the costs of food and energy required for our business. So it makes good business sense – and it’s the right thing to do – to take a resource-focused approach to our sustainability strategy. We work hard to use energy and water efficiently in our restaurants and support operations. This reduces our climate and water footprints, saves money and enhances our competitiveness. Engage our Employees: Each of our restaurant brands offers guests a distinct combination of food, service and atmosphere. The secret that drives our growth – and potential – is our insight into what guests expect from our brands; indeed, brand-building is a key differentiator for Darden. But it’s our employees who deliver the experience to our guests. Their commitment and passion are the foundation of our success. So it’s important to engage them in our sustainability approach. Already, about 10,000 of our employees serve on the Green Teams we’ve formed at each restaurant. They’re helping us save energy and water and manage waste better. Since they’re on the front lines, they’re in the best position to see where we can improve. For example, an employee’s suggestion for a process improvement in our Olive Garden restaurants is expected to save 400,000 rolls of register paper, worth $400,000 each year.

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Executive Message

Leverage our Scale: We own and operate 1,800 restaurants in the United States and Canada. We have nearly 180,000 employees, and we’re the 29th largest private-sector employer in the United States. We purchase from 1,500 suppliers in 35 countries, and we served more than 400 million meals in 2009. One of the key strengths of our business is our ability to develop innovative solutions and then bring those solutions to scale across our operations. In this way, even small changes can add up to big impacts. We’ve applied this thinking to environmental and social challenges as well as financial ones. A suite of water-saving measures we rolled out in 2009, for example, will save an estimated 700,000 gallons of water per year in each of the restaurants that implement them. Collaborate: Our most important challenges range from ensuring the safety of food in our global supply chain to supporting sustainable agriculture and fisheries. What these disparate issues have in common is that no one company can tackle them alone. Collaboration throughout the value chain and between government and business organizations is needed. And we often find that research and advocacy organizations bring important information and insights to the table. We’re working collaboratively on many issues. For example, Darden played a key role in establishing the Global Aquaculture Alliance, which provides a forum for experts from multiple sectors to develop standards for environmentally and socially responsible aquaculture practices. The following are additional examples of what we’ve accomplished through this four-pronged approach:

1 On our partners’ produce farms in Mexico, our relentless drive to ensure a safe supply of food for our restaurants has transformed the lives of migrant workers, built successful businesses and improved environmental conditions.

1 In our restaurants throughout the United States, we donate rather than discard surplus food, when our food safety standards permit it. In fiscal year 2009, Darden restaurants contributed 8.7 million pounds of cooked food to food banks and other charities that serve hot meals. In addition to helping those in need, the food donations save our restaurants the cost of disposal and earn tax benefits.

1 From New Brunswick to Nicaragua, we’re working with diverse organizations to support sustainable lobster fisheries. And we’re partnering with the New England Aquarium to promote sustainable fisheries and provide our seafood buyers with tools to analyze the complex choices involved in buying seafood.

1 At our new LEED Gold-certified headquarters building in Orlando, Florida, we’ve incorporated a wide range of features that save energy and water, use recycled materials and treat storm water naturally. The building also provides a healthy, collaborative environment for our employees. Though touching on many distinct issues, these examples demonstrate that a collaborative, resource-focused approach can lead to environmental, social and economic benefits. Sustainability issues are complex and multi-faceted, and so are the solutions.

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Executive Message

To drive continued sustainability progress, we have established a governance structure that includes a Sustainability Leadership Council composed of our brand presidents and other senior executives. Cross-functional sustainability teams focus on key areas, including our supply chain, energy and water, and our people. The Public Responsibility Committee of our Board of Directors helps establish direction and oversees our progress and performance. We have also developed an initial set of goals for improved environmental performance, based in part on a comprehensive carbon footprint study of our operations. We are calling these goals “15x15 over 0.” That is, we aim to reduce our per-restaurant energy and water use by 15 percent by 2015, using 2006 as a baseline. And, we have an aspirational goal of sending zero waste to landfill that we are using to guide our waste-reduction efforts. It’s early in our sustainability journey, but we believe our approach will have lasting value because it builds on our heritage, values and way of doing business. We have ambitious plans, and we’re confident that even better days lie ahead for Darden. For the future of our company as well as the future of the planet, our vision is to create a more secure and healthy food supply – now and for generations. Clarence Otis, Jr. Chairman and Chief Executive Officer Andrew H. Madsen President and Chief Operating Officer

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Our Philosophy and Strategy At Darden, our sustainability vision can be summed up like this: We want to create value while balancing the well-being of our society, our environment and our business – now and for generations. It’s relatively easy to come up with a vision. The hard part is turning a vision into a reality. We know that one company can’t do everything, and we know our own limits. So we’re focused on four primary areas that are within our sphere of influence – energy, water and waste; seafood sustainability; food safety; and our own workforce. For example, as a company that serves 400 million meals annually, food safety has to be the ultimate filter for all that we do. As a result, much of our work revolves around making the ingredients in our food supply chain even safer and more sustainable. Similarly, as one of the largest buyers of seafood in the world, we can use our influence to promote, preserve and protect the ocean’s resources. F IG URE 1

Our Sustainability Framework

Darden’s core values

Darden’s sustainability vision Darden’s key areas of focus

Darden’s sustainability strategy

integrity & fairness

respect & caring

diversity

always learning & teaching

being “of service”

teamwork

excellence

“creating value while balancing the well-being of our society, our environment and our business now and for generations.” energy, water and waste seafood sustainability food safety people

“Partnering with our key stakeholders, to generate ecosystem conservation and enhancement solutions to continually create long-term collective value and resource availability.”

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Our Philosophy and Strategy

Sustainability Strategy Darden had been doing sustainability work for years, particularly around issues in our supply chain, such as seafood sustainability and the welfare of farm animals. But we decided to take a more strategic and focused approach. In early 2008, we did a materiality analysis of our key issues, developed a sustainability vision and mapped out a strategy, as shown in Figure 1. To guide our work, we established a Sustainability Leadership Council of senior executives from across our enterprise. We have developed teams focused on key topics made up of experts from throughout the company. We believe in building sustainability knowledge and skills throughout the organization rather than building a stand-alone sustainability function. To reach our vision, we are partnering with key stakeholders, particularly those who will not only challenge us but who will also work to find common ground. We seek to engage with stakeholders who are respected by their peers and other industry groups. We look for partners who are experts in their chosen fields, but who also understand that we must take multiple perspectives into account when making sustainability choices. By working with other businesses and organizations, we can help to drive broader societal changes that go far beyond our own company. Throughout our sustainability efforts, weâ&#x20AC;&#x2122;re taking a resource-focused approach (see Figure 2). In other words, we want to use our resources wisely â&#x20AC;&#x201C; from the ingredients we serve, to the energy and water we need to cook the meals, to the waste we generate. F IG URE 2

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Our Philosophy and Strategy

We know that sustainability can’t be a series of one-off programs or events. It has to take a longer-term, strategic approach. We believe in taking a holistic view that considers sustainability through multiple lenses. For example, changing to fluorescent light bulbs saves energy. But the toxic mercury contained within them creates a waste disposal issue. Therefore, when we switched to energy-efficient fluorescents in our restaurants, we also instituted an easy-to-use recycling system so that all spent bulbs will be properly disposed. We want our sustainability strategy to resonate with our employees – nearly 180,000 of them. They are the ones who help us implement many of our key sustainability programs. And they are the ones who make our business as successful as it is.

Business Strategy Our sustainability strategy is very much intertwined with the overall approach we take to our business: that of accelerated growth. We recognize that in order to grow, we must conduct our operations sustainably – environmentally, socially and economically. Vibrant growth is vital for our company to make an even more significant impact on all those we touch – well beyond now, and, indeed, for generations. We’ve been laying a dynamic growth path for our brands. We want, and expect, to play a larger role and to matter even more in the $388 billion restaurant industry. We see an opportunity not just to lead our category, but to re-imagine and transform it. Darden seeks to be more influential in the public policy arena. For example, we have assumed a leadership position on such global issues as the sustainability of our vital resources, particularly seafood.

Our Formula for Growth We’re optimistic about the future, and we have forged a competitive business strategy that will help us achieve our goals. We are focused on four key areas (detailed below) that we call our Formula for Growth. This is a framework and guide to align our strategic and day-to-day efforts. • Great brand-building is about creating, delivering and evolving compelling brand promises that make each brand indispensible to its key constituent group and that build loyalty over time. • Great brand support means providing a platform of services that is effective, efficient, expandable and enabling to leaders of our brands. • A vibrant business model will ensure we achieve financial success while we build great brands. • A vibrant organization, culture and leadership team will make sure we are operating and collaborating in a nimble, decisive and disciplined way, while inspiring our people and providing new opportunities for growth.

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Our Philosophy and Strategy

Looking Ahead Ultimately, our business depends on consistency and scale. Our scale allows us to have the best systems in the industry. Itâ&#x20AC;&#x2122;s what gives us a competitive edge â&#x20AC;&#x201C; on delivering our brand promise, providing cost efficiencies that enable future growth, recruiting best-in-class talent, building stateof-the-art systems and investing in society. Our scale is also what allows us to take smaller, incremental steps toward change in the sustainability realm. When multiplied across 1,800 restaurants, seemingly small improvements can have a big impact on our company, our environment and the communities in which we are located. We appreciate the opportunity to share with the public how our sustainability vision and strategy are beginning to bear fruit. And we look forward to reporting on our continued progress in the future.

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Governance Approach Accountability is the foundation of good governance and trust between our company and its stakeholders. At Darden, we have established accountability at the Board of Directors and senior executive levels for our sustainability strategy and performance. Cross-functional teams oversee our key sustainability issues, while our sustainability office coordinates the companyâ&#x20AC;&#x2122;s approach and engages with external stakeholders. Our codes of conduct hold Darden employees and members of the Board of Directors accountable for acting ethically at all times.

Board of Directors Our Board of Directors is composed of 12 members, 10 of whom are independent directors, as defined by the rules of the New York Stock Exchange. Clarence Otis Jr., Chief Executive Officer of Darden Restaurants, Inc., serves as Chairman of the Board of Directors. Andrew H. Madsen, President and Chief Operating Officer, also serves on the Board of Directors. Three Board members are African-American and two are female (one of whom is Hispanic). The Board supports a committee structure in which the committees study and consider key issues in depth, bringing recommendations to the full Board. These Board committees are: Audit, Compensation, Nominating and Governance, Finance, and Public Responsibility. (See Figure 1.) F IG URE 1

Implementation Team Structure board of directors committees nominating and governance audit compensation finance public responsibility

ceo/coo

sustainability leadership council members of the e-team, o-team and brand presidents

supply chain sustainability team purchasing total quality supply chain

communications sustainability team human resources internal communications enterprise communications brand communications creative services

energy, water and waste team operations facilities design and development purchasing green teams

Sustainabilty office role: facilitator/coordinator, strategic counselor & external outreach. Coordination between groups is essential for consistency and to leverage opportunities.

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Governance Approach

The Public Responsibility Committee, which was formed in 1995, has at least three members, all of whom are independent directors. The committee has oversight of the company’s public policy positions and corporate social responsibility (including the physical and social environment and diversity); it also reviews the corporation’s and the Darden Restaurants Foundation’s support of charitable, educational and business organizations. These areas of focus cover the company’s carbon footprint, greenhouse gas reduction projects, sustainability goal-setting and conservation programs. Darden believes that communication between the Board, stockholders and other interested parties is an important part of the company’s corporate governance process. To this end, the Board provides a process for shareholders to send communications to the Board, any individual director or the non-management directors as a group, through the Lead Director. In addition, the Corporate Governance Guidelines and committee charters are available on our website and in print, free of charge, to any shareholder who requests them. Please see www.dardenrestaurants.com/corp_gov.asp for more information.

Sustainability Management Our Sustainability Leadership Council is a 10-member, cross-functional group composed of senior executives from operations (including brand presidents), purchasing, government affairs, legal, human resources, business development and our Office of Sustainability. The Council meets quarterly and maintains oversight of all sustainability-related activities, including tracking emerging issues and developing the company’s sustainability strategy. Three teams are responsible for coordinating, developing and implementing Darden’s sustainability programs: the Supply Chain Sustainability team, the Energy, Water and Waste team, and the Communications Sustainability team. Each of these teams draws on the expertise of Darden employees across functions and restaurant brands. The Energy, Water and Waste team meets every few weeks; the Supply Chain and Communications teams meet at least quarterly. Our Office of Sustainability facilitates and coordinates the implementation of our sustainability strategy, including oversight of our carbon footprint work, the development of sustainability goals and our external reporting. The office also serves as our liaison with a wide array external organizations and partners. We have standards for all of our restaurants that relate to topics such as food safety, quality, customer service, training, appearance and condition of the restaurant, and so forth. These standards are enforced by our restaurant management teams, and ultimately by the senior vice presidents of operations for each restaurant brand. Our sustainability measures are now among those standards, and they are enforced in the same way. For example, once our Energy, Water and Waste team decided in early 2010 to switch to a new water-efficient product for cleaning our kitchen floors, all of our 1,800 restaurants implemented that change within the designated timeframe.

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Governance Approach

Ethical Conduct All of our employees are subject to our Code of Business Conduct and Ethics. Appendix A to the Code provides a special Code of Ethics with additional provisions that apply to our principal executive officer, principal financial officer, principal accounting officer or controller and persons performing similar functions (the â&#x20AC;&#x153;Senior Financial Officersâ&#x20AC;?). Appendix B to the Code provides a Code of Business Conduct and Ethics for members of our Board of Directors. These documents are posted on our website at www.darden.com and are available in print, free of charge, to any shareholder who requests them. We will disclose any amendments to or waivers of these Codes for directors, executive officers or Senior Financial Officers on our website. To encourage our employees to report any illegal or unethical behavior, confidential, toll-free hotline phone numbers for each restaurant brand and the Restaurant Support Center (our headquarters in Orlando) are communicated through posters located in all restaurants and through other means, including on our website. Our Supplier Code of Conduct, which covers a full range of ethics issues, is being communicated to our suppliers.

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Sustainability Reporting Welcome to Darden Restaurants’ first sustainability report. This report is in the form of a website. Key content for the purposes of the Global Reporting Initiative is also captured in this full PDF document. Launched in May 2010, it provides information on our sustainability strategy, how we are implementing that strategy and our progress to date. We’re not following a typical reporting format, but have developed this website to be useful and engaging to a variety of audiences: first and foremost, our employees, whose enthusiastic participation is critical to the success of our sustainability strategy. Other important audiences include the organizations with which we collaborate on sustainability initiatives, our business partners, investors, governmental and nongovernmental organizations and the guests at our restaurants. This report covers our wholly owned operations. We also offer information about key issues in our supply chain. The subjects covered were identified through a materiality analysis and internal discussions. Since this is our first report, we have included information on the development of our sustainability approach over several years. Some data is presented by fiscal year and some by calendar year. We have included three years of time-series data where possible. We plan to take advantage of the flexibility of a web-based report by updating qualitative and quantitative information as new information becomes available, rather than on an annual cycle. Our energy and greenhouse gas emissions data was compiled by a third party, but the data in this report (other than financial data prepared for the annual report) has not been subject to formal external third-party assurance. Notes on data methodologies and assumptions are included with the data charts. We used the Global Reporting Initiative Guidelines to help shape the content of the report. We are self-declaring the report to be at a “C” application level. (More

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Darden at a Glance Headquartered in Orlando, Florida, Darden Restaurants, Inc. (NYSE:DRI) is the world’s largest company-owned and -operated restaurant company, employing approximately 180,000 people. Our business operates in the full-service dining segment of the restaurant industry, primarily in the United States. At May 31, 2009 (the end of fiscal year 2009), we operated nearly 1,800 Red Lobster®, Olive Garden®, LongHorn Steakhouse®, The Capital Grille®, Bahama Breeze®, Seasons 52®, Hemenway’s Seafood Grille & Oyster Bar® and The Old Grist Mill Tavern® restaurants in the United States and Canada. Through subsidiaries, we own and operate all of our restaurants in the United States and Canada, except three. Those three restaurants are located in Central Florida and are owned by joint ventures managed by us. None of our restaurants in the United States or Canada is franchised. As of May 31, 2009, we franchised five LongHorn Steakhouse restaurants in Puerto Rico to an unaffiliated franchisee, and 25 Red Lobster restaurants in Japan to an unaffiliated Japanese corporation, under area development and franchise agreements. Our sales from continuing operations were $7.22 billion in fiscal 2009 compared to $6.63 billion in fiscal 2008.

Sustainability Reporting

information about the Global Reporting Initiative and application levels can be found at www.globalreporting.org.) We will review and update the GRI index (found at the end of this document) quarterly and will also indicate when information on the website has been updated. We welcome your feedback on this report. Please provide comments to sustainability@darden.com.

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The Sustainability of Our Restaurants Why It Matters: Our Restaurants Are the Heart of Our Business Darden is the world’s largest full-service restaurant company. We operate 1,800 restaurants across six brands: Red Lobster, Olive Garden, LongHorn Steakhouse, The Capital Grille, Bahama Breeze and Seasons 52. (See map.) And we’re still growing; we have been opening about 60 new restaurants each year. We employ some 180,000 people in the United States and Canada, approximately 99% of whom (177,771, at this writing) work directly for one of our restaurant brands.

Darden Restaurant Facts We operate 1,800 restaurants in the United States and Canada, including (as of April 2010): • • • • • •

Olive Garden (722) Red Lobster (695) LongHorn Steakhouse (335) The Capital Grille (41) Bahama Breeze (25) Seasons 52 (11)

We have approximately 180,000 Most aspects of our sustainability strategy focus employees, 99% of whom work directly squarely on the day-to-day operations of our for one of our restaurant brands. restaurants. That’s where we can have the most positive effect on the environment, our communities and our bottom line. And with so many restaurants, even small changes implemented in each one add up to a big impact overall.

The impact can go beyond our business as well. As we educate employees about measures to reduce water use or waste, for instance, they can take what they learn into their homes and communities, thereby multiplying our influence even further.

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The Sustainability of Our Restaurants

What We’re Doing: Driving Sustainability Improvements We’re focusing closely on resource use in our restaurants – that is, the energy and water we use and the waste we produce in the course of our operations. Using resources wisely and minimizing our waste makes sense for the environment and for our balance sheet. We are also building our new restaurants to be more sustainable from the start, making our “products” (our meals and guest experience) more sustainable and staying financially strong.

Decreasing Our Energy Use and Greenhouse Gas Emissions In 2010, we committed to reducing our energy use by 15% per restaurant by 2015, using fiscal year (FY ) 2006 as a baseline. Between FY2006 and FY2008 (the latest year we’ve reported), our per-restaurant energy use stayed essentially flat, dropping by less than 1%, while our carbon dioxide (CO2) emissions dropped about 2%. Many of our energy-efficiency efforts have taken place since FY2008, so we expect to show more progress going forward. In 2009, for example, we switched more than 25,000 incandescent bulbs in our restaurant kitchens to more-efficient fluorescent bulbs. We have also adjusted thermostat settings in our restaurants and altered our cooking equipment power-up schedules, all in an effort to reduce our energy use and energy costs. For more, see p. 64.

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The Sustainability of Our Restaurants

Decreasing Our Water Use To drive water conservation, we’ve also set a goal for water use. We’re aiming for a 15% reduction in our use of water by 2015, using FY2006 as a baseline. We have assessed water use at a number of our restaurants, but are still working to compile and calculate company-wide water use data. To reach our goal, we’ve implemented alternatives to “dipper wells” (i.e., utensil holders through which a continuous stream of water runs) in about 600 of our restaurant kitchens. And we’ve installed 1,751 low-flow aerators on hand-washing sinks and dishwashing stations. These and other solutions are estimated to save more than 700,000 gallons of water per year at each of the restaurants that implement all of them. For more, see p. 72.

Decreasing Our Waste We’ve set an ultimate goal of “zero waste” – that is, sending no trash to landfills from our restaurants or our headquarters. We are committed to identifying opportunities to reduce the amount of waste we generate and then recycle, donate or compost the rest. We believe that discarded food is the biggest component of our waste stream, making up about 70%. We’ve launched a number of initiatives to drive progress toward our goal. For example, in FY2009 we donated nearly 9 million pounds of leftover food to Feeding America, a hunger-relief organization, instead of throwing it away. All of our restaurants recycle fluorescent light bulbs. Most of our restaurants recycle cardboard (an average of 38,000 lbs. per year) and used fry oil (an average of 2,400 lbs. per year). And, thanks to a smart idea from one of our employee Green Teams, we have reduced our use of computer register paper at Olive Garden by about 400,000 rolls per year, which saves us $400,000 annually. For additional information, see p. 77.

Engaging Employees in These Efforts To help us implement all of these resource-focused efforts, we’ve established employee Green Teams. These teams – now active at nearly all of our restaurants and consisting of five to seven employees each – have been instrumental in overseeing initiatives like our equipment power-up schedules, thermostat settings and the switch to fluorescent bulbs in our kitchens. They also regularly conduct comprehensive leak inspections to be sure we aren’t wasting water. For more on their activities, see p. 82. In 2009, we reached out to all Darden restaurant employees by presenting a poster on sustainability in every restaurant kitchen. (See below.) The poster outlines our restaurant sustainability initiatives and explains why they are important; it also describes steps employees can take to conserve resources at home. The design of the poster is edgy and eye-catching, and is meant to engage and educate employees who might not otherwise take an interest in these issues.

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The Sustainability of Our Restaurants

Building New Restaurants Better One of the challenges we face in our sustainability efforts is that all of our restaurant buildings are different. Some buildings were purpose-built for us; others were retrofitted and redesigned to meet our needs. Implementing consistent changes across such a wide array of building types can be difficult, but we are working to do it wherever possible. Going forward, we’re working to build our restaurants with sustainability in mind from the start. Our first restaurant expected to achieve LEED “green building” certification – an Olive Garden in Jonesboro, Arkansas – opened its doors in January 2010. (LEED stands for Leadership in Energy and Environmental Design; it’s the certification system of the U.S. Green Building Council.) Seven additional restaurants seeking LEED certification will open in 2010 and 2011. Under the latest LEED guidelines, these buildings must use 14% less energy than the previous prototypical building design; they also must meet stringent water conservation standards and use recycled materials in their construction.

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The Sustainability of Our Restaurants

While we may not seek LEED certification for every restaurant we build or remodel, we plan to make a positive impact by learning from the eight restaurants where we are seeking LEED certification and applying best practices across our portfolio. In fact, we have committed to incorporating sustainability features in all of our new buildings. This will ensure superior performance in energy efficiency, water conservation and the use of green materials.

Making Our “Products” More Sustainable Many forward-thinking companies focus on making their products more sustainable. Our “products” are the meals our restaurants serve every day. Two key aspects of our restaurants’ meals are vital to our sustainability strategy – food safety and seafood sustainability. Food safety has been our number-one priority since our first Red Lobster restaurant was founded in 1968 – long before “sustainability” became a household term. Today, it falls within our sustainability work because it is so important to our continued success as a company. Darden has rigorous, state-of-the-art food safety systems that reach from our restaurants all the way back into our supply chain. Training our restaurant employees is an important foundation for food safety. Thousands of our managers have been certified in food safety processes through a program of the National Restaurant Association. In addition, restaurant employees receive extensive food safety, personal hygiene and sanitary practices training. At the corporate level, we have a team of 20 field total quality managers who review and certify the food safety processes in our restaurants. For more on our food safety systems, including information on product traceability, see p. 35. Seafood sustainability is also important to Darden, because we are one of the largest buyers of seafood of any full-service restaurant company in the world. We are committed to helping ensure sustainable stocks of seafood – for the sake of our business and for the sake of preserving ocean ecosystems for generations to come. We currently do not serve species that are considered at risk, such as Chilean sea bass and orange roughy, as these species are overfished at present. We are committed to purchasing species from sustainable sources. We have worked with governments to strengthen policies regarding wildcaught species such as North Atlantic lobsters and Caribbean rock lobsters. And we have partnered with conservation groups, such as the New England Aquarium, to learn more about the science behind the fisheries and to help ensure that the species we serve are sustainable, based on the best science of the day. We are also committed to responsible aquaculture – so we can supplement the supply of seafood while avoiding the depletion of species. Our goal is to have all of our aquaculture products certified to the standards of the Global Aquaculture Alliance (a multi-stakeholder nonprofit organization we co-founded in 1997) as they become available. Already, 100 percent of the aquacultured shrimp processors that supply Darden are certified. For more information, see p. 52.

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The Sustainability of Our Restaurants

Staying Financially Strong At Darden, our approach to sustainability helps our restaurants succeed financially. At the same time, our restaurants’ financial success strengthens our sustainability efforts. The resource conservation efforts described above directly benefit our restaurants’ bottom lines. For example, the switch to fluorescent light bulbs in our restaurant kitchens is expected to save us up to $400 per restaurant per year. The water-saving efforts we’ve implemented will save each restaurant up to $5,000 per year. Each of our restaurants is an important contributor to the community in which it is located – through employment opportunities as well as taxes paid. In fiscal year 2009, our restaurants paid governments a total of $568.8 million in sales and use taxes and more than $65 million in property taxes. And each time we open a new restaurant – which we do an average of 60 times a year – we create more than 150 jobs. Over the last decade, casual dining companies like ours have had strong shareholder returns, with Darden leading the way with a solidly top quartile S&P 500 result. Our performance in 2009, for example, confirms that our company is well positioned to succeed in difficult times. We were able to deliver strong financial results while continuing to invest in our long-term future. We expect casual dining sales growth to continue to be relatively strong. By remaining financially strong, our restaurants can continue to contribute to their communities, be good corporate citizens and strengthen their sustainability efforts. For more, see p. 84.

Where We’re Going: Toward a Sustainable Future At Darden, we intend to keep growing and opening new restaurants, and we want that growth to be sustainable, in all senses of that term. By making our restaurants more sustainable, we’re making our whole business more sustainable. We look forward to operating restaurants that have been built for us from the ground up according to “green building” principles, and to upgrading our existing restaurants as needed to help us meet our sustainability goals. We will also continue to work to make our food more sustainable and to engage employees in helping us meet our sustainability goals. Some of our sustainability initiatives are quite new, and we’re still learning the best ways to drive improvements in our day-to-day operations. But we feel confident we are on the right track, and we look forward to reporting on our progress in the years to come.

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The Sustainability Features of Our New HQ Why It Matters: Buildings Have an Impact Everyone knows that cars and trucks have a big impact on the environment – they require fossil fuels to run and they emit greenhouse gases and other pollutants into the atmosphere. That’s why hybrid vehicles, which use less gasoline and emit fewer pollutants, have become popular. But it turns out that transportation is only part of the story. Buildings also have big impacts on the environment. In fact, the U.S. Green Building Council estimates that buildings are responsible for 39% of all carbon dioxide (CO2) emissions, 40% of all energy consumption and 13% of all water consumption in the United States. (CO2 is said to be the primary greenhouse gas behind humancaused climate change.) So, if we want to be good environmental stewards and create a more sustainable future, it’s important that we pay attention to buildings too.

What We’re Doing: Achieving the Gold Standard Darden’s leaders were thinking along these lines when they decided in 2005 that it was time to construct a new headquarters site. At that point, the 1,250 employees in Darden’s Restaurant Support Center (RSC) – which is what we call our HQ – were housed in 13 separate older buildings in south Orlando, Florida. The leadership decided that Darden’s new headquarters would be a “green” building, demonstrating Darden’s commitment to sustainability and reaping the benefits of cost-saving efficiencies. That decision was just the latest among a number of environmental improvements Darden had been making at the headquarters level. In 2008, for example, RSC employees reduced their paper consumption by 33% and decreased their overall energy use by 10%. We also eliminated the use of 250,000 bottles of water annually by giving all RSC employees a reusable travel cup and discontinuing the free bottled water in our break rooms. Completed and opened in September 2009, the new RSC site is a great example of the latest in green building design and technologies. In fact, the new facility has received a LEED Gold certification. “LEED” stands for Leadership in Environmental and Energy Design. Developed by the U.S. Green Building Council, LEED standards include four levels of certification – Certified, Silver, Gold and Platinum. As of this writing, the new RSC was one of only nine Fortune 500 headquarters buildings to receive any of these LEED designations.

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The new site includes a 469,000-square-foot main building, a 19,000-square-foot data center and a four-story parking garage, all situated on 42 acres in south Orlando. The site boasts numerous environmental, economic and social benefits. The primary ones are listed below.

Environmental Features The main RSC building has these cutting-edge energy-efficiency features:

1 a building orientation and U-shaped floor plan that limits western exposures, to reduce the absorption of heat from the afternoon sun

1 a floor-to-ceiling glass exterior, to maximize natural light, save energy on lighting and help keep employees connected to the natural surroundings

1 high-performance windows that let in daylight but not heat 1 a high-efficiency heating and cooling system, including a chilled water plant, energy recovery units, variable speed motors, and a computerized building management system that monitors and controls the mechanical and electrical equipment

1 a highly reflective, insulated roof, to reduce heat absorption and thus cooling costs 1 motion sensors that turn off lights when rooms are unoccupied 1 a “daylight harvesting” system that monitors natural light levels and automatically dims artificial lighting as appropriate, to reduce electricity needs The design of the building is also meant to encourage efficient transportation. For example, the building has:

1 a 450-seat cafeteria, to minimize employee car trips (and thus gasoline consumption) offsite for lunch

1 extensive on-site training facilities (including for restaurant managers in training), which minimizes RSC staff travel to offsite locations

1 bicycle racks and changing rooms for bicycle commuters

1 designated close-in parking spaces for hybrid and carpool/vanpool vehicles

Key Definitions Reclaimed water is wastewater that has been minimally treated such that it is useful for some purposes but not safe for drinking. Darden’s wastewater is treated and then reused in the RSC’s toilets and landscape irrigation system. Single-stream recycling is a system whereby all recyclable materials are collected together in one bin, and the sorting is done at the recycling facility. Such systems are known for increasing participation and recycling rates. Darden has contracted with a waste management company to handle our recyclables at the RSC in this way.

1 a bus stop in front of the campus

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The site was also designed to conserve water. It has these water conservation features:

1 toilets and an irrigation system that use reclaimed water 1 restroom sinks with auto on/off sensors 1 â&#x20AC;&#x153;bioswales,â&#x20AC;? or specially constructed drainage areas in the landscape that slow the runoff of rainwater, filter out contaminants and recharge the groundwater, instead of having stormwater drain directly into nearby ponds

1 water-efficient landscaping consisting of native Florida plants and trees Recycling and reducing waste have also been a big focus. The waste-reduction features of the building are as follows:

1 diversion of more than 90% of construction debris (2,060 tons) from landfill via reuse or recycling

1 more than 10% of building materials manufactured from recycled material 1 office furniture containing 100% recycled particleboard, up to 25% recycled aluminum and up to 30% recycled steel

1 a single-stream recycling collection system that diverts nearly 12 tons of trash from landfill monthly

1 composting of food waste from the cafeteria 1 double-sided printers and copiers, to reduce paper use 1 centrally located printing/faxing/copying stations, which eliminate the need for numerous individual desk-side machines Air-quality was also taken into account in designing and building the new site. The new RSC has the following air-quality features:

1 low- or no-VOC paint, carpet, furniture, moveable walls, sealants and other building materials (VOC = volatile organic compounds, i.e., harmful fumes)

1 a system that circulates fresh outside air into the building every hour 1 carbon dioxide monitors throughout the building, to provide information for use in regulating air quality

1 high-efficiency particulate air (HEPA) filters in the air ducts, to minimize airborne allergens

1 a cleaning company that uses only environmentally friendly cleaning products and techniques

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Economic Features The new RSC had an investment of $140 million. Building it according to LEED principles increased our costs by about 3%. However, we expect to earn back that amount in energy and water savings within 6-7 years. After the initial investment is recouped, the new building will save us money each year. As a certified green building, we will have approximately 16% lower operating costs than a comparable new building built only to code requirements. The new RSC is also estimated to have 30% lower operating costs than the buildings in our old headquarters campus. Our new headquarters has positive economic impacts on our local community as well. For example, about 900 workers were hired to build the RSC (in addition to about 100 design and consulting professionals).

Social and Workplace Features The new RSC was designed to promote employee health and well-being, as well as effective teamwork and collaboration. Specifically, the site has the following workplace-related features:

1 an on-site wellness center and doctorsâ&#x20AC;&#x2122; offices staffed by Florida Hospital personnel 1 an on-site 5,000-square-foot fitness center with locker and shower facilities, available to RSC employees for $10 per month

1 a half-mile walking/nature trail around the campus 1 prominent, open staircases, to encourage walking instead of riding elevators 1 natural daylight in more than 75% of the workspaces 1 a dining facility operated by Guckenheimer (the industry leader in corporate food service) with a good mix of indulgent and healthful options, including an outstanding salad bar

1 a three-story building design and numerous break room areas, to promote interaction among employees

1 an open office floor plan with consistent workspace standards

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Where Weâ&#x20AC;&#x2122;re Going: Putting Sustainability into Practice We are thrilled with our new RSC facility, and with how tangibly it demonstrates our commitment to sustainability. We look forward to seeing how all of the cutting-edge efficiency technologies translate into actual energy, water and waste savings. And, we will continue to explore additional technologies and perhaps even alternative energy sources down the road. At present, we are looking into partnering with a hotel company to build a hotel on the remaining nine acres of our site. This would ensure that our managers in training and other visitors to the RSC could stay right next door, thus minimizing travel to and from their overnight accommodations. We are putting sustainability into practice at the RSC, and we look forward to documenting and reporting our progress in the future.

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CASE STUDY

A New Era for Darden Most of our guests know Darden through our restaurants. They’ve enjoyed the soup, salad and breadsticks at Olive Garden, perhaps, or the grilled seafood at Red Lobster. Few know much about our corporate headquarters in Orlando, Florida, where 1,250 employees work behind the scenes on everything from menu development to marketing to the mind-spinning logistics involved in getting fresh fruits and vegetables delivered regularly to every one of our 1,800 restaurants. We call our corporate headquarters the Restaurant Support Center, or RSC.

The “Before” For nearly two decades, all RSC employees – including top company executives – were spread out among 13 office buildings in south Orlando. This inefficient setup could be frustrating for employees, who often found themselves driving from one building to another for meetings. “The primary old building worked fine at first,” said Kim Eifler, Darden’s Director of Supply Optimization. “But we outgrew it sometime in the early 1990s, and from there expanded more and more each year into nearby office park buildings. It was hard to feel like one cohesive unit when we were split up like that.”

The Decision Everything changed in 2005, when Darden’s leaders decided the time was right to build a new corporate headquarters. Our leaders wanted a building that would finally bring RSC employees together under one roof. At the same time, they agreed that the new facility should be a model of environmental and workplace efficiency, in order to showcase Darden’s commitment to sustainability. In fact, they decided it should be built according to nationally recognized Leadership in Environmental and Energy Design (LEED) “green building” standards. Construction workers broke ground in October 2007, and employees began moving in September 2009.

The Move We didn’t want employees to move 18 years of accumulated clutter to the new location, but we also didn’t want to send useable items to landfill. Kim Eifler thus oversaw a “clutter removal” project that ended up benefiting a variety of local charities. Ultimately, we donated nearly 25,000 lbs. worth of office supplies, knick-knacks, clothing, light bulbs, holiday decorations, serving dishes, utensils and a whole host of other miscellaneous items to organizations such as the Coalition for the Homeless, Second Harvest, A Gift for Teaching and other Central Florida charities.

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Case Study: A New Era for Darden

“We got pretty creative in finding homes for these items,” said Eifler. “For instance, 1,800 vases were given to a local retiree who makes silk flower arrangements for nursing home residents.” We also recycled 10 tons of paper at the old site, and held public “garage sales” to sell off the office furniture.

The “After” The move marked the beginning of a new era for Darden. Darden’s HQ went from older and out-of-date to cutting-edge modern, from disconnected and detached to one cohesive whole. While the work employees do remains the same, the atmosphere and setting in which they do it have changed considerably for the better. The first thing you notice about the new RSC is its low visual profile, which fits well into the flat Florida landscape. The three structures – the main building, the smaller data center and the parking garage – are surrounded by ponds and open spaces (including 3.5 acres of preserved wetlands) that host an array of wildlife, including sandhill cranes, other wading birds, ducks, deer and at least one very large alligator. As you walk into the new building, you’re struck by the open, light-filled atrium, the prominent central staircase and the restaurant test kitchens located along the main corridor. You might also notice the prominent recycling bins in the employee cafeteria. Many of the building’s environmental features may not be obvious at first, but they all add up to one very green building. In fact, the new RSC is certified LEED Gold. (For more information, see p. 20.)

The New Beginning Darden’s restaurants will always be the most public “face” of our business. But our RSC employees are excited to work in a beautiful new space they can be proud of, and that so prominently communicates our commitment to sustainability.

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Engaging with Our Employees Why It Matters: Engaged Employees = Happy Guests Our founder, Bill Darden, often said: “The greatest competitive edge our company has is the quality of our employees, evidenced by the excellent job they do every day.”

Darden Restaurants, Inc. Total Employees: Approximately 180,000 Total in the U.S.: 175,000 Total in Canada: 5,000 Hourly Employees: 95% Salaried Employees: 5%

That sentiment is as true today as it was when he opened his first Red Lobster restaurant more than 40 years ago. We depend on our employees to create great dining experiences for our guests. For that to happen, we must create great working environments for our employees. We employ nearly 180,000 people, which gives us 180,000 reasons to create a great place to work and teach enduring life skills.

Our Values • Integrity and Fairness: It all begins with integrity and fairness. We trust in the integrity and fairness of each other to always do the right thing, to be honest with ourselves and others, to solve without blame and genuinely care for everyone’s interest.

It’s all about people and talent at Darden. Our people deliver our brands, which means we depend on their engagement and efforts. When employees are engaged, they are motivated and inspired to go beyond their written job descriptions. Our company’s culture is a huge part of that – how we treat our employees, what we value, and how we recognize and reward a job well done.

• Respect and Caring: We reach out with respect and caring. We have a genuine interest in the well being of others. We know the importance of listening, the power of understanding and the immeasurable value of support.

We know that restaurant work isn’t easy. It’s fast-

• Excellence: We have a passion to set and pursue, with innovation, courage and humility, ever-higher standards.

• Diversity: The power of diversity makes a world of difference. We are strengthened by a diversity of cultures, perspectives, attitudes and ideas. We honor each other’s heritage and uniqueness. Together, we make a world of difference. • Always Learning – Always Teaching: We learn from others as they learn from us. We learn. We teach. We grow. • Being “of Service”: Being of service is our pleasure. We treat people as special and appreciated by giving of ourselves, doing more than expected, anticipating needs and making a difference. • Teamwork: Teamwork works. By trusting one another, we bring together the best in all of us and go beyond the boundaries of ordinary success.

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paced, high-energy and often stressful during busy periods. We believe that our strong corporate values and culture help our employees learn, thrive and cope effectively with the pressures of the job. We see a critical link between our employees and our sustainability strategy. We want our employees to be proud of who Darden is and what we do. We also want them to know that they are essential to our success in this effort. Our employees are on the front lines for us, helping us implement many of our key sustainability programs, such as our charitable food donation program to feed the hungry and resource conservation efforts. Nearly all of our 1,800 restaurants have employee “Green Teams” to assist with our sustainability efforts and come up with new ideas, too. (For more on those, see pp. 82 and 92.)

Employee Facts Fact: Almost half of our 6,000-plus restaurant managers, and 99% of our general managers, come from team member ranks. Fact: Many Darden executives worked their way up through our organization. Fact: 45% of the graduates of our Manager in Training programs started as hourly employees. Fact: Darden enjoys one of the lowest employee turnover rates in our industry. Fact: All employees are eligible for health insurance access from day one of employment. Fact: More than 125,000 employees responded to our annual 2009 workplace survey, and we reviewed more than 300,000 written comments.

In short, engaged employees equal happy guests. And happy guests equal a thriving and financially secure company.

What We’re Doing: Nurturing Employees At Darden, developing our people is a cornerstone of our business model. We aim to build a team of exceptional leaders at all levels of our company so we can create a positive workplace for all of our employees. We offer more than just jobs for nearly 180,000 individuals; we also offer opportunities to build rewarding careers. We teach thousands of people a lifelong skill: how to succeed in the workplace. According to the National Restaurant Association, employment in a restaurant is the first job for one-third of all Americans. And nearly half of all adults have worked in a restaurant at some point in their lives. In our communities, just one of our restaurants creates about 100 jobs. Any one of those jobs can lead to a career with Darden. Dave Pickens, the president of Olive Garden, is a good example. He started as a line cook at Red Lobster and rose to the top over 30 years. And that’s not unusual at Darden. In fact, we hire 99 percent of our restaurant general managers from within our own ranks, and we can point to any number of leaders within our company who started out just like Dave.

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Training Employees We invest in the training of our employees to ensure that they can succeed in what they do. We aim to provide a supportive work environment that is focused on integrity, excellence and exceptional service.

Training Programs

We also recognize that nurturing our employees ultimately benefits our company. Our team members are our future leaders, so it is vital that we have the right people in the right positions. We work hard to ensure we have a pipeline of individuals so we can meet our business needs while improving employee engagement and fostering career development.

• The Manager in Training (MIT) program, which focuses on the development of skills needed to manage a Darden restaurant.

We offer programs at all levels to encourage and develop our employees. Among them: • Development activities designed to develop the leadership skills of front-line employees to allow them to take on greater future responsibility.

• A variety of ongoing leadership programs to develop high-potential restaurant managers for general manager positions. • The Leadership Assessment and Development at Darden Restaurants (LADDR) program, an assessment center for restaurant managers aspiring to be general managers and for general managers preparing to take on director of operations roles.

New employees participate in a structured training program to help them Culinary Institute of Tuscany learn more about the Many guests can quote the tagline we use for our Italian-themed company, our brands and Olive Garden restaurants: “When you’re here, you’re family.” our expectations. Onthe-job training is So we decided to give our employees an international taste of Italy, family style. In 1999, we began Olive Garden’s Culinary provided by Certified Institute of Tuscany. Eleven times a year, we send 14 top Trainers – team members employees for a week-long stay at an 11th-century villa in who have completed Tuscany where they study Italian cooking with a husband-andcertification to train wife team who run a restaurant, winery and inn. others – who teach the Over the last decade, about 850 of our employees have learned new employees the ins how to create Italian dishes from these Italian chefs. About 80% and outs of the job. On of those employees are still with our company. average, new team members receive 40 to 80 hours of training (depending on the job) through video and hands-on instruction. Company values and expected behaviors are woven throughout the training to reinforce that how we treat our guests – and how we treat each other – is as important as the specifics of the job itself. Our restaurant managers spend a minimum of 600 hours as “managers in training” in their first year. One measure of our success: 45% of the graduates of our Manager in Training programs started as hourly employees in our restaurants.

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At the corporate level, new company executives in any role spend up to three months training in actual restaurants. These high-level company directors and officers are asked to work as dishwashers, prep cooks, bussers, hosts and servers, to help them truly understand the operations and culture of each brand. Many of our innovative talent development programs began with our Olive Garden restaurants, which needed to quickly develop managers at all levels to keep pace with extraordinary growth â&#x20AC;&#x201C; a

In 2009, we reached out to all Darden restaurant employees by presenting a poster on sustainability in every restaurant kitchen. (See below.) The poster outlines our sustainability initiatives and explains why they are important; it also describes steps employees can take to conserve resources at home. The design of the poster is edgy and eye-catching and is meant to engage and educate employees who might not otherwise take an interest in these issues.

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4.9% compound annual growth rate from fiscal year (FY ) 2005 through FY2009. Olive Garden has been named for six consecutive years to Training magazine’s list of “Training Top 125” – the only casual dining restaurant company included on the list. In our business, high job turnover is the norm. We’re proud to say that we have one of the lowest turnover rates among hourly restaurant workers – typically about 10 points better than our competitors.

Listening to Employees At Darden, we believe it’s important to listen to our employees, especially those closest to our guests. Directors and senior vice presidents regularly visit our restaurants and meet with team members and managers to hear their concerns and ideas. Also, our senior leaders conduct annual visits to restaurants all over the U.S. and Canada, holding listening sessions with restaurant employees.

Employee Engagement Results 82% agreed or strongly agreed that they were proud to work for Darden. 84% agreed or strongly agreed that Darden is a great place to work. 84% agreed or strongly agreed that they like the work they do. 81% agreed or strongly agreed they would strongly recommend Darden to family and friends as a great place to work.

We have an open-door policy that encourages employees to talk to their managers or direct supervisors to discuss any issue they have, without fear of retaliation. Team members can also call our employee relations hotline to raise any issues, including concerns about their managers. In another example of listening, we administer an employee engagement survey to all of our employees each year. By doing so, we hope to understand what we are doing well as an employer, and where we need to improve. More than 125,000 employees – or 74% of our workforce, up from 62% the previous year – responded to our October 2009 survey; we reviewed more than 300,000 written comments. According to the results, our employees are very proud of Darden and our brands, and of the role they play in the company. The number-one driver of engagement for every Darden employee – from restaurant workers through corporate officers was: “My work gives me a strong sense of personal accomplishment.” Our employees’ responses ranked significantly higher than a restaurant industry sampling on every single item in the survey. We also scored higher than the U.S. workforce norm on 21 items that could be compared within industries. For example, 46% strongly agreed that they would “strongly recommend” Darden to family and friends as a great place to work, compared to just 9% of the general U.S. workforce sample.

Thanking Employees We believe it is critical to recognize employees for a job well done. We expect all our managers to

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be on the lookout for performance that they can praise and encourage. We know that positive reinforcement leads us to success. We have both informal and formal recognition programs that reward individual and team performance. Our “Diamond Club,” for example, recognizes nearly 100 general managers and managing partners per year.

Diversity and Inclusion Darden is committed to creating an environment where everyone is welcome. Our founder embraced diversity as a business imperative, recognizing that a diverse workforce would help to draw a broad range of guests. We have a zero-tolerance policy for any type of discriminatory behavior. We are committed to attracting, retaining, engaging and developing a workforce that mirrors the diversity of our guests. Today, 42.5% of our employees are minorities, and 52% are women. Both percentages rank above average in our industry.

Diversity Awards We’re proud of the work we do to ensure that our workforce comprises employees of many cultural and ethnic backgrounds. Several publications and external organizations have recognized our efforts, including: • Top 50 Companies for Hispanics, Hispanic Business, September 2009 • Top 50 Employers in the United States for Hispanic Women, Latina Style, August 2009 • 40 Best Companies for Diversity, Black Enterprise, July 2009 • CEO Clarence Otis named one of the 100 most powerful executives in corporate America, Black Enterprise, February 2009 • Noteworthy Company, DiversityInc., 2008 and 2009

Diversity training is woven throughout our • Top 50 Companies for Diversity, orientation and management training DiversityInc., 2007 programs. We believe that our leaders need • Faces of Diversity Inspiration Award, a clear understanding of the importance of National Restaurant Association, 2007 diversity to the business. Darden officers, directors, general managers and managing partners attend our Diversity Learning Experience, a multi-day training session geared toward managing the similarities and differences that exist among a diverse workforce. We encourage and promote Employee Network Groups that support our diversity efforts in recruiting, retaining and engaging talent while enhancing opportunities for employees to learn and grow. Each network is supported by an executive advisory committee made up of three cross-cultural individuals at the vice president level or above. Participation is voluntary. We have six networks: the African American Network; Asian Network; Women’s Network; Hispanic Network; Family Network; and the Pride Alliance Network (for our lesbian, gay, bisexual and transgender employees). (For more on our diversity-related work within our communities and our supply chain, please see the Communities section of our corporate website.)

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Compensation and Benefits Darden offers competitive compensation, flexible work schedules and industry-leading benefits. Scheduling flexibility is the number-one reason why many people choose to work in the restaurant business. As a national chain, we can offer our employees jobs across the United States and parts of Canada, allowing employees to stay with us when personal circumstances require relocation. We offer many types of careers, both inside and between brands and at our corporate headquarters.

Helping Employees in Need We recognize that employees sometimes need a little extra financial help. That’s why we established Darden Dimes, a source of support for employees facing a personal financial crisis. Participating employees donate at least 10 cents from each paycheck to the fund, raising more than $500,000 annually to help hundreds of employees affected by hardships, such as home fires, flooding, emergency travel due to illness or funeral expenses. Employee contributions to the program are matched by the Darden Foundation. In fiscal 2009, we paid out 2,163 grants totaling more than $1.25 million.

All employees are eligible for health insurance access and disability coverage from the first day of employment, which is highly unusual in the restaurant business. Approximately 15% of employees take advantage of the health insurance benefit. Also unique in the industry is our vacation pay benefit. Hourly team members are awarded vacation pay, whether or not they choose to take time off. They receive one week of pay after their one-year anniversary, two weeks after three years and three weeks after seven years.

In addition, we pay our employees on a weekly basis, rather than bi-weekly – even though it costs us more to do so – because we recognize the economic needs of our workers. Employees enjoy a 35% percent discount (up recently from 25%) for themselves and up to seven family members or friends when dining at our restaurants. Team members receive a 50% discount on meals during their work hours. Our headquarters building boasts on-site Wellness and Fitness Centers for the 1,250 employees in our Restaurant Support Center, or RSC. The Wellness Center, which we first opened in 1996, provides on-site medical exams, flu shots, evaluations and other services by doctors and nurses from Florida Hospital. Employees pay nothing to use the center, other than a co-pay for any medications. We also have a Fitness Center, staffed by a team from Florida Hospital and open seven days a week. We’re also proud to offer every employee in our Orlando headquarters 16 hours each year of paid time for community service during regular work hours.

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Employee Health and Safety The health and safety of our employees is one of our highest priorities, and we incorporate safety training into all of our training programs. In fact, we typically do not offer stand-alone health and safety training because we believe that safety should be integrated into everything that we do. Safety is not something that gets turned on and off; itâ&#x20AC;&#x2122;s how we run our business every day. Darden continuously evaluates the risks present in our facilities, tracks any resulting claims, and works with operations management to provide the cleanest and safest restaurants in the casual dining industry. We have reduced employee workplace injuries by 48% over the past seven years through a variety of initiatives including:

1 Analyzing systems to identify inherent risks within the restaurant setting 1 Engaging operations managers to incorporate safety into the daily work environment 1 Focusing on appropriate training to clearly communicate safe working procedures 1 Incorporating slip-resistant footwear into dress code standards 1 Introducing improved tools to perform essential functions 1 Motivating and incentivizing safety through management performance reviews.

Where Weâ&#x20AC;&#x2122;re Going: Forward, Together As one of the largest private employers in America, virtually any employment issue affects us. We have been working and will continue to work to make our voice heard on important topics, such as health care. These days, consumers have a dizzying number of choices when it comes to restaurant dining. We know that if we want to treat our guests like family, we must treat our employees like family, too. Our employees are our greatest asset, and we will continue to look for ways to develop and engage with them so we can move forward as a company, together.

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Food Safety, Health and Wellness, and Animal Welfare Why It Matters: Guests Are Our Priority We know that consumers have scores of choices when they dine out. Part of the reason guests choose us is because they know we offer meals that are safe and enjoyable to eat. This section addresses separate topics that are critical to our business and relate directly to the meals we serve: food safety and animal welfare. Below we detail what we are doing as a company in each of these areas.

FOOD SAFETY What We’re Doing: Leading the Industry Our number-one priority is the quality and safety of our food. From the earliest days of our first Red Lobster restaurants, we have set the highest standards for food safety. And we are constantly challenging ourselves to raise the bar even higher. As the largest full-service restaurant operating company in the world, we play an influential role in setting standards across our industry. We’re one of the world’s largest buyers of seafood and a major consumer of other foods. As a result, Darden doesn’t just buy; we analyze and inspect what we buy from our sources worldwide. When it comes to protecting the public’s health, nothing is proprietary at Darden. We believe it is important to share food safety knowledge broadly, even with our competitors. Our experts have developed cutting-edge food safety technologies and practices, and we have openly shared what we have learned with other restaurant companies. Darden has had a Food Safety/Total Quality Department for more than 30 years – longer than most other restaurants. In 1979, we implemented a rigorous food safety program based on a protocol known as Hazard Analysis of Critical Control Points (HACCP). Today, HACCP programs are standard practice for restaurants and food companies. But back then, only a handful of businesses were implementing systematic, preventive approaches to food safety. These days, our Total Quality Department includes a team of more than 50 biologists, food scientists and public health professionals located around the world. We have 17 field plant inspectors in the United States and elsewhere – including Chile, China, Costa Rica, Ecuador, Honduras, India, Peru, Mexico and Thailand – who inspect food plants, products and safety processes. And we have another team of 20 field total quality managers who review and certify the food safety processes in our restaurants. SUSTAINABILITY AT DARDEN: COMPLETE GRI CONTENT

Food Safety, Health and Wellness, and Animal Welfare

Traceability Darden buys raw ingredients and food products from approximately 1,000 food suppliers in 35 countries around the world. More than a decade ago, we recognized that an increasingly global food market required us to take quality and food safety to the next level. And that meant taking our food safety programs all the way back to the source. Today, our food safety practices are integrated at every level of the supply chain. We like to say we have traceability from pond to plate (for seafood), from farm to fork (for land-based proteins) and from dirt to door (for fresh produce). All of our suppliers provide us with traceability of all raw products, as far back as can be taken. (For more on the traceability of our fresh produce, see p. 48.)

What’s Next Many critical food safety practices are fairly low-tech – like washing hands. Ensuring correct hand-washing procedures by our restaurant employees is one of the most essential elements of our food safety program. But we also continue to push the frontiers of food safety management and innovation. For example, we’re testing new technologies for remote temperature monitoring of our coolers and exploring new sanitizers for our restaurants that offer additional protections against new and emerging viruses, such as norovirus.

We have established a series of critical controls in our supply chain. By having control points where products are produced, we can verify the ingredients are safe and meet our specifications before they are shipped. This benefits Darden, of course, but it clearly benefits our suppliers, too. In fact, many of our suppliers tell us that we have helped improve their processes so much that it has helped them win business from other companies as well.

We view our Darden quality specialists as teachers and consultants at our vendor sites who help make our suppliers even more successful by helping to conduct plant inspections and verifications and identifying key risks. Several years ago, for example, we found we were rejecting about 12% of shipments of farmed shrimp from Asia, due to Salmonella contamination. The Salmonella, it turned out, came from tainted waters where the shrimp were farmed. By working with the suppliers to change their farming practices and to improve their safety controls within the processing facilities, we were able to bring the Salmonella incidence rate to zero. As this example shows, we pay particular attention to the safety and quality of the seafood we purchase, especially from Southeast Asia. We have a team of quality specialists dispersed throughout China, Thailand and India. Each of these specialists has earned a minimum of a bachelor’s degree and many have either a master’s or a doctorate degree in a scientific discipline. These team members inspect and approve for production more than 50 million pounds of seafood throughout the Eastern Hemisphere each year for use in our restaurants.

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For seafood products from the Western Hemisphere, we have a team of highly trained quality and safety specialists based in four inspection labs in the United States. Each year, these global teams inspect millions of pounds of seafood, rejecting nearly 10% of shipments that do not meet our stringent food safety specifications. Darden’s seafood inspection program has been at the forefront of our industry for decades. For example, we were the first in the casual dining industry to establish a Quality Assurance Microbiology and Analytical Laboratory in 1976. In the 1980s, Darden was an industry leader in the development of an Integrated Lot Inspection Program with the U.S. Department of Commerce. This system of inspection uses a statistical model to provide us with a high level of confidence in the results. Our Seafood Inspection Team also developed an integrated system that tracks our seafood from its origin by lot identification. Today, we have control points as early in the process as possible. We focus on building quality into the products and testing prior to the products being shipped. Every consumable product used by any of our restaurants – nearly 2,000 ingredients in all – are tested to ensure compliance with U.S. Food and Drug Administration (FDA) regulations.

The Six Most Critical Food Safety Components: • Safe water supply • Personal hygiene • Prevention of cross-contamination (bacterial, physical or chemical) • Temperature control

Among some of our other food safety efforts, we:

1 Provide regular HACCP audits and “mini audits” of our vendors to analyze root causes of problems and provide corrective actions as needed.

• Metal detection • Traceability

Other Food Safety Worries: • Pollution • Bioterrorism

1 Arrange for external lab analyses and work with suppliers to correct any issues.

• Salmonella • Shigella

1 Expect seafood vendors to pass a rigorous set of tests to ensure their ability to produce seafood that is of the highest quality.

1 Require shrimp processing facilities to be

• E. coli • Norovirus • Water-borne diseases • New viruses

certified in compliance with best practice standards developed by the Global Aquaculture Alliance, or GAA. (See p. 52 for more on this topic.)

1 Require prospective suppliers to sign a letter of guarantee indicating their ongoing commitment to food safety and their intent to supply products that comply with U.S. laws.

1 In Mexico, where about half of our produce is grown, we inspect farms at least every three weeks, with additional third-party inspections at least once or twice a year.

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Training The key to our success in providing top-quality food safety and sanitation lies with our people. So training our people in food safety processes is an important focus for us. Back in the mid-1970s, we worked with what is now the Educational Foundation of the National Restaurant Association to pioneer manager certification in food safety training. Thousands of our managers have been certified through this program, and our restaurant employees receive extensive food safety, personal hygiene and sanitary practices training. To guide our seafood purchases, we have developed training and education programs for our inspection staff, our seafood buyers, our vendor partners and many other seafood quality and safety interest groups. At least every two years, we hold Fresh Fish Seafood Summits for our fresh fish vendors from around the world to ensure the safety and quality of the fish that we serve.

Darden Food Safety and Quality Standards Food Safety Is Our #1 Priority The best way to ensure quality is to go to the source. Utilizing a risk-based, Hazard Analysis of Critical Control Points (HACCP) approach, ensure: • Food safety practices are integrated at all levels of the supply chain • Highest level of security to the Darden supply chain (domestic & international), with traceability from pond to plate / farm to fork

Guests Raw Material Suppliers

Manufacturers

Food protection – Darden Verification at the Source

Distributors

Restaurants

Data into information Continuous system improvement

Timely problem identification, resolution & communication

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Recalls Food-borne illnesses are a constant risk for a company like ours. In recent years, the U.S. has witnessed major national recalls for items including peanut products, spinach, tomatoes and peppers. In addition to serious impacts on human health, food-borne illnesses can have a significant economic impact on restaurants like ours â&#x20AC;&#x201C; even when we are not directly affected by a tainted product. At Darden, we try to stay ahead of the curve through vigilant assessment of our supply chain. We are able to minimize the risks because we can quickly identify the sources and origins of all of our foods. When government regulators announce the recall of a product, we can determine almost immediately if we are impacted. We require our suppliers to readily identify:

1 The number of cases produced, according to date,

1 Where the products were shipped and when, and

Beef Recall Darden was one of several restaurant chains affected by a December 24, 2009, recall of 124 tons of beef. We immediately pulled the beef from our restaurants after receiving a notice from one of our suppliers about the recall of marinated beef medallions used in Olive Gardens in the Texas region. Although the medallions had been tested and found to be free of E. coli, they were included in the recall because they were processed in the same plant, and in the same timeframe, as other products that had been tainted.

1 How much of the product they still have on hand. And the suppliers must be able to do the same with their own raw material suppliers, too. Our food safety/recall processes, which exceed government standards, have largely protected us from direct contamination to our supply chain. For example, none of our restaurants was impacted by the huge 2008 recall of 143 million pounds of tainted beef. Any time the FDA issues an advisory about a tainted product, our restaurants are affected. Take, for example, the recall of fresh spinach after a deadly E. coli outbreak in 2006. Although we were certain that our spinach was safe, we nonetheless chose to remove it from our menus.

Public Policy At Darden, we welcome global food safety standards that help protect consumers. We support science-based federal legislation that would truly improve food safety in the United States, and we have been closely following recent legislative proposals in Washington that would overhaul the nationâ&#x20AC;&#x2122;s food safety systems.

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The U.S. food supply chain is recognized as the safest in the world. Yet, recent disease outbreaks make it apparent that the U.S. food inspection system is not perfect. We believe there are opportunities to enhance existing measures to further protect consumers. The key to minimizing the risk of food-borne disease is to ensure that systems are in place that: focus on the proactive prevention of food safety issues; strengthen surveillance and enforcement; and improve the response and recovery in the event of a crisis. Only through effective collaboration and harmonization of standards among industry, government and academia can we ensure the safety of all food products in a global market. We lend our expertise to federal regulators on issues that affect our industry. Recently, for example, we collaborated with the FDA to help develop draft guidance for safety practices related to the growing of tomatoes and leafy greens. The FDA plans to move toward greater regulation of those products within the next two years.

Recognition In 2002, the International Association for Food Protection awarded us its prestigious Black Pearl Award in recognition of our food safety and quality programs.

Industry Memberships Darden is a member of a number of industry associations dedicated to food safety, including: • Global Aquaculture Alliance • National Fisheries Institute • National Restaurant Association Quality Assurance Study Group • United Fresh Produce Association • Produce Marketing Association • Food Safety Leadership Council • International Association for Food Protection • Conference of Food Protection • National Environmental Health Association

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HEALTH AND WELLNESS Our Commitment to Transparency, Choice and Innovation Darden is committed to the health and well-being of our guests, and we are taking a holistic approach to improving the nutritional content of our menu offerings. Our efforts are guided by three pillars: transparency, choice and innovation. Transparency means we are committed to arming our guests with the information they need to make informed decisions in our restaurants. Darden was one of the first restaurant companies to provide guests with calorie and other key nutritional information online more than a year ago and was a leader in the effort to pass federal legislation to require nutrition disclosure in restaurants. Our nutritional information is available upon request in all of our restaurants. Choice means we offer our guests a range of menu items that appeal to a variety of taste preferences and dietary needs, and guests are free to decide how they want to apply their own personal beliefs about what healthy eating means to them. Guests are able to apply this choice in various ways in our restaurants. For instance, guests at Olive Garden can substitute 100 percent whole grain pasta in any dish. At Red Lobster, they can enjoy their favorite seafood prepared over a wood-fire grill or broiled. And at Seasons 52, which is undergoing rapid expansion, all items on the seasonally inspired menu have fewer than 475 calories. In response to our guests’ desire for better-for-you entrees, we have already introduced some innovations to match our offerings to our guests’ wishes. The fresh fish at Red Lobster is a great example of that. Innovation means we are working to improve our menu offerings over time to provide even greater nutritional value, while still meeting our guests’ high expectations for taste and quality. We’re taking a holistic approach that will include examining portion size and kids’ menus, as well as specific nutrients such as sodium and fat and the inclusion of positive nutrients like lean proteins, fruits and vegetables and whole grains. Our nutrition information can be found by visiting our websites below:

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ANIMAL WELFARE What We’re Doing: Taking a Holistic and Science-Based Approach Darden is strongly committed to the welfare and well-being of farm animals. It’s critical to our business, and it’s in keeping with two of our company’s core values – respect and caring. We also view animal welfare issues as a crucial component of our industryleading food safety program. Animals subject to poor housing and handling conditions are more susceptible to developing poor health, which can affect the quality of the food product. (For more on food safety, see above.) When it comes to animal welfare, we take a holistic approach. That is, when we consider issues of animal welfare, we must also consider the related economic, environmental, social and food safety aspects of protein production. Our policies are based on the best-available science of the day. We have been and will continue to listen to a wide range of stakeholders in order to better understand animal welfare issues before making decisions that impact our purchase of animal products. We believe collaboration within the restaurant and food service industry and across the supply chain will lead to improvements that enhance the welfare of farm animals.

Food Animal Welfare Principles and Policies (FAWPP) Food Safety • The health and safety of our guests is our number-one priority. Darden will continue to provide the safest and highest-quality products for our guests. Respect and Caring • At Darden, we live by our core values, which include Respect and Caring. This core value extends to the respect and caring of animals. Best Science • Darden’s principles and policies will be based on the best-available science in the context of good judgment and ethical behavior. • As the best-available science and our increased understanding of the broad set of animal welfare issues evolve, we will update our operating practices accordingly. Stakeholders • Darden will work with its suppliers to improve farm and processing plant animal welfare. • Darden will collaborate with those in the industry (suppliers, food service companies, retailers and others) to understand evolving best science and continuously improve animal welfare. • Darden will continue to listen to, and take into consideration, various points of view from our stakeholders (government, academia, communities where we operate, shareholders, suppliers, interest groups and others) to inform our efforts going forward.

Principles and Policies Since 2005, our Animal Welfare Working Group (AWWG) has been monitoring animal welfare issues to help ensure that we apply the most up-to-date scientific standards to the well-being of animals in our supply chain. SUSTAINABILITY AT DARDEN: COMPLETE GRI CONTENT

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The AWWG, which meets quarterly, includes representatives from several Darden departments â&#x20AC;&#x201C; including supply chain, total quality assurance, legal, and government/community affairs â&#x20AC;&#x201C; as well as outside experts and scientists who specialize in animal welfare. For example, we brought in a scientific advisor who is internationally recognized for her work related to agricultural animals. Dr. Janice Swanson, a professor and director of animal behavior and welfare at Michigan State University, worked with us as a technical advisor to finalize a set of Food Animal Welfare Principles and Polices (FAWPP) for our suppliers based on current sound science. We believe these principles and policies, which were reviewed by several external animal welfare experts, are grounded in good judgment and ethical behavior. As a condition of doing business with Darden, our suppliers must affirm their commitment to animal welfare. Each supplier must comply with all legal and regulatory requirements, such as the Federal Humane Slaughter of Livestock Act, and must abide by recognized science-based guidelines established by industry groups such as the American Meat Institute, the National Chicken Council and others. We also require our suppliers and producers to certify the welfare of animals by providing internal data records and through third-party verification audits of their processing facilities. In addition, annual on-site assessments of processing facilities are performed by Darden employees who have been trained through the Professional Animal Auditor Certification Organization, or PAACO, program. (For more on PAACO and its mission see www.animalauditor.org/paaco.) If we discover any problems during an audit, we work with the supplier to resolve the concerns. Suppliers then must go through another auditing process within 30 days to ensure all issues are satisfactorily resolved. As a large purchaser of beef, pork and poultry within the full-service restaurant industry, we believe we have an opportunity to work with our suppliers toward enhancing animal welfare through science-based improvements. Darden actively supports programs that enhance the welfare of farm animals, providing up to $100,000 annually in grants. We sponsor reviews of scientific literature on selected topics of importance to animal welfare and fund farm animal welfare science research that relates to animal products purchased by Darden. We have identified a number of academic institutions with robust animal welfare science programs as possible future recipients of Darden funding. Our AWWG works with our scientific advisor to review and evaluate grant proposals that meet our guidelines for submittal to the Darden Restaurants Foundation. Our FAWPPs are intended to be living principles and policies that change as new science and information becomes available. With guidance from our scientific advisor, the AWWG formally reviews these principles every year to evaluate our progress on animal welfare issues to date and assess where Darden might go in the future.

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Purchasing Decisions Darden follows the best-available science when making purchasing decisions that are based on how animals are raised or slaughtered.

“Darden has a well-defined animal welfare program. Not only have they laid out basic principles, but they have sets of policies to measure the outcomes. I think they have taken a very measured and thoughtful approach to these issues – they don’t make snap decisions.”

For example, scientific studies have - Dr. Janice Swanson, Professor, Animal Behavior shown that “open pen housing” and Welfare, Dept. of Animal Science, Michigan systems that provide the pregnant sow State University with greater freedom of movement can be as effective and productive as the individual gestation crates that have been the industry standard for years. So we are now giving purchasing preference to pork producers who have committed to move to open pen housing or who are in the process of phasing out the use of gestation crates. By giving purchasing preference, Darden can help to change industry practices to enhance animal welfare. However, we have not chosen to give purchasing preference to poultry suppliers that use a system known as Controlled Atmosphere Stunning, or CAS, for slaughtering chickens. Currently in the U.S., most poultry processors use electrical stunning prior to slaughter. The CAS system uses a combination of gases that cause the animals to lose consciousness before slaughter. While current science indicates CAS may improve some animal welfare issues – for example, the chickens don’t have to be shackled – questions remain about whether the process creates new animal welfare and food safety concerns. For example, in some birds, CAS causes respiratory distress and can lead to violent wing flapping that may cause wing breakage. In CAS systems, the rate of not detecting a dead bird before slaughter has been found to be higher than in electrical stun systems.

Veal at Our Restaurants Only one of our restaurant brands – The Capital Grille – serves veal. The veal we offer was raised in sustainable, healthy and humane conditions. The animals are never tethered and are able to roam free in pastures. Darden uses third-party auditors to verify that the veal is raised and handled in a humane way.

In the United States, CAS systems for poultry, especially chickens, requires more refinement to enable processors to maximize animal welfare benefits and ensure food For more information on our safety; only a limited supply of poultry slaughtered in this veal supplier, visit www.freeraised.com. manner is on the market today. Given the current economic environment, we believe it’s unrealistic to expect the poultry industry to invest the capital and resources that would be required to make major modifications to their processing systems.

Darden will continue to collaborate with the industry to conduct research and build scientific consensus on CAS and other existing – or potential – technologies that may improve the welfare of poultry.

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Promoting Sustainability in Our Supply Chain Why It Matters: Global Reach, Global Impacts Each year, Darden buys about $3 billion worth of food, equipment, energy and services from 1,500 supplier companies in 35 countries. These companies, which make up our “supply chain,” help to sustain communities around the world. The impacts of many of our key issues – seafood sustainability, energy and water use, greenhouse gas emissions and animal welfare – are most significant in our supply chain. For example, we estimate that the amount of greenhouse gas emissions from our supply chain is 10 to 100 times that of our own operations. And our most important issue of all – food safety – depends on actions at every step of the supply chain, “from farm to fork.” To deliver on our commitment to sustainability, we need to be confident that the food we buy is grown, processed and shipped in hygienic conditions; that the seafood we serve comes from sustainable sources; that the welfare and well-being of animals raised for food in our restaurants is based on the best-available science of the day, in the context of good judgment and ethical behavior; and that our suppliers share our commitment to reducing their environmental footprints and ensuring sound working conditions for their employees. If it sounds like we demand a lot of our suppliers, we do. But we also try to offer a lot of value in return. We’re dedicated to building long-term, mutually beneficial relationships. We share our knowledge and look to our suppliers for their expertise. If we encounter issues, we work cooperatively to resolve them. If we identify more efficient ways to do business, we share the benefits. We want our supply chain partners to be ever more competitive, which helps both the supplier and Darden in the long run. We believe our supply chain relationships provide us with a competitive advantage. By working closely with suppliers and leveraging our scale, we can innovate to develop a better, more sustainable supply chain while also improving efficiency and reducing our operating costs.

What We’re Doing: Focusing on Key Issues To manage and coordinate our approach to sustainability issues in the supply chain, we have established the Darden Supply Chain Sustainability team. The team is composed of senior leaders from the purchasing, supply chain management, total quality and logistics functions. Formed in early 2009, the team has established a supply chain sustainability vision, principles and objectives (see Figure 1).

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F IG URE 1

What is Our Vision?

Darden’s core values

Darden’s sustainability vision overall Darden supply chain objectives

Darden’s sustainability vision

integrity & fairness

respect & caring

diversity

always learning & teaching

being “of service”

teamwork

excellence

“creating value while balancing the well-being of our society, our environment and our business now and for generations.” To deliver total value to the enterprise by enhancing: Economics Environment Delivery Food Safety Community Quality Supplier Diversity Resource Availability

“Partnering with our key stakeholders, to generate ecosystem conservation and enhancement solutions to continually create long-term collective value and resource availability.”

The work of the team builds on ongoing efforts in several key areas:

1 Animal welfare: More than seven years ago, we began discussions with our suppliers about their animal welfare practices. Drawing on the expertise of the suppliers, Darden staff and independent experts, we developed and adopted a set of animal welfare principles. Suppliers are required to certify that they adhere to the principles, and Darden’s quality teams conduct spot audits to verify adherence. Please see p. 35 for details.

1 Seafood sustainability: For more than 13 years, our supply chain experts have worked to build the capacity of our seafood suppliers and Darden’s seafood buyers to improve the sustainability of our seafood supply. Darden has played an important role in forming the Global Aquaculture Alliance and facilitating its development of social and environmental standards. We’ve also worked with the New England Aquarium to equip our seafood buyers with a “sustainability dashboard” to inform purchases of wild-caught fish species. These and other initiatives are discussed beginning on p. 52.

1 Working conditions: We see sound conditions for workers as an integral part of safe, highquality operations. We’ve collaborated for several years with produce supplies in Mexcio (see p. 48) to build high-quality operations there that also raise the standard of living for migrant workers. In addition, we have a Supplier Code of Conduct (see box), which is being communicated to all suppliers. The Code is also part of the certification requirements of the Global Aquaculture Alliance.

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Where We’re Going: Deeper Engagement Our current supply chain priorities, as identified by the Supply Chain Sustainability team, include further work in seafood sustainability, supplier packaging, logistics and distribution. We are launching a project to reduce the packaging that suppliers use for items they ship to us, without sacrificing food safety, quality or other important attributes. The type of packaging used varies widely, so there is no single solution. But we will be collaborating with our suppliers to help identify ways to cut packaging waste at our restaurants and distribution centers and to improve the environmental profile of those materials. We will continue to work on these and other priorities as we build a more sustainable supply chain. In the long run, this will make our company and our suppliers stronger, smarter, more resilient and better able to adapt to global challenges.

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Darden’s Supplier Code of Conduct Darden’s Supplier Code of Conduct prohibits the use of child or forced labor or abusive physical discipline by Darden suppliers. It also: • Advises suppliers to contract only with suppliers that will adhere to the Code and to monitor the subcontractor’s compliance with the Code. • Encourages suppliers to adopt and enforce similar codes and to encourage their suppliers, in turn, to take similar action. • Provides for audits of adherence to the Code by Darden, the supplier, or a third party, at Darden’s discretion.

CASE STUDY

Growing Safe and Sustainable Produce in Mexico About a decade ago, all of the fresh fruits and vegetables used in our restaurants came from farms in the United States. We began to realize, however, that we were relying too heavily on farmers in only two U.S. states â&#x20AC;&#x201C; Florida and California. This dependence grew especially evident in 2004 after a series of hurricanes in Florida, coupled with unfavorable weather in California, wiped out tomato crops and drove up prices. What we needed was geographic diversity. And the solution was found south of the border in Mexico. We knew, however, that sourcing produce from Mexico wouldnâ&#x20AC;&#x2122;t be easy. Contracting with Mexican farms would require us to take a much more active management role than we had with our U.S.-based produce suppliers. At that time, Mexican farms were reputed to have poor working conditions for employees and lax oversight in the fields. In Mexico, we saw several opportunities to not only improve our business operations but also to significantly improve the lives of hundreds of Mexican farm workers and their families. Food safety was our biggest driver. But we knew that operating farms to the highest standards also improves conditions for workers. The challenges in Mexico were many and varied. They included:

1 Inferior worker hygiene and sanitary standards 1 Underage workers and children accompanying parents to work 1 Livestock wandering in the growing fields 1 Substandard water quality and irrigation 1 Lack of trust in U.S. buyers

Finding Partners We began our Mexican sourcing program by meeting with growers to demonstrate that Darden was interested in long-term purchasing relationships. (Historically, U.S. purchasers had primarily made one-off buys from Mexican farms, with no future commitments.) We chose as partners those growers with a reputation for quality and innovation. But even those growers had a lot of catching up to do to meet our comprehensive and demanding food safety standards. At Darden, food safety is our top priority, and we will not contract with any farm unless we are assured that the products will meet our stringent criteria.

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Case Study: Growing Safe and Sustainable Produce in Mexico

The Risks of Fresh Produce Fresh produce is inherently risky for many reasons. For one thing, lots of people touch and handle the crops, providing opportunities for disease transmittal if proper safety regimens (like hand washing) aren’t followed. Moreover, many fresh produce items – such as tomatoes, cucumbers, peppers and lettuce, which our restaurants serve in our salads – aren’t cooked before reaching the end consumer. (Cooking would help to kill harmful bacteria that could result in illness.) According to the Centers for Disease Control and Prevention, produce caused more reported illnesses than seafood, dairy and processed foods combined between 1996 and 2007 in the United States. (See Figure 1 below.1) F IG URE 1

The Risks of Fresh Produce FDA-regulated foods linked to reported illness, 1996-2007. (There were 23,885 reported illnesses from 1996-2007; the CDC estimates a total of 717,000 illnesses from 96-07.)

Processed Foods 15.4% Produce 43.6% Eggs 27.7%

Seafood 11.8% Dairy 1.5%

We saw that shifting produce purchases to Mexico would require Darden employees and our consultants to work with and train the growers’ managers and employees. It also would mean pushing for substantial changes in the working conditions of local and migrant farm employees, as well as the living conditions of migrant workers. “The plight of the migrant worker in Mexico warranted our involvement,” says Pat Hynes, Darden’s senior director of produce purchasing who helped to spearhead the Mexican programs.

The pie chart does not include animal protein products, which are monitored by the U.S. Department of Agriculture, not the Food and Drug Administration. Data through FY07 is the most recent available.

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Case Study: Growing Safe and Sustainable Produce in Mexico

Hynes and other Darden employees who visited several Mexican farms were dismayed by what they saw. Workers living in villages constructed out of cardboard boxes. Extended families crowded into small rooms of abandoned buildings. Meals cooked outside near the fields on open fires. Insufficient bathroom facilities. Young children following their parents in the fields.

Our Requirements We recognized that we could improve food safety by improving working and living conditions for employees. In areas where migrant workers are employed, one key element of our program was to encourage our growers to develop better housing for employees and their families. At some of the farms, many families now stay in the housing year-round â&#x20AC;&#x201C; even during the off-season â&#x20AC;&#x201C; creating permanent worker communities. We also insisted that the growers put a stop to the traditional practice of allowing employees to take their pre-school age children with them into the fields. We required our growers to open daycare facilities and schools so the children would have safe places to play and learn while their parents worked. When told they could not bring their children with them to the fields, many parents initially resisted the idea. Some workers even quit, choosing instead to work for growers who would allow them to continue the custom. But those workers who did remain grew to recognize the value of the daycare and school programs. Many children of these workers are the first in their families to go to school and learn to read. We also required our growers to:

1 Build shaded eating facilities for workers, 1 Establish bathroom facilities in and near the fields, complete with monitors to ensure hand washing, and

1 Erect fencing around the fields to keep livestock away from the crops. Some of the growers added on other beneficial programs for their employees, including:

1 On-site medical clinics, with full-time nurse practitioners on site, weekly doctor visits and weekly dental clinics.

1 Worker-owned and managed cooperative stores, where the workers share in any profits.

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Case Study: Growing Safe and Sustainable Produce in Mexico

A Mutually Beneficial Program We helped the growers develop extensive safety protocols and procedures, as well as mechanisms to ensure they were followed and enforced. We sent in Darden Total Quality employees and our consultants to inspect farms with unannounced visits. And we began requiring third-party annual inspections. “We thought we had high standards for our Mexican operations – that’s why Darden wanted to work with us,” says Mark Munger, vice president of marketing for Andrew & Williamson Fresh Produce (A&W), whose Mexican operations now supply tomatoes and cucumbers for Darden restaurants west of the Mississippi. “But Darden really helped open our eyes to improved food safety. What was nice was they didn’t come in like it was a police state. They worked with us side by side and helped us through the entire process.” Munger says A&W spent several hundred thousand dollars to improve its facilities in order to meet Darden’s expectations. “Darden was the catalyst that helped us improve our operations,” Munger says. “We were ready to change and put in infrastructure, like housing and daycare. But Darden came in and really acted as a guide to help us put things in place.” Our successes in Mexico have prompted us to work with a number of growers in Central America, including Guatemala, where the infant mortality rate on our farms is significantly lower than the national average, thanks to improvements our growers have implemented. Our approach in Mexico took several years to develop, but it has been well worth the effort – for all parties involved. The growers recruit and retain loyal and capable workers and have been able to increase their business with other U.S.-based companies who were willing to contract in Mexico once Darden paved the way. The workers – and their families – have a significantly better quality of life. And Darden has a steady supply of top-quality produce grown on farms with food safety standards that are better than those on many U.S. farms.

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Our Approach to Seafood Sustainability Why It Matters: Wild Fish Stocks Are Under Pressure Seafood is the main source of protein for more than 1 billion people worldwide; another 3 billion count on seafood for up to 20%2 of the protein in their diets. And in the United States in particular, demand continues to skyrocket as consumers heed nutritionists’ advice to eat seafood for better health. Scores of studies point to seafood as one of the healthiest foods one can eat. The fatty acids in fish have been shown to reduce the risk of heart disease, stroke, dementia and autoimmune diseases such as Crohn’s and rheumatoid arthritis. Global demand for seafood is rising so fast that wild-caught species simply cannot keep pace. According to the United Nations’ Food and Agriculture Organization (FAO), most of the stocks of the top 10 fish species (representing about 30 percent of world marine captures) were either fully exploited or overexploited in 2007.3 A depleted fishery has huge environmental, economic and social ramifications. When one fish species struggles, an entire marine ecosystem can suffer. Fishermen, and fishing communities, struggle financially, as do the businesses that sell the seafood to consumers. And for many impoverished individuals around the world, there may not be alternative sources of protein that they can easily access and afford.

Global Fish Trade Total Global Seafood Purchases: $60 billion a year Seafood Marketplace: Nearly 200 countries that supply the global seafood marketplace Commercial Products*: More than 800 species of fish, shellfish, mollusks World Population:** 2010 Population: 6.8 billion 2050 Projected Population: 9+ billion * Source: www.fishbase.org **Source: United Nations and U.S. Bureau of the Census estimates

Global Fish Stocks Of the 600 marine stocks monitored by the FAO: 17% of species are overexploited 7% are depleted 1% are recovering from depletion 52% are fully exploited 20% are moderately exploited or underexploited 3% are underexploited Source: FAO

2 3

Food and Agriculture Organization (FAO) – The State of World Fisheries & Aquaculture (SOFIA, 2008). The FAO defines these terms as follows. “Fully exploited” means the fishery is operating at or close to an optimal yield level, with no expected room for further expansion. “Overexploited” means the fishery is being exploited at or above a level which is believed to be sustainable in the long term, with no potential room for further expansion and a higher risk of stock depletion/collapse. “Depleted” means catches are well below historical levels, irrespective of the amount of fishing effort exerted.

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Our Approach to Seafood Sustainability

Global seafood demand is expected to jump to 144 million tons per year by 2025 – a huge increase from the 94 million tons in 2007. Yet, the amount of seafood harvested from the oceans has remained flat since the late 1980s, at about 85 million to 90 million tons a year. Figure 1 illustrates expected trends in future world seafood supply in relation to projected per capita demand. (We derived these figures from FAO fish capture data and U.S. Census Bureau statistics on the increasing world population.) F IG URE 1

Future World Seafood Demand To maintain per capita status quo (5.49 kg [12.1 lbs.]) will require approximately 8.0 million metric tons (edible wt.) by 2025.

46.00 44.00

Required Production

42.00 40.00

8.0 MT deficit requires a 21% increase in supply

38.00 36.00 34.00 32.00

Current Production

30.00 2007

2009

2011

2013

2015

■ Current Production

2017

2019

2021

2023

2025

■ Required Production

Data from U.S. Census and FAQ Assumes constant seafood consumption of 5.49 kg/capita and population growth of roughly 0.9% per annum (US Census)

Certainly the overfishing of desirable species is a major contributor to the problem. So is illegal, unreported and unregulated fishing. But these are not the only causes of fish population declines. Historically, in many parts of the world, human impacts such as coastline development have severely affected coral reef ecosystems4 and other sensitive habitats, such as mangroves, where young fish live before they venture out into the open ocean.5 In addition, pollution runoff has harmed fish populations and even created large “dead zones” in some bodies of water.6

Christopher Delgado, et al., Fish to 2020: Supply and Demand in Changing Global Markets (Washington, DC: International Food Policy Research Institute, 2003). 5 Ibid. 6 Ibid.

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Our Approach to Seafood Sustainability

What We’re Doing: Strengthening Policies, Seeking Alternatives Seafood sustainability isn’t new for Darden. We’ve been passionate about this issue for 40 years – well before “sustainability” was a household term. When Red Lobster was founded in 1968, highquality seafood was available only to the wealthy, or to diners lucky enough to live along the coasts. Red Lobster Founder Bill Darden figured out how to make seafood available and affordable for all, no matter where they lived. As our company grew, we increasingly recognized the importance of sustainable fisheries not only to our business and our company’s bottom line, but also to our global community. In the 1970s and early 1980s, for example, our then-president, Joe Lee, helped coordinate a team that collaborated with the United Nations to help draft the Law of the Seas Treaty, which was designed to protect the world’s oceans and marine life from overfishing.

Our Seafood Sustainability Promise At Darden, we are committed to doing the right thing when it comes to seafood sustainability. For example: • We are committed to purchasing wild-harvested and aquacultured species from sustainable sources. • We consult regularly with respected scientists to ensure we stay abreast of changes to ocean ecosystems and to stay current with best sustainability practices. • We use our influence to encourage the industry to follow more sustainable practices.

But early conservation efforts went only so far. So we took action, strengthening our policies and changing our purchasing practices regarding wild-caught and aquacultured fish. For example:

1 We currently do not serve certain species such as Chilean sea bass, orange roughy or any type of shark, as these species are overfished at present. We are constantly monitoring scientific information on the changing conditions of fish stocks to evaluate whether we should remove other species from our menus, too.

1 We are committed to purchasing wild harvested and aquacultured species from sustainable sources. Darden utilizes the input and expertise of the New England Aquarium to guide our sustainable choices. For aquaculture, we also rely on the best practice standards of the Global Aquaculture Alliance. (See below for more information.)

1 We established the Darden Environmental Trust (as part of the Darden Restaurants Foundation) to fund projects that protect marine life. To date, the trust has donated more than $5 million to various marine preservation projects, including one that was instrumental in conservation efforts to protect the Kemp’s ridley sea turtle, one of the most critically endangered sea turtle species in the world.

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Our Approach to Seafood Sustainability

To make a sustainable seafood purchase, a buyer must consider multiple factors for a given species, including where and how it was caught and how it was transported. For example, some species of fish, like swordfish, live all over the world; the species may be overfished in one ocean but not in another. For farmed species, a buyer must also consider what the fish were fed and where that food came from, as well as the impacts of the aquaculture practices on land and water. We have been working with the New England Aquarium – a global leader in marine conservation and one of the premier aquariums in the United States – to develop what we call a “Sustainable Seafood Dashboard.” (See below for a screenshot of the opening page.) The Dashboard is designed to provide the most current and detailed environmental, conservation and scientific data about wild-capture and aquacultured species, highlighting how a species is caught, where it is captured and whether it is in jeopardy, among other issues. The Dashboard is intended to inform Darden’s seafood buyers regarding sustainability issues and to encourage a two-way dialogue between Darden and the Aquarium, in order to move forward on matters of seafood sustainability.

Seafood Safety At Darden, food safety is our highest priority. We have a team of highly trained seafood quality and safety specialists who inspect millions of pounds of fish and shellfish each year. Our seafood evaluations consist of physical, organoleptic (i.e., do they look and smell fresh?), chemical and microbiological tests, and we go above and beyond standard testing for industrial pollutants such as mercury and polychlorinated biphenyls (PCBs). For a detailed look at our food safety practices and procedures, see p. 35.

In developing the tool, members of our seafood purchasing department have been meeting with Aquarium scientists to discuss the environmental, economic and commercial implications of our wild-capture purchases. The Dashboard will not provide a simple “yes” or “no” approach to purchasing a particular species; rather, it aims to further educate our buyers about the factors that should be considered to make a responsible purchase. Lydia Bergen, the Aquarium’s Director of Conservation, said the Dashboard has also been educational for the Aquarium, as it provides a deeper awareness of the business considerations, including quality, cost and availability of supply, that impact purchasing decisions at a large company like Darden.

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Our Approach to Seafood Sustainability

“We understand the biology of the fish and the rules and regulations of fisheries management, so we have certain insights into how things work,” Bergen says. “But Darden has the relationships with the vendors, so they have different insights. Our hope is that we can work together to share information so we can develop some workable solutions.” (See more on our partnership with the New England Aquarium below.) We have also placed particular emphasis on protecting lobster fisheries; after all, it’s the iconic namesake of one of our most popular restaurants. Among our initiatives:

1 We’re leading efforts to stop the import of tails from undersize lobsters from Central and South America, and we’ve been working in Canada to increase minimum allowable lobster size for harvest in order to sustain the resource. (Increasing the limits allows lobsters to reach sizes more optimal for breeding.)

1 We also choose not to sell lobsters that are over 4 pounds in weight, because these lobsters tend to be better breeders, producing dramatically more eggs than smaller lobsters.

1 We’re partnering with the government of New Brunswick, Canada, on an innovative lobster stock enhancement project that increases the survival rate of juvenile lobsters by up to 30-fold.

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Our Approach to Seafood Sustainability

The Advantages of Responsible Aquaculture The world’s population is growing, but the ocean’s ability to feed it is not. Demand is rapidly outpacing supply, and we must develop and encourage ways to fill the gap. We believe that responsible aquaculture (fish farming) can positively contribute to help fill that gap. Darden has been an active proponent of responsible aquaculture for more than a decade. In 1997, we co-founded the Global Aquaculture Alliance to create a uniform set of standards, systems and best practices for the cultivation of fish and seafood. This organization, which began as an alliance among a handful of restaurant companies and retailers, has grown into an impressive international coalition of more than 70 members, including buyers, growers, scientists and environmental groups. Darden thought it was important to bring many parties to the table, and we encouraged those with differing points of view to join us in our goal: furthering environmentally responsible aquaculture to meet world food needs. Darden continues to play a leadership role in the organization. As part of our work, the GAA created a nonprofit, public-benefit organization called the Aquaculture Certification Council, Inc. (ACC), to inspect and certify companies that apply the GAA’s “best aquaculture practices” (BAPs). Red Lobster was the first restaurant company in the world to require all of our aquaculture shrimp suppliers to be ACCcertified. Today, 100 percent of the aquacultured shrimp processors that supply Darden are certified.

Top U.S. Aquaculture Species • • • • • • • •

Shrimp Salmon Tilapia Trout Catfish Cobia Corvina Barramundi

About 60% of all Darden seafood purchases (in pounds) are from aquaculture sources; the remaining 40% are wild-caught.

The ACC certification covers a range of issues relating to the health and welfare of the fish, as well as water quality and other environmental issues, food safety protocols, traceability and workforce standards.

In addition to standards for shrimp, BAP standards have also been completed for tilapia and catfish – two species we source primarily from aquaculture – and we are working with our suppliers to implement these standards. Standards are currently being developed for other species, too. Our goal is to have all of our aquaculture products certified to GAA standards as they become available. Years ago, aquaculture faced challenges when some fish farms were built on environmentally sensitive lands. The resulting negative reputation grew after some farmers began using harmful chemicals in a misguided attempt to minimize disease and maximize growth. The aquaculture industry has been working hard to demonstrate that it is a viable, reliable – and sustainable –

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Our Approach to Seafood Sustainability

method to complement wild-caught fisheries. The BAP standards do not allow the degradation of sensitive land. The fact is, when grown responsibly and according to ACC standards, aquaculture seafood has many advantages over wild-caught. Aquaculture growers have influence over so many factors, from the cleanliness of the water to the population density of the fish to the harvesting practices used. For example, in many cases, the water pumped out of our suppliers’ aquaculture ponds is cleaner than what is put in. Our suppliers’ aquaculture facilities are also optimally positioned near transportation hubs. For instance, tilapia reared in aquaculture facilities in Ecuador are en route to North America within four hours of harvesting. That means they’re fresher than wild species that are caught by fishing boats in the middle of the Pacific. Today, our restaurants source most of their shrimp and salmon and all of their tilapia, trout and catfish from aquaculture suppliers. We have very high standards, inspecting each aquaculture supplier to ensure they are following our prescribed food safety practices. (For more on food safety, see p. 35.) We firmly believe that responsible aquaculture is one of the best ways to help meet the world’s growing demand for seafood. Without it, wild fish stocks will continue their downward trend, making seafood so costly that it will be unaffordable for many people, not only in the U.S., but also the world.

The Importance of Partnerships At Darden, we don’t make decisions about seafood in isolation; we look to the best science of the day for guidance. That’s why we partner and engage with a broad array of experts.

“Darden is definitely playing a leadership role. The entire industry faces a supply challenge – there’s just not enough seafood out there to sell. I think Darden is taking on that challenge and doing what they need to do, working with their suppliers and within their industry to find innovative solutions that will create a more sustainable supply of seafood.”

Notable among them is our relationship with the New England Aquarium. In 2005, we asked this Boston-based aquarium to begin advising us on ways we might improve existing purchasing strategies related to seafood -Lydia Bergen, Director of Conservation, New England Aquarium. sustainability. We also look to the Aquarium to help us collaborate on multi-stakeholder initiatives on seafood. The Aquarium’s sustainable seafood program provides advice on how to develop and implement visionary and realistic sourcing polices and practices that protect the fisheries. Darden is one of several companies that participate.

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Our Approach to Seafood Sustainability

Bergen, the Aquarium’s director of conservation, says the program is mutually beneficial. A large buyer like Darden, she explains, can have a big impact on the supply chain by making informed seafood purchases that are environmentally responsible. For example, Darden asked the Aquarium to evaluate whether we should consider adding the Lake Victoria Nile Perch to our list of approved species. The Aquarium’s scientists evaluated the fisheries in Kenya, Tanzania and Uganda and determined that this species was not a good choice because of potential environmental and social concerns. We listened, and decided not to purchase the fish. We want to use our influence to enhance fisheries – both the seafood stocks themselves and the lives of those who make their living from catching them. The more we engage with scientists, governments, environmental groups, fishermen and other stakeholders, the more we learn about how we can best make a difference. We believe we can obtain the best results when we consider different viewpoints; that’s why we work to bring together a variety of stakeholders – including those who normally differ in their views or opinions – to help us move forward. It’s all about doing the right thing and making a positive impact.

Where We’re Going: Continuing to Meet Demand Sustainably Seafood sustainability is an incredibly complex issue framed by what are often competing environmental, economic and political interests. We are pleased with the progress we have made in our commitments toward sustainable sourcing, particularly the advancements in aquaculture. Yet we don’t pretend to have all of the answers. We do know this: if current trends continue, seafood supply and demand will be on a collision course. One of the reasons our guests come to our restaurants is because they know they will be served safe seafood that comes from only reliable sources. It’s in our best interest as a company to make sure we have an adequate and consistent supply of seafood to meet our guests’ demands. Of course, it is also in the best interest of our planet to ensure a healthy ocean ecosystem. Consumers hear many conflicting messages about “sustainable” seafood. Should they choose wild versus farmed? Organic versus non-organic? Should it come from a “local” source? Unfortunately, there are no simple answers when it comes to seafood sustainability. We will continue to work with partners such as government bodies, nongovernmental organizations, fishery stakeholders, suppliers, and industry trade groups, like the National Fisheries Institute, to inform our thinking. And we will rely on the best science of the day to guide us in our decisions about which seafood we should or should not serve.

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CASE STUDY

Sustaining the North Atlantic Lobster Fishery Diane Cowan is one of the world’s foremost experts on lobsters. But she doesn’t hesitate to dine on them. “I feel better about eating lobster than about most things I eat,” she says. Cowan has devoted her life to studying the crustaceans. She founded The Lobster Conservancy in Maine in 1996 with an eye toward building, and maintaining, a strong and healthy lobster resource. She also wanted to bring together two groups that were often at odds: fishermen and scientists. In 2002, The Lobster Conservancy sought out an obvious partner – Darden and our Red Lobster brand. It was a logical fit. Darden, after all, is the world’s largest purchaser of North American lobster. Over the years, Darden has become increasingly involved in Cowan’s group, actively participating in multi-stakeholder meetings and discussions on the future of the lobster fishery. Says Cowan: “We sought out Darden because we recognized that they were a company interested in sustainability. And, of course, they were interested in having a sustainable product so they could continue to serve lobsters to their customers.” To date, Darden has contributed more than $60,000 to a variety of The Lobster Conservancy’s programs. One of them is the Juvenile Lobster Monitoring Program, a unique scientific research effort that investigates lobsters at their earliest stages of development, when lobsters the size of a fingernail spend time on and near the shore. A team of 120 trained volunteers monitors the juvenile lobsters and collects data that is helping Cowan and other researchers understand more about the creatures and the critical lobster nursery habitats that dot the New England coastline. Yet, as Cowan puts it, she can’t study the babies without wondering about the mothers. So, with financial support from Darden, Lobster Conservancy scientists also tag and track reproductive female lobsters in their deep-water habitat to better understand the relationship between egg production and harvest. Among the learnings: the bigger the female, the further she traveled with her eggs. Smaller egg-bearing females stayed close to home in Maine; larger females went as far as Cape Cod. Why is this relevant? By traveling, lobsters strengthen the genetic diversity of the population, helping to maintain a much healthier gene pool. Scientific evidence plays an important role in fisheries management and, in fact, helped convince lawmakers throughout the lobsters’ range to adopt a new maximum legal catch size to protect the largest females because of their ability to reproduce millions of eggs. Darden executives, she

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Case Study: Sustaining the North Atlantic Lobster Fishery

said, helped to spread the word among legislators and the public about the importance of protecting egg-bearing females. Maine had protected these reproductive lobsters since the 1930s; now all of the New England states are on board. “You can’t manage a fishery according to fiction,” says Cowan. “You need to understand the science of why issues are important.” Unlike other fisheries with decreasing stocks, the North Atlantic lobster catch is at record highs – about 70 million pounds a year in Maine, up from 30 million in the early 1980s. Cowan attributes the boom to several factors, including good management that bumped up the minimum legal catch size and warmer water temperatures (both surface and bottom), which increase the chances of survival among juveniles.

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CASE STUDY

Our Work in Two Lobster Fisheries Lobster is an essential product for Darden Restaurants, especially for our Red Lobster brand. As the world’s biggest purchaser of North American lobsters, and one of the biggest purchasers of Caribbean spiny lobsters, we must take some responsibility for ensuring sustainable lobster fisheries for future generations, particularly in areas where the resource is under pressure. We have been actively participating in two programs in Canada and the greater Caribbean that focus on not only the sustainability of the lobsters, but also the economic impact of the fisheries on their communities.

Canadian Lobsters In the province of New Brunswick, we support the recently launched Lobster Sustainability Foundation, a multi-stakeholder group that is working with, among others, harvesters, processors, customers, scientists and governments to preserve and improve the lobster industry. The goal of the foundation is to sustain and enrich Canadian fishing communities through shared research and resources. In 2008, landings for North Atlantic lobsters in Canadian waters were the highest they have been since the early 1980s. “To ensure stable year-over-year landings, we need to focus on strategic rationalization of our fleet,” said Rick Doucet, Minister of Fisheries for New Brunswick. “We want to ease the number of lobster fishermen vying for a quality product.” Along the Canadian coast, thousands of people make their living from the sea. The goal of restructuring the fishery is to ensure a stable and sustainable living for those in the industry. “We need to sustain this fishery for the long-term and protect generations of lobsters and generations of fishermen,” Doucet said.

Our work with the lobster fisheries was one of the reasons Fast Company magazine ranked us Number 3 on its 2010 list of the 10 most innovative food companies. The publication highlighted our research on new ways to ensure the sustainability of seafood, and lobsters in particular.

Doucet said the Lobster Sustainability Foundation is breaking new ground in the region by bringing all of those involved in the industry together. “Darden’s involvement shows the company’s commitment to the future of the Canadian lobster fishery,” he said. “It’s not just about the sustainability of the resource,” Doucet said. “It’s about the sustainability of the harvesters, the processors and the marketplace. Each one plays a major role in the value chain.” At Darden, we hope our efforts will enhance lobster stocks and ensure a sustainable livelihood for those across the industry.

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Case Study: Our Work in Two Lobster Fisheries

Caribbean Lobsters Darden has also been working to enhance sustainable practices in lobster fisheries in the Caribbean. Several years ago, Darden funded a World Wildlife Fund (WWF) program to improve the Caribbean Spiny Lobster stock in Honduras. The lobster fishery had been declining in part due to the harvest of juvenile lobsters that had not had the chance to reproduce. Over the last few years, lobster stocks are reported to be down by about a third. With fewer lobsters in shallow waters, fishermen have been increasingly turning to scuba diving in much deeper waters, threatening both the divers and the lobster stocks. Scuba diving can be dangerous for lobster fishers who are not properly trained, and several thousand men have suffered permanent injury due to unsafe scuba diving practices. Moreover, the process divers use to catch lobsters – hooking them and pulling them out of their holes – kills the crustaceans. Darden and the WWF held meetings with the country’s fishing industry to introduce a possible remedy to the problem: a modified trap that allows smaller lobsters to escape while allowing those large enough for legal harvest to remain. The new traps, which were put into use by many fishermen in 2007, not only help the lobsters, but also benefit the fishermen, boat owners and others who depend on the sustainability of the species. The program with the WWF evolved into a partnership with the U.S. Agency for International Development and multiple nongovernmental organizations to create the Global FISH Alliance’s Spiny Lobster Initiative in Honduras and Nicaragua. This program, managed by the nonprofit AED, is working to increase the number of lobsters off the coasts of these two Caribbean countries while simultaneously improving the lives of lobster fishermen. (See http://www.globalfishalliance.org/.) To date, we have provided $100,000 for the program. In early 2009, the Spiny Lobster Initiative began bringing together representatives from across the lobster fishery – fishers of all types (including scuba divers and trappers), seafood processors, exporters, buyers, government inspectors and environmental groups – to develop strategies for system-wide change that will improve the situation for the lobsters and those who catch them. “In order to bring about the change needed to achieve a sustainable fishery, all of those stakeholders are essential to the process,” said Gabriela Pineda de Arias, Fisheries Executive Director for Honduras’ Ministry of Agriculture and Livestock (DIGEPESCA). “They are an integral part of the production and supply chain. Also integral is the Honduran government, which, as administrator of the fishery resource, will not sidestep the complex economic issues associated with the sustainability process.” Darden has a policy against purchasing lobsters caught by scuba diving. Our contracts are specific and explicit: We will not accept scuba dive-caught product, and we monitor our suppliers closely to ensure compliance. At Darden, we are committed to sustainable sourcing. We believe our alliance with the Spiny Lobster Initiative helps to focus attention on the need to protect the stability of the fishery and a way of life for the coastal communities of Nicaragua and Honduras. “Having Darden involved gives credibility to the program because the people in the lobster fishing industry in Honduras and Nicaragua know that Darden buys a lot of their lobster,” said Chanya Charles, director of the Global Fish Alliance. “They recognize that if Darden is an active participant in the initiative, it must be a legitimate effort.”

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Reducing Our Energy Use Why It Matters: It’s the Smart Thing to Do Darden’s restaurants – like all restaurants – require a lot of energy to operate every day. We use electricity, natural gas and/or propane to power our lighting, refrigerators, freezers, water heaters, dishwashers, heating and air conditioning units, and all manner of cooking equipment. In addition, the food and goods delivered to our restaurants by truck also require energy to run. Because energy is an expensive resource, it makes sense to look for ways to save money by using less. After all, energy prices are volatile and, over time, seem destined to rise as greater demands are placed on limited supplies of fossil fuels. For Darden, therefore, reducing energy use contributes to our long-term economic sustainability and competitiveness. Also, energy use is affecting the climate. (The relationship between energy and climate are described in the sidebar.) We know it’s important for us to do our part to reduce our energy use and our greenhouse gas emissions. And the fact is, this issue could end up affecting our company in some fairly tangible ways.

Climate Change 101 Greenhouse gases in the Earth’s atmosphere trap heat, which makes the planet warm enough to sustain life. If the concentration of these gases in the atmosphere gets too high, however, too much heat is trapped, causing an overall warming effect. In the longer term, this has the potential to alter everything from ocean currents to rainfall patterns. The most common greenhouse gas is carbon dioxide (CO2), which is emitted into the air during the combustion of fossil fuels – e.g., gasoline in cars and coal for electricity. Among the other greenhouse gases are hydrofluorocarbons (HFCs), which are widely used as refrigerants. According to the National Oceanic and Atmospheric Administration (a U.S. government agency), the concentration of CO2 in the atmosphere during preindustrial times was about 280 parts per million (ppm). By 2006, it had increased to 382 ppm. The natural range of CO2 in the atmosphere over the last 650,000 years has been 180 to 300 ppm, so we are now well above the high end of that range. Over the past century, the Earth’s average temperature has risen about 0.74° Celsius (1.33° Fahrenheit). That’s according to the Intergovernmental Panel on Climate Change (IPCC), the international body of climate scientists. While 0.74° Celsius may not sound like much, it is significant. The IPCC has documented numerous changes in natural ecosystems (i.e., in forests, oceans, the Arctic tundra, etc.) as a result of this warming. Many factors can affect the Earth’s climate, but the IPPC is convinced that the increase in global average temperatures has been caused by the burning of fossil fuels and the associated buildup of CO2 and other greenhouse gases in the atmosphere. And unfortunately, the buildup of CO2 appears to be accelerating, not slowing.

In the next few years, the U.S. Congress may pass climate change legislation regulating greenhouse gas emissions, which could have the effect of raising energy costs. This in turn would increase the costs of key business inputs SUSTAINABILITY AT DARDEN: COMPLETE GRI CONTENT

Reducing Our Energy Use

for us such as electricity in our restaurants and gasoline for transporting our products. It would also likely affect the cost of the food ingredients that go into our menu items. To the extent that the emission of greenhouse gases into the atmosphere increases the frequency and severity of drought, causes the loss of crops or livestock, changes ocean currents or acidifies the oceans, it will affect our agricultural supply chain in ways that are very difficult to predict. For all of these reasons, it’s in our best interest to ensure that we decrease our energy use now and help to stem greenhouse gas emissions. By taking steps to improve our energy efficiency now, we will be well-prepared to operate in an economy in which greenhouse gases are regulated and energy costs are higher. This issue has also spurred us to have important conversations with some of our agricultural suppliers about how to adapt in the long term. And, we hope and expect that our sustainability efforts will help us communicate to our stakeholders – including our employees and our guests – that we are doing our part to cut energy use and reduce greenhouse gas emissions.

What We’re Doing: Working to Decrease Our Energy Use At Darden, we are committed to reducing our energy use. We have begun to institutionalize energy conservation practices in our restaurants and install energy-efficient technologies throughout our operations. We also have been developing, evaluating and refining an overall sustainability strategy for our company that includes energy-reduction initiatives. In 2008, we conducted our first greenhouse gas inventory. That is, we calculated the greenhouse gas emissions that result from electricity use, on-site fuel use and refrigerants at all of our 1,800 restaurants. We also included emissions from our headquarters (which we call our Restaurant Support Center, or RSC), as well as mobile emissions from our small fleet of company cars and three corporate aircraft.7 We submitted all of this emissions data to the Carbon Disclosure Project (CDP), an independent nonprofit organization that maintains a public database of corporate greenhouse gas emissions information. We were the first full-service restaurant company in the United States to submit data to the CDP. The CDP rates submissions according to quality and depth of detail; Darden received a rating of 69 (out of 100), which is very high for a first-time responder. You can see our full CDP submission online. In 2009, we hired a consulting firm to conduct energy audits of 12 of our restaurants, to assess our energy practices and determine areas for improvement. The firm also benchmarked industry trends and best practices, and identified short-, mid- and long-term energy-efficiency strategies for Darden. We have implemented a number of their recommendations (many of which are described in this section) and are currently working to prioritize the rest.

Our Goal In 2010, Darden set a corporate-wide goal for energy use. We are seeking to reduce our perrestaurant energy use by 15% by 2015, using our 2006 emissions data as a baseline. 7

Note that we subsequently sold one aircraft and now operate only two. Also, our greenhouse gas inventory did not include emissions from the distribution of food and goods to our restaurants, which is done via truck and rail, because we do not own these distribution lines. We carefully oversee how distribution is conducted, but we hire third-party transportation companies to do the actual shipping.

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Reducing Our Energy Use

Our Performance Thus Far We have begun to make progress toward our goal, but much work remains to be done. Figures 1 and 2 show Darden’s overall and per-restaurant energy use from FY2006 to FY2008.8 The approximately 7% increase in our overall energy use is due to business growth – that is, we operated more restaurants in 2008 than in 2006, therefore we used more energy in total. At the same time, our per-restaurant energy use stayed essentially flat during this time (dropping by less than 1%). Many of our energyefficiency efforts have taken place since FY2008, so we expect to show progress going forward. FIGURE 1

Overall Energy Use 3,500,000

Megawatt Hours

3,000,000

2,929,082

2,737,890

2,825,282

9,035

9,866

1,598,225

1,658,061

1,130,630

1,157,355

1,206,937

FY2006

FY2007

FY2008

10,662

2,500,000 2,000,000

1,711,483

■ LPG/Liquid Propane ■ Natural Gas ■ Electricity

1,500,000 1,000,000 500,000 -

FIGURE 2

Average Energy Use per Restaurant 1,746

Megawatt Hours

1,744

1,742 1,740 1,738 1,736

1,735

FY2007

FY2008

1,734 1,732 1,730 FY2006

8 9

Figures 3 and 4 show Darden’s overall and per-restaurant greenhouse gas emissions from FY2006 to FY2008.9 Naturally, these emissions follow a similar pattern as our energy use: overall emissions are up (by 6%) due to business growth, while per– restaurant emissions have dropped slightly (by 2%). The pie chart in Figure 5 shows the breakdown of total emissions by source.

Darden’s fiscal year (FY ) runs from June 1 to May 31. Darden’s GHG inventory was prepared in accordance with the principles and guidance of the World Resources Institute and the World Business Council for Sustainable Development’s Greenhouse Gas Protocol Initiative. Emissions factors were taken from government and international organizational sources, such as the U.S. Environmental Protection Agency, the Intergovernmental Panel on Climate Change and the World Resources Institute.

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Reducing Our Energy Use

Figure 6 shows greenhouse gas emissions per restaurant, by restaurant brand.10 We are still evaluating the factors that might help explain the differences between our brands, such as average square footage, guest count, location, age of the buildings, age of the equipment, type of food served and so forth. Darden’s greenhouse gas emissions of about 1 million metric tons of “CO2 equivalents” (or CO2e) in FY2008 is about the same as is emitted by 90,000 homes each year, or 190,000 cars. For perspective, this “carbon footprint” is more than three times the size of Starbucks’, but only 1/5 the size of Coca Cola’s and 1/20 the size of Walmart’s. F IG URE 3

FI GURE 4

Overall C02e Emissions

Average C02e Emissions per Restaurant

1,080000

616

1,075,233

1,070,000

615

1,060,000

612 610 1,040,498

1,040,000

Metric Tons

1,050,000

1,030,000 1,020,000

615

1,015,547

608

602

1,000,000

600

990,000

598 FY2006

FY2007

603

604

1,010,000

980,000

607

606

596

FY2008

FY2006

FY2007

FY2008

F IG URE 5

FY2008 C02 Emissions by Source Business Air Travel 1% On-Site Liquid Propane 0%

On-Site Natural Gas 29%

Electricity 67%

Refrigerants 2% Transport Fuel 1%

In this chart, SRG stands for Specialty Restaurant Group, which is composed of Seasons 52, Bahama Breeze and The Capital Grille.

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F IG URE 6

C02e Emissions per Restaurant, by Concept 800 700

Metric Tons

600 500 400

■ FY2006 ■ FY2007 ■ FY2008

300 200 100 0 SRG

LongHorn

Olive Garden Red Lobster

Progress at Our Headquarters We’re proud that our new Restaurant Support Center, which opened in September 2009 in Orlando, Florida, is a model of energy efficiency. The RSC is a “green building,” built according to Leadership in Energy and Environmental Design (LEED) standards and certified LEED Gold. It will use 16% less energy than if we had not built it according to LEED standards. Among its many energy-efficiency features are:

1 window glazing that lets in daylight while keeping out heat, 1 a white roof that reflects the sun and prevents heat build-up and 1 fluorescent lighting that dims automatically when there’s enough natural light. Even before we made the move to the new facility, our RSC staff had been working hard to conserve energy. In 2008, after the implementation of an energy-awareness campaign, RSC staff reduced their energy usage by 10% compared to the previous year. You can read all about the sustainability aspects of our new RSC beginning on p. 20.

Progress in Our Restaurants Darden has been opening an average of 60 new restaurants each year. And, we’re working to build our restaurants with sustainability in mind from the start. Our first restaurant expected to achieve LEED certification – an Olive Garden in Jonesboro, Arkansas – opened its doors in January 2010. Seven additional restaurants seeking LEED certification will open in 2010 and 2011. Under the latest LEED guidelines, these buildings must use 14% less energy than the previous prototypical building design; they also must meet stringent water conservation standards and use recycled materials in their construction.

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While we support the continued development of LEED, we recognize it may not be realistic to have every new restaurant we build LEED certified, in large part because the certification process today can be time-consuming and costly. However, we plan to make a positive impact by learning from the eight restaurants where we are seeking LEED certification and applying best practices across our portfolio. In fact, we have committed to incorporating sustainability features in all of our new buildings and, where feasible, restaurant remodels. This will ensure superior performance in energy efficiency, water conservation and the use of green materials. At our 1,800 existing restaurant locations, we have initiated a number of energy-efficiency programs, including the following.

1 Equipment “Power-Up” Schedule: Cooking equipment (e.g., ovens, griddles, grills) is typically the biggest consumer of energy in a restaurant, so ensuring that equipment is turned on and off at the proper times is essential to energy conservation. Beginning in November 2008, each Darden restaurant implemented a new equipment power-up schedule, using stickers for each piece of equipment that list proper “on” and “off” times.

1 Restaurant Thermostat-Setting Standards: Each additional degree of heating or cooling in our restaurants results in at least 2% more energy consumed. While we want to ensure the comfort of our guests and employees, we also want to conserve energy. In November 2008, we implemented standards for thermostat settings in our dining rooms, with different settings for operating hours and non-operating hours. For many of our restaurants, these changes could be easily done via programmable thermostats; in the remainder, the settings are changed manually each day.

1 Fluorescent Light Bulbs in Kitchen Areas: In early 2009, we replaced more than 25,000 incandescent light bulbs in our restaurant kitchen areas with energy-efficient fluorescent bulbs. Not only do fluorescent bulbs use less electricity, they save money. Each bulb delivers $30 to $35 in net savings over the life of the bulb, which adds up to annual cost savings of about $800,000 for all Darden restaurants. We are currently investigating light sources that are even more energy efficient, such as LED and cold-cathode lighting. We have involved our restaurant employees in these and other efforts through the establishment of employee Green Teams. For more, see p. 82. We are in the process of initiating additional energy-saving measures in our restaurants, such as high-efficiency lighting in the dining room areas. This has proven to be more difficult, as the circuitry and dimming systems in many of our older restaurants do not support many of the newer energy-efficient light bulbs. Indeed, one of the challenges we face in our sustainability efforts is that all of our restaurant buildings are different. Some buildings were purpose-built for us; others were retrofitted and redesigned to meet our needs. Our oldest restaurants are now more than 40 years old. Implementing consistent changes across such a wide array of building types can be difficult, but

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we are working to do it wherever possible. For example, when it comes time to replace equipment in our older restaurants – items such as heating and cooling units, water heaters and dishwashers – we purchase models with the Environmental Protection Agency’s Energy Star label. Also, we have been actively remodeling many of our older restaurant buildings. In 2009 we remodeled nearly 50; in 2010 we expect to remodel more than 100. Each of these remodels involves a variety of energy-saving upgrades.

Progress in Our Distribution System Darden oversees a complex logistics and distribution system – that is, the system by which we keep our 1,800 restaurants supplied with everything from fresh produce to dishware to servers’ uniforms. Though we do not own any trucks or warehouses (we lease them), we do manage and control the whole system. Over the past several years, we’ve instituted a variety of efficiency improvements that have saved money while reducing energy use and greenhouse gas emissions.

1 About five years ago we developed and began

Recognition of Our Progress In 2009, Climate Counts (a nonprofit advocacy organization) included Darden among its rankings of companies’ efforts to combat climate change. Darden received the second-highest ranking out of six companies in the Food Service sector, and was the only full-service restaurant company among those ranked.

implementing a best-in-class food distribution system called Darden Direct. This system has involved (among other things) increasing our use of rail shipments, routing our trucks more efficiently and utilizing “redistribution” warehouses in several locations. The system is currently used by 25% of our warehouses; by 2012, it should be implemented at 90%. Already, we have saved about 30 million miles of driving per year, or 4.8 million gallons of gas, with this system.

1 In nearly all of our distribution warehouses around the country, we have switched from incandescent lights to high-efficiency T5 fluorescent lighting. And these new lights are on motion sensors, so they turn off when not needed. This change is expected to save a total of 4.5 million kilowatt-hours per year, or $300,000 in energy costs.

1 The cold-storage facility we lease in Chicago is the first such facility ever to be built according to “green building” standards. The developer has applied for a LEED rating of Gold. This means it uses less energy than a facility built to typical standards and it employs the latest refrigerant technologies. We also maintain a “smallwares” warehouse in Orlando, Florida; this is where we store all nonfood items, such as dishes, linens and decorations, for shipment to our restaurants. We have installed 10 huge energy-efficient fans to keep this 100,000-square-foot facility cool in the summer, without the use of air conditioning. In the winter, we reverse the direction of the fans to push warm air downward, thus eliminating the need for heating as well. Each of the fans is either 24 feet or 16 feet in diameter.

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We’ve also decreased the number of times per month that our restaurants can order smallwares, in order to eliminate the continual shipment of multiple small loads. This has reduced our number of shipments per month by 40% and saved us $1 million per year in transportation costs.

Progress in Our Supply Chain We have not attempted to quantify all of the CO2 emissions in our supply chain (i.e., our share of the emissions of all of the companies that supply us with food ingredients, smallwares and services.) This would be an enormous and complex task. We estimate, however, that emissions within our supply chain are between 10 and 100 times greater than our own emissions. Darden is also taking part in Field to Market: The Keystone Alliance for Sustainable Agriculture. This multi-stakeholder, collaborative process has brought together growers, agribusiness, food and restaurant companies and conservation organizations to discuss and promote sustainable agricultural methods. It is convened and facilitated by the nonprofit Keystone Center. Among the outcomes thus far is a Fieldprint Calculator – an online tool that helps growers evaluate their own sustainability practices, including on-farm energy use.

Where We’re Going: To Achieve Our Goals Going forward, we will continue working to reduce energy use and CO2 emissions throughout our company in order to meet our goal of a 15% reduction in energy consumption per restaurant by 2015. To do this, we will continue to prioritize and implement key energy-efficiency activities in our restaurants, with the help of our Green Teams and restaurant managers. We also intend to work through our purchasing group to better understand the lifecycle CO2 emissions for a number of key product lines, such as livestock, wild-harvest fish, additional aquaculture fisheries, produce and pasta. And, we hope to identify collaborations with other businesses (non-competitors and suppliers) as well as universities and scientists, in order to develop standardized approaches for these types of analyses. This will ensure that we do not have duplicative work streams and multiple efforts, and it will help to minimize complexity and drive actual change. We look forward to reporting on our progress in the future.

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Reducing Our Water Use Why It Matters: Water Is a Vital Natural Resource Fresh water is a critical natural resource, and it makes up less than 3% of all water on Earth. Most fresh water is locked up in polar ice and glaciers. What remains is under pressure – pressure from the Earth’s growing population, pressure from pollution and pressure from the changing climate. In the past 50 years, global demand for fresh water has tripled as population has grown. As the world’s population continues to grow – from 6.8 billion today to an expected 9+ billion by 2050 – demand for clean, fresh water will likely also rise.11 The United States is fortunate to have relatively greater quantities of fresh water than some of the drier regions of the planet. And according to the U.S. government, Americans have actually decreased their water consumption in the past 30 years, due largely to efficiencies in industrial and agricultural use.12 But according to the United Nations, Americans still use more water per capita than any other country.13 The Water Footprint Network, an international nonprofit organization, estimates that Americans’ “water footprint” is twice the global average.14 Clearly, we must make our water consumption more sustainable over the long term. Water quality is also an issue in many regions of the world. Pollutants like phosphorus and nitrogen (typically from sewage effluent and chemical fertilizers), as well as chemicals, trash and other byproducts of civilization, make their way into waterways, where they degrade water needed by humans and ecosystems alike. While water quality has improved in some locales, pollution is still a major global problem. Water availability and quality are also linked to climate change. Climate change has the potential to affect rainfall patterns in unpredictable ways – making both droughts and flooding more severe and more frequent, in addition to affecting glacial ice and snow melt, soil moisture, groundwater and river flows. The United Nations says that adapting to climate change will require, first and foremost, better water management.15 As these pressures increase, the cost of fresh water will continue to rise. Already, the price of fresh water is rising faster than the inflation rate, according to the National Restaurant Association.

http://www.unesco.org/water/wwap/wwdr/wwdr3/pdf/WWDR3_Facts_and_Figures.pdf. http://pubs.usgs.gov/circ/1344/pdf/c1344.pdf. 13 http://hdr.undp.org/en/media/HDR06-complete.pdf. 14 The organization defines a nation’s water footprint as “the volume of water that is used to produce the goods and services consumed by the inhabitants of the nation.” http://www.waterfootprint.org/?page=cal/waterfootprintcalculator_national. 15 http://www.unwater.org/downloads/UNWclimatechange_EN.pdf. 12

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That presents a big opportunity for a restaurant company to improve, because restaurants use a lot of water. At Darden, our greatest direct water use occurs in our kitchens, where we use water for washing fresh fruits and vegetables; for cooking (e.g., boiling pasta); for scrubbing equipment and floors; for cleaning dishes, utensils and pots and pans; and for hand washing (15-25 times a day per person!). These uses of water are essential for proper food handling and food safety. We also use water in employee and guest restrooms and for landscape irrigation. Of course, the amount of water we use directly pales in comparison to the amount we use indirectly – that is, in our supply chain, in the irrigation of crops and the production and processing of livestock. Irrigated agriculture is the largest use of fresh water globally, accounting for about 70% of all water use. It makes sense for us to reduce water use in our restaurants. It’s the smart thing to do for the environment and for the communities in which we operate. Reducing our water use will help to ensure adequate water supplies in the long term. It will help us to maintain goodwill in the communities in which we are located, particularly if water is scarce. And it makes smart economic sense, since water conservation saves us money.

What We’re Doing: Working to Reduce Our Water Use At Darden, we’ve been working hard to better understand and measure our direct water usage, and to reduce it.

Our Goals In 2010, we set a corporate-wide goal for water use. We are aiming to reduce our water usage by 15% per restaurant by 2015, using 2006 as the baseline year. While we assessed water use at a number of our restaurants in the course of setting the goal and planning water-reduction initiatives, we are still compiling company-wide water data. In addition, we are still learning what the biggest drivers of water use are within our restaurants. Because each faucet or spigot is not individually metered and measured, it’s not a simple task to understand and identify the most inefficient uses. We continue to work on how best to do this.

Progress in Our Restaurants In the past year, we have taken numerous steps to decrease water use in our restaurants. One of our accomplishments has been to implement an alternative to “dipper wells” in most of our Olive Garden restaurants. Dipper wells are holders for the utensils that are used to handle food in our kitchen sauté stations. Running water flows through dipper wells continuously, in order to prevent the buildup of bacteria. As a result, dipper wells use a lot of water. In 2009, we switched from dipper wells to storing the utensils in a recessed hot well at the sauté station. This change was implemented at the approximately 600 Olive Gardens (nearly 90% of

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the total) that have an available recessed hot well. The change is estimated to save about 261,000 gallons of water per restaurant per year. To ensure food safety, the federal Food and Drug Administration requires water used in this way to be maintained at a minimum temperature of 135 degrees and to be changed every four hours. We exceed those standards by maintaining the water at 165 degrees and changing it every two hours. Not all Darden restaurants have an extra recessed hot well that can be dedicated to storing utensils. We are thus exploring other technology solutions for the elimination of dipper wells in these remaining restaurants. Another recent initiative has been the installation of low-flow aerators on hand-washing sinks in our kitchen areas. A low-flow aerator reduces the flow of water coming out of a faucet (while maintaining adequate force) by mixing air into the stream. In late 2009, we installed more than 8,500 of these aerators in 1,751 of our restaurants (i.e., an average of almost five aerators per restaurant). (Some of our restaurants had incompatible plumbing.) Our rough estimate is that the average Darden restaurant will reduce water consumption by about 195,000 gallons per year by making this change. We have also completed the installation of about 790 low-flow pre-rinse sprayers in the dishwashing stations of restaurants that did not already have them. The U.S. Energy Act of 2005 mandated that all replacement and new restaurant pre-rinse sprayers be low-flow devices. By 2009, many of our restaurants had already made the switch, but we decided last year to finish the change-over all at once rather than wait for the remaining older ones to require replacement. While the old sprayers allowed a flow of up to 6 gallons per minute (GPM), the new ones conserve water by limiting the flow to 1.4 GPM. At Darden, this saves an estimated 225,000 gallons of water per restaurant per year. In late 2009, we charged our employee Green Teams with the task of ensuring that our restaurants are leak-free, using a 30-point leak-inspection guide. (A faucet that drips one drop per second can waste more than 3,000 gallons per year.) Though we don’t know how much water this effort has saved, we do know it was not uncommon for a restaurant to have multiple leaks. (For more, see p. 82.) Finally, in early 2010 we implemented a new method for cleaning the floors in our restaurant kitchens – a method that uses much less water. Traditionally, we scrubbed our kitchen floors with soap and water, and then rinsed them. Now, we are using a natural, enzymatic floor cleaner that does not require rinsing. Once the product is sprayed on the floor, the enzymes in the cleaner “consume” the dirt and oil within a few minutes; then the cleaner and any debris are cleared away with a squeegee. This product change is estimated to save up to 32,670 gallons of water per restaurant per year. The new cleaning system is also better at eliminating odors and is less destructive to floor grout.

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These initiatives together are expected to save more than 700,000 gallons of water and close to $5,000 per year at each restaurant that implements all of them. Overall, it’s estimated Darden will save more than 700 million gallons of water and $5 million. To read more about the sustainability aspects of our restaurants, go to p. 14.

Progress at Our Headquarters Our new headquarters building in Orlando, Florida – called our Restaurant Support Center, or RSC – is a model of water efficiency. Completed in 2009 and certified as a “green building” in 2010, the new RSC is expected to use 1.8 million fewer gallons of drinkable water per year than a comparable building built to standard codes. The new RSC site has toilets and an irrigation system that use “reclaimed” water (i.e., minimally treated wastewater). The landscaping is water-efficient and consists of native Florida plants. And the area around the buildings contains “bioswales” – specially constructed drainage areas that slow the runoff of rainwater, filter out contaminants and recharge the groundwater, instead of having stormwater drain directly into nearby ponds. The year before we moved to the new RSC, we eliminated the use of 250,000 bottles of water annually by giving all RSC employees a reusable travel cup and discontinuing free bottled water in our break rooms. You can read about the sustainability aspects of our new RSC beginning on p. 20.

Progress in Our Supply Chain The amount of water used in our supply chain for growing crops and livestock far outweighs the amount we use in our restaurants and headquarters. Thus, we are actively working with our suppliers to encourage them to use water wisely. We are also beginning to work with our peer companies and other interested stakeholders to address water issues in the broader agricultural system. About six years ago, we began to source some of our own produce directly from farmers. Cutting out “the middleman” was a smart financial move for us; it also gave us greater influence over how the produce is grown. Through this system, we work closely with farmers to ensure that they meet our stringent specifications and standards for everything from food safety to working conditions to growing practices. Among these are standards for water use and water quality. On our suppliers’ farms in Mexico, which is where about half of all the produce we use is grown, we require farmers to use drip irrigation. Drip irrigation involves applying water directly to plants’ roots, which is much more efficient than the various forms of sprinkler irrigation. We continue to encourage more of our suppliers in the United States to use drip irrigation as well.

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We also have strict supplier requirements for water quality. In Mexico and Latin America, for example, we require farmers that supply Darden to ensure that the irrigation water used is the highest quality – that is, that it meets strict biological standards. (The U.S. government allows irrigation water to meet lower “recreational use” standards.) Also, for the purposes of food safety and proper hygiene, we require farmers to provide fencing to keep animals out of the fields and to have proper latrine facilities for workers. For more on our work with farmers in Mexico, see p. 48. In an effort to have a positive influence on agricultural sustainability beyond our own suppliers, we’ve joined Field to Market: The Keystone Alliance for Sustainable Agriculture. This multistakeholder, collaborative process has brought together growers, agribusiness, food and restaurant companies and conservation organizations to discuss and promote sustainable agricultural methods. It is convened and facilitated by the nonprofit Keystone Center. Among the outcomes thus far is a “Fieldprint Calculator” – an online tool that helps growers evaluate their own sustainability practices, including on-farm water use.

Where We’re Going: Toward Better Water Conservation We continue to gather and compile data to document our overall water use, to track progress toward our 15% reduction goal and to better understand the drivers of water use in our operations. We also look forward to identifying more opportunities to reduce water use in our restaurants, while of course maintaining proper food handling and hand-washing practices. As we discover new technologies and practices, we will ensure that they are implemented throughout our 1,800 restaurants, where feasible. In this way, even small improvements can cumulatively yield big savings. As a major buyer, we have a strong positive influence over how our suppliers produce their goods, so we will continue to work closely with our supply chain on issues relating to water conservation. We will also continue to seek out multi-stakeholder mechanisms that involve our peer companies and other organizations, to help promote sustainable water use more broadly.

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Reducing Our Waste Why It Matters: Waste Is a Waste In the past, Americans thought about waste mostly as a disposal problem. As in, “What should we do with all this garbage?” We lamented the litterbugs who threw trash along our highways and worried that we were running out of landfill space. Waste disposal remains an important issue, but more and more, people are coming to realize that garbage represents a waste of precious natural resources as well as a significant waste of money. We have limited supplies of natural resources on Earth, and they are expensive to extract and process. So if they are ending up in a trash heap, that means we have an opportunity to become smarter in our use of them. Today, the mantra is “reduce, reuse, recycle,” and we are all doing better than we used to (see Figure 1). At the same time, however, Americans are generating more waste – about 4.5 pounds per person per day in 2008, compared to 3.66 pounds in 1980.16 So, there’s plenty of room for progress. F IG URE 1

Management of Municipal Solid Waste in the United States 100%

89%

80% 60%

54%

■ 1980 ■ 2008

33%

40% 20%

10%

13% 1%

0% Discarded

Recovered

Combustion with Energy Recovery Source: U.S. Environmental Protection Agency

At Darden, we deal with several different kinds of waste in our restaurants. Food waste, naturally, is a key component of our waste stream; since this waste contains a lot of water, it is heavy and thus expensive to dispose of. (Waste haulers typically charge by a combination of weight and volume.) Cardboard is another significant component, as our food and nonfood deliveries arrive at our restaurants in cardboard boxes. Other aspects of our waste stream include glass, paper, aluminum, plastic, used cooking oil (called “yellow grease”), grease from the grease traps in our 16

http://www.epa.gov/epawaste/nonhaz/municipal/msw99.htm.

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sewer lines, and miscellaneous trash. At our Restaurant Support Center, or RSC (i.e., our corporate headquarters in Orlando), we generate primarily office paper waste as well as food waste from the cafeteria and our restaurant test kitchens. We know it makes good sense for us to reduce, reuse and recycle – in our restaurants and our RSC. By figuring out how we generate waste and reducing it, we can lessen the amount of money we spend on things that would otherwise be headed for the trash. We can also trim our wastehauling costs, which are significant. And of course, reducing costs this way helps us stay competitive. Reducing our waste is the smart thing to do – not only for the environment, but for our company’s future.

What We’re Doing: Wasting Less, Recycling More At Darden, we are working hard to reduce the amount of waste we generate, and to recycle, donate or reuse the rest, wherever feasible. The primary challenge we face in this effort is that we can’t develop and implement a standard set of solutions, because our waste disposal and recycling practices differ in each locale where our restaurants are located. These practices are driven by municipal rules and regulations and by the availability of appropriate recycling facilities and costeffective hauling services. We contract with a national waste management company to handle waste at all of our 1,800 restaurants. In turn, the waste company contracts with local haulers and ensures that we comply with all of the different municipal and county ordinances.

Our Goal In 2010, we set a corporate-wide goal of “zero waste to landfill.” That is, we are aiming to send no trash to landfills at all, but to reuse, recycle, donate or compost all the waste we generate. We have not put a timeframe on this goal, as we are still learning what it will take to achieve it. However, we are confident that putting such a challenging goal in place will help spur our efforts forward.

Performance in Our Restaurants The approximate annual weight of Darden’s solid waste from our restaurants is 537,000 tons. This includes waste sent to landfill and recycled, though not food donated. We work to minimize our food waste by donating food to Feeding America (formerly America’s Second Harvest), the largest U.S.-focused hunger-relief organization. At the end of each night, our cooks take food that has been prepped but not served – for example, full trays of thawed chicken – and they cook it and then store it in the freezer. (We do not donate any raw products, out of concerns for food safety.) About once a week, food bank volunteers come by to pick up the frozen food. In the past, this leftover food would have been thrown away. In fiscal year 2009, we donated nearly 9 million pounds of food through this program. For more, see p. 92. At Olive Garden in 2009, our employees alerted us to an opportunity to reduce our paper waste. The customer check system in these restaurants used to print out a slip of paper every time a server entered new items for a table of guests. Most of these slips were thrown directly in the

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trash. We have now changed the system so that printing is optional, not automatic. We estimate that this one fix will save about 400,000 rolls of paper and $400,000 each year. We seek to recycle waste from our restaurants wherever feasible. The following are examples of our recycling efforts:

1 Due to a new program we implemented in 2009, all of our restaurants now recycle their fluorescent light bulbs. (These bulbs contain small amounts of mercury, a toxic heavy metal.) Each restaurant is given a recycling box with a prepaid shipping label. Restaurant managers simply mail the box to the designated recycling company when full, and receive a new one in return. We expect that each restaurant will recycle 30 to 50 fluorescent tubes per year, or an average weight of about 10 lbs. per year.

1 More than 85% of our restaurants recycle all of their cardboard. Overall, we recycle more than 65 million lbs. of cardboard annually. That saves about 553,350 trees from having to be cut down and used for pulp.

1 Nearly all of our restaurants recycle “yellow grease” (discarded fry oil), at a rate of about 2,400 pounds per restaurant per year. This grease is reused for biodiesel, animal feed, and as an ingredient in soaps and perfumes.

1 All restaurants have “grease traps” in the sewer lines that trap fats, oils and grease. We capture about 6.8 million gallons of grease effluent and solids per year in these traps, and we are able to recycle about 50% of that. (The remaining 50% includes solids that have little recycle value and gray water, which is only beginning to become recyclable.) The recyclable material is handled and recycled separately from yellow grease; after the water is boiled out, it is used as a fuel in power plants.

1 Nearly 80% of our restaurants recycle office paper. In a typical year, these restaurants recycle nearly 150 tons of paper, or about 200 pounds each per year.

1 At a handful of Darden restaurants in California and Minnesota, composting services pick up fruit and vegetable scraps and compost them. These services compost about 3,000 cubic yards of organic material per restaurant per year.

1 In Dade County, Florida (Miami), we put all recyclables together in one bin, and it’s sorted at a local recycling facility. This “single-stream recycling” system is mandated by law, and we must pay extra to have the recyclables hauled away.

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There is wide variation in the recycling services offered and rates charged by the private haulers that serve our restaurants. Thus, while we would like to recycle glass, plastics and aluminum everywhere we operate, it is often not cost-effective for us to do so. At present, about 200 of our restaurants (or 11%) recycle these materials. We also would like to compost more, but composting pick-up services are even rarer, and we cannot store discarded food scraps on-site for health and sanitary reasons. These are among the waste issues for which we continue to seek solutions.

Each year, each of our restaurants recycles an average of: 40 fluorescent light bulbs 200 lbs. of office paper 38,000 lbs. of cardboard 2,400 lbs. of yellow grease 10,000 lbs. of fats, oils and grease from grease traps

In 2009, we worked with our waste management company to re-bid our waste hauling business and, in some cases, reduce the frequency of pickups (though not the quantity picked up). This initiative will save Darden $3 million annually.

Performance at Our Headquarters In recent years we have taken steps to reduce waste and increase recycling at our headquarters in Orlando, Florida – our RSC. In 2008, we eliminated the use of 250,000 bottles of water annually by giving all 1,250 RSC employees a reusable cup and discontinuing the free bottled water in our break rooms. Also that year, our employees reduced their paper consumption by 33% after we purchased double-sided printers and conducted an awareness campaign. And, we put in place a single-stream recycling collection system that diverts nearly 12 tons of trash from landfill monthly. In 2009 we moved from our old headquarters site (comprised of 13 older buildings) into a stateof-the-art new “green” building in south Orlando. Before the move – in an effort to clear out clutter from the old buildings – we donated nearly 25,000 lbs. worth of office supplies, knickknacks, clothing, and other miscellaneous items to local charities. We recycled about 10 tons of paper at the old site, and sold off the office furniture so it would not end up in a landfill. And, we collected all the coffee, nonperishable food and Styrofoam containers from our break rooms and donated it to food shelters. During the construction of the new building, more than 90% of all construction debris was diverted from landfill via reuse or recycling. Our new office furniture is made from materials with recycled content. We have continued the single-stream recycling, and we now also compost food waste from the employee cafeteria. And, we no longer use any Styrofoam or plastic cutlery at our headquarters. For more on the waste-efficiency features of our new RSC, see p. 20.

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Performance in Our Distribution System In our smallwares warehouse in Orlando – where we store and ship all non-food items used in the restaurants, such as plateware, glassware, utensils and décor – we have instituted a cardboard reuse program. We save the cardboard boxes in which items are shipped to us, and reuse them to pack and send shipments to our restaurants. This effort saves us about $1,000 per month. Whatever cardboard we don’t reuse gets recycled; we recycle about 275 tons annually.

Where We’re Going: Toward Zero Waste to Landfill At Darden, we know we have a long way to go to reach our ultimate goal of sending zero waste to landfill. We must continue to reduce our generation of waste and to recycle more. But we are proud of our efforts thus far – especially our donation of 9 million pounds of food per year, our recycling of cardboard and yellow grease, and the single-stream recycling and composting systems at our corporate headquarters. We look forward to reporting on our continued progress in the future.

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Our Restaurant Green Teams At Darden, our restaurant employees have inspired a great deal of the company’s progress and activities relating to sustainability. Recently, we established employee Green Teams as a way to more formally organize and involve employees in our sustainability efforts. Our Green Teams, first established in 2009, are groups of five to seven employees in each restaurant – including servers, cooks, bussers, dishwashers, bartenders, etc. – who help to implement our sustainability initiatives. And, they have come up with some pretty great “green” ideas of their own. While the activities of each team thus far may seem small in isolation, they make a huge impact when multiplied by the 1,800 Darden restaurants in which Green Teams have been created. And we know that our Green Team members are taking what they learn back into their homes and neighborhoods – so that’s more than 10,000 people seeking to make a positive environmental impact in our restaurants and in their communities. Our efforts may also help move the restaurant industry in the right direction. “[Darden is] a leader in the industry, and among all restaurants people turn to us to look for trends,” said Bahama Breeze employee (and Green Team member) Pam Martin. “If they see us doing things to be responsible for the environment, then hopefully others will follow suit. Little things…from every restaurant will add up, and that makes a big difference.”

Green Team Responsibilities One of the first things we asked our Green Teams to do was identify any water leaks in their restaurant, using a 30-point leak-inspection checklist. (One leaky faucet dripping one drip per second can waste more than 3,000 gallons per year.) The Green Teams have also been involved in (among other projects):

1 Making sure all Darden restaurants use low-flow sprayers in the dishwashing areas, 1 Overseeing the equipment power-up program, 1 Ensuring that low-flow aerators are used on hand-washing sinks, 1 Ensuring that thermostats are properly set, 1 Making sure the kitchen areas are outfitted with compact fluorescent light bulbs and 1 Introducing and implementing a new fluorescent light bulb recycling process.

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Case Study: Our Restaurant Green Teams

Green Team members, who are appointed by their restaurant general managers, are expected to:

1 Attend quarterly Green Team meetings, 1 Adopt, communicate and help support Darden sustainability initiatives, 1 Complete audits as appropriate (like the leak inspections), 1 Review audit results and compare them to previous audits, 1 Decide what actions to take in the future, and 1 Adopt, communicate and help support additional, restaurant-specific sustainability efforts.

A Great Source of Ideas Our Green Teams also enable us to tap into the creative ideas of our employees, who may identify promising sustainability opportunities as they go about their day-to-day work. At Olive Garden, for example, Green Team members alerted us to an opportunity to reduce our waste. Olive Garden’s customer check system used to print out a slip of paper every time a server entered new items for a table (i.e., after the guests ordered drinks, and then again after they ordered their main courses, etc.). Most of these slips of paper went directly into the trash. We have now changed the system so that printing is optional, not automatic. We estimate that this one small fix will save 400,000 rolls of paper each year, for a cost savings of about $400,000 per year.

A Clear Path of Communication With the Green Teams in place, our corporate operations team has a clear path of communication regarding sustainability measures. We have developed a simple management structure for the Green Teams within our business, which includes Green Team leaders in each restaurant, region, division, and brand – all reporting up to Darden’s Executive Vice President. Some sharing of ideas and best practices takes place among the individuals at each of these levels; we hope to encourage more of that in the future.

An Essential Element Darden’s Green Teams have proven to be an effective way to implement sustainability initiatives, gather good ideas from staff, communicate about and gain buy-in into our sustainability efforts and improve our performance. We view them as an essential part of our sustainability strategy, and we look forward to working closely with them going forward. “I’m already very happy with all the changes and improvements we’ve made thus far,” said Green Team member Camila Zorrilla from Seasons 52. “So I’m very confident that as a team we’re going to be able to come up with even more ways to be environmentally sustainable.”

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Managing for Long-Term Success Why It Matters: Financial Stability Enables Sustainability Lots of people count on our company’s long-term success. Roughly 180,000 employees depend on us, of course. So do our 1,500 suppliers in 35 different countries. So do the communities that rely on our restaurants for the tax income we generate. Large companies like ours have indirect economic benefits, too, although these are harder to quantify. For example, our employees pay taxes and spend the money they earn within their local communities. And each time we build a restaurant, we spur local economic growth by hiring crews to construct the new building. We view Darden’s financial viability as a critical element of our sustainability approach. Think of it as a circle: Financial success enables sustainability progress; and sustainability progress enhances financial success. In other words, sustainability makes our company smarter and more profitable. Many of our sustainability initiatives can be good for the environment or for society and save Darden money at the same time. That money-saving element is always important, but it’s especially critical in a tough economy. We want to continue to be a strong company so we can contribute to the well being of our stakeholders – now and for generations. Our growth and success as a company provides the resources that allow us to focus on other areas of corporate responsibility, like reducing our carbon footprint or funding programs in our communities. For more on our financial operations, please see our Annual Report. Employees Countries of operations Number of restaurants 2009 sales 2009 net earnings 2009 diluted earnings per share 2009 net cash flow 2009 operating costs 2009 capital expenditures 2009 income taxes 2009 wages paid 2009 community investments

Approx. 180,000 U.S., Canada 1,800 $7,217.5 $ 372.2 $ 2.65 $ 783.5 $5,636.9 $535.3 $140.9 $2,023.9 $5,978,636

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Managing for Long-Term Success

What We’re Doing: Positioning Our Brands to Succeed Darden manages for the long-term financial sustainability of our business. We look for ways to position our restaurants and brands to succeed even in difficult times – such as the economic downturn of 2008 and 2009. Indeed, fiscal 2009 was one of our most challenging years; yet it was also one of our finest. We were able to deliver strong financial results while continuing to invest in our future. We adjusted to the faltering economy by carefully managing our costs and focusing on creative ways to bring guests to our restaurants. Our brands – and the people behind them – are the keys to our continued success. We’re in the quintessential people business, and we nurture our employees to take pride in what they’re doing so our guests enjoy their dining experiences – and visit us again. Managing for the long term means listening to our guests. Our guests enjoy our restaurants because we understand what they want – and we know how to deliver on our promises to meet their expectations. Managing for the long term also means developing Taxes Paid better relationships with our suppliers – because our (FY2009) success is interdependent with theirs. For example, we Overall restaurant sales and use have moved to automated demand forecasting and taxes paid to local/state “just-in-time” ordering so we can have a more government: $568.8 million accurate picture of our inventory. That translates into Overall property taxes paid for all less food wasted – and fewer dollars wasted, too. We restaurants: $65 million have also developed our own line of produce so we know exactly where our fruits and vegetables are coming from and how they were grown. (For more on this topic, see pp. 35 and 45.) When it comes to sustainability, we view financial success as a fundamental piece of the equation. We pursue innovative ideas that have multiple benefits, on environmental, social and financial levels. For example, our restaurants proudly participate in a food donation program (see p. 92) that helps the hungry, reduces waste, lowers our waste disposal costs, and provides our company with important tax benefits, too. To us, programs like these define how sustainability can lead to smarter solutions.

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Managing for Long-Term Success

We believe companies should make it a priority to view sustainability through a financial or economic lens. This includes factors such as short- and long-term impacts and tangible and intangible costs and opportunities.

Where We’re Going: A Truly Great Company We aspire to be a company that enriches the lives of our guests, our employees, our communities and our business partners. That isn’t always so easy to do, especially in difficult economic times. As a customer-driven company, we aim to stay ahead of our guests’ expectations. We want our guests to remain confident that we serve food that is safe and enjoyable. We also recognize that more and more guests will want to patronize restaurants that are also doing good things for their employees, for their communities and for the environment. We know that being a good corporate citizen is the right thing for a company like ours to do. We also know that there are business opportunities that accompany these efforts. We want to be able to maximize them as we seek to re-imagine and transform the full-service dining industry.

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Our Collaborative Partnerships Why It Matters: We Can’t Do It Alone This website details many of the sustainability-related activities we at Darden are undertaking on our own, such as our energy- and water-reduction initiatives and the creation of employee Green Teams. We are proud of these efforts, and we know they are having a positive impact on the environment and on the communities in which we operate. But we also know we can’t do it all alone. Darden’s sustainability issues are complex and require both knowledge and innovative thinking. These issues include, for example, charting a course toward sustainable food supplies for a burgeoning world population; protecting the safety of the global food supply network; and engaging employees to help reduce the environmental footprint of our restaurants. Collaboration helps us to learn from the experience and expertise of others, as well as teach others what we have learned. It enables us to leverage our resources by combining our knowledge and insights with organizations in other fields – effectively multiplying our impact. It allows us to align and simplify the sustainability expectations communicated to our suppliers. It offers opportunities for leadership when we see a need for cooperative action and are able to help convene the relevant stakeholders. And, we know it’s important for us to hear others’ perspectives, even if we do not agree with them. For all of these reasons, collaborating with others to learn, share insights and drive larger-scale change is an important part of our sustainability strategy.

What We’re Doing: Participating in Collaborative Efforts Our sustainability approach is anchored in collaboration with partners that provide us with important perspectives and expertise. We are working with industry and business groups, nongovernmental organizations and multi-stakeholder alliances on an array of sustainabilityrelated efforts. This section describes our collaborative efforts across three major issue areas: seafood, agriculture, and sustainability best practices.

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Our Collaborative Partnerships

Seafood We are deeply involved in partnerships relating to sustainable seafood. The section beginning on p. 52 describes these efforts in some detail. In brief, these affiliations include the following:

1 The Global Aquaculture Alliance, a multi-stakeholder partnership we cofounded, which is working to create a uniform set of standards, systems and best practices for the cultivation of fish and seafood.

1 The New England Aquarium’s sustainable seafood program, which provides advice on how to develop and implement visionary and realistic sourcing policies and practices that protect fisheries.

1 The Lobster Conservancy, the Lobster Sustainability Foundation and the Global FISH Alliance, three nonprofit organizations focused on preserving lobster stocks in specific locales around the world. (Darden primarily helps to fund these three organizations, though we also take part in multi-stakeholder discussions and educational efforts involving them.)

Agriculture In early 2009, Darden joined the steering committee of Field to Market: The Keystone Alliance for Sustainable Agriculture. This multi-stakeholder committee includes representatives from about 40 organizations within all parts of the agriculture and food supply chain, from farmers and grower organizations to agribusiness companies to food and restaurant companies, along with conservation groups and academic and research organizations. Darden helps bring to the table the important perspective of a food purchaser and retailer. The purpose of Field to Market is to define, support and encourage the implementation of sustainable agriculture The Clinton Global Initiative methods. The effort is convened by The Keystone In early 2010, Darden joined the Clinton Global Initiative Center, a nonprofit public (CGI), an organization founded by Former President Bill Clinton that brings together leaders from all sectors of society policy organization. To date, Field to Market has published a report describing how land use, soil loss, water use and energy use have changed over time in the growing of four major commodity crops – corn, cotton, soybeans and wheat. The group also developed (and is pilot testing) a “Fieldprint Calculator” – an

– private, nonprofit, philanthropic, political, academic, media, etc. – to discuss and make “commitments to action” on global issues of pressing concern. Through annual events and year-long initiatives, CGI members form partnerships that help to drive social change. According to CGI, its members have so far made nearly 1,700 specific commitments valued at $57 billion, which have improved more than 200 million lives in 150 countries. Darden is joining on as a partner to the program and is one of a few major sponsors of the 2010 CGI University, which brings together college students and inspires them to make their own commitments.

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Our Collaborative Partnerships

online tool that enables farmers to determine how their management choices affect natural resources, production levels and operational efficiency.

Sustainability Best Practices Darden is a member of several alliances that bring together corporations and others to discuss and promote sustainability practices. These collaborative efforts help organizations to learn from each other, understand what works and doesn’t work, and move their sustainability programs forward. For example, Darden recently became a member of the Sustainability Consortium, an independent organization of diverse global members that’s jointly administered by the University of Arkansas and Arizona State University. The Consortium brings together corporations such as Wal-Mart, Unilever, Cargill, HP and others; the U.S. Environmental Protection Agency; nongovernmental organizations; and numerous university scientists and researchers. Darden is serving on the Consortium’s steering committee and will take part in the food and agriculture sector subgroup. The organization’s mission is “to build a scientific foundation that drives innovation to improve consumer product sustainability.” Consortium members work to research the sustainability impacts of products in all phases of their lifecycle; identify opportunities for improvement; and facilitate dialogue on how progress can be stimulated, measured and communicated. Darden is also a member of the Business and Biodiversity Council (BBC) convened by Conservation International’s Center for Environmental Leadership in Business. The BBC is composed of more than 25 large corporations – such as Coca-Cola, Wal-Mart, Starbucks, Shell, Goldman Sachs and Ford – who are committed to sustainability and the conservation of natural resources. Darden joined the BBC in early 2009; our director of sustainability takes part in their twice-yearly meetings. The BBC provides corporate leaders from different sectors of industry with the opportunity to interact and learn sustainability best practices from each other. Council meetings focus on topics of the members’ choosing and aim to address questions and issues that executives face on a daily basis. The meetings also typically include a field trip to see sustainability activities in practice at one of the member companies. Between meetings, BBC members can consult with Conservation International’s staff of scientists and business experts on topics specific to their company. Darden joined the Corporate Eco-Forum in January 2009. This invitation-only, corporatefunded membership group brings together high-level executives from about 75 companies across multiple industries to share ideas and best practices relating to environmental sustainability (primarily energy use and carbon dioxide emissions). Members include, for example, AT&T, Microsoft, FedEx, General Electric, Disney, Dell and Levi Strauss.

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Our Collaborative Partnerships

Corporate Eco-Forum members attend a two-day annual meeting at which sustainability topics are addressed in large plenary presentations as well as smaller, discussion-oriented breakout sessions. Members also can take part in quarterly conference calls. The Corporate Eco-Forum’s small staff also conducts practical research on issues of interest to members; one of the benefits of membership is access to the results of that research. Sustainable Florida is an alliance of public and private organizations committed to promoting sustainable development principles in the state of Florida, which is home to Darden’s headquarters. In July 2009, Darden’s director of sustainability joined Sustainable Florida’s Board of Directors. The board is multi-stakeholder in makeup, including individuals not only from other businesses (e.g., Progress Energy and Publix Supermarkets) but academic institutions (e.g., the University of Central Florida and Florida A&M University) and conservation organizations (e.g., Trust for Public Land, Audubon of Florida and Environmental Defense).

Among Sustainable Florida’s major activities is a best-practice awards program, which highlights effective sustainability practices in the private, public, nonprofit and government sectors. The organization also hosts a college campus conference, sustainability trainings, and environmental education awards that recognize K-12 efforts. All of Sustainable Florida’s efforts aim to educate about, promote and incentivize positive sustainability practices. Finally, in 2009, Darden became one of the founding members of Michigan State University’s Food + Society Alliance. This collaborative effort – which is still in the organizational stages – aims to bring together 15-25 professionals from the food and restaurant industry, private foundations, public agencies and universities to address issues at the intersection of food and society – for example, ethics and governance, food safety, and finite resources. Organizers envision that the alliance will help members to frame complex issues and share experiences and learning, and may also spur university research on key topics.

Where We’re Going: Forward, in Partnership Sustainability is a journey, not an endpoint. All along this journey we expect to engage with a variety of stakeholders and experts to help us understand how to make our business more sustainable, and with whom we can share what we’ve learned. The collaborative partnerships described above have been helping us to do that, and to forge important relationships outside of our own walls. In the future, we will continue in these partnerships as long as they prove productive, and will partner with other groups and institutions as appropriate and helpful.

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Our Communities We are in the service business. Yet our service philosophy extends far beyond our restaurant walls. It reaches straight into our communities. “Being of service” is one of our core values and a cornerstone of our corporate culture. It’s a concept that began 40 years ago with our founder, Bill Darden. And it’s a concept that continues to thrive at our company today. With 1,800 restaurants, we have a presence in hundreds of communities across the United States and Canada. We believe we have an obligation to serve and give back to those communities – whether we are donating meals for the hungry, helping young people pursue an education, or providing business opportunities for suppliers of diverse backgrounds. Our corporate and employee-sponsored initiatives help to enhance the quality of life in the neighborhoods where we live and work. As a restaurant company, it’s logical that we donate food to those in need. Our Darden Harvest food donation program supplies hunger-relief agencies with nourishing meals. In fiscal year 2009, our restaurants contributed 8.7 million pounds of cooked food to families in need across the United States. Through the Darden Restaurants Foundation, we donate millions of dollars a year to worthwhile charities. Recently, the Foundation began to take a more focused approach to corporate philanthropy by concentrating its efforts on educational programs. The Darden Environmental Trust, a key program of the Darden Restaurants Foundation, has also funded projects related to marine life and fisheries, aquaculture and the preservation of natural resources. At Darden, we know there’s much more to our operations than how well we run our restaurants or how much value we return to shareholders. We believe our true worth is illustrated in how we live, work and serve our communities. Read more about our community efforts, including supplier diversity, on our corporate website.

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CASE STUDY

Our Food Donations It’s the ultimate paradox of an affluent society. Each year, some 14 billion pounds of food are sent to landfills in America. Meanwhile, nearly 37 million Americans – including 14 million children – are at risk of hunger.20

Olive Garden Red Lobster LongHorn Steakhouse Warehouse The Capital Grille Bahama Breeze Seasons 52 Total

Pounds Donated 3,438,264 2,313,636 1,463,866 941,240 546,320 35,322 19,853 8,758,500

Recipient Agencies 671 649 333 43 34 31 7 1,15019

Darden, like most restaurants, grappled for years with the problem of food waste. We particularly struggled with the uncomfortable dilemma of throwing away food that was perfectly good and safe to eat, yet, for a variety of reasons, couldn’t be sold to our guests. That’s why we were so pleased to partner with the Food Donation Connection, a national network that works with restaurants and other food service companies to distribute high-quality, prepared foods to hunger-relief organizations across the United States. A pilot program that began in 2003 grew into a companywide effort the following year. Today, nearly all of our 1,800 restaurants participate in what is called the Darden Harvest food donation program.

Our Food Donation Partners Our food donation program wouldn’t be so successful without the efforts of many different organizations. These include: Food Donation Connection. This national organization acts as the liaison between the restaurants interested in donating leftover food and the social service agencies that provide meals for the homeless and people at risk of hunger. Feeding America. As the largest hunger-relief agency in the country, Feeding America collects the majority of our prepared food donations and distributes the meals to charities in the communities where our restaurants are located. Social Services Agencies. In the Orlando area alone, our food donations help to support more than 50 local charities, including food banks and residential treatment centers for adults struggling with addiction.

19 Total is less than sum because many agencies pick up from more than one restaurant brand. 20 Source: Feeding America

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Our Food Donations

In fiscal year 2009, Darden restaurants contributed 8.7 million pounds of cooked food to families in need across the United States. Our main distribution partner is Feeding America (formerly America’s Second Harvest), the nation’s largest hunger-relief organization. Representatives from Feeding America take the food from our restaurants to the charities that directly feed the needy. More than 1,200 charities benefit from our food donation program.

How It Works Here’s how the program works: Each night, at the end of a dinner shift, our restaurants have leftover food that can’t be used – such as full trays of thawed chicken breasts or steak tips. (We even sometimes donate lobsters.) Our rigorous food safety guidelines won’t allow us to save food items like these for use on the following day. So instead, our kitchen crew cooks them just as they would for any paying guest, then packages and freezes them for weekly collections by the hunger-relief agencies. Our donations also often include cooked vegetables and sauces, like Olive Garden’s popular Alfredo sauce. Our restaurants are extremely good at forecasting what our guests will order. But we can’t predict with 100% accuracy, and we don’t want to run out of menu items, either. This means there are always some leftover ingredients at the end of each day. (Other leftover food includes take-out meals that were prepared, but never picked up by the diners who had ordered them. These, too, get frozen for the charities.) For safety reasons, we never donate any raw foods – only items that have been thoroughly cooked.

Program Benefits The food donation program has so many benefits – social, environmental and economic – that it’s hard to know where to begin. First, and most important, it lets us assist Americans who are in need of a good meal. Second, it reduces our waste stream by taking food that would otherwise have gone to landfills and diverting it to an extremely worthy cause. Third, the program saves our company money, thanks to generous federal tax deductions and reduced disposal costs (i.e., less food waste = less money for waste removal fees). Our restaurant employees benefit from the program, too. Many of our team members routinely tell us that they feel good knowing that they are helping members of their communities. We’re proud of the work our employees do to make this program so successful. In fact, it’s one of the most valuable things we do as a company. This program gives us yet another way to fulfill our core purpose – to nourish and delight everyone we serve.

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GRI Index Darden used the 2006 G3 Sustainability Reporting Guidelines of the Global Reporting Initiative (GRI) at a GRI C level. This index covers all indicators on which we have fully or partially reported. (Core indicators are in plain text; additional indicators are in italics.) Please visit www.globalreporting.org for the full text of the indicators and other information on the Guidelines.

Key to Indicators: Reported Partially Reported

Indicator

Description

CORPORATE PROFILE INDICATORS Strategy and Analysis 1.1 Executive statement 1.2 Key impacts, risks and opportunities Organizational Profile 2.1 Name of organization 2.2 Primary brands, products and/or services 2.3 Operational structure 2.4 Headquarters 2.5 Countries with major operations 2.6 Nature of ownership and legal form 2.7 Markets served 2.8 Scale of reporting organization 2.9 Significant changes during reporting period 2.10 Awards received in reporting period Report Parameters 3.1 Reporting period 3.2 Date of most recent report 3.3 Reporting cycle 3.4 Contact point

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Page(s)

2-4 2-4, 5-8 12 12 12 12 12 12 12 84 14 32 12 12 12 13

GRI Index

Indicator Description Report Scope and Boundary 3.5 Process for defining report content 3.6 Report boundary 3.7 Limitations on scope/boundary 3.8 Basis for reporting on joint ventures, subsidiaries, etc. 3.9 Data measurement techniques 3.10 Restatements 3.11 Significant changes from previous reporting periods GRI Content Index 3.12 GRI index Assurance 3.13 External assurance Governance 4.1 Governance structure 4.2 Board chairperson/executive officer 4.3 Independent and/or non-executive members 4.4 Shareholder recommendations

4.6 4.8 4.9 4.10

Avoiding conflicts of interest Mission statement/code of conduct Board of Directors performance oversight Board of Directors performance evaluation

Commitments to External Initiatives 4.12 External principles/initiatives 4.13 Industry memberships Stakeholder Engagement 4.14 List of stakeholders engaged 4.15 4.16

Stakeholder identification Stakeholder engagement

4.17

Stakeholder concerns

Indicator ECONOMIC INDICATORS Management Disclosures Economic Performance EC1 EC2 ENVIRONMENTAL INDICATORS Management Disclosures Materials EN2 Energy EN3 EN4 EN5 EN7

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Page(s) 12 12 12 12 12 12 N/A 94 12 9-10 9 9 http://www.darden.com/pdf/corporate/ Lead_Director_and_Shareholder_ Communication_Procedure.pdf 11 5, 11 9-10 http://www.darden.com/pdf/corporate/ D_Corporate_ Governance_Guidelines.pdf 57-58 40, 87-90 25, 27, 40, 42-43, 45, 48, 57-59, 60, 62-63, 82, 85, 88-90, 91, 92 2, 3, 6, 27-28, 45, 57, 87, 91 29-31, 36-38, 40, 42-43, 45-47, 48-51, 57-59, 60-63, 82-83, 88-90, 91, 92-93 43-44, 46, 48-51, 55-59, 60-61, 62-63, 83, 93 Page(s)

2-3, 19, 84-86, 91 4, 14, 19 2, 64-65, 72

2, 4, 6-7, 9-10, 15-18, 20, 54-56, 65-68, 70, 73, 75, 78, 80 22 66 66 66 21

GRI Index

Indicator Biodiversity EN11 EN13 Emissions, Effluents and Waste EN16 EN17 EN18 EN22 Products and Services EN26 LABOR INDICATORS Management disclosures Employment LA1 LA2 Occupational Health and Safety LA7 Training and Education LA10 LA11 Diversity and Equal Opportunity LA13 HUMAN RIGHTS INDICATORS Management Disclosures Investment and Procurement Practices HR2 SOCIETY INDICATORS Management Disclosures Community Impacts SO1 Public Policy SO5 PRODUCT INDICATORS Management Disclosures Customer Health and Safety PR1 Product and Service Labeling PR2

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Page(s) 21, 26 26 66-68 67 68-71 78 18, 46, 54-58, 60-63, 75-76

27-28, 31-34 27 29, 32 34 29-31 28-31 9, 32

46-47 46-47

9-11, 32, 91 19, 84-86 41

35, 38 35-40 39