Vital Farms Inc

Impact Highlights

We progressed toward achievement of our short- and medium-term Impact-related goals that we announced in 2022, including achievement of our short-term goal of making our Egg Central Station processing facility a “zero-waste-to-landfill” site.

Our Restorative pasture-raised egg product became the first national egg brand to earn certification from Regenified™, a regenerative agriculture verification organization measuring farming and ranching practices.

We have advanced our efforts to foster an inclusive farming community through continued outreach to farmers from communities that have been historically marginalized in agriculture, including through collaboration with nonprofit organizations focused on farmers from underrepresented communities.

We continued to build out our governance structure to effectively manage risks and address our stakeholders’ various interests, including through implementation of our Clawback Policy, completion of a pay equity analysis and maintenance of a diverse, gender-balanced Board.

We launched a new learning management system for our remote and production crew members, with a focus on creating a performance and development ecosystem to unlock the potential of our crew.

How we do Business

At Vital Farms, our business – and our culture – are rooted in Conscious Capitalism. We’re focused on creating positive change and driving sustainable outcomes for our stakeholders through a purpose-driven approach to Impact. Our operational model prioritizes the long-term benefits of each of our stakeholder groups: (i) farmers and suppliers; (ii) crew members; (iii) communities and the environment; (iv) customers and consumers; and (v) stockholders. We are fierce competitors who believe that driving positive, sustainable outcomes for each of these stakeholder groups creates a stronger, more resilient business.

Our commitment to raising the standards of the food industry has made Impact an integral part of the Vital Farms business model and is core to our continued success. Our Senior Leadership Team and Board recognize the importance of this commitment, and we have established an internal cross-functional Impact Steering Committee that is tasked with driving additional progress toward initiatives that promote sustainability and further transparency.

Our Impact Strategy and Goals

Our Impact strategy is an embedded part of our operating model and is driven by three core principles: transparency, stakeholder success and alignment to financial expectations. In late 2022, we announced that we had taken the next steps to formalize our strategy so that we can drive even more positive impact. In doing so, we released short- and medium-term goals grounded in our purpose to improve the lives of people, animals and the planet through food. These goals were the result of a years-long evaluation process.

Our short- and medium-term goals show a clear, disciplined path forward, and we are committed to transparent reporting on our progress toward these goals over the next several years. The table below outlines the progress we have made toward achievement of our goals:

Building a Resilient Food System

The over 300 family farms that supply our shell eggs are the foundation of our supply chain. These are located along what we call the “Pasture Belt,” a region of the United States with a more temperate climate, enabling millions of hens to live a life with access to the outdoors. Each hen has the freedom to roam and forage during the daytime on at least 108 square feet of pasture for natural food sources. Our animal welfare practices for the hens that lay our eggs are consistently and independently audited by Certified Humane and certain retailers, and our organic egg farms are audited by Oregon Tilth and Bioagricert according to USDA National Organic Program standards. Our practices are rooted in regenerative agriculture – the egg farmers in our network practice pasture rotation, encouraging nutrient cycling and allowing soil to rest and recover between grazing. We are continuing to engage the farms in our network on additional regenerative practices through training, educational resources and funding opportunities.

We recognize the importance of the environment as one of our stakeholders and are cognizant of the impact of our operations on animals, land, air and water. We are committed to responsible environmental practices that include climate change resilience, conservation of natural resources, pollution prevention, exploration of regenerative agricultural practices and reduction of waste. At Egg Central Station, we have put this commitment to work by investing in a number of energy and water efficiency features, including regular water recirculation, bioretention features, LEED Gold certification for our most recent expansion of the facility and a solar array.

Our efforts to reduce waste are further reflected in our achievement in 2023 of our goal to make Egg Central Station a“zero-waste-to-landfill” facility under the Total Resource Use and Efficiency rating system of 90+% overall diversion from landfills over a twelve-month period. We implemented a number of affirmative steps to achieve this goal, including efforts to process more broken shell fragments, recycling of hair and beard nets, more efficient utilization of undersized eggs and working with customers to improve order accuracy and reduce spoilage.

We carefully consider the impact that greenhouse gases can have on the communities we serve, especially on people who live in vulnerable areas. We have worked with greenhouse gas inventory experts to develop our Scope 1, 2, and 3 emissions inventories, which have been published in our annual Impact reports since 2022. We aim to use packaging that is recyclable and compostable, while prioritizing our food safety and quality standards, exemplified by our use of carbon-neutral, 100% post-consumer recycled paper cartons for all of our shell egg products. We believe that our focus on innovation, with the objective of reducing costs and improving the ecological impacts of our operations, provides a strategic benefit for all stakeholders.

Fostering a People-First Culture

We empower our crew members to live our mission and our values, and we aim to achieve a team that is representative of the community we serve. We believe that a diverse team significantly increases opportunities for creativity and innovation. We regularly survey our crew members’ engagement using Culture Amp®, an employee experience platform with a mission to create culture-first organizations, and among our short-term goals is increasing our inclusion score in this engagement survey by at least five percentage points.

We believe in providing our crew members an environment of equal opportunity and the tools necessary to succeed. Our People team annually reviews our employees’ pay to ensure that every employee receives pay equity for their roles. We conducted a third-party pay equity analysis to support this work in 2023 and determined no significant pay discrepancies were identified. The benefits we provide to crew members include health insurance, 401(k) matching, equity grants, leadership training and an Employee Stock Purchase Plan. For all crew members at Egg Central Station, we pay in excess of living wage for an individual without children and provide a full benefits package from the first day a crew member joins Vital Farms.

We take the health and safety of our crew members seriously, and we expect our team to follow our safety standards and protocols. We perform regular safety audits to ensure that proper safety policies are in place and appropriate safety training is provided. At Egg Central Station, we work to reduce physicality as much as possible. We have automated certain jobs like tray washing, added scheduling blocks in our daily lineup template to prevent our crew members from working the same job for numerous days, and provided ergonomic handling equipment to help reduce job strain. In 2023, we had 15 reported injuries. Our Total Recorded Injury Rate was 5.9.

We are working to build an environment where every crew member feels valued and empowered. We formally established our Inclusion and Belonging function in 2020, and under the leadership of our Head of Inclusion and Belonging and Inclusion and Belonging Council, have worked to increase diversity across our crew and supply chain (including our farmer network). As of December 31, 2023, approximately 41% of our full-time crew members were women and approximately 23% were members of underrepresented minority groups.

In addition to our efforts to foster inclusion among our crew members, we are committed to continuously building an environment where each of our farmers feels welcome, valued, respected and appreciated. In 2020, we announced a commitment to create opportunities for farmers from historically underrepresented communities, and we have since spent time listening to experts and aligning with organizations that support this important cause, including recent collaboration with nonprofit organizations focused on farmers from underrepresented communities. In November 2022, we hosted our first Inclusive Farmer Open House, an event designed to offer access and opportunity to individuals who have been historically marginalized and discriminated against in agriculture, and we are working to develop a more diverse network of farmers through ongoing recruitment efforts.

We support a vast network of community organizations through monetary and product donations, as well as paid time off for crew volunteering, with a focus on organizations promoting transparency, access to ethical food and animal welfare. We therefore measure success not only in financial terms, but also in our ongoing support of our communities and environment. In 2023, we donated to 14 charitable organizations, including donations of more than 713,244 pounds of food (including 4.4 million eggs), which provided over 590,000 meals to food-insecure families.

Driving Engaged and Accountable Oversight

We have established our corporate governance framework with three goals: (i) effectively addressing the interests of our varied stakeholders; (ii) appropriately managing enterprise risks; and (iii) fostering a culture of integrity throughout our organization. Our Code of Conduct outlines the ethical principles that help each of our crew members and leadership keep these goals in mind when carrying out our business.

We are among a very select group of U.S. companies that are publicly traded, B Corporation Certified, and Delaware public benefit corporations. As a public benefit corporation, we are legally required to balance our financial interests with the best interests of our stakeholders. We believe that prioritizing the long-term viability of all stakeholders will produce stronger outcomes, for everyone, over time. Our Board and its committees help set the tone for our Company and meet regularly to review policies, current regulations and industry best practices. With respect to our sustainability initiatives and goals, our Nominating and Corporate Governance Committee receives updates from management (including our Head of Impact) at least quarterly and provides regular updates to the Board.

Periodic Public Benefit Corporation Statement

As a Delaware public benefit corporation, our Board and executive team manage the Company with an eye toward promoting the long-term benefits of each of our stakeholders. Pursuant to Section 366(b) of the Delaware General Corporation Law, the following is a summary of how we have supported each of the stated public benefit objectives listed in our amended and restated certificate of incorporation:

In order to ensure achievement of the public benefit objectives identified in our amended and restated certificate of incorporation, our Board carefully considers these objectives and the interests of each of our stakeholder groups in its oversight of the Company. We believe that we have been successful in meeting these objectives and promoting the attendant public benefits to our stakeholders. Our January 2022 recertification as a Certified B Corporation, which followed a comprehensive and objective assessment of our social and environmental impacts, serves to underscore our continued commitment to these objectives.

**We routinely engage with our stakeholders to better understand their views, carefully considering the feedback we receive and acting when appropriate. For more information, please visit our corporate website at investors.vitalfarms.com. **