Questions 1-6 are in the sustainability report. Please and thank you for the help.

BROBECK 2015 SUSTAINABILITY PROGRESS REPORT The Three Ps of Sustainability: People, Planet, and Profit Contents 2 3 7 8 14 21 25 26 Letter from CEO Executive summary Governance People Planet Profit Reporting GRI Index 1 MESSAGE FROM Kimberly Brighton Chairman, President and Chief Executive Officer, Brobeck The Brobeck Sustainability Progress report is inspired by our passion for sustainable living and our commitment to you. It presents our framework for a sustainable business and informs you, our stakeholders, and community, of our progress. At Brobeck, sustainability is the foundation of our businessit is the principle that drives the decisions we make. We integrate sustainability in our business strategy across our entire value chain: in the partnerships we create, the processes we follow, the products we sell, the employees we hire, the customers we serve, and the community in which we operate. Brobeck's social responsibility is anchored on three pillars: People, Planet, and Profit (3Ps). These pillars foundation of our shared imperativesare the company's mantra for moving toward a sustainable world. They allow us to focus and align our objectives with the people and community around us. The imperatives (outlined in the executive summary and further discussed later in this report) are 'shared,' as creating a sustainable world is best undertaken in partnership with others in the value chain. This year's report illustrates how we are accomplishing our goals. I am extremely proud of our accomplishments and know you will be too. This year we have engaged an independent assurance provider to validate our reportdemonstrating, to our stakeholders, a higher level of confidence in our efforts. I invite you to read and enjoy the report. As our stakeholder, you have the right to expect more, and we strive each day to meet or beat your expectations. While we are not there yet, we are steadily making progress toward creating a brighter future and a sustainable planet for everyone. Regards, Kim Kimberly Brighton Chairman, President and CEO Brobeck, Inc. May 15, 2016 2 EXECUTIVE SUMMARY Overview Brobeck Incorporated (Brobeck)founded in 1845is one of the largest regional department store chains in the United States (U.S.). Today, we operate under three nameplates: Brobeck, Crimson Stores, and Fogels. Each nameplate has a heritage that exceeds 100 years and is well grounded and highly recognized in its region. We strategically position our 200 stores near predominantly fashion-oriented shopping malls and lifestyle centers across 25 states in the Southeast, Northeast, and Midwest regions in the United States. As the hometown store provider of great fashion, we offer a wide assortment of national, private, and exclusive (Dolphin) brand fashion apparel, accessories, cosmetics, home furnishings and other goods. Brobeck contracts to have its private and exclusive brand merchandise manufactured in accordance with its specifications. Our product mix is typical of a high-end department store. Apparel is our big seller, comprising almost one-half of our sales. Home goods and cosmetics are our next largest sellers. We also recognize significant revenue from sales of accessories and footwear. Product Mix Footwear; 9% Accessories; 9% Apparel; 49% Cosmetics; 15% Home; 18% Industry Overview We compete in the regional, high-end department store segment of the U.S. retail industry. This industry is highly competitive among high-end department stores operating within Brobeck's market area. Threats from new entrants in the markets are minimal in the near term as time is needed to establish a new department whether it is new or from another region. Brobeck faces significant competition from other retail formats including mass merchandisers, national chain retailers, specialty retailers, and online retailers. The market has been transformed, in recent years, with the expansion of mobile technology and social media. Additionally, Brobeck is 3 challenged by powerful suppliers and consumers' changing needs. Furthermore, the industry is directly affected by economic conditions and their impact on consumer spending. These economic conditions include unemployment trends, changes in disposable income, and the strength of the dismal economic recovery in the U.S. and around the globe. Sustainability Mission Our overriding sustainability mission is to foster social, environmental, and fiscal responsibility across our value chain. We support our primary mission by setting clear goals, taking steps to achieve those goals, and using balanced scorecards and metrics to track our progress. Our shared imperatives are (1) We will create a sociable worldwhere our products are made, marketed, sold, and consumed with high regard for individual and community well-beingour products will be the natural choice for 'green' consumers. (2) We will create a clean worldby reducing waste and emissions. (3) We will create a thriving worldwhere incomes and quality of life are growing by accelerating growth and social development through our value chain. Our overall sustainability mission and specific activities are management- and employee-driven. A joint management-employee sustainability committee establishes areas of concern and develops short-term and long-term goals in each area. The committee then monitors the company's progress toward these goals each year. An outcome of this committee is the annual preparation of this sustainability report to keep you, Brobeck's stakeholders, informed. In the next few pages, we provide further examples of our commitment to sustainability. We present our goals, details of our accomplishments, and summaries of our progress along the 3Ps People, Planet, and Profit. People At Brobeck, we demonstrate our commitment to peoplethe driving force of our businessthrough our actions. We employ caring individuals, we serve our employees, investors, and other stakeholders with respect, and we empower employees and others in the community through giving. This year we focused on three main objectives. Our first people objective is to create a healthy workforce through lasting lifestyle changes. To accomplish this, we planned to develop an employee wellness program; enroll 50 percent of employees in the program by 2015 with a goal of 100 percent enrollment by 2018. Our second people objective is to build a diverse management workforce through education and training. We will empower women and increase the percentage of women store managers to 10 percent by 2018. We will also foster a diverse and inclusive culture by accelerating upward mobility and increasing the percentage of minorities in middle management to 20 percent by 2018. Our final people objective is to further enrich the communities we serve by giving more each year through scholarships, donations, and volunteerism. This year, we wished to increase the number and dollar amount of scholarships awarded by our foundation, donate $5 million in corporate monetary contributions, and increase the number of volunteer hours by 20 percent. 4 By the end of 2015, sixty percent of employees joined the new wellness program. We are on track for 100 percent participation. The diversity of our workforceoverall and management has also improved this past year. As of 2015, our store manager composition is 4 percent female and 9 percent minority, and our middle management minority composition exceeds 8 percent. This is more than double the levels when we began our efforts in 2013. Finally, we exceeded our 'giving' goals. We offered more scholarships to more individuals, the Brobeck Foundation donated more money, and employees volunteered more hours than ever before in our history. Planet Our commitment to the planet is simple. We want to preserve the planet for future generations by minimizing our carbon footprint. However, doing so successfully requires careful and conscious effort today. We are making progress in terms of the products we sell and the operations of our stores. Our first planet objective is to sell sustainable products by enhancing integrity, safety, and responsibility throughout our value chain. We will ensure that the people who make our products do so in a safe and healthy workplace. We will also require that 100 percent of our vendors, suppliers, and manufacturers of our products do not engage in child labor practices. To accomplish this, we will increase monitoring and assessment of factories that make our private brand and exclusive Dolphin brand merchandiseconduct 200 unannounced factory visits and audits by 2018. From an environmental perspective, we will do our part to sustain the environmentwe want to go green. Our goals are to reduce energy consumption by 25 percent in our stores by 2020, reduce greenhouse gas emissions by 5 percent per square foot by 2020, and create zero waste in our stores. We continually review our business partnerships for compliance with regulations and our rules of engagement. This year, we stopped doing business with a number of business partners for violating our rules of engagement. We partnered with Good4You to end child labor practices and we do not believe any of our suppliers are participating in this activity. We used an external party to audit 100 percent of our factories in other countries and also inspect 50 percent of the factories manufacturing our private label garments. We succeeded in using less energy and reducing our waste this past year. Recyclable shopping bags are used in 90 percent of our stores and 20 percent of our product packaging is recyclable material. Profit It would be unrealistic to say profit is not important. Having healthy businesses provides for a healthy economy, which in turn creates a sustainable world. Our primary objective is to run a profitable company with above industry average returns and continued growth at an acceptable risk level. We expect to achieve annual same-store growth in over 90 percent of the company's stores, maintain employee turnover below 12 percent, achieve return on equity above industry median, achieve positive industry-adjusted shareholder returns, and maintain leverage (debt to total assets) below 20 percent. This past year has been quite successful for us; we have grown 3.3 percent overall. Same store growth was 1.2 percent and 187 of our stores were able to achieve positive year-to-year growth. 5 While our industry-adjusted return on equity was slightly negative, our industry-adjusted shareholder returns were positive at 0.53 percent. Our strong performance is partially attributable to our employees who stay with us. Our turnover is 12 percent, a slight decrease from last year. A turnover rate this low is almost unheard of in retail. Our leverage, a measure of our business risk, also remains low at 14 percent, a decrease of 4 percent from the previous year. Materiality The sustainability committee has identified key aspects of the company's operations that have material social, environmental, and economic impacts. These aspects are identified under the 3Ps people, planet, and profit discussed above. Our Pledge to our Stakeholders As you can see, Brobeck is serious about sustainability and the effect our business has on the world today and the future. We pledge to continue our focus on the 3Ps of sustainability People, Planet, and Profits; effectively, creating a sustainable business of which you can be proud to be a part. This is the 5th annual corporate social responsibility report that we have prepared for our stakeholders, and it encompasses activities at all Brobeck entities. Unless noted otherwise, it covers the fiscal year 2015 (January 1, 2015December 31, 2015). Contact or Feedback Questions or comments on this report should be directed to CorporateResponsibility@brobeck.com 6 GOVERNANCE A joint management-employee sustainability committee is responsible for making recommendations to the board of directors, monitoring progress, and reporting. The committee consists of three employees at the store manager or above level selected by the CEO in consultation with the board of directors to staggered three-year terms: three employees elected by employees to staggered three-year terms and one community representative selected by the other committee members for a two-year term. The first sustainability committee was formed ten years ago and has been very active ever since. The committee also issues an open call to all stakeholders for input and feedback. The committee then recommends any changes to the board of directors for consideration. The board of directors has ultimate authority to determine the sustainability objectives, goals, and aspirations. Executive Vice-President Samuel Brighton currently serves as chair of the committee and as a liaison between the committee and various parties, including the board of directors and top management. He is also responsible for implementing Brobeck's sustainability initiatives. He has broad authority to employ required reporting for monitoring sustainability activities and ensure that the sustainability activities are being performed. The committee has reviewed the company operations and identified stakeholders as those who may be impacted by the company in some way. The stakeholders include shareholders, management, employees, communities where facilities and stores are present, suppliers and vendors, employees of the suppliers who manufacture the company's products, and the communities where these operations are located. The committee has also taken the lead in communicating sustainability issues with the company's stakeholders. To accomplish this, the committee recommended, and the company adopted, the preparation and distribution of this sustainability report. In addition, the committee provides an anonymous hotline allowing stakeholders to confidentially share sustainability concerns or issues with the committee. Over the past three years, the committee has received over 100 calls to the hotline identifying sustainability concerns specific to Brobeck and its operations across the world. The committee discusses each concern, addresses the minor issues internally, and refers the other issues to the board of directors for further investigation and final resolution. 7 PEOPLE 'People' in the 3Ps represents the social aspect of sustainability. The people we hire and those we serve are fundamental to our business. We believe investment in peopleinternally and externallyhas a fundamental positive impact on our business and society at large, which translates into a healthy and sustainable economy. We want to be an employer of choice so we treat our employees with respect, provide safe working conditions, empower associates of all levels, promote individual wellness, and create a diverse, happy, and healthy environment. Brobeck's success is dependent on the success of the communities we serve. We believe it is our responsibility to help enrich the lives of people in the communities in which we do business. We do so by giving back to the community through various philanthropic platforms, such as education, scholarships, donations, and volunteerism. While the company's social metrics span a wide variety of key areas of social responsibility, this year we focused on making greater strides in employee wellness, diversity, and giving. To assess our progress in improving the lives of our employees and customers, we conduct employee and customer surveys every three years. In our 2015 survey, employees stated they would recommend Brobeck to their friends as a great place to work. Customers also rated Brobeck as the leader, as compared to its national competitors, in overall customer servicewith a 95 percent customer satisfaction. Next, we discuss our aspirations, efforts, and progress related to each of these areas. Employee Wellness Overall objective: Create a healthy workforce through lasting lifestyle changes Aspirations 1. Develop an employee wellness program for all company employees 2. Enroll 50 percent of employees in the wellness program by 2015 3. Enroll 100 percent of employees in the wellness program by 2018 At Brobeck, we recognize our employees are our greatest asset and have always treated them with the care and respect deserving of that role. We offer affordable medical and dental insurance coverageamong the best in the retail industryto all our employees (part-time and full-time) and their families. We encourage wellness by sponsoring employee participation in charitable community events involving activities, such as walk-, run-, and bike-a-thons. This year, we formally launched a wellness campaign to encourage healthy lasting lifestyle changes for all of our employees that is based on the successful program we implemented at the headquarters five years ago. The wellness program includes (a) cash incentive for annual biometric health screening and physicals; (b) reimbursement for gym membership when employee visits 3 hours per week or 10 times per month; (c) sponsored seminars and workshops to encourage better nutrition and other healthy practices; and (d) incentives to stop smoking and for making other healthy lifestyle choices. The successful implementation of this program has both societal and business impacts as healthy employees are happy employees and happy employees are more likely to be loyal, sociable, and caring to co-workers and customers enhancing employee and customers satisfaction. 8 Progress This program is a huge successaveraging 60 percent employee enrollment company-wide in the first year we expanded the program to all employees. Employee participation in each of the four parts of the program was 80 percent, 70 percent, 50 percent, and 40 percent, respectively. Our partnership with local YMCA organizations, hospitals, and clinics in the communities where our employees live was largely responsible for the success of the program. Additionally, Brobeck offered employees the opportunity to get their biometric screening and attend the sponsored nutrition seminars during their working hours rather than use vacation or family time. We believe we are on track to meet our 100 percent participation goal by 2018. Diversity Overall objective: Build a diverse management workforce through education and training Aspirations: 1. Empower womenincrease percentage of women store managers to 10 percent by 2018. 2. Foster a diverse and inclusive cultureaccelerate upward mobility and increase percent of minorities in middle management to 20 percent by 2018. Diversity and inclusion provides a sustainable culture. It is our policy to maintain a workforce that is representative of the community we serve; thus, we are very intentional in our hiring process. We hire entry level associates directly from the community and from local colleges and universities. This process has served to create a diverse workforce in lower-level positions but not at middle- or upper- management. To accelerate upward mobility for all our junior level employees, we implemented a five-year plan in 2013 to invest $1 million in training and development of our young, promising, and talented retail associates. We invest in programs that educate employees in retail career paths, engage in better pre-employment training, provide more innovative and relevant on-the-job training, and reimburse employees seeking advanced degrees and certificates in business from accredited organizations. An additional $500,000 was pledged for programs that empower women employees to advance to middle- and upper-management positions. We offer grants and scholarships for higher education and child care services to allow working mothers to return to school or complete a retail management training program. Progress In 2013, our middle management workforce and store managers consisted of predominantly white males (97 percent). Using 2013 as our baseline yearthe implementation year of our diversity training and development programwe observe subtle increases in diversity of our store managers. As of 2015, our store manager composition is 4 percent female and 9 percent minorities. While the progress toward a diverse mid-level workforce has been slow, we expect to reach our 2018 goals as planned. There has been considerable interest in the program this year as its successes resonate among the employees; enrollment and grant applicationsfrom women and other minoritieshave almost doubled over last year. 9 Giving Overall objective: Enrich the communities we serve by giving back through scholarships, donations, and volunteerism. Aspirations: As related to last year, we aspire to... 1. Increase the number and dollar amount of scholarships awarded 2. Donate $5 million in corporate monetary contributions 3. Increase the number of volunteer hours by 20 percent Brobeck's success depends on the financial stability of the communities we serve and in which we conduct business. Thus, we strongly believe it is our corporate responsibility to help create and maintain a stable community. We do so by making a positive impact in the lives of youth through education, via scholarships and grants, and to the community at large through monetary donations to charitable organizations and volunteerism at local events. To aid in all of our giving efforts, we established Brobeck Foundation, Inc. (BFI)a non-profit organization created to improve the lives of the people in our community. BFI is funded primarily by Brobeck Inc., including net profits from its exclusive Dolphin merchandise, with supplemental contributions by employees, vendors, and the general public. The goal each year is to increase BFI's total annual contributions by 10 percent and give 100 percent of net profits back to the community in the form of scholarships, grants, and other philanthropic efforts. Since 2001, Brobeck has donated $100 million through its giving program. Brobeck's giving includes (1) grants to youth outreach centersdesigned to keep youths engaged in sports and productive activities and off the streets, (2) full tuition scholarships to need-base high school and college students, (3) merchandise and food donation to organizations caring for abandoned and undernourished children, (4) matching employee and customers donations made to charitable organizations of their choicethus encouraging others to give back as well, (5) grants to local hospitals, fire and police departments for equipment and man-power needed to protect the community, (6) needed resources during and after a natural disaster, (7) grants to strengthen community preparedness and ability to recover from a disaster, and (8) resources to promote employee volunteerismempowering employees to form teams and participate or lead community events. Prizes, in the form of a donation to the charity (or charities) of their choice, are awarded to the 5 teams with the most volunteer hours. Individual team members are also recognized with a plaque and one paid vacation day. Progress Brobeck is a strong supporter of its community. Each year, employees strive to surpass their previous year's personal giving goals. This year was no exception. As a company we offered $6 million in scholarships (a 15 percent increase from last year), donated $15 million to various organizations (a 12 percent increase), and increased volunteer hours by 20 percent. Our commitment and dedication to our community and customers is well-embedded in the Brobeck tradition and we do not expect this to change in the near future. 10 Social Scorecard Percent Females as Store Managers 4.0% 3.5% 3.0% 2011 2.5% 2.0% 1.5% 1.0% 0.5% 0.0% 3.6% 2012 2013 2.1% 4.0% 2014 2015 0.5% 0.0% % female store managers Percent Minorities as Store Managers 8.2% 10.0% 8.0% 2011 6.0% 2012 4.0% 1.1% 2.0% 0.0% 2013 1.6% 9.0% 8.0% 7.0% 6.0% 2011 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% 7.3% 2012 4.4% 2.2% 2013 8.2% 2014 2014 2.6% % minorities - store managers Percent Minorities in Middle Management 2015 3.3% % minorities in middle management 11 9.0% 2015 12 Social Scorecard Number of Scholarships Awarded 150 118 130 144 132 150 100 50 0 Scholarships awarded - number 2011 2012 2013 2014 2015 Dollar Amount of Scholarships Awarded 40,000 35,000 30,000 25,000 20,000 15,000 10,000 5,000 - 25,000 30,000 34,000 36,000 40,000 $ amount of Scholarship 2011 13 2012 2013 2014 2015 Social Scorecard Contributions as Percent of Revenue 0.5% 0.4% 0.4% 2011 0.3% 0.3% 0.2% 0.2% 0.1% 0.1% 0.0% 0.3% 0.3% 2012 0.4% 0.4% 2013 0.4% 2014 2015 % of revenue (contributions) Dollar Amount of Contributions 20,000 15,000 10,000 5,000 - 13,500 15,022 11,245 10,969 12,262 $ amount (contributions) 2011 2012 Employee Volunteer Hours 79,600 80,000 70,000 60,000 50,000 40,000 30,000 20,000 10,000 - 57,332 58,658 64,888 66,300 Employee volunteer hours 2011 2012 2013 2014 2015 14 2013 2014 2015 15 PLANET 'Planet' in the 3ps refers to Brobeck's promise to conduct business in ways that provide for a sustainable environment. From production to sales, and everything in between, we aspire to serve our customers with quality merchandise produced with the highest level of integrity, ethics, safety, and with the least amount of adverse environmental impact. We do so by (1) ensuring that throughout our value chainvendors, suppliers, and other business partnerscomply with our \"Rules of Engagement.\"1 This zero-tolerance policy requires we terminate our relationship with value chain partners who refuse to sign, or fail to comply with, the terms and conditions of our ethics and integrity policy, and (2) doing our part to conserve energy, reduce waste and leave a smaller carbon footprint on the planet. Below, we discuss our aspirations and progress in products and environmental sustainability. Products Overall objective: Sell sustainable products by enhancing integrity, safety, and responsibility throughout our value chain. Aspirations: 1. Ensure that the people who make our products do so in a safe and healthy workplace 2. Require that 100 percent of our vendors, suppliers, and manufacturers of our products do not engage in child labor practices. 3. Increase monitoring and assessment of factories that make our private brand and exclusive Dolphin brand merchandiseconduct 200 unannounced factory visits and audits by 2018. We have high ethical values and integrity at Brobeck and expect the same from others with whom we do business, such as suppliers, vendors, and other business partners. Starting in 2013, we require all business partnersthose who make or distribute our productsto agree to, sign and comply with our ethics and policy standards i.e. our \"Rules of Engagement.\" Additionally, Brobeck's zero-tolerance rule calls for immediate termination of partnership for egregious violations of local laws and our Rules of Engagement.2 Our commitment to sell sustainable products requires we source responsibly. Hence, we expect the manufacturers and distributors of Brobeck's private and exclusive Dolphin brand products to provide a safe and healthy work environment for its workers, i.e., safe buildings and no 1 To view a full copy of our Rules of Engagement, visit our website at brobeckroe.com. 2 Examples of egregious violations include child labor (or any forced labor), physical or sexual abuse, human trafficking, bribery of auditors or compliance officials, product tampering etc. 16 condoning of repression, forced or child labor. Accordingly, we do not knowingly carry products that use cotton from Uzbekistana country that condones child labor (or any other country or entity that does). To ensure the integrity of our products, we offer free factory inspection and educational workshops on safety and health for all factory management used by Brobeck. We also engage independent third parties, e.g. auditors and compliance officers, to conduct routine and surprise inspections, on a rotational basis, of factories making our products; every factory is inspected at least once every 3 years. Progress In 2015, we terminated 5 long-standing business partnerships due to egregious violations of our Rules of Engagement. We also refused to do business with 2 others for failure to sign our ethics policy. Beginning in 2013, we partnered with Good4You to help put an end to child labor in the retail industry. Good4You is an international nonprofit organization whose objective is to stop the exploitation of children in the retail industry. They also offer educational opportunities to rescue at-risk children in the communities around the world riddled with child exploitation. In 2015, Brobeck became a member of the Sustainable Apparel Coalition (SAC) to reduce the environmental and social impact of apparel and footwear productsour primary merchandise. To enhance sustainability of our products, from raw material to finished goods, we are working with our business partners to align our sustainable planet initiatives across our supply chain. While none of the factories that make our products were involved in the recent Bangladesh fires, Brobeck partnered with the Alliance for Bangladesh Worker Safetyan organization that helps improve the working conditions of Bangladesh factories, mainly fire and electrical safety, as well as the structural integrity of the buildings. In 2015, Alliance audited all the factories used by Brobeck. Seventy-five percent of the factories met the safety inspections, and the other 25 percent are on probation. Alliance will provide training and guidance to factory management and re-inspect these facilities in 2016. Overall, 50 percent of factories that produce Brobeck's private and exclusive Dolphin brand merchandise were inspected in 2015, totaling 110 scheduled visits and 55 unscheduled (surprise) visits. Twenty factories did not meet our standards; we are working to bring them into compliance by 2016. Environment Overall objective: Do our part to sustain the environmentGo Green. Aspirations: 1. Reduce energy consumption by 25 percent in our stores by 2020. 2. Reduce greenhouse gas emissions by 5 percent per square foot by 2020 3. Create zero waste in our stores At Brobeck, we understand the challenges and limitations of our planet's resources and are committed to do our part to sustain the environment. As such, we have implemented a five year plan to conserve energy, reduce greenhouse gas emissions, and eliminate waste. To conserve energy, we seek to switch to renewable energy to power our stores by adding rooftop solar panels to 50 percent of our stores over the next five years. To meet this arduous and challenging task, 17 we partnered with industry leading energy companies and state and federal grant programs to help build out quickly. As every effort counts, 100 percent of stores will use energy saving lightbulbs by 2020. Greenhouse Gas (GHG) emissions are dangerous for the environment as these gasses, e.g. carbon dioxide and methane, trap heat in the earth's atmosphere, increasing the temperature of the earth's surface.3 The gases are produced primarily from the burning of fossil fuels, such as coal and oil for heat, electricity, transportation, and consumer products.4 According to the United States Environmental Protection Agency (EPA), \"human activities are responsible for almost all of the increase in greenhouse gases in the atmosphere over the last 150 years.... The primary sources of GHG by economic sector are Electricity (31 percent) Transportation (27 percent), Industry (21 percent), and other (21 percent) (http://www.epa.gov/climatechange/ghgemissions/sources.html).5 As a national retail apparel corporation, we engage in activities that contribute significantly to the GHG. In 2015, we made a commitment to reduce our GHG emissions by 25 percent by 2020. As our products are manufactured in 17 countries around the world, this task is difficult to do on our own. We are working with others within our supply chainthrough education and assistance with renewable energy investmentsto reduce GHG emissions across our supplier base. Additionally, we are working with our vendors and suppliers to reduce the number of loads shipped and miles travelled to save on fuel, reduce carbon emission and lower costs, thereby incorporating sustainability in every phase of the supply chain process. 3 The gases include Carbon dioxide (CO2), Methane (CH410%), Nitrous oxide (N2O-5%), and Fluorinated gases3%. In 2013, the composition of GHG emissions was 82%, 10%, 5% and 3%, respectively (see http://www.epa.gov/climatechange/ghgemissions/gases.html). 4 EPA classifies GHG emissions into \"scopes.\" Scope 1 emissions are direct GHG emissions from sources that are owned or controlled by the entity, e.g. fossil fuels burned on site, emissions from entity-owned or entity-leased vehicles, and other direct sources. Scope 2 emissions are indirect GHG emissions, e.g. from the generation of electricity, heating and cooling, or steam generated off-site but purchased by the entity. Scope 3 emissions include indirect GHG emissions from sources not owned or directly controlled by the entity but related to the entity's activities (http://www.epa.gov). 5 Based on 2013 EPA datafor more information on Greenhouse gas emission, visit the EPA website http://www.epa.gov/climatechange/ghgemissions/sources.html. 18 We implemented a zero waste policy in our stores. Our five-year goal is to eliminating waste in all our stores through recyclable packaging and wrapping. Our biggest impact to the environment through use of recyclable packaging/wrapping is best accomplished through our supply chain partners. As such, we are working with suppliers and vendors to package the products we sell with recyclable materials. Additionally, by 2016, 100 percent of our stores will providefor a nominal chargerecyclable shopping bags for customer purchases. Customers have the option to carry their purchases in the recyclable shopping bags or without a bag. Progress In 2015, we operated with 11 percent less energy per square foot as 30 percent of the energy used by Brobeck is from solar, wind and other renewable energy sources. Fifty (25 percent) of our stores have solar rooftop arrays that generate about 20 percent of their energycontributing to a 5 percent increase in our energy star certification from the EPA this year. In June of this year we signed onto the Corporate Renewable Energy Buyer's Principles, sealing our commitment to renewable energy.6 The intent of the principles is to spur renewable energy progress and spike discussion between customers, utilities, and renewable energy providers with the hope of enhancing the ability of large commercial customers to buy renewable energy. We have made small steps toward reducing our greenhouse emissions this year but plan to work harder with our supplier base to improve our position over the next few years. Our total emissionsdirect and indirectwas 1,055 MTCO2e (scope 1 and scope 2), a total reduction of 9,000 MTCO2e, or 1 percent per square foot. Scope 1(direct) emission was 150,400 MTCO2e, while Scope 2 (indirect) emission equaled 800,250 MTCO2e. Ninety percent of our stores now use recyclable shopping bags, putting us ahead of our goal for the current year. However, only 20 percent of applicable products are packaged from recyclable materials as not everyone in our supply chain is in a position to convert to recyclable materials. We believe we are on track to meet our 100 percent goal by 2020. 6 Principles developed through the combined forces of World Resources Institute (WRI) and World Wildlife Fund (WWF). 19 Product Scorecard Child Labor Verification 500 400 300 200 100 0 340 428 368 490 303 Child labor verification 2011 2012 2013 2014 2015 Total Number of Inspections 305 350 300 250 200 150 100 50 0 0 Percent Inspected 64.9% 60.0% 50.0%2011 40.0% 2012 2013 30.0% 10.0% 0.0% 2014 2015 13.7% 20.0% 0.0% 0.0% 62 Total Inspections 2011 70.0% 0 15 3.1% Percent Inspected 20 2012 2013 2014 2015 Environmental Scorecard Energy Reduction 14.0% 12.0% 10.0% 2011 8.0% 6.0% 4.0% 2.0% 0.0% 12.8% 2012 2013 11.5% 2014 5.4% 2015 3.3% 0.0% Energy Reduction per year Greenhouse Gas Emission Reduction 9.0% 8.0% 7.0% 6.0% 2011 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% 8.0% 2012 2013 2.2% 0.0% 2014 3.3% 0.5% Greenhouse Gas Emissions Reduction per year 21 2015 Environmental Scorecard Recyclable Shopping Bags 88.0% 90.0% 80.0% 70.0% 60.0% 2011 50.0% 40.0% 30.0% 20.0% 10.0% 0.0% 90% 75.0% 55.0% 2012 60.0% 2013 2014 2015 Recycle shopping bags Recyclable Packaging for Products 20.0% 20.0% 18.0% 16.0% 14.0% 2011 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% 16.0% 2012 2013 15.0% 2014 7.0% 5.0% Recycle packaging for products 22 2015 PROFIT The profit aspect of the 3Ps refers to a sustainable economy. The key to maintaining a sustainable economy and allowing Brobeck to continue with our CSR objectives is to have a financially strong company that continues to grow with acceptable business risk to our investors, employees, and other stakeholders. A healthy financial profile enables us to enhance value for our shareholders, create opportunity for employees, support the communities in which we live and work, and reinvest in our business to support future growth. Strong profits have historically been the focus of companies that focus on the investor. Strong profits are also important to a company that takes an expanded view toward the world. Without strong profits, the company may not survive to make the other important contributions within its sustainability objectives. Financial Performance Overall Objective: Earn returns above industry with continued growth at an acceptable risk level. Aspirations: 1. Achieve annual same store growth in over 90 percent of the company's stores. 2. Maintain employee turnover below 12 percent. 3. Achieve return on equity above industry median. 4. Achieve positive industry-adjusted shareholder returns. 5. Maintain leverage (debt to total assets) below 20 percent. Revenue growth is important to maintaining a sustainable economy, especially for a retailer. For Brobeck, growth focuses on the retail stores where same store growth is essential to overall company growth. If individual store revenue doesn't grow from year-to-year, the company will face problems. Overall growth can still be obtained, but that revenue growth is due to acquisitions and is not sustainable in the long-term. Brobeck provides a lot of flexibility to store managers to achieve year-to-year growth. Related is the importance of low turnover, especially at the stores. A high quality workforce that remains with the company is able to better assist customers in making purchases and returning to the store for repeat business. As mentioned, profitability is important because without it, there is no company. While we understand that our performance will suffer at times, such as during a recession, we still expect that our performance will be better than our competition. By achieving performance that exceeds industry averages, we are maintaining a sustainable economy. Sustainability must also be achieved without incurring excessive risk. An important indication of a company's risk is its leveragehow much debt is used to support the company's operations. With higher leverage, returns can be enhanced, but at a cost. The company has increased expenses with the additional interest expense. 23 Progress During 2015, our same store growth rate was 1.2 percent overallthis rate approximates 2015 level of inflation. More importantly, 187 of our stores were able to achieve positive year-to-year growth. This is an astounding 95.4 percent of our stores. While the overall economy has been improving, much of the retail growth has been in the discount area. Traditional department stores, similar to Brobeck, have not shared in the overall growth. Our performance is therefore all the more important, especially, the same store growth. We attribute much of this to our employees. We have a dedicated and talented group of employees that we have been able to retain. Our turnover has been minimal in recent years. In 2015, the employee turnover at our retail locations was only 13 percent; overall, our turnover was 12 percent. Brobeck boasts strong returns this past year. Our return on equity (ROE) was 16.1 percent. However, when we adjust for industry, it is -1 percent. Turning to the shareholder returns, overall, the retail industry was sluggish. However, after industry adjustments, Brobeck's performance is strong at 0.5 percent. Leverage decreased to 14 percent in 2015. 24 Profit Scorecard Percent of Growth Stores 100.0% 90.0% 80.0% 70.0%2011 60.0% 50.0% 40.0% 30.0% 20.0% 10.0% 0.0% 92.6% 89.5% 93.2% 95.4% 2012 2013 2014 2015 0.0% Percent of Stores Total Employee Turnover 12.3% 12.5% 12.0% 11.5%2011 11.0% 10.5% 10.0% 9.5% 9.0% 11.1% 11.3% 2012 2013 10.4% Total Turnover Percent 25 12.0% 2014 2015 Profit Scorecard Industry Adjusted Return On Equity 0.0% 0.0% -1.0% -2.0% 2011 -3.0% -4.0% -5.0% -6.0% -7.0% -8.0% -9.0% -10.0% -6.2% -8.2% on equity -1.0% Industry-9.4% adjusted return 2012 2013 2014 2015 Industry Adjusted Shareholder Returns -8.5% 2.0% 0.0% 2011 -2.0% -0.4% -6.0% -8.0% -10.0% Leverage 18.0% 17.0% 18.5% 14.1% 10.9% 2012 2013 0.4% 2012 2013 2014 Industry-adjusted shareholder returns -4.0% 20.0% 18.0% 16.0% 14.0%2011 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% -1.1% 2014 2015 Leverage (Debt / Assets) 26 0.5% 2015 REPORTING This is Brobeck's annual Corporate Social Responsibility Report update. In this report, we provide our stakeholders with a balanced view of our sustainability goals and performance during the year ended 2015. This report is organized, in part, around our 3PsPeople, Planet, and Profitsas this framework is closely aligned with our sustainability strategy. We believe all material aspects of our sustainability efforts are incorporated. We prepared this report using the Global Reporting Initiative (GRI) 4.0 framework. The GRI framework is a set of internationally accepted guidelines and principles for companies and organizations to report on corporate responsibility and sustainability performance. Brobeck recognizes GRI as one of the most credible and widely-used standards for reporting environmental, social and governance performance. We believe it helps bring focus to our continued and evolving work as a responsible corporate citizen. For more information about GRI, go to www.globalreporting.org. This CSR Report addresses our operations on a global basis. Unless otherwise stated, principles and policies referenced in the report apply to locations operated worldwide, and to all of our employees. The goals and various metrics in this report are established by Brobeck's Sustainability Committee and are measured by the management responsible for achieving them. This is done in consultation with internal and, in some cases, external stakeholders, as well as by reference to external benchmarks and leadership practices. Our goal is to deliver a useful and accurate picture of our performance. Brobeck reports financial data in its 2015 Annual Report on Form 10-K. In accordance with the requirements of the U.S. Securities and Exchange Commission, the consolidated financial statements of Brobeck included in the Form 10-K are subject to audit by an independent registered public accounting firm. Big Auditor's report, dated March 7, 2016, is included in the most recent Form 10-K report. Selected data from that report are included herein. In addition, environmental metrics are reported using widely accepted parameters and units. We use the Greenhouse Gas Protocol to calculate our GHG emissions. Additional information about Brobeck's operations and financial performance is available in our 2015 Annual Report and Form 10-K, which are both available on our corporate website. We value and welcome feedback from interested stakeholders. You may contact us anytime with questions or comments at CorporateResponsibility@brobeck.com. 27 GLOBAL REPORTING INITIATIVE INDEX Brobeck considered the Global Reporting Initiative (GRI)G4Sustainability Reporting Guidelines in preparing this report. We self-declare this report pursuant to the 'In Accordance'Core level.7 GRI Indicator Disclosure Description Report Location General Standards Disclosures Strategy and Analysis G4-1 Statement from the most senior decision maker of the organization G4-2 n/a Organization Profile G4-3 Name of the organization G4-4 Primary brands, products, and services G4-5 Location of the organization's headquarters G4-6 Countries where the organization operates G4-7 Nature of ownership and legal form G4-8 The markets served G4-9 Scale of the organization G4-10 Number of employees by contract and gender G4-11 Percentage of total employees covered by collective bargaining agreements G4-12 Organization's supply chain G4-13 Significant changes during the reporting period regarding the organization's size, structure, ownership, or its supply chain G4-14 Whether and how the precautionary approach or principle is addressed by the organization G4-15 Externally developed initiatives to which the organization subscribes or endorses G4-16 Memberships of associations and national or international advocacy organizations 2 n/a 3 3, 10K 10K 10K 10K 10K 10K 10K n/a 10K 10K 14-15 14-15 14-15 7 Generally, 'In Accordance' Corerequires reporting on the following: (1) General Standards Disclosures -in all casesfor the organization and for the Sectors (if available) G4-1, G4-3 through G4-34, G4-56; and (2) Specific Standard Disclosures: for material aspects onlyDisclosures on Management Approach (DMA)at least one indicator related to each material aspect and sector information if available for the organization's sector and if material. For more information on Global Reporting Initiative Index guidelines, visit https://www.globalreporting.org/standards/g4/Pages/default.aspx. 28 29 Identified Material Aspects and Boundaries G4-17 All entities included in the consolidated financial statements and entities that are not covered by the report G4-18 Process for report content and Aspect Boundaries that explains how they implement the reporting principles for defining report content. G4-19 Material Aspects identified in the process for defining report content G4-20 For each material Aspect, report the Aspect Boundary within the organization G4-21 For each material Aspect, report the Aspect Boundary outside the organization G4-22 Effect of any restatements of information provided in previous reports, and the reasons for such restatements G4-23 Significant changes from previous reporting periods in the Scope and Aspect Boundaries Stakeholder Engagement G4-24 List of stakeholder groups engaged by the organization G4-25 Basis for identification and selection of stakeholders with whom to engage G4-26 Organization's approach to stakeholder engagement G4-27 Key topics and concerns that have been raised through stakeholder engagement, and how the organization has responded to those key topics and concerns Report Profile G4-28 G4-29 G4-30 G4-31 G4-32 G4-33 Period for information provided Date of most recent previous report Reporting cycle Contact point for questions regarding the report or its contents Which 'in accordance' option the organization has chosen and the GRI content index for the chosen option Organization's policy and current practice in regard to seeking external assurance for the report. Report the scope and basis, relationship of the assurance provider, and if the highest governance body is involved with seeking assurance for the sustainability report 30 6, 25 7, 25, 10K 3-6 3-6 3-6 n/a n/a 7 7 7 7 6, 25 25 6, 25 26 n/a Governance G4-34 G4-35 G4-36 G4-37 G4-38 G4-39 G4-40 G4-41 G4-42 G4-43 G4-44 G4-45 G4-46 G4-47 G4-48 G4-49 Governance structure of the organization, including committees of the highest governance body. Identify any committees responsible for decision-making on economic, environmental and social impacts Process for delegating authority for economic, environmental and social topics Whether the organization has appointed an executivelevel position responsible for economic, environmental and social topics Processes for consultation between stakeholders and the highest governance body on economic, environmental, and social topics Composition of the highest governance body and its committees Whether the chair of the highest governance body is also an executive officer Nomination and selection process for the highest governance body and its committees Processes for the highest governance body to ensure conflicts of interest are avoided and managed Highest governance body's and senior executives' roles in the organization's purpose, mission statements, policies, and goals Measures taken to develop and enhance the highest governance body's collective knowledge of economic, environmental, and social topics Processes for evaluation of the highest governance body's performance with respect to governance of economic, environmental and social topics Highest governance body's role in the identification and management of economic, environmental and social impacts, risks and opportunities Highest governance body's role in reviewing the effectiveness of the organization's risk management processes for economic, environmental, and social topics Frequency of the highest governance body's review of economic, environmental and social impacts, risks, and opportunities Highest committee or position that formally reviews and approves the organization's sustainability report and ensures that all material aspects are covered Process for communicating critical concerns to the highest governance body 31 4, 7, Proxy 4, 7 7, Proxy 7 7 7, Proxy 7 7 7 7 7 7 7 7 7 7 G4-50 G4-51 G4-52 G4-53 G4-54 G4-55 Nature and total number of critical concerns that were communicated to the highest governance body and the mechanisms used to address them Remuneration policies for the highest governance body and senior executives Process for determining remuneration and whether remuneration consultants are involved and whether they are independent How stakeholder's views are sought and taken into account regarding remuneration Ratio of the annual total compensation for the organization's highest-paid employees in each country to the median annual total compensation for all employees in the same country Ratio of percentage increase in annual total compensation for the organization's highest-paid individual in each country to the median percentage increase in annual total compensations for all employees in the same country Ethics and Integrity G4-56 Describe the organization's values, principles, standards and norms of behavior such as codes of conduct and codes of ethics n/a n/a n/a 7 n/a n/a 2, 4 Specific Standards Disclosures Economic* G4-DMA Generic disclosures on management approach 14 Environmental G4-DMA Materials G4-EN2 Energy G4-EN3 G4-EN6 Generic disclosures on management approach Percentage of materials used that are recycled input materials Energy consumption within the organization Reduction of energy consumption Emissions (not material)* G4-EN15 Direct greenhouse gas (ghg) emissions (scope 1) 32 14 15-17 15-17 15-17 15-17 G4-EN16 Energy indirect greenhouse gas (ghg) emissions (scope 15-17 Other indirect greenhouse gas (ghg) emissions (scope 15-17 Greenhouse gas (ghg) emissions intensity Reduction of greenhouse gas (ghg) emissions 15-17 15-17 2) G4-EN17 3) G4-EN18 G4-EN19 SOCIAL G4-DMA Generic disclosures on management approach. 8 Labor Practices and Decent Work Employment G4-LA1 Total number and rates of new employee hires and employee turnover by age group, gender and region Supplier Assessment for Labor Practices G4-LA15 Significant actual and potential negative impacts for labor practices in the supply chain and actions taken 9, 21-22 14 Human Rights Child Labor G4-HR5 Operations and suppliers identified as having significant risk for incidents of child labor, and measures taken to contribute to the effective abolition of child labor Forced or Compulsory Labor G4-HR6 Operations and suppliers identified as having significant risk for incidents of forced or compulsory labor, and measures to contribute to the elimination of all forms of forced or compulsory labor Assessment G4-HR9 Total number and percentage of operations that have been subject to human rights reviews or impact assessments Supplier Human Rights Assessment G4-HR10 Percentage of new suppliers that were screened using human rights criteria 14-15 15 14-15 14-15 * Although this GRI G4 Aspect was not determined to be material in Brobeck's materiality assessment, we recognize that it is relevant to some stakeholders and we provide information about Brobeck's programs and performance in this area. 33 Note 1: Environmental and energy use data are subject to measurement uncertainties resulting from limitations inherent in the nature and the methods used for determining such data. The selection of different but acceptable measurement techniques can result in materially different measurements. The precision of different measurement techniques may also vary. 34 ISSUES IN ACCOUNTING EDUCATION Vol. 32, No. 3 August 2017 pp. 95-102 American Accounting Association DOI: 10.2308/iace-51582 Providing Assurance for Sustainability Reports: An Instructional Case Veena Looknanan Brown University of Wisconsin-Milwaukee Mark J. Kohlbeck Florida Atlantic University ABSTRACT: Due to increased interest in sustainability from non-governmental organizations (NGO), investors, and other stakeholders, many companies prepare sustainability reports, sometimes with third-party assurance as to the veracity of their claims. This instructional case provides a challenging and enriching experience for students in which the provision of assurance services on nonfinancial sustainability reporting is addressed. The case involves determining the procedures necessary to provide assurance on a sustainability report where procedures are nonstandard and may vary substantially from client to client. To arrive at a solution, students are required to familiarize themselves with sustainability reporting in general and use judgment in deciding the most appropriate type of assurance and related procedures to provide. Students are also asked to discuss a number of related topics including the need for assurance in this area and auditor independence issues. This instructional resource provides students with an opportunity to gain an understanding of sustainability reporting and assurance. The case is appropriate for upper-division undergraduate and graduate auditing courses in which assurance services other than audits are discussed and can be assigned on an individual or group basis for out-of-class preparation, followed by inclass discussion. Keywords: assurance; sustainability; corporate social responsibility; reporting. INTRODUCTION robeck Incorporated (Brobeck) is a large regional department store with stores across 25 states.1 Kimberly Brighton, the president, as well as other personnel in key management positions, are descendants of the company's founder. In addition to holding management positions, family members also own a substantial portion of the outstanding shares of the company. Ms. Brighton runs an environmentally conscious firm and is concerned about the company's impact on the planet's future. As such, Brobeck is involved in a number of initiatives that promote sustainability (also referred to as corporate social responsibility [CSR] activities). Five years ago, management began reporting the company's sustainability efforts to its stakeholders via an annual sustainability report, presenting sustainable goals and progress toward these goals. This year, management is considering obtaining external assurance on its most recent sustainability report. In the following sections, a brief history of Brobeck, its operations, and its management team is provided to gain an understanding of the basis for providing sustainability reports. An overview of Brobeck's CSR activities follows and the company's sustainability report is introduced. B We thank Lori Holder-Webb (editor), Elizabeth Carson (associate editor), two anonymous reviewers, and Karen Hooks for helpful comments and suggestions on earlier versions of this case. We also appreciate the institutional knowledge provided by Maura Hodge (KPMG) and Terri Desris (UWM CPA in Residence, formerly of KPMG). Supplemental material can be accessed by clicking the link in Appendix A. Editor's note: Accepted by Lori Holder-Webb. Submitted: December 2015 Accepted: May 2016 Published Online: September 2016 1 Brobeck is a fictitious company (any included internet links to Brobeck are not active); however, the sustainability information contained in the report is drawn from the authors' review of a number of actual sustainability reports. 95 Brown and Kohlbeck 96 BROBECK'S HISTORY Brobeck was founded in 1845 by Elijah Brighton in Nashville, Tennessee, as a dry goods and clothier store. In the early 1900s, a second store was opened in Nashville. Both stores evolved into department stores. Following World War II, the company expanded to ten stores operating throughout Tennessee. Additional growth ensued, including acquisitions of other department store chains. Today, the company is one of the larger regional department store chains in the United States. The company operates under three nameplates: Brobeck, Crimson Stores, and Fogels. Each nameplate has a heritage that exceeds 100 years and is well grounded and highly recognized in its region. The 200 stand-alone stores are strategically placed near predominantly fashionoriented shopping malls and lifestyle centers across 25 states in the Southeast, Northeast, and Midwest regions of the United States. The retail outlets offer a wide assortment of national, private, and exclusive (Dolphin) brand fashion apparel, accessories, cosmetics, home furnishings, and other goods. Brobeck contracts to have its private and exclusive brand merchandise manufactured in accordance with its specifications. OPERATING PERFORMANCE A review of Brobeck's financial statements indicates that the company is financially strong. Growth is generally funded through earnings and debt has remained lowno more than 20 percent of total assets. Most store locations are stand-alone building structures under long-term leases classified as operating. Asset growth is primarily a function of inventory levels and leasehold improvements. In 2015, revenue generated from the company's 200 stores totaled $3.6 billion, an increase of 3.3 percent over the past year. The increase is due to opening four stores in 2015 and same store sales growth of 1.2 percent. While the sales growth was historically low, the company continues to outperform the industry. The company has been consistently profitable and only reported losses twice in the stores' history, both in the early 1930s during the Great Depression. Despite the lackluster sales growth in prior years, 2015 net income totaled $95 million, almost double the 2014 level. The increase was due primarily to improved inventory purchasing. In addition, the company completed a corporate restructuring that streamlined management positions and reporting channels. As expected, earnings per share also jumped from $2.40 per share to $4.61 per share. The company has consistently paid dividends to its shareholders; although the payouts have not kept pace with increasing profits. In 2015, the directors increased the dividend per share from $0.22 to $0.25; however, the dividend payout ratio dropped to 5.4 percent in the current year. Kimberly Brighton has recently discussed potential acquisitions with the other members of the management team. There are a few smaller regional retailers whose product and customer mix are compatible with Brobeck's. Ms. Brighton believes that acquisitions are necessary to maintain sustainable growth levels. However, she is aware that the other family members on the management team do not like the risk associated with borrowing money. Nevertheless, it is likely that Brobeck will need another public share offering to raise funds for potential acquisitions. OWNERSHIP AND MANAGEMENT Despite its consistent profitability and highly desirable store locations, the company has avoided being acquired by one of the larger national department store chains. The founding family still has considerable control over the company and family members are active in the operations of the company. The key family members on Brobeck's management team are listed below. Name Kimberly Brighton Samuel Brighton Jerry Summereze Christina Summereze Alec Brighton Other family members Non-family members Relationship Position Percent Ownership Great-great granddaughter of Elijah Brighton Brother of Kimberly Brighton Cousin of Kimberly Brighton Niece of Kimberly Brighton Son of Kimberly Brighton Various None Chairman, President, and Chief Executive Officer Director, Executive Vice-President Director, Vice-President of Purchasing Director, Chief Financial Officer Vice-President of Store Acquisitions Various Various 9.2 4.2 8.7 2.2 1.9 12.6 61.2 The current generation of family members leading the firm is Kimberly Brighton, Samuel Brighton, and Jerry Summereze. These three directly control 22.1 percent of Brobeck's outstanding stock and indirectly control all of the shares by family members (38.8 percent). Seven of the 12 directors are family members. Issues in Accounting Education Volume 32, Number 3, 2017 Providing Assurance for Sustainability Reports: An Instructional Case 97 The company's leaders, past and present, strongly believe corporations have a social responsibility to the planet and everyone on it. As such, Brobeck is well known in the industry as an environmentally conscious corporationeven before the concept of environmental responsibility become popular with the public and social media. Today, Kimberly, Samuel, and Jerry are seeking to expand Brobeck's sustainability efforts by focusing on minimizing the company's negative impact on the ecosystems, societies, and environments of the future. We discuss some of management's sustainability activities in more detail in the following section. BROBECK'S SUSTAINABILITY ACTIVITIES Sustainability is concerned with the impact of corporations' present actions on the ecosystems, societies, and environments of the future. Brobeck began its sustainability efforts over 30 years ago, with a focus on recycling. Their activities have expanded over the years to encompass much more. Management believes the social responsibility of a business encompasses the economic, legal, ethical, and discretionary expectations that society has of organizations at a given point in time. Brobeck exemplifies CSR through various means. This year, management focused on giving back to the community, promoting diversity, improving employee wellness, minimizing negative effects on the environment, and enhancing vendor responsibility. The following paragraphs provide an overview of these activities. The company gives back to the community through three main programs. The company's charitable foundation, which is funded by the company and top management, provides monetary contributions to charities located in communities in which the company has operations. Education scholarships provide for employees and their children. These scholarships are granted to individuals based on a combination of need and merit. Finally, management promotes employee volunteerism and provides each employee with up to 40 hours per year of paid time-off to volunteer. This paid time-off is in addition to vacation pay. Management believes that a diverse workforce across all operations and levels provides a sustainable culture and is ultimately important to continued success. In general, employee hiring is meant to reflect regional and local demographics. Within this, management is aware that the diversity of store managers and middle management is lacking and seeks to increase the number of female store managers and overall minority representation in middle management. An underlying theme at Brobeck since Elijah hired his first employee is that the company is only as good as its employees. Occupational health and safety is a major concern for retailers and Brobeck is no exception. Brobeck continually monitors and improves ways to keep its employees healthy and safe. Five years ago, current management implemented a wellness program at the company's headquarters promoting employees' responsibility for their own well-being, while providing incentives, guidance, and other assistance. The successful implementation at the headquarters, documented by decreased sick days and improved employee satisfaction, has led management to expand the program company-wide. Protecting the environment is always an important aspect of sustainability. It is no different at Brobeck. Within Brobeck's retail operations, sustainability activities center on store operations. Management is focused on making the store operations more environmentally friendly. The company has plans in place to reduce energy consumption, reduce greenhouse gas emissions, and eliminate waste (and move toward 100 percent