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2014

Greetings,

We are pleased to present to you our third annual Mountain Rose Herbs Sustainability Report, which highlights our achievements concerning the environmental aspects of our business practices and provides our customers the transparency they expect. Mountain Rose Herbs is a mission based organization whose motto is People and Planet before Pro�t. With this comes a resolute commitment to ethical business practices and environmental integrity. These values are the core of every business decision we make.

Since 1987, we have led our industry in regards to sustainable operations and we have o�ered guid-ance and consultation to numerous companies throughout the country. We take pride in being the �rst in many categories including zero waste, carpool and bicycle incentives, the creation of our own grassroots organization called The Mountain Rose River Project, our paid time for community involve-ment program, and becoming Eugene’s �rst and only, Salmon-Safe certi�ed company. We are also proud to be the largest corporate sponsor of several non-pro�t organizations including Cascadia Wildlands, Oregon Wild, McKenzie River Trust, Beyond Toxics, and more!

With this being our third Sustainability Report, please note that some projects outlined are still in their infancy. This report will always be in a state of evolution. The results in this report show where we perform successfully, as well as those areas that need improvement, namely in tracking data, controlling emissions, and educating our customers. We are certain that from 2015 on, we will only improve, and understand that our customers, employees, and community members depend on this continued development.

Sincerely,

SUSTAINABILITY REPORT 2014

Vice President/Co-ownerShawn Donnille

ACCOMPLISHMENTS / 04PRODUCTS / 05ENERGY USAGE / 07WATER USAGE / 09FACILITY DESIGN / 10CAMPUS DESIGN / 11WASTE & RECYCLING / 13EMPLOYEE BENEFITS / 15EMPLOYEE VOLUNTEERISM / 17RIVER RESTORATION / 18STRATEGIC PHILANTHROPY / 19HERBAL EDUCATION / 20

Table of Contents

Diverted 93.6% of company waste

Launched redesigned website, blog, and newsletter

O�set 366 tons of CO2 emissions through Carbonfund.org

Collected 550 lbs of donations during the annual employee-led Food and Clothing Drive

Vice President/Co-Owner, Shawn Donnille, named Visionary Leader by Beyond Toxics

Founded the Green Team and Stewardship Program

Remodeled the Pick-Up Parlor and Showroom in Eugene, OR

Won 2nd Place in the Business Commute Challenge with nearly 40% employee participation

Distributed the �rst customer survey in 3 years

New warehouse equipment and technology improved productiv-ity, e�ciency, and safety

The Quality Control Department’s expanded identi�cation program and reference material library ensured proper identi�ca-tion of our botanical ingredients

Held an employee contest to name a new tea: Tulsi Delight

2014 ACCOMPLISHMENTS

04

ountain Rose Herbs is commit-ted to o�ering organic, sustainably harvested, fair trade products!

In 2014, once again we scored the highest performance level possible with IMO for both the Fair Life (Hired Labor) and Fair for Life (Handler) certi�cates!

05

We’re always increasing the number of fair trade products we o�er. In 2014, we added coconut oil, peppermint essential oil, smoked black peppercorn, chili �akes, and whole chilies to this list.

In 2014, we began working with the Non-GMO Project to verify a selec-tion of products. Since the bulk of our products are certi�ed organic, they do not contain GMOs. But we wanted to take it one step further, and we veri�ed these products:

Organic Beet Root Powder Organic Broccoli Sprouting Seed Organic Wheatgrass Sprouting Seed Wheat Germ Oil

products

Jennifer Gerrity, our Executive Director of Operations, in a stand of Bird’s Eye Chili in Kibbachlu, a small tropical area in Karnataka, India.

M

97% of our products are USDA certi�ed organic through Oregon Tilth

Rigorous quality control testing in our lab guarantees product integrity

Banned: synthetic fertilizers, pesticides, irradiation, and genetic engineering

IMO Fair For Life and Good Trade Program

06

We work closely with our organic farmers and wild-harvesters who grow our herbs and spices. This partnership extends to the suppliers who provide the glass containers, metal tins, tea pots, lip balm tubes, and other ingredients we o�er.

We collect and reuse or donate packing peanuts, block styrofoam, bubble wrap, and �ller paper. Our packing materials and shipping labels are made with recycled plastic and paper content.

Customers have the option of refusing brochures and other printed materials in their orders.

Our new palo santo smudge sticks and palo santo essential oil are sustainability harvested in Ecuador.

PRODUCTS

In 2014, members of the Procurement team visited many of our farmers and wild-harvesters including trips to North Carolina, California, Washington, Germany, and Oregon.

PRODUCT PACKAGING

SOURCING

We are committed to using recycled materials in the production and packaging of our products. Christine, our Product Manager, is constantly looking for the most sustainable packaging options with the highest post-consumer content, recycled, and recyclable materials available.

In 2014, we redesigned packaging for our organic matcha tea, henna hair coloring, and smoking herbs in custom reusable canisters.

SHIPPING DEPARTMENT

In Addition...

Thanks to our warehouse and shipping crew, we continue to upgrade and innovate our shipping materials and order ful�llment practices to ensure customers receive their eco-friendly goodies safely and in a timely manner.

In 2014, we replaced bubble wrap with Geami’s GreenWrap made from 100% recy-clable, biodegradable, and compostable materials. It’s a great plastic alternative to cushion and protect merchandise in transit.

07

We are proud to have converted to 100% renewable energy by transferring our conven-tional electrical power usage to renewable energy sources, credits, and development through the Carbonfund.org. Learn what you can do to lessen your carbon footprint by visiting Carbonfund.org.

In 2014, we o�set 365.957 tons of CO2 emissions through Carbonfund.org!

Since 2010, we have invested in GreenPower – a voluntary program provided by the local utility. The money raised through the program goes into a fund which is designed to support the development of renewable energy generation by non-pro�t organizations in the community.

ENERGY USAGE

OUR EMISSIONS

ELECTRICITY

FUELNATURAL GAS

72%

16%12%

08

We calculated our energy usage in electricity, natural gas, and fuels such as gasoline and diesel for company-owned and operated vehicles for business use. From this we estimated the greenhouse gas (GHG) emissions associated with operations.

ENERGY USAGE

ELECTRICITY

FUEL : Biodiesel & Gas

Natural Gas

TOTAL EMISSIONS

Amount C02 Conversion Factor MTCO2e % Emissions

652,188 kWh

10,123 Therms

337.7 100%

4,542 Gallons 0.00950 53.8 16%

0.00037 243.7 72%

0.00530 40.2 12%

09

WATER USAGETo determine total usage in production and operations, we gathered all of our water bills for 2014 and calculated usage for our main facility.

2014

2013

376,000 gallons$1,800.79

Potable water

bottled / drinking5,460 gallons

$8,071.25

total381,460 gallons

$9,872.04

total | 310,320 Gallons | $8,454.84

Potable Water | 305,000 Gallons | $1,200

Bottled / Drinking | 5,320 Gallons | $7,254.84

vs.

In 2014, water usage increased by 71,140 gallons. We attribute this jump to increased production and a growing number of employees. We are taking steps to curb water consumption and explore water conservation practices both inside our facility and on our landscape.

10

We operate in three buildings with a total of 114,611 sq. ft. Our main facility was built to LEED (Leadership in Energy & Environmental Design) standards before the certi�cation existed.

In 2014, we constructed a covered employee break area adjacent to the West Eugene Wetlands. We also redesigned the customer service department and replaced desks. We donated the old desks to St. Vincent de Paul.

FACILITIES DESIGN

In Addition...

We use recycled or reclaimed materials whenever possible for construction and repair projects, in-line with our Zero Waste Policy.

We use 22 motion sensors for lights and spent light bulbs are recycled.

We use Energy Star rated appli-ances in production and the o�ce.

We use lemon essential oil and grapefruit seed extract to make an environmentally friendly surface cleaner.

11

Campus Design

Since receiving our Salmon-Safe certi�cation in 2013, we’ve

created a 5 year action plan to conserve water, restore riparian habitat, limit fertilizer use, and

improve our stormwater treatment system.

In April 2014, we worked with the Long Tom Watershed Council and our landscaper to assess the retention pond, bio-swale, and irrigation system. In August, we

conducted a water audit site visit with the help of two Water Conservation Technicians.

12

Our Creative Director designed this herbalicious ad to bring awareness to the program and inspire other

businesses, organizations, and individuals.

13

We adopted our Zero Waste Policy in 2007. Our �rst priority is to make sure we only use what we need. What’s left is either reused or reclaimed, and �nally recycled or composted. Constant employee education helps us achieve our zero waste goals. We have sta� train-ings, instructional signage, and continuously looking for creative ways to divert waste from the land�ll.

WASTE & RECYCLING

- - - Yep These! - - -

- - - No please! - - - food cans

cans without deposit

This poster courtesy of Mountain Rose Herbs

- - - Yep These! - - -Glass Jugs

Glass Bottles

Glass Jars

plates & bowls

window glass

ceramics

Lids

- - - No Please! - - -

This poster courtesy of Mountain Rose Herbs

- - - Yep These! - - - oFFICE BATTERIES

- - - No Please! - - -

CAR BATTERIES

This poster courtesy of Mountain Rose Herbs

- - - Yep These! - - -

store bags

sandwich bags

herb bags

- - - No Please! - - - rigid plastic

food soiled clear plastic

all other plastic

This poster courtesy of Mountain Rose Herbs

We switched to 25% recycled content toilet paper.

We now have four Master Recyclers on sta�!

Cigarette butts are recycled through the TerraCycle program, where they are shipped back to RJ Reynolds Tobacco Company to be transformed into plastic blocks for re-use.

The small things add up. In 2014, the Green Team added “Remember… These Come From Trees” stickers on all paper towel dispensers to encourage awareness about using less.

On November 26, we promoted Buy Nothing Day! Instead of playing into commer-cialism on Black Friday, we encourage our sta� and customers to spend time with family, volunteer, and enjoy nature.

IN 2014...

14

WASTE & RECYCLING

DIVERSION RATEs

30.6%

63.0%

6.4%

RECYCLING

COMPOST

WASTE

COMPOST |108,065 LBSWood & Scrap Herbs | 63.0%

WASTE |11,059 LBSLand�ll 10,800 | 6.3%Hazardous Waste 259 | 0.1%

2012

89.2%

2013

92.8%

2014

93.6%

RECYCLING | 52,490 LBSPaper & Special Materials 28,238 | 16.5%Community Partnerships 7,852 | 4.6%Comingled Recycling 16,200 | 9.4%Repurposed Materials 200 | .1%

2014

15

Mountain Rose Herbs takes every measure to ensure a welcoming work environment for employees by providing a vast array of bene�ts.

On October 12, 2014 Oregon Wild led a private hike for Mountain Rose Herbs employees. We discovered native, edible mushrooms on Patterson Mountain in Oregon!

Mountain Rose Herbs is an EarthShare Oregon business partner, o�ering employees an easy way to contribute to 80+ environmental non-pro�ts. Through workplace giving, employees make tax-deductable contributions directly from their paychecks.

In 2014, 35 employees pledged $4,328!

EMPLOYEE BENEFITS

Medical, Dental, and Vision CoverageTerm Life coverage Supplemental Insurance by AFLAC Paid public holidays after 30 days401K plan with matching funds from MRH$200 bodywork stipend per calendar year On-site herbal education coursesTuition reimbursement program 40% o� employee purchases We o�er personal budgeting education, either one-on-one or in group settingsFormer employees who worked with us for at least 6 months and are in good stand-ing to receive a LIFETIME 10% discount

16

Mountain Rose Herbs o�ers one of the nation's �nest commuting programs, paying substantial cash incentives to all employees who use alternative modes of transportation. We award sta� members who carpool to work with co-workers 12 cents per mile for each passenger and 12 cents per mile for bus commuters. For those who bicycle or walk to work, we compensate 20 cents per mile. Every year, we reward the employee who logs the most miles in each category with an additional $250. Employees have access to a covered and locked bike garage, indoor lockers, and showers.

In 2014, Mountain Rose Herb added walking to the list of alternative modes of transporta-tion. In total, we awarded employees over $8,700 this year!

For the third year, Mountain Rose Herbs participated in the regional Business Commute Challenge and placed 2nd in our category! Nearly 40% of our sta� participated carpooling, walking, busing, or cycling to work during a warm week in May. We logged 166 trips in just 7 days! In total, all businesses saved 68,987 driving miles and 70,234 lbs of CO2 and burned 120,438 kcals.

GREEN TEAM

2014 Greenteam Accomplishments

Carpool policy and incentives

In March 2014, we had our �rst Green Team meeting. Representatives from each depart-ment meet once a month to learn and discuss company policies and programs, then share that info with co-workers. The group looks at operating practices to reduce waste, conserve energy and water, encourage use of alternative transportation, and inform co-workers about workplace giving and volunteer opportunities. These folks help our management team and the Director of Sustainability have eyes on the ground in di�erent departments, keep people informed, energize co-workers, and gain employee feedback and buy-in.

Launched a Stewardship Program for the neighboring wetlandsReduced paper towel waste with “Remember… these come from trees” stickersHelped promote the Business Commute Challenge and earned 2nd place in 2014GreenTeam reps improved recycling/sorting in respective departmentsStyrofoam packing peanuts are now separated and sent to NextStep, not to our customersHelped with EarthShare employee giving program which won us a national Excellence Award from Charities@Work!

Overall, formation of the GreenTeam has increased communication among departments regarding sustainability programs, perks, and possibilities!

17

We encourage employees to give back to our community. Through the Paid Time for Community Involvement Program, employees are paid 24 hours (3 days) every year to volunteer with a non-pro�t or local organization. One way employees can use these hours is through the Mountain Rose River Project – a grassroots action campaign coordinated and funded entirely by our company. Each year, employees manage 6-8 restoration projects with a focus on riparian ecosystems, stream health, and �sh habitat.

In 2014, we went above and beyond! We led or sponsored a total of 12 restoration projects! Stats: 38 MRH employee shifts (and an additional 68 community volunteers) logged 152 hours, removed 653 gallons of trash, cleared 20 cubic yards of invasive plants, and planted 221 trees and native plants.

In 2014, we adopted two native plots in the Friends of Buford Park’s Native Plant Garden, including a plot of Yarrow and one of Trillium.

EMployee Volunteerism

18

RIVER RESTORATION

19

In 2014, we held our �rst-ever Pop-up Shop in downtown Eugene, Oregon!

In 2014, we debuted the Herbal Radio Podcast on iTunes, featuring free lectures and interviews with herbal leaders.

We are passionate about educating the members of our herbal community. In 2014, we posted many new recipes and old favorites on the Mountain Rose Blog, YouTube, as well as across social media. We also created recipe cards that we give away at herbal conferences,

tradeshows, local events, and workshops! Some of these recipes cards include: a vanilla mint honey scrub, elderberry syrup, lip balm, bitters, four thieves vinaigrette, and mama’s

belly butter.

Mountain Rose Herbs hosts the Free Herbalism Project, a series of free lectures to the communi-ty featuring renowned herbal-ists from around the county. Not only are the lectures free to the public, but we brew organic tea and enjoy live music. The event is also a fundraiser for a small herbal school, free clinic, or non-pro�t organization through the sale of Mountain Rose Herbs’ herbal merchan-dise, DVDs, and books.

In 2014, the Free Herbalism Project donated $500 to each of these organizations: Occupy Medical, the American Herb Association and the Sylvan Institute of Botanical Medicine.

Herbal Education

20

Supporting our community through �nancial contributions, in-kind donations, and volunteer hours is a core part of our company culture. We work directly with local and national non-pro�t organizations through charitable giving, event sponsorships, matching gifts, conservation work, and plant-related projects.

STRATEGIC PHILANTHROPY

CHARITABLE GIVING

Mountain Rose Herbs is committed to sustainable business practices, organic agriculture, social equality, and inspiring other businesses to prescribe to a People and Planet before Pro�t motto. We also have sta� currently sitting on the Board of Directors or serving on a committee for these organizations: American Herbal Products Association, Cascadia Wild-lands, Provender Alliance, and the Willamette Valley Sustainable Foods Alliance. We encourage anyone with an interest in herbal products or the natural food industry to get involved.

2014 HighlightsWe collected 275 lbs of foods and 275 lbs of clothes during the annual employee-led Food and Clothing Drive.We supported American Herbal Products Association’s Osha Sustainability Study with a matching gift.We adopted Trillium through United Plant Savers’ Adopted an ‘At-Risk’ Healing Herb.

to the extraordinary sta� at Mountain Rose Herbs, our vendors, and our customers who support us along the road to herbal bliss.

Thank you