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JCPENNEY SUSTAINABILITY

Twelve JCPenney stores have rooftop solar energy systems.

More than a century ago, James Cash Penney founded our company as an active and responsible member of the community and earned a special place in the hearts of American families. Today as we invest in the future of our business, we remain committed to building on our legacy of responsible corporate citizenship by advancing social, environmental and ethical standards across our operations.

"Supporting the communities we serve goes well beyond philanthropic efforts- it's about making mindful decisions in all of our operations, whether in stores, supply chain, customer service centers or international offices."

- Myron E. (Mike) Ullman, III, Chief Executive Officer of JCPenney

GLOBAL SUPPLY CHAIN

JCPenney is one of the largest purchasers of clothing, shoes, accessories and household items to be sold in the United States. The focus of our supply chain social and environmental responsibility program is on the manufacturing of JCPenney private brand products and exclusive brand products when we source the merchandise. In 2012, we used more than 700 factories across more than 25 countries for production of private brands.

We recognize that a critical factor in our continuing success in the retail industry is our ability to build and sustain strong relationships with our suppliers- relationships based on trust, integrity and high standards for ethical behavior and legal compliance. JCPenney's Supplier Principles outline JCPenney's expectations of all suppliers that conduct business with our company and are an integral part of our supplier selection process. To improve our suppliers' social and environmental standards, we now provide targeted auditing and increased support and training to encourage suppliers to develop their own systems to raise standards.

Global Supply Chain

For more details on our global supply chain, see the Supplier Social and Environmental Standards section of the 2013 JCPenney Sustainability Report

operations

With approximately 1,100 stores, 14 logistics facilities and our Home Office, our physical footprint across the country is significant. JCPenney is committed to reducing our environmental footprint through operational efficiency measures including energy and waste management. We work hard to conserve energy, limit our greenhouse gas emissions, minimize the amount of waste we generate, manage logistics efficiently and use paper and packaging responsibly.

In 2009, we launched an energy strategy with a goal of reducing energy consumption per square foot by 20% by 2015 (based on a 2008 baseline) and at the end of 2012, we had achieved a 16.5% reduction. As of October 2013, 500 JCPenney buildings had earned the ENERGY STAR label and the company had been recognized by the U.S. Environmental Protection Agency with a string of ENERGY STAR awards.

JCPenney contracts the transportion of millions of goods from suppliers to logistics facilities to stores and customers, and we do this with maximum efficiency. By optimizing transport loads, using our fleet to backhaul materials, and designing efficient e-commerce shipping strategies, we ensure that our costs and carbon emissions are minimized. The truck fleet that we lease to pick up JCPenney shipments from ports in southern California includes 55 clean diesel trucks. Additionally, we saved an estimated five million gallons of diesel fuel by transporting almost half of our domestic shipping loads from consolidation facilities to regional logistics facilities through intermodal rail in 2012.

Recyclables from stores are transported to our logistics facilities where they are sorted and then sent to processing facilities. In 2012, JCPenney recycled 80,816 tons of recyclable materials through our main recycling streams for cardboard, plastic films and bags, hangers, mixed paper, metals and electronic waste.

For more details on reducing our environmental impact, see the Store and Operations section of the 2013 JCPenney Sustainability Report

community

We continue James Cash Penney's legacy of giving back with a firm commitment to support the communities where we live and work. Important philanthropic efforts include customer giving, grants and sponsorships, disaster relief, in-kind donations and community engagement through associate giving and volunteerism. We also support efforts that improve lives and enrich communities in the areas of health and welfare, education, arts and culture, and with an increasing focus on military and veteran support. Finally, our international offices expand our corporate philanthropy to the global community by giving back locally.

In 2012, our associates registered more than 76,800 volunteer hours and, through the James Cash Penney Award for Community Service, more than $112,900 in cash grants were awarded to 457 nonprofit organizations in recognition of associates' volunteer hours served in the community. Our Change for the Better associate giving campaign raised more than $5 million in total, including a JCPenney corporate gift and money generated through special events across our units and stores and at our Home Office.

We also support disaster relief and in 2012, twelve FEMA-declared disasters, including Hurricane Isaac and Superstorm Sandy, impacted JCPenney associates nationwide. JCPenney supported Superstorm Sandy critical response programs in many ways, including a $250,000 grant to the American Red Cross to support emergency relief efforts to help New York and New Jersey residents devastated by the disaster. We also contributed $2.4 million worth of warm clothing and outerwear to Red Cross distribution centers.

For more details on our community involvement, see the Part of the Community section of the 2013 JCPenney Sustainability Report