Climate Change Data

Environmental Metrics

ESG Focus Areas

• Product Stewardship and Safety
• Operations and Supply Chain
• Associate Engagement and Wellness
• Community Engagement
• Governance and Transparency

Social Achievements

• Published 10th Corporate Responsibility Report, prepared in accordance with the Global Reporting Initiative (“GRI”) Standards: Core option.
• Published several ESG-related policies and statements on our corporate website.
• Responded to the Carbon Disclosure Project’s climate questionnaire.
• Completed the S&P Corporate Sustainability Assessment.
• Participated in the Human Rights Campaign’s Corporate Equality Index annual benchmarking survey.

Climate Goals & Targets

Environmental Challenges

• The COVID-19 pandemic has had, and continues to have, an impact on financial markets, economic conditions, and portions of our business and industry.
• Increased demand for many of our products compared to periods before the pandemic.
• Uncertainty resulting from COVID-19 could result in an unforeseen additional disruption to our business, including our global supply chain and retailer network, and/or require us to incur additional operational costs.

Mitigation Strategies

• Implementing contingency plans, making operational adjustments where necessary, and providing assistance to organizations that support front-line workers.
• Implementing additional health and safety measures and social distancing protocols, consistent with government recommendations and/or requirements, to help to ensure their safety.
• Implemented an interim premium pay allowance for certain associates in our field sales force and our manufacturing or distribution centers.

Supply Chain Management

Climate-Related Risks & Opportunities

Physical Risks

• changes in rainfall patterns, water shortages, changing storm patterns and intensities, changing temperature levels

Transition Risks

• changes in legislation, regulation and international accords

Reporting Standards

Frameworks Used: GRI

Environmental Metrics

ESG Focus Areas

• Product Stewardship and Safety
• Operations and Supply Chain
• Associate Engagement and Wellness
• Community Engagement
• Governance and Transparency

Social Achievements

• Received a score of 100% on the Human Rights Campaign Corporate Equality Index (HRC CEI) and the designation of being one of the “Best Places to Work for LGBTQ Equality” for calendar year 2021.

Environmental Challenges

• Oversupply of cannabis significantly decreased cannabis wholesale prices and indoor and outdoor cannabis cultivation.
• Higher transportation and materials costs, including fertilizer inputs such as urea, due in part to the negative impact of the war in Ukraine on the global economy.
• Unexpected shortfall in earnings that affected the ability to remain in compliance with the leverage ratio covenant of the Sixth A&R Credit Agreement.

Mitigation Strategies

• Implemented a series of Company-wide organizational changes and initiatives intended to create operational and management-level efficiencies, achieving approximately $100 million of annual cost reductions.
• Further cost reduction initiatives targeting an additional $85 million of annual cost reductions.
• Contingency plans to further reduce or delay additional expenses and cash outlays, or reduce borrowings, should operations weaken beyond current forecasts or if cash inflows are not received when expected.
• Amendment No. 1 to the Sixth A&R Credit Agreement, increasing the maximum permitted leverage ratio for the quarterly leverage covenant.

Supply Chain Management

Responsible Procurement

• Published a Supplier Code of Conduct in fiscal 2022 that establishes the minimum standards that suppliers must satisfy to sell goods or do business with the Company.

Climate-Related Risks & Opportunities

Physical Risks

• Changes in rainfall patterns, water shortages, changing storm patterns and intensities, changing temperature levels

Transition Risks

• Changes in legislation, regulation and international accords
• Consumers and businesses changing their behavior as a result of concerns regarding the impact of climate change, governmental regulations and public perceptions.

Reporting Standards

Frameworks Used: GRI Standards: Core option, SASB’s Chemicals industry standard

Environmental Metrics

ESG Focus Areas

• Product Stewardship and Safety
• Operations and Supply Chain
• Associate Engagement and Wellness
• Community Engagement
• Governance and Transparency

Social Achievements

• Continued strategic reductions in workforce to create operational and management-level efficiencies.
• Published 12th Corporate Responsibility Report, prepared in reference to the Global Reporting Initiative (“GRI”) Standards (2021) and with consideration for the Sustainability Accounting Standards Board’s (“SASB’s”) Chemicals industry standard.

Governance Achievements

• Responded to the Carbon Disclosure Project’s climate questionnaire and completed the S&P Corporate Sustainability Assessment.

Climate Goals & Targets

Environmental Challenges

• Oversupply of cannabis, significantly decreasing cannabis wholesale prices and indoor and outdoor cannabis cultivation.
• Cost inflation, resulting in persistently high manufacturing and logistics costs, as well as volatile commodity costs.
• Unexpected shortfall in earnings affecting compliance with leverage ratio covenant.

Mitigation Strategies

• Implemented Company-wide organizational changes and initiatives intended to create operational and management-level efficiencies, including reducing supply chain network size, staffing levels, and implementing cost-reduction initiatives.
• Accelerated reduction of certain Hawthorne inventory.
• Implemented significant price increases across the business.
• Entered into Amendment No. 2 to the Sixth A&R Credit Agreement to temporarily increase the maximum permitted leverage ratio for the quarterly leverage covenant and make other adjustments.

Supply Chain Management

Responsible Procurement

• Supplier Code of Conduct

Climate-Related Risks & Opportunities

Physical Risks

• abnormally wet or dry weather
• changes in rainfall patterns, water shortages, changing storm patterns and intensities, and changing temperature levels

Transition Risks

• evolving policy, legal and regulatory changes

Reporting Standards

Frameworks Used: GRI Standards (2021), SASB’s Chemicals industry standard

Environmental Metrics

Climate Goals & Targets

Supply Chain Management

Climate-Related Risks & Opportunities