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SUSTAINABILITY REPORT

Tyson Foods’ main environmental footprint areas include water, air, carbon, energy use, solid waste, packaging, and sustainable agriculture. The sections that follow review our management approach to each of these impact areas as well as our performance data for these areas during fiscal year 2012, with select highlights from fiscal years 2010 and 2011.

Total Water Usage Chart Protecting and Conserving Water
Tyson Foods understands the importance of water in our everyday lives and our responsibility for protecting water quality. Our poultry, beef, and pork processing plants used approximately 24.38 billion gallons of water in fiscal year 2012 to produce food products and ensure the cleanliness of their facilities. At this time, we have not included water usage data related to our prepared food processing plants; however, efforts are underway to begin collecting and reporting this data.

As evidenced by the results of our water quality performance data, we are committed to protecting the water bodies to which we discharge. We operate 34 full-treatment and 43 pretreatment wastewater facilities in North America. In addition to establishing electronic tools that enable our facilities to proactively monitor the performance of their treatment systems, our long-term goal is to eliminate Notices of Violations (NOVs) and permit exceedances. From the end of fiscal year 2010 to the end of fiscal year 2012, the company decreased its wastewater-related permit exceedances by 48 percent. During this same time frame, the company’s NOVs related to wastewater decreased by 86 percent.

Water conservation has been an important area of focus for Tyson Foods for many years. We employ programs and technologies, such as best management practices, water reclamation systems, and Team Member education, to conserve and reuse this natural resource. Our first priority is to ensure the wholesomeness and safety of our food products. Water use is critical to the cleanliness of facilities and for ensuring the safety of our products; its use is mandated by the government. We recognize the important balance between protecting product quality and conserving a natural resource. Accordingly, we will never reduce water usage in situations where food safety and quality could be compromised.

Water Usage per Pound of Finished Product Chart We are pleased with the water conservation efforts made and the results achieved so far. Our water conservation efforts, along with several facility closures, have led to a water usage reduction of 10.9 percent since October 2004, which is equivalent to a 21-percent reduction in the number of gallons used per pound of finished product.

In addition, per the company’s Environmental, Health, and Safety Management System Standards, Tyson Foods maintains a requirement that any facility in the United States or Mexico that uses more than one million gallons of water per week must document and implement a Water Conservation Plan that sets forth a goal for water reduction and a timeframe for achieving that goal. Moreover, to ensure continual improvement, the company set a goal to reduce water consumption by 10 percent over a two-year period, as compared to its water usage levels at the end of fiscal year 2008. While we did not meet this goal, we are pleased with the substantial progress we’ve made and are currently evaluating a more engineered approach toward longer-term water conservation and management efforts.

University of Arkansas Division of Agriculture Research & Extension Logo In late fiscal year 2011, in partnership with the University of Arkansas, we performed a two-stage assessment of water scarcity and usage. Stage one evaluated the geographic characteristics of each location based upon seven water scarcity indices. Stage two created an assessment based on local water supply, water consumption, discharge, and total sector impact.

At this time, Stage two has been completed for eight Tyson Foods’ facilities within the United States. The assessment tool provides a score between 0 and 100, which indicates areas of opportunity and provides a comparison between facilities. The assessment also indicated that Tyson Foods’ “blue water footprint” (blue water footprint = total incoming water - water discharged per permit conditions) is relatively small with only 13 percent of total water usage actually being consumed. During fiscal year 2013, the company will be partnering with the University of Arkansas to perform the stage-two assessment at additional facilities.

The Oklahoma Watershed
Tyson Foods and several other poultry companies are currently defendants in a lawsuit filed by the Oklahoma attorney general alleging pollution of the Illinois River Watershed. The suit, filed in June 2005, alleged the practice of using chicken litter as fertilizer in the Illinois watershed posed a significant threat to the environment and human health, and the poultry companies' treatment of poultry litter violated the state's environmental standards. In 2008, the federal judge in the case denied the attorney general’s request for a preliminary injunction to stop the use of poultry litter in the watershed finding that the state of Oklahoma had failed to prove that bacteria in the river could be linked to poultry litter. In July 2009, the judge dismissed the damages component of the state’s case. On September 2, 2009, the Cherokee Nation filed a motion to intervene which was denied on September 15, 2009, and the denial was further affirmed by the Tenth Circuit Court of Appeals.

A non-jury trial of the case began on September 24, 2009. At the close of Oklahoma’s case, the Court granted the defendants’ motions to dismiss claims based on Resource Conservation and Recovery Act, nuisance per se, and health risks related to bacteria. The defense rested its case and closing arguments were held on February 11, 2010. On October 6, 2010, the Cherokee Nation and the State of Oklahoma filed a petition for rehearing or en banc review seeking reconsideration of this ruling. The Court of Appeals denied this petition. The district court has not entered a decision from the trial, which ended in February 2010.

Maintaining Air Quality and Managing Greenhouse Gas Emissions
The primary air emissions managed by Tyson Foods’ operations include:

  • Particulate matter, particulate matter of 2.5 micrometers or smaller, and particulate matter of 10 micrometers or smaller (PM 10) from operations such as feed milling and cooking;
  • Sulfur oxides, nitrogen dioxide, carbon monoxide, and PM10 emissions from the combustion of fossil fuels; and
  • Volatile organic carbon emissions that may result from fryer operations.

In the United States, air emissions are regulated by various federal, state, and local environmental agencies. Our compliance with these regulations is verified through annual emissions inventories, annual and semi-annual emission compliance certifications, sampling, periodic state agency audits, and internal compliance monitoring systems.

Our air emissions management approach also includes the implementation of pollution prevention programs, the installation of pollution control equipment, and investment in air emission control technologies, as needed. We have completed a potential-to-emit inventory for our U.S.-based operations as a component of the ongoing process of managing air permits and operational changes.

Tyson Foods completed its corporate-wide GHG inventory in accordance with the Climate Leaders Greenhouse Gas Inventory Protocol. This inventory includes GHG emissions from our U.S. chicken, beef, pork, and prepared foods operations as well as our hog buying stations and transportation operations. Additionally, it includes information from our U.S. based Cobb-Vantress and Pork Group subsidiaries. It does not include information from our independent poultry producers.

Our GHG footprint during calendar year 2004 was 5.35 million metric tons. This baseline inventory includes data related to facility fuel and electricity usage, transportation fuels, refrigeration usage, and anaerobic biogas production. Based on this inventory, the company is evaluating its energy profile and considering a process for establishing energy metrics tied to GHG emissions. We believe any approach selected must provide a consistent framework for measurement to align with future regulatory and policy expectations related to carbon management. In light of the current uncertainty surrounding the legislative and scientific discussions related to climate change, however, we may choose to delay our decision on goal setting in order to better understand the future legal landscape and role of carbon in the economy as well as its potential financial implications on our company.

Green House Gas Emission Source Comparison Chart

We also became a partner in the EPA SmartWay® Transport Partnership in 2004. The SmartWay partnership is a voluntary environmental and energy conservation program for companies that ship and haul freight. In 2006, we expanded our involvement in this program, and gained national status and recognition from the EPA as an authorized shipper/carrier partner. At the time this status was achieved, we were one of only seven companies to be recognized as both a shipper and carrier partner.

SmartWay™ Transport Partner Logo On October 4, 2012, the U.S. Environmental Protection Agency’s (EPA) SmartWay Transport Partnership shined a spotlight on Tyson Foods for its efforts to reduce emissions and overall truck miles. As part of its participation of the program, Tyson Foods’ Team Members eliminated more than 145 million over-the-road truck miles during fiscal years 2011 and 2012. The SmartWay partnership noted Tyson Foods’ work to purchase lightweight equipment, its innovative package design, use of railway shipping and logistics as successful improvements.

Approximately 99 percent of Tyson Foods’ refrigerated shipments are transported by SmartWay Carriers. In addition, below are recent initiatives designed and implemented by Tyson Foods to reduce the company’s environmental impact and improve its overall sustainability.

  • Eco-Friendly Equipment
    All SmartWay Partners are committed to reducing greenhouse gas emissions, air pollution, and fuel usage in their transportation fleets. To fulfill this commitment, Tyson Foods’ private fleet includes more than 900 auxiliary power units (25-percent are electric powered), and employs the use of cab extenders and trailer skirts within their fleet. In addition in fiscal year 2012, the company purchased 507 SmartWay certified tractors and 350 trailers.
  • Direct Ship to Customer
    In partnership with its customers, Tyson Foods continues to evaluate and implement opportunities to save truck miles by shipping directly to a customer’s dock. By altering order patterns and volumes to allow direct shipping, the company saved more than 2.4 million truck miles during its 2012 fiscal year
  • Heavy Shipment and Ultra-Light Equipment
    Tyson Foods and our SmartWay partners have invested in ultra-light equipment allowing the company to add product weight to its shipments. In addition to procuring lighter equipment, Tyson Foods and its partners strategically identify and add weight to other high-volume shipping lanes. As a result of these efforts, approximately 3-million truck miles were saved in the company’s fiscal year 2012.
  • Sustainable Packaging
    Tyson Foods received the 2012 Excellence in Sustainability award from Wal-Mart Stores, Inc., for a specific packaging change developed by Tyson Foods’ Team Members that reduced box size and, at the same time, added product weight. These changes led to eliminating not only raw materials, but also an impressive 2.1-million truck miles.
  • Rail
    Tyson Foods has further reduced its truck miles by using rail to ship food and other by-products to our customers. In fiscal year 2012, we saved more than 57-million truck miles by shipping products over rail.

At Tyson Foods, these initiatives were designed to “Drive Out Miles.”  These programs, along with the support and leadership of the company’s Team Members, were responsible for the elimination of more than 64 million over-the-road truck miles during the company’s 2012 fiscal year.

We recognize our company faces potential risks due to physical changes associated with extreme weather conditions such as droughts, floods, excessive heat or cold, hurricanes, and ice and snow storms. These conditions can impact the health and growth of livestock and result in operational disruptions.

Tyson Foods’ Position on the Carbon Disclosure Project
For the past several years, the Carbon Disclosure Project (CDP) has requested Tyson Foods’ disclosure of climate change related information. We have reviewed the CDP process, format, and information requirements and, at this time, have decided to communicate our GHG information through alternative but equally effective means rather than participate in the CDP.

There are several reasons for Tyson Foods’ approach to communication regarding GHG information. First, we have reported our GHG emissions summary in our sustainability report, which is publicly available. Second, we believe it is unnecessary to commit the additional resources required to annually report our information under CDP’s unique format. Third, we continue working with EPA regarding GHG inventory information related to mandatory GHG reporting requirements for affected operating locations drawing upon the Agency’s expertise and long-term management responsibility for climate change.

Energy Usage and Conservation
Energy use in Tyson Foods’ production facilities is the company’s first and second largest source of GHG emissions. Our main source of energy is electricity, which represented 53 percent and 54 percent of our total GHG emissions during calendar years 2010 and 2011 respectively. We use electricity to power processing, refrigeration, and wastewater treatment equipment, and for lighting, heating, and air conditioning. In addition, many of our facilities use natural gas in boilers for steam generation, in fryers and ovens to cook our food products, and in water heating systems. The combustion of natural gas represented 27 percent of our total GHG emissions in both calendar years 2010 and 2011.

Energy-efficiency projects reduce both costs and associated GHG emissions. Below are examples of energy conservation efforts underway at Tyson Foods.

  • Tyson Foods operates renewable energy processes and researches new and evolving technologies to create renewable energy. For example, we have six wastewater treatment systems that have enclosed their anaerobic lagoons in order to generate and capture biogas. Biogas is naturally produced during the decomposition of organic matter in these anaerobic systems. Four of these six facilities, are able to clean and use their biogas as an alternative fuel source to natural gas in on-site boilers.
  • Tyson Foods is currently implementing a web-based, real-time process for energy management that focuses on monitoring and reporting total usage of energy, water, and the sub-processes related to our primary energy-intensive systems like compressed-air, cooking, hydraulics, refrigeration, steam, and tempered-water systems. We anticipate this process will provide important data that will result in energy efficiency and optimization projects which could reduce our total energy consumption by 10 to 20 percent over the next five to 10 years.
  • Tyson Foods is in the process of evaluating a modular water re-use application that would allow our company to reuse water at the rate of 500 to 1000 gallons per minute. In addition, we are in the process of integrating speed drives and controls on variable motor-load applications to reduce total energy consumption by two to five percent over the next five years, and we are in the process of converting existing obsolete lighting to more energy efficient lighting designed to reduce total energy consumption by two to five percent over the next five years.

Renewable Energy
New ventures are leading Tyson Foods strategy to turn non-prime products into high-margin initiatives through a variety of creative endeavors. For example, Dynamic Fuels, LLC, a joint-venture of Tyson Foods, Inc., and Syntroleum Corporation, produces next-generation renewable, synthetic fuels from animal fats, greases, and vegetable oils, contributing to our nation’s energy independence and helping to reduce greenhouse gas emissions.

Dynamic Fuels® Facility The Dynamic Fuels plant in Geismar, Louisiana, – the first of its kind – uses state-of-the art processes to produce a synthetic diesel that generates the exact same molecule you get from petroleum diesel, without all of the impurities that give petroleum diesel its unique odor and color. Dynamic Fuels is capable of processing a wide range of feedstocks into ultra-clean fuels. These products are extremely stable, exceed all the standards of conventional petroleum-based fuels, and are usable across a wide band of operating temperatures, including summer-grade to arctic-grade diesel. In scientific testing, Dynamic Fuels® bio-synfined renewable diesel fuel had lower sulfur levels than traditional biodiesel and crude oil. The fuel also performed much better in colder temperatures and had faster ignition from initial injection to combustion. The plant is designed to produce a nominal 5,000 barrels per day or approximately 75-million gallons per year of finished products.

The proprietary process used by Dynamic Fuels produces renewable diesel that is chemically identical to conventional diesel and has the lowest emission levels of any transportation fuel on the market. The renewable, synthetic diesel can be used to produce high-performing fuel for aviation applications that meet all U.S. military requirements. Unlike traditional biodiesel, Dynamic Fuels' synthetic diesel fuel can use traditional infrastructure for transporting, storing, and dispensing the fuel. Pipelines can send our product down their lines mixed with regular petroleum.

  • In June 2011, KLM Royal Dutch Airlines became the first airline in the world to operate a commercial flight on biofuel, using a 50/50 blend of conventional jet fuel and renewable jet fuel produced by Dynamic Fuels. The airline subsequently scheduled more than 200 similar commercial flights between Amsterdam and Paris in September 2011.
  • The first commercial flights in the U.S. to use biofuel produced by Dynamic Fuels began in Seattle in November 2011. Alaska Airlines initiated two flights on November 9 using a 20-percent blend of renewable jet fuel from Dynamic Fuels. These two flights were the first of 75 regularly scheduled flights that Alaska Air and Horizon Air confirmed for November as part of an effort to raise awareness around alternative commercial aviation fuel.
  • In December 2011, the U.S. Navy awarded a contract to Dynamic Fuels for 450,000 gallons of renewable fuels – the largest single purchase of biofuel in U.S. government history. Solazyme, Inc., helped Dynamic Fuels fulfill the contract. The fuel, delivered to the U.S. Navy in May 2012, was used as part of the Navy’s efforts to develop a “Green Strike Group” composed of vessels and ships powered by biofuel. This will play a significant role for the Navy to source 50 percent of its energy from renewable sources by 2050.
  • Dynamic Fuels entered into a strategic marketing alliance and commercial off-take and supply-chain management agreements with Mansfield Oil Company (Mansfield) to efficiently distribute synthetic renewable diesel to the commercial-fleet-vehicle market in January 2012. Under the alliance, Dynamic Fuels and Mansfield will jointly market renewable diesel. This will provide Dynamic Fuels with access to Mansfield’s existing commercial accounts while expanding Mansfield’s portfolio of renewable fuel products, and ensure Dynamic Fuels has immediate access to fleet markets for its renewable diesel. In February 2012, shortly after entering this alliance, Dynamic Fuels and Mansfield signed an agreement to supply renewable diesel to Norfolk Southern Corporation, one of the nation’s largest transporters of coal and industrial products.

Solid Waste Management and Recycling
Solid Waste Sent to Landfills Chart Plastics and OCC Recycled Chart Tyson Foods’ operations generate mostly non-hazardous solid waste, consisting of paper, plastics, scrap metals, used oils, food wastes, wooden pallets, protein by-products, and old corrugated containers (OCC). As stated in our EHS Policy, we are committed to managing our operations in an environmentally responsible manner with emphasis on pollution prevention, conservation, recycling, and operational efficiency. While working to constantly find alternative uses for wastes and by-products, we promote consistent waste management practices throughout our company. These efforts aid in reducing the amount of waste sent to landfills and reduce methane generation which contributes to the generation of greenhouse gas emissions.

Monitoring waste generation, disposal, and reuse enables us to assess our progress and continually improve our waste management performance. Our goal is to reduce the amount of waste we send to the landfill and to increase the amount of materials recycled year-over-year.

Tyson Foods generated 110,387 tons of landfill solid waste in fiscal year 2010 and 114,153 tons in fiscal year 2011, representing a 3.4 percent increase from 2010 to 2011. We recycled 26,211 tons of OCC and plastics during fiscal year 2010 and 26,434 tons during fiscal year 2011, a .8 percent increase from 2010 to 2011.

Family Farmer Environmental Awareness
In 2011, the Environmental Protection Agency’s (EPA) Region 6 office conducted several inspections of independent poultry farmers in the northwest Arkansas area. Based on the feedback and results of these inspections, Tyson Foods collaborated with the Natural Resources Conservation Service, Arkansas Natural Resources Commission, the University of Arkansas, Oklahoma State University, Arkansas Farm Bureau, Washington County Conservation District, and other poultry companies to conduct three environmental training sessions for poultry farmers in fiscal year 2012. In the spring of 2012, EPA Region 6 conducted a second round of inspections and indicated the training with the poultry farmers had been helpful by increasing environmental knowledge, awareness, and best practices among the poultry farming community.

In an effort to recognize independent poultry farmers that embrace our Core Value stating “We serve as stewards of the animals, land, and environment entrusted to us,” Tyson Foods maintains a Poultry Environmental Stewardship Awards program. The award is presented to Family Farmers based upon several criteria including implementation of best management practices, community activities, neighbor relations, previous awards, and wildlife habitat management. Tyson Foods’ 2011 award winners included Tommy and Vicky Porter of Monroe, NC; T.K. and Michele Ballard of Clarksville, Ark.; and Mike and Shandra Langley of Noel, Mo. Awardees received $1,500 and a bronze trophy to recognize their accomplishment.

In addition to these training sessions, Tyson Foods initiated an effort to better serve the cross-cultural educational needs for the increasing number of southeast Asian-American poultry farmers in the northwest Arkansas and northeast Oklahoma areas. The Natural Resources Conservation Service provided a partial grant to fund a technical service provider (TSP) for the Southeast Asian-American farmers. The poultry industry provided the matching funds that allow the TSP position to be in effect for three years. Specifically, the position is responsible for out-reach regarding compliance, conservation, and cost-share opportunities. The TSP will also translate key environmental regulations into Laotian and Hmong to further assist poultry producers with compliance.

In 2004, Tyson Foods and other poultry companies in the northwest Arkansas area developed BMPs, Inc., a non-profit organization assisting Family Farmers with poultry litter export. From 2004 through fiscal year 2012, over 585,000 tons of poultry litter has been hauled out of the Illinois River watershed located in northwest Arkansas and northeast Oklahoma. Approximately two-thirds of the total export volume has come from poultry farmers that contract with Tyson Foods, with Tyson Foods’ total investment in the export of this litter totaling over $2 million.

Sustainable Packaging
An often-overlooked element of a food product is its packaging. At Tyson Foods, our first packaging priority is to ensure the wholesomeness, safety, and shelf-life of our products. Our packaging supply partners must meet or exceed the safety regulations and standards applicable to food-grade packaging. In addition, we require annual third-party audits for our packaging supply partners and letters of guarantee for the products they supply to Tyson Foods.

We also recognize the importance of reducing packaging waste and reducing the use of non-renewable materials in packaging content. Our Packaging Applications Team, in collaboration with our packaging supply partners, is committed to reducing the environmental impact of our packaging while ensuring the safety of our products.

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