Lowes_2022 Forestry Report

Lowe’s 2022 Forestry Report | 1

Forestry Report

December 2022

Table of Contents

Executive Summary 3

Review Process 4

Lowe’s Forestry Footprint 5

2021 Wood Sourcing Data 5

Our Current Forest Management Practices

Evaluating Our Findings 9

Deforestation & Degradation of Primary Forests 9

Indigenous Rights & FPIC 10

Opportunities to Improve Our Wood Sourcing Practices 10

Looking Ahead 11

Conclusion 11

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Lowe’s Forestry Report December 2022

Table of Contents | 3

Executive Summary

In 2022, we reviewed our forestry footprint and wood sourcing practices to assess how we could increase the scale, pace and rigor of our

efforts to eliminate wood linked to deforestation and the degradation of primary forests within our supply chain. This report outlines the

assessment process, key findings from our assessment and the steps we plan to take next.

The assessment process occurred throughout 2022 and included primary research, benchmarking and discussions with stakeholders.

As a result of the assessment, we plan to take the following steps:

Lowe’s will invest in reforestation projects in key sourcing regions

designed to benefit carbon sequestration and biodiversity.

Lowe’s will strengthen its wood sourcing policy in the coming

year by:

A. Adding a provision that encourages all vendors to engage in Free,

Prior and Informed Consent where applicable

B. Updating the identified Regions at Risk

Lowe’s will require all wood products sourced from Canada to

originate from credible third-party certified forests by 2027.

Lowe’s will implement a grievance mechanism focused

on its forestry supply chain.

Lowe’s Forestry Report December 2022

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Review Process

In this report, we outline our current forestry footprint and how we are operationalizing our wood sourcing commitments. In 2022, we conducted a detailed

review of our initiatives, footprint and programs to identify opportunities to improve our wood sourcing practices.

We then reviewed our findings with key stakeholders and our leadership team to determine next steps, which are outlined in the Looking Ahead section of this report.

As part of the assessment process, we:Our assessment focused on the potential impacts of our forestry

footprint on deforestation and degradation of primary forests,

including effects on:

CARBON SEQUESTRATION AND CARBON STOCK

INDIGENOUS PEOPLES’ RIGHTS

BIODIVERSITY

benchmarked sustainable business practices against other retailers;

consulted with Non-Governmental Organizations (NGOs) and industry experts;

met with vendors to assess the feasibility, challenges and barriers associated with

improving their forestry management practices; and

collaborated with forest management certification bodies to understand

different approaches to sustainable forest management.

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Lowe’s Forestry Footprint

LOWE’S 2021 TOTAL WOOD VOLUME BY COUNTRY

LOWE’S 2021 TOTAL WOOD VOLUME BY SPECIES

0 10 20 30 40 50

48% Pine

11% Spruce-Pine-Fir (SPF)

7% Aspen

5% Fir

5% Orientated Strand Brand (OSB)

4% Douglas Fir

3% Hem-Fir

3% Particleboard

2% Non-Virgin Wood Material (recycled content)

2% Cedar

2% High Density Fiberboard (HDF)

2% Medium Density Fiberboard (MDF)

2% Poplar

1% Oak

1% Redwood

0 10 20 30 40 50 60 70 80

69.94% United States

13.98% Canada

5.22% Brazil

2.84% China

1.15%

Chile

1.11% New Zealand

1.03% Argentina

0.84% Uruguay

0.78% Indonesia

0.62% Germany

0.45% Mexico

0.37% Vietnam

All data provided was gathered through Lowe’s annual wood sourcing survey. The 2021 survey

had a 95% response rate and included sourcing data from November 1, 2020, through October

31, 2021. This data is for Lowe’s US operations only.

Lowe’s began to discontinue sourcing from Russia in 2022.

LOWE’S 2021 TOTAL WOOD VOLUME BY CERTIFICATION

Sustainable Forestry Initiative (SFI) 57%

None 31%

Forest Stewardship Council (FSC) 8%

Program for the Endorsement of Forest Certification (PEFC) 4%

United States

70%

Canada

14%

Brazil

Argentina

Chile

New Zealand

China

Russia

<1%

Map Legend

Lowe’s sources ≥ 1% from these countries

Lowe’s sources < 1% from these countries

Lowe’s Forestry Report December 2022

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INTACT FOREST LANDSCAPES

WITHIN LOWE’S FORESTRY

FOOTPRINT

Intact Forest Landscapes (IFLs) are

defined as groupings of primary

forest of 50,000 hectares or more.

Primary forests are defined as for-

ests that have remained relatively

undisturbed by human activity.

The map to the right shows the

location of IFLs across the globe

along with the top product catego-

ries Lowe’s sources from the coun-

tries where these IFLs are located.

BRAZIL

• Fencing

• Moulding

• Specialty Millwork

GABON

Entry, Interior

and Storm Doors

NEW ZEALAND

Structural Lumber

MALAYSIA

• Moulding

• Specialty Millwork

CHINA

• Fencing

• Structural Lumber

RUSSIA

Vanities

FINLAND

• Moulding

• Specialty Millwork

UNITED STATES

Structural Lumber

CHILE

• Moulding

• Specialty Millwork

CANADA

• Structural Lumber

• Panel Products

• Siding

INDONESIA

• Structural Lumber

• Moulding

• Specialty Millwork

Lowe’s product category data used is from 2021.

Lowe’s began to discontinue sourcing from Russia in 2022.

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OUR CURRENT FOREST MANAGEMENT PRACTICES

Over the last 20 years, Lowe’s has implemented public commitments, a wood sourcing policy and data collection processes to improve its approach to sourcing

wood products.

Lowe’s Wood Sourcing Policy

We implemented our first wood sourcing policy in 2000 and have made several updates to the policy in the last two decades. Our current policy applies to all products

containing wood that are sold in Lowe’s stores.

Through the wood sourcing policy, Lowe’s commits to source wood that:

• originates from a known source;

• is legally harvested and traded;

• does not threaten high conservation value or high carbon stock forests;

• does not originate from deforestation or other ecosystem conversion, which leads to

biodiversity loss, including that of rare, threatened and endangered species;

• is not endangered;

• is harvested and produced in a way that recognizes and upholds Indigenous

peoples’ and other local community rights and customs; and

• is harvested and produced ensuring that human and worker rights are protected,

including decent and humane working conditions and no forced labor.

PROGRESS 10%

Lowe’s aims to achieve 100% Forest Stewardship Council (FSC)

certification for all wood products sourced from identified

Regions at Risk.

PROGRESS 69%

By 2025, 100% of Lowe’s wood products will be purchased

from a responsible source, thus either certified or from a

controlled source.

Public Commitments

Current Lowe’s public commit-

ments regarding wood sourcing

include the following:

Progress percentages are from 2021 data.

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Verifications and Non-Compliance Protocols

Lowe’s encourages all vendors to have certifications in place where commercially

feasible. If a vendor does not hold any credible, third-party sustainable forest

management certifications, they are subject to third-party audits. To monitor

compliance, Lowe’s conducts annual verifications with a selected sample of vendors.

Lowe’s holds vendors accountable to its Wood Sourcing Policy and reserves the right

to take actions against our vendors, which can include:

Detailed assessments of the vendor’s sourcing

A reduction in purchased goods

Suspension or elimination of purchases

Termination of business agreements

World Wildlife Fund’s Forests Forward Program

In 2021, Lowe’s joined World Wildlife Fund’s Forests Forward program, which engages

companies globally to help develop both near- and long-term strategies to reduce

their forest footprints. Through two initiatives led by WWF, Lowe’s has helped fund

the following forest restoration projects in Canada.

1. An analysis and mapping of degraded lands across Canada to optimize

opportunities for nature-based climate solutions. This work will inform future

discussions with businesses, governments, communities and others regarding

implementing restoration projects that have the greatest potential benefit for

conservation and climate.

2. A First Nations project, the Secwepemcúl’ecw Restoration and Stewardship Society

(SRSS), to support large-scale restoration efforts in British Columbia. In 2017, the

Secwepemcúl’ecw’s forests were devastated by the Elephant Hill Fire, which burned

nearly 200,000 hectares in the interior of the province over 75 days. The fire burned

some areas so intensely that tree seeds buried in the soil and sealed in cones were

destroyed, rendering the forest incapable of regenerating naturally. The SRSS’s

activities include tree planting, restoration along waterways and both water quality

and carbon monitoring.

Lowe’s is proud to support these projects and be a part of efforts to better understand

ways to restore Canada’s forests. We look forward to continuing our work with WWF

and its Forests Forward program to help drive better forestry management practices

across the globe.

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Evaluating Our Findings

Deforestation and Degradation of Primary Forests

Deforestation and degradation of primary forests are two of the leading concerns

related to the health of the world’s forests. Globally, there has been an 11% decrease

in the overall tree cover since 2000

. While agriculture has been cited as the leading

driver of global deforestation, other factors such as logging, human migration and

industrial development also contribute to forest loss

. Through research and discus-

sions with stakeholders in our value chain, we assessed the potential for deforestation

within our footprint. Our assessment revealed minimal risks of deforestation in our

supply chain due to our vendors’ forest management plans, government regulations

and our wood sourcing requirements.

Primary forests comprise an estimated 27% of the world’s forest cover and provide

valuable ecosystem services, including habitats for a diverse range of wildlife and

carbon sequestration and stock. The process of harvesting timber from these areas

often leads to a degradation of these forests. While it is challenging to determine

what percentage of our wood products are sourced from primary forests, we believe

that products sourced from Canada have the highest likelihood of being harvested

from primary forests. Lowe’s sources roughly 14% of its wood supply from Canada

and approximately 30% of Canada’s landscape has been identified as IFLs.

During our assessment, we evaluated the feasibility of banning primary forests as a

source of timber within our supply chain, with a focus on wood products sourced

from Canada. We spoke with key suppliers in the region, reviewed government har-

vesting and replanting requirements, and discussed concerns with various environ-

mental NGOs. Based on our research, we concluded that eliminating primary forests

from our supply chain is not feasible at this time. We do, however, plan to identify

methods to mitigate the impacts of our sourcing on carbon sequestration and biodi-

versity. Those plans are outlined in the Looking Ahead section of this report.

Forest Loss | Global Forest Review (wri.org)

Deforestation fronts | Stories | WWF (worldwildlife.org)

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Indigenous rights & FPIC

Forests play a central role culturally, spiritually and economically in the lives of many

Indigenous peoples worldwide. Businesses and organizations within the forestry sup-

ply chains have a responsibility to safeguard and respect these Indigenous voices.

One potential solution to protect Indigenous rights within the forestry industry is

the process of Free, Prior and Informed Consent (FPIC). The FPIC process allows

Indigenous peoples to provide or withhold consent to any project that may affect

them or their territories. Notably, FPIC implementation affects forest management

requirements in Canada, as there are many Indigenous communities and First

Nations residing in Canadian forestland.

Our assessment revealed that our Canadian suppliers have taken steps to improve

collaboration with First Nations in their forest tenures, including engagement in the

FPIC process. The Canadian government has also passed regulations and imple-

mented new processes to further promote the FPIC process. Lowe’s is aligned with

the principles of FPIC and plans on updating its wood sourcing policy to reflect

these values.

Opportunities to Improve Our Wood Sourcing Practices

While the evaluation of our footprint and processes did not reveal significant issues in

our supply chain, we did identify several opportunities for incremental improvement:

Enhance Data Collection, Quality and Reporting: The Lowe’s wood sourcing survey

is currently our most accurate method for evaluating compliance with sourcing

requirements, commitments and for identifying opportunities to improve how we

source wood products. Our assessment helped to identify enhancements to both

our system and processes.

Deeper Understanding of Our Carbon Impact: Lowe’s continues to evaluate impacts

of our wood sourcing on carbon sequestration and storage. With the help of key

stakeholders, experts in the space, as well as the Science-Based Target initiative

(SBTi) FLAG Guidance, Lowe’s will work to quantify the carbon impacts of our for-

estry value chain.

Enhance Supply Chain Traceability: The complexity of our forestry supply chain,

coupled with industry dynamics, makes it difficult to fully trace the source of our

wood products. Lowe’s will continue to work with our vendors, peers and third-party

experts to identify and test new product traceability methods to improve

supply chain transparency.

Continued Support of FSC Certification in Regions at Risk: Obtaining FSC certifica-

tions from vendors sourcing from Lowe’s identified Regions at Risk has been more

challenging than expected. Lowe’s will continue working with our vendors and the

WWF to increase FSC certification and mitigate obstacles to FSC adoption.

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Looking Ahead

Our assessment helped us to identify several steps that we can take to improve our wood sourcing practices:

Lowe’s will invest in reforestation projects in key sourcing regions

designed to benefit carbon sequestration and biodiversity.

Reforestation and habitat restoration can help to reestablish carbon

stock and biodiversity. Lowe’s has longstanding partnerships with key

environmental organizations such as The Nature Conservancy and

WWF. We look forward to working with these and other NGOs and non-

profits to identify where we can make the greatest impact. Additional

details on our reforestation efforts will be provided in the 2022

Corporate Responsibility Report.

Lowe’s will strengthen its wood sourcing policy in the coming year by:

A. Adding a provision that encourages all vendors to engage in Free,

Prior and Informed Consent where applicable

B. Updating the Lowe’s identified Regions at Risk

Lowe’s will implement a grievance mechanism focused on its forestry

supply chain. This new grievance mechanism will provide stakehold-

ers in our value chain a clear channel for sharing their concerns.

Lowe’s will take action to address these concerns, including the

development of corrective action plans and termination of business

relationships with vendors depending on the nature and severity of

the issue.

Lowe’s will require all wood products sourced from Canada to

originate from credible third-party certified forests by 2027.

Certifications include Forest Stewardship Council (FSC), Sustainable

Forestry Initiative (SFI) and the Programme for the Endorsement of

Forest Certification (PEFC). Lowe’s will give preference to FSC when

purchasing items from Canada, as long as they meet business and

market requirements.

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Conclusion

This forestry assessment reinforced that our wood sourcing supply chain is complex and challenging to navigate. We are committed to our role as a responsible corporate

citizen and look forward to continuing our work with our suppliers and other key stakeholders on the important topics discussed in this report. We welcome stakeholder

feedback as we strive to improve processes, policies and practices within our forestry supply chain.

This report includes “forward-looking statements” within the meaning of the Private Securities Litigation

Reform Act of 1995. Statements including words such as “believe”, “expect”, “anticipate”, “plan”, “project”,

“estimate”, “will”, “should”, “could”, “would”, “may”, “strategy”, “potential”, “opportunity” and similar

expressions are forward-looking statements. Forward-looking statements involve expectations,

projections, and assumptions about our forestry practices, strategy, priorities, expectations and

intentions. Such statements involve risks and uncertainties, and we can give no assurance that they

will prove to be correct. Actual results may differ materially from those expressed or implied in such

statements. Investors should carefully consider the risk and uncertainties described in “Item 1A - Risk

Factors” in our most recent Annual Report on Form 10-K and as may be updated from time to time in

Item 1A in our quarterly reports on Form 10-Q or other subsequent filings with the Securities and

Exchange Commission. All such forward-looking statements speak only as of the date they are made,

and we do not undertake any obligation to update these statements other than as required by law.

are registered trademarks of LF, LLC.