Natural Grocers Highlights Regenerative Agriculture in ESG Report

(Photo: Natural Grocers store, located in Flagstaff, Arizona. Credit: Wikimedia Commons.)

(Photo: Natural Grocers store, located in Flagstaff, Arizona. Credit: Wikimedia Commons.)

by | Feb 16, 2023

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(Photo: Natural Grocers store, located in Flagstaff, Arizona. Credit: Wikimedia Commons.) Regenerative agriculture

(Photo: Natural Grocers store, located in Flagstaff, Arizona. Credit: Wikimedia Commons.)

In its second annual ESG report, Natural Grocers by Vitamin Cottage, Inc. focused on the company’s product standards and current practices, in particular its emphasis on regenerative agriculture. Natural Grocers has a long legacy as a retailer of natural and organic groceries, body care products, and dietary supplements. Founded in 1955, the company began with the dream of Margaret and Philip Isely to foster nutrition education in their home of Golden, Colorado. Each store still employs a nutritional health coach with free one-hour sessions for customers.

This year’s ESG report highlights that their Five Founding Principles are clearly recognizable as sustainability goals as well, despite being well-established before the age of ESG reports. The principles include nutrition education, quality, Always Affordable pricing, community, and crew. In particular, Natural Grocers stands out from the competition for its rigorous product standards. Not only do they offer organic produce, pasture-raised dairy, free-range eggs, and humanely raised and sustainably sourced meats; but also the company refuses to stock products that don’t fit those standards.

This commitment to quality has the added benefit of supporting regenerative agriculture. Regeneration International defines the practice as farming and grazing that reverses climate change by rebuilding soil organic matter and restoring degraded soil biodiversity. According to research by the Natural Resources Defense Council (NRDC), the alternative to regenerative agriculture – the industrial agricultural system – often results in a soil erosion rate that is 10 to 100 times faster than soil formation, as well as many other threats to biodiversity for the sake of profitable monoculture.

“We chose to focus on our commitment to regenerative agriculture in this year’s ESG report because we believe it is beneficial to the earth and an important practice with the potential to mitigate climate change,” said Kemper Isely, Natural Grocers’ co-president. “Regenerative agriculture is a reclamation of the best practices from the past, combined with current evidence-based research, to improve and renew the ecosystem and natural resources that are foundational to farming.”

In addition to regenerative agriculture, the ESG report reveals four other key points of improvement:

  • To invest in their staff, the company raised wages for hourly employees by $1.00 per hour in November 2022. This was the third increase in wages over a period of three years.
  • To save energy, a new store received a CO2 refrigeration system as an experiment in recycling or delaying the emission of exhaust gas.
  • To limit bulk packaging, their distribution center reduced plastic stretch wrap use by 50% and converted to engineered wood pallets with environmental benefits.
  • To enhance transparency, the company continued implementing systems to provide additional ESG data over time. Of note, their SASB Index at the end is missing much information, with caveats that they “endeavor to disclose this information in the future”.

At the end of 2022, Impact Awards from Progressive Grocery recognized Natural Grocers in two categories: Food Security/Nutritional Leadership and Workforce Development/Employee Support.

Though daily store sales rose a modest 0.5% in the last earnings report, Simply Wall St. reports that stakeholders recently endured a loss of 37% over the course of one year. As a family-operated business, the Isely Family Group is the largest shareholder, followed second by Zephyr Isely, co-president of Natural Grocers. His brother and other co-president, Kemper Isely, is optimistic about the resiliency of the company though.

“On a three-year basis, daily average comparable store sales were up 17.6%, our third consecutive quarterly increase,” said Kemper Isely. “Product cost inflation remained elevated during the quarter, though our specialized supply chain has historically provided more cost stability compared to conventional grocery peers.”

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