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Sustainability Process

We are managing sustainability and responsibility as a continuous process involving four key focus areas:

Click on sections of the process wheel to jump to a specific section. Development of commitments and goals Sustainability strategy development Materiality and defining report content Stakeholder engagement

Our Sustainability Strategy

2014 was another important year for sustainability and responsibility at Tim Hortons. We continued to execute our priorities and activities developed as part of the strategy update we performed in 2012 and we are pleased to show the additional progress made in 2014.

Challenges

Since implementing our initial sustainability and responsibility strategy in 2009, we have learned a lot about embedding sustainability into our business and the various challenges and opportunities for our Company. While we have celebrated many successes, we have also identified areas for improvement and continued focus. We are committed to working with the entire Tim Hortons system and embedding accountability for the strategy into the business to advance on our sustainability journey.

Franchise Business Model – We operate a franchise business model. Currently, more than 99% of our restaurants in Canada and the U.S. are owned by independent Restaurant Owners. This type of business model is a strength, and pivotal to our long-standing history and culture. However, it also poses some challenges with respect to implementing sustainable business practices across the entire chain. Ultimately, the successful execution of sustainable business practices requires the commitment of our Restaurant Owners. Therefore, we have identified Restaurant Owner and Team Member engagement as one of our priority areas.

Data Collection – As evidenced in our goals and commitments, we believe that “what gets measured gets managed.” Based on our franchised business model as described above, we work with our Restaurant Owners to obtain reliable environmental and social information about restaurant operations. We are always looking to improve the efficiency of sustainability data gathering and reporting with our Restaurant Owners. This commitment to improved efficiency for data collection is also reflected in our work with corporate processes and procedures. Overall, we intend to continue to focus on sustainability reporting and data management for both restaurants and corporate information.

Stakeholder Education – Another sustainability challenge for our Company relates to stakeholder education. Many of our key issues (e.g., coffee sourcing, waste diversion and recycling, etc.) are complex and require an understanding of many different topics including industrial processes, agricultural practices, government legislation and more. Our ability to accurately communicate to, and educate, our stakeholders in these areas can impact our progress. For example, advancements in the area of restaurant waste diversion are only possible through the participation of our guests and our Restaurant Team Members. Therefore, stakeholder engagement and communication remain important.

Management of Risks and Opportunities

The assessment and management of risks and opportunities are embedded as part of our sustainability and responsibility strategy, governance framework and supporting implementation plan. Key aspects of our approach in 2014 included:

Further, a report of progress made on the Company’s sustainability and responsibility strategy, programs and performance was delivered to our Executive Team, the Nominating and Corporate Governance Committee of the Board of Directors, and our Restaurant Owner Advisory Board in 2014 in order to facilitate appropriate governance and risk management practices.

Stakeholder Engagement

We believe it is important to engage with stakeholders to understand issues, impacts, risks and opportunities that can affect our organization. In 2014, we engaged a variety of different stakeholder groups through the methods outlined in the table below. For information on how these activities influence how we determine what content to include in our Report, please see the Materiality and Defining Report Content section.

STAKEHOLDER TYPEENGAGEMENT METHODFREQUENCY
Restaurant Owners Regional Meetings Twice a year
Restaurant Owner Advisory Board1 Three times a year
Restaurant Owner Conference Calls Throughout the year
Restaurant Owner Convention Once a year
Restaurant Owner Engagement Survey ~Every two years
Sustainability and Responsibility Roundtable As required
Corporate Employees Company-wide Communications Meetings Twice a year
Employee Opinion Survey As required
Employee News (online) Continuous
Senior Management Leadership Symposium Annually
Restaurant Team Members Team Member Hotline (phone, email, mail) Continuous
Hospitality Manager Conference Calls Monthly
Manager Symposiums Annually
Guests Guest Services (phone, email, letters) Continuous
Guest Panel Research (focus groups, online) As required
Investors/Analysts Annual Meeting Annually
Financial Reporting, Investor/Analyst calls Quarterly
Investor enquiries (phone, email, letters) Continuous
Suppliers Face-to-face meetings, phone and email Continuous
Cross-functional meetings to review quality reports As required
Industry Events As required
Supplier Symposium Every two years
Government (Federal, Provincial/State, Municipal) Face-to-face meetings (e.g., public meetings, municipal council meetings, etc.), phone and email As required
Non-governmental Organizations/Sustainability Thought Leaders Face-to-face meetings, phone and email As required
Local Communities/Community Organizations Face-to-face meetings, phone and email As required
Industry Associations Face-to-face meetings, conferences, workshops, phone and email As required

1 We have national advisory boards of elected Restaurant Owners. The mandate for these boards includes responsibility for matters related to the Canadian and U.S. advertising funds, respectively, including promotions, operations, and research and development.

Materiality and Defining Report Content

Our Sustainability commitments and goalsWe followed the GRI G3.1 Guidelines to determine materiality for our Report. We evaluated both internal and external factors in defining material topics that have helped us establish and prioritize our sustainability and responsibility commitments and goals, our report content and boundaries, and the GRI indicators that we deemed important to report. In particular, we ensured that the information included in our Report was of significance to stakeholders.

To determine the most critical sustainability and responsibility issues to Tim Hortons, we engaged in the following activities:

We prioritized the sustainability and responsibility issues based on an assessment of Company-wide risks and opportunities and a review of alignment with current Company strategic plans. The issues that had the greatest perceived impact on our business and on our stakeholders continue to be:

Individuals Nutrition Foot safety Hospitality Employee rights and practices Community Tim hortons children's foundation Community initiatives Tim hortons coffee partnership The Planet Reduction waste, responsible packaging Minimizing our environmental footprint, greenhouse gas emissions, water, energy and waste Sustainable and ethical supply chain practices(including animal welfare

Each of these topics has been addressed in our 2014 Sustainability and Responsibility Report. For further details, please see the Development of Commitments and Goals section.

Development of Commitments and Goals

Commitments

As part of our Making a True Difference framework, we developed overarching sustainability and responsibility commitments. Our commitments are aspirational, long-term statements related to our most important sustainability and responsibility issues, as follows:

CATEGORYSUB-CATEGORYOUR COMMITMENT
GuestsMenu OptionsProvide our guests with balanced choices
Guest Experience Provide a hospitable and welcoming overall experience
Employees Employee Culture Champion a culture that is fair and provides opportunities
Partners Partners Manage stakeholders with honesty, transparency and respect
Children Children Make a meaningful contribution to the lives of children
Community Community Success Make our communities a better place to live in
Coffee Partnership Coffee Partnership Help build viable coffee communities
Environmental Stewardship Waste Reduction Reduce the waste we create in all aspects of our business
Resource Reduction Reduce the energy, carbon emissions and resources we use
Supply Chain Supply Chain Ensure best practices are embedded across our supply chain

In developing these commitments, three main inputs were used which included:

Please see our Sustainability Strategy Development and Materiality and Defining Report Content sections for supporting details.

Goals

In addition to our commitments, we also set goals in each of our focus areas as part of the last strategy update in 2012. Our goals are tangible, short-term targets that focus on improving our performance. These goals are also reviewed on an annual basis to maintain their relevance to our stakeholder expectations and business.

Our performance in 2014 was measured against the goals we set in 2012. In this report, we have included our performance on any goals that had target dates beyond 2013. Going forward, all goals will be reviewed as part of the 2015 strategy update and new goals will be established to drive our performance.

To access an overview of all of our performance highlights, please visit our 2014 Sustainability and 2014 Sustainability and Responsibility Performance Summary Report.