Zoetis Environmental, Social And Governance Review

ENERGY AND GREENHOUSE GAS EMISSIONSTOPIC1201920182017Scope 1 emissions (metric tons CO2e)82,03683,94273,391Scope 2 emissions (metric tons CO2e)217,515205,166193,434Scope 1 and 2 emissions (metric tons CO2e)299,551289,108266,825Scope 1 and 2 emissions intensity (metric tonsCO2e/ 1MM revenue)485050Efforts to reduce and manage energy use andgreenhouse gas emissions 4% 2017-2019 EMISSIONS INTENSITYWe are committed to reducing our energy use and associated greenhouse gasemissions. To achieve this, we have invested in high efficiency air compressors, chillers,boilers and LED lighting, are optimizing operating processes in air ventilation andchilling systems and are focusing on procuring renewable energy. Three of ourinternational sites are currently operating with 100% renewable energy.While our absolute emissions have increased due to increased demand for our products,our emissions intensity decreased by 4% from 2017 to 2019. To continue to meet ourcustomers’ needs, we have purchased facilities and increased production volume;however, even as we grow, we are dedicated to reducing our environmental impact.1 hese metrics cover our Global Manufacturing and Supply, Veterinary Medicine Research and Development, and other operations not including stand-alone office spaces. TheseTemissions account for more than 99% of our operational emissions.WATERTOPIC1201920182017Water intake (cubic meters)3,154,5252,906,6302,812,930Water discharge (cubic meters)2,843,5002,447,4212,139,789Water intake intensity (cubic meters/ 1MMrevenue)503499530Water discharge intensity (cubic meters/ 1MMrevenue)454420403Efforts to reduce water use 5%2017-2019 WATER INTAKE INTENSITY 11%2017-2019 WATER DISCHARGE INTENSITYTo reduce our water intake, we have invested in improved technology suchas closed loop cooling systems, identified opportunities to reduce and reusewater in our processes and implemented other efficiency measures. We arecommitted to improve our water discharge and continue to test newtechnologies. For example, improvements at one site have resulted in 30%reduction in wastewater sent for thermal treatment.1 These metrics cover our Global Manufacturing and Supply, Veterinary Medicine Research and Development, and other operations not including stand-alone office spaces.ZOETIS 2019 ENVIRONMENTAL, SOCIAL & GOVERNANCE REVIEW7

SOLID WASTETOPIC1201920182017Solid waste (kilograms)6,552,8086,939,14510,377,588Solid waste recycled (kilograms)3,458,3982,410,9322,510,133Solid waste intensity (kilograms/ 1MM revenue) 1,0471,1911,955Solid waste recycled intensity (kilograms/ 1MMrevenue)414473Efforts to reduce and manage solid waste552 87% SOLID WASTE INTENSITY 14% RECYCLING RATE OF SOLID WASTEWe have reduced solid waste through operational excellence projects and achanging product mix. We have increased recycling by identifyingopportunities to separate and recover recyclable materials fromconstruction debris and convert waste to energy instead of landfilling.HAZARDOUS WASTETOPIC1201920182017Hazardous waste (kilograms)9,767,5579,631,4199,025,985Hazardous waste recycled (kilograms)3,435,9621,973,1221,879,104Hazardous waste intensity (kilograms/ 1MMrevenue)1,5601,6531,701Hazardous waste recycled intensity(kilograms/ 1MM revenue)549339354Efforts to reduce and manage hazardous waste 9%HAZARDOUS WASTE INTENSITY 35% RECYCLING RATE OF HAZARDOUS WASTEWe maintain an EHS Policy Standard: Waste and Surplus Material Management thatdefines performance expectations for proper management of wastes. We also maintaina Global Resource Document to prevent releases to soil, groundwater or surface water.We have reduced hazardous waste by optimizing operating processes and expandingon-site treatment capabilities for biological waste generated in our R&D activities. Wehave increased our recycling rate by projects including a land application program formanure waste to be used as fertilizer.1 These metrics cover our Global Manufacturing and Supply, Veterinary Medicine Research and Development, and other operations not including stand-alone office spaces.ZOETIS 2019 ENVIRONMENTAL, SOCIAL & GOVERNANCE REVIEW8

WORKFORCEZOETIS 2019 ENVIRONMENTAL, SOCIAL & GOVERNANCE REVIEW9

EMPLOYEE RECRUITMENT, DEVELOPMENT & RETENTIONTOPICDiscussion of talent recruitment and retentionefforts for scientists and research anddevelopment personnelSASB: HC-BP-330a.1We employ a variety of career development, employee benefits, policies andcompensation programs designed to attract, develop and retain our colleagues.R&D Talent Processes – Our R&D team promotes open roles for scientists and researchand development personnel through scientific associations and forums and leverages avariety of R&D-specific talent tools, including Opportunity Finder, to help colleaguesfind opportunities to further develop technical skills and knowledge. Our R&Dorganization also offers flexible work arrangements to promote the retention andfacilitate technical knowledge transfer as colleagues approach retirement.Your Development Matters – Our Your Development Matters talent portal contains acustomized, self-paced curriculum that helps colleagues pursue individual developmentgoals with the support of the organization and their manager.Mentoring Programs – Our mentoring programs, including one exclusively for women,help colleagues succeed and advance through enhanced business acumen and selfawareness and constructive feedback. Women in our R&D and manufacturingorganizations may participate in a formal mentoring process. In 2019, this program hadmore than 100 female mentees and 35 mentors (18 women/17 men).Talent Profiles – Each colleague is encouraged to complete a “Talent Profile” in our HRInformation System to provide visibility into professional background, education, skills,interests and desire to travel or relocate. These profiles support succession planning andtalent discussions.Opportunity Finder – This program matches global R&D talent with developmentassignments to grow their careers and alert the organization to interests.Zoetis Core Competencies – These skills and behaviors have been defined as importantto success at Zoetis. They provide a practical tool to evaluate and develop moreeffective career planning. Colleagues have access to a 360-feedback tool and leadershipdevelopment programs such as recruitment and selection, DISC type assessment,career development, performance management, emotional intelligence and more.We are proud of being recognized as a top employer by esteemed publications andorganizations, listed on our Awards & Recognitions page.(1) Voluntary and (2) involuntary turnover ratefor: (a) executives/senior managers, (b)mid-level managers, (c) professionals and (d)all others (U.S.)SASB: HC-BP-330a.2VOLUNTARYINVOLUNTARYExecutives/senior managers0.1%0.1%Mid-level managers0.3%0.2%Professionals2.4%0.8%All others4.8%1.5%ZOETIS 2019 ENVIRONMENTAL, SOCIAL & GOVERNANCE REVIEW10

Partnerships with educational institutionsOur partnerships create opportunities for our leaders to build awareness of Zoetis andthe animal health industry and to engage with students at the high school, college andpost-graduate levels.We are a strong supporter of the National FFA Organization, which prepares youth forleadership and careers in science, business and technology of agriculture.We are a sponsor of INROADS College Links program in Newark, N.J. which preparesunderrepresented minority students at the high school level for college and introducesthem to potential careers and required curricula, including careers in STEM andveterinary medicine.We also have long-standing partnerships with colleges of veterinary medicine tosupport leadership and diversity among future veterinarians. As part of ourcommitment to the future of the veterinary industry, we have given more than 7million in scholarship funds through the Zoetis Veterinary Student Scholarship Program.Employee developmentWe have onboarding curriculum to help new colleagues succeed in their first days,weeks and months. Our various business units and functions provide job-specificdevelopment and training programs.These include field force effectiveness training, sales foundations for new colleagues,and training related to the species group the colleague serves in our U.S. Operationsteams; Quality, Engineering and Operations training in Manufacturing; and, for R&D, jobspecific online training and content including Standard Operating Procedures (SOPs),Systems, and Safety training. Much of the R&D training occurs on-the-job, with manyroles including mentorship by more experienced peers to facilitate skill development.We track participation in many of our training programs as well as our investment intraining. In 2019, over 900,000 trainings were completed across our business globally.Our annual training spend is approximately 1.5 million.Leadership development trainingWe offer multiple leadership development programs. The President’s LeadershipDevelopment Program (PLDP) develops high-potential colleagues in our U.S.Operations into future leaders. With a year-long Action Learning Program, the PLDPengages colleagues in teams to work on a real business-critical project outside of theirnormal job scope. Mentoring is provided by senior leadership to enhance skills andcapabilities, and participants engage in “learning-reflection” activities. At the conclusionof the year-long program, participants emerge as advanced leaders, demonstratinggreater business acumen, business savvy and overall success.In 2019, 53% of PLDP participants were women, and half of these women advancedtheir careers during the program, either through promotions or job changes.Additionally, the Leadership Essentials program – a new program launched in 2019 forfirst-line field managers and managers in newly acquired business (typicallycolleagues new to people management) – is focused on building and motivatingsuccessful teams. The curriculum stresses the importance of diversity through topicson recruitment and selection, leadership behavior assessment, career development,performance management, emotional intelligence and more. Half of the participantswere women in 2019.Employee performance reviewsWe measure performance against objectives established annually at the company,organization, and individual level. Individual objectives focus on 2 to 3 critical prioritiesplus day-to-day job responsibilities. Separately, colleagues define career goals and planexperiences to reach them with an Individual Development Plan.Managers and colleagues meet yearly to discuss performance against objectives, andmanagers can provide an optional written evaluation.ZOETIS 2019 ENVIRONMENTAL, SOCIAL & GOVERNANCE REVIEW11

EMPLOYEE ENGAGEMENT & OPEN FEEDBACK CULTURETOPICEmployee engagementWe assess colleague engagement and key drivers enabling organizational performanceby regularly conducting employee engagement surveys. In 2020, the survey wasconducted in 3 waves, inclusive of all colleagues. Prior to 2020, we conducted thesurvey every 2 years.Our engagement rate based on the first wave of the 2020 survey was 90%,in 2018 it was 85%, and in 2016 it was 81%.Grievance escalation and reporting processWe value responsibility and integrity. Our Code of Conduct contains general guidelinesfor conducting business with the highest standards of ethics. We are committed to anenvironment where open, honest communications are the expectation, not theexception. We want colleagues to feel comfortable in approaching their supervisor ormanagement in instances where they believe violations of policies or standards haveoccurred. In situations where colleagues prefer to place an anonymous report inconfidence, they are encouraged to use our ethics hotline, hosted by a third-partyhotline provider, EthicsPoint. Colleagues are encouraged to submit reports relating toviolations stated in our Code of Conduct, as well as asking for guidance related topolicies and procedure and providing positive suggestions and stories.Open feedback cultureWe have an Open Door Policy where colleagues are encouraged to present ideas,concerns, questions, problems or suggestions directly to any level of leadership withinZoetis, without fear of retaliation.BENEFITS & COMPENSATIONTOPICBenefits (U.S.)1We are proud to offer competitive and comprehensive healthcare and retirementsavings benefits along with inclusive policies to support our U.S. colleagues’ diverseneeds. Our benefits include family-focused programs such as subsidized back upchildcare, concierge-level coordination for caregivers, multiple programs for parentswith school-age children, including college application assistance and discountedtutoring. Our fertility, surrogacy and adoption benefits support opposite- and same-sexcouples and single people who want to grow their families. In addition, starting in 2020,colleagues are provided with one day of paid time off to volunteer for a nonprofitorganization of the colleague’s choice.Our U.S. Tuition Reimbursement Program supports colleagues who are continuingtheir education to seek a bachelor’s or graduate degree. In 2020, the programreimburses full-time eligible employees up to 15,000 annually and part-timecolleagues up to 5,000 annually for tuition and other eligible expenses at approvedschools. In 2019, 155 colleagues (49% were women) received tuition reimbursement,an increase of 6% from 2018.In addition, we offer benefits and programs to support colleague well-being, fromhealth and financial wellness to family and lifestyle resources. Colleagues are eligible forZoetis health, insurance and personal benefit plans if they are a U.S. or Puerto Ricocolleague working full- or part-time (regularly scheduled to work at least 40% of astandard work week).1 rior to implementing our new policy in 2020 as described above, the week of Caregiver leave provided to all new parents (mothers and fathers) was not tracked. Data is onlyPavailable for colleagues who took maternity short-term disability, Family and Medical Leave Act (FMLA), or paid and unpaid parental leave tracked through our leaveadministrator.ZOETIS 2019 ENVIRONMENTAL, SOCIAL & GOVERNANCE REVIEW12

Parental leaveIn 2020, we introduced fully paid U.S. Parental Leave, providing all colleagues 6 weeksof 100% paid leave after welcoming a child. Birth mothers continue to receive additionalfully paid short-term disability benefits, and the primary adoptive parent receives anadditional 6 weeks of paid leave through our Adoption Paid Leave of Absence. Wecontinue to provide all colleagues an additional one week of paid Caregiver Leave peryear to care for children, parents or other family members with caregiving needs.We also offer phased return to work following parental leave, which allows new parentsthe flexibility to ease back into their full-time job over.Parental leave metrics arental leave8312665616Adoption leave112200In 2020, 69 female colleagues and 55 male colleagues took parental leave.3Equitable compensation1We’re committed to maintaining an inclusive environment where every colleague canthrive. In 2017, we performed our first internal review of pay practices to ensure genderpay equity, and this initial review confirmed no material or unexplainable pay gaps basedon gender. In 2020, we expanded this internal review of pay practices beyond gender toinclude race/ethnicity across our U.S. colleagues. The 2020 review similarly confirmedthat there were no noteworthy or unexplainable pay gaps related to gender or race/ethnicity. Our compensation practices and processes include safeguards to ensure thatsalaries established when colleagues are hired, promoted or awarded annual salaryincreases consider relevant factors such as experience, qualifications, performance andapplicable market salary data to ensure pay equity across our colleagues.As of 9/30/20.Benefits described are for colleagues based in the U.S. We will consider reporting additional details in subsequent reports.2 “ As we strive to make Zoetis a more inclusive,welcoming company where everyone feelsvalued and included, our colleagues make thedifference in our ability to drive change withinour company as we embrace diversity to improvethe quality of our innovation and collaboration.”Evelyn OrtizChief Talent, Diversity, Equity & Inclusion OfficerZOETIS 2019 ENVIRONMENTAL, SOCIAL & GOVERNANCE REVIEW13

DIVERSITY & INCLUSIONTOPICWorkforce demographicsGender diversity50% of our executive team members are womenEEO CATEGORYFEMALEMALEExec/Sr. Manager30%70%Mid-Level Manager33%67%Professionals49%51%All ONALSALL OTHERWhite83.7%85.0%79.8%78.1%Black/African %5.5%Asian6.7%7.8%12.0%7.9%Mixed Race2.2%0.9%1.0%1.2%All Other0.7%0.3%0.7%1.6%U.S. ETHNICITYDiversity & inclusion programsOur diversity, equity & inclusion (DE&I) strategy is managed by our Talent, Diversity &Inclusion Center of Excellence, led by our Chief Talent, Diversity, Equity & InclusionOfficer, reporting to our Chief Human Resources Officer. Our DE&I strategy is reviewedwith the executive leadership team and Board of Directors each year, and we reviewour progress on DE&I initiatives quarterly, including our workforce gender and race/ethnicity representation.We will work to achieve our DE&I aspirations to accelerate inclusion, equity and morediverse representation across Zoetis through targeted recruitment efforts andpartnerships with educational institutions, and DE&I education for our colleagues.To learn more about our DE&I efforts, including our D&I Council, Colleague ResourceGroups, and partnerships, see our Diversity, Equity and Inclusion webpage.ZOETIS 2019 ENVIRONMENTAL, SOCIAL & GOVERNANCE REVIEW14

EMPLOYEE HEALTH & SAFETYTOPICHealth & safety metricsHealth & safety programWe track health and safety performance metrics total injury rate (TIR), lost time injuryrate (LTIR), restricted work injuries and medical treatment injuries on a monthly basisfor all manufacturing and VMRD sites, as well as for U.S. offices, field force, fleet andlogistics. Since 2018, we have tracked TIR and LTIR for all our operations worldwide.Our safety programs have resulted in strong safety performance, with TIR and LTIRrates lower than the industry averages (U.S. averages in 2018 were 1.6 for TIR and 0.4for We are committed to ensuring a safe working environment for our colleagues, and ourGlobal EHS Policy standards define EHS performance requirements for each site,procedures and recommended practices. Our sites have injury prevention programs,and we strive to build best-in-class safety culture. Our procedures emphasize the needfor the cause of injuries to be investigated and for actions plans to be implemented tomitigate potential recurrence.We regularly conduct internal and external site audits according to risk assessments.We maintain an EHS auditing program for internal si

Self Audit. In addition to our internal EHS Management System, two of our sites – Catania, Italy and Suzhou, China – are ISO 14001 certified. CLIMATE CHANGE RISKS AND OPPORTUNITIES (TCFD) TOPIC Governance Our Board of Directors has determined that oversight of our overall sus