Packaging Technology Center Waukegan, Illinois

Environmental Sustainability Report Fiscal Year 2016

Cardinal Health creates optimized packaging designs for our business that meet patient safety requirements while conforming to the principals of regulatory compliance and environmental efficacy. The team of engineers at the Packaging Technology Center (PTC) evaluate packaging designs to find opportunities for improvement in both recyclability and raw material utilization.

FY 2016 marks the completion of a five-year effort between the PTC and the Environment, Health, and Safety (EHS) department to reduce packaging by 5 percent or approximately 3 million pounds of packaging material for our self-manufactured products from FY 2011 levels. The results of this effort exceeded our goals.

Environment, Health, Safety, & Sustainability Program

The Cardinal Health environmental

sustainability program strives to

reduce the environmental footprint

of our operations and products.

Aspects of the program include:

• Global EHS Policy

• Global EHS Management System

• Global EHS Standards

Global EHS Policy

The Cardinal Health EHS Policy advocates our respect for the environment. Cardinal Health is committed to the health and safety of its employees, contractors and the community and to minimizing the impacts of its business on the environment. We believe that work-related illnesses, injuries, and environmental incidents are preventable. It is our vision to have all employees and contractors working safely and in an environmentally responsible manner 100% of the time.

To accomplish this, Cardinal Health will: • Conduct business in a manner that complies with EHS regulatory and internal

company requirements.

• Create a culture that strives for zero work-related injuries, illnesses, and environmental incidents.

• Integrate EHS into company-wide business processes and strive for continuous improvement in EHS performance.

• Provide the necessary training and resources to work safely and in an environmentally sound manner, and hold employees and contractors accountable.

• Design products and conduct business consistent with its environmental guiding principles on pollution prevention, energy optimization, and design for the environment.

Global EHS Management SystemCardinal Health utilizes a Global Environment, Health, and Safety Management System (EHSMS) similar to that of ISO 14001 and OHSAS 18001. The Cardinal Health EHSMS is built on the Plan-Do-Check-Adjust continual improvement model. The system provides the framework for operations to predictably and sustainably manage EHS through goal setting, defining roles and responsibilities, developing proactive performance measures, as well as holding individuals accountable for their responsibilities within the EHSMS. The Cardinal Health EHSMS provides the structure, strategy and expectations to continually improve EHS performance.

The EHSMS is organized into 12 elements that define the planning, implementation, assessment and measurement of the management system. Operations and business units utilize the EHSMS as the framework to understand hazards and develop and implement strategies to reduce risk. Cardinal Health operations are supported by EHS professionals and EHS consultants. A key element of the EHSMS is Hazard Recognition, Evaluation and Control which establishes and documents a process to continuously identify and assess hazards and associated risks (including compliance with existing and emerging regulatory requirements) and establish methods to eliminate or reduce the risk. Additionally, Cardinal Health has adopted a Global EHS Policy and Global EHS Standards to ensure the consistent implementation of recognized EHS practices globally.

Please visit the Cardinal Health Environmental and Sustainability website for additional information: http://www.cardinalhealth.com/en/about-us/corporate-citizenship/environmental-sustainability.html

Developing opportunities

Covered

88%

12%

20%

80%

Environment, Health, and Safety Management System Operational Employee Coverage

Approximately 88% of our operational employees are covered under the EHSMS. This number does not include call centers, field, offices and sales.

Global EHS StandardsThe Cardinal Health Global EHS Standards apply to all businesses and operations worldwide. The standards establish company requirements for the recognition, evaluation, and control of hazards.

Air Emissions & Greenhouse Gases

Chemical Management

Contractor EHS

Dock Safety

Electrical Safety

Ergonomics

Gas Fired Equipment

Occupational Health

Powered Industrial Trucks

Waste Management

Water Management

Working at Heights

About this Report

Cardinal Health Operates on a fiscal year starting July 1 through June 30.

Statistics and metrics included in this report may be based on estimates, assumptions, or developing standards.

Guiding Principals

Fundamental to our sustainability program are four key principles that guide our efforts.

Pollution Prevention: Minimize waste generated in our operations and maintain high rates of reuse and recycling.

Energy Optimization: Optimize energy selection and use to reduce impacts to the environment, minimize greenhouse gas emissions and give preference to renewable energy sources when feasible.

Design for Environment: Design products and services to reduce consumption of natural resources and energy requirements, to reduce waste and emissions, and to maximize overall product functionality.

Employee & Public Outreach: Promote environmental awareness and engagement among employees, the public and our customers that lead to sustainable development.

Health and Safety Injury Reduction Initiatives Over 2,360 Ergonomic and Injury Reduction Initiatives aimed at reducing risk and making our employees and contractors safer in the workplace have been completed since FY 2015. The Ergonomic and Injury Reduction Initiatives are a part of the EHSMS and are a part of our operations. Ergonomic Solutions were only counted if they had an improvement of 20% or greater from the original score.

0

500

1000

1500

2000

329

1018

410 605Ergonomic Solutions

Injury Reduction Initiatives

FY15 FY16

Cardinal Health operates a Toyota Prius hybrid fleet of over a dozen vehicles. This hybrid fleet drives over 300,000 miles annually and sustains average fuel economy of over 45 miles per gallon. Each year additional hybrids and more fuel efficient vehicles are added increasing our overall fleet fuel efficiency.

Cardinal Health Puerto Rico has invested in Liquid Petroleum Gas (LPG) fleet vehicles to increase efficiency, reduce emissions, and costs. The project has successfully resulted in improved fuel efficiency, while reducing maintenance costs, fuel prices, and emissions. The success of the project resulted in an ongoing expansion to the LPG fleet.

Sustainability ProgressEnergy Optimization Cardinal Health is committed to evaluating our energy footprint and investing in sustainable technologies that reduce our greenhouse gas emissions through improving technology and increasing efficiency. Examples of past projects include a LEED Certified headquarters building, a Biomass Boiler, Solar Photovoltaic (PV) panels, improved efficiency through Heating, Ventilation, Air-conditioning (HVAC) systems, upgraded efficient process equipment, and upgraded lighting systems with Light Emitting Diode (LED) technology.

Since FY 2011 Cardinal Health has invested in over 80 energy optimization projects resulting in a reduction of over 62,500 million kilowatt hours (kWh), with a corresponding cumulative CO2e reduction of over 44,000 metric tonnes had these projects not been completed.

Water Conservation Cardinal Health strives to conserve the amount of water used in our manufacturing processes, and on our facility grounds. Approximately 17% of our total water consumption is comprised of recycled process water at our facilities. Since FY 2009 Cardinal Health has recycled more than 1.3 billion gallons of water.

• A manufacturing plant has invested in a waste water recovery operation from their expanding process instead of sending increased waste water to local water treatment plants.

• A Cardinal Health facility in Puerto Rico collects rain water from site roofs and utilizes it for cooling of air handling units, bathrooms, and irrigation. Since its installation this collection system continues to reduce municipal water demand and reduce energy consumption for the air handling units.

• At the Cardinal Health headquarters, rain water runoff is redirected and collected to supplement water used for irrigation of the campus grounds. This reclaimed rain water makes up over 40% of the water utilized for irrigation for the grounds and landscaping during the summer months.

• A facility located in an arid climate has relandscaped their grounds implementing xeriscaping in which only native plants that thrive in their region are utilized thus eliminating the need for supplemental irrigation.

• Multiple facilities have reduced their amount of water usage by over 60% from eliminating lawn irrigation.

Water Usage (million cubic meters)

FY12FY09*

3.2

0.31

FY13 FY14 FY15 FY16

Total usage

Total recycled

FY16 represents 81 percent of total square footage

4.0

0.69

4.0

0.67

4.0

0.71

4.2

0.75

3.6

0.64

Renewable Energy Cardinal Health has invested globally in renewable energy projects. In FY 2016 solar panels generated over 212,000 kWh.

The Cardinal Health Rayong, Thailand manufacturing operation, with a long standing commitment toward environmental sustainability, can operate a biomass renewable energy boiler depending on economic conditions. Fueled by sustainable eucalyptus wood wastes, the renewable energy generator is capable of offsetting 100% of the natural gas consumption in the manufacturing process. The biomass boiler utilizes fuel supplied by partners that are certified Forest Stewardship Council (FSC) 100%.

Waste to Energy / Landfill AvoidanceSome locations are pursuing landfill avoidance by sending site wastes to an incineration to energy facility. In FY 2016 over 250,000 pounds of waste avoided landfills and were converted to electricity.

TransportationCardinal Health has been a partner in good standing in the SmartWay program as both a shipper and a carrier since 2010. Cardinal Health Canada has been a proud partner since 2015. Over 60% of our business operates through active SmartWay Shipper partner companies that work toward more efficient transportation operations. Our entire carrier fleet participates.

>60% SmartWayShippers

100% SmartWayCarriers

Total Recycling & Waste (System Calculated in million pounds)

40

100

140

120

80

60

0

20

FY12 FY13 FY14FY09*

Recycled waste Non-Recycled

FY15 FY16

54%

74.3 M

46%

75%

25%

77%

23%

77%

23%

77%

23%

122.8 M 120.5 M119.5 M112.5 M 109.6 M

78%

22%

FY16 represents 76 percent of total square footageFY16 Hazardous Waste represents <3.0% of total waste.

Recycling Data (million pounds)

FY09 FY12 FY13 FY14 FY15 FY16

Wood14.8 42.0 40.5 35.9 37.5 44.2

Cardboard19.3 37.1 37.1 36.7 34.3 33.9

Paper0.6 2.1 2.4 2.5 1.7 2.4

Plastics3.0 4.9 3.9 4.2 4.7 5.5

Metals0.3 2.0 2.3 3.8 2.4 2.7

Electronics0.2 0.2 0.3 0.2 0.2 0.3

Recycling (million pounds)

Recycling is a part of our core guiding principles fundamental to our sustainability program. Our established programs are designed to recycle wood, cardboard, plastics, paper, metal, electronics, and ink cartridges among other resources. Since FY 2009 Cardinal Health has recycled over 640 million pounds of material.

Waste MinimizationIn working towards minimizing landfill waste, multiple facilities are working with a U.S. manufacturer of printer toner cartridges. The manufacturer operates a closed loop process allowing remanufactured cartridge cores to be reused multiple times and avoid single use and disposal as landfill waste. Annual ink cartridge recycling totals approximately 10,000 pounds.

Cardinal Health is actively reducing our paper waste through optimizing electronic documentation. What began as an innovative idea entered into the company’s internal business idea competition has expanded to an enterprise wide standard. Utilizing electronic signatures, data management and integration with tracking and storage of signatures, approvals, orders, and customer onboarding are saving the company time, money, and energy. This application enables Cardinal Health to provide a better customer experience with a faster onboarding process, improved response rates with patient sign-up, increased customer sales with an easier ordering process and rapid contract signature process.

Three years after the implementation of the electronic signature project began the company has processed over 610,000* electronic documents, avoiding over 697,000 gallons of water, 58,000 pounds of waste, and 227,000 pounds of wood had all these documents been printed.

*Documents calculated as 2 copies of a 5 page contract.

Source: Calculations are based on the papercalculator.org v 3.2. The Paper Calculator was developed and operated by Environmental Defense Fund, now under ownership of the Environmental Paper Network.

EngagementThe Numbers *FY09 is the baseline year

Data ValidationCardinal Health has a robust internal validation process both at the business and the corporate level that involves: gap analysis, invoice reconciliation, and data trends evaluation. Our key performance indicator library includes data parameters that ensure consistent data recording across all business units. EHS metric data is input into the Cardinal Health global EHS Data Management System and validated by a combination of the responsible EHS leader for each business and the Global Director of Environmental Affairs and Sustainability. Our internal validation process is periodically reviewed by the Cardinal Health Internal Audit Group and reported out to the Environment, Social, and Governance (ESG) Committee.

Greenhouse Gas (GHG)(Thousand metric tons CO2e)

Scope 1 (Direct)*Scope 2 (Indirect)*Scope 3 (Other Indirect)†

FY16FY12FY09*

100

200

0

FY13 FY14 FY15

FY16 represents 83 percent of total square footage* Scope 1 & 2: Calculated according to the Climate Registry General Reporting Protocol† Scope 3: Calculated according to the US EPA Greenhouse Gas Inventory Protocol

100

200

0100

200

0 100

200

0 100

200

0 100

200

0

0.3

0.4

0.5

0.6

0.7

0.8

0.3

0.4

0.5

0.6

0.7

0.8

0.47

0.62

0.48

0.44

0.74

0.49

0.70

0.58

0.50

0.39

Carrier Fleet OSHA Recordable Injuries/Million Miles

Vehicle Fleet OSHA Recordable Injuries/Million Miles

FY16FY15FY14FY13FY12

Fleet Safety Metrics

OSHA Total Recordable Incident Rate (TRIR)

1.381.64

1.841.86

2.31

3.70

TRIR: (Total OSHA Recordable Incidents x 200,000/Total Hours Worked)

FY16FY12FY09* FY13 FY14 FY15

1.0

2.0

3.0

4.0

2016 Reusable Packaging Association (RPA)

Excellence in Reusable Packaging Award

2016 Healthcare Distribution Management Award (HDMA) Merit Finalist (2nd Place) - Innovative, Sustainable, Bulk Cold Chain Delivery

Puerto Rico Manufacturing Association’s (PRMA) Environmental Excellence Award

Third award for the rainwater reuse system

Award for waste reduction by recycling polystyrene or styrofoam

Award for improved and reuse of cold packaging materials

PRMA President Award for the Occupational Safety Health Records

for 2013, 2015 & 2016.

Silver medal for recycling over 87 percent of waste generated by Cardinal Health PR.

2016 Newsweek Green Rankings

US Rank: 76/500 Global Rank: 133/500

DJSI ROBECOSAM

Cardinal Health was named a RobecoSAM Industry Mover 2016

Cardinal Health was named a RobecoSAM Sustainability Yearbook Member 2016

FY16 Recognition

Cardinal Health is one of a select number of companies to participate in the EPA SmartWay program both as a carrier — a company that owns or operates a public or private fleet; and as a shipper — a company that ships or receives items delivered by truck or rail transport. Cardinal Health has been a partner company in good standing since 2010. Cardinal Health Canada joined SmartWay in 2015. http://epa.gov/smartway/about/partnerlists.htm

NAEM – Cardinal Health has been a corporate member of the National Association of Environmental Managers (NAEM) since 2008.

Cardinal Health is a Founding Sponsor of Practice Greenhealth’s Greening the Operating Room (GOR) Initiative, which aims to reduce the environmental footprint of operating suites in hospitals across the country.

Cardinal Health has been recognized for its sustainability efforts by the Dow Jones Sustainability Index (DJSI) RobecoSAM and has been included on the DJSI North American Index since 2006.

Cardinal Health is a proud participant in the Carbon Disclosure Project (CDP) with annual submissions since 2010. https://www.cdp.net/en-US/Pages/CDPAdvancedSearchResults.aspx?k=cardinal%20health

The Healthcare Plastics Recycling Council (HPRC) is a private technical coalition of peers across the healthcare, recycling and waste management industries seeking to inspire and enable sustainable, cost-effective recycling solutions for plastic products and materials used in the delivery of healthcare.

© 2017 Cardinal Health. All Rights Reserved. CARDINAL HEALTH, the Cardinal Health LOGO and ESSENTIAL TO CARE are trademarks or registered trademarks of Cardinal Health. All other marks are the property of their respective owners. Lit. No. 5LE17-624809 (06/2017) cardinalhealth.com

Please visit the Cardinal Health Environmental and Sustainability website for additional information: http://www.cardinalhealth.com/en/about-us/corporate-citizenship/environmental-sustainability.html

Cautionary NoteThis environmental sustainability report contains statements reflecting our views about our future performance that constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are generally identified through the inclusion of words such as “aim,” “believe,” “estimate,” “expect,” “goal,” “intend,” “may,” “plan,” “target,” “commit,” “pledge” and “will” or similar statements or variations of such terms and other similar expressions. The forward-looking statements concern our goals, plans and projections with respect to corporate responsibility, sustainability, employees, environmental matters, policy and business risks and opportunities. You can also identify forward-looking statements by the fact that they do not relate strictly to historical or current facts. Forward-looking statements inherently involve risks and uncertainties that could cause actual results to differ materially from those predicted in such statements, including changes in the legal and regulatory environment, our ability to compete effectively, our ability to achieve our environment, health, safety and sustainability goals, unfavorable economic conditions in the countries in which we operate and the other factors discussed in the risk factors section of our most recent annual report on Form 10-K and subsequent reports on Forms 10-Q and 8-K. Forward-looking statements are aspirational and not guarantees or promises that goals or targets will be met. Investors are cautioned not to place undue reliance on any forward-looking statements. We undertake no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise.