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We have committedto reducing thecarbon-equivalentfootprint of ourceiling products by40%below the productcategory averageby 2020.12 USG CORPORATIONIncreasingly, industry guidelines such as US Green Building Council’s LEED v4now require applicants to also report the impact of building materials onhuman health. We are a member of the Health Product Declaration Collaborative (HPDC) which developed the Health Product Declaration (HPD), astandardized document that lists a product’s ingredients and related healthinformation. We have published 31 USG wallboard and ceiling HPDs in theHPD Public Repository.We have also developed Product Attribute Report (PAR) documents thatsummarize both the environmental and health impacts of a product.These reports combine sustainability data, regional materials and recycledcontent information, EPD data, and health product transparency information.We published 31 PARs for USG wallboard and ceiling panels in 2016 andhave more in development.Another product transparency initiative we completed was to redesign all ourpackaging to meet the Globally Harmonized System (GHS) of Classification andLabeling standards. GHS was a new initiative adopted by the US OccupationalSafety and Health Administration to standardize the way manufacturersclassify and label chemicals and raw materials. It provides common languageand pictograms to help customers understand which raw materials are inproducts and how those materials might affect them.

New ProductsWe always strive to solve our industry’s toughest challenges, and as demandfor sustainable products continues to grow, architects and builders are lookingto manufacturers to take the next step in lowering our environmental footprint.That’s why we have developed some of the industry’s most forward-thinking,environmentally friendly building innovations with products that are easier andsafer to use, that reduce waste and improve efficiency — all without compromising design quality and performance.With USG Sheetrock Brand’s new EcoSmart Panels, we have introduced thefirst wallboard available to meet the Architecture 2030 Challenge for Productswith a lower carbon footprint. USG Sheetrock Brand EcoSmart Panels representa revolution in wallboard manufacturing and are the industry’s first and onlywallboard that is both lightweight and sustainable. These panels are built uponUSG’s UltraLight technology that contractors prefer but are now manufacturedwith fewer natural resources and reduced impact on the environment.USG Sheetrock Brand EcoSmart Panels use 25 percent less water to manufacture,reduce associated greenhouse gas emissions by 20 percent and lessen thecarbon footprint of transportation energy by 20 percent compared to standard5/8 inch Type X gypsum panels¹. These are impressive numbers on their own,but in aggregate they become even more astounding. In fact, an industry-wideconversion to USG Sheetrock Brand EcoSmart Panels could save over 1.7billion gallons of water, reduce CO2 emissions by over 2.8 billion pounds andsave 5.5 million gallons of diesel transportation fuel annually.1. As presented in the Gypsum Association’s 5/8 inch Type X Environmental Product Declaration(FPI/GA/01/2014) with fresh water usage updated to be in accordance with ISO 14046.2016 SUSTAINABILITY REPORT 13

SUSTAINABLE PRODUCTTRANSPORTATIONWe are committed to sustainablytransporting our products.We have been a member of theEnvironmental ProtectionAgency’s (EPA) SmartWay Transport Partnership programsince 2006. The programpromotes environmentallycleaner and more fuel efficienttransportation options toimprove air quality and reducefuel consumption.We collaborated with Tremco Commercial Sealants & Waterproofing on anothersustainable product innovation, the Securock ExoAir 430 System. This first-ofits-kind system improves the energy efficiency of buildings by combining ourSecurock Brand Glass-Mat Sheathing with Tremco’s fluid applied air/waterbarrier membrane. BuildingGreen named Securock ExoAir 430 System one ofits Top 10 Green Building Products for 2017 and the system was also recognizedas an Edison Awards Silver award winner in the Energy & Sustainabilitycategory for Building Construction & Lighting Innovations.The system applies the membrane in the controlled manufacturing setting, asignificant advantage over traditional air and water membranes, which areapplied on the job site. With the Securock ExoAir 430 System, there are notapes or pails of fluid to transport or dispose. Additionally, the three key systemcomponents, USG Securock Brand Glass mat sheathing gypsum wallboard,Tremco’s ExoAir Fluid Membrane and Dymonic 100 Sealant, have all beencertified GREENGUARD Gold. Because the system protects structures from air,water and vapor it also reduces occupant heating and cooling costs.14 USG CORPORATION

ENHANCE ENERGY MANAGEMENTSince our 2005 baseline, we have reduced energy consumption by a combined15.7 percent on a per unit of production basis across our product lines.This has led to a similar reduction in greenhouse gas emissions during thesame time period.While our products are already low in embodied energy compared to otherbuilding materials, we are always looking to improve. We have foundopportunities to consume less energy through increased use of alternativelow-carbon energy sources, converting to cleaner burning fuels such as naturalgas, and through consistent review and optimization of our manufacturingprocesses and equipment. Each of our plants has an energy coordinator whosejob includes monitoring usage and looking for reduction opportunities.Plant Honoredfor EnergyConservationOur Sperry, Iowa plantwas recognized at theannual Alliant EnergyConference for upgradingtheir lighting system tohigh efficiency bulbs,making work areasbrighter and safer whileusing much less energy.2016 SUSTAINABILITY REPORT 15

Weekend Shut Downs Lead toSignificant Energy SavingsSince 2009, our Norfolk, Virginia wallboard plant has reduced energyuse by completing a comprehensive shutdown checklist for weekendswhen the equipment isn’t running. The plant first identified switches,panels and other equipment that were non-essential on the weekendand turned those items off. Next, they installed a smaller air compressorto support only the plant’s fire suppression system, which allowed themto turn off main compressors. These two changes led to an immediateand significant reduction in energy demands. Last year, the plant addeda power-monitoring screen to their process control system, which allowsthem to see exactly where energy is being used — and make adjustmentsas needed.This year-round focus on weekend energy use evolved from our annualKill-A-Watt contest in which participating plants compete to see howmuch they can reduce their weekend energy demands during theThanksgiving holiday weekend.Several plants have found great success through the contest, includingBridgeport, Alabama, which has consistently maintained a weekendenergy consumption rate of less than five percent of its normalweekday demands.At our Red Wing, Minnesota plant, we completed a project to reduce theenergy required to manufacture our mineral wool ceiling tiles by more than20 percent. Mineral wool is made from slag, a waste byproduct from steelproduction. Our ceiling tile plants use foundry coke as a fuel source to meltthe slag which is then spun into fibers.Red Wing changed its coke combustion process to significantly reduce theamount of waste energy generated. The plant expects further energy savingsas it continues to optimize the new process and our colleagues will explorethe feasibility of making similar changes at our Walworth, Wisconsin plant.Red Wing’s coke optimization project was one of several hundred Lean SixSigma (LSS) projects we have completed in recent years to drive continuousimprovement of our processes, equipment design and how we use resources.Many of these projects focused on reducing energy and optimizing rawmaterials, reducing time needed to start up machines in board plants andpapers mills, increasing compressed air efficiencies by improving machinereliability and optimizing temperatures for raw materials.16 USG CORPORATION

IMPROVE HOW WE USE RESOURCESDuring manufacturing, we continuously strive to use the least amount ofresources needed while maintaining superior quality. For example, we appliedLSS to improve how we use a chemical compound that increases the waterresistance of popular USG products including FIBEROCK Brand Underlaymentand SECUROCK Brand Gypsum-Fiber Roof Board. Over the years, thiscompound replaced wax as the primary ingredient to create moistureresistance. The wax replacement resulted in dust issues and energy inefficiencies.A LSS team that represented our Corporate Innovation Center, TechnicalServices and Manufacturing divisions developed several solutions thathelped our Gypsum, Ohio plant reduce the chemical’s usage by 40 percent.The LSS team adjusted the chemical to water ratio, how the chemical was fedthrough pumps and the amount of energy needed. Equipment re-designs andprocess changes further reduced the amount of dust generated. The plantnow uses less natural gas and equipment lasts longer.CENTER FORMANUFACTURINGEXCELLENCEAs part of our quest to run a moreefficient and effective business,we established the Center forManufacturing Excellence at ourEast Chicago, Indiana plant to pilot“next generation” manufacturingstrategies.These advanced controls providereal-time production data toreduce waste, downtime, energyand effort, and will enable us toproduce higher quality productsfaster, safer and at a lower cost.2016 SUSTAINABILITY REPORT 17

USG Participates in WallboardRecycling ProjectOur Washingtonville, Pennsylvania plant is recycling clean wallboardscrap from New York City job sites as part of a pilot program developedby the Durst Organization and Lend Lease, in partnership with theNew School and the City University of New York. The normal cutting anduse of wallboard in a construction projects typically creates about 10 to12 percent excess product. Some of this waste is reused for agriculturalpurposes, but much of it ends up in landfills.We are working with the City of New York and industry stakeholders todevelop a much needed closed-loop wallboard recycling model thatsegregates clean wallboard waste from other job site waste and thenhauls it away separately. Such actions drastically increase the recyclabilityof the gypsum and improve the recyclability of the other wastematerials as well.We are also conscious of reducing or eliminating waste from our processes.For example, we use 100 percent recycled paper on our wallboard products, andnearly 100 percent of the raw materials used during gypsum panel productionleave as finished product. To expand this commitment to our customers andcommunities, some of our locations have increased the percentage of recycledcontent in our wallboard through waste reclamation efforts.In addition to recycling the plant’s own board waste, our Rainier, Oregon planthas a new waste reclamation system that turns job site wallboard wasteback into gypsum panels. When new wallboard waste comes into the plant,a machine separates the gypsum core from the paper. The paper is sent toa local dairy farm where it’s used as bedding, and the recovered gypsum isput back into our manufacturing process to be recycled into new wallboard.The new system allows us to meet increased customer demand for productshigher in post-consumer recycled content.We are constantly monitoring our waste streams and our ability to recycleour raw materials, products and other supplies. We’re exploring ways to reuseancillary items in our processes, including plastics, steel, paper and pallets.18 USG CORPORATION

Responsible MiningWe operate 12 mining operations in NorthAmerica, including three underground minesand 9 surface quarries. Two of our quarries usesurface mining machines to extract and sortgypsum rock through a single process,eliminating the conventional steps of drilling,blasting and crushing the rock. Eliminating theseprocesses dramatically improves the energyefficiency of the mining operation.Gypsum is a plentiful mineral, and mininggypsum is easier on the environment than othertypes of mining. We continuously evaluateour mining practices to reduce our impact onthe environment and the communities aroundour mines.Just one example of our commitment toresponsible practices is our progressivereclamation of mining sites to promote vegetation,slope stability and animal habitats.As part of our ongoing reforestation activitiesat our Tecomán, Mexico quarry, we recentlycompleted backfilling and earthwork, andre-planted 3,200 native trees to return a twoacre site to almost pre-mining condition.Over the next four years, we will plant 25,000more trees and plants as we reclaim another15 acres of land.In Alabaster, Michigan our ongoing projects torestore and improve wildlife habitat on companyproperty have included wetland creation andenhancement, timber management, deermanagement and control of invasive species.Our goal is to return the land of our formermining sites to a productive state. In LocustCove, Virginia where we mined gypsum foralmost 40 years, the site now consists of hillsand meadows inhabited by deer, turkey, blackbears, beavers and other wildlife.Our efforts help us in our goal to consistentlyand substantially exceed all state and federalrequirements.2016 SUSTAINABILITY REPORT 19

SOCIALRESPONSIBILITY20 USG CORPORATION

SAFETY FIRSTSAFETY VISIONWe will be the industry leader in health and safety by creating an injury-freeworkplace and modeling safe behaviors for our families, colleagues, customersand communities. We are committed to working safely: every minute, everytask, every day — so we can live life to the fullest with those who depend on us.USG accepts theRobert W. Campbell Award.We value the safety of our employees above everything else and believe no jobis so urgent that it cannot be done safely. More than half of our manufacturingoperations have surpassed one million hours without a lost time injury.The National Safety Council (NSC) honored our safety-first culture with itsprestigious 2016 Robert W. Campbell Award, presented annually to anorganization that achieves excellence through the integration of environmental,health, safety and sustainability management into business operations.Cutting across international and industry boundaries, Campbell Award winnersrepresent organizations that have taken great strides in EHS excellence.Award winners are acknowledged not only as leaders in the business realm,but also as those that recognize the value of protecting employees andtheir environment.In the history of the award, we are one of only a few to receive the CampbellAward as a first time applicant. The NSC presented us with the award at theNational Safety Council Congress & Expo, the world’s largest annual gatheringof safety and health professionals. “USG truly has a culture of safety excellence,”said Deborah A.P. Hersman, president and CEO of the National Safety Council.“The company-wide dedication to safety is clear, and we are excited to honortheir commitment to saving lives and preventing injuries.”2016 SUSTAINABILITY REPORT 21

Our Canadian subsidiary, CGC Inc. was recognized by Canadian OccupationalSafety magazine as a winner in the manufacturing category of Canada’s 2016Safest Employers Awards. The magazine evaluates honorees on a range ofoccupational health and safety elements including employee training, OHSmanagement systems, emergency preparedness, incident investigation andinnovation through health and safety initiatives.These honors were in addition to EHS Today magazine naming USG to its 2015list of America’s Safest Companies. The award honored just 16 top companiesacross a variety of industries that have accomplished ambitious safety goalsand achieved injury and illness rates lower than average.“What we’ve been hearing from experts is that in order for workplaces toachieve world-class safety, they must look beyond concepts like ‘zero injuries’and look toward creating a culture that aligns business and safety,” said EHSToday Editor-in-Chief Sandy Smith when she announced the list.In 2016, our recordable injury rate was 1.81 per 100 employees and wassignificantly lower than the Manufacturing Recordable Injury Industry Averageof 3.8 per 100 employees (according to data from the US Bureau of LaborStatistics). Our lost time rate of 0.04 was also lower than the 1.0 industryaverage (in 2015).Injuries are not our only focus. We encourage our teams to report near missestoo, so we can identify opportunities to reduce risk. By analyzing theseincidents, we are able to implement effective corrective and preventativeactions before an injury occurs. We consider safety everyone's responsibility,which means that each of our employees actively identifies hazards anddevelops plans to address those issues.RECORDABLE INJURIESLOST TIME INJURIESManufacturingIndustryAverage 20154.01.503.803.02.0ManufacturingIndustryAverage 20151.002.001.991.962.021.811.00.00.500.00201222 USG 420122013201420152016

USG Names Jennifer Scanlon President and CEOJennifer F. Scanlon became president and CEO of USG Corporation onNovermber 1, 2016. She joined USG in 2003 and has held a number ofleadership positions including serving as executive vice president, presidentof USG Corporation’s International business, and president of L&W SupplyCorporation (sold in 2016). “This is an important time in USG’s history.We are a leading manufacturer of innovative products, and we’re ready forthe future,” she said. Jennifer was a 2015 Women in Manufacturing STEP(Science, Technology, Engineering and Production) Ahead Award honoree.She is not only a sought-after thought leader on global manufacturing andbuilding technologies in the U.S. and around the world, but also on thevalue of diversity and inclusion in the workplace.“We engage our employees’ heads, hearts and hands in our safety program,recognizing that they are closest to the hazards each day,” explains Justin Dugas,director, Safety and Health. “Employees do not look to managers or supervisorsto tell them how to safely do their jobs. They tell us. By listening to their ideasand concerns, we improve the safety of our operations.”Many of our locations achieved significant safety milestones in the past twoyears. Our Galena Park, Texas employees recorded 10,000 safe days, employeesin Stockton, California reached 8,000, Little Narrows, Nova Scotia employeesworked 7,000 safe days, our colleagues in Chamblee, Georgia reached 4,000safe days and in Hagersville, Ontario employees achieved 2,000 safe days.BUILDING A GREAT PLACE TO WORKOur safety culture is just one of many ways we

From our USG Design Studio LEED Report tool to Environmental Product Declarations and certifications, we're committed to transparent manufacturing and product data. More than 200 of our wallboard, ceiling tile and joint treatment products have earned UL (Underwriters Laboratories) Environment's GREENGUARD Gold certification.