REWE Group Sustainability Report 2017

Social Standards in the Supply Chain

GRI 414: Supplier Social AssessmentGRI 412: Human Rights AssessmentManagement Approach

REWE Group obtains a large number of products and product components through supply chains that extend across several countries. The company’s goal is to work together with business partners and suppliers to implement binding standards that apply to their joint supply chains, promote dialogue between all partners to strengthen human rights, and further improve labour and social standards in production operations. The value creation steps for the cultivation of raw materials and processing are particularly in focus.

The Guideline for Sustainable Business Practices of REWE Group applies to all business relationships. The guideline is based on the UN Universal Declaration of Human Rights, the conventions of the International Labour Association (ILO) and UN Global Compact. It addresses such issues as a ban on forced labour and exploitative child labour practises as well as fair employee policies. REWE Group reserves the right to apply sanctions when the principles contained in the guideline are deliberately and flagrantly breached.

Within the “Strategy Green Products 2030” developed by PENNY and REWE in Germany in 2017, the topic of social standards is anchored in the supply chain under the area of action “fairness”. The focus issues of this area of action are “living wage” as well as “elimination of forced and child labour”. Close cooperation with suppliers, including at production sites, increases transparency as well as the avoidance of risks along the supply chains. In addition, individual supplier development supports continuous improvement at the production sites with the aim of strengthening human rights and improving working conditions.

In order to make progress in the area of action “fairness” measurable, the following key performance indicators for store brands have been defined (for more information, see the overarching Management Approach Green Products):

KPI 1: By the end of 2030, 100 per cent of all relevant strategic production sites are to be integrated into training programmes (capacity building)

KPI 2: By the end of 2025, introduction of a complaints mechanism system into relevant supply chains

As part of the process to comply with human rights due diligence, measures are developed on the basis of an analysis of social risks. The process then uses a monitoring system to observe and evaluate them. In 2016, for example, REWE Group markedly expanded its effort to identify and systemise risks (for more information about risk analysis, see link). The findings of the analysis flow into the further development of measures to strengthen human rights and improve working conditions in supply chains. Measures can be defined in different ways depending on which risks are identified. They include a demand for standards and certifications, cooperation with standards organisations, the joining of industry initiatives, and projects with local suppliers and producers.

REWE Group has been intensively working to meet the requirements of the German National Action Plan on Business and Human Rights since its inception, and has also developed a strategy in this context to further develop and implement complaints mechanisms in its supply chains.

Local REWE Group purchasing cooperatives can discuss requirements and issues directly with suppliers or production sites and implement measures. In Asia, for example, the sourcing office REWE Far East (RFE) is responsible for the purchasing of some food and non-food products. As a result, it plays a key role in the improvement of working conditions in the supply chain. The Corporate Responsibility Department of RFE maintains direct contact with suppliers and assists with the social compliance process on site.

GRI 414-2: Negative social impacts in the supply chain and actions taken

In general, REWE Group has developed three different approaches to counter negative social impacts in the supply chain. Measures are carried out within each approach:

1. Internal Management: Raising Awareness Levels, Educational Campaigns and Reporting

Employees of REWE Group receive regular training about relevant labour and social standards issues. This ensures, for example, that social audits are considered accordingly in the selection of suppliers and in the purchasing process. Purchasers, in particular, regularly take part in additional events on this complex of issues, such as the annual area workshops, which provide information on human rights as well as labour and social standards and the current status of the Social Improvement Programme.

2. Supply Chain Management: Supplier Assessment, Raising Awareness Levels and Obligations, Audits and Standards, Measures for Supplier Development

At supplier events and in individual discussions with suppliers, REWE Group is constantly raising awareness of issues regarding human rights and working conditions.

In addition, the requirements for these topics are incorporated into both contracts with suppliers and the Guideline for Sustainable Business Practices, meaning that compliance with each tender or contract is confirmed by the suppliers. For those raw materials in focus, such as cocoa or palm oil, REWE Group has defined guidelines with detailed requirements and objectives (see here).

Social-Improvement-Programm: from Audits to Further Development

In 2017, REWE Group restructured the concept of its supplier development activities in the area of social issues and set up a social improvement programme. It includes the following steps: 1) Onboarding 2) Auditing/certification 3) Remediation/improvements and 4) Training.

The social improvement programme applies to all production sites in the first supply chain level in risk countries (as defined by amfori BSCI).

New suppliers or production sites will be informed about the requirements of REWE Group during onboarding and, if no social audit has taken place yet, they will receive support from experts on site when it comes to preparing for the first audit. In the second step, all suppliers and production sites in risk countries are required to present confirmation of a valid social audit. Recognised social audits include those based on the amfori BSCI standard or the SA8000 standard. SMETA audits of the Supplier Ethical Data Exchange were added in 2017. Textile production sites in Bangladesh must also undergo an inspection based on the Bangladesh Accord on Fire and Building Safety.

  20171
Share of production sites at each step of the Social Improvement Programme  
Onboarding step 2.96 %
Audit step 97.04 %
Audit results
SA8000 3.26 %
amfori BSCI A 5.03 %
amfori BSCI B 5.53 %
amfori BSCI C 68.11 %
amfori BSCI D 4.74 %
amfori BSCI E 0.10 %
SMETA 1.78 %
Invalid SMETA 0.30 %
No audit/expired audit 8.19 %

The calculation was based on the number of production sites and includes all REWE Group production sites for food and non-food products of the first supply chain level in risk countries.

By demanding audits, first improvements in human rights issues and working conditions have already been observed. However, on-site visits to production sites also show that although audit requirements are being implemented, the sense and purpose of many requirements are not always understood and therefore problems are not being identified and remedied independently. Consequently, REWE Group has placed even greater focus on supplier development as part of the “Strategy Green Products 2030” in order to specifically drive improvements at the production sites.

In 2017, more work was done on the conceptual development of training programmes. Tasks included performing analyses to find out where there is room for improvement at production sites. Based on these analyses, REWE Group encourages its suppliers and production sites to participate in amfori BSCI training and has also developed its own training programme for strategic production sites.

As part of the Bangladesh Accord on Fire and Building Safety, REWE Group uses technical advisers at selected production sites to help suppliers implement improvements. As a result, an above-average rate of progress was achieved for the shortcomings identified during the Accord inspections in 2017. The textile factories of REWE Group operating in Bangladesh have rectified 94 per cent of all findings from the inspections. REWE Group wants to continue promoting safety at production sites in the future and has therefore signed a follow-up agreement to the Bangladesh Accord on Fire and Building Safety.

Improvement of Social Standards in the Supply Chains of Raw Materials in Focus: from Certifications to Projects

Since 2013, REWE Group has required suppliers of primary fruit and vegetable products to pledge as part of the framework agreement that they will comply with the core labour standards of the International Labour Organisation (ILO) and pay statutory, negotiated or contractually set wages within the context of their national code of laws. The suppliers must also demonstrate this compliance to the company. The suppliers are also required to ensure that their own suppliers also meet these standards. All producers of fruit and vegetable products must demonstrate that they meet the requirements cited above by undergoing external audits (such as the GLOBALG.A.P Risk Assessment on Social Practice (GRASP), SA8000, Sustainable Agriculture Network (SAN), amfori BSCI). Compliance with these requirements is checked during spot audits.

In the reporting period, REWE Group conducted the following projects to improve social standards in the supply chains of raw materials, among other things:

Cocoa
As a charter member of the multi-stakeholder German Initiative on Sustainable Cocoa, REWE Group joins other companies in supporting the PRO-PLANTEURS project, a joint, five-year (2015 to 2020) cocoa programme being conducted in Côte d’Ivoire. The project strives to professionalise the work of 20,000 cocoa farmers, their families and producer organisations. The aim is to improve the lives of the families by boosting incomes and upgrading diets. So far, some 12,410 cocoa farmers and their families have participated in the project. The project is aimed in particular at women and young farmers with the goal of increasing the appeal of cocoa farming. In the future, the project will focus more on coaching cooperatives and farmers, with particular emphasis on financing and gender equality. The intention is for women in particular to be offered the opportunity to optimise their income. They will also receive support in areas such as diversification in cultivation, production, processing and marketing. Specifically, 40 female members of the cocoa cooperative have been trained as advisers to implement the training programme together with the field workers.

CmiA cotton
REWE Group has been a supporter of Cotton made in Africa (CmiA), an initiative of the Aid by Trade Foundation, since 2008. The initiative is committed to improving the living conditions of African smallholders by helping them to help themselves. Agricultural training sessions teach them about efficient farming methods that increase cotton yields and quality while protecting their health and reducing the environmental impact. These measures are improving the income of farmers and their families. They are also receiving support through various cooperation projects, for example in the areas of education and the promotion of women. In Germany, REWE, PENNY and toom Baumarkt DIY stores are working to increase the share of textiles made of more sustainable cotton (such as CmiA and GOTS, recycled fibre) to 100 per cent by 2025. REWE Group is also involved as a consultant on the Cotton made in Africa Board of Advisers.

3. Stakeholder Management: Industry Initiatives and Partnerships, Advancement of Sustainability Standards, Involvement at a Policy and Regulatory Level

In order to improve general conditions, REWE Group joins forces with other companies and stakeholders in industry initiatives and partnerships, thereby increasing its influence. In addition, REWE Group actively participates in the further development of these partnerships and represents its interests there.

In 2008, REWE Group joined the amfori Business Social Compliance Initiative (amfori BSCI), an alliance of companies that are committed to improving labour and social standards in risk countries. To achieve this goal, amfori BSCI members have developed the amfori BSCI Code of Conduct. This code was revised in 2014. Its requirements include a renunciation of exploitative child and forced labour practises as well as freedom of association and collective bargaining.

In 2017, REWE Group was represented in two working groups of the amfori BSCI and joined the GRASP Technical Committee. Furthermore, REWE Group is active in the following initiatives, which also deal with human rights and working conditions in the respective context:

  • Charter member of the Forum for Sustainable Palm Oil, represented on the Steering Committee
  • Charter member of the German Initiative on Sustainable Cocoa
  • Member of the Fruit Juice CSR Platform
  • Member of the World Banana Forum
  • Member of the Bangladesh Accord on Fire and Building Safety
  • Member of the Alliance for Sustainable Textiles
  • Member of the Board at Cotton Made in Africa

REWE Group is also committed to ensuring that the Marine Stewardship Council (MSC) and the Global Organic Textile Standard (GOTS) take social standards into account, such as those of the International Labour Organization (ILO). This is currently not the case.

GRI 412: Employee training on human rights policies or procedures

See GRI 414-2: Internal management: Raising Awareness Levels, Educational Campaigns and Reporting.

More topics:

GRI 102-11

Risk Management

GRI 204

More Sustainable Product Range

GRI 204-1

Regional Products

GRI 204-FP1

Raw materials

GRI 204-FP2

Organic and PRO PLANET

GRI 301

Materials and Packaging

GRI 304

Biodiversity

GRI 308

Environmental Standards in the Supply Chain

GRI 416

Customer Health and Safety

GRI 417

Promoting Sustainable Consumption

FP10

Animal Welfare