REWE Group Sustainability Report 2017

Green Products

Pillar of Sustainability: Green Products

The concept of sustainability has entered the mainstream of society. It is reflected in both dietary and consumption behaviour as well as in the selection of holiday destinations. Recent surveys have found that about two-thirds of Germans buy organic products on occasion at the very least (source: German Ministry of Food and Agriculture: Environmental Barometer 2017; the German Environmental and Protection Agency: Attitudes About the Environment in Germany 2016). In addition, more than one-third of Germans want to take more sustainable trips (source: German Ministry of Environment, Nature Conservation, Building and Nuclear Safety: Travel Analysis 2014). More and more people are interested in knowing how their actions impact society and the environment. In particular, they want to know that products and services are made or offered under good working conditions and that the environment is not damaged in the process. Nonetheless, one principle still applies: Sustainability is never the sole criteria used to take a decision. Quality and the price are just as important. At the same time, consumers interpret the term “sustainability” in different ways. Some define it as protecting nature and the environment. Others view it from the perspective of social conditions and animal welfare.

REWE Group intends to address these needs and excite growing numbers of people about more sustainable products and services. REWE Group considers sustainability to be a part of its business strategy, an area that contributes to the company’s success in business and serves as a major driver of growth. In order to put itself in the best position for the future and to integrate sustainability as an integral part of procurement processes, the “Strategy Green Products 2030” was developed in 2017, which will apply to the food retail sector in Germany from 2018. The strategic approach is based on the core elements of the OECD guidelines for responsible agricultural supply chains.

Strategic Approach

As a leading international trade and tourism company, REWE Group is keenly aware of the special role it plays as an interface among producers, suppliers and consumers. The production of REWE Group store-brand products has impacts on humans (social) as well as animals and nature (environmental). REWE Group customers assume and should be able to trust that REWE Group, as a trade company, is aware of its responsibility in the supply chains of its store brands and also takes responsibility for any impacts. With the newly developed Green Products 2030 strategy, REWE Group seeks to meet these expectations as well as identify, evaluate and take effective countermeasures against any impacts. This strategy is embedded in the overall sustainability strategy of REWE Group and summarises the strategic objective and operational implementation of sustainability in the pillar Green Products. The mission of the pillar of sustainability Green Products, “We act responsibly for humans, animals and nature”, forms the “umbrella” of the strategy, with which concrete measures are aligned. In the first step, the strategy will be applied to the REWE and PENNY sales lines in Germany. The strategies of the other sales lines will be gradually aligned with the Green Products 2030 strategy.

The strategy will be implemented through a comprehensive management approach that defines the principles and instruments for implementing measures. All levels of the management approach are based on the content of the three defined areas of action:

These content topics are handled on three levels that form the management approach:

  • Internal management: The goal is to further integrate sustainable procurement into REWE Group’s purchasing processes so that sustainability aspects are taken into account in every purchasing decision. During this process, the company lays the foundation for concrete activities through strategic and organisational projects. For example, REWE Group contributes to internal awareness by providing risk analyses and briefings, integrating sustainability criteria into target agreements for purchasers, and giving training on sustainability issues. Internal reporting enables continuous development within the individual sustainability issues. External communication creates transparency vis-à-vis stakeholders.
  • Supply chain management: Risks in the supply chain are assigned to the areas of action “conservation of resources”, “fairness” and “animal welfare”. The sustainability risks that arise in the supply chain with regard to these areas of action are being addressed by REWE Group in a targeted manner through systematic supply chain management, which is characterised by close cooperation with suppliers and commitments when it comes to production sites and the production of raw materials. First of all, REWE Group will be using supply chain management to increase transparency along the supply chain for store-brand products in those areas where it does not already exist. In this way, risks can be identified and then better avoided or directly addressed. In addition, the integration of sustainability as part of the supplier assessment will be promoted and, by making contract partners aware of the issue and their obligations, specific rules will be created to implement sustainability across the entire supply chain. Audits and standards are intended to improve sustainability across the board, while individual measures and sustainability projects for supplier development aim to systematically reduce impacts along the supply chain.
  • Stakeholder management: The challenges associated with handling sustainability risks in the production of store-brand products often lie in global trade structures and are influenced by political and social conditions. An important starting point for identifying relevant issues and implementing the sustainability strategy is therefore good stakeholder management. As part of this activity, the company works closely with stakeholders, including the PRO PLANET Board of Advisers and dialogue forums. Key elements include participation in external events, multi-stakeholder forums, industry initiatives, partnerships, commitment to the advancement of sustainability standards, and keeping track of relevant policy and regulatory developments.

The pillar Green Products for the food retail sector in Germany has been led by Jan-Peer Brenneke (Managing Director for Store Brands Purchasing & Development national / international) since 2016. The Sustainable Products department together with Purchasing and Category Management are responsible for implementing measures and achieving the goals set out in the Green Products 2030 strategy.

Areas of Action

A comprehensive analysis of the sustainability risks and impacts of REWE Group in the supply chains of store-brand products formed the basis for strategy development. Other important building blocks of strategy development were surveys of stakeholders and customers as well as political and scientific analyses and objectives (such as the Sustainable Development Goals of the United Nations). With the help of this opportunity and risk analysis, environmental, social and corporate data were firstly analysed to assess the social and environmental impacts of the products and to identify where the greatest sustainability impacts lie. Building on this, the external impacts and effects on humans and nature that arise in connection with store-brand products could be quantified in monetary terms. Among other things, the analysis showed that especially the production of raw materials and the processing of products are highly relevant with regard to sustainability criteria. A holistic view of the supply chain is therefore an important element of the sustainability strategy, which is increasingly becoming an integral part of purchasing processes and requires an intense dialogue with direct and indirect suppliers. From the analysis, 25 aspects have emerged, which REWE Group has summarised for operationalising the strategy in the areas of action “fairness”, “conservation of resources” and “animal welfare”. Within these three areas, in turn, the following focus issues were derived and supported with concrete measures:

  • Fairness: living wage as well as forced and child labour
  • Conservation of resources: circular economy, water and biodiversity
  • Animal welfare: husbandry conditions, procedures performed on animals and breeding

Within the defined strategy and budget process, the identified aspects and focus issues of each area of action are prioritised for each product line in collaboration with Purchasing and Category Management and supported with concrete measures. Clear objectives and responsibilities are also agreed during this process.

A regular review of the strategy and measures developed has been firmly established through the annual strategy and budget process. This enables REWE Group to ensure that current issues resulting from changing conditions are picked up.

Another topic in the area of Green Products is diet. REWE Group is committed to promoting a varied, healthy diet. In addition to its commitment to conducting educational campaigns on healthy diets and exercise, the topic is also addressed in the design of its product range. For example, from 2018, the first 100 or so pilot products with reduced sugar content will be available from REWE in its store-brand range. Wherever possible, REWE wants to reduce sugar content by 2020. No alternative sweeteners will be used as substitutes. The sugar content of the products will be reduced gradually, so that customers slowly get used to the new taste.

  • Diet: varied, healthy diet

Key Performance Indicators (KPIs)

For the two areas of action “fairness” and “conservation of resources”, new KPIs have been defined and approved for store brands as part of strategy development. The status of the KPIs will be published in the next sustainability report.

Area of action: fairness

Objective: Strengthen human rights and improve working conditions in supply chains

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

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

Area of action: conservation of resources

Objective: Protect natural resources and preserve biodiversity along supply chains

KPI 1: By the end of 2030, 100 per cent of relevant food and non-food producers are to be integrated into an environmental programme

KPI 2: By the end of 2030, 100 per cent of store-brand packaging is to be more environmentally friendly

Sustainable Development Goals

The activities conducted in the pillar Green Products also focus on the global goals of sustainable development. During the reporting period, REWE Group measured its sustainability strategy against the Sustainable Development Goals (SDGs). It then identified and prioritised the SDGs that are relevant to the company (see section Strategy). Three of the highest-priority SDGs apply to the pillar Green Products: SDG 12: Responsible Consumption and Production, SDG 15: Life on Land, SDG 14: Life Below Water. The SDGs were also an important element in the development of the Green Products 2030 strategy (see Strategic Approach).

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 412, 414

Social Standards in the Supply Chain

GRI 416

Customer Health and Safety

GRI 417

Promoting Sustainable Consumption

FP10

Animal Welfare