REWE Group Sustainability Report 2018

Raw Materials in Focus – Food

The supply chain links of raw materials production and processing involve particular ecological challenges and a heightened risk of non-observance of labour and social standards. Accordingly, REWE Group activities are focused on these. As part of product-related risk analysis, REWE Group has defined the following food raw materials as critical: fruits and vegetables in general with a special focus on bananas and pineapples, meat and dairy products including animal feed, coffee, cocoa, orange juice, tea, palm oil and fish.

To permanently integrate sustainability into its company processes, REWE Group has developed an all-encompassing sustainability strategy that is made up of four main pillars: Green Products; Energy, Climate and the Environment; Employees; and Social Involvement. The Green Products Strategy 2030 was adopted in 2017 in a move to more strongly anchor sustainability within procurement processes. In the action areas of ethical business practices, animal welfare and conservation of resources, the trade and tourism company designs effective measures to reduce environmental and social impacts as part of the Green Products commitment. Activities relating to the focus food raw materials are of special importance in these areas of action.

GRI FP1:

Percentage of purchased volume from suppliers compliant with the company’s sourcing policy

REWE Group continuously works to make its supply chains more social and environmentally conscious. The REWE Group observes internationally recognised certification standards, cooperates in industry initiatives, launches its own projects and formulates its own requirements within the framework of company policies and the PRO PLANET process. The approaches that the company takes for individual raw materials are outlined below.

Fruit and Vegetables

Since 2013, REWE Group has required agricultural suppliers of primary fruit and vegetable products to agree to comply with the core labour standards of the International Labour Organisation (ILO), within the respective framework of applicable national laws. This includes proper legal payment of at least the minimum wage required by law, collective agreement or contract. Both are mandatory requirements, compliance with which must be documented by the suppliers. The suppliers are also responsible for ensuring that their own suppliers in turn 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 addition to addressing social issues in fruit and vegetable production, REWE Group is also committed to reducing environmental impact. This includes promoting biodiversity through specific projects, for example concerning apple and vegetable farming in Germany, requirements for the use of pesticides and adherence with Rainforest Alliance, Fairtrade and other ecological standards.

Bananas and Pineapples

The cultivation of the tropical fruits bananas and pineapples may result in negative environmental and social impacts in production countries. These include poor working conditions at fruit farms, the widespread use of pesticides and damage to ecosystems. In 2015 and 2016, REWE Group and its sales lines in Germany completely switched their purchasing of pineapples and bananas to Rainforest Alliance. As a result, all pineapples and bananas have come from farms certified by the Rainforest Alliance since the end of 2016. Following the merger between the Rainforest Alliance and UTZ, REWE Group joined the committee for further development of the certification standard in 2018. The sales lines also offer organic pineapples and bananas and, at PENNY, Fairtrade bananas. To heighten transparency in supply chains, REWE Group is introducing a QR code for REWE store brand bananas in early 2019 allowing customers to trace bananas back to the producer.

Percentage of Conventional Bananas and Pineapples from Rainforest Alliance-certified Cultivation (REWE Group in Germany)

2016 2017 2018
Bananas 100% 100% 100%
Pineapple 100% 100% 100%

Palm Oil

The increased cultivation of palm oil is destroying peat forests and rainforests. In the process, the basis of local populations’ lives is frequently being taken away, and the habitats of valuable species are being lost. The clearing of rainforests is also releasing huge amounts of carbon dioxide.

Against this backdrop, REWE Group developed its Guidelines for Palm Oil and Palm Kernel Oil Products at the beginning of 2011. The goal behind this guideline is to exclusively use more sustainably produced palm oil in all store brand products. To ensure this, the REWE Group relies primarily on the certification standard of the Roundtable on Sustainable Palm Oil (RSPO), of which the Group has been a member since 2011. Four trade models are applied in supply chains for the purchasing of certified palm oil. Each has different requirements regarding traceability of the raw material to the farm. REWE Group has used 100 per cent certified palm oil since 2013. In Austria, REWE Group has exclusively purchased certified palm oil since 2014, and the Group’s brand Ja! Natürlich has been palm oil-free since 2018.

Percentage of Store Brand Products Using Certified Palm (Kernel) Oil Products

2016 2017 2018
RSPO-certified palm (kernel) oil in store brand products (Germany) 100% 100% 100%
RSPO-certified palm (kernel) oil in store brand products (Austria) 100% 100% 100%

The objectives of the REWE Group guideline are part of a company pledge that the company signed in 2015 as a member of the Forum for Sustainable Palm Oil (FONAP). Members of the forum have committed themselves to using only sustainably certified palm oil, palm kernel oil and their derivatives and distillates in their products. The traceability of palm oil used is to be ensured over the long term with adherence to additional defined criteria in order to meet the ambitious goals set as part of the voluntary commitment. This work also involves purchasing palm oil that is subject to the demanding trade model of segregation. In this process, sustainably produced oil is continuously separated from non-certified oil along the entire supply chain. In consideration of the individual goals for each palm (kernel) oil product, REWE Group attained a total achievement level of 99 per cent with all store-brand products in Germany in 2018.

REWE Group in Germany is working with its suppliers to achieve the last per cent needed to achieve the goal. The requirements pose a special challenge to small suppliers with complex supply chain structures. For instance, some suppliers could only make the switch to the segregation trade model gradually because of the very expensive work that goes into setting up separate product streams. This is particularly the case when a supplier switches only a small amount of his total production. In Austria, REWE Group has made major strides in its effort to use certified palm oil. In consideration of the individual goals for each palm (kernel) oil product, REWE Group attained a total achievement level of over 95 per cent with all store-brand products in Austria in 2018.

Closer Conformity with FONAP Criteria

When the Forum for Sustainable Palm Oil (FONAP) was founded in November 2015, REWE Group joined the FONAP Steering Committee and has since played an active role in its working groups, tasked for example with communicating the Forum’s work developing and implementing a project in producer countries. This is a cooperation project between FONAP and the Malaysian non-governmental organization WildAsia that started in July 2018. The purpose of the project is to gather feedback on the feasibility of the additional criteria required by FONAP and jointly test out their applicability with select smallholders in the Perak/West Malaysia region. The additional criteria are:

  • Stopping cultivation on peat soils and other high-carbon sites
  • Stopping usage of highly dangerous pesticides (Rotterdam and Stockholm Conventions, WHO 1a and 1b and Paraquat)
  • Strict reduction targets for greenhouse gases
  • Exclusive use of oil palm fruits (fresh fruit bunches) from legal cultivation
The project runs until July 2019.

Cocoa

A major amount of global raw cocoa comes from Western Africa. The production work is primarily done on small, family-run farms. Cocoa farmers have to battle difficult business conditions there and frequently live with their families below the poverty level. This results in a lack of the necessary funds for investment and poor working conditions in many cases. In turn this leads to exploitative forms of child labour (for more information see the section (Child Labour and Forced Labour). In a policy document called the Guideline for Cocoa, REWE Group formulated the goal of purchasing all raw cocoa supplies for its store brands from more sustainable farming structures by the end of 2015. This is assured by applying the standards Fairtrade, Fairtrade Sourcing Programme, Rainforest Alliance and UTZ. By the end of the deadline on 1 January 2016, REWE Group in Germany was unable to achieve this goal. The percentage of certified cocoa used was 99 per cent in 2017 and remained at this level in 2018. REWE Group in Germany is working with its suppliers to achieve the last per cent needed to achieve the goal. One major challenge for some suppliers involves switching only small amounts of the total production to the certified product. At REWE Group in Austria, approximately 99 per cent of raw cocoa supplies for store brands were certified in 2018.

Percentage of Cocoa Certified for Fairtrade, the Fairtrade Sourcing Programme, the Rainforest Alliance and UTZ

2016 2017 2018
Store brand products in Germany containing cocoa 94 % 99 % 99 %
Store brand products in Austria containing cocoa - 80 % 99 %

Improving Conditions: German Initiative on Sustainable Cocoa

As a founding member of the multi-stakeholder German Initiative on Sustainable Cocoa, REWE Group supports the PRO-PLANTEURS project along with other companies. The five-year cocoa project in the Ivory Coast is aimed at professionalising cocoa-producing family farms and cooperatives. In particular, women are to be given opportunity to optimise their own income and create an improved basis for feeding their families. Additionally, cocoa cultivation is to be made more attractive for young cocoa farmers. The living conditions of local families are to be improved through increased income and a more balanced diet. PRO-PLANTEURS has trained 41 women from the cooperatives newly selected in 2018 as farming advisers, in partnership with the National Food Program of the Ivory Coast. Including the advisers already trained, the project is reaching more than 20,000 households.

 

Special training sessions for women were conducted in March 2018. Acting as points of contact and role models, they will now bring their newly acquired knowledge and skills to their cooperatives. New training courses for women on agricultural diversification began in November 2018. In another training opportunity, producers from the newly joined cooperatives are to receive intensive coaching on professionalising their operations. PRO-PLANTEURS also finances training for young cooperative members.

Orange Juice

Orange growing and orange juice production involve complex societal and environmental challenges. These include financial problems for small farmers, precarious employment conditions, the use of pesticides and high levels of energy consumption. REWE Group is committed to more sustainable production of orange juice, cooperating with others to improve the social, environmental and economic conditions surrounding orange juice production. To achieve this, the company purchases sustainably produced orange juice products, is involved in origin projects and industry-wide dialogue and promotes transparency throughout the supply chain. In the spring of 2019, the store brands REWE Beste Wahl (REWE) and Paradiso (PENNY) introduced 100 per cent Fairtrade-certified orange juice that is traceable to its producer organisations. With sale proceeds from this orange juice, REWE Group is supporting a project in Brazil to improve local working conditions. In 2019, REWE Group published a Guidelines document for orange juice stating that the REWE and PENNY store brands will switch to 100 per cent certified orange juice by the end of 2025. The Group utilises the Fairtrade and Rainforest Alliance certifications and the EU Organic Seal of Approval to mark this change. In addition, customers will have access to information on the origin of individual orange juice products to create pressure for higher wages in the orange juice supply chain.

Responsibility in the Fruit Juice Industry: The Juice CSR Platform

In June 2016, REWE Group became a member of the European Juice CSR Platform and works to improve the social and environmental aspects of the industry’s supply chain. The Platform is a sustainability initiative launched to help European fruit juice producers incorporate CSR measures into their company strategies, and thus achieve a long-term, sustainable contribution along the global value chain of fruit juices for all stakeholders. In addition, REWE Group works actively in a working group on orange juice from Brazil, of which the Group has been a steering committee member since 2017.

Coffee

Coffee is a globally traded product and its farming is an important economic sector for many countries in Latin America, Asia and Africa. But the yields of the small farms that produce the beans are frequently too tiny to produce an income from which coffee farmers and their families can live. Added to this are the health and environmental risks posed by the incorrect use of pesticides. To improve the lot of coffee farmers, REWE and PENNY set themselves the goal of switching all of their store brands to certified coffee by the end of 2020. In 2018, the percentage of coffee certified organic or by UTZ, the Rainforest Alliance or for Fairtrade rose to 71.4 per cent, from 69.4 per cent in 2017.

Percentages of Store Brand Coffee Certified Organic or by UTZ, Rainforest Alliance or for Fairtrade

2016 2017 2018
REWE and PENNY (Germany) 61.7 % 69.4 % 71.4 %

A Special Relationship: Supporting Coffee Farmers in Their Local Areas

REWE Group entered into a partnership with the people of the Fairtrade coffee cooperative Valle de Incahuasi in Peru in 2009 in which purchasing of their coffee is guaranteed. Together with this cooperative, REWE Group is carrying out measures and projects to counteract climate change and increase farmers’ incomes.

The cooperative produces REWE Feine Welt coffee, which is certified organic and for Fairtrade. The plants are grown under controlled organic farming conditions that put less strain on the sensitive local ecosystem. After harvesting, the beans are tasted in the cooperative before undergoing quality controls and then being transported to the nearest larger city of Andahuaylas in small vans. From there they are transported on to Lima, and are ultimately roasted in the Germany’s Ruhr Valley area.

Tea

Conventional tea farming is frequently monoculture farming that involves heavy use of pesticides. This endangers biodiversity and the drinking water supply for people who live in the cultivation areas. Local workers also face a number of challenges, including low wages and inadequate occupational health and safety practises. To address such issues, REWE Group promotes sustainable agriculture in tea production and purchases certified products that bear the Rainforest Alliance seal. In 2017, the share of certified tea products at REWE and PENNY was 19 per cent. The share rose to 31.7 per cent in 2018. REWE Group strives to continuously increase this percentage.

By the end of the 2018 reporting period, both REWE and PENNY had switched their green and rooibos teas to 100 per cent Rainforest Alliance-certified raw material. The process of switching the black tea segment from 50 over to 100 per cent Rainforest Alliance-certified raw materials was also completed in 2018.

Percentage of Certified Tea Products/Raw Materials at REWE and PENNY

2016 2017 2018
Tea products certified organic or by the Rainforest Alliance or for Fairtrade 14% 19% 31.7%
Rainforest Alliance-certified raw materials for green and rooibos teas
Rainforest Alliance-certified raw materials for black tea
100%

100%

Fish

Rising demand for fish and seafood has put the world’s fish stocks under severe pressure and resulted in over-fishing in some regions. In the company’s Guideline for Fish, Crustacean and Shellfish, REWE Group has pledged to increasingly purchase fish products from sustainable and certified fishing operations and aquaculture, and to transparently inform consumers about these efforts.

Percentage of More Sustainable REWE Group Store-brand Fish Products in Germany

2016 2017 2018
Percentage of certified products (MSC, ASC, GGN) 86 % 88 % 90 %
Percentage of products with tracking code 85 % 81 % 67 %

The REWE Group assortment in Austria includes roughly 400 MSC-certified fish products for both store brands and industry brands.

Soybeans as Animal Feed

In conventional animal-husbandry practises, soybean meal imported from overseas countries is used to provide animals with sufficient amounts of protein. This meal frequently includes genetically modified types of beans. For this reason, REWE Group has drawn up a Guideline for Soy in Animal Feed that requires producers of store-brand products to abandon the use of genetically modified soybeans, among other requirements. This requirement is implemented on an individual basis for each species of farm animal. As proof that no GMO feed is being used, REWE Group in Germany works with the German Association of Non-Genetically Modified Foods (VLOG). As in the previous year, the entire range of fresh eggs at REWE Group in Germany bore the VLOG seal in 2018. For fresh milk and UHT milk, the share rose from 77 per cent in 2016 to 100 per cent in 2018. At REWE Group in Austria, the entire range of fresh eggs and fresh milk comes from non-GMO feed.

Percentages of Products Bearing the Seal of the German Association for Non-Genetically Modified Foods (VLOG)

2016 2017 2018
Fresh milk and UHT milk 77 % 99 % 100 %
Fresh egg assortment 100 % 100 % 100 %

For further information about the involvement of REWE Group in organisations and initiatives, see the section Initiatives and Memberships.

Further topics in this area:

Product-related Risk Analyses

GRI 102-11

Regional Products

GRI 204-1

Raw Materials in Focus – Non-food

GRI FP1

Organic

GRI FP2

PRO PLANET

GRI FP2

Packaging

GRI 301

Biodiversity

GRI 304

Ecological Impacts
Within the Supply Chain

GRI 308

Social Issues
in the Supply Chain

GRI 412, 414

Customer Health
and Product Safety

GRI 416

Promoting Sustainable Consumption

GRI 417

Animal Welfare

FP10

Child Labour
and Forced Labour

GRI 408, 409

Livestock Farming Conditions

FP10

Nutrition

FP10