REWE Group Sustainability Report 2018

Social Issues in the Supply Chain

REWE Group obtains a large number of products and product components through supply chains that may extend across several countries. The supply chain links of raw materials production and processing involve a heightened risk of non-observance of labour and social standards. Accordingly, REWE Group activities are focused on these.

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 social issues and ethical business practices fall within the area of action of ethical business practices. For REWE Group, ethical business practices include respecting and promoting human rights, improving working conditions and promoting fair trade. 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.

GRI 414: Supplier Social Assessment
GRI 412: Human Rights Assessment

Management Approach

The Guidelines for Sustainable Business Practices of REWE Group apply to all business relationships of the REWE Group. The guidelines are based on the UN Universal Declaration of Human Rights, the conventions of the International Labour Association (ILO) and UN Global Compact. They address such issues as a ban on forced labour and exploitative child labour as well as policies for fair treatment of staff. REWE Group reserves the right to apply sanctions when the values set forth in the guidelines are deliberately and flagrantly breached.

In its Human Rights Policy Statement, REWE Group commits to strengthening human rights and preventing human rights violations. This commitment applies both to its own business activities and to the global delivery and value chains.

REWE Group employs a four-stage process for promoting ethical business practices in supply chains. This process enables the systematic identification, minimisation and prevention of potentially negative human rights implications of business activity.

Step 1: Thorough risk and hot spot analyses are conducted to identify impacts. REWE Group has substantially expanded and systematised its risk recognition efforts since 2016. For more information, see the section Product-related Risk Analysis.

Step 2: Focus raw materials and key issues are identified based on insights obtained in step 1. Two key topics have emerged which are relevant to many raw materials in focus and countries. These are “child labour and forced labour” and “living wages”.

Step 3: The focus raw materials and key issues are addressed via measures suitable for reducing negative impact. These measures are implemented by means of a management approach that is applied on three levels:

  1. Internal management, through training of purchasers, for example
  2. Supply chain management, through requirements for suppliers or for purchasing certified raw materials, for example
  3. Stakeholder management, by further developing standard organisations, for example

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, joining industry initiatives as well as conducting projects with local suppliers and producers.

Step 4: The activities implemented are monitored and evaluated. Findings from monitoring flow into the further development of measures.

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

KPI Target Status1
Percentage of strategically relevant production sites that are integrated into a training programme (capacity building) 100% by the end of 2030 ↗︎
Introduction of a complaint mechanism system in relevant supply chains End of 2025 ↗︎
↗︎On Track Target attainedTarget not attained
1 Detailed information on the current status of target attainment should be available from 2019 upon the introduction of system tracking.

REWE Group has been intensively working to meet the requirements of the German National Action Plan (NAP) on Business and Human Rights since its inception, and has 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.

Guidelines Defining a Framework for Action

REWE Group released its Guidelines for Ethical Business Practices in February 2019. In this policy document, the Group committed to strengthening human rights, improving working conditions and promoting fair trade within the supply chains for all store brand products of REWE, PENNY and toom Baumarkt DIY stores. These guidelines define a binding framework for action and for business relationships with contract partners, outlining requirements and goals. It is regularly updated on the basis of current trends and developments.

Value chain complexity presents major challenges for the travel industry, involving a large number of travel destinations and service providers. In 2017 DER Touristik Group began conducting a risk and materiality analysis to identify actual and potential negative impacts of its business activities on human rights as part of the company’s human rights due diligence obligations. The analysis revealed that the first step the company must take is to focus on further strengthening protections of workers’ rights and of children in tourism. Corresponding measures will be implemented from 2019, such as the development and revision of company policies and processes, contracts with business partners and staff training offerings. Human rights due diligence is a continuous process for DER Touristik.

GRI 414-2:

Negative social impacts in the supply chain and actions taken

REWE Group takes three different approaches in implementing specific measures to reduce negative social impacts, as described below:

1. Internal management

REWE Group is working to further integrate sustainable procurement into its purchasing processes so as to ensure that sustainability considerations are taken into account in every purchasing decision. REWE Group raises awareness internally by providing risk analyses and briefings, coordinating binding targets with purchasing departments and carrying out training on sustainability issues.

REWE Group staff receive regular training on relevant labour and social standards issues to ensure that defined standards, such as compulsory social audits, are considered accordingly in supplier selection and in the purchasing process. Internal reporting enables continuous development within the area of action of ethical business practices. External communication creates transparency vis-à-vis stakeholders.

2. Supply chain management

REWE Group addresses sustainability risks in the supply chain that are pertinent to the areas of action of ethical business practices in a targeted fashion through systematic supply chain management, involving close cooperation with suppliers as well as commitments on the production site and raw materials production levels. 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. Efforts are also made to integrate sustainability into the supplier evaluation process.

In its supply chain management, REWE Group employs a three-stage approach to ethical business practices that involves formulating requirements, supplier controlling and development and supply chains:

All business partners in REWE Group store brand supply chains are required to state the production sites where products are manufactured for REWE Group. Raising awareness and binding contract partners are part of a concrete framework for implementing sustainability throughout the supply chain. The REWE Group sustainability department verifies adherence with requirements in the purchasing process.

REWE Group business partners are obliged to comply with minimum requirements, such as international and national laws and the core labour standards of the International Labour Organization (ILO). This involves obligation to adhere to the following principles in particular:

  • Any form of discrimination is prohibited. Business partners undertake not to exclude or favour individuals for any reason, including their gender and ethnicity.
  • All companies in the supply chain must pay their staff the national minimum wage or a greater amount regularly (at least monthly).
  • Business partners must ensure that working hours are in compliance with applicable national laws and industry standards.
  • Business partners must comply with health and safety regulations under national laws and international standards.
  • All business partners must allow workers to exercise their rights of freedom of association and collective bargaining.
  • Business partners must ensure that no children work in their companies.
  • Business partners must ensure fair and respectful treatment of workers.
  • Business partners must ensure that forced or compulsory labour and human trafficking do not take place in any form.

At supplier events and in individual discussions with suppliers, REWE Group is constantly raising awareness of issues regarding human rights and working conditions. The Group met with some 200 suppliers in Shanghai In September 2018 in a Supplier Summit involving a range of workshops on various sustainability topics under the slogan “Together for a Sustainable Future”.

Focus Topic: Raw Materials

The following critical raw materials have been defined to be relevant to the area of action Product-related Risk Analysis: coffee, cocoa, tea, palm oil, orange juice, fish and fruit and vegetables in general, with a particular focus on bananas and pineapple, as well as cotton, textiles and natural stones.

  • Cotton and Textiles
  • Fish
  • Coffee
  • Cocoa
  • Orange Juice
  • Orange Juice
  • Tea
  • Fruit and Vegetables
  • Bananas
  • Pineapple
  • Natural Stone

REWE Group has defined guidelines with detailed requirements and goals for certain focus raw materials. For further information see the sections Raw Materials in Focus – Food and Raw Materials in Focus – Non-food.

Processing in Risk Countries: the Social Improvement Programme

All production sites on the first supply chain level from nations defined as risk countries are integrated into the REWE Group Social Improvement Programme, which is based on the three-stage approach of requirements, controlling and development. REWE Group orients its approach around the assessment of amfori: This country risk assessment is based on World Bank governance indicators and other indices, and is updated annually.

If no social auditing is in place, as part of Onboarding (1) new suppliers and production sites are informed of the REWE Group requirements and given support in preparing for the initial audit. In a second step, all production sites in risk countries have to present documentation of having undergone Audits (2) under recognised certification or verification schemes. These audits are both announced and unannounced and conducted by independent third parties. Recognised social audits include audits based on the amfori BSCI and the SA8000 standards and SMETA audits of the Supplier Ethical Data Exchange. Textile production sites in Bangladesh must also undergo an inspection based on the Bangladesh Accord on Fire and Building Safety.

REWE Group documents audit results for the purpose of continuously improving working and social standards. If requirements are not met, improvement measures are defined together with the suppliers (Remediation (3)) and the production sites are instructed to take amfori BSCI seminars and Training (4) courses. REWE Group reserves the right to terminate the business relationship if a production site is unwilling to take such improvement measures.

  20171 2018 ✓
Percentages of Production Sites in the Respective Stages of the Social Improvement Programme    
Onboarding stage 2.96 % 1.49 %
Audit stage 97.04 % 98.51 %
Audit Results
SA8000 3.26 % 3.47 %
Naturland 0.20 %
amfori BSCI A 5.03 % 3.08 %
amfori BSCI B 5.53 % 4.86 %
amfori BSCI C 68.11 % 70.63 %
amfori BSCI D 4.74 % 5.75 %
amfori BSCI E 0.10 % 0 %
SMETA 1.78 % 4.17 %
Invalid SMETA 0.30 % 0.30 %
No audit/audit expired 8.19 % 6.05 %

1 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.

Risk analyses, factory visits and work with stakeholders has revealed that the knowledge and management experience necessary to implement processes and policies ensuring good working conditions and the upholding of human rights are still lacking in many parts of the supply chain. In such cases, requirements under social standards may be met but factory management does not properly understand the meaning and purpose behind the requirements. The knowledge and experience necessary for them to develop solutions to problems on their own is also lacking. Additionally, in some cases there is lacking awareness of the positive impact for companies of introducing and implementing social management systems.

REWE Group has thus designed a training program for relevant and strategically important suppliers aimed at communicating the importance of adhering to REWE Group standards for sustainable business practices and at establishing systems and work procedures that promote sustainable business practices. To this end, managers at strategic production sites take an 18-month training program with modules on health and safety, complaint mechanisms, wages and working hours and ethical recruitment practices. As appropriate, the programme may also include group training session addressing shared challenges across different production sites. Metrics are defined and referenced on an ongoing basis to document progress.

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 2018. The textile factories of REWE Group operating in Bangladesh have rectified 97 per cent of all findings from the inspections (previous year: 94 per cent). REWE Group will continue its efforts to promote safety at production sites and continue supporting the Bangladesh Accord on Fire and Building Safety, despite the difficult local conditions. REWE Group is in favour of an orderly transition of government in Bangladesh.

3. 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. REWE Group thus remains in constant dialogue with stakeholders, who are regularly invited to discussion events. REWE Group is also involved in the following national and international initiatives concerned with human rights and working conditions in the respective contexts:

  • Member of amfori BSCI: As a member, the company and all of its suppliers and producers undertake to uphold the amfori BSCI Code of Conduct. REWE Group is actively represented in working groups and the Membership Committee to help shape further developments.
  • Member of the Consumer Goods Forum: The organisation aims to help retailers and consumer goods manufacturers, along with other key interest groups, work to build consumer confidence and drive positive change under the motto “Better Lives through Better Business”.
  • Charter member of the Forum for Sustainable Palm Oil (FONAP): The aim of this multi-stakeholder initiative is to significantly increase the share of sustainably produced palm oil while improving existing certifications and standards. REWE Group is represented on the FONAP Management Board.
  • Charter member of the German Initiative on Sustainable Cocoa: This multi-stakeholder initiative has been committed to improving the living conditions of cocoa farmers, protecting natural resources and biodiversity, as well as growing and marketing sustainable cocoa.
  • Member of the Fruit Juice CSR Platform: The platform is driving social and environmental improvements in the supply chains of the fruit juice industry. It was created 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.
  • Member of the World Banana Forum: The forum brings together various stakeholders from the global banana supply chain to achieve sustainable cultivation, respect for human rights and improved working conditions.
  • Member of the Bangladesh Accord on Fire and Building Safety: The aim of this accord is to increase safety in the textile industry through independent inspectors who check building safety, fire safety and electrical safety during factory visits.
  • Member of the Alliance for Sustainable Textiles: The alliance is a partnership of various stakeholders aimed at driving improvements along the global value chain in the textile industry. As a member of the working groups on complaint mechanisms and living wages, REWE Group is active in social issues. For 2018 REWE Group again developed a roadmap for reaching the Alliance targets, and will outline the progress made in 2018 as part of the Textile Alliance’s reporting.
  • Member of the Board at Cotton made in Africa: This initiative was born with the aim of improving the living conditions of people in Africa’s cotton-growing regions.
  • Member of the Global G.A.P. GRASP Technical Committee: GRASP is a module developed for the social risk assessment of farms that are certified in accordance with the Global G.A.P. standard. The central task of the Technical Committee is to advise the Steering Committee on strategic and technical developments.
  • Member of the Rainforest Alliance Standards Committee: The Rainforest Alliance is a sustainability standard for the production of agricultural commodities and products. The Standards Committee makes decisions about content-related development based on public consultations on standards.
  • Member of the Center for Child Rights and Corporate Social Responsibility: CCR CSR helps member companies implement policies relating to children’s rights.

GRI 412-2:

Employee training on human rights policies or procedures

See Internal management.

Further topics in this area:

Product-related Risk Analyses

GRI 102-11

Regional Products

GRI 204-1

Raw Materials in Focus – Food

GRI FP1

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

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