REWE Group Sustainability Report 2018

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 more than three-fourths of Germans buy organic products at least occasionally (source: Federal Ministry of Food and Agriculture: Environmental Barometer 2018), while roughly half of the German population is interested in more sustainable travel (source: Federal Ministry for the Environment, Nature Conservation and Nuclear Safety: Travel Analysis 2017). 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 criterion used to take a decision. Quality and price are just as important. At the same time, consumers interpret the term “sustainability” in different ways. Some define it as protecting nature or resources conservation. 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.

The Green Products 2030 strategy was developed in 2017 to optimally position the company for the future and make sustainability an integral part of procurement processes. The strategy focuses on the supply chains for REWE Group store brand products distributed in Germany by REWE, PENNY and toom Baumarkt. The strategic approach is based on the core elements of the OECD guidelines for responsible agricultural supply chains. The strategies of the other sales lines will be gradually aligned with the Green Products 2030 strategy.

The sales lines of the REWE Group distribute both store brand products and products of third-party brands. Regular discussions are held with brand producers, within the framework of industry initiatives for example, as part of a dialogue on sustainability. REWE Group closely monitors the sustainability-relevant activities of brand producers and seeks direct dialogue as needed. REWE Group has more control over store brand products, and thus bears particular responsibility for them.

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, animals and the environment. 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.

The corporate group is working to offer more sustainable product ranges. In the food area, these include organic and regional products and store brand products for which supply chain improvements have been made. With this is mind, REWE Group has developed the PRO PLANET label. PRO PLANET represents one major goal of REWE Group: to make conventional products in the mass market more sustainable while promoting sustainable consumption among the general public. This “navigation system for more sustainable products” is a reliable guide for those consumers for whom environmental protection and the social compatibility of products are important when shopping (for further information see the section PRO PLANET). More sustainable offers are increasingly being created in tourism as well.

The purpose of the REWE Group Green Products 2030 strategy is to identify, evaluate and implement effective measures for reducing the impact of store brand products on people, animals and the environment. This strategy is embedded in the overall REWE Group sustainability strategy, defining the strategic alignment and operational implementation of sustainability as part of the Green Products commitment. The mission of the pillar of sustainability Green Products, “We act responsibly for humans, animals and the environment”, forms the “umbrella” of the strategy, with which concrete measures are aligned.

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). Environmental, social and corporate data were first evaluated in an opportunity and risk analysis in order to assess the social and environmental impacts of products and identify where sustainability can have the most effect. Building upon this, the impacts and effects store-brand products have on humans, animals and the environment were shown quantified in monetary terms.

The analysis showed, among other things, 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 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 following areas of action:

The strategy will be implemented through a comprehensive management approach that defines the principles and instruments for implementing measures. In this management approach, the respective areas of action are addressed on three levels, as outlined below.

  1. 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 information on the basis of risk analyses and briefings, coordinating binding targets with purchasing departments and conducting training on sustainability issues. Internal reporting enables continuous development within the individual sustainability issues.

  2. Supply chain management

    Risks in the supply chain are classified to the areas of action of ethical business practices, animal welfare and conservation of resources. 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 aimed at achieving broad sustainability gains. Specific measures, training programmes and supplier development sustainability projects are designed to reduce impacts along the supply chain.

  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. This means the company works closely together with stakeholders, including the Sustainability Advisory Board 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. External communication creates transparency vis-à-vis stakeholders.

In addition, REWE Group has defined a fourth area of action as part of the Green Products commitment:

In the 2018 reporting period, the pillar Green Products for food retailing in Germany was overseen by Jan-Peer Brenneke (Managing Director for Store Brands Purchasing & Development national/international). 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.

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.

Areas of Action

The following focus issues were identified within the four areas of action, for which specific measures are being taken.

Ethical business practices: living wage, forced labour, child labour
Today’s globalised world of complex trade relations is characterised by an imbalance of power, with stark differences evident in the economic strength of developing and developed countries respectively. This can lead to societal ills such as forced labour, child labour and poverty-level incomes. REWE Group is active to ensure fair working conditions and the upholding of human rights in the supply chain.

Animal welfare: husbandry conditions, procedures performed on animals and breeding
Livestock farming is a major branch of agricultural production, and the conditions under which the animals are kept are critical for animal welfare. These conditions are not always adequate in modern production systems for meeting animals’ natural needs. In addition, animals are subject to routine physical operations to facilitate livestock farming using conventional stall systems. As a food retailer, REWE Group works actively to improve animal welfare in livestock farming, including animal-appropriate living conditions, dispensing with the practice of performing painful operations, use of alternative breeds and limiting over-breeding.

Conservation of resources: Circular economy, water and biodiversity
Natural resource consumption and competition for scarce resources, such as fresh water, land and raw materials, are increasing worldwide. In parallel, global environmental problems are worsening, such as climate change, soil degradation and loss of biodiversity. The manufacturing of products generates environmental impact in the REWE Group supply chain. The trading company acts to fulfil its responsibilities through a range of measures promoting sparing usage of natural resources in the supply chain. This achieves lasting reduction of impact in the areas of biodiversity, climate and air, water and soil as well as plastic and packaging.

Nutrition: a varied, healthy diet
Nutrition is another complex of issues the REWE Group is focused on, 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. In 2018, approximately 250 store brand products already underwent optimisation for sugar or salt content. The recipes for nearly 700 items are currently under review. REWE and PENNY intend to review the sugar and salt content of all store brand products and reduce the sugar or salt content of 50 per cent of these items 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.

Targets and Key Performance Indicators (KPIs)

For the two areas of action “ethical business practices” and “conservation of resources”, new targets and KPIs have been defined and approved for store brands as part of strategy development. Target attainment is measured applying defined KPIs and this data is published in the sustainability report.

Area of action: ethical business practices

REWE Group activities relating to ethical business practices are aimed at furthering human rights and improving working conditions in supply chains.

KPI Target Status1 Measures
Percentage of strategically relevant production sites that are integrated into a training programme (capacity building) 100% by the end of 2030 ↗︎ See section Social aspects in the supply chain
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.

Area of action: conservation of resources

REWE Group implements measures for the conservation of resources in its supply chains in an effort to protect natural resources and preserve biodiversity.

KPI Target Status1 Measures
Percentage of relevant food and non-food producers integrated within an environmental programme 100% by the end of 2030 ↗︎ See section Environmental aspects in the supply chain and Packaging
Percentage of more environmentally friendly store brand packaging 100% by the end of 2030 ↗︎
↗︎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.

Sustainable Development Goals

During the reporting period, REWE Group measured its sustainability strategy against the Sustainable Development Goals (SDGs) identified as high-priority or relevant for the company (see the section Strategy). Three of the highest-priority SDGs fall within the scope of the Green Products commitment: 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 the section Strategic Approach).”

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

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