Social Aspects 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 anchor sustainability more strongly within procurement processes. In the areas of action of people, animals and the environment, the trade and tourism company develops effective measures to reduce environmental and social impacts as part of the Green Products commitment. The activities with regard to social aspects and fairness in the supply change relate to the area of action of people. These 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 and promote dialogue between all partners – in order to strengthen human rights, and further improve labour and social standards.
GRI 414: Supplier Social Assessment
GRI 412: Human Rights Assessment
Management Approach
The Guideline on sustainable business practices of REWE Group apply to all business relationships. They are based on the UN Universal Declaration of Human Rights, the conventions of the International Labour Association (ILO) and the 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.
Position on the Due Diligence Act
Human rights are non-negotiable. REWE Group firmly believes that a binding framework is required to create fair conditions throughout global supply chains. For that reason, REWE Group is in favour of mandatory international supply chain regulations to effectively strengthen standards of due diligence throughout global value chains. A mandatory international solution that involves all stakeholders can create an effective level playing field. The aim must be to invest in what will have the greatest possible impact on improving human rights Rather than creating an excessive administrative burden. REWE Group announced its position on a possible regulation with concrete requirements but also solution-oriented ideas in November 2020.
In its Declaration of Principles, 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. Due to the special features in the tourism industry, in 2019 DER Touristik Group adopted its own, additional Policy statement on the observance of human rights and implemented a Supplier Code of Conduct. Corporate guidelines and processes are adapted to take account of human rights due diligence and the formulated measures are implemented successively.
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 Product-Related Risk Analyses.
Step 2: Focus raw materials and issues are identified based on insights obtained in step 1. Three focus issues that are relevant to many focus raw materials and countries have emerged. These are child labour and forced labour living wages and income and the topic of women in the supply chain.
Step 3: The focus raw materials and 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:
- Internal collaboration, through training of purchasers, for example
- Collaboration within the supply chain, through requirements for suppliers or for purchasing certified raw materials, for example
- Collaboration with stakeholders, by further developing standard organisations, for example
Depending on the risks that are determined, different actions are defined, such as demanding standards and certifications, collaboration with standards organisations, participation in industry initiatives and 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 people, the following key performance indicators (KPIs) for store brands have been defined (for more information, see the overarching Green Products Management Approach):
| KPI | Target | Status | |
|---|---|---|---|
| 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 | ↗︎ | |
| ↗︎Being implemented Target attained✕Target not attained |
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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.
Value chain complexity presents major challenges for the travel industry, involving a large number of travel destinations and service providers. For instance, within the scope of its human rights due diligence, in 2018, DER Touristik Group carried out a risk analysis to determine actual and potential negative effects of its business operations on human rights (for more information, see Product-Related Risk Analyses). Human rights due diligence is a continuous process for DER Touristik.
Complaint mechanisms
REWE Group has developed a strategy for refining and implementing complaint mechanisms in its supply chains. When promoting complaint mechanisms, it focuses on its focus raw materials’ areas of production and on processing in risk countries. The company already implements the corresponding measures here: For instance, complaint mechanisms in the supply chain are checked by requesting applicable audits. Strategic production facilities also take part in an intensive training programme. If during the preliminary talks with the production facilities it is discovered that they have no functioning complaint mechanisms, the corresponding content is included in the training courses. The development of back-up complaint mechanisms in the supply chain is also an important aspect for REWE Group. These are used when local mechanisms do not work or do not exist. For example, REWE Group contributes towards the development of a complaint mechanism in the supply chain in the project group of amfori. A pilot is planned in Vietnam in 2021. To this end, an evaluation had previously been made of which channels are best suited to this and which requirements need to be taken into account. As part of a public consultation process, all interested stakeholders will also have the opportunity to provide feedback. The findings will be used in the review process.
REWE Group has defined an internal process to handle complaints about human rights abuses in the supply chain. With this defined procedure, the company ensures that indications of deficiencies are followed up consistently and that remedial measures are taken when a complaint is received.
Handling complaints
1. Receive and check the complaint
After receipt of the complaint, it is documented and checked for reliability. Relevant contacts within REWE Group are informed.
2. Investigate the situation and identify possible measures
The complaint is then investigated – for example by meeting with suppliers, industry initiatives or NGOs, through on-site visits or in the form of interviews with those affected. Effective measures are identified on the basis of the results.
3. Implement and monitor the remedial measures
The supplier or production facility concerned must implement the defined measures, such as stopping the behaviour that was criticised, preventive actions through training courses or compensation for the persons concerned. REWE Group checks consistently that the measures have been implemented – if they are not, the supplier may not receive any orders in the future.
4. Close and evaluate the complaint
If countermeasures were successfully implemented, the complaint is closed.
Guidelines define the framework
In the Guideline on fairness published in 2019, REWE Group outlined its commitment 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. The guideline defines a binding framework for the business relationships with contractual partners and specifies requirements and goals. They are updated regularly based on current developments. In addition, REWE Group has created a Guideline on the prevention of child labour, a Guideline on living wages and incomes and a Guideline on women in the supply chain to specify the requirements and measures of the focus issues (for more information, see the Child Labour and Forced Labour, Living Wages and Income and Women in the Supply Chain sections).
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 collaboration
REWE Group is working to further integrate sustainable procurement into its purchasing processes 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. For example, in the 2020 financial year 35 REWE Group employees were trained on the topic of social compliance in fruit and vegetables. The training is being continued in 2021.
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 reports enable continuous development within the area of action of people. External communication creates transparency vis-à-vis stakeholders.
2. Collaboration within the supply chain
REWE Group addresses sustainability risks in the supply chain that are pertinent to the area of action of people in a targeted manner through systematic supply chain management, involving close cooperation with suppliers as well as commitments on the level of production sites and raw materials production. 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 takes a three-pronged approach with regard to the area of action of people, which includes formulation of requirements, monitoring and developing the suppliers 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 for
At supplier events and in individual discussions with suppliers, REWE Group is constantly raising awareness of issues regarding human rights and working conditions. This also includes the social improvement coaching carried out in 2020:
Social improvement coaching for suppliers
In 2020, REWE Group provided social improvement coaching for strategically relevant suppliers with production sites in risk countries. In this way, the company wants to support suppliers to better help production sites implement social standards. Following a self-assessment, a series of virtual workshops were held. The development of an action plan to improve social standards was the priority here. In the subsequent coaching, suppliers were able to obtain support with implementing the action plan from a partner of REWE Group.
The social improvement coaching teaches suppliers new tools to tackle problems systematically in the future. In this way, social standards and working conditions in the production sites can be continuously improved. In addition, the coaching strengthens communication between suppliers and production sites.
Focus topic: raw materials
Based on the product-related risk analyses, the following critical raw materials have been defined to be relevant to the area of action of people: 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.
Raw materials for REWE and PENNY in Germany
Cotton and Textiles
Fish
Coffee
Cocoa
Orange Juice
Palm Oil
Tea
Fruit and Vegetables
Bananas
Pineapple
Natural Stone
REWE Group has defined Guidelines with detailed requirements and goals for certain focus raw materials. For more information, see 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. In high-risk countries, REWE Group orients its approach around the assessment of amfori: This 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 further training (4) courses. REWE Group reserves the right to terminate the business relationship if a production site is unwilling to take such improvement measures.
| 2018 | 2019 | 2020 ✓ | |
| Percentages of production sites in the respective stages of the Social Improvement Programme1 | |||
| Onboarding stage | 1 % | 0 % | 0.3 % |
| Audit stage | 99 % | 100 % | 99.7 % |
| Percentages of Production Sites According to their Audit Results | |||
| SA8000 | 3 % | 4 % | 3.5 % |
| Naturland | 0 % | 0 % | 0.2 % |
| amfori BSCI A | 3 % | 5 % | 4.4 % |
| amfori BSCI B | 5 % | 8 % | 6.6 % |
| amfori BSCI C | 71 % | 67 % | 68.5 % |
| amfori BSCI D | 6 % | 2 % | 0.9 % |
| amfori BSCI E | 0 % | 0 % | 0 % |
| SMETA | 4 % | 6 % | 6.6 % |
| Expired audit | 6 % | 8 % | 9.4 % |
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1 Values are rounded. 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. |
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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.
Factory Improvement Training (FIT)
REWE Group set up a training programme (“Factory Improvement Training”, FIT) for its strategically important production sites to build social skills. It will help them better understand the importance of complying with the REWE Group standards for sustainable business practices and establish systems and work practices to strengthen sustainable management. Specifically, the production facilities receive support to measure and improve the social working conditions in their factories. They are also supposed to increase their own responsibility to the extent that they can carry out their own programmes to comply with social standards. 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 sessions addressing shared challenges across different production sites. The businesses are previously analysed with regard to their social standards, and individual action plans are created based on the results. In order to document progress, key figures are defined and measured on an ongoing basis and employees are surveyed.
REWE Group has the aim of integrating 100 per cent of its strategic suppliers’ relevant production sites in the FIT programme by the end of 2030. 14 businesses in China, Thailand, Vietnam, and Bangladesh already completed the training between 2018 and 2020. In addition to improving complaint mechanisms, carrying out training sessions to raise awareness of the topic of modern slavery and dealing with various occupational safety topics, ten businesses were able to build improved processes for recording working time as a result of the training. This also had a positive impact on the correct payment of wages for overtime.
In 2020, twelve additional businesses, including in Pakistan, India, and Turkey, started the programme. Following the experiences of the first time the programme was run, content was added – for instance on topics relating to employee health in the context of Covid-19 and empowering women.
As part of the Bangladesh Accord on Fire and Building Safety, annual inspections are made. In 2020, it was possible to achieve an above average rate of progress for the identified deficiencies. By the end of 2020, the textile factories of REWE Group operating in Bangladesh had rectified 98 per cent of all findings from the inspections.
The accord’s transition phase ended in May 2021. Since then, REWE Group has supported the measures in the factories and taken part in the discussion about continuing the efforts to improve occupational safety in Bangladesh.
3. Collaboration with Stakeholders
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. Hence, good collaboration with the stakeholders is an important starting point to identify the relevant topics and implement the sustainability strategy. REWE Group thus remains in constant dialogue with stakeholders, who are regularly invited to discussion events.
Stakeholder dialogue on strengthening social standards
In 2020, REWE Group held its first digital stakeholder dialogue on the topic of fairness. The status and future development of the REWE Group strategy on the topic of fairness was discussed together with representatives of NGOs and standards, advisers, and politicians. As part of various workshops, topics such as living incomes, women in the supply chain, complaint mechanisms and purchasing practices were intensively discussed.
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 to encourage continued development.
- 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. REWE Group will develop a new roadmap for 2021 that contributes to the goals of the alliance.
- Member of The Centre for Child Rights and Business: The centre helps companies implement policies relating to children’s rights.
- Member of the Competitive Cashew Initiative: The Competitive Cashew Initiative (ComCashew) pursues the goal of increasing the competitiveness of the cashew value chain in selected African countries.
- 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”.
- 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.
- Global Organic Textile Standard (GOTS): GOTS is a global, independent standard for textiles that covers the whole of production. The label ensures that items of clothing or textiles are manufactured under monitored socially and environmentally responsible conditions. REWE and PENNY textiles with the PRO PLANET label are manufactured in accordance with the criteria of the international Global Organic Textile Standard (GOTS).
- 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.
- Founder member of the Partnership for Sustainable Orange Juice (PANAO): The partnership promotes social justice, labour rights and environmental protection in the orange juice supply chain. In the long term, this should increase the proportion of sustainably produced orange juice in the German and European market.
- Founder member of the German Initiative on Sustainable Cocoa (GISCO): This multi-stakeholder initiative is actively engaged in improving the living conditions of cocoa farmers, protecting natural resources and biodiversity, as well as growing and marketing sustainable cocoa.
- Founder member of the Forum for Sustainable Palm Oil: The aim of this multi-stakeholder initiative is to significantly increase the share of sustainably produced palm oil while improving existing certifications and standards.
- Member of the GLOBALG.A.P. Technical Committee GRASP: GRASP is a module developed for the social risk assessment of farms that are certified in accordance with the GLOBALG.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 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.
- Participation in the Initiative for Sustainable Agricultural Supply Chains: As part of a working group under the umbrella of the Initiative for Sustainable Agricultural Supply Chains, REWE Group is committed to living wages and incomes in the banana sector.
- Member of the Roundtable on Sustainable Palm Oil (RSPO): The not-for-profit organisation RSPO works with its members on developing and implementing global standards for sustainable palm oil. In order to produce sustainable palm oil, companies must comply with a set o f environmental and social criteria. REWE Group has been a member of RSPO since 2011.