GRI 305

Climate Protection in the Supply Chain

The impacts of the climate crisis are already perceptible today. Heat records, storms, droughts and floods are threatening ecosystems, biological diversity and the existence of millions of people. The world is facing enormous challenges here. The Paris Climate Agreement seeks to limit global warming to 1.5 degrees Celsius. Germany has signed the climate agreement and derived a regulatory framework from it: According to the Climate Protection Act, there is the binding requirement to achieve greenhouse gas neutrality by 2045. In addition, the company is calling for increasingly strong climate protection measures, as shown by movements such as Fridays for Future.

Consumers, employees and specialist stakeholders of the REWE Group rate the topic as particularly significant for the company as part of the materiality analysis: They want climate protection to be taken into consideration at all levels (for more information, see Materiality Analysis).

In addition to the circular economy and biodiversity, the topic of climate is also a focus issue in the area of action of the environment within the Green Products Strategy 2030.

Background

Climate change is also having economic consequences in the food sector and raw material production. Agriculture is at great risk of suffering damage and loss due to extreme weather events. Temperature fluctuations, heavy rainfall and frequent extreme weather are reducing yields. This also can lead to reduced supplier reliability.

According to the World Economic Forum, 25 per cent of all global greenhouse gas emissions are caused by the supply chains of the food industry. In the European retail trade, emissions from the upstream supply chain represent the largest share (90 per cent) of total emissions in this sector. Therefore, they are fundamentally important for companies when it comes to climate protection. Consequently, the REWE Group has defined a climate strategy for the upstream supply chain.

GRI 305: Emissions

Management approach

Principles

In its Guidelines on Sustainable Business Practices, the REWE Group commits to continuously reducing the greenhouse gas emissions resulting from business processes.

In 2009, the commercial company had already published its first climate goal at company level and this has been updated since then (for more information, see Climate Protection at Company Level). However, the REWE Group also wants to reduce climate-relevant emissions along the supply chain. Consequently, the company has defined a climate strategy for the upstream supply chain. This was adopted in 2020 and laid down in the Guideline on Climate Protection in the Supply Chain at the start of 2022.

Implementation

The three principles “Avoidance first, then reduction, then compensation” form the framework for the climate strategy in the supply chain at the REWE Group.

Avoidance: The REWE Group's top priority is to avoid the emission of climate-damaging greenhouse gases along the upstream supply chain of its products, wherever this is possible. Particularly for products which have a high impact on the climate, this is to be achieved, for example, by substituting products or raw materials, avoiding deforestation, or eliminating packaging or packaging components. An example is plant-based alternative products which have lower emissions due to the elimination of greenhouse gases which are produced in animal husbandry.

Reduction: Where it is not possible to avoid emissions, the REWE Group wants to reduce them through the use of more climate-friendly raw materials and production methods, more environmentally friendly packaging, or shorter transport routes. Examples include the use of deforestation-free feed or recycled paper instead of virgin fibres.

Compensation: The REWE Group plans to compensate, i.e. offset, any remaining emissions which cannot be avoided during the obtaining of raw materials, their processing, or the transport of products, by promoting climate protection projects. These projects are to be verified or certified in accordance with a recognised standard.

With regards to climate protection in the supply chain, the REWE Group has set strategic goals which give the Group's commitment clear orientation in terms of making product ranges more climate-friendly. Here it has used the requirements of the Science Based Targets Initiative – an alliance of the UN Global Compact, World Resources Institute and WWF – as guidance. This internationally recognised standard helps companies to develop science-based climate goals which are in line with the Paris Climate Agreement.

Goals

Goal 1: Strategic reduction goal for the supply chain
Reduction of absolute greenhouse gas emissions by 15 per cent in the supply chains of private label products at REWE and PENNY in Germany by the end of 2030 (compared with 2019).

Goal 2: Strategic suppliers commitment goal
The aim is to have agreed climate goals in line with the Science Based Targets Initiative with all strategic suppliers, who are responsible for a total of 75 per cent of product-related emissions, by the end of 2024.

Similar to the approach for more responsible supply chains, the REWE Group pursues a four-stage process in its climate strategy for the supply chain in order to achieve its objective: Product Range and Risk Analysis, Derivation of Focal Points, Implementation and Measures, Monitoring and Reporting.

Product range and risk analysis: calculation of carbon dioxide equivalent footprint

The strategy for climate protection in the upstream supply chain covers all product groups. For 2019, the REWE Group has determined a carbon dioxide equivalent footprint of around 4.6 million tonnes for its supply chains with over 11,000 private label products of REWE and PENNY in Germany.

The determination of Scope 3 emissions meets the requirements of the Greenhouse Gas Protocol, a standard for calculating greenhouse gas emissions. Due to the complexity of purchasing as well as the large number of suppliers and products purchased, the carbon dioxide equivalent footprint was calculated on the basis of an established expenditure-based method which is based on the so-called “environmentally extended input-output model”. This model maps global product streams and the climate impacts (in a specific sector and in a particular region) which correspond to the purchasing volume of the REWE Group. The emission factors which have been taken into account for the calculation of the carbon dioxide equivalent footprint include the climate impacts along the upstream value chain, from the cultivation phase to the factory gate. For example, the climate impacts of rearing, slaughtering and processing a pig, including the production of feed (plant cultivation, harvest and further processing), were taken into consideration. The emissions for packaging and transport were estimated separately.

Data about Scope 3 emissions was collected using the purchased products data of the main product groups. Third-party brands as well as other purchased goods (for example, equipment) and services were not taken into account.

Using a similar calculation method and base year as REWE and PENNY, the carbon dioxide equivalent footprint in the supply chains of toom Baumarkt DIY stores was determined to be around 170,000 tonnes and took 18,455 private label products into consideration.

In the area of services, DER Touristik also worked on the calculation of greenhouse gas emissions in 2021: Together with the tourism sustainability initiative Futouris e. V., the company has developed a feasibility study on the creation of an industry-wide carbon dioxide accounting system for travel. DER Touristik wants to use the study to inform its guests about the climate impacts of different travel offerings in a transparent manner and, at the same time, to specifically promote climate-friendly travel alternatives (see also Raw Materials in Focus – Non-Food).

Climate-relevant greenhouse gases are produced in all supply chains of the REWE Group, both upstream and downstream. Scope 3 emissions from the upstream supply chain make up the largest share: 62 per cent is attributable to raw materials production (including agriculture), 24 per cent to processing, 6 per cent to packaging and 8 per cent to transport.

The evaluation of the product range and risk analysis revealed a highly fragmented footprint. The REWE Group identified nine product groups which, owing to their high impact on the climate, are the initial focus when deriving measures to reduce the carbon dioxide equivalent footprint: milk and dairy products, sausage, cheese, poultry, eggs, pork, beef, fruit and vegetables. Animal products make up around 42 per cent of the footprint in the product range of the REWE Group, plant products (in this case: fruit and vegetables) 12 per cent. Even though plant-based products generally have a significantly lower greenhouse gas intensity than animal products, they also need to be taken into consideration in the sum of greenhouse gas emissions due to the rising demand from customers.

The strategic approach for climate protection in the supply chain is implemented on three levels:

Firstly, the Group promotes climate protection in the supply chain among the general public by defining specific goals. In addition, it gives its suppliers clear recommendations for action, from which long-term binding requirements are to develop. These relate to categories such as energy, agriculture or waste and call for the deployment of more efficient technology, the use of more sustainable raw materials, or the promotion of the circular economy.

Furthermore, the identification and realisation of improvement potentials, both across product ranges and within a specific product range, form the basis for implementing measures which reduce greenhouse gases in the value chain.

In addition, the REWE Group wants to work with its partners along the supply chain to actively help shape and promote the transformation and climate protection in its supply chains in the form of innovation projects.

Measures and projects to reduce greenhouse gas emissions

In order to consistently reduce greenhouse gas emissions in the supply chain of private labels, the REWE Group is implementing a series of different measures, a selection of which is presented below. The company is aware that a continuous expansion of measures is necessary in order to achieve its strategic goals.

For the definition of clear requirements and goals:

Reduction Roadmaps

In order to promote climate protection in the supply chains of its private labels and reduce emissions in a targeted manner, the Group is developing, in a first step, “reduction roadmaps” for the nine product groups which have a particularly high impact on the climate. These are to be continuously expanded and adjusted, and are also planned for all other product groups.

Deforestation-free supply chains

The REWE Group is aiming to make its supply chains deforestation-free in the areas of wood/paper, palm oil and soy in animal feed by the end of 2025. The company has set specific goals to achieve this. For more information, see Raw Materials in Focus – Food and Raw Materials in Focus – Non-Food. By doing this, the REWE Group wants to reduce the carbon dioxide equivalent footprint in the supply chain.

Rewetting and protection of peat bogs with NABU and peat-free soils

When wet, peat bogs store a quarter of terrestrial carbon, even though they occupy just three per cent of the global land area. Therefore, the REWE Group is involved in the preservation and rewetting of peat bogs. For example, starting in 2022 and for five years, the REWE sales line will pay five million euros each year into the newly created NABU Climate Fund set up by its long-standing partner NABU. The purpose of the NABU Climate Fund is to counteract the drainage of peat bogs caused by agriculture and peat cutting and therefore the release of large amounts of greenhouse gases. In order to achieve this, the water levels on the land will be raised, thereby bringing the degradation of peat to a stop. The focus of climate projects lies in northern Germany and EU countries in the Baltic region. Drained peat bog areas are to be purchased or leased, or farms are to receive support with switching over to climate-friendly wetlands management.

In addition, the REWE Group is switching its entire soil product range – both private labels and brand products – at REWE, PENNY and toom Baumarkt DIY stores over to peat-free alternatives by the end of 2025. By eliminating peat, the REWE Group is reducing the emission of greenhouse gases from drained peat bogs. toom Baumarkt DIY stores also plan to replace peat with alternative materials for ornamental plants. For more information, see Raw Materials in Focus – Non-Food.

Packaging

By the end of 2030, the REWE Group plans to make all sales and service packaging of private labels at REWE, PENNY and toom Baumarkt DIY stores more environmentally friendly. This enables greenhouse gas emissions to be avoided, by saving plastic or using recycled materials, for example. For more information, see Packaging.

For the identification and realisation of improvement Potentials:

Online platform to support suppliers

As part of its strategic suppliers commitment goal (see Goals), the REWE Group is asking its private label suppliers to develop climate goals and measures which are in line with the requirements of the Science Based Targets Initiative. The “REWE Group Initiative – Together for More Climate Protection” helps the Group to monitor this commitment and provides support when it comes to sharing knowledge. For example, it enables suppliers to identify reduction potentials, formulate their own climate goals, and derive corresponding measures. In this way, the REWE Group would like to pool forces through dialogue with its suppliers to achieve ambitious climate protection objectives. The online platform is to be continuously further developed.

For transformation through innovation projects:

Plant-based product alternatives: bio + vegan and food for future

In order to avoid climate-damaging greenhouse gases, the Group is making its private label product range more climate-friendly and positioning itself as a driver and market leader in the sector with innovative solutions, for example with purely plant-based private labels.

REWE Bio + vegan currently offers more than 30 vegan organic alternative products and the product range is to be steadily expanded. All products are not only vegan, but also organic certified, with no unnecessary additives. Since September 2021, the product range is also climate neutral: During the production of all REWE Bio + vegan products, the quantity of emissions of around 32,600 tonnes carbon dioxide equivalents is compensated, through a forest protection project in Uruguay, for example. This is certified according to the Verified Carbon Standard / Climate Community & Biodiversity Standards. In addition, since November 2021, eight hectares of land have been planted with around 32,600 trees as a mixed forest in Overath in the Rheinisch-Bergischer district close to Cologne, in order to also reduce the impacts of climate change in Germany.

When it was launched in October 2020, the PENNY private label Food for Future was the first cross-product-group vegan private label in the German discount sector. PENNY now offers its customers over 40 different Food for Future products which provide a wide choice for a vegan diet. The number of listed products is increasingly being expanded. In addition, the private label is climate neutral. Each year, PENNY compensates over 16,000 tonnes carbon dioxide equivalents through a Gold Standard-certified wind energy project in Chile. In addition, up to 16,000 trees are being planted in Eulenthal, Overath, in order to also reduce the impacts of climate change in Germany.

As a result of its extensive vegan product range comprised of private labels and brand products, REWE was crowned the “Most vegan-friendly supermarket” at the PETA Vegan Food Awards 2021. The cross-product-group vegan private label at PENNY, “Food for Future”, was the winner in the category “Best private label”.

PRO PLANET greenhouse

For PRO PLANET greenhouse crops such as peppers, tomatoes and strawberries, REWE and PENNY use a resource-conserving cultivation method in particularly sustainably operated greenhouses in Germany. Renewable energies are used here, thus reducing greenhouse gas emissions.

Dialogue within the sector

The REWE Group communicates regularly with suppliers, industry associations and NGOs on pioneering climate protection activities in the supply chain in order to identify and implement innovative approaches for more climate-friendly production methods. In addition, the Group is committed to promoting industry-wide solutions.