Environmental Aspects in the Supply Chain

The REWE Group sources a large number of products and product components from within Germany and abroad. This can bring negative environmental effects, particularly in farming and production. Natural raw materials are also used. At the same time, the global demand for such raw materials is increasing – this is why the protection of resources is particularly important to the REWE Group.

Activities connected with environmental aspects within the supply chain centre on the area of action of the environment within the Green Products Strategy 2030 and are aimed at protecting natural resources and preserving biodiversity along the supply chains. For this purpose, three focus issues were defined, and specific work is being carried out on these. In addition to the Circular Economy and Biodiversity, the focus issue of Climate Protection in the Supply Chain is also important here.

Principles

In order to improve the environmental impacts along the supply chains, the REWE Group is careful to comply with environmental standards when selecting its suppliers and business partners. The company works with them to make supply chains more transparent and production more environmentally responsible. The REWE Group has formulated the principles of its business relationships with the Guidelines on Sustainable Business Practices. In the area of ecology, these principles include:

• the careful use of resources such as soil, air, water and natural raw materials,
• the protection and preservation of natural ecosystems and biological variety (biodiversity) as well as
• the avoidance and reduction of environmental risks.

These fundamental values apply both for the company's own business processes as well as for business partners and suppliers of the REWE Group. The REWE Group reserves the right to apply sanctions when the values contained in the guidelines are deliberately and flagrantly breached.

Strategy process

In order to identify the significant environmental impacts and implement suitable measures to improve these impacts in the global supply chains of its products which sometimes can be very complex, the REWE Group uses a four-stage process.

Step 1: Detailed risk and hot spot analyses are used to identify impacts. Since 2016, the REWE Group has significantly expanded and systematised its approach to recording risks. For more information, see Product-Related Risk Analyses.

Step 2: The findings obtained in the first step are used to derive focus raw materials and issues. Textile, plastic and metal, as well as fruit, vegetables and meat in area of food, have been identified as product groups which have particularly high environmental impacts.

Step 3: The focus raw materials and issues are addressed with corresponding measures to counteract negative effects. These measures are implemented through a management approach which works on three different levels:

1. Internal cooperation, through training of purchasers, for example
2. Cooperation within the supply chain, through requirements for suppliers or for purchasing certified raw materials, for example
3. Cooperation with stakeholders, by further developing standards organisations, for example

Depending on which risks are identified, measures may be defined differently, from the requirement of standards and certifications, cooperation with standards organisations, or the joining of industry initiatives through to on-site projects with suppliers and producers.

Step 4: The activities that we conduct are monitored and evaluated. The results of this monitoring work are then incorporated into refining the measures.

Implementation

Through the REWE Group's local purchasing companies, requirements and problems can be discussed directly with suppliers and production sites. In addition, any necessary measures can be implemented. In Asia, for example, the sourcing and procurement office REWE Far East (RFE) is responsible for the procurement of certain food and non-food products and plays an important role in the improvement of environmental conditions in the supply chain. The Corporate Responsibility Department of RFE maintains direct contact with suppliers and assists with the Green Production Programme and Detox Programme on site.

When it comes to the procurement of fruit and vegetables, the REWE Group receives support from its wholly owned subsidiaries Eurogroup and Campina Verde through their individual country representatives. This enables the commercial company to make its value chains more transparent. The country managers for Spain, Italy and Germany ensure close communication with production and help to implement the requirements of the REWE Group in the best possible way.

The REWE Group implements specific measures to reduce negative environmental impacts through three approaches:

1. Internal cooperation

Employees of the REWE Group receive regular training on relevant environmental topics such as biodiversity, packaging or deforestation so that these issues are given appropriate consideration when selecting suppliers and during the purchasing process. The information is made available for specific target groups.

2. Cooperation within the supply chain

Supply chain management at the REWE Group involves evaluating suppliers and making them aware of certain issues and their obligations, as well as audits and any measures derived therefrom. The REWE Group relies on established standards to gradually make the supply chain more sustainable. Special requirements are already taken into consideration during the tender process and incorporated into supplier agreements.

The REWE Group is constantly raising awareness of environmental issues, whether at supplier events or during individual discussions with suppliers. In addition, requirements in this regard are integrated into agreements with suppliers and into the Guidelines on Sustainable Business Practices. Therefore, suppliers confirm their compliance in this area with each tender or agreement. For focus raw materials such as, for example, cocoa and palm oil, the REWE Group has defined guidelines with detailed requirements and goals which, in turn, are imposed on suppliers.

Implementing environmental standards

When implementing improvements, the REWE Group uses internationally recognised standards such as, for example, the Global Organic Textile Standard (GOTS) seal, Cotton made in Africa for sustainable textiles, or the FSC® and PEFC™ certifications for sustainable forestry. Standards such as the Rainforest Alliance, Naturland, Fairtrade, Blauer Engel (Blue Angel), the Verband für Lebensmittel ohne Gentechnik e. V. (German Association of Non-Genetically Modified Foods) and the EU organic logo/label also play an important role for the REWE Group when it comes improving environmental conditions in the supply chain. In the supply chain link of production, the REWE Group uses, amongst other things, tools of the Business Environmental Performance Initiative (BEPI) or the Detox Programme. The REWE Group also plays an active role in platforms such as the Forum for Sustainable Palm Oil (FONAP) and the German Initiative on Sustainable Cocoa (GISCO) as a way of refining standards and initiating industry-wide improvements in environmental conditions (see also Raw Materials in Focus – Food and Raw Materials in Focus – Non-food).

Climate protection in global supply chains

In view of the major importance of greenhouse gas emissions from global agriculture for climate change, the REWE Group is seeking to help limit global warming through engagement in its supply chains. Consumers, employees and specialist stakeholders of the REWE Group also rate the topic as particularly significant for the company as part of the materiality analysis (for more information, see Materiality Analysis). Therefore, the company has set itself the goal of achieving an absolute reduction in greenhouse gas emissions of 15 per cent by the end of 2030 compared with 2019 in the supply chains of private label products. For more about the company's approach to reducing greenhouse gas emissions in its supply chains, see Climate Protection in the Supply Chain.

Negative list for the use of pesticides in conventional fruit and vegetables

The REWE Group aims to reduce pesticide levels in conventional fruit and vegetables. To achieve this, it is working with producers, NGOs and scientists on solutions which will minimise harm to the environment and health but still ensure production and yield security for farmers. For this purpose, the REWE Group has defined a negative list. It currently lists 148 active ingredients which producers are not permitted to use in production. In summer 2022, this will be expanded to 249 active ingredients. For 23 additional active ingredients, the REWE Group has significantly tightened the upper limit for maximum residue levels (MRL): these can be a maximum of 25 per cent of the maximum values stipulated by law. In this case too, the number of active ingredients will rise to 95 in 2022. For all others, an upper limit of 50 per cent of the MRL applies. In order to develop specifications further, the REWE Group has commissioned the creation of specific analysis reports in recent years – on endocrine disruptors in 2017 and substances which are harmful to bees in 2018, for example. In addition, all fruit and vegetable products are regularly inspected for possible pesticide residue on the basis of a risk-oriented sampling plan used as part of quality management. This risk analysis is also part of Purchasing's annual seasonal planning since it is a decision criterion for whether and how a product is brought to market.

Detox programme against negative impacts in textile production

In order to reduce the environmental impacts in the textile supply chain, the REWE Group joined the Detox campaign by Greenpeace in 2014 and set up a corresponding programme for products distributed by the REWE Group in the product groups of clothing, shoes and home textiles. The goal is to ensure safe textile production with no dangerous chemicals. To achieve this, the REWE Group worked together with its suppliers to systematically eliminate hazardous chemicals from textile production. The REWE Group documented developments with regards to the Detox Programme from 2015 to 2019 in annual progress reports.

The Greenpeace Detox campaign officially came to an end in 2020. Regardless of this, the REWE Group is committed to eliminating dangerous chemicals from textile production. In 2020, the company started a new Detox process. The approach particularly includes supplier development in the area of chemicals management.

In addition, the REWE Group has been using the Manufacturing Restricted Substances List (MRSL) of the initiative “Zero Discharge of Hazardous Chemicals (ZDHC)” since 2020. This contains chemicals which are classified as dangerous and are not permitted to be used in production. In addition, factories must always have a valid wastewater test, produce a chemicals inventory and participate in annual training. The REWE Group sources its products from a pool of wet processing factories which meet these new requirements.

Between 2018 and 2021, a total of 24 producers, for example from China, Serbia, Italy, Bangladesh and Turkey, received training. From doing this, improvements were recorded in the areas of chemicals management, management systems, process optimisation, wastewater and waste management as well as water consumption. The producers for the REWE Group who took part improved by 24 per cent on average.

To further advance the topic, the REWE Group promotes dialogue with other retailers and textile companies and supports the Green Button textile seal.

3. Cooperation with stakeholders

In order to improve general conditions, the REWE Group pools its forces with other companies and stakeholders in industry initiatives and partnerships, thus increasing its influence. In addition, the REWE Group is actively involved in further developing these partnerships and represents its interests there.

The REWE Group takes part in the following national and international initiatives which deal with environmental impacts in supply chains – detailed descriptions of individual initiatives can be read in Industry Initiatives and Memberships:

• Member of amfori BEPI
• Dialogue and cooperation with the Aquaculture Stewardship Council (ASC)
• Involvement in the initiative Biodiversity in Good Company
• Member of the Partnership for Sustainable Textiles
• Member of the Consumer Goods Forum
• Member of the board at Cotton made in Africa
• Member of the Floriculture Sustainability Initiative (FSI)
• Founding member of the initiative Food for Biodiversity
• Dialogue and cooperation with the Forest Stewardship Council (FSC^®)
• Founding member of the German Initiative on Sustainable Cocoa (GISCO)
• Founding member of the Forum for Sustainable Palm Oil (FONAP)
• Member of the GLOBALG.A.P. working group on environmental aspects in the cultivation of crops
• Regular dialogue and cooperation with the Marine Stewardship Council (MSC)
• Dialogue and cooperation with the Programme for the Endorsement of Forest Certification Schemes (PEFC^TM)
• Member of the Rainforest Alliance Standards Committee
• Member of the Roundtable on Sustainable Palm Oil (RSPO)
• Member of the Sustainable Juice Platform
• Partnership with the Donau Soja Association
• Member of the World Banana Forum
• Cooperation with XertifiX