Product-related Risk Analyses

The REWE Group strives to reduce the environmental and social impacts of its business operations wherever possible. In order to implement this, the REWE Group conducts analyses to assess social and environmental risks: at the product group or raw material level in order to formulate strategies and at the level of individual products, topics or countries in order to specify measures. Within this framework, the REWE Group continuously checks its own performance and progress with a view to minimising risks. When different goals come into conflict with one another, the company calls on experts from its own ranks and from external stakeholder groups.

GRI 102-11: Precautionary principle or approach

Analysis of the social and environmental risks in the supply chains

The risk analyses of the REWE Group are used to identify and assess the impacts of its business activities on people, animals and the environment. The aim is to identify the significant negative environmental and social impacts of private label products and clarify where these occur. The analysis is used to help decide which measures should be taken and with which priority – with the aim of minimising any risks identified and using opportunities. Therefore, it forms the basis for strategic focus in the area of more sustainable product ranges and for developing the strategy Green Products 2030 in which topics, key performance indicators (KPIs), goals and measures are defined.

Product-related risk analyses: trade

The REWE Group in Germany has conducted a formalised risk analysis for food and non-food products for the supply chains of private label products sold at REWE and PENNY in Germany. For this purpose, the product range of food and non-food products was divided into a total of 37 product clusters. The approach thus takes the total product range into consideration.

The procedure is divided into two strands: a qualitative analysis and a quantitative analysis. As part of the qualitative investigation, studies and reports were evaluated and interviews conducted with purchasers and NGOs in order to identify significant sustainability issues along the value chains. In addition to the environmental impacts, risks in the area of working conditions and human rights were also particularly identified as part of this process.

The quantitative input-output analysis is based on an economic model. For this purpose, the environmental impacts in the supply chain, such as greenhouse gas emissions, for example, were determined and converted into monetary amounts. The social impacts were assessed by identifying how many people per product cluster are active in the total supply chain. This data was linked to the purchasing volume of the company as well as to information about the countries of production or origin in order to assess environmental and social risks specifically from a monetary standpoint. This made it possible to quantify the external costs of the company’s economic activity for the individual product clusters. This also enabled the environmental and social hot spots to be identified along the entire value chain based on facts and particularly high-risk product groups and focus raw materials to be determined.

The analysis made it possible to determine that the main impacts are in the supply chain links of raw materials production and processing. Therefore, these areas are the focus of REWE Group activities.

Impacts along the value chain

	Cultivation/Breeding	Processing	Logistics	REWE Group	Consumers	Disposal
Animal welfare & health
Air emissions & energy
Land consumption
Water
Human rights & working conditions
Transport
Transparency
Nutrition & health
Waste (includes food waste and packaging)

Impact

low high

In addition, the following critical raw materials were identified:

fruit and vegetables in general, bananas and pineapples in particular,
meat and dairy products, including animal feed,
coffee, cocoa, tea, palm oil, fish, orange juice, as well as
cotton, textiles and natural stones (for more information, see Raw Materials in Focus – Food and Raw Materials in Focus – Non-Food).

Scorecards summarise the results of the analysis for each individual product cluster. They provide an overview of the social and environmental costs of the respective products along the value chain. The allocation to the five links of the value chain enables a more detailed examination of the focus issues.

Example: impacts on fruit and vegetables

For the “fruit and vegetables” product cluster, air emissions and energy, biodiversity, soil, water, working conditions and human rights were identified as focus issues along the supply chain. In addition to these topics from the value chain stages of raw material extraction and processing, the following were also identified as sustainability issues: transparency and business practices, environmental pollution and carbon dioxide emissions caused by transport as well as packaging and food waste.

Fruit and vegetables scorecard – overview of environmental and social impacts

Raw Material Production	Processing	Transport	Consumption
Air emissions / energy	Human rights & working conditions	Environmental pollution	Packaging
Biodiversity	Water	Carbon dioxide emissions	Food waste
Soil	Transparency & business practices
Water
Working conditions, human rights

Results in the “fruit and vegetables” product cluster

Focus issues
Air emissions & energy	Carbon dioxide emissions from using fertiliser and energy consumption during farming Carbon dioxide emissions from logging to gain farming land Emissions from transport
Biodiversity	Threat to biodiversity due to pesticides, use of chemicals, etc. Threat to biodiversity due to logging to create farming land and thus associated soil leaching and erosion
Soil	Leaching of soils from farming Soil erosion
Water	Water pollution from fertilisers Fresh water wastage during farming and production/processing
Working conditions	Occupational safety (handling of chemicals, pesticides, hazardous substances, etc.) Remuneration (e.g. of field workers, but also in further processing) Limited access of small farmers to information, technology and resources
Human rights	Risk of child labour and forced labour

The scorecards show the focus issues as well as their relevance and present the individual findings in detail. A comparison of the results with the sustainability activities of the REWE Group in Germany results in necessary measures to be taken.

In order to substantiate the results, the REWE Group conducts additional investigations for individual product areas, focus issues or vulnerable groups of people.

In 2019, for example, an assessment of the carbon footprint for the supply chains was prepared (for more information, see Climate Protection in the Supply Chain). In addition, a risk analysis was conducted in the area of forced labour (for more information, see Child Labour and Forced Labour) and, in 2020, in the area of women (for more information, see Women in the Supply Chain). An external risk analysis was conducted for fruit and vegetables in the financial year in order to analyse the supply chains using external data. The results serve as the basis for the strategic focus of the fruit and vegetables product range with regards to sustainability.

For more information, see Risk Management.

Human rights risk analysis: DER Touristik Group

To get a comprehensive overview of the human rights risks in its value chain and in destinations, DER Touristik Group conducts a human rights risk analysis at regular intervals and derives measures and objectives from it.

The relevant human rights risks and aspects in tourism include:

Children’s rights
Workers’ rights
Modern slavery
Equality
Local residents’ access to land, water and food
Rule of law with a focus on personal rights
Standard of living
Corruption
Political participation
Rule of law with a focus on political rights

The human rights risk analysis could not be conducted in 2020 and 2021 due to the corona pandemic. However, it is planned for 2022 for the entire DER Touristik Group (previously only Germany) in preparation for the German Supply Chain Due Diligence Act.

In the last human rights risk analysis conducted in 2018, the violation of workers’ and children’s rights was identified as a particularly significant risk for DER Touristik Germany, with Thailand, South Africa and Egypt being rated as particularly risky countries. In 2019, the analysis was followed by a social impact assessment with the Round Table for Human Rights in order to identify specific challenges in Thailand and develop solutions. This covered topics such as women’s rights and child protection. Broad challenges such as modern slavery, sexual exploitation and land theft were also addressed as part of industry initiatives.