GRI 308

Ecological Aspects in the Supply Chain

Brief Overview:

The REWE Group aims to conserve natural resources and to protect and promote biodiversity along the supply chains. The company

commits in its Guideline on Sustainable Business Practices to a conservative approach to using resources like soil, air and water, as well as natural raw materials, and to protecting natural ecosystems and biodiversity;
obliges its suppliers to minimise the environmental impact of their business activities and to actively implement measures to promote environmental protection with its Supplier Code of Conduct on corporate due diligence in the supply chain;
cooperates with established standards to gradually make the supply chain more sustainable;
bundles its strengths in industry initiatives and partnerships with other companies, as well as other stakeholders, on ecological aspects in the supply chain.

The activities concerning ecological aspects in the supply chain are related to the Environment area of action within the Green Products Strategy 2030 that was drawn up for REWE and PENNY in Germany. To protect natural resources and preserve biodiversity along the supply chains, the company works specifically on three focus topics: Circular Economy, Biodiversity and Climate Protection in the Supply Chain.

GRI 308: Supplier Environmental Assessment

Management Approach

Effect

As a trade and tourism company, the business activities of the REWE Group have many different impacts on biodiversity. In addition to direct effects, for example at the company's locations or in the transport of goods, the upstream stages of the value chain are particularly important. Negative ecological effects may arise here from the unsustainable use of natural ecosystems – for instance, in the extraction of raw materials, in the production of goods or in tourism offers. Furthermore, natural resources are consumed at a time when global demand for them is increasing. For this reason, protecting resources is a significant concern. Major influence can be exerted in cooperation with suppliers and standards, especially in the supply chains of the private labels, to avoid and reduce impacts on natural resources, the climate and biodiversity. The REWE Group has a positive influence on ecological aspects in the supply chain with numerous measures and activities.

Principles

To improve ecological impacts along the supply chains, the REWE Group ensures that environmental standards are adhered to when it chooses its suppliers and business partners. The company works with them to make supply chains more transparent and to make manufacturing more ecologically compatible.

The REWE Group has formulated the principles of its business relationships in its Guideline on Sustainable Business Practices. In the area of ecology, this includes:

careful use of resources such as soil, air, water and natural raw materials;
protection and preservation of natural ecosystems and biodiversity; and
avoidance and reduction of environmental risks.

These core values apply both to its own business processes as well as for business partners and suppliers of the REWE Group. In the event of deliberate gross disregard of the values described in the guideline, the REWE Group reserves the right to impose sanctions.

In order to improve the ecological impact along the supply chains, the REWE Group adheres to environmental standards when selecting its suppliers and business partners.

Furthermore, in October 2022, the REWE Group updated its Supplier Code of Conduct („REWE Supplier CoC“) for compliance with its corporate due diligence in the supply chain. It applies as of 1 January 2023 and outlines the minimum human rights and environmental standards that suppliers must respect and comply with in business transactions with the REWE Group companies. It requires suppliers to limit the environmental consequences of their business activity to a minimum and to actively implement measures to promote environmental protection. They are also expected to recognise and adhere to all applicable local and internationally recognised environmental standards and laws. The REWE Suppliers CoC also takes into account the requirements of the German Act on Corporate Due Diligence Obligations in Supply Chains (LkSG).

Strategic Approach

The REWE Group follows a four-stage process to identify significant ecological impacts and implement appropriate measures to improve the sometimes highly complex and global supply chains for private label products at REWE and PENNY in Germany:

Risk and hotspot analysis: This enables the company to identify its impacts. The REWE Group has greatly expanded and systematised its approach to recording risks since 2016. Studies and reports are analysed and evaluated and interviews conducted with purchasers and NGOs in order to determine significant sustainability issues along the value chains, see also Product-Related Risk Analysis.
Derivation of focus topics and goals: Focus raw materials and topics are derived from the findings from the first step. Fruit and vegetables, meat and textiles, plastic and metals were identified as product groups with particularly high environmental impacts.
Implementation through actions and requirements: To counteract negative impacts, appropriate measures are taken in order to deal with the focus raw materials and focus topics determined in the second step. Depending on which risks are determined, measures can be defined differently, from requiring standards and certification, cooperation with standards organisations or joining industry initiatives to projects with suppliers and producers on site (see section Implementation).
Monitoring and reporting: The activities carried out are monitored and evaluated. The findings of the monitoring are incorporated into the further development of the measures.

Targets and KPIs

To make progress in the Environment area of action measurable, the following targets and Key Performance Indicators (KPIs) were defined for the private labels (for more information see the overarching Management Approach Green Products):

Objective	Status
Complete integration of relevant food and non-food suppliers of the RFE (REWE Far East) for the private label products of REWE and PENNY in Germany as well as toom Baumarkt DIY stores into an environmental programme by the end of 2030
100 per cent more eco-friendly packaging for our private label products by the end of 2030¹
Implementation in progress Target achieved Not available Target not achieved ¹ This goal applies to the REWE Group in Germany (REWE, PENNY, toom Baumarkt DIY stores) and since 2019 also to the international sales lines (BILLA, BILLA PLUS, PENNY and ADEG).

On the way to achieving the goal, it was established that the biggest ecological impacts are present in the lower levels of the supply chain. To counteract this, cooperation with suppliers and producers is forced. Furthermore, progress can be achieved when standardised requirements are carried into the supply chain. Their standardisation is therefore essential for the REWE Group. To this end, the company is strengthening cooperation in industry initiatives.

Responsibility and Resources

Implementation of strategies and measures regarding ecological aspects in the supply chain is the responsibility of dedicated teams and departments in the respective sales lines. For more information, please refer to Management Approach Green Products.

Implementation

The implementation and its concrete measures are realised on three different levels:

Internal cooperation: Employees of the REWE Group receive regular training on relevant ecological issues, such as biodiversity, packaging and deforestation. These are correspondingly taken into consideration in the selection of suppliers and in the purchasing process. The information is provided in a target-group oriented manner.
Cooperation within the supply chain: Supply chain management encompasses supplier evaluation, awareness raising among suppliers and supplier obligations, as well as audits and measures derived from them. The REWE Group cooperates with established standards to gradually make the supply chain more sustainable. Special requirements are taken into consideration in the tender process and integrated into supplier contracts.
Awareness of ecological issues is continuously raised at supplier events and in individual talks with suppliers. Furthermore, the requirements are integrated into agreements with suppliers, in the Supplier Code of Conduct and in the Guideline on Sustainable Business Practices. Adherence to the requirements is therefore confirmed by suppliers with every invitation to tender and/or every agreement. Guidelines with detailed requirements and objectives were defined and passed on to suppliers for focus raw materials, such as cocoa and palm oil.
Cooperation with stakeholders: To improve framework conditions, the REWE Group bundles its strengths in industry initiatives and partnerships with other companies and stakeholders. Furthermore, the REWE Group actively cooperates on further developing these partnerships.

The REWE Group cooperates with established standards to gradually make the supply chain more sustainable.

Requirements and issues can be directly discussed with suppliers and/or production sites and measures implemented through the REWE Group purchasing companies on site. For example, the sourcing and procurement office REWE Far East is responsible for some procurement of food and non-food products in Asia and plays an important role in improving environmental conditions in the supply chain. For this purpose, the Corporate Responsibility Department of REWE Far East is in direct contact with suppliers. It is responsible for the Green Production Program and the Detox Program to investigate and improve environmental effects and to eliminate hazardous chemicals in textile production on site.

With regard to procurement of fruit and vegetables, the REWE Group is supported by its 100 per cent subsidiaries Eurogroup and Campina Verde with their individual country branches. This enables the commercial company to make its value chains more transparent. The country representatives for Spain, Italy and Germany ensure a close exchange with production and help to implement requirements as well as possible.

Involvement of Stakeholders

Stakeholders assessed the topic of Ecological Aspects in the Supply Chain as relevant for the company in the Materiality Analysis. They are informed annually about the effectiveness of measures taken via the Sustainability Report and in various dialogue formats (see Stakeholder Dialogue). This exchange allows stakeholders to provide important input on the issue. Furthermore, ecological aspects are addressed in different initiatives and memberships, in which the REWE Group is involved, in collaboration with standards or in direct exchange with suppliers, as in the PRO PLANET Biodiversity Project (see also Cooperation with Stakeholders).

Customers, suppliers and retailers, as well as other stakeholders, can submit their complaints or comments through established reporting and grievance mechanisms. For more information, please refer to the Compliance section. No reports were made during the reporting period.

GRI 308-2: Negative environmental impacts in the supply chain and actions taken

Measures and Projects

The measures for the reporting period are presented below sorted thematically according to implementation level:

Cooperation Within the Supply Chain

Improvement through ecological standards

When implementing improvements, the REWE Group uses internationally recognised standards, such as Siegel Global Organic Textile Standard (GOTS), Cotton Made in Africa for sustainable textiles and FSC® and PEFC™ certifications for sustainable forestry. Standards such as Rainforest Alliance, Naturland, Fairtrade, “Blauer Engel” (Blue Angel), “Verband für Lebensmittel ohne Gentechnik e. V.” (German Association for Food without Genetic Engineering) and the EU organic logo also play an important role for the REWE Group in order to improve ecological conditions in the supply chain. In the production stage of the supply chain, the REWE Group also implements instruments of the Business Environmental Performance Initiative (BEPI) and the Detox Program. The REWE Group is also committed to further developing standards and to bringing about industry-wide improvements in ecological conditions through active cooperation in platforms such as the Forum for Sustainable Palm Oil "Forum Nachhaltiges Palmöl" (FONAP) and the German Initiative on Sustainable Cocoa (GISCO) (see also section Focus Raw Material – Food and Focus Raw Material – Non-Food and Services).

Climate protection in global supply chains

Given the major impact on climate change of greenhouse gas emissions from global agriculture, the REWE Group would like to contribute to limiting global warming through commitment in its own supply chains. For example, the company has set the objective of achieving an absolute reduction in greenhouse gas emissions of 15 per cent by the end of 2030 compared to 2019 in the supply chains of private labels at REWE and PENNY in Germany. More information about the approach to reducing greenhouse gas emissions in their supply chains can be found under Climate Protection in the Supply Chain.

Reducing pesticide use in conventional fruit and vegetables

The REWE Group aims at reducing the pesticide load of conventional fruit and vegetables and is therefore working with producers, NGOs and science on solutions to minimise the impact on the environment and health while ensuring production and yield security for farmers. For this purpose, the REWE Group has defined a negative list for the sales lines REWE and PENNY in Germany. This was extended in summer 2022 from 148 (2021) to 237 active ingredients. For further 87 active ingredients, the REWE Group has significantly tightened the upper limit of the maximum residue levels (MRLs) (2021: 24): These may amount to a maximum of 25 per cent of the legally prescribed limits. For all other active ingredients, an upper limit of 50 per cent of the MRL applies. Furthermore, the number of active ingredients, the maximum total load and the load of the acute reference dose is limited. In recent years, the REWE Group has had specific analysis reports prepared in order to further develop the specifications – for example, in 2017 on the topic of endocrine disruptors and in 2018 on the topic of substances hazardous to bees. In addition and as part of quality management, all fruit and vegetable products are regularly tested for possible pesticide residues on the basis of a risk-oriented sampling plan. This risk analysis is also part of the annual seasonal planning of the purchasing department as it is a criterion for whether and how a product is put on the market.

To also reduce the pesticide load on conventional fruit and vegetables, the REWE Group in Austria developed the Pesticide Reduction Program (PRP) in 2003, together with the environmental protection organisation GLOBAL 2000. It is applied to all fruit and vegetables of the REWE Group in Austria. The limit values set by GLOBAL 2000 are binding for suppliers and are mostly far below the highest legal limits. Adherence to the required residue values throughout the entire fresh fruit and vegetable range is tested at random through regular, risk-oriented inspections. The results of the inspections are continuously published on the BILLA and BILLA PLUS website.

Furthermore, GLOBAL 2000 has drawn up the annual status report Status Report Chemical Crop Protection for the REWE Group since 2009. It shows the pesticide load of the conventional range of fresh fruit and vegetables and forms the basis for its further developments. Since 2016, pesticides containing endocrine disruptors (EDCs), the use of which is not yet regulated by law, have also been included in the Pesticide Reduction Program (PRP). These chemicals are exogenous substances that can intensify or block the body’s own hormones. Since many of these chemicals can be effective even in small doses, they were banned within the context of the PRP.

In 2022, 1,484 samples (2021: 1,538) from 115 different products (2021: 113) were examined for pesticide residue and evaluated by GLOBAL 2000. 80.5 per cent (2021: 81) of the 1,194 samples (2021: 1,245) were contaminated with residues above the detection limit. In 13 per cent of the samples (2021: 12), the strict limit values of PRP were not adhered to. There has been an increase since 2020 because of the clear reduction in the PRP limit value of ten common pesticides that act like hormones.

Testing and improving environmental effects with the Green Production Program

Highlight

In 2018, the REWE Group started an environmental programme for suppliers of REWE and PENNY in Germany, as well as toom Baumarkt DIY stores that contributes to achieving the KPI: The Green Production Program serves to improve and regularly monitor environmental effects at suppliers’ production sites. To this end, every production site must present a self-assessment based on the amfori Business Environmental Performance Initiative (BEPI) or an ISO 14001 certificate. Alternatively, an OEKO TEX STeP certificate or Higg FEM verification is possible for textile suppliers. In addition, the production sites undergo a random amfori BEPI audit to check adherence to environmental regulations. In 2022, all suppliers that produce for REWE Far East were included – 382 suppliers (2021: 387) and therefore 778 production sites (2021: 752) of the REWE Group are now integrated into the Green Production Program. The REWE Group advises all strategic suppliers whose processes are categorised as harmful to the environment on how they can improve.

Elimination of hazardous chemicals in textile production

As a distributor in the product groups of clothing, footwear and home textiles, the REWE Group set up a programme for the use of harmless chemicals in textile production in 2014. Furthermore, the company was part of the Greenpeace Detox campaign with the REWE and PENNY sales lines in Germany from 2014 to 2020. Since its end, REWE and PENNY in Germany, as well as toom Baumarkt DIY store, have committed themselves to eliminating hazardous chemicals in textile production and have started a new detox process. In particular, the approach includes supplier development with a view to chemicals management. The REWE Group uses, for example, the Manufacturing Restricted Substances List (MRSL) of the “Zero Discharge of Hazardous Chemicals” (ZDHC) initiative. This list contains chemicals that are categorised as hazardous and that are not allowed to be used in production. The factories must always be able to provide a valid wastewater test result and a chemical inventory and must take part in annual trainings. The REWE Group sources its products sold in Germany for the REWE and PENNY sales lines and in Austria from a pool of wet process facilities that meet these requirements.

Between 2018 and 2022, 28 producers in total (by 2021: 24), for example from China, Serbia, Italy, Bangladesh, Pakistan and Turkey received training. Improvements in the areas of chemicals management, management systems, process optimisation, wastewater and waste management as well as water consumption were recorded. The participating producers were able to improve on average by 26.5 per cent (2021: 24).

The REWE Group in Austria has been implementing safe private label textile production without hazardous chemicals since 2020, as part of its area of action Biodiversity and Habitats.

To keep pushing the topic forward, the REWE Group promotes the exchange with other retailers and textile companies and supports the textile label Green Button "Grüner Knopf" in Germany (see also Raw Materials Non-Food and Services).

Cooperation with Stakeholders

With regard to environmental impacts in the supply chains, the REWE Group is involved in industry and member associations, as well as national and international interest groups, see also Initiatives and Memberships. All of the REWE Group’s other relationships with associations and institutions are presented on the website.

Member of amfori BEPI
Dialogue and cooperation with the Aquaculture Stewardship Council (ASC)
Member of the "Workgroup Sustainability" for fruit, vegetables and potatoes in the system of QS GmbH
Member of the "Workgroup Sustainability" of animal feed in the system
Member of ARGE GMO-Free “ARGE Gentechnik-frei”
Involvement in the initiative Biodiversity in Good Company
Member of the "Bündnis für nachhaltige Textilien" (Partnership for Sustainable Textiles)
Member of the Consumer Goods Forum
Board member of Cotton made in Africa
Protein partner of Donau Soja
Member of the Floriculture Sustainability Initiative (FSI)
Founding member of the initiative Food for Biodiversity
Dialogue and collaboration with the Forest Stewardship Council (FSC^®)
Member of the "Forum Nachhaltigere Eiweißfuttermittel" (FONEI) (German Forum for More Sustainable Protein Feed) and the "AG für Entwaldungsfreie Soja-Lieferketten" (Working Group Deforestation-Free Soy Supply Chain) as part of FONEI
Founding member of German Initiative on Sustainable Cocoa (GISCO)
Founding member of “Forum Nachhaltiges Palmöl” (FONAP) (Forum for Sustainable Palm Oil)
Member of the GLOBALG.A.P. Working group on environmental aspects in crop cultivation
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 "Runder Tisch für nachhaltiges Palmöl" (RSPO) (Roundtable on Sustainable Palm Oil)
Member of the Sustainable Juice Platform
Member of the World Banana Forum
Cooperation with XertifiX