Living Wages and Incomes

In addition to Child and Forced Labour and Women in the Supply Chain, Living Wages and Incomes is a focus topic in the People area of action within the Green Products pillar.

Effect

The REWE Group is aware that its business activities as a trade and tourism company may have a wide range of social impacts. In this context, the upstream stages of the value chain are of particular importance. Violations of human rights may occur in the extraction of raw materials and their processing in the supply chains of the company's private labels as well as in production or in tourism offers. For example, in the production and processing of raw materials such as cocoa, coffee, orange juice, cotton, fruit and vegetables, and the processing of textiles and natural stones, there is an increased risk that living wages are not paid or that living incomes are not guaranteed¹. The REWE Group has identified the issue as particularly sensitive in its relevant supply chains and countries (see section Strategic Approach and Social Aspects in the Supply Chain). These challenges in the supply chain stages are therefore the focus of the REWE Group's activities. Particularly in the retail sector and with its private labels, the company can have a positive influence on the issue of wages and incomes in cooperation with suppliers and through standards. The REWE Group agrees that living wages and incomes should be set at levels that ensure workers and their families a decent standard of living – including food, water, housing, education, health care, transport, clothing and other essential needs – with provision for unexpected events.

¹Since many self-employed people, such as smallholders, do not receive a wage but earn their income by selling their goods or services, the concept of a living income was additionally introduced. The definition applies here transferred to the net annual income.

Principles

The REWE Group is committed to ensure that products in its ranges are manufactured in compliance with human rights. For example, all business partners of the REWE Group are contractually obliged to comply with minimum requirements such as internationally and nationally applicable laws as well as the core labour standards of the International Labour Organization (ILO) and to commit to the Guideline on Sustainable Business Practices. It includes, among other things, guidelines on remuneration and fair treatment of employees. For example, the regular (at least monthly) payment of the nationally applicable minimum wages is required by all companies in the supply chain. In the event of deliberate gross disregard of the values set out in the guideline, the REWE Group reserves the right to impose sanctions.

In the reporting period, the REWE Group has updated its Declaration of Principles which shows the company's strategy for respecting human rights and environmental concerns. The REWE Group specifically addresses the risks that arise in the supply chain with regard to the People and Environment areas of action through systematic supply chain management. For instance, the REWE Group is committed to strengthening human rights and preventing human rights violations. This commitment applies to its own business operations as well as to the global supply and value chains.

Moreover, in October 2022, the REWE Group updated its Supplier Code of Conduct (”REWE Supplier CoC“) for the 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 observe and comply with when doing business with companies of the REWE Group. The REWE Supplier CoC also takes into account the requirements of the German Act on Corporate Due Diligence Obligations in Supply Chains (LkSG). For example, suppliers are obliged not to violate human rights-related obligations and to ensure this in their own business area. In this context, the right of all employees to receive adequate remuneration that is sufficient to ensure them and their families a decent living must also be observed. Due to the special nature of the tourism industry, DER Touristik Group has adopted its own supplementary Commitment to the Protection of Human Rights in 2019 and also implemented a Supplier Code of Conduct. Corporate guidelines and processes are adapted with regard to human rights due diligence and the measures formulated are successively implemented.

In its Guideline on Fairness, the REWE Group is committed to strengthening human rights and improving working conditions within the supply chains of all private label products of REWE and PENNY in Germany as well as toom Baumarkt DIY stores. In its Guideline on Living Wages and Incomes, the REWE Group also raises awareness of the importance of living wages and incomes in the countries of origin of the raw materials for REWE and PENNY in Germany as well as toom Baumarkt DIY stores and identifies concrete measures and objectives. The guideline defines a binding framework for business relationships with contractual partners.

Strategic Approach

In order to promote living wages and incomes along the entire supply chain, the REWE Group has adopted the overarching four-stage management approach for responsible supply chains at REWE and PENNY in Germany as well as toom Baumarkt DIY stores (see also Management Approach Green Products).

1. Risk analyses of REWE and PENNY in Germany as well as toom Baumarkt DIY stores revealed that the supply chain stages of raw material production and processing are particularly relevant. This applies above all to the raw materials cotton, textiles, natural stones, coffee, cocoa, tea, palm oil and fish as well as fruit and vegetables in general, but with a special focus on bananas and pineapples. The focus of the analyses was on private label products, as this is where the company can achieve the greatest impact.
2. To this end, key topics as well as objectives and measures were defined.
3. These were implemented at three different levels of cooperation (see section Implementation).
4. The fourth and final step is to review and evaluate the activities carried out. The findings of the monitoring are incorporated into the further development of the measures.

Responsibility and Resources

Implementation of strategies and measures regarding Living Wages and Incomes is the responsibility of dedicated teams and departments in the respective sales lines. For more information, please refer to Management Approach Green Products. When implementing human rights due diligence in the supply and value chains, the Corporate Responsibility Departments of the sales lines and the procurement organisations are of particular importance.

Implementation

The REWE Group implements its approach and the measures derived from it to improve the wage and income situation in the supplier countries at three levels:

• Internal cooperation: Here, the focus is on purchasing. The company purchases raw materials that are certified according to Fairtrade, Rainforest Alliance, Naturland, GOTS or Cotton made in Africa, for example, in countries from which it obtains focus raw materials from several supply chain stages, such as coffee, cocoa and cotton. This ensures compliance with binding labour and social standards. In the fruit and vegetables segment, all suppliers need to prove compliance with ILO core labour standards through an audit (e.g. Rainforest Alliance) or risk assessment (e.g. GRASP).
  
  In addition, Buyers and Category Managers are sensitised internally in regular working groups and through training. Further projects and measures will be developed together.
• Cooperation within the supply chain: The REWE Group works together with its suppliers to implement measures to improve the wage and income situation in projects. Pilot projects in focus supply chains are an essential element of the approach for the REWE Group to actively contribute to the implementation of measures and to evaluate the resulting successes.
  
  Training courses support suppliers and producers in implementing the REWE Group's requirements for living wages and incomes and in further continuous improvement. In various pilot projects, the REWE Group works directly with raw material producers to meet the challenges.
  
  
  

The REWE Group works together with its suppliers to implement measures to improve the wage and income situation in projects.

• Cooperation with stakeholders: In addition, the REWE Group is in continuous exchange with a large number of stakeholders and is involved in various national and international initiatives as well as multi-stakeholder initiatives, alliances or forums. For example, the REWE Group is part of the Working Group of German Retailers for Living Wages and Incomes under the umbrella of the Initiative for Sustainable Agricultural Supply Chains (INA), in which the company actively participates in the development and implementation of responsible business practices (for more information, see section Cooperation with Stakeholders).

Involvement of Stakeholders

The REWE Group's stakeholders identified the topic of Living Wages and Incomes 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. In addition, the REWE Group works with other companies, stakeholders and standards organisations to find solutions and participates in benchmark analyses (see Measures and Projects).

Customers, suppliers, and partners, as well as other stakeholders, can submit their grievances or comments. For this purpose, the REWE Group has established reporting and grievance mechanisms. For more information, please refer to the Compliance section.

Specifically for supply chains, the REWE Group promotes the establishment of effective grievance mechanisms. In this way, the company aims to ensure that grievances in the supply chains can be detected. This also concerns securing living wages and incomes. The REWE Group already checks within the scope of audits and certifications whether production sites offer their employees complaint options. The REWE Group has developed a systematic process for dealing with grievances (for more information, see Social Aspects in the Supply Chain).

The REWE Group relies on numerous measures and projects to achieve improvements in living wages and incomes. These are presented below for the reporting period sorted thematically by the approach to implementing the strategy – the pilot projects play a special role: