Management Approach Green Products

An increasing number of people is taking an interest in the social and ecological impact of their nutrition and consumption behaviour. Sustainability alone is never the only criterion relevant for decision-making; quality and price are equally important. At the same time, consumers associate different aspects with the term of sustainability. Whereas some might think of climate protection or resource conservation, others emphasise the importance of social conditions or animal welfare.

The REWE Group aims to meet these demands and at the same time inspire more and more people for more sustainable products and services. The REWE Group regards sustainability as part of its business strategy, which contributes to economic success and is an important growth driver.

Principles

The production of the REWE Group's private label products has an impact on people, animals and the environment. The REWE Group’s customers expect and should be able to trust that the REWE Group, as a commercial company, is aware of its responsibility in the supply chains of its private labels and addresses the social and ecological effects.

In order to identify and assess its impact as well as to take effective measures and thus integrate sustainability as an integral part of the procurement processes, the company launched the Green Products 2030 Strategy for REWE and PENNY in Germany in 2017 (see section Implementation). It is based on the core elements of the OECD-FAO Guidance for Responsible Agricultural Supply Chains. The strategy covers the supply chains of the company's private labels, which are sold at REWE and PENNY in Germany. It is embedded in the overarching Sustainability Strategy of the REWE Group and summarises the strategic orientation and operational implementation of sustainability in the Green Products pillar. Its mission, "We act responsibly for people, animals and the environment”, provides the umbrella of the strategy, to which concrete measures are aligned.

Responsibility

In the 2022 reporting period, the Green Products pillar for REWE and PENNY in Germany was headed by Marcel Weber (Business Manager Merchandise Private Label National and International). Together with Purchasing and Category Management, the Sustainable Goods Department, headed by Dirk Heim, is responsible for implementing the measures and achieving the goals set in the Green Products 2030 Strategy (excluding the topic of nutrition). Within these departments, the topics are worked on and driven forward by selected teams.

Every year, the departments develop and prioritise aspects and focus topics for each product group within the firmly defined strategy and budget process – and back these up with concrete measures. In this way, the REWE Group ensures that current issues arising from changing framework conditions are addressed.

At the REWE Group in Austria, the Category Management Purchasing, Private Labels and Sustainability departments are responsible for achieving the targets and implementing the measures.

At DER Touristik, the Corporate Responsibility department, headed by Laura Steden, Director Corporate Responsibility, is responsible for coordinating and managing measures in the product area. In addition, a Corporate Responsibility Group Manager focuses on product-related issues and is in close contact with colleagues from the product area.

toom manages developments in the area of more sustainable products through a specialist department in the purchasing division, which continuously expands the range of more sustainable product alternatives together with toom Purchasing and Category Management. Kai Battenberg, Lead Sustainability and Product Compliance, is responsible for coordinating and supporting the implementation of measures in the area of more sustainable products. Supraordinated responsibility for sustainability lies with Dominique Rotondi, Managing Director Purchasing and Logistics.

At the Lekkerland sales line, the Quality Management and Corporate Responsibility departments are responsible for coordination and accompany the implementation of measures for more sustainable products in the Buying and Category Management departments.

Implementation

The REWE Group is working to offer more sustainable product ranges. To this end, the REWE Group focuses its sustainability commitment on its private label products, as it has a greater influence and thus a special responsibility here. Furthermore, the company holds regular talks with brand manufacturers in Germany and Austria and promotes professional exchange on the topic of sustainability, for example within the framework of industry initiatives or through joint projects.

In the food sector, the company offers organic, regional, vegetarian and vegan private label products, as well as products where improvements have been achieved in the supply chains. Since 2010, REWE and PENNY in Germany and toom Baumarkt DIY stores have been using the PRO PLANET label to mark products that are produced in a more socially and ecologically sustainable manner or meet higher animal welfare standards. In this way, the sales lines aim to promote sustainable consumption among a broad group of consumers (see PRO PLANET). In addition, the company purchases certified raw materials.

More sustainable offers are also continuously being developed in tourism. In its online annual catalogue "Conscious Travel", DER Touristik presents hotels with sustainability certification and provides information about their sustainable commitment (for more information, see Promoting Sustainable Consumption). 2022 also saw the first online themed world on more sustainable travel. In addition to the range of GSTC-certified hotels, travellers were also given tips on more sustainable behaviour when travelling.

In their implementation, REWE and PENNY in Germany follow the Green Products 2030 Strategy. It applies to the supply chains of the company's private labels, which are sold at REWE and PENNY in Germany and was developed based on a comprehensive analysis of sustainability risks and impacts in the supply chains of private label products. Other important building blocks were the survey of stakeholders and customers (see Materiality Analysis) as well as political and scientific analyses and objectives (see Sustainable Development Goals).

In a first step, the opportunity and risk analysis was used to evaluate environmental and social as well as company data to assess the social and environmental impacts of the products and identify the most significant sustainability impacts (for more information, see section Product-Related Risk Analysis). This enabled the impacts on humans, animals and the environment that arise in connection with private label products to be quantified in monetary terms.

The analysis showed, among other things, that particularly the extraction of raw materials and the processing of products are highly relevant in terms of sustainability criteria. The holistic assessment of the supply chain is therefore an important element of the sustainability strategy, which is an integral part of the purchasing processes and requires a close exchange with direct and indirect suppliers.

Particularly the extraction of raw materials and the processing of products are highly relevant in terms of sustainability criteria. The holistic assessment of the supply chain is therefore an important element of the sustainability strategy.

The strategy is implemented through a comprehensive management approach that describes the principles and instruments for defining the measures:

1. Risk analyses:

It follows a continuous assessment of opportunities and risks in the area of sustainability. These analyses are based on external investigations of product areas, specific products or raw material supply chains. In addition, the assessment of the advisory board for sustainability (see section Stakeholder Dialogue) as well as other stakeholders such as producers, suppliers and employees is taken into account.

2. Derivation of focus topics and objectives:

On the basis of the risk analyses conducted, focus raw materials and focus topics as well as goals and measures were defined, which are adapted and scrutinised when new results or findings emerge.

3. Definition and implementation of measures:

The measures to achieve the objectives with regard to focus raw materials and focus topics are implemented at three different levels of cooperation:

3.1 Internal cooperation

Through internal awareness-raising and training, the continuous analysis of opportunities and risks, and the formulation of strategies and goals, sustainable procurement is further integrated into the purchasing processes. The goal is to take sustainability aspects into account in every supplier and/or product decision.

3.2 Cooperation within the supply chain

In the cooperation with stakeholders in the supply chain, a three-step approach is used, which includes the definition of requirements as well as the monitoring and development of the stakeholders. Business partners in the private label supply chains are obliged to indicate the production sites where products are manufactured. By raising the contract partners’ awareness and holding them accountable, concrete rules are created to implement sustainability throughout the supply chain.

In principle, the requirements of the EU Unfair Commercial Practices Directive are implemented in all sales countries of the REWE Group. In addition, ecological and social requirements are an integral part of the binding framework for business relationships with contractual partners in the private label supply chains at REWE and PENNY in Germany, toom as well as the REWE Group in Austria. Moreover, in October 2022, the Supplier Code of Conduct was updated, applicable as of 1 January 2023. It will be integrated into all contracts with suppliers who deliver goods to REWE, PENNY and toom Baumarkt DIY stores in Germany.

Suppliers and producers are supported through training in the implementation of the requirements and in further continuous improvement. The company works directly with raw material producers to meet the challenges. In addition, transparency and the integration of sustainability are promoted as part of the supplier evaluation. Work in the supply chain also includes the establishment of effective grievance mechanisms.

3.3 Cooperation with stakeholders

In the long term, sustainability along the supply chain can only be achieved through cooperation with all relevant stakeholders. The REWE Group is in continuous contact with a large number of stakeholders and is involved in various national and international initiatives, alliances and forums. Key elements include participation in external events, industry initiatives, partnerships, involvement in the further development of sustainability standards and monitoring of relevant developments at political and regulatory level.

4. Monitoring and reporting:

The implemented activities are monitored and evaluated. The findings of the monitoring are incorporated into the further development of the measures.

Areas of Action

25 aspects have emerged from the comprehensive analysis of sustainability risks and impacts in the supply chains of private label products. These were summarised in the following areas of action for the operationalisation of the strategy:

• People
• Animals
• Environment

Furthermore, a fourth area of action was defined in the Green Products pillar with the REWE and PENNY sales lines in Germany as competent and reliable partners for balanced nutrition. This is covered in various projects:

• Nutrition

Within the four areas of action People, Animals, Environment and Nutrition of the Green Products 2030 Strategy, the focus topics listed below were derived and backed up with concrete measures. They show which aspects within the areas of action present particularly high risks and opportunities for REWE and PENNY in Germany as well as toom Baumarkt DIY stores and are therefore being specifically addressed. To this end, targets and KPIs for the private labels were also defined and adopted within the areas of action. The status of target achievement is checked with the help of the defined KPIs and published in the Sustainability Report.

At the REWE Group in Austria, analyses of impacts in the supply chains of private label products, stakeholder surveys and international objectives have resulted in four areas of action: Conscious Nutrition, Fairness and Social Standards, Biodiversity and Habitats (Resource Conservation) and Animal Welfare.

People: Living Wages and Incomes, Forced and Child Labour as well as Women in the Supply Chain

In a globalised world with complex trade relations and a strong economic disparity between developing and developed countries, there is an unequal balance of power. This can lead to social problems such as a lack of living wages and income or forced and child labour. Similarly, women's disadvantage is a challenge in global supply chains. The REWE Group takes its human rights due diligence very seriously and is committed to fair working conditions and the protection of human rights in the supply chain.

With its measures in the area of People, the REWE Group pursues the strengthening of human rights and the improvement of working conditions in the supply chains.

Animals: Husbandry Conditions

Farm animal husbandry in Germany often focuses on maximising the performance of the animals. Breeding for rapid growth and weight gain, as well as maximising stocking densities, can lead to stress, altered social behaviour, increased aggressiveness or disease. For REWE and PENNY in Germany, treating animals with respect in the production of goods of animal origin is essential. The sales lines would like to anchor more animal welfare in their supply chains for private labels. For example, any lack of usability or long journeys within the supply chain should be eliminated and the conditions under which animals are kept should be based on their needs – with more space and more time outdoors, more activity and fewer interventions.

The measures in the area of Animals aim to anchor animal welfare in the supply chains of animal origin of the private labels.

Scope: Private label products at REWE and PENNY in Germany

With regard to its area of action Animal Welfare, REWE Group in Austria also pursues the improvement of animal husbandry conditions and the reduction of interventions on animals. This includes animal-friendly husbandry conditions, the avoidance of painful interventions as well as the use of alternative breeds and the limitation of overbreeding.

Environment: Circular Economy, Climate and Biodiversity

The use of natural resources and competition for scarce resources are intensifying worldwide. At the same time, global environmental problems such as climate change, soil degradation and biodiversity loss are increasing. In the REWE Group's supply chain, environmental impacts occur during the manufacture of products. The trade company takes its responsibility seriously and deploys various measures to promote the careful use of natural resources along its supply chain. In this way, impacts on the aspects of biodiversity, climate and air, water and soil as well as through plastic and packaging are to be sustainably reduced.

With their environmental measures, the REWE Group sales lines pursue the protection of natural resources and the preservation of biodiversity along the supply chains. In the reporting year, for example, all relevant food and non-food suppliers were integrated into an environmental programme at REWE and PENNY in Germany as well as toom Baumarkt DIY stores.

Nutrition

Various REWE Group sales lines are committed to a diverse and balanced diet. In addition to education on healthy nutrition and exercise, the adaptation of the product range as well as transparent information on the nutritional values of the products play an important role. For example, following the publication of the strategy paper Sugar, Salt, the entire private label range at REWE and PENNY in Germany was reviewed with regard to sugar and salt content. Since then, this has been continuously reduced without the addition of alternative sweeteners. Since 2020, the optimisation of nutritional values has continued with the introduction of the Nutri-Score in Germany. The additional nutritional labelling helps consumers to make a conscious food choice – just like the ErnährWert evaluation format of the REWE sales line in Germany, which takes the nutrients of a dish into account, or the nutritional lexicon.

With their measures in the area of Nutrition, REWE and PENNY in Germany are committed to a diverse and balanced nutrition. In the reporting year, the goal of increasing the number of items labelled with the Nutri-Score at REWE and PENNY in Germany to 80 per cent by mid-2022 was achieved. The full implementation shall take place by mid-2023.

The following sections of the GRI report contain all approaches, data and topics of the Green Products pillar:

• Biodiversity
• Organic
• Nutrition
• Living Wages and Incomes
• Focus Raw Materials – Food
• Focus Raw Materials – Non-Food and Services
• Women in the Supply Chain
• Child and Forced Labour as well as Child Protection
• Climate Protection in the Supply Chain
• Circular Economy
• Costumer Health and Product Safety
• Food Waste
• Promoting Sustainable Consumption
• Ecological Aspects in the Supply Chain
• PRO PLANET
• Product-Related Risk Analysis
• Regionalism
• Social Aspects in the Supply Chain
• Animal Welfare
• Packaging
• Water