Product-Related Risk Analyses

For REWE and PENNY in Germany, the risk analyses in the supply chains of their private label products form the basis for the strategic orientation in the area of more sustainable product ranges and for the definition of topics, key performance indicators (KPIs), objectives and measures. DER Touristik derives measures and objectives from its regular risk analyses.

Effect

The REWE Group is aware that its business activities as a leading international trade and tourism company can have a wide range of impacts on humans, animals and environment. The company conducts analyses in order to identify the most important negative ecological and social impacts of private label products and where they occur. The aim is to minimise identified risks and seize opportunities.

Implementation

The analyses are conducted at product group or raw material level to formulate strategies as well as at the level of individual products, topics or countries to decide which measures are to be taken and with what priority.

As part of the analyses, the REWE Group continuously examines its own performance and progress. The company reflects on conflicting goals both with experts within the company and with external stakeholders.

In addition and with a view to the German Act on Corporate Due Diligence Obligations in Supply Chains (LkSG), the REWE Group carries out analyses of its human rights or environmental risks within its own business operations as well as in the supply chains in order to prevent or minimise them or to end the violations of human rights or environmental obligations. For more information, please refer to Social Aspects in the Supply Chain.

The implementation and results of the product-related risk analyses are presented below according to:

• Product-Related Risk Analyses: Trade
• Portfolio Analysis: DER Touristik Group

The REWE Group in Germany has carried out 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 the analysis, the range of food and non-food products was divided into a total of 37 product clusters. Therefore, the entire range was considered.

The approach is divided into two strands: a qualitative and a quantitative analysis. The qualitative analysis included the evaluation of studies and reports as well as interviews with buyers and NGOs in order to identify main sustainability issues along the value chains. In addition to ecological impacts, risks in the area of working conditions and human rights were also identified in the process.

The quantitative analysis in the form of an input–output model is based on an economic model. For this purpose, the ecological impacts in the supply chain, such as greenhouse gas emissions, were determined and converted into monetary amounts. The social impacts were assessed by identifying how many people per product cluster are working in the entire supply chain. This data was put in relation to purchasing volumes as well as information on countries of manufacture and origin to specifically assess environmental and social risks in monetary terms. This allowed the quantification of the external costs of the company’s own economic activity for the individual product clusters. Furthermore, the ecological and social hot spots in the entire value chain were identified based on evidence and particularly high-risk product groups and focus raw materials were determined.

The analysis helped to determine that the impacts are most severe in the supply chain stages of raw material cultivation and processing. These are therefore the focus of the activities.

Impacts Along the Value Chain

	Cultivation/Breeding	Processing	Logistics	REWE Group	Consumers	Disposal
Animal Welfare & Animal Health
Air Emissions & Energy
Land Usage
Water
Human Rights & Working Conditions
Transport
Transparency
Nutrition & Health
Waste (including Food Waste and Packaging)

Furthermore, the following raw materials were identified as critical:

• Fruit and vegetables in general with particular focus on bananas and pineapples
• Meat and dairy products, including animal feed
• Coffee, cocoa, tea, palm oil, fish, orange juice
• Cotton, textiles and natural stone

With regard to environmental risks, the raw materials plastic and metal were also identified as particularly relevant.

For more information, see sections Focus Raw Materials – Food and
Focus Raw Materials – Non-Food and Services.

So-called 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 stages of the value chain enables a more detailed examination of the focus topics, their relevance and the individual findings. A reconciliation of the outcome with the sustainability activities at REWE and PENNY in Germany results in necessary measures to be taken.

Example: For the product cluster “fruit and vegetables”, air emissions and energy, biodiversity, soil, water, labour conditions and human rights were identified as focus topics along the supply chain. In addition to these topics from the value chain stages of raw material extraction and processing, transparency and business practices, transport-related environmental impact and CO₂ emissions as well as packaging and food waste were also identified as sustainability topics.

Scorecard Fruit and Vegetables – Overview of Ecological and Social Impacts

Raw Material Extraction	Processing	Transport	Consumption	Packaging/End of Life
Air Emissions/ Energy	Human Rights & Working Conditions	Environmental Pollution	Packaging
Biodiversity	Water	CO2 Emissions	Food Waste
Soil	Transparency & Business Practices
Water
Working Conditions, Human Rights

Risk Analysis: toom Baumarkt DIY Stores

toom Baumarkt DIY stores uses various sources to assess the risks in its supply chains. In some cases, for example, the product groups are integrated into risk analyses of other areas such as non-food analyses. Furthermore, the sales line carries out its own risk analyses, particularly within the framework of PRO PLANET, in which the life cycle of product groups is analysed and particular risks/hot spots are identified. In addition, external service providers are commissioned to conduct detailed analyses of certain raw materials, such as coir from Asia as a peat substitute for peat-free soils from the aspect of ecological and social factors as well as CO2 emissions in the supply chain. For other product groups, toom decidedly considers the risk for humans (users) and the environment. For example, products in the area of plant protection and pest control were analysed with regard to the risk of the active substances they contain and adjustments to the product range were made as a result.