Supply chain and products

Our core business involves the sale of goods and services. Responsible business practices mean two things to us: as a group of companies that employs various retailing formats, we strive to create added value for our customers who have differing shopping needs. At the same time, we intend to consider environmental and social issues in the decisions we take regarding our range of products and services. The objective is to identify the opportunities and risks for our business and to take systematic action.

Traceability in the value-added chain

Knowing the source and the individual steps in the value-added chain is critically important to us. The reason for this is clear: this is the only way that we will be able to influence the safety, quality and sustainability of our product range. That is why we support product traceability. We are committed to creating complete transparency regarding resources that have been used and the procurement of products throughout the value-added chain. We take innovative approaches to achieve this goal. In March 2013, we began working with other retailers and highly respected partners in the value-added chain on an international, cross-industry solution, one that already represents a pioneering approach to the issue. We are being assisted in this effort by GS1, a global service provider that sets worldwide standards designed to improve value-added chains. The key element of this solution is to store relevant data in a decentralised way that significantly improves access to this information and arranges it intuitively. As a result, the data storage creates more transparency throughout the entire chain – all the way to the end consumer.

As a first step in this work, we launched a pilot project for the product group fish in the spring of 2013. We consciously selected this product group in particular. Transparent supply chains are the only approach we can take to stop illegal fishing activities and, thus, secure a basis for feeding the world’s population in future.

In a second step, we will apply the industry solution to other product groups, including meat, fruit and vegetables. Non-food products will also be integrated into the programme at some point in future.

Degree of goal achievement

Measure not yet started

Measure started

Measure ongoing

Measure concluded

New goal implemented

In progress

Goal reached

Goal not reached

Theme

Goals

Status goal

Measures

Status measures

 

 

 

 

 

CONSER­VATION OF RESOURCES/
SAFEGUARDING OF FOOD SUPPLIES/
SUSTAINABLE SOURCING

METRO GROUP initiates and supports the development of an international, intersectoral and product-spanning technical solution for traceability.

Based on the project steps realised so far, a pilot project is to be implemented in the fish category by mid-2014.

More sustainable products through sustainable procurement

Production and procurement form the first links in our supply chain. Customers demand for goods falls at the end of it. We, like some of our customers, are now looking beyond the issues of quality and safety when we judge products. To these customers and to us, the social and environmental compatibility of products and the manufacturing processes used to make them are becoming a higher priority. To consider this issue in a systematic and comprehensible manner, METRO GROUP devised a cross-product procurement policy for the entire company during the reporting period. This policy spells out the fundamental requirements for sustainable supply-chain and procurement management. It also forms the framework for guidelines that address specific issues related to individual product and raw-material categories. This includes the purchasing policy for fish that took effect in September 2011 and the guidelines for palm oil and packaging that were introduced during the short financial year 2013. By developing and implementing guidelines for sustainable purchasing and by monitoring compliance with social and quality standards, we strengthen our procurement channels and help to improve the quality and sustainability of our products.

Various symbols and labels inform customers about the specific sustainability aspects of products and help them to take decisions. The product ranges in our sales lines include articles from fair trade as well as foods that bear the European organic seal. In the reporting period, our sales lines METRO Cash & Carry and Real generated sales of products certified by the EU organic directive totalling €85 million. Our stores also offer products from sustainable, environmentally conscious fishing and aquaculture. Customers can identify such products when they see the seal of the Marine Stewardship Council (MSC) for wild fish and the logo of the Aquaculture Stewardship Council (ASC) for farmed fish. Our METRO Cash & Carry and Real sales lines now offer a large number of MSC-certified brand and own-brand products. In the short financial year 2013, our sustainable fish assortment contained 64 MSC-certified own-brand products and 514 brand items. These products generated sales of approximately €45 million. In addition, our stores offer 39 ASC-certified items.

Our sales lines also provide customers in many product groups with a broad range of environmentally conscious and socially responsible products. These products include

  • efficient electric appliances bearing energy labels from A+ to A+++,
  • stationery based on the standards of the Blauer Engel (Blue Angel), a German environmental seal, or of sustainable forestry
  • natural cosmetics and
  • textiles made from organic cotton or cotton produced in accordance with the “Cotton made in Africa” standard.

As a helpful guide to customers, our Galeria Kaufhof sales line adds the logo “natürlich GALERIA” (naturally GALERIA) to products that meet the requirements of a defined sustainability standard. Nearly 9,400 products in the Kaufhof assortment now fulfil this standard.

Degree of goal achievement

Measure not yet started

Measure started

Measure ongoing

Measure concluded

New goal implemented

In progress

Goal reached

Goal not reached

Theme

Goals

Status goal

Measures

Status measures

 

 

 

 

 

CONSER­VATION OF RESOURCES/
SAFEGUARDING OF FOOD SUPPLIES/
SUSTAINABLE SOURCING

… METRO GROUP is working on a responsible range of products and assortments.

By 2015, we will have defined processes that will enable us to evaluate the sustainability impact of the own-brand products of METRO GROUP sales lines. By continuously carrying out our general METRO GROUP purchasing policy on sustainability, we will adjust all relevant product categories to reflect aspects of sustainability.

Fair, socially just working conditions among suppliers

In addition to environmental compatibility and conservation of resources, one essential aspect of sustainable purchasing is the assurance of humane working conditions. As part of our effort to live up to our corporate social responsibility in this area, a project group on social standards was created in 2011 within the focal point on “supply chain and products”. During the reporting period, this project group developed a process showing how all purchasing channels can be designed in a socially compatible manner. By the end of 2014, our goal is to integrate all suppliers and producers of non-food own-brand products who make items for us in so-called risk countries (as defined by the Business Social Compliance Initiative – BSCI) into a social management system. These countries include Bangladesh and Turkey. A key element of this process is a close working relationship of all parties along a transparent supply chain. This will facilitate efforts to meet the challenges posed by the implementation of socially compatible working conditions primarily in developing and emerging countries that serve as traditional production sites. Verification of a production location’s observance of fair and socially compatible working conditions is provided by a BSCI audit or similar social-standard review. The BSCI works to ensure that fundamental human rights are protected in the production and supply chain. The success of the concept hinges on the provision of special training to all workers in a production operation as this location works to become a socially compatible work site. As a member company of the BSCI, we are committed to helping our suppliers and production operations to set up such a management process. This process is designed to enable all of our business partners to systematically introduce socially compatible working conditions from now on.

Social audits of own imports through MGB Hong Kong

as of closing date

Supply chain and products – Social audits of own imports through MGB Hong Kong (bar chart and line chart)

Status of BSCI audits of active suppliers for own imports by MGB Hong Kong from countries defined as risk areas by the BSCI who provided METRO GROUP with clothing, shoes, toys and hardware for the EU market as of 31 December of the year under review and 30 September in 2013 respectively. Active suppliers are those who generated actual sales as of 31 December of the year under review and 30 September in 2013 respectively. Suppliers who have passed the audit can demonstrate their successful compliance with the BSCI standard by presenting a certificate awarded by an independent third party. Alternatively, suppliers may produce a certificate issued by an independent third party attesting to successful compliance with an equivalent social standard system.

All of our producers of non-food items that are shipped to the EU through our import business MGB Hong Kong are subjected to a BSCI-standard audit or similar review. At the end of 30 September 2013, 853 producers had been audited. Of this group, 65 per cent received a grade of “good”. This represents an increase of 3 per cent from the balance sheet date of 31 December 2012 to the balance sheet date of 30 September 2013. Producers who fail to pass the audit have 18 months following the audit date to improve conditions at the site. Should these improvements not be made, the production site will receive no more orders until it can demonstrate that it has sustainably improved its organisational processes.

When necessary, METRO GROUP works to not only ensure socially compatible working conditions, but also provide for building safety in the textile factories of production countries. In one reflection of this effort, we signed the Accord on Fire and Building Safety in Bangladesh in June 2013. This agreement was worked out by a multi-stakeholder initiative that comprised company representatives, unions and non-governmental organisations. Together with more than 100 European retail and brand-name companies, METRO GROUP has pledged to actively and organisationally support the accord in its work to achieve increased building safety in Bangladesh.

Degree of goal achievement

Measure not yet started

Measure started

Measure ongoing

Measure concluded

New goal implemented

In progress

Goal reached

Goal not reached

Theme

Goals

Status goal

Measures

Status measures

1

This covers the producers of merchandise (own brands and own imports) who carry out the final significant and value-creating production step.

 

 

 

 

 

INTERNATIONAL LABOUR STANDARDS/
SOCIAL STANDARDS

METRO GROUP intensifies ist commitment to fair working conditions among its suppliers.

Inclusion of all non-food own-brand suppliers1 in a BSCI or equivalent social standard system by the end of 2014 if the final product is produced in a risk country (based on BSCI definition).

Strategic partnership to harmonise standards

For many years, METRO GROUP has been lending its support to sustainability standards and certificates for fish, including the Marine Stewardship Council (MSC) and the Aquaculture Stewardship Council (ASC). In doing so, it has done its part to maintain fish stocks. However, small producers frequently cannot afford the certifications. Furthermore, the large number of certificates that now exist complicate purchasing decisions rather than simplifying them.

As part of the Global Sustainable Seafood Initiative (GSSI), METRO GROUP has joined with partners from industry, the political community and non-governmental organisations to urge the creation of an overview of all sustainable-fishing certificates available around the world and to objectively assess them. GSSI, an effort launched in February 2013, will make it easier for consumers to choose sustainable fish products and lower the certification costs particularly for small producers. METRO GROUP provides administrative support to the project and represents the industry and the retail sector in partnerships with government authorities.