Sustainable procurement and assortment

Social audits of own imports through MGB Hong Kong and non-food own brands of the METRO GROUP sales lines

as of closing date 30/9

Social audits of own imports through MGB Hong Kong and non-food own brands of the METRO GROUP sales lines (bar chart and pie chart)

Producers that have passed the audit can demonstrate their successful compliance with the BSCI standard or an equivalent social standard system by presenting a certificate awarded by an independent third party.

1 Adjustment of the 2014/15 figures for social audits at producers relating to own imports through MGB Hong Kong; in addition, the 2014/15 figures include producers relating to non-food own brands of the METRO GROUP sales lines

2 Adjustment of the 2015/16 figures due to the sale of the former METRO GROUP sales line Galeria Kaufhof

3 From 2015, adjustment of BSCI rating system from three rating categories (good/improvements needed/non-compliant) to five rating categories (A/B/C/D/E). The result “improvements needed” was understood as a passed audit. Under the new measurement system, a portion of the previous “ improvements needed” results was assigned to the categories “C” (passed audit) and “D” (failed audit). This adjustment resulted in a lower share of producers with a passed audit in the last financial year.

In our procurement activities, we strive to purchase high-quality and safe products with sound social and economic credentials. This allows for responsible assortment design. In addition, as a retail group, we depend on the long-term availability of resources because we need these raw materials to produce and package our products. We take these aspects into account by following our group-wide purchasing policy for sustainable procurement across all our products. In this policy, we have laid down the fundamental requirements for sustainable supply chain and procurement management. At the same time, our purchasing policy forms the framework for various guidelines that address specific issues related to individual product and raw material categories. By developing and implementing such guidelines for sustainable purchasing, we are strengthening our procurement channels and help to improve the sustainability of our products and thus our assortment.

To ensure socially acceptable working conditions within our sourcing channels, a systematic approach to achieving social standards is an integral part of the process, as well as an important tool. It enables us to take effective action against any risks from violations. Irresponsible practices within the supply chain damage confidence in our conduct and, consequently, also our business. Our goal is therefore that all of our producers in defined risk countries (based on the assessment of the Business Social Compliance Initiative, BSCI) in which MGB Hong Kong manufactures goods for import as well as our producers that manufacture their own labels or their own imports of clothing, shoes, toys or hardware for METRO GROUP’s sales lines undergo audits conducted in accordance with BSCI or equivalent standards. As of 30 September 2016, 1,632 producers have been audited. Of that group, 86 per cent (1,405 producers) passed the audit. Producers who fail to pass the audit have twelve months to provide proof of improvement through a follow-up audit. Should these improvements not be made, the production site will receive no more orders from 1 January 2018 until it can demonstrate that it has sustainably improved its organisational processes.

Topic

Goals

Status of goal achievement

Measures

Status of measures

SUSTAINABLE PROCUREMENT AND ASSORTMENT

By 2015, we will have defined processes with which to assess the sustainability impact of the own-brand products of METRO GROUP sales lines. By continuously carrying out our general METRO GROUP purchasing policy on sustainable procurement, we will work on all product categories relevant to aspects of sustainability.


Measure ongoing

Assessment of the social impacts of METRO Cash & Carry’s own-brand portfolio and its effects on the environment along the supply chain has been completed. The assessment was performed at the levels of raw materials, products and product groups and follows the standard international assessment criteria for social and ecological impacts.

The purpose of the process was to establish basic requirements and to design supply chain and procurement management to be more sustainable in the relevant categories. We have implemented this through our guidelines.

Assessing the product portfolio, defining minimum standards and establishing specific KPIs enables METRO Cash & Carry to fulfil the requirements for a more sustainable assortment.


Measure ongoing

Topic

Goals

Status of goal achievement

Measures

Status of measures

1

This includes merchandise producers (non-food own brands and own non-food imports) that carry out the final significant and value-creating production step.

2

BSCI definition of risk country

SUSTAINABLE PROCUREMENT AND ASSORTMENT

METRO GROUP intensifies its commitment to fair working conditions at its suppliers.


In progress

Continued inclusion of all non-food own brand producers1 in a valid BSCI or equivalent social standard system and increase in the share of valid audits for products manufactured in a risk country2.

Tighten requirements of suppliers with the consequence that all used producers1 must at least be able to provide acceptable audit
results by 1 January 2019.


Measure ongoing