ACTING RESPONSIBLY - Schwarz Dienstleistungen

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ACTING RESPONSIBLY - Schwarz Dienstleistungen
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ACTING RESPONSIBLY - Schwarz Dienstleistungen
Contents

     03   SCHWARZ GROUP PROFILE
     04   Our Group and Our Locations
     06   Shaping Change
     08   Analysing our Priority Issues
     10   Managing Sustainability

     12 SUSTAINABLE PRODUCT RANGE
     13 Environmentally Friendly Business with Strong Partners
     14 Bringing Sustainable Consumption to the Society at large

     16 E
         CONOMY– RESPONSIBLE GROWTH
     17 Strong Market Position
     18 Future-Oriented Stores

     20 E
         NVIRONMENT – RESPONSIBLE VALUE
        CREATION
     21 Conserving Resources
     23 Valuing Recyclables
     24 Supporting the Energy and Mobility Transition

     26 SOCIAL COMMITMENT TO EMPLOYEES
        AND COMMUNITY
     27 Our Staff
     28 Raising Awareness
     29 Joining Forces for a Good Cause

     30 Legal Notice

     All information stated relates to the Schwarz Group 2018 fiscal year
     (March 2018 - February 2019). Any information that deviates from this
     is reported separately.

02
ACTING RESPONSIBLY - Schwarz Dienstleistungen
SCHWARZ GROUP
PROFILE
The Schwarz Group is one of the largest retailers in the world. We c  ­ over
the lion’s share of the food retail value chain in house – from p
                                                                ­ roduction
through retailing to recycling. We endeavor to use and increase our
­influence to drive forward sustainable development.

  429,000
Around

           employees

                                  Over

                                         12,100                                stores

       100
                                                                               worldwide

                                          billion
    Over                                  euros
                                          in turnover

                                                                                           03
ACTING RESPONSIBLY - Schwarz Dienstleistungen
Our Group
     and Our Locations

             GreenCycle                                                         Production
             GreenCycle, with its PreZero sales brand, is a                     The production companies Mittel­
             globally active waste management and recycling                     deutsche Erfrischungsgetränke (MEG),
             company belonging to the Schwarz Group.              Bonback, Bon Gelati, and Solent belong to the
      GreenCycle uses its recycling expertise to contribute       Schwarz Group. They produce own brand products
      to Schwarz Group’s plastic strategy.                        (beverages, chocolate, baked goods and ice cream)
                                                                  for Kaufland and Lidl. In addition, returned ­beverage
                                                                  bottles are recycled to create new ones in the group’s
               Kaufland – the Full-range Retailer                 own recycling and plastic processing plants.
               Kaufland operates over 1,300 stores in ­Germany
               and Eastern Europe, and also plans to open
               stores soon in Australia. It offers a total of                         Schwarz Dienstleistungen
      around 25,000 products in its large-­scale stores, inclu-                       The Schwarz Group pools a variety
      ding 1,700 organic food items. As a full-range retailer,                        of services and offers them to all
      Kaufland offers its customers a wide range of food and      its group divisions. These include operational and ad-
      non-food products. It also produces a significant part      ministrative activities in Administration, IT and Central
      of its prepared meat products in its own meat proces-       Services.
      sing factories.

              Lidl – the Discounter
              Lidl is present in 30 countries around the world,
              and currently operates 10,800 stores and over
              160 goods distribution centers. On average,
      the assortment of Lidl includes 3,800 different products
      per year, of which an average of 250 are organic. As a
      discount supermarket, Lidl focuses on good quality for
      low prices.

04
ACTING RESPONSIBLY - Schwarz Dienstleistungen
Kaufland and Lidl
 Lidl
 Expansion of Kaufland or Lidl
 GreenCycle
 Production plants

represented
in more than
30 countries

                                 China

         USA                                         Australia

                                         Hong Kong

                                                                 05
ACTING RESPONSIBLY - Schwarz Dienstleistungen
Shaping Change
     As one of the world’s leading retailers, we shape the change neces-
     sary in those places we can actively make an impact: in production, in
     ­consumption and in recycling of our products. We are taking bold action
      to support the goals of the global agenda for 2030. In pursuit of these
      goals we will set new industry standards.

     Leveraging our Influence

     The Schwarz Group is working together with its group divisons,
     ­customers and partners to drive the transition towards a sustainable
      society along its value chain. We make our contribution where we
      have the greatest leverage – in production, retail, consumption and
      recycling – in order to advance sustainable development in retail.

     Our Vision                                                              SDG 12 – Ensure sustainable
                                                                             consumption and production
     “Taking bold decisions                                                  patterns
     for sustainable transformation –
                                                                             Transitioning to a sustainable economy
     together, every day.”                                                   and lifestyle can only work if we change
                                                                             our consumption habits and produc-
                                                                             tion methods. To achieve this, we have
                                                                             to reduce our consumption of natural
                                                                             resources, as well as the quantity of
                                                                             waste and pollutants we generate along
                                                                             the entire value chain. As the third
                                                                             largest sector of the economy, retail
                                                                             is directly involved in how natural re-
                                                                             sources are processed and consumed.
                                                                             It is for this reason that the Schwarz
                                                                             Group focusses its sustainability efforts
                                                                             on Sustainable Development Goal
                                                                             (SDG) 12.

06
ACTING RESPONSIBLY - Schwarz Dienstleistungen
Our Commitments

To underpin the strategic focus on SDG12, the Schwarz Group is cooperating
with its different business units and subsidiaries, to achieve the SDG 12 t­ argets
relevant to the group’s business. It has set the first milestones towards the
­ambitious goals as follows:

Sustainable Raw Materials                     SDG 12.2               Zero Waste                                    SDG 12.5

We are conducting a systematic analysis until 2020 in order to       We will reuse, recycle or recover a significant percentage of the
set sustainable goals for our most relevant raw materials.           waste generated in the company by 2025.

Food Waste                                    SDG 12.3               Empowerment                                   SDG 12.8

By 2025, we will significantly reduce food waste in our own          We will empower and support all of our employees in sustainably
production and retail in all countries and will enable customers     performing their jobs by 2022, and continue to do so thereafter.
to do the same.
                                                                     We will provide our customers with greater transparency on the
We will reduce food waste for selected raw materials along the       social, environmental and health-related effects of our product offe-
supply chain.                                                        ring, enabling them to make conscious decisions, by 2025.

Chemicals                                     SDG 12.4

We will strive to achieve healthy and environmentally friendly use
of chemicals in production of our own brands by 2030.

                                                                                                                                             07
ACTING RESPONSIBLY - Schwarz Dienstleistungen
Analysing our Priority Issues
     The Schwarz Group surveyed its stakeholders in 2018 on relevant sustainability
     issues to serve as the basis for its corporate social responsibility (CSR) focus.
     The key issues, that were identified, indicate the aspects on which our stake-
     holder groups expect transparency. The materiality assessment thus constitutes
     the basis for Schwarz Group reporting.

     Materiality Process with an SDG Focus

     Step 1: Determining relevant issues                                       Step 3: Surveying stakeholder
     The 17 Sustainable Development Goals (SDGs) with 169 targets              The Schwarz Group surveyed more than 1,100 individuals from
     ­served as the basis for the materiality assessment the Schwarz Group     our relevant stakeholder groups on the materiality of the selected
      concluded in 2018. Together with external experts, the Schwarz Group     issues, online in May 2018. The survey sample included employees,
      initially pared these issues down to 80 company and ­industry-relevant   business partners and banks. With a response rate of 33 percent,
      goals divided into 17 categories. Combining these with two expanded      the Schwarz Group obtained results that represent the sustainability
      categories, animal welfare and product quality/safety, yielded 19        issues that the stakeholders consider the most important.
      categories with a total of 45 individual issues available for impact
      assessment.                                                              Step 4: Identifying key issues
                                                                               The final step involved superimposing the results of the impact
     Step 2: Assessing impact                                                  assessment and the stakeholder survey on all stages of the value
     In order to analyze the Schwarz Group’s impact on its environment,        chain. This step identified six key issues: waste and chemicals,
     the group’s SDG achievement status was compared to the group’s            climate protection, economic development, water and oceans,
     value creation. The Schwarz Group used the Bertelsmann Stiftung           resource efficiency and health management. These six issues were
     SDG Index to analyze the targets relevant to specific countries,          identified as having the greatest need for action in the countries in
     ­based on their implementation status. Those targets with achie-          which the Schwarz Group operates.
      vement status rated as below average were then compared in a
      subsequent step with value creation or Schwarz Group sales in the
      countries concerned. Such comparisons enabled determination of
      the issues on whose improvement the Schwarz Group potentially
      has the greatest influence through its core business.

                                                                                           More than
08
ACTING RESPONSIBLY - Schwarz Dienstleistungen
Banks

                  Scientific                   Managers
                 community

    Associations
         and
                               Schwarz Group               Business
                                                           partners
    policymakers
                                stakeholders

                   NGOs                        Customers

                                   Employees

stakeholders participated
in the survey.
                                                                      09
ACTING RESPONSIBLY - Schwarz Dienstleistungen
Managing Sustainability
     Business success and social responsibility are inseparable principles for the
     Schwarz Group. This attitude is firmly rooted throughout the group in our ­corporate
     principles. The implementation of CSR is tailored to the specific environment
     of each devision. A joint committee in which all group divisions are represented
     ­ensures a group-wide exchange of ideas.

     Our corporate principle on sustainability:
     “We assume economic, social and ecological
     responsibility in our daily activities.”

     Managing Sustainability Effectively                                        KPIs and Measures at a Glance

     The requirements for effective CSR management are just as varied           Group-wide transparency with regard to CSR measures and KPIs
     as the Schwarz Group’s areas of activity – from production, through        is essential for comprehensive sustainability management. These
     retail, to recycling. The group divisions separately manage their          constitute the central elements of reporting for internal and external
     sustainability activities in line with their individual environments for   stakeholders.
     this very reason. The Schwarz Group has set out the CSR ma-
     nagement requirements in a central framework in order to ensure            The Schwarz Group has introduced a group-wide software solution
     common understanding throughout the group. This framework will             to ensure a comprehensive view of the measures of each group divi-
     be further developed on a continuous basis together with the group         sion and country. This software allows employees to customize their
     divisions’ CSR managers.                                                   view of CSR measures and campaigns from any country to meet
                                                                                their own specific needs. It enables CSR managers and other emp-
                                                                                loyees to access best practices and adapt them for their respective
     Group-wide Exchange                                                        country. Moreover, selected CSR measures serve to demonstrate
                                                                                the Schwarz Group’s sustainability performance.
     Regular exchange of information among the group divisions is ­
     crucial for implementing environmental, social and economic aspects        The Schwarz Group also keeps an eye on its sustainability KPIs.
     in day-to-day business in the same way throughout the group.               To this end, it has defined a group-wide set of CSR KPIs, which it
     The Schwarz CSR committee, to which the CSR managers of all group          uniformly records and further develops for all countries and group
     divisions belong, serves this purpose. It facilitates joint definition     divisions. It based its selection of key issues on the internationally
     and long-term development of group-wide guidelines and general             recognized Global Reporting Initiative (GRI) Standards.
     conditions. The committee, headed and coordinated by Schwarz
     Dienstleistungen CSR, normally meets once a month.

10
Management of group divisions
                                                Responsible for sustainability

                           inform                                                       decide and instruct

                                          Schwarz CSR Committee
GROUP DIVISIONS

                  CSR                 CSR                         CSR                  CSR                    CSR

                                                              System and
                                                            process initiator
COUNTRIES

                          CSR         CSR          CSR                          CSR    CSR        CSR
                        Kaufland    Kaufland     Kaufland                       Lidl   Lidl       Lidl
                           DE          PL           ...                          DE     ES         ...

                                                                                                                    11
PRODUCTS

     SUSTAINABLE RANGE
     OF GOODS
     The Schwarz Group is consciously expanding the share of its
     products that are environmentally friendly and fairly traded. Ultimately,
     as a visible interface to our customers, they directly promote sustainable
     ­consumption. The quality and sustainability of our products is decisively
      thanks to the production processes we develop in house and in close
      collaboration with our suppliers.

                                                 Around

                                                            1,700
             Around

                         250
                         organic products are available
                         in the Lidl range on average.
                                                                            organic products are
                                                                            available in the Kaufland
                                                                            range on average.

12
Environmentally Friendly
Business with Strong Partners
Making high quality organic food available to large groups of the
population – in cooperation with well-known organic food associa-
tions, Kaufland and Lidl are offering their customers more and more
organic food locally produced to high standards – thereby breaking
it out of its niche status.

Lidl Cooperation with Bioland                                            Demeter Range at Kaufland

Lidl Germany has been cooperating with Bioland, the leading asso-        Kaufland focuses on food of excellent organic quality: It has offered
ciation for organic farming in Germany, since October 2018, in order     more than 150 Demeter products, largely from the ­Demeter ­Campo
to bring top-quality and local organic products to its German stores.    Verde brand, since February 2019. The Demeter range includes juices,
Bioland has already certified a total of around 50 items that meet       sandwich spreads, dairy products, canned vegetables, ­cooking oils,
its strict criteria. For example, Bioland quality apples, herbs, wheat   pasta, flours, cereals, baked goods, as well as fruit and vegetables.
flour and almost all dairy products of Lidl’s own BioOrganic brand       Very strict biodynamic agricultural standards that extend far beyond
are now for sale throughout the country.                                 the minimum EU organic label apply to members certified by
                                                                         Demeter – Germany’s oldest organic food association.
Lidl and Bioland would like to effectively develop the sustainable
farming and food industry in the long term. The focus is on gradually    Kaufland will expand the Demeter offering to include more
transitioning traditional farms and EU organic farms to meet Bioland     than 200 products by the end of 2019.
criteria in order to offer a sufficient supply of high-quality organic
food.

                                                                                                                                                 13
Bringing Sustainable Consumption
     to the Society at large
     Within the Schwarz Group, Kaufland and Lidl exercise the ­greatest
     ­influence on sustainable consumption with the composition of their
      ­product range. They assume direct responsibility, with their own brands,
       in particular. They are also committed to a sustainable ­assortment with
       other brand-name and supplier products.

     Sustainable Clothing on Offer                                           Sustainable Employee Uniforms

     The processes for manufacturing textiles and shoes, such as dying,      The Schwarz Group also focuses on sustainability under its own
     gluing and printing, rely on chemicals. With this in mind, Kaufland     roof. Kaufland and Lidl attach great importance to sustainably
     and Lidl have joined Greenpeace’s Detox campaign to keep potential      produced uniforms. All store employee uniforms worldwide are
     dangers to humans and the environment to a minimum. In implemen-        produced from organic cotton, in compliance with the strict Global
     ting this move, the supermarkets aim to replace potentially hazardous   Organic Textile Standard (GOTS) criteria. In addition, some compo-
     chemicals with more environmentally friendly ones in the manufacture    nents of our store uniforms are also fair-trade certified.
     of their own brands of clothing and shoes. They also plan to reduce
     the amounts of chemicals used in general.                               Moreover, some of the old Kaufland employee uniforms in Germany
                                                                             and six other European countries are not merely disposed of, but
     Kaufland and Lidl intend to completely eliminate from their ­           recycled with the support of the group’s own recycling company
     global supply chains the use and release of the 11 priority             GreenCycle. This produces thermal blankets that Kaufland donates to
     groups of ­hazardous chemicals identified by Greenpeace in              the Workers’ Samaritan Federation (Arbeiter-Samariter-Bund – ASB).
     their clothing and shoe production.

     More detailed information on the current implementation status
     of the Detox campaign is available here:

     Kaufland Detox           Lidl Detox Commitment
     Report                   Interim Report                                                   In 2018 Kaufland donated more
                                                                                               than 10,000 blankets made of
                                                                                               ­recycled employee uniforms.

14
Environmentally Friendly Range                                          Raising Consumer Awareness

In order to address consumers’ growing demands for products             The retail goods produced by Kaufland and Lidl in line with environ-
manufactured in a responsible and environmentally friendly manner,      mental and social standards are clearly labeled with the relevant
the Schwarz Group relies on different types of certification for its    product seals. Brochures and packaging include information on
range of goods, including Blue Angel. The ecolabel of the German        ­product sustainability features in order to make consumers more
federal government identifies products that are more environmen-         aware of the benefits.
tally friendly and protect people’s health without compromising pro-
duct usage. Examples of such products include sanitary and paper        You can find an overview online of all logos and certifications
products made of 100% recycled paper, and garbage bags made of          ­identifying sustainable products sold by Kaufland and Lidl.
recycled plastics. Kaufland and Lidl offer Blue Angel certified items
in their stores across Europe, thus making environmentally friendly
items accessible to a broad range of customers.

                                                                        The number of items certified by seal offered in
                                                                        the Kaufland and Lidl ranges*:

                                                                                                                         Kaufland   Lidl

                                                                                                       UTZ                  >120    >280

                                                                                                       FSC                   >70    >180

                                                                                                       Rainforest            >20    >20
                                                                                                       Alliance
                                                                              www.ra.org/siegel

                                                                                                       Fairtrade            >180    >70

                                                                        * refers to the average range in all countries

                                                                                                                                               15
ECONOMY

     RESPONSIBLE
     GROWTH
     The Schwarz Group sets standards with its record turnover in 2018, and d  ­ emonstrated it
     could hold its own in a challenging environment. A large share of our i­nvestments goes to
     expanding and modernizing Kaufland and Lidl stores. This is our way of addressing the
     need for contemporary store design.

                                                                       2018
                                                                2017
                                                         2016          104.3
                                                 2015
     Net turnover in the Schwarz Group                          96.9
                                          2014
     core business                                       90.2
                                                  85.7
     in billions of euros                 79.4

                                   +31.4%
     This represents an increase
     from 2014 to 2018 of

16
Strong Market Position
The Schwarz Group posted sales of more than EUR 100 billion for             Since 2006, the Schwarz Group has continuously expanded its
the first time in fiscal year 2018. This followed more than a 30 ­percent   portfolio beyond its retail business by adding its own food produc-
increase in net sales in the past five years, with the company thus         tion capacities. It currently manufactures its own brand of chocola-
continuing to expand its market position as the largest retailer            te, dried fruit, baked goods and ice cream, as well as mineral water
in E­ urope. The Schwarz Group constantly maintained its total              and soft drinks.
­investments in 2018 at the same high level of the previous year of
 EUR 7.5 billion. A large portion go to expanding and modernizing           Moreover the Schwarz Group is also strengthening its waste dis-
 Kaufland and Lidl stores. We would like to further increase the current    posal and recycling business. With the acquisition of disposal firm
 number of K ­ aufland and Lidl stores worldwide (approximately 12,100)     Tönsmeier by its own service provider GreenCycle, the Schwarz
 after adding close to 400 in 2018.                                         Group has established recyclables management as an additional
                                                                            business segment, thereby promoting a holistic single-source circu-
Digitalization also plays an increasingly important role as an ad-          lar economy.
ditional growth driver. Lidl Online is currently operating in six
countries and has more than 18 million customers. In 2018 alone,
Lidl increased its sales of non-food items in the online area by 56
percent. Kaufland’s customer app, a digital shopping aid and source
of recipe suggestions is becoming increasingly popular.

                                                                                                       16
                                                                                                        production plants

                                                                                                       30
                                                                                                        sorting and recycling plants

                                                                                                        219
                                                                                                        warehouses

                                                                                                       12.118
                                                                                                        stores

                                                                                                        626
                                                                                                        new store openings
                                                                                                        including replacement locations

                                                                                                                                                   17
Future-Oriented Stores
     Suburban locations, rural areas, heavily built-up city centers – there is a
     broad variety of demands depending on the location, sometimes even
     challenges in potential construction. We offer the right solution for every
     location and develop strategies for the ideal store design with our wide
     range of store concepts.

     Flexibility                                                               Focus on Sustainability

     Lidl offers different store concepts for a variety of requirements:       Sustainable construction and energy efficiency play an important
     • The basic store: open, light and customer-oriented                      role in Kaufland and Lidl store designs. In their new builds, for
     • The metropolitan store: modern and flexible – designed                  example, the company is increasingly using photovoltaic systems
       for urban centers                                                       and quick charging stations with green electricity for electric cars.
     • The city center store: perfectly integrated                             Green roofs can help to filter pollutants from the air and support
     • The retail park: many offerings at a single site                        water retention. Waste heat generated by cooling systems enables
     • Special stores: customized solutions for unique buildings               some stores to heat without the use of fossil fuels.
       and locations
     Lidl opened its first metropolitan store in Barcelona in 2016. Its        For more information on sustainable construction by the Schwarz
     compact construction style pays off, particularly in heavily built-up     Group, see the Environment section on pages 24/25.
     metropolitan areas like Catalonia’s capital.

     Kaufland has always practiced flexible construction. Its store types      Overview of store types
     are adapted to location features based on the size of the property        Kaufland       Lidl
     – from single-story stores with parking lots in front to elevated store
     solutions with parking lots on the ground floor and the sales area
     above. Underground parking solutions are also an option, parti-
     cularly in urban spaces. Location-specific designs with multi-use
     enable Kaufland to offer urban solutions for property sizes starting
     from 6,000 m².

18
+
                                       Climate protection
                                       Kaufland and Lidl can offer carbon-
                                       neutral electricity from solar power
                                       generated by rooftop photovoltaic
                                       systems.                                     Environment protection
                                                                                    Green roofs can help to filter pollutants from
                                                                                    the air and support water retention.

                                   +
                                                                                        Integration into
                                                                                        surrounding buildings
Mobility
Customers can currently charge
their electric cars at the quick
charging stations free of charge
while shopping.

                                                                                                 +

+                                                                                                 Energy efficiency
                                                                                                  Instead of only heating with combustibles
                                                                                                  such as oil, gas, and wood, waste heat
                                                                                                  generated by store chillers contributes to
                                                         Sustainable architecture                 heating. The combined cooling/air conditio-
                                                                                                  ning systems save energy and conserve
                                                                                                  natural resources.

642,000 m
    Over

                                                                          2
                                                                                                                        90
                                                                              photovoltaic systems are o­ perated
                                                                              by the Schwarz Group. That
                                                                              ­corresponds to an area of around                       soccer fields.

                                                                                                                                                  19
ENVIRONMENT

     RESPONSIBLE
     VALUE CREATION
     The Schwarz Group has its focus set on the entire value chain, including Kaufland
     and Lidl, our production facilities and our waste disposal and recycling service
     provider GreenCycle. This set-up enables us to effectively implement resource
     ­efficiency initiatives – from a comprehensive plastic strategy through holistic
      energy management to green mobility concepts.

     The recycling plants process returnable PET beverage
     bottles to make food grade PET granules.

20
Conserving Resources
The Schwarz Group was one of the first retailers to include a commitment in
its plastic strategy to significantly reducing plastic consumption in production
and the retail business. We aim to close the loop for materials and generate
tomorrow’s raw materials from today’s waste.

REset Plastic – the Schwarz Group
Plastic Strategy                                                    The five Action Areas

The Schwarz Group launched its international REset Plastic          REduce                            REdesign
plastic strategy along its value chain at the start of 2018. Five   We reduce plastic – wherever      We design recyclable
areas of action serve to complete the circle and reduce con-        sustainably possible.             ­packaging and close loops.
sumption of plastic. We avoid plastic where possible, employ
resource-conserving designs, collect, sort and recycle mate-        REcycle                           REmove
rials, remove plastic waste from the environment, look for inno-    We collect, sort and               We support the removal
vative solutions and raise awareness of resource conservation.      recycle plastics to                of plastic waste from the
The Schwarz Group has confirmed its commitment in signing           close the loop.                   ­environment.
up to the Ellen MacArthur Foundation’s Global Commitment. At
                                                                    REsearch
the heart of the initiative is a vision of a new circular economy   We invest in research and development of
in which plastic no longer becomes a waste product.                 ­innovative solutions and educate on recycling.

For more information online, see reset-plastic.com

Our aims:

-20% 100%
plastic at Kaufland                     recyclability of plastic
and Lidl by 2025                        packaging for own
                                        brand by 2025

                                                                                                                                    21
In the loop
                                 100 %
     One example of a closed material loop is the 1.5 liter PET bottle
                                                                                          Recycling-PET
                                                                                          “Saskia” still
                                                                                          mineral water
                                                                                          1.5 L bottle

     of Lidl’s own brand “Saskia” still mineral water. The bottle* is
     made exclusively of recycled PET collected in stores and sorted
     in the group’s own production facilities, where it is then recycled                  Savings on new PET
     and made into new bottles. These are then filled and resold in                       product: more than
     Lidl stores. That means all process steps in the material loop                       10,000 tonnes of
     are completed by a single source. New plastic is not needed                          new PET per year
     for ­production. The bottles are currently available in Germany,
     Switzerland, Austria and Denmark. Other bottles of own-brand
     beverages Sakia and Freeway are made of at least 50 percent                          Carbon savings of
     recycled material on average.                                                        approx. 17,000 tonnes
                                                                                          per year
     * excluding cap and label

     STOP – Stop Ocean Plastics

     Plastic waste in the world’s oceans is a global problem. In order to make its own contri-
     bution to removing plastic waste, the Schwarz Group has supported Project STOP as a
     technical partner – and the first food retailer – since the beginning of 2019. This leading
     initiative to prevent plastic waste from entering oceans cooperates with communities in
     Indonesia to develop efficient waste disposal systems there.

     www.stopoceanplastics.com

22
Valuing Recyclables
The group’s own waste disposal and recycling service provider PreZero,
a subsidiary of GreenCycle, plays an important role in Schwarz Group’s circu-
lar economy. The company organizes collection and recycling of all reusable
­materials generated by Kaufland and Lidl store and logistics operations as
 well as by the production facilities. The close cooperation between the group
 divisions in d
              ­ ay-to-day business ensures an international knowledge transfer.

The Schwarz Group production facilities that manufacture Kaufland      Waste by material
and Lidl’s own brands are also developing their production processes   in tonnes                     275,396 non-recyclable waste
and packaging in the same environmentally friendly manner.
                                                                                                     82,438 other recyclables
                                                                                                     3,646 textiles

Raising Employee Awareness                                                                           54,143 wood
                                                                                                     68,173 plastics

Proper collection of all waste via waste sorting systems is key to            2.5 million
                                                                                tonnes
                                                                                                     163,291 PET
achieving high rates of recycling in the company – and this needs to
be in the very place where the waste is created. GreenCycle conti-
                                                                                     of waste in
nuously analyzes which types of waste are generated where in the
                                                                                  fiscal year 2018
Schwarz Group and how to plan collection and sorting as intuitively
and simply as possible. GreenCycle educates store and logis-                                         405,643 organic waste
tics staff in its “Valuing recyclables” Campaign involving training
courses, detailed brochures and videos. This enabled the Schwarz
Group to increase its recycling rate.
                                                                                                     1,430,150 paper/cardboard

GreenCycle is sharing this experience and advising companies,
such as the Bundesliga soccer club TSG 1899 Hoffenheim, on
­recycling management. GreenCycle subsidiary PreZero replaced
 styrofoam cups for hot beverages with reusable cups. This saves
 around 400 kilograms of plastic per soccer match. Also, the two
 tonnes of stadium grass clippings collected each month are used
 to make paper for the annual supply of autograph cards.

               “Valuing Recyclables”
               at the Schwarz Group

                                                                                                                                    23
Supporting the Energy and Mobility Transition
     The Schwarz Group has set itself the aim of contributing to a sustainable energy
     and mobility transition. To this end it constructs energy-efficient buildings and ­covers
     around 30 percent of total electricity consumption exclusively through renewable
     ­energies – including from its own sources. We are increasing our focus on charging
      stations for electric cars and bikes, which our customers and employees can currently
      use free of charge, to promote climate-friendly mobility.

     Energy-efficient and Sustainable Construction                             Energy Management as the Basis

     The Schwarz Group attaches great importance in its expansion to                          A holistic energy management system based on the
     energy-efficient and sustainable construction of its stores, administ-                   international standard ISO 50001 enables the Schwarz
     rative buildings and goods distribution centers. To ensure this objec-                   Group to improve its energy efficiency and lower the
     tive is met it applies renowned national and international sustainable                   associated carbon emissions. To achieve this objective,
     construction standards. Here are some examples:                                          all group divisions had all relevant areas of their store
                                                                                              locations, logistics centers and administrative buildings
                                                                                              certified on the basis of this standard.*
                         BREEAM: “Building Research Establishment
                         Environmental Assessment Method” is a UK
                         sustainability certification scheme for real esta-    Award-winning Energy Concept
                         te. In addition to other locations, the Lidl logis-
                         tics center in Waddinxveen in the Netherlands         The EHI Retail Institute e.V. awarded Lidl’s concept for climate pro-
                         has been awarded the BREEAM “Outstanding”             tection, ECO2NEXT, the EHI Energy Management Award 2018 in the
                         seal of quality.                                      “Cross-store energy management concept” category. Lidl Germany
                                                                               reduced its energy consumption in fiscal year 2017 by implementing
                         EDGE: “Excellence in Design for Greater Effi-         effective measures in energy-efficient logistics, biogas extraction,
                         ciencies” is a system for certifying sustainable      alternative mobility solutions and store optimizations. Lidl increased
                         buildings developed by the World Bank Group’s         the self-generated solar energy share of the company’s total energy
                         International Finance Corporation (IFC). All Lidl     consumption tenfold during the same period.
                         stores and the central warehouse in Lithuania,
                         for example, as well as Kaufland stores in Bul-
                         garia have been EDGE certified.

                         LEED: “Leadership in Energy and Environmental
                         Design” is an internationally established green
                         building rating system. Lidl’s US headquarters
                         in Arlington, Virginia, for example, was LEED
                         certified with a Gold rating in 2017.

                                                                               * excluding Poland, Serbia and USA

24
Absolute Greenhouse Gas Emissions

                                               Scope 1
                                               879,629                 Energy consumption is a key position with emissions of
                                                                       1,941,816 tonnes of CO2e (in Scope 2). That is why we are
                                                                       trying to gradually lower this position and reduce our carbon

                  5,712,969                                            emissions by using green electricity. Nearly 30 percent of
                                                                       our current consumption comes exclusively from renewable
                   tonnes                                              sources.
                        CO2e in
                                                                       * The market-oriented approach uses energy providers’ emission factors.
                    fiscal year 2018
                   (market-oriented*)                                  Scope 1: Emissions from direct consumption of energy (building, fuel, refrigerant)
                                                                       Scope 2: Emissions from electric and district heating
                                                  Scope 2              Scope 3: Emissions from the upstream and downstream supply chain
                                                  1,979,302                     (e.g. logistics, reusables, supplies)

      Scope 3
      2,854,038

Fill up on green electricity at Kaufland and Lidl

Kaufland and Lidl customers can fill up on free electricity w
doing their shopping. The company is actively promoting
                                                            ­ hile

­climate-friendly electro mobility by expanding its charging station
 network. The stations are operated mainly with green electricity
 from 100 percent renewable energies.
                                                                                                                     763   Kaufland and Lidl stores are
                                                                                                                           equipped with at least one
                                                                                                                           electric charging station.

                                                                                                                                                            25
SOCIAL ASPECTS

     COMMITMENT TO
     EMPLOYEES AND
     COMMUNITY
     Whether nutrition or circular economy, the Schwarz Group
     business operates in various areas of life. The group is not only
     committed on behalf of its employees to actively developing
     these issues, but also collaborates with its customers on cha-
     ritable projects as well, thereby improving living and working
     conditions worldwide.

                                                                               66.9 %
     Schwarz Group employees

                                                                428,599
     Age distribution
     Average age 36

      < 30 years of age        33 %

      ≥ 30 < 50 years of age               54 %
                                                                   employees
      ≥ 50 years     13 %
        of age

                                                  33.1 %
26
Our Staff
Around 429,000 employees worldwide are the foundation of the
Schwarz Group’s success. We aim to offer our staff a safe and ­attractive
work ­environment characterized by mutual appreciation. Regular awards
­confirm that we are on track in our human resources work.

Award-winning Employer                                                      Climate-friendly Employee Mobility

Our business success is based on a high level of employee                   A more relaxing commute to work and saving emissions at the same
­satisfaction. This is also reflected the awards we receive in this area.   time – the Schwarz Group offers its employees at the central loca-
                                                                            tions around Heilbronn modern solutions for environmentally friendly
                                                                            mobility via its ready4green program.
                                      Certified Top Employer
Great Place to Work
                                      2019 in Europe ...                    Smart Carpooling
                                                                            Commuter traffic is getting ever heavier. We offer our employees the
                                                                            opportunity to share rides and thus reduce traffic with our carpool
                                                                            app. The Twogo app automatically finds the right carpool for com-
                                                                            muters and drivers.

                                      ... and in these                      Bus & Train
                                                                            Employees receive a subscription of discounted monthly tickets for
                                      countries:
                                                                            public transport plus an employer subsidy per ticket.
                                      Kaufland
                                      Bulgaria, Germany, Poland,            Electric and Hybrid Cars
                                      ­Romania, Slovakia and the
                                                                            Electric and hybrid cars have proven themselves most of all in
                                       Czech Republic
                                                                            the short distances between the main locations in the Heilbronn
                                      Lidl                                  region. Different car models are thus available to Schwarz Group
                                      Belgium, Finland, Greece, Italy,      employees for business travel. The Schwarz Group is continuously
                                      Lithuania, Malta, the Nether-         adding to the offering of electric and hybrid cars and expanding the
                                      lands, Poland, Romania, Slova-
                                                                            charging point infrastructure.
                                      kia, Spain, Cyprus

                                                                            Bicycle Discount
                                                                            Employees receive a company discount on bicycles from a local
                                                                            partner company for climate-friendly rides to work.
                                  Further information on
                                    ready4green can be
                                            found online

                                                                                                                                                   27
Raising Awareness

     Raising Awareness of Healthy Eating                                      A Circular Economy Up Close
     and Conserving Resources
                                                                              Creating value from waste – the GreenCycle business model is being
     Kaufland and Lidl launch and support campaigns worldwide to              presented in a special way at the National Garden Exhibition in Heil-
     teach children and adults a responsible approach to food and             bronn (BUGA Heilbronn) in 2019. A pavilion was constructed entirely
     responsible use of natural resources. The objective is to create and     out of recycled materials together with the Ministry of the Environ-
     raise awareness of the importance of maintaining a healthy, environ-     ment Baden Württemberg, the waste management companies of the
     mentally-friendly lifestyle.                                             city of Heilbronn and the Karslruhe Institute of Technology. This crea-
                                                                              ted a visual expression of a complete circular economy. Information
     • Kaufland has offered its own education program on environ-            is offered inside the pavilion that introduces visitors to the issues of
        mental issues, such as plastic and bees, to children in Germany       sustainability and recyclables in a fun way.
        since 2004. It has reached around 270,000 children thus far in its
        “environment day” campaign. It cooperates with the Association
        of German Nature Parks (Verband Deutscher Naturparke e.V.).
        Around 150 events were held in schools and daycare centers
        around the country from March to November 2018.

     • Lidl supports the “5 a Day” campaign through the Lidl Fruit School.
        In 2018 for the third year in a row, professional nutrition experts
        visited 200 elementary school classes around Germany, playfully
        motivating some 5,000 third and fourth-graders to learn more about
        balanced nutrition. They prepared simple meals together with the
        children and showed them how five portions of fruit and vegetables
        a day can be enjoyable. The idea was also implemented in a diffe-
        rent form in other countries, such as Greece and Spain.

     • Lidl Netherlands has collaborated with the Missing Chapter Foun-
        dation since 2015 to actively involve children in decision-making
        processes. Elementary school children are introduced to business
        challenges relating to a conscious and sustainable lifestyle and
        are given a chance to develop their own ideas for solutions.
        The main question in 2018 was: How can Lidl help bees?

28
Joining Forces
for a Good Cause

Round it up, please!                                                    Helping with Donations

Since 2012, Kaufland customers in Germany have been able to             Since 2008, Lidl customers in Germany have had the opportunity
round up their shopping bill to the next higher 10-cent amount and      to donate their bottle deposit slip amount at all of the 6,100 Lidl
donate the difference to a good cause. The donations benefit the        reverse vending machines around the country. Lidl customer de-
“Germany rounds up” initiative, which supports charitable projects      posit slip amounts and Lidl Germany’s daily food donations go to
to promote disadvantaged children and adolescents in Germany.           more than 940 local food banks. Lidl bottle deposit donations have
Kaufland customers have rounded up their bills more than 47 ­million    generated over EUR 17 million so far, which the food banks have
times so far, generating more than EUR 2 million. This makes            been able to use to finance charitable projects. These have focused,
Kaufland one of the initiative’s three biggest partners. Moreover,      for instance, on help with homework for children and adolescents,
Kaufland conducted seven campaigns from 2012 to 2018, in which          cooking courses for families and cultural programs for people
it doubled the donations from its customers’ rounded up amounts.        suffering from loneliness or poverty in old age. Other countries are
This yielded an additional EUR 280,000.                                 also following the bottle deposit donation principle. Lidl Lithuania

                                                                                                47
                                                                        has supported a national donation project to support child daycare
Kaufland has launched campaigns to support disadvantaged children       centers since 2017. The company also matches the customers’
in other countries as well. In Poland, for example, K
                                                    ­ aufland suppor-   donations.
ted the SOS Children’s Villages from 2016 to 2018, with customers
and employees of Kaufland stores donating a total of EUR 175,500.
Customers in Polish stores can now donate money to the Polish food
bank via donation boxes located at the checkout.
                                                                                           Over

                                                                                  Round it
                                                                                  up, please!

                                                                                                           million times since 2012

                                     17
                                                                                                           – Germany’s Kaufland
                                                                                                           ­customers have rounded
                                                                                                            up their purchase amounts
                                                                                                            for a good cause.

                                                                            million euros have
                                                                            been raised in Germany
                                                                            through the Lidl bottle
                                                                            ­deposit donation initiative.
                                  Over                                                                                                         29
Published by
     Schwarz Dienstleistung KG
     Stiftsbergstraße 1
     74172 Neckarsulm
     Germany

     CSR/Sustainability Department
     csr@mail.schwarz

     For further information, see
     www.greencycle.de/nachhaltigkeit/nachhaltigkeit-bei-greencycle
     www.kaufland.de/machen
     www.lidl.de/verantwortung
     www.meg-gruppe.de/unsere-umwelt.html
     www.jobs.schwarz/wir-als-arbeitgeber/unsere-verantwortung

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           natureOffice.com | DE-318-607181
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     on FSC®-certified paper

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