Schwarz Gruppe is a family-owned retail group operating over 12,900 food stores, supermarkets, hypermarkets and discount stores across 33 countries under the Lidl and Kaufland brands. It employs around 500,000 people worldwide. Kaufland is a discount retailer supplying fresh food, apparel and household items. The company produces the majority of its fresh meat products through plants in Germany and Czech Republic. Lidl operates as a chain of grocery stores in Europe, offering both food and non-food products to its customers. Through Lidl, the group has also been expanding its presence in the US through recent agreements with Best Market, a US-based supermarket operator, to acquire its stores in New York and New Jersey. In addition to retail business, the Schwarz Group is also engaged in businesses ranging from food production (Schwarz Produktion) to the management of recyclables (PreZero).
Schwarz Gruppe ranks 52nd in food and beverage manufacturers and processors and 17th food retailers segment. In both segments, the company demonstrate a strong performance in the governance and strategy and social inclusion measurement areas. Nonetheless, Schwarz Gruppe can improve further by proving greater disclosure in both segments. For example, in governance and strategy, by linking the highest governance body’s remuneration policy to sustainability targets, something higher ranking peers have started to disclose. In nutrition, the company performs in the upper grouping of companies in both segments, but could improve further by disclosing quantitative evidence to support activities, such as on efforts to promote healthy foods. Similarly, in environment, the company performs in the middle grouping of companies due to a lack of depth of disclosure in key topics, such as sustainable sourcing practices or addressing food loss and waste.
Plastic use and packaging waste
Schwarz Gruppe commits to use up to 20% less plastic, to make 100% of its private label packaging maximum recyclable, and to use an average of 20 % recycled material in its own-brand plastic packaging by 2025 in all countries and business units. The company shares its activities acting on reducing plastic use and packaging waste. Moreover, the company reports progress against this target in use of total weight of reusable material in tons. Nonetheless, there remains room for the company to improve by engaging with value chain partners to reduce plastic use or transition to sustainable forms of packaging.
Sustainable development strategy
Schwarz Gruppe shares its materiality analysis which has identified and defined the ten most relevant sustainability topics for the company to report on. The company shares its CSR strategy and its targets for the most relevant topics it has defined and reports progress against them. However, the company’s targets do not cover the three measurement areas of the benchmark, notably nutrition, presenting an opportunity for the company for future reporting.
Governance and accountability framework
Schwarz Gruppe discloses that it has a CSR Committee, to which the CSR managers of all group divisions belong, forms the basis for overall coordination of the content of sustainability topics. The CSR Committee jointly defines group-wide guidelines and framework conditions. While the company reports that overall responsibility and accountability for the implementation of the sustainability strategy lies with the highest governance body, the company does not disclose if the highest governance body’s remuneration policy aligns with performance across sustainability topics.
Schwarz Gruppe discloses its stakeholder management process and list of stakeholders. The company also shares the outcomes of the stakeholders engagement and its integration into CSR topics and reports against them. The topics raised by stakeholders cover all three benchmark measurement areas. However, the company does not provide a stakeholder identification process, presenting an opportunity for the company going forward.
Scope 1 and 2 greenhouse gas emissions
Schwarz Gruppe aims to reduce its scope 1 and 2 greenhouse gas emissions by 55 percent by 2030 compared to 2019. As part of this, Lidl and Kaufland have set a target to reduce their operational greenhouse gas emissions (Scope 1 and 2) by 80 percent over the same period of time. It shares evidence of its subsidiary Kaufland on reducing scope 1 and 2 greenhouse gas emissions. It reports that Kaufland Germany achieved 30.3% reduction in CO2 between 2010 and 2015. However, is an opportunity for the company to further improve by reporting the progress against it.
Schwarz Gruppe discloses that Kaufland’s meat processing plants are working on saving 20 percent of average water consumption at all its locations by 2022. It also discloses by end of 2019, the division had already succeeded in achieving water savings of 11 percent compared to the 2017 base year. However, there remains opportunity for the company to set up group-wide water use reduction target and report progress against the target.
Food loss and waste
Schwarz Gruppe sets its target to reduce food waste at the Schwarz Group by 50 percent by the end of 2030. Moreover, it aims to reduce food waste in the supply chain for selected raw materials. However, the company is yet to start to report progress against this target, presenting an opportunity for the company for future reporting.
Availability of healthy foods
Schwarz Gruppe discloses quantitative evidence of sugar and salt reduction its own brand products. Moreover, the company discloses reformulation targets for Kaufland in Germany – 20% reduction of sugar, salt, and fat content on average in more than 300 own brand items – and for Lidl in 18 countries – 20% sales weighted average reductions to be achieved in pre-determined own brand product categories. However, the company has an opportunity to improve its performance by adopting nutritional guidelines for its products and setting a target to increase the proportion of healthy options.
Accessibility and affordability of healthy foods
Schwarz Gruppe does not disclose a commitment and activities to improve the accessibility and affordability of healthy foods for vulnerable groups.
Schwarz Gruppe discloses that both retail divisions have defined and implemented essential steps for ensuring food safety. These include certification in accordance with the International Featured Standard (IFS) and British Retail Consortium (BRC) for all production facilities. The company also shares that it maintains clear procedures for approving suppliers and materials which require that suppliers have established a quality management system recognized by the Global Food Safety Initiative (GFSI). However, the company does not disclose the percentage of food suppliers certified to a GFSI-recognised food safety scheme.
While Schwarz Gruppe commits to prohibiting child labour in its own operations and requires its suppliers to adhere to the same standard, it has an opportunity to disclose a policy requiring its suppliers to have an age-verification system in place.
Schwarz Gruppe states that it prohibits any form of forced labour in both its own operations and supply chain. For suppliers and business partners, the company discloses commitments which requires suppliers to not withhold pay, social security contributions or personal documents. Moreover, the company discloses that it supports workers to join unions and bargain collectively, for both its own operations and suppliers. While the company references a monitoring system, this is only for business partners and not for its own operations, presenting an opportunity for the company for future reporting.
Farmer productivity and resilience
Schwarz Gruppe shares that Kaufland and Lidl are committed to fair living wages for farmers and workers in producer countries. The company also shares its activities to improve the productivity for farmers and small-holder producers. However, the company does not disclose on the outcome and impact of its support activities, presenting an opportunity for future reporting.
Core social indicators
The core social indicators are part of the social inclusion measurement area. These indicators assess societal expectations of business conduct that companies should meet if they aspire to be part of a system transformation that leaves no one behind.
Schwarz Group discloses commitments to respect human rights and for workers as well as grievance mechanisms which are accessible to both workers and third parties. The company also discloses its policy to engage with affected and potentially affected stakeholders, though could provide further information on this topic in future reporting. Moreover, there is a lack of information regarding human rights due diligence process in the public domain, presenting a risk for the company going forward.
Schwarz Group addresses all key issues for providing and promoting decent work through publicly available policies or statements, but there remains an opportunity for these to be strengthened. For example, there is room for Schwarz Group to improve by increasing disclose on health and safety data, by disclosing the numbers of work related fatalities or high- consequence injury rate in its reporting. Moreover, the company could disclose that it works to support the practices of its supply chain partners in relation to freedom of association and collective bargaining.
Schwarz Group discloses its policy on anti-bribery and anti-corruption policy for business partners, however, company can improve its performance by providing publicly available commitment on this topic. Additionally, Schwarz Group provides insufficient evidence of protecting personal data and does not disclose its policies towards responsible tax or responsible lobbying and political engagement. For example, on tax, the company could disclose a global tax policy which has been approved by the board of directors.