Responsibility is part of day-to-day work
Corporate responsibility has been integrated
into Kesko's management system
and is implemented through normal daily
activities in the line organisation. The
corporate responsibility team that operates
within the Corporate Communications
and Responsibility Unit develops
and coordinates responsibility actions,
and reports on the results.
The team's work is supported by a
Corporate Responsibility Advisory Board
(appointed by the Corporate Management
Board), which consists of five members
representing the management of Kesko's
various division parent companies. The
duties of the Advisory Board include
determining the responsibility strategy
and the operating policies and systems
needed for its implementation, and monitoring
the implementation of objectives.
In 2008, the Corporate Responsibility
Advisory Board focused on preparing the
objectives of Kesko's responsibility programme
for the years 2008–2012. The programme
was approved by the Corporate
Management Board in late 2008.
The most important objectives for 2009
are to incorporate the responsibility programme
into the brand and marketing
strategy work, to strengthen the responsibility
image associated with Kesko, its
division parent companies and the various
product brands, and to bring the
results of responsibility work to the attention
of customers in the stores. The
responsibility programme will be published
in full in Kesko's Corporate Responsibility
Report for 2008.
The Environmental Steering Group is
responsible for developing and coordinating
environmental issues in different
countries. The Steering Group networked
throughout the Kesko Group during the
year in order to implement the requirements
of REACH, the EU's new regulation
on chemicals and their safe use, throughout
the supplier chain and to perform the
first REACH pre-registrations. As a result of
another cooperative effort throughout the
Kesko Group, a collection system, based
on the supplier responsibility referred to
in the EU's Directive on Batteries and
Accumulators, was set up in the stores
and the related retailer and dealer training
was organised.
A steering group consisting of representatives
from division parent companies'
purchasing management coordinates
responsible purchasing. In 2008, Kesko's
major responsible purchasing projects
included the establishment of a monitoring
team to audit suppliers in China and
the introduction of a self-assessment
form for suppliers operating in high-risk
countries. As part of the introduction of
REACH, a list of retricted chemicals that to
some extent exceeded the requirements
of the law was also introduced.
Kesko is an Organisational Stakeholder
of the Global Reporting Initiative (GRI)
and complies, in its corporate responsibility
reporting, with the sustainability
guidelines drawn up by the GRI. Kesko's
Board of Directors discusses the Corporate
Responsibility Report annually after
it has been published. Kesko's corporate
responsibility reporting has been
assured by an independent party since
2002. The 2008 report will be assured
by PricewaterhouseCoopers Oy, Kesko's
auditors. The Corporate Responsibility
Report for 2008 will be published in
April 2009.
Full points for eco-efficiency to Kesko
For the sixth time in succession,
Kesko was included in the Dow
Jones sustainability indexes, DJSI
World and DJSI STOXX. In the 2008
assessment, Kesko was given a full
100 points for the eco-efficiency of
its operations.
In January 2009, the World Economic
Forum listed Kesko for the
fifth time among the 100 best
companies in the world in sustainable
development. Moreover,
Kesko's work for responsibility qualified
in the silver class in the Consumer
Staples sector in the 2008 and 2009 Sustainability
Yearbooks. No companies in
this sector qualified in the gold class.
As in the previous year, Kesko participated
in the assessment of the Carbon
Disclosure Project in 2008 and was
awarded 85 points (compared with 73 in
2007). As Kesko did not give permission
to disclose its replies, it is not included
in the 2008 CDP Leadership index. Kesko's
rankings in different indexes are available
at www.kesko.fi/responsibility.
Economic responsibility
Good financial performance makes it easier to assume environmental and social responsibility and, conversely, environmental and social responsibility contribute to reducing costs and promoting job satisfaction. In the Corporate Responsibility Report, economic performance is viewed in more detail from the perspective of different stakeholders.
Manufacturing industry is an important partner
Kesko's operations produce economic benefit for many different parties. In 2008, Kesko's purchases from suppliers of goods and services totalled about €8.1 billion. Kesko had about 31,000 active suppliers (those annually supplying goods and services worth over €1,000 to Kesko). Approximately 18,000 of these operated in Finland, accounting for 66% of the total purchases. Kesko's investments totalled €338.4 million, of which €240.3 million was spent in Finland. Breakdowns of economic benefits from Kesko's operations in Finland by stakeholder group and region, and the breakdown of imports by country, are given in the Corporate Responsibility Report.
Comprehensive store network for customers
Together with the K-retailers, Kesko is
responsible for a nationwide store network
in Finland. Its services are complemented
by a mail order business and
e-commerce.
At the end of 2008, there were 15 fewer
K-food stores than the year before, i.e.
1,055 stores located in 316 of Finland's 348
cities and municipalities (situation on 1
January 2009). 139 new K-retailers started
during the year.
In 2008, there were 144 K-Group building
and home improvement stores, 81
agricultural stores, 28 Anttila department
stores, 2 Anttila Store speciality stores,
8 Kodin Ykkönen department stores for
interior decoration and home goods and
332 speciality stores in Finland. There were
31 building and home improvement
stores, 13 agricultural stores and 11 furniture
stores in the Baltic countries. There
were 36 building and home improvement
stores in the other Nordic countries. In
Russia, there were 9 building and home
improvement stores, of which 3 are in line
with the new K-rauta concept.
Sales to the K-retailers accounted for
nearly 49% of Kesko’s total sales. Kesko’s
own retail stores accounted for 26% of the
company's total sales.
Support for the public good
Kesko and its subsidiaries gave financial
support amounting to approximately €1.6
million to about 100 organisations and
institutions operating for the public good.
Kesko's cooperation with the Young
Finland Association has continued for over
a decade. Families with children are an
important cooperation target for the
K-Group. The purpose of the campaigns
carried out on a joint basis is to highlight
the importance of a healthy diet and
physical exercise as a way of life.
Environmental responsibility
All of Kesko’s operations that have a
major impact on the environment are
certified by the ISO 14001 environmental
system. The ISO 14001 certification of Anttila
Oy was revised in spring 2008. The
system covered all of Anttila Oy's operations.
The department stores in Mikkeli,
Rovaniemi, Pori and Nummela were
included in the system during the year.
VV-Autotalot Oy and Turun VV-Auto Oy
comply with the action plan of the Finnish
Central Organisation for Motor Trades
and Repairs. This plan, which has been
prepared for Finnish car dealers and
repair shops, fulfils the quality and environmental
management requirements of
the ISO 9001 and ISO 14001 standards, as
well as the quality requirements of the
Volkswagen Group. Business partners providing
property construction, maintenance
and waste management services
for Kesko have corresponding systems.
Also Keslog's transport and warehouse
operations have the ISO 14001 certification.
510 K-environmental stores
'At the end of the year, 423 K-food stores,
59 K-rauta and Rautia stores and 28
K-maatalous stores fulfilled the requirements
of the
Energy
In 2008, the combined electricity
consumption of Kesko and the
K-stores operating in Kesko’s
premises in Finland exceeded 751
GWh. Consumption remained nearly
unchanged (up by 0.6%), while the total
area of real estate increased by 2.0%. The
total specific consumption of electrical
energy in all real estate decreased by
1.4%. The consumption of heat energy
totalled 288 GWh (291 GWh in 2007). The
specific consumption of heat energy in all
real estate declined by 3.0%. Kesko used
centralised purchasing to buy 77% of the
electricity used. The electricity bought by
Kesko for the
Transport
In 2008, Keslog's transport reporting was expanded to cover all distribution, long distance and trunk transportation and outsourced transportation. Most of the contract drivers were trained in economical driving methods, and the remaining drivers will be trained during 2009. A total of 17.7 million kilometres was driven in distribution transportation, 11.6 million kilometres were driven in long distance and trunk transportation, and 8.8 million kilometres were driven in outsourced transportation. Transportation caused approximately 44,000 tons of carbon dioxide emissions. Proportional CO2 emissions per kilo transported totalled 0.024 kg. Proportional CO2 emissions increased by 1.1% on the previous year.
Waste management and recycling
In waste management, the focus was on minimising the amount of mixed waste generated and achieving a high recovery rate. In Kesko Food's warehouse operations, the total amount of waste dropped by 6% and the waste recovery rate was 89%. Anttila Oy's high recovery rate (96%) dropped by two percent on the previous year. New operating practices launched included the nationwide collection of recyclable plastic bottles, 18 million of which were collected by return logistics, as well as the collection of used batteries and small accumulators. The number of returned cans remained at 81.9 million, the level of the previous year. Recycling points for used plastic bags were introduced at 55 K-food stores.
Social responsibility
Kesko’s social responsibility can be
divided into the direct social responsibility
for its own personnel, and the indirect
social responsibility for personnel helping
to produce the merchandise sold by
Kesko.
The core areas of Kesko's social responsibility
for its own personnel are a good
working community, equality, competence
development, and health and safety. The
development of the working community
at Kesko is measured with the help of an
annual personnel survey. The survey was
revised and standardised in 2008 and was
conducted throughout Kesko and its chain
stores. The revised survey provides even
more concrete information about the
strengths and development targets of
working communities.
In 2008, one of the major tasks of HR
management was to ensure that the new
guide, “Our Responsible Working Principles”,
published in late 2007, was put into
practice in every country in which Kesko
operates. This was accomplished partly
through an e-learning programme established
for managers and various staff
events arranged by the managers in their
respective units.
For more information about HR issues,
see pages 49–50 and the Corporate
Responsibility Report for 2008.
Responsible purchasing
As China is the main country outside the
EU from which Kesko imports products,
the company established its own twomember
monitoring team in Shanghai in
October 2008.
The monitors evaluate the responsibility
practices of the Chinese supplier factories
against the criteria set by Kesko, decide
on any required corrective actions and
give support to the factories implementing
these actions. The goal of monitoring is always an independent audit, carried
out by auditors accredited by the BSCI or
the SAI (an independent organisation
managing the SA8000 standard). The
aim of the team is to make annually
at least 160 visits to the factories
of 50 suppliers. The suppliers
selected from different parts
of China deliver clothing,
household textiles, furniture,
shoes and sports
equipment to Kesko.
In spring 2008, a list of restricted
chemicals was introduced, defining
the chemicals whose use is either completely
banned or restricted in the
household textiles, clothing, leather
goods and upholstered furniture supplied
to Kesko. The list forbids the use of substances
of very high concern to REACH in
amounts exceeding 0.1 percent by weight.
In China, compliance with chemical regulations
is always verified during monitoring
visits.
Kesko is an active member of the Business
Social Compliance Initiative (BSCI),
a joint international organisation established
to promote social audits in the
supply chain. By the end of the year, 32
of Kesko's suppliers in high-risk countries
had been audited following the BSCI
model and seven suppliers were themselves
members of the BSCI. Kesko also
has 21 suppliers of home and speciality
goods with SA 8000 certification, and all
the Chiquita plantations supplying
bananas to Kesko have also been audited
in compliance with the requirements of
both the SA 8000 and Rain Forest Alliance
standards.
More than 30 Kesko's suppliers participated
in the training events arranged
by the BSCI in China and India. Kesko's
suppliers who participate in
the development project underway
in Vietnam were reaudited
in line with the BSCI model,
and several major improvements
have been accomplished
in all factories.
Responsibility in the product trade
At the end of 2008, Kesko Food offered
a selection of about 600 organic or Fairtrade
products or products with environmental
labelling. There were 30 organic
products and 59 products with environmental
labelling in the Pirkka range. In
addition, individual
The K-food stores carry the widest
selection of Fairtrade certified products in
Finland and Kesko Food doubled the
selection during 2008. At the end of the
year, the selections included over 120 Fairtrade
products, 16 of which were in the
Pirkka range. The first combination product
– the Pirkka yoghurt, which combines
Fairtrade ingredients and Finnish work
– was also introduced to the range. The
selection and marketing policies concerning
organic and Fairtrade products and
products with environmental labelling are
included in the K-food stores' chain concepts.
During the year, several sustainable
sourcing policies concerning the origins
and production conditions of foodstuffs
were made. Since September, all Pirkka
eggs have been free-range or organic
eggs. At the same time, Pirkka Fairtrade
bananas were launched in the
The promotion of a healthy way of life
is a central part of Kesko Food's responsibility
work. The amount of salt was
reduced in 19, fat in 17 and sugar in six
Pirkka products. The GDA (guideline daily
amounts) information was added on the
labels of several hundreds of Pirkka products.
A series of 69 lectures entitled “The
best choices of the day” were organised
in cooperation with Dietician Hanna Partanen
and K-food retailers throughout
Finland.
In August 2008, K-citymarket launched
Doogood, a clothing collection of its own
with a focus on environmental values. The
clothing is produced according to the Global
Organic Textile Standard (GOTS), and
the working conditions of employees
meet the minimum requirements set by
the International Labour Organisation. The
manufacturer of the Doogood collection
has been certified by the IMO. The K-citymarkets
also sell the Excelgreen clothing
collection which is made of recycled plastic
bottles.
Rautakesko offers a wide selection of
products with environmental, energy or
emission category labelling. The proportion
of certified timber out of total timber sales was around 90%. A total of 832 tons
of impregnated timber (753 tons in 2007)
were recycled through the K-rauta and
Rautia stores. Tropical wood and timber
accounted for under one percent of Rautakesko's
total sales. In line with Kesko's
sourcing policy, the garden furniture sold
by all K-Group stores is either FSC-certified
or made of cultivated tropical wood
species.
Rautakesko develops cost- and ecoefficient
service solutions for construction
and living. In March 2008, Rautakesko
published a guidebook on sustainable
housing, which is available for free in all
K-rauta and Rautia stores. The themes of
the guide are energy, water, indoor air,
waste management, maintenance,
repairs, safety and security.
Product safety
The Product Research Unit of Kesko Food
is responsible for ensuring the quality of
purchases, keeping abreast of food legislation,
maintaining and providing support
for the self-control plans required by
law and for developing private label
products together with the purchasing
and marketing units. During the year, the
recipe service of the
Quality is controlled in purchasing by
auditing the operations of product manufacturers
and analysing product composition
and quality. In 2008, the Product
Research Unit audited 31 suppliers, 19 of
which were Finnish. These companies
mainly included suppliers of Kesko's private
labels. A total of 5,744 food novelties
and product development samples, and
1,341 product lot and other self-control
samples were analysed. Kesko Food's
Product Research Unit also plays a key role
in exceptional situations, when a product
launched on the market fails to meet
safety or quality requirements.
A total of 66 product recalls took
place, most of which related to
defective quality or taste, or a manufacturing
or packaging error. 18 of the
recall cases were Kesko Food's private
label products; in other cases the Product
Research Unit assisted manufacturing
industry. Four of the recall cases were
public recalls, involving potential health
hazards.
Among the non-public cases, the recall
of Pirkka beer gained the most media
attention. The lots in question contained
an amount of alcohol that exceeded by
0.1–0.2 volume percent the limit of 4.7
vol. percent permitted in grocery stores.
735,000 cans in all were returned to the
supplier.
In April, the national accreditation body
FINAS (the Finnish Accreditation Service)
audited the activities of Kesko Food's
Product Research Unit for the purpose of
ISO 17025 accreditation. No major deviations
were found during the visit and corrections
to the minor deviations detected
have been sent to FINAS. On completion
of the accreditation process, the laboratory
of Kesko Food's Product Research Unit
will be the first accredited laboratory representing
the Finnish trading sector. In
2008, there were 45 laboratories with ISO
17025 accreditation in Finland. Nearly all
were run by the authorities, with the
exception of a few big food manufacturers.
In May, Kesko Food and Finfood organised
a joint seminar on food safety. The
results of the survey ordered by Kesko
Food from TNS Gallup, assessing Finnish
consumers' attitudes towards food safety,
were published at the seminar. The survey
was conducted in March-April and
answers were received from 1,391
respondents. According to the survey,
confidence in the Finnish production
chain has remained high and consumers
feel that Finnish food is safer than food
produced elsewhere. Young people had by
far the highest confidence in the safety of
the production chain. A healthy diet was
definitely also seen as part of product
safety.
Melamine-contaminated milk in China
and a counterfeit scandal concerning Italian
cheese made it to the headlines in the
autumn, and the dioxin in Irish pork did
the same before Christmas. The Product
Research Unit kept a close eye on all such
cases, and took actions to ensure the
cleanliness of the ingredients of Pirkka
products. As far as melamine was concerned,
the Unit examined all the products
included in the selection, verifying
that they did not contain any milk components
of Chinese origin.