The K-Group’s environmental and energy policy

Mitigation of climate change is one of the main themes of Kesko’s responsibility programme. Every K-Group employee’s duties include work for the environment.

The K-Group's environmental management is based on the ICC Business Charter for Sustainable Development, standards for environmental management, and the requirements set by legislation. Kesko has also committed itself to the UN Global Compact initiative.

Environmental management is part of the K-Group's management system. Kesko Group's Corporate Responsibility Advisory Board defines the main policies for the environmental work and the target levels for Group companies, taking into account the environmental impacts of operations and their significance. The assessment of the significance of impacts aims to examine the total impact throughout the whole life cycle and chain of functions. The division parent companies and subsidiaries specify the main policies of their environmental work into environmental action programmes which support their business operations. The line organisation is responsible for the implementation of the programmes. The action programmes are monitored and updated annually as part of strategic work.

A significant proportion of K-Group stores comply with the K-responsibility concept which includes the environmental management model. Every retailer or store manager is responsible for ensuring that the concept followed. The environmental management model may also be some other approved environmental system, for which a third party has provided assurance. For example, the majority of our logistics operations in Finland use certified ISO 14001 environmental systems.

Scope of the environmental and energy policy

The K-Group's environmental and energy policy covers the operations of Kesko Group and K-Group stores in Finland and other operating countries. The K-Group's main partners are also expected to observe similar environmental management principles.

Environmental impact and objectives

The K-Group's operations have both direct and indirect impacts on the environment. The most significant direct impacts include emissions from the production of electric and heat energy used in properties, emissions from transportation, and waste produced during the storage of goods and by store operations. Indirect impacts are related to the production, use and disposal of products sold and their packaging. Indirect impacts are also generated from shopping visits to K-Group stores.

The environmental objectives set by the K-Group focus on reducing both direct and indirect impacts on the environment, and on continuously improving the level of performance, as follows:

• In cooperation with our business partners, we develop solutions for the building, repairs, concept modifications, maintenance and use of real estate properties that are material- and energy-efficient.

• We do long-term work to reduce our impact on the environment. We actively search for opportunities and pilot renewable energy sources in our store site projects. We survey opportunities to participate in the production of renewable energy.

• In cooperation with our business partners, we develop our logistics operations for smaller impact on the environment by optimising transportation, promoting energy-efficient and low-emission modes of transport, and by offering reverse logistics and recycling services to our customers.

• In line with the principles of circular economy, we aim to recover all waste generated in our operations. We develop material- and resource-efficient solutions in cooperation with other operators. We prevent the generation of waste by using reusable transport units and by minimising the wastage of products on sale.

• We provide product, package and service options suitable for circular economy. We actively offer these options to our customers. We train our employees in issues related to environmental and energy efficiency. We also guide customers to make environmentally and energy efficient choices.

Communications

Kesko reports on its environmental performance openly and comprehensively in its annual integrated report, on its website, via social media channels and on Keskonet, Kesko's intranet. Reporting is based on the guidelines and recommendations drawn up by the Global Reporting Initiative and is covered by an assurance statement from an impartial assurance provider.

Approved by Kesko's Group Management Board on 19 December 2011 and by the Board of the K-Retailers' Association on 29 November 2011. Reviewd and updated by the Environmental Steering Group on 22 November 2014.

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