These guiding principles constitute a global standard for expected conduct regarding business operations and human rights for all business enterprises.
These pages describe Kesko’s implementation of its human rights assessment and the practices, processes and procedures compliant with the guiding principles, with which Kesko monitors and addresses the human rights impacts of its operations.
• Kesko respects all internationally recognised human rights.
• In compliance with the due diligence obligation, Kesko has, and will, establish its procedures and practices in ways which respect human rights in all of Kesko’s operations.
• Kesko’s operations have a salient impact on the human rights of four groups: customers, personnel, purchasing chains and communities in which we operate.
• Kesko listens to its stakeholders’ views on human rights and takes them into account in the development of its operations.
• Kesko expects its business partners to respect all internationally recognised human rights.
The statement of commitment on human rights was approved on 20 May 2016 by Kesko’s Group Management Board and on 20 September 2016 by Kesko’s Board of Directors.
Kesko’s human rights assessment is reviewed every three years by the Group’s Corporate Responsibility Management Team and updated correspondingly on the Kesko.fi pages. The last review took place on 4 December 2019. Efforts are made to expand the assessment to provide better coverage of operations in Kesko’s operating countries outside Finland.
Kesko has three divisions: grocery trade, building and technical trade, and car trade. Read more about the divisions.
Kesko has over 20,000 suppliers and service providers from whom annual purchases value at least €1,000. Some 80% of annual purchases of goods made by Kesko Group’s Finnish companies are from suppliers operating in Finland and less than 20% from suppliers elsewhere.
Global purchasing chains often have multiple tiers, and as you move on the tiers, you see how K Group’s purchasing chains extend all over the world.
Kesko pays special attention to human rights issues and working conditions in the purchasing chain. In monitoring suppliers, Kesko focuses primarily on high-risk countries, i.e. countries with a high risk of human and labour rights violations. In risk assessments, Kesko utilises amfori’s risk classification for countries, which is based on the World Bank's Worldwide Governance Indicators.
Direct purchases from suppliers in high-risk countries annually account for some 1% of Kesko’s total purchases. Direct imports from high-risk countries account for approximately 14% of Kesko's total imports into Finland annually. The figures concern direct purchases from Finland: there are no statistics for imports from high-risk countries into Kesko’s other operating countries.
High-risk countries typically produce clothing and home textiles, shoes, tools, sports equipment, toys, agricultural products (such as coffee, tea, cocoa, fruit, vegetables, wines) and canned fish, fruit and vegetables.
Kesko annually publishes a list of the manufacturing plants for own brand clothing, shoes and bags in high-risk countries on its website. For the sake of supply chain transparency, the list includes the names and address of the factories.
Kesko has been a member of amfori, an organisation that promotes sustainable business, since 2005 and takes part in amfori BSCI. In assessing suppliers in high-risk countries, Kesko uses international social responsibility audit and certification systems, primarily amfori BSCI auditing. Kesko has committed to promoting the principles of the amfori BSCI Code of Conduct in its purchasing. Some of Kesko’s suppliers are themselves amfori members and thus promote amfori BSCI audits in their own supply chains.
Kesko also accepts other social responsibility assessment systems if their criteria correspond to those of amfori BSCI auditing and if the audit is conducted by an independent party.
In accordance with the amfori BSCI operating model, a full audit is conducted at factories every two years to assess every sub-area of the auditing protocol. If a factory receives an audit result of C, D or E, a follow-up audit within 12 months must be arranged to assess the deficiencies identified in the full audit and the corrective measures implemented to address them.
Corrective measures and their follow-up are included in the audit process. Kesko does not terminate cooperation with a supplier that undertakes to resolve the grievances specified in the audit report.
Kesko’s purchases are guided by its sustainability policies. Sourcing policies are used for guiding the purchasing of products that contain ingredients identified as critical from a social and environmental responsibility perspective.
In 2018, Kesko joined the Accord on Fire and Building Safety in Bangladesh. The accord aims to improve the electrical, fire and building safety of clothing factories in Bangladesh through inspections, training and corrective actions. All clothing factories in Bangladesh that make clothes for K-Citymarket’s mywear brand are included in the Accord process.
Kesko is a member of the Centre for Child Rights and Corporate Social Responsibility (CCR CSR) based in China. The objective of CCR CSR is to prevent and reduce child labour, improve the status of young workers at factories, and make the daily life of migrant worker parents easier. If any use of child labour was detected at a factory, the organisation would provide Kesko with an operating model to get the children out of the factory and into schools.
In 2019, Kesko together with CCR CSR opened a summer day care facility at a LED site lighting factory in Ningbo, China. Some 30 children of the factory’s migrant workers attended the day care, and could therefore spend the summer with their parents.
We arrange sustainability training for suppliers in high risk countries. The training sessions explain Kesko’s social responsibility requirements for suppliers. Training has been organised in China, India and Thailand. Some of our suppliers have also taken part in sustainability training organised by amfori BSCI.
We regularly arrange training on responsible purchasing for Kesko employees engaged in purchasing. The training sessions cover e.g. the amfori BSCI Code of Conduct, the assurance process in purchasing from high-risk countries, and the social responsibility assessment systems approved by Kesko and sustainable purchasing policies.
Kesko's grocery trade has had an extensive collaboration agreement with Fairtrade Finland for over 20 years.
Flowers are the most popular Fairtrade product in K-food stores, and Pirkka Fairtrade roses are the most popular Fairtrade product in Finland. In between 2008 and 2018, Fairtrade flowers sold in K-food stores accumulated Fairtrade Premiums of over 2 million euros for social development projects. Local communities have used the premiums to refurbish and extend schools and day care centres and purchase kitchen appliances such as stoves.
Kesko reports on its social responsibility auditing processes and audit results in more detail in its Annual Reports.
As part of the human rights assessment, customer views on the implementation of human rights in Kesko’s operations were surveyed in 2015.
TNS Gallup looked into the implementation of human rights in K Group’s operations on the basis of four small-group discussions and an online questionnaire sent to 567 K Group customers and 41 specialists.
1. Qualitative section of the survey
The small-group discussions confirmed the impression that from customers’ point of view, the right to health, children’s right to special protection and the prohibition of discrimination are the main human rights of which Kesko has to take special care in its customer interface.
A special emphasis in the discussions was on the implementation of human rights of people who differ in some way from the majority of the population.
In consequence, special attention in the customer interface should be paid to:
• zero-tolerance for discrimination and the development and maintenance of grievance mechanisms for cases of discrimination
• the development and maintenance of accessibility and availability
2. Quantitative section of the survey
The online questionnaire was directed at both majority representatives as well as special groups. The ethnic or national origin of the representatives of the special groups was other than that of the majority of the Finnish population, their Finnish language skills were deficient, or they had some disability or illness that prevents them from equal social participation with others. Representatives of special groups account for 11% of all consumers. This means that every ninth K-store customer has some issue that makes their shopping difficult!
Kesko was considered to be slightly better than a regular Finnish company in implementing various human rights. However, the ratings given by the special groups were in some areas clearly lower compared to those given by the rest of the population. The special groups gave best ratings to equal checkout treatment of persons with some external deviation, and to the accessibility of disabled parking. The poorest ratings were related to the following issues:
• Store accessibility is not mentioned on the website
• Store fixtures are not easy for persons with reduced mobility
• There is not enough staff to provide assistance
• Accessibility of neighbourhood stores has not been taken care of
• Ethnic or visual diversity of staff is not sufficient
Research report by TNS Gallup Oy: Kesko and human rights – listening to customer stakeholders
Personnel views have been examined based on the results of the personnel survey and in a 2016 questionnaire targeted at shop stewards.
1. Personnel survey results
Kesko conducts personnel surveys at around 18-month intervals. The entire personnel in all operating countries is invited to respond to the survey. The survey indices are Employee Engagement, Performance Enablement, and Wellbeing at Work. Unit-specific action plans are prepared based on the results and their implementation is monitored.
The table below lists the survey questions especially related to the human rights assessment.
|I am appropriately involved in decisions that affect my work.||70%||73%||63%|
|I am generally able to balance my work and my personal life.||85%||88%||68%|
|The voices of employees representing minorities (e.g. gender, ethnicity, sexual orientation, age etc.) are heard in K Group
*phrasing of the question changed
|We operate in a socially and environmentally responsible way.||87%||87%||81%|
|In my unit we work according to the K Code of Conduct.||80%||73%||n/a|
|Number of respondents (whole Group)||8,061
The ‘Identified salient human rights impacts and assessment of related risks’ section presents monitoring indicators.
Kesko’s sustainability strategy is based on taking stakeholders’ views into account. Stakeholder assessment is included in Kesko’s management model and operating plans. Cooperation with stakeholders is described in the Annual Reports.
We listen to customers in, for example, daily customer encounters (nearly 1.5 million / day), via customer feedback channels, K-Consumer Service and customer surveys.
Personnel is heard in day-to-day managerial work, performance and development reviews and personnel surveys, as well as via shop stewards. Kesko does not restrict the unionisation of employees. A feedback channel for personnel is available on intranet.
There is an e-learning programme for introducing and revising our responsible operating principles. In addition, K Code of Conduct events are arranged for key members of personnel.
Kesko complies with the ethical principles for purchasing, which are based on the fundamental rights at work accepted by the International Labour Organisation (ILO), the UN Declaration of Human Rights and the UN Convention on the Rights of the Child. Kesko's grocery trade is committed to good trading practices in the European food chain.
The social responsibility of factories in high-risk countries is assured with audits. If problems are identified, efforts shall be made to correct them in cooperation with the supplier. Only in cases where the supplier refuses to cooperate and take any corrective actions, the purchasing agreement is terminated.
The task of Kesko Group's communications is to promote the businesses of the Group and its business partners by proactively providing stakeholders with factual information on the Group’s objectives and operations. Kesko's general communication principles include reliability, openness and speed. Communication is carried out across all media: media releases, statements and interviews, as well as through K Group websites and social media channels.
Each year, Kesko publishes an Annual Report which reports extensively on the social impacts of Kesko’s operations with respect to customers, personnel, purchasing networks and the operating environment.
Alongside daily communication, fast, comprehensive and open case-specific communication is needed on acute human rights issues and problems. Our principle is to proactively shed light on important human rights cases and issues.
1. Customer feedback channels
Kesko provides various feedback channels to its customers, including the K-Plussa customer service, K-consumer service and chain-specific feedback channels. Although these channels are intended for feedback on everyday customer issues, they occasionally also receive feedback on human rights related matters.
2. Personnel feedback channel in Yammer
Yammer on Kesko’s intranet acts as an electronic feedback forum for personnel: it enables giving feedback and asking questions about any matters concerning the operations of Kesko or its subsidiaries. Messages may also be anonymous. All feedback and answers are published on the channel to ensure all personnel can follow the conversation. All feedback is examined carefully and used in the development of Kesko’s operations.
3. SpeakUp reporting channel
Employees can make confidential contact via the SpeakUp reporting channel. This channel is mainly intended for situations in which an employee has to consider the legality of some operation and/or whether it is in line with Kesko’s values and responsible operating practices.
The e-mail address and phone number are included in Kesko’s K Code of Conduct attached to purchasing and service agreements, so that suppliers and service providers can also use this feedback channel.
4. Workers at factories in high-risk countries
Kesko recognises the fact that the real possibility of factory workers in high-risk countries to use any grievance mechanisms is almost non-existent. Kesko must strive, jointly with its suppliers, local trade unions, NGOs and authorities, to establish effective grievance mechanisms.
Kesko’s identified salient human rights impacts have been, even before the assessment, comprehensively although incoherently included in Kesko’s operating models. In the operating models, responsible parties and indicators have been assigned for an ongoing monitoring of the impacts.
In connection with the assessment, however, two development areas that require separate actions emerged (surveys of high-risk country factories and shop steward survey). Responsible parties have been assigned to these development areas and their progress will be monitored.
The assessment also produced good indications for the development of customer service, among other things. Possibilities for implementation are being explored.
Kesko’s first human rights assessment conducted in accordance with the UN Guiding Principles was published in 2016. The human rights assessment is reviewed every three years by the Group’s Corporate Responsibility Management Team and updated accordingly on the Kesko.fi website. Efforts will be made to expand the assessment to provide better coverage of operations in Kesko’s other operating countries.
Kesko asked an international, independent third party to comment on the coverage and content of the 2016 assessment and to identify targets for development. The task was allocated to KPMG Oy Ab.
Read KPMG’s commentary.
In global supply chains, living wages and incomes are a major and complex problem. In emerging countries, statutory minimum wages are often insufficient to cover the normal expenses of workers and their families, such as housing, nutritional food and education.
As a result of inadequate wages and incomes, workers and their families live in poverty and many work overtime to secure their livelihoods. A low wage level is a risk to the wellbeing of workers and their families and increases the risk of child and forced labour, for example. (source: amfori living wage briefing)
To achieve a living wage, each player in the supply chain needs to support a living wage in their own capacity, including standard systems, retailers, brands, supplier companies, unions and other labour groups, industry organisations, governments, civil society, and academia. (source: Global Living Wage Coalition). Promoting workers’ rights of freedom of association and collective bargaining is particularly important.
While there is no formal definition of a living wage, there is broad consensus around what constitutes a living wage. Kesko defines a living wage in supply chains in accordance with the Anker Methodology. The Anker Methodology is widely accepted and recognised by the international Global Living Wage Coalition. Kesko’s major stakeholders amfori and Fairtrade also use Anker’s definition.
According to the Anker Methodology, a living wage is:
The remuneration received for a standard workweek by a worker in a particular place sufficient to afford a decent standard of living for the worker and her or his family. Elements of a decent standard of living include food, water, housing, education, health care, transportation, clothing, and other essential needs including provision for unexpected events.
The concept of a living wage applies to hired workers. A living wage is not the same as a statutory minimum wage, which in many countries does not guarantee a living income. The estimate is carried out locally in a particular region, and the calculation takes into account the fact that families often have more than one working adult (Source: Global Living Wage Coalition)
A comparable definition for self-employed entrepreneurs and farmers refers to a living income. According to Fairtrade, a living income is:
A living income is defined as sufficient income to afford a decent standard of living for all household members – including a nutritious diet, clean water, decent housing, education, health care and other essential needs, plus a little extra for emergencies and savings – once farm costs are covered.