Sustainable standards in the non-food supply chain

Tag

[GRI 204/103-1, 308/103-1, 414/103-1] Our objective is to enable millions of customers in Europe to shop in our stores with a good conscience. To make this possible, we take responsibility for safe and fair working conditions and compliance with environmental standards wherever we can make a difference. Our non-food range includes, among other things, textiles, cosmetic and toiletry products, and weekly special-buy products – from electronics and household goods to furniture. The supply chains behind these products are diverse and complex. During production, non-food products often pass through several production sites in various different countries. Hence, the challenges are complex as well: Issues such as building safety, living wages or reducing the use of chemicals in textile production require cross-sector cooperation among companies, governments and non-governmental organisations (NGOs). That is why we have joined forces with other players to work on these challenges in global initiatives such as amfori BSCI (Business Social Compliance Initiative).

Non-food product group production facilities by country in 2017

Number of non-food production facilities used in the part of the product range under review (in per cent)

Our approach

[GRI 308/103-1, 414/103-1] We focus on long-term, fair and reliable business relationships with suppliers who share our understanding of quality and responsibility. They have the goods that we have commissioned manufactured at production facilities in countries such as China, Bangladesh or Turkey. Together, we work on enforcing high environmental and social standards.

Our measures focus on countries of origin in which the risk of violations of social and environmental standards is increased. We are guided in this process by the list of countries that amfori (formerly the Foreign Trade Association – FTA) has classified as risk countries.

With regard to working conditions, we subject our suppliers and the production facilities they place orders with to clearly defined requirements.

Compliance with social standards in the supply chain

[GRI 308/103-1, 414/103-1, 407/103-1/2/3, 407-1]

The amfori BSCI Code of Conduct

We require ourselves and our suppliers to comply with the amfori BSCI Code of Conduct. The Code of Conduct is based on numerous international agreements including the core conventions of the International Labour Organization (ILO) or the Universal Declaration of Human Rights by the United Nations (UN). This enshrines all eleven central employee rights, including the right to safety in the workplace and proper pay. It also excludes discrimination, child labour and forced labour. Compliance with the amfori BSCI Code of Conduct is monitored and evaluated by on-site inspections (audits). All production facilities that are commissioned by our suppliers must present a valid amfori BSCI audit or SA8000 certification.

Audit results

[GRI 102-10, 308-2] The quality of the audit result is of crucial importance for us. We expect our suppliers to commission production facilities that have achieved good to very good audit results. The Corporate Responsibility (CR) department checks existing information for each submitted production facility and records an overall assessment. If the overall assessment is poor, no order is commissioned in the first instance. In such cases, the supplier must ensure that action plans are worked out for the necessary improvements and any problems in the production facilities are remedied. The ALDI North Group expects all suppliers to correct any defects as quickly as possible and to continuously improve the working and social conditions in the production facilities. Suppliers are not permitted to subcontract other production facilities without prior review and approval. The procedure in the event of violations of our requirements is defined contractually. The severity and the frequency of any breaches of regulations are taken into account to the same extent as the joint responsibility of the supplier. Potential consequences range from written warnings to – in the worst case scenario – termination of business relationships. No use was made of these consequences in 2017.

Organisation

[GRI 308/103-1, 414/103-1] The CR department coordinates the review of environmental and social standards and is in close contact with suppliers and buyers. ALDI CR-Support Asia Ltd. in Hong Kong, whose primary task is to monitor suppliers and production facilities, provides support for the CR department during its work in the production countries. This allows us to additionally review the conditions and progress at local facilities. ALDI CR Support Asia Ltd. is also responsible for the qualification of the suppliers and production facilities, as well as stakeholder management in Asia. The findings of ALDI CR Support Asia Ltd. are included in the overall assessment and therefore play a role in purchasing decisions.

CR Policy and purchasing policies

[GRI 204/103-2, 308/103-1, 414/103-1] Supply chain responsibility is a key field of action in our CR Policy. We formulate our requirements for the supply chain and products in our purchasing policies, among other documents. In the year under review, we introduced new international purchasing policies for flowers and plants; for wood, board and paper; and a National Cotton Purchasing Policy for Germany.

Sector and multistakeholder initiatives

We also tackle the multifaceted challenges in the textile industry in cooperation with other business enterprises, governments, NGOs and unions. Through our work in sector and multistakeholder initiatives, we are making a contribution to developing standards and achieving structural improvements:

  • In 2017, the ALDI North Group signed the follow-up agreement to the Accord on Fire and Building Safety in Bangladesh, the Transition Accord. From the perspective of the ALDI North Group, the accord remains an important tool for continuously improving the safety of workers in the textile sector in Bangladesh.
  • We have been supporting the objectives of Greenpeace’s Detox campaign through a voluntary commitment (ALDI Detox Commitment) since 2015.
  • Since 2015, we have been a member of the Leather Working Group (LWG). Since 1 January 2017, we have required the exclusive use of leather from LWG-certified tanneries for articles made of leather or leather components.
  • We have also been a member of Germany’s Partnership for Sustainable Textiles (Bündnis für nachhaltige Textilien) since 2015. We actively contribute to the achievement of the partnership’s goals and support the “Environmental and chemical management” initiative (Bündnisinitiative “Umwelt- und Chemikalienmanagement”).
  • In late 2017, we joined the European Clothing Action Plan (ECAP), an EU-sponsored project to reduce the negative environmental impact of the textile industry.

Progress and measures in 2017

[GRI 308/103-2, 414/103-2]

Our monitoring of social and environmental standards in the non-food supply chain

ALDI Social Assessments introduced

[GRI 414-1, 308-2, 407-1] Together with our suppliers, we visit the production facilities that work on our behalf as part of the ALDI Social Assessments (ASA). This allows us to see for ourselves how our requirements are being implemented in the supply chain. An ASA covers talks with the management, an accounting audit and an inspection of the production facility to audit working and social standards, as well as talks with employees. In the event of deficiencies, we work with suppliers and production facilities to draw up action plans aimed at achieving lasting improvements as quickly as possible and review their implementation [LINK Story Arbeitsbedingungen/Hongkong]. In the year under review, we performed 199 ASAs in eight countries, many of them in China (70 per cent). There were deficiencies at roughly 13 per cent of the production facilities in 2017 in fields such as occupational health and safety. Such deficiencies are often the result of structural challenges in the production countries. We also work to address findings of this nature through overarching initiatives such as the Bangladesh Accord on Fire and Building Safety.

In focus: Sustainable Textiles Purchasing project

[GRI 414-1, 308-2] Since 2017, we have been compiling the data from our supplier assessment in the sustainable textile purchasing project. We use this information to compare suppliers’ sustainability performance. The project aims to bring about closer cooperation with strategic suppliers who are willing to comply with our requirements and continuously achieve advancements at the production facilities they place orders with. The longer-term planning certainty enables our suppliers to take further steps towards a more sustainable supply chain.

Supplier qualification: ALDI Factory Advancement Project expanded

[GRI 414-1, 414-2] We continued to advance the ALDI Factory Advancement (AFA) Project in the year under review (2017). The project pursues a dialogue-based, cooperative approach that fosters communication between workers and managers and encourages them to work together to identify and efficiently solve problems. The central focus is dealing with issues such as health protection and safety in the workplace, fire protection, pay, working hours and discrimination. The subsequent alumni project also covers productivity- and quality-related issues. Today, 38 production facilities have joined the programme, thereby covering some 54 per cent of the purchasing volume (2015: 35 per cent) from Bangladesh. More than 85,000 workers benefit from this programme. As part of a further project – AFA Project PLUS – the Group worked with an NGO from Bangladesh to achieve improvements at in-house crèches at nine factories by the middle of 2017. Seven further production facilities will complete the AFA Project PLUS in 2018.

Chemical management: compliance with environmental standards

[GRI 308-2] Coordinated action by all players in the industry is absolutely essential to achieving positive change in the supply chain. We must work with the right partners to implement the requirements laid out in the ALDI Detox Commitment. It was for this reason that we joined the amfori BEPI initiative (Business Environmental Performance Initiative) in early 2017. amfori BEPI aims to promote environmental protection in supply chains during chemical-intensive production processes, among other things. amfori BEPI is the central platform for collaboration between the ALDI North Group and our business partners. Since July 2017, all production facilities for clothing, home textiles and footwear that work for our suppliers have been required to complete an amfori BEPI Self-Assessment. This disclosure provides starting points for environmental management improvement measures. Training measures for production facilities give participants essential information about the practical implementation of these measures.

In the field of chemical management, amfori BEPI works with the Zero Discharge of Hazardous Chemicals (ZDHC) group, for example, whose standards are widely accepted in the industry. The partnership gives participating production facilities access to the ZDHC’s training programmes. We also use our amfori BEPI membership to share findings that we gained in 2016 during pilot projects in the field of chemical management audits (CMAs), allowing other companies to benefit from this information.

In 2017, we also joined forces with the service provider NimkarTek to develop a chemical management training programme that includes compulsory modules on APEOs (alkylphenol ethoxylates), a chemical group that is used in textile production primarily as a surfactant in detergents and is one of the focal points of our activities due to its environmentally damaging effects, as well as additional training modules on topics such as chemicals, wastewater and silt management.

We also launched a pilot project with four selected production facilities of our suppliers in 2017, which are participating in the BVE3 programme offered by the certification provider Bureau Veritas. The programme calculates the production facility’s expected wastewater load based on benchmarks related to production processes and data on the chemicals used for processes such as dyeing and washing, allowing us to ensure greater transparency and calculate the expected chemical load in wastewater. This programme is specifically tailored to industrial processes that use water. Training sessions are also offered. The BVE3 programme is initially slated to last twelve months. Production facilities will be supported by ALDI CR Support Asia Ltd. The programme will be subsequently evaluated with a view to use in other production facilities.

Transparency for our customers

We enable our customers to trace the origin of our textiles and footwear. In a first step, we published information on all relevant production facilities for selected product groups for the first time on the German and Portuguese ALDI websites in 2017. We are constantly reviewing the additional information on the production facilities that we can release. The first textiles with the ALDI Transparency Code (ATC) will go on sale in Germany in 2018. The ATC can be gradually expanded within the ALDI North Group to all items featuring certified cotton following a successful test phase. In Germany, Fairtrade textiles have already received the Fairtrade code, making it possible to trace the origins of the cotton.

99 %

Audit rate at non-food product group production facilities in risk countries (proportion of products traded from non-food product groups that were made at production facilities in risk countries)

Purchasing of sustainable resources: clear guidelines and new projects

[GRI 204/103-2/3] In Germany, we published a National Cotton Purchasing Policy in 2017, which already covers the majority of all items sold in the ALDI North Group countries due to international buying practices. The purchasing policy sets a target of raising the proportion of certified sustainable cotton to 30 per cent by 2018. That figure stood at just under 23 per cent, or 20 per cent throughout the entire ALDI North Group, in 2017 [1]. We currently rely on the Global Organic Textile Standard (GOTS), the Organic Content Standard (OCS), Fairtrade, organic cotton and recycled cotton. To support producers in implementing our requirements, we plan to sponsor a cotton project in a country of origin. In 2017, we made a public pledge to the NGO Textile Exchange that we would increase the proportion of recycled fibres (polyester) by 25 per cent (reference year: 2016) by 2020. We were already able to achieve this goal in 2017. We were also ranked among the top ten retailers of recycled cotton in Textile Exchange’s 2017 Textile Fiber Market Report.

[1] Excluding ALDI Netherlands due to a lack of data for 2017.

New International Flowers and Plants Purchasing Policy

In 2017, we published our International Flowers and Plants Purchasing Policy, in which we pledge to promote the sustainable cultivation of flowers and plants and improve workers’ working and living conditions in the long term. We are therefore working to change over our entire range of flowers and plants to certified sustainable goods throughout the ALDI North Group within the scope of this Purchasing Policy by the end of 2019. For this purpose, we will only accept the GLOBALG.A.P. standard in combination with the additional module GRASP (GLOBALG.A.P Risk Assessment on Social Practice) or any certification that is approved by ALDI North or GLOBALG.A.P. Wherever possible, we will use the GLOBALG.A.P. label to show consumers that they are purchasing certified flowers and plants.

Wood: International Timber Purchasing Policy published

[GRI 204/103-2/3] Forests are important ecosystems and provide a habitat for humans, animals and plants. They also act as a vital reservoir of drinking water and have a moderating effect on the climate. Sustainable forestry and the sustainable processing and recovery of wood and wood-based products and packaging are necessary to protect forests and preserve them in the long term. Furthermore, it is essential to prevent illegal logging and protect endangered forests.

Wood or wood-based resources are often used in the products we sell, such as furniture, toilet tissue or packaging. In December 2017, we published our International Timber Purchasing Policy for the ALDI North Group, in which we defined clear requirements for products and packaging with constituent elements made of wood, cellulose fibres, bamboo and cellulose-based viscose and non-woven fabric. We have also pledged to change over our wood and wood-based products to certified sustainable materials by the end of 2020. The standards we will accept are FSC®, PEFCTM and EU Ecolabel. For more details about our requirements, please see “Packaging & cycle”.

Targets and status

[GRI 204/103-2/3, 308/103-2/3, 414/103-2/3] As part of our voluntary commitment and purchasing policies, we have set ourselves a number of ambitious targets. We report transparently on our progress in our Detox Commitment Progress Report or as part of our Textile Partnership road map.

Our targets from the CR Programme:

Field of action: supply chain responsibility

Objective Status Target date Target value Target relevance
All production facilities located in amfori BSCI risk countries, which manufacture non-food own-brand products for the ALDI North Group, have a valid and adequate social audit (Business Social Compliance Initiative – amfori BSCI)  
2019 100 % ALDI North Group
Integration of selected production facilities for non-food own-brand products into the qualification programme ALDI Factory Advancement (AFA) Project for improving the working conditions by means of dialogue promotion between workers and managers in Bangladesh   Ongoing Continuation and expansion ALDI North Group
Establishment and management of a dedicated inspection process in Asia   2017 Completion of the testing process and implementation of the inspections ALDI North Group
Changeover of all flowers and plants for defined own-brand products to sustainably certified goods (e.g. GLOBALG.A.P. in combination with GRASP) new 2019 100 % ALDI North Group
Ban on specific groups of substances in the manufacture of own-brand products in the product groups of clothing, home textiles and footwear (ALDI Detox Commitment)   2020 100 % ALDI North Group
Preparation and publication of an International Cotton Purchasing Policy Target for Germany achieved 2017 Purchasing policy ALDI North Group
Use of sustainable cotton (e.g. GOTS, OCS 100/blended, Fairtrade, recycled cotton) for clothing and home textiles new Ongoing Expansion depending on availability in the respective quality category ALDI North Group
Use of sustainable cotton (e.g. in accordance with the GOTS, OCS, Fairtrade standard) new 2018 30 % Germany
Preparation and publication of an International Timber Purchasing Policy   2017 Purchasing policy ALDI North Group
Changeover of wood and wood-based products to certified sustainable materials (FSC®, PEFC™, EU Ecolabel or comparable standards) new 2020 100 % ALDI North Group

 Target achieved   Ongoing process

Performance indicators

Proportion of insourced products with FSC®- or PEFC™-certified resources [GRI FP2]

Proportion of insourced own-brand products which are FSC®– or PEFC™-certified resources out of the total number of insourced own-brand products from the standard and special-buy product ranges with constituent elements made of wood, board, paper, and cellulose-based viscose and non-woven fabric, as well as bamboo (in per cent)

FSC® 100%, FSC® MIX and PEFC™ are considered to be certification standards. In 2017, the biggest proportion was attributable to FSC® MIX certification (around 48 per cent), followed by FSC® 100% certification (around 30 per cent) and PEFC™ certification (around 22 per cent).

  2015 2016 20171  
  Total of which FSC® 100%  of which FSC® MIX of which PEFC™ Total of which FSC® 100% of which FSC® MIX of which PEFC™ Total of which FSC® 100% of which FSC® MIX of which PEFC™
Belgium/Luxembourg2 24.8 41.5 12.3 46.2 28.8 38.9 23.6 37.5 52.1 32.8
45.1
22.1
Denmark 72.4 32.9 38.2 28.9 89.8 21.9 63.2 14.9 93.2 45.7 39.1 15.2
Germany 84.4 34.5 31.1 34.4 87.3 25.3 58.6 16.1 88.2 28.6 55.1 16.3
France 41.5 25.8 47.4 26.8 46.4 35.4 41.5 23.1 65.7 35.0 40.8 24.2
Netherlands 54.3 20.6 28.6 50.8 58.4 29.6 38.0 32.4 68.5 36.9 33.6 29.5
Poland 59.4 47.4 15.8 36.8 60.6 26.0 44.1 29.9 65.4 37.0 42.0 21.0
Portugal 60.2 37.5 21.4 41.1 68.7 33.3 43.0 23.7 86.3 42.1 43.7 14.3
Spain 42.6 32.6 15.2 52.2 64.0 30.1 34.0 35.9 74.5 41.0 37.1 21.9
ALDI North Group 41.3 30.9 36.7 32.4 53.1 26.4 49.7 23.9 62.8 30.0 47.9 22.1

1 The scope of application was expanded in 2017 to include further product groups and own-brand products with constituent elements made of cellulose-based viscose and non-woven fabric, as well as bamboo, following publication of the International Timber Purchasing Policy.
2 The information regarding the legally independent companies of the ALDI North Group in Belgium and Luxembourg has been combined for the purposes of a simplified presentation (refer to “Subject of the report”).

Proportion of sustainable cotton out of the total weight of cotton sold [GRI FP2]

Proportion of certified sustainable cotton out of the total weight of cotton sold in the period under review for own-brand products in the product groups of clothing and home textiles from the standard and special-buy product ranges (in per cent)

  2017  
  Total of which GOTS of which OCS of which other organic of which Fairtrade of which recycled without label
Belgium/Luxembourg1 9.6 60.5 7.9 11.4 20.2
Denmark 19.1 76.7 0.4 5.4 14.2 3.3
Germany 22.8 82.8 1.4 1.4 11.0 3.4
France 19.0 72.6 0.9 2.8 6.7 16.9
Netherlands2 n/a n/a n/a n/a n/a n/a
Poland 11.3 61.3 2.0 29.9 1.8 5.1
Portugal 19.6 83.9 1.4 1.8 8.7 4.2
Spain 17.2 81.5 1.5 1.9 15.1
ALDI North Group 20.6 80.5 1.3 2.2 10.4 5.6

1 The information regarding the legally independent companies of the ALDI North Group in Belgium and Luxembourg has been combined for the purposes of a simplified presentation (refer to “Subject of the report”).
2 No data on the tonnage of cotton sold is available (n/a = not available) for ALDI Netherlands for 2017.

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