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REspONsIblE PURCHasING aNd saLEs REsEaRCHED aNd saFE PROduCTs There are many steps between the manufacturer and the end-user. An individual purchase can only be successful if the right product has originally been acquired for the selection and the sales assistant knows the product and can tell about it to the customer. Kesko provides regular training for its buyers who are responsible for sourcing and purchasing and for sales assistants who serve customers in stores. 30 Kesko Corporate Responsibility Report 2011 Customers must be able to rely on the fact that their responsible choices start as soon as they enter a K-store. And K-stores' function is to help customers make better choices. PRINCIPLES AND STATEMENTS SUPPORT RESPONSIBLE PURCHASING Kesko's purchasing principles guide Kesko's responsible purchasing. Above all, the principles are applied to purchases from countries where the risks of human rights and employee violations are the highest. Various policy statements have been prepared to support purchasing. The new statements drawn up in 2011 were Kesko Food's palm oil policy and Kesko's stand on the sandblasting of jeans. Palm oil is an important source of income to the national economies of those countries which produce it, but the expansion of palm oil production to new areas in the tropics is causing growing concern for the environment. Kesko Food recommends the use of Certified Sustainable Palm Oil (CSPO) for manufacturers of Pirkka and Menu products. “Currently, the palm oil used in 10 Menu products and 14 Pirkka products – Pirkka pop corn and potato crisps, for example – is CSPO. Our aim is to go on replacing the current palm oil with CSPO in the products where palm oil is used,” says Matti Kalervo, Kesko Food's Product Research Manager. Kesko Food is a member of the RSPO, the Roundtable on Sustainable Palm Oil (www.rspo.org), which promotes the sustainable production of palm oil. In the WWF Palm Oil Scorecard published in autumn 2011, the score given to Kesko for the responsibility of its sourcing chain of palm oil was 4.5 (max. 9), which exceeded the European average. The sand used in the sandblasting process for jeans contains the mineral silica, which may cause incurable silicosis in the lungs of the workers who inhale the dust. In autumn 2011, Kesko stated that it does not allow sandblasting on its private label jeans. The stand is observed in the chains that sell jeans: K-citymarket, Anttila and Intersport. The fish and shellfish statement is applied in Kesko Food's, Kespro's and K-food stores' purchasing of fish and shellfish and the products in which fish is the main ingredient.
The selections of Kesko Food, Kespro and K-food stores do not contain species given a red rating in the traffic light type format in WWF Finland's (www.wwf.fi) fish guide, such as eel, Atlantic Halibut and fresh tuna. Kesko Food, Kespro and K-food stores promote the species with a green rating, such as perch, pike, vendace, in their selections. When making decisions on selections, sustainable fish stocks and MSC certified suppliers are preferred. Kesko Food supports retailers' opportunities to sell fish caught in local waters using sustainable methods. At the end of 2011, there were six MSC certified products in the Pirkka range. GUIDANCE FOR SUSTAINABLE PURCHASING For supplier audits, Kesko uses international assessment systems – BSCI auditing and SA8000 certification. The objective is to do business in high-risk countries only with those suppliers who have passed the audit. Kesko's suppliers in high-risk countries have around 247 BSCI audited factories. Kesko has a Steering Group for Responsible Purchasing, which promotes the sharing of best practices within the Group. The steering group, which meets approximately four times a year, consists of the purchasing representatives of various divisions. In China, Kesko supports its suppliers of home and speciality goods by monitoring activities. The local monitor guides, trains and oversees the terms of employment and working conditions of Kesko's Chinese suppliers, and the observance of environmental and chemical regulations. A total of 64 factory visits were conducted in China in 2011. Rautakesko monitors and improves the working conditions of its suppliers in the Far East through Eurogroup cooperation. BSCI audits cover the evaluation of occupational health and safety practices, compliance with legislation concerning working time and compensation as well as management practice in the factories of Rautakesko's suppliers. Kesko's buyers are provided regular training in responsible purchasing practices. Kesko Food's buyers of processed foods received more information on BSCI and responsible purchasing in December 2011. “The event was useful for the whole product line. There was a wide-ranging discussion on how we could better promote and monitor BSCI audits of suppliers in high-risk countries. Responsible operating practices have a comprehensive impact on the whole purchasing process. At the very beginning, when searching for new possible suppliers, we observe the candidates and take up possible drawbacks. The aim is to find suppliers who share the same responsible principles as Kesko Food,” says Product Group Manager Tuuli Luoma. Tuuli Luoma became a member of the BSCI's Food Working Group at the beginning of 2012. “From the group meetings, I'm expecting plenty of open dialogue with participants from different countries and a joint view on how to improve the processes. I believe that group work will increase the knowledge of the various sectors of responsible purchasing across the entire product line,” says Tuuli Luoma. TOP PRIORITy TO DOMESTIC PRODUCTS When products are selected to the Pirkka range, top priority is always given to the domestic alternative, provided that it meets the quality and price criteria. The domestic content of Pirkka products in fresh foods, such as meat and processed meat, liquid dairy products, such as milks and creams, is very high, even 100%. A significant part of products purchased from abroad are those which are not available in Finland, like fruits and canned foods. The domestic content also depends on the seasons of the year: domestic products are not always sufficiently available around the year. LABELLING PROvIDES SUPPORT FOR CUSTOMERS In the package labelling of its own brands and imports, Kesko complies with Finnish law and with EU legislation. Package labelling of Kesko's own food brands always comprises – package size and space permitting – nutritional values, even if not required by law. some 680 K-environmental stores In the food trade, the building and home improvement trade and the agricultural trade, environmental management is based on the K-environmental store model. A K-environmental store works for the good of the environment, helping its customers to make sustainable choices. When a store becomes a K-environmental store, all its employees receive training in environmental issues. REspONsIblE PURCHasING aNd saLEs All Finnish Pirkka products have had the name and location of the manufacturer indicated on packaging for over 25 years. Foreign Pirkka products bear the name of the manufacturing country. Finnish Pirkka products always carry the Swan label to indicate domestic origin if the criteria set for this are fulfilled. The current number of Pirkka products with the Swan label is nearly 270. Since summer 2011, the country of origin of meat has been indicated on the list of ingredients in those Pirkka products which have meat as one of the main ingredients. Legislation requires that the area where fish has been caught must be indicated, but Kesko has expanded such information to concern also fish products in the Pirkka range, such as fish fingers and canned tuna. There are now around 260 products for which the origin of the main ingredient is indicated. The objective is to have the information on origin added to most meat and fish products by the end of 2012. The country of origin is indicated on most private label products of K-citymarket and Anttila. This information will be added to the remaining products during 2012. THE PRODUCT RESEARCH LABORATORy HAS ISO 17025 ACCREDITATION Kesko Food has a Product Research Laboratory of its own, which monitors the quality of groceries and home and speciality goods sold by K-food stores, K-citymarkets and Anttila and Kodin Ykkönen department stores. It is the only research laboratory for trading sector private labels in Finland to have ISO 17025 accreditation, which is international certification. Based on the Food Act, this accreditation also enables acting as a self-control laboratory approved by the Finnish Food Safety Authority Evira. Obtaining and maintaining ISO 17025 accreditation necessitates a high level and continuous development from the laboratory. The accreditation requires that a quality system in compliance with the standard has been prepared for the laboratory and the measuring instruments used are traceably calibrated and analysis methods validated, Kesko Corporate Responsibility Report 2011 31
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