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sOCIal REsPONsIBILITy Kesko is a member of CGF (The Consumer Goods Forum), a discussion and cooperation forum for the grocery trade and industry, currently working on the Global Social Compliance Programme (GSCP), aimed to enhance the comparability of social and environmental audits. In China, Kesko supports its suppliers of home and speciality goods through monitoring. A local monitoring officer guides, trains and oversees Kesko’s Chinese suppliers in issues related to the terms of employment and working conditions and compliance with environmental and chemical regulations. Kesko's own monitoring principles support the BSCI audit requirements. The ultimate aim is to get the factory to apply for a third-party BSCI audit or SA8000 certification. In 2011, a total of 64 (86) factory visits were made. Rautakesko and Kesko Food monitor and develop the responsibility of the purchasing chain as part of the sourcing cooperation with other European retail chains (in Eurogroup, ICASS and AMS). Kesko has a SUMO (supplier monitoring) database, in which all the information on supplier audits, certifications and monitoring visits to suppliers in high-risk countries is saved alongside their respective risk ratings. The information on BSCI audits is also saved in the database maintained by the BSCI and available for all members. Main elements of SA8000 and BSCI audits Auditing areas Relevant ILO convention Compliance with laws and agreements Freedom of association and collective 110 (agriculture) bargaining 11, 87, 98, 135 and 154 Discrimination 100, 111, 143, 158, 159, 169 and 183 Compensation 12, 26, 101, 102 and 131 Working hours 1, 14 and recommendation 116 155, 184 and recommendations 164 Health and safety at work and 190 10, 79, 138, 142, 182 and Child labour recommendation 146 Forced labour 29 and 105 Basic environmental protection - SUPPLIERS' AND CONTRACTORS' SCREENING ON HUMAN RIGHTS, HR2, AND OPERATIONS WITH A RISK FOR INCIDENTS OF CHILD LABOUR, OR FOR INCIDENTS OF FORCED OR COMPULSORy LABOUR, H6 AND HR7 No significant risks related to child, forced or compulsory labour have been detected in Keskos' own operations. Kesko's reporting concentrates on supplier assessments. sA8000 CeRtiFiCAtions At the beginning of 2011, Kesko had 10 suppliers with SA8000 certification. In addition, all plantations that supply Pirkka bananas have SA8000 and Rainforest Alliance certification. bsCi AUdits Kesko’s objective for 2011 was to have 90 initial audits and 55 reaudits at the factory premises of the suppliers of home and speciality goods and foodstuffs, and five initial audits at the farms of the producers of agricultural products. The total number of initial audits carried out at suppliers' factory premises or farms during the year was 73, while the number of re-audits was 61. At the beginning of 2012, a total of 247 factories or farms of Kesko's suppliers in high-risk countries were in the BSCI auditing process, an increase of 59 factories from the previous year. In addition, some of Kesko's suppliers are themselves members of BSCI and promote audits in their own supply chains. The results of the BSCI audits of Kesko's suppliers' factories for 2011 are presented in the figures on this page. Most deficiencies occur in documentation, observance of working time regulations, compensation, and occupational health and safety. Experiences gained from monitoring work in China are similar, and it has been found that Chinese suppliers need time and professional support in order to manage the corrective actions required by BSCI. Reaudits prove, however, that improvements in working conditions are possible. Kesko' target for 2012 is 45 initial BSCI audits and 40 re-audits. BSCI members also strive to improve the qualitative level of suppliers, and accordingly quantitative audit targets alone are informed to BSCI; instead, the targeted audit results must be at the ’good’ or ’improvements needed’ level. KEsKO's bsCI REsUlTs IN 2011, INITIal aUDITs KEsKO's bsCI REsUlTs IN 2011, RE-aUDITs 86 Kesko Corporate Responsibility Report 2011 Good 33% Improvements needed 37% Non-compliant 30% Good 41% Improvements needed 30% Non-compliant 30%
Certification and audit systems related to production in high-risk countries used by Kesko Certification/audit system Product group Coverage of criteria Product label BSCI (Business Social Compliance Initiative) All product groups Social, limited environmental part No SA8000 All product groups Social No Fairtrade Agricultural products, incl. cotton Social, environmental Yes Rainforest Alliance Agricultural products Social, environmental Yes UTZ Certified Coffee, cocoa, tea Social, environmental Yes FSC (Forest Stewardship Council) Wood products and timber Social, environmental Yes MSC (Marine Stewardship Council) Caught fish and shellfish Environmental (sustainable fishing) Yes REsUlTs OF KEsKO's bsCI aUDITs IN DIFFERENT aREas IN 2011, % OF aUDITED FaCTORIEs Management Practice Documentation Working Time Compensation Child Labour/Young Employees Forced Labour/Disciplinary Measures Freedom of Association/Collective Bargaining Discrimination Working Conditions Health and Social Facilities Occupational Health and Safety Dormitories Environment FAiRtRAde pRodUCts Kesko Food has a comprehensive cooperation agreement with Fairtrade Finland and a licence for Fairtrade products in the Pirkka range. The selection and marketing policies of Fairtrade products are included in K-food stores' chain concepts. In 2011, Kesko Food had 222 Fairtrade products (213 in 2010) in its selection, of which 38 (37) were Pirkka products. According to the statistics of Fairtrade Finland, Kesko Food had 158 Fairtrade suppliers in 35 countries, and the products sold by Kesko Food generated over €280,000 in Fairtrade premium for social development projects. In 2011, Kesko's home and speciality goods companies had a total of some 70 (50) Fairtrade products made of Fairtrade cotton in their selections. Part B, initial audits (73) Part B, re-audits (61) sOCIal REsPONsIBILITy Good Improvements needed Non-compliant Not applicable Kesko Corporate Responsibility Report 2011 87
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CORPORATE 2011 RESPONSIBILITY REPOR
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