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SUSTAINABILITY REPORT 2014

Together for Change!

Each week, Tchibo surprises its customers with a new and diverse assortment of high-quality goods, at fair prices. We work towards compliance with social and environ­mental standards in production processes and are committed to ensuring continuous improvement. As a value oriented family business, we take our respon­si­bility seriously and believe that business success must not come at the expense of people and the environment.

Our assortment of goods is diverse: in 2014 it comprised approx­i­mately 3,000 products. With our new line, "Tchibo Lieblingsstücke" (Tchibo Favourites), we offer our customers a permanent collection of the 300 most popular products on our online shop. These goods are manufac­tured globally, especially in Asia and Europe.

In a Global Economy: Creating Oppor­tu­nities for Partic­i­pation and Preser­vation of the Environment

In the wake of global­i­sation, labour-intensive indus­tries have shifted to emerging and devel­oping countries. Germany no longer produces large quantities of consumer goods; instead, these now come from China and other Asian countries. The low production costs there far outweigh the higher cost of transport to Europe. Factories have also developed the expertise needed to meet our stringent quality require­ments, including product safety and durability. Especially the younger gener­a­tions in emerging and devel­oping markets work in factories, opening up new profes­sional and personal perspec­tives. However, indus­tri­al­i­sation also brings with it social, environ­mental and political challenges; for example, factory workers are often vulnerable to the risk of accidents, their wages are often insuf­fi­cient to meet their own and their families' basic needs, and the production processes pollute the environment. A lack of trans­parency and the limited ability to polit­i­cally enforce higher social and environ­mental standards complicate the situation. We are convinced that the inter­na­tional division of labour can open up oppor­tu­nities for all, as long as they do not come at the expense of people and the environment. As a respon­sible buyer, we are committed to the sustainable management of our supply chain.

Integrated Supplier Management: The Basis for Trans­parency and Partic­i­pation

As one of the largest inter­na­tional retail companies in Germany, Tchibo takes respon­si­bility for its entire supply chain. Since 2006, sustain­ability has been an integral part of our business strategy. On the way towards becoming a sustainable business, we are reworking products and processes, such as purchasing and sourcing, to make them environ­men­tally and socially friendly.

Setting Prior­ities on the Way to Sustainable Business

In the process of trans­forming our business opera­tions in the supply chain, we focus on the areas where we can have the most impact on people and the environment, and where we can exercise the most influence for change. These priority areas include:

  • Implement respon­sible business practices together with stake­holders,
  • Gradually source resources and materials from respon­sible sources,
  • Improve working and environ­mental condi­tions at factories
  • Tackle struc­tural challenges through cross-industry coali­tions.

At the same time, we are pushing for more trans­parency and account­ability in the question of where and under what condi­tions our goods are manufac­tured.

Principles of our respon­sible actions

The UN Guiding Principles on Business and Human Rights (also known as the Ruggie Principles, for the former UN Special Repre­sen­tative, Professor John Ruggie) and the conven­tions of the Inter­na­tional Labour Organi­zation (ILO) provide a framework for our respon­sible business practices. Close cooper­ation with local stake­holders to further the interests of factory workers and the protection of the environment is another tenet of our work. Based on inter­na­tional standards, and taking stake­holder expec­ta­tions into account, we have formu­lated the following clear and binding principles for our work:

  • Dialogue and partic­i­pation: When working with our suppliers, we involve both the management (top-down) as well as the workers (bottom-up). Only by involving all interest groups, can joint solutions that are acceptable for all parties be found.
  • Setting Targets: We set ambitious but realistic goals, check the impact of our efforts and contin­ually seek to make improve­ments.
  • Respon­si­bility in our daily business: We encourage and empower our opera­tional depart­ments, such as purchasing, quality management or marketing, to proac­tively and indepen­dently implement improvement measures.
  • Openness and willingness to learn: We do not want to instruct. Rather, we listen and are open to the views of local stake­holders, openly discuss challenges, are self-critical and learn from our mistakes.

With this approach, we improve working and production condi­tions, ensure long-term sourcing capacity, and produce goods that make it easier for our customers to make sustainable purchasing decisions. In sum, our sustain­ability strategy contributes to our long-term business success.

Imple­menting Respon­sible Business Practices Together with Stake­holders

Since 2006, sustain­ability is firmly anchored in the Tchibo business strategy, in the Tchibo DNA and in the Code of Conduct for our employees; it is a core component of all business processes. Our sustain­ability goals also shape our relations with suppliers and business partners, through the Tchibo Social and Environ­mental Code of Conduct (SCoC), which was also created in 2006. It is the basis for all buying contracts, and obligates our suppliers to comply with social and environ­mental standards. It includes require­ments, such as fair wages, safe working condi­tions and the existence of environ­mental management systems in our production facil­ities. Moreover, it is important to us that factory workers can help shape their working condi­tions. With the WE (Worldwide Enhancement of Social Quality) Programme, we offer managers and workers the oppor­tunity to engage in a struc­tured dialogue process, with support from experi­enced trainers, to develop improve­ments in the workplace and implement these together. Finally, we are involved in efforts to enforce the Rights to Freedom of Associ­ation and Collective Bargaining.

Our efforts and programmes can only achieve limited progress in countries like China or Bangladesh. The 2013 collapse of the Rana Plaza factory in Bangladesh, with more than 1,100 dead, exemplified the extent of the problem. Improve­ments can only be made and disasters of this kind avoided if all relevant actors in the value chain work together. Coali­tions like the "Accord on Fire and Building Safety in Bangladesh" are an ideal platform for doing so. In this coalition, we are working with other companies and stake­holders on struc­tural solutions to improve the condi­tions of the entire textile industry in Bangladesh (Respon­sible business practices).

Gradual Transition to Respon­sibly-Sourced Resources and Materials

The products that we offer have to meet many require­ments: They must be well-made, stylish, and durable. Tchibo and its customers under­stand that quality also means that the valuable resources and materials contained in our products are sourced sustainably. Tchibo therefore increas­ingly sources from socially and environ­men­tally respon­sible sources. When it comes to cotton, wood and pulp we collab­orate with inter­na­tionally recog­nised standards certi­fi­cation organi­za­tions and industry experts. For materials such as leather or animal fibres, for which no recog­nised certi­fi­ca­tions or accred­i­ta­tions exist, we pursue own approaches to improve the processes. In addition, we continue to increase the number of products made from recycled materials and improve the recycla­bility of our products.

Trendiness and a sense of respon­si­bility are closely linked: we increased the proportion of cotton textiles made from respon­sible cotton from 40% in 2012 to 85% in 2015. Nearly 6,000 tonnes of organic cotton were woven into Tchibo lingerie and home textiles in the past year. As the third largest buyer of organic cotton worldwide, we are working to increase the demand and promote organic farming. On the way to our goal to source 100% of the cotton in our products from sustainable sources, we were certified according to the Global Organic Textile Standard (GOTS) in 2014. Since 2013, 100% of wood and pulp origi­nates from respon­sible sources, of which a large proportion has been certified by the Forest Stewardship Council (FSC®) (Sustainable products and resources).

Lasting Improvement of Working and Environ­mental Condi­tions at Factories

In many of the countries from which we source, viola­tions of labour and human rights and environ­mental offenses are common. As a company which takes respon­si­bility seriously, we want to ensure that our goods are produced with respect for human rights and the environment. That is why our purchasing experts work to ensure that standards are reliably imple­mented and integrated at the factories. The WE Programme has an important role to play: on the one hand, the trainings empower workers to artic­ulate and defend their interests; on the other hand, we guide the management to construc­tively respond to these. Experi­enced local trainers facil­itate an open dialogue and ensure that trainings are designed to consider the local context in which they are held. Through hands-on trainings, trainers support managers and workers in meeting social and environ­mental standards such as occupa­tional health and safety, fair wages, non-discrim­i­nation and reasonable working hours. Since the pilot phase in 2011, we have been expanding the WE Programme to our strategic suppliers.

So far, 320 suppliers have completed or are currently enrolled in WE. For the products sold in 2015, around 75% of our buying volume for Non Food goods in high-risk markets were produced at WE factories. The capacity necessary for such close cooper­ation with our suppliers is created through the consol­i­dation our supplier network: in 2014 we further reduced the total number of producers to 780 (from 808 in 2013). In the medium-term we aim to include all strategic suppliers in risk countries in the WE Programme.

As part of our risk management strategy, potential new suppliers and suppliers in countries where we have not yet estab­lished WE are subject to an audit process. In the case of new suppliers, only those who meet the minimum require­ments of the SCoC may produce for us. Those factories already in our portfolio are audited regularly, either by us directly or a third party. Factories in the WE Programme receive compre­hensive support to apply a dialogue process towards compliance with the require­ments of the SCoC (Sustainable supply chains).

Tackling Struc­tural Challenges with Cross-Industry Partner­ships

Effective change also requires legal, political and economic param­eters to be estab­lished, adjusted and adapted. In order to support these processes, we are involved at the political level and work closely with stake­holders from other indus­tries. In countries such as Benin and Zambia, which produce cotton for our textiles and garments, we support education programmes.

Issues such as safety standards, protection of the Right to Freedom of Associ­ation and Collective Bargaining and living wages can only be addressed through a cross-sector approach. In 2012, we were the second company worldwide to join the “Accord on Fire and Building Safety in Bangladesh”. In this effort, we work with other companies, factories, trade unions and NGOs to improve fire safety and building safety standards for the garment industry in Bangladesh. In addition, we joined forces with several other proactive global brands, in partnership with the inter­na­tional trade union feder­ation Indus­triALL Global Union, to form the ACT on Living Wages Initiative. The initiative pushes for binding, industry-wide collective agree­ments towards the goal of ensuring that factory workers are paid a living wage. Since June 2015, we are a member of the German Partnership for Sustainable Textiles, which seeks to promote the imple­men­tation of environ­mental and social standards at all stages of the textile supply chain (Social aspects of production).

Through our WE Programme and the Carbon Perfor­mance Improvement Initiative (CPI₂), we offer strategic suppliers practical tools to reduce their energy consumption and CO₂ emissions. Since early 2015, modules for water and chemical management have been integrated into the CPI₂ programme. The pre-production processes of our direct suppliers are also incor­po­rated. In 2014, we signed the Detox Commitment with the aim to exclude hazardous chemicals from our textile supply chain by 2020. The initiative was launched by the environ­mental non-govern­mental organ­i­sation Green­peace to draw attention to the use of such chemicals (Environ­mental aspects of production).

Since 2008 we support the countries from where our cotton is grown through the Cotton Made in Africa (CmiA) initiative of the Aid by Trade Foundation. It focuses on the principle of "helping people help themselves" to improve the lives of cotton farmers and their families in sub-Saharan Africa. In trainings, farmers learn how they can improve the quality of their cotton, increase their yield and learn about environ­men­tally friendly culti­vation methods. In addition, we are involved with educa­tional and vocational projects for the children of cotton farmers in Benin and Zambia, and support the devel­opment of school infras­tructure (Educa­tional projects in the source countries).

Progress 2014 & Goals 2015

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