SUSTAINABILITY REPORT
2016

Improving condi­tions together – ensuring economic success

In weekly-changing theme worlds, we offer our customers consumer goods that are distin­guished by their quality and variety. We take care to ensure that social and environ­mental standards are complied with in the sourcing of raw materials and in production, and include sustain­ability aspects in our product design. We are working to further increase trans­parency in our value chains so as to bring about improve­ments at upstream supply chain levels as well. Global challenges in the supply chain that we cannot solve on our own are tackled through cooper­ation projects, ideally in industry-wide initia­tives.

Since 2006, sustain­ability has been an integral part of Tchibo's corporate strategy. On our way to becoming a 100 % sustainable business, we contin­ually expand our assortment of sustainable consumer goods, implement social and environ­mental standards in the supply chain, and work with other stake­holders to find answers to questions arising from the challenges of global­i­sation. We take our respon­si­bility as a value-oriented family-owned business seriously, and are convinced that business success must not be at the expense of people and the environment.

The oppor­tu­nities and challenges of global supply chains

The liber­al­i­sation of the flow of goods and finances has resulted in a global division of labour in which countries focus on their specific compet­itive advan­tages. Tchibo sources a large proportion of its textiles and other consumer goods from Asia and Eastern Europe, where they can be produced at cheaper prices than in Western and Southern Europe. At the same time, Tchibo – like other companies – is confronted with risk factors. These include disregard for labour and social rights and environ­mental standards. We are convinced that the inter­na­tional division of labour can open up oppor­tu­nities for everyone if it is not at the expense of people and the environment. That is why we work for a sustainable design of our consumer goods value chains.

The culti­vation and processing of raw materials such as cotton and wood have reper­cus­sions for people and the environment. For example, cotton farming requires large amounts of water. In conven­tional farming, chemical pesti­cides and fertilisers are used in the fields. Worldwide, wood is not always harvested in compliance with environ­mental and nature conser­vation standards. The further processing of these raw materials often takes place without suffi­cient attention to environ­mental and social standards. Tchibo is aware of this problem. As a respon­sible company that integrated sustain­ability into our company strategy more than ten years ago, we are contin­u­ously reducing the negative impact of our business activ­ities on people, the environment and society. On the one hand, by imple­menting social and environ­mental standards in the supply chain. These include occupa­tional health and safety measures as well as resource conser­vation and chemicals management. On the other, by expanding our sustainable product ranges and promoting sustainable consumption. For example, by building demand for sustainably grown cotton, we are also promoting sustainable agriculture. By making sustainable consumption possible for our customers, we are also making a contri­bution to increasing sustainable growth. This requires creating trans­parency in the global supply chains, and a network of partners whom we can work with to find solutions to challenges in the supply chain. We are convinced that this is part of the remit of a company that acts respon­sibly. Economic devel­opment is only sustainable if the natural basis of existence is protected, and if all the people involved also benefit from it.

Focuses of our measures on our way to a 100 % sustainable business

We contin­ually develop the focuses of our sustain­ability management work. As long ago as 2012, we evaluated and mapped consumer goods for our value chain as part of a materi­ality survey conducted with our stake­holders. We defined ‘environ­mental and social standards in the supply chain’, ‘resource-saving product design’ and ‘supplier quali­fi­cation’ as our focus topics.

These prior­ities guide us in devel­oping concrete goals and actions on the way towards becoming a 100% sustainable business. In 2016, too, we conducted extensive and targeted stake­holder dialogues and stake­holder surveys that feed into the devel­opment of our focus topics. In the field of social standards, for instance, we are redou­bling our focus on trans­parency in the supply chains and on human rights, especially in light of the United Nations Guiding Principles on Business and Human Rights (UNGs) and their Sustainable Devel­opment Goals (SDGs), which we also regard as global frame­works for our own sustain­ability agenda.

As one of Germany's largest inter­na­tional consumer goods and retail companies, Tchibo takes respon­si­bility for its value chains. On the way towards becoming a sustainable business, we work step by step to design all products and processes in an environ­men­tally and socially acceptable way. We concen­trate our actions on those areas where we have the greatest impact on people and the environment, and where we can have the most influence:

  • Put respon­sible business practices into effect with stake­holders

  • Obtain raw materials and ingre­dients exclu­sively from sustainable sources, step by step

  • Perma­nently improve working and environ­mental condi­tions at the production sites

  • Tackle struc­tural challenges through cross-industry coali­tions and alliances

Guide­lines and Principles for our Respon­sible Business Practices

In striving to contin­ually improve our sustain­ability management, we are guided by inter­na­tional guide­lines, in particular the Sustainable Devel­opment Goals (SDGs) as a global political framework, the United Nations Guiding Principles on Business and Human Rights for socially respon­sible conduct in the supply chains, the conven­tions of the Inter­na­tional Labour Organ­i­sation (ILO), and the principles of sustainable devel­opment based on the Rio Decla­ration of 1992. EU regula­tions (e.g. the REACH regula­tions for chemical management) as well as German legis­lation (for example, the Waste and Packaging Act and Food and Consumer Goods Act) provide the legal framework for the sustainable design of our products and processes.

Based on this, we have formu­lated the following clear and binding principles that guide us in designing sustainable value chains for consumer goods:

  • Dialogue and partic­i­pation: When working with our suppliers, we involve both the management (top-down) as well as their employees (bottom-up). This turns everyone involved into “owners” of the processes and improves the prospects of finding solutions that are acceptable for all parties.
  • Setting targets: We set ambitious but realistic goals, regularly monitor results, and work on continual improve­ments.

  • Social an environ­mental standards as minimum requirement: We encourage and empower our opera­tional depart­ments, such as purchasing, quality management and marketing, to take respon­si­bility for changes and put measures into practice.

  • Openness and willingness to learn: We don’t seek to instruct, but listen to stake­holders, openly address problems, are self-critical, and learn from our mistakes.

Social and environ­mental standards as minimum requirement

Since 2006, sustain­ability has been integrated in our company’s strategy and is a core component of all business processes. The Tchibo Social and Environ­mental Code of Conduct (SCoC), which we developed in cooper­ation with our stake­holders, is the foundation for this. It defines minimum require­ments for working condi­tions and environ­mental standards in the production of our consumer goods, and is the basis of all purchasing contracts. Developed in 2006 as the Tchibo Social Code of Conduct, in 2011 we expanded the Code to include environ­mental require­ments. By signing the SCoC, our producers commit to social and environ­mental standards at their production sites. This includes occupa­tional safety, the prohi­bition of child labour and discrim­i­nation, the recog­nition of trade union rights, and measures to avoid negative environ­mental impacts.

In 2017, we revised the SCoC again. It now includes further environ­mental require­ments as well as additions that became necessary due to our commit­ments under the Global Framework Agreement with the Indus­triALL Global Union, the Alliance for Sustainable Textiles, and the SDGs.

Platform for joint solutions: Vendor Days and Change Labs

In 2012, we intro­duced Vendor Days as a platform for knowledge sharing with our suppliers. In 2015, we further developed it into Change Labs. This format is aimed mainly at jointly addressing current industry topics. For instance, in 2016 Tchibo employees got together with core suppliers to discuss process efficiency, product creativity, the require­ments of the Detox Commit­ments, as well as supply chain trans­parency and living wages. This discourse provides input and innovative approaches for jointly achieving improve­ments in the supply chains.




Engagement in industry-wide initia­tives

We can only tackle struc­tural challenges in the value chains in collab­o­ration with the relevant stake­holders. That is why we work closely with other retailers, producers, govern­ments, trade unions and non-govern­mental organ­i­sa­tions, science and trade unions, and are involved in cross-industry alliances, to implement global solutions step by step.

In September 2016, Tchibo became the first German trading company to sign a framework agreement with the Indus­triALL Global Union. The idea is to make it possible for employees and trade unions at the production sites to negotiate – wages and social benefits in particular – with factory owners and management. As a member of the ACT (Action, Collab­o­ration, Trans­for­mation) initiative we also work in partnership with Indus­triALL and other inter­na­tional trading companies on living wages and industry-wide wage bargaining between social partners on an equal footing in the clothing industry.

As long ago as 2012, Tchibo became the second company in the world to sign the 'Accord on Fire and Building Safety in Bangladesh' and contributed to its entry into force, improvement and continuous imple­men­tation. In 2017, we signed a follow-up accord for another three years. It  will continue the accord until such time as the public author­ities in Bangladesh can take over its work.

In 2015, we joined the Partnership for Sustainable Textiles, initiated by Germany’s Federal Ministry for Economic Cooper­ation and Devel­opment (BMZ). The focus of the alliance of politics, business, standards organ­i­sa­tions, NGOs, trade unions, science and academe and other stake­holders is committed to imple­menting environ­mental and social standards at all stages of the global textile supply chain. As part of our membership, we are on the one hand imple­menting our own published ‘roadmap’, and on the other hand have provided support in two ways since 2016: an alliance initiative to system­i­cally improve the working condi­tions of girls and young women in spinning and textile mills in the southern Indian state of Tamil Nadu, and a cooper­ation to develop chemical and environ­mental management that builds on our strategic alliance with the German Society for Inter­na­tional Cooper­ation (GIZ) and the Rewe Group.

In Myanmar, we also work together with the GIZ on the ‘Working and Social Standards in the Textile and Clothing Sector in Asia’ project, to ensure compliance with human rights and labour standards by our core suppliers there.

In 2016, we became a member of the multi-stake­holder initiative 'Organic Cotton Accel­erator', which was launched in 2014. In it, we work with protag­o­nists from the inter­na­tional cotton industry to strengthen the production of organic cotton and estab­lishing a sustainable organic cotton market.