13 March 2024

Working as equal partners for climate protection: REWE Group’s supplier initiative

Reading time: 6 min.

The effects of climate change are becoming ever more apparent. We want to be a pioneer when it comes to protecting the climate, and we have defined this as a focus of our sustainability strategy. We are also expanding our commitment to specifically include our supply chain, as this is where the greatest leverage for more climate protection lies. At REWE and PENNY Germany, emissions from the upstream supply chain make up a large share of overall climate-related emissions.

For this reason, we are committed to comprehensive measures that effectively reduce our emissions and promote innovative solutions along the entire supply chain. We can only achieve this by working together with our suppliers. To this end, we launched the #TogetherforMoreClimateProtection initiative in 2021. By the end of 2024, we will have agreed on specific targets for reducing greenhouse gases in upstream supply chains with our strategic private-label suppliers, which account for 75 percent of product-related emissions. The targets will be based on the Science-Based Target initiative (SBTi), which the REWE Group has joined. With our new climate protection support programme, we have also been supporting measures to implement the targets since the beginning of this year.

What is the SBTi?

The SBTi is a collaboration between the CDP, UN Global Compact, World Resources Institute (WRI), and World Wide Fund for Nature (WWF). It works closely with scientists to develop climate change goals in accordance with the Paris Agreement. SBTi targets primarily focus on sharp reductions in company emissions. By joining the SBTi, the REWE Group has committed to science-based emissions reduction targets aligned with the 1.5-degree reduction pathway set out in the Paris Agreement. Our ambitious goal is to reach net zero emissions as a Group by 2050. With this goal, we are focussing not only on drastically reducing emissions in our own activities, but also in those of our supply chains.

We strengthened our commitment to this goal by launching our first sustainability-linked bond on the capital market in September 2023. The repayment amount of the sustainability-linked bond (SLB) at the end of the term depends on whether REWE and PENNY have achieved clearly defined and objectively verifiable sustainability goals for Scope 1, 2, and 3 emissions – which includes upstream supply chain emissions – in Germany.

We recognise that we cannot achieve our ambitious goals alone. Rather, we can only achieve them if we support our private-label suppliers on the path to setting SBTi-compliant climate  targets of their own. For this reason, we offer support materials, training, and forums for dialogue as part of the “Together for More Climate Protection” initiative.

Round tables: Collaboration, inspiration, best practices

This also includes the “climate round tables” that take place twice a year. Last May, the event focussed on climate protection in the upstream supply chain and involved 500 private-label suppliers. In December 2023, the focus was on political requirements and governance, with around 1,000 participants in attendance.

The overarching theme is the setting of climate goals by suppliers, with a focus on learning from one another. In the course of sharing best practices, several suppliers that are pioneers in their industries discussed how they successfully conduct sustainability management as well as how they set and actively implement climate goals. They serve as role models for other companies that are not yet quite that far along.

The initiative has already had some success: In 2023, additional suppliers signed a climate agreement, and they have already defined and published climate targets in accordance with SBTi.

What specific projects have we implemented in the supply chain to protect the environment?

  • Deforestation-free supply chains We have set a goal of 100% deforestation- and conversion-free supply chains for all of REWE and PENNY’s private-label product ranges across all of Germany by 2025*.

    *For our primary risk commodities, such as cocoa, coffee, palm oil, and soya as animal feed, with a cut-off date of 1 January 2020. Conversion refers to all valuable ecosystems.

  • Peat-free soil range By the end of 2025, we will be switching our entire soil range – both our own products as well as third-party products – to peat-free alternatives at REWE and PENNY in Germany and at toom Baumarkt.

  • Making packaging more environmentally friendly By the end of 2030, we want to ensure more environmentally-friendly packaging for all private-label products at REWE and PENNY in Germany, toom Baumarkt, and international sales lines (BILLA, BILLA PLUS, PENNY, and ADEG). This will be achieved, for example, by reducing the amount of plastic or using recycled materials.

New component of the supplier initiative: REWE and PENNY Germany’s climate protection support programme

Another component intended to strengthen collaboration within the value-added chain is REWE and PENNY Germany’s new climate protection support programme. We are the first German food retailer to launch a support programme that helps fund climate protection projects undertaken by our private-label suppliers in order to jointly reduce greenhouse gas emissions in our supply chains. The programme was unveiled at the Green Week in Berlin at the end of January. It was then presented in detail to REWE and PENNY Germany private-label suppliers at an online event in February. Suppliers can now submit their ideas for projects. All measures that contribute to a measurable and creditable reduction of greenhouse gas emissions in supply chains, such as crop cultivation, livestock production, processing, packaging, and transport, are eligible for support.

Submitted project ideas will be assessed in order to choose the best proposals.