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REsponsibility monitoring and steering

Responsible operator 

Management approach We are committed to responsible working principles and we together generate economic value added
Material aspects
  • Economic performance
  • Indirect economic impacts
  • Anti-corruption
  • Public policy
  • Anti-competitive behaviour
  • Compliance
  • Grievance mechanisms for impacts on society
  • Customer privacy
We generate economic value added At Kesko, economic responsibility refers to the good management of finances, the efficient use of resources, as well as generating stable, long-term economic benefits to the various stakeholders. Kesko's operations generate economic benefits for shareholders, personnel, retailers, suppliers of goods and services and their employees, customers, as well as municipalities and states.
Responsible working principles (Code of Conduct) and reputation management Different aspects of responsibility, such as ethicality of production and sourcing, fair and equal treatment of employees and environmental protection are increasingly important for customers. Kesko's attitude to bribery and other malpractice is absolutely uncompromising. Responsible working principles are essential for building trust between Kesko, K-stores, our customers and our partners.
Public policy Kesko plays an active role in trade and industry organisations in Finland and in the European Union, contributing its expertise to social development and legislative work. Kesko does not donate funds to political parties.
Customer privacy Customers' personal data are, for instance, processed in various personal data registers and online stores' customer registers that are collected for the implementation of marketing activities. K-Plus Oy, a Kesko subsidiary, manages and maintains the K-Plussa customer loyalty system, operated by K-chains and K-Plussa partners. Using the information received from the K-Plussa customer loyalty system we can develop and tailor our operations to better suit our customers' needs. Taking care of our customers' privacy is of utmost importance to us.
Objectives The objectives have been recorded in the responsibility programme.
Policies, working principles and commitments 
Accounting policies Kesko Group complies with International Financial Reporting Standards (IFRS) approved for adoption by the European Union.
Corporate Governance principles
Kesko's decision-making and corporate governance are guided by Kesko's values and responsible working principles. Decision-making and corporate governance comply with the Finnish Limited Liability Companies Act, regulations concerning publicly quoted companies, Kesko's Articles of Association, the charters of Kesko's Board and its Committees and the rules and guidelines of NASDAQ OMX Helsinki Ltd. The company complies with the Finnish Corporate Governance Code for Listed Companies that entered into force on 1 October 2010.
Risk management principles The risk management policy confirmed by the Board of Directors guides risk management in Kesko.
Good trading practices Kesko's grocery trade and Kespro are committed to good trading practices.
Our responsible working principles The 'Our responsible working principles' guidelines (Code of Conduct) bind all Kesko employees in all operating countries to act in accordance with shared values and responsible working principles.
Data protection policy The data protection policy defines how Kesko Group strives for compliance with the law in the processing of personal data and a high level of data protection in all of its operations and operating countries.
Monitoring and control systems; programmes, projects and initiatives 
Financial reporting and planning Kesko's financial reporting and planning are based on Kesko Group's management system. The Group's financial development and achievement of financial objectives are monitored by financial reporting covering the entire Group.
Compliance Kesko runs compliance programmes to ensure that Kesko employees are familiar with the key laws relating to operations and act in compliance with them. For Kesko, knowledge of and compliance with competition laws is of primary importance. Kesko has a competition law compliance programme, composed of training sessions and an e-learning component available to all Kesko employees. Those whose work is largely related to competition laws are separately obligated to complete the training. The Group Legal Affairs Unit supervises the completion of the training.
Prevention of malpractice

Kesko's Internal Audit pays special attention to the efficiency of controls that prevent malpractice and financial losses. Measures preventing malpractice have included more effective communications, training and guidelines as well as tightened controls. Kesko's Risk Management, Legal Affairs and Internal Audit have organised value discussions in Kesko subsidiaries with the focus anti-bribery work.

Through Kesko's intranet, employees in all operating countries, except for Belarus, can give feedback and ask questions concerning operations not only in their own units but also directly to top management. Feedback can be given openly or anonymously. Through the intranet or by e-mail at IA@kesko.fi, employees can also contact Kesko's Internal Audit in confidence.

A new channel for reporting suspected malpractice was taken in use in Kesko's Russian subsidiaries. The channel for suspected malpractice is a Russian-language channel through which the partners and employees of Kesko's Russian subsidiaries can report in confidence any suspicions of malpractice in Kesko's Russian subsidiaries.

Risk management Kesko has a uniform risk assessment and reporting system. Risk identification is based on business objectives and opportunities and the defined risk appetite.

Risks are prioritised on the basis of their significance by assessing the impacts and probability of their materialisation and the level of risk management, taking into account that not all risks can be managed or are worth managing. When assessing the impact of materialisation, the impacts on reputation, people's wellbeing and the environment, among other things, are considered in addition to impact in terms of euro. Risk management measures are assigned persons in charge who are responsible for planning, implementing and monitoring the measures. The measures defined are added in action plans and monitoring systems. Kesko's Internal Audit annually assesses the functioning and efficiency of Kesko's risk management system. At the beginning of 2015, Kesko's risk management function took part in an international peer assessment concerning the level of risk management. The results are used to further develop Kesko's risk management.
Privacy protection

Personal data collected for various purposes on the grounds defined in the Finnish Personal Data Act form separate person registers. For example, the customer information of K-Plussa cardholders forms a customer database that is used, with the customer's permission, for managing customer relationships, for customer contacts and marketing purposes of the companies that have joined the K-Plussa system. K-Plussa customers can prohibit the connection of product or product group level information to their identified customer relationship. In compliance with the Personal Data Act, K-Plus Oy's file description is available in Finnish at www.plussa.com.

Data controllers ensure that customer information is only used for the purposes specified in the file description. Information on individual customers is secured by issuing instructions to personnel and by using technical systems. Customer data is only disclosed to third parties if required by law.

In 2014, Kesko started a data protection programme which consists of training events and an e-learning session. The implementation of the programme is overseen by the Privacy Officer who works under the supervision of the Legal Affairs Unit.

Responsibilities and resources
  • Keskos Corporate Governance structure is presented at Kesko's Corporate Governance
  • Group Legal Affairs Unit
  • Internal Audit Unit and Risk Management and Strategy Process Unit
  • K-Plus Oy
Management approach assessment

The management approach is assessed continuously as part of operations. Changes in the operating environment and in Kesko are taken into account by adjusting objectives, operating principles, monitoring systems and resources.

Kesko Group's Internal Audit monitors and secures the functioning and efficiency of management, supervision, risk management and corporate governance in Kesko Group.

 

For the benefit of the community

Management approach We build a better society together
Material aspects
  • Purchase practices
A local approach has an effect on the entire society Retail trade plays an important role in a local community. It serves and employs local people. In addition to its direct employment impact, the retail trade is also a significant indirect employer through its suppliers and business partners.

Retailers, supported by Kesko's district organisations, represent local activities. The K-retailer entrepreneur is responsible for his or her store's staff and customer satisfaction. Listening to the wishes of local customers and making use of customer data, K-retailers build a selection of products and services that meet customer needs. We develop our business in interaction with our customers.

Kesko purchases the majority of the products it sells from Finland and encourages K-retailers to include locally produced products in their selections. The impact of Finnish products on employment is significant. For example, Pirkka products are produced in nearly 170 companies all over Finland.
Objectives The objectives have been recorded in the responsibility programme.
Policies, operating principles and commitments 
Good trading practices Kesko's grocery trade and Kespro are committed to good trading practices of the food chain.
Our responsible working principles Kesko requires that its suppliers and other partners act in compliance with Kesko's values and responsible operating principles. A responsibility clause has been incorporated in all significant new agreements since the beginning of 2013.
Chain business model The principal business model in the Finnish market is the chain business model, in which independent K-retailers run retail stores in Kesko's retail chains. In Finland, all food stores, building and home improvement stores and agricultural stores in the K-Group are run by K-retailer entrepreneurs.

In the retailer model, through its chain operations Kesko provides a first-class setting for its retailer entrepreneurs to provide the best possible service to their customers. The K-retailer entrepreneur implements the chain concept and is responsible for store management, customer satisfaction, personnel and business profitability.
Stakeholder interaction In Kesko's operations, social impact on local communities is estimated as part of the development of the store network. The establishment of a new store or the expansion or change of an existing store involves various statutory reports – both at the planning and building permit stages – and hearings of local inhabitants and operators, depending on the extent of the project. Reports take a stand on the impact of the project on the community structure, traffic and employment, among other things.
Monitoring and control systems; programmes, projects and initiatives 
The Blue and White Footprint campaign K-food stores, K-citymarket Oy (home and speciality goods), K-rauta stores and Rautia stores participated in the Blue and White Footprint campaign of the Association for Finnish Work in 2015. The campaign aimed to increase the sales of Finnish products and consciousness of the positive impacts of buying Finnish work.
Responsibilities and resources
  • K-retailers and K-Retailers' Association 
  • Kesko's district organisation
  • Steering group for responsible purchasing and Kesko's buyers
  • Division Management Boards
Management approach assessment The management approach is assessed continuously as part of operations. Changes in the operating environment and in Kesko are taken into account by adjusting objectives, operating principles, monitoring systems and resources.

 

Working community

Management approach We perform and offer high-quality work
Material aspects
  • Employment
  • Labour/management relations
  • Occupational health and safety
  • Training
  • Diversity and equal opportunity
  • Equal remuneration
  • Labour practices grievance mechanisms
Employment and labour/management relations We want to be the most attractive workplace in the trading sector, with satisfied employees and competent supervisors. The K-Group offers varied career and personal development opportunities in varied jobs of the trading sector.

In restructuring situations, Kesko complies with the local legislation in all of its operating countries. Read more about minimum notification periods in restructuring situations in the GRI report.
Health and safety at work Kesko and K-stores are responsible for providing employees a safe working environment and appropriate training and guiding for their work.
Development of personnel

Systematic, business-driven development of personnel and management is critical for future success. The major change in the trading sector and the growth of electronic transactions have created the need for new competencies.

Other core areas of competence development have included:

  • sales and service competence
  • product line specific competitive advantage projects
  • safety and responsibility
  • leadership and management.
Diversity and equal opportunity A pluralist organisation that promotes diversity guarantees equal opportunities, rights and treatment to all. Equality, justice and non-discrimination are important principles which are observed at Kesko throughout the employment relationship. The most suitable person with the most development potential is selected for the job, and applicants are judged according to their competence, skills and accomplishments.
Remuneration The objective of remuneration in Kesko is to encourage employees to exceed the objectives given and to motivate them to do long-term work in order to meet the goals of Kesko Group and its subsidiaries. Remuneration is fair and is based on principles that are commonly known.
Labour practices grievance mechanisms Employees can ask questions and give feedback or development proposals on issues related to the operations of Kesko or its subsidiaries anonymously via the Direct Line available on the Keskonet intranet. Answers are published for all to see on Keskonet.
Objectives The objectives have been recorded in the responsibility programme.
Policies, working principles and commitments
HR policy Kesko's HR management is based on Kesko's values and responsible operating practices, which are described in the guide 'Our Responsible Working Principles'. Kesko's HR policy defines key operating principles in the various areas of HR management. The HR strategy defines HR management objectives, critical success factors and key development initiatives.
Diversity commitment Kesko is a member of Diversity Charter Finland. The operations of Diversity Charter Finland are based on a charter that is signed by all members.
Monitoring and control systems; programmes, projects and initiatives
Wellbeing at work programme

In the development of wellbeing at work, the objective is to increase job satisfaction and motivation, reduce sickness absence, increase the retirement age and decrease premature pensions, and enhance the employer image. In 2015–2018, the wellbeing at work programme focuses on:

  • Supporting employees' health and reducing sickness absence
  • Developing safety at work and strengthening the role of labour protection
  • Promoting employee engagement, implementing the people principles
Labour protection programme The personnel's ability to work is protected by creating a safe and supportive working environment. The goal of labour protection is to secure and maintain employees' ability to work and to prevent and avoid occupational injuries, occupational diseases and other physical and mental health hazards arising from work or the working environment. 
Employment of disabled people and people with partial work capacity

In 2012, the K-Retailers' Association launched a project called 'Many kinds of performers' in cooperation with the Finnish Association on Intellectual and Developmental Disabilities (FAIDD). A permanent model was created to provide work for those with intellectual disabilities. Most of the intellectually disabled who were employed during the project still work at the K-Group.

In the Greater Helsinki area, Kesko's Occupational Health Service directs employees to AMI rehabilitation, which promotes mental health. The partial daily allowance can help employees return to work after a sick leave. The support provided by pension insurance companies for occupational rehabilitation has been used to promote return to work.

Youth Guarantee in the K-Group programme

In 2013, Kesko and the K-Retailers' Association launched the Youth Guarantee in the K-Group programme, the aim of which was to offer a job, a work trial or an apprenticeship in the K-Group to 1,000 young people aged under 30 and at risk of social exclusion by the end of 2014. The target group also included young immigrants and young people with disabilities. By the end of 2015, more than 2,500 young people had found employment in the form of a work trial, through wage support and apprenticeship training.

Employment of young people and special groups continues as a permanent model. The K-Retailers' Association has a Youth Guarantee coordinator who gives advice to K-retailers and Kesko's supervisors on issues related to the employment and training of young people and special groups, while also acting as a contact person to the authorities and organisations.   

Responsibilities and resources
  • HR Management Board
  • Kesko HR
  • HR Service Centres
  • Each supervisor is responsible for labour protection in his/her area as it is part of the line organisation's normal management and supervisory work.
Management approach assessment The management approach is assessed continuously as part of operations. Changes in the operating environment and in Kesko are taken into account by adjusting goals, operating principles, monitoring systems and resources.

The personnel survey is implemented at 18-month intervals to measure the quality of management. The results of the survey are used when agreeing on development measures that are integrated as part of the yearly action plan and personnel plan. The fulfilment of the measures is monitored.

 

Responsible purchasing and sales

Management approach We purchase and sell responsibly and support our customers in their sustainable choices
Material aspects
  • Products and services
  • Supplier assessment for labour practices
  • Labour practices grievance mechanisms
  • Human rights
  • Customer health and safety
  • Product and service labelling
  • Marketing communications
  • Compliance
Purchasing from high-risk countries

In its operations, Kesko pays special attention to human rights issues and working conditions in its purchasing chain and, in monitoring these, primarily focuses on suppliers in high-risk countries. In accordance with the BSCI (Business Social Compliance Initiative), these are countries and areas where there is a risk of human rights and workers' rights violations. The classification is based on the World Bank's Worldwide Governance Indicators.

High-risk countries typically produce clothing and home textiles, shoes and other leather goods, furniture, carpets, interior decoration items, sports equipment, toys, agricultural products (such as coffee, tea, cocoa, fruit, vegetables, wines) and canned fish, fruit and vegetables.

In 2015, direct purchases by Kesko's Finnish companies from suppliers in risk areas totalled €90 million (€131 million in 2014) and accounted for 1.2% (1.5%) of Kesko's total purchases. The most significant high-risk countries in terms of imports are listed at Human rights assessments. Direct imports from high-risk countries accounted for 14.8% (21.1%) of Kesko's total imports into Finland. There are no statistics available on the imports of Kesko's subsidiaries in other countries from high-risk countries. Around 82% (76%) of Kesko's imports into Finland come from EU countries. The figure does no include imports by VV-Auto.

In addition to its own direct imports, Kesko also purchases goods produced in high-risk countries from other brand and import companies operating in Finland. There are no reliable statistics available on the countries of origin of these imports. There may also be social risks involved in the manufacture of products imported to Finland through third countries or in the production of their ingredients.

Product safety and product labelling

Kesko and K-Group stores are responsible to the products' end-users for ensuring that the products comply with all the requirements of Finnish and EU legislation, are safe for users and meet quality and other promises. Product labelling and marketing communications comply with legislative requirements and authorities' recommendations.

Kesko and K-Group stores want to support customers in making sustainable choices and offer a wide selection of products with responsibility criteria.

Objectives The objectives have been recorded in the responsibility programme.
Policies, working principles and commitments 
Purchasing principles Responsible purchasing is guided by Kesko's purchasing principles. The principles are based on national labour protection legislation and corresponding conventions of the International Labour Organization (ILO), which are applied when national legislation does not correspond to the same level.
Policy on chemicals Kesko's policy on chemicals applies to home textiles, clothing, leather goods, shoes and upholstered furniture. Based on EU and Finnish legislation, it lists the chemicals which are prohibited or the quantity of which is restricted in the products supplied to Kesko. In addition, for substances of very high concern, Kesko sets restrictions that are stricter than those set in legislation.
PVC statement Kesko reduces its impact on the environment by actively seeking options for PVC plastic, both in the packaging of its own brands and in the products themselves. It has been estimated that the elements and compounds contained in PVC, such as chlorine and phthalates, have significant environmental and health impacts. Therefore, replacing PVC with materials more suitable for recycling is appropriate, particularly in packaging and products with short life spans.
Policy statements Various product group specific policy statements, such as the palm oil policy, the fish and shellfish statement, the timber policy, and the stand on the sandblasting of jeans, have been prepared to support purchasing operations.
K-responsibility concept Responsible choices are communicated to customers in stores according to the K-responsibility concept with in-store communications, such as shelf labelling and product labelling. The selection and marketing policies of organic, eco-labelled and Fairtrade certified products are included in K-food stores' chain concepts. The K-responsibility concept was first adopted in K-food stores in 2013. In 2014, it was adopted by K-rauta stores and the introduction to Rautia chain stores started. In 2015, it was adopted by Rautia stores and in the K-maatalous chain.
Monitoring and control systems; programmes, projects and initiatives 
Audits of suppliers in high-risk countries

Kesko requires its suppliers in high-risk countries to have social responsibility certification or audits. Kesko is a member in the European BSCI audit system and is committed to the BSCI Code of Conduct, the content of which is practically the same as Kesko's own purchasing principles.

In cooperation with the BSCI, Kesko follows other audit systems in the market and accepts audits based on them, provided that the level of requirements is the same as in the BSCI audit. Below is a table of the certification and audit systems Kesko uses in various product groups.   The responsibility of the purchasing chain is also monitored and developed as part of the sourcing cooperation with other European retail chains (Swisstec, ICA, AMS).

Kesko has a SUMO (supplier monitoring) database, in which 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 is available to all members.

In 2015, Kesko's grocery trade adopted a risk assessment tool, which is used to survey such manufacturers of Kesko's own food brand products' ingredients (so-called 2nd tier) in high-risk countries from which a sustainability report is required.

Audits of Kesko's grocery trade's own brand product manufacturers and producers Kesko's grocery trade requires that the manufacturers and producers of its own brand products have an international food safety certification. Kesko's grocery trade accepts the following audit procedures: BRC, IFS, ISO/FSSC 22000, SQF1000/2000 and GlobalGAP, IP basic certification for vegetables or IP-Sigill. 
Kesko Product Research Unit's laboratory The Product Research Unit's laboratory monitors the quality of products sold by K-food stores and K-citymarket hypermarkets. It is a testing laboratory T251 which has been accredited by the FINAS accreditation services and approved to comply with the SFS-EN ISO/IEC 17025 standard.
K-responsibility concept audits The assessment of a store's responsible operations comprises the store's annual self-assessment, the criteria defined in the store's quality system and a responsibility audit performed by an external party on a specified sample. The auditor reports the results to the store and to Kesko.
Responsibilites and resources
  • The Group's Corporate Responsibility Steering Group
  • The Steering Group for Responsible Purchasing and Kesko's buyers
  • Kesko's grocery trade's Responsibility Steering Group
  • Kesko Product Research Unit
  • Division parent companies' employees responsible for communications and marketing
  • K-stores
Management approach assessment

The management approach is assessed continuously as part of the operations of the steering groups. Changes in the operating environment and in Kesko are responded to by adjusting objectives, working principles, monitoring systems and resources.

Internal Audit conducts audits on responsible sourcing in Kesko companies. The audits evaluate the effectiveness of controls and provide recommendations on how shortcomings can be corrected.

The self-control of Kesko's grocery trade and K-food stores is developed on the basis of the results of official inspections, among other things. The Product Research Unit's laboratory is audited annually as required by the SFS-EN ISO/IEC 17025 standard. In addition, its operations are assessed annually with an internal audit and an inspection by the management.

 

Certification and audit systems related to production and products in high-risk countries used by Kesko

Certification/audit systemProduct groupCoverage of criteriaProduct label
BSCI (Business Social Compliance Initiative) All product groups Social, limited environmental part No
SA8000 All product groups Social No
ETI All product groups Social No
Sedex/SMETA All product groups Social, limited environmental part No
ICS All product groups Social No
ICTI CARE Toys Social No
FSC (Forest Stewardship Council) Wood products and timber Social, environmental Yes
Fairtrade Agricultural products, incl. cotton Social, environmental Yes
Rainforest Alliance Agricultural products Social, environmental Yes
Pro Terra Agricultural products Social, environmental Yes
UTZ Certified Coffee, cocoa, tea Social, environmental Yes
RSPO (Roundtable on Sustainable Palm Oil) Products containing palm oil Economic, environmental, social Yes
WIETA Wines Social Yes
MSC (Marine Stewardship Council) Caught fish and shellfish Environmental (sustainable fishing) Yes
ASC (Aquaculture Stewardship Council) Farmed fish and shellfish Social, environmental Yes
Florverde Sustainable Flowers Flowers Social, environmental Yes
FLA (Fair Labor Association) Consumer goods Social No
FWF (Fair Wear Foundation) Clothing Social No
GOTS (Global Organic Textile Standard) Textiles, hygiene products (organic) Social, environmental Yes
WRAP (Worldwide Responsible Accredited Production) Textiles, shoes Social No

 

Wellbeing for customers

Management approach We offer services that promote customers' wellbeing
Material aspects
  • Customer health and safety
Products and services that promote wellbeing Kesko and K-stores aim to make their customers' lives easier, providing them with services that promote health and wellbeing and guidance on the proper use of products. Promoting healthy ways of living and eating habits as well as physical activity is central to the K-Group's food and sports stores.
E-commerce and multi-channel services Customers' needs and consumption behaviour change greatly as new electronic services and, particularly, mobile services become increasingly widespread. Kesko's key strategic objective is to serve customers in all of its divisions by using the opportunities provided by mobile services, online services and digital marketing.
Objectives The objectives have been recorded in the responsibility programme.
Policies, operating principles and commitments 
K-responsibility concept The K-responsibility concept is used to tell customers about the store's good deeds and to help them make healthy and sustainable choices easily. The K-responsibility concept was first introduced in K-food stores in 2013. The concept was taken into use in K-rauta stores and its launch in Rautia stores started over the course of 2014. It was introduced in Rautia stores and in the K-maatalous chain in 2015.
E-commerce and multi-channel services The objective of Kesko's digital strategy is that the K-Group will provide the best digital services in 2017. The development of digital services requires major investments in competence development and capital expenditure in technology and logistics systems. Kesko provides online stores and digital services in all of its product lines.
Monitoring and control systems, programmes, projects and initiatives 
Product research Kesko Product Research Unit's laboratory monitors the safety and quality of groceries and home and speciality goods sold by K-food stores and K-citymarket hypermarkets.

In addition to the laboratory, the Product Research Unit includes the test kitchen and Kesko Food's consumer service. The test kitchen's duties include sensory evaluations of products and testing their cooking properties. The consumer service provides information on Pirkka products. Customers give feedback about products and ask about various aspects such as product origins, ingredients, their suitability for different kinds of users and instructions for use and preparation.
Recipe service The home economics teachers in Kesko's grocery trade's marketing unit develop and test hundreds of new food recipes annually. The nutritional contents for about 6,000 recipes found in the K-ruoka.fi recipe service have been calculated to help customers make choices.
K-responsibility concept audits The assessment of a store's responsible operations comprises the store's annual self-assessment, the criteria defined in the store's quality system and an external responsibility audit based on a defined sample. The auditor reports the results to the store and Kesko.
Customer satisfaction The service level, recognition level and images of Kesko's chains are regularly monitored in brand surveys targeted at consumers in all product lines. The same practice is applied to the K-Plussa customer loyalty programme and the grocery trade's own brand products. Store-level customer satisfaction is measured by customer satisfaction surveys and the mystery shopping method in food stores and the building and home improvement stores.
Responsibilities and resources
  • Kesko's divisions
  • Kesko's Product Research Unit
  • K-stores
Management approach assessment The management approach is assessed continuously as part of the operations. Changes in the operating environment and in Kesko are responded to by adjusting objectives, operating principles, monitoring systems and resources.

 

Mitigation of climate change

Management approach We take part in mitigating climate change and promote the sustainable use of natural resources
Material aspects
  • Energy
  • Water
  • Biodiversity
  • Emissions
  • Wastewater and waste
  • Environmental assessment of suppliers
Energy consumption The energy consumption of properties accounts for the major share of the greenhouse gas emissions caused by the K-Group. Constant improvement of the energy efficiency of properties is a main focus area in Kesko's environmental work.
Water Properties managed by Kesko use municipal water mainly for various cleaning purposes.
The most significant impacts on water are related to the supply chains of products to be sold. In 2015, Kesko started a water risk assessment of the supply chains of its private label products.
Biodiversity Kesko only builds retail stores in areas zoned for business properties, so building does not have significant direct biodiversity impacts.
Kesko's largest impacts are indirect and occur in the supply chain of the products sold and in the production of raw materials. Kesko manages these impacts with sourcing policies, materials efficiency and by promoting the circular economy.
Emissions

Kesko's operations generate greenhouse gas emissions mainly from the energy consumption of properties and from logistics. Energy-efficient solutions in properties and the acquisition of low-carbon electricity reduce retail stores' emissions. 
The grocery trade logistics (Keslog) constantly aims to improve its efficiency in order to reduce emissions.

Waste management Materials efficiency, recycling of materials and minimising food waste are the key means by which Kesko reduces the amount of waste, promotes the circular economy and achieves the zero landfill waste level.
Environmental assessments of suppliers The assessment procedures of Kesko's suppliers include environmental criteria.
Objectives The objectives have been recorded in the responsibility programme.
Policies, working principles and commitments 
Environmental and energy policy The K-Group's environmental and energy policy covers the operations of Kesko Group and the K-Group stores both in Finland and the other operating countries. The K-Group's key business partners are also expected to observe corresponding environmental management principles.

Environmental management is part of the K-Group's management system and is based on the ICC Business Charter for Sustainable Development, environmental management standards, as well as requirements set by legislation and the authorities.
Monitoring and control systems, programmes, projects and initiatives 
Environmental work steering Kesko Group's Corporate Responsibility Advisory Board defines the main policies for environmental work and the target levels for the Group companies, taking account of the environmental impacts of operations and their significance throughout the whole life cycle and supply chain. The division parent companies and subsidiaries specify the main policies of their environmental work into environmental action programmes which support their business operations. The action programmes are monitored and updated annually as part of strategy work.
Environmental systems

At the end of 2015, environmental systems covered 67% of the Kesko companies' net sales in Finland and 55% of the whole Group's net sales. The coverage has been calculated in proportion to retail sales.

The logistics operations of Keslog Ltd and Rautakesko Ltd are ISO 14001 certified.

VV-Auto Group Oy fulfils the requirements of the ISO 9001 quality system and VV-Autotalot Oy fulfils the requirements of the quality and environmental action programme of the Finnish Central Organisation for Motor Trades and Repairs (AKL).

In the food stores and the building and home improvement stores, environmental management is based on the K-responsibility concept. Key environmental issues are also included in the concept measurement of the food store chains. In 2015, the K-responsibility concept was also adopted by the agricultural chain of K-maatalous stores.

No certified environmental systems were yet in use in operations in other countries.

Energy consumption monitoring Kesko's maintenance partners monitor the energy consumption of properties with the help of the EnerKey.com system supplied by Enegia Oy. Enegia reads remotely energy consumption measurement terminals located in properties and records the data in the database by the hour. Also the consumption figures for properties where the data are collected manually are saved in the EnerKey system. The EnerKey programme responds to even minor location-specific changes in consumption and sends an alarm to the person in charge.
Energy efficiency agreement Kesko has signed the trading sector energy efficiency agreement.

In terms of specific energy consumption, the types of properties with the highest energy consumption are K-citymarkets and K-supermarkets, and large wholesale and warehouse buildings.

Kesko conducts energy reviews in the properties managed by it on a regular basis.
Water consumption monitoring Water consumption monitoring is part of real estate consumption monitoring. Kesko's goal is to maintain a high level of water consumption efficiency in all operations.
Biodiversity

In line with Kesko's building and home improvement trade's sourcing statement, the products made of tropical wood must be either FSC or PEFC certified.

The K-Group’s fish and shellfish statement directs Kesko's grocery trade's and Kespro's own sourcing, as well as K-food retailers' sourcing to safeguard responsible fishing and cultivation of fish. 

Kesko's grocery trade is a member of the RSPO (Roundtable on Sustainable Palm Oil) and its objective is that by 2020, all palm oil used in Pirkka private label products will be responsibly produced (CSPO).

Kesko is a founding member in the Finnish soy commitment group. Kesko has become a member in the RTRS (Roundtable on Responsible Soy) and made a commitment that by 2020, all of the soy in the production chains of its private label products is responsibly produced, either RTRS or ProTerra certified soy. The commitment covers both the Finnish production chain and sourcing from other countries.

Policy statements

Waste management

Kesko develops recycling systems in cooperation with other operators and promotes waste recycling by developing packaging methods and the use of materials. The generation of waste is prevented by using reusable transport units and by minimising the wastage of products on sale.

According to Kesko's business model, retailer entrepreneurs are responsible for waste management in K-stores.

Kesko's target is to recover all waste from operations and to achieve the zero waste to landfill level.

Building contracting and maintenance Kesko's building contracting is based on target conditions and key technical quality factors determined for each business concept and the planning and execution instructions in respect of building services and construction engineering based on them. Kesko measures the efficiency and quality of planning and execution by providing its individual properties with international environmental certificates, such as BREEAM and LEED. In 2015, Kesko's partners in the maintenance and service of properties were Caverion Oy, Ovenia Oy and L&T plc. The environmental systems of Caverion Oy and L&T plc are ISO 14001 certified. 
Business Environmental Performance Initiative BEPI Kesko has joined the Foreign Trade Association's (FTA) Business Environmental Performance Initiative (BEPI). BEPI is aimed at helping member companies in the management of global supply chains and, consequently, increasing the transparency and risk management of their product supply chains.
Responsibilities and resources
  • Group Corporate Responsibility Advisory Board
  • Environmental Steering Group
  • Store Sites and Real Estate Unit
  • Keslog Ltd
Management approach assessment The management approach is assessed continuously as part of the operations. Changes in the operating environment and in Kesko are responded to by adjusting objectives, operating principles, monitoring systems and resources. Audits and reviews of the environmental systems.

 

Environmental systems at Kesko

FunctionEnvironmental management systemComment
Keslog's warehousing, terminal and transportation operations ISO 14001 Certificate revised in 2015.
Rautakesko Ltd's logistics centre ISO 14001 Certificate revised in 2015.
Real estate service and maintenance operations ISO 14001, ISO 9001 ISO 14001, ISO 9001: Caverion, L&T
ISO 9001: Ovenia
VV-Auto Group Oy ISO 9001 and AKL's environmental programme

ISO 9001 certificate: VV-Auto Group Oy.
Action programme of the Finnish Central Organisation for Motor Trades and Repairs (AKL): VV-Autotalot Oy

K-food stores: 776 K-responsibility stores K-responsibility concept Chain requirement for K-citymarket, K-supermarket and K-market stores
K-rauta stores: 41 K-responsibility stores K-responsibility concept Total number of stores: 45
Rautia stores: 88 K-responsibility stores (including 4 K-maatalous combination stores) K-responsibility concept Total number of stores: 93
K-maatalous stores: 24 K-responsibility stores K-responsibility concept Total number of stores: 35