ACTING RESPONSIBLY Contents

03 SCHWARZ GROUP PROFILE 04 Our Group and Our Locations 06 Shaping Change 08 Analysing our Priority Issues 10 Managing Sustainability

12 SUSTAINABLE PRODUCT RANGE 13 Environmentally Friendly Business with Strong Partners 14 Bringing Sustainable Consumption to the Society at large

16 ECONOMY– RESPONSIBLE GROWTH 17 Strong Market Position 18 Future-Oriented Stores

20 ENVIRONMENT – RESPONSIBLE VALUE CREATION 21 Conserving Resources 23 Valuing Recyclables 24 Supporting the Energy and Mobility Transition

26 SOCIAL COMMITMENT TO EMPLOYEES AND COMMUNITY 27 Our Staff 28 Raising Awareness 29 Joining Forces for a Good Cause

30 Legal Notice

All information stated relates to the Schwarz Group 2018 fiscal year (March 2018 - February 2019). Any information that deviates from this is reported separately.

02 SCHWARZ GROUP PROFILE

The Schwarz Group is one of the largest retailers in the world. We cover the lion’s share of the food retail value chain in house – from production through retailing to recycling. We endeavor to use and increase our influence to drive forward sustainable development.

Around

employees

429,000Over stores 12 ,10 0 worldwide billion Over euros in turnover 100 03 Our Group and Our Locations

GreenCycle Production GreenCycle, with its PreZero sales brand, is a The production companies Mittel globally active waste management and recycling deutsche Erfrischungsgetränke (MEG), company belonging to the Schwarz Group. Bonback, Bon Gelati, and Solent belong to the GreenCycle uses its recycling expertise to contribute Schwarz Group. They produce own brand products to Schwarz Group’s plastic strategy. (beverages, chocolate, baked goods and ice cream) for Kaufland and Lidl. In addition, returned beverage bottles are recycled to create new ones in the group’s Kaufland – the Full-range Retailer own recycling and plastic processing plants. Kaufland operates over 1,300 stores in Germany and Eastern Europe, and also plans to open stores soon in Australia. It offers a total of Schwarz Dienstleistungen around 25,000 products in its large-scale stores, inclu- The Schwarz Group pools a variety ding 1,700 organic food items. As a full-range retailer, of services and offers them to all Kaufland offers its customers a wide range of food and its group divisions. These include operational and ad- non-food products. It also produces a significant part ministrative activities in Administration, IT and Central of its prepared meat products in its own meat proces- Services. sing factories.

Lidl – the Discounter Lidl is present in 30 countries around the world, and currently operates 10,800 stores and over 160 goods distribution centers. On average, the assortment of Lidl includes 3,800 different products per year, of which an average of 250 are organic. As a discount supermarket, Lidl focuses on good quality for low prices.

04 Kaufland and Lidl Lidl Expansion of Kaufland or Lidl GreenCycle Production plants

represented in more than 30 countries

China

USA Australia

Hong Kong

05 Shaping Change

As one of the world’s leading retailers, we shape the change neces- sary in those places we can actively make an impact: in production, in consumption and in recycling of our products. We are taking bold action to support the goals of the global agenda for 2030. In pursuit of these goals we will set new industry standards.

Leveraging our Influence

The Schwarz Group is working together with its group divisons, customers and partners to drive the transition towards a sustainable society along its value chain. We make our contribution where we have the greatest leverage – in production, retail, consumption and recycling – in order to advance sustainable development in retail.

Our Vision SDG 12 – Ensure sustainable consumption and production “Taking bold decisions patterns for sustainable transformation – Transitioning to a sustainable economy together, every day.” and lifestyle can only work if we change our consumption habits and production methods. To achieve this, we have to reduce our consumption of natural resources, as well as the quantity of waste and pollutants we generate along the entire value chain. As the third largest sector of the economy, retail is directly involved in how natural resources are processed and consumed. It is for this reason that the Schwarz Group focusses its sustainability efforts on Sustainable Development Goal (SDG) 12.

06 Our Commitments To underpin the strategic focus on SDG12, the Schwarz Group is cooperating with its different business units and subsidiaries, to achieve the SDG 12 targets relevant to the group’s business. It has set the first milestones towards the ambitious goals as follows:

Sustainable Raw Materials SDG 12.2 Zero Waste SDG 12.5

We are conducting a systematic analysis until 2020 in order to We will reuse, recycle or recover a significant percentage of the set sustainable goals for our most relevant raw materials. waste generated in the company by 2025.

Food Waste SDG 12.3 Empowerment SDG 12.8

By 2025, we will significantly reduce food waste in our own We will empower and support all of our employees in sustainably production and retail in all countries and will enable customers performing their jobs by 2022, and continue to do so thereafter. to do the same. We will provide our customers with greater transparency on the We will reduce food waste for selected raw materials along the social, environmental and health-related effects of our product offe- supply chain. ring, enabling them to make conscious decisions, by 2025.

Chemicals SDG 12.4

We will strive to achieve healthy and environmentally friendly use of chemicals in production of our own brands by 2030.

07 Analysing our Priority Issues

The Schwarz Group surveyed its stakeholders in 2018 on relevant sustainability issues to serve as the basis for its corporate social responsibility (CSR) focus. The key issues, that were identified, indicate the aspects on which our stakeholder groups expect transparency. The materiality assessment thus constitutes the basis for Schwarz Group reporting.

Materiality Process with an SDG Focus

Step 1: Determining relevant issues Step 3: Surveying stakeholder The 17 Sustainable Development Goals (SDGs) with 169 targets The Schwarz Group surveyed more than 1,100 individuals from served as the basis for the materiality assessment the Schwarz Group our relevant stakeholder groups on the materiality of the selected concluded in 2018. Together with external experts, the Schwarz Group issues, online in May 2018. The survey sample included employees, initially pared these issues down to 80 company and industry-relevant business partners and banks. With a response rate of 33 percent, goals divided into 17 categories. Combining these with two expanded the Schwarz Group obtained results that represent the sustainability categories, animal welfare and product quality/safety, yielded 19 issues that the stakeholders consider the most important. categories with a total of 45 individual issues available for impact assessment. Step 4: Identifying key issues The final step involved superimposing the results of the impact Step 2: Assessing impact assessment and the stakeholder survey on all stages of the value In order to analyze the Schwarz Group’s impact on its environment, chain. This step identified six key issues: waste and chemicals, the group’s SDG achievement status was compared to the group’s climate protection, economic development, water and oceans, value creation. The Schwarz Group used the Bertelsmann Stiftung resource efficiency and health management. These six issues were SDG Index to analyze the targets relevant to specific countries, identified as having the greatest need for action in the countries in based on their implementation status. Those targets with achie- which the Schwarz Group operates. vement status rated as below average were then compared in a subsequent step with value creation or Schwarz Group sales in the countries concerned. Such comparisons enabled determination of the issues on whose improvement the Schwarz Group potentially has the greatest influence through its core business.

More than 08 360 Banks

Scientific Managers community

Associations and Schwarz Group Business policymakers stakeholders partners

NGOs Customers

Employees

stakeholders participated in the survey. 360 09 Managing Sustainability

Business success and social responsibility are inseparable principles for the Schwarz Group. This attitude is firmly rooted throughout the group in our corporate principles. The implementation of CSR is tailored to the specific environment of each devision. A joint committee in which all group divisions are represented ensures a group-wide exchange of ideas.

Our corporate principle on sustainability: “We assume economic, social and ecological responsibility in our daily activities.”

Managing Sustainability Effectively KPIs and Measures at a Glance

The requirements for effective CSR management are just as varied Group-wide transparency with regard to CSR measures and KPIs as the Schwarz Group’s areas of activity – from production, through is essential for comprehensive sustainability management. These retail, to recycling. The group divisions separately manage their constitute the central elements of reporting for internal and external sustainability activities in line with their individual environments for stakeholders. this very reason. The Schwarz Group has set out the CSR management requirements in a central framework in order to ensure The Schwarz Group has introduced a group-wide software solution common understanding throughout the group. This framework will to ensure a comprehensive view of the measures of each group divi- be further developed on a continuous basis together with the group sion and country. This software allows employees to customize their divisions’ CSR managers. view of CSR measures and campaigns from any country to meet their own specific needs. It enables CSR managers and other employees to access best practices and adapt them for their respective Group-wide Exchange country. Moreover, selected CSR measures serve to demonstrate the Schwarz Group’s sustainability performance. Regular exchange of information among the group divisions is crucial for implementing environmental, social and economic aspects The Schwarz Group also keeps an eye on its sustainability KPIs. in day-to-day business in the same way throughout the group. To this end, it has defined a group-wide set of CSR KPIs, which it The Schwarz CSR committee, to which the CSR managers of all group uniformly records and further develops for all countries and group divisions belong, serves this purpose. It facilitates joint definition divisions. It based its selection of key issues on the internationally and long-term development of group-wide guidelines and general recognized Global Reporting Initiative (GRI) Standards. conditions. The committee, headed and coordinated by Schwarz Dienstleistungen CSR, normally meets once a month.

10 Management of group divisions Responsible for sustainability

inform decide and instruct

Schwarz CSR Committee DIVISIONS

CSR CSR CSR CSR CSR GROUP

System and process initiator

CSR CSR CSR CSR CSR CSR Kaufland Kaufland Kaufland Lidl Lidl Lidl DE PL ... DE ES ... COUNTRIES

11 PRODUCTS SUSTAINABLE RANGE OF GOODS The Schwarz Group is consciously expanding the share of its products that are environmentally friendly and fairly traded. Ultimately, as a visible interface to our customers, they directly promote sustainable consumption. The quality and sustainability of our products is decisively thanks to the production processes we develop in house and in close collaboration with our suppliers.

Around

Around organic products are 1,700available in the Kaufland range on average.

organic products are available 250in the Lidl range on average.

12 Environmentally Friendly Business with Strong Partners

Making high quality organic food available to large groups of the population – in cooperation with well-known organic food associations, Kaufland and Lidl are offering their customers more and more organic food locally produced to high standards – thereby breaking it out of its niche status.

Lidl Cooperation with Bioland Demeter Range at Kaufland

Lidl Germany has been cooperating with Bioland, the leading asso- Kaufland focuses on food of excellent organic quality: It has offered ciation for organic farming in Germany, since October 2018, in order more than 150 Demeter products, largely from the Demeter Campo to bring top-quality and local organic products to its German stores. Verde brand, since February 2019. The Demeter range includes juices, Bioland has already certified a total of around 50 items that meet sandwich spreads, dairy products, canned vegetables, cooking oils, its strict criteria. For example, Bioland quality apples, herbs, wheat pasta, flours, cereals, baked goods, as well as fruit and vegetables. flour and almost all dairy products of Lidl’s own BioOrganic brand Very strict biodynamic agricultural standards that extend far beyond are now for sale throughout the country. the minimum EU organic label apply to members certified by Demeter – Germany’s oldest organic food association. Lidl and Bioland would like to effectively develop the sustainable farming and food industry in the long term. The focus is on gradually Kaufland will expand the Demeter offering to include more transitioning traditional farms and EU organic farms to meet Bioland than 200 products by the end of 2019. criteria in order to offer a sufficient supply of high-quality organic 1,700 food.

13 Bringing Sustainable Consumption to the Society at large

Within the Schwarz Group, Kaufland and Lidl exercise the greatest influence on sustainable consumption with the composition of their product range. They assume direct responsibility, with their own brands, in particular. They are also committed to a sustainable assortment with other brand-name and supplier products.

Sustainable Clothing on Offer Sustainable Employee Uniforms

The processes for manufacturing textiles and shoes, such as dying, The Schwarz Group also focuses on sustainability under its own gluing and printing, rely on chemicals. With this in mind, Kaufland roof. Kaufland and Lidl attach great importance to sustainably and Lidl have joined Greenpeace’s Detox campaign to keep potential produced uniforms. All store employee uniforms worldwide are dangers to humans and the environment to a minimum. In implemen- produced from organic cotton, in compliance with the strict Global ting this move, the supermarkets aim to replace potentially hazardous Organic Textile Standard (GOTS) criteria. In addition, some compo- chemicals with more environmentally friendly ones in the manufacture nents of our store uniforms are also fair-trade certified. of their own brands of clothing and shoes. They also plan to reduce the amounts of chemicals used in general. Moreover, some of the old Kaufland employee uniforms in Germany and six other European countries are not merely disposed of, but Kaufland and Lidl intend to completely eliminate from their recycled with the support of the group’s own recycling company global supply chains the use and release of the 11 priority GreenCycle. This produces thermal blankets that Kaufland donates to groups of hazardous chemicals identified by Greenpeace in the Workers’ Samaritan Federation (Arbeiter-Samariter-Bund – ASB). their clothing and shoe production.

More detailed information on the current implementation status of the Detox campaign is available here:

Kaufland Detox Lidl Detox Commitment Report Interim Report In 2018 Kaufland donated more than 10,000 blankets made of recycled employee uniforms.

14 Environmentally Friendly Range Raising Consumer Awareness

In order to address consumers’ growing demands for products The retail goods produced by Kaufland and Lidl in line with environ- manufactured in a responsible and environmentally friendly manner, mental and social standards are clearly labeled with the relevant the Schwarz Group relies on different types of certification for its product seals. Brochures and packaging include information on range of goods, including Blue Angel. The ecolabel of the German product sustainability features in order to make consumers more federal government identifies products that are more environmen- aware of the benefits. tally friendly and protect people’s health without compromising product usage. Examples of such products include sanitary and paper You can find an overview online of all logos and certifications products made of 100% recycled paper, and garbage bags made of identifying sustainable products sold by Kaufland and Lidl. recycled plastics. Kaufland and Lidl offer Blue Angel certified items in their stores across Europe, thus making environmentally friendly items accessible to a broad range of customers.

The number of items certified by seal offered in the Kaufland and Lidl ranges*:

Kaufland Lidl

UTZ >120 >280

FSC >70 >180

Rainforest >20 >20 Alliance

www.ra.org/siegel

Fairtrade >180 >70

* refers to the average range in all countries

15 ECONOMY RESPONSIBLE GROWTH

The Schwarz Group sets standards with its record turnover in 2018, and demonstrated it could hold its own in a challenging environment. A large share of our investments goes to expanding and modernizing Kaufland and Lidl stores. This is our way of addressing the need for contemporary store design.

2018 2017 2016 104.3 2015 Net turnover in the Schwarz Group 2014 96.9 90.2 core business 85.7 in billions of euros 79.4

This represents an increase from 2014 to 2018 of

16 +31.4 % Strong Market Position

The Schwarz Group posted sales of more than EUR 100 billion for Since 2006, the Schwarz Group has continuously expanded its the first time in fiscal year 2018. This followed more than a 30percent portfolio beyond its retail business by adding its own food produc- increase in net sales in the past five years, with the company thus tion capacities. It currently manufactures its own brand of chocola- continuing to expand its market position as the largest retailer te, dried fruit, baked goods and ice cream, as well as mineral water in Europe. The Schwarz Group constantly maintained its total and soft drinks. investments in 2018 at the same high level of the previous year of EUR 7.5 billion. A large portion go to expanding and modernizing Moreover the Schwarz Group is also strengthening its waste dis- Kaufland and Lidl stores. We would like to further increase the current posal and recycling business. With the acquisition of disposal firm number of Kaufland and Lidl stores worldwide (approximately 12,100) Tönsmeier by its own service provider GreenCycle, the Schwarz after adding close to 400 in 2018. Group has established recyclables management as an additional business segment, thereby promoting a holistic single-source circu- Digitalization also plays an increasingly important role as an ad- lar economy. ditional growth driver. Lidl Online is currently operating in six countries and has more than 18 million customers. In 2018 alone, Lidl increased its sales of non-food items in the online area by 56 percent. Kaufland’s customer app, a digital shopping aid and source of recipe suggestions is becoming increasingly popular.

16production plants

30sorting and recycling plants

warehouses219

12.118stores

626new store openings including replacement locations

17 Future-Oriented Stores

Suburban locations, rural areas, heavily built-up city centers – there is a broad variety of demands depending on the location, sometimes even challenges in potential construction. We offer the right solution for every location and develop strategies for the ideal store design with our wide range of store concepts.

Flexibility Focus on Sustainability

Lidl offers different store concepts for a variety of requirements: Sustainable construction and energy efficiency play an important • The basic store: open, light and customer-oriented role in Kaufland and Lidl store designs. In their new builds, for • The metropolitan store: modern and flexible – designed example, the company is increasingly using photovoltaic systems for urban centers and quick charging stations with green electricity for electric cars. • The city center store: perfectly integrated Green roofs can help to filter pollutants from the air and support • The retail park: many offerings at a single site water retention. Waste heat generated by cooling systems enables • Special stores: customized solutions for unique buildings some stores to heat without the use of fossil fuels. and locations Lidl opened its first metropolitan store in Barcelona in 2016. Its For more information on sustainable construction by the Schwarz compact construction style pays off, particularly in heavily built-up Group, see the Environment section on pages 24/25. metropolitan areas like Catalonia’s capital.

Kaufland has always practiced flexible construction. Its store types Overview of store types are adapted to location features based on the size of the property Kaufland Lidl – from single-story stores with parking lots in front to elevated store solutions with parking lots on the ground floor and the sales area above. Underground parking solutions are also an option, particularly in urban spaces. Location-specific designs with multi-use enable Kaufland to offer urban solutions for property sizes starting from 6,000 m².

18 + Climate protection Kaufland and Lidl can offer carbon- neutral electricity from solar power generated by rooftop photovoltaic systems. Environment protection Green roofs can help to filter pollutants from the air and support water retention.

Integration into surrounding buildings Mobility Customers can currently charge their electric cars at the quick charging stations free of charge while shopping.

+ Energy efficiency Instead of only heating with combustibles such as oil, gas, and wood, waste heat generated by store chillers contributes to Sustainable architecture heating. The combined cooling/air conditio- ning systems save energy and conserve natural resources.

Over

photovoltaic systems are operated 2 by the Schwarz Group. That corresponds to an area of around soccer fields.

642,000 m 90 19 ENVIRONMENT RESPONSIBLE VALUE CREATION

The Schwarz Group has its focus set on the entire value chain, including Kaufland and Lidl, our production facilities and our waste disposal and recycling service provider GreenCycle. This set-up enables us to effectively implement resource efficiency initiatives – from a comprehensive plastic strategy through holistic energy management to green mobility concepts.

The recycling plants process returnable PET beverage bottles to make food grade PET granules.

20 Conserving Resources

The Schwarz Group was one of the first retailers to include a commitment in its plastic strategy to significantly reducing plastic consumption in production and the retail business. We aim to close the loop for materials and generate tomorrow’s raw materials from today’s waste.

REset Plastic – the Schwarz Group Plastic Strategy The five Action Areas

The Schwarz Group launched its international REset Plastic REduce REdesign plastic strategy along its value chain at the start of 2018. Five We reduce plastic – wherever We design recyclable areas of action serve to complete the circle and reduce con- sustainably possible. packaging and close loops. sumption of plastic. We avoid plastic where possible, employ resource-conserving designs, collect, sort and recycle mate- REcycle REmove rials, remove plastic waste from the environment, look for inno- We collect, sort and We support the removal vative solutions and raise awareness of resource conservation. recycle plastics to of plastic waste from the The Schwarz Group has confirmed its commitment in signing close the loop. environment. up to the Ellen MacArthur Foundation’s Global Commitment. At the heart of the initiative is a vision of a new circular economy REsearch We invest in research and development of in which plastic no longer becomes a waste product. innovative solutions and educate on recycling.

For more information online, see reset-plastic.com

Our aims:

- 20 %plastic at Kaufland 100 %recyclability of plastic and Lidl by 2025 packaging for own brand by 2025

21 Recycling-PET In the loop “Saskia” still mineral water 100 %1.5 L bottle One example of a closed material loop is the 1.5 liter PET bottle of Lidl’s own brand “Saskia” still mineral water. The bottle* is made exclusively of recycled PET collected in stores and sorted in the group’s own production facilities, where it is then recycled Savings on new PET and made into new bottles. These are then filled and resold in product: more than Lidl stores. That means all process steps in the material loop 10,000 tonnes of are completed by a single source. New plastic is not needed new PET per year for production. The bottles are currently available in Germany, Switzerland, Austria and Denmark. Other bottles of own-brand beverages Sakia and Freeway are made of at least 50 percent Carbon savings of recycled material on average. approx. 17,000 tonnes per year * excluding cap and label

STOP – Stop Ocean Plastics

Plastic waste in the world’s oceans is a global problem. In order to make its own contribution to removing plastic waste, the Schwarz Group has supported Project STOP as a technical partner – and the first food retailer – since the beginning of 2019. This leading initiative to prevent plastic waste from entering oceans cooperates with communities in Indonesia to develop efficient waste disposal systems there.

www.stopoceanplastics.com

22 Valuing Recyclables

The group’s own waste disposal and recycling service provider PreZero, a subsidiary of GreenCycle, plays an important role in Schwarz Group’s circular economy. The company organizes collection and recycling of all reusable materials generated by Kaufland and Lidl store and logistics operations as well as by the production facilities. The close cooperation between the group divisions in day-to-day business ensures an international knowledge transfer.

The Schwarz Group production facilities that manufacture Kaufland Waste by material and Lidl’s own brands are also developing their production processes in tonnes 275,396 non-recyclable waste and packaging in the same environmentally friendly manner. 82,438 other recyclables 3,646 textiles 54,143 wood Raising Employee Awareness 68,173 plastics

Proper collection of all waste via waste sorting systems is key to 2.5 million 163,291 PET achieving high rates of recycling in the company – and this needs to be in the very place where the waste is created. GreenCycle conti- tonnes of waste in nuously analyzes which types of waste are generated where in the fiscal year 2018 Schwarz Group and how to plan collection and sorting as intuitively and simply as possible. GreenCycle educates store and logis- 405,643 organic waste tics staff in its “Valuing recyclables” Campaign involving training courses, detailed brochures and videos. This enabled the Schwarz Group to increase its recycling rate. 1,430,150 paper/cardboard GreenCycle is sharing this experience and advising companies, such as the Bundesliga soccer club TSG 1899 Hoffenheim, on recycling management. GreenCycle subsidiary PreZero replaced styrofoam cups for hot beverages with reusable cups. This saves around 400 kilograms of plastic per soccer match. Also, the two tonnes of stadium grass clippings collected each month are used to make paper for the annual supply of autograph cards.

“Valuing Recyclables” at the Schwarz Group

23 Supporting the Energy and Mobility Transition

The Schwarz Group has set itself the aim of contributing to a sustainable energy and mobility transition. To this end it constructs energy-efficient buildings and covers around 30 percent of total electricity consumption exclusively through renewable energies – including from its own sources. We are increasing our focus on charging stations for electric cars and bikes, which our customers and employees can currently use free of charge, to promote climate-friendly mobility.

Energy-efficient and Sustainable Construction Energy Management as the Basis

The Schwarz Group attaches great importance in its expansion to A holistic energy management system based on the energy-efficient and sustainable construction of its stores, administ- international standard ISO 50001 enables the Schwarz rative buildings and goods distribution centers. To ensure this objec- Group to improve its energy efficiency and lower the tive is met it applies renowned national and international sustainable associated carbon emissions. To achieve this objective, construction standards. Here are some examples: all group divisions had all relevant areas of their store locations, logistics centers and administrative buildings certified on the basis of this standard.* BREEAM: “Building Research Establishment Environmental Assessment Method” is a UK sustainability certification scheme for real esta- Award-winning Energy Concept te. In addition to other locations, the Lidl logistics center in Waddinxveen in the Netherlands The EHI Retail Institute e.V. awarded Lidl’s concept for climate pro- has been awarded the BREEAM “Outstanding” tection, ECO2NEXT, the EHI Energy Management Award 2018 in the seal of quality. “Cross-store energy management concept” category. Lidl Germany reduced its energy consumption in fiscal year 2017 by implementing EDGE: “Excellence in Design for Greater Effi- effective measures in energy-efficient logistics, biogas extraction, ciencies” is a system for certifying sustainable alternative mobility solutions and store optimizations. Lidl increased buildings developed by the World Bank Group’s the self-generated solar energy share of the company’s total energy International Finance Corporation (IFC). All Lidl consumption tenfold during the same period. stores and the central warehouse in Lithuania, for example, as well as Kaufland stores in Bul- garia have been EDGE certified.

LEED: “Leadership in Energy and Environmental Design” is an internationally established green building rating system. Lidl’s US headquarters in Arlington, Virginia, for example, was LEED certified with a Gold rating in 2017.

* excluding Poland, Serbia and USA

24 Absolute Greenhouse Gas Emissions

Scope 1 879,629 Energy consumption is a key position with emissions of

1,941,816 tonnes of CO2e (in Scope 2). That is why we are trying to gradually lower this position and reduce our carbon emissions by using green electricity. Nearly 30 percent of 5,712,969 our current consumption comes exclusively from renewable tonnes sources. CO2e in fiscal year 2018 * The market-oriented approach uses energy providers’ emission factors. (market-oriented*) Scope 1: Emissions from direct consumption of energy (building, fuel, refrigerant) Scope 2: Emissions from electric and district heating Scope 2 Scope 3: Emissions from the upstream and downstream supply chain 1,979,302 (e.g. logistics, reusables, supplies)

Scope 3 2,854,038

Fill up on green electricity at Kaufland and Lidl

Kaufland and Lidl customers can fill up on free electricitywhile doing their shopping. The company is actively promoting Kaufland and Lidl stores are climate-friendly electro mobility by expanding its charging station equipped with at least one network. The stations are operated mainly with green electricity 763electric charging station. from 100 percent renewable energies.

25 SOCIAL ASPECTS COMMITMENT TO EMPLOYEES AND COMMUNITY

Whether nutrition or circular economy, the Schwarz Group business operates in various areas of life. The group is not only committed on behalf of its employees to actively developing these issues, but also collaborates with its customers on charitable projects as well, thereby improving living and working conditions worldwide.

66.9 %

Schwarz Group employees

Age distribution Average age 36 < 30 years of age 33 % 428,599 ≥ 30 < 50 years of age 54 % employees ≥ 50 years of age 13 %

33.1 %

26 Our Staff

Around 429,000 employees worldwide are the foundation of the Schwarz Group’s success. We aim to offer our staff a safe and attractive work environment characterized by mutual appreciation. Regular awards confirm that we are on track in our human resources work.

Award-winning Employer Climate-friendly Employee Mobility

Our business success is based on a high level of employee A more relaxing commute to work and saving emissions at the same satisfaction. This is also reflected the awards we receive in this area. time – the Schwarz Group offers its employees at the central locations around Heilbronn modern solutions for environmentally friendly mobility via its ready4green program. Certified Top Employer Great Place to Work 2019 in Europe ... Smart Carpooling Commuter traffic is getting ever heavier. We offer our employees the opportunity to share rides and thus reduce traffic with our carpool app. The Twogo app automatically finds the right carpool for com- muters and drivers.

... and in these Bus & Train countries: Employees receive a subscription of discounted monthly tickets for public transport plus an employer subsidy per ticket. Kaufland Bulgaria, Germany, Poland, Electric and Hybrid Cars Romania, Slovakia and the Electric and hybrid cars have proven themselves most of all in Czech Republic the short distances between the main locations in the Heilbronn Lidl region. Different car models are thus available to Schwarz Group Belgium, Finland, Greece, Italy, employees for business travel. The Schwarz Group is continuously Lithuania, Malta, the Nether- adding to the offering of electric and hybrid cars and expanding the lands, Poland, Romania, Slova- charging point infrastructure. kia, Spain, Cyprus

Bicycle Discount Employees receive a company discount on bicycles from a local partner company for climate-friendly rides to work. Further information on ready4green can be found online

27 Raising Awareness

Raising Awareness of Healthy Eating A Circular Economy Up Close and Conserving Resources Creating value from waste – the GreenCycle business model is being Kaufland and Lidl launch and support campaigns worldwide to presented in a special way at the National Garden Exhibition in Heil- teach children and adults a responsible approach to food and bronn (BUGA Heilbronn) in 2019. A pavilion was constructed entirely responsible use of natural resources. The objective is to create and out of recycled materials together with the Ministry of the Environ- raise awareness of the importance of maintaining a healthy, environment Baden Württemberg, the waste management companies of the mentally-friendly lifestyle. city of Heilbronn and the Karslruhe Institute of Technology. This created a visual expression of a complete circular economy. Information • Kaufland has offered its own education program on environ- is offered inside the pavilion that introduces visitors to the issues of mental issues, such as plastic and bees, to children in Germany sustainability and recyclables in a fun way. since 2004. It has reached around 270,000 children thus far in its “environment day” campaign. It cooperates with the Association of German Nature Parks (Verband Deutscher Naturparke e.V.). Around 150 events were held in schools and daycare centers around the country from March to November 2018.

• Lidl supports the “5 a Day” campaign through the Lidl Fruit School. In 2018 for the third year in a row, professional nutrition experts visited 200 elementary school classes around Germany, playfully motivating some 5,000 third and fourth-graders to learn more about balanced nutrition. They prepared simple meals together with the children and showed them how five portions of fruit and vegetables a day can be enjoyable. The idea was also implemented in a different form in other countries, such as Greece and Spain.

• Lidl Netherlands has collaborated with the Missing Chapter Foun- dation since 2015 to actively involve children in decision-making processes. Elementary school children are introduced to business challenges relating to a conscious and sustainable lifestyle and are given a chance to develop their own ideas for solutions. The main question in 2018 was: How can Lidl help bees?

28 Joining Forces for a Good Cause

Round it up, please! Helping with Donations

Since 2012, Kaufland customers in Germany have been able to Since 2008, Lidl customers in Germany have had the opportunity round up their shopping bill to the next higher 10-cent amount and to donate their bottle deposit slip amount at all of the 6,100 Lidl donate the difference to a good cause. The donations benefit the reverse vending machines around the country. Lidl customer de- “Germany rounds up” initiative, which supports charitable projects posit slip amounts and Lidl Germany’s daily food donations go to to promote disadvantaged children and adolescents in Germany. more than 940 local food banks. Lidl bottle deposit donations have Kaufland customers have rounded up their bills more than 47 million generated over EUR 17 million so far, which the food banks have times so far, generating more than EUR 2 million. This makes been able to use to finance charitable projects. These have focused, Kaufland one of the initiative’s three biggest partners. Moreover, for instance, on help with homework for children and adolescents, Kaufland conducted seven campaigns from 2012 to 2018, in which cooking courses for families and cultural programs for people it doubled the donations from its customers’ rounded up amounts. suffering from loneliness or poverty in old age. Other countries are This yielded an additional EUR 280,000. also following the bottle deposit donation principle. Lidl Lithuania has supported a national donation project to support child daycare Kaufland has launched campaigns to support disadvantaged children centers since 2017. The company also matches the customers’ in other countries as well. In Poland, for example, Kaufland suppor- donations. ted the SOS Children’s Villages from 2016 to 2018, with customers and employees of Kaufland stores donating a total of EUR 175,500. Customers in Polish stores can now donate money to the Polish food bank via donation boxes located at the checkout. Over

Round it up, please!

million times since 2012 – Germany’s Kaufland customers have rounded 47up their purchase amounts for a good cause.

million euros have been raised in Germany through the Lidl bottle deposit donation initiative. Over17 29 Published by Schwarz Dienstleistung KG Stiftsbergstraße 1 74172 Neckarsulm Germany

CSR/Sustainability Department [email protected]

For further information, see www.greencycle.de/nachhaltigkeit/nachhaltigkeit-bei-greencycle www.kaufland.de/machen www.lidl.de/verantwortung www.meg-gruppe.de/unsere-umwelt.html www.jobs.schwarz/wir-als-arbeitgeber/unsere-verantwortung

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