Open tools
Open share menu
Annual report 2013

Product’s path

The customers who enter the K-Group’s stores trust that the products available there are responsible choices. Kesko’s buyers and Product Research unit work daily to ensure that the products in the stores are high-quality, safe and produced responsibly.

Kesko aims to take care of wellbeing across the entire production chain and take responsibility from field to fork. By the time products end up on store shelves, they have undergone extensive study and research.

Kesko’s purchasing principles, the Principles and Practice of Socially Responsible Trading guide, as well as several statements and policies, guide Kesko’s responsible purchasing. These principles also provide the basis when Kesko’s buyers and Product Research unit start considering adding a new item to the range of own brand products. Environmental impacts are taken into account at the planning stage; unnecessary packaging is avoided and preference is given to recyclable materials.


Products are analysed even before purchasing decisions

Customers’ needs and expectations provide the basis when plans are made to add new products to selections. In 2014, Kesko had around 21,800 such suppliers and service providers from whom annual purchases exceeded €1,000. Approximately 10,200 of them operated in Finland, about 8,500 in Kesko’s other operating countries and about 3,100 elsewhere.

Kesko has its own Product Research unit, which monitors the safety and quality of groceries and home and speciality goods sold by K-food stores, Anttila department stores, K-citymarkets and Kodin1 department stores for interior decoration and home goods. The unit’s laboratory analysed more than 8,860 product samples and conducted over 29,530 analyses in 2014.

Kesko’s own Pirkka product range has nearly 500 suppliers. These suppliers and the ingredients they use are carefully screened before being accepted as suppliers of Kesko’s own brands. The planning and development of a new Pirkka food product involves close cooperation between the supplier, purchasing unit, product quality managers and the Pirkka test kitchen. Supplier monitoring and competitive tendering, sensory evaluations, laboratory analyses and package label design are some examples of the work done over the months preceding the launch of a new product.

More certified products

One of the objectives of Kesko’s responsibility programme is to have 500 products that meet a responsibility criterion in the Pirkka range by 2015. Responsibility criteria include Fairtrade or a corresponding production method, environmental labelling, MSC certification, UTZ certification or CSPO certification for sustainable palm oil. At the end of 2014, there were 44 Pirkka Fairtrade products, 116 Pirkka Organic products, 29 Pirkka MSC certified fishes, 16 Pirkka products with UTZ certification and 13 Pirkka products containing certified sustainable palm oil (CSPO).

In 2014, the products sold by Kesko Food generate a total of €361,682 in Fairtrade premiums for social development projects. Out of this, flowers sold by Kesko Food accounted for €197,727.


 

Did you know?

All Pirkka coffees and cocoas are either Fairtrade or UTZ certified products. See the video.

 
Special attention paid to high-risk countries

In its operations, Kesko pays special attention to the human rights issues and working conditions throughout its purchasing chain. In supplier monitoring, the focus is on the countries where the risks of violating these rights are the greatest (for example, most Asian and African countries).

Special attention is paid to working conditions at factories in high-risk countries, though the quantities imported from these countries are small (1.5% of all Kesko’s purchases in 2014). International assessment systems, BSCI auditing and SA8000 certification, are used for supplier audits in high-risk countries. Kesko is a member of the European Business Social Compliance Initiative (BSCI).

The Principles and Practice of Socially Responsible Trading guide has been created to help Kesko’s buyers and suppliers with purchases from high-risk countries. The guide provides basic information about Kesko and its purchasing principles. It describes the BSCI process step by step. Online training courses on responsible purchasing practices have been developed to ensure all buyers’ competencies in this.

 

Did you know?

  • Rautakesko has a representative in China who is responsible for managing Rautakesko’s purchases from Asia.
  • Working conditions at Rautakesko’s suppliers’ factories are assessed with BSCI audits.
 

Goods are transported efficiently and saving the environment

Goods that come to Kesko’s selections from outside Finland are transported efficiently in containers, mainly by sea or road.

Kesko’s logistics company Keslog Ltd provides logistics services for Kesko Group companies. Keslog carries goods to Finland from over 100 countries and its transportation network covers all of Finland.

In Finland, the kilometres covered by Keslog’s contract drivers’ trucks every day when they take goods to the K-Group’s stores is two times the circumference of the globe. Emissions from transportation are among the most significant environmental impacts of Kesko’s operations. For the purpose of managing environmental impacts and improving the efficiency of operations, Keslog uses a certified environmental system that is based on the ISO 14001 standard.

Keslog aims to cut carbon dioxide emissions from transportation by 10% by 2020. The most important means of cutting emissions include route and load optimisation, driver training, reverse logistics services and efficient fleet solutions, such as two-tier trailers.

In 2014, Keslog picked up around 93 million aluminium beverage cans, 54 million bottles of recyclable plastic and 10 million bottles of recyclable glass from K-food stores and Kespro's customers for further processing and recycling.

Keslog’s central warehouses and terminals recover nearly all their waste, around 98%. For example, 30% of the material used for Pirkka bags made of recycled plastic is derived from plastic covers of goods transported to Kesko Food.

Sea containers that come from Asia to Finland have often been gassed with pesticides. In 2013, Keslog initiated a project with the aim of increasing safety for people handling the containers. The project involved determining the most appropriate gas measurement instrument, acquiring the best protective wear for employees and providing training on correct working methods. Now the gas content of all imported containers is measured and, if necessary, the container is moved for ventilation before unloading begins.


Competent sales people

The sales assistants who meet customers in stores must be well aware of the products’ properties and origins and able to instruct customers in their proper use. Sales assistants’ product knowledge is increasingly important, as customers often have some information about the product, having read comparisons and other customers’ recommendations on the web before entering the store.

K-instituutti has trained retail sales assistants by offering the Master Sales Assistant training for over 50 years. The training provides assistants with extensive, up-to-date information about products and customer service, as well as the chain’s strategic focuses and concepts. Every year, more than 10,000 people participate in the Master Sales Assistant training and, in 2014, over 160,000 courses were completed.

Product circulation continues

A product’s path from a factory or a farm to a customer’s shopping basket is often long and consists of many phases. During the process, much is done for the product – in design, manufacture, research, transportation and stores. Each phase provides work for many people who, in addition to getting their livelihood, benefit their communities through the purchases they make and the taxes they pay on their salaries.

Something will be left of each product after use: packaging material, food leftovers or, in the end, a broken appliance. As importers, Kesko and K-stores have an obligation to organise waste management for discarded products. In 2014, there were about 252 eco points at K-food stores for recycling consumer packaging (fibre, glass, metal). Out of these, 11 also received plastic for recycling. Many eco points also receive waste paper and discarded clothing.

Since 2013, consumers have also been able to return their waste electrical and electronic equipment (WEEE) to stores. The store's obligation to accept them depends on its sales area and product selection.

Nearly all Pirkka packages have a material symbol, which makes recycling easier for households.


 

ADDRESS: A LIVING WAGE FOR ALL EMPLOYEES ACROSS THE PRODUCTION CHAIN

 

In summer 2014, Pro Ethical Trade Finland (Eetti) conducted a survey on the work of major Finnish clothing companies on respecting human rights across their production chains. The survey, which was published in the autumn, showed that Finnish clothing companies promote the implementation of human rights in their production chains. In order to implement all the basic employment rights in the production countries, such as a salary that is sufficient to ensure a basic standard of living, stronger commitment and enhancement of operating practices are needed.

"Kesko should be committed to ensuring that every employee across the entire production chain is paid a living wage. Through its own practices, Kesko is able to contribute to the implementation of human rights in the production chain.

Kesko is a member of the Business Social Compliance Initiative (BSCI) of retail chains, which is a strong operator in corporate responsibility. Kesko could join a multilateral responsibility system, which would better guarantee the participation of stakeholders, such as trade unions and organisations, in the development of working conditions.

About one fifth of Kesko’s own clothing imports come from high-risk countries where violations of working rights are common. When operating in these countries, it is crucially important that the company has practices for minimising such risks. Kesko is currently conducting a risk assessment of its human rights impacts. The results of the assessment must be imprinted throughout the whole organisation, creating comprehensive actions in order to minimise the risks observed, monitoring the efficiency of the measures taken and providing open information about the results of the survey."

Anna Härri is Campaign Coordinator of Pro Ethical Trade Finland.

 

 

CASE: SOCIAL COMPLIANCE MANAGER JOE LIU HELPS CHINESE FACTORIES

 

 

Joe Liu

Kesko operates a monitoring programme of its own in China and, as necessary, also in India. In 2014, 39 monitoring visits were made to the factories of Kesko’s suppliers.

Monitoring is based on BSCI’s Code of Conduct and the ultimate aim in every case is to have the factory included in the BSCI audit process. Significant improvements can often be seen during re-audits.

Social Compliance Manager Joe Liu, domiciled in Shanghai, monitors factories manufacturing clothes, shoes, bags and home textiles in different parts of China.

"Our factory visit consists of four parts: a tour of the factory, an inspection of documents, an interview with management and an interview with workers. In 2013, we visited a clothing factory at Ningbo whose result in the BSCI audit had been ’non-compliant’. We detected shortcomings in the management systems, workers’ rest day arrangement and occupational health and safety matters at the factory. We discussed management system models, working time arrangements and safety practices with the factory management", says Liu.

In a re-audit a year later, this factory received a better result.

"Today, the factory manager spends a lot of time in training the workers and the factory is tidy and safe. The workers and the supervisor are satisfied and in the 2014 audit, the factory achieved the result ’improvement needed’. The manager told me that they would be continuing improvements aiming at ‘good’, the best result in a BSCI audit", says Liu.