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Annual report 2013

Responsibility programme

Responsible operator:
We are committed to responsible working principles and we together generate economic value added
  • Responsible working principles guide all our operations.
  • We follow good corporate governance principles.
  • We improve financial profitability together.
  • We develop the multi-channel approach in our store network while listening to customers' expectations.
Objective  Progress
All of our personnel act in compliance with our responsible working principles.
On plan

Guidelines are a material part of the induction of new employees. In 2014, Kesko's Internal Audit conducted a survey on responsible working principles for all Kesko employees in Finland. A total of 93.3% of all respondents were familiar with the Our Responsible Working Principles guidelines.

We organise regular training on our responsible working principles.
On plan

The online training on responsilibity which was prepared in 2014 and is compulsory to all Kesko employees, describes Our Responsible Working Principles. As part of the constant responsibility training, four events on responsible working practices were organised by different divisions in Finland, Latvia, Lithuania and Estonia in 2014. On Keskonet, Kesko's intranet, there is a permanent banner on the front page to remind Kesko employees of the guidelines.

Kesko's target for return on equity is 12% and the target for return on capital employed is 14%.
On plan

In 2014, the return on equity excl. non-recurring items was 7.6% and the return on capital employed excl. non-recurring items was 9.9%.

We offer e-commerce services in all divisions during 2014. Comprehensive store-specific product information, prices and availability will be provided online by the end of 2016.

All our divisions focus on electronic and multi-channel customer service. The online store for food expanded to all of the Greater Helsinki area in 2014. The online store opened in 2014 and the online store of the Sotka chain in January 2015. In spring 2015, Kesko's Group Management Board will be joined by the Chief Digital Officer, who will be responsible for Kesko's business development, digital business environment and marketing.

For the benefit of the community:
We build a better society together
  • We establish partnerships and contribute to the development of local communities.
  • We develop our operations in interaction with customers.
  • Our personnel act responsibly in day-to-day operations.
Objective  Progress
We are an attractive partner and a responsible neighbour.
On plan

K-food stores, Anttila and Kodin1 participated in the Blue and White Footprint campaign in 2014, and new participants in 2015 include K-rauta and Rautia stores. In 2014, Local Food Dates were organised in order to increase the supply of local products in K-food stores. Kesko was the national partner of the Salvation Army's Christmas Kettle Collection in 2014. Some of the proceeds of K-food stores' bottle return raffles are directed either to the Mannerheim League for Child Welfare or to the Association of Friends of the University Children's Hospitals every six months. The K-Group participated in the development project of village stores in 2013–2015.

We include our customers and our personnel in our responsibility work.
On plan

In 2014, a compulsory online course on responsibility was prepared for all Kesko employees and a compulsory online course on responsible purchasing for the employees in the food trade's commerce. An online course on the K-responsibility concept was drawn up for the building and home improvement store staff. An advisory board was established to promote corporate responsibility work in other countries. During 2015, each company will prepare their own responsibility objectives to support Kesko's responsibility programme. Customer expectations are regularly reviewed by conducting various surveys and studies.

We help customers in efficient shopping; onilne stores, SmartPost, in-store collection.
On plan

All of the divisions focus on electronic and multi-channel customer service. K-rauta, Rautia, K-maatalous and Byggmakker provide customers with comprehensive electronic services across their whole area of operations. Many building and home improvement stores and food stores launched click&collect services in 2014. A total of 137 K-food stores have the automated SmartPost terminal.

We expand the contract seed production programme trainings; the objective is to train 100% of the contract farmers within three years.
On plan

By the end of 2014, 77% of the seed contract farmers had been trained.

We develop the organic farming programme into a concept.
On plan

The K-Group's experimental farm tested plant varieties in the Åland Islands in 2014. The experimental farm is seeking new options to continue organic research with grain varieties in continental Finland.

Working community:
We perform and offer high-quality work
  • We have satisfied employees and competent supervisors.
  • We offer meaningful and diverse jobs and development opportunities.
  • We are the most attractive workplace in the trading sector.
  • We offer a safe and healthy working environment. 
Objective  Progress
We are the best employer in the trading sector in terms of job satisfaction.
Behind plan

In the 2014 personnel survey, the employee engagement index was 53%. In the Universum Young Professionals 2014 survey, Kesko's ranking was 29.

We conduct a performance and development review annually with every employee.
On plan

In the 2014 personnel survey, 83% of respondents said that they had had a performance and development review during the past 12 months.

We train our supervisors on a regular basis.
On plan

Key tools in the development of supervisory work include training courses entitled Let's Talk about Work, Performance Management, Employee Engagement and the extensive online training programme for the various areas of supervisory work, completed in 2014. A total of 2,391 online courses for supervisors were completed in 2014.

We reduce sickness absences and premature disability pensions.
On plan

Since the beginning of 2011, about 950 supervisors in Finland have been trained in the Let's Talk about Work model, which is used by nearly all of our companies. In Finland, the sickness absence percentage has decreased by 11% since 2009, while the number of disability pensions has decreased by 37% since 2010. In other countries, the sickness absence percentage has decreased by 10% since 2009.

Responsible purchasing and sales:
We purchase and sell responsibly and support customers in making sustainable choices
  • We provide customers with information and support in responsible buying decisions.
  • We make responsible actions visible and easy for customers.
  • We develop our product selections while listening to customers.
  • We ensure responsibility in the supply chain.
  • We answer for the safety and quality of products.
Objective  Progress
We identify the whole of our supply chain and actively promote the social responsibility audits of our suppliers in high-risk countries.
On plan

In 2014, 88 full audits and 74 re-audits were conducted in suppliers' factories and farms. In 2014, Kesko's suppliers in high-risk countries had 284 factories or farms within the scope of the BSCI process. Efforts to ensure the sustainability of ingredients imported from high-risk countries continued. Kesko started to assess human rights impacts in 2014.

We add indication of origin to our own brand products.
On plan

Origins are indicated on our own brand products. In 2014, a major project of changing package labelling of own brand products was underway at Kesko Food, based on the EU food information regulation. The project will continue until spring 2015, when the transition period of the complementing regulation on the indication of the origin of certain meats ends.

We offer a wide selection of Pirkka responsible products; 500 Pirkka products meeting a responsibility criterion by 2015 and 200 Pirkka organic products by 2015.
Behind plan

In 2014, the Pirkka range included 44 Fairtrade products, 116 Organic products, 29 MSC certified fishes, 16 UTZ ertified products and 13 products containing certified sustainable palm oil (CSPO).

By 2020, all palm oil in Pirkka products is responsibly produced (CSPO).
Behind plan

At the end of 2014, about 13% of the palm oil in Kesko Food's and Kespro's products was certified sustainable palm oil. Kesko's website includes a list of Pirkka products containing CSPO.

Social responsibility of the production of Kesko Food's own direct imports from high-risk countries is 100% assured by the end of 2015.
On plan

At the end of 2014, nearly 100% of such imports was assured.

Wellbeing for customers:
We offer services which promote customers' wellbeing
  • We make life easier for our customers.
  • We offer healthy products and services which promote wellbeing.
  • We increase our offer of e-services.
  • We provide advice to customers in using products.
Objective   Progress
Every building and home improvement store has at least one trained Energy Expert or Energy Master and a service cooperation network.
On plan

In 2014, Energy Expert service products were part of stores' basic selection. Expertise available at retail stores was reinforced with training courses, which were attended by employees from nearly all K-rauta and Rautia stores.

All K-food stores will have adopted the K-responsibility concept by 2014.

All K-food stores have adopted the K-responsibility concept. In 2014, the concept was adopted by K-rauta stores and the introduction to the stores in the Rautia chain started. During 2015, the concept will be implemented at all Rautia stores and in the K-maatalous chain.

The theme 'Let's do good. Together.' is visible in stores and marketing.
On plan

The theme 'Let's do good. Together.' is a material part of the grocery trade communications and marketing.

We train and advise our machinery trade customers in the correct, safe and economical use of machines and devices and in prolonging the service lives of machinery.
On plan

Customers in the agricultural machinery trade are trained in the use of the machinery they have bought, such as combine harvesters, precision choppers and large tractors.

Mitigation of climate change:
We jointly mitigate climate change and promote the sustainable use of natural resources
  • We reduce our environmental impacts in cooperation with the whole supply chain.
  • We promote the development towards a low carbon society.
  • We help our customers reduce their environmental impacts. 
Objective  Progress
We increase cooperation with the supply chain in order to promote the sustainable use of natural resources and the development towards a low carbon society.

In late 2014, Kesko joined the Foreign Trade Association's (FTA) Business Environmental Performance Initiative (BEPI). BEPI helps member companies in the management of the environmental issues of global supply chains.

We recover the waste generated in our operations to achieve zero landfill waste.
On plan

In 2014, the waste recovery rate of Anttila's logistics centre was 99%, and that of Keslog's central warehouses and terminals 98%. The recovery rate of waste generated in stores was 96% and the recycling rate was 67%. VV-Auto Group's waste recovery rate was nearly 100%.

We reduce food wastage by 10% by 2020.
On plan

K-food stores have reduced food wastage with the help of electronic forecast and order systems, efficient logistics, employee training, lowering prices of products approaching their best before dates and by optimising properties of packaging. Many K-food stores also donate food to charity. K-food stores participated in the Consumers' Union of Finland's Wastage Week campaign in 2014.

We improve our annual energy efficiency by 65 GWh by 2016.
On plan

During 2014, Kesko improved its energy consumption by 59 GWh and achieved 90% of its objective.

We reduce the relative carbon dioxide emissions from Keslog's transportation by 10% by 2020.
On plan

Emissions are reduced by route planning, reverse logistics, two-tier trailers and training in economical driving style. In March 2015, Keslog starts to pilot an extra long Ecotruck on the main logistics route between Vantaa and Oulu.