May 7, 2021

Asda sets out sustainability ambitions with first ESG report

ESG
Sustainability
Procurement
net-zero
Tilly Kenyon
2 min
Asda has published its first Environmental, Social and Governance (ESG) report which sets out its commitments to a sustainable business strategy
Asda has published its first Environmental, Social and Governance (ESG) report which sets out its commitments to a sustainable business strategy...

Asda has published its first-ever Environment, Social, and Governance (ESG) report, showing various commitments unveiled by the retailer in recent months as it works towards slashing the environmental impact of its operations.

With launching this report, Asda has said it is recognising the growing importance of ESG issues to customers, investors, suppliers, and the communities Asda serves. It also brings together existing and new commitments that build on Asda’s current Create Change for Better programme.

Research with more than 3,000 customers was carried out to help produce this report, it looked at which ESG related issue matters the most to them. The top three were affordable greener choices, reducing single-use plastics, and cutting food waste. 

The ESG report sets out a number of Asda’s future commitments including:

  • Making it affordable for customers to shop sustainably through the ‘Greener at Asda Price’ promise
  • Becoming a net-zero carbon business by 2040 – a journey that includes reducing Green House Gas emissions (Scope 1 and 2) by 50% by 2025
  • Removing 3bn pieces of plastic from products by 2025
  • Ensuring the top 20 commodities such as cotton and cocoa are all sustainably sourced by 2025
  • Cutting food waste by 20% by 2025 as part of the Courtauld commitment
  • Delivering 120m meals by the end of this year through our Fight Hunger programme (2018-2021) to communities across the UK
  • Increasing the proportion of own-brand products that are low in fat, sugar, and salt, to 60% by 2024

Roger Burnley, Asda CEO and President, said: “Despite the challenges of the pandemic, we have not lost sight of our wider ESG responsibilities and this report provides an update of where Asda is now on the issues that matter most to our colleagues, customers, and communities and importantly where we want to be in the future. It builds upon our existing create change for better commitments and the resilience we have shown during the last 12 months means we are well-positioned to help customers make greener, healthier, and responsible choices when they shop with us.”

More sustainable future 

Sustainability is one of the most important issues right now with most supermarkets making various pledges towards climate change and becoming net-zero. Supermarkets are having to make significant adjustments to their supply chains, the products they supply, and how they interact with their consumers to have an impact. 

Changes in the way consumers shop and the demand have drastically changed, especially over the past year. The commitments made by supermarkets could be vital in tackling climate change, but only time will tell if they really make an impact. 

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Jun 15, 2021

Germany Adopts Revolutionary Supply Chain Human Rights Laws

ESG
DaimlerAG
supplychain
Germany
4 min
Supply chain legislation makes German multinational corporations legally responsible for human rights and environmental abuses across global supply chains

While the title states that Germany’s newly adopted that targets human rights abuse across global supply chains is “revolutionary” ─ which it is ─, it certainly shouldn’t be. But nonetheless, today, on June 11th, 2021, the German Parliament has ushered in a long-awaited shift to mandatory company compliance rules. After months of negotiation, the German lawmakers finally pushed it over the finish line within the final days of the current legislative period. The bill will see German multinational corporations held legally responsible for any human rights or environmental abuses found across their global supply chains. 

“The German government has taken a critical step to ensure that companies operate responsibly,” said Juliane Kippenberg, associate director, children's rights division, at Human Rights Watch. “Respect for human rights in global supply chains is not something that should be optional.”

This news comes at a time when global corporations are already being pushed towards environmental, social and governance (ESG) compliance, with a massive drive to reduce Scope 1, 2, and 3 carbon emissions from their supply chain operations and a concerted effort to avoid suppliers and manufacturers that do not meet the standards that industry-leading companies are now expected to meet. 

Who will the new law affect?

With Germany’s new legislation, organisations that fail to meet the rules and regulations could be forced to pay fines potentially equivalent to 2% of their annual global turnover. However, it isn’t applicable to all.

According to Reuters, under the act, companies above a certain size will be forced to establish set due diligence procedures that prevent the abuses; from 2023, only companies with more than 3,000 employees in Germany will be affected. From 2024, the rules will expand to companies with more than 1,000 employees. 

Statistics from within the country suggest that the first stage of this regulation rollout will affect 900 companies, while the second stage will put 4,800 companies under the spotlight. The bill will also enable the government to temporarily exclude from public tenders companies that receive fines in excess of €175,000. 

“Incalculable risks arise for companies,” said Joachim Lang, general manager at the Federation of German Industry. A word of warning from a respected leader, at a time when industry lobby groups and wholesale businesses fear that the new law increases bureaucracy and suggest that price rises may be inbound. 

The Take of German Giants

After looking at the incoming legislation, Daimler AG, known more commonly as the automotive giant Mercedes-Benz, a company which, should there happen to be any ESG-compliance issues along its multinational supply chain, would pay a hefty fee, is welcoming of the push for change but hesitant about certain aspects of the bill. 

“Daimler's position is: The respect for human rights is a central aspect of our sustainable business strategy. We, therefore, welcome the progress made on the Supply Chain Act. Although the regulations are very ambitious, the proposed legislation has a sound approach overall. It is based on internationally recognised human rights and on international agreements. And it gives companies more legal certainty in an area that has so far only been partially regulated.

Supply chains are not "chains" but rather exceedingly complex networks: Daimler alone has over 60,000 direct suppliers - and many more sub-suppliers. For this reason, we also consider the proposed risk-based gradual model to be sensible. The responsibility of the companies lies primarily in their own business area and with their direct suppliers. Companies must then take action in the deeper supply chain if there are concrete indications of human rights violations. Daimler AG already does that today. 

Even though we support the proposed legislation in principle, we consider some aspects to be critical, e.g. the planned fines of up to 2% of the average annual turnover. Instead of threats of sanctions, we consider concrete measures, which companies must take in the event of deficits, to be more expedient. In addition, certain wordings are still vague and leave room for interpretation. Terms such as, e.g. "fair standard of living" should be phrased precisely in order to create legal certainty. Furthermore, documentation and reporting requirements should not lead to unnecessary bureaucracy and should be harmonised with existing rules. On the one hand, this does not help the people on the ground, and on the other hand, it puts a burden on the companies – and the implementation can pose substantial challenges for smaller companies in particular.”

This law is arguably one of the most important developments in the supply chain space so far this year. But it must be remembered that changes do not and will not happen at the push of a button and that democratic principles should be applied to the discussion prior to enshrining legislation into tablature. Environmental and human rights advocacy is a hike, not a brisk walk around the park ─ so, for German companies, it’s time to get their boots on the ground and start assessing their global, interconnected supply chain operations. And, hopefully, they’ll set a stellar example for the rest of us.

 

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