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Frontpage The Group Responsibility

Responsibility

Kesko is working for sustainability on a long-term and committed basis. Customers have to be able to rely on our products and the fact that their responsible choices start from entering the store. Kesko's general principles of corporate responsibility and the guide 'Our Responsible Working Principles' provide guidelines for our operations.

Building for a better tomorrow

Corporate responsibility is part of Kesko's values, business strategies, management and day-to-day work. Reporting and the key principles are discussed by Kesko's Board of Directors and the Corporate Management Board. The Corporate Communications and Responsibility Unit, supported by the advisory board and various steering groups, develops, coordinates and reports on the results. Communications officers of the Kesko Group and subsidiaries as well as the chains' marketing units are responsible for communicating on responsibility to consumers and other stakeholders.

Kesko's 11th corporate responsibility
report in spring 2011

Since 2000, Kesko has reported on its responsible actions in the Corporate Responsibility Report. The Corporate Responsibility Report for 2010 will be published in spring 2011. In its reporting, Kesko follows the recommendation for reporting on sustainable development drawn up by the Global Reporting Initiative (GRI) and is a GRI Organisational Stakeholder. Independent assurance has been provided to Kesko's report. Kesko's Corporate Responsibility Report for 2009 was chosen as the second best report in the 2010 Corporate Responsibility Reporting Competition in Finland.

Responsibility programme 2008–2012

To support its operations, Kesko has prepared a responsibility programme for 2008–2012. The programme sets targets for:

• combating climate change
• energy efficiency
• wellbeing of employees
• transportation and travel
• recovery and material efficiency
• environmental management at stores
• responsible purchasing and product assortments
• creating a strong responsibility image.

The updating of the responsibility programme will start in 2011.

We report on the progress of the responsibility programme in Kesko's Corporate Responsibility Report and at www.kesko.fi/responsibility.

The guide 'Our Responsible Working Principles' provides a common basis

'Our Responsible Working Principles' guides all employees of the K-Group to work in accordance with the joint values and the responsible operating practices approved by the corporate management.

In Kesko and the K-Group, seven areas are highlighted in day-to-day responsibility:

• compliance with legislation
• avoiding conflicts of interest
• not accepting or giving bribes
• creating a good working atmosphere
• safety and security
• keeping customer information confidential
• open communications.

According to the 2010 personnel survey, 69% of all employees had familiarised themselves with the guide and the principles contained.

The 'Our Responsible Working Principles' guide has been published in eight languages: Finnish, Swedish, English, Russian, Latvian, Lithuanian, Estonian and Norwegian.

Video animations on responsible practices give examples of the situations and decisions employees face at their everyday work.

The guide will be updated in 2011.

Impact on society

Economic responsibility creates the basis for all entrepreneurship. Kesko's economic responsibility refers to the good management of finances, the efficient use of resources as well as generating stable, long-term economic benefits.

We engage in open cooperation with all our stakeholders. Our internal operations are guided by good corporate governance, jointly agreed operating models and rules, and Kesko's values.

Comprehensive store network

There is a K-food store near every Finn. Kesko has the most extensive food store network in Finland: there were 1,007 K-food stores in 342 municipalities in 2010. 51% of the Finnish population lives within one kilometre of the nearest K-food store. 68 new K-retailers started business during the year.

Store numbers are specified in the tables presented at each division in Food trade pages.

Impact of Kesko's operations on society

In 2010, Kesko's salaries and other benefits to employees totalled €451 million in all the countries where it operates. The Kesko Group's income taxes were €97 million, while pensions and social security expenses amounted to €65 million.

Most of the Kesko Group's purchases come from Finland

Most of the economic benefit generated by Kesko – 85% of Kesko's net sales – goes to suppliers of goods. In 2010, Kesko's purchases from Finnish suppliers totalled €5,174 million and from other countries €2,311 million.

We encourage retailers to increase the amount of local purchasing. Retailers' direct purchases from each Finnish region are presented in the Corporate Responsibility Report.

Considerable donations to universities in 2010

Kesko primarily participates in sponsorship initiatives that benefit the everyday lives of families with children, promote the quality of living and sustainable development.

In 2010, Kesko and its subsidiaries gave financial support amounting to approximately €2.3 million to various organisations and institutions.

On Mother's Day, Kesko and K-retailers donated sculptor Pekka Jylhä's 'Expectation', depicting an expectant mother, to the City of Helsinki. The bronze sculpture is located in Kaivopuisto Park in Helsinki.

In spring 2010, Kesko participated in Your Move On Tour of the Young Finland Association in Helsinki, Oulu, Pori, Jyväskylä and Turku. The tour encouraged over 25,000 young people aged from 12 to 16 to get moving.

In spring 2010, Kesko's Board of Directors granted donations to Aalto University and the Universities of Helsinki, Tampere, Turku, Eastern Finland, Jyväskylä, Oulu and Vaasa, and to some polytechnics. The total amount donated was €1,115,000.

For the 23rd time, Kesko's Board of Directors granted scholarships to talented young athletes and art students in May 2010. The scholarships totalled €40,000.

The Good Christmas Spirit collection was organised jointly by the Mannerheim League for Child Welfare, the Finnish Red Cross, the Finnish Broadcasting Company's YLE Radio Suomi and Morning TV, and Kesko for the 14th time. The collection for the benefit of low-income Finnish families with children in difficult situations in life raised €1,034,827.

Wellbeing of employees

Wellbeing at work is focused on work and competence, management and leadership of immediate superiors, quality of personal life and the working community.

The state and development of the working community and the quality of management are measured with an annual personnel survey. A similar survey is conducted throughout Kesko and its chain stores. In the 2010 survey, the implementation of equality was considered to be good: In Kesko's operations, the equality with respect to gender was rated at 4.02 (scale 1–5), with respect to age at 4.00 and with respect to ethnic origin at 4.12.

For more information about HR issues, see Human resources pages and the Corporate Responsibility Report.

Energy solutions

In the area of environmental responsibility, Kesko focuses on curbing climate change by improving the efficiency of energy consumption and increasing waste recovery.

We increase energy efficiency

In 2010, the K-Group's combined consumption of electricity and heat energy was 1,124 GWh. The previous downward trend in the specific consumption of electricity turned into an increase of 3%. This can, to a large extent, be attributed to changes in store opening hours and the exceptionally hot summer.

The K-Group has signed the trading sector energy efficiency agreement and is committed to saving over 65 million kWh by the end of 2016. It corresponds to the annual energy consumption of 15 K-citymarkets.

In 2010, Kesko bought some 75% of the K-Group's electricity on a centralised basis, all of which was carbon-free electricity, produced with nuclear power and renewable energy sources.

Energy savings with lids, doors, LED lighting and new refrigeration technology

Freezers and other refrigeration equipment consume a considerable amount of energy in K-food stores.

Since 2008, all new K-food stores' refrigeration equipment has been supplied with lids and doors. Annual energy savings achieved by covering freezers amount to 11.6 million kWh, which corresponds to the annual electricity consumption of nearly 600 one-family houses.

The total length of lids and doors on K-food stores' refrigeration equipment exceeded 4.5 kilometres. By the end of 2010, lids had been installed on the existing freezers of some 50 stores. Chest freezers fitted with lids save 30–40% energy compared with uncovered ones.

LED technology is used in the illuminated signs of all new K-food stores. The resulting savings compared with traditional neon and fluorescent tube solutions are over 60–70%.

The general lighting of K-supermarket Torpparinmäki, opened in Helsinki in October 2010, has been implemented with an energy-efficient LED system, which consumes over 35% less energy than the traditional fluorescent lighting.

The coolant used in the refrigeration equipment of K-supermarket Peltola, which was opened in Järvenpää in 2009, is carbon dioxide that has been collected from industrial processes. Thanks to the efficient recovery of the condensation heat from store refrigeration equipment, lid-covered chest freezers and the energy saving blowers installed in the equipment, the store consumes electricity and heat tens of percent less than an average K-supermarket.

Energy efficiency of housing

In construction, the emphasis is moving from new buildings to repairs. In autumn 2010, Rautakesko started an initiative on energy efficiency in housing. Rautakesko's aim is to be the best expert and seller of energy efficiency services.

We reduce emissions from transportation

In 2010, the total distance by all transportation managed by Keslog was 40.7 million kilometres. Keslog's target is to decrease carbon dioxide emissions. All contract drivers are trained in economical driving, which reduces fuel consumption and this way saves the environment.

Kesko encourages its employees to favour video conferences over business travel.

When purchasing company cars, Kesko favours low-emission models and the latest engine technology. Emission levels of the Kesko Group's company cars are primarily below 160 g CO2/km.

Waste recovery

Reducing the amount of waste and shrinkage from stores and warehouses and increasing recovery have a major impact on the environment.

The aim of Kesko Food's logistics is to direct nearly all the waste generated to recycling or to energy and fuel production. Kesko Food's aim is to increase its own and K-food stores' waste recovery rate to 90% by 2012. At the Anttila warehouse in Hämeenkylä, the waste recovery rate was 97%.

The Pirkka recycled plastic bag receives the recovery award of the year

Kesko Food launched Pirkka recycled plastic bags to K-food stores in September 2010. The bag is 90% made of recycled plastic, 30% of which comes from protective plastic wrappings used in Kesko Food's goods transportation. The rest of the bag's recycled raw material is recovered from Suominen Flexible Packaging Ltd's factories.

In November 2010, the Pirkka recycled plastic bag received the recovery award, granted by the Association of Environmental Enterprises (YYL) and Uusiouutiset, the Finnish Recycling News magazine.

Responsible purchasing and sales

Kesko's responsible purchasing is guided by Kesko's ethical purchasing principles. In product sourcing, Kesko pays special attention to the human rights and working conditions of the employees throughout the purchasing chain. Kesko focuses its monitoring on countries where the risks of violating these rights are the highest.

In supplier assessment, Kesko uses international auditing systems, the BSCI auditing and the SA8000 certification. The aim is to trade in high-risk countries only with suppliers who have passed the audit. Some 190 of Kesko's supplier factories in high-risk countries are included in the BSCI auditing system.

Kesko trains its buyers in responsible purchasing practices on a regular basis. The BSCI organised 70 supplier training events in 15 countries in 2010.

In China, Kesko's monitoring team guides, trains and oversees Chinese suppliers of Kesko's division parent companies. The monitoring team made 86 factory visits in 2010.

Product safety

Kesko Food's Pirkka Product Research analyses product samples of food and home and speciality goods, develops new foodstuffs and tastes, and is responsible for product recalls.

The Pirkka Product Research laboratory has the ISO 17025 certification. In 2010, the Product Research unit analysed 8,826 product samples and audited 43 suppliers. There were 80 product recalls during the year, most of which were caused by quality, taste, manufacturing or packaging defects.

One of Kesko Food's focal areas in responsibility is encouraging consumers to eat healthily.

The Product Research unit promotes a healthy way of life by reducing the amount of sugar, fat and salt from Pirkka products. Since 2008, the content has been reduced in about 80 Pirkka products.

Product research experts answer the questions and feedback sent to Kesko Food's Consumer Service. In 2010, there were 19,106 such customer contacts.

The Pirkka test kitchen, which has been operating for over 50 years, produced 656 recipes during 2010.

International recognition for responsibility

Kesko participates in the Global Compact Initiative

Kesko participates in the UN Global Compact initiative launched in 2000. The participating companies commit, in their operations and strategies, to observe ten generally accepted principles related to human rights, labour standards, the environment and anti-corruption.

Kesko in sustainability indexes

For years, Kesko has been included in the most important sustainability indexes and ranked among the best companies in the world in the compliance with the principles of sustainable development.

Kesko is included in the Dow Jones sustainability indexes DJSI World and DJSI Europe. In the 2010 assessment, Kesko ranked the best in the sector in operational eco-efficiency, environmental reporting, risk management, and anti-corruption and anti-bribery practices.

Kesko is included in the FTSE4Good Global and FTSE4Good Europe indexes focusing on responsible investment.

Kesko is also included in the 'The Global 100 Most Sustainable Corporations in the World' list, published annually at the meeting of World Economic Forum in Davos. Kesko has been on the list since 2005. Kesko's ranking on the list published in January 2011 was 26th, compared with 33rd a year before.

In the Sustainability Yearbook 2010, published by the SAM Group in January 2010, Kesko's sustainability work qualified in the SAM Silver Class in the Food & Drug Retailers sector. Kesko was also recognised as the 'Sector Mover', a qualification given to the company that has achieved the biggest proportional improvement in its sustainability performance.

Kesko's ranking in other indexes is presented at www.kesko.fi/investors.