Sustainable food purchasing practices

[GRI 204/103-1, 308/103-1, 414/103-1] With over 1,600 products, we offered our customers an even wider range of products in 2017 than in the previous years, most of them*¹. Our seasonal and regional product range played an essential role in our offerings. Our responsibility for these products stretches from the warehouse to the point of sale and beyond, including the more sustainable production of resources throughout the value chain. With this goal in mind, we subject our suppliers to clearly defined requirements and take advantage of certifications in line with recognised sustainability standards. We act in accordance with the Sustainable Development Goals (SDGs) of the United Nations’ 2030 Agenda, which address topics such as improving life on land (SDG 15) and sustainably using oceans, seas and marine resources (SDG 14).

[GRI 102-11, 204/103-2, 308/103-2, 414/103-2] Our food product range is made up primarily of own-brand products that we select and design for our customers. We define purchasing policies for specific resources and internal purchasing guidelines while pursuing a risk-based approach. This means that we take action where environmental or social challenges exist – and where we can therefore achieve the greatest impact through our improvements. We work in close cooperation with our suppliers and are in constant contact regarding our sustainability requirements to enable them to implement our standards. We also participate in cross-sector and multistakeholder initiatives on a variety of topics, such as tropical and subtropical fruits. The traceability of products is gaining more and more importance for us to manage the conversion of resources all the way through to the producer. The ALDI Transparency Code (ATC) allows our customers to quickly find out where various products come from. In addition, we work with recognised sustainability labels, seals and certificates.

[GRI 204/103-2/3, 308/103-2]

Throughout the Group, fruit and vegetables is one of the most important product groups. Our product range includes almost 100 different kinds of fruit and vegetables on average. This figure varies depending on the country and season. Since 2015, the range has grown by more than 20 per cent in total. The issues we face in this product group are diverse. Each crop has different needs and therefore a different impact, from requiring a high amount of water during cultivation to special protection from pests. The task at hand is also to ensure fair working conditions in the field. All producers of fruit and vegetables sold by the ALDI North Group must provide verification of valid GLOBALG.A.P certification and a social evaluation in accordance with the additional GLOBALG.A.P. module GRASP*² (GLOBALG.A.P. Risk Assessment on Social Practice). At the end of 2017, the proportion of producer businesses evaluated in conformity with GRASP or businesses with a comparable social evaluation stood at nearly 80 per cent (measured by the total number of producer business of fruit and vegetable suppliers which supply the ALDI North Group in Germany). Since 2017, we have purchased only organic Fairtrade and Rainforest Alliance Certified^TM bananas and Rainforest Alliance Certified^TM pineapples in Belgium, Germany and the Netherlands.

In 2017, we initiated supplier dialogues to discuss key challenges in the fruit and vegetables supply chain. In the Netherlands, we are also working with suppliers to label fruit and vegetables with the PlanetProof seal of approval issued by SMK (Foundation Milieukeur). The seal recognises conventionally cultivated products that stand out due to improvements aimed at achieving greater sustainability, such as the use of pesticides, water protection, land management or energy conservation. We are continuing the dialogue at an international level through our memberships in the Juice CSR Platform and the World Banana Forum. We were once again in close contact with non-governmental organisations (NGOs) such as Oxfam and Danwatch (Denmark) in 2017, with a focus on critical issues such as improving working conditions in banana and wine growing.

Tropical and subtropical fruits such as oranges and bananas are some of the most frequently consumed kinds of fruit in Germany. That makes it particularly important to aim for sustainable cultivation and improve social and working conditions on plantations. As a result, we approved the internal purchasing guidelines for tropical and subtropical fruits in October 2017, which defines purchasing requirements specifically for tropical and subtropical fruits. The guidelines aim to establish long-term partnerships between our suppliers and the producers of tropical and subtropical fruits by supporting producers in meeting high social and environmental standards during cultivation. The guidelines also call on our suppliers to perform checks in the countries of origin. We reserve the right to perform our own checks or engage a third party to do so.

Palm oil is a versatile resource that is used in a wide range of products, from cake icing to detergents. In many areas of cultivation in south-east Asia, however, the production of palm oil can have a negative impact on people and the environment. The oil palm is the most productive oil fruit worldwide, making palm oil hard to replace. Throughout the ALDI North Group, we have been campaigning for more sustainable and environmentally friendly cultivation methods through our International Palm Oil Purchasing Policy, which was introduced in 2015. The platform is provided by physical certification*³ in conformity with the Roundtable on Sustainable Palm Oil (RSPO). By the end of 2018, we plan to change food and non-food own-brand products containing palm oil to 100 per cent physical RSPO-certified palm oil  Derivatives and fractions not available on the market in physical certified quality by the end of 2018 will from them on be covered by RSPO Book & Claim certificates*^4. In the period under review, the share of palm oil covered by this scheme already stood at almost 90 per cent throughout the ALDI North Group (2015: 77 per cent).

[GRI 414-2] We plan to train over 2,000 small farmers in Ivory Coast by 2019, who are subsequently to be certified in accordance with RSPO criteria. The project is managed on location by the NGO Solidaridad International, which is dedicated to promoting more sustainable supply chains. The training and certification improve not only environmental protection, but also the small farmers’ marketing opportunities.

Most cocoa is cultivated by small farmers and their families in West Africa, and sold to cooperatives. We would like to make a contribution to preserving ecosystems and improving the living conditions of the people involved in cultivating cocoa, thereby helping safeguard cocoa stocks in the future and preserving them as a basis for our products. Since the end of 2017, all confectionery, cereals, ice creams and other own-brand products with significant cocoa content in our product range have contained sustainable resources certified in accordance with Fairtrade*⁵, Fairtrade Cocoa Program, Rainforest Alliance*⁶ or UTZ standards*⁷. As a result, we have achieved the objective of our International Cocoa Purchasing Policy and our CR Programme. In some ALDI North Group countries, such as Portugal and Spain, we have already converted additional product groups or plan to do so. The product groups affected include chocolate doughnuts or croissants.

The ALDI North Group is also set to become a Fairtrade Cocoa Program partner in 2018, which will allow us to purchase certified cocoa from the Fairtrade Cocoa Program for various own-brand products in the future. Selected Moser Roth chocolate products will be changed over throughout the ALDI North Group. In contrast to the traditional Fairtrade mark, the cocoa programme focuses on fair resource purchasing rather than the composition and certification of individual products.

[GRI 414-2] Since 2015, we have been working to improve the working and living conditions of cocoa farmers in Ivory Coast as part of the PRO-PLANTEURS project. The project was initiated by members of the German Initiative on Sustainable Cocoa in cooperation with the German and Ivorian governments.

The cultivation of coffee provides the livelihood for around 25 million small farmers from Africa, Asia and Latin America. Numerous work processes on the route to the final product present social, environmental and economic challenges. Small farmers also face new problems as a result of increasing climate change and its consequences, such as long periods of drought, flooding and low yields. We aim to promote responsible cultivation in the countries of origin through our work on the ground and by generating demand for responsibly produced goods. Since 2016, our International Coffee Purchasing Policy has stipulated a continuous increase in the certified share of green coffee in our own-brand products. At the end of 2017, 48 per cent of the green coffee used in own-brand products featured the UTZ, EU organic, Fairtrade or Rainforest Alliance Certified^TM label throughout the entire ALDI North Group (2015: 13 per cent).

[GRI 414-2] Since March 2017, we have been working with Hanns R. Neumann Stiftung to promote more sustainable coffee production in Colombia. A total of 800 small farmers are to receive active support over a period of two years through training and workshops on sustainable cultivation methods, improved coffee processing methods, professional farm management and business planning.

Tea is one of the world’s most important commodities. The largest growers are China, India, Kenya and Sri Lanka. Many steps are necessary to turn the raw material into a finished product. Around the world, 200 million people work on tea plantations. The main sustainability challenges here are issues such as rural flight, working conditions, the use of pesticides and climate change. In early 2017, we published our International Tea Purchasing Policy, which governs the purchasing of all raw tea volumes for the ALDI North product categories black, green, herbal and fruit tea (tea bags, loose tea). The goal is to convert at least 80 per cent of our black and green tea volumes to certified sustainable resources (UTZ, EU organic logo, Fairtrade or Rainforest Alliance Certified^TM label) by the end of 2018. At the end of 2017, almost 53 per cent of the black and green tea volumes used in own-brand products had been certified as sustainable throughout the entire ALDI North Group. Moreover, we aim to convert 30 per cent of the herbal tea and fruit infusions we use in own-brand products to sustainably certified resources by the end of 2018, with that share set to rise to 40 per cent by the end of 2020 (UTZ, UEBT/UTZ/ EU organic logo, Fairtrade or Rainforest Alliance Certified^TM label). At the end of 2017, 30 per cent of the herbal tea and fruit infusion volumes used had already been certified as sustainable throughout the entire ALDI North Group.

Many natural fish stocks are under threat as a result of overfishing, illegal methods of catching fish and environmental impacts. In order to protect stocks and to be in a position to cover the demand for fish as a source of food over the long term, both catching fish in the wild and fish farming need to undergo change. We want to ensure a more sustainable approach to fish and seafood along the entire supply and production chain for our own-brand products. In 2017, the proportion of certified resources in conformity with the Marine Stewardship Council (MSC), Aquaculture Stewardship Council (ASC), GLOBALG.A.P. or EU organic logo was nearly 40 per cent throughout the entire ALDI North Group (2015: 33 per cent). In 2018, we plan to supplement our national purchasing policies to include an International Fish Purchasing Policy that defines Group-wide binding targets. A Group-wide analysis of the product range has been conducted in this context, and a “red list” of fish species not to be sold throughout the ALDI North Group has been defined. In cooperation with the Buying department, the CR department continually analyses the entire fish product range on the basis of defined criteria, such as the fishing methods, fishing zone and the current population of the fish species in question.

The subject of fish is also very important in the dialogue with our partners. In 2017, we joined the Global Dialogue on Seafood Traceability, where we are working with other stakeholders to improve the traceability of fish products. When it comes to tuna, we work with the International Seafood Sustainability Foundation. Together with other food retailers, we also support the website Fischbestände-Online, which is run by the Thünen Institute.

We help consumers make conscious buying decisions through our fish label and the ALDI Transparency Code (ATC). Both labels are being gradually introduced in the ALDI North Group countries.

[GRI FP Animal welfare] Species-appropriate husbandry of livestock is the focus of a debate within the community. A lot of own-brand products at the ALDI North Group contain resources of animal origin. We are therefore responsible for working together with suppliers to establish and develop animal welfare standards. Over recent years, we have implemented various measures throughout the ALDI North Group that go beyond the statutory requirements, particularly a ban on specific animal products such as angora wool or genuine fur. Our International Animal Welfare Purchasing Policy provides a binding framework for our activities. This policy has applied to all products of the ALDI North Group food and non-food own brands containing resources of animal origin since 2016. Among other things, the purchasing policy stipulates a ban on battery eggs no later than from 2025 in all ALDI North Group countries.

We already adopted National Animal Welfare Purchasing Policies in Belgium, Denmark, Germany and the Netherlands in 2015/2016. Portugal and France followed suit in early 2018, with Spain planning to introduce a similar policy over the course of the current year. Intensive efforts were made to further raise the level of animal welfare on a wide scale in 2017, especially in Belgium, Denmark, Germany and the Netherlands. The measures taken in Germany included the introduction of the German Animal Welfare Federation’s animal welfare label and the Fair & Gut own brand. In Denmark, we made use of the official animal welfare seal, with the Beter Leven seal of approval at the focus of our efforts in the Netherlands. Our progress is apparent for all to see, as evidenced by our ranking in the Business Benchmark on Farm Animal Welfare 2017.

[GRI 204/103-2/3, 308/103-2/3, 414/103-2/3] Each purchasing policy contains Group-wide or country-specific targets, some of which we monitor annually using supplier surveys. The targets can be found in our purchasing policies. We publish policy updates on
cr-aldinord.com, making our progress transparent and easy to understand.

*¹ Food & Non-Food
By “food”, we mean all food from both our special-buy and standard product ranges, including seasonal and regional products. The standard product range is permanently available in our stores, but it varies from country to country and is different at individual stores. “Non-food” describes, among other things, our cosmetic and toiletry products from the standard range and a large proportion of our weekly special-buy products such as furniture or textiles.

*² GRASP
GRASP stands for GLOBALG.A.P. Risk Assessment on Social Practice and is a voluntary add-on module developed to assess social practices on farms. It addresses specific aspects of workers’ health, safety and welfare, which are monitored during audits. A GRASP assessment helps producers to establish a good social management system on their farms. Since 2016, we have required fruit and vegetable farms to undergo a GRASP social assessment to help us better evaluate producers’ social management systems.

*³ Physical certification
Palm oil products can be physically RSPO-certified if they meet the requirements of one of the three supply chain systems Identity Preserved (IP), Segregation (SEG) or Mass Balance (MB).

1. Identity Preserved (IP): It is possible to trace the oil back to a single, specific plantation. The palm oil is segregated, meaning it is kept strictly physically separated from non-certified palm oil throughout the supply chain. The final product contains only certified palm oil.

2. Segregation (SEG): As with IP, the final product contains only certified palm oil. However, material from several sustainably certified plantations may be mixed.

3. Mass Balance (MB): Under this system certified palm oil is mixed with non-certified palm oil in a controlled manner at the refinery. As a result, the final product does not just contain certified palm oil. This kind of system requires exact record-keeping and complete monitoring of the certified flow of goods throughout the supply chain.

*⁴ Book & Claim certificates
The Book & Claim supply chain model allows RSPO-certified mills, palm kernel crushers and independent smallholder groups to sell RSPO credits to the supply chain players at the end of the supply chain while selling their physical oil palm products conventionally and/or without certification.

Mills, palm kernel crushers and independent smallholder groups can sell their certified volumes through one or more of the four supply chain models, ensuring that the volume is only sold once. Members of RSPO can purchase RSPO Credits to compensate for the volume of non-certified/conventional oil palm products used in their processes. By purchasing RSPO Credits, buyers can create direct incentives for sellers to engage in sustainable production practices (source: RSPO [2017]: RSPO Supply Chain Certification Standard).

*⁵ Fairtrade
Products with the Fairtrade label come from fair-trade practices. The aim is to promote smallholder farmers and workers in developing countries in Africa, Asia and Latin America and to sustainably improve their position in the global market. To receive the label, international fair-trade standards must be observed, which cover wide-ranging social, economic and environmental aspects.

*⁶ Rainforest Alliance
The international environmental conservation organisation Rainforest Alliance was founded in 1987 to help fight the encroaching destruction of rain forests. The Rainforest Alliance Certified™ seal, featuring a green frog, identifies products such as coffee, cocoa, tea, bananas or citrus fruit from farms that employ sustainable cultivation methods. In exchange, farmers and producer organisations must fulfil the strict criteria of the Rainforest Alliance standard for sustainable agriculture, which include environmental conservation, and social and economic criteria. Better working conditions for workers, access to education and the conservation of natural resources, sensitive ecosystems and wild animals are part of this standard, as is the traceability of resources.

 *⁷ UTZ
The UTZ programme was launched in 2002 with the aim of providing sustainable support to farmers in the countries that produce coffee, cocoa, tea, herbs and hazelnuts to create better prospects for their families. In a wide range of training and education programmes, farmers receive lessons on theory as well as practical support employing good agricultural and business practices. It also promotes organic cultivation and harvesting measures to conserve natural resources in the producing country. This wide range of measures ultimately increases not only the quality of the resources, but also the efficiency of cultivation – and therefore the financial earnings of farmers.