Schwarz Sustainable Regional Retail Expansion

Location:

Regional

Project number:

53644

Business sector:

Agribusiness

Notice type:

Private

Environmental category:

B

Approval date:

20 Jul 2022

Status:

Approved

PSD disclosed:

16 Jun 2022

Project Description

Provision of up to EUR 175 million senior loan to German retail chain Schwarz Group (Schwarz, or the Group). The proceeds of the loan will be used to support the expansion of Lidl format stores in the Western Balkans, including Albania, Bosnia and Herzegovina, Kosovo, North Macedonia and Montenegro (EUR 75 million) and the expansion of Kaufland operations in Romania and Moldova (EUR 100 million).

Project Objectives

The proceeds of the loan will be used to support the 2022-2024 investment programme of the Group, focusing on the development of Kaufland stores in Romania and Moldova and Lidl stores in the Western Balkans.

Transition Impact

ETI score: 61

Transition impact of the transaction will be derived from:

Inclusive (primary): Kaufland Romania and Moldova will promote inclusive and gender-responsive human resource policies and practices, benefitting refugees as well as existing employees, particularly women and parents. The Company will partner with civil society organisations to support childcare provision, as well as with local employment agencies to share employment opportunities among refugees from Ukraine. The Company will also introduce diversity management and staff training and foster the exchange on best practices in the private sector by sharing its lessons learned through the UNHCR Global Compact on refugees.

Green (secondary): the construction of new stores with high energy efficiency performance, including the certification of stores in line with international green building standard EDGE in the Western Balkan countries.

Client Information

LIDL STIFTUNG AND CO. KG

Stiftsbergstrasse 1, 74167 Neckarsulm, Germany

KAUFLAND ROMANIA S.C.S

Barbu Vacarescu nr. 120-144, 020284 Bucuresti, Sector 2, Romania, both 100% subsidiaries of the Group

 

EBRD Finance Summary

EUR 175,000,000.00

Total Project Cost

EUR 850,000,000.00

Additionality

The Banks's additionality stems from support delivered on setting higher economic inclusion standards in cooperation with civil society organisations, especially in relation to refugee employment and childcare support. The EBRD will also draw on its experience of climate corporate governance to support the Group's efforts in de-carbonisation of its value chain.

Environmental and Social Summary

Categorised B (ESP 2019). The environmental and social impacts associated with the construction and operation of retail stores in seven countries are readily identified and managed. Environmental and social due diligence (ESDD) was undertaken in-house, based on information provided by Schwarz Group, a visit of a Kaufland retail store in Bucharest for Romania (including management and workers interviews), project questionnaires for the five new countries (Bosnia and Herzegovina, Northern Macedonia, Albania, Kosovo, Montenegro), and previous due-diligence and monitoring outcomes in Moldova. Previous and recent due-diligence in Greece and Moldova has demonstrated Lidl's and Kaufland's capacity and systems to manage environment, health, safety and labour issues in the development and operation of stores, warehousing and logistics in compliance with the Bank's PRs. However, a few requirements related to labour conditions, energy efficiency and contractor supervision will have to be implemented and have been included in the ESAP. The ESAP has been drafted and will be agreed before Board.

 

Among the seven countries covered by this new transaction, only Romania and Moldova have existing operating stores, which were therefore subject to more detailed ESDD, in particular with respect to labour and contractor management. Kaufland Romania organises an anonymous employee satisfaction survey every year. An Employee Grievance mechanism is in place. Kaufland Romania received, for the seventh consecutive year, the Top Employer certification in Romania. The company has created jobs for Ukrainian refugees during 2022, especially for those who want to stay in Romania in the medium or long term. A call center is in place to allow Ukrainian refugees to apply, and the work contract template has been translated into Ukrainian. The visit to the store in Bucharest suggested that working conditions are adequate and employees are generally satisfied. Environmental targets are in place for the short and medium term.  Kaufland hires an external consultant to conduct regular audits (4 times a year) on occupational H&S for each store in Romania. A grievance mechanism and a reclamation register are in place (same mechanism). The Sustainability report for Kaufland Romania is disclosed every year.

 

Kaufland Moldova is committed (as captured in the existing ESAP) to organize an anonymous employee satisfaction survey every year (the first one was conducted end 2021), and is in the process of organising election of workers representatives and negotiating a collective agreement (by end 2022). A grievance mechanism for employees is in place since 2020. The first Sustainability report for Kaufland Moldova was disclosed in February 2022. The first six opened stores received ISO50001 certification. The review of the 2021 AESR shows satisfactory implementation of the existing ESAP for Moldova.

 

For all seven countries, the process for land acquisition is similar. The plots for the new stores are purchased from developers, who are responsible for supplying land that is free of any legal liabilities (including environmental legacies). The client confirmed that land is acquired on a willing buyer/willing seller basis. The construction permit is obtained by the developer. Obligation to obtain all necessary permits is included in the pre-contract of acquisition. Kaufland/Lidl require every contractor to sign a Code of Conduct for Business Partners, which covers non-discrimination, forced labour and child labour, freedom of association, wages and overtime, occupational health and safety, and protection of the environment. During the construction works, Kaufland/Lidl hire a company specialised in occupational health and safety to monitor the works. Kaufland/Lidl's environmental management and resource efficiency are well integrated in key activities such as store design and construction, and is generally in line with PR3. All stores are built asbestos free. There is a plan to get ISO50001 certification for all new stores.

 

The Bank's environmental and social monitoring will continue to rely primarily on annual reporting, while reserving the possibility of undertaking site visits if necessary.

 

The Project is Paris aligned for climate mitigation as it features in the joint MDB "aligned list". Considering multiple locations of the stores, the Project is deemed not significantly exposed to physical climate risks and is Paris-aligned for adaptation. The GET share for the project is 100%.

Technical Cooperation and Grant Financing

None

Company Contact Information

Schwarz Dienstleistung KG
Finanzen Stiftsbergstr. 1 74172 Neckarsulm Germany

PSD last updated

28 Jun 2022

Understanding Transition

Further information regarding the EBRD’s approach to measuring transition impact is available here.

Business opportunities

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Environmental and Social Policy (ESP)

The ESP and the associated Performance Requirements (PRs) set out the ways in which the EBRD implements its commitment to promoting “environmentally sound and sustainable development”.  The ESP and the PRs include specific provisions for clients to comply with the applicable requirements of national laws on public information and consultation as well as to establish a grievance mechanism to receive and facilitate resolution of stakeholders’ concerns and grievances, in particular, about environmental and social performance of the client and the project. Proportionate to the nature and scale of a project’s environmental and social risks and impacts, the EBRD additionally requires its clients to disclose information, as appropriate, about the risks and impacts arising from projects or to undertake meaningful consultation with stakeholders and consider and respond to their feedback.

More information on the EBRD’s practices in this regard is set out in the ESP.

Integrity and Compliance

The EBRD's Office of the Chief Compliance Officer (OCCO) promotes good governance and ensures that the highest standards of integrity are applied to all activities of the Bank in accordance with international best practice. Integrity due diligence is conducted on all Bank clients to ensure that projects do not present unacceptable integrity or reputational risks to the Bank. The Bank believes that identifying and resolving issues at the project assessment approval stages is the most effective means of ensuring the integrity of Bank transactions. OCCO plays a key role in these protective efforts, and also helps to monitor integrity risks in projects post-investment.

OCCO is also responsible for investigating allegations of fraud, corruption and misconduct in EBRD-financed projects. Anyone, both within or outside the Bank, who suspects fraud or corruption should submit a written report to the Chief Compliance Officer by email to compliance@ebrd.com. All matters reported will be handled by OCCO for follow-up. All reports, including anonymous ones, will be reviewed. Reports can be made in any language of the Bank or of the Bank's countries of operation. The information provided must be made in good faith.

Access to Information Policy (AIP)

The AIP sets out how the EBRD discloses information and consults with its stakeholders so as to promote better awareness and understanding of its strategies, policies and operations following its entry into force on 1 January 2020. Please visit the Access to Information Policy page to find out what information is available from the EBRD website.

Specific requests for information can be made using the EBRD Enquiries form.

Independent Project Accountability Mechanism (IPAM)

If efforts to address environmental, social or public disclosure concerns with the Client or the Bank are unsuccessful (e.g. through the Client’s Project-level grievance mechanism or through direct engagement with Bank management), individuals and organisations may seek to address their concerns through the EBRD’s Independent Project Accountability Mechanism (IPAM).

IPAM independently reviews Project issues that are believed to have caused (or to be likely to cause) harm. The purpose of the Mechanism is: to support dialogue between Project stakeholders to resolve environmental, social and public disclosure issues; to determine whether the Bank has complied with its Environmental and Social Policy or Project-specific provisions of its Access to Information Policy; and where applicable, to address any existing non-compliance with these policies, while preventing future non-compliance by the Bank.

Please visit the Independent Project Accountability Mechanism webpage to find out more about IPAM and its mandate; how to submit a Request for review; or contact IPAM  via email ipam@ebrd.com to get guidance and more information on IPAM and how to submit a request.

 

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