Project Description
Provision of up to EUR 100 million senior loan to German retail chain Schwarz Group (Schwarz, or the Group). The proceeds of the loan will be used to support expansion of Lidl format stores in Latvia and Estonia.
Project Objectives
The proceeds of the loan will be used to support 2023-2025 investment programme of the Group focusing on development of EDGE-certified Lidl stores in Latvia and Estonia.
Transition Impact
ETI score: 66
Transition impact of the transaction will be derived from:
- Inclusive (primary): Lidl Latvia and Estonia will promote inclusive human resources policies and practises, focusing on increasing opportunities for people with disabilities as well as older workers, continuing the companies' existing support to refugee workers, and setting targets for women in managerial positions. In order to do so, the companies will partner with a civil society organisation and local public agencies to review existing HR practices and workplace accessibility, develop training for workers with disabilities, and raise awareness internally (e.g. through trainings to managers and HR personnel) and externally, regarding diversity best practices.
- Green (secondary): The construction of new stores with high energy efficiency performance will entail the certification of stores in line with international green building standard EDGE, in addition to the operations of the stores being under best practice energy management system with 100% renewable electricity.
Client Information
SIA LIDL LATVIJA
SIA "LIDL Latvija" Dzelzavas iela 131, Riga, Latvia, LV-1021, 100% subsidiary of the Group
Lidl Eesti OÜ, A. H. Tammsaare tee 47 Tallinn Harjumaa 11316, Estonia 100% subsidiary of the Group
EBRD Finance Summary
EUR 100,000,000.00
Total Project Cost
EUR 220,000,000.00
Additionality
The Bank's additionality stems from support delivered on setting higher economic inclusion standards and targets - in cooperation with civil society organisations - regarding the inclusion of disabled and older workers in the client's workforce, and promotion of women to managerial positions. The EBRD will also draw on its experience on green buildings and in development of circular economy initiatives within supply chains.
Environmental and Social Summary
Categorised B (2019 ESP). The environmental and social impacts associated with the construction and operation of retail stores are readily identified and managed. Environmental and social due diligence (ESDD) was undertaken by the Bank, based on information provided by Schwarz Group, a visit to Lidl Latvia offices, the client's main warehouse/logistics centre for both countries and a Lidl retail store in Riga, as well as due diligence and monitoring outcomes of previous Schwarz Group investments in other countries. The due diligence demonstrated Schwarz Group's and Lidl's adequate capacity and quality 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 Environmental and Social Policy (ESP) and Performance Requirements (PRs).
The process for land acquisition for new Lidl stores does not entail any involuntary resettlement risks as land is exclusively acquired on a willing buyer/willing seller basis. Construction contractors are subject to the Schwarz Group's Business Partners' Code of Conduct, which is based on a comprehensive set of internationally recognised human rights and labour standards, OECD Guidelines and Paris Climate Agreement and aligned with the Bank's environmental and social requirements. The Code of Conduct provides for auditing and termination rights on grounds of any breaches. During the construction works, Lidl retains a company specialised in occupational health and safety to monitor the works. Lidl's environmental management and resource efficiency are well integrated in store design, construction, and operations, in line with the Bank's requirements on resource efficiency and pollution prevention and control. Environmental targets are in place related to emissions reductions, food waste reductions and plastics recycling, among others. A grievance mechanism and a reclamation register are in place (same mechanism) for customers and other external stakeholders, as is a whisteblowing process accessible online and globally to the public, employees and business partners.
Lidl Latvia and Estonia human resources management is structured to align with the requirements of the Bank's labour and working conditions requirements. Anti-harassment policies and an employee grievance mechanism are in place (accessible via app or hotline) and Lidl operates a 'person of trust' system and provides access to external employee assistance services to ensure employee welfare. Lidl Latvia and Estonia have both been awarded Top Employer for the past two years. Lidl Latvia and in particular Lidl Estonia proactively recruited Ukrainian refugees during 2022-23, with work contracts and onboarding training provided in Ukrainian language. Migrant workers are employed on strictly equivalent terms and conditions and wages. According to the client, they offer the highest salaries in the regional retail market and inclusive professional development opportunities with a focus on diversity and targets for increasing female representation in managerial positions. Human resources carry out annual 'pulse' surveys and additional surveys targeted at specific teams. The cashier automation programme will bring more efficiency but will not result in reducing the number of employees per store.i
At the corporate level, Lidl has comprehensive supply chain management systems in place addressing climate, environmental and human rights issues, in particular worker rights. Lidl has developed a human rights purchasing policy to protect workers in its supply chain, making three key commitments: taking more effective action against worker exploitation, ensuring fair and equal treatment for women, and increasing transparency and accountability. Lidl commits to the UN Guiding Principles on Business and Human Rights, OECD Guidelines for Multinational Enterprises and the International Labour Organisation (ILO) fundamental Conventions. Lidl has adequate capacity and processes in place to meet good international practice (GIP) when it comes to supply chains. Lidl prioritises key commodities based on severity of risks, likelihood and responsibility and has carried out and published a number of human rights impact assessments (HRIAs) and action plans. Lidl has public policies in place for animal welfare, microplastics, deforestation, and responsible sourcing of raw materials and water, as well as several commodity-specific sourcing policies. Schwarz Group published a progress update report in 2023 that demonstrates significant progress in many key areas including the promotion of safeguarding standards in cooperation with NGOs and support to cross-industry grievance mechanisms. To improve living incomes for small-scale farmers, Lidl developed the "WayToGo" programme with Fairtrade focusing on cocoa, cashew and coffee, building on three pillars of higher incomes, farmer empowerment and gender equity. As part of its Climate Strategy, the Group is also engaging with its largest carbon emitting suppliers) to implement decarbonisation programmes by 2026 in accordance with Science-Based Targets. The Bank will continue to monitor progress of Schwarz's implementation toward meeting its strategic targets related to human rights and labour risks set out in its roadmap to 2025.
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.
Technical Cooperation and Grant Financing
None.
Company Contact Information
Schwarz Dienstleistung KG
Finanzen
Stiftsbergstrasse 1
74172 Neckarsulm
Germany
Implementation summary
PSD last updated
15 Jun 2023
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.
