Schwarz Sustainable Retail Greece

Location:

Greece

Project number:

50060

Business sector:

Agribusiness

Notice type:

Private

Environmental category:

B

Target board date:

18 Jul 2018

Status:

Disbursing

PSD disclosed:

18 Jun 2018

Translated version of this PSD: Greek

Project Description

Provision of EUR 40 million senior loan to German retail chain, Schwarz Group (Schwarz, or the Group).

Project Objectives

  • Support energy efficiency improvements and refurbishment of selected Lidl supermarkets in Greece.
  • Support the construction of three new green stores, promoting Lidl's green store concept and supporting deployment of best available technologies for resource efficiency.

Transition Impact

Transition impact of the transaction will be derived from:

  • applying advanced industry standards of energy efficiency and resource management across various operations, e.g. green building standards, logistics, and sustainable retail practices in Greece;
  • support towards implementation of the Group's plastic waste strategy, in particular through encouraging packaging waste reduction and innovation along food value chains, cooperation with the Group in the economies where the EBRD invests.
  • working with the Group and relevant stakeholders in Greece towards increasing the awareness about food waste and decreasing levels of food waste.

Client Information

LIDL HELLAS AND SIA OE

Lidl Hellas & SIA O.E., a 100% subsidiary of the Group

EBRD Finance Summary

EUR 40,000,000.00

Total Project Cost

EUR 330,000,000.00

Environmental and Social Summary

Categorised B. The Project has been categorised B under the 2014 Environmental and Social Policy.

The environmental and social impacts associated with the construction, refurbishment and operation of retail stores and warehouses are readily identified and managed.

Environmental and social due diligence was undertaken by ESD based on information provided by Lidl Hellas at headquarters in Thessaloniki. Further, information was reviewed about past performance of existing Kaufland and Lidl investments in Poland, Romania and Bulgaria, related annual reporting and labour audits undertaken in 2008 (covering Poland), 2009 and 2013 (both covering Romania and Bulgaria), and in 2017 in Poland.

Previous due diligence 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 in compliance with the Bank's PRs. Due diligence for the proposed project demonstrated capacity of the Lidl Hellas team to manage E&S issues at a national level.

The scope of the ESDD covered environmental and social management at Greek level. No material non-compliances were identified during the due diligence with regards to EBRD PRs, including with regards to labour and working conditions (PR2). ESD reviewed documentation provided by Lidl Hellas, mainly pertaining to environmental and resource efficiency matters, human resources management, and health and safety. Additional information requested following the site visit was provided to ESD.

Lidl has a Code of Conduct in place that equally applies to its own operations, its contractors and its suppliers. Lidl is a member of the joint initiative "Business Social Compliance Initiative" (BSCI) within the framework of the European Foreign Trade Association, which aims to improve the core social standards practiced by its Business Partners across all countries. There is a CSR team in place and Lidl's Sustainable Development Strategy is based on the UN-Sustainable Development Goals.

Greek suppliers represent 60% of Lidl Hella's suppliers. Detailed E&S standards for suppliers and contractors are planned to be developed at mid-term. The Code of Conduct covers labour and working conditions, and requests each Contractual Partner to agree to implement the same social and environmental standards.

Lidl Hellas is certified as Top Employer Greece 2018 and Top Employer Europe 2018, following an independent research of HR management and employee conditions. A grievance mechanism is in place for Lidl employees and the visit to two stores in Thessaloniki suggested that working conditions are adequate and employees are generally satisfied.

Lidl Hellas' approach to environmental management and resource efficiency is well integrated in key activities such as store design and construction, and is generally in line with PR3. There is a plan to get ISO50001 certification by end 2018. Projects to reduce plastic and food waste are under consideration. All stores and warehouses in Greece will get EDGE certification (Green Buildings) by end 2019.

An Occupational Safety Risk Assessment study is performed for each store. Regular health and safety inspections are conducted by the State Authorities at stores and warehouses. Lidl disclosed its first CSR report in 2017 and is planning to publish one every 2 years. The report covers monitoring of environmental performance, stakeholder engagement, CSR programs implementation, etc.

Lidl Hellas has stood out as one of the most sustainable companies in Greece according to the Corporate Responsibility Institute and the rating criteria of the Corporate Responsibility Index. It also implements for the third consecutive year a socio-economic impact report in cooperation with Ernst and Young to reveal the value added in the entire value chain and the contribution to the country's GDP, tax revenues, job opportunities, society, environment, stakeholders and Greek suppliers.

It is also scheduled to execute the first Social Return on Investment (SROI) report to reflect the social value of its investment for supporting the Center of Hospitality for Children and their Families in Attica.

The E&S due diligence did not identify any areas of material non-compliance, but based on interviews and in the context of the number of new stores to be built in the coming years, it is recommended that additional efforts be undertaken to strengthen health and safety performance inhouse and increase supervision of construction contractors in this area as well.

Annual reporting on environment and social matters to date has been variable and improvements in the scope and content of such reports will be required. It is recommended that the development of reporting guidelines for country operations be built on to achieve such improvements and that a centralized quality assurance for reporting to EBRD be established to ensure consistency across EBRD's investments in the Schwarz Group. Predicated on such improvements, 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

None.

Company Contact Information

Schwarz Dienstleistung KG, Sekretariat Finanzen
Stiftsbergstr. 1 D-74172 Neckarsulm Germany

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