Schwarz Sustainable Retail Serbia Expa

Location:

Poland

Project number:

48747

Business sector:

Agribusiness

Notice type:

Private

Environmental category:

B

Approval date:

20 Jul 2016

Status:

Repaying

PSD disclosed:

19 Jan 2017

As permitted by paragraph 2.6 of Section III of the Access to Information Policy, disclosure of this PSD was deferred in accordance with paragraph 1.4.4 of the Directive on Access to Information.

Project Description

Provision of EUR 100m senior loan to German retail chain, Schwarz Group (Schwarz, or the Group). The proceeds of the loan will be used to support expansion of Kaufland operations in Poland. The proceeds of the loan will be used to support energy efficiency improvements and refurbishment of selected Kaufland discount hypermarkets and a logistics centre in Poland, promoting Kaufland's green store concept, and supporting deployment of best available technologies for resource efficiency.

Transition Impact

ETI score: 60

  • Setting standards for corporate governance and business conduct, by applying advanced industry standards of energy efficiency and resource management across various operations, e.g. green building standards, logistics, and sustainable retail practices in existing and new markets. The practices apply to other sectors, so the expected demonstration impact of the project is expected beyond the retail sector.
  • Market Expansion in Serbia via support of sustainable local supply chains and capacity building and improving standards in the operations of the local suppliers

Client Information

KAUFLAND POLSKA MARKETY SP ZOO SP K

EBRD Finance Summary

EUR 100,000,000.00

Total Project Cost

EUR 100,000,000.00

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 Schwarz Group and Kaufland Poland during a visit to the Group's headquarters in Germany and Kaufland's Polish headquarters, as well as a visit to two retail stores in Wroclaw. 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), as well as publically available information.

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 further demonstrated increased corporate-level commitment and capacity to develop and roll-out Corporate Social Responsibility (CSR) measures across the Group.

The scope of the ESDD covered environmental and social management at the corporate and Polish levels, environmental and social performance of Kaufland's operations in Poland, as well as the Group's approach to rolling out new operations in Serbia. 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 the Schwarz Group, mainly pertaining to environmental and resource efficiency matters. Additional information requested following the site visit was provided to ESD.  

At the Group level, a CSR team was established 2 years ago and there are a number of CSR initiatives under development or being piloted in Germany and Western Europe, harmonising approaches to environmental management across the Group, especially with regards to supply chain management, climate change accounting, and CSR reporting. The Group has a "copy-paste" approach to their operations globally, which means that all operations and stores have to conform to the distinct Kaufland and Lidl 'blueprint' stipulated by the Group and by Kaufland and Lidl International respectively. 

The management of social and labour risks in supply chains is well established in both Kaufland and Lidl International, with a large, centralised in-house auditing team in Kaufland, which is currently developing a fully integrated supply chain management tool, and an outsourced auditing programme carried out in partnership with the Business Social Compliance Initiative (BSCI) in Lidl. In keeping with good international practice, audits are primarily aimed at building the capacity of suppliers to correct any poor social or labour performance.

The Group's 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. A majority of operations in Western Europe are ISO50001 certified and there are targets in place to get Poland and Slovakia certified to the Energy Management standard in 2017 and Bulgaria, Croatia and Romania in 2019. Additional measures to monitor environmental performance under the new corporate CSR and GHG emissions reporting frameworks are also expected to identify opportunities for improvement in the near future. Engagement with customers on environmentally sustainable products and practices (e.g. to reduce household waste) is another element of this well-integrated approach.

Findings from past labour audits in Lidl and Kaufland in Poland, Romania and Bulgaria that were reviewed for this due diligence did not identify any significant non-compliance between 2008 and 2013. Overall, conclusions pointed to adequate human resources management systems and competent management teams, with some suggestions for improvements that were taken on board by the respective country teams. Audits noted the significant improvements in people management, including a move toward SAP-based electronic time-recording systems (this is currently planned for Q1 2017 in Poland), which improves transparency in terms of wages and hours calculations. The latest audit also reported good levels of employee satisfaction in Romania and Bulgaria (2013).  Staff turnover remains high in Poland, where staff is paid 10% over the minimum wage in view of reducing turnover levels. A visit to two stores in Wroclaw suggested that working conditions are adequate and facilities provided to workers in good order.

The EHSS due diligence did not identify any areas of material non-compliance but based on observations in store and gaps in the information provided, and in the context of past sensitivities around labour matters, a new independent labour audit for Kaufland Poland has been agreed with the client for 2017 and for Serbia in 2018.  It is further recommended that additional efforts be undertaken to increase employees' awareness of their representation through the worker council in Kaufland Poland and that storage areas be assessed for safety risks.   

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.

Company Contact Information

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

Implementation summary

EBRD financing has supported Schwarz Group's investment in energy efficient buildings and the roll out of the "green" store concept in Poland. During 2016 and 2017, Kaufland Polska has refurbished 27 stores and one logistic centre in Poland.

The Project ensured adherence to strict environmental, energy-efficiency and social standards. The Company has also introduced Corporate Social Responsibility ("CSR") reporting according to Global Reporting Initiative ("GRI") in Kaufland's markets in Poland. Moreover in 2018 the Company successfully implemented ISO 50001 standards.

Transition impact of the Project stems also from contributing to Setting Standards of Corporate Governance and Business Conduct.

PSD last updated

12 Feb 2021

Understanding Transition

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

Business opportunities

For business opportunities or procurement, contact the client company.

For business opportunities with EBRD (not related to procurement) contact:

Tel: +44 20 7338 7168
Email: projectenquiries@ebrd.com

For state-sector projects, visit EBRD Procurement:

Tel: +44 20 7338 6794
Email: procurement@ebrd.com

General enquiries

Specific enquiries can be made using the EBRD Enquiries form.

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.

 

Share this page: