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This report can be downloaded at
www.kingfisher.com For further information contact: Alan Knight Head of Social Responsibility
[email protected] Kingfisher plc 3 Sheldon Square Paddington London W2 6PX Tel: +44 (0)20 7372 8008
how green is this report? The paper used is certified by the Forest Stewardship Council and is made up of 25% FSC certified pulp and 75% post consumer waste.The printer holds FSC Chain of Custody certificate no. SGSCOCO620. Printed by Beacon Press using their pureprint® environmental print technology. The printing inks are made from vegetable based oils and 95% of cleaning solvents are recycled for further use.The electricity was generated from renewable sources and on average 84% of any waste associated with this production will be recycled. pureprint® is a Millennium Product.
Corporate Social Responsibility
Beacon Press is registered to the Environmental Management System, ISO 14001 and EMAS, the Eco Management and Audit Scheme.
growth, returns... and responsibility corporate social responsibility summary report 2003
Beacon Press is a Carbon Neutral® company and has planted 3000 trees to offset its carbon emissions. This report is available in large print, braille and audio tape. FSC Trademark © 1996 Forest Stewardship Council A.C.
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a global company facing global issues
– an introduction by Gerry Murphy CEO, Kingfisher and Margaret Salmon, Chairperson to CSR Committee
Gerry Murphy CEO, Kingfisher plc
Margaret Salmon, Committee Chairperson and Non-Executive Director, Kingfisher plc
2003 saw Kingfisher become a truly integrated retail home improvement business – the third largest in the world. With market-leading retail operating companies in the UK, France, Poland, Italy, China and Taiwan, as well as operations in Spain and Turkey, Kingfisher is already a truly international retail business with real scale. But that only tells half the story – in addition to our stores we have eight thousand suppliers based around the world. This scale can be harnessed to create supply chains where everybody benefits – not just our customers, employees and shareholders, but everyone up and down those long and complex chains. For example, French customers enjoying garden furniture bought from Castorama become a ‘trading neighbour’ with the forest community of Indonesia.
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Similarly, reducing our dependency on solvents in paints helps our business grow sales, helps our customers and helps air quality. While this is easy to say, it is not always easy to deliver. We are committed to being a better neighbour in every community we serve, but recognise that just saying the words will not deliver, and there are some critical investments and business systems that we have to ensure are in place: First – we have to make it clear that our business strategies for growth and shareholder returns are not inconsistent with social responsibility. Second – we recognise that we do not operate in a vacuum, isolated from the rest of the world. We must identify, understand and manage the risks and opportunities created by the significant global environmental and social trends that will shape our planet and business over the years. We also accept that the bigger debates about ‘sustainable development’ and ‘globalisation’ are significant for Kingfisher, especially the recent sustainable production and consumption discussions. That is why, in 2003, the Kingfisher Board agreed this new vision for our Corporate Social Responsibility (CSR) agenda:
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Leadership
Our Vision
“ We will ensure that the long-term development of our business is sustainable, and reflects the values and expectations of our communities. ”
Companies on this rung will be actively involved in the debate on a particular trend or issue.They will be recognised as ‘best in class’ and making a significant contribution to the overall discussion in society.
Creating opportunity Thirdly – we need a robust, but straightforward CSR system. The targets in our 2002 review focused on the establishment of effective policy and management systems, and the key elements of this were in place by the end of the summer in 2003. Our approach to targets is simple. Our dedicated CSR unit has summarised all the different environmental and social issues that impact our business into twelve key trends. For each trend we have a ‘ladder’.The ladders have four ‘rungs’, as shown to the right. Each operating company, by using a checklist, has decided which ladder position it is currently on. Our ladders approach is also producing results – B&Q recently won the Corporate Responsibility category at the UK Retail Week Awards 2004. This report summarises our progress. We hope you find it useful.
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Companies on this rung will be using the trend to create a business opportunity, whether from cost savings, an improved marketing position, or some other way.
Managing the issue Companies on this rung will be managing the trends in a positive and comprehensive manner.They will have a good understanding of how the trends will affect their products, processes and people and be willing to discuss the issues with interested parties.
Managing the risk Companies on this rung will take a reactive approach, implementing only those actions which are essential to protect their business from current trends.
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global trends and ladder positions
key to ladders leadership creating opportunity managing the issue managing the risk
non-compliant
timber We are selling more wood, but it is becoming harder to find. In October 2003, a Kingfisher timber policy was agreed.This recognised Forest Stewardship Council (FSC) as our preferred forest scheme. B&Q UK has over 80% of all its products FSC certified. In France, where the state forests are certified by the Pan European Certification Scheme, Brico Dépôt, like Castorama France, has many of its products certified under that alternative scheme. Kingfisher’s partnership with the Tropical Forest Trust will help achieve FSC for garden furniture.
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B&Q UK
factory working conditions We will be judged by the way the people who make our products are treated.
Castorama France Castorama Poland Brico Dépôt B&Q China Castorama Italy Screwfix Direct B&Q Taiwan Koçtas
All the operating companies now have some level of supplier assessment processes for own-label suppliers. Our overseas sourcing office has revised the process by which suppliers are assessed.The emphasis is now on continuous improvement. B&Q UK continues to work with our South African suppliers to increase awareness of solutions to HIV and Aids in the workforce.
for more about the key performance indicators visit
B&Q UK Castorama France Castorama Poland Brico Dépôt B&Q China Castorama Italy Screwfix Direct B&Q Taiwan Koçtas
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supply chains
chemicals
Growing accountability for the impact of our supply chains on the environment.
Chemicals are causing increasing concern and controversy.
The B&Q original supplier environmental audit was launched in 1991 and replaced by QUEST (B&Q’s supplier assessment scheme) in 1995. QUEST is still used by B&Q and was updated in 2003.The Kingfisher Code of Conduct for working conditions in overseas factories also includes environmental performance and this means that even the smaller operating companies are beginning to implement environmental awareness within their vendor base.
B&Q UK Castorama France Castorama Poland Brico Dépôt B&Q China Castorama Italy Screwfix Direct B&Q Taiwan Koçtas
for more about the key performance indicators visit
Asian customers are particularly concerned about the chemicals in their products, so Kingfisher will create a methodology to make the learning from B&Q UK’s chemical “detox” strategy available to the whole Group. As “Colours”, the Kingfisher own-brand paint, is stocked across the Group, the market share of low solvent paints will grow in all the markets in which Kingfisher has stores.
B&Q UK Castorama France Castorama Poland Brico Dépôt B&Q China Castorama Italy Screwfix Direct B&Q Taiwan Koçtas
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global trends and ladder positions
key to ladders leadership creating opportunity managing the issue managing the risk
non-compliant
respect for the diversity of people New laws and high expectations from our customers and employees. At Castorama France, one manager is responsible for creating policies and infrastructure to employ disabled people. At Brico Dépôt, stores have dedicated parking facilities for the disabled. Meanwhile B&Q in China and Taiwan has enjoyed media attention for its recruitment campaign for staff over 50 years old. B&Q UK has guidelines for store managers on understanding and responding to different cultural and religious groups.
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B&Q UK Castorama France Castorama Poland Brico Dépôt B&Q China Castorama Italy Screwfix Direct B&Q Taiwan Koçtas
climate change
transport
store waste
Climate change equals change to buildings and products.
We are moving more stock, but congestion gets worse.
When we throw rubbish away it takes profit with it.
Castorama Poland has one store that is fuelled by the methane emissions from a landfill site. Meanwhile B&Q UK continues to roll out energy saving measures, significantly improving the energy efficiency in the day-to-day running of stores. As for the product ranges, B&Q Taiwan, B&Q China and Koçtas have significantly increased the proportion of energy-efficient light bulbs sold.This is a result of the successful launch of own-label energy-efficient light bulbs. Koçtas also sells solar panels and other operating companies will look into selling solar panels in 2004 or beyond.
Screwfix Direct operates by only offering products via catalogue and the internet, eliminating the need for customer car trips. Castorama France, Poland Fr oland and Koçtas will all deliver major reductions in truck trips by the implementation of central distribution systems. B&Q UK has significantly reduced truck miles by having import containers shipped into Rotterdam and then by smaller ships direct into Immingham, where the distance from the docks to its central warehouse is less than 30 miles.
In 2003, Castorama Poland completed a thorough audit of waste streams and introduced recycling.This includes closed loop, where refuse bags sold by Castorama are made from their own store plastic waste. All the other operating companies recycle their waste, while B&Q UK continues to donate waste goods to local charities and take back waste materials to its regional consolidation centres for more efficient recycling.
for more about the key performance indicators visit
B&Q UK Castorama France Castorama Poland Brico Dépôt B&Q China Castorama Italy Screwfix Direct B&Q Taiwan Koçtas
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B&Q UK Castorama France Castorama Poland Brico Dépôt B&Q China Castorama Italy Screwfix Direct B&Q Taiwan Koçtas
for more about the key performance indicators visit
B&Q UK Castorama France Castorama Poland Brico Dépôt B&Q China Castorama Italy Screwfix Direct B&Q Taiwan Koçtas
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global trends and ladder positions
key to ladders leadership creating opportunity managing the issue managing the risk
non-compliant
packaging
product disposal
store neighbours
product stories
Packaging waste will become bigger financial waste.
We need to plan what happens when our customers want to dispose of the products they have bought from us.
Communities will reject businesses who are not good neighbours.
Greater need for knowledge on product stories.
In 2003 Kingfisher decided that stores should find creative ways to engage with the community. Koçtas, whose stores are close to the coast, will work with a local marine conservation charity and become involved in beach clean-ups. B&Q China will launch a Better Neighbour Grants Scheme next year, whereby each store is given money to support local community projects. In 2003 B&Q UK awarded its 2,000th Better Neighbour Grant, while developing a more sophisticated urban and rural re-generation strategy.
In 2003, Castorama Poland stocked a wooden toy workman’s bench and tools where the wood was FSC.The product was made locally and all the profits were donated to a local charity. For six years, B&Q UK has been working with development experts in Manila, where our Capiz lampshades are made, to find ways of using our trading relationship to bring continuous improvement to the working lives of the people who make this product. B&Q UK is continuing to work with cottage units in the Indian brassware industry to deliver similar benefits.
As part of its low-cost culture, Brico Dépôt has many important ranges that use no packaging. Even the smallest nuts and bolts are sold free from packaging – customers collect all the fittings they need and place all those items in one bag. Other operating companies are using minimal amounts of packaging for many products, including plumbing, electrical, guttering, floor tiles and ceramic tiles.
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B&Q UK Castorama France Castorama Poland Brico Dépôt B&Q China Castorama Italy Screwfix Direct B&Q Taiwan Koçtas
B&Q Taiwan offers recycling facilities for customers to return fluorescent tubes and batteries. In addition, European companies are implementing the requirements of the Waste Electrical and Electronics Directive (WEEE). Performance Power and Mac Alister, the two Kingfisher power-tool brands, are being designed to be easily dismantled for recycling.This involves extensive planning and discussion with our manufacturers in China and elsewhere.
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B&Q UK Castorama France Castorama Poland Brico Dépôt B&Q China Castorama Italy Screwfix Direct B&Q Taiwan Koçtas
www.kingfisher.com
B&Q UK Castorama France Castorama Poland Brico Dépôt B&Q China Castorama Italy Screwfix Direct B&Q Taiwan Koçtas
for more about the key performance indicators visit
B&Q UK Castorama France Castorama Poland Brico Dépôt B&Q China Castorama Italy Screwfix Direct B&Q Taiwan Koçtas
www.kingfisher.com
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supply chains where everyone benefits
using global buying skills to help social causes . . .
Global sourcing is central to our business strategy.That is why we have buying offices in Hong Kong, Shanghai, India and South Africa, with other offices planned elsewhere.
. . . our partnership with Motivation.
These countries are at different stages of industrial development and working conditions do not always meet the standards prevailing in Europe or North America. Kingfisher has a code of conduct outlining what we expect from the working conditions in factories. All the operating companies over time are committed to establishing ways to ensure that their suppliers are aware of this code and are working towards meeting the standards expected. B&Q UK, for example, produced a CD with guidance material in English and simplified Chinese and launched these through a series of seminars. In 2003 our buying offices in Hong Kong and Shanghai completed a thorough audit of the supplier assessment process, and this has led to increased investment in follow-up activity.
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A new factory assessment team will inspire, help and coordinate a programme for factories to continuously improve their working conditions. We believe our actions will create supply chains where everyone’s quality of life is better as a result of our trading relationship.That way we can ensure that the sourcing aspect of our business worldwide helps not only Kingfisher, but the other people our trade touches.
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We believe our global buying skills can help our trading partner countries with more than just increased trade and improved working conditions.There must be ways we can use our skills and contacts in our global trade network to improve the overall quality of life of people in the developing countries where we trade. There are an estimated 20 million people who live in these countries who need a wheelchair but do not have one. Motivation is a charity that builds bespoke wheelchairs for developing countries that can be maintained using local materials and expertise. Current production is limited by having small workshops in the country of use (total production is less than 100 per month). If production was concentrated in one location and volumes raised to 1,000 a month, the cost per chair would halve. But that requires a level of design, sourcing and supply management skills previously not available to a charity like Motivation.
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For the past 24 months, B&Q’s direct sourcing team and Kingfisher have funded and worked with Motivation to finalise the design of a chair suitable for mass production and global distribution. During the summer of 2003 the design was tested both in a laboratory and in real life conditions in Sri Lanka. Final changes to the design will lead to our direct sourcing team looking for a suitable factory in 2004 with an ambition to have the first order delivered early in 2005. B&Q UK will also fund the production of some wheelchairs and intends to work with other Kingfisher companies across the Group to help them participate in the funding of further chairs.
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towards more sustainable homes
using our ranges and marketing to encourage sustainable living
The very essence of our business is to provide people with the products they need to improve their homes and their quality of life. Improving quality of life is also a main driver of the sustainable development debate. Sustainable development is about balancing the needs of a healthy economy with environmental and social needs. Through our ‘ladders’ approach we have a methodology that allows our businesses around the world to grow, but also respond to the environmental and social issues that impact on our stores and products. The sustainable development debate, however, goes a long way beyond our business into public policy and even our customers’ homes. Collectively, our homes have an enormous impact on the environment. 45% of all the energy generated across the world is used to heat, light and ventilate buildings. As the demand for housing increases, the pressure on the Earth’s existing resources to meet that energy demand becomes ever more intense.
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Therefore, not only will we as a business have to address these environmental and social issues, our customers, through growing awareness and even public policy, will find themselves turning more and more to running homes with a lower environmental impact. As a home improvement retailer, it is essential for us to be aware what this trend means for our product range. Our stores around the world have already increased the availability of water-based paint in our range. Energy-efficient light bulbs are now better value and the sales volumes are growing. But we now need to consider what more we can do and say to our customers. Should we give them more information on the environmental issues associated with our products?
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Case study: Paint For example, B&Q China in 2003 developed an educational promotion on water-based paints to inform its customers of the benefits. Operating companies will continue to be encouraged to give their customers the products and information to help enhance the quality of their home whilst making them more energy-efficient and environmentally sound. It is not our role to tell our customers how to live their lives, but as the debates around sustainable consumption and sustainable development evolve, we as a retailer need to be ready to respond through the products we offer and the information we provide.
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Paint is core to home improvement.The story starts with its various raw materials, most of which are composed of hydrocarbons or Titanium dioxide. Although these raw materials cause concern, the most significant issues surround product use. As paint dries, volatile organic compounds (VOCs) are emitted into the air, causing unpleasant smells and headaches. This is why B&Q UK has been reformulating paint to reduce its dependency on the solvents and VOCs.To help customer choice, the VOCs label was introduced in 1995. In 2004 this label will be reviewed to ensure compliance with the proposed EU paint directive, while the Asian businesses will look into rationalising the environmental labels on their paint ranges.
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eco design
The need for more sustainable living is being addressed by public policy.There are many draft forms of European legislation that would shape the design and nature of our products. Electrical goods, for example, have to be designed to be recycled, reused or refurbished. A long list of toxic chemicals must be removed from products and there is draft policy to encourage life-cycle thinking in the design of all products. It is essential for Kingfisher to find ways to comply with these directives and ideally go beyond the proposed standards. This, however, must be achieved at a low cost if our customers are not going to reject the changes.This requires planning. We should have to design our products not only to comply with the latest legislation, but also to the best of our ability with future legislation. By combining these, we have devised 12 principles that we believe should be applied to design products ready for the future.
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our commitment
12 principles 1.
Long-term availability of raw materials
2.
Raw material extraction
3.
Pollution from manufacture
4.
Quality of life of all the people touched by the supply chain
5.
Packaging
6.
Energy in transport
7.
Energy in use
8.
Use
9.
Inclusive design
10. Product disposal 11. Service provided 12. Transparency of information
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Last years targets and next steps
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Kingfisher CSR Management System to be in place by 2003 – Achieved – this report represents the third CSR report on behalf of the Group.The first report introduced the ladder concept whilst the second report described progress embedding that system across the Group. New Target – By June 2004 to have confirmed one year and five year targets for each company shown on our web page. Indicators agreed by May 2003 Achieved New Target – By June 2004 to have indicators collated and published on our webpage. Policy on each trend agreed Achieved New Target – By June 2004 to have these published and displayed on our web page. Management awareness Achieved – Senior management training programme in China. New Target – To continue training ensuring that the boards of
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by Alan Knight, Head of Social Responsibility, Kingfisher plc. each operating company have been made aware of the 12 ladders through board meetings and/or individual briefings. Directors’ manual – first draft completed and will be combined with the policy publication due in June 2004. To trial independent verification of at least one operating company Achieved – B&Q UK has been trialling third-party verification. Publish third report Achieved – indicators will appear on our new web page. New Target – By March 2005 fourth report to be published. Re-launch of web page Achieved New Target – By December 2004 – to further revise our web page to include extra information, establishing it as the main reporting format for the Group on CSR.
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