Kesko's Corporate Responsibility Report for 2004 will be published in English towards the end of May.
Generally good performance in 2004
Kesko's good economic performance contributed to the wellbeing of its employees, suppliers, shareholders and public authorities. The best achievements in environmental responsibility included reductions in energy consumption and emissions, high levels of waste recovery, and further expansion of recycling. Relative transportation-related emissions increased per ton and per cubic metre delivered, but total emissions remained unchanged, however. In social responsibility, job satisfaction remained unchanged in Finland, improved slightly in Sweden and fell slightly in the Baltic countries. The number of employees increased in Finland and in the Baltic countries in particular, and staff turnover grew slightly. The number of sick days per employee grew. The number of training days decreased, but more money was spent on training. The proportion of women in top and middle management increased for the fifth year in succession.
Kesko's good economic performance contributed to the wellbeing of its employees, suppliers, shareholders and public authorities. The best achievements in environmental responsibility included reductions in energy consumption and emissions, high levels of waste recovery, and further expansion of recycling. Relative transportation-related emissions increased per ton and per cubic metre delivered, but total emissions remained unchanged, however. In social responsibility, job satisfaction remained unchanged in Finland, improved slightly in Sweden and fell slightly in the Baltic countries. The number of employees increased in Finland and in the Baltic countries in particular, and staff turnover grew slightly. The number of sick days per employee grew. The number of training days decreased, but more money was spent on training. The proportion of women in top and middle management increased for the fifth year in succession.
High proportion of domestic purchases, providing benefits valued at five billion euros to Finnish regions
Kesko bought goods and services from Finnish suppliers to a value of EUR 4.5 billion, and from other countries to a value of EUR 2.0 billion. In Finland, domestic purchases accounted for 90% of food and 93% of hardware and builders' supplies, compared with the average of 80% in the whole Group. In Kesko's Baltic operations, the proportion of domestic purchases was likewise similar, at some 90% in food, whereas in the hardware and builders' supplies and agricultural trade the proportion of imports was higher than in Finland. Finnish production accounted for 54% of the volume of Kesko's own Pirkka products and 68% of their sales. All in all, Kesko and K-retailers in Finland generated over EUR 5 billion in purchases, investments, salaries and taxes - detailed by region in this report.
International recognition and participation
Kesko was chosen as the best in its sector in the Dow Jones 2005 Sustainability Index for European Companies and was included among the 100 most sustainable companies in the world at the World Economic Forum in January 2005. Kesko had a representative on the EU Multi-Stakeholder Forum on CSR, which issued its final report in June 2004. Currently Kesko has a representative in the group of experts of the Global Reporting Initiative working on updating the GRI recommended indicators by summer 2006.
Kesko was chosen as the best in its sector in the Dow Jones 2005 Sustainability Index for European Companies and was included among the 100 most sustainable companies in the world at the World Economic Forum in January 2005. Kesko had a representative on the EU Multi-Stakeholder Forum on CSR, which issued its final report in June 2004. Currently Kesko has a representative in the group of experts of the Global Reporting Initiative working on updating the GRI recommended indicators by summer 2006.
Kesko's Corporate Responsibility Report for 2004 will be published in English towards the end of May.
Further information: Kesko Corporation/Corporate Responsibility, Head of the Unit Jouko Kuisma, tel. +358 1053 23140 or +358 50 5143 043, jouko.kuisma@kesko.fi and Senior Manager Ulla Rehell, tel. +358 1053 22464 or +358 50 383 9426, ulla.rehell@kesko.fi
Attachment: Kesko's performance in corporate responsibility in 2004
Kesko has published an annual corporate responsibility report following the guidelines of the Global Reporting Initiative (GRI) since 2000. An independent assurance has been provided for Kesko's report since 2002 by PricewaterhouseCoopers Oy, Kesko's auditors.
Economic responsibility
Kesko's profit improved, the market value of its shares increased, and its dividend yield remained high in 2004. The number of Kesko shareholders increased by over a thousand. The proportion of non-Finnish shareholders grew to 23.3% from 16.8% in 2004. Investments totalled 170 million euros, of which 44 million euros were invested in business operations outside Finland.
Kesko rated highly by international sustainability indicators
Kesko was rated the best in its sector in the Dow Jones 2005 Sustainability Index for European Companies published in September 2004. Kesko was also included in the first the Global 100 Most Sustainable Corporations list, drawn up by Innovest Strategic Value Advisors Inc. Launched in January 2005 by the World Economic Forum, this list highlights companies' ability to link economic, environmental and social responsibility to their strategies as factors contributing to profitability and added value.
Proportion of domestic purchases remained high
Kesko had approximately 14,400 Finnish and 5,200 foreign suppliers of goods and services in 2004. Purchases in Finland totalled EUR 4.5 billion, and EUR 2.0 billion from other countries. In terms of imports (Kesko's own direct imports excluding VV-Auto and Kaukomarkkinat), the largest countries were Germany (EUR 73 million), Sweden (EUR 47 million), China (EUR 45 million) and Italy (EUR 44 million). One hundred suppliers accounted for 52% of Kesko's purchases.
For the first time, the report presents Kesko's domestic purchases both by division and country. In Finland, domestic purchases accounted for 90% of food and 93% of hardware and builders' supplies, while the average for the whole Group was 80%. In the Baltic countries, domestic purchases also accounted for around 90% of Kesko's food purchases, but the proportion of imports in the hardware and builders' supplies and agricultural trade was higher than in Finland. Finnish production accounted for 54% of the volume of Kesko's own Pirkka products and 68% of Pirkka sales.
The economic benefits produced by Kesko and K-retailers across Finland totalled over EUR 5 billion, of which nearly EUR 2.5 billion was directed outside the region of Uusimaa. Approximately 10% of Kesko's purchases are not covered by the statistics. K-retailers' direct purchases from local suppliers totalled about EUR 400 million.
Environmental responsibility
Kesko has reported on its environmental responsibility since 1997. Kesko's environmental system in Finland - including all Anttila and Kodin Ykkönen department stores - has been certified in accordance with the ISO 14001 standard. No corresponding system has yet been implemented in subsidiaries outside Finland, but Kesko Food's and ICA AB's joint venture, Rimi Baltic AB, plans to start the work this year. K-stores' own environmental system - the K-environmental store diploma - had been adopted by 287 K-stores by the end of 2004. The system was incorporated in the K-food store chain concepts.
Energy saving
Energy saving was adopted as the theme for 2004 in Kesko's real estate operations in Finland. The consumption of electricity totalled 638 GWh, a reduction of 4.3% on 2003. When the reduction in floor area that took place during the year is taken into account, consumption remained unchanged. Heat consumption (259 GWh) fell by 9.9% if temperature adjustments are taken into consideration, and combined energy costs dropped by 5-6%. Looking at operations in all countries together, electricity consumption in the Kesko Group decreased by 1.5%, heat consumption by 12%, climate warming-related emissions by 16%, and acidifying emissions by 20%.
Relative transport-related emissions increased
The volumetric efficiency of loads increased by over 5%, but as the average driving distance per load rose by 15%, relative carbon dioxide emissions increased by 6% per ton delivered and by nearly 10% per cubic metre delivered. Total emissions remained unchanged. Kesko Food's return logistics collected approximately 28 million packages for recovery and reuse - the same as in 2003. The waste recovery rate dropped at Kesko Food's warehouses from 90.6% to 89.9% and rose at the Anttila central warehouse from 87.2% to 91.4%.
Customers interested in quality and product safety
Kesko Food's Customer Service Unit in Finland received over 17,000 feedback items during 2004, and answers were given to all of them. 9,400 samples of new products and 1,300 self-control samples were analysed. There were 30 product recalls from K-stores, most caused by defective quality or taste, or a manufacturing or packaging error. Two were food alert cases, involving a potential health hazard.
Social responsibility
The Group had 22,146 employees (+ 2,735) at the end of 2004, of whom 8,544 (+ 1,729) outside Finland. Fixed-term employees accounted for 10.2% and part-time employees for 27.8% of all personnel. The proportion of both fixed-time and part-time employees dropped in Finland and in other countries. In January 2005, the number of employees increased by over 700 when Keswell Ltd, a Kesko subsidiary, acquired Indoor Group. Over 70% of all Group employees work in the retail trade. Staff turnover in Finland was 24%, and varied between 23% and 38% in other countries.
Job satisfaction unchanged
The job satisfaction of Kesko employees remained unchanged in Finland, improved in Sweden, and fell in the Baltic countries. The number of sick days per person increased in Finland and decreased in other countries. In Finland, the change was largely due to more accurate registering of short absences. The average retirement age dropped again slightly after taking an upward turn in 2003. The proportion of women in top and middle management continued to increase for the fifth successive year.
New focus on social auditing of suppliers
Kesko's purchases from countries included in the sphere of social quality control totalled EUR 110 million, or 1.7% all purchases. A certificate complying with the SA 8000 standard has been obtained by 24 suppliers with a total of 54,000 employees. At the beginning of 2005, Kesko joined the Business Social Compliance Initiative, BSCI, established by European trade chains to promote a uniform auditing practice among suppliers in developing countries. By March 2005, 29 Kesko suppliers had passed a BSCI audit or were preparing for one.
UNICEF project achieved good results
Kesko's five-year co-operation project with UNICEF India to prevent child labour came to an end, as agreed, at the end of 2004. The project was first implemented in the town of Bhiwandi, and later in the town of Malegaon as well. Both are centres of the weaving industry and are estimated to employ around 70,000 children in all. During the project, nearly 10,000 children have started attending school, and about 800 mothers have employed themselves. Over 14,000 children have been to health and tuberculosis tests and vaccinations, of whom 2,800 have been sent for treatment.