ACTINGRESPONSIBLY

Contents

03 SCHWARZ GROUP PROFILE04 Our Group and Our Locations

06 Shaping Change

08 Analysing our Priority Issues

10 Managing Sustainability

12 SUSTAINABLE PRODUCT RANGE13 Environmentally Friendly Business with Strong Partners

14 Bringing Sustainable Consumption to the Society at large

16 ECONOMY– RESPONSIBLE GROWTH17 Strong Market Position

18 Future-Oriented Stores

20 ENVIRONMENT – RESPONSIBLE VALUE CREATION

21 Conserving Resources

23 Valuing Recyclables

24 Supporting the Energy and Mobility Transition

26 SOCIAL COMMITMENT TO EMPLOYEES AND COMMUNITY27 Our Staff

28 Raising Awareness

29 Joining Forces for a Good Cause

30 Legal Notice

All information stated relates to the Schwarz Group 2018 fiscal year (March 2018 - February 2019). Any information that deviates from this is reported separately.

02

The Schwarz Group is one of the largest retailers in the world. We cover the lion’s share of the food retail value chain in house – from production through retailing to recycling. We endeavor to use and increase our ­influence­to­drive­forward­sustainable­development.

SCHWARZ GROUPPROFILE

Around

employees

429,00012,100 stores

worldwideOver

100 billioneurosin turnover

Over

03

Our Group and Our Locations

GreenCycle GreenCycle, with its PreZero sales brand, is a globally active waste management and recycling company belonging to the Schwarz Group.

GreenCycle uses its recycling expertise to contribute to Schwarz Group’s plastic strategy.

Kaufland­–­the­Full-range­RetailerKaufland operates over 1,300 stores in Germany and Eastern Europe, and also plans to open stores soon in Australia. It offers a total of

around 25,000 products in its large- scale stores, inclu-ding 1,700 organic food items. As a full-range retailer, Kaufland offers its customers a wide range of food and non-food products. It also produces a significant part of its prepared meat products in its own meat proces-sing factories.

Lidl – the DiscounterLidl is present in 30 countries around the world, and currently operates 10,800 stores and over 160 goods distribution centers. On average,

the assortment of Lidl includes 3,800 different products per year, of which an average of 250 are organic. As a discount supermarket, Lidl focuses on good quality for low prices.

Production The production companies Mittel-deutsche Erfrischungsgetränke (MEG),

Bonback, Bon Gelati, and Solent belong to the Schwarz Group. They produce own brand products (beverages, chocolate, baked goods and ice cream) for Kaufland and Lidl. In addition, returned beverage bottles are recycled to create new ones in the group’s own recycling and plastic processing plants.

Schwarz DienstleistungenThe Schwarz Group pools a variety of services and offers them to all

its group divisions. These include operational and ad-ministrative activities in Administration, IT and Central Services.

04

Production plants

GreenCycle

Lidl

Kaufland and Lidl

China

Hong Kong

USA Australia

represented in more than

30 countries

Expansion of Kaufland or Lidl

05

Leveraging­our­Influence

The Schwarz Group is working together with its group divisons, customers and partners to drive the transition towards a sustainable society along its value chain. We make our contribution where we have the greatest leverage – in production, retail, consumption and recycling – in order to advance sustainable development in retail.

Shaping ChangeAs one of the world’s leading retailers, we shape the change neces-sary in those places we can actively make an impact: in production, in ­consumption­and­in­recycling­of­our­products.­We­are­taking­bold­action­to­support­the­goals­of­the­global­agenda­for­2030.­In­pursuit­of­these­goals we will set new industry standards.

Our Vision“Taking bold decisions for sustainable transformation – together, every day.”

SDG­12­–­Ensure­sustainableconsumption and production patterns

Transitioning to a sustainable economy and lifestyle can only work if we change our consumption habits and produc-tion methods. To achieve this, we have to reduce our consumption of natural resources, as well as the quantity of waste and pollutants we generate along the entire value chain. As the third largest sector of the economy, retail is directly involved in how natural re-sources are processed and consumed. It is for this reason that the Schwarz Group focusses its sustainability efforts on Sustainable Development Goal (SDG) 12.

06

We will strive to achieve healthy and environmentally friendly use of chemicals in production of our own brands by 2030.

We are conducting a systematic analysis until 2020 in order to set sustainable goals for our most relevant raw materials.

By 2025, we will significantly reduce food waste in our own production and retail in all countries and will enable customers to do the same.

We will reduce food waste for selected raw materials along the supply chain.

We will empower and support all of our employees in sustainably performing their jobs by 2022, and continue to do so thereafter.

We will provide our customers with greater transparency on the social, environmental and health-related effects of our product offe-ring, enabling them to make conscious decisions, by 2025.

We will reuse, recycle or recover a significant percentage of the waste generated in the company by 2025.

Sustainable­Raw­Materials

Food Waste

Chemicals

Zero Waste

Empowerment

Our Commitments

To underpin the strategic focus on SDG12, the Schwarz Group is cooperating with its different business units and subsidiaries, to achieve the SDG 12 targets relevant to the group’s business. It has set the first milestones towards the ambitious goals as follows:

SDG 12.2

SDG 12.3

SDG 12.4

SDG 12.5

SDG 12.8

07

Analysing our Priority Issues

Materiality Process with an SDG Focus

Step 1: Determining relevant issuesThe 17 Sustainable Development Goals (SDGs) with 169 targets served as the basis for the materiality assessment the Schwarz Group concluded in 2018. Together with external experts, the Schwarz Group initially pared these issues down to 80 company and industry-relevant goals divided into 17 categories. Combining these with two expanded categories, animal welfare and product quality/safety, yielded 19 categories with a total of 45 individual issues available for impact assessment.

Step 2: Assessing impactIn order to analyze the Schwarz Group’s impact on its environment, the group’s SDG achievement status was compared to the group’s value creation. The Schwarz Group used the Bertelsmann Stiftung SDG Index to analyze the targets relevant to specific countries, based on their implementation status. Those targets with achie-vement status rated as below average were then compared in a subsequent step with value creation or Schwarz Group sales in the countries concerned. Such comparisons enabled determination of the issues on whose improvement the Schwarz Group potentially has the greatest influence through its core business.

Step 3: Surveying stakeholderThe Schwarz Group surveyed more than 1,100 individuals from our relevant stakeholder groups on the materiality of the selected issues, online in May 2018. The survey sample included employees, business partners and banks. With a response rate of 33 percent, the Schwarz Group obtained results that represent the sustainability issues that the stakeholders consider the most important.

Step 4: Identifying key issuesThe final step involved superimposing the results of the impact assessment and the stakeholder survey on all stages of the value chain. This step identified six key issues: waste and chemicals, climate protection, economic development, water and oceans, resource efficiency and health management. These six issues were identified as having the greatest need for action in the countries in which the Schwarz Group operates.

The­Schwarz­Group­surveyed­its­stakeholders­in­2018­on­relevant­sustainability­issues­to­serve­as­the­basis­for­its­corporate­social­responsibility­(CSR)­focus.­The­key­issues,­that­were­identified,­indicate­the­aspects­on­which­our­stake-holder groups expect transparency. The materiality assessment thus constitutes the­basis­for­Schwarz­Group­reporting.

More than36008

Associationsand

policymakersBusinesspartners

Banks

Managers

CustomersNGOs

Employees

Scientificcommunity

stakeholders participatedin the survey.

Schwarz Groupstakeholders

360 09

Managing­Sustainability

Managing­Sustainability­Effectively

The requirements for effective CSR management are just as varied as the Schwarz Group’s areas of activity – from production, through retail, to recycling. The group divisions separately manage their sustainability activities in line with their individual environments for this very reason. The Schwarz Group has set out the CSR ma-nagement requirements in a central framework in order to ensure common understanding throughout the group. This framework will be further developed on a continuous basis together with the group divisions’ CSR managers.

Group-wide­Exchange­

Regular exchange of information among the group divisions is crucial for implementing environmental, social and economic aspects in day-to-day business in the same way throughout the group. The Schwarz CSR committee, to which the CSR managers of all group divisions belong, serves this purpose. It facilitates joint definition and long-term development of group-wide guidelines and general conditions. The committee, headed and coordinated by Schwarz Dienstleistungen CSR, normally meets once a month.

Business­success­and­social­responsibility­are­inseparable­principles­for­the­Schwarz­Group.­This­attitude­is­firmly­rooted­throughout­the­group­in­our­­corporate­principles.­The­implementation­of­CSR­is­tailored­to­the­specific­environment­of each devision. A joint committee in which all group divisions are represented ­ensures­a­group-wide­exchange­of­ideas.

KPIs and Measures at a Glance

Group-wide transparency with regard to CSR measures and KPIs is essential for comprehensive sustainability management. These constitute the central elements of reporting for internal and external stakeholders.

The Schwarz Group has introduced a group-wide software solution to ensure a comprehensive view of the measures of each group divi-sion and country. This software allows employees to customize their view of CSR measures and campaigns from any country to meet their own specific needs. It enables CSR managers and other emp-loyees to access best practices and adapt them for their respective country. Moreover, selected CSR measures serve to demonstrate the Schwarz Group’s sustainability performance.

The Schwarz Group also keeps an eye on its sustainability KPIs. To this end, it has defined a group-wide set of CSR KPIs, which it uniformly records and further develops for all countries and group divisions. It based its selection of key issues on the internationally recognized Global Reporting Initiative (GRI) Standards.

Our­corporate­principle­on­sustainability:“We assume economic, social and ecological responsibility in our daily activities.”

10

Schwarz CSR Committee

inform decide and instruct

System and process initiator

GR

OU

P D

IVIS

ION

S

CSRKaufland

DE

CSRKaufland

PL

CSRKaufland

...

CO

UN

TRIE

S

Management of group divisionsResponsible for sustainability

CSR CSR CSR CSR CSR

CSRLidlDE

CSRLidlES

CSRLidl...

11

1,700

The Schwarz Group is consciously expanding the share of its products that are environmentally friendly and fairly traded. Ultimately, as­a­visible­interface­to­our­customers,­they­directly­promote­sustainable­­consumption.­The­quality­and­sustainability­of­our­products­is­decisively­­ thanks to the production processes we develop in house and in close collaboration­with­our­suppliers.

SUSTAINABLE RANGEOF GOODS

PRODUCTS

organic products are available­in­the­Kaufland­range on average.

organic­products­are­available­in the Lidl range on average.

250Around

Around

12

1,700

Environmentally FriendlyBusiness with Strong Partners

Lidl Cooperation with Bioland

Lidl Germany has been cooperating with Bioland, the leading asso-ciation for organic farming in Germany, since October 2018, in order to bring top-quality and local organic products to its German stores. Bioland has already certified a total of around 50 items that meet its strict criteria. For example, Bioland quality apples, herbs, wheat flour and almost all dairy products of Lidl’s own BioOrganic brand are now for sale throughout the country.

Lidl and Bioland would like to effectively develop the sustainable farming and food industry in the long term. The focus is on gradually transitioning traditional farms and EU organic farms to meet Bioland criteria in order to offer a sufficient supply of high-quality organic food.

Demeter­Range­at­Kaufland­

Kaufland focuses on food of excellent organic quality: It has offered more than 150 Demeter products, largely from the Demeter Campo Verde brand, since February 2019. The Demeter range includes juices, sandwich spreads, dairy products, canned vegetables, cooking oils, pasta, flours, cereals, baked goods, as well as fruit and vegetables. Very strict biodynamic agricultural standards that extend far beyond the minimum EU organic label apply to members certified by Demeter – Germany’s oldest organic food association.

Kaufland will expand the Demeter offering to include more than 200 products by the end of 2019.

Making­high­quality­organic­food­available­to­large­groups­of­the­population­–­in­cooperation­with­well-known­organic­food­associa-tions,­Kaufland­and­Lidl­are­offering­their­customers­more­and­more­organic­food­locally­produced­to­high­standards­–­thereby­breaking­it out of its niche status.

13

Bringing­Sustainable­Consumption­to the Society at largeWithin­the­Schwarz­Group,­Kaufland­and­Lidl­exercise­the­­greatest­­influence­on­sustainable­consumption­with­the­composition­of­their­­product­range.­They­assume­direct­responsibility,­with­their­own­brands,­in­particular.­They­are­also­committed­to­a­sustainable­­assortment­with­other­brand-name­and­supplier­products.

Sustainable­Employee­Uniforms

The Schwarz Group also focuses on sustainability under its own roof. Kaufland and Lidl attach great importance to sustainably produced uniforms. All store employee uniforms worldwide are produced from organic cotton, in compliance with the strict Global Organic Textile Standard (GOTS) criteria. In addition, some compo-nents of our store uniforms are also fair-trade certified.

Moreover, some of the old Kaufland employee uniforms in Germany and six other European countries are not merely disposed of, but recycled with the support of the group’s own recycling company GreenCycle. This produces thermal blankets that Kaufland donates to the Workers’ Samaritan Federation (Arbeiter-Samariter-Bund – ASB).

Lidl Detox CommitmentInterim Report

Kaufland DetoxReport In 2018 Kaufland donated more

than 10,000 blankets made of recycled employee uniforms.

Sustainable­Clothing­on­Offer

The processes for manufacturing textiles and shoes, such as dying, gluing and printing, rely on chemicals. With this in mind, Kaufland and Lidl have joined Greenpeace’s Detox campaign to keep potential dangers to humans and the environment to a minimum. In implemen-ting this move, the supermarkets aim to replace potentially hazardous chemicals with more environmentally friendly ones in the manufacture of their own brands of clothing and shoes. They also plan to reduce the amounts of chemicals used in general.

Kaufland and Lidl intend to completely eliminate from their global supply chains the use and release of the 11 priority groups of hazardous chemicals identified by Greenpeace in their clothing and shoe production.

More detailed information on the current implementation status of the Detox campaign is available here:

14

Environmentally Friendly Range

In order to address consumers’ growing demands for productsmanufactured in a responsible and environmentally friendly manner,the Schwarz Group relies on different types of certification for itsrange of goods, including Blue Angel. The ecolabel of the Germanfederal government identifies products that are more environmen-tally friendly and protect people’s health without compromising pro-duct usage. Examples of such products include sanitary and paperproducts made of 100% recycled paper, and garbage bags made ofrecycled plastics. Kaufland and Lidl offer Blue Angel certified itemsin their stores across Europe, thus making environmentally friendlyitems accessible to a broad range of customers.

Raising Consumer Awareness

The retail goods produced by Kaufland and Lidl in line with environ-mental and social standards are clearly labeled with the relevantproduct seals. Brochures and packaging include information on product sustainability features in order to make consumers more aware of the benefits.

You can find an overview online of all logos and certifications identifying sustainable products sold by Kaufland and Lidl.

The­number­of­items­certified­by­seal­offered­in­the­Kaufland­and­Lidl­ranges*:

* refers to the average range in all countries

UTZ

FSC

Rainforest Alliance

Fairtrade

>70

>280

LidlKaufland

>180

>20

>70

>120

>20

>180

www.ra.org/siegel

15

The Schwarz Group sets standards with its record turnover in 2018, and demonstrated it could hold its own in a challenging environment. A large share of our investments goes to expanding­and­modernizing­Kaufland­and­Lidl­stores.­This­is­our­way­of­addressing­the­need for contemporary store design.

RESPONSIBLEGROWTH

ECONOMY

This represents an increasefrom 2014 to 2018 of

Net turnover in the Schwarz Groupcore­businessin billions of euros

20142015

20162017

2018

79.485.7

90.296.9

104.3

+31.4 %16

sorting and recycling plants30

The Schwarz Group posted sales of more than EUR 100 billion for the first time in fiscal year 2018. This followed more than a 30 percent increase in net sales in the past five years, with the company thus continuing to expand its market position as the largest retailer in Europe. The Schwarz Group constantly maintained its total investments in 2018 at the same high level of the previous year of EUR 7.5 billion. A large portion go to expanding and modernizing Kaufland and Lidl stores. We would like to further increase the current number of Kaufland and Lidl stores worldwide (approximately 12,100) after adding close to 400 in 2018.

Digitalization also plays an increasingly important role as an ad-ditional growth driver. Lidl Online is currently operating in six countries and has more than 18 million customers. In 2018 alone, Lidl increased its sales of non-food items in the online area by 56 percent. Kaufland’s customer app, a digital shopping aid and source of recipe suggestions is becoming increasingly popular.

Since 2006, the Schwarz Group has continuously expanded its portfolio beyond its retail business by adding its own food produc-tion capacities. It currently manufactures its own brand of chocola-te, dried fruit, baked goods and ice cream, as well as mineral water and soft drinks.

Moreover the Schwarz Group is also strengthening its waste dis-posal and recycling business. With the acquisition of disposal firm Tönsmeier by its own service provider GreenCycle, the Schwarz Group has established recyclables management as an additional business segment, thereby promoting a holistic single-source circu-lar economy.

Strong Market Position

production plants16

warehouses219

new store openingsincluding replacement locations

626stores12.118

17

Future-Oriented­StoresSuburban­locations,­rural­areas,­heavily­built-up­city­centers­–­there­is­a­broad­variety­of­demands­depending­on­the­location,­sometimes­even­challenges­in­potential­construction.­We­offer­the­right­solution­for­every­location and develop strategies for the ideal store design with our wide range of store concepts.

Flexibility­

Lidl offers different store concepts for a variety of requirements:• The basic store: open, light and customer-oriented• The metropolitan store: modern and flexible – designed

for urban centers • The city center store: perfectly integrated• The retail park: many offerings at a single site• Special stores: customized solutions for unique buildings

and locationsLidl opened its first metropolitan store in Barcelona in 2016. Itscompact construction style pays off, particularly in heavily built-upmetropolitan areas like Catalonia’s capital.

Kaufland has always practiced flexible construction. Its store typesare adapted to location features based on the size of the property– from single-story stores with parking lots in front to elevated storesolutions with parking lots on the ground floor and the sales areaabove. Underground parking solutions are also an option, parti-cularly in urban spaces. Location-specific designs with multi-use enable Kaufland to offer urban solutions for property sizes starting from 6,000 m².

Focus­on­Sustainability

Sustainable construction and energy efficiency play an important role in Kaufland and Lidl store designs. In their new builds, for example, the company is increasingly using photovoltaic systems and quick charging stations with green electricity for electric cars. Green roofs can help to filter pollutants from the air and support water retention. Waste heat generated by cooling systems enables some stores to heat without the use of fossil fuels.

For more information on sustainable construction by the SchwarzGroup, see the Environment section on pages 24/25.

Overview of store typesLidlKaufland

18

MobilityCustomers can currently chargetheir electric cars at the quickcharging stations free of chargewhile shopping.

Environment protectionGreen roofs can help to filter pollutants from the air and support water retention.

Climate protectionKaufland and Lidl can offer carbon-neutral electricity from solar powergenerated by rooftop photovoltaicsystems.

Energy­efficiency­Instead of only heating with combustiblessuch as oil, gas, and wood, waste heatgenerated by store chillers contributes toheating. The combined cooling/air conditio-ning systems save energy and conservenatural resources.

Sustainable­architecture

Integration intosurrounding­buildings

642,000 m2Over

+

+

+

+

photovoltaic systems are operated by­the­Schwarz­Group.­That­ corresponds to an area of around 90 soccer­fields.

19

The­Schwarz­Group­has­its­focus­set­on­the­entire­value­chain,­including­Kaufland­and Lidl, our production facilities and our waste disposal and recycling service provider­GreenCycle.­This­set-up­enables­us­to­effectively­implement­resource­­efficiency­initiatives­–­from­a­comprehensive­plastic­strategy­through­holistic­energy­management­to­green­mobility­concepts.

RESPONSIBLEVALUE CREATION

ENVIRONMENT

The­recycling­plants­process­returnable­PET­beverage­bottles­to­make­food­grade­PET­granules.

20

The­Schwarz­Group­was­one­of­the­first­retailers­to­include­a­commitment­in­its­plastic­strategy­to­significantly­reducing­plastic­consumption­in­production­and­the­retail­business.­We­aim­to­close­the­loop­for­materials­and­generate­tomorrow’s raw materials from today’s waste.

Conserving Resources

REset Plastic – the Schwarz Group Plastic Strategy

The Schwarz Group launched its international REset Plastic plastic strategy along its value chain at the start of 2018. Five areas of action serve to complete the circle and reduce con-sumption of plastic. We avoid plastic where possible, employ resource-conserving designs, collect, sort and recycle mate-rials, remove plastic waste from the environment, look for inno-vative solutions and raise awareness of resource conservation. The Schwarz Group has confirmed its commitment in signing up to the Ellen MacArthur Foundation’s Global Commitment. At the heart of the initiative is a vision of a new circular economy in which plastic no longer becomes a waste product.

For more information online, see reset-plastic.com

Our aims:

The­five­Action­Areas

REduceWe reduce plastic – wherever sustainably possible.

REdesignWe design recyclable packaging and close loops.

REcycleWe collect, sort and recycle plastics to close the loop.

REmoveWe support the removal of plastic waste from the environment.

REsearchWe invest in research and development of innovative solutions and educate on recycling.

- 20 %plastic at Kauflandand Lidl by 2025

recyclability of plasticpackaging for own brand by 2025

100 %

21

In the loop

One example of a closed material loop is the 1.5 liter PET bottle of Lidl’s own brand “Saskia” still mineral water. The bottle* is made exclusively of recycled PET collected in stores and sorted in the group’s own production facilities, where it is then recycled and made into new bottles. These are then filled and resold in Lidl stores. That means all process steps in the material loop are completed by a single source. New plastic is not needed for production. The bottles are currently available in Germany, Switzerland, Austria and Denmark. Other bottles of own-brand beverages Sakia and Freeway are made of at least 50 percent recycled material on average.

100 %Recycling-PET­“Saskia” still mineral water 1.5­L­bottle

Savings on new PET product: more than 10,000 tonnes of new PET per year

Carbon­savings­of­approx. 17,000 tonnes per year

STOP – Stop Ocean Plastics

Plastic waste in the world’s oceans is a global problem. In order to make its own contri-bution to removing plastic waste, the Schwarz Group has supported Project STOP as a technical partner – and the first food retailer – since the beginning of 2019. This leading initiative to prevent plastic waste from entering oceans cooperates with communities in Indonesia to develop efficient waste disposal systems there.

www.stopoceanplastics.com

* excluding cap and label

22

The Schwarz Group production facilities that manufacture Kaufland and Lidl’s own brands are also developing their production processes and packaging in the same environmentally friendly manner.

Raising Employee Awareness

Proper collection of all waste via waste sorting systems is key to achieving high rates of recycling in the company – and this needs to be in the very place where the waste is created. GreenCycle conti-nuously analyzes which types of waste are generated where in the Schwarz Group and how to plan collection and sorting as intuitively and simply as possible. GreenCycle educates store and logis-tics staff in its “Valuing recyclables” Campaign involving training courses, detailed brochures and videos. This enabled the Schwarz Group to increase its recycling rate.

GreenCycle is sharing this experience and advising companies, such as the Bundesliga soccer club TSG 1899 Hoffenheim, on recycling management. GreenCycle subsidiary PreZero replaced styrofoam cups for hot beverages with reusable cups. This saves around 400 kilograms of plastic per soccer match. Also, the two tonnes of stadium grass clippings collected each month are used to make paper for the annual supply of autograph cards.

“Valuing Recyclables”at the Schwarz Group

Waste­by­material­in tonnes

1,430,150 paper/cardboard

405,643 organic waste

163,291 PET

68,173 plastics54,143 wood

3,646 textiles

82,438 other recyclables

275,396 non-recyclable waste

2.5 million tonnes

of waste in fiscal year 2018

Valuing­RecyclablesThe group’s own waste disposal and recycling service provider PreZero, a­subsidiary­of­GreenCycle,­plays­an­important­role­in­Schwarz­Group’s­circu-lar­economy.­The­company­organizes­collection­and­recycling­of­all­reusable­­materials­generated­by­Kaufland­and­Lidl­store­and­logistics­operations­as­ well­as­by­the­production­facilities.­The­close­cooperation­between­the­group­divisions­in­­day-to-day­business­ensures­an­international­knowledge­transfer.

23

Supporting­the­Energy­and­Mobility­TransitionThe­Schwarz­Group­has­set­itself­the­aim­of­contributing­to­a­sustainable­energy­ and­mobility­transition.­To­this­end­it­constructs­energy-efficient­buildings­and­­covers­around­30­percent­of­total­electricity­consumption­exclusively­through­renewable­ energies – including from its own sources. We are increasing our focus on charging stations­for­electric­cars­and­bikes,­which­our­customers­and­employees­can­currently­use­free­of­charge,­to­promote­climate-friendly­mobility.

Energy-efficient­and­Sustainable­Construction

The Schwarz Group attaches great importance in its expansion to energy-efficient and sustainable construction of its stores, administ-rative buildings and goods distribution centers. To ensure this objec-tive is met it applies renowned national and international sustainable construction standards. Here are some examples:

* excluding Poland, Serbia and USA

BREEAM: “Building Research Establishment Environmental Assessment Method” is a UK sustainability certification scheme for real esta-te. In addition to other locations, the Lidl logis-tics center in Waddinxveen in the Netherlands has been awarded the BREEAM “Outstanding” seal of quality.

EDGE: “Excellence in Design for Greater Effi-ciencies” is a system for certifying sustainable buildings developed by the World Bank Group’s International Finance Corporation (IFC). All Lidl stores and the central warehouse in Lithuania, for example, as well as Kaufland stores in Bul-garia have been EDGE certified.

LEED: “Leadership in Energy and Environmental Design” is an internationally established green building rating system. Lidl’s US headquarters in Arlington, Virginia, for example, was LEED certified with a Gold rating in 2017.

Energy Management as the Basis

A holistic energy management system based on the international standard ISO 50001 enables the Schwarz Group to improve its energy efficiency and lower the associated carbon emissions. To achieve this objective, all group divisions had all relevant areas of their store locations, logistics centers and administrative buildings certified on the basis of this standard.*

Award-winning­Energy­Concept

The EHI Retail Institute e.V. awarded Lidl’s concept for climate pro-tection, ECO2NEXT, the EHI Energy Management Award 2018 in the “Cross-store energy management concept” category. Lidl Germany reduced its energy consumption in fiscal year 2017 by implementing effective measures in energy-efficient logistics, biogas extraction, alternative mobility solutions and store optimizations. Lidl increased the self-generated solar energy share of the company’s total energy consumption tenfold during the same period.

24

Fill­up­on­green­electricity­at­Kaufland­and­Lidl

Kaufland and Lidl customers can fill up on free electricity while doing their shopping. The company is actively promoting climate-friendly electro mobility by expanding its charging station network. The stations are operated mainly with green electricity from 100 percent renewable energies.

Absolute­Greenhouse­Gas­Emissions

Energy consumption is a key position with emissions of1,941,816 tonnes of CO2e (in Scope 2). That is why we are trying to gradually lower this position and reduce our carbon emissions by using green electricity. Nearly 30 percent of our current consumption comes exclusively from renewable sources.

Scope 3 2,854,038

Scope 1 879,629

Scope 2 1,979,302

5,712,969 tonnes

CO2e in fiscal year 2018

(market-oriented*)

Kaufland and Lidl stores are equipped with at least one electric charging station.

763

* The market-oriented approach uses energy providers’ emission factors.

Scope 1: Emissions from direct consumption of energy (building, fuel, refrigerant)Scope 2: Emissions from electric and district heatingScope 3: Emissions from the upstream and downstream supply chain (e.g. logistics, reusables, supplies)

25

COMMITMENT TO EMPLOYEES AND COMMUNITY

SOCIAL ASPECTS

Whether nutrition or circular economy, the Schwarz Group business­operates­in­various­areas­of­life.­The­group­is­not­only­committed­on­behalf­of­its­employees­to­actively­developing­these­issues,­but­also­collaborates­with­its­customers­on­cha-ritable­projects­as­well,­thereby­improving­living­and­working­conditions worldwide.

< 30 years of age

≥ 30 < 50 years of age

≥ 50 years of age

Age­distributionAverage age 36

Schwarz Group employees

33 %

13 %

54 %

428,599employees

66.9 %

33.1 %26

Our­StaffAround 429,000 employees worldwide are the foundation of the Schwarz­Group’s­success.­We­aim­to­offer­our­staff­a­safe­and­­attractive­work­­environment­characterized­by­mutual­appreciation.­Regular­awards­­confirm­that­we­are­on­track­in­our­human­resources­work.

Award-winning­Employer

Our business success is based on a high level of employee satisfaction. This is also reflected the awards we receive in this area.

... and in thesecountries:

KauflandBulgaria, Germany, Poland, Romania, Slovakia and the Czech Republic

LidlBelgium, Finland, Greece, Italy, Lithuania, Malta, the Nether-lands, Poland, Romania, Slova-kia, Spain, Cyprus

Great Place to Work

Climate-friendly­Employee­Mobility

A more relaxing commute to work and saving emissions at the same time – the Schwarz Group offers its employees at the central loca-tions around Heilbronn modern solutions for environmentally friendly mobility via its ready4green program.

Smart CarpoolingCommuter traffic is getting ever heavier. We offer our employees the opportunity to share rides and thus reduce traffic with our carpool app. The Twogo app automatically finds the right carpool for com-muters and drivers.

Bus & TrainEmployees receive a subscription of discounted monthly tickets for public transport plus an employer subsidy per ticket.

Electric­and­Hybrid­CarsElectric and hybrid cars have proven themselves most of all in the short distances between the main locations in the Heilbronn region. Different car models are thus available to Schwarz Group employees for business travel. The Schwarz Group is continuously adding to the offering of electric and hybrid cars and expanding the charging point infrastructure.

Bicycle DiscountEmployees receive a company discount on bicycles from a local partner company for climate-friendly rides to work.

Further information on ready4green can be

found online

Certified Top Employer 2019 in Europe ...

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Raising Awareness of Healthy Eatingand Conserving Resources

Kaufland and Lidl launch and support campaigns worldwide to teach children and adults a responsible approach to food and responsible use of natural resources. The objective is to create and raise awareness of the importance of maintaining a healthy, environ-mentally-friendly lifestyle.

• Kaufland has offered its own education program on environ-mental issues, such as plastic and bees, to children in Germany since 2004. It has reached around 270,000 children thus far in its “environment day” campaign. It cooperates with the Association of German Nature Parks (Verband Deutscher Naturparke e.V.). Around 150 events were held in schools and daycare centers around the country from March to November 2018.

• Lidl supports the “5 a Day” campaign through the Lidl Fruit School. In 2018 for the third year in a row, professional nutrition experts visited 200 elementary school classes around Germany, playfully motivating some 5,000 third and fourth-graders to learn more about balanced nutrition. They prepared simple meals together with the children and showed them how five portions of fruit and vegetables a day can be enjoyable. The idea was also implemented in a diffe-rent form in other countries, such as Greece and Spain.

• Lidl Netherlands has collaborated with the Missing Chapter Foun-dation since 2015 to actively involve children in decision-making processes. Elementary school children are introduced to business challenges relating to a conscious and sustainable lifestyle and are given a chance to develop their own ideas for solutions. The main question in 2018 was: How can Lidl help bees?

A Circular Economy Up Close

Creating value from waste – the GreenCycle business model is being presented in a special way at the National Garden Exhibition in Heil-bronn (BUGA Heilbronn) in 2019. A pavilion was constructed entirely out of recycled materials together with the Ministry of the Environ-ment Baden Württemberg, the waste management companies of the city of Heilbronn and the Karslruhe Institute of Technology. This crea-ted a visual expression of a complete circular economy. Information is offered inside the pavilion that introduces visitors to the issues of sustainability and recyclables in a fun way.

Raising Awareness

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Joining Forces for a Good Cause

Round it up, please!

Since 2012, Kaufland customers in Germany have been able to round up their shopping bill to the next higher 10-cent amount and donate the difference to a good cause. The donations benefit the “Germany rounds up” initiative, which supports charitable projects to promote disadvantaged children and adolescents in Germany. Kaufland customers have rounded up their bills more than 47 million times so far, generating more than EUR 2 million. This makes Kaufland one of the initiative’s three biggest partners. Moreover, Kaufland conducted seven campaigns from 2012 to 2018, in which it doubled the donations from its customers’ rounded up amounts. This yielded an additional EUR 280,000.

Kaufland has launched campaigns to support disadvantaged children in other countries as well. In Poland, for example, Kaufland suppor-ted the SOS Children’s Villages from 2016 to 2018, with customers and employees of Kaufland stores donating a total of EUR 175,500. Customers in Polish stores can now donate money to the Polish food bank via donation boxes located at the checkout.

Helping with Donations

Since 2008, Lidl customers in Germany have had the opportunity to donate their bottle deposit slip amount at all of the 6,100 Lidl reverse vending machines around the country. Lidl customer de-posit slip amounts and Lidl Germany’s daily food donations go to more than 940 local food banks. Lidl bottle deposit donations have generated over EUR 17 million so far, which the food banks have been able to use to finance charitable projects. These have focused, for instance, on help with homework for children and adolescents, cooking courses for families and cultural programs for people suffering from loneliness or poverty in old age. Other countries are also following the bottle deposit donation principle. Lidl Lithuania has supported a national donation project to support child daycare centers since 2017. The company also matches the customers’ donations.

1747Round it

up, please!

million times since 2012 – Germany’s Kaufland customers have rounded up their purchase amounts for a good cause.

Over

Over

million euros havebeen raised in Germany through the Lidl bottle deposit donation initiative.

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klimaneutralnatureOffice.com | DE-318-607181

gedruckt

Published­by­Schwarz Dienstleistung KGStiftsbergstraße 174172 NeckarsulmGermany

CSR/Sustainability­Departmentcsr@mail.schwarz

For further information, seewww.greencycle.de/nachhaltigkeit/nachhaltigkeit-bei-greencyclewww.kaufland.de/machenwww.lidl.de/verantwortungwww.meg-gruppe.de/unsere-umwelt.htmlwww.jobs.schwarz/wir-als-arbeitgeber/unsere-verantwortung

This brochure was printedon FSC®-certified paper

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