Actions and achievements in 2010

Product safety

We require our suppliers to follow strict product safety procedures and policies, which meet international standards. For our own-brand products, we use third-party auditing and certification for our suppliers.

Food safety

Ahold, together with a number of other retailers, founded the Global Food Safety Initiative (GFSI) in 2000 to establish a food-safety certification framework. Ahold was one of the first food retailers globally to demand adherence to GFSI-recognized standards from suppliers of own-brand food products in addition to our own food safety requirements.

Since then, we have certified our suppliers for the Netherlands and are currently in the process of certifying our suppliers for the Czech Republic, Slovakia and the United States to GFSI-recognized standards. Our target is to have 80 percent of our food suppliers certified to GFSI-recognized standards by the end of 2012.

Other examples of food safety initiatives during the reporting year include:

• Albert in the Czech Republic succeeded in obtaining certification of both its distribution centers against the British Retail Consortium (BRC) Storage and Distribution food safety standard
• In 2010, Albert also widened the scope of suppliers required to comply with GFSI standards. Previously, only suppliers of own-brand products were asked to gain certification, but this was widened to all delicatessen-counter suppliers. In 2009, 32 percent of suppliers were GFSI certified; by the end of 2010, 68 percent were certified and 9.5 percent are awaiting certification
• The “I care” project at ICA reinforces and coordinates ICA’s food safety requirements (as well as social compliance and other sustainability issues) between companies. This ensures better overall control, higher levels of transparency, and more consistent standards in the supply chain. ICA Sweden reached the 80 percent target for GFSI certification of own-brand suppliers in 2010

Non-food safety

Our assortment now contains more non-food products than ever before – especially since Albert Heijn broadened its non-food range during the reporting year. We aim to manage the safety of our non-food products in a similar way to food safety.

In Europe, we require our own-brand non-food suppliers to have the British Retail Consortium (BRC) Consumer Products certification or equivalent for high-risk products. In the United States, we have a third-party verification program for high-risk products.¹

1 See Glossary for definition of high-risk products.

Sustainably sourced products

Sustainable sourcing covers a wide range of issues: we want our own products to be produced, grown or sourced with consideration for – and responsibility towards – the people, animals and environment involved in their production. Currently, sustainability issues include climate change, biodiversity, exploitation of land and water, social conditions, animal welfare, product safety, waste, and packaging reduction. However, these criteria are expected to grow and change over time – and we will update our strategy to reflect this as needed.

In 2010, Dick Boer, then-Chief Operating Officer of Ahold Europe, announced that all of Ahold Europe’s own-brand products should be more sustainable in 2015. This means that they must meet the needs of the customer in terms of price and quality, while minimizing their impact on the environment and – where possible – improving social conditions and animal welfare. The intention is to meet the needs of current and future customers, while securing the future of our business.

We inform our customers in a variety of ways about the sustainability credentials of the products we sell, so that they can make responsible choices. Our own-brand products carry the following sustainable-sourcing brands and labels:

• The “AH puur&eerlijk” (pure and honest) brand in Albert Heijn comprises five different categories: organic, fair trade, sustainable catch (seafood), free-range meat, and ecological non-food products. At the end of 2010, the total number of AH puur&eerlijk products was 382; the aim for 2011 is 500 products. In May 2010, Albert Heijn launched a three-week campaign on AH puur&eerlijk products, during which customers benefited from a discount of at least 25 percent over the entire range. The aim was to encourage more customers to make sustainable choices
• Albert offers the “Albert bio” range of organic products, and all coffee sold under the own brands “Albert Quality” and “Albert Excellent” is UTZ CERTIFIED
• The Nature’s Promise Marketplace in more than 90 Ahold stores in the United States is a dedicated section of the store offering organic and natural products, including coffees and teas
• The “ICA I love eco” range at ICA comprises organic products, a number of which are also Fairtrade certified. ICA sells around 200 ICA I love eco products; they were successfully introduced in the Baltic countries during 2010, and continue to sell well in Sweden and Norway
• ICA in Sweden also uses the KRAV organic label and EU organic certification. KRAV ensures a protected natural environment, proper care for animals, good health, and social responsibility. In some cases, KRAV standards (such as care for animals) are stricter than EU organic standards

Animal welfare

In food that contains animal products, we work to ensure the wellbeing of the animals, often implementing stricter controls than regulations require. Ahold is actively working with other stakeholders in the European Animal Welfare Platform to build a future roadmap for the main welfare issues identified in six selected supply chains: pork, beef, dairy, poultry meat, poultry eggs, and farmed salmon. This will assist the industry, governments, and NGOs in addressing welfare issues of common concern. Ahold does not commission any animal testing.

Examples of our animal welfare activities include:

• Starting in 2010, pork sold in Albert Heijn holds a minimum of one out of three stars for the quality of treatment of the animals. By June 2011, this will apply to all pork sold. This means, for instance, that the pigs have more living space of a higher quality, and the male pigs are no longer castrated. Some of Albert Heijn’s own-brand pork holds two or three stars as well. The star system was initiated and is maintained by the Dutch “Dierenbescherming” (animal protection agency)
• During the reporting year, ICA launched its “Farm pork” selection, with new, stricter requirements for the treatment of pigs. The pigs are raised on four selected farms in Sweden and, for instance, are fed only on Swedish-grown, GM-free feed

Critical commodities

We have set a specific target relating to six basic ingredients to which we pay special attention at all stages in the supply chain; these are known as critical commodities, and include tea, coffee, cocoa, palm oil, soy, and seafood. They potentially have an adverse impact on several sustainability issues (climate change, biodiversity, exploitation of land, excessive depletion of water, and social labor standards). We aim to reduce this impact by making use of approved standards and certifications.

Palm oil

Palm oil is used in approximately 40 percent of our own-brand products, including cookies, shampoo and oil for deep-fat frying. The production of palm oil potentially causes deforestation in several countries, including Indonesia and Malaysia.

Ahold is a member of the Roundtable for Sustainable Palm Oil (RSPO), which coordinates the certification of palm oil plantations to ensure that the oil is produced in a sustainable way. One of the RSPO’s commitments is to make sure that palm oil is never taken from recently planted plantations, to prevent further deforestation.

However, because certified sustainable palm oil is often mixed with other palm oil before it reaches the suppliers who make our own-brand products, it can be difficult to ensure the palm oil we are using comes from a certified plantation. We therefore buy GreenPalm certificates to offset our palm oil consumption¹. The money that we pay for GreenPalm certificates goes to growers of sustainable oil palms.

1 For 2010, Ahold purchased GreenPalm certificates to offset its estimated palm oil consumption (6,000 metric tons) for own-brand products. Our process for estimating palm oil consumption is detailed in the section Process and CO₂ conversion factors.

Coffee, tea and cocoa

UTZ CERTIFIED is a worldwide certification program for responsible coffee, cocoa and tea production and sourcing. Producers who are UTZ CERTIFIED comply with the UTZ CERTIFIED Code of Conduct. This is a set of economic, social, and environmental criteria for responsible production.

Fairtrade certification means that certified products have been produced according to specific social and environmental requirements. In addition, Fairtrade-certified producers receive a set premium paid by the customer for their certified products, which they must use to support their employees and the local community. UTZ CERTIFIED, on the other hand, does not require the customer to pay a set premium on the products, but instead focuses on working with producers to increase their efficiency and quality.

Certification initiatives across the Group include:

• Ahold’s own-brand coffee in Europe is UTZ CERTIFIED (except Albert Euroshopper) or Fairtrade certified. We are working towards UTZ CERTIFIED compliance for own-brand tea
• All own-brand Fairtrade products in the Netherlands are sold under the AH puur&eerlijk brand. In 2010, Albert Heijn’s own-brand chocolate bars and “chocolate letter” assortment, sold annually in preparation for the Dutch Sinterklaas holiday in December, was produced using only sustainable, UTZ CERTIFIED and Fairtrade cocoa
• Our U.S. operating companies sell Fairtrade coffee
• All ICA own-brand coffee products are UTZ CERTIFIED, and ICA has a growing number of Fairtrade products (both national and own brands). The own-brand products that are certified according to Fairtrade, UTZ CERTIFIED, and Rainforest Alliance include coffee and chocolate; their packaging has been re-designed to draw attention to these labels

Soy

Ahold is a member of the Round Table on Responsible Soy (RTRS), which works on the same principle as the RSPO. The RTRS supports the responsible production and trade of soy.

Through its membership of the Initiative for Sustainable Soy, Albert Heijn supports third-party certification and the responsible use of soy in cattle feed in the Netherlands. ICA participated in a stakeholder dialogue during 2010 on sustainable soy for cattle feed and various products. Soy is not considered to be a critical commodity in the United States as it is a soy-producing country.

Seafood

Our overall aim is to maintain seafood stocks and to minimize the potential adverse impacts of fish farms. We endeavor to buy as much seafood as possible from sustainable sources, such as those certified to the standards of the Marine Stewardship Council (MSC), and those meeting the standards of the Aquaculture Stewardship Council (ASC). We continue to work with our current sources, as well, in order to work collaboratively on further improvements. We also take advice from the World Wildlife Fund (WWF), New England Aquarium in Boston, and John G. Shedd Aquarium in Chicago, when sourcing seafood. Ahold is an active member of the MSC as well as the Aquaculture Dialogues, which is a multi-stakeholder roundtable facilitated by the WWF that prioritizes sustainable aquaculture.

Examples of initiatives taken to source seafood more sustainably include:

• In 2010, Albert Heijn introduced an alternative species of eel from Madagascar, and stopped selling the traditional European eel, in order to help preserve the species. Read more in the case study
• All of Ahold’s U.S. companies support the Conservation Alliance for Seafood Solutions’ Common Vision for Environmentally Sustainable Seafood. The Common Vision identifies six critical areas that can make a significant difference in long-term seafood sustainability by establishing guidelines and strengthening collaboration among the retail industry, seafood suppliers, and partner aquariums
• In 2010, Ahold USA participated in, and sponsored, the New England Aquarium’s World Oceans Day celebration. The celebrations featured free family-friendly activities including scavenger hunts, sustainable seafood cooking demonstrations, and giveaways. This event also marked the 10-year anniversary of Ahold USA’s partnership with the New England Aquarium, and all companies (Stop & Shop, Giant Carlisle and Giant Landover) collaborated on a press release to mark this milestone and highlight World Oceans Day
• ICA continued to improve its seafood assortment in close collaboration with WWF. They increased the number of MSC-certified products and de-listed products listed as “red” in the WWF consumer fish guide

Social compliance

In 2010, we published our Standards of Engagement on our website. Our Standards of Engagement set minimum compliance standards for our suppliers. They require all our suppliers, as well as those who supply them, to treat all employees fairly, with dignity and respect, and in accordance with all applicable laws and regulations.

In high-risk countries¹ in terms of labor conditions, we have started a program (included in our CR report 2009) to ensure that all our suppliers undergo an independent social audit within the next two years. The auditing is being carried out according to the Business Social Compliance Initiative (BSCI) or equivalent program. The BSCI’s standards are based on international conventions protecting workers’ rights, including the ILO Conventions, United Nations Universal Declaration of Human Rights and other relevant UN conventions, Organisation for Economic Co-operation and Development (OECD) Guidelines for Multinational Enterprises, and the UN Global Compact. The BSCI standards include requirements relating to child labor, forced labor, discrimination, compensation, working hours, and working conditions.

Following the audit, suppliers that do not meet the criteria required must implement a Corrective Action Plan and demonstrate improvements over a specified period of time. If the suppliers do not show any improvement, or have so-called “unacceptable non-compliances” we stop working with them. However, the intention of our improvement-based social compliance program is to ensure that our suppliers are committed to, and engaged in, improving working conditions in their facilities. So far, we have collected at least 350 BSCI reports from suppliers across the Ahold Group.

In countries that are not identified as high risk, we react promptly and appropriately to specific and credible evidence of wrongdoing. In April 2010, Ahold USA suspended purchases of tomatoes from the Immokalee region in Florida in response to allegations about wages and working conditions of certain tomato growers. Ahold USA entered into a dialogue with the Coalition of Immokalee Workers and others to learn more about the issue, and sent an internal team of experts to the region to talk with growers, suppliers, authorities, and other relevant groups. The team completed a review of growers’ compliance with Ahold′s Standards of Engagement. During its review, Ahold USA did not find evidence to support the allegations, and found that the growers in general demonstrated a strong commitment to comply with our Standards of Engagement, including all applicable laws and regulations. In December 2010, Ahold USA resumed purchasing tomatoes from the Immokalee region in Florida from suppliers who are in compliance with our Standards of Engagement. Further details of Ahold’s response are included on our website.

In 2011, we will continue to map our supply chain to ensure that we have a clear insight into where and how our products are being produced. That will, in turn, allow us to engage with all suppliers in high-risk countries to ensure that they are audited on social compliance and share our commitment to good working conditions.

1 The definition of high-risk countries is based on definitions in the United Nations Human Development Index, and the ILO Economic Security Index. More details on high-risk countries are included in our Standards of Engagement.

Environmental impact

In order to source our products in a sustainable way and reduce their environmental footprint, we are paying increasing attention to the impact of our supply chain on the environment. Environmental impact refers to a range of issues, including carbon emissions, energy usage, water depletion, waste production, and biodiversity.

Looking at the environmental impact of our suppliers is a new area in the food retail industry, and one which we are tackling as part of The Sustainability Consortium (see case study). We have set an ambitious target to map 50 percent of our own-brand products′ supply chains by 2015.

More information about our policies relating to the environmental impact of our own operations, our suppliers and our customers can be found in the Climate action section.

Local sourcing

Buying local has advantages for many stakeholders: customers benefit from a wider assortment; local (often smaller) suppliers are able to grow; and our relationships with local communities are further strengthened.

In the United States, a product is considered local if it is sourced from the respective state or municipality in which we operate – this applies whether the product is own brand or not. Many of our stores operate in rich agricultural areas, so they are able to source many products locally. There are certain government regulations that restrict the use of the term “local” (especially when applied to dairy produce) and this can vary by state, region or municipality.

Some examples of local sourcing include:

• Albert uses regional suppliers for certain bakery products, because customers are used to a particular region’s recipe and appearance
• In the United States, there is an established local produce program that is executed during the local growing season. During 2010, Giant Food Stores and Martin’s Food Markets encouraged customers to follow “Local Route” signs in stores that pointed the way to fresh products grown locally by farmers within their own communities
• ICA makes several efforts to meet the increased demand for locally produced food. The “ICA Square” is a marketplace on ICA’s intranet where local producers and ICA retailers can interact. ICA makes it easier for producers to connect with retailers and stores: for example, by highlighting locally produced products at the retailers’ network meetings and allowing local producers to market their products at the annual ICA retailers event. Joint marketing and merchandising materials are also designed to help local producers market their products in stores to customers
• Rimi in Estonia supported the Association of Estonian Food Industry’s initiative to raise consumer awareness about Estonian products, by adding an Estonian flag label to products of Estonian origin
• At some Rimi stores in Lithuania, local farm shops known as “Vikis” have opened within the stores – see case study