Åhléns Sustainability Report 2015

Sustainability report 2015

2015 in brief During the year, we continued to develop Bra Val (Good Choice) our sustainable product range, took actions to increase energy efficiency and focused on diversity and integration initiatives.

3

4

6

From the CEO

About Åhléns

Strategy

New store openings and e-commerce – positive aspects of an otherwise challenging year.

More than 3,000 employees in 75 department stores and 22 stores.

Strategy maintained with a focus on tangible activities.

8

10

14

Customer dialog

Employees

Offering

Large-scale changes in the organization, updated corporate values and leadership initiative.

Additional brands and a completely new range of menswear featuring a large share of Bra Val products.

Diversity campaigns engage.

Major customer survey conducted.

20

24

28

Production

Operation

Social Responsibility

Updated Code of Conduct introduced.

Progress made in working conditions and environment impact of leather production.

Reduced electricity consumption and new requirements regarding refurbishing and building new department stores.

Diversity initiative and cooperation with Action Aid. Continued collaborations with Myrorna and The City Mission.

Cover photo: SPR I NG COU R AGE Our latest campaigns have been characterized by a diversity and genus perspective, with the spring campaign

focusing on courage. Lea T, a successful professional model, has her own story to tell and shows great courage and strength. As a transperson, she has battled against discrimination and prejudice all her life.

2

From the CEO The aim of the sustainable-development work conducted by Åhléns is to be a responsible yet profitable company over time, and that we, together with others, can contribute to positive social development.

We operate in a tough market where the competition is intense. We saw in 2015 how sales in the industry are being driven more than ever before by special offers and sales, developments that translate into reduced margins.

Elsewhere in the business environment, we see a distinct trend whereby many consumers are showing increased awareness of and commitment to diversity and the equal value of people.

which increased awareness of us and our values, the integration project for newly arriving Swedes arranged in our cafés and the decision to accept 100 new arrivals as trainees during 2016. I am also proud of the way our sustainable product range has been developed, but less satisfied that sales of Bra Val items still account for such a limited share. Here we have potential to reach further.

For Åhléns, 2015 was a difficult and partly turbulent year for our organization, marked by down sizing at the head office and closure of department stores. The year also entailed intensive work on preparing for the launch of our e-commerce platform. Thanks to the long-term approach of our owners, in terms of both business strategy and corporate culture, we can continue to be proactive in our sustainability work even during weaker years in business terms, when profits are absent.

I believe that Åhléns has a key role in advancing issues that are important to the sector, such as what chemicals and materials are used in products and how we cooperate with suppliers to achieve responsible production, but also through active work in society to promote diversity and integration.

There is a lot to be proud of when we look at what we achieved in 2015, including the successful campaigns we implemented during the year,

3

We are convinced that we will have a role to play in the future, as the department store that offers carefully selected and affordable solutions that satisfy our customers’ needs – in a simple, inspiring and accessible way. We want to be a department store for everyone.

We will continue to communicate our values and the positions we take in terms of responsibility, diversity and being the department store where everyone is welcome. We are also looking forward to the opening of new department stores during the year and the premier for e-commerce, which will be launched in spring 2016.

In conclusion, I would like to highlight all the Åhléns employees who take part in and develop the operations, and who facilitate thousands of positive meetings with customers, every day.

Without you, no Åhléns!

STEFA N DA N I ELI ACTI NG CEO

About Åhléns

Our value chain

Åhléns was founded in 1899 in Insjön, Sweden. Today, we are proud to be one of the best-known brands in the Nordic region and we want to continue managing our brand responsibly and sustainably.

We aim to generate value and take responsibility for our impact on people and the environment in all aspects and areas of our business – from design and manufacturing, to sales and end-of-life management.

In slightly more than 70 department stores in Sweden, we offer a wide range of carefully selected products in beauty, fashion, children’s wear, menswear,

entertainment, interior and food.

While a large proportion are private labels, we also sell other brands. Åhléns is part of the Axstores retail group,

which also includes Kicks. Axstores, in turn, is part of the family company Axel Johnson AB, which is owned by Antonia Ax:son Johnson and family.

2015 in numbers

The department store that carefully selects products and solutions for every day in our lives.

Together with our employees, supp­ liers, customers, owner and other business partners, we work to manage risk, minimize negative impacts and seize opportunities across the entire value chain. This work covers

many different issues, and focuses on those with the greatest impact and those that enable us to really make a difference. Åhléns’ range consists of tens of thousands of products manu­factured by suppliers in various

parts of the world, mainly Asia and Europe. Many of Åhléns’ private label products are purchased by our local production offices in Asia and then shipped by boat to Sweden.

(No. of employees, department stores and stores as per Dec. 31, 2015)

• SEK 5 billion in sales

Access to raw materials

• 75 department stores in Sweden

• Approx. 3,000 employees • Approx. 80 million visitors • 2.2 million members of Åhléns

• 22 interior-design stores in Norway

DESIGN AND PRODUCT DEV­E LOPMENT

Sustainability requirements on raw materials and ingredients

Range and product development

Sustainability-related targets and KPIs

Resource efficiency

The following table presents targets and KPIs for the sustainability issues that are important to Åhléns.

Choice of materials

Key figures

2012

2013

2014

2015

Objective

Percentage of sustainable products (% of sales measured in SEK)

4.4%

4.9%

6.0%

6.0%

12% in 2018

Energy consumption in department stores (kWh/m2)

–

146

143

136

-5% per year 2015–2018*

Percentage of audited facilities (located in high-risk countries that produce private labels)

75%**

70%**

77%**

73%**

100% in 2016

Employee Satisfaction Index (ESI) (index, where the maximum is 100)

90

90

Not measured

Commitment, CI*** (index, where the maximum is 100)

–

–

83

79

83 in 2017

Customer Satisfaction Index, CSI (index, where the maximum is 100)

–

–

–

77

78 in 2016

Sickness absence (percentage of working hours)

6.0%

5.7%

6.4%

Data is lacking****

Not set

Product quality and use lifespan

Efficient logistics

Use of water and chemicals

RAW MATERIALS

Delivery quality PRODUCTION

Climate and environmental impact

DEPARTMENT STORES AND SALES

Safety

Product quality, complaints management Product and customer information

Supplier relationships

Customer relationships

Occupational health and safety and human rights

Employee engagement TRANSPOR­TATION

Marketing Energy consumption

Use of water, energy and chemicals

Waste management

Not set

* New target 2015–2018. ** As of 2014, all facilities are included, even the smallest ones. The figure for 2013 and onwards has been restated but not that for 2012. As of 2015, only valid audits are included (no older than 3 years). *** CI (Commitment Index) is a ratio showing the commitment of employees’ and this complements the ESI Employee Satisfaction Index) by reflecting the employees’ perceived energy and clarity within Åhléns. This has shown that the correlation with the CSI (Customer Satisfaction Index) is strong. CI is measured twice annually. **** Due to switch to new follow-up system.

5

REUSE, RECYCLING AND WASTE

End-of-life management USE

Materials recycling

Sports & Balance The launch of our new sports and wellness concept was fronted

by Barbro Bobäck, gold medalist in the veteran World Athletics Championships, to prove that everyone can work out, regardless of age.

Conscious strategy for sustainable department stores Åhléns’ sustainability work is based on our company-wide corporate strategy, in which sustainability is one of five core areas designed to develop Åhléns and improve profitability.

STRENGTHENED STRATEGY The actual sustainability strategy comprises four components: sustainable offer, production, operation and social responsibility. Targets and action plans have been determined for each area. These efforts also harmonize well with our owner’s sustainability strategy, which is followed up via quarterly reports and KPIs. Our new brand strategy also provides guidance for the sustainability work. Åhléns aims to be the department store that carefully selects products for every day in our lives. We intend to do this in a manner that simplifies, enriches and improves our customers. This means that we should offer the customers affordable products and sustainable solutions in a simple, inspiring and accessible way. With a communications strategy that is more clearly based on our values, we place the emphasis on the dialog with customers, in which we want to be perceived as an conscious department store.

SOCIAL RESPONSIBILITY

SUSTAINABLE OFFER

NEW REQUIREMENTS Legislation is increasingly becoming a driver of sustainability work in the Swedish retail sector. During 2015, two new laws came into force that impact our operations. The first of these was WEEE, which addresses the collection and recycling of electronic waste, and the second was EKL, which is designed to reduce energy consumption in properties. We had already adapted our operations to the EU’s Timber Regulation and Cosmetics Regulation. We expect additional national and European regulations in the next few years, governing such areas as plastic carry bags, textile recycling and chemicals.

“Despite it being a financially tough year, we continued to improve quality and environmental aspects in several parts of the product range. For example, we increased the share of Better Cotton, leather production has less environmental impact and we have launched the initiative for more sustainable palm oil in cosmetic products. I hope that political decisions are

SUSTAINABLE OPERATIONS

SUSTAINABLE PRODUCTION

NEXT STEP Parallel with the ongoing work, internal discussions have started to focus on the next step in our sustainability effort.We want to develop our cooperation with our brand suppliers concerning sustainability, since our brand strategy includes a broader offer of brands. We have also asked ourselves: what role can Åhléns play in a future society based on a circular economy? And how can we contribute to diversity and integration through our operations and in the Swedish society? The idea is to launch an updated sustainability strategy during 2016.

taken this year to introduce national producer responsibility for textiles, so that it becomes easier for everyone to recycle their used garments.

Naturally, I look forward to continuing to develop both the range and communications surrounding Bra Val – our important guide to products that pay extra attention to people and the A N ITA FA LKEN EK environment.”

SUSTAI NAB I LIT Y MANAGER , ÅH LÉNS

7

Value-driven communications with an impact We want to become better at telling our customers what Åhléns stands for and offers. By focusing on values and diversity in the 2015 campaigns, knowledge of Åhléns as conscious department store has increased.

CONSCIOUS TARGET GROUP The customers who shop at Åhléns include many who belong to the growing group of consumers who desire to make conscious choices. They want to live and consume in a way that is good for themselves, their families, the future and society at large, and they want to choose products and companies that help them in doing this and that share their values. Åhléns wants to be a conscious department store that simplifies the everyday life of many.

Our values are based upon diversity, sustainability and the equal value of people – and we offer a large range of sustainable products. To date, awareness of this among customers has been relatively low. Supported by a new communications platform, we focused during 2015 on more clearly communicating our corporate values and the values we add. Surveys and follow-ups show that both preferences and commitment have increased noticeably.

THEME: DIVERSITY Our campaigns during the year highlighted diversity and the equal value of people in terms of age, ethnicity, geographical origin and gender affiliation. Photos from the campaigns are used as chapter dividers in this report.

The campaigns met with a highly positive response and were also the subject of considerable debate; for example, when a woman wearing a veil was used in advertisements for “Nordic tones”.

We are pleased that the messages touch people’s hearts and we willingly engage in dialog concerning our approach.

LARGE CUSTOMER SURVEY A major customer survey was conducted in autumn 2015. Nearly 50,000 customer club members responded to an online survey concerning how satisfied they were with Åhléns from the viewpoint of various parameters. The results show that the employees, instore environment and product range are the factors that have the greatest impact on the customer experience, and that there is room for additional improvement in all of these areas.

Compared with the other questions, fewer respondents answered the questions about sustainability issues in the questionnaire and relatively few had any views on our sustainability work, an indication that awareness of this remains low.

Although Åhléns is generally perceived as a credible company that takes social responsibility, only 19% responded that their knowledge of Bra Val was good or very good. At the same time, many expressed a demand for more sustainable products, and ask for guidance in finding these in the department store. An important conclusion is that we need to continue to communicate Bra Val, and that employees in the department stores must become more proactive in answering questions about the sustainability work that Åhléns conducts in various areas. The result of the Customer Satisfaction Index was 77, and the aim is to raise this to 78 during 2016.

70,000 E-MAILS & PHONE CALLS In 2015, our Customer Service unit

8

“We are a department store for everyone. And we truly mean that. Regardless of who you are, where you come from, when you arrived, what you look like, how old you are, who you choose to love – we respect you and welcome you to our department stores. This will become visible in our communications over time.”

LI NA SÖD ERQU IST, MAR KETI NG MANAGER , ÅH LÉNS

responded to 36,000 phone calls and 35,000 e-mails from customers and department stores. While many questions were about club offers, the customers increasingly want to have more information about materials, origin, labelling, chemicals, animal welfare and working conditions in production facilities. More customers are asking for good quality, longer product life span and the possibility to buy complementary parts, such as extra glasses for an espresso machine and spare light bulbs for chandeliers.

Nordic tones In the choice of model for the autumn fashion campaign, we wanted to reflect our customers – a diversity of backgrounds, cultures and religions. Åhléns does not make a stand for or against wearing a veil; however, we believe that everyone should have the right to choose their own way of expressing their identity.

9

Together we are Åhléns It is our employees who create good customer experiences every day and they are a key factor for a successful company.

During 2015, our corporate values, leadership and diversity were in focus, at the same time as we reorganized and made the preparations for e-commerce.

OUR CORPORATE VALUES In 2015, some 3,000 employees worked at Åhléns, the majority in our department stores and stores. Our company culture is based on shared values, where each employee is expected to take responsibility and initiatives to contribute in the best manner possible to customer satisfaction and sustainable profitability.

During 2015, we renewed our corporate values to align them with Åhléns’ development and focus for the future.

The updated corporate values – We care, We dare, We share – reflect the clearer focus we have on the meeting with customers, on cooperation and on caring about each other and society at large. A training program in the form of an introductory film which, for example, conveys the values in a tangible manner, has been communicated to all employees.

We care

ETHICAL BUSINESS CODE During the year, we communicated and implemented our new Ethical Business Code throughout the organization. It has been signed by all employees, and we have informed our suppliers about the Code and our policies. New employees sign the Code in connection with taking employment. Accordingly, each employee accepts a responsibility to comply with Åhléns’ policies and Ethical Business Code in their daily work.

We care

Welcome to all our new employees!

Our corporate values:

We dare

We dare

To be true to what we believe in To challenge ourselves To take action

We care

About us and each other About our customers About the world

We share

We share

Our knowledge and experiences Our successes Our enthusiasm

11

W

creasing diversity, we are, for example, working to develop our recruitment processes and to include the diversity perspective in our management training programs. In the employee survey, we also followed up on how employees perceive Åhléns as a workplace in terms of diversity and inclusion.

To further increase the diversity and awareness in the company, we are cooperating with the Public Employ-

“Here at Åhléns, everyone should always feel welcome.We care about each other, our visitors and the environment.The Customer Compass is our new tool on the journey towards the best customer experience. Using this, we work continuously to translate our lodestars of welcome, simple, inspiring and trust into our daily work in the department stores.

This will give us an incredible impact when it truly shapes everything that we do!

Together with other managers at Åhléns, I have completed the ‘Customer-driven leadership’ training program, a work method aimed at clarifying our leadership profile and our values.

Sharing experiences and evolving together generates tremendous commitment and strength. My own personal view is that it has contributed to my feeling secure in my leadership – I know where Åhléns is headed and what is required of me to achieve success.”

VERON ICA FORSÉN A LFREDSSON DEPARTM ENT STOR E MANAGER ÅH LÉNS ÖSTERSU N D

ment Service (Arbetsförmedlingen) with a view to offering traineeships to new arrivals; read more about this in the chapter on our collaborations on page 29.

MORE HEALTH ACTIVITIES We want to contribute to, and promote, increased physical activity and a balanced lifestyle, so that our employees feel good and stay motivated, and

to reduce sickness absence. Åhléns’ wellness allowance is targeted at all employees and comprises SEK 2,000 per employee per year, and a range of activities for exercise and inspiration.

A number of wellness days around different themes have been arranged at various places of work. We also have agreements with fitness and wellness providers, enabling our employees to take advantage of special offers.

Diversity status and targets 2015 As per December 31, 2015. Figures for 2014 within parentheses.

Cathrine Westerlind, Product Quality Developer, and Anna Hönig, Buyer at WERA, checking quality.

CUSTOMER EXPERIENCE Improving the customer experience must be the guiding principle for everyone at Åhléns. We know from customer surveys that we have improvement potential in respect of service and the staff’s availability to customers. On this basis, we continued to work with the Customer Compass as a tool during the year and implemented a leadership program for our managers.

One important change is that we now, even more clearly than before, link employeeship to customer satisfaction. We are also working to simplify our internal structures and work methods in order to bring the head office and the department stores closer to each other and thus release more time in the department stores, which can thus be devoted to customers.

A TRYING YEAR The closure of stores in Norway and a number of department stores in Sweden resulted in personal cutbacks in the stores as well as at the head office.

In cooperation with the TRR employment security agency and Antenn, we

12

offer support and personal coaching in the transition to new employment.

Preparations for the new e-commerce initiative have required a great deal of resources and effort from many different parts of the organization, and the continued implementation of our new business system during the year entailed a large amount of work and created stress.

At the same time, we recruited new employees for our newly opened department stores. For Mall of Scandinavia we received a full 1,984 external and 150 internal applications for about 80 positions. In this recruitment process, a great deal of focus was devoted to achieving a workforce with many different backgrounds. Some 30% of the new employees have an international background.

INCREASED DIVERSITY Today, the composition of Åhléns’ employees largely matches that of our customers. More than 90% are women, and the average age of our employees is 36. We value having a workplace with diversity in a number of dimensions. With the aim of in-

Head office

Department stores & stores

Production offices

No. of employees

242 (266)

2,932 (3,003)

62 (61)

Percentage of women/men

85/15 (88/12)

92/8** (92/8)

20/42 (69/31)

Target 2020: 80/20

Target 2020: 85/15

Target 2020: 60/40

Percentage with an international background*

14 (14)

17 (23)

21 (20)

Target 2020: 25

Target 2020: 25

Target 2020: 25

Average age (women/men)

42/42

36/37

40/42 (40/43)

*Percentage who answered “Yes” to the following question in the employee survey: Were both of your parents born in a country other than the one you are working in? **Only Åhléns Sweden. Åhléns’ company management comprises ten individuals, of whom eight are women and two men.

Gösta Åhléns’ 60 th Anniversary Fund In connection with the 60th birthday of Gösta Åhlén (son of the founder Johan Petter Åhlén) in 1964, a fund was instituted with the purpose of promoting learning and development in the company by means of study trips.

Employees in Sweden have an opportunity to apply for a study trip to Hong Kong, featuring visits to our Asian offices and production facilities.

Employees in our offices in Asia have an opportunity to apply for a study trip to Sweden. The aim is that the journeys will implemented every second year. In 2015, the trip headed to Stockholm, with four employees from our Asian offices.

Tracy Tang, Shelly Zhang, Hamim Haque and Vijaya Kumar from the Asian offices.

13

More brands & more sustainable products To be able to even better satisfy our customers’ demands, we increasingly offer more branded products and we are continuing to adapt our range of private labels to customer preferences.

During the spring season, our offerings included the Green Collection – a sustainable fashion collection for women and children.

SUSTAINABLE OFFER

NEW BRA VAL TARGET To the extent possible, we endeavour to comply with the criteria for Bra Val when we develop new and existing Åhléns products. During 2015, the range was expanded in several areas.

In certain product categories, it is impossible or challenging to find products that can fulfil our tough Bra Val criteria; such products include accessories, glassware, crockery and saucepans. Despite many new products, the share of Bra Val items has stabilized at 6% of total sales, which means that the target of 10% for 2015 was not achieved.

suppliers that offer sustainable products, such as Knowledge Cotton, Nudie and Bread & Boxer in the Fashion segment. 9% of all menswear from external brands is already Bra Val. There are also a number of brands in the Children’s department with ranges that are partly or 100% sustainable.

These include Green Toys made from recycled plastic, Brio toys made from FSC-certified wood and Dantoy with Swan-labelled toys. The brands of clothing include Mini Rodini with several organic products and Kavat with the EU Ecolabel, which are thus Bra Val.

The principal explanation is that the proportion of brands in our sales has increased. We have decided to set new targets, with the target for 2018 being that Bra Val products will account for 12% of our sales.

We would like to see more brands of beauty products that can fulfil the Bra Val criteria. N´vey and Less is More are new brands at City Stockholm. Estelle & Thild and Weleda are continuing their successes with us, and the brand UNE offers our customers organic make-up. There are also a number of Beauty brands with a distinct sustainability profile, although not all of their products satisfy the Bra Val criteria.

These include Origin, Body Shop and Björk&Berries, which have a selfevident place in Åhléns and are appreciated by our customers.

BRANDS GROWING IN IMPORTANCE To satisfy customer requirements, we will be offering more brands in more department stores around Sweden, a process that has already started.

A prerequisite for being able to fulfil our Bra Val target is to engage in cooperation with our brand suppliers.

We already have a number of brand

14

15

Regulation, electrical safety, chemicals in bathroom products and products that come into contact with food. We did not receive any remarks, except for a number of brands of beauty products whose package labelling did not comply with the law. Our cafés have undergone both their continuously self-assessment programs and have had regulatory supervisions. The remarks that were made have been rectified.

Ahead of Fathers’ Day, we launched a completely new private label of menswear, with Bra Val products accounting for a major share.

PRODUCT REQUIREMENTS All of Åhléns’s suppliers must sign, and comply with, our general agreement.

These include both legal requirements concerning the product and production process, and Åhléns-specific requirements regarding function, quality, environment and ethics. In addition, there are Product Quality Specifications (PQS) for various product categories, which are updated when needed. The PQSs define the product’s requirements in terms of characteristics and content, and how it should be tested to verify quality compliance.

ANIMAL WELFARE Our general agreement has for manu years included requirements concerning animal ethics; in November, however, they were revised, in part to harmonize them with those of other

companies that are members of the Swedish Federation of Trade and Services. This resulted in clarifications that we do not permit leather or hair fibres from dogs or cats, that we do not accept any form of Angora wool and that, to the extent possible, we want to receive documentation concerning the origin of animal material. For some time, we have prohibited the use of down picked from geese that are liveplucked or force-fed and we only sell furs or rugs that are by-products of meat production.

Our general agreement also state that all animals should be handled in accordance with “The EU Five Freedoms” .

FOCUS ON PRODUCT QUALITY The aim is that Åhléns’ product range will exceed, or at least meet, customer

16

expectations. By logging all customer complaints, we obtain a good overview of the products that do not meet expectations. During 2015, we were forced to recall two products from customers: our toy labyrinth Barbapapa, which had screws that could loosen, and a light bulb (not a private label). No injuries or accidents were reported.

During the year, we improved our methodology for spot testing, by conducting spot tests of chemicals in products in the production stage, and we reviewed our whole testing program.

REGULATORY SUPERVISION In 2015, supervisory authorities conducted inspections to ensure that we comply with the requirements of the Timber regulation, the Cosmetics

BETTER COTTON Åhléns is a member of the Better Cotton Initiative (BCI), a global organization that helps farmers to grow cotton in a way that reduces stress on the local environment and improves the livelihoods and welfare of farming communities. Through BCI, Åhléns contributes to increasing volumes of sustainable cotton on the global market by an amount corresponding to our own sales of cotton. Over a period of three years, our collaboration partner, Cotton Connect, has trained 100 farmers in India in improved cultivation methods, which reduce the amount of water and pesticides and simultaneously improve the farmers’ profitability. (Read more at bettercotton.org and cottonconnect.org) NEW RANGE OF MENSWEAR Ahead of Father’s Day, we launched a completely new private label of menswear, with Bra Val products representing a major share. Bra Val accounts for 23% of our private label of menswear and 100% of all men’s underwear of the Åhléns brand. The products were presented with the support of a campaign, in which we asked for views on the underwear to be able to improve it further. We received approximately 200 views, which have been incorporated into the product development of forthcoming deliveries.

GREEN COLLECTION Green Collection, a Bra Val collection reflecting a high degree of fashion, was launched in April, with garments made of organic cotton, Tencel® and recycled polyester. All Åhléns basic cotton tops are made of organic raw material and we have continued to

increase the share of Tencel® in WERA and Å. Tencel is a viscose material made from FSC-certified pulp in an environmentally sound, closed-loop process. We continue to experience an increase in sustainable material in socks, underwear and night wear, with Bra Val now accounting for about 10% of sales in these product groups. Today, 15% of all private label womens wear is Bra Val. More items of Better Cotton women's wear are increasingly being produced.

MORE SPORT To satisfy greater interest in working out and wellness, we launched our new Sport & Balance concept at Åhléns City in Stockholm, the Mall of Scandinavia and in Uppsala. On this space, we offer a broad range of workout clothing, sports footwear and yoga products, with parts of the yoga collection being organic.

BRA VAL FOR CHILDREN AND BABIES We put extra effort into finding sustainable material for our children’s items.

Our ambition is that all children’s underwear should be made of organic cotton. All basic garments in the Å range and all Mini garments for the tiniest babies are already Bra Val, made of organic cotton or recycled polyester.

Our water-repellent outerwear for children now features a more environmentally compatible surface treatment from Bionic Finish Eco, without adding perfluorinated compounds. The range of Bra Val products for children’s rooms is relatively broad, including bed sets, pillows, duvets, toys and storage boxes.

The latter are made of recycled paperboard.

When it comes to toys, our top priority is that they are safe, but preferably also made of sustainable materials, which currently represent 9% of sales of all toys. During the year, we gradually also switched to water-based coatings on wooden toys.

17

Bra Val in the product range • In the new range of men’s underwear, T-shirts and a large percentage of the organic cotton nightwear range.

• In Fashion and Childrenswear, a complete spring collection was launched comprising fashionable Bra Val garments.

• Increasing numbers of garments in the WERA line are made of Tencel®.

• The range for babies and children includes a large assortment of Bra Val products, which correspond to about 20% of total sales in this category • FSC-labeled wood is used for most of our wooden toys and paper products.

• FSC-labeled forest raw materials are used in all wooden outdoor furniture, gift wrapping paper and most of our office products.

• Our range of organic home textiles has been further expanded, through the addition of, for example, more Line products, our series of bed sets.

• Our make-up and hair brushes are Bra Val, and have been complemented with 14 new brushes also made of FSC-labeled handles.

• Our own Oliv series has been updated with two new Swan-labeled products.

Read more about Bra Val and what this involves at ahlens.se

MORE SUSTAINABLE WOOD An important initiative in Home was to bring in approximately 80 new home furnishing brands in connection with the opening of new floor space at the Stockholm City department store, items that have since gradually been on offer in more department store around Sweden. All wood that is imported to the EU has to comply with the Timber regulation, which requires documentation ensuring that the timber was felled legally.

We have also continued to focus on FSC-labelled wooden products, for example in cutting boards, and all wooden products in Cooking and Dining must be FSC-labelled. All giftwrapping paper is currently Bra Val. We offer hooks, shoe horns and trinkets made of recycled aluminium.

business area was favourable, including the successful launch of Zlatan products. Many of our make-up and hair brushes with wooden handles are Bra Val products and the aim for 2016 is that all brushes will have handles made from FSC wood. With two new Swan-labelled Oliv products, this series now consists of seven items. Today, the portion of Bra Val products in Beauty is 2%, slightly higher than in 2014.

In addition to beauty products complying with cosmetics legislation, we have an Axstore-wide list of chemicals that must not be used in beauty products. This list is more far-reaching than the legal requirements.

MORE SUSTAINABLE PALM OIL In October, Åhléns and other companies in the beauty products industry

jointly launched SISPO, the Swedish Initiative for Sustainable Palm Oil in cosmetics and detergents. The aim is to drive development towards traceability and the transition to sustainably produced palm oil in beauty products. Palm oil is used in the production of cosmetic raw materials and frequently represents a “hidden” share of the product.

The companies that stand behind the initiative undertake, at the very minimum, to compensate for the constituent volume of palm oil in their products by issuing Green Palm certificates, which entails that a corresponding volume of palm oil will be cultivated in a more sustainable manner according to the RSPO criteria.

We have identified palm oil as a raw material risk, since the palm oil

Our eco-labelled washing-up liquid has been complemented with a corresponding soap spray and all our paper napkins are Swan-labelled, as is a large share of our candles, including the new tea lights available as refills.

MORE SUSTAINABLE HOME TEXTILES A large share of the home textiles that we offer are now sustainable. Many are made of organic or recycled cotton or are purchased as Better Cotton.

Essentially all cotton home textiles purchased from India and Bangladesh are Better Cotton. We currently have a very broad selection of Bra Val products in the areas of towels and bedding, manufactured from organic cotton.

At the end of the year, Torget was opened on the Tube station floor at Åhléns Stockholm City.

plantations contribute to destruction of natural rainforests. In the Åhléns range, palm oil is found in candles, cosmetics and food products. RSPOcertified palm oil is already used in a number of Åhléns products. For other products, we purchase Green Palm certificates for the estimated volume of constituent palm oil. rspo.org.

Sales of organic terry products and sustainable rugs are rising, indicating that we should expand the range. We also offer rugs made from wool, hemp and jute, as well as linen in bedding products, materials that are regarded as having less environmental impact.

TASTY PRODUCTS IN THE PANTRY Our “Pantry” in the Home department is filled with food products under Åhléns’ private labels. It contains a large share of products with Swedish origins and Bra Val products, such as organic tea and Fair Trade candy. If the products contain palm oil, the oil is always RSPO-certified.

POSITIVE YEAR FOR BEAUTY Customers in Sweden and, to an increasing extent, men are spending progressively more money on beauty products. The trend for our Beauty

18

NEW FOOD GUESTS IN THE CITY Two new restaurants opened their doors at the Stockholm City department store in 2015. Systrarna Voltaire was the first to open, offering a climate-smart, vegetarian menu.

In August, Paulo Roberto opened the doors to the Pane Fresco restaurant, with Italian specialities. Around Christmas, Torget, which contains a number of mini-boutiques offering coffee, tea and flowers, was opened on the Tube station floor. StrÅ offers wraps, porridge and juices frequently made of organic fruits, depending on supply. A number of Café Å Lait cafés have been opened, offering specially selected products, frequently grown

19

locally and without unnecessary additives. The coffee and ice cream served are organic and many of the products are purchased from Swedish suppliers, such as Bergstrands Kaffe and Sänkdalens glass, and beverages from Kulla Must and Kivik.

CARRY BAGS AND RECEIPTS All receipts from Åhléns are made from FSC-certified paper and are BPA-free. Åhléns carry bags and all wrapping paper are made of FSClabelled pulp. Plastic bags are 80% made of recycled plastic.

Improvement work in the supply chain We continue to work systematically to improve working conditions and reduce the environmental impact in the supply chain.

In 2015, we started to implement BSCI’s new Code of Conduct and continued efforts with environmental audits at tanneries.

SUSTAINABLE PRODUCTION

PRODUCTION OF ÅHLÉNS PRODUCTS In its capacity as a department store, Åhléns offers both private labels and brands. In our agreements with brands, we demand that they take responsibility for their supply chains.

For our range of Åhléns private labels, we have processes and systems for ensuring that continuous improvements occur. We have a wide range of private labels, which means that we have many different suppliers and facilities that manufacture products for us, most of them in Asia.

In order to influence responsibility for people and the environment, we strive for long-term relationships and close dialog with suppliers. Our four local production offices in Hong Kong,

Shanghai, New Delhi and Dhaka, which have about 60 employees, are responsible for maintaining regular contact with suppliers, verifying quality at the facilities and identifying new, potential producers.

PRIORITIZING OF SUPPLIERS During 2015, we developed a segmentation model for classifying suppliers on the basis of various parameters, of which CSR is one. The model enables a joint valuation that identifies our most prioritized suppliers. We want to develop and improve the supplier base by bringing in new suppliers with a good sustainability performance, while continuing to reduce the total number of suppliers and facilities used by Åhléns.

Our production of private labels in the world

20

China 56%

Turkey 2%

India 10%

Bangladesh 2%

Sweden 6%

South Korea 2%

Taiwan 4%

Denmark 1%

Italy 3%

Span 1%

Portugal 3%

Other countries 10%

21

FOCUS ON IMPROVEMENTS Åhléns works systematically to monitor, train and improve the processes of our suppliers based on the BSCI (Business Social Compliance Initiative) Code of Conduct. New suppliers and facilities in high-risk countries are audited before partnerships are initiated. If the result is satisfactory, a new inspection is conducted after a period of two years; if there are deviations, the facility is inspected again within 6–12 months.

We focus on conducting improvement processes at facilities that are prioritized according to the segmentation model and for production associated with particular risks for workers’ health and safety, or for the environment. The audits are performed by

In 2015, we had 401 (455 in 2014) suppliers and 739 (877 in 2014) production facilities, in a total of 40 countries, that manufactured private labels for Åhléns.

Most of the facilities, 413 or about 56%, were located in China.

A total of 550 facilities were located in high-risk countries according to the BSCI definition: China, India, Turkey, Bangladesh, Indonesia, Pakistan, Cambodia, Vietnam, Moldova, Macedonia, Brazil, South Africa, Thailand and Belarus.

Results of audits of facilities in risk countries 2015

Good, SA8000 certified, ICTI A B, 24% Improvements required, ICTI C, 41% Deviations from the standard 7% Not inspected 27% SMETA 1% Identified deviations pertained primarily to working standards in terms of wages, working hours, insurance cover and lack of documentation. No severe deviations in the zero toleration category (child labor, serious health and safety risks, change of subcontractor without our approval and refusing to allow audits) were reported during the year.

Of the total of 550 production facilities in risk countries, 399 (73%) had valid and thus current audit certificates in 2015*. 66% of the facilities were audited with good or acceptable results. In addition to BSCI, audits were conducted according to SMETA, a total of 8,000, and ICTI (industry standard for auditing toy suppliers).

* Because we have sharpened our follow-up of expired audits, more production facilities than previously are classified as not audited. The objective is that more facilities will renew their audit according to plan, which is an overall BSCI goal.

Sewing production in Bangladesh.

accredited, third-party BSCI auditors.

Although we also perform our own audits of Chinese suppliers that are not BSCI-affiliated, the aim is to reduce the share of our own audits and instead invest more in training and proactive initiatives. In the past two years, we have consciously worked to reduce the number of suppliers showing multiple deviations by making more rigorous demands for improvement and by replacing suppliers who fail to live up to our requirements.

The number of suppliers showing non-compliance was reduced from 23% to 7% in 2015, out of those that have valid audits BSCI’s NEW CODE OF CONDUCT The BSCI Code of Conduct is based on the UN Declaration of Human Rights and the labor standards of the International Labor Organization (ILO). The new version of the code that became effective in 2015 has a greater focus on risk assessment and on safeguarding working conditions throughout the entire supply chain, while clearer demands that the facilities have a

functioning management system for social responsibility are also placed.

The classification of audits has been changed from three to five levels. With the new code, the BSCI is more clearly moving towards ensuring that facilities with multiple deviations really make improvements. A new BSCI procedure places more distinct demands on member companies to act in the event of repeated unfavourable audit results. During 2015, our purchasing department and production offices underwent training in the new code, and our suppliers were urged to take part in BSCI’s training programs to be able to satisfy the new requirements.

More information on: bsci-intl.org As a way of identifying new suppliers with a good sustainability profile, we are accepting for a trial period other systems that examine working conditions, such as SMETA. The objective is to motivate suppliers to undergo BSCI examination within one year.

TEST OF BEPI A great deal of work still remains for managing the environmental aspects

22

of the supply chain. Since 2014, Åhléns has been part of the Business Environmental Performance Initiative (BEPI), a sister organization to BSCI, whose purpose is to reduce the environmental impact. A facility audited by BEPI must meet targets for, for example, environmental management systems, energy and water use, chemicals or waste management depending on the type of production and the environmental impact. A handful of Åhléns’ Chinese suppliers tested the BEPI program during the year.

The outcome of this initiative was not as favourable as we desired and a dialog is in progress with BEPI concerning the next steps we should take to achieve a better impact. Åhléns has set a target that all production facilities with an identified high environmental impact are to be examined according to BEPI or a corresponding system by 2020. More on BEPI: bepi.intl.org TANNERY REQUIREMENTS The operations of tanneries can result in material health and environmental risks due to the large amounts of salts,

chemicals, such as chrome, and water that are used. In countries with inadequate controls of tanning operations, it is important that we, as companies, impose stringent environmental requirements and ensure that they are met.

examined tanneries in India. In 2016, about 80% of WERA bags will be made solely from leather originating from LWG-examined tanneries. This corresponds to 70–80% of our entire leather

Since 2014, we have been setting requirements for tanneries in India, where most of our leather products are manufactured, through membership of the Leather Working Group (LWG): leatherworkinggroup.com. By participating in such partnerships as the LWG, we see opportunities, together with other companies, for achieving a long-term impact on a wider scale by achieving greater transparency and improved environmental performance in the industry.

In spring 2015, Åhléns, and LWG, leather manufacturers and tanneries, jointly implemented a full-day training program in New Delhi with the aim of ensuring increased understanding of our demands for a controlled tanning process with reduced environmental impact. The training contributed to a faster adjustment to

23

products. By 2020, our goal is that all tanneries used by Åhléns’ suppliers will be LWG-examined or the equivalent.

Reduced energy consumption & efficient logistics By saving energy, recycling waste and planning our transports as intelligently as possible, we reduce the direct climate and environmental impact of our operations. In 2015, we developed new criteria for selecting materials and services in conjunction with new builds or refurbishing.

SUSTAINABLE OPERATION

QUARTERLY FOLLOW-UP 60 of Åhléns’ approximately 70 department stores receive quarterly reports of their electricity consumption. The meters are connected to a joint software system, which compiles information about consumption compared with the preceding quarter, targets and a breakdown over the day.

The report also gives proposals concerning actions to take. The objective is that all department stores will be encompassed by the system, regardless of whether or not their electricity costs are included in the lease. Åhléns’ new target is to lower electricity consumption by 5% per year through 2018. On the whole, the department stores that have been linked to the system have reduced their consumption by 5%, and the head office also achieved a full 5% reduction in 2015 compared with 2014. The DC cut its electricity consumption by 13%, which was due in part to a reduction in the floor space used.

LED REDUCES CONSUMPTION The introduction of energy-efficient LED lighting can reduce our overall

24

energy consumption in department stores by up to 30%. LED is always installed in conjunction with refurbishing and the opening of new stores. As of 2015, complete LED fittings are also installed when it is time to replace light bulbs, which was done at 15 of the department stores during the year.

For 38 department stores, we have had central power supplies from Guarantee-of-orginin hydropower for several years. At other department stores, we are engaged in a dialog with the property owner concerning the use of electricity from renewable sources.

ENERGY MAPPING IN 2016 During the year, we prepared for fulfilling the new energy mapping legislation, which is designed to reduce energy consumption in properties.

All properties over which Åhléns has control have been registered with the Energy Agency and, during 2016, we will implement the energy mapping required by the law. The DC is one of the larger properties that will be inspected and, for this property, we see savings potential and also an opportunity for self-generated energy, such as through solar cells on the roof.

Electricity consumption in premises (kWh/m2) Due to a new measuring method, the figures are new.

Only floor space on which we conduct our own operations is now included.

Target 2013 2014 2015 14–18 Department stores, Sweden

146

143

136

-5%/year

Distribution center

64

61

53

-5%/year

Head office

149

153

137

-5%/year

25

INDICATORS FOR WASTE The largest volumes of waste arising in the department stores comprise corrugated cardboard, soft plastics and combustible waste. The target is to recycle as much as possible. Since 2014, just over 20 department stores have been encompassed by central procurement of waste-management services, which has led to better sorting at source, lower costs and better opportunities for measurement and follow-up.

Since 2015, we measure a new key KPI on a quarterly basis: the amount of non-recycled waste in relation to sales.

This KPI will be presented as of 2016.

RECYCLING OF SOFT PLASTIC The department stores that are part of malls and shopping centres are offered opportunities to return unsorted soft plastic with return transport to the distribution centre (DC) in Jordbro.

At the DC, the plastic is pressed and bundled before being forwarded for recycling and production of new plastic products. In addition to the environmental gain, we are also paid for the plastic. In 2015, the DC sent 1,200 metric tons of soft plastics for recycling.

NEW LAW CONCERNING ELECTRONIC WASTE Since October 2015, consumers are able to hand in used electronic products to retailers when purchasing an equivalent new product. Åhléns has prepared the ground for this updated law (WEEE) by informing employees and customers, and by providing new containers that the department stores can place by cashier. In 2016, we will conduct an internal follow-up of volumes and experiences.

NEW DEMANDS When new department stores are built or remodelled, large amounts of materials and products are used, which also affect environmental performance throughout the entire lifecycle. To be able to make as aware and

good choices as possible, we developed new environmental requirements for materials and services in conjunction with construction processes during the year. Our primary aim is that the building contractor will act according to one of the environmental certificates for buildings – BREEAM or Sunda Hus. The requirements also stipulate that unsuitable chemicals must be avoided, and that FSC-certified wood and LED lighting should be used. The requirements are included in the premises standards for store concepts or as an appendix to agreements with the building contractor.

bound goods and distribution carriers.

Key demands include systematic environmental management in line with ISO 14001, a drug-testing policy, maximum speed limits, engine class and training of drivers in safe and ecodriving. The use of renewable or other clean fuels is also encouraged. Åhléns previously cofounded an environmental truck that was used for distribution in the Stockholm area; the local carrier has since acquired an additional truck.

The trucks run on methane diesel, which cuts carbon emissions by up to 70% compared with conventional diesel trucks.

EFFICIENT TRANSPORTATION Efficient logistics with minimum climate impact largely take the form of optimized route planning and high fill rates throughout the entire transport chain. This requires effective coordination and partnership at all levels, from purchasing to sales. All private labels and a large share of branded products are transported to department stores via our distribution centre (DC) in Jordbro. Åhléns’ private labels arrive at the DC from Asia and Europe.

The products are mainly transported by sea from Asia, and by truck within Europe and the Nordic region.

C02 EMISSIONS In 2015, carbon emissions from Axstores’ purchased goods transports (from suppliers to department stores via the DC in Jordbro) amounted

Air transport is only used in exceptional cases; in 2015, 0.2 (0.13% in 2014) of inbound goods, measured as a percentage of Åhléns’ total volumes of paid transportation. An software system is used to manage the entire flow of goods, and we work continuously to improve and increase the fill rate.

At the same time, the rising volume of larger and bulkier products, such as furniture, poses a challenge. In 2015, the fill rate for inbound containers was just over 80%. In collaboration with Åhléns’ Supply Chain organization, an initiative to achieve a fill rate of at least 90% is currently underway.

MANAGEMENT SYSTEMS Åhléns demands proactive work in the areas of the environment, occupational health and safety, and personal safety from both the shippers of in-

26

Åhléns’ remodeled department store in Uppsala

Logistics for e-commerce Warehousing and distribution for Åhléns’ new e-commerce activity will be managed by the DC in Jordbro. Customers are encouraged to collect their ordered goods in Åhléns’ department stores, which means that they can be transported to the stores with scheduled deliveries. This helps to avoid additional transport costs and unnecessary climate impact.

to 6,139 tons (7,760 tons in 2014), of which incoming transport accounted for 4,739 tons (5,458) and distribution for 1,454 tons (1,552). This corresponds to some 27 grams per ton/km of freighted goods. The reduction is primarily attributable to reduced need for transport due to the reduction in department stores and stores in Norway. Calculations of CO2 emissions are based on the Network for Transport and Environment’s (NTM) guidelines for calculating the environmental effects of transport.

REDUCTION IN TRAVEL Every year, Åhléns employees make a number of business trips, both domestic and international, including trips to our purchasing countries.

Opportunities for video conferencing improved during the year, thus facilitating regular communication with our production offices. In 2015, the number of business trips by air, and therefore CO2 emissions, was reduced compared with 2014. Emissions from the multiple train journeys made

27

during the year totalled 0.85 kg CO2, a negligible amount.

Carbon emissions Carbon emissions (metric tons) from business trips by air based on trips booked via our travel agent 2013

2014

2015

291

263

255

Involvement in integration We have initiated new activities and partnerships aimed at increasing integration of newly arrived Swedes. We continue to participate in various initiatives to tackle challenges such as textile recycling, chemicals and animal welfare.

SOCIAL RESPONSIBILITY

Thank you!

JOBS FOR NEW ARRIVALS Åhléns wants to contribute to integration by giving newly arrived Swedes the basic prerequisites for entering the Swedish labor market. At our cafés, 12 new co-workers with new residence permits were recruited during the year.

In 2016, Åhléns will offer an additional 100 people who have recently received residence permits traineeships at our department stores, the head office or the DC. In December, a decision was made to participate in the Open Door initiative, which is designed to increase integration in Sweden. Åhléns employees will have an opportunity to take part in activities to support people who have received residence permits, starting at the head office. Read more at oppnadorren.se.

UNSOLD PRODUCTS DONATED For several years, Åhléns has been donating unsold products to the City

Mission and Myrorna charities in Sweden. The products are used in their social activities, or sold in second-hand stores. At Christmas 2015, gift labels were sold in collaboration with the City Mission for the benefit of exposed people. In addition, Åhléns employees donated their Christmas present from the company to the needy through the City Mission. Åhléns employees also initiated a collection of clothes and shoes for the benefit of the organization’s operations for refugees who have recently arrived in Sweden.

TEXTILE RECYCLING During 2016, the Environmental Protection Agency is expected to present a proposal concerning textile recycling. Åhléns is working for a national system of shared producer responsibility for the collection and recycling of textiles.

We are convinced that this would be

FUNDRAISING FOR THE EXPOSED On two occasions during the year, we arranged “en tia till” (a pound/dollar more) initiatives in collaboration with Action Aid, so that we, together with customers, could collect money for earthquake victims in Nepal, and for refugee camps in the Lebanon and Jordan.

Action Aid employees in action at refugee camps.

Organization

What

Contribution, SEK

The City Mission

Christmas gift labels

386,000

The homeless

The City Mission

Åhléns’ Christmas gift from the company

200,000

The homeless and newly arrived refugees

Action Aid

"En tia till" – Nepal

600,000

Initiatives in Nepal after the earthquake

Action Aid

"En tia till" – Refugees

200,000

Initiatives for refugee camps in the Lebanon and Jordan.

Breast Cancer Fund

Pink ribbon and reflexes

438,000

Battle against breast cancer

Unicef, Swedish Childhood Cancer Foundation, the Swedish Cancer Society, SOS Children’s Villages, the Swedish Federation of People Suffering from Heart and Lung Diseases

Christmas cards

330,000

Initiatives in the particular organization

Lone mothers, Fryshuset

Products

Initiatives for lone mothers

WWF, Swedish Society for Nature Conservation

Corporate sponsorship

Initiatives in the particular organization

We would like to thank all customers who have contributed to a better life for exposed fellow humans.

28

more effective and provide a larger volume of collected products than collection in stores. During the year, we met with politicians and authorities both directly and via the Textile for Recycle Initiative (T4RI); read more at svenskhandel.se.

29

For the benefit of

About GRI and the Sustainability Report

Start of the school term Åhléns is a department store for everyone.

We know that the start of the school term varies in the different parts of Sweden. The year’s school start collection was launched using all of the pupils from the Ammarnäs school, near Vindelfjällen in the far north of Sweden, as models. At this school, eight children sandwich lessons in the classroom with outdoor tuition in the Sami language.

Åhléns strives for credible and relevant reporting of our sustainability efforts, and therefore applies the Global Reporting Initiative’s Sustainable Reporting Guidelines.

G4 SUSTAINABILITY REPORTING GUIDELINES For this 2015 Sustainability Report, we have applied the latest version of the GRI framework – G4. Although more work and data collection is required in some areas before we meet the criteria for full disclosure, our aim is to continuously develop and improve both our sustainability efforts and our reporting.

MATERIALITY ANALYSIS The report content reflects the material aspects for Åhléns, based on the impact of our operations on people and the environment throughout the entire value chain, and on our stake-

holders’ requirements and expectations. The selection and prioritization of the report content and the most significant issues have been made on the basis of customer surveys and other stakeholder dialogs, and through dialog with internal key employees at Åhléns. The reported data and KPIs pertain to Åhléns AB’s operations in 2015, unless otherwise specified.

ality analysis, references to where the information can be found in our Sustainability Report and additional comments. Feel free to contact us!

GRI INDEX ON THE WEBSITE The GRI Index is published in Swedish at ahlens.se

sustainability@ahlens.se

It contains a list of the GRI aspects and indicators that we have chosen to report on the basis of the materi-

We welcome questions and comments on our sustainability efforts.

Contact our Sustainability Manager, Anita Falkenek, by e-mail, phone or regular mail: +46 8402 80 00 Åhléns AB, Ringvägen 100, SE-118 90 Stockholm, Sweden

Governance and organization of sustainability efforts Åhléns’ company management has overall responsibility for Åhléns’ processes related to product quality and sustainability. The Sustainable Purchasing Council is responsible for establishing new or updated purchasing criteria and for Bra Val. The role of the sustainability department is to support the company through its four employees. The Sustainability Manager is a member of Åhléns’ Management

Group, and reports to the CEO. All managers are responsible for pursuing the sustainability issues relevant to their own area of responsibility. Each function and business area annually updates a three-year business plan, which includes sustainability and product quality. At department stores, the store manager has overall responsibility. The primary task of sustainability ambassadors is to stimulate

sales of Bra Val products and to inspire their colleagues to undertake active sustainability work. Åhléns’ sustainability work is based on our new updated corporate values, and on the our Ethical Business Code, which was implemented during the year. These provide practical guidance for integrating responsibility and sustainability efforts into daily work.

Texter: Åhléns and Trossa,Design: Futerra. Please consider the environment and read this report electronically.

If you decide to print the report, please use Swan-labeled and/or FSC-certified paper.papper.

30

31