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Society

 

We contribute to creating a better society
  • We create partnerships and participate in developing local communities.
  • We develop our business in interaction with our customers.
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Topic Objective
Progress of objectives 2017
Progress of objectives 2016
Progress of objectives 2015

Local production

We support local producers.

GRI 204-1

We organised six local food dates around Finland, giving K-retailers and local food producers a chance to meet and establish a collaboration. K-food stores had 10 'Thank the Producer' products in their selections. Overall, some six million 'Thank the Producer' products were sold during the year, for which we pay more than €350,000 extra to Finnish food producers. K-food stores’ ‘Even better from Finland’ campaign encouraged buying Finnish products. K Group was the main cooperation partner in the 'MTK 100' celebrations (the Central Union of Agricultural Producers and Forest Owners, MTK) nationwide. In our social media channels, we published ‘Shared growth stories’ on growth-generating collaborations between producers, local entrepreneurs and K-retailers.

K-food stores, K-Rauta stores and Rautia stores participated in the Blue and White Footprint campaign. We organised Local Food Dates in six different locations. K-food stores sold 12 different Pirkka 'Thank the Producer' products for which we paid extra directly to the producer. In 2017, we will be the main cooperation partner in the 'MTK 100' celebrations.

K-food stores, K-Citymarket Oy (home goods), K-Rauta stores and Rautia stores participated in the Blue and White Footprint campaign. We organised Local Food Dates in six different locations. We created the ‘Thank the Producer’ operating model to highlight the position of producers and increase the appreciation of Finnish production.

Donations, sponsoring and charity campaigns

We participate in projects, which are connected to improving families' daily life and sustainable development.

GRI 201-1

In August 2017, we began an extensive multi-year collaboration, K Fishpaths, with the environmental organisation WWF Finland to save and restore endangered migratory fish populations in Finland. Read more in 304-3.

We continued our co-operation with the children’s rights organisation Plan International Finland to improve the responsibility of the fishing industry and the position of migrant workers in Thailand. A cooperation agreement has been made for the period from 2015 to 2018.

The Little Big Deeds model established by K-Retailers' Association and Kesko brings to public attention responsible deeds relevant to our customers. Watch Aino's Room video and Tomi's story video.

We took part in the Hyvä Joulumieli Christmas fundraising campaign and the Salvation Army's Christmas Kettle collection. Intersport Finland took part in the Red Nose Day campaign. K-food stores have taken part in the international Pampers-UNICEF vaccine campaign for ten years, and during that time, the funds collected via K-food stores have led to the donation of nearly 10 million tetanus vaccines. K-food stores collected nearly 450,000 euros for the Finnish Cancer Foundation’s Pink Ribbon campaign. The cooperation between Pirkka and the Finnish Basketball Association continued, and more than 40,000 children have taken part in Pirkka Little Wolves sports events between 2015 and 2017.

K-Plussa customers can choose to donate their Plussa money to charity.

We participated in Red Nose Day, the Good Christmas Spirit collection and the Salvation Army's Christmas Kettle collection. Finland's K-Rauta and the Women's Bank launched cooperation to help Ugandan women in the early phases of entrepreneurships. K-food stores participated in UNICEF's and Pamper's international vaccination campaign and raised funds for almost 900,000 tetanus vaccinations. We participated in the Pink Ribbon campaign with a more significant contribution than before. K-food stores' bottle return raffle's proceeds were donated to the Eväitä Elämälle aid programme by Save the Children. The Finnish Basketball Association and K-food stores cooperated to organise basketball events for over 10,000 children across Finland. We continued our cooperation with Plan to improve the sustainability of Thailand's fishing industry and to improve the status of migrant workers; cooperation has been agreed for the period of 2015-2018. K-Plussa customers can choose to donate their Plussa money to charity.

We participated in Red Nose Day, the Good Christmas Spirit collection, the Salvation Army's Christmas Kettle collection and the Pink Ribbon campaign. K-food stores participated in the UNICEF's and Pamper's international vaccination campaign. K-food stores' bottle return raffle's proceeds were donated to the Eväitä Elämälle aid programme by Save the Children. Together with the Finnish Basketball Association we organised basketball events and Pikkusudet basketball schools for primary school children across Finland. We started a research project with Plan to investigate the status of Cambodian migrant workers in Thailand.

        

Indirect economic impacts

201-1 Direct economic value generated and distributed - Community investments

Kesko's community investments
€ 1,000 2017 2016 2015
Non-governmental, environmental and other organisations 231 412 555
Sports (adults) 1,145 891 721
Youth sports and other youth work 144 56 64
Science, research and education 50 67 61
Culture 32 14 32
Health 459 270 12
Veteran organisations and national defence 113 3 5
Political parties and organisations - - 8
Total 2,174 1,713 1,457
In addition, Veikkaus Oy contributed an estimated combined revenue of €105-110 million to the Ministry of Education and Culture, the Ministry of Social Affairs and Health, and the Ministry of Agriculture and Forestry, generated from the sales of games by Veikkaus points of sale located at K-stores. The estimate is based on the average breakdown of each euro spent on games in 2017. Due to the merger of Finnish gaming companies on 1 January 2017, the figure is not comparable to the figures of previous years. The estimate has been calculated by Veikkaus Oy. The Ministry of Agriculture and Forestry, the Ministry of Education and Culture, and the Ministry of Social Affairs and Health distribute the revenue in its entirety to beneficiaries in Finland.

204-1 Proportion of spending on local suppliers

Kesko assesses the economic benefit it generates by reporting its purchases by operating country and the company’s country of domicile. Kesko also reports both its own as well as K-retailers’ direct purchases of goods in Finland.

Most of the economic benefit generated by Kesko’s operations – approximately 84% of Kesko’s net sales – flows to suppliers of goods, from which purchases were valued at €9.0 billion in 2017. The purchases of all Kesko companies from suppliers operating in Finland totalled €5,821 million, accounting for 65.0% (65.9% in 2016) of the Group’s total purchases.

In 2017, Kesko had around 26,300 suppliers and service providers from whom purchases were valued at a minimum of €1,000 during the year. Of these, around 12,600 operated in Finland, around 10,900 in Kesko’s other operating countries, and around 2,800 elsewhere.

The 10 largest suppliers accounted for 26.4% (24.3% in 2016) of the Group’s purchases of goods, and the 100 largest suppliers for 59.8% (54.4% in 2016). Of the 10 largest suppliers, seven were Finnish food industry companies, one an import company operating in Finland, and two German car manufacturers.

The purchases of goods by Kesko Group’s Finnish companies totalled €7,175 million. Of these purchases, 80.5% were from suppliers operating in Finland and 19.5% from other countries. It should be noted that because some of the suppliers operating in Finland are import companies, reliable statistics cannot be compiled on the origin of goods supplied by them.

Kesko's purchases by operating country in 2017
Suppliers of goods and services in operating country Purchases from suppliers of goods Suppliers of goods and services in other countries Purchases from suppliers of goods
number € million % number € million %
Finland 12,330 5,773 80.5% 2,525 1,402 19.5%
Sweden 2,251 248 85.2% 246 43 14.8%
Norway 1,739 574 97.6% 198 14 2.4%
Estonia 1,094 67 53.4% 488 59 46.6%
Latvia 815 26 35.1% 431 48 64.9%
Lithuania 433 115 33.9% 221 225 66.1%
Poland 1,066 136 95.1% 64 7 4.9%
Russia 1,330 133 95.5% 40 6 4.5%
Belarus 702 49 58.5% 368 35 41.5%
Total 21,760 7,122 79.5% 4,581 1,839 20.5%

Kesko's purchases by company's and supplier's country of domicile in 2017
Company's country of domicile Supplier's country of domicile
€ million Finland Sweden Norway Estonia Latvia Lithuania Poland Russia Belarus Other
countries		 Total
Finland 5,773 157 10 45 5 7 20 1 6 1,152 7,175
Sweden 14 248 5 1 - 0 4 - - 18 291
Norway 0 9 574 0 - - - 0 - 4 588
Estonia 15 2 1 67 5 2 6 - - 28 126
Latvia 7 0 - 4 26 1 2 0 0 33 73
Lithuania 9 1 0 11 30 115 40 2 4 130 341
Poland 1 0 - - 0 - 136 - - 6 143
Russia 3 - - 1 - - 0 133 - 3 140
Belarus 0 0 - - 0 1 4 15 49 14 84
Total 5,821 418 590 129 65 128 213 151 59 1,388 8,961

Kesko is actively increasing the amount of local purchases and encourages K-retailers to include products from near-by producers in their selections. In 2017, K-retailers’ direct purchases from Finnish regions totalled €748.4 million.

Economic benefit generated by Kesko and K-retailers to Finnish regions in 2017
Region

€ million		 Kesko's purchases of goods K-retailers' direct purchases of goods Kesko's and K-retailers' capital expenditure1 Salaries paid by Kesko Salaries paid by K-retailers Taxes paid by K-retailers Total
Åland 38.7 - 0.0 0.2 - - 39.0
Southern Karelia 8.6 12.7 6.9 6.8 12.1 0.5 47.6
Southern Ostrobothnia 237.1 41.6 7.3 6.0 12.9 0.9 305.9
Southern Savo 47.5 16.5 7.0 5.1 11.6 1.3 88.9
Kainuu 9.3 9.1 2.4 1.8 6.3 0.5 29.4
Kanta-Häme 58.3 35.9 7.4 7.0 12.0 0.9 121.5
Central Ostrobothnia 54.4 18.0 2.0 2.3 4.7 0.5 82.0
Central Finland 61.9 28.2 9.4 10.9 19.3 1.7 131.3
Kymenlaakso 41.0 17.1 9.8 7.9 10.9 1.1 87.8
Lapland 20.7 31.2 11.5 8.6 20.6 1.8 94.4
Pirkanmaa 258.5 41.5 34.4 37.2 36.8 2.7 411.2
Ostrobothnia 159.3 11.8 3.3 7.3 10.0 0.7 192.3
Northern Karelia 31.8 26.9 3.0 5.5 11.4 1.2 79.6
Northern Ostrobothnia 158.9 60.3 17.7 20.4 28.2 2.2 287.8
Northern Savo 192.9 49.0 10.2 12.1 22.3 1.4 287.8
Päijät-Häme 161.0 33.4 7.2 10.9 13.1 1.1 226.9
Satakunta 203.8 41.8 5.0 8.5 16.5 1.0 276.5
Uusimaa 3,301.9 191.2 219.4 307.6 130.2 13.8 4,164.1
Varsinais-Suomi 727.2 82.1 59.5 30.6 38.5 4.4 942.2
Total 5,772.8 748.4 423.4 496.7 417.5 37.6 7,896.4
1 Incl. increase in lease liabilities of K-retailers' equipment
The figures are for those K-retailers whose accounts and payroll are managed by Vähittäiskaupan Tilipalvelu VTP Oy, representing around 95% of K-retailers’ total business volume.

In 2014–2017, Kesko and Ruokatieto ry, an association that promotes Finnish food culture, organised Local Food Date (Lähiruokatreffit) events that bring together local food producers and K-retailers. The purpose is networking as well as improving the supply of local products in the K-food stores in the area and thereby supporting Finnish work.

The 'Thank the Producer' operating model provides customers with an easy way to support Finnish food producers. K-food stores had 10 'Thank the Producer' products in their selections, for which K Group paid more than €350,000 extra directly to the food producers in 2017.

Capital expenditure

Kesko’s capital expenditure has a positive financial impact on the operations of building firms, building sector service companies, and suppliers of fixtures, equipment and information systems, for example.

In 2017, Kesko’s capital expenditure totalled €350 million (€743 million in 2016), or 3.3% of net sales (7.3% in 2016). Capital expenditure in store sites was €256 million (€217 million in 2016). Capital expenditure in foreign operations accounted for 14.5% (15.2% in 2016) of the total capital expenditure. In 2016, Kesko Group acquired Onninen Oy, Suomen Lähikauppa Oy and Oy Autocarrera Ab. The total capital expenditure on the acquisitions was €445.5 million.

In addition to Kesko, K-retailers make capital expenditures in the fixtures of stores. These figures included, K Group’s total capital expenditure in Finland was around €423 million in 2017.

GRI management approach

Material aspects

  • Purchase practices

Local presence has an impact on the whole of society

The retail trade plays a significant role in local communities. It serves and employs local people. In addition to the direct employment impact, the retail trade also employs a significant number of people indirectly through suppliers and business partners.

Retailers, supported by Kesko's district organisations, represent local activities. A K-retailer entrepreneur is responsible for his or her store's staff and customer satisfaction. Listening to the wishes of local customers and making use of customer data, K-retailers put together a selection of products and services that meet customer needs. We develop our business through interaction with our customers.

Kesko purchases the majority of the products it sells from Finland and encourages K-retailers to include locally produced products in their selections. The impact of Finnish products on employment is significant; for example, Pirkka products are produced in 175 companies all over Finland.

Policies and commitments

Kesko's grocery trade and Kespro are committed to the grocery store chain's good trading practices. Kesko requires that its business partners act in compliance with the K Code of Conduct. We add a K Code of Conduct contract clause to agreements signed by Kesko Group companies under which the Group companies purchase products or services from parties outside the Group.

Monitoring and control systems

Changes in the operating environment and in K Group are taken into account by adjusting objectives, operating principles, monitoring systems and/or resources.

Responsibilities and resources

  • K-retailers and K-Retailers' Association
  • Kesko's district organisations
  • Steering group for responsible purchasing and Kesko's buyers
  • Division Management Boards

Programmes, projects and initiatives

In September 2017, K Group began to offer a new nationwide student benefit, in which higher education and university level students receive 10 times the normal Plussa benefit on purchases. This means a 5% rebate on groceries bought in the previous month. The rebate is paid as Plussa money. K Group wants to enable students to also make high-quality, sustainable consumer choices.

In the renewal of the K-Rauta chain, discarded work clothes, flags and other textiles were collected from 140 stores and recycled. Discarded work clothes from rebranded stores were processed into material that can be utilised, for example, by the car industry.

Grievance mechanisms

Boundaries

Economic performance Kesko
Indirect economic impacts K Group
Purchase practices K Group