Analyse of CSR report: Lidl case

ASSESSMENT :

LIDL Belgium & Luxembourg Sustainability Report 2019^[1]

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Executive Summary

Lidl Belgium & Luxembourg is a subsidiary of Lidl Stiftung & Co. KG, a German company, operating in the retail sector. Lidl Belgium & Luxembourg was considered, in its early stages, as a hard discounter. In the 2000s, the brand decided to move away from this image and tried to diversify themselves. They were acting regarding to their ambition : wine fair , emergence of national and international brands in their shelves, birth of the concept of bakery inside the selling area,… These actions have contributed to the repositioning of the brand and are part of the strategy set up to become a soft discounter. They did not hesitate to communicate about this and advocated that  the quality of their products were compatible with low prices.

To disclose Sustainability Report is part of the strategy. They began to disclose these from 2015. There are now three Sustainability Reports of Lidl Belgium & Luxembourg. When comparing the sustainability policy through the retail sector, we observe that the more thorough report are these from Lidl.

In this assessment, we will scrutinize the report to see if the bottom is as pretty as the shape. Figures, tables, colors, a great overview… Nice! Is Lidl as sustainable as they claim ?

Sustainability policy of Lidl Belgium & Luxembourg^[2]

Lidl hold a clear sustainability policy and consider that they have a duty of full disclosure. Indeed, at the beginning of their report, it is mentioned that the company wants to be one of the best retailers in terms of sustainability but most importantly, they assume their full liability for the negative consequences of the company and its actions. Obviously, they want also to strengthen their positive influence. This policy is embedded in their strategy. Lidl made the choice of integrate the concept of sustainability across all their value chain. In that sense, they are consistent with their commitment to monitor their positive impacts as well as their negative impacts no matter at which stage of the value chain we are situated.

         I cannot talk about this without mentioning the link I make between the Lidl’s strategy and this from Solvay Brussels School of Economics and Management. Our school decided, step by step, to teach sustainable development by setting up  an integrated approach into their course as a whole and not like an optional course. We can easily establish the relationship between these two strategies because the methods used are the same.

Behind this policy and this strategy, Lidl give themselves the means to implement it. In this way, the company built a CSR team, a multidisciplinary team. As we can see on Appendix 1, each member is part of a key department in the organization. It allows to track progress of projects towards achieving the defined goals. They are also a contact point in their own department in a matter of sustainability.

Stakeholders consultation

To define on which impacts Lidl will pay attention, they use the “materiality matrix” (Appendix 2) , a typical approach of the CSR world. Its role consist of  assessing CSR issues in terms of their importance to stakeholders^[3] and their relevance to the organization's business.  To be consistent, once again, positive and negative impacts have been taken into account and the issues have been assessed across all their value chain. In addition to this, they compare the  “ materiality”^[4] of  report 2019 with the previous one. This is, until now, the best proof that Lidl follows the “ Sustainability Reporting Guidelines “  of GRI^[5].  This tool ( the matrix) enables Lidl for being credible in the eyes of their stakeholders.[pic 2]

Greenwashing^[6] detection

Almost a third of the Sustainability Report 2019 of Lidl is devoted to analyze the 18 themes selected from 43 thanks to the process detailed in Appendix 3 and based on “GRI’s four-step process” ^[7]. This analyze is composed of 4 phases required to go from raw material to finished product offered to the customer. During this part of the report, Lidl explains how they implement their sustainability policy and strategy. To be relevant, a lot of labels are used to prove the quality, the sustainability of their practices. Indeed, the increasing awareness of customers related to environmental issues leads to some misuses from the companies and those build a false reputation of “ sustainable company”.  For Lidl, we realize that all labels they referred are independent, consistent with strict standards. However, we have detected a lack of full disclosure in some points.

Firstly, we will introduce you two labels present in the Sustainability Report 2019 of Lidl regarding raw materials and agriculture. We can pinpoint some omissions.

This label is awarded by the Dutch organization “Dierenbescherming “ and means that the company, Lidl, makes an effort to contribute to the animal welfare. The assessment of farm businesses is made by independent certifying bodies which are consistent with the EU’s accreditation rules. However, after some researches, we realize that there are three levels and Lidl achieves only the first one. In short, this is a relevant label, there is no greenwashing, but Lidl does not mention the second and third levels and does not mention any ambition of reaching them.[pic 3]

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The Round Table on Responsible Soy Association ( RTRS) is an international non-profit organization founded in 2006. RTRS enables soy producers to become sustainable. This is label awarded to producers and not to Lidl. If we understand well, Lidl purchased RTRS credits which ensure them to have a soy’s supply chain investing in producers that have adopted the RTRS standards. To conclude, this is a relevant label.

Secondly, after considering food products, we can discuss about textile products or small domestic appliances as well. After bring to the fore labels regarding environmental issues in the field of food, we are a little bit surprised by the fact that there are no mention of any labels in the field of textile. Although it is not the core business of Lidl, we can believe that they ignore the consequences of products made overseas like Bangladesh. They disclose that they work with independent auditors but the problem cannot be resolved in this way. Why sell clothes made in Bangladesh? What about CO2  emissions related to the transport ? According to me, the solution is to sell clothes from Europe or/and consistent with relevant labels. If it is not feasible for a discounter like Lidl to achieve this goal, it would be better to stop selling this kind of products.