Kingfisher’s plan for corporate social responsibility October 2001

For further information contact Dr Alan Knight Kingfisher plc North West House 119 Marylebone Road London NW1 5PX www.kingfisher.co.

I am delighted to introduce Kingfisher’s plan for corporate social responsibility. Our aim is toexplain how our strategy for operating a companyas diverse and dynamic as Kingfisher in asocially responsible manner will be put intoaction. We also want to provide an overview of some of the ways in which our operatingcompanies are already tackling different aspectsof social responsibility. But I want to stress thatthis document is not intended to be read as areport, nor as a substitute for one. It is a plan,one element of which will lead to the publicationof a report by the end of the next financial year.

For Kingfisher, social responsibility is aboutthree things - managing the risks to ourbusiness, preparing ourselves for the future and improving the lives of all those whom our business touches. We are proud of theachievements of our operating companies inthese areas. Many of them have been involvedin exciting, innovative and socially responsibleprojects for some time. Others lead the debate

in areas such as ensuring that timber comesfrom well-managed forests and finding new,socially beneficial uses for end-of-life electricalequipment. We believe that it is nowappropriate to co-ordinate these activities morerigorously, at a Group level. In doing so I hopewe will contribute to a general sharing of ideasand good practice, both internally andexternally, and encourage feedback from ourstakeholders. This plan marks the start of thatprocess, by introducing our new socialresponsibility strategy and explaining how wewill implement it throughout our businesses.

Ensuring that our commercial success andgrowth is not achieved at the expense ofanybody's quality of life, or of the communitiesand environments on which we have an impact,presents complex and difficult challenges. We don’t pretend to have all the answers, buthaving a clearly defined plan is an importantfirst step towards achieving our ultimate aim ofoperating in a socially responsible manner. It is

also important that we should be open aboutwhat we are doing, and why we are doing it. I have no doubt that there will be those whowould prefer to see us do more, or less, orindeed nothing at all, in this area. To all of themI would simply say ‘please look at this like anyother aspect of our business – read thisdocument, understand the business case for thethings we are trying to do, think about thestrategy, and then let us know your views’.

To be ready for the future we need to know what the important issues are today and tounderstand how adopting a strategy based oncurrent trends will either enhance or threatenour business. To remain competitive, ourbusinesses will need to sell more products, openmore stores and employ more people. They willneed to do those things in a world where thereis pressure on natural resources, pressure toreduce our impact on the environment andpressure to ensure everything we do improvesthe quality of life of everybody we touch.

IntroductionImproving the lives of everyone we touch

These issues are not new to Kingfisher or ouroperating companies. We’ve been reducing ourenvironmental impacts and building ourinvolvement in local communities for more thana decade. Both in France and the UK ourcompanies have been recognised as leaders inthe field of environmental management, diversityin employment and ethical trading. We have alsobegun to address more complex issues such aslabour standards in the thousands of factoriesthat supply our products.

All these challenges offer us countlessopportunities to create products and systemsthat will prepare us to operate in a moresustainable, more responsible and probablymore demanding society. If we manage it well,this process should enhance the efficiency,brand and profitability of Kingfisher and its businesses.

As a global retailer with a wide range ofexperience across many different markets andcultures, we are also in a good position to driveforward the debate about socially responsiblebusiness in a co-ordinated and intellectuallyrobust way – and we intend to do so. We aim tobe recognised as the major retailer with thebest understanding of the real issues of socialresponsibility and sustainable development, in aglobal context and from a balanced perspective.This will require us to remain at the cuttingedge of both thinking and actions.

We can and will give a strategic lead in thisarea, through the work of the Kingfisher SocialResponsibility Committee, which has recentlybeen strengthened by the inclusion of some ofthe most senior Directors from our business. At their meeting in May of this year theCommittee agreed that their vision should be ‘to improve the quality of life of all thepeople we touch’. This is a difficult task, andnot one that we are likely to achieve in the

foreseeable future, but it is a valid andimportant aspiration, and one that I endorse. I also want to take this opportunity to stressthat our individual companies must decide forthemselves how to pursue that vision, in waysthat make sense for them, in their own markets.Our commitment, at Kingfisher, is to provide theinspiration, tools and support to help andencourage them in that process.

We will look forward to your comments on theplan, and to reporting our progress.

Sir Geoff MulcahyChief Executive, Kingfisher plc

After 21 years at Darty where corporate socialresponsibility has always been about service to our customers, I am looking forward to thechallenge of sharing the learning of all ourelectrical companies across the KingfisherElectrical Group. Comet and Darty have alreadybenefited from a close working relationship inthis area and everyone involved in the businessis excited about the benefits to be derived frompartnerships, both internal and external to our business.

For the electrical business our main prioritieshave been improving the treatment andrecycling of household electrical equipment that has reached the end of its working life, and in particular using that ‘waste’ creatively to benefit society (for example, RENEW andENVIE). On a global scale, the most significantof our impacts is the energy consumed throughthe products that we sell, and we recognise thatencouraging energy efficiency is a majorchallenge for our businesses.

Being an international business brings with ithuge opportunities, but means we now face newchallenges. Across the world, people arebecoming increasingly sceptical and mistrustfulof the actions and motives of big business, andKingfisher must retain the trust it has earnedover the last two decades.

One issue the public has become very concernedabout is the treatment of the people who makeour products. These people are as vital a part ofour business as our stores and offices. They liveand work in countries as diverse as the UK,China, India and Russia, all of which have verydifferent working cultures and expectations.This makes questions about the social andenvironmental impacts of our products far morecomplex than they may at first appear. We relyon our ability to source products globally inorder to provide wider choice for our customers,and keep prices competitive. In doing so, wehave to be sensitive to these concerns and ableto demonstrate what we are doing to addressthem. The focus for Kingfisher is not to find“perfect” factories but to work with suppliersand potential suppliers to improve existingconditions. We want it to make commercialsense for our suppliers to invest in realimprovements, rather than creating a culture of “tests” and “inspection”.

The role of the Social Responsibility Committeeis to act as a focus for social and environmentalissues within Kingfisher. We have a wide remitto review external developments in the areaswhich will affect our customers, staff, productsand processes, and to ensure that operatingcompanies (all of whom are represented on thecommittee) respond appropriately. In such adiverse company, it is important that individualoperating companies devise their own solutions,appropriate to their own markets and situations.Our role in that process is to encourage, eveninspire, them to take action and to ensure thatgood ideas and best practice are shared bothinternally and externally.

Dr Alan KnightHead of Social Responsibility, Kingfisher plc

People buy our products to improve their home environment and make their lifestyle even more convenient. People make ourproducts and work in our stores to earn themeans to improve their and their families’quality of life. Together, they form a network of people living throughout the world.

They are linked through the manufacture, sale,use and even disposal of the products we buyand sell. For me, corporate social responsibilityis about doing as much as possible to reducethe negative environmental impact of thatprocess and enhance the positive social impact.In other words having supply chains whereeveryone benefits. By continuously workingtowards that goal our companies will be wellprepared for a more sustainable future.

Jean-Noël LabroueChief Executive, Kingfisher Electrical Group

Jean-Hugues LoyezChief Executive, Castorama DuboisInvestissements S.C.A.

Margaret SalmonChair, Kingfisher Social Responsibility Committee

ContentsBill WhitingChief Executive, B&Q plc

10 years ago a journalist asked me: “How muchtropical timber does B&Q stock?” I was unableto answer the question, and he assumed that ifI didn’t know, I didn’t care. That conversationmarked a turning point for B&Q on socialresponsibility. Starting with the appointment ofan environmental specialist in 1990, B&Qembarked on a journey which has ensured thecompany is now recognised as a leader in thisarea. Everyone both in B&Q and in Kingfisher is tremendously proud of the fantasticachievements of the sustainability team and we now look forward to sharing some of thatexperience and expertise across the group.

Today it is not just journalists who are askingquestions about our products but a wide rangeof stakeholders. As a Group we want to be able to respond to and assure our customers,our employees and our shareholders that our products are made in safe and healthyconditions, in ways that do not damage local or global environments.

We all need successful, efficient businessesand I believe that high workplace standards,good health and safety, fair pay and conditionsand care for the environment are importantelements in business success.

Kingfisher global reach 2/3

What social responsibility means to Kingfisher 6/7

Range of issues 8/9

Product issues 10/11

Lifecycle of a fridge-freezer 12/13

Kingfisher companies and social responsibility 16BCC 17ProMarkt 17Vanden Borre 17Darty 18BUT 19Comet 20/21Koçtas 22NOMI 22Réno Dépôt 23B&Q 24B&Q China 25B&Q Taiwan 25Castorama 26Chartwell Land 27E-commerce 27Kingfisher Asia Limited 28The B&Q Buying Office – India 29

Why is social responsibility important to Kingfisher? 32/33

Prioritising the issues 34/39

The ‘ladders’ 40/45

Next steps and targets 46/47

How will Kingfisher help operating companies? 48/49

Appendix 1: History of policy development 1990 - 2000 50/51

Appendix 2: Kingfisher Group environmental and ethical code of conduct for suppliers 52/54

How green is this report? 55

FRANCE

BRICO DEPÔT 40BUT 79CASTORAMA 110DARTY 183

TOTAL STORES 412

BRAZIL

CASTORAMA 3

CANADA

RÉNO DÉPÔT 16

Kingfisherglobal reach

For more information on what each of ouroperating companies is doing turn to pages 16-29

UK

B&Q 307COMET 258CHARTWELL LAND

TOTAL STORES 565

GERMANY

CASTORAMA 6PROMARKT 188

TOTAL STORES 194

NETHERLANDS

BCC 25

CZECH REPUBLIC

DATART 11

TURKEY

KOÇTAS 5

ITALY

CASTORAMA 12

TAIWAN

B&Q 10

AUSTRIA

PROMARKT 3

SLOVAKIA

DATART 5

2/3BELGIUM

CASTORAMA 2VANDEN BORRE 52

TOTAL STORES 54

POLAND

CASTORAMA 11NOMI 32

TOTAL STORES 43

HONG KONG

KINGFISHER ASIA

CHINA

B&Q 3

KEYHOME IMPROVEMENT SECTORELECTRICAL AND FURNITURE SECTORBUYING OFFICESPROPERTY COMPANYAll details are correct as at 4 August 2001

INDIA - JAIPUR

B&Q BUYING OFFICE

LUXEMBOURG

PROMARKT 2

Do we really improvequality of life?

4/5People and communities across the world are linked by onecommon aim – to increase their own quality of life and that of theirfamilies. Kingfisher companies provide some of the products andinspiration that help people across the world meet that aim, forexample through enabling them to enjoy their gardens or listen tomusic wherever they are.

Social responsibility is about making sure that in helping ourcustomers improve their quality of life we do not destroy someoneelse’s. That might mean improving the working conditions in thefactories that make the products we sell, using renewable energysources, or making sure our equal opportunities policies are robust.

What socialresponsibility means to KingfisherOur approach to social responsibility encompasses both threats and opportunities.

■ We must identify and manage the risks to our business; ■ we need to prepare ourselves for the future; and ■ we want to reap the benefits of improving the lives of all those whom our business touches.

But the term ‘social responsibility’ covers a huge range of individual issues (see illustration on pages 8/9).They range from climate change to the diversity of our people, and they have impacts on all areas of our business, from procurement and recruitment to corporate governance.

A more sustainable society

Sustainability or ‘sustainable development’ is a cherished goal of policy makers almosteverywhere, even though it isn’t a concept thatconsumers, or businesses for that matter, findeasy to relate to. It sounds rather theoretical,but broadly it means meeting the needs oftoday without compromising the ability of futuregenerations to meet their own needs. Thisincludes using natural resources wisely, avoidingpollution and generally operating with one eyeon the future consequences of all our actions.

In practice, operating sustainably comes down to ensuring that in improving our ownquality of life we don’t, knowingly orunknowingly, harm the quality of life of anyoneelse, whether that person is in the next street or the next generation.

The desire to achieve sustainability underpinsmuch of the new environmental regulationwhich affects our businesses and it is at theheart of many of the campaigns launched byenvironmental groups. It is therefore a majorconsideration for our businesses. Operatingsustainably is an important component ofbehaving in a socially responsible fashion and ifwe fail we will put our reputation at risk. Moreconstructively, we need to play our part inhelping to build a more sustainable world, whileat the same time preparing ourselves to operatesuccessfully in such a world.

A more transparent society

We are living in an increasingly informedsociety. Instant global communication, cheapinternational travel and the huge amount ofinformation reaching all of us every day meansthat the public is more aware than ever beforeof where and how products are made. The environmental and social consequences(both good and bad) of business activities areeasily identified and can be communicated to a global audience in a matter of hours.Companies that are revealed to be operating in ways that don’t meet public expectationscan find themselves facing global campaignsand unprecedented criticism.

A more concerned society

Public expectations of corporate behaviour arerising all the time. It is no longer sufficient forcompanies to obey laws, pay taxes and makeprofits. Increasingly they are expected to do all these things as a bare minimum, and also to contribute to making the world a betterplace. There is no doubt that some of theexpectations now being placed on businessesare unreasonable, but the message is clear.Businesses must embrace the socialresponsibility agenda.

An increasing number of consumers,particularly in Europe and other parts of thedeveloped world, are both willing and able totake their business away from companies whodon’t meet their expectations. Consumerboycotts, and other forms of activism, areincreasing and multinational companies arefrequently the targets.

6/7

Addressing these issues is not some sort of ‘optional extra’. Whether we like it or not they will, sooneror later, change the way we do business because they are driven by broader developments in society.Those developments include:

Range of issues

Electrical goods recyclingPackagingEnvironmental ClaimsEfficiency/Embedded energy in products (climate change)

■ Toxics/chemicals■ PVC■ Timber and forestry■ Peat■ VOCs/Indoor air pollution

■ Provision of recycling■ Staff awareness■ Role of E - commerce■ Product take-back

Sourcing and manufacture

Products

■ Child labour■ Working conditions■ Health and safety■ Bonded labour■ Slave labour■ Prison labour

■ Fair wages■ Cottage industry/home working■ Freedom of association■ Living conditions in dormitories■ Global versus local sourcing■ Transparency and accountability

■ Pollution■ Supply chain auditing

and management■ Supplier relationships■ Consistency of standards■ Sustainability of resources

■ Electrical goods recycling■ Packaging■ Environmental claims■ Labelling■ Information■ End of life issues

■ Energy efficiency of products■ Embedded energy in products■ Climate change■ Toxics/chemicals■ PVC■ Timber and forestry

■ Organic gardening■ Peat bog conservation■ Volatile organic

compounds in paint■ Indoor air pollution

Kingfisher companies encounter a wide range of social and environmental issues in the different phases of their operations.

These include:

8/9

Operations and processes

Our people and our customers

Communities

■ Distribution and transport■ Green commuter plans■ Out of town/in town stores■ Energy use and carbon

dioxide production■ Site management

(water, wildlife etc)

■ Waste management■ Provision of recycling facilities

in stores■ Role of e-commerce■ Product take-back

■ Disability■ Race and culture■ Gender and sexuality■ Age■ Work-life balance

■ Training and life-long learning■ Staff awareness■ Payroll giving■ Customer information■ Health and safety in stores

■ Relationship with local store neighbours/community

■ Relationship with corporate community such as investors

■ Relationship with supply base

■ Charitable giving - as cash or gifts in kind

■ Volunteering by staff■ Stakeholder dialogue

There are issues connected with everything we sell. This diagram illustratesjust a few of the issues surrounding a family barbecue in the garden.

Product issues

Good waste management makes our stores good neighbours,saves money and helps the environment. It also keeps storestidy, making them pleasant places to shop.

WASTE MANAGEMENT - GOOD OR BAD?

Extracting peat destroys wildlife habitats. B&Q offers a full range of peat free composts and is phasing out peat use entirely.

PEATLAND DESTRUCTION - YES OR NO?

WORKING CONDITIONS - GOOD OR BAD?

The spade is made in India. A local organisation works withour production experts to ensure good working conditions inall the factories that supply B&Q.

10/11

PAINT - HIGH SOLVENT OR LOW?

The garden bench comes from Bolivia. It is independentlycertified by FSC as coming from a well-managed forest.

FOREST MANAGEMENT - GOOD OR BAD?

Making charcoal from mangroves destroys important wildlifehabitats. Using charcoal from FSC certified forests givesreassurance of good management. In some cases we caneven use charcoal from local woodlands, which keepscoppice trees alive and helps birds and spring flowers.

MANGROVE DESTRUCTION - OR LOCAL PRODUCT?

The barbeque comes from Taiwan. Our inspection teamswork with the factory to ensure it isn’t causing pollution.

FACTORY POLLUTION - YES OR NO?

Many people want to garden without chemicals. That’s whyB&Q has an organic range.

CHEMICAL GARDENING - OR NATURAL?

Solvents (known as VOCs) given off by paint when it driescause pollution and contribute to climate change. Clearlabels provide customer information.

Lifecycle of afridge-freezer

1

2

Raw materials

- environmental impacts of mining- ensuring health and safety of workers

Component suppliers

- fair wage rates and safe working conditions- energy and water used in production- global warming gases emitted- waste reused, recycled or disposed

Manufacturers

- audits of environmental standards- design for low energy use and ease of recycling- packaging reduced or recycled

Kingfisher stores

- Kingfisher employs over 90,000 people- staff trained to give advice on energy efficiency

and safe use of products- health and safety for staff and customers- support for schools and local community

regeneration- energy used for heating and lighting- waste minimised and recycled - home delivery to reduce car use

Households

- fridges and freezers consume a large proportionof electricity used in the home

- correct use leads to safe and healthy food andlower electricity costs

- best new models can save up to £46 a year inrunning costs

Repair and reuse

- jobs and training places created in communityprojects

Safe disposal and landfill

- health and environmental problems associatedwith waste sites

- hazardous waste separated

Recycling

- creation of new raw materials and components

Transport

- deliveries timed to minimise nuisance inneighbourhoods

- emissions of global warming gases andparticulates

3

4

5

6

8

9

There are issues connected with every stage of the life cycle of our products. This diagram illustrates just a few of the issues that occur during the life of a fridge-freezer.

7

1

2

8

3

9

4

5

7

6

RAW MATERIALS- iron- copper- plastics- coolant gases

COMPONENT SUPPLIERS

MANUFACTURERS- assembling the

finished product

TRANSPORT- moving stock and

materials mostly byroad, but also by sea

KINGFISHER STORES

REPAIR AND REUSE- collection of old and broken

equipment for repair - some reuse by low income

households

SAFE DISPOSAL AND LANDFILL- disposal of whole appliances or

parts that cannot be recycled orremanufactured

- includes safe disposal of freongases (CFC and HFC)

RECYCLING

HOUSEHOLDS

12/13

How much is enough?

Our companies have already achieved a great deal in addressingsocial and environmental issues such as sound forest management,repair and reuse of electrical goods and ethical trading.

Yet the more we do the more we realise we need to do, because ofKingfisher’s commitment to continuous improvement, because of theneed to constantly track and respond to new and existing issues, and because in order to lead the way we have to constantly strive to be better. There are still serious global and local issues whichaffect our business which we need to address.

Social responsibility is an ongoing commitment to a new way ofdoing business which recognises our role in society and the need to respect both people and the environment in our approach to our business.

How do we know what is right?

14/15

How do we know whether the forest photographed here is beingmanaged well or not? And what will happen when the photographerisn’t around? Difficult questions like these accompany many of ourproducts. Finding the right answers requires complex judgements,balancing economic, social and environmental agendas. As ithappens, this forest has been independently certified by the ForestStewardship Council (FSC), but for other issues we often have toreach decisions on the basis of our own judgement.

Kingfisher has been developing a strategicapproach to social responsibility since 1990,with environmental and social policies in place,and mechanisms to drive implementation. Moredetails are given at Appendix 1. This approachwas effective, but it was developed at a timewhen Kingfisher was made up of UK andFrench retail chains. Since then, Kingfisher hasexpanded across Europe and Asia, opening newchains in Taiwan and China, establishing buyingoffices in Hong Kong and (through B&Q) inIndia, and acquiring businesses throughout

Europe. It is now appropriate, and necessary,for Kingfisher to develop a social responsibilitystrategy which reflects the global nature of the Group by being flexible enough to adapt to the diverse cultures it contains, whileensuring a common approach and philosophyacross the world.

Kingfisher’s commitment to social responsibilityis based on a foundation of work already beingdone by many of our operating companies, inenvironmental management, ethical trading,

diversity (equal opportunities) and communityinvolvement. The next section of the planprovides an overview of the kind of work that isalready underway. As you read it, bear in mindthat we are describing ‘work in progress’ andthat, as in any other area of business, someprojects have been more successful than others.There are many more things that the operatingcompanies can and will do, building on thisfoundation of experience and acquired skills, as our work develops.

Kingfisher companiesand social responsibility

16/17BCC

SECTOR: ELECTRICALAND FURNITURELOCATION: NETHERLANDS

BCC is a Dutch electrical retailer. In commonwith other European electrical retailers, itsmain concern is managing the disposal ofcustomers’ waste electrical and electronicequipment. It is part of an industryfoundation which develops ways of collectingand recycling end-of-life electrical equipment(refrigerators, washing-machines, TVs etc.).The foundation is financed by a removalcontribution which is levied on electricalappliances and paid by the customer for eachelectrical appliance they buy. The final priceand the removal contribution are separatelylisted on the price-ticket. Approximately 40%of BCC customers return their old appliances,and these are refurbished by projectsemploying people who have been long-termunemployed, and sold in special shops topeople on low incomes.

In BCC shops, energy efficient appliances areclearly displayed and labelled by the supplier,and by sending this label back to the supplierthe customer can receive a refund of fl.100.

There are battery collection points in allstores for recycling of all batteries.

PROMARKT

SECTOR: ELECTRICALAND FURNITURELOCATION: GERMANY

ProMarkt is a German electrical chain. Being based in Germany, the company’senvironmental impacts are controlled bystrict national laws, and recycling is commonthroughout the business. Old goods arecollected from customers’ homes as part oftheir commitment to customer service. Mostof these are stripped down and recycled.

Part of the company, Wegart GrosslaborGmbH & Co KG, is a laboratory whichprocesses films. The laboratory runs a wastemanagement project focusing on therecycling of chemicals used in the developingprocess. The project recovers 1.3 tonnes ofsilver a year, all chemicals are reused andwhere it has been impossible to recycle achemical, it is disposed of by specialistagencies. The vast majority of film cases arealso recycled.

Going forward, ProMarkt intends to establisha social and environmental working group todevelop the agenda throughout the business.

VANDEN BORRE

SECTOR: ELECTRICALAND FURNITURELOCATION: BELGIUM

Vanden Borre is the leading Belgianelectrical retailer. Belgium was one of thefirst countries to introduce recyclinglegislation, and as such all electrical retailersare now obliged to take back any electricalgoods, large or small, from customers.Vanden Borre is a member of ‘Recupel’, an organisation that ensures recycling ofappliances and is funded by a levy chargedon all appliances sold. Vanden Borre hasmade this levy clearly visible in-store and inadvertising, so that the customer clearly seesnot only the final price but also the levy.

At store level, general waste is recycled andenergy efficiency ratings are clearly displayedand explained in press advertising. Batterycollection points are provided in all stores forrecycling of all batteries.

Vanden Borre recently made an agreementwith Belgian ‘kringloopcentra’ (whichtranslates as ‘recycling centres’), allowingthem to pick up old appliances once a week.These centres collect and repair all sorts ofgoods, particularly old electrical goods andfurniture. They employ people who are notable to find a job, and sell refurbishedproducts mainly to low income families. Theproject is similar to Darty’s ENVIE project,and Vanden Borre hopes to develop itsrelationship with the kringloopcentra in thesame direction.

DARTY

SECTOR: ELECTRICAL AND FURNITURELOCATION: FRANCE

appliances are collected by Darty fromcustomers’ homes when new products aredelivered. About 10% of the appliancescollected are suitable for repair and donatedto ENVIE. The other 90% are dismantled andsold for appropriate industrial treatment.

This project is part of Darty’s overallprogramme of waste segregation andrecycling. In the Paris area (which includes54 of the 183 Darty stores), waste fromstores is collected through a reverse logisticsystem (backhauling) and sent to the wastesegregation and treatment centre (created in1996) located at the distribution centre.Once segregated, waste is sent to the mostappropriate industry for recycling or energyproduction. Only 5.7% of Darty’s waste endsup in landfill.

Darty is currently working to reduce theimpact of its own transport. Drivers attendtraining sessions - run in partnership with carsuppliers and transport companies - to learnhow to drive in a way that respects theenvironment. The company also sets rules of conduct and controls emission standards. A high proportion of the cars in its after sale service fleet now use LPG and/orunleaded petrol.

Darty is France’s leading electrical retailer.The company has been involved in issues of social responsibility for many years andhas always aimed to achieve positive social impacts even while tackling theenvironmental issues raised by electricalretailing. As a result, Darty has an integrated approach to social andenvironmental issues and is particularlyinvolved in social inclusion and wastesegregation and treatment.

Darty’s partnership with ENVIE is a primeexample of the company’s approach. Itbegan in 1985, when ENVIE was created.ENVIE now runs a network of 30 companiesthroughout France. These companies run twoyear programmes that train people withlearning difficulties to repair domesticelectrical appliances. The appliances arethen sold on the second hand market (inENVIE ‘stores’) at a low price and with a oneyear guarantee.

Darty has been involved in writing thetraining tools for the ENVIE businesses, but the company’s main contribution is toprovide ENVIE with electrical appliances ona regular basis in all French regions. These

Darty is also involved in other social projects,for instance with ARES, a project working forthe employment of homeless people, andFACE, the Foundation Against Exclusion. It also funds some medical research, mainlyinto disability.

Inside a Darty store

18/19BUT

SECTOR: ELECTRICALAND FURNITURELOCATION: FRANCE

BUT supports a French charity by givingthem furniture previously destined for waste and disposal which they then repairand re-use.

It is also worth noting that in Francediversity and equal opportunities are dealtwith in a different way from many of theother markets in which Kingfisher operates.Many of the issues – such as working hoursand maternity and paternity packages - aredealt with through strong social legislation.The record of all our French companies onsocial issues is therefore quite different fromour other companies.

COMET

SECTOR: ELECTRICAL AND FURNITURELOCATION: UNITED KINGDOM

Parts of the retail sector are still poor in theway they approach recycling – if all adoptedthe approach shown by Comet, wastereduction and recycling would gain in leapsand bounds”.

A more ambitious waste managementproject, designed to achieve new uses for waste items, was inspired by the workundertaken in France by Darty and thecharity ENVIE. In August 2000 Cometbecame one of the founding partners ofRENEW North East. Based in Gateshead,RENEW provides high-quality vocationaltraining to the long-term unemployedthrough remanufacture and recycling ofwhite goods (refrigeration, washing machinesand electric cookers) donated by Comet’sHome Delivery Platform in the North East.

Over the first year of operation RENEW hasdiverted over 5,000 appliances from thewaste stream, around 1,000 of which havebeen remanufactured and re-sold in the local community at prices accessible to low-income families. 29 trainees havecompleted the one-year RENEW trainingcourse. As in France, there are now plans toreplicate the RENEW model across the UK,and the second operation opened in Leeds inAugust 2001. This project seeks to providetraining to people with disabilities as well asthe long-term unemployed.

Comet’s biggest environmental impact arisesfrom the consumption of electricity and gasduring the use of its products. Energy labels,which rate appliances on a relative scale ofenergy efficiency, are displayed prominentlyat the point of sale on a range of white goods(including refrigerators, washing machines,tumble-dryers and dishwashers). All retailstaff now receive a full day of training whichexplains the origins of the label, its contextin terms of European Climate Change Policyand how to use the label during the salesprocess. The quality of this programme hasbeen recognised by the UK Government’sEnergy Saving Trust.

Comet is the UK’s second largest electricalretailer. The company first adopted astructured, targeted approach to socialresponsibility in 1997, with the internalpublication of a three-year EnvironmentalAction Plan for the Millennium. The plan set targets for improvement in a range ofoperational and product related issues.

One of the first objectives of the plan was to establish a company-wide recyclingprogramme for the 5,000 tonnes ofpackaging waste being sent to landfill eachyear. Zero In On Waste, an on-goingprogramme of change in waste management,was launched in 1997. Baling andcompacting facilities were established atRegional Distribution Centres and emptyspace in lorries was used to returnsegregated packaging to central recyclingfacilities. As a result, in 2000, Cometrecycled over 600 tonnes of expandedpolystyrene, 3,000 tonnes of cardboard and300 tonnes of polyethylene pallet wrap.

In recognition of the success of Zero In On Waste, Comet won the award for BestIndustry Initiative at the 1999 UK NationalRecycling Awards. According to ‘MaterialsRecycling Magazine’, one of the awardssponsors, “…Comet has set an excellentexample in its broad approach to recyclingand sustainable waste management.

Assessing appliances suitable for remanufacture atRENEW

20/21

Comet is a partner in the Energy SavingTrust’s Energy Efficiency campaign and since1997 has been closely involved with nationalactivities to promote energy efficientappliances through stores. During thesummer of 1999 Comet ran the first of fourpromotions in which customers were offereda reduction in the purchase price on a rangeof efficient appliances when replacing theirexisting models.

Comet also seeks to address the needs of its disabled customers. Comet’s new formatdestination stores are designed to provideimproved access for customers withdisabilities, with wide aisles and lowered tillcounters which are more useful forwheelchair users. Induction loops are fittedat tills to improve the clarity and volume ofvoice levels for hearing aid users. Mobileinduction loops are also fitted on the tunicsof trained sales staff. This year the companyhas run a series of successful open days fordisabled customers to encourage feedbackon store layout, accessibility and stafftraining. In partnership with RICABILITY, anindependent charity, Comet also providesbuying guides on key product categories forelderly and disabled customers.

Comet has adopted Macmillan Cancer Reliefas its national charity. Macmillan providesexpert treatment and care through specialistMacmillan nurses and doctors, information,buildings for cancer care, and grants forpatients in financial difficulties. Comet hasset itself a target of raising £200,000 forMacmillan by May 2002.

The most efficient products carry the EST’s‘recommended’ label

Comet’s new stores give easy access for customers using wheelchairs

NOMI

SECTOR: HOMEIMPROVEMENTLOCATION: POLAND

KOÇTAS

SECTOR: HOME IMPROVEMENTLOCATION: TURKEY

After the earthquake which killed more than25,000 people in western Turkey in 1999,Koçtas was one of the companies whichdonated money, clothes and other urgentneeds to the people living in the affectedtowns and countryside.

In 2002, Koçtas is planning to initiate asimple version of B&Q’s QUEST programme.This will enable it to manage suppliers’environmental, social and product qualityperformance. The company has a policy ofnot selling any product that is not certified bythe Institute of Turkish Standards.

Koçtas is aware that its social responsibilityactivities will grow as the business grows.

Koçtas was founded in 2000 as a jointventure between B&Q and Koç, the biggestconglomerate in Turkey. The company has 5stores in 4 different regions.

Being a young company, Koçtas is developingits social responsibility activities. Its headoffice has begun to introduce environmentalhousekeeping measures such as reducing theamount of paper used, collecting waste paperfor recycling, and saving energy through smallmeasures such as switching off lights.

The company is getting involved with itsneighbours through special events like “day out in the garden” with people living in a local retirement home and wall paintingactivities for kids visiting stores.

Koçtas is one of the sponsors of Vehbi KoçFoundation, the first large scale foundation inTurkey. The foundation serves the communityby supporting existing active organisations. It has sponsored and contributed to thebuilding of many schools, dormitories andhealth care clinics.

Based in Poland, NOMI is involved in twosocial responsibility projects. It supportsorphanages financially through donations in kind and the organisation of events atChristmas, and offers practical assistance to families in difficulty through donation of products.

22/23RÉNO-DÉPÔT

SECTOR: HOME IMPROVEMENTLOCATION: CANADA

In 1995, in partnership with the Society for Disabled Children in Quebec, the ‘AubergeRéno Dépôt’ project (Réno Dépôt hostel) waslaunched on the Papillon Camp site. Workstarted in 1998 to build 4 houses, each of which could accommodate 25disabled persons, and to revamp the cafeteriaand other parts of the site. The company’sassociates, suppliers and customers havefunded the project over 5 years. A total of$1.5m Canadian has been donated, of which$1m was provided by Réno Dépôt and$500,000 was donated by suppliers, much ofwhich was as gifts in kind.

Réno Dépôt also funds medical research and many of its stores are involved in local projects.

Réno Dépôt is a Canadian homeimprovement chain, based in Quebec, withseveral stores also in Ontario. The companyhas run a number of environmental andsocial responsibility programmes.

It has been particularly involved in wasteissues, and has set up a program for thecollection and recycling of cardboard, paper,glass, plastics, and metals in stores. A pilotproject is currently being trialled in Quebecto collect plants and earth for furthercomposting by a sub-contractor. This is planned to be extended to other stores.

In addition, Réno Dépôt sponsors variousevents in Canada with particular emphasison culture, education and sport. Forinstance, in 1999, the company took part inthe “Corporation du 35ème Mondial desMétiers”, which promotes technical trainingfor various jobs. The event involved 600young people. It was also a partner in the“Opération Patrimoine Populaire de Montréal1999”, which raises awareness of thearchitectural heritage of Montreal.

B&Q

SECTOR: HOME IMPROVEMENTLOCATION: UNITED KINGDOM

For over ten years, through a culture ofconstant improvement and inspiration andworking in partnership with its stakeholders,B&Q has achieved significant improvementsin the environmental impact of itsoperations, suppliers and products.

Timber is one of the key challenges B&Q hashad to face. Work began in 1991 with theidentification of timber sources and suppliers,and the publishing of the company’s firstreport on timber: ‘Tropical Deforestation – TheDIY perspective’. The company then setitself two targets: that by 1993 all timbersourcing would be transparent, and that by1995 all timber would come from internallyidentified well-managed sources. Thesetargets led to a programme of continuousimprovement. They also made it clear thatB&Q could not tackle this issue alone, andthat a credible international system ofindependent certification and labelling wasneeded. As a result, B&Q helped create thenow internationally recognised ForestStewardship Council (FSC). In 1995 B&Qset a further target, that by 1999 all itstimber should be from independentlycertified, well-managed sources. B&Q revisedand re-launched its timber policy in 2000.

B&Q paint also carries a label indicating thelevel of VOC (volatile organic compounds)emissions associated with it. This providescustomers with information which enables

them to make an informed choice. As aresult of the labelling scheme anddevelopment of low VOC alternatives, thecompany has achieved a 21% reduction inaverage VOCs per litre sold.

B&Q’s environmental managementprogramme QUEST (which stands forQUality, Ethics and SafeTy), has drivenenvironmental improvements with suppliersand stores. In 1999, 84% of its suppliersmet or exceeded performance targets.

In the community, almost 1,000 BetterNeighbour Grants (previously known asGreen Grants) have been awarded to storesfor use in local projects to date. Certainwaste products are also donated to localcommunity groups, benefiting them andsaving the business over £500,000 a year indisposal costs.

B&Q has also become well known for itswork on diversity. There is no upper age limitto retirement or graduate recruitment withinB&Q, and the company has won much praisefor its positive approach to employing olderworkers. The fifty-plus age group nowaccounts for 18% of the B&Q workforce.

The company has also taken the lead inimproving customer service and access fordisabled customers and employees. Thenumber of disabled people employed by B&Q

has increased by 300% over the last twoyears. Every person employed by B&Qreceives disability awareness training and by2004 it is planned that every store will havebeen refitted to increase accessibility.

B&Q’s innovative approach meant that in1999 and 2000, it was the overall winner ofthe UK’s EASE Awards (Ease of Access toServices and Employment). In 2000 it alsoreceived the Business in the CommunityAward for Innovation through Partnership.

B&Q’s sustainability programme,achievements and approach were rewarded in2001 when the company won one of theUK’s highly prestigious Queen’s Awards forSustainable Development.

Further information on the company’s work onethical trading can be found in the section onB&Q’s buying office in India on page 29.

Bill Whiting, Chief Executive of B&Q plc, receivesthe Queen’s Award from the Lord Lieutenant ofHampshire, Mrs Mary Fagin

24/25B&Q CHINA

SECTOR: HOME IMPROVEMENTLOCATION: CHINA

begun to educate its vendors and customerson the issues where appropriate.

It has also begun to recycle materials instore. All cardboard and plastic is collectedand reused by local customers. The nextstage will be to introduce sorting bins forplastic, paper, metal and glass.

In terms of packaging, at present B&Q Chinadoes not generate enough packaging materialto introduce a large scale recyclingprogramme. However, once volumes havereached a workable level it will embark on aprogramme for its own brand packaging inconjunction with a packaging solutionscompany, as well as encouraging itssuppliers to do the same.

B&Q China also audits its suppliers and usesKingfisher supplier assessment guidelinesand procedures to do so.

Chinese Government policy towardsenvironmental issues is still developing. B&QChina intends to monitor the progress andfurther develop its environmental policies asthe laws change. Its key areas of concernwill be sourcing timber from well managedforests, assessing suppliers on environmentaland human rights issues, and safe disposalof harmful or toxic waste.

B&Q China is B&Q’s newest internationalventure. With the opening of B&Q’s biggestever store in August 2001, B&Q China nowhas 4 stores: 3 in Shanghai and 1 inSuzhou. The chain plans further expansionacross China over the next 5 years.

The chain has already begun to take itsenvironmental responsibilities seriously andhas, like its international counterparts,adopted measures to ensure this is appliedin all areas of business.

One of those areas is timber buying. Thestores already stock some wood productscertified by the Forest Stewardship Council,and have recently introduced own brandflooring which is FSC certified with fullchain of custody. There are however no FSCcertified forests (or wood productmanufacturers) in China, so all certifiedproducts must be imported. B&Q China has

B&Q TAIWAN

SECTOR: HOMEIMPROVEMENTLOCATION: TAIWAN

B&Q Taiwan is a small Taiwanese homeimprovement chain. Environmentalmanagement is a relatively new concept inTaiwan, but the company has already begunto implement projects. For example, allpackaging uses recyclable PP or PE plastic,rather than PVC, and customers areencouraged to recycle batteries at a batteryreclaim box in every store

In January 2002, the Taiwanese governmentwill launch a law requiring fluorescent tubesto be recycled. B&Q Taiwan will participatein this activity and is applying for arecycling point.

The stores also stock environmentallyresponsible products such as bins and bagsfor sorting waste.

The opening of a new B&Q store in TaiwanThe opening of the huge Yangpu store in August 2001

CASTORAMA

SECTOR: HOME IMPROVEMENTLOCATION: FRANCE

Castorama also takes responsibility forimproving the impacts of the products itsells. Since 1999, the company has run a supplier audit scheme to assess theenvironmental impacts and business ethicsof its suppliers. It has developed apartnership approach to its relationship withits suppliers, and as a result was awardedthe ‘Grés d’Or’ by the FEEF (Fédération desEntreprises et Entrepreneurs Français) in2001, for its co-operation with one of itssuppliers, Mobois.

In order to tackle the timber issue Castoramahas increased contacts with professionalorganisations such as Fédération Nationaledu Bois, state organisations such as OfficeNational des Fôrets, and environmental NGOssuch as WWF and Greenpeace. In November2000 the company joined France’s WWFtimber working group – the Club Profôrets -to encourage the use of certified labels suchas FSC by its suppliers. It is also involved inthe steering group for the development of theISO14000 standard for timber and forests. Inpartnership with the Fédération Française desMagasins de Bricolage, the company is now inthe process of requiring its timber suppliers togive the timber species and origin on timberproduct tags.

The Castorama Group is France’s numberone home improvement retailer. In 1995 itestablished a Quality department to addressthe health and safety of customers and theimpact of products.

Over the past 3 years, this department hasrun a successful project aimed at preventingaccidents in the home in collaboration withCSC (Commission de Sécurité desConsommateurs) and AFNOR (the Frenchstandards organisation). As part of this,several publications were developed inpartnership with expert organisations anddisplayed in stores. They included a comicbook for children aged 5 - 10 to help themunderstand potential hazards in the home or while doing DIY; 8 leaflets on first aid athome; and 5 leaflets on specific hazards inparticular rooms, including the kitchen,garden and bathroom.

In 2000, in partnership with ADEME(Agence De l’Environnement et de laMaîtrise de l’Energie), Castorama publisheda customer information leaflet which aimedto raise awareness about the environmentalimpacts of home improvement and gardeningactivities whilst buying, using and disposingof its products. Entitled ‘Comment bricoleret jardiner en respectant l’environnement?Les bons gestes’, 150,000 of the leafletswere distributed through stores.

Also in 2000, a campaign in schools waslaunched to raise children’s awareness of the role of trees; a magnet board showingthe life cycle of a tree was distributed free to those schools requesting it.

The company has been involved in a numberof social projects for many years. It sponsorsSébastien Barc, a disabled sports championemployed at Castorama, who won 3 medalsat the Sydney Paralympics in 2000. In 1996it created a social fund to help employeesthat face particular difficulties due toaccidents or disability. Since 1997, it hassupported an annual Telethon collectingfunds for research into genetic disorders. It also funds the ‘Fondation de la DeuxièmeChance’ acting for social inclusion, and is a partner in the French Federation forHandisport Athleticism. Stores are alsoinvolved in various local social projects ontheir own initiative.

The garden centre at a Castorama store

26/27CHARTWELL LAND

SECTOR: RETAIL PROPERTYLOCATION: UNITED KINGDOM

Imperial Park, Bristol is being used as anenvironmental best practice project with arange of measures in place which have beenagreed with two firms of environmentalconsultants. The object is to take forwardthe learning points from this scheme intofuture projects.

All consultants and contractors are asked to demonstrate their commitment toenvironmental issues before appointmentand Chartwell has produced a handbook fortenants which will help them to makeinformed decisions on environmental matterswhen fitting out and occupying their stores.

Chartwell Land’s policy on socialresponsibility is to put something back into the local communities where it hasundertaken a major investment ordevelopment project. Examples of thisinclude a sensory garden at a school fordisabled children in Glasgow, theconstruction of a Women’s Centre and crèchein Watford, refurbishment of the children’slibrary in York and the provision of cyclepaths, off-site landscaping and a new bridgeover the River Nene at Northampton.

Chartwell Land is Kingfisher’s specialist retailproperty company, purchasing and developingsites for the Group’s companies in the UK.

Chartwell Land is recognised within theproperty industry as taking a responsible andactive role on environmental issues. Asfounder members of the PropertyEnvironment Group, the company isbenchmarked annually against its peers inthe property market and has consistentlyperformed within the upper quartile.Chartwell has replaced its environmentalpolicy with an Environmental ManagementSystem which has clear objectives backed upby measurable targets. These are externallyaudited every year.

Chartwell Land has agreed to sponsor and siton the advisory panel of the new BREEAMfor Retail Scheme run by the BuildingResearch Establishment, which will measurethe environmental efficiency of new retailbuildings. Chartwell achieved a “Very Good”rating in a BRE Environmental AssessmentMethod assessment of its retail park at GreatWestern Road, Glasgow, and is on target toachieve an “Excellent” rating at the newB&Q Warehouse at Imperial Park, Bristol.

E-COMMERCE

Aware of the growing perceptions that e-commerce could encourage moresustainable forms of retailing, Kingfisher wasone of the sponsors of the Digital Futuresproject undertaken by Forum for the Future,a UK-based sustainable developmentorganisation of which Kingfisher was amember from 1996 until 2000.

This research concluded that whilst e-commerce could make a significantcontribution to more sustainable retailingthis would only happen if companiesengaged in e-commerce adopted strategiesthat ensured their operations had positiveenvironmental and social impacts. Kingfisheris therefore committed to reviewing thesocial responsibility of its e-commerceactivities by the end of 2001.

Opened in 1995 as Kingfisher’s sourcing officein Hong Kong, Kingfisher Asia is responsible forthe co-ordination of Group sourcing operationsin most of South East Asia, where total exportvolume in 2001 is expected to exceed £300million, filling over 10,000 40ft containers.This co-ordinated approach has proved sosuccessful that it has been extended to includesatellite offices in Shenzhen and Shanghai.

KAL has been a valuable partner in helpingoperating companies deliver their environmentalobjectives. It was KAL’s co-ordination thatresulted in the FSC certification of B&Q’swooden bathroom accessories and a substantialproportion of garden furniture from Indonesiaand Vietnam.

KAL has also ensured that operating companies’packaging polices are adhered to, and workedwith its own suppliers to reduce packaging.Since 1997, the elimination of polystyrenetrays in toilet seat boxes has not only takenthem out of eventual landfill but has also savedB&Q more than £100,000 a year.

With more than 1,000 factories in the region,KAL’s biggest challenge is ensuring that working conditions in supplier factoriescomply with the Kingfisher ethical andenvironmental code of conduct. This isparticularly difficult in China, where the cultureand business environment is different fromEurope, and where there is only a very limitednumber of civil society organisations to helpguide the company’s approach. Nevertheless,KAL was the first part of Kingfisher to field-trialthe code, and all new suppliers are nowmeasured against these criteria. Where remedialaction is required systems are also in place toensure that this is achieved. Third party and in-house auditors carry out assessments of all newfactories and where possible KAL works withsuppliers to develop improvement plans. Anextensive training programme for auditors hasnow been completed.

Kingfisher has co-ordinated a number of factoryspecific improvement projects, including a trialof the new independent SA8000 standard in a bathroom accessory factory. In a cast ironbench factory, KAL is into the fourth year of acontinuous improvement programme which hasseen the accident rate in the casting unitdecline by 90% since 1997.

KAL is also part of the local Hong Kongneighbourhood, and has recently linked upwith a local charity called Crossroads, throughwhich unwanted manufacturers’ samples,such as tools, are sent to self-help projectsthroughout China. Some of the office staffhave also taken part in a 25km sponsoredhike, raising HKD 12,000 (£1,200) for alocal environmental group.

KINGFISHER ASIA LIMITED (KAL)

Patio furniture sourced by KAL

Until last year most of B&Q’s buying from Indiawas completed via British-based importers. Butlast year the company opened its own buyingoffice in Jaipur. The office now buys productsincluding leather tool bags and garden toolsfrom several factories. Although this office wasonly opened recently, B&Q has been working onsupply chain issues for some time, with itssuppliers and import agents, achieving positiveresults in a number of areas.

Looking carefully at working conditions is nowan essential component of the buying process.By inspiring factory owners to make thenecessary changes, improvements toprofitability, final cost price and workingconditions have all been possible. Experienceshows that this approach ensures real changes,rather than a cosmetic exercise ‘to keep B&Qhappy’. Experts in production techniques visitevery factory prior to orders being agreed andagain at regular intervals after the orders havebeen placed. They are assisted by anindependent non-governmental organisationcalled International Resources for Fairer Trade(IRFT). The aim is to improve both theproductivity of the factory and the workingconditions. In November 2000, potentialsuppliers attended a seminar in Delhi tobecome aware of B&Q’s commercial and ethical values.

Examples of this approach in action include:

■ Brassware There are major health and safetyissues associated with casting, polishing andother manufacturing processes. Since 1992B&Q has worked with its brassware suppliers toaddress all of these issues. One joint initiativeaimed to reduce dust in the polishing unit byimproving extraction units. This has resulted ina dramatic reduction in airborne dust. Togetherwith other improvements, this has bothincreased productivity in the factory andreduced health risks.

■ Coir doormats These are made from fibrouscoconut husks. They are produced in a complexnetwork of cottage units around the Cochinregion of Southern India. B&Q, with the help ofIFRT, has helped improve the productivity of thecottage units to increase wage levels. As far aspossible, health and safety and environmentalpollution controls have been established. Thecompany has also set up micro-credit schemesin some areas to help those on low wagesaccess credit.

■ Hand knotted rugs B&Q was the first retailer to have all its rugs certified by the Rugmarkscheme, an independent organisation thatcertifies that the manufacture of rugs does not use exploited or illegal child labour. In onevillage where a high proportion of rugs destinedfor B&Q are made, over 800 weaver familieshave benefited from a health centre openedjointly by B&Q and its supplier.

■ Garden gloves Castorama is also aware of the potential ethical issues associated with India. The company has moved its supply ofgloves away from a supplier with poor workingconditions and an unacceptable level of pollution from the tanning process, and intends to introduce continuous improvementprogrammes for all Indian supplier factoriesalong the same principles as B&Q.

■ Garden tools One of the first projectssupervised by the new buying office hassignificantly improved the working conditions in a garden tool factory. This has resulted inimproved productivity and reduced the cost ofthe products to B&Q and, ultimately, to theircustomers. Everyone in the chain has benefited.

The buying office is already supporting the localcommunity in other ways. B&Q and its Indianbusiness partner have agreed to commit 1% ofturnover to local causes. They are planning touse these funds to help meet the needs ofdisabled people in India and other countriesthrough a working relationship with Motivation.This is a charity which designs wheel chairsappropriate for use in developing countries, and trains local organisations to build them.

THE B&Q BUYING OFFICE – INDIA

28/29

Women separating coconut husks from their shells to make coir

Is this product ready fora sustainable society?

30/31

As society becomes more sustainable there will be further, far-reaching changes to the way our products are designed,manufactured, used and disposed of. For us this could be a threat or an opportunity - it all depends on how ready we are.

To be ready for this future we need to be able to spot trends inenvironmental and social issues that will affect our ability to dobusiness now and in the future, and be flexible and creative enoughto respond to them in all the markets where we operate.

This is no small task. There are hundreds of issues that could affectus or our products. We must understand and manage them beforethey start to dictate to us.

Why is socialresponsibility importantto Kingfisher?Can social responsibility support Kingfisher’splans for growth and commercial success? Whatis the business case and where will we see thebenefits? Well, we don’t yet have any way ofquantifying the benefits (and nor, we believe,does anyone else), but here are six areas inwhich we expect that social responsibility willhelp our businesses.

Being ready for the future

A successful social responsibility strategy will allow us to identify and manage issues and trends which have the potential toundermine or enhance the business plans of our operating companies.

Respect for people

We are a multi-cultural business. The more we understand cultural diversity, the more weunderstand our customers, staff and suppliers.Empathy with people’s values makes ourcompanies more attractive places to work at all levels. For example, working in the localcommunity provides a great opportunity tocreate a real sense of teamwork and belongingin the organisation. This in turn helps to keepstaff turnover low and build valuable expertiseand experience.

Stores that communities welcome

Creating stores which are active and involvedmembers of the neighbourhoods in which theyoperate improves staff morale, local awareness,recruitment, and customer loyalty.

Product innovation

New and innovative products keep our storesexciting and help us meet customer desire forchoice and value. As the leading retailer inmany of our markets we have to be ahead of our competitors in shaping markets for newproducts and services.

Peat free compost, energy efficientrefrigeration, organic pest control – all these are products our stores did not stock until anunderstanding of the environmental issues led us to investigate alternatives to existingproduct lines.

In a highly competitive retail market, it isimportant to be able to identify challenges andopportunities before our competitors. If we cando this we can help to shape the way themarkets for our products are moving.

The business case for action

Saves costs

A great deal of environmental management issimply about reducing the amount of resourceswe use, or using them more efficiently, to reducethe amount of waste we produce. Tacklingclimate change, for example, means reducing theamount of CO2 (and other greenhouse gases) weproduce when we burn fuel in our vehicles or useelectricity in our stores and offices. The best wayto do this is to use energy as efficiently aspossible, providing cost savings for the business.The same goes for reducing waste in our stores –the cost of disposal goes down as the volume ofwaste decreases.

Anything that improves staff recruitment,morale and retention increases the quality ofour customer service and saves costs. We cantake these savings even further if we encourageour suppliers to follow our example, so we cancontinue to provide great value for ourcustomers and investors.

Brand

The reputation and behaviour of any operatingcompany can enhance the overall reputation ofthe Group. If badly managed it can also damagenot only the Group’s reputation, but that of allthe other operating companies.

A good reputation depends on keeping therespect, trust and goodwill of not only ourcustomers and shareholders, but all the peoplewho have an influence over our ability to run a successful business: employees, suppliers,investors, politicians, campaign groups, localcommunities across our supply chain - to namebut a few. Our ability to manage our perceivedimpact on the issues important to ourstakeholders will be fundamental to gaining the trust of our customers.

32/33

SOCIAL RESPONSIBILITY, DOING NOTHING IS NOT AN OPTION

CONSEQUENCES OF INACTION

Staff embarrassed/ashamed

Staff discomfort with job

Poor staff recruitment

Poor retention of staff

Detachment of staff

Customers reject shops

Customers reject products

Mistrust from customers

Disappointment

Low quality/cynical suppliers

Ignorance about supply chain

Skeletons in cupboard

Issues manage us

Not ready for future

Business strategy undermined

We become defensive to outside world

Planners reject our stores

Uncompetitive

BENEFITS OF SUCCESS

Proud staff

Confidence in job

Quality recruitment

Higher retention

Involvement

Preferred choice for customers

We are a trusted brand

Respect and loyalty

A story that adds value

High calibre suppliers

Buyers understand supply base

Good PR about our supply base

We manage issues

Ready for future

Strategy re-enforced by our action

Outside world celebrates our success

Planners accept, even welcome us

Better than our competitors

Prioritising the issuesChallenges of social responsibility in a global company

We cannot tackle all the issues we have identified separately (see list on page 8/9). Our approach is therefore to recognise key trends in our planning, each representative of developing themes in the societies in which we operate, and incorporating several individual issues. They all have the potential to affect, either positively or negatively, Kingfisher's ability to do business now and in the future. There is therefore a strong business case for all operating companies to devote time and resources to addressing each of these trends.

Operating companies will, however, have to set their own orders of priority. They will do thisbased on an understanding of which trendspresent the greatest threats or opportunities to their business and where they can have thegreatest impact.

But operating companies do not work inisolation. Because we are all part of one group,the actions of one company will impact directlyand indirectly on all the others. There willtherefore be a minimum level at which allcompanies in the Group will need to addresseach of the trends, to protect the reputationand business strategy of Kingfisher as a whole.

34/35The 12 trends are:

EVERY PRODUCT WILL SOON BETELLING A STORY - AND THEYALL NEED TO BE GOOD

Our customers increasingly regard us ashaving responsibility for everything to dowith the products we sell. Every product wesell has a story. The first chapter describesits journey from raw materials, throughfactories and stockrooms, and into ourstores. The second chapter follows theproduct to our customers' homes and intouse. The final chapter describes the disposalof the product, followed by possiblerefurbishment and re-use, before finaldisposal or recycling.

These stories are becoming easier to tell andare arousing greater interest. Our customerscan all too easily see how our products arebeing made - by watching television, readingbooks and newspapers, or visiting Internetsites. To avoid any risk of being embarrassedor ashamed by what they discover we have toensure that we know about each stage of thestory and understand all the significantimpacts. Then we can take whatever actionis necessary to create a story we can takepride in. This is never going to be easy.There are simply too many products on ourshelves, and too many issues to come toterms with. But we must continue to workwith our suppliers, and our otherstakeholders, to set sensible priorities andreduce the uncertainties.

THE WAY WE TREAT ALL OURPEOPLE IS BECOMING MOREIMPORTANT THAN EVER

Our ability to serve, employ and buyproducts from people across the world willincreasingly depend on our ability tounderstand and work in harmony withdiverse groups of people. If we candemonstrate that we have taken their needsand expectations into account, we willmaintain their custom and loyalty, and earnrespect as a responsible company.

Customers and employees alike rightlydemand that everyone who works or shopswith us is treated with dignity, and has anequal opportunity to access our stores,products and services. Our employees mustalso be given proper opportunities to achievetheir potential. In all aspects of ourbusiness, ‘equal opportunities’ must meanexactly what it says if we are to deliveragainst society’s developing expectations inthis important area.

COMMUNITIES WILL REJECTBUSINESSES WHO ARE NOTGOOD NEIGHBOURS

In a world of increasingly competitive retailmarkets, the trust and goodwill of the localcommunity is becoming a vital ingredient inattracting customers and retaining staff.Being seen to add value and to actresponsibly in the communities where weoperate is crucial to our business success.

The public is more sensitive than ever to theimpacts of business on their localneighbourhoods, and can make their viewsknown forcibly. Together with local andnational governments, they are aware of theimportance of sustainable development andare looking to businesses to help themimplement sustainable solutions to localproblems. We need to make sure that we arepart of these solutions and not the source ofany of the problems. Our aim must be todevelop local community involvementprogrammes that build on our existing skillsand deliver real benefits.

A B&Q-sponsored community project in Croydon, England

A supplier’s factory in China

Our customers have diverse needs andexpectations

OUR SUPPLIERS NEED TO BECLEANER AND GREENER TOO

Customers do not want to buy products thathave caused excessive pollution duringmanufacture. They expect us to ensure thatour suppliers achieve the same highenvironmental standards as we do ourselves.This presents a huge challenge for us. Globalsupply chains are complex, and to achieveuniform standards through them is a bigundertaking. However, there is a majorincentive for us to take effective steps tohelp our suppliers manage theirenvironmental impacts. News of a pollutionincident anywhere in the world, or poorenvironmental management at a factory, cantravel via television and the Internet to ourcustomers across the world in a matter of minutes. If the factory is revealed to have been making goods for a Kingfisher companyour reputation will suffer, regardless of wherethe fault and legal liability for the situationmay lie. This situation may not be 'fair' butit is a fact of life.

WE ARE SELLING MORE WOOD, BUT IT IS BECOMING HARDER TO FIND

There is not enough timber growing on the planet to sustain current patterns ofconsumption indefinitely. According toFriends of the Earth, if all countriesconsumed at the level the UK does today we would require at least four planets tosupply the amount of wood they wouldrequire. Yet the trend is for us to use more and more wood and wood products.Global wood consumption has risen by 64% since 1961.

Consumers are increasingly aware of the linkbetween the wood they buy and the highlypublicised loss of rainforest and old growthNorthern forests. They want to know that thedecking or laminate flooring they buy from aKingfisher store has not made theseproblems worse. Schemes to certify timberfrom well-managed forests already exist.Organisations such as the ForestStewardship Council provide the reassurancethat we and our customers want, and webelieve that we are approaching a positionwhere no reputable retailer will attempt tosell timber that is not guaranteed to havecome from a well-managed forest. The hugeDIY chains in the USA are beginning tomatch the commitment of the pioneers inthis area, like B&Q and Castorama, and seektheir own supplies of certified timber. Yetsupplies of certified timber are not increasingin line with demand. Forestry is a long-termbusiness and achieving certification canrequire major changes in practices. Webelieve this issue will become a source ofcompetitive advantage, which provides astrong business case for us to ensure that wehave sufficient supplies of certified timberavailable for all our requirements.

Certification allows us to trace the wood we sellfrom the forest …

… to the factory, and finally to our stores.

News of this kind of pollution in our supplychain could damage our reputation

36/37CHEMICALS ARE CAUSING INCREASING CONCERN AND CONTROVERSY

As a society, we rely on a huge andincreasing range of chemicals - both naturaland man-made - to maintain our quality oflife. As our understanding of human healthand environmental science improves, we arediscovering new ways in which thesechemicals interact with the natural world,and identifying new gaps in our knowledge.There is however a lot of uncertaintysurrounding cause and effect, which hasfuelled the recent controversies over manychemicals. Some of these concerns haveclearly been legitimate. Others appear tohave been largely unfounded.

It is clear that the number of chemicalscoming under public scrutiny will increase.As retailers, we will continue to findourselves in the middle of difficult andemotive arguments between groups of peoplewho hold strong but opposing views on therole of chemicals in society. Health andenvironment campaign groups will putpressure on us as responsible retailers toremove any chemicals suspected of beingharmful from our shelves. Yet the chemicalsindustry will argue that many of thesechemicals are essential and that there is noconclusive proof that they are harmful. Theonly certainty is that doing nothing will notbe an option for us.

In response, we must be certain that theactions we take are both appropriate for, andin proportion to, the scale of the problem.We will need to examine and deal with theissues carefully, looking at all the risks tohuman health, to the environment and to ourreputation, and reach our own decisions onacceptable levels of risk and appropriatelevels of response.

Our experience has been that where we havetaken a pro-active approach - such as VOClabelling of paint at B&Q - the benefits havesignificantly outweighed the time and costsinvolved, because we have been able tomanage the issue at our own pace. Wherehave had simply to react to issues for whichwe were not prepared - such as fine dust andformaldehyde fumes released from sawn MDF- resolving the problem has been moredifficult and more disruptive to our businessand our customers.

We need to plan what happenswhen our customers want todispose of the products theybought from us

Our society is generating ever-increasingquantities of waste. For example, as thenumber of electrical appliances in ourcustomers' homes increases, the averagelifespan of these products is decreasing.Electrical waste is growing three times asfast as domestic waste in the EU andnational governments are now looking toretailers to take back waste products. Someof our electrical chains are already requiredto charge a levy on the appliances they sell,to cover the costs of disposal.

We therefore need to develop innovative waysto help our customers to deal with wasteproducts. We are already attempting todevelop products which can be recycled andwe provide advice about the best way of disposing of certain products. This trendneeds to be extended to all our product lines.

Clear product labelling helps customers makebetter informed choices

A typical levy charged on electrical goods in Belgium

PACKAGING WASTE WILL BECOMEA BIGGER FINANCIAL WASTE

As part of the pressure to reduce waste,retailers and producers are increasinglybeing held responsible for productpackaging. This is adding significantly to ourbusiness costs - this year B&Q could spendup to £1 million to meet its obligationsunder UK packaging laws, in response to theEU packaging directive.

In the next ten years, the most cost effectiveway of managing packaging waste will be tomake sure we do not produce it in the firstplace. This will mean developing new waysto transport and store products, for exampleusing reusable toteboxes, and developingdisposable packaging materials that arerecyclable or biodegradable.

WE WILL BE JUDGED BY THE WAY THE PEOPLE WHO MAKE OUR PRODUCTS ARE TREATED

Competitive pressures and demands forcheaper products are leading almost allbusinesses to source products and rawmaterials globally. Yet the public does nottrust multinational companies to sourceresponsibly. As retailers, we are being heldmore and more accountable for the workingconditions of the people who make ourproducts. Media reports have shownappalling conditions and child labour infactories in the developing world, makingproducts for sale in the developed world. As a result, any company sourcing from thedeveloping world is regarded with suspicion.But the concerns are not all about exploitingproducers in far corners of the globe. Thereare ‘sweat shop’ scandals in developedcountries too. Multinational companies arealso regarded as damaging their homeeconomies by not sourcing products locally.

In response to these concerns some retailersnow insist that their supplier factories areindependently certified against agreedstandards. Other companies have drawn up codes of conduct and use local auditorsto check compliance. These approaches do provide some reassurance, but there are no simple answers that we can apply in every circumstance.

We need to be trusted to buy productswherever we choose and we can only do thatby achieving and maintaining good workingconditions in all the factories where ourproducts are made. That is what ourcustomers want us to do. It is also what wewant to do because clean, safe factories,where the staff are treated with dignity,produce the high quality products we need.The most effective way of achieving this isfor us to develop constructive partnershipswith local factory owners and managers.Where standards are low we believe it ismore responsible to offer help andencouragement than to threaten to walkaway. Our experience is that standards canbe raised more effectively through inspirationand education than by imposing conditionswhich may appear arbitrary or unreasonable.With our global expansion in places likeChina and Taiwan, the people we help byimproving their working conditions couldsoon also be our customers - and we musttreat them with respect.

A typical dormitory for workers at a Chinese factory

Baling cardboard makes it cheaper and easier totransport and recycle

38/39MOVING MORE STOCK IS GOOD -MORE TRAFFIC CONGESTION IS BAD

Over the next 20 years, car traffic couldgrow by more than a third. In the EU, growthin passenger and freight transport currentlyoutstrips growth in GDP, with freighttransport growing fastest. Increasedcongestion in and around urban centresmeans a less reliable distribution network,adding to the cost of transport andundermining our competitiveness,particularly in towns and cities, wherecongestion is worst. Air pollution resultingfrom increased congestion in urban areas isalso thought to contribute to respiratoryproblems such as asthma amongstvulnerable groups.

To ease these problems, local authorities areincreasingly reluctant to grant planningpermission for offices and stores, unlesstransport mechanisms which do not rely oncars are included in the plans. Wherever weare in the world, concerns about congestionand health will continue to be important tothe local communities around our stores.Incorporating environmental and healthconcerns into our distribution and storesiting strategies will make our logistics moreefficient, and make sure we don't makeexisting traffic problems worse.

CLIMATE CHANGE EQUALSCHANGES TO HOMES -APPLIANCES WILL CHANGE TOO

World energy consumption almost doubledbetween 1970 and 1999. It is projected torise by 59% between 1999 and 2020. Themajority of this increase is likely to be metby burning oil and coal to produce electricity.Yet burning fossil fuels such as oil and coalis one of the biggest sources of carbon dioxide(CO2), and contributes to climate changethrough global warming. The consequences ofclimate change - flooding in low lying areasand shifting of climate zones which will affectplant growing seasons - have already led somegovernments to tax energy use in order toencourage a reduction in CO2 emissions.Energy use in our businesses is likely to bearincreasing taxes. B&Q and Comet are alreadypaying an energy tax.

As international agreements such as the KyotoTreaty strengthen, there are likely to be morefinancial incentives to use less energy, and toswitch to renewable sources such as wind orsolar power. The biggest impact on ourbusinesses will be in the products andappliances we sell. An increasing proportion of home improvements will be undertaken toimprove the energy efficiency of our customers’homes. We need to be ready with the productsthey will need. There will also be commercialbenefits in developing electrical productswhich enable our customers to use energymuch more efficiently or to choose alternativeforms of energy. This trend is already apparentin energy efficiency labelling, but we will see it become a major element in customer choiceas the measures that will be taken to reduceclimate change begin to bite.

WHEN WE THROW RUBBISHAWAY IT TAKES OUR PROFITSWITH IT

As the amount of 'stuff' society consumesincreases, so the amount of waste producedincreases. Until now it has been possible todispose of waste that is not reused or recycledin landfill sites, but the amount of landavailable for these huge holes in the ground is finite, and the public are increasinglyconcerned about their environmental andhealth impacts. Incineration is an alternative,but not a popular one. No-one wants to livenext to either a landfill site or an incineratorand the costs of waste disposal are set toincrease sharply.

In the next 10 years, the 'zero waste' store,distribution centre or construction site willnot only be a possibility, but an economicnecessity. To get there, we need to learn how to produce less waste, and how to dealcreatively with the waste materials weproduce, through reuse by stores or localcharities, or recycling to form new products(such as the recycled plastic trellis some ofour stores already sell).

Old appliances waiting to be recycledTraffic congestion is an increasing problem in thetowns and cities we serve

The ‘ladders’Our way of managing the trendsTo be successful, we need to make sure that all operating companies have the same approach to socialresponsibility, not in what they do but in the principles and thinking that underpin their actions. One of the mainchallenges for Kingfisher is to develop a strategy flexible enough to accommodate the differences between ourbusinesses whilst reflecting a common vision.

In order to manage this complexity we have developed a series of twelve ladders – one for each of the twelvetrends we have identified in the previous section of the plan as being of critical importance to our business. Each ladder has four rungs, corresponding to the four different business positions each operating company could choose to take in response to that trend.

The four rungs are:

1

2

3

4

LEADERSHIPCompanies on this rung will be actively involvedin the debate on that particular trend or issue.They will be recognised as ‘best in class’ andmaking a significant contribution to the overalldiscussion in society.

CREATING AN OPPORTUNITYCompanies on this rung will have used thetrend to create a business opportunity, whetherfrom cost savings, an improved marketingposition or in some other way.

MANAGING THE ISSUESCompanies on this rung will be managing thetrend in a positive and comprehensive manner.They will have a good understanding of how thetrend will affect their products, processes andpeople and be willing to discuss the issues withinterested parties.

MANAGING THE RISKCompanies on this rung will take a reactiveapproach, implementing only those actionswhich are essential to protect their businessfrom current trends.

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Example ladderActions required by eachoperating company

Operating companies are asked to look at thetwelve trend ladders in the context of their ownbusiness, in their own market. They then need todo four things:

■ Define the actions which would be appropriate to each rung of each ladder. Even though they may not intend to reach the higher rungs on some of the ladders, they should still define the actions which would be required to achieve each rung.

■ Determine their current position on each ladder.

■ Decide the position they will seek to achieve and the appropriate time scale for doing so.

■ Produce an action plan for discussion with the Kingfisher Social Responsibility Team.

The ladders are outlined here, with a completed‘generic’ ladder. When completed the ladders willallow us to plot progress across the Group andenable the Board and the companies to see at aglance where we are doing well and what furthersteps are necessary to achieve our aims.

GENERIC CRITERIA, ON A NATIONAL LEVEL, FOR SOCIAL RESPONSIBILITY TRENDS

LEADERSHIPActively involved in the debate andrecognised as ‘best in class’.

OPPORTUNITYUsing the trend tocreate a businessopportunity.

MANAGINGTHE ISSUESManaging the trend in a positive and comprehensivemanner. Willing todiscuss the issues with interested parties.

MANAGING THE RISKA reactive approach,implementing onlythose actions whichare essential.

■ Actively involved in the debate

■ Publicly recognised as best in class in this area by a third party

■ Social responsibility and sustainable development is an integral part of company strategy

■ Achieving commercial benefits from environmentally improved products and using external communication to promote brand and generate sales

■ Creating a feeling of pride and loyalty through staff awareness of company actions in this area

■ Reducing operational costs by managing environmental issues

■ Promoting brand awareness through social responsibility communication

■ Maintaining close working relationships with suppliers, leading to improved co-operation and a more integrated supply chain, and to innovation in products and/or operations

■ A systematic approach to reducing environmental impacts

■ Staff training includes environmental and social issues

■ Suppliers’ audits completed, following company guidelines

■ Undertake projects tackling specific aspects of issues

■ Ability to provide customers with information regardingthe environmental impact of products

■ Ability to communicate with stakeholders

■ Ability to offer alternative products when a significant environmental impact has been identified

■ Identification and evaluation of risks to business in this area either because a product or operation is harmful or controversial

■ Conscious decision on actions having evaluated business risk

42/43he way we treat all our eople is becoming moremportant than ever

Every product will soon betelling a story - and they all need to be good

Communities will rejectbusinesses who are not good neighbours

Our suppliers need to be cleaner and greener too

We are selling more wood, but it is becoming harder to find

To be completed

by individual

operating companies

by April 2002

Example ladder continued

GENERIC CRITERIA, ON A NATIONAL LEVEL, FOR SOCIAL RESPONSIBILITY TRENDS

LEADERSHIPActively involved in the debate andrecognised as ‘best in class’.

OPPORTUNITYUsing the trend tocreate a businessopportunity.

MANAGINGTHE ISSUESManaging the trend in a positive and comprehensivemanner. Willing todiscuss the issues with interested parties.

MANAGING THE RISKA reactive approach,implementing onlythose actions whichare essential.

Chemicals are causing increasing concern and controversy

We need to plan what happenswhen our customers dispose ofproducts they have bought from us

■ Actively involved in the debate

■ Publicly recognised as best in class in this area by a third party

■ Social responsibility and sustainable development is an integral part of company strategy

■ Achieving commercial benefits from environmentally improved products and using external communication to promote brand and generate sales

■ Creating a feeling of pride and loyalty through staff awareness of company actions in this area.

■ Reducing operational costs by managing environmental issues

■ Promoting brand awareness through social responsibility communication

■ Maintaining close working relationships with suppliers, leading to improved co-operation and a more integrated supply chain, and to innovation in products and/or operations

■ A systematic approach to reducing environmental impacts

■ Staff training includes environmental and social issues

■ Suppliers’ audits completed, following company guidelines

■ Undertake projects tackling specific aspects of issues

■ Ability to provide customers with information regardingthe environmental impact of products

■ Ability to communicate with stakeholders

■ Ability to offer alternative products when a significant environmental impact has been identified

■ Identification and evaluation of risks to business in this area either because a product or operation is harmful or controversial

■ Conscious decision on actions having evaluated business risk

To be completed

by individual

operating companies

by April 2002

44/45We will be judged by the way the people who make our products are treated

Moving more stock is good -more traffic congestion is bad

Climate change equals changesto homes - appliances willchange too

When we throw rubbish away ittakes our profits with it

Packaging waste will become a bigger financial waste

We are a global company with global impacts and global responsibilities. The aim of ourbusiness is to improve our customers’ ability to enjoy their home and lifestyle, but withoutdamaging anyone else’s quality of life, whoever and wherever they are. To protect ourbusiness and make the most of market opportunities we need to be able to predict trendsin the environmental and social issues that affect our ability to do business, and respond to them effectively. The more we do to address our responsibilities the more we realise we have to do. And we recognise that there are thousands of possible solutions to thechallenges of social responsibility.

Having a plan is an important first step in tackling the challenges of social responsibility. Now we need effective ways of carrying this work forward and communicating results to our stakeholders in ways they will find credible.

Next steps and targets

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1 Visits and presentations

The Social Responsibility Team will continue itsprogramme of visits to operating companies, tohelp develop plans and learn about progress.

TARGET: Each operating company will havereceived at least two visits by the end of 2002.

2 Ladders

We will formalise individual operating company ladders.

TARGET: All ladders to be complete and agreed by April 2002.

3 Building a community

We will establish Group-wide Fora on key issues which concern more than onecompany, so that knowledge and ideas can be shared widely.

4 Register of impacts and indicators

Operating companies will need concise, reliableand easily accessible information on theenvironmental and social impacts associated withparticular materials and processes. They will alsoneed to acquire a detailed understanding ofmany of the issues and trends highlighted here,and be aware of appropriate indicators againstwhich they can benchmark their progress. Wewill therefore be establishing a register on theKingfisher website as a resource for all ouroperating companies and with links to otherrelevant information sources. Companies thathave acquired particular knowledge or expertiseof issues will be invited to use the register toshare their experiences within the group.

TARGET: The format for the register will be finalisedby December 2001 and the register completed byDecember 2002.

5 Indicators

We recognise the need to provide numericaldata, aggregated across the group, for keyenvironmental impacts. We will therefore collectand publish information on our total energy use,transport, global warming emissions, wasteproduction and water consumption. In addition,the operating companies will need to collectand monitor key indicators in order to reach thehigher rungs of the ladders, and may choose topublish individual targets and information abouttheir progress towards achieving them.

TARGET: Group-wide information published byDecember 2002.

6 Monitoring progress

The Kingfisher Social Responsibility Committee(SRC) will review the progress of each operatingcompany on a regular basis.

TARGET: The SRC will have formally reviewedinformation from all operating companies by June2002, and again in December 2002.

7 Reporting progress

We are committed to communicating ourprogress to our stakeholders in the mostaccessible and useful way we can. Our mainreporting channel will be the socialresponsibility area on the Kingfisher website.We will also produce a summary report on ourprogress each year with the group’s annualreport. Operating companies may also decide toproduce regular reports on their own activities.

TARGET: Summary report included with annualreport in April 2002.

How will Kingfisher helpoperating companies?

The Social Responsibility Team at Kingfisherwill help coach and advise managers anddirectors in operating companies, and will beresponsible for reporting on progress bothinternally and externally.

The team will work closely with the SocialResponsibility Committee, which reports to the Kingfisher Board.

In working with the operating companies theKingfisher Social Responsibility Team will aimto supply four key ingredients:

Inspiration

The team will inspire, encourage and help theindividual operating companies. They will stressthat social responsibility will require changes inthe way we think about our business and in theway we do things. But by focusing on thebusiness benefits and developing creative waysof dealing with old problems, we can provideemployees with the enthusiasm they need tomake the necessary changes.

Assistance

The team will help to create a communityamongst environmental and social managers inthe business, and develop a culture of sharingand learning. By supporting each other we canmake sure that best practice is spread acrossthe group. We will also make sure that theactions of one operating company do notcompromise the success or reputation ofanother, either directly or by association.

Adaptability

Our operating companies have different workingcultures, operate in very different markets, andsell different kinds of products. What works inChina may not be effective in France; someissues are more relevant to the electricalbusinesses whilst others are more relevant tothe home improvement chains. Our strategyneeds to be relevant to all of these people, and to do this it must be adaptable to differentcircumstances whilst still adhering to acommon approach.

Understanding

We have set ourselves some challenging goalsfor our work on social responsibility. All ouroperating companies are at different stages inaddressing the issues we face, and havedifferent opportunities and constraints. Theteam’s approach will recognise that real changetakes a long time to happen, and tackling manyof these complex subjects will require a greatdeal of patience.

The Social Responsibility Team

Discussion Fora

Within each company, a senior manager willhave responsibility for overseeing the socialresponsibility programme, and making sure the correct information is fed back to Kingfisheron progress. Other senior managers will also be responsible for driving progress on each ofthe ladders.

These practitioners will meet regularly todiscuss progress and share ideas andexperience. Once a year we will bring them alltogether for an annual conference.

Smaller discussion groups are already formingaround key issues and areas of interest. We will

encourage more of these to form, but thosealready established are:

■ Electrical Forum (with representatives from all our electrical retailers)

■ Home Improvement Forum (all the home improvement retailers)

■ French Forum (an informal French-speaking group discussing issues relevant to France including BUT, Darty and Castorama)

■ UK Forum (consisting of Chartwell Land, B&Q and Comet)

■ Quality and Supplier Assessment Forum (discussing Code of Conduct and supply chain issues)

48/49

■ Sir Geoffrey Mulcahy*

■ Sir John Banham*

■ Jean-Hugues Loyez*

■ Jean-Noël Labroue*

■ Bill Whiting*

■ Margaret Salmon*

■ Tony Stanworth

■ Alan Knight

■ Andrew Mills

Kingfisher is committed to keeping these issues at the forefront of our business and themembers of the new Social ResponsibilityCommittee at Kingfisher are business leadersfrom within the group, reflecting the diversityof our operations. The Committee meets everysix months, and agrees the overall strategicdirection for Kingfisher’s social responsibilityprogramme. It reports on progress andstrategy to the main Kingfisher Board.

* denotes Main Board Director

THE NEW SOCIAL RESPONSIBILITY COMMITTEE

Kingfisher started developing a strategic approachtowards social responsibility in the early 1990s.In 1990 we sponsored the publication of twobooks: “Actions Speak Louder: a ManagementGuide to Corporate Social Responsibility” and “Working in the Community: a Guide toCorporate Social Responsibility” (both authoredby David Clutterbuck and Deborah Snow).

At the same time the Kingfisher SocialResponsibility Committee was established. It was chaired by Sir Geoffrey Mulcahy andattended by a Director from each operatingcompany. During these meetings the membersreported on community and charity initiativeswithin their own operating companies anddiscussed the implications for the businessfrom a Group wide perspective.

Kingfisher adopted a Group environmentalpolicy in 1991, updated first in 1994 andagain in 1997. This was used to give directionfor the individual operating companies toformulate their own policies.

The Environmental Forum

Since 1991 Kingfisher has had an internalEnvironmental Forum whose members includedthe key environmental managers in theoperating companies. The Forum providedpractitioners with a means to discuss key issues and provided a pool of experience andexpertise. It was at the recommendation of theForum that group-wide targets on some keyissues were developed and agreed at Kingfisherboard level, helping to drive progressthroughout the operating companies. Central to the group’s policy was the observation thatthe most significant impacts of retail are themanufacture, use and disposal of products.Based on this nine* key issues were selected.Our achievements on each of these issues arelisted opposite.

*Following the separation of its GeneralMerchandise businesses in 2001, Kingfisherceased to be involved in the retailing ofcosmetic products.

ENERGY AND TRANSPORT

LAND AND PROPERTY

SUPPLIER AUDITING

PACKAGING

TIMBER AND PAPER

ANIMAL TESTING OF COSMETICS* and toiletries

DEVELOPING NATIONS

PRODUCT USE

WASTE MANAGEMENTAND RECYCLING

History of policy development 1990 - 2000 KEY ISSUES

APPENDIX 1

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■ Responsibilities for energy management clearly defined■ Present level of energy consumption for buildings and vehicles established ■ Energy conservation action plan established■ Present level of vehicle emissions established

■ All developments for which planning consent is required are subject to environmental appraisal, especially where greenfield sites are involved

■ Clear policy on the use of materials and energy conservation for new developments and refurbishments

■ Relevant staff have a reasonable understanding of the environmental issues associated with the product range ■ Annual action plan to monitor the environmental performance of principal suppliers■ Environmental criteria included in key buying decisions

■ Annual action plan with targets for packaging reduction and recycling ■ For most products there is:

- no over packaging- packaging is recyclable- plastic components are marked- cardboard contains a high proportion of recycled waste

■ The company has a detailed understanding of the types, quantities and sources of wood used in products ■ The vast majority of wood comes from well-managed forests■ The company is a member of the Forest Stewardship Council and/or the WWF Buyers Group

■ The company has a good understanding of the arguments surrounding animal testing■ The company is working to ensure that alternative test methods are available

■ Factories where products are made are systematically audited against minimum environmental, health and safety and employment conditions

■ The company actively researches the environmental impacts of products during use ■ Improvement programmes to reduce impacts during use of key product ranges have been established ■ Environmental labelling provided by suppliers is subject to review

■ Responsibilities for waste management clearly defined■ Present waste arisings are quantified■ Present recycling rates quantified ■ Waste minimisation and recycling action plan established

STANDARD ACHIEVED BY END OF 1999

The following vision statement demonstrates ourcommitment to work with factories rather thanboycott them:

It is Kingfisher’s policy to buy from factories thatare committed to improving worker welfareconditions and reducing their impact on theenvironment.

Kingfisher believes that every link of the supplychain should benefit from the trade of the product.It is Kingfisher’s vision to enable people to enjoytheir home and lifestyle better than any otherretailer in the world. This enjoyment would beundermined if it was at the expense of the qualityof life of the people making our products.

Kingfisher has developed a set of standardsreflecting the way in which we would like thefactories we buy from to be managed. TheKingfisher Standards cover the issues of: childlabour, hours of work, wages, employee relations,health and safety, hygiene, accommodation andsupply chain management and environment.

Kingfisher wants to buy from factories that meetthese standards or are committed to meeting the standards. This code is the base standardfor all Kingfisher suppliers – it is currentlybeing used by Castorama France, Comet andDarty. Following field trials are working withimprovement version and the code will beshared with the smaller operating companiesand adapted into their purchasing policies.

These standards are global and apply to allproducts sourced by Kingfisher.

Critical Failure Points

We recognise that it can help improve thequality of life of the people making its productsby working with factories to make the necessaryimprovements where required. However, as acompany we will not work with factories whichare not committed to improvement ordemonstrate unacceptably low standards asstated in the Kingfisher Critical Failure Points.Kingfisher will not buy from factories which failon any of the Kingfisher Critical Failure Points.Factories which pass the Critical Failure Pointswill be assessed against the KingfisherStandards and awarded a performance gradeaccordingly.

Kingfisher will not source from factories thatdemonstrate one or more of the following eightcritical failures:

■ The factory employs children below the local legal minimum age, and/or a minimum age of 14.

■ The factory uses forced, bonded or involuntary labour.

■ Workers are forced to lodge “unreasonable” deposits or their identity papers with their employers, so they are not free to leave after reasonable notice.

■ Workers are subjected to physical abuse, the threat of physical abuse, or intimidating verbal abuse.

■ Accommodation, if provided, is not clearly segregated from the factory or production area.

■ An adequate number of safe, unblocked fire escape routes are not accessible to workers from each floor or area of the factory and accommodation if provided.

■ The factory knowingly and continually contravenes local or national environmental legislation without being able to demonstrate a plan of action to improve.

■ The factory management does not demonstrate a willingness to improve on any significant areas of concern identified during the audit.

Kingfisher Group environmental and ethical code of conduct for suppliers

APPENDIX 2

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Kingfisher standards

Kingfisher will source from factories which meet or are willing to meet the following standards with regardsto labour and welfare conditions, health and safety and environmental management.

Child Labour■ All workers must meet the local legal

minimum age, and/or a minimum age of 14.

■ Factories should hold adequate records on the ages of all workers.

■ Young persons up to the age of 18 should not work at night (between the hours of 10 p.m. and 6 a.m.), or on tasks that are potentially hazardous to their health.

■ The factory should develop and participate in policies and programmes which help the elimination of any exploitation of children in their industries.

Hours of Work ■ Factories should hold adequate records,

showing the hours worked by each worker, both as part of their contractual agreement, and as overtime.

■ Contractual hours do not exceed 48 hours per week.

■ All overtime is voluntary and paid at an additional rate.

■ Workers should be provided with at least one day off in every seven.

■ Workers should be allocated breaks, the length and frequency of which is appropriate to the tasks undertaken.

Wages■ Wages and benefits should be consistent

with industry benchmarks and/or local/regional standards.

■ Any deductions made to the basic wage must be clearly understood, and reasonable in the context of the total wage.

Employee Relations■ There is no discrimination in hiring, or

employment conditions on any grounds.

■ Workers should be allocated a written contract of employment. The terms of which must be clearly communicated to the worker in a language or method that is understood.

■ All disciplinary rules must be written and clearly communicated to workers in a language and/or method that is understood.

■ There should be a clear recognised process of worker representation, to ensure good flow of communication between workers and management.

■ Workers should be allowed to negotiate collectively, in unions or groupings of their choice.

Hygiene■ The factory should provide a clean and

hygienic place of work and rest, consistent with local standards and the nature of the industry.

■ Workers should have access to acceptable drinking water at all times.

Accommodation

■ Adequate provision should be made for prevention and fighting of fire.

■ Accommodation should be comfortable and provide for individual’s privacy.

■ Accommodation should be clean and hygienic.

■ Recreational facilities should be provided within or accessible to the living area.

■ The factory should provide parents with childcare facilities or arrangements.

■ Toilets and bathing facilities should be clean and hygienic.

■ Where food preparation facilities are provided, they should be clean and hygienic.

Supply Chain Management■ The factory management should understand

the product’s supply chain, and be willing to divulge its details.

■ The factory management should ensure visits and assessments are made of all parts of the product’s supply chain where there is obvious potential for environmental or ethical problems.

■ The factory management systematically measures standards within their supply chain and where necessary encourages improvements on key issues.

■ Sub-contract cottage units or homeworkers should only be used where there are benefits for the sub-contractor/homeworker.

■ Sub-contracted “factory” manufacturing sites should adhere to the Kingfisher Standards.

Health and Safety■ Factories should be safe, with risk of harm

from hazardous activities minimised through the provision of safety equipment, training and a safe factory infrastructure.

■ There should be a manager with responsibilityfor Health and Safety issues.

■ Factories should be able to demonstrate active management and improvement of Health and Safety issues.

Environment■ Factories should have an Environment Policy

signed by the Chief Executive.

■ Factories should have an Environmental Action Plan against which progress is measured.

■ Factories supplying timber products should have a “Chain of Custody” in place, which is, or can be certified, and they should understand forest certification and be prepared to deliver if operating company requires.

Kingfisher Code of Conduct

In the Code of Conduct governing the behaviourof our employees, we have set out the standardsgoverning our relationship with suppliers. We arecommitted:

■ to comply with the laws of all the countries where we do business;

■ to treat suppliers with fairness at all times;

■ to observe legal and ethical standards;

■ to prohibit corrupt or improper behaviour in dealings with suppliers;

■ never to engage in bribery; and

■ to abide by the Foreign Corrupt Practices Actand the OECD Convention on Combating Briberyof Foreign Public Officials in InternationalBusiness Transactions.

Kingfisher standards continued

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