Green and sustainable living for everyone, every day

Revamped version of Szamamm

In 2021, we embarked on a process of changing the ingredients of Szamamm — one of our most popular own brand ranges. Acting in line with our strategic commitments related to good nutrition, we have reduced, by 5%, salt and sugar content the spaghetti Bolognese meal that is highly popular among our customers. We have also reduced, by 5%, salt content in chicken penne. Those recipe reformulations were preceded by positive laboratory tests and tasting trials. We are currently working on reformulating the recipes of other Szamamm line products — 13 additional products have already successfully completed flavor trials conducted by experts and consumers. Their introduction to our offer is conditioned on a positive result of laboratory tests, By the end of 2021, 87.6% of products other than own brand products sold in Żabka stores and containing palm oil, met the requirements of the policy we had adopted. the last stage of the comprehensive recipe reformulation process. The Szamamm brand was the first own brand range with a Nutri-Score label. In 2021, more than 60% meals were labelled with Nutri-Score of A or B.

We have eliminated palm oil

We want our customers’ nutritional choices not only to be good from the health point of view, but also favorable for the planet. That is why we have completely eliminated palm oil from our own brand products. As far as branded products offered by our suppliers are concerned, acting in accordance with the Sustainable Palm Oil Policy, all other products offered in Żabka stores will be allowed to contain only palm oil from certified sources by the end of 2022. The Polish Coalition for Sustainable Palm Oil has decided the RSPO is the best certification scheme currently existing on the market – it guarantees sustainability of crops and an adequate level of protection of the environment, animals, humans and their traditions. By the end of 2021, 87.6% of products other than own brand products sold in Żabka stores and containing palm oil, met the requirements of the policy we had adopted.

Nutri-Score labelling system

Nutri-Score is a color-coded food labelling system using scores of A to E. The score awarded depends on how balanced the content of healthy ingredients (fiber, proteins, vegetables, fruit, nuts) and substances whose use should be limited (energy value, sugars, saturated fats, sodium originating from salt). Products with the A score should be consumed more frequently, while the intake of those labelled with the E score should be reduced. The main objective of the Nutri-Score system is to enable customers to enjoy better balanced diets. Studies show that 90% of consumers understand the Nutri-Score system and 91% consider it helpful in making their purchases. Therefore, we strive to label all own brand ready-to-eat or readyto- heat products with a Nutri-Score value. In 2021, almost 16% of our own brand products had a Nutri-Score label on their packaging, and almost 12% had a score of A or B. Producer brands labelled with Nutri-Score are also sold in Żabka stores.

Plant Hunter – a 100% plant-based brand

In April 2021, we launched our first 100% plant-based own brand range known as Plant Hunter, actively pursuing our strategic commitment to increase the sales of plant-based products. Customers enjoy a choice of snacks, salads, lunch dishes, ready meals and sweets. In the lunch dishes, meat has been replaced by a GMO-free soy-based product. The recipes of Plant Hunter meals have been developed by professional chefs. The products contain no sweeteners, hardened fats and preservatives. Plant Hunter dishes are suitable for consumption as is, or , in the case of ready meals, after being heated in a microwave. They are a perfect fit with the modern convenience format, offering our customers a fully balanced, plant-based meal that may be enjoyed without long waiting times. The launch of the Plant Hunter brand has won us the second award in the 2021 Plant-Based Game Changer contest organised by RoślinnieJemy.org.

We minimise food waste

At our distribution centres, we are progressively introducing solutions that improve the efficiency of supply management processes, increase the flexibility of product shipments to franchisees and, consequently, contribute to optimising the number of products offered in the stores. Goods are delivered to each store based on an individual analysis supported by artificial intelligence algorithms. Owing to analytical models based on sales data and knowledge about local residents, potential competitors and characteristic features, we are capable of selecting types and amounts of products offered in a manner that prevents food from being wasted. Additionally, we rely on over 250 thousand special planograms that support the process of displaying products in the store – they optimise our offering, taking into account the number and width of shelves, but also sales performance of a specific store. Bearing in mind the growing challenges stemming from the dynamic expansion of our chain, we have started working on a comprehensive action plan covering all aspects of our value chain. The first pilot programmes will be launched in the second half of 2022.

We provide food to those in need

Close cooperation with social welfare organisations finding good use for unsold foodstuffs by effectively distributing them to locations where they are actually needed is one of the methods we rely on to manage the scale of food waste. Products with a short shelf-life date are transferred to, among other places, Caritas, the Federation of Polish Food Banks and the Kamiliańska Social Assistance Mission. Foodstuffs provided to branches of non-governmental organisations are later shipped to local communities via various institutions, such as canteens, social and therapeutic daycare centres and homeless shelters. Żabka products are used there for preparing hot meals. The food is donated directly to individuals and families in the form of packages. We cooperate with our social partners in order to increase the efficiency of distribution of food products to people in need of such a form of support. In 2021, we donated almost 630 tonnes of food to non-profit organisations — 15% more than the year before.

One app, numerous benefits

Each Żappka user receives a personalised offer prepared based on their own shopping history. They are also given the opportunity to collect żapps — points that can be exchanged for selected products, including of the own brand variety, promoting a sustainable lifestyle. Żappka offers also the Żappka Post functionality allowing to monitor the status of and to easily collect any parcels. The process of sending a parcel is simple and convenient. The customer orders the service online, and no labels are required to be printed out. All they have to do is to label the parcel by hand, with the appropriate number generated online, and deliver it to a store of their choice. In 2021, through the app, we conducted the pilot phase of the “Good Package” programme that supports the prevention of food waste in our stores. As far as social engagement is concerned, customers could also use the app to support the initiatives of our choosing. Additionally, the app allows customers shopping at Żabka Nano stores to make purchases in the simplest possible way — by taking products from shelves, without the need to scan and pay at the cash desk. The technology used in the store recognises Żappka users and automatically processes the payment.

Żabka without waiting in line

In 2021, we introduced cash registers which, depending on the mode they are operating in, are capable of playing different roles. These are ordinary cash desks operated daily by store employees. However, after the register’s screen and scanner are turned to face the customer, the devices switches into self-service mode, allowing customers to scan products, read the Żappka code and pay by card. The fact that the cash register may be operated by customers shortens the service time and is a quicker and more convenient form of shopping. It also supports the work of franchisees and their employees who are able to handle more customers more quickly, especially during peak hours. It is also an option for customers who prefer to make purchases without contacting the store’s staff. Self-service cash registers have become very popular among customers, in particular those who come to the store to pick up a few things only. In the satisfaction survey, users of such self-service cash registers express their satisfaction with the ease and intuitive character of the solution — the NPS survey One app, numerous benefits Each Żappka user receives a personalised offer prepared based on their own shopping history. They are also given the opportunity to collect żapps — points that can be exchanged for selected products, including of the own brand variety, promoting a sustainable lifestyle. Żappka offers also the Żappka Post functionality allowing to monitor the status of and to easily collect any parcels. The process of sending a parcel is simple and convenient. The customer orders the service online, and no labels are required to be printed out. All they have to do is to label the parcel by hand, with the appropriate number generated online, and deliver it to a store of their choice. In 2021, through the app, we conducted the pilot phase of the “Good Package” programme that supports the prevention of food waste in our stores. As far as social engagement is concerned, customers could also use the app to support the initiatives of our choosing. Additionally, the app allows customers shopping at Żabka Nano stores to make purchases in the simplest possible way — by taking products from shelves, without the need to scan and pay at the cash desk. The technology used in the store recognises Żappka users and automatically processes the payment. score for this form of shopping equalled 74 points. The result serves as a basis for future activities promoting this type of service among our customers. In 2021, approximately 10% of them took advantage of our self-service cash registers.

Reducing business risk

Running a business involves a series of inherent risks, also those of a financial nature. In the interest of our franchisees we are the first franchise network in Poland to prepare a new product, “Business Insurance Programme,” in cooperation with Towarzystwo Ubezpieczeń Wzajemnych Polski Zakład Ubezpieczeń Wzajemnych (TUW PZUW). “Business Insurance Programme” is the first product on the Polish insurance market that increases the security of running a business through the compensation of a portion of the potential debt. The monthly cost of the policy and the sum insured depend, among other things, on the number of stores operated by the franchisee. Attractive insurance premiums are guaranteed not only by the scale of Żabka’s operations, but also by the fact that financial support is provided to cover the expenses of the policy at the initial stage of its term. Work on the terms of the policy was performed asked franchisees cooperating with us to participate in the campaign. This attractive offer stands out from the proposals of other chains on the market, as confirmed by the franchisees’ willingness to contribute with the participation of a wide range of franchisees, and the solution itself is intended for all of them, regardless of their history of cooperation with the chain, or of their financial standing. By the end of 2021, all franchisees enjoyed protection offered under this risk-mitigating instrument.

Stimulating the entrepreneurial spirit

In 2021, we launched a new campaign known as “To żabkość na rynku” (a play of words in Polish incorporating the word “Żabka” to convey the message “It’s a rare thing on the market” — translator) targeted at potential entrepreneurs who do not have a specific business plan or the funds required to start a business. In 2021, our campaign focused on informing about the financial conditions of operating one’s own Żabka store: an upfront payment of PLN 5,000, PLN 16,000 in basic revenue per month, a fully equipped and stocked store for starter, and emphasised how efficient the process of establishing your own company is. We want to offer greater support and to foster local entrepreneurship all over Poland, which is why we asked franchisees cooperating with us to participate in the campaign. This attractive
offer stands out from the proposals of other chains on the market, as confirmed by the franchisees’ willingness to contribute to the campaign and share their own experiences. In our communications, we
also emphasise the support tools and mechanisms which franchisees take their first steps in the world of business.

Optimising the work of our franchisees

We provide our franchisees with a set of tools helping them run their stores in an effective manner. OptiPlan is a set of initiatives and solutions aimed at optimising the activities performed in the day-to-day management of the store. The proposed, tested solutions will support some aspects related to the store’s work. The said set comprises solutions related to food safety management and store logistics. It also includes the following: Żabka Assistant (an app allowing each franchisee to conveniently check and plan the scope of works for the coming days), and planograms available in the Żabka Manager app. We support franchisees in their daily operations, thus allowing them to find the time to care for their store, to expand their knowledge and to stimulate the engagement of their employees.

Assistance in hiring staff

The range of systemic solutions supporting franchisees is supplemented by flexible forms of assistance in emergency and unforeseen situations. Although the franchisees, being private entrepreneurs, are responsible for all personnel-related issues at their stores, they may count on significant support offered by the “Here and now” programme enabling every franchisee to take advantage of the services of a temporary worker. As in any other business, emergency situations take place in commerce too. They affect the number of staff reporting to work or require that additional help be provided during the peak season. If any of the employees calls out sick, or if additional support is needed during the holiday season, it is often the case that help for the store’s team must be found very quickly. The programme allows those running Żabka stores to pay only for the time during which the temporary employee is completing the tasks ordered. In practice, this means that franchisees are able to conveniently plan labour costs and the division of tasks in the store, regardless of unforeseen situations and unplanned emergencies. Depending on the actual needs of the store, temporary workers may be providing assistance over a period of several hours, days or months.

Cooperation with start-ups

We hold meetings with the authors of projects that may exert the greatest positive impact on the Group’s business. Having conducted a careful analysis of the presented solutions, we decide to cooperate with start-ups at different stages of their development journey. The MIT Enterprise Forum CEE accelerator programme is one of the tools we rely on while looking for ESG-related solutions. Our attention is drawn by projects focusing on alternatives to plastic packaging and on replacement protein sources, i.e. solutions helping reduce meat consumption. Together with Huge Thing, an accelerator of innovative solutions, we launched the Żabka Future Lab accelerator programme. We also strive to attempt cooperation with start-ups whose solutions will be helpful in reducing the amount of wasted food (by supporting stock management), or in increasing the comfort of consumers taking advantage of autonomous stores. We have also become a partner of the “Positive Impact Start-ups” campaign overseen by the Koźmiński University’s Koźmiński Business Hub. It focuses on supporting those initiatives that contribute to improving the quality of life and the quality of the environment.

We grow together with our business partners

Acting together, we analyse the results of our cooperation, so as to make the necessary changes in real time. In order for this to be possible, we have introduced the Advanced Customer Insight Tool (ACIT) providing us and our partners with access to the same multidimensional data, based on which new solutions related to our cooperation are implemented. The work based on ACIT data is accompanied by joint workshops with our trading partners – 170 such working meetings were held in 2021. It is crucial for bilateral development to ensure that our partners are engaged in thinking about the strategic development of the Żabka Group. By presenting the Group’s long-term plans and regularly meeting for a joint review of the results achieved, we provide partners with the knowledge enabling them to build scenarios for the long-term growth of their own companies. Open dialogue and readiness to implement our partners’ ideas are important element of cooperation as well. The workshops are used to jointly identify the changes in the range of products carried by the individual companies, so that they are able to best respond to changing consumer needs. Our suppliers value the openness and cooperation characterising our relations. In 2021, they voted us the Retailer of the Year. We also ranked first in the nationwide NFS survey in which over 400 suppliers and 20 retailers participated.

Helping by shopping

We encourage our customers to support initiatives promoting social engagement – when shopping at Żabka stores, taking advantage of the Żabka Jush! platform or using the Żappka app. As it is the case each year, our franchisees were collecting money for Wielka Orkiestra Świątecznej Pomocy and were the largest group of volunteers participating in the effort nationwide. Donations could be made via money boxes available in stores. Cashless deposits could be made as well, (for instance via the e-money box, by transferring funds to the Foundation’s account or by using payment cards). The users of our app were able to exchange Żapps loyalty points collected during shopping, for charity donations. The total value of funds transferred in 2021 amounted to PLN 3 million. The mechanism relying on using Żapps points for supporting charities is very flexible and we rely thereon as one of the means of implementing our Social Engagement Strategy. In 2022, our customers using the app were also able to donate their Żapps points for supporting refugees from Ukraine. The total amount of support amounted to over PLN 1 million.

Supporting those willing to engage

In 2021, we continued to pursue Żabka’s Scholarship Programme that has been, for a number of years now, an important part of our social engagement initiatives. The programme is aimed at ambitious and talented children of franchisees, employees and co-workers who, thanks to our monthly support, are able to develop their extraordinary passions and skills. During the 11th edition of the programme, we awarded as many as 60 scholarships: 13 for artistic, 9 for scientific and 38 for sports achievements. Biographical notes of the scholarship holders, along with a description of their talents and the results they achieved, are published in Żabka’s information materials. This allows the young people to communicate the impact of support they receive under the programme has on the expansion of their passions. For employees and co-workers valuing cooperation and physical activity, we have created Żabka’s Sports Team. It is made up of active members of our company’s staff who are keen on practicing sports, often work out together and represent Żabka at numerous sports events. The team is currently made up of approximately 130 people showing interest in individual and team sports. They participate in a number of competitions, primarily between March and October, but our players train all year round — they run, ride bicycles, swim, and play basketball and football.

Offering a good start

When defining our agenda for the “Equal Opportunities” pillar of our Social Engagement Strategy we relied, among others, on the experience gained while supporting youths in a difficult situation and at risk of exclusion. The “Safe internship with Żabka” programme is aimed at people over the age of sixteen. It allows them to take part in an internship at a selected store, thus taking their first steps along the path towards independence. The programme is implemented in cooperation with Fundacja Samodzielni Robinsonowie, with active participation of our franchisees who, as mentors and caretakers, share their experience with our trainees and help them build entrepreneurial skills. During eight editions of the programme, we organised internships for 146 young males and females that the Foundation is caring for. Interns have already worked more than fifteen thousand hours in Żabka stores. Eighteen of them were employed at Żabka stores after the programme had ended, and one of the female interns became our franchisee. So far, ninety franchisees operating Żabka chain stores have been involved in the programme at seventeen locations throughout Poland. Young interns could also count on the support of twenty-six mentors designated by the Foundation.

Olympic silver medal

In August 2021, we took part in a charity auction organised by Maria Andrejczyk — a silver Olympic medalist from Tokyo. Maria put up her medal for sale, with all proceeds benefiting a campaign raising funds for medical treatment (available in the US) needed by an eight-month-old boy named Miłosz. We offered PLN 200,000 for the medal and won the auction. Maria Andrejczyk admitted the medal was “a symbol of struggle, faith and ability to make dreams come true, despite many difficulties”. It was natural for us, as winners of the auction, that this extraordinary symbol should remain where it belonged. That’s why we returned it to our proud champion. In addition to the PLN 200,000 from Żabka, Maria’s fans raised an additional PLN 300,000 for the treatment of Miłosz. The fund raiser has allowed to finance the child’s heart surgery at the Stanford hospital in the US. Maria Andrejczyk’s gesture was widely commented by Internet users. Information about the auction was trending very high on social media. The event was reported by the largest media in Poland and by the press worldwide (“The Times” or “The Sun”).

Promoting equity

The commitment to implement a culture of equal opportunities and an inclusive organisational culture is expressed in the Equity Policy we have adopted. Its implementation, communication and monitoring are the responsibilities of the Equity and Inclusive Organisational Culture Manager. That is how we guarantee that decisions are taken without prejudice, based on competence, experience and the work results achieved. The Żabka Group is open to people with different identities, experiences, competences and prospects, and that is the spirit we desire to build our teams on. The positive results of our activities are confirmed by the outcome of the pulse survey. This year, its scope was expanded to include questions about diversity and inclusive organisational culture: “the company is open to diversity among employees” and “I am treated equally in the company, regardless of who I am”. The aim of those questions was to verify whether employees have a sense of equal treatment and whether the Żabka Group, as an organisation, is open to diversity. The study participants assessed both statements as highly accurate: on a scale from 1 to 10, the score regarding the first question equalled 8.7, and in the other, it amounted to 9.1.

Increasing the level of satisfaction with work

2021 was the first year in which we performed an additional Business Impact Analysis by the Gallup Institute as part of which we linked the results of engagement studies with indicators concerning HR, such as turnover or absence rates, to understand their causes. We discussed the conclusions of the study together with all the directors in the organisation, with the aim of increasing our awareness of what we should work on. In the context of building employee engagement, the attitude of managers and their ongoing competence support are of particular importance. An action taken in response to the results of the engagement studies is ‘Praising Days’ – a time during which employees are encouraged to provide positive feedback to their colleagues. During the last edition of the campaign, the record of praise messages provided was broken — 4,928 were given in total. Each employee and co-worker received, on average, two virtual cards praising their efforts. The satisfaction survey covers all our employees and co-workers, and the turnout in 2021 was as high as 91%, placing us among the top employers conducting such research. The activities resulted in the increased engagement of our employees. In the Gallup Institute survey, we achieved a score of 4.30, 0.06 higher than in 2020.

Caring for our employees’ growth

Żabka Academy is a platform offering a series of training programmes and development activities tailored to the needs of employees, as well as our co-workers and franchisees. We offer on-boarding, specialist and managerial training. The Academy also conducts unique projects designed in cooperation with schools or universities, such as doctorate theses implementing specific solutions. All employees can also benefit from subsidies for English language courses — group or individual classes are offered, and the courses are supplemented by access to an e-learning platform. In 2021, a new module Logistics Manager Academy was introduced in response to the development needs of personnel performing logistics-related tasks. We have also ensured that managerial competences were strengthened. The management staff commenced a dedicated Senior Leader Development Programme. The most experienced managers participate in a diagnostic programme leading to the development of growth programmes tailored to their individual needs. The most talented in the organisation are able to boost their qualifications through training sessions organised by INSEAD, Stanford University, Yale and other institutions. All those activities gradually bring us closer to achieving the strategic objective. In 2021, the average time spent by each employee on their development equalled 22 training hours, without the mandatory OHS training considered.

EQUAL-SALARY certification

Żabka Polska is the first Polish retail company with certification indicating equal pay in the organization regardless of gender. The award granted by the EQUAL-SALARY Foundation is based on the UN guidelines and recognized by the European Commission. Gender equality in pay is a human right. Creating equal pay conditions is the responsibility of the business.  Having a certificate of equal pay strengthens our position among the best employers, who not only talk about their commitment to equality but also demonstrate it in real terms.

We started preparing for the EQUAL-SALARY certification in November 2021. It is carried out by the EQUAL-SALARY Foundation, an independent non-profit organization, which issues a certificate based on a coherent, science-based approach. Certification includes analysis of data on salaries and evaluation audit of the company’s HR policies, evaluation of the company’s solutions from the perspective of the employee group, and the company’s management’s commitment to ensuring equal pay. In June 2022, Żabka completed the final stage of the audit, and in August received the EQUAL-SALARY certification.

We comply with the best standards

We also expect our suppliers to implement and certify quality and food safety management systems. A business partner who has not implemented such a system or is a supplier of own brand products shall be qualified, in accordance with the Quality Qualification Manual in place, as a high-risk supplier and may cooperate with us only after undergoing a qualification audit whose assessment criteria are equivalent to the requirements of the quality management system. In the case of suppliers of own brand products who have implemented their own quality procedures, we shall audit their effectiveness before establishing a business relationship.

In 2021, we conducted twenty-nine qualifications audits — all suppliers passed them successfully. We also periodically verify compliance with quality standards by means of announced and unannounced verification audits — in 2021, we carried out fifty audits of this nature. Eleven suppliers were obliged to establish a remediation plan addressing the deficiencies identified. Those entities shall be subject to an audit ensuring that the corrective actions set out in the remediation plan have been implemented. We are also conducting qualification audits with regard to suppliers of producers’ brand products. The audit procedures revealed that three of them failed to receive a positive result, prompting us to refrain from commencing cooperation with them. If any complaints are submitted or improper product quality is reported, we perform intervention audits at our business partners – in 2021, such audits accounted for 8% of all audits performed among suppliers of own brand products, and for 12% of audits conducted among suppliers of producers’ brand products. The introduction of additional controls is a response to the challenge of ensuring the highest quality of the food produced and is intended to reduce the number of recalls caused by quality defects. In 2021, we recorded 12 such events — all of them related to producers’ brand products. In our stores and distribution centres, we also maintained the Safety and Hygiene+ certification system which we created, as the first chain of stores, together with TÜV Nord Poland. The system covers also suppliers of our own labels and franchisees operating stores under the Żabka brand. During the verification process, such areas as approach to safety and hygiene management in production processes, organisation’s crisis management, requirements for subcontractors, infrastructure and the environment, are verified. Conformity assessment is performed by auditing documentation, as well as production and storage premises, in order to verify the implementation of processes and to introduce crisis management procedures. The level of the employees’ awareness and their attitude are evaluated as well. In 2021, such reassessment and certification were performed at fifty-two of our own brand suppliers.

Ensuring a safe working environment

We are conducting extensive preventive measures — we have created a dedicated website for employees, where key health and safety documents, such as accident reporting forms and occupational risk assessment procedures, are published. Once a quarter, the Council of Employees, with the participation of the Member of the Management Board in charge of the People Strategy, is held. It serves as a venue at which issues related to occupational health and safety management system are discussed, among other things. We have also prepared Occupational Health and Safety Starter Kits for our distribution staff — they contain binders with all necessary procedures and manuals. We have also completed work on the OHS Knowledge Compendium – a publication that will be distributed to all newly hired employees after completion of general OHS training. We are also regularly conducting first aid training and contests. In 2021, 225 people completed such training courses. As a result of all those activities, the standard LTI (FR) accident rate, presenting the frequency of accidents per one million working hours, equalled 4.2 and was more than 20% lower than in 2020. In 2021, we recorded fifteen accidents at work, and all of them occurred at our distribution centres and terminals. Insufficient attention of employees performing their activities was the most frequent reason behind those accidents. Each event has been analysed by our accident investigation teams and appropriate measures have been taken with logistics staff to prevent similar accidents from occurring in the future.

Knowing that the level of safety is impacted by numerous factors, we have created a comprehensive Support Programme for employees and their families. Advice on financial and legal issues is offered under the programme, as is psychological support. It may be taken advantage of by calling our hotline or by contacting us via a dedicated app. The number of consultations offered is unlimited. Apart from individual support, we also provide all those eligible to participate in the Programme with access to training and knowledge resources related to human health and well-being. Interactive educational webinars are also held periodically, as a form of group support for our employees. The topics discusses include, among others, the pandemic, remote work, work-life balance or ability to concentrate.

We have adopted the Code of Conduct and Ethics for Employees

The document supports our employees whenever they face an ethical dilemma. It is applied throughout the entire value chain, referring both to relationships existing within our organisation and to those with external stakeholders. Provisions reminding about ways of reporting any violations of the Code, as well as about other applicable policies and procedures constitute a key element of the Code. The strengthening of ethical standards is supported by two mandatory annual training programmes focusing on compliance issues and on the Code of Ethics. In 2021, 90% and 77% of our employees completed those programmes, respectively. We are continuing our efforts to increase the share of those trained in the coming years. By expanding our employees’ knowledge, we also ensure more efficient management of the whistleblowing process. In 2021, we received four reports about potential violations of the Code. They were all subjected to internal investigations performed by the Ethics Committee and were deemed justified. They Approximately 190 suppliers generating more than 30% of our total turnover are being assessed in the pilot phase of the project. In the process, we use the global SMETA platform, developed to exchange information on production standards within the supply chain. Suppliers are evaluated in five areas, and the verification results in an assessment of the risk of cooperation with a given company. included allegations of discrimination and corruption, but the investigations failed to confirm any of those accusations. We have taken steps to prevent the similar situations from occurring in the future, in accordance with the procedures in effect.

We have implemented the Code of Conduct for Business Partners

The document is based on key international and national legislation. Its provisions cover the full spectrum of business activity – from ethical business management and respect for workers’ rights, through the quality of products and services offered, to environmental and climate impacts. We build our business relationships based on mutual trust. That is why the Code identifies channels for reporting potential violations of its provisions and clearly presents mechanisms for handling these. We require all business partners to confirm, with their signature, that they have read and understood the document. We also work on introducing a system for verifying our business partners and for analysing supply chain risks. Approximately 190 suppliers generating more than 30% of our total turnover are being assessed in the pilot phase of the project. In the process, we use the global SMETA platform, developed to exchange information on production standards within the supply chain. Suppliers are evaluated in five areas, and the verification results in an assessment of the risk of cooperation with a given company.

Transparent reporting

We treat reports as one of the key communication channels with our stakeholders and as an element of building the company’s credibility. In order to ensure the highest quality of the disclosures, we decided to publish the 2021 report according to the latest GRI Standard, formally entering into effect in 2023. The compliance with GRI Standard and the reliability of data presented in the Responsibility Report are assured by an external verification performed in accordance with ISAE3000. The high quality of our reporting was appreciated by independent experts: the 2020 “Conveniently and Responsibly” Report received the main prize in the Sustainable Development Reports contest organised by the Responsible Business Forum and Deloitte. An independent jury has praised us for drawing up a well-structured and comprehensive report which clearly shows our mission, development vision, the company’s ESG strategy, precisely defines the business model and contains a practical executive summary. We are also aware of the growing importance of climate disclosures and that is why we decided, as one of the first companies in Poland, to prepare a Climate Report devoted, among other things, to analysing climate risks, in accordance with Task Force on Climate-Related Financial Disclosures (TCFD) recommendations. The publication presents our decarbonisation plan, together with a report on the achievement of SBTi objectives.

Financing based on ESG targets

We have entered into the first credit agreement and a factoring agreement which are based on the achievement of ESG targets, including those relating to the company’s decarbonisation plan. The values of the credit margin and the factoring margin, respectively, depend on the progress in fulfilling our obligations arising from the Responsibility Strategy. Such a financing method not only makes our commitments more reliable, but it also shows our declarations are backed by specific activities. The financing project was implemented thanks to close cooperation with the Santander Group, which actively supports entrepreneurs on their green transformation journeys. The solution made available is unique in the entire business sector and will also have a positive impact on the environment — it will be used to finance an automated and low-carbon distribution centre built in the town of Radzymin. Its launch is planned for the second half of 2022.

Verification and certification of ESG activities

In 2021, we underwent the external EcoVadis certification process again. After receiving the medal last year, we developed a remediation plan aiming to make our undertakings more professional. The said plan has been successfully implemented throughout the organisation. It has resulted in a significant increase of scores in all areas subject to assessment. Twenty-one criteria divided into four categories are taken into consideration during the certification process: human and employee rights, the environment, ethics and sustainable procurement. As a result of the assessment, we have received the highest possible distinction — a platinum medal. This ranked us among 1% of companies globally that are most successful in integrating ESG aspects into their strategies and operations. Additionally, we received the highest possible score (“best in class”) for managing our carbon footprint. This was possible thanks to implementing a system for measuring, monitoring and reporting emissions and thanks to setting reduction targets approved by SBTi.

Building an automated distribution centre

The construction of a state-of-the-art distribution centre (DC) located in the vicinity of the town of Radzymin (close to Warsaw) began in mid-January 2021. The DC will be equipped with innovative automated solutions which will not only accelerate the pace at which our stores are served, but will also improve the quality of service for franchisees and minimise environmental impact. The DC will be 100% powered by electricity from renewable sources, and will be commissioned in the second half of 2022. In the future, renovation of some of the remaining distribution centres is planned in order to implement the individual solutions developed during the construction phase.

Electric vehicle fleet in the pilot phase

We are implementing a pilot phase of the programme under which heavy goods vehicles will be procured in partnership with two entities. Since 2019, we have been testing zero-emission commercial vehicles in cooperation with the Volkswagen Group. We use four electric ABT transporters and two e-Crafter vans. We have also invested in our own electric car charging stations at the distribution centres in Nadarzyn and Plewiska, and in our headquarters. In 2021, we started cooperation with Volvo Polska, testing a zero-emission refrigerated Volvo FL Electric truck. It is used for delivering goods to stores in the Silesia region. It is the first fully electric distribution truck in Poland that was for working in the city. We are also gradually modernising our fleet of passenger cars and are conducting tests aimed at replacing combustion engine vehicles with their electric and hybrid counterparts. New electric and hybrid cars reduce greenhouse gas emissions and noise levels, so that they can be successfully used in clean transport zones.

Testing green solutions in our stores

Our store in the Warsaw’s Białołęka district serves as proving grounds for solutions aimed at reducing our environmental impact. We are testing solutions in the areas of green energy, transport, clean air and circular economy. The store uses photovoltaic panels, the quantum dots technology, a kinetic floor that transforms steps into energy and anti-smog paving bricks supplemented by a green wall absorbing dust and smog. Innovative cooling equipment and refrigerants with low greenhouse effect potential are used in the store. An EKOmat machine and an electric car charging station are located in front of the store as well. The store is 100% powered by renewable energy. Based on experience from pilot programmes conducted at the Warsaw store, we have introduced new solutions to our chains, including freezer cabinets with the zero-heating doors technology, adaptive lighting, as well as new refrigerators with lower global warming poten- By encouraging conscious food choices, we are also expanding the range of plantbased products as an excellent alternative to animal products. We have introduced products of such brands as Garden Gourmet, Dobra Kaloria or Alpro. In 2021, we also created our own 100% plant-based brand, Plant Hunter. tial. Thanks to the initiatives introduced, we have reduced greenhouse gas emissions by more than 1,300 tCO2e, and we have also reduced electricity consumption by almost 261 MWh.

Lowering emissions in the supply chain

Our suppliers of goods and services are responsible for 68% of scope 3 carbon footprint emissions, which is why we involve partners from various industries in search of innovative solutions to reduce emissions in the value chain. An example is cooperation with the carbon neutral brand Goodvalley, whose products have a zero carbon footprint, and Grupa Żywiec, which uses only electricity from renewable sources in its production process. We also look for emission reduction opportunities through convenienct services, as we reduce emissions through delivery to pickup points in cooperation with InPost and other logistics operators in Poland. Delivering a parcel to Żabka generates a lower carbon footprint than direct delivery to the customer personal address. By encouraging conscious food choices, we are also expanding the range of plantbased products as an excellent alternative to animal products. We have introduced products of such brands as Garden Gourmet, Dobra Kaloria or Alpro. In 2021, we also created our own 100% plant-based brand, Plant Hunter.

We joined the Polish Plastic Pact

The pact is part of the global Plastics Pact Network operated by the Ellen MacArthur Foundation. More than four hundred companies responsible for introducing 20% of packaging to the global markets, institutional stakeholders, non-governmental and industry organisations, as well as scientific centres and investors participate in the initiative globally. The aim of the Polish Plastic Pact is to change the current model of using plastics in packaging materials, to ensure that the principles of circular economy are followed. Members of the Pact shall take effort to increase the recycling rate and, consequently, reduce the carbon footprint. They also commit to initiate consumer awareness projects and contribute to increasing the level of correct segregation of packaging materials. The objectives set by the signatories of the Pact for the period until 2025 reach beyond the legal regulations in force in Poland.

We have implemented the Circularity Policy for Plastic

It allows our business partners to be involved in activities that maximise our impact on ensuring circularity of plastic use throughout the entire value chain. The policy will be implemented gradually, in cooperation with all business partners. It is based on the original green circulation model, which provides guidance on responsible resource management in seven areas: eco-design, resource-conscious creation, sustainable distribution, responsible sales, conscious consumption, efficient collection as well as comprehensive recovery and recycling. We have established a set of clear principles we follow in our endeavors towards circularity, and we are applying accountability rules to the entire process – from design, to ensuring a second life and revitalising the environment.

We have developed our Eco-design Policy

The Policy serves as a roadmap, presenting clear rules for designing and selecting suitable raw materials for the packaging of own brand products and for materials used in stores. It is based on four principles: loop, reduce, simplify and communicate. We reduce the weights and volumes, as well as promote reusable types of packaging. When designing packaging, we place an emphasis on the choice of materials and the use of recycled products. Components that are preferred in recycling processes are given priority as well. We simplify the form of packaging by ensuring its shape allows the product to be emptied. Using a system of pictograms placed on the packaging, we offer consumers advice on which fraction of waste should it be disposed of to after the contents have been used. In accordance with the Policy, we avoid contrast colours, soot-based pigments and solid, inseparable labels made of materials other than the packaging itself. All these measures make the packaging easier to recycle.

Eliminating plastic and foil packaging

We have replaced plastic coffee cup lids and shopping bags with their equivalents made of paper with the FSC certificate. Such an approach ensures that at least one new tree is planted for each that has been felled. The paper used in the manufacture of shopping bags and coffee cup lids decomposes naturally over the course of several weeks. Due to these changes, we have reduced the use of plastic by approximately one thousand tonnes per year. We are developing solutions with our suppliers to reduce the use of foil packaging in our products. Thanks to cooperation with Carlsberg Poland, we introduced to the market six-packs of beer relying on Snap Pack technology. Instead of wrapping cans with foil, they are attached to each with the use of adhesive. This reduces the consumption of foil by as much as 82% compared to standard packaging.