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Title:Sector review: Supermarkets EU
Date of publishing:October 01, 2014

Sector review: Supermarkets EU
October 01, 2014

Forum ETHIBEL has updated its register ratings of the European Supermarkets sector. Based on the meticulous research of Vigeo and the advice of the  Register Committee, the CSR performance has been re-assessed, in order to identify the best-in-class companies. The resulting changes in the Ethibel Pioneer and Excellence Investment Registers are explained in this sector review.

The supermarkets sector is an important sector in terms of revenue within the retail industry. When looking at the 250 World’s Largest Retailers on the 2013 Global Powers of Retailing ranking list, 64 of them are supermarket retail chains around the world. Even though Wal-Mart Stores leads the overall ranking, Europe dominates food retailing on the global level with 29 of the 64 largest supermarket chains worldwide.

The European supermarket sector is a big employer. The two biggest companies in the sector, namely Tesco and Carrefour, account for over 537.000 and 364.000 employees respectively. In this regard a solid human resource policy and a good overall performance on the social pillar are indispensable. 

The sector however underperforms in the human resources domain. Even the sector leader in terms of human resources, Metro, only obtains a limited score, thereby indicating a very weak general performance by European standards. Given the low scores at sector level and the high importance of labor and employment conditions in the sector, a Pioneer rating could no longer be given to any of the companies in the sector. As a result Tesco andKesko were removed from the Ethibel Pioneer Investment Register.

As Tesco and Kesko are overall still among the better performers in the sector, they remain members of the Ethibel Excellence Investment Register. Other good performers in the sector that have been reconfirmed for inclusion in the Ethibel Excellence register are Ahold (best known in Belgium through its subsidiary Albert Heijn), Casino Guichard, Metro and Colruyt. Concerns were raised, however, regarding the poor reporting and lack of transparency of Colruyt. Consequently, Forum ETHIBEL calls upon the company to improve its reporting standards.

Furthermore one new company was added to the Ethibel Excellence Investment Register, namely Carrefour. During previous rating cycles the company was not included due to the high amount of controversies. Though Carrefour is still not controversy free, the total number of controversies remains very low in proportion to the size of the company. In addition, the company reports transparently on existing controversies and has taken corrective actions where needed. Based on its overall performance Carrefour is considered one of the best CSR performers in the sector and is therefore included in the Ethibel Excellence Investment Register, in line with other sector leaders.  

Delhaize Group and Sainsbury have been removed from the Ethibel Excellence Investment Register due to a declining CSR performance. For Delhaize Group the overall weak performance on social issues lead to the company’s exclusion. Sainsbury on the other hand was perceived to have a substandard performance on both social and environmental issues. As a result these companies are no longer perceived as best-in-class.

Click here in order to consult the full composition of the Ethibel Pioneer and Excellence investment registers (after registration only).