Ahold Delhaize

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- Participation and commitment of senior management: Sustainable retailing at Ahold Delhaize is managed at all levels of the organization, from the Supervisory Board (Sustainability and Innovation Committee), to a designated Executive Committee (ExCo) member, to individual leads at each of the brands for the three focus areas (including ‘Reduction of food waste’) and five commitments.

Within the ExCo, the Chief Sustainability, Transformation and Communications Officer is responsible for sustainable retailing. The Vice President Sustainable Retailing is responsible for Ahold Delhaize’s Group-wide Sustainable Retailing strategy, for global reporting against it both internally and externally, and for engaging external stakeholders on the strategy, monitoring related trends and managing related issues and risks.

The performance criteria in Ahold Delhaize’s incentive plans (remuneration) for senior management include Key Performance Indicators related to all three focus areas (including ‘Reduction of food waste’). The progress against their sustainable retailing targets and the assessment of their sustainability performance for the Dow Jones Sustainability Index are also important criteria for evaluating the performance of their senior management team.

- Risk assessment and compliance: In addition to the evaluation of the principal risks and uncertainties linked to the strategic, operational, financial, and compliance areas, Ahold Delhaize has assessed the risks anticipated in the relevant sustainability issues affecting the food retail industry.

The Supplementary Report on Sustainable Retailing Performance 2016 and the sustainable retailing content in the Ahold Delhaize Annual Report 2016, have been reviewed by the company’s external auditor, PwC.

Weaknesses:

- Inherent limitations: The sustainability retailing strategy of Ahold Delhaize includes prospective information such as expectations on ambitions, strategy, plans, estimates and risk assessments based on assumptions. Inherently, the actual results are likely to differ from these expectations, due to changes in assumptions.

- Non-utilization of existing online portal for reduction of food waste: Ahold Delhaize is selling their products through their existing online portals such as ah.nl and bol.com. However, these channels are not utilized for channeling the near expiry foods and related items to the customers under discount schemes. These online portals also can be exploited fully to reduce food waste other than through their conventional store channels.

- Behavioral challenge to reduce food waste at home: Ahold Delhaize is trying to educate customers to reduce food waste at home through tips on keeping food fresh and recipes for food that might otherwise be thrown away. We feel that this approach can pose many challenges as this is primarily related to change customers’ behavior which is by nature quite difficult. This approach can be modified and can be made more effective by incentivizing the customers through various schemes for being a part of this focus area.

- Possibility of dilution of pre-merger goals and targets: Ahold and Delhaize Group merged on 24 July 2016. Subsequently, Ahold Delhaize implemented a new strategy, conducted a new materiality analysis, harmonized reporting processes, and implemented new key performance indicators including targets and related reporting policies. The reported key performance indicators cover the twelve-month period ended 1 January 2017, which in part relates to a period prior to the merger.

We consider this a key challenge in view of the introduction of the new strategy, materiality analyses, new key performance indicators and related reporting policies, the (harmonization) changes to the reporting processes, and the retrospective application of definitions to 2016 pre-merger data. It might be possible that, in the process of merger, some of the vital goals or strategic policies might have got diluted to make way for new harmonized goals and policies.

- Non-compliance with the GRI ‘comparability principle’: GRI G4 Sustainability Reporting Guidelines require Ahold Delhaize to comply with the ‘comparability principle’, which, amongst others, prescribes the disclosure of comparative figures. Due to the implementation of a new strategy and related key performance indicators and targets, and the inherent limitations in gathering reliable key performance indicator information for 2015 under the new definitions, Ahold Delhaize has not disclosed any comparable 2015 key performance indicator data. As a result, the 2016 sustainability reporting is not in compliance with the ‘comparability principle’ as required by GRI G4 Sustainability Reporting Guidelines.

- Possibility of error in reported data: For the 2016 figures reported, Ahold Delhaize has often used manual data collection processes, which are more prone to error than, for example, automated processes. This poses a risk of presence of error in the reported data.

- Nonfinancial information reporting: The absence of a significant body of established practice on which to draw, to evaluate and measure nonfinancial information allows for different, but acceptable, measurement techniques and can affect comparability between entities and over time.

- Missing targets in Sustainability KPIs related to reduction of food waste: Ahold Delhaize has not set any target for ‘food waste sent to disposal’ and ‘unsold food donated to feed people’ for 2020. The reason(s) behind this is not clear.

Improving food waste management across Ahold Delhaize

Development of Store Inventory and Customer Discount Portal[pic 18]

Wasted food is the number one product entering landfills. The value of the food wasted globally is estimated to be between 162 and 218 billion dollars annually. Thus, we propose that Ahold Delhaize spend in the development of an online platform that will look at significantly reducing the amounts of food that reaches expiry date in their hands and is effectively wasted and ends in landfills.

The online and mobile marketplace will look at the disposal of these foods prior to their expiry date by automatically marking down the price and directing the consumers via Global Position Systems (G.P.S) location settings on mobile or online detailing the location of the stores where a consumer is likely to find the specific goods they are looking for.

Practically, the platform will consist of an enterprise