SUSTAINABILITY
REPORT
2016/17

1

Here at Kingfisher, we want to make sustainability an easy choice for our customers. It’s this vision that illuminates the path for everything we do.

Over the last year, we’ve been working hard to embed sustainability into our practices and processes, investing in bright ideas and new ways of working. From head office to the shop floor, we want to make sure that sustainability becomes a part of every day.

This report reveals what we’ve been doing and the progress we’re making towards our sustainability goals. There’s more to it than first meets the eye.

2
KINGFISHER AT A GLANCE

KINGFISHER PLC IS A HOME IMPROVEMENT COMPANY WITH NEARLY 1,200 STORES IN 10 COUNTRIES ACROSS EUROPE.

We employ 77,000 people and nearly six million customers shop in our stores and through our websites and apps every week.

Our ambition is to become the leading home improvement company. We believe everyone should have a home they feel good about, so our purpose is to make home improvement accessible for everyone.

We believe that a Good Home is a sustainable home: one that is functional and evolves with family needs; is green outside and in; is resource and energy smart; clean and healthy to live in; durable in quality and style; coordinated to look good; and that provides the best economics possible. We want to help our customers create sustainable homes and to make our home, – our business – sustainable too.

OUR STORE NUMBERS AND OUR MARKETS

3
TOTAL SALES 2016/17

Contribution to total sales

UK & Ireland £4,979m
France £4,254m
Other International £1,992m
Total £11.2bn
RETAIL PROFIT 2016/17

Contribution to retail profit

UK & Ireland £358m
France £353m
Other International £136m
Total £847m
  • Total sales
  • Adjusted pre-tax profit§ £000m
  • Employees 00,000
  • Total stores 0,000
4

From our chief executive officer

Our ambition is to become the leading home improvement company. We want to make home improvement accessible for everyone, and help people to have the home they feel good about.

Sustainability is at the core of our ambition and has been a key part of Kingfisher for many years now. For example, we were the first major retailer to launch a sustainable timber policy over 25 years ago. This was just the beginning, and as this report shows we have made significant progress. We have managed to bring sustainability in the products that we offer to our customers, in new solutions and in our stores.

Looking back at what we have done over the last 12 months, I am delighted that more than a quarter of our sales are now from products that help improve the sustainability of people’s homes. We have achieved 96% responsibly sourced wood and paper in our products, and we saved our customers £840 million through sales of energy saving products.

We also believe sustainability should be found inside our company and our stores and we have worked hard to cut our energy and carbon intensity in our businesses this year, as well as achieving a world-class employee engagement score.

When we launched Net Positive in 2012 we set ourselves 53 targets. I’m pleased to report that we met many of our most important milestones for 2016/17 in areas such as sustainable home products, energy efficiency and responsible sourcing of wood and paper. This demonstrates significant progress in making sustainability part of the way we work. However, we are also aware that more is needed in many areas for us to achieve our longer term commitments and to become a truly sustainable company. We did not meet some of the milestones and targets we set ourselves for 2016/17 and we now need to go further and faster to become a truly sustainable company.

We will build on our sustainability strategy during 2017, based on our customers’ needs. We will focus on what really matters to them to impact their behaviours and to help them to have a more sustainable home. We believe everybody should be able to have a home they feel good about and our approach will reflect this. Our targets will be no less ambitious, in fact we want to go even further, but will be more closely aligned to our purpose to offer our customers solutions to make their home sustainable. This is an exciting opportunity for Kingfisher and everyone in the business will have a role to play.

I am looking forward to updating you again as we progress on the next stage of our sustainability journey.

Véronique Laury
Chief Executive Officer










BECOMING ONE KINGFISHER

Our ambition is to become the leading home improvement company. At Kingfisher we believe everybody should be able to have a home they can feel good about, so our purpose is to make home improvement accessible for everyone.

There are seven actions we will do together to achieve our ambition:

  • Think of customer needs first
  • Design a seamless customer process
  • Create a unique and leading offer with an integrated supply chain
  • Create a leading customer experience in our stores
  • Be a truly sustainable company
  • Work as one
  • Be low cost always

The ONE Kingfisher five year plan will leverage the scale of the business by creating a unified company, where customer needs always come first.

5

An External Perspective

This Sustainability Report describes Kingfisher’s progress in an unprecedented year of transition towards ONE Kingfisher, which expresses an ambition to become the leading home improvement retailer through a seven-point action plan, one aspect of which relates to an ambition for Kingfisher to become a truly sustainable company. It’s encouraging to see sustainability being presented as central to this transformation and that in key material areas such as energy and timber sourcing, Kingfisher's sustainability targets have been met. In addition, targets that describe Kingfisher’s ambition to mainstream sustainability in all its products were also met, with products that help improve the sustainability of people’s homes accounting for more than a quarter of all sales.

The transitional nature of 2016 may go some way to explain why less than half of Kingfisher’s sustainability targets were met. However, investigating Kingfisher’s performance in greater detail actually tells a more positive story than the broad brush percentage achieved figure might first imply.

An analysis of those targets that were missed indicates that actual performance falls into different categories. In impact areas such as waste recycling and completion of community projects, the targets were missed by incredibly slim margins, in other areas targets were not achieved as it is obvious business priorities changed as the transformation project progressed. Finally, in some areas targets weren’t achieved due to a lack of internal reporting mechanisms. And perhaps there were just too many targets – although I would like to see a sustained focus on sustainable supply chains, including chemicals, where although progress was made in 2016, it perhaps didn’t equate to the materiality of impacts in these areas.

The mixed performance described in this report also underlines the timeliness of the planned recasting of Kingfisher’s sustainability strategy. Looking ahead, for me, this report gives three reasons to be confident that Kingfisher will be successful in delivering its ambition to be a truly sustainable company.


First, there is a clear understanding demonstrated in this report of the ways in which sustainability drives commercial success, through revenue opportunities, supply chain resilience, efficiency and productivity, and finally through building long-term customer preference – a sustainable home is a good home. And it’s the centrality of the customer to Kingfisher’s interpretation of sustainability which is the second cause for optimism. Kingfisher is one of only a handful of companies that is making serious efforts to find out what its customers want and understand when it comes to sustainability, which in turn will allow it to accelerate the delivery of sustainable products to market.

Finally, this report is sprinkled with wonderful stories of innovation, from innovation in the sustainability of products, such as B&Q’s Pro Grow compost made from garden waste, to innovation in the delivery of a service – there are numerous examples of lease and rental revenue models in this report, from carpet cleaners to everyday tools. And perhaps most exciting, and critical for a retailer serious about remaining relevant in perhaps the most significant era of disruption retail has ever seen, experiments with the sharing economy in the shape of Casto Labs, where customers can learn DIY skills and use specialist tools and equipment.

Kingfisher has a proud history of being a pioneer in sustainability, from being the first to back FSC timber, to the first to sound the rallying cry for Net Positive. I look forward to this mighty business emerging stronger, and even more successful from the current transformation programme, and continuing to blaze a sustainability trail.

Sally Uren, Chief Executive
Forum for the Future
6
7

NET POSITIVE: THE JOURNEY SO FAR 2012-16

Net Positive is our long-term ambition for how we will create positive change in our business and the world. With Net Positive we aim to improve life for our customers, employees and communities and to have a restorative impact on the environment. Net Positive reflects our goal to be a truly sustainable company and to make sustainable homes desirable and achievable for our customers.

Since we launched Net Positive in 2012, we have focused on four priority issues, supported by work in three other areas.

Our Net Positive aspirations and targets

PRODUCTS & INNOVATION

Aspiration: Every Kingfisher product will enable a more sustainable and ultimately Net Positive lifestyle.

2020 target: 1,000 Kingfisher products with closed- loop credentials.

ENERGY & CARBON

Aspiration: Every Kingfisher store and customer’s home is zero carbon or generates more energy than it consumes.

2020 target: 38 TWh of energy saved for customers. 45% reduction in energy intensity of our property.

WOOD & PAPER

Aspiration: Kingfisher creates more forest than it uses.

2020 target: 100% responsibly sourced wood and paper in all our operations.

COMMUNITIES

Aspiration: Every Kingfisher store and location supports projects which build local communities or equip people with skills.

2020 target: 4,000 community projects completed

OUR PEOPLE

We want Kingfisher to be a rewarding place to work where all our colleagues feel engaged and supported.

SUPPLIERS & PARTNERS

We work with our suppliers to integrate sustainability into our products, services and operations.

ENVIRONMENT

We are reducing our impacts as the first step towards being restorative to the environment.

8
HOW DID WE DO?

When we launched Net Positive we set ourselves 53 ambitious targets for 2020, with milestones for 2016/17.

We have made strong progress in embedding sustainability into our business and achieved many of our most important milestones in areas such as sales of sustainable home products, responsible sourcing of wood and paper, saving energy for customers and reducing energy use in our business.

In some areas, we have further work to do, including embedding our supply chain standards and increasing our community involvement. Overall, we met 24 of our milestones and targets for 2016/17 (45%). A detailed summary of our performance against milestones is provided on page 78-90, in our Performance Summary section.

One of the most important things we’ve learnt over the last four years, is the need for an integrated approach, embedding sustainability in our products and services and in the way we work so it becomes natural and easy for our colleagues and customers. This theme is explored throughout the report.

UPDATING OUR STRATEGY IN 2017

Much has changed in our business since we launched Net Positive in 2012. We are undergoing a major transformation to become ONE Kingfisher, creating a unified company based on putting customer needs first including unifying our sourcing and our product ranges. We need to update our sustainability strategy so that it reflects this change and our new ambition.

During 2016/17, we reviewed our sustainability goals and carried out research with our customers and stakeholders. We will publish an updated strategy and targets during 2017 that are more closely aligned with the needs of our customers and the business. Our updated strategy will incorporate our most important Net Positive targets. Our strategy will be no less ambitious and we remain committed to having a positive impact on people and the planet.

9
10

SUSTAINABILITY – PART OF HOW WE WORK

Sustainability should be a natural part of the way we work every day. We are focussing on integrating sustainability into every aspect of the business and we are establishing strong governance processes to oversee our work.

Leadership from the top

Sustainability, as a pillar of the ONE Kingfisher business strategy, is the responsibility of our Chief Executive Officer. This responsibility is discharged to our Chief Customer Officer, who is a member of our leadership team and reports directly to our CEO. He is responsible for integrating sustainability across the whole business.

Our Group Sustainability Committee provides direction on the development and integration of sustainability. It is responsible for providing the governance framework to deliver our strategy. The Committee, which met two times during the year, is chaired by the Chief Customer Officer and its members include senior leaders from our Group functions and operating companies. It monitors progress against our targets and reviews risks and opportunities. It also facilitates sharing of best practices across the Group and supports the development of capacity and capability at all levels throughout the business to deliver on our goals.

Our Board receives regular updates on our sustainability performance. Identification and management of risks relating to sustainability, at an operating company and Group level are incorporated in our strategic risk assessment processes, see page 74, in our Governance & Management section, for more information.

Our sustainability teams

Our central sustainability team develops and leads implementation of our sustainability strategy and engagement with our stakeholders. It provides oversight of governance across all areas of sustainability and is a source of expertise for the business. It works closely with our operating companies and group functions including Offer and Supply Chain, group purchasing, digital and retail operations to embed sustainability into how we work.

We have a sustainability lead in every operating company and sustainability teams in our largest markets. They report into a director or Board member who is responsible for delivery of our strategy. The Kingfisher Sustainability Network is a monthly forum for our sustainability experts. The online Kingfisher Exchange enables colleagues in our sustainability, retail operations, health and safety and customer insight teams to share best practices, see page 53, in Our People section.

Products and sourcing

Our Offer and Supply Chain (OSC) function sources and develops our ranges, including our unique and unified product offer and is responsible for ensuring the availability of our products and their delivery to our stores and customer homes. Our OSC sustainability team works with our buying offices, product leads, designers, engineers and product communication experts to integrate sustainability into our offer using our sustainability policies, Sustainable Home Product Guidelines and our sustainability roadmaps for each category. We are making sustainability a core learning module for all OSC colleagues.

OUR GROUP SUSTAINABILITY COMMITTEE
PROVIDES
DIRECTION ON THE DEVELOPMENT AND INTEGRATION OF SUSTAINABILITY.

11
Keeping track of performance

Operating companies and Group functions report progress against our targets to the Group once a year via our Foundations questionnaire. The results are reviewed by our operating company CEOs and senior directors at Group level.

We publish an annual internal progress report which enables our senior leadership to track and compare performance across our companies. This is reviewed by the Group Sustainability Committee and communicated to all operating companies.

Training and engaging our people

We invest in helping our people to build their sustainability knowledge and to share information and ideas. Sustainability is part of induction training at five of our operating companies and we run more detailed training for relevant employees in key areas. For example, we train our product teams on our Sustainable Home Product Guidelines.

We make sure our leadership have the knowledge and skills to lead on sustainability. For example, during 2016/17, 35 senior employees in the business completed courses by the University of Cambridge Institute for Sustainability Leadership. More information and examples are included on page 53, in Our People section.

Stakeholder engagement

We engage with a wide range of stakeholders to understand their views, learn from their expertise and share our approach and performance. Our stakeholders include our customers, investors, people, suppliers and regulators as well as NGOs, the media and other organisations working on sustainability and business issues. Examples from 2016/17 are included on page 68-71, in our Governance & Management section. You can read a perspective on our performance from Sally Uren, Chief Executive of Forum for the Future, on page 6, in our Introduction section.

WE INVEST IN HELPING OUR PEOPLE TO
BUILD THEIR SUSTAINABILITY KNOWLEDGE
AND TO SHARE INFORMATION AND IDEAS.
SUSTAINABILITY IS PART OF INDUCTION
TRAINING AT FIVE OF OUR OPERATING
COMPANIES.

12

Your home and our home

We believe that a good home is a sustainable home. We want to support our customers in making sustainable choices, at affordable prices. We know that our long-term success depends on our operating sustainably – so we will make our home, our business, sustainable too.

Sustainable homes for our customers

Our research with customers shows us that sustainability is core to a good home. Whether it's creating a home that uses fewer resources and is more affordable to run, or having a natural garden and a healthy home without harmful chemicals – sustainability issues matter to our customers.

Yet being sustainable at home can be complicated and even intimidating. We want to change that by making it simple, inspiring, affordable, and achievable. We support people to make sustainable choices - choices they may not know exist.

Making our home sustainable too

Our company is our home. Each part of our home has a role to play in making it truly sustainable; our retail and product brands, our international functions and operating companies, our stores, our colleagues and our suppliers.

We know that our long-term success depends on our operating sustainability. As we transform our business we are integrating sustainability into how we work, making sure that we protect natural resources, design out waste, choose suppliers who protect human rights and the environment, and support the communities in which we work.






13

UNDERSTANDING CUSTOMER NEEDS
– A DEEPER LOOK

We want to have a positive impact by helping our customers to live sustainably. To do this, we need to really understand customer views and have an insight into what motivates or demotivates them when it comes to sustainability.

We commissioned in depth research with consumers during 2016 to help us provide the right products, services and support to enable our customers to create more sustainable homes.

What we did

Our research covered 45 households in five markets and included visits to customer homes and their local stores. We also reviewed existing quantitative research on consumer attitudes to sustainability.

What our customers told us

Not surprisingly, we found that consumers sometimes have different attitudes to sustainability. While some actively seek out sustainable options, others are disinterested or sceptical, and many more are interested but lack the time or information to make sustainable choices.

However, our research revealed some important shared lessons about their priorities and how best to respond to their needs and to engage our customers on sustainability:

1) Make it simple and convenient for me

The research showed that, for many, making sustainable choices is often complicated or time consuming. When customers are grappling with a complex home improvement project, it can be too difficult to think about sustainability as well.

People expect big brands to take the lead and to build sustainability into their products. They need information on sustainability that is easy to understand.

2) Help me save money – definitely don’t make sustainability expensive

Some consumers are very committed to sustainability. But for the majority, they are most motivated when sustainability helps them to save money. Saving energy at home has become a top of mind concern for many people and customers are motivated to invest in energy efficiency.

3) Give me products that last or help me repair things – I like to be thrifty

Customers value long-lasting products and like to be resourceful. There is growing interest in ‘upcycling’ - repairing, restoring and customising old products. Customers are used to recycling and don’t like to be wasteful. For some customers actual ownership is less important – they are happy to share or rent the tools they need.

4) Help me to create a natural and
healthy home

Customers are interested and motivated by products that are better for their own health and wellbeing and that of their

family. They also want to reconnect to nature and to live more naturally. There is growing interest in growing food, natural gardening and using fewer chemicals in the home.

What next?

We are using what we’ve learnt from the research to inform the development of our ranges and in our review of our sustainability strategy.

FOR MANY, MAKING
SUSTAINABLE
CHOICES IS OFTEN COMPLICATED OR
TIME CONSUMING.

14

OUR COMMERCIAL MODEL FOR SUSTAINABILITY

By integrating sustainability into our business we will create a company that can survive and prosper over the long term. We use a commercial model to help us communicate the business benefits of sustainability to our colleagues and identify new opportunities.

It illustrates the commercial impact of sustainability in four areas:

  • Revenue opportunities
  • Customer preference
  • Supply chain resilience
  • Efficiency and productivity.
15
Next Section - Product innovation

SUSTAINABILITY
REPORT
2016/17

Download Report as PDF