Materiality analysis 2020/21

In the course of the financial year 2020/21 we have carried out a materiality analysis to identify and assess potential economic, environmental, social and governance topics that could affect METRO. This analysis has been conducted in accordance with the requirements of § 289c of the German Commercial Code and the reporting standard of the Global Reporting Initiative (GRI) comprising all three aspects at the same time:

• What influence the issue has on METRO’s business, financial result or economic situation (according to German Commercial Code)
• What influence METRO’s business operations have on the issue in question (according to German Commercial Code and GRI)
• How relevant the issue is for the stakeholders affected by it (according to GRI)

The outcome of this analysis are 11 material issues for METRO covering internal (corporate mission and strategy) and external factors (reflective on stakeholder concerns) which the company has the ability to control and influence, including the value chain.

These issues were selected in a process that consisted of several steps. First, a complete list of non-financial issues relevant to our company or our stakeholder groups was generated from key sources including:

• Existing strategies, commitments and guidelines of METRO and its operational entities
• Requirements for various rating systems, including the Dow Jones Sustainability Index (DJSI)
• Disclosure standards, such as Sustainability Accounting Standards Board (SASB)
• Trend reports from World Economic Forum, European Commission, among others
• Competitors’ materiality analysis

The wide range of issues was summarized into a condensed long-list of 18 issues, making sure that each aspect from the complete list appeared in the content of the condensed list. The process followed the design principles for business relevance, as:

1. the topic has the ability to affect the company’s operational results and financial conditions
2. is within the sphere of control and influence of METRO but
3. excluding topics that are purely financial and/or operational.

Each of these 18 topics was assessed by the Materiality Analysis Project team, consisting of 3 experts from the METRO AG Corporate Responsibility department, from a scale of 1 to 7 (1 being low impact and 7 high impact) by the related risks and opportunities, current and potential future impact on METRO’s business success. All those topics that had an average of 4 or higher were considered as meeting the materiality threshold, resulting in a shortlist of 11 materialities.

These shortlisted topics formed the basis for the validation and prioritization of materialities by different internal and external stakeholders during 18 online interviews including METRO’s top management, country organization’s CEOs, customers, suppliers and Consumer Goods Forum’s peers.

Moreover, 2 online internal workshops took place with METRO employees from across different departments and country organizations to gain by-proxy stakeholder views of customers, suppliers, employees, peers, investors, and public organizations. These participants were asked to:

• Rank the issues from the perspective of each stakeholder group they were assigned to
• Discuss the influence the issue has on METRO’s business, financial result or economic situation by evaluating the risks and opportunities of each issue and the link to METRO’s daily business
• Assess the impact of METRO’s business operations could have an impact on society or environment and estimate the relative magnitude as of high, medium, or low.

Lastly, the material topics were plotted into the matrix reflecting the:

• Impact of topic on METRO’s business, financial result, or economic situation – for example impacts on sales, investments, costs or the company’s reputation and
• Impact of METRO’s business operation along the value chain – for example in the event of non-compliance with certain laws or environmental or social standards and
• Relevance of issue for stakeholder affected by it (shown by the size of the circles in the graph) – for example in relation to purchase or investment decisions.

Whilst the topics of Business Ethics and Transparency, Data Privacy and Security and Talent Attraction and Development are part of our key business practices, all other topics including those with the highest priority, namely Responsible Sourcing and Sustainable Assortment, Human Rights, Food Waste Management and Packaging + Plastic, are explicitly allocated in METRO’s sustainability approach and the corresponding areas of responsibility as follows:

With all 11 issues being material according to GRI and German Commercial Code requirements, the respective management approach for each of the 11 issues is described already in the non-financial statement of METRO’s Annual Report 2020/21 namely the chapters Actively Managing Sustainability, Environmental and Social Matters, Employee Interest, Business Ethics and Transparency and Customers. Therefore, they are not presented in depth here.

METRO and its affiliates will continue to conduct stakeholder surveys as a basis of their materiality analysis and we are available for dialogue via the options provided on our website and via our e-mail address CR@metro.de.