Managing sustainability
The economy exists for the people – not the other way around. This mindset and the strong awareness of societal responsibility shape the Otto Group.
Prof. Dr. Michael Otto recognized early on that responsible business practices should determine the future, and inspired customers, employees, business partners, and like-minded individuals from other companies with this vision. As early as 1986, climate protection became part of the corporate strategy, followed by many initiatives for people, nature, and society.
Today, our sustainability strategy is firmly anchored in the corporate strategy and the shareholder vision of "Responsible commerce that inspires."
Sustainability strategy
The Otto Group takes responsibility for every part of its value chain – from resource extraction to product processing, delivery, and ultimately the use of the product by consumers. Our goal is to make the production of our products ecologically and socially sustainable.
Regulatory requirements, as well as our own Otto Group Sustainability Standards, which go beyond legal obligations, apply to all companies of the Otto Group. The sustainability strategy applies to those Group companies that have the greatest impact on social or ecological issues along the entire value chain: OTTO, Bonprix, Crate and Barrel, the Witt Group, and Hermes Germany. Additionally, Otto International plays a relevant role in the context of sourcing for these companies.
We use our materiality analysis to assess the impact of our business activities on people and the environment, as well as the financial influences on the company. Based on this, we derive operational measures and strategic goals. Our sustainability strategy equally considers the economic, ecological, and social dimensions, further embedding them into our business processes. A key focus of our strategy lies on environmental and social aspects in the supply chain and the usage phase. Accordingly, we have formulated focus topics in the areas of environment and human rights with visionary, long-term ambitions that enable us to align our daily actions with the long-term corporate goals of the Otto Group. These are specified through short-term goals with clearly defined time horizons, allowing us to measure our progress towards long-term change. They are dynamic, regularly reviewed, adjusted, and gradually supplemented to respond to current developments.
Environmental goals
We aim to significantly lower our ecological impacts to operate within planetary boundaries. In line with the 1.5 degree climate target of the Paris Climate Agreement, we reduce our greenhouse gas emissions, minimize our resource consumption and protect biodiversity. Accordingly, we have formulated our near-term science-based climate target (near-term SBT) and are following a path to reduce greenhouse gas emissions by the end of the 2031/32 financial year in line with the 1.5-degree path.
- Near-term Science-Based Target
- Sub-target 1: Absolute scope 1 and 2 greenhouse gas emission reduction by 42 percent by the end of the financial year 2030/31 compared to the financial year 2021/22.
- Sub-target 2 (Supplier engagement): At least 75 percent of third-party brands based on purchasing volume and at least 20 percent of marketplace partners based on Gross Merchandise Value (GMV) have set an own SBT, that was validated by the SBTi, by the end of the 2027/28 financial year.
- Sub-target 3: Absolute reduction in Scope 3 greenhouse gas emission by 42 percent by the end of the financial year 2031/32 compared to the financial year 2021/22.
Reference SBTi: The official target formulation can be viewed on the SBTi website: https://sciencebasedtargets.org/target-dashboard
Furthermore, we have defined additional ambitions we are seelomg to achieve for our most relevant assortments (textiles, furniture, electronics) by the end of the 2035/36 financial year:
- Circular business solutions: We largely offer circular business solutions (reuse, repair or recycling) and constantly increase their implementation.
- Preferred materials1: We strive to use exclusively preferred materials. These are materials that have lower negative impacts on the environment compared to conventional alternatives. We focus on fibers, wood, plastic, and metals in our most relevant assortments.
- Eco-Design for Circularity: We largely shift to eco-designed products.
- Responsible Products2: We constantly increase the share of responsible products.
1 A "preferred material" meets our requirements for reducing environmental impacts or animal welfare at the raw material production level compared to conventional alternatives. The evaluation is based on factors such as global warming potential, eutrophication, water scarcity, resource depletion, chemical use, and animal welfare.
2 A "responsible product" shows a significant improvement compared to a conventional alternative regarding at least one sustainability criterion (e.g., ecologically produced raw materials). The product must be certified to an accepted third-party verified standard/label and must contain the minimum required share of the accepted certified material (applicable to material level certificates only).
Human rights goals
We respect human rights and are committed to improving working conditions in our supply chains. To fulfill our human rights due diligence, we focus on the key challenges by identifying focus topics and key stakeholders.
Knowledge, resources and learning specific skills are crucial to enable progress and improvement, to prevent human rights violations and to achieve better working conditions for the people in our supply chains in the long term. We promote Capacity Development as a lever for positive change in the lives of workers in our supply chains.
Accordingly, we aim to ensure that the majority of our key stakeholders have participated in Capacity Development on the following relevant human rights topics by the end of the 2035/36 financial year: Child Free Production, Freely Chosen Employment, Living Wages, Decent Working Hours, Safe Work Environment.
For our focus topics, we have used a risk-based approach to identify three groups of key stakeholders who can directly influence improvements and should therefore participate in capacity development: Our business partners with whom we maintain a direct contractual relationship; workers in final production facilities in countries with an increased risk of human rights violations; and the management in final production facilities whose actions are of great relevance to the workers.
As an internationally active group of companies, we too must fulfil the requirements placed on us regarding human rights. We do this by complying with laws and regulations and implementing our binding requirements within the framework of our own Otto Group Sustainability Standards.
Sustainability management
Our global sustainability activities are jointly managed and developed by the Executive Board and the CR Board. The operational implementation of the sustainability strategy takes place at the level of the Group companies.
Executive Board
Sustainability is comprehensively integrated into the business activities of the Otto Group and anchored at the highest strategic planning level. The Executive Board bears overall responsibility for the sustainability strategy of the Otto Group. It is responsible for ensuring that sustainability aspects are considered in key decisions within the company and integrated into the management and processes of the Otto Group. Relevant topics are regularly on the agenda in board meetings and other board formats.
CR Board
The CR Board is the central decision-making board that has been tasked by the Executive Board with developing CR management in the Group. It consists of representatives from key companies within the Otto Group. Led by the Chair of the Otto Group Executive Board, the CR Board is mandated with defining overarching sustainability goals for the Otto Group within the framework of the CR strategy and adopting individual targets and measures for the Group companies. The CR Board advises the Executive Board on far-reaching decisions, including fundamental adjustments to the CR strategy or decisions that involve significant investments or have a significant impact on the business models of Group companies.
Group companies
The sustainability strategy applies to Group companies with the greatest impact on human rights or environmental issues along the entire value chain: OTTO, Bonprix, Crate and Barrel, the Witt Group and Hermes Germany. Moreover, we have appointed Otto International as a so called facilitator, as the company supports those Group companies in achieving their goals, particularly in regard to procurement in the upstream supply chain.
One of the challenges of the sustainability strategy is also a success factor: the different business models of the Group companies must be taken into account. For this reason, the design of the sustainability strategy is left to the Group companies themselves. They develop individual priority areas, goals and measures that match their business models within their action framework set by the Otto Group Holding. These are documented in annual action plans and reported to the CR Board and the Executive Board. This ensures that all Group companies jointly contribute to the Otto Group’s ambitious goals. For implementation, each of the relevant Group companies has assembled an interdisciplinary CR team, comprising a Sustainability Officer and experts for the individual topic areas within the scope of the strategy. The teams drive sustainability topics and establish synergies within the Group.
Expert Circles
The company-wide exchange of best practices and the networking of experts and interested parties within the Otto Group are key success factors of our sustainability strategy. Alongside our focus topics, the CR representatives of the Group companies and the Otto Group Holding regularly meet in so-called Expert Circles to discuss both the achievement of goals in their area and new ambitions and ideas. They develop and implement corresponding measures during these discussions.
Materiality analysis
The materiality analysis forms the basis of our sustainability strategy and the strategic development of corporate responsibility. We use the analysis to assess the impact of our business activities on people and the environment, as well as the financial influences on our company. The topics identified as material serve as the basis for the focus topics of our sustainability strategy. Additionally, we conduct risk analyses, the results of which are integrated into the materiality analysis and the formulation of strategic goals. We regularly review whether changes occur and whether our sustainability strategy sets the right priorities.