Mazars quantified Lidl’s impact on the Slovak economy and society

Is it possible to calculate the company's contribution to the economy and communities? This is the question Mazars' sustainability experts in Slovakia asked themselves when they wanted to quantify how important a particular company is to the country in which it operates. Over the past years, we have already produced two editions of the socioeconomic study for Lidl Slovakia – for the consecutive years 2021 and 2022.

In this way, companies get a better idea of their positive economic impact not only on the overall economy, but also on their regions. They have in their hands a tool that they can use in their PR activities, in promoting their business interests before governments or in co-operation with other partners.

To quantify the benefits, Mazars experts used the theoretical model of Leontiev's production function. Based on quantitative data, they determined the effect induced by the direct and indirect economic impacts of their activities in Slovakia.

The impact on society and the economy is complex. Indeed, entrepreneurial activity does not only generate profit, although this is the ideal outcome. However, it could not be achieved without functioning relationships between entrepreneurs, knowledge exchange between economic actors (including their own employees) and other processes that benefit the economy.

The study names these often "invisible" processes and estimates their positive economic impacts. "For example, we can think of it as an estimate of multiplier effects in the economy - a supplier or manufacturer can increase its turnover thanks to a long-term contract with Lidl, which allows it to achieve so-called economies of scale and produce more for the same price. This extra quantity produced can be resold. Such positive, often secondary effects of Lidl's presence in the Slovak economy have been mapped and their value has been estimated: 1 euro generated by the chain has the potential to generate an additional 58 cents in the Slovak economy,“ explains the co-author of the study, Martin Dolinský, Sustainability Manager at Mazars in Slovakia, who is the co-author of the study.

The Mazars experts developed the study to be concrete and understandable to a wide audience. According to publicly available data, they compared the economic value of operating a food chain in Slovakia with what the country urgently needs. "We wanted to express what diverse societal needs could be met with the real economic value generated by Lidl in the Slovak economy. For example, that the money could cover the training of more than 14 thousand new doctors, would be enough to create more than 54 thousand places in kindergartens or to build more than 2,000 kilometres of new bicycle paths," explains Martin Dolinský.

Read Lidl's socioeconomic study 2022

The study also mapped the flow of real economic value (actual payments) to beneficiaries: the third sector, workers, the private sector, cities and the state. Payments to the private sector mean support for a functioning business, even in less developed regions and the smallest municipalities; payments to workers mean support for their families; donations to the third sector are an expression of responsibility towards the community. Thanks to a socio-economic study, it is possible to express all these positive impacts of a particular company.

As many more companies over 250 employees operating within the European Union will have to report on non-financial sustainability from 2025 onwards, such a study serves as an example to complement the mandatory reporting under ESRS (European Sustainability Reporting Standards).