Climate Change Data

Environmental Metrics

ESG Focus Areas

• Environmental Sustainability
• Social Sustainability
• Governance

Environmental Achievements

• Reduced carbon footprint through increased use of biofuel (442,605 liters in 2016 vs 324,800 liters in 2015)
• Recycled 13,342 metric tonnes of plastic and cardboard
• Reduced average cost per kilometer through enhanced cube utilization in trucks and distribution centers

Social Achievements

• 9,060 days spent on employee training (2015: 15,067 days)
• R13.2 million spent on training 10,800 employees
• R3.7 million invested in employee wellness clinics (2015: R2.8 million)
• Retail training programs for 1,052 candidates, with 321 placed in jobs
• Reduced health and safety incidents to 5 in 2016 (2015: 12)
• R15.7 million invested in CSI initiatives (2015: R14.1 million)
• R16.8 million invested in sponsorship projects (2015: R17.5 million)

Governance Achievements

• Annual ERM analysis to integrate sustainability risks with group risks and strategy
• Development of a group risk register detailing top 40 risks
• Detailed action plans for top 10 risks monitored at board level

Climate Goals & Targets

Environmental Challenges

• Sustained economic weakness and low sales environment
• Aggressive marketing and unsustainable price drops by competitors
• Rising fuel, food, and utility prices
• Persistent drought and fluctuating exchange rates
• Service delivery protests and labor unrest
• Poor individual retailer performance
• Lack of buy-in and discipline by some retailers
• Labor disputes and industrial action
• Challenges with large customer groups
• Transformation issues across all areas

Mitigation Strategies

• Strategic focus on optimizing core business functions
• Financial benchmarking and tailored service packages for retailers
• Online database for retailers with store and product specifications
• SPAR Academy of Learning for retailer training
• Support for new retailers
• Robust pilots for new initiatives
• Annual comprehensive climate survey at all sites
• Annual review and update of strike contingency plan
• Identifying risks per major customer group
• Offering retailers leadership in completing transformation scorecards

Supply Chain Management

Responsible Procurement

• Joint business planning to target efficiencies
• Emerging farmer development programme
• Sustainable product development
• Transparent sourcing

Climate-Related Risks & Opportunities

Physical Risks

• Fire, natural disaster

Transition Risks

• New legislative requirements (e.g., Draft Carbon Tax Bill)

Sustainable Products & Innovation

• Freshline, Tender and Tasty, Good Living, Chika Chicken and Beantree

Environmental Metrics

ESG Focus Areas

• Retail relationships
• Leadership and support
• Retailer profitability
• Supply chain optimisation
• Transformation
• New business opportunities
• Centre of community
• Motivated and competent people
• Competitive pricing
• Excellence in Fresh

Environmental Achievements

• Introduction of a new slow-moving product model between North and South Rand facilities
• Initiation of a long-term solar energy project with first panels installed at the South Rand distribution centre

Social Achievements

• Efforts to attract and support new black retailers in South Africa
• Engagement with the Public Investment Corporation and Masisizane Fund to assist with funding of black retailers
• Funding of a number of black retailers at prime minus 4% when acquiring stores
• Flagship emerging farmer development business delivering income, employment, and opportunities
• Relaunch of SPAR’s Code of Ethics, translated into multiple languages
• Successful launch of a cybercrime awareness program

Governance Achievements

• Smooth transition from King III to King IV corporate governance
• Review of board and committee charters to ensure King IV compliance
• Appointment of Andrew Waller as an independent non-executive director

Climate Goals & Targets

Environmental Challenges

• Weak consumer buying power and confidence in South Africa
• Increased price competition among retailers
• Political turmoil and policy uncertainty in South Africa
• Brexit uncertainty in Ireland
• Slowdown in sales, particularly in South Africa, leading to margin contraction for retailers
• Competition Commission inquiry into grocery retail sector
• Competition Tribunal matter launched by Massmart
• Delays in obtaining liquor licenses for TOPS at SPAR
• Price competition from blended cement and imports negatively affecting Build it retailer loyalty
• Delays in new facilities development due to environmental assessments and slower demand

Mitigation Strategies

• Tightened cost control and margin management measures
• Increased marketing drive
• Enhanced distribution capacity and efficiency
• Efforts to reduce resource impact throughout supply chains
• Improved retailer relationships to ensure loyalty
• Increased financial disclosure and benchmarking for retailers
• Development of competitive plans for strategic stores
• Increased constructive engagement with government
• Offering new retailers training and support
• Active management of poor-performing retailers
• Development of a clear emerging market strategy
• Implementation of cost saving plans in SPAR Switzerland
• Focus on improving retail offering in SPAR Switzerland
• Active participation in industry bodies
• Development of a group funding strategy and model for new site development
• Implementation of a new incident management system
• Groundwork for inclusion of SPAR Ireland and SPAR Switzerland in the enterprise risk management framework
• Development of a group-wide data governance program

Supply Chain Management

Responsible Procurement

• Joint business planning with major suppliers targeting vertical coordination and mutually beneficial initiatives

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: IFRS, Companies Act, No. 71 of 2008, JSE Listings Requirements, BBBEE Codes of Good Practice, Framework, GRI Standards, CDP

Third-party Assurance: Deloitte & Touche (financial); AQRate (BBBEE); External verification for CDP data (2015/2016)

Sustainable Products & Innovation

• SPAR house brands

Awards & Recognition

• Top Employer in South Africa

Environmental Metrics

ESG Focus Areas

• Ethics
• Corporate Citizenship
• Risk Management
• Technology and Information Governance
• Compliance
• Remuneration
• Stakeholder Engagement
• Sustainability

Environmental Achievements

• Not disclosed

Social Achievements

• Launched an emerging farmer programme
• Improved BBBEE rating
• Adherence to the Universal Declaration of Human Rights and the International Labour Organisation’s Declaration on Fundamental Principles and Rights at Work
• Implementation of a Code of Ethics and Whistleblowing hotline

Governance Achievements

• Amended the company’s gender diversity policy to include a policy on race diversity
• Reviewed and approved the Group Fraud and Corruption Prevention Policy
• Annual self-evaluation process for the board and its committees
• Implementation of a delegation of authority framework

Climate Goals & Targets

Environmental Challenges

• Unique challenges for effective control in a voluntary trading model due to retailer independence
• Potential risks associated with IT systems
• Software quality risks
• Meeting demands placed on IT resources
• Food safety compliance for products sourced by retailers from smaller suppliers

Mitigation Strategies

• Retail operations team, in co-operation with the guilds, provides structures for risk mitigation and controls
• Internal and external assurance mechanisms, formal policies and frameworks
• Risk management is integral to the achievement of strategic objectives
• IT strategy supports business strategy and delivers value through cost and resource management, risk management and regulatory compliance
• Working with retailers and holding them accountable for appropriate controls, assisting small suppliers to improve and align with programmes such as GFSI, quarterly inspections of all stores

Supply Chain Management

Supplier Audits: Not disclosed

Responsible Procurement

• Supplier management and audits to ensure food safety compliance

Climate-Related Risks & Opportunities

Physical Risks

• Not disclosed

Transition Risks

• Not disclosed

Opportunities

• Not disclosed

Reporting Standards

Frameworks Used: Framework

Certifications: Null

Third-party Assurance: PwC, AQRate

UN Sustainable Development Goals

• Not disclosed

Not disclosed

Sustainable Products & Innovation

• Not disclosed

Awards & Recognition

• Not disclosed

Environmental Metrics

ESG Focus Areas

• Sustainability
• Transformation
• Nutrition
• Community Engagement
• Employee Wellbeing

Environmental Achievements

• Reduced municipal electricity usage at South Rand distribution centre from 8,512 MWh to 7,542 MWh through solar panels.
• 3,500 tonnes of used plastic diverted from landfills annually through 100% recycled plastic bags.
• Introduction of 100% recycled plastic carrier bags and brown paper carrier bags.

Social Achievements

• SPAR recognised as one of South Africa’s top employers for the sixth year.
• Millhouse Porridge initiative distributing fortified porridge to feeding schemes and orphanages.
• SPAR actioned its commitment to the youth employment services (YES) programme by recruiting 450 learners.
• Extensive design and refurbishment works completed at several EUROSPAR stores.
• SPAR was the first Swiss retailer to voluntarily commit to not selling energy drinks to children under 14.

Governance Achievements

• SPAR’s performance meets FTSE4Good index series standards.
• King IV Report on Corporate Governance™ for South Africa, 2016 (King IV) compliance.
• Decisive action taken against a retailer who brought the brand into disrepute due to labor practices and food safety issues.

Climate Goals & Targets

Environmental Challenges

• Tough market conditions in all regions of operation.
• Highly competitive South African food and grocery retail market.
• Weak building materials sector in South Africa.
• Aggressive marketing campaign in Switzerland not delivering desired results.
• Profitability at recently acquired S Buys under pressure.
• Slow conversion to Pharmacy at SPAR.
• Challenges in growing and transforming the SPAR footprint (availability of experienced black retailers and funding).
• Climate change.
• Political instability in SPAR markets.

Mitigation Strategies

• Focused margin management and tight cost and efficiency control.
• Continued store growth, rebranding, refurbishments, and innovative in-store concepts.
• Exploring growth in the informal food economy in South Africa.
• Ceasing the extent of price investment in Switzerland in the second half of the year.
• Focus on margins and managing costs while driving volumes at S Buys.
• Attracting and developing retailers from within the SPAR network, including identifying and training new entrants and exploring alternative funding mechanisms.
• Mitigation plans and costs determined in CDP carbon and water submission.
• Regular political insights from knowledgeable commentators to determine potential impact on future business.
• Developed plans for strategic stores and identified market share gaps.

Supply Chain Management

Responsible Procurement

• Mixed procurement approach (distribution centre and store level sourcing)
• Rural hub model supporting small-scale farmers
• Supplier Code emphasizing SPAR’s values

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: IFRS, Companies Act, No. 71 of 2008, JSE Listings Requirements, King IV Report on Corporate Governance™, BBBEE Codes of Good Practice, IIRC Integrated Reporting Framework, GRI Sustainability Reporting Standards, CDP

Third-party Assurance: PricewaterhouseCoopers Inc. (financial statements), mPowerRatings (BBBEE), external verification (CDP Scope 1 and 2 data)

Sustainable Products & Innovation

• 100% recycled plastic bags
• Brown paper bags

Awards & Recognition

• SPAR Switzerland received the 2019 Lean & Green Award from GS1

Environmental Metrics

ESG Focus Areas

• Environment
• Social
• Governance
• Health
• Community
• Sourcing
• Supply chain

Environmental Achievements

• Reduced Scope 1 and 2 emissions by 1.1% compared to 2020.
• Transitioned all distribution centers (excluding Build it) to renewable energy.
• Reduced electricity consumption by 8.6% due to solar PV installations and LED lighting.
• Introduced a 100% recycled plastic carrier bag, diverting 4,000 tonnes of plastic from landfills annually.
• Achieved a 40% reduction in emissions associated with the production of the recycled plastic bag.

Social Achievements

• Launched SPAR Supervisor Premier League, an online development program for supervisors.
• Expanded online learning platforms to keep employees engaged.
• Continued to drive e-learning at retail, including COVID-19 safety protocols and POPIA compliance training.
• Supported the development of small-scale rural farmers, winning the ABSA Business Day Supplier Development Awards in 2020 and 2021.
• Created 144 direct jobs and 47 secondary jobs through the SPAR rural hub initiative.
• Provided extra support to FoodCloud during the COVID-19 pandemic.
• Donated 24,650 kgs of food, equivalent to 58,690 meals, through FoodCloud.

Governance Achievements

• Embarked on a climate scenario analysis process in line with TCFD recommendations.
• Implemented a carbon pricing methodology to facilitate GHG emissions reduction targets and protect against carbon tax risks.
• Achieved a level 7 B-BBEE contributor status.

Climate Goals & Targets

Environmental Challenges

• Food waste in operations and supply chains.
• Climate change impacts on suppliers, including weather-related events and carbon tax.
• Increased costs related to refrigeration equipment and fuel consumption.
• Increasing demand for product labeling on environmental impact.
• Water scarcity in certain regions.
• Low water pressure affecting refrigeration operations.
• Youth unemployment and skills crisis in South Africa.
• Global concern over over-exploitation of seafood resources.

Mitigation Strategies

• Implementing food waste reduction strategies, including internal policies, stakeholder collaboration, and food donation programs.
• Investing in energy efficiency and renewable energy initiatives (solar PV installations, LED lighting, battery-electric truck refrigeration system).
• Engaging with suppliers to promote sustainable farming methods and resource efficiency.
• Developing a climate change strategic roadmap to address climate risks and opportunities.
• Installing water efficiency technologies (adiabatic cooling systems, water collection measures, boreholes, water recycling systems).
• Implementing innovative solutions to address low water pressure.
• Launching FutureMe and JumpStart programs to address youth unemployment and skills shortage.
• Procuring certified coffee and seafood to support sustainable practices and responsible sourcing.

Supply Chain Management

Supplier Audits: Not disclosed

Responsible Procurement

• Ethical trading policy
• Food safety agreements
• Sustainable sourcing of forest-based products (FSC certified)
• Sustainable sourcing of seafood (WWF-SASSI guidelines)

Climate-Related Risks & Opportunities

Physical Risks

• Weather-related events impacting suppliers
• Increased costs related to refrigeration and fuel consumption

Transition Risks

• Carbon tax
• Increasing demand for product labeling on environmental impact

Opportunities

• Development of energy-efficient products
• Investing in renewable energy

Reporting Standards

Frameworks Used: Greenhouse Gas Protocol, TCFD

Certifications: GLOBALG.A.P, FSC, Lean & Green

Third-party Assurance: Independent verification of Scope 1 and 2 emissions

UN Sustainable Development Goals

• SDG 7
• SDG 8
• SDG 9
• SDG 10
• SDG 12
• SDG 13

The report aligns its sustainability initiatives with several UN Sustainable Development Goals (SDGs) and South Africa's National Development Plan (NDP).

Sustainable Products & Innovation

• 100% recycled plastic bags
• Milk cartons made from 87% renewable resources

Awards & Recognition

• ABSA Business Day Supplier Development Awards (2020, 2021)
• Gold Pack Awards (2020)
• Lean & Green Award (2019)

Environmental Metrics

ESG Focus Areas

• Reputation
• Distribution and logistics
• Expansion
• Exiting Polish market and building resilience in Switzerland
• Relationship with independent retailers
• Consumer trends (nutrition, healthy living, sustainability)
• Diversity, transformation and inclusion

Environmental Achievements

• 8 612 MWh of energy generated by distribution centres in South Africa
• 17 387 tonnes of cardboard and plastic recycled through distribution centres in South Africa
• Build it procured wood is 100% Forest Stewardship Council certified

Social Achievements

• Level 5 B-BBEE in South Africa
• Ongoing Gender-based Violence campaign
• R23.0 million CSI spend in South Africa
• Empowerment of small suppliers through the SPAR supplier development programme
• 484 learners participated across SPAR and Build it stores in the YES programme

Governance Achievements

• Improved governance, new leadership and new competencies
• Significant changes at Board and executive level to restore faith in its governance
• Appointment of a new marketing executive and PR manager
• Resolution of disputes with retailers
• Addressing of three reportable irregularities

Climate Goals & Targets

Environmental Challenges

• Reputational damage caused by media allegations
• Leadership changes
• High cost of living
• Electricity loadshedding and inflationary cost pressures
• SAP implementation challenges
• High levels of Group debt and rising interest costs
• Poor performance in Poland and Switzerland
• Consumer price sensitivity and competition in on-demand shopping
• Extreme weather events
• Geopolitical challenges

Mitigation Strategies

• Significant changes at Board and executive level
• Appointment of a new marketing executive and PR agency
• Development of quality private label products
• Access to funding for investment in solar energy
• Addressing of SAP implementation issues
• Debt restructuring
• Decision to sell interests in Poland
• Focus on convenience and fresh products in Switzerland
• Rollout of SPAR2U on-demand shopping solution
• Development of a new omnichannel strategy
• New loyalty strategy
• Targeted turnover growth and cost management initiatives
• Greater focus on capital allocation policy
• Increased focus on credit management

Supply Chain Management

Responsible Procurement

• Sourcing from local suppliers
• Incorporating sustainability practices

Climate-Related Risks & Opportunities

Physical Risks

• Severe flooding in KZN
• Water shortages in the Eastern Cape

Transition Risks

• Regulatory changes
• Market shifts

Reporting Standards

Frameworks Used: Framework, IFRS, Companies Act, JSE Limited Listings Requirements, King IV, B-BBEE Codes, CDP, TCFD, UN SDGs

Certifications: Level 5 B-BBEE

Third-party Assurance: mPowerRatings (B-BBEE), External verification of Scope 1 and 2 data submitted to CDP

Sustainable Products & Innovation

• SPAR private label products

Awards & Recognition

• Level 5 B-BBEE

Environmental Metrics

ESG Focus Areas

• Gender-Based Violence (GBV)
• Supplier Development
• Food Safety
• Water Risk Management
• Circular Economy
• Decarbonisation
• Transformation
• Sustainability

Environmental Achievements

• Scope 1 and 2 GHG emissions reduced by 99% from 2017 baseline
• 21,432 tons of cardboard and plastic recycled through South African distribution centres
• 19,786,022 kWh solar energy generated
• Adopted solar energy across all distribution centres
• Pioneered the use of biodiesel across our Southern African fleet
• Implemented a packaging policy and achieved Extended Producer Responsibility compliance across all business units
• Using 100% recycled plastic for bags and transitioning to white plastic caps on milk bottles for easier recycling

Social Achievements

• R8.5 million invested in our commitment to ending Gender-Based Violence
• 80 small-scale suppliers completed our small-scale supplier food safety programme
• Food safety training for 28,869 suppliers, distribution centre employees and retailers
• SPAR supports South Africa’s Operation Hunger initiative to combat malnutrition in rural communities
• 31 future leaders enrolled in our BWG Next Generation Entrepreneurs Programme in Ireland
• Collaborating with Leafline to promote reusable sanitary pads, while continuing the distribution of our Petals private label sanitary pads

Governance Achievements

• Significant progress made in governance, diversity and transformation
• New Group CEO, Group COO appointed
• Board is now more diverse and skilled
• Whistleblowing policies were revised to align with legal requirements and best practice
• The talent acquisition policy was updated, specifically addressing the process for executive director appointments
• Fair wage policy adopted

Climate Goals & Targets

Environmental Challenges

• Operational difficulties and strategic transitions
• Tough operating environment
• SAP implementation issues in KwaZulu-Natal
• Loadshedding in South Africa
• High fuel, labour and energy costs
• Persistent inflation
• Increased competition
• Decreased consumer spending power
• Challenges with SAP implementation
• Decreased retailer loyalty
• Decline in independent retailer profitability
• Cybersecurity threats
• Reputational damage from earlier media allegations
• Increased living costs, service level disruptions, unemployment

Mitigation Strategies

• Tough decisions and changes taken to position the business for future success
• Refining operating model, enhancing retailer loyalty and exploring new opportunities
• Addressing underlying issues, positioning us to return to normalcy
• Implementing cost control measures and enhancing operational efficiencies
• Enhancing service offerings in rural and township markets
• Exploring alternative energy solutions and optimising productivity
• Strengthening governance processes
• Resolving system problems
• Focusing on stabilising operations and improving overall efficiency
• Exiting Poland to reallocate capital
• Optimising balance sheet
• Investing in better internal control systems and processes
• Improving control environment, especially within procurement and supplier onboarding processes
• Introducing more stringent controls for long-term stability and improvement
• Investing in automation and emerging technologies like artificial intelligence (AI)
• Collaborating with suppliers on sustainability practices

Supply Chain Management

Supplier Audits: Not disclosed

Responsible Procurement

• Support for enterprise and community suppliers
• SPAR Supplier Development Programme
• Transition to cage-free eggs

Climate-Related Risks & Opportunities

Physical Risks

• Flooding in KwaZulu-Natal
• Water shortages

Transition Risks

• Regulatory changes
• Market shifts

Opportunities

• Development of energy-efficient products
• Alternative energy solutions

Reporting Standards

Frameworks Used: International Integrated Reporting Framework (2021), IFRS, King IV, TCFD, UN Sustainable Development Goals

Certifications: Null

Third-party Assurance: mPowerRatings (B-BBEE); External verification for Scope 1 and 2 data submitted to CDP

UN Sustainable Development Goals

• Not disclosed

Not disclosed

Sustainable Products & Innovation

• SPAR2U e-commerce solution
• Private label products
• Petals private label sanitary pads
• Cage-free eggs (future)

Awards & Recognition

• Ranked as the top grocery retail brand in South Africa
• TOPS at SPAR rated South Africa’s favourite liquor store
• Operational excellence in warehousing
• Overall Logistics and Transport Excellence Award
• The third most loved brand in Sri Lanka
• GLOBALG.A.P. “Changemaker of the Year” award for SPAR Mopani Rural Hub