Climate Change Data

Environmental Metrics

ESG Focus Areas

• Environmental protection
• Social responsibility
• Employee focus
• Product mix policy
• Human rights
• Corporate governance

Environmental Achievements

• Quelle switched from gas to district heating in Nuremberg, reducing CO2 emissions by 2,000 metric tons annually.
• Neckermann reinsulated its Frankfurt service center, significantly reducing energy consumption.
• Karstadt Warenhaus switched to reusable clothes hangers in 1998.
• Karstadt Warenhaus added copier and printer paper made from recycled materials to its office supplies range in January 2003.
• Quelle Slovakia gained ISO 14001 accreditation and EMAS registration.

Social Achievements

• KarstadtQuelle approved a code of conduct for purchasing in October 2000, based on ILO conventions.
• Karstadt Warenhaus set up a Germany-wide transfer company to facilitate socially responsible staff reduction.
• Karstadt Warenhaus granted equal legal status to registered same-sex life partnerships in employment and career matters.
• Quelle supported the “Alliance for Children – against violence” foundation.
• Karstadt branches hosted a week-long organic foods promotion, expanding their organic product range to around 700 items.

Governance Achievements

• KarstadtQuelle appointed a corporate governance manager in August 2002.
• The Management Board approved the corporate Sustainability Guidelines in December 2003.

Climate Goals & Targets

Environmental Challenges

• Difficult financial year for German retailers due to economic problems and consumer reluctance to spend.
• Pressure to improve working conditions in supplier countries.
• Criticism from stakeholders (e.g., Greenpeace demonstrations).
• Managing risks associated with international purchasing activities.

Mitigation Strategies

• Restructuring into a retail and service company.
• Risk management system covering all Group activities.
• Active role in seeking voluntary undertakings and cooperative solutions for the sector.
• Support for the “Ensuring Social Standards” initiative.
• Intensive discussions with stakeholders (e.g., Clean Clothes Campaign).

Supply Chain Management

Supplier Audits: Not disclosed

Responsible Procurement

• Code of conduct for purchasing.
• Joint quality guidelines for textiles.
• Requirements for environmentally friendly packaging.

Climate-Related Risks & Opportunities

Physical Risks

• Not disclosed

Transition Risks

• Not disclosed

Opportunities

• Offering more energy-efficient products.

Reporting Standards

Frameworks Used: GRI, Rating agencies specializing in sustainability

Certifications: ISO 14001 (Quelle Slovakia), EMAS (Quelle Slovakia)

Third-party Assurance: Not disclosed

UN Sustainable Development Goals

• Not disclosed

Not disclosed

Sustainable Products & Innovation

• Energy-efficient appliances
• Solar products
• Organic foods
• Fair trade products
• Environmentally friendly stationery products

Awards & Recognition

• B.A.U.M. e.V. environmental award (Karstadt, Quelle, Neckermann)
• BDI environmental prize (Karstadt Warenhaus)
• ASU commendations for environmentally aware corporate management (Karstadt Warenhaus, Neckermann)
• Bavarian Quality Award (Quelle)

Environmental Metrics

ESG Focus Areas

• Social Standards in Supply Chain
• Environmental Management
• Corporate Social Responsibility

Environmental Achievements

• Published first sustainability report, ranked 25th globally and 2nd in Germany among retail companies.

Social Achievements

• Implemented "Sozialstandards sichern" initiative, training suppliers in 11 countries and auditing hundreds globally.
• Established "Round Tables" in supplier countries to improve social standards.
• Achieved a workforce with approximately 70% female employees (consistent over several years).

Governance Achievements

• Updated Corporate Governance Code compliance statement.
• Implemented a risk management system with improved internal controls and reporting.
• Successfully completed a capital increase.

Climate Goals & Targets

Environmental Challenges

• Weak domestic demand and high unemployment in Germany.
• Suboptimal allocation of financial resources and lack of focus on core business.
• Negative publicity and public discussion about the company's future.
• High Restructuring costs

Mitigation Strategies

• Implemented the "KarstadtQuelle Neu" restructuring and realignment program.
• Reached an agreement with employees on cost savings of €760 million from 2005 to 2007.
• Restructured financing through a capital increase, convertible bond, and long-term syndicated loan.
• Implemented a portfolio streamlining program.
• Refocused on core retail business, divesting non-core assets.

Supply Chain Management

Supplier Audits: Several hundred suppliers audited globally.

Responsible Procurement

• Behavioral code of conduct.
• Implementation of "Sozialstandards sichern" initiative.

Climate-Related Risks & Opportunities

Sustainable Products & Innovation

• Promotion of sustainable products in department stores (e.g., organic week, TransFair week).

Awards & Recognition

• Awards for sustainability report.

Environmental Metrics

ESG Focus Areas

• Environmental
• Social
• Governance

Environmental Achievements

• Increased the share of energy-efficient appliances in the assortment.
• Increased the share of textiles with the "Öko-Tex Standard 100" label.
• Reduced logistics costs by three million euros through process optimization.
• Recycled paper and cardboard at 100%.

Social Achievements

• Launched employee well-being program.
• Implemented a training program on social standards for buyers.
• Maintained a high employment rate for disabled people.
• Donated 35,000 US dollars for humanitarian aid after a factory collapse in Bangladesh.

Governance Achievements

• Implemented a comprehensive risk management system.
• Complied with the German Corporate Governance Code.
• Consistently included sustainability aspects in procurement policy.

Climate Goals & Targets

Environmental Challenges

• Company restructuring and resulting challenges in maintaining sustainability initiatives.
• Supply chain disruptions and social/environmental issues in supplier countries.
• Maintaining customer interest in sustainability initiatives during times of economic stability.

Mitigation Strategies

• Continued sustainability activities at a high level despite restructuring.
• Participation in the Business Social Compliance Initiative (BSCI) for supplier audits and training.
• Intensified dialogue with employees and stakeholders.
• Implemented measures to improve the quality of customer service.

Supply Chain Management

Supplier Audits: Audits conducted through BSCI.

Responsible Procurement

• Code of Conduct for procurement
• Social standards audits
• Eco-Tex Standard 100 certification

Climate-Related Risks & Opportunities

Physical Risks

• Not disclosed

Transition Risks

• Not disclosed

Opportunities

• Development of energy-efficient products

Reporting Standards

Frameworks Used: GRI

Certifications: DIN EN ISO 9001:2000, DIN EN ISO/IEC 17025:2000

Third-party Assurance: Not disclosed

UN Sustainable Development Goals

• Not disclosed

Not disclosed

Sustainable Products & Innovation

• Energy-efficient appliances
• Textiles with Öko-Tex Standard 100 label
• FSC-certified furniture

Awards & Recognition

• Top 50 in Sustainability Ltd. benchmark study
• Second place in future e.V. and IÖW ranking of sustainability reports

Environmental Metrics

ESG Focus Areas

• Environmental Protection
• Social Responsibility
• Governance

Environmental Achievements

• Reduced internal CO2 emissions by more than 30 percent at Quelle in the past four years.
• Reduced fuel consumption by 20 percent through the introduction of a sustainable fleet park management system.
• 94 percent of Quelle's electrical devices offered in 2007 were classified A, A+, and A++ energy efficiency grades.
• Reduced CO2 emissions through combining deliveries and transferring shipments to rail and inland ships at Karstadt.

Social Achievements

• Created more than 1,000 new training positions in 2006.
• Founded the Arcandor Academy in 2006.
• Settled a long-standing legal dispute with the Jewish Claims Conference in 2007.
• Improved customer satisfaction consistently over the years (e.g., 95% of UK customers would travel with Thomas Cook again in 2007).

Governance Achievements

• Restructured sustainability organization and updated sustainability strategy in 2007.
• Implemented a new organizational structure for group-wide sustainability management in July 2008.
• Brought Arcandor’s Code of Practice on Sustainability Management into effect in July 2008.
• Created a nomination committee in December 2007.

Climate Goals & Targets

Environmental Challenges

• Data limitations due to the restructuring of the Group.
• Difficulties in implementing Corrective Action Plans (CAPs) with suppliers.
• Challenges in introducing environmental management systems throughout the Primondo Group due to restructuring.
• Difficulties in achieving consistent EMAS or ISO 14001 certifications for environmental management systems at Quelle due to cost-benefit considerations.

Mitigation Strategies

• Further complementary themes relating to sustainability are addressed on the Arcandor AG corporate website.
• Holding special workshops, individual discussions, and training courses with suppliers.
• Developing ideas and solutions together with suppliers.
• Planning to establish sustainability management throughout Primondo by the beginning of 2009.

Supply Chain Management

Supplier Audits: 52% of products from risk procurement markets from socially-audited factories in 2007

Responsible Procurement

• Arcandor’s procurement guidelines (Code of Conduct, CoC)
• BSCI (Business Social Compliance Initiative)

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: GRI G3 guidelines

Sustainable Products & Innovation

• Energy-efficient electrical devices
• Textiles meeting the Oeko-Tex Standard 100
• Collections featuring organic cotton

Awards & Recognition

• Fourth place in the Institut für ökologische Wirtschaftsforschung (IÖW) and future e. V. ranking of sustainability reports in 2007
• Listing in the FTSE4Good (FTSE4Good Europe Index and FTSE4Good Global Index)
• Listing in the Ethibel Sustainability Index

Environmental Metrics

ESG Focus Areas

• Sustainability
• Employee Relations
• Supply Chain Responsibility
• Climate Change
• Environmental Management

Environmental Achievements

• Reduced CO2 emissions by 17,776 tons compared to the previous year.

Social Achievements

• Signed the "Charta der Vielfalt" (Charter of Diversity) in June 2008.
• Concluded a "Zukunftspakt" (Future Pact) with employees in October 2008 to secure the company's future, involving a percentage salary reduction for three years.
• Karstadt's "Energy Efficiency in Households" campaign was awarded by the German UNESCO.

Governance Achievements

• Published the first group-wide sustainability report in October 2008, aligned with GRI guidelines and UN Global Compact principles.
• Implemented a new organizational structure for group-wide sustainability management in July 2008.

Climate Goals & Targets

Environmental Challenges

• Restructuring and realignment of the group.
• Negative economic environment, including the real estate and financial crisis, rising prices for food, raw materials, and energy, and the appreciation of the euro.
• Decreased private consumption.
• Increased competition and emergence of alternative business models.
• Risks associated with the merger of Thomas Cook and MyTravel.
• Risks related to the restructuring of Karstadt and Primondo.
• Financial risks, including fluctuations in interest and currency markets, price changes, and the availability of credit lines.
• Risks associated with suppliers due to the banking and financial market crisis.
• Risks from the potential suspension of factoring and ABS programs.
• Risks from the insolvency of former Arcandor group companies (Hertie, SinnLeffers, Wehmeyer).
• Compliance risks, including tax audits and legal proceedings.

Mitigation Strategies

• Sale of the NeBus Group, Mode & Preis Group, and 51% of the shares in Neckermann.de (Primondo).
• Realignment of Karstadt department stores, including new openings.
• Various acquisitions in the Thomas Cook segment.
• Implementation of a comprehensive efficiency program at Karstadt.
• Implementation of a group-wide risk management system and the R2C risk management IT system.
• Securing of currency risk through foreign exchange forward transactions.
• Hedging of fuel requirements for the flight schedule.
• Active management of credit lines and intensive contact with creditors.
• Regular monitoring of the business development, consistent assortment analysis and planning, and supplier selection.
• Diversification into new business types, flexible use of sales promotions, and realignment and expansion of business areas.
• Internationalization through M&A activities.
• Implementation of a liquidity planning and monitoring system.
• Consistent adherence to payment terms with suppliers.
• Cooperation with Li & Fung Ltd. for procurement.
• Implementation of a measures controlling system to monitor the working capital effect.
• Formation of provisions for risks from insolvencies and tax audits.
• Implementation of comprehensive measures and backup systems to protect against data loss or IT system failure.

Supply Chain Management

Supplier Audits: 52% of import volume from risk countries were audited in the last year.

Responsible Procurement

• Arcandor procurement guidelines/Code of Conduct (CoC) are a fixed part of contracts with suppliers.
• Participation in the Business Social Compliance Initiative (BSCI) since 2004.

Climate-Related Risks & Opportunities

Physical Risks

• Not disclosed

Transition Risks

• Not disclosed

Opportunities

• Not disclosed

Reporting Standards

Frameworks Used: GRI, UN Global Compact

Certifications: Null

Third-party Assurance: BDO Deutsche Warentreuhand Aktiengesellschaft Wirtschaftsprüfungsgesellschaft

UN Sustainable Development Goals

• Not disclosed

Not disclosed

Sustainable Products & Innovation

• Numerous products with the Blue Angel environmental label and the Forest Stewardship Council (FSC) seal in Quelle's furniture assortment.
• Home textiles made from organically grown cotton in the Spring/Summer 2008 catalog.

Awards & Recognition

• German UNESCO award for Karstadt's "Energy Efficiency in Households" campaign