Natural Capital

Massmart defines natural capital as our commitment to collectively reduce our environmental footprint and to enable sustainable supply chain and consumerism.
Waste management:
24,000
additional tons of waste diverted from landfill

 

Water conservation:
7,750kl
harvested across 75 sites
Operational cost avoidance:
R52 million
delivered by energy saving initiatives

 

JSE Socially Responsible Investment Index
In 2014, Massmart achieved ‘best practice’ status in the area of environmental performance and climate change

 

Recycling:
74%
74% of all Massmart stores recycling and separating waste
Energy efficiency:
First new generation Builders Warehouse launched with LED sales floor lighting

Our environmental initiatives are driven by an understanding that advocating more sustainable practices and product choices is fundamental to our commitment to enable sustainable supply and consumerism. In this context we recognise that minimising our own environmental footprint is the nucleus around which we develop credibility for our advocacy with our suppliers and customers.

 

Minimising Massmart’s environmental footprint

Our priorities are energy efficiency, waste management and minimisation and water conservation. Massmart’s corporate accountability initiatives are identified and prioritised on the basis of stakeholder feedback and with reference to set assessment criteria. Prioritisation is based on our assessment of key areas as indicated in the table below:

 

Priority Area Assessment criteria
    Is there a legislative /regulatory driver for this initiative? Is there direct commercial benefit associated with this initiative? Does this initiative have resonance with Government and civil society driven social discourse? What is the relevance of this initiative for Walmart’s Global sustainability commitments? Does this initiative present for Massmart-Walmart’s reputation in Africa? What practical influence is Massmart able to exert over this issue?
1 Energy Efficiency  National Energy Act 2008 Increasing energy costs along with energy insecurity have a direct impact on Massmart’s operating costs Energy insecurity and carbon emissions resulting from electricity generation have lead stakeholders to call reductions in energy usage Walmart has made Global commitments to both energy efficiency and the use of renewable energy in their facilities Demonstrates that Massmart is mindful of the energy challenges faced by much of Africa and the need to manage these resources efficiently Through investment in energy efficiency technologies and advocacy to suppliers
2 Waste Minimisation  The National Environmental Waste Management Act The separation and recycling of commoditised waste has the potential to offset waste management costs Government mandates Extended producer responsibility initiatives place burden on industries to manage their waste. One of Walmart’s top three sustainability focus areas Assists in Establishing Massmart’s accountability credentials Dedicated resources provided to identify opportunities to optimise waste separation and recycling at Massmart facilities
3 Water Conservation  National Water Act, 1998 Although not intensive water users optimize our water efficiency, assists us to reduce overall operating costs. Constrained water resources and stressed infrastructure have heightened public awareness regarding the need to conserve water Broadly aligned to Walmart’s environmental sustainability focus Water conservation is a key focus area for a number of countries in Sub-Saharan Africa. Installation of water harvesting technologies at standalone stores to minimise water use intensity

Risks are identified in the context of Massmart’s operations

 

Energy efficiency

By December 2020 we will reduce the per square meter energy intensity of our stores by 10% (as compared with our 2010 baseline stores). We will achieve this by implementing a range of energy efficiency interventions aimed at maximising energy savings.
In 2014 we opened our first new generation Builders Warehouse store that makes use of 100% LED sales floor lighting, daylight harvesting and evaporative cooling. Introduced Building Management Systems, that leverage the ASDA Energy Bureau, to remotely monitor and manage energy consumption across 12 Cambridge stores. Completed the rollout of independent electricity meters across all Masscash stores.
Massmart’s energy intensity is currently 18.6% below the Group’s modelled Business As Usual (BAU) consumption. These energy saving initiatives have resulted in an estimated operational cost avoidance of R52 million in 2014.
While we are encouraged by the progress achieved in improving energy efficiencies, so far we have been unsuccessful in achieving our goal to pilot test a commercially viable proof of concept Photo-voltaic (PV) pilot at one of our standalone stores. Despite this, we remain optimistic about the opportunities presented by renewable technologies and will continue working towards identifying potential solutions. Our initial analysis indicates that PV projects, based on a power purchase model, hold considerable promise. Identifying grid-tied solutions, which operate on a power-purchase model, will therefore be our key focus for the future.

Water efficiency

In 2013 we communicated our intention to more accurately quantify our Group operational water consumption. As a result, in 2014 we re-focussed our water consumption tracking to cover kilolitres consumed rather than rand cost of water consumed. We also improved tracking of actual consumption by expanding the installation of independent water check meters to include selected Makro, Builders Warehouse and Cambridge stores. Based on this more accurate data, Builders Warehouse and Makro were confirmed as the highest water users within the Group. This reinforces our prior decision to prioritise water-saving initiatives including rainwater harvesting and condensate capture within these two formats. Our water harvesting initiatives in these two formats now cover 75 sites, which we estimate have combined, helped us to save 7,750kl of water.

Operational waste recycling

In 2013 we confirmed our commitment to minimising the volume of operational waste we send to landfill. Our priority remains the separation and recycling of board, plastic and paper produced at our stores and Distribution Centres
The results of our most recent waste assessment survey indicate that 74% of all Massmart stores are actively separating and recycling their waste. This corresponds to a 15% increase in the number of sites that recycle and approximately an additional 24 000 tonnes of waste diverted from landfill.
2014 highlights include: a 16% increase in the number of Builders Warehouse stores that recycle, and an estimated 70% of Makro’s waste diverted from landfill.

However, accurately calculating the volume of waste generated by our operations remains a challenge. In 2014 we embarked on a waste diversion validation process together with Walmart to improve the accuracy of our waste data reporting. The process which, was lead by Walmart consultants UL Environment, found no evidence to indicate that the diversion rates reported by Massmart are materially inaccurate.
We also conducted our first due diligence review of third party waste service providers to ensure that they were suitably qualified to responsible manage and dispose of the waste produced by our stores. One unanticipated consequence of this review was that we identified opportunity to improve efficiencies and service effectiveness by rationalising the number of waste service providers contracted to the group. This will be a key focus in 2015.

Enabling sustainable supply and consumerism

Offering our customers products that have been responsibly sourced and manufactured is fundamental to enabling sustainable supply and consumerism. However, we recognise that to achieve this, we must screen potentially high risk products, such as seafood and timber, and proactively advocate more sustainable practices to members of our supply chain.

Supply Chain Risk table

We promote sustainable and responsible environmental practices through supplier advocacy and risk management strategies. Our engagement with suppliers has enabled us to identify and address the following supply-chain risks:

Priority Area Assessment criteria
    Is there a legislative /regulatory driver for this initiative? Is there direct commercial benefit associated with this initiative? Does this initiative have resonance with Government and civil society driven social discourse? What is the relevance of this initiative for Walmart’s Global sustainability commitments? Does this initiative present for Massmart-Walmart’s reputation in Africa? What practical influence is Massmart able to exert over this issue?
1 Seafood Sourcing Marine Living Resources act Failure to provide customers with sustainably sourced seafood products may lead customers shop elsewhere. Sustainable seafood sourcing is a focus area for a number of environmental NGOs and activism groups Sustainable seafood sourcing is one of Walmart’s sustainability focus areas Relevant in the context of artisanal fisheries and natural resource management challenges faced in many African countries. Through product screening, buyer engagement and supplier site visits and advocacy.
2 Timber Sourcing National Forest Act Reputational impact of sourcing high risk timber products may affect sales and investor confidence Deforestation and illegal and unregulated timber harvesting has high resonance with civil society and environmental NGO’s Aligns with Walmart’s commitment to source products that sustain people and the environment Combating deforestation represents an environmental priority in Africa. Annual product screening and direct engagement with local suppliers of hardwoods and timber fibre suppliers
3 Environmental Supply chain monitoring N/A Although indirect, provides a basis for identify product innovation opportunities Growing perspective that retailers need to engage suppliers regarding sustainable practices Walmart’s participation in the Sustainability Consortium N/A Ongoing engagement through advocacy surveys and the recognition of top performing suppliers through the environmental supplier awards
4 Palm Oil N/A Potential reputational damage caused as a result of sourcing palm oil from unsustainable sources Significant international attention levelled at deforestation caused as a result of palm crop expansion Walmart have committed to source 100% sustainable palm oil by 2015 Palm plantation expansion in Africa have raised concerns regarding deforestation and local community livelihoods. Tracking private label palm oil usage and supporting sustainable palm oil production through the procurement of RSPO GreenPalm certificates
5 Packaging Rationalisation N/A Cost saving opportunities presented through packaging rationalisation and transport efficiency savings Government have listed packaging as a priority waste stream and called for the development of an industry waste management plan (IWMP) Walmart have achieved considerable success in reducing product packaging and end product cost through a variety of packaging rationalisation initiatives Indirectly reduces waste burden in the African countries in which we operate Through packaging rationalisation workshops and the development of a packaging evaluation scorecard.

 

 

Rationalising primary packaging

We recognise that many consumers are concerned with over-packaging of products sold by retailers. With this in mind Massmart initiated in 2012 a review of our private label packaging. Initially, our efforts centered around exposing our buyers, through packaging rationalisation workshops, to packaging approaches that emphasised recyclability, resource efficiency, and product waste minimising. A key outcome of these workshops was the development of a Group packaging evaluation scorecard, which enabled us to more critically appraise our private label packaging and pinpoint the area’s most in need of improvement.
In 2014, subsequent to the completion of a Group-wide private label packaging rationalisation audit, we were pleased to see a marked improvement in the quality, recyclability and suitability of the Group’s private label packaging. Specifically we have noted that our buyers are more adept at specifying environmentally intelligent packaging options. Whilst we recognise that there is still considerable room for improvement we are pleased with progress to date which includes: the introduction of doypacks to the M brand snack range; the rationalisation of the Builders Pride nut and bolt range; and through the inclusion of child-safe closures across the entire Builders pride solvents range, which on their own will impact one million packs supplied to customers in 2015. Further progress was made when we, in collaboration with our peers in the retail sector, launched a more customer-centric packaging recycling logo. The new on pack recycling logo, which has been launched on our Builders Warehouse Private Label packaging, is intended to simplify the separation and recycling process for consumers and in so doing, reduce recyclable materials finding their way to landfill.

Local supplier advocacy

Massmart proactively promotes responsible environmental practices within our supply chain. Since the launch of Massmart’s supplier advocacy process in 2009 we have engaged and benchmarked the environmental practices of over a 1,000 suppliers through focused environmental advocacy surveys. We are intent on playing a hands-on role in encouraging more sustainable supply chain practices, to this end we expand the survey process to include site visits to verify survey responses and better understand our suppliers’ environmental performance. Our current advocacy process includes a generic environmental survey that is supplemented with focused seafood, timber and palm oil advocacy surveys. In the area of seafood alone, we have conducted environmentally orientated site visits with suppliers who comprise over 61% of our annual seafood procurement.
Environmental advocacy supply chain survey findings

  • 20% of respondents launched products that appeal to environmentally aware consumers
  • 31.8% of respondents utilise energy saving practices and technologies to improve operational energy efficiency
  • 31% of respondents implement in-house waste reduction processes

On the basis of our engagement with suppliers over the last four years, we were pleased that we were in a position to host Massmart’s first Environmental Supplier Awards ceremony to recognise top performing suppliers who have demonstrated an industry-leading commitment to sustainable supply chain management. Our finalists, representing multiple local industries, were selected based on survey feedback, input from leading environmental NGOs and site inspections by a three person Massmart environmental team. Altogether 9 finalists were identified resulting in our awarding Mondi the accolade of Massmart Supplier of the year. Looking forward to 2015, our goal is to intensify our supplier site visit programme and increase our efforts to educate and promote sustainable fishery management practices amongst our smaller seafood suppliers.

JSE Socially Responsible Investment Index
Massmart qualified for inclusion in the JSE Socially Responsible Investment Index (Equivalent of FTSE4good). We are proud to have been members of the Index since its inception. This year we achieved ‘Best Practise’ status in the area of environmental performance and climate change, within the medium impact category. Massmart met 64 of the 65 indicators that measure environmental governance and sustainability practices.

 

Helping consumers to recycle e-waste

Rapidly rising volumes of electronic (e-waste) presents a growing environmental concern both globally and locally. E-waste, made up of electronic consumer items, is now one of the fastest growing waste streams worldwide. It contains potentially hazardous and polluting substances which need to be disposed of carefully to avoid disrupting soil ecology, micro-organisms and polluting ground water supplies.
In 2008, Makro launched its first e-waste recycling project with Fujitsu-Siemens and electronic recycling specialists DESCO. Initially piloted at Makro’s Woodmead store, it was rolled out to ten Makro stores in South Africa. In 2013 Makro and DESCO, together with new partners Samsung Electronics expanded the e-waste project to 18 Makro stores across the country. It is now South Africa’s largest retail-led e-waste collection programme, Makro-Samsung e-Waste programme is available across 18 Makro stores. So far an excess of 596 tons of e-waste has been processed. However, despite increasing bin numbers, in late 2014 we noticed a reduction in e-waste collection figures. We are investigating the cause and will work with Samsung to generate greater consumer participation in this project.

Eco-label advocacy

In line with our commitment in 2014 to increase the penetration of energy rating labels on major appliances sold in our stores, we have, through engagement with the Department of Energy (DOE) and our suppliers, formalised a group wide approach to energy efficient appliance labelling. Key to this is an undertaking to enforce a discipline that requires major appliance manufacturers to apply energy efficiency ratings labels on their products in accordance with the standards set out by the DOE.
Recognising that we have made indifferent progress toward implementing this undertaking, we have prioritised it as a key focus in 2015. Through our Sustainable Timber Sourcing survey and one-on-one engagement with suppliers, we have learned that 68% of the suppliers we surveyed in 2014, offer Forest Stewardship Council (FSC) certified timber products. However, these suppliers have indicated that there continues to be a lack of consumer understanding of FSC labelled products. To address this, our objective in 2015 is to engage more closely with the FSC to develop proactive marketing strategies that will increase consumer awareness of the label.