Integrated annual report
for 52 weeks ended 27 December 2015
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Natural capital

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. We recognise that minimising our own environmental footprint builds credibility for advocacy with our suppliers and customers.
In 2015…
What we did well:
Helped customers avoid approximately 50,000 tCO2e of emissions through the sale of energy efficient and alternative energy products.

Conserved an estimated 17 million litres of water through rainwater and condensate harvesting programmes at participating stores.
Identified three potential solar Photo-Voltaic pilots that will generate an estimated 2.4 million kWh of electricity a year.

Assisted our customers to recycle and responsibly dispose of 143 tons of post-consumer e-waste.

 

 

 

MASSMART DEFINES NATURAL CAPITAL AS OUR COMMITMENT TO COLLECTIVELY REDUCE OUR ENVIRONMENTAL FOOTPRINT AND TO ENABLE SUSTAINABLE SUPPLY AND CONSUMERISM.

 

 

 

 

 

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Top:
Evaporative coolers installed in Builders Warehouse Rivonia are 20-30% more efficient than conventional HVAC systems.

Above:
LED sales floor lights, daylight harvesting and high performance CO2 refrigeration systems combine to make new Makro stores 25% more energy efficient.

 

 

 

 

 

 

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.

 

 

 

 

 

 

Environmental advocacy supply chain survey findings

35%

of environmental survey respondents are actively assessing their supply chain to better understand their products environmental impacts.

55%

of suppliers surveyed last year indicated that they had established systems and processes to optimise logistics and reduce total transport related energy consumption.

50%

of responding suppliers have invested in energy and water

64%

of the suppliers we surveyed in 2015 have taken steps to minimise the volume of waste they produce.

Minimising Massmart’s environmental footprint

Water conservation

Water conservation remains a key focus for Massmart, particularly in light of the significant water security challenges currently impacting large parts of our country.

During the period, we continued to make progress in the area of water conservation through the introduction of rain water and condensate harvesting at our more water intensive standalone formats. At present, a total of 82 Builders and Makro stores have implemented water harvesting programmes, which resulted in estimated savings of 17 million litres of water.

In 2016 Massmart will complete a store level water risk review to highlight further water conservation opportunities and ensure that our stores are appropriately prepared in the event of shortages.

Energy efficiency

Massmart continues to optimise operational energy efficiency through the establishment of format specific energy targets and the installation of a variety of energy saving technologies such as: LED sales floor lights; daylight harvesting; high performance refrigeration plants; and Building and Energy Management systems. In 2015, a further eight Builders Warehouse stores were equipped with daylight harvesting cells, while our Makro Crown Mines store underwent a comprehensive energy retrofit which included the installation of LED sales floor lights, a high performance CO2 refrigeration plant and daylight harvesting. At the end of 2015, 25 Builders Warehouse stores now make use of natural lighting while 14 of Makro’s 19 stores have transitioned to high-bay LED lights.

Overall Group energy intensity increased by 5% as compared with 2014. This increase can in large part be attributed to unusually high ambient temperatures leading to an increase in air conditioning related energy consumption. Notwithstanding this, at 215 kWh/m2, Massmart’s per square meter electricity consumption remains the lowest reported in the South African retail sector and we are currently tracking 15.8% below our 2020 Business as Usual (BAU) energy targets.

In line with our commitment to explore commercially viable renewable energy opportunities, we indicated in 2014 that we had prioritised the implementation of a proof of concept Solar Photo-Voltaic pilot project.

As a result, we have successfully identified three potential Solar Photo-Voltaic pilot opportunities; which include a plant proposed for Builders Warehouse, and two further installations for our Makro Woodmead and Makro Carnival Mall stores.

Collectively we forecast that these three plants will generate in excess of 2.4 million kilowatt hours of electricity a year. They are expected to come into operation during the second quarter of 2016.

Operational waste recycling

To reduce the volume of waste we send to landfill, Massmart has prioritised the recycling of secondary packaging, paper, plastic and board at our stores and DC’s. During the period, the percentage of stores engaged in waste separation and recycling initiatives increased to 83%, a 9% improvement over 2014.

As previously reported, quantifying overall waste diversion rates remains a challenge due to difficulties associated with obtaining accurate waste collection and recycling data from waste service providers. As a result we have implemented an annual waste management review process across all of our facilities and have developed and distributed a waste reporting template to all waste providers. On the basis of the waste data provided by waste vendors we estimate that we diverted approximately 43% of our operational waste from landfill in 2015, we calculate that this amounted to approximately 20,000 tons of paper, board and plastic.

In addition to tracking waste recycling efforts across the Group, we have embarked on a store level waste training programme to improve store recycling and waste management procedures. A total of 91 store and regional managers received waste management and recycling training in 2015.

Beyond our current paper, plastic and board waste recycling interventions, the enhancement of food donation programmes aimed at reducing food product waste will be a key priority in 2016.


Enable sustainable supply and consumerism

Environmental supplier advocacy and product screening

We are committed to working with willing suppliers to advocate the adoption of more sustainable manufacturing and sourcing practices.

Since 2013 we have profiled the sustainability performance of over 660 unique suppliers through our various environmental advocacy and screening programmes. Our advocacy programme includes the distribution of a bespoke environmental survey to the top 30 suppliers by value across all product categories. We also issue advocacy surveys and product screening reviews targeted at our Seafood and Timber product suppliers. Beyond supplier profiling and product screening reviews, we are committed to encouraging the adoption of sustainable supply chain practices and we have therefore incorporated environmental supplier site visits and workshops into the programme. In 2015, we expanded the survey process to include all Massmart Private Label suppliers and going forward, we have prioritised the establishment of a more formal Private Label supplier advocacy and engagement programme.

As noted in our 2014 update, Massmart has taken the decision to publicly recognise those suppliers who we have noted are industry leading when it comes to implementing sustainable practices in their respective industries. In line with this, Massmart successfully hosted its second Environmental Supplier Awards ceremony in 2015, at which Belgotex Floorcoverings was recognised as the Massmart Environmental Supplier of the Year for, among other things, the installation of a 1MW solar energy plant at their KwaZulu-Natal facility.

Timber and seafood advocacy

With respect to timber and seafood product screening, a key challenge has been the paucity of sustainability data available for many of the species we source. To address this, Massmart completed a comprehensive in-house sustainability review of the timber and seafood products which do not currently have sustainability ratings. A key outcome was the introduction of a Group Sustainable Timber sourcing policy and the roll-out of environmental training to timber buyers across the Group. We are aware that the efficacy of our various product screening programmes relies heavily on supply chain transparency and the accuracy of the information provided to us by our suppliers. To ensure that we have complete visibility of the origins and species that we procure, we will request chain of custody documentation from our suppliers for select timber and seafood products.

Eco-friendly merchandise

Massmart is uniquely positioned to offer customers a wide range of products that assist them to not only reduce their environmental footprint but also to save money. Over the last three years our portfolio of environmentally sensitive product options has grown considerably. Collectively, we offer well in excess of 1,250 products ranging from low Volatile Organic Compound paints to solar geysers and energy efficient lighting options.

We have previously noted that the sales of green products, particularly energy efficient lamps and appliances, are strongly correlated to national energy security and specifically load shedding. In 2015 total sales of green products for the year exceeding R300 million across our Makro and Builders Warehouse Divisions. We estimate that the sale of energy efficient light bulbs will result in the avoidance of approximately 50,000 tCO2e in carbon emissions per annum. Building on our learnings in this area, our priority in 2016 is to place more emphasis on identifying and marketing water saving products that confer a material benefit to end users.

Post-consumer e-waste recycling

E-waste, which includes consumer items such as mobile phones, IT equipment, entertainment electronics, and household appliances, is considered to be one of the fastest growing waste streams worldwide. Although accurate statistics regarding the volume of e-waste produced and recycled in South Africa are not available, given its rapid growth, the South African government has declared e-waste a priority waste stream.

In 2008 Makro launched a post-consumer e-waste project, in partnership with Fujitsu-Siemens and electronic recyclers Desco. In 2013 Makro and Desco, together with, Samsung Electronics expanded the e-waste project to 19 Makro stores countrywide. In 2015 more than 143 tons of post-consumer e-waste was collected and recycled through the programme, bringing the total volume of e-waste collected since inception to 739 tons.

In 2015 the Department of Environmental Affairs called for the submission of an Industry Waste Management Plan (IWMP) aimed at achieving a reduction in the generation of e-waste in South Africa. In acknowledgement of Makro’s long running post-consumer e-waste take back programme, Massmart was asked to join the steering committee tasked with drafting the IWMP for e-waste. Based on initial discussions, we believe convenient e-waste drop off sites are likely to play an integral part of the proposed IWMP. We are currently assessing opportunities to replicate the project at selected Builders Warehouse and standalone Game stores.

Primary product packaging rationalisation

We recognise that our customers are concerned with the progress we are making with regards to the design and introduction of more recyclable and resource efficient primary product packaging.

Although Massmart has focused attention on this area including development of a Group Private Label packaging scorecard; exposing Divisional buyers to packaging innovation opportunities through focused workshops; and the introduction of a Private Label Packaging Rationalisation Policy, our recent progress has been indifferent.

Our objective in 2016 is to re-emphasise this process to ensure that, as we expand our Private Label product offering, we continue to design resource efficient and recyclable packaging. With this in mind, we will review packaging of all Private Label products launched during the past 18 months. We will also engage closely with the Packaging Association of South Africa to better understand the packaging implications of the IWMP that has been requested by the Department of Environmental Affairs.