cdp 2017 climate change 2017 information...

CDP CDP 2017 Climate Change 2017 Information Request

The Spar Group Ltd

Module: Introduction

Page: Introduction

CC0.1

Introduction Please give a general description and introduction to your organization. The SPAR Group Limited listed on the JSE in 2004, and today operates six distribution centres and one Build it distribution centre. The distribution centres supply and service 2033 independently owned SPAR, TOPS at SPAR, Build it, Pharmacy at SPAR and SaveMor stores in Southern Africa. The group has a presence in South Africa, Mozambique, Zimbabwe, Swaziland, Botswana, Lesotho, Namibia and Zambia, as well as in the Republic of Ireland and South West England. Goods are distributed to the stores by a fleet of trucks and trailers, which are owned by the SPAR Group. The Group’s operating model is geared towards supporting independent retailers through a decentralised wholesale, distribution and support service offering. The SPAR brand has been part of the South African food retail landscape for 54 years. Each SPAR has its own personality, offering consumers products that are unique to their local store. This results from a “voluntary trading” model, which supports the retailers in taking full advantage of sourcing specific goods from local traders, as well as utilising SPAR’s trading power. While the Group’s focus is on supporting voluntary traders, the Group does own 35 stores of its own. These stores were purchased primarily for defensive reasons to secure key retail sites and are therefore not intended as long-term assets of the organisation and hence are excluded from this submission. Due to South Africa’s challenging economic environment, there has been an increase of SPAR owned stores and we hope to find business entrepreneurs to take ownership of these in the near future (as is our business model). The scope of this submission comprises the head office in Pinetown which is based in KwaZulu Natal and the seven distribution centres which are spread across Southern Africa with their associated distribution fleets. The SPAR Group Limited participated in the Carbon Disclosure Project for the first time in 2009. The company continues to manage and actively reduce its energy consumption and greenhouse gas emissions, as well as generally reduce its impact on the environment. Through socially and environmentally sustainable business practices SPAR seeks to ensure the long-term viability of the organisation.

CC0.2

Reporting Year Please state the start and end date of the year for which you are reporting data. The current reporting year is the latest/most recent 12-month period for which data is reported. Enter the dates of this year first. We request data for more than one reporting period for some emission accounting questions. Please provide data for the three years prior to the current reporting year if you have not provided this information before, or if this is the first time you have answered a CDP information request. (This does not apply if you have been offered and selected the option of answering the shorter questionnaire). If you are going to provide additional years of data, please give the dates of those reporting periods here. Work backwards from the most recent reporting year. Please enter dates in following format: day(DD)/month(MM)/year(YYYY) (i.e. 31/01/2001).

Enter Periods that will be disclosed

Thu 01 Oct 2015 - Fri 30 Sep 2016

CC0.3

Country list configuration Please select the countries for which you will be supplying data. If you are responding to the Electric Utilities module, this selection will be carried forward to assist you in completing your response.

Select country

South Africa

CC0.4

Currency selection Please select the currency in which you would like to submit your response. All financial information contained in the response should be in this currency. ZAR (R)

CC0.6

Modules As part of the request for information on behalf of investors, companies in the electric utility sector, companies in the automobile and auto component manufacturing sector, companies in the oil and gas sector, companies in the information and communications technology sector (ICT) and companies in the food, beverage and tobacco sector (FBT) should complete supplementary questions in addition to the core questionnaire. If you are in these sector groupings, the corresponding sector modules will not appear among the options of question CC0.6 but will automatically appear in the ORS navigation bar when you save this page. If you want to query your classification, please email [email protected]. If you have not been presented with a sector module that you consider would be appropriate for your company to answer, please select the module below in CC0.6.

Further Information

Module: Management

Page: CC1. Governance

CC1.1

Where is the highest level of direct responsibility for climate change within your organization? Board or individual/sub-set of the Board or other committee appointed by the Board

CC1.1a

Please identify the position of the individual or name of the committee with this responsibility The Social and Ethics Committee of the Board has overall accountability for the sustainability and climate change agenda of the Group. The Committee is made up of executive and nonexecutive members. The direct responsibility for managing sustainability and climate change resides with the Group Strategy, Sustainability & Corporate Governance Executive who is a Board member.

CC1.2

Do you provide incentives for the management of climate change issues, including the attainment of targets? Yes

CC1.2a

Please provide further details on the incentives provided for the management of climate change issues

Who is entitled to benefit from

these incentives?

The type of incentives

Incentivized performance

indicator

Comment

Executive officer Monetary reward

Energy reduction project Energy reduction target

The Executive has a key performance indicator (KPI) which is specifically related to these targets and an incentive bonus is partly related. These are reviewed on an annual basis. This Executive also reports bi-annually to the Social and Ethics Committee, a sub committee of the Board, on these issues.

Other: Fleet drivers Monetary reward

Emissions reduction project Efficiency target Behavior change related indicator

Behaviour change: This is done through monitoring of driver behaviour and training programmes Emissions reduction and efficiency target: A driver fuel incentive scheme is in place at three of our Distribution Centers and the others will be implemented soon. It is calculated by measuring the fuel saved against a set target.

Further Information

Page: CC2. Strategy

CC2.1

Please select the option that best describes your risk management procedures with regard to climate change risks and opportunities Integrated into multi-disciplinary company wide risk management processes

CC2.1a

Please provide further details on your risk management procedures with regard to climate change risks and opportunities

Frequency of monitoring

To whom are results

reported?

Geographical

areas considered

How far into

the future are risks

considered?

Comment

Six-monthly or more frequently

Board or individual/sub-set of the Board or committee appointed by the Board

South Africa > 6 years

The SPAR Group implemented the BarnOwl Enterprise Risk Management (ERM) process, which is an intensive and robust process whereby the materiality of risks and opportunities for the business are identified, assigned to owners, linked to key risk indicators (KRIs) and associated with action plans to take advantage of the opportunity or mitigate the risk.

CC2.1b

Please describe how your risk and opportunity identification processes are applied at both company and asset level The Enterprise Risk Management (ERM) Process is being driven from the Executive level (company level) down to functional levels at distribution centres (asset/business level). This has allowed for various parts of the business to get exposure to the critical risks and opportunities, and for DC specific risks and opportunities to be identified. The Risk Committee, which reports to the Board, reviews the key risk indicators (KRIs) and devised action plans during bi-annual workshops. Climate change risk and opportunities associated with both the reputation of the company and physical impacts at business unit/asset level are considered during these workshops. Regular feedback sessions are held at internal conferences (company level) and at distribution centre executive meetings (business unit/asset level) throughout the year to communicate the management of existing risks and opportunities and assist in identifying potential new risks and opportunities.

CC2.1c

How do you prioritize the risks and opportunities identified? Identified risks and opportunities are prioritised through a ranking process that considers the potential impacts and likelihood of occurrence.

CC2.1d

Please explain why you do not have a process in place for assessing and managing risks and opportunities from climate change, and whether you plan to introduce such a process in future

Main reason for not having a process

Do you plan to introduce a process?

Comment

CC2.2

Is climate change integrated into your business strategy? Yes

CC2.2a

Please describe the process of how climate change is integrated into your business strategy and any outcomes of this process SPAR’s business strategy is continuously reviewed through an Enterprise Risk Management (ERM) framework that incorporates key sustainability issues and integrates sustainability thinking into all aspects of the business. A strategic focus area in the ERM framework is that of “sustainable systems”. It is through this process climate change has been identified as one of the leading risks associated in the “sustainable systems” category. A five-year environmental action plan was thus developed in 2013, which contains key environmental targets and measurements. These have been set per distribution centre and are reported on to the Social and Ethics Committee on a quarterly basis. Regulatory risks in the form of fuel and energy taxes, physical risks in the form of changing weather patterns, and reputational risks all influence SPAR’s strategy. SPAR operates significant physical infrastructure in the form of buildings and distribution fleets which are energy intensive. Being reliant on Eskom grid electricity, SPAR has attained a significant carbon footprint however regulatory changes that might impact on the cost of fossil fuel energy are still considered to have the greatest potential impact on the business. The key risk indicators (KRIs) assigned to all risks and opportunities are reviewed at bi-annual workshops. Regular feedback sessions are also held at internal conferences (company level) and at distribution centre executive meetings (business unit/asset level) throughout the year

to communicate progress. These processes have influenced the business to more accurately capture and report data on water usage, waste generated, and electricity and fuel consumption. As in the previous reporting period, the most considerable business decisions influenced during this reporting period by climate change aspects relate to the company’s key capital investments. More specifically, climate change regulatory issues that drive the need for energy efficiency (fuel and electricity) have driven the organisation to continually modify their vehicle specifications for all new vehicles purchased, to monitor drivers and to adopt various ‘green building’ principles and practices that reduce the consumption of electricity and facilitate the recycling of water. The most important component of the short-term strategy which has been influenced by climate change is the implementation of targets to reduce water usage, waste generated, and electricity and diesel consumption. This has led to the implementation of various projects to assist in reaching these targets. Some short-term initiatives include energy efficiency measures in buildings, implementing more environmentally friendly refrigeration technologies and refrigerants, minimising waste production and recycling programmes, a fleet management programme to reduce fuel consumption in the fleet, introducing biodiesel into the vehicle fleet fuel mix, reducing business travel by utilising video conferencing, initiating a programme to redesign SPAR-branded product packaging to reduce its environmental impact, and various behavioural change initiatives focussed on both employees, franchises and customers. For more detail on specific initiatives, please see Question 3.3 of this submission. In terms of SPAR’s long-term strategy, the organisation’s logistics model and strategy have been impacted by a significantly greater focus on optimised route planning, as well as on increasing the fuel efficiency of the vehicles carrying the goods. We are in continuous discussions with suppliers for back-hauling opportunities to reduce our fuel consumption. This is an on-going process with a focus on continuous improvement of the SPAR vehicle fleet over the long-term. The business has, in addition, altered its technology strategy and specifications for large-scale infrastructure investments, such as vehicles, buildings and equipment, to incorporate ‘green’ technologies wherever possible. Climate change issues are increasingly influencing SPAR’s product strategy from a house brand perspective. It is anticipated that this will become an increasing focus over time, with the current study to reduce the environmental impact of the house brand packaging as the first step in this process. Climate change issues also influence the long-term strategy behind SPAR’s service offering to its customers. SPAR is currently running two long-term programmes focussing on sustainable sourcing of food products. Although reduced energy consumption results in reduced costs, SPAR acknowledges that the efficiencies gained through areas such as energy, water and waste management are unlikely to yield a noteworthy competitive advantage, as most of the other industry players are driving similar efficiencies. However, these efficiencies are critical to ensuring that SPAR can remain competitive and to operate within acceptable margin boundaries for its shareholders. The key competitive advantage that arises from SPAR’s climate change strategy relates directly to SPAR’s value proposition of “providing leadership and a full support service to retailers to enable them to run sustainably profitable and professional businesses”. SPAR believes that addressing climate change throughout its organisation strengthens the company’s ability to deliver a superior service to its customers. In an industry context where independent retailers struggle to retain their identity and independence, access to practical best practice approaches to addressing climate change in retail, as well as the benefit of the buying power of SPAR for the procurement of ‘green’ technologies will become invaluable to SPAR’s customers.

CC2.2b

Please explain why climate change is not integrated into your business strategy

CC2.2c

Does your company use an internal price on carbon? Yes

CC2.2d

Please provide details and examples of how your company uses an internal price on carbon It is internal - SPAR acknowledges and keeps track cost implications, given the updated draft Carbon Tax Regulations, being R120 p/CO2eq.

CC2.3

Do you engage in activities that could either directly or indirectly influence public policy on climate change through any of the following? (tick all that apply) Direct engagement with policy makers Trade associations Other

CC2.3a

On what issues have you been engaging directly with policy makers?

Focus of legislation

Corporate Position

Details of engagement

Proposed legislative solution

Adaptation resiliency

Support SPAR Group’s stakeholder focus was driven by a strategy for increased local sourcing from emerging smallholder farmers. This programme includes assisting these farmers in achieving sustainable farming practices. SPAR engaged with the Department of

Use SPAR’s approach to local sourcing and sustainable farming as a learning opportunity and potential adaptation

Focus of legislation

Corporate Position

Details of engagement

Proposed legislative solution

Agriculture to share knowledge and gain support for the programme, which can assist in wider adaptation resilience in South African agriculture.

measure for the South African agriculture sector.

CC2.3b

Are you on the Board of any trade associations or provide funding beyond membership? Yes

CC2.3c

Please enter the details of those trade associations that are likely to take a position on climate change legislation

Trade association

Is your position on

climate change

consistent with theirs?

Please explain the trade association's position

How have you, or are you attempting to, influence the position?

Consumer Goods Council of South Africa (CGCSA)

Consistent

The CGCSA engages with government and policy makers on all issues relating to the industry, one of which is climate change. The CGCSA supports systems, processes and principles that will enable trade to be better, faster, more efficient and environmentally friendly.

The SPAR Group’s one of the company’s executives sits on the board of the CGCSA. Through the CGCSA, SPAR advocates for environmentally friendly systems in the retail sector that will help reduce emissions causing climate change.

National Business Initiative (NBI)

Consistent

The NBI engages with government on climate change regulation and policy, voicing the comments and concerns of its business members and assisting government where it can in the transition to a low carbon economy.

Being a member of the NBI, SPAR attends discussions on climate regulation, using this as a platform to make comments and transfer learning from our experience.

CC2.3d

Do you publicly disclose a list of all the research organizations that you fund?

CC2.3e

Please provide details of the other engagement activities that you undertake SPAR acknowledges that there is a global concern over the over-exploitation of seafood resources and the environmental impacts of fishing and aquaculture activities on marine ecosystems. Retailers and wholesalers, who are major role players in the seafood industry, can help drive positive change in fisheries by supporting sustainable seafood choices from legal and responsibly managed sources, creating market driven incentives to catalyse at sea. SPAR together with other interested bodies put pressure on the Namibian Hake Association to have their facility Marine Stewardship Council (MSC) certified. This is a part of our commitment to improve our business through incorporating sustainability best practice principles while still considering social, economic and ecological challenges. Once the Namibian Hake Association has been MSC certified, our Private Label will have all its species either listed as Green or under Improvement which is assessed by the WWF South Africa Sustainable Seafood Initiative (WWF-SASSI). We also engaged with the Indian Ocean Tuna Commission (IOTC), the Regional Fisheries Management Organisation that controls fishing activity in the Indian Ocean requesting that they adopt a 20% reduction in the catch of Yellowfin Tuna, in response to recent research that indicates that the stock could collapse within five years if immediate steps were not taken. SPAR therefore understands that if we are to ensure the survival of our marine ecosystems and continue to enjoy seafood, we need to ensure that our seafood is responsibly procured and supports sustainable and well managed fisheries and aquaculture operations.

CC2.3f

What processes do you have in place to ensure that all of your direct and indirect activities that influence policy are consistent with your overall climate change strategy? The Social and Ethics Committee, responsible for climate policy and strategy, reviews activities and engagements that influence policy and checks their alignment to overall strategy.

CC2.3g

Please explain why you do not engage with policy makers

Further Information

Page: CC3. Targets and Initiatives

CC3.1

Did you have an emissions reduction or renewable energy consumption or production target that was active (ongoing or reached completion) in the reporting year? Absolute target Renewable energy consumption and/or production target

CC3.1a

Please provide details of your absolute target

ID

Scope

% of emissions in

scope

% reduction from base

year

Base year

Base year emissions covered by

target (metric tonnes CO2e)

Target year

Is this a science-based

target?

Comment

Abs1 Scope 1 91% 10% 2013 40034 2017 No, but we anticipate setting one in the next 2 years

The base year emissions represent the period 01/10/2012 – 30/09/2013

Abs2 Scope 2 (location-based)

100% 20% 2013 51500 2017 No, but we anticipate setting one in the next 2 years

The base year emissions represent the period 01/10/2012 – 30/09/201

CC3.1b

Please provide details of your intensity target

ID

Scope

% of emissions in

scope

% reduction from base

year

Metric

Base year

Normalized base year emissions covered by

target

Target year

Is this a science-based target?

Comment

CC3.1c

Please also indicate what change in absolute emissions this intensity target reflects

ID

Direction of change anticipated in absolute Scope 1+2 emissions at

target completion?

% change anticipated in absolute Scope 1+2

emissions

Direction of change anticipated in absolute Scope 3 emissions at target

completion?

% change anticipated in absolute Scope 3

emissions

Comment

CC3.1d

Please provide details of your renewable energy consumption and/or production target

ID

Energy types covered by

target

Base year

Base year

energy for

energy type

covered (MWh)

% renewable

energy in base year

Target year

% renewable

energy in target year

Comment

ID

Energy types covered by

target

Base year

Base year

energy for

energy type

covered (MWh)

% renewable

energy in base year

Target year

% renewable

energy in target year

Comment

RE1 Electricity consumption

2013 51500 20% 2017 21%

Targets are set to reduce Scope 1 and Scope 2 emissions. SPAR achieved its energy reduction target for Scope 2, electricity consumption, and look to set ambitious science based targets going forward.

CC3.1e

For all of your targets, please provide details on the progress made in the reporting year

ID

% complete (time)

% complete (emissions or renewable energy)

Comment

Abs1 75% 25.57%

Abs2 75% 73.07%

RE1 0% 0% SPAR assessed and tendered for the installation of renewable energy technology at its sites. This has been now budgeted and will be phased in over time.

CC3.1f

Please explain (i) why you do not have a target; and (ii) forecast how your emissions will change over the next five years

CC3.2

Do you classify any of your existing goods and/or services as low carbon products or do they enable a third party to avoid GHG emissions? Yes

CC3.2a

Please provide details of your products and/or services that you classify as low carbon products or that enable a third party to avoid GHG emissions

Level of

aggregation

Description of product/Group of

products

Are you

reporting low carbon product/s or avoided emissions?

Taxonomy, project or

methodology used to classify

product/s as low carbon or to calculate

avoided emissions

%

revenue from low carbon

product/s in the

reporting year

% R&D in

low carbon

product/s in the

reporting year

Comment

Company-wide

The SPAR Group provides its independent retail customers with a full support service. This includes providing extensive support on store design and layout, as well as efficiency optimisation techniques across all areas of retail operations. By leveraging both local expertise and international best practice through SPAR International, SPAR has developed, and continues to develop, store designs and layouts that make use of the most up-to-date and efficient technologies and approaches. The ‘green building’ practices that SPAR

Avoided emissions

Other: Negotiating with suppliers to backhaul

0% Less than or equal to 10%

It is estimated that green building practices and general energy efficiency recommendations enabled franchises to reduce emissions by 5,000 tonne CO2e between 01 October 2015 and 30 September 2016. Impacts of the other initiatives could not be quantified. Due to a lack of direct measurements or usage data, energy consumption of franchises were estimated based on the number and types of stores, average floor space per type of store, and the SAN204:2011 Energy Efficiency in Buildings standard, from which a national average maximum

Level of

aggregation


products

Are you





avoided emissions

%


product/s in the

reporting year

% R&D in

low carbon

product/s in the

reporting year

Comment

incorporates into the design and operation of its own facilities are integrated into the retail store designs that are provided to the SPAR retailers. Through its buying power, SPAR is able to provide the retailers with access to the latest technologies at prices that the independent retailer would otherwise be unlikely to secure. This enables the retailers to procure the equipment required to implement the new store designs and layouts which then ensure that they are able to operate at maximum efficiency and therefore reduce or avoid a fair degree of GHG emissions. SPAR’s central distribution model also enables a number of its suppliers to reduce or avoid carbon emissions related to distribution. These suppliers need only deliver to a few centrally located facilities, rather than to over 1 864 stores that the SPAR Group services. Through operating vehicles that carry full loads on a less frequent basis, these suppliers are able to avoid significant mileage and therefore emissions. SPAR’s research into packaging improvements will enable producers of packaging materials upstream to reduce emissions

energy requirement per square metre of a large commercial shop was obtained. It was assumed that green building practices and energy efficiency has enabled a 2% reduction in energy requirements of all franchises.

Level of

aggregation


products

Are you





avoided emissions

%


product/s in the

reporting year

% R&D in

low carbon

product/s in the

reporting year

Comment

associated with the production thereof, reduce transport emissions by using lighter materials, and reduce downstream end-of-life emissions of the packaging materials as it will allow for more to be recycled.

CC3.3

Did you have emissions reduction initiatives that were active within the reporting year (this can include those in the planning and/or implementation phases) Yes

CC3.3a

Please identify the total number of projects at each stage of development, and for those in the implementation stages, the estimated CO2e savings

Stage of development

Number of projects

Total estimated annual CO2e savings in metric tonnes CO2e (only for rows marked *)

Under investigation

Stage of development

Number of projects

Total estimated annual CO2e savings in metric tonnes CO2e (only for rows marked *)

To be implemented*

Implementation commenced* 15 12940

Implemented*

Not to be implemented

CC3.3b

For those initiatives implemented in the reporting year, please provide details in the table below

Activity type

Description of activity

Estimated annual CO2e

savings (metric tonnes CO2e)

Scope

Voluntary/ Mandatory

Annual monetary savings

(unit currency

- as specified in CC0.4)

Investment required

(unit currency -

as specified in CC0.4)

Payback period

Estimated lifetime of

the initiative

Comment

Behavioral change

Waste. Waste management and, more specifically, recycling is the focus of this programme. The aim of the initiative is to recycle as much of SPAR’s own waste as possible, as well as to assist the retailers in recycling their waste. This will assist in reducing the emissions associated with waste, as well

700 Scope 3

Voluntary

<1 year >30 years

Waste collected at 73% of stores in KZN, 5% of stores in the South Rand, 90% of stores in the Western Cape and and 11% of stores in the Lowveld.

Activity type




Scope



(unit currency


Investment required

(unit currency -


Payback period


the initiative

Comment

as avoiding valuable waste filling landfill sites. This initiative involves the recycling of ‘traditional’ materials such as cardboard, paper, plastic and fine metals, as well as used vehicle lubricants and refrigeration oils. Organic waste is also converted to compost which local community farmers make use of. Apart from recycling, cardboard boxes are replaced with reusable rolltainers on outbound legs to stores. All six DCs have implemented comprehensive recycling programmes. Two DCs have also extended this to include retailers, from whom they backhaul waste when deliveries are made. Glass and metal recycling is not in place at all DCs, but is anticipated to be more of a focus going forward. The compost initiative is currently being carried out at as a pilot initiative at one DC. It is anticipated that other facilities will implement the process going forward. All DCs have

Activity type




Scope



(unit currency


Investment required

(unit currency -


Payback period


the initiative

Comment

begun the process of utilising reusable tertiary packaging for outbound deliveries.

Energy efficiency: Building services

Lighting. This programme focuses on the identification and implementation of efficient lighting designs and technologies across all of SPAR’s facilities. It also extends into the design (e.g. maximising natural light) and technology specifications (i.e. low energy light fittings) for SPAR retail stores. Technology changes have included replacing old lights with energy saving light fittings and bulbs (e.g. CFLs, LEDs, and T5 bulbs), motion detectors and timers.

940

Scope 2 (location-based)

Voluntary

890000 1560000 1-3 years

Ongoing

SPAR acknowledges that this is an ongoing process to keep up to date with new technologies. Lighting was first changed from fluorescent to T5, now the latest technology is LED.

Energy efficiency: Building services

HVAC. This programme focuses on reducing the electricity consumption of air-conditioning units. Timers for automatic start up and shut down have been installed for this purpose. In the cases where replacement is necessary, it is done so with newer, more energy efficient technology. Timers are used

1880


Voluntary

1780000 546224 1-3 years

>30 years

Activity type




Scope



(unit currency


Investment required

(unit currency -


Payback period


the initiative

Comment

at 50% of DCs, and new technology is replaced as required across the Group. A complete HVAC upgrade is also being investigated.

Energy efficiency: Processes

Refrigeration. As a food wholesaler and distributor, SPAR has sizable refrigeration installations within each of its distribution facilities. This programme focuses on identifying and implementing the most efficient refrigeration technologies within these facilities. Examples of this have been the installation of high-speed doors and air curtains, as well as the monitoring and adjusting of set point temperatures to reduce electricity consumption. The initiative also extends to identifying and specifying efficient refrigeration technologies for retail stores. Some installations are already complete, particularly within the new facilities. 50% of DCs are currently making use of

1880


Voluntary

1780000 12902000 1-3 years

>30 years

Refrigeration - R1,8mil for x2 air curtains; R8,8 2NH3 compressors; Evap Condenser, Heat Exchanger; Blower Coils)

Activity type




Scope



(unit currency


Investment required

(unit currency -


Payback period


the initiative

Comment

high speed doors and/or air curtains, and will likely be employed at all other DCs in the future. This programme is still in its infancy, with the focus on research and piloting of new technologies (e.g. Variable Speed Drive).

Fugitive emissions reductions

Refrigerants. This programme focuses on implementing more environmentally friendly refrigeration and air-conditioning technologies in SPAR facilities in order to drive down fugitive emissions as well as to save costs. This extends into the technology specification for retail stores. In many instances, the costs of these new technologies are not significantly higher than the older technologies. This programme is still in its infancy, with the focus on research and piloting of new technologies. All DCs have made the switch to Ammonia as a refrigerant gas. It is anticipated that the gas used in the air-conditioning systems will follow suit with system

Scope 1

Voluntary

37200 4-10 years

6-10 years x4 new fridge units use R452A

Activity type




Scope



(unit currency


Investment required

(unit currency -


Payback period


the initiative

Comment

upgrades and replacements. It is anticipated that the programme will gain momentum in the coming two years.

Transportation: fleet

Vehicle efficiency improvements. This initiative is also part of the Group’s fleet management programme. It focuses on identifying and implementing the most efficient and appropriate vehicle specifications for SPAR’s distribution fleet. Other adjustments are made to vehicles is in the form of aerokits which are added to the vehicles to reduce drag on longdistance trips. This is a fairly advanced part of the fleet management programme, and all vehicles now meet this standard with 63 new Euro 3 specification vehicles added to the fleet during the reporting period. Although these specifications are now considered the norm, there is a focus on continuous improvement. The fitting of aerokits on all long distance

70 Scope 1

Voluntary

229000 677000 4-10 years

>30 years

Side Skirts x 3 trailers; Solar panels to charge taillifts; battery x4 X 6 Side shirts

Activity type




Scope



(unit currency


Investment required

(unit currency -


Payback period


the initiative

Comment

vehicles was completed at all fleets in the reporting year.

Energy efficiency: Processes

Machine replacement. This process focuses on reducing electricity consumption of warehouse battery bays. Battery bays have been found to consume anything from 8 to 20% of electricity (based on meters employed at certain DCs). Old battery chargers are replaced with High Frequency units that are less energy intensive. All SPAR facilities are the process of replacing inefficient chargers. Replacements of electric geysers with solar water heaters are also underway. This alternative sourcing for water heating purposes is expected to take place at DCs over time.

240


Voluntary

223000 1079232 1-3 years

>30 years


Fleet management programme. The Group’s comprehensive fleet management programme has various focus areas in an attempt to increase fuel efficiency and reduce emissions associated with

160 Scope 1

Mandatory

1500000 3000000 1-3 years

3-5 years

Axle weight distribution is currently being investigated

Activity type




Scope



(unit currency


Investment required

(unit currency -


Payback period


the initiative

Comment

diesel consumption. The SPAR Group employed a Group Transport Manager in 2013 to oversee this project. These following areas are monitored: driver management, fuel consumption, excessive idling, route determination and optimisation, route adherence, and speeding. Performance in these areas is monitored via onboard computer systems. The outstanding DCs that had yet to take on the monitoring programme have done so in the reporting year. This project will continue to be improved and strengthened in the coming years.


Fuel switch. This initiative is aimed at including biodiesel into the fuel mix used to operate the SPAR vehicle fleet. The fleets are currently operating on a 95:5 diesel:biodiesel fuel mix. This has been successful not only in reducing transport associated emissions, but has also resulted in financial

1090 Scope 1

Voluntary

128800 120000 1-3 years

>30 years

Activity type




Scope



(unit currency


Investment required

(unit currency -


Payback period


the initiative

Comment

savings with biodiesel at a cheaper price than conventional diesel. Three DCs have incorporated biodiesel into their fuel mix, one of which backhauls used cooking oil from retailers. Due to difficulties with good quality & reliable biofuel supply, together with site specific climatic issues, the other DCs are not using this biofuel mix. Diesel gas blending is also under currently investigation, as a potential alternative to using 100% diesel.

Transportation: use

Business travel. The implementation and utilisation of video conferencing facilities is aimed at reducing business travel, particularly air travel. This initiative is advanced, with video conference facilities up and running in all SPAR facilities. The focus going forward is on driving the behaviour change around conducting meetings via these facilities, rather than face-to-face, as well as improving facilities.

470 Scope 3

Voluntary

2789000 250000 <1 year >30 years

Activity type




Scope



(unit currency


Investment required

(unit currency -


Payback period


the initiative

Comment

Product design

Packaging. This programme is focused on reviewing the house brand product strategy and product design with a view to reducing the environmental impact of SPAR’s own brands. The initial focus is on reducing food packaging wherever possible. Over time, the focus will extend to actual product design and packaging material selection, as well as into other nonfood categories. The focus to date has been on understanding the landscape and identifying quick win opportunities through research into the packaging and waste management industry. With this as a foundation, it is anticipated that this initiative will gain momentum in the shortterm.

Scope 3

Voluntary

1-3 years

6-10 years

Specific focus is currently on our plastic carrier bags ensuring that they are recyclable which SPAR will extend to all House Brand plastic packaging.

Behavioral change

Drivers. This is a focused initiative on changing behaviour of drivers of SPAR vehicles. Driver trainers are employed at each Distribution Centre. Trainers aim to improve driver performance by

40 Scope 1

Voluntary

114000 2400000 <1 year >30 years

Activity type




Scope



(unit currency


Investment required

(unit currency -


Payback period


the initiative

Comment

ensuring an understanding of and the most efficient use of vehicles, thereby extending vehicle life, minimising fuel consumption and reducing emissions. A debrief takes place on the drivers’ returns to the DCs. Driver fuel consumption is also analysed and where over target, the necessary action is taken. All drivers are assessed at least once a year and checked against the Group target. This forms part of the Group’s comprehensive fleet management programme. DriveSmart is also being used by the SPAR Group as an additional monitoring programme. This initiative is well developed in SPAR, with every driver in the distribution fleet now monitored. With positive results in reduced fuel consumption per distance travelled, we anticipate that driver monitoring will be continued and strengthened going forward. DriveSmart is currently being piloted at one DC. This may be rolled out to

Activity type




Scope



(unit currency


Investment required

(unit currency -


Payback period


the initiative

Comment

the other fleets depending on results achieved.

Behavioral change

Employee awareness. An awareness campaign focuses on driving awareness around reducing electricity consumption. This is mainly driven through emails and signs that serve as reminders to switch off lights and air-conditioning systems, as well as to open and close freezer doors as efficiently as possible. The use of portable heaters and other non essentials are also removed or limited, where possible. The use of metres has also assisted in creating a culture of awareness around high electricity consumption, and has been effective in identifying highest users, and where most impact can be made. Although this is carried out all SPAR facilities, it is anticipated that a more aggressive and proactive approach going forward in order to achieve the greatest impact. 50% of the DCs make

470


Voluntary

445000 120000 1-3 years

>30 years

Activity type




Scope



(unit currency


Investment required

(unit currency -


Payback period


the initiative

Comment

use of metres, although this is likely to be rolled out to all facilities in the following year.

Behavioral change

Employee education. The SPAR Group has invested in effective training programmes for their management and senior leaders. It is only in the last reporting year, however, that the programme now includes sustainability as one of the areas covered. SPAR has realised the importance of educating employees on sustainability issues, so that this longterm thinking is applied to all functions of the business and in particular in management decisions going forward. Both programmes are underway and are anticipated to grow in the future.

Scope 1 Scope 3

Voluntary

1-3 years

>30 years

Behavioral change

Franchisee. This programme is aimed at impacting the energy efficiency and waste management practices within SPAR’s franchise base. This programme incorporates elements from the various energy efficiency programmes

5000 Scope 3

Voluntary

16463000

1-3 years

21-30 years

Activity type




Scope



(unit currency


Investment required

(unit currency -


Payback period


the initiative

Comment

running throughout SPAR but also includes the development of best practices for retail processes and training of SPAR retailers. The objective is to improve the energy efficiency of stores through behaviour change that is coupled with changes in technology. While new technologies and store designs are constantly being incorporated into the retail support package, the thoughtleadership element around energy efficiency is in its infancy. However, this is likely to become an increasingly important component of SPAR’s service offering over time.

CC3.3c

What methods do you use to drive investment in emissions reduction activities?

Method

Comment

Compliance with regulatory requirements/standards

Environmental compliance has been deemed a material aspect for SPAR, from both an economic and management indicator perspective. From an economic perspective, ensuring compliance helps to reduce financial risks that occur either directly through fines or indirectly through impacts on reputation. In some circumstances, non-compliance can lead to clean-up obligations or other costly environmental liabilities. The level of non-compliance within an organisation helps indicate the ability of management to ensure that operations conform to certain performance parameters. Even though there are currently no climate change related regulatory requirements or standards in place in South Africa, by investing in emissions reduction we are positioning ourselves to comply with future carbon or energy related legislation, such as the potential carbon tax.

Employee engagement

While leadership in the sustainability space is crucial for strong performance, the successful integration of sustainability into a business relies heavily on staff engagement. SPAR have focused heavily on engaging senior and middle management around the sustainability agenda. Communications, in the form of forums and engagement sessions place an emphasis on why sustainability is important to SPAR and its related strategy and commitments. SPAR has recognised that a potential stumbling block to the successful implementation of its strategy will be a lack of internal understanding and knowledge about sustainability. We have decided to pre-empt this and focus heavily on educating staff about sustainability. Examples of this would be the sustainability focus in SPAR’s Senior Leadership Development Programme and the Management Growth Programme. SPAR is also investing in developing a formal sustainability-training programme for staff within key functions within the organisation.

Financial optimization calculations

The reduced energy requirements result in reduced operational costs to the company. Past savings are used to motivate future investment.

Other Capital is freed up as and when required to undertake activities that will contribute towards meeting the company’s targets.

CC3.3d

If you do not have any emissions reduction initiatives, please explain why not

Further Information

Page: CC4. Communication

CC4.1

Have you published information about your organization’s response to climate change and GHG emissions performance for this reporting year in places other than in your CDP response? If so, please attach the publication(s)

Publication

Status

Page/Section reference

Attach the document

Comment

In mainstream reports (including an integrated report) but have not used the CDSB Framework

Complete pg 68 - 70 https://www.cdp.net/sites/2017/49/18949/Climate Change 2017/Shared Documents/Attachments/CC4.1/Integrated-Annual-Report-2016.pdf

Further Information

Module: Risks and Opportunities

Page: CC5. Climate Change Risks

CC5.1

Have you identified any inherent climate change risks that have the potential to generate a substantive change in your business operations, revenue or expenditure? Tick all that apply Risks driven by changes in regulation Risks driven by changes in physical climate parameters Risks driven by changes in other climate-related developments

CC5.1a

Please describe your inherent risks that are driven by changes in regulation

Risk driver

Description

Potential impact

Timeframe

Direct/ Indirect

Likelihood

Magnitude of impact

Estimated financial

implications

Management

method

Cost of

management

Carbon taxes

If the carbon tax is implemented, it is expected that Eskom will pass through its carbon tax liability in the form of an increased electricity price, which will further increase the operational cost of SPAR. This will add to the already increasing grid electricity price increase of 9.4% in the 2016/2017 Eskom financial year.

Increased operational cost

Up to 1 year

Direct Virtually certain

Medium-high

ZAR 250000

SPAR is actively managing the risk through annually updating its carbon footprint and tracking its emissions. By knowing the company’s emissions, SPAR can calculate the potential financial implications and better prepare for the risk. SPAR also set a target to reduce its Scope 2 emissions and is in the process of implementing emission reduction projects to achieve this target and thereby reduce the potential impact of the carbon tax.

R2,857,000 for projects to reduce Scope 2 emissions in this reporting year. R45,000 on internal staff costs dedicated to this activity.

Carbon taxes

SPAR’s supply chain will also be impacted by the potential carbon tax. There is a risk that the financial implications of the carbon tax will be passed on to SPAR

Reduced demand for goods/services

Up to 1 year

Indirect (Supply chain)

Virtually certain

Medium-high

ZAR 20 million

SPAR believes that significant potential negative environmental impacts may be prevented or mitigated with its choice in suppliers. SPAR has also

R45,000 for consultants fees to calculate Scope 3 emissions to identify hotspots. R45,000 for dedicated

Risk driver

Description

Potential impact

Timeframe

Direct/ Indirect

Likelihood

Magnitude of impact

Estimated financial

implications

Management

method

Cost of

management

from its suppliers, which will mean that SPAR would either have to absorb these costs, or pass it on to its retailers and ultimately to the customer. This risk can lead to customers opting to shop at competing retailers rather than at SPAR.

implemented various activities and programs to assist in the reduction of emissions in its supply chain, which will help minimise the overall impact of the carbon tax. Furthermore, we’ve started a more detailed Scope 3 accounting process this year, which allows for identifying where the largest risk areas are in the supply chain and where efforts should be targeted. All these methods minimise the potential impact that the supply chain’s carbon tax will have on SPAR.

internal staff working on this topic.

Emission reporting obligations

If companies are to be taxed on their emissions in future, emissions reporting obligations will be implemented. It is unclear when reporting obligations


Up to 1 year

Direct Very likely Low-medium

R200,000

SPAR is actively managing the risk through annually updating its carbon footprint and tracking its emissions. SPAR is in the process of

R45,000 on consultants fees for calculating carbon footprint and emissions tracking. R17 000 on internal

Risk driver

Description

Potential impact

Timeframe

Direct/ Indirect

Likelihood

Magnitude of impact

Estimated financial

implications

Management

method

Cost of

management

will be implemented or the extent of accounting and reporting that will be required. Although SPAR is actively calculating its carbon footprint, reporting obligations might place an additional burden on the company to report according to a specific standard and also have emissions verified.

improving its accounting practices and is also considering having the carbon footprint verified in future.

staff dedicated to this activity.

Product labeling regulations and standards

There has been an increasing trend internationally for labels to display what the environmental impact has been in the making of the product. A similar trend may be introduced in South Africa, where energy efficiency standards and ratings on labels of product may be required. This may call for a revision in the design of the


3 to 6 years

Direct Likely Low-medium

Unknown

SPAR is in the process of conducting various studies to reduce the environmental impact of its products, these include sustainable sourcing and redesigning its packaging. In general, SPAR tries to be as transparent as possible with the labelling on our products and we closely monitor legislative developments in this

R32,000 on internal staff dedicated to this activity.

Risk driver

Description

Potential impact

Timeframe

Direct/ Indirect

Likelihood

Magnitude of impact

Estimated financial

implications

Management

method

Cost of

management

labelling. Although this represents another cost that the SPAR Group would potentially need to absorb, satisfying consumers’ demand for sustainability conscious goods will be beneficial.

field.

CC5.1b

Please describe your inherent risks that are driven by changes in physical climate parameters

Risk driver

Description

Potential impact

Timeframe

Direct/ Indirect

Likelihood

Magnitude of impact

Estimated financial

implications

Management

method

Cost of

management

Change in mean (average) temperature

SPAR operates refrigeration equipment both in the distribution centres and in trucks transporting goods to stores. Increasing mean atmospheric temperatures will require this


3 to 6 years

Direct More likely than not

Medium

If electricity consumption were to increase by 5% as a result of increased refrigeration and air conditioner demand, it will increase SPAR’s

SPAR trains its personnel to be aware of energy losses when operating refrigeration equipment and has also implemented initiatives for reducing energy requirements of the

R297 000

Risk driver

Description

Potential impact

Timeframe

Direct/ Indirect

Likelihood

Magnitude of impact

Estimated financial

implications

Management

method

Cost of

management

equipment to work harder, increasing the energy consumption (electricity in DCs and diesel in the trucks) to ensure that the refrigeration temperatures remain below the set points. An increasing mean temperature will also result in air conditioners working harder and for longer hours in the office buildings, increasing electricity consumption

electricity bill by R 2 million.

refrigeration equipment. These include the installation of high-speed doors and air curtains, as well as the monitoring and adjusting of set point temperatures to reduce electricity consumption.

Change in precipitation extremes and droughts

Extreme weather events like extreme rainfall and droughts can severely impact on SPAR’s supply chain. These events will have a negative impact on the agricultural sector, which can lead to increased food prices and potential lack of delivery of goods. This can lead to SPAR not being competitive


3 to 6 years

Indirect (Supply chain)

Likely Medium

SPAR might need to absorb some of the cost increases of food products to stay competitive. If this were to result in a 5% loss in operating profit, it could cost SPAR around R 103 million per year.

SPAR believes that significant potential negative environmental impacts may be prevented or mitigated with its choice in suppliers. We’ve therefore started surveying the top suppliers and screening new suppliers using environmental criteria. SPAR is also engaging with local

R1 million on sustainable farming training and consulting fees.

Risk driver

Description

Potential impact

Timeframe

Direct/ Indirect

Likelihood

Magnitude of impact

Estimated financial

implications

Management

method

Cost of

management

with other retailers or not having certain products on the shelves.

farmers to assist them in sustainable farming practices, thereby making them more resilient to climate change impacts.

CC5.1c

Please describe your inherent risks that are driven by changes in other climate-related developments

Risk driver

Description

Potential impact

Timeframe

Direct/ Indirect

Likelihood

Magnitude of impact

Estimated financial

implications

Management

method

Cost of

management

Reputation

There is increasing pressure from stakeholders, including consumers and the broader public, for large corporates to address environmental issues, particularly climate change. It is becoming more important over time in the South African food retail industry that


Up to 1 year

Direct About as likely as not

High

If this were to result in a 5% loss in revenue, it could cost SPAR around R 3,112 million per year.

Reputational issues are managed through improving and broadening the communication process related to environmental issues that SPAR is addressing. The SPAR Guild Report that is shared with all SPAR retailers and DCs contains information around what SPAR is doing to address climate

R15,500 on internal staff dedicated to this activity.

Risk driver

Description

Potential impact

Timeframe

Direct/ Indirect

Likelihood

Magnitude of impact

Estimated financial

implications

Management

method

Cost of

management

players play an active role in driving change throughout the value chain. If SPAR is unable to demonstrate that it is addressing environmental and climate change issues, the overall SPAR brand is likely to suffer over time. If the company were unable to respond effectively to market and consumer shifts as a result of climate change, the SPAR brand would be seen as out-of-date and undesirable. These issues could result in a decline in the demand for SPAR retail outlets and therefore for the SPAR Group’s goods and services.

change and broader environmental issues. The SPAR Integrated Annual Report also contains a section dedicated to the Group's responses to climate change and its environmental responsibilities. It is anticipated that this communication will increase over time to more actively engage other stakeholders such as consumers and suppliers. The fact that sustainability has been integrated into the business strategy means that automatic exposure and awareness will be achieved. SPAR's focus on house brand innovation and renovation is key to and ensuring that it remains relevant and is able to take advantage of new trends and technologies. The Group is working

Risk driver

Description

Potential impact

Timeframe

Direct/ Indirect

Likelihood

Magnitude of impact

Estimated financial

implications

Management

method

Cost of

management

actively with its suppliers to identify and introduce more environmentally friendly products. Three existing product examples are SPAR charcoal briquettes, which are produced from sustainably sourced wood; the SPAR seafood range, which is currently being reviewed to ensure compliance with SASSI (South African Sustainable Seafood Initiative) guidelines; and the reduction in weight of SPAR PET bottles. Effective communication to consumers around such initiatives and products will play a role in ensuring that SPAR is perceived as responsible and innovative.

Fluctuating socio-economic conditions

Climate change could also impact the distribution of population, particularly in more


>6 years Direct About as likely as not

High

If this were to result in a 5% loss in revenue, it could cost

SPAR’s analysis process that is conducted prior to any new SPAR retail store being opened

The only additional costs associated with the research around new and

Risk driver

Description

Potential impact

Timeframe

Direct/ Indirect

Likelihood

Magnitude of impact

Estimated financial

implications

Management

method

Cost of

management

rural areas. This is most relevant where severe water shortages and lasting droughts become the norm. It could also become relevant should particular areas be unusually hard hit by climate change related diseases which would impact the spending patterns of consumers in those areas. There are a large number of SPAR retail stores situated in rural areas. These stores are significant contributors to SPAR’s overall volumes. Should these stores be forced to close down as a result of dwindling population numbers or declining disposable income levels, this could have a large

SPAR around R 3,112 million per year.

incorporates data such as population growth trends of the area, demographics and other critical metrics. The process is also applied to existing to retail outlets support the forecasting approach mentioned above. Risks associated with shifting populations and spending patterns are largely addressed through this process.

existing stores’ physical locations may be driven by the need to purchase more data over time. The quantum of this cost is not yet known.

Risk driver

Description

Potential impact

Timeframe

Direct/ Indirect

Likelihood

Magnitude of impact

Estimated financial

implications

Management

method

Cost of

management

impact on the demand for SPAR’s goods and services.

CC5.1d

Please explain why you do not consider your company to be exposed to inherent risks driven by changes in regulation that have the potential to generate a substantive change in your business operations, revenue or expenditure

CC5.1e

Please explain why you do not consider your company to be exposed to inherent risks driven by changes in physical climate parameters that have the potential to generate a substantive change in your business operations, revenue or expenditure

CC5.1f

Please explain why you do not consider your company to be exposed to inherent risks driven by changes in other climate-related developments that have the potential to generate a substantive change in your business operations, revenue or expenditure

Further Information

Page: CC6. Climate Change Opportunities

CC6.1

Have you identified any inherent climate change opportunities that have the potential to generate a substantive change in your business operations, revenue or expenditure? Tick all that apply Opportunities driven by changes in regulation Opportunities driven by changes in physical climate parameters Opportunities driven by changes in other climate-related developments

CC6.1a

Please describe your inherent opportunities that are driven by changes in regulation

Opportunity driver

Description

Potential impact

Timeframe

Direct/Indirect

Likelihood

Magnitude of impact

Estimated financial

implications

Management

method

Cost of

management

Fuel/energy taxes and regulations

If government were to implement compulsory biofuel regulation or increased taxes on fossil fuels, there would be a good market potential for SPAR to

New products/business services

1 to 3 years

Direct Likely Low-medium

Biodiesel could be an additional revenue stream for SPAR or just reduce the cost of fuel for the SPAR vehicle fleet, as biodiesel is already cheaper for SPAR than fossil fuel diesel. If a combined

Existing biodiesel programme

R132 000 investment in the biodiesel programme to date.

Opportunity driver

Description

Potential impact

Timeframe

Direct/Indirect

Likelihood

Magnitude of impact

Estimated financial

implications

Management

method

Cost of

management

extend its current biofuels programme to include more vehicles, larger volumes, and possibly external customers. As demand increases, SPAR franchises will be in a good position to provide used cooking oil as feedstock for biodiesel production.

impact of reduced fuel costs and increased revenue due to an external market opportunity for SPAR biodiesel were to result in a 2% increase in operating profit, it would be an additional R 41 million per year.Biodiesel could be an additional revenue stream for SPAR or just reduce the cost of fuel for the SPAR vehicle fleet, as biodiesel is already cheaper for SPAR than fossil fuel diesel. If a combined impact of reduced fuel costs and increased revenue due to an external market opportunity for

Opportunity driver

Description

Potential impact

Timeframe

Direct/Indirect

Likelihood

Magnitude of impact

Estimated financial

implications

Management

method

Cost of

management

SPAR biodiesel were to result in a 2% increase in operating profit, it would be an additional R 41 million per year.

CC6.1b

Please describe your inherent opportunities that are driven by changes in physical climate parameters

Opportunity driver

Description

Potential impact

Timeframe

Direct/ Indirect

Likelihood

Magnitude of impact

Estimated financial

implications

Management

method

Cost of

management

Induced changes in natural resources

Climate change could result in a change in agricultural land usage patterns and production levels of certain natural resources. As a result, certain agricultural commodities may become viable in more central or convenient locations than before, resulting in lower transport

Reduced operational costs

>6 years Direct About as likely as not

Medium

Reduction in 10% of fuel costs alone will result in savings of about R 16 million per year for the SPAR fleet.

SPAR actively monitors the product sourcing landscape in order to identify potential new suppliers and sources of product, with a view to reducing costs whilst simultaneously driving innovation. Any shift in natural resources will be identified and incorporated into the business via this

R264 000 has been spent on internal staff managing this opportunity (Monitoring system)

Opportunity driver

Description

Potential impact

Timeframe

Direct/ Indirect

Likelihood

Magnitude of impact

Estimated financial

implications

Management

method

Cost of

management

costs for SPAR. New opportunities may arise for regional or local sourcing of natural input materials that were previously imported by suppliers for use in their products. Such opportunities could result in a reduction in input costs for certain products.

process.

CC6.1c

Please describe your inherent opportunities that are driven by changes in other climate-related developments

Opportunity driver

Description

Potential impact

Timeframe

Direct/ Indirect

Likelihood

Magnitude of impact

Estimated financial

implications

Management

method

Cost of

management

Reputation

There is increasing pressure from stakeholders, including consumers and the broader public, for large corporates to

Increased demand for existing products/services

Up to 1 year

Direct Virtually certain

Medium-high

A 2% increase in revenue as a result of this opportunity will result in additional revenue of around R 1,245 million

SPAR is actively reporting its management and actions on climate change issues in its annual integrated report as well as to the CDP. SPAR’s

R 240,000 spent on internal staff managing this opportunity.

Opportunity driver

Description

Potential impact

Timeframe

Direct/ Indirect

Likelihood

Magnitude of impact

Estimated financial

implications

Management

method

Cost of

management

address environmental issues, particularly climate change. It is becoming more important over time in the South African food retail industry that players play an active role in driving change throughout the value chain. If SPAR is able to demonstrate that it is addressing environmental and climate change issues, the overall SPAR brand is likely to benefit over time. If the company is perceived to be able to respond effectively to consumer shifts as a result of climate change, the SPAR brand would be seen favourably by the market. These issues could result in an increase in the demand for SPAR retail outlets

per year. product strategy process actively considers consumer trends and matches product with consumer needs. SPAR has a very active innovation process that has delivered over 650 new products over the past 2 years. Part of this innovation process includes identifying opportunities to reduce packaging, include recyclable, biodegradable and sustainable source materials and inks in both new and existing products. For example, SPAR charcoal briquettes are made from wood sourced from sustainable forests and donations are made to the World Wildlife Fund (WWF) for each bag sold.

Opportunity driver

Description

Potential impact

Timeframe

Direct/ Indirect

Likelihood

Magnitude of impact

Estimated financial

implications

Management

method

Cost of

management

and therefore for the SPAR Group’s goods and services.

CC6.1d

Please explain why you do not consider your company to be exposed to inherent opportunities driven by changes in regulation that have the potential to generate a substantive change in your business operations, revenue or expenditure

CC6.1e

Please explain why you do not consider your company to be exposed to inherent opportunities driven by changes in physical climate parameters that have the potential to generate a substantive change in your business operations, revenue or expenditure

CC6.1f

Please explain why you do not consider your company to be exposed to inherent opportunities driven by changes in other climate-related developments that have the potential to generate a substantive change in your business operations, revenue or expenditure

Further Information

Module: GHG Emissions Accounting, Energy and Fuel Use, and Trading

Page: CC7. Emissions Methodology

CC7.1

Please provide your base year and base year emissions (Scopes 1 and 2)

Scope

Base year

Base year emissions (metric tonnes CO2e)

Scope 1 Mon 01 Oct 2012 - Mon 30 Sep 2013

40034

Scope 2 (location-based) Mon 01 Oct 2012 - Mon 30 Sep 2013

51500

Scope 2 (market-based)

CC7.2

Please give the name of the standard, protocol or methodology you have used to collect activity data and calculate Scope 1 and Scope 2 emissions

Please select the published methodologies that you use

Please select the published methodologies that you use

The Greenhouse Gas Protocol: A Corporate Accounting and Reporting Standard (Revised Edition)

CC7.2a

If you have selected "Other" in CC7.2 please provide details of the standard, protocol or methodology you have used to collect activity data and calculate Scope 1 and Scope 2 emissions

CC7.3

Please give the source for the global warming potentials you have used

Gas

Reference

CO2 IPCC Fifth Assessment Report (AR5 - 100 year)

CH4 IPCC Fifth Assessment Report (AR5 - 100 year)

N2O IPCC Fifth Assessment Report (AR5 - 100 year)

HFCs IPCC Fifth Assessment Report (AR5 - 100 year)

CC7.4

Please give the emissions factors you have applied and their origin; alternatively, please attach an Excel spreadsheet with this data at the bottom of this page

Fuel/Material/Energy

Emission Factor

Unit

Reference

Diesel/Gas oil 2.67620 kg CO2e per liter

DEFRA 2016

Motor gasoline 2.30250 kg CO2e per liter

DEFRA 2016

Electricity 0.00094 kg CO2e per MWh

(Unaudited) data provided by the NBI - update of the figures contained in a MACC consulting publication.

Biodiesels 0.01982 kg CO2e per liter

DEFRA 2016

Further Information

Page: CC8. Emissions Data - (1 Oct 2015 - 30 Sep 2016)

CC8.1

Please select the boundary you are using for your Scope 1 and 2 greenhouse gas inventory Operational control

CC8.2

Please provide your gross global Scope 1 emissions figures in metric tonnes CO2e 39010

CC8.3

Please describe your approach to reporting Scope 2 emissions

Scope 2, location-based

Scope 2, market-based

Comment

We are reporting a Scope 2, location-based figure

We have no operations where we are able to access electricity supplier emissions factors or residual emissions factors and are unable to report a Scope 2, market-based figure

CC8.3a

Please provide your gross global Scope 2 emissions figures in metric tonnes CO2e

Scope 2, location-based

Scope 2, market-based (if applicable)

Comment

43974

CC8.4

Are there any sources (e.g. facilities, specific GHGs, activities, geographies, etc.) of Scope 1 and Scope 2 emissions that are within your selected reporting boundary which are not included in your disclosure? Yes

CC8.4a

Please provide details of the sources of Scope 1 and Scope 2 emissions that are within your selected reporting boundary which are not included in your disclosure

Source

Relevance of

Scope 1 emissions from

this source

Relevance of

location-based Scope 2

emissions from this source

Relevance of

market-based Scope 2 emissions

from this source (if

applicable)

Explain why the source is excluded

Emissions of stores owned by SPAR Group. There are roughly 35 stores owned by SPAR Group. Emissions associated with the running of the stores are from electricity usage, diesel consumption for generators, and leakages of refrigeration gasses.

Emissions are relevant and calculated, but not disclosed

Emissions are relevant and calculated, but not disclosed

SPAR Group only temporarily owns these stores when there isn’t a direct sale from one store owner to the next. This results in the SPAR Group operational boundary changing almost annually. To avoid restating the base year, emissions from these stores are excluded

CC8.5

Please estimate the level of uncertainty of the total gross global Scope 1 and 2 emissions figures that you have supplied and specify the sources of uncertainty in your data gathering, handling and calculations

Scope

Uncertainty range

Main sources of uncertainty

Please expand on the uncertainty in your data

Scope 1 Less than or equal to 2% Data Management

Calculation based on actual records of fuel usage in diesel fleet and generators

Scope 2 (location-based) Less than or equal to 2% Data Management

Calculations based on actual records of electricity consumption

Scope 2 (market-based)

CC8.6

Please indicate the verification/assurance status that applies to your reported Scope 1 emissions Third party verification or assurance process in place

CC8.6a

Please provide further details of the verification/assurance undertaken for your Scope 1 emissions, and attach the relevant statements

Verification

or assurance cycle in place

Status in

the current reporting

year

Type of verification

or assurance

Attach the statement

Page/section

reference

Relevant standard

Proportion of reported

Scope 1 emissions verified (%)

Annual process

Complete Limited assurance

https://www.cdp.net/sites/2017/49/18949/Climate Change 2017/Shared Documents/Attachments/CC8.6a/SPAR Group_CFA Verification_Statement_V1.0.pdf

Conclusion ISO14064-3

90

CC8.6b

Please provide further details of the regulatory regime to which you are complying that specifies the use of Continuous Emission Monitoring Systems (CEMS)

Regulation

% of emissions covered by the system

Compliance period

Evidence of submission

CC8.7

Please indicate the verification/assurance status that applies to at least one of your reported Scope 2 emissions figures Third party verification or assurance process in place

CC8.7a

Please provide further details of the verification/assurance undertaken for your location-based and/or market-based Scope 2 emissions, and attach the relevant statements

Location-based or market-based figure?

Verification

or assurance

cycle in place

Status in

the current

reporting year

Type of verification

or assurance



Relevant standard

Proportion

of reported Scope 2

emissions verified

(%)

Location-based

Annual process

Complete Limited assurance

https://www.cdp.net/sites/2017/49/18949/Climate Change 2017/Shared Documents/Attachments/CC8.7a/SPAR Group_CFA Verification_Statement_V1.0.pdf

Conclusion ISO14064-3

90

CC8.8

Please identify if any data points have been verified as part of the third party verification work undertaken, other than the verification of emissions figures reported in CC8.6, CC8.7 and CC14.2

Additional data points verified

Comment

Other: Outside scope ‘Outside of scopes’ emissions (more than 90% but less than or equal to 100% of reported global emissions were verified).

Additional data points verified

Comment

This includes fugitive emissions (non-Kyoto gases) and biofuels.

CC8.9

Are carbon dioxide emissions from biologically sequestered carbon relevant to your organization? Yes

CC8.9a

Please provide the emissions from biologically sequestered carbon relevant to your organization in metric tonnes CO2 8

Further Information

Page: CC9. Scope 1 Emissions Breakdown - (1 Oct 2015 - 30 Sep 2016)

CC9.1

Do you have Scope 1 emissions sources in more than one country? No

CC9.1a

Please break down your total gross global Scope 1 emissions by country/region

Country/Region

Scope 1 metric tonnes CO2e

CC9.2

Please indicate which other Scope 1 emissions breakdowns you are able to provide (tick all that apply) By facility By activity

CC9.2a

Please break down your total gross global Scope 1 emissions by business division

Business division

Scope 1 emissions (metric tonnes CO2e)

CC9.2b

Please break down your total gross global Scope 1 emissions by facility

Facility


Latitude

Longitude

Head office 34.79 -29.819594 30.861389

Eastern Cape DC 6222.89 -33.950531 25.607620

KZN DC 14032.02 -29.721837 31.003911

Lowveld DC 2081.95 -25.463142 30.970154

North Rand DC 5433.24 -25.972252 28.232412

South Rand DC 9073.79 -26.177395 28.216182

Western Cape DC 1940.05 -34.010027 18.477246

BuildIt 191.66 -29.815828 30.868396

CC9.2c

Please break down your total gross global Scope 1 emissions by GHG type

GHG type


CC9.2d

Please break down your total gross global Scope 1 emissions by activity

Activity


Mobile combustion 34947.90

Activity


Stationary combustion 81.42

Fugitive emissions 3981.08

Further Information

Page: CC10. Scope 2 Emissions Breakdown - (1 Oct 2015 - 30 Sep 2016)

CC10.1

Do you have Scope 2 emissions sources in more than one country? No

CC10.1a

Please break down your total gross global Scope 2 emissions and energy consumption by country/region

Country/Region

Scope 2, location-based (metric

tonnes CO2e)

Scope 2, market-based (metric tonnes CO2e)

Purchased and consumed electricity, heat, steam or cooling

(MWh)

Purchased and consumed low carbon electricity, heat, steam or cooling

accounted in market-based approach (MWh)

CC10.2

Please indicate which other Scope 2 emissions breakdowns you are able to provide (tick all that apply) By facility

CC10.2a

Please break down your total gross global Scope 2 emissions by business division

Business division

Scope 2, location-based (metric tonnes CO2e)


CC10.2b

Please break down your total gross global Scope 2 emissions by facility

Facility



Head Office 693.19

Eastern Cape DC 5887.20

KZN DC 12746.74

Lowvled DC 2434.65

North Rand DC 4335.84

South Rand DC 8674.41

Western Cape DC 8885.82

BuildIt 315.75

CC10.2c

Please break down your total gross global Scope 2 emissions by activity

Activity



Further Information

Page: CC11. Energy

CC11.1

What percentage of your total operational spend in the reporting year was on energy? More than 5% but less than or equal to 10%

CC11.2

Please state how much heat, steam, and cooling in MWh your organization has purchased and consumed during the reporting year

Energy type

MWh

Heat 0

Steam 0

Cooling 0

CC11.3

Please state how much fuel in MWh your organization has consumed (for energy purposes) during the reporting year 175271.04

CC11.3a

Please complete the table by breaking down the total "Fuel" figure entered above by fuel type

Fuels

MWh

Diesel/Gas oil 170441.87

Motor gasoline 556.54

Biodiesels 4302.60

CC11.4

Please provide details of the electricity, heat, steam or cooling amounts that were accounted at a low carbon emission factor in the market-based Scope 2 figure reported in CC8.3a

Basis for applying a low carbon emission factor

MWh consumed associated with low

carbon electricity, heat, steam or cooling

Emissions factor (in units of metric

tonnes CO2e per MWh)

Comment

No purchases or generation of low carbon electricity, heat, steam or cooling accounted with a low carbon emissions factor

0

CC11.5

Please report how much electricity you produce in MWh, and how much electricity you consume in MWh

Total electricity consumed

(MWh)

Consumed

electricity that is purchased (MWh)

Total electricity produced

(MWh)

Total renewable

electricity produced (MWh)

Consumed renewable

electricity that is produced by company

(MWh)

Comment

46780.43 46780.43 0 0 0 No electricity produced

Further Information

Page: CC12. Emissions Performance

CC12.1

How do your gross global emissions (Scope 1 and 2 combined) for the reporting year compare to the previous year? Increased

CC12.1a

Please identify the reasons for any change in your gross global emissions (Scope 1 and 2 combined) and for each of them specify how your emissions compare to the previous year

Reason

Emissions value (percentage)

Direction of change

Please explain and include calculation

Reason

Emissions value (percentage)

Direction of change

Please explain and include calculation

Emissions reduction activities

Divestment

Acquisitions

Mergers

Change in output

Change in methodology

Change in boundary

Change in physical operating conditions

6.38 Increase Mainly due to expansions (20,000 m2 expansion of Gilbeys satellite warehouse (North Rand)), addition of new guardhouse, electric fence, additional lighting and 9 additional forklifts (Eastern Cape) and 5,000 m2 extension of perishables facility (KZN)) especially in refrigeration.

Unidentified

Other

CC12.1b

Is your emissions performance calculations in CC12.1 and CC12.1a based on a location-based Scope 2 emissions figure or a market-based Scope 2 emissions figure? Location-based

CC12.2

Please describe your gross global combined Scope 1 and 2 emissions for the reporting year in metric tonnes CO2e per unit currency total revenue

Intensity figure =

Metric numerator (Gross global combined

Scope 1 and 2 emissions)

Metric denominator:

Unit total revenue

Scope 2

figure used

% change from previous year

Direction of change

from previous

year

Reason for change

0.000001333455612 metric tonnes CO2e 62232300000 Location-based

2.61 Decrease Although emissions have increased, revenue has increased more.

CC12.3

Please provide any additional intensity (normalized) metrics that are appropriate to your business operations

Intensity figure =

Metric numerator (Gross global combined

Scope 1 and 2 emissions)

Metric denominator

Metric

denominator: Unit total

Scope 2 figure used

% change from

previous year

Direction of change

from previous

year

Reason for change

0.000363965 metric tonnes CO2e

unit of production 228000000 Location-based

0.53 Increase

There has been a small increase in the number of cases moved from last year and the combined Scope 1 and Scope 2 emissions have increased.

21.38 metric tonnes CO2e

full time equivalent (FTE) employee

3881 Location-based

3.25 Decrease Although emissions have increased, the number of FTE has increased by 18% from last year.

Further Information

Page: CC13. Emissions Trading

CC13.1

Do you participate in any emissions trading schemes? No, and we do not currently anticipate doing so in the next 2 years

CC13.1a

Please complete the following table for each of the emission trading schemes in which you participate

Scheme name

Period for which data is supplied

Allowances allocated

Allowances purchased

Verified emissions in metric tonnes CO2e

Details of ownership

CC13.1b

What is your strategy for complying with the schemes in which you participate or anticipate participating?

CC13.2

Has your organization originated any project-based carbon credits or purchased any within the reporting period? No

CC13.2a

Please provide details on the project-based carbon credits originated or purchased by your organization in the reporting period

Credit origination

or credit purchase

Project type

Project identification

Verified to which standard

Number of credits (metric

tonnes CO2e)

Number of credits (metric tonnes

CO2e): Risk adjusted volume

Credits canceled

Purpose, e.g. compliance

Further Information

Page: CC14. Scope 3 Emissions

CC14.1

Please account for your organization’s Scope 3 emissions, disclosing and explaining any exclusions

Sources of Scope 3

emissions

Evaluation status

metric tonnes CO2e

Emissions calculation methodology

Percentage of

emissions calculated using data obtained

from suppliers or value chain

partners

Explanation

Purchased goods and services

Relevant, calculated

14882 GHG Protocol Corporate Value Chain (Scope 3) Accounting and Reporting Standard. Defra 2016 emission factors.

0.00%

Emissions associated with the production of office paper, SPAR leaflets for promotional purposes, SPAR plastic bags, and supply and treatment by the municipality of water consumed by SPAR Group are estimated based on volumes of these products consumed.

Capital goods Not relevant, explanation

Capital goods are limited in our industry. We periodically purchase new vehicles and

Sources of Scope 3

emissions

Evaluation status

metric tonnes CO2e


Percentage of



partners

Explanation

provided office equipment, but upstream emissions associated with these goods are estimated to be very small and therefore are not relevant.

Fuel-and-energy-related activities (not included in Scope 1 or 2)



0.00%

Emissions associated with the extraction and refining of the fuel we consume are estimated, as well as the upstream emissions from power stations and the transmission and distribution losses.

Upstream transportation and distribution

Relevant, not yet calculated

This will entail the supply of goods to our DCs. Data on this emission source could not be sourced for this year’s reporting.

Waste generated in operations


826.38 GHG Protocol Corporate Value Chain (Scope 3) Accounting and Reporting Standard. Defra 2016 emission factors.

0.00%

Different waste volumes are recorded at all our facilities and was used to estimate emissions associated with landfilling and recycling of specific waste streams.

Business travel Relevant, calculated

3160

GHG Protocol Corporate Value Chain (Scope 3) Accounting and Reporting Standard. Defra 2016 emission factors. For vehicle allowances it was assumed that: 40% of fuel used as part of vehicle allowance in employee's vehicles is used for business.

100.00% This includes emissions estimated for car hire, and vehicle allowances associated with business travel.

Employee commuting


3883 GHG Protocol Corporate Value Chain (Scope 3) Accounting and Reporting Standard. Defra 2016 and South African specific emission factors.

100.00%

This is based on data from an in-house employee travel survey that was conducted. Mode of travel and average travel distance was obtained from the survey.

Upstream leased assets

Not relevant, explanation provided

SPAR has no upstream leased assets.

Sources of Scope 3

emissions

Evaluation status

metric tonnes CO2e


Percentage of



partners

Explanation

Downstream transportation and distribution



100.00% This was calculated based on fuel consumption data from downstream logistics providers.

Processing of sold products


SPAR operates largely as a wholesaler of consumer goods that are sold on directly to consumers through SPAR retail stores. The impact on emissions of products sold by SPAR into retail store kitchens is deemed immaterial.

Use of sold products


Goods sold by SPAR have very little, if any, direct emissions associated with them in the usage phase and therefore this category is not relevant. The indirect emissions from the usage phase, emissions associated with transport of customers and refrigeration and cooking of food products, is large, but it is not possible to estimate these emissions.

End of life treatment of sold products


307.78 GHG Protocol Corporate Value Chain (Scope 3) Accounting and Reporting Standard. Defra 2016 emission factors.

0.00% The emissions associated with the recycling of SPAR plastic bags and the promotional leaflets were estimated.

Downstream leased assets


Spar periodically rent out buildings to franchisees, but the associated emissions are very small and are accounted for under franchises

Franchises Relevant, calculated

5000

GHG Protocol Corporate Value Chain (Scope 3) Accounting and Reporting Standard. Eskom grid emission factor. Emissions were estimated based on the number and types of stores, average floor space per type of store, and the SAN204:2011 Energy Efficiency in Buildings standard, from

0.00%

Emissions were estimated for all the stores under the SPAR brand, which include Superspar, Spar, Kwikspar, SaveMor, Tops, BuildIT and Pharmacy at Spar.

Sources of Scope 3

emissions

Evaluation status

metric tonnes CO2e


Percentage of



partners

Explanation

which a national average maximum energy requirement per square metre of a large commercial shop was obtained. It was assumed that green building practices and energy efficiency has enabled a 2% reduction in energy requirements of all franchises.

Investments Not relevant, explanation provided

SPAR has no investments.

Other (upstream) Not evaluated

Other (downstream)

Not evaluated

CC14.2

Please indicate the verification/assurance status that applies to your reported Scope 3 emissions No third party verification or assurance

CC14.2a

Please provide further details of the verification/assurance undertaken, and attach the relevant statements

Verification or

assurance cycle in place

Status in the

current reporting year

Type of

verification or assurance



Relevant standard

Proportion of

reported Scope 3 emissions verified (%)

CC14.3

Are you able to compare your Scope 3 emissions for the reporting year with those for the previous year for any sources? Yes

CC14.3a

Please identify the reasons for any change in your Scope 3 emissions and for each of them specify how your emissions compare to the previous year

Sources of Scope 3

emissions

Reason for

change

Emissions

value (percentage)

Direction of change

Comment

Purchased goods & services

Change in output 40.1 Increase An increase in emissions from SPAR plastic bags and leaflets produced, likely due to an increase in plastic bag and leaflet production

Fuel- and energy-related activities (not included in Scopes 1 or 2)


1.71 Increase Increased due to expansions

Waste generated in operations


21.77 Increase Increased due to expansions

Business travel Other: 16 Decrease Business travel as a whole has greatly reduced over this reporting period due to

Sources of Scope 3

emissions

Reason for

change

Emissions

value (percentage)

Direction of change

Comment

Behavioural change

a reduction of staff vehicle allowance which is calculated as a 40% proportion of fuel consumption allocated to business purposes. Those members of staff who receive a car allowance are travelling less over this reporting period.

Employee commuting Unidentified 0 No change

Downstream transportation and distribution


12.50 Increase Increase due to expansions

CC14.4

Do you engage with any of the elements of your value chain on GHG emissions and climate change strategies? (Tick all that apply) Yes, our suppliers Yes, our customers

CC14.4a

Please give details of methods of engagement, your strategy for prioritizing engagements and measures of success During the past year, SPAR had a focus to engage directly with smallholder farmers in the value chain to encourage sustainable farming practices and make them more resilient to climate change. This engagement was prioritised due to the large part that food products play in the SPAR product range and due to vulnerability of the agriculture sector to climate change. The success of this engagement is measured by the increased number of farmers participating. SPAR is also conducting research to improve packaging materials, which involves the engagement of packaging material suppliers to reduce the impact that they have on the environment and also the impact that the final product will have at the end of its life. The engagements with packaging material suppliers are prioritised due to the large role that packaging materials play in the SPAR-branded products. SPAR further engages with franchises (customers of SPAR Group) to assist them in reducing their carbon footprint. This is done by making recommendations on green building practices and assisting them with purchases of energy efficient technologies. This engagement is prioritised given that the franchises are the “face” of SPAR Group that the public sees and also that this is the largest Scope 3 emission category for SPAR.

CC14.4b

To give a sense of scale of this engagement, please give the number of suppliers with whom you are engaging and the proportion of your total spend that they represent

Type of engagement

Number of suppliers

% of total spend (direct and indirect)

Impact of engagement

Other: Joint business plans 14 38.30%

CC14.4c

Please explain why you do not engage with any elements of your value chain on GHG emissions and climate change strategies, and any plans you have to develop an engagement strategy in the future

Further Information

Module: Sign Off

Page: CC15. Sign Off

CC15.1

Please provide the following information for the person that has signed off (approved) your CDP climate change response

Name

Job title

Corresponding job category

Kevin James O’Brien Group Risk Sustainability & Corporate Governance Executive Board/Executive board

Further Information

CDP 2017 Climate Change 2017 Information Request