Climate Change 2017 Information Request Massmart Holdings Ltd · 2018-04-17 · Climate Change 2017 Information Request Massmart Holdings Ltd Module: Introduction Page: Introduction

Climate Change 2017 Information RequestMassmart Holdings Ltd

Module: Introduction

Page: Introduction

CC0.1IntroductionPlease give a general description and introduction to your organization.

Massmart is a managed portfolio of four Divisions, each focused on high-volume, low-margin, low cost distribution of mainly branded consumer goods for cash, through 412 stores in13 countries in sub-Saharan Africa. We are a South African retailer and wholesale distributor, with 373 stores in South Africa and 39 stores in other sub-Saharan Africa. In Africa weoperate in Botswana, Ghana, Kenya, Lesotho, Malawi, Mozambique, Namibia, Nigeria, Swaziland, Tanzania, Uganda and Zambia. However, for reporting purposes we disclose asper South Africa and Africa only.

Group brands include Game, DionWired, Makro, Fruitspot, Builders Warehouse, Builders Express, Builders Trade Depot, Builders Superstore, CBW, Cambridge Food, Jumbo Cashand Carry, Rhino and Shield. Massmart's merchandise proposition includes food, liquor, general merchandise, home improvement goods and building supplies.

CC0.2Reporting YearPlease 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 notprovided 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 ofanswering 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 recentreporting year.Please enter dates in following format: day(DD)/month(MM)/year(YYYY) (i.e. 31/01/2001).

Enter Periods that will be disclosedFri 01 Jan 2016 - Sat 31 Dec 2016

CC0.3Country 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 completingyour response.

Select countrySouth AfricaBotswanaGhanaKenyaLesothoMalawiMozambiqueNamibiaNigeriaSwazilandTanzaniaUgandaZambia

CC0.4Currency 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)

CC0.6ModulesAs 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) shouldcomplete 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 barwhen you save this page. If you want to query your classification, please email [email protected] 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

We operate in Botswana, Ghana, Kenya, Lesotho, Malawi, Mozambique, Namibia, Nigeria, Swaziland, Tanzania, Uganda and Zambia. However, for reporting purposes we discloseas per our market areas - South Africa and Africa (which includes all of these countries collectively) only.

Module: Management

Page: CC1. Governance

CC1.1Where 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

CC1.1aPlease identify the position of the individual or name of the committee with this responsibility

mailto:[email protected]

Both the Social & Ethics Committee and the Audit & Risk Committee have a broad oversight role on matters relating to climate change.The Social & Ethics Committee keeps the Massmart Board appraised of the Group's climate change progress and its responsibility towards sustainability with respect to practices thatare consistent with good corporate citizenship.The Audit & Risk Committee monitors climate change risks and updates relating to issues that are significant from a climate change perspective, such as energy consumption andwaste reduction. These are submitted to the Audit and Risk Committee and to the extent that risks are deemed material, they are included as a priority risk on the Group risk register.Members of the board, both executive and non-executive, sit on both the above-mentioned committees which allow for direct interaction with other committee members and ensurethat issues being considered are clearly communicated to the highest levels of the Company.Each Board Committee has a charter, or terms of reference, that is formally signed off by the Board and is reviewed annually by the Committees and Board to ensure relevance. Atleast one board member sits on each of the committees.

CC1.2Do you provide incentives for the management of climate change issues, including the attainment of targets?

Yes

CC1.2aPlease provide further details on the incentives provided for the management of climate change issues

Who isentitled to

benefitfrom theseincentives?

The type ofincentives

Incentivizedperformance

indicator Comment

Executiveofficer

Recognition(non-monetary)

EmissionsreductionprojectEnergyreductionprojectEnergyreductiontargetEfficiencyprojectEfficiencytargetBehaviorchangerelatedindicatorOther:Behaviourchangerelatedindicator

Formal citation award to most Socially Responsible Division within the Massmart Group. This takes into account environmental andsocial initiatives and performance. Environmental performance is measured based on energy efficiency, water efficiency, logisticsoptimization and waste reduction initiatives.

Allemployees



Key achievements in the area of environmental performance are recognised through Group media publications. These articles aremade publicly available on the Massmart website and circulated to Massmart and Walmart senior management. In addition,employees are also recognised in monthly Massmart News Live meetings and quarterly in the Massmart News internal newspaper.Environmental performance is measured based on energy efficiency, water efficiency, logistics optimization and waste reductioninitiatives.

Allemployees



All employees that have shown exceptional performance in their work are awarded with a CEO's Citation Award. CEO CitationAwards have been awarded to staff for environmental performance based on; energy efficiency, water efficiency, logisticsoptimization, waste reduction and supplier advocacy initiatives.

Who isentitled to

benefitfrom theseincentives?

The type ofincentives

Incentivizedperformance

indicator Comment

Other:Operationsmanagers



Operations managers are responsible for measuring, managing and reducing energy consumption and associated greenhouse gasemissions reduction and operations. The individuals in these functions are held accountable for progress on our greenhouse gasreduction goals and are recognised based on their performance.

Other:Suppliers


EmissionsreductionprojectEmissionsreductiontargetEnergyreductionprojectEnergyreductiontargetEfficiencyprojectEfficiencytargetBehaviorchangerelatedindicatorOther:Behaviourchangerelatedindicator

In 2009, we launched a survey-based advocacy process to motivate and benchmark responsible environmental practices in oursupply chain. As a result we have collected and shared comparative information about supplier environmental practices that hasenabled interested suppliers to compare their performance with that of their peers. To date we have profiled the environmentalpractices of over 1000 individual suppliers on up to 35 different environmental indicators. Among others environmental indicators, thesurvey addresses issues such as: energy and water consumption at supplier facilities, logistics efficiency, environmental attributes ofproduct packaging, the environmental attributes of products supplied to Massmart, environmental sanctions or censures due tosupplier practices or products and public disclosure of environmental indicators material to the supplier’s business. In 2016Massmart, for a third year running, publicly recognised the top 10 performing suppliers who demonstrated an industry leadingcommitment to sustainable environmental management and product development. These suppliers were recognised at Massmart'sAnnual Supplier Environmental Awards lunch which is attended by leading national and international NGO's and media. In addition,top-performing suppliers are also recognised in press releases and a survey report which is sent out to all participating suppliers.

Further Information

Page: CC2. Strategy

CC2.1Please 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

CC2.1aPlease provide further details on your risk management procedures with regard to climate change risks and opportunities

Frequencyof

monitoring

To whom areresults

reported?

Geographicalareas

considered

How far intothe futureare risks

considered?

Comment

Six-monthlyor morefrequently

Board orindividual/sub-set of theBoard orcommitteeappointed bythe Board

South Africa,Botswana,Ghana,Kenya,Lesotho,Malawi,Mozambique,Namibia,Nigeria,SwazilandTanzania,Uganda andZambia

3 to 6 years

Massmart evaluates climate change risks and opportunities at a group-wide, division and facility level. A widevariety of climate change related risks and opportunities are evaluated by different groups (Risk Committee and theSocial and Ethics Committee) depending on the scope of their impact, such as general regulatory risks that couldimpact company or market operations, specific regulatory and physical risks that could impact individual facilities orregional operations, and a variety of other risks and opportunities in the supply chain, operations, and at acustomer level. Massmart continuously gathers information to identify risks and opportunities through extensiveresearch and engaging with knowledgeable stakeholders. Our stakeholder engagement practices includeparticipation in stakeholder organised forums, conducting one-on-one meetings, making formal submissions toParliament, conducting stakeholder surveys, and hosting public policy and general interest discussion groups.

CC2.1bPlease describe how your risk and opportunity identification processes are applied at both company and asset level

Company level risks are seen as strategic risks: These are longer-term and more material in nature and may only be monitored and managed through longer-term strategic businessresponses. For example executive talent retention and succession, transformation and supply chain. Company-level, climate change risks are identified and investigated by asustainability unit, specifically mandated with performing this role. Risks are presented to and evaluated by different functional groups at company level (e.g. Risk Committee). Risksidentified at divisional and facility levels are discussed at a divisional level before being relayed to the sustainability unit and relevant group forums and committees situated atcompany level. This is applicable in both the evaluation of long- and short-term climate change impacts. Asset level risks are seen as operational risks: These risks (e.g. in-store health, safety and security, fire prevention and detection) can be immediately addressed by localmanagement actions and are the direct responsibility of each Divisional Executive Committee where a Loss Prevention or Risk Officer has line-responsibility. Asset level risks are

identified based on how the risk affects product availability and cost (especially relevant to staple foods which form the backbone of Massmart’s food offering in many of the ruralmarkets in which it operates) and the ability for local producers and manufacturers to operate (e.g. effect of carbon tax on supply chains).

Risks that affect multiple assets are addressed at company-level. Depending on magnitude, either a targeted approach (at asset level) or blanket approach (company level) isdeployed. For example, because Massmart operates in a water scarce part of the globe, water efficiency initiatives are deployed across the Company (long-term mitigationprocesses) however, a more targeted approach may apply for areas or assets that are specifically affected by severe drought conditions in the short-term.

CC2.1cHow do you prioritize the risks and opportunities identified?

Risks are prioritised based on the probability of the risk and the potential impact to the company’s operations and current business structure and the consequences of taking actionversus taking no action. For example, an immediate regulatory requirement mandating a reduction in waste generated to lower emissions requires immediate action to ensurecompliance. Whereas a potential regulatory change that may have impacts years into the future, but that does not currently impact our facilities, is monitored but does not necessarilydrive short-term actions.Risks are plotted and prioritised based on risk probability and estimation of impact, as per the following assessment criteria:1. Is there a legislative/regulatory driver?2. Is there a directly associated commercial implication?3. Is there resonance with Government and civil society driven social discourse?4. What is the relevance to Walmart’s Global sustainability commitments?5. What positive leverage does it present for Massmart-Walmart’s reputation in Africa?6. What practical influence is Massmart able to exert over the issue?

CC2.2Is climate change integrated into your business strategy?

Yes

CC2.2aPlease describe the process of how climate change is integrated into your business strategy and any outcomes of this process

i. A description of how the business strategy has been influenced;

The Groups strategic priorities include:1. To drive the growth and profitability of the core South African business over the medium-term; 2. To expand further into Food Retail and the Fresh categories through new stores and our existing formats in South Africa; 3. Sub-Saharan African expansion through opening Builders Warehouse, Game and Masscash stores. In the next two years we anticipate opening 11 new stores representing ex-SAspace growth of about 26.2%; and 4. To expand, improve and refine our online/e-commerce offerings in DionWired, Makro and Massbuild. All risk assessment procedures are thus aligned to ensure that the group will be able to effectively meet these strategic priorities. Climate Change risks (and opportunities) thatimpede (or enhance) our ability to meet these strategic objectives are included in to our company wide risk assessment procedures.

The majority of data collection happens on an annual basis. These data inform the GHG footprint from across the business. The results and any changes are included in reports toboth the Executive Committee and the Board. It is the responsibility of Corporate Affairs at company-level to track progress against targets, which are currently aimed at reducingenergy consumption on an intensity basis and are primarily where internal climate change mitigation takes place.We continuously evaluate supply chain risks so that we make appropriate sourcing decisions to minimise impact and where appropriate, adopt responses in the event of climateinduced impacts. This process is informed by means of the Massmart Environmental Advocacy Programme (direct engagement with Massmart’s supply chain) and through thecontinuous monitoring of climate-related risks as presented on national and international platforms (i.e. desktop and media alerts, tracking of the political landscape changes, climatechange mitigation strategies and expectations of the private sector).

ii. At least one example given of how the business strategy has been influenced;

As energy tariffs for grid electricity continue to rise and consumer and stakeholder awareness of climate change grows, a clear strategic advantage would be one that relates toreducing emissions, mitigating costs and being identified as a responsible retailer. Massmart’s climate change strategy is primarily influenced by regulatory and reputational risks, andthe need to drive down emissions. The majority of the Group’s total emissions (70-80%) are implicated in purchased electricity generation. Key resulting emissions-reductionstrategies include reducing the Company’s energy footprint through energy efficiency initiatives (such as store retrofits and technical innovation) and increasing its reliance on cleanenergy generation through the implementation of a company-wide renewable energy project.

iii. What aspects of climate change have influenced the strategy (e.g. need for adaptation, regulatory changes, or opportunities to develop green business);

Massmart’s climate change strategy is integrated into a holistic operational and supply chain management framework. These are influenced by changes to South Africa’s nationalgreenhouse gas regulations, reputational risks and opportunities to reduce operational costs and reliance on nationally-supplied electricity. The strategy is also influenced by supplychain risks and the challenges they present to ensuring secure supply of food products, especially staples.

Climate change forms an important part of project considerations and business strategy at Massmart. We are committed to playing a role in mitigating climate change impacts inareas where our actions can make a material difference. This may vary between companies and industries however, we have identified that we can have the greatest impact ongreenhouse gas emissions through reducing our Scope 2 emissions (accounts for over 75% of our combined Scope 1, 2 and 3). We are currently embarking on projects which areprimarily aimed at improving energy efficiency while reducing cost and emissions resulting from consumption of fossil-fuel generated energy. We also see opportunity to adapt todrafted national regulatory changes which seek to reduce national carbon emissions through carbon taxation and emissions reporting. Energy consumption data are currentlycollected across all operations and facilities which are part of the Massmart Group of companies. These data are then used to inform decisions to identify where certain carbonemissions-reducing projects should be prioritised. These data are reported quarterly to Massmart Head Office.

iv. How the short term strategy has been influenced by climate change (or if none, this is stated) – ‘Short term’ can mean ‘current’;

Short-term is defined as current or annual. Massmart’s short- to medium-term strategy is one of prioritising energy efficiency initiatives through implementation of energy savingprojects (which are also necessary to achieve our long-term intensity target of 10% reduction overall). These include the use of daylight harvesting in stores and distribution centres,installation of/conversion to LED lighting and business management systems (BMS), on-going roll-out of online consumption meters and CO₂ refrigeration. Additionally, wecontinuously evaluate supply chain risks so that we make appropriate sourcing decisions to minimise impact and where appropriate, adopt responses in the event of climate inducedimpacts.

v. How the long term strategy has been influenced by climate change (or if none, this is stated);

Long term is defined as 5-6 years. Longer term strategies at store and facility level involve exploration of renewable energy solutions once energy efficiency has been optimised atstores and DCs. Massmart has already implemented a photo-voltaic pilot project (a decision endorsed by the Board in 2015) as part of developing specific long-term goals in thisarea.

vi. How the Paris Agreement has influenced the business strategy (e.g. the process of transition planning alongside the ratcheting of Intended Nationally Determined Contributions(INDCs));

The Paris Agreement has not yet influenced the business strategy, but has paved the way for the company to set more ambitious science based targets. The process of consideringthese types of targets is currently underway, and will be aligned to a future strategy to manage our emissions performance.

vii. How this is gaining a strategic advantage over your competitors; and

Addressing climate risks assists us in reducing costs thus making us more competitive, as well as improving our reputation which assists us with gaining greater market share and

improving shareholder confidence.

viii. Do you use forward-looking scenario analyses, including a 2oC scenario, to inform your organization’s businesses, strategy, and/or financial planning?

Currently, no.

CC2.2c Does your company use an internal price on carbon?

No, and we currently don't anticipate doing so in the next 2 years

CC2.3Do 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 makersTrade associationsOther

CC2.3aOn what issues have you been engaging directly with policy makers?

Focus oflegislation

CorporatePosition Details of engagement Proposed legislative solution

Energyefficiency Support

Massmart supports government’s drive to improve energy efficiency and reduce carbonemissions. Massmart also attends discussions with government and key stakeholdersrelated to the introduction of new regulations around energy efficiency labelling on whitegoods. Makro has engaged with Eskom (a government parastatal) regarding theirdemand side management programmes and has contributed to Eskom energyawareness campaigns.

Massmart continues to identify opportunities to install moreenergy efficient technology in its stores and distributioncentres and help empower its consumers to make moreenvironmentally responsible choices by promoting energyefficient products where available and ensuring compliancewith national energy efficiency regulations.

Cleanenergygeneration

Support

Through the implementation of Massmart's pilot PV project, engagement with localgovernment has centred on permission to install power generation facilities on site,investigating the benefits of renewable energy and how to accommodate renewables inwith the current national strategy for energy generation. Discussions have also includedtopics around low and medium voltage net-metering (not currently available) for grid-tiedsystems. The legalities of entering into power purchase agreements with entities otherthan Eskom have also been discussed.

Massmart supports regulation which promotes clean energy.We would like to see regulations that allow for widespreadparticipation from any interested party and that stipulate asubsidies framework to assist with migration to a morediverse energy mix. Regulations should also aim to reduceor remove barriers and provide incentives to promoteincreased adoption of clean energy.

CC2.3bAre you on the Board of any trade associations or provide funding beyond membership?

Yes

CC2.3cPlease enter the details of those trade associations that are likely to take a position on climate change legislation

Tradeassociation

Is yourposition

on climatechange

consistentwith

theirs?

Please explain the trade association's position How have you, or are you attempting to, influence the position?

NationalBusinessInitiative(NBI)

Consistent

The NBI’s position on climate change is that; climatechange and energy are no longer purely ofenvironmental concern but are becoming an importantissue in economics and sustainable business. Theadverse changes to climate and the depletion of energyresources have a direct impact on the "business asusual" approach. NBI, therefore, aims to mobilisebusiness as a whole towards the formulation of abusiness climate change response strategy through:increased awareness, voluntary collective action, policyengagement, mitigation activities, adaptation, andpromotion of capacity building initiatives throughpartnerships.

Massmart supports energy efficiency initiatives and engages with the National BusinessInitiative (NBI) on an on-going basis. As member of the sustainable retail forum and withrespect to a request from Greenpeace, Massmart requested the NBI to approachgovernment on its behalf around issues, relating to renewable energy policy. Massmart haspreviously worked closely with the NBI's Private Sector Energy Efficiency (PSEE)programme where we identified suppliers through our supplier advocacy process who hadthe potential to benefit from the completion of free and/or partially subsidised energy audits.Further to that Massmart actively engaged with these suppliers and asked them to makecontact with the NBI and also provided their contact details to the NBI. Massmart has alsostated the importance of moving toward a renewable energy future and has reiterated theimportance of engaging with government to form a clear climate change strategy whichfundamentally incorporates renewable energy.

WorldWildlifeFund

Consistent

The World Wildlife Fund (WWF) has set a goal for theworld to develop an equitable low carbon economy by2050, which is resilient to the level of climate changethat is now unavoidable. To this end, the WWF isadvocating for a new international climate agreement,promoting energy efficiency, renewable energy sources,preventing greenhouse gas emissions fromdeforestation and developing and promoting climatechange adaptation strategies.

Massmart proactively supports energy efficiency initiatives and engages with the WWF onan on-going basis.

Greenpeace Consistent

Greenpeace's mission is to work with others to fosterenvironmental consciousness whereby Africa's peopleseek social and economic prosperity in ways thatprotect the environment for the benefit of humans, theplanet, and the future. Greenpeace is driving acampaign with the major retailers in South Africa toswitch to renewable energy. As per this campaign,Greenpeace is interacting with all retailers with a pushto transform the retailers into 100% renewable energy.As part of this drive, the organisation produces reportsand ranks each of the retailers.

Massmart supports Greenpeace's drive for greater widespread adoption of renewablesaccess in South Africa, and is providing as much data as is required. Massmart attendedand was a panel participant at the launch of Greenpeace’s “Retailers and RenewableEnergy Report”. Other panel participants included representatives from Woolworths, theCSIR, Eskom and the South African Photovoltaic Industry Association (SAPVIA). Thedebate touched on issues including renewable energy implementation, legalities, Eskom-specific views and implications of a renewable energy future in South Africa. Massmart metwith Greenpeace Africa and the National Business Initiative to discuss challenges andobstacles to renewable energy installations and implementation within the retail sector.These concerns were to be raised at an appropriate time with Government per the NBI’sliaison function.

ConsumerGoodsCouncil ofSouth AfricaCGCSA)

Consistent

The CGCSA facilitates stakeholders’ engagement onrisk, safety, compliance and sustainable issues acrossthe consumer goods value chain; as well aschampioning advocacy projects transparently to allmembers since 2002. The CGCSA is partnering withthe DTI and DoE in their introduction of energyefficiency standards and labelling appliances in SouthAfrica.

Massmart is in support of labelling and products, and supplying energy efficient products.Massmart attended a meeting hosted by the CGCSA on energy efficiency labels andminimum energy performance standards (MEPS) for white goods.

CC2.3e

Please provide details of the other engagement activities that you undertake

Massmart maintains an open-door-policy with our stakeholders and whilst we utilise more formalised mechanisms of engagement such as workshops and surveys to track ourstakeholders’ perceptions and feedback, throughout the year stakeholder engagement also takes the form of informal dialogues and discussions as well as regular correspondence.For example, Massmart conducts an annual supplier environmental survey with our suppliers. The survey tracks our supplier environmental performance and perceptions. Amongother environmental indicators, the survey addresses issues such as; energy consumption at manufacturing facilities, operational water consumption, logistics efficiency, andenvironmental attributes of both products and packaging supplied to Massmart. In addition to this, Massmart conducts site visits, media reviews and engages with a number ofenvironmental NGO's to verify responses provided in the supplier environmental survey, and when needed we conduct workshops with suppliers to address key environmental issueswithin the supply chain. In addition, we participated in the Department of Environmental Affairs (DEA) steering committee on e-waste and we’ve engaged heavily with GreenpeaceAfrica with regards to their renewable energy advocacy initiative. As a part of this we also participated in an interactive Greenpeace-hosted panel on renewable energy in the retailspace. We have also arranged and facilitated a joint session between other retailers, NBI and Greenpeace to discuss challenges, etc. in the retail sector with regards to renewableenergy.

CC2.3fWhat 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?

Direct and indirect communication activities are overseen by the Group's Sustainability Manager who is also responsible for defining the Group's climate change strategy.Core to Massmart's corporate accountability approach is the Group’s commitment to integrate commerciality and accountability. This commitment has given rise to Massmart's threesustainability themes, which are: minimise the group environmental footprint, to enable sustainable supply and consumerism and champion social equality initiatives. The focus ofMassmart's climate change strategy is related to minimising the Group's environmental footprint by improving operational energy efficiency and minimising water use and wastegeneration. As such, Massmart's corporate accountability model and objectives compliment the Group's climate change strategy and goals.

Further Information

Page: CC3. Targets and Initiatives

CC3.1Did you have an emissions reduction or renewable energy consumption or production target that was active (ongoing or reached completion) in the reporting year?

Intensity target

CC3.1bPlease provide details of your intensity target

ID Scope% of

emissionsin scope

%reduction

frombaseyear

Metric Baseyear

Normalizedbase yearemissionscovered by

target

Targetyear

Is this ascience-

basedtarget?

Comment

Int1Scope 2(location-based)

47% 0%

MetrictonnesCO2epersquaremeter*

2010 0.343 2020

No, butweanticipatesettingone inthe next2 years

This target refers specifically to scope 2 emissions of DionWired and Gamestores only within the Massdiscounters division. These stores accounted for 47%of all scope 2 emissions during the base year. These targets exclude all non-store facilities and Africa stores. In 2013, Massmart set electricity reductiontargets against a business as usual projection. The projections assumed thatboth Game would be transitioning towards a more energy intensive space of foodretail, utilising more refrigeration and HVAC. The BAU projections for Gamewould therefore allow a significant increase in energy consumption per squaremeter (26%). DionWired’s location in energy intensive shopping centreenvironments was also expected to result in increases in intensity here but notnearly to the same degree (allow for a 12 % increase). The targets forMassdiscounters stores was to reduce this BAU scenario by 8% by 2020. Whentranslating this into an intensity target, emissions intensity would need to becapped at the same emissions intensity as that of the base year. Note all targetswere calculated based on a South African grid emission factor of 1 Tonne CO2per MWh (at time of base year), which has not changed significantly throughoutthe reporting years.


27% 0%


2010 0.373 2020


This target refers specifically to scope 2 emissions of Makro stores only withinthe Masswarehouse division. These stores accounted for 27% of all scope 2emissions during the 2010 base year. These targets exclude all non-storefacilities and Africa stores. In 2013, Massmart set electricity reduction targetsagainst a business as usual projection. The projections used assumed thatMakro stores would be transitioning towards a more energy intensive space offood retail, utilising more refrigeration and HVAC. The BAU projections for wouldtherefore allow a 26% increase in energy consumption per square meter. Thetargets for Makro stores was to reduce this BAU scenario by 13% by 2020. Whentranslating this into an intensity target, emissions intensity would need to becapped at the same emissions intensity as that of the base year. Note all targetswere calculated based on a South African grid emission factor of 1 Tonne CO2per MWh (at time of base year), which has not changed significantly throughoutthe reporting years.


11% 10%


2010 0.11 2020


This target refers specifically to scope 2 emissions of Masscash Cash and Carryand Jumbo stores only within the Masscash division. These stores accounted for11% of all scope 2 emissions during the 2010 base year. These targets excludeall non-store facilities and Africa stores. In 2013, Massmart set electricityreduction targets against a business as usual projection. The emission reductiontarget of 10% was set against the BAU projection, The projections used for theseMasscash stores assumed no fundamental change in the business model, andtherefore when translating this into an intensity target, this is represented as anintensity target of 10%. Note all targets were calculated based on a South Africangrid emission factor of 1 Tonne CO2 per MWh (at time of base year), which hasnot changed significantly throughout the reporting years.

ID Scope% of

emissionsin scope

%reduction

frombaseyear

Metric Baseyear

Normalizedbase yearemissionscovered by

target

Targetyear

Is this ascience-

basedtarget?

Comment


14% 0%


2010 0.09 2020


This target refers specifically to scope 2 emissions of Builders Warehouse,Builders Express and Builders Trade Depot of the Massbuild division only. Thesestores accounted for 14% of all scope 2 emissions during the 2010 base year.These targets exclude all non-store facilities and Africa stores. In 2013,Massmart set electricity reduction targets against a business as usual projection.The projections assumed that Builders Express stores specifically would betransitioning towards a smaller, more energy intensive store sizes, utilising moreHVAC. The BAU projections would therefore allow a significant increase inenergy consumption per square meter (an increase of 33%), Builders warehouseprojections also allowed for an energy intensity increase of 12%. The targets forMassbuild stores was to reduce this BAU scenario by 11% by 2020. Whentranslating this into an intensity target, emissions intensity would need to becapped at the same emissions intensity as that of the base year. Note all targetswere calculated based on a South African grid emission factor of 1 Tonne CO2per MWh (at time of base year), which has not changed significantly throughoutthe reporting years.

CC3.1cPlease also indicate what change in absolute emissions this intensity target reflects

ID

Direction ofchange

anticipated inabsolute Scope

1+2 emissions attarget

completion?

% changeanticipatedin absoluteScope 1+2emissions

Direction ofchange

anticipated inabsolute Scope 3

emissions attarget

completion?

% changeanticipatedin absolute

Scope 3emissions

Comment

Int1 Increase 98 No change 0

Our projected growth rate (in square meters) was estimated to be 73% by 2020. Based on theestimations in our BAU scenario (modelled on a transition towards higher intensity food based retailstores) our energy consumption was estimated to grow by 116%. However the 8% reduction fromBAU translates to an actual MWH growth of 98%. We are already tracking much better than thetargets, showing a much lower absolute emissions growth than projected.


Our projected growth rate (in square meters) was estimated to be 81% by 2020. Based on theestimations in our BAU scenario our energy consumption was estimated to grow by 110%. Howeverthe 13% reduction from BAU translates to an actual MWH growth of 83%. We are already trackingmuch better than the targets, showing a much lower absolute emissions growth than projected.





CC3.1eFor all of your targets, please provide details on the progress made in the reporting year

ID

%complete

(time)

% complete(emissions

or renewableenergy)

Comment

Int1 60% 100%

The intensity target was based on a BAU projection, estimated in 2013. Since this time Massmart has embarked on a range of energy efficientprogrammes (outlined below and in previous CDP responses), which has resulted in energy intensity improvements throughout all its stores. Bythe end of this reporting year the Massdiscounters stores achieved an energy intensity of 0.224 MWh per m2, this is an achievement of 175% ofthe set target.

Int2 60% 100%

The intensity target was based on a BAU projection, estimated in 2013. Since this time Massmart has embarked on a range of energy efficientprogrammes (outlined below and in previous CDP responses), which has resulted in energy intensity improvements throughout all its stores. Bythe end of this reporting year the Makro stores achieved an energy intensity of 0.284 MWh per m2, this is an achievement of 132% of the settarget.

Int3 60% 97%

The intensity target was based on a BAU projection, estimated in 2013. Since this time Massmart has embarked on a range of energy efficientprogrammes (outlined below and in previous CDP responses), which has resulted in energy intensity improvements throughout all its stores. Bythe end of this reporting year the Masscash stores achieved an energy intensity of 0.108 MWh per m2, this is an achievement of 97% of the settarget.

Int4 60% 100%

The intensity target was based on a BAU projection, estimated in 2013. Since this time Massmart has embarked on a range of energy efficientprogrammes (outlined below and in previous CDP responses), which has resulted in energy intensity improvements throughout all its stores. Bythe end of this reporting year the Massdiscounters stores achieved an energy intensity of 0.080 MWh per m2, this is an achievement of 136% ofthe set target.

CC3.2Do 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

CC3.2aPlease 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 ofaggregation

Description of product/Group of products

Are youreporting

low carbonproduct/sor avoidedemissions?

Taxonomy,project or

methodologyused toclassify

product/s aslow carbon

or tocalculateavoided

emissions

%revenuefrom lowcarbon

product/sin the

reportingyear

% R&D inlow

carbonproduct/s

in thereporting

year

Comment

Group ofproducts

Energy efficient products which allow our customers to avoid emissions associated withnationally-supplied grid electricity. Products include energy efficient lighting products (CFL &LED products), solar products (water heating and lighting), natural gas products (cookers andheaters) and thermal insulation products. In addition, indirect emissions avoidance isfacilitated through water- saving products such as low-flow/aerated showerheads andregulators. Other products in the range which assist consumers to avoid emissions includerechargeable batteries, low VOC paints and increased recyclability of products andpackaging. In 2016 1.4 million low energy lamps were sold amounting to an estimated 98million kWh savings (98000 tonnes CO2e avoided emissions). More than 42 000 waterefficient product alternatives sold achieving sales of R119.3 million.

Avoidedemissions

Other:Internallycalculatedenergyefficiencyclassificationmethodology.

0.4%Less thanor equalto 10%

Product

Post-consumer e-waste recycling service. All Makro stores now assist consumers in reducingemissions through an e-waste return and recycling programme in association with Samsungand Desco. In 2016, 106 tonnes of e-waste was recycled and over 845 tonnes has beenrecycled since the programme’s inception.

Avoidedemissions

Other:Recyclingprogramme

0%Less thanor equalto 10%

CC3.3Did you have emissions reduction initiatives that were active within the reporting year (this can include those in the planning and/or implementation phases)

Yes

CC3.3aPlease 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 0 0To be implemented* 1 600Implementation commenced* 0 0Implemented* 6 56500Not to be implemented 0 0

CC3.3bFor those initiatives implemented in the reporting year, please provide details in the table below

Activitytype

Description of activity

EstimatedannualCO2e

savings(metrictonnesCO2e)

Scope Voluntary/Mandatory

Annualmonetarysavings

(unitcurrency

- asspecifiedin CC0.4)

Investmentrequired

(unitcurrency -

asspecifiedin CC0.4)

Paybackperiod

Estimatedlifetime of

theinitiative

Comment

Energyefficiency:Buildingservices

Integration of Building Management Systems primarily atMassbuild sites. Implementation commenced in previousreporting periods, but rolled out across 10 additionalstores during the reporting period. (implemented)

16000Scope 2(location-based)

Voluntary 16642000 7000000 1-3years

16-20years

This projectcommencedin 2013. Herewe arereporting theadditional 10sites thatcame onlineduring thereportingperiod to atotal of 39stores and 1office (40entities) at ~R175 000 perinstallationwith estimatedefficienciesimprovementof a minimumof 35%.

Energyefficiency:Buildingfabric

Massmart has been on a retrofit programme to replace allhigh-bay halogen lighting with more efficient LED lightsprimarily at Massbuild and Masswarehouse. Thisprogramme commenced in previous reporting periods,but was rolled out to a further 18 sites during thisreporting period. (implemented)


Voluntary 743633 2052000 1-3years 6-10 years

This projectcommencedin 2013. Herewe arereporting onthe additional18 stores thatcame onlineduring the2016reportingperiod(bringing thetotal of storesto 27 stores).Saving of187W perlight fitting(213W highbay LED vs.400Whalogen).

Activitytype

Description of activity

EstimatedannualCO2e

savings(metrictonnesCO2e)

Scope Voluntary/Mandatory

Annualmonetarysavings

(unitcurrency

- asspecifiedin CC0.4)

Investmentrequired

(unitcurrency -

asspecifiedin CC0.4)

Paybackperiod

Estimatedlifetime of

theinitiative

Comment

Lowcarbonenergyinstallation

Massmart commenced investigations and implementationof a renewable energy programme in 2015. In 2016, solarPV projects were implemented at two Massmartlocations. Makro Carnival, which opened in April, becamethe first building in the Massmart Group to make use ofrenewable energy. The 2,080 solar photovoltaic (PV)panels installed on its roof have the capacity to generatealmost one million kilowatts of electricity per annum,accounting for approximately 60-80% of the building’selectricity needs during the day and 30% of the store’stotal annual energy requirements. Makro Woodmeadfollowed in Makro Carnival’s footsteps by installing aneven larger solar PV plant in the store’s car park. Notonly is it estimated to supply roughly 20% of the store’sannual electricity needs, it offers the added benefit ofshaded parking for customers.(implemented)


Voluntary 330200 0 <1 year 16-20years

No investmentcapitalrequired, aselectricity ispurchased ata cheaperrate form athird party.

Wasterecovery

Our objective remains to reduce waste to landfill byprioritising the separation and recycling of paper, plasticand board at our stores and distribution facilities. Wehave made considerable effort to improve our recyclingrates by circulating online waste assessments, workingclosely with waste service providers and monitoringwaste generation across our facilities. Currently, 89% ofall stores are actively engaged in separating andrecycling their waste, resulting in an estimated 25,000tons of waste being diverted from landfill in 2016. Thosestores not recycling are located in areas where we are, atpresent, unable to find reliable vendors to perform thisfunction. During the year, Makro and Massbuildsuccessfully negotiated national waste managementcontracts that have seen the number of waste serviceproviders reduced by 86%. In Makro alone, associatedcost savings have amounted to approximately R2 million.(implemented)

28000 Scope 3 Voluntary 15000000 0 <1 year 16-20years

Wastemanagementstill results ina net cost tothe businesshowever,rebates fromrecyclablesprovide alevel ofsubsidy whichcan be viewedas a costsaving(rebates varybutconservativelyare in theregion ofR600/tonne.

Energyefficiency:Buildingfabric

Massmart embarked on a programme to install andretrofit daylight harvesting panels at all standalone stores(primarily Makro and Massbuild). This started in 2011, butduring the reporting year, 5 new stores were retrofitted.(implemented)


Voluntary 5448600 54000000 4-10years

16-20years

The savingsindicated areannualsavings todate. 100 000kWh perstore, perannum. 54stores (16Makro, 38Massbuild)with daylightharvesting.Up to R 1millioninvestmentper store.

Energyefficiency:Buildingservices

Massmart embarked on a programme to retrofit olderinefficient and high GWP refrigerant systems with moreefficient and lower emissions CO2 systems, mostlythroughout all Makro stores. (implemented)

10000 Scope 1 Voluntary 0 0 1-3years

16-20years

Capitalinvestment onnaturalrefrigeration istypically 8-10% higherthan similarmainstreamrefrigerationplants usingsyntheticrefrigerants.Paybackperiod is 2-3years and socapital costsand savingsare notindicated hereas anabsolutevalue.

Lowcarbonenergyinstallation

As part of its Solar PV rollout, Massmart has alreadycommissioned the 3rd such site for 2017. (To beImplemented)


Voluntary 150000 0 <1 year 16-20years

Massmart isin a PPA witha 3rd partythat sellselectricity at arate cheaperthan wouldhave beenfrom thenational grid.No capitalcosts arerequired forthis.

CC3.3cWhat methods do you use to drive investment in emissions reduction activities?

Method Comment

Compliance withregulatoryrequirements/standards

Regulatory requirements drive investment in emissions reductions initiatives across Massmart operations because we align our business to be incontinued compliance with state, provincial and municipal requirements. For example, the waste management act drives investment in more efficientwaste management processes and has resulted in greater emphasis being placed on the rationalisation of secondary packaging.

Dedicated budget forenergy efficiency

Although the size of the budget for energy efficiency varies between Massmart divisions, budget is allocated on a divisional basis for both new storesretrofits, which enables the installation of more energy efficient technology and a more energy efficiency logistics system.

Dedicated budget forother emissionsreduction activities

Massmart sets aside budget for the reduction of other emission sources. Examples include a shift towards the use of natural gases in Massmart'srefrigeration units (new Makro stores) and the installation of photo-voltaic power plants.

Financial optimizationcalculations

Massmart invests in energy efficiency projects to reduce business operating costs. This has led to the roll out of programmable check meters across allMassmart divisions and retrofitting of existing stores with more energy-efficient technology. This is on-going. In addition, Massmart is implementingbusiness management systems (BMS) which remotely monitor and manage energy consumption in Cambridge Food, Game and Builders Warehousestores. In 2016 we have completed the introduction of another 10 BMS systems, bringing the total to 40 since roll-out began in 2014.

Lower return oninvestment (ROI)specification

Massmart calculates the profitability and plausibility of energy efficiency and renewable energy projects on a store-by-store basis. In cases where storescan still optimise energy efficiency, projects that improve efficiencies usually have a payback period of maximum 4 years while renewable energy projectsare designed to ensure a payback period of between 5 - 7 years. Projects are designed to ensure that energy efficiency investments are targeted atoptimising energy reductions and return on investment.

Further Information

Page: CC4. Communication

CC4.1Have 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 CDPresponse? If so, please attach the publication(s)

Publication Status Page/Section reference Attach the document Comment

Inmainstreamreports(includinganintegratedreport) inaccordancewith theCDSBFramework

Complete Pg 88 - Natural Capitalhttps://www.cdp.net/sites/2017/20/11420/ClimateChange 2017/SharedDocuments/Attachments/CC4.1/MassmartIAR2016.pdf

Emissions intensity, and other resourceconsumption intensity reported.

Inmainstreamreports(includinganintegratedreport) inaccordancewith theCDSBFramework

CompleteWeb based report:http://www.massmart.co.za/iar2016/environmental-performance-indicators/

No file attached for web based report, that is webbased version of the Integrated PDF Report.http://www.massmart.co.za/iar2016/environmental-performance-indicators/

Further Information

Module: Risks and Opportunities

Page: CC5. Climate Change Risks

CC5.1Have 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 regulationRisks driven by changes in physical climate parametersRisks driven by changes in other climate-related developments

CC5.1aPlease describe your inherent risks that are driven by changes in regulation

Risk driver DescriptionPotentialimpact

Timeframe

Direct/Indirect

Likelihood

Magnitudeof impact

Estimatedfinancial

implications Management method Cost of

management

Carbontaxes

The South African governmentintends to introduce a carbon taxin line with its commitment toreduce greenhouse gasemissions nationally as part ofinternational agreements. Thecommitments directly impact onMassmart through potentialtaxation of Massmart’s Scope 1emissions as well as increases inelectricity prices across theGroup’s operations as a result ofincreased taxation levied againstEskom, the primary energyprovider across Massmart’soperations. The Proposed taxrate of R120 per tonne CO₂e maybe reflected as an effective rate ofR48 per tonnes CO2e once allallowances are allocated.Although Massmart is unlikely tobe subject to the tax directly for atleast the first phase (5 years),should the carbon tax beimplemented, electricity cost mayincrease immediately, and shouldthe exemptions be reduced infuture, Massmart may be liable topay tax on all of its scope 1emission in the future.

Increasedoperationalcost

1 to 3years Direct Very likely Medium-

high

Massmart'scurrent Scope 1emissions arebelow the 100000thresholdproposed byGovernment,based on this thedirect cost ofScope 1 taxationof emissions islikely to benegligible.However shouldgovernmentlower thethreshold,Massmart maybe liable to paybetween R0.75 -R2 million for itsSouth Africanbased operationsscope 1emissions. Scope2 emissionsrepresentbetween 70-80%of Massmart’stotal carbonemissions.Eskom hasalready increasedenergy tariffs by12.69% in 2015.Should thisenergy cost befurther increasedwith the advent ofthe Carbon tax, itcould have asignificantimplication forenergy pricesand Massmart’soperational costsit is expected thatthis tax will bepassed on inMassmart'sSouth Africanoperations.Should Eskompass on the fullZAR48 per tonneCO2e, this wouldtranslate toZAR48 per MWh.The over430000MWh thatMassmartconsumes in SAcould result inover ZAR20Million additionalcost to electricityper annum.

Massmart managesScope 1 emissionsprimarily by targetingfugitive emissions fromair-conditioning andrefrigeration systemswhich have high globalwarming potentials. NewMakro stores contain(and older stores arebeing retrofitted with)efficient CO₂refrigeration which has asignificantly lower globalwarming potential and ismore energy efficient. Inmost BuildersWarehouse stores andsome Makro stores,evaporative cooling isused as a moresustainable alternative totypical air-conditioning,reducing Massmart’sScope 1 emissionsfootprint. Managing thefinancial implicationsthat a carbon tax willlikely have on gridenergy tariffs, Massmarthas implemented energyefficiency measureswhich include:installation ofindependent checkmeters, fitting newMakro and BuildersWarehouse stores withlight metering, auto-lighting systems anddaylight-harvesting.These interventionsensure that new Makrostores are on average25% more efficient thanlegacy stores. New SolarPV installations are alsoestimated to reducestore reliance on gridenergy by up to 33%annually. By settingenergy reduction targetsand placing greateremphasis on energyefficiency Massmart ismanaging the risksassociated with energyinstability, tariff increasesand simultaneouslyreducing its overallcarbon footprint(predominantly Scope 2emissions).

The cost ofinstallingenergyefficienttechnologies(e.g. lightmeteringsystems, highperformancerefrigerationunits) areincorporatedinto the storedevelopmentcosts of eachstore. Theinstallation ofpolycarbonatelight boxes innewgenerationMakro andBuildersWarehousestores areestimated atZAR500000-ZAR1000000per store.Photo-voltaicpower plantcost modelsare variablebut rangefrom ZAR1-5million.

Fuel/energytaxes andregulations

South Africa has historicallybenefited from relatively cheapelectricity. However, the price ofelectricity rose rapidly from anaverage of 17c/kWh in 2006 to99c/kWh in 2016 (average tariffthroughout the Group in SA).Escalating energy prices have thepotential to significantly increaseoperating costs in the future.Given the increased demands forenergy and the shortage ofexcess generation capacity inSouth Africa, it is likely that theseincreases will continue. Inaddition to the increases seen in2015, the National EnergyRegulator of South Africa(NERSA) has approved a 2%increase in energy tariffs effectivefrom April 2016, and this mayincrease significantly in2017(proposed 20% increase).Continued substantial increasesin energy tariffs significantlyimpacts Massmart’s operatingcosts


1 to 3years Direct Very likely Medium-

high

Electricityoutages andenergy pricehikes are likely toimpact storeoperations andthe Group'soperational costs.It expected thatenergy pricevolatility will havefurther impactson operatingcosts in thefuture. In Randterms, anincrease of 9.4 %will result inadditional ZAR40 million – 45million inelectricity costsper annum.

To address electricityprice volatility Massmartis currently implementingmodular photo-voltaicsystems that reduceenergy costs. We expectthat as a result of 3 newrenewable energyinstallations, there couldbe an annual estimatedR 650 000 – R900 000worth of financial benefitto the business throughparticipation in carbontrading andconsumption-relatedexpenses based on thepilot project alone. Inaddition, we continue toimplement a range ofenergy efficiencyinitiatives across ourstores. These includelighting retrofits, theinstallation of efficientevaporative coolers andhigh performancerefrigeration units.Massmart has prioritisedoperational energyefficiency through thedevelopment of a Groupenergy guidanceposition which makesmonitoring and recordingof monthly energyconsumption mandatory,programmable checkmeters and thedevelopment of storespecific energyefficiency plans thatdefine energy savingswhen benchmarkedagainst legacy stores,indicate expectedenergy savings in thecase of store retrofitsand keep track ofprogress towardachieving energytargets.

Theinstallation ofpolycarbonatelight boxes innewgenerationMakro andBuildersWarehousestores is on-going (storesopened after2008) areestimated atZAR500000 -ZAR1000000per store.BuildingManagementSystems(BMS) whichremotelymonitor andmanageenergyconsumptionand energymeteringcosts are on-going. Suchsystems areavailable onthe marketfrom betweenZAR150000 -ZAR250000.The price ofenergymonitoringmeters ragefrom ZAR100- ZAR500 persite. Smallscale PVinstallationscost betweenZAR1-2millionhowever,establishmentof large-scale,long-termpowerpurchaseagreementsincur nocapital costsrelevant toMassmart.

Emissionreportingobligations

The National EnvironmentalManagement Act: Air Quality Act:Draft National Greenhouse GasReporting sets out to incorporategreenhouse gases, as priority airpollutants. Under this regulation,companies with specific listedemission generating activities arerequired to report on their GHGemissions to nationalgovernment, using the NAEISreporting framework. Theregulations were promulgated intolaw in April 2017. The only risk toMassmart with such a regulationis that the company mayeventually meet the threshold interms of the listed activity ofenergy generation (throughgenerators) when taking intoaccount the entire generatingcapacity of all its generatorsthroughout South Africa. The riskof failure to report could result inpenalties.


1 to 3years Direct Unlikely Medium-

high

Under theregulation, shoulda company suchas Massmart failto comply, orprovides falseinformation, thatcompany can besubject to a finenot exceedingZAR5 Million, andpotentialimprisonment notexceeding 5years. A secondoffence, couldresult in a fine notexceedingZAR10Million andimprisonment notexceeding

Massmart has beenmeasuring its GHGinventory for since 2010,and has for the past 4years been verifyingthese emissions, and isimproving on the scopeand boundaries, and onthe internal carbonmanagement systems.Massmart is alsodeveloping a registry ofenergy generatingcapacity, to ensure thatthresholds are not met,and if they are met, thatthe company will beready for submittingemissions data.

The cost ofmeasuringand verifyingall scope 1and 2emissionsamounts toaboutZAR160000per year -This figuretakes intoaccount costsrelated to in-house staffand third-partyverificationand CDPreportcompilation.Additionalconsultantsmay berequired todevelop a listof assets thatinclude listedemissionsactivities, andfor submittingthat data totheDepartment ofEnvironmentalAffairs.Consultantscould cost uptoZAR100000.

CC5.1bPlease describe your inherent risks that are driven by changes in physical climate parameters

Risk driver Description Potential impact Timeframe Direct/Indirect

Likelihood

Magnitudeof impact

Estimatedfinancial

implications

Managementmethod

Cost ofmanagement

Change inmean(average)temperature

Mean temperature changeinfluences a number of keyabiotic processes including;rainfall patterns, meanprecipitation, oceanictemperatures and ice capmelting. Slight changes in theseabiotic factors can lead tonatural disasters such as floodsand droughts which coulddecrease the resilience ofMassmart's diverse supplychain. For example; theseabiotic factors play a huge rolein determining global foodproduction and agriculturaldevelopment. South Africa andthe African countries in whichMassmart operates in are for themost part seasonally arid,therefore a change in meantemperature could have negativeimpacts on crop yield andproduction through decreasedsoil moisture which underminesfood production causingpotential disruption to the foodsupply chain and particularly, thesupply of staple foods such asmaize, sugar and wheatproducts and fresh fruit andvegetables. Such disruptions arelikely to lead to an increase inthe price of staple foods, priceinflations negatively affectconsumers.

Reduction/disruptionin productioncapacity

1 to 3years

Indirect(Supplychain)

Likely Medium

Ultimately, thefinancialimplications ofassociated with thisrisk will likely be aloss of sales due toproducers/suppliersbeing unable toadapt to changingand unpredictableclimatic conditions.A hypothetical 25%drop in productionof key commoditycrops resultingfrom climate-induced conditionssuch as droughtcould potentiallyaffect annual salesof a single productby as much asZAR320 million.

As a retailer,Massmart isless likely tobe affecteddirectly byphysicalclimatechanges butwe realise thatthere arepotentiallyseriousimpacts on oursuppliers.Understandingthe effects ofdesertificationand howclimate cyclessuch as ElNiño affect,especiallyfoodproductionassists withrespondingappropriatelyto theassociatedrisks. Since2012Massmart hasengaged withfoodproducersincludingstaplessuppliers suchas maize.Beyond directinvestment,Massmartcontinues tomanage risksin this areathrough closeengagementwith forumswhich is key tomitigate priceand supplyfluctuations. InadditionMassmartproactivelyengages withits supplychain onenvironmentalinitiativeswhich allowsus to assesstheir level ofresilience as afirst step toidentifyopportunitiesto advocatefor betterpractices thatwould insulatethem fromclimatechange risks.

Massmart’ssupplierdevelopmentprogramme(SDP) has,since itsinception,invested ZAR17 million infoodproducers.The SDPprogramme isdirectlyfocussed onpromotingsupply chainsustainabilityand buildingresilience.During 2016,Massmartinvested R1million inamong otherthings insmall scalecommoditysuppliers whohad beenimpacted bythewidespreaddroughtsacross thecountry.Engaging withour supplychain onclimatechange riskscosts anestimatedZAR 250000per annum.


Likelihood

Magnitudeof impact

Estimatedfinancial

implications

Managementmethod

Cost ofmanagement

Inducedchanges innaturalresources

Changes in ocean conditionscan impact the sourcing of fishand fishing activities throughchanges in migration patternsand this could also result intighter limits being implementeddue to stock depletion. Inaddition increased carbondioxide levels may lead to theacidification of oceans, whichmay lead to further losses in fishbiodiversity, thus compromisingfood security and our ability tomeet our customer’s seafooddemands. For example shouldocean conditions impact pilchardstock biomass this wouldsignificantly reduce an importantprotein source for a largenumber of South Africans andalso result in price increases dueto fishing restrictions. In recentyears such climate changerelated disruptions have becomemore apparent and have thepotential to impact Massmart'sability to meet customerexpectations and demands.

Reduction/disruptionin productioncapacity

>6 years Direct Likely Medium-high

The financialimplicationsassociated with thisrisk have not beenfully calculated,however they willbe dependent onthe type of seafoodspecies (whetherthey are part of ourproduct offering ornot) affected by thechanges in oceanicconditions and thescope of change. Ifinduced changesimpacted onseafood productsourcing by 15%for example, itcould potentiallyimpact sales bybetween ZAR50-80million.

ThroughMassmart’ssustainablemarineadvocacyprocess,which includesannualseafoodspeciesassessments,suppliersurvey,workshops,site visits andone-on-onemeetings withour suppliers,buyers andNGO’sregardingsustainablemarinesourcing andfish stockhealth. Basedon theseengagementswe makesourcingdecisions suchthat we sourcesustainablefish speciesfrom wellmanagedfisheries.Throughevaluating thesustainabilityof the fishspecies wesource we arebetter able toidentify eachspecies'biomass andhow we canrespond toclimate relatedimpacts inthesefisheries.

The costsassociatedwithmanaging thisrisk arecoveredannually andareincorporatedin Massmart’sstakeholderengagementand researchbudget andtheenvironmentalsustainabilityand reportingbudget.Seafoodworkshopscost in theregion ofZAR5000-ZAR10000depending onthe number ofattendeesand onaverage wehave oneannually. Inaddition, ourWorld WildlifeFund (WWF)annualmembershipis ZAR25000.The WWFengagesclosely withgovernmentand they areinvolved inpolicydecisionmaking.Supplierengagementthroughsurveys andsite visits tounderstandclimate risks,amongstothers, costsapproximatelyZAR250000per annum.


Likelihood

Magnitudeof impact

Estimatedfinancial

implications

Managementmethod

Cost ofmanagement

Change intemperatureextremes

South Africa experienced itshottest year on record in 2016,with indication that years aregetting hotter. Higherenvironmental temperatureshave prompted an increase inenergy demand for refrigerationand ambient air temperaturecontrol in stores. As climatechange continues to influenceextremes in weather andtemperature, it is likely tobecome more of a risk throughincreased operating costs andenergy consumption.

Increasedoperational cost

Up to 1year Direct Virtually

certainMedium-high

Financialimplicationsassociated with thisrisk will likelyinvolve increasedenergyconsumptionrelated costs.Coupled withcontinuedincreases innational energytariffs, unavoidablegrid-electricityconsumption willresult inconsiderableincreases inenergy-relatedexpenditure.Refrigeration andair conditioningconsumeapproximately 30%of our storeconsumption, and ifwe look at anaverage storefootprint, increasedin cooling energyrequirements of forexample 5% wouldresult in anincreased cost ofZAR5.4 Million, ifwe continue in aBAU scenario.

Massmartmakes use ofevaporativeair-cooling(along withthermalinsulation) inselectedstores whichare lessenergyintensivealong withhighperformancerefrigerationsystems thathave beenoptimised forhigh ambienttemperatures.In addition,Massmart hasan active pilotphoto-voltaicpowergenerationprogrammewhich willassist withreducing costsassociatedwith increasedenergyconsumptionvia thenational grid.New storesare designedto be morethermally inertand lessaffected byexternaltemperaturefluctuations.

Massmart’senergyefficiencyprojects arebuilt into theenergyefficiencybudget. Initialcostsassociatedwith initiativesareapproximately30% moreexpensivethan thetypicalalternativeshowever, thecost savingsthroughimprovedefficiencyover timeoutweigh thecosts of theinitialinvestment.The cost ofinstallingenergyefficienttechnologies(e.g. lightmeteringsystems, highperformancerefrigerationunits) areincorporatedinto the storedevelopmentcosts of eachstore. Theinstallation ofpolycarbonatelight boxes innewgenerationMakro andBuildersWarehousestores areestimated atZAR500000-ZAR1000000per store.Photo-voltaicpower plantcost modelsare variablebut rangefrom ZAR1-5million.

CC5.1cPlease describe your inherent risks that are driven by changes in other climate-related developments

Riskdriver Description

Potentialimpact

Timeframe

Direct/Indirect

Likelihood

Magnitudeof impact

Estimatedfinancial

implications

Managementmethod

Cost ofmanagement

Reputation

Climate change could sensitiseconsumers to the importance ofsustainable corporate practices.This could result in greaterexpectations being placed onretailers to demonstrateenvironmental sustainabilityprogress within both theiroperations and supply chains.Our perspective is that althoughthe majority of our customerscontinue to make purchasingdecisions based on cost andvalue proposition. A core group ofcustomers who are passionateabout corporate accountabilityhave a significant voice inlobbying for sustainable practicesin the retail sector and canchange the shopping behaviour ofothers. Failure to be identified bythese consumers as anenvironmentally responsibleshopping destination may erodeour consumer base, decrease oursales and affect the company’sreputation going forward.

Reduceddemand forgoods/services

3 to 6years Direct Likely Medium

Climate changemay lead tochanges inconsumerdemand.Massmart runsthe risk of adecrease inbrand andshare value if itis perceived asfailing toadequatelyaddressrelevant climatechange risks.This risk couldresult inconsumersdefecting tocompetitorswho areperceived tooffer moreenvironmentallyresponsiblechoices.Althoughdifficult toestimate, a 2%decrease insales couldresult in lossesofapproximatelyZAR3billion

In order to managethese risks, thefollowing action hasbeen taken: -We trackcustomer attitudes toenvironmentallyresponsibleconsumerism throughcustomer interceptsurveys. -IntroducedEcowise merchandiserange to increaseenvironmentallyresponsiblepurchasing practices(all BuildersWarehouse privatelabel productsintroduced in 2013carry an Ecowisepanel), expertise andsupplierinfrastructure. -Wecontinue to widen thecomprehensive rangeof energy-efficientproducts, increasethe number of GreenStands at selectedBuilders Warehouseand Builders Expressstores, which promotemore energy andwater efficientproducts toconsumers. -Wecontinue to run ourpost-consumer e-waste take-backinitiative which allowscustomers toresponsibly disposeof their electronicwaste. -Massmartcontinues to conductenvironmentalscreening on productattributes to ensurethat consumers haveaccess to sustainableproducts thatconsider climate andthe environment. ---We communicate inthe following ways:In-storecommunications(notices), eco-labelling (e.g. eco-wise label), on packmessaging (privatelabel), in-storebanners (e.g. MakroCarnival). Alsothrough brandcampaign – ads inSawubona andDestiny magazine.Visits to suppliers withjournalists (MassmartSupplierEnvironmentalAdvocacyProgramme).

The cost ofMassmart’sannualcustomersurvey whichincludestrackingcustomerattitudes toenvironmentallyresponsibleconsumerism isbuilt into theGroup'sstakeholderengagementbudget.Annually, costsassociated withthe customerintercept surveyandstakeholderengagementare betweenZAR100000-200000. TheBuildersWarehouseEco-wise paneland Greenstands have notbeencalculated,however theyare built intothe Group'sproductmerchandisingbudget. Thecosts of thepost-consumere-waste takeback initiativeare estimatedto be in excessof ZAR1 millionper year.However, notall of thesecosts arecovered directlyby Massmartand itsdivisions. Thecost associatedwithcommunicatingwith ourcustomers arebuilt into theGroupscommunicationand marketingbudget. GroupUpdates thatdetailMassmart’ssustainabilityand climatechange relatedinitiatives costan estimatedZAR3500 perupdate.

Further Information

Page: CC6. Climate Change Opportunities

CC6.1Have you identified any inherent climate change opportunities that have the potential to generate a substantive change in your business operations, revenue or expenditure? Tick allthat apply

Opportunities driven by changes in regulationOpportunities driven by changes in physical climate parametersOpportunities driven by changes in other climate-related developments

CC6.1aPlease describe your inherent opportunities that are driven by changes in regulation

Opportunitydriver Description Potential impact Timeframe Direct/Indirect Likelihood Magnitude

of impact

Estimatedfinancial

implications Management method Cost of

management

Fuel/energytaxes andregulations

New energy tariffstructures andsubsidies aimed atreducing electricityand fuel demands andpromoting energyefficiency maypresent opportunitiesto invest in newtechnologies andinfrastructure.Currently solarinstallations arelimited by maximumviable generationcapacity at a storelevel. Should a net-metering schemecome into effect, theincentive to increasethe size of current andfuture PV installationswould have positivecost implicationsthrough sale ofrenewable energy.

Investmentopportunities


Solar PVinstallationswould allow forthe sale ofexcessgeneratedrenewableenergy backinto the nationalgrid, this wouldhinge on theresale ofelectricitythrough ourPPAs (thecurrent model).We coulddoublegeneratingcapacity atMakro storesand quintuple itat BuildersWarehousestores. Storeswhich are inlower tariffareas (2020) vs.2020 energygoals (2010->2020) -Calculatedcumulativeyear-on-yeardifferences inconsumptionfrom projectiondata - Usedcurrent averageelectricity tariffexperiencedacross theGroup(R0.99/kWh) asa watershed,+-8% forinflation perannum -Cumulativesavings (2010->2020)representedconservativelyasZAR355539000.

Massmart is focusedon improving theenergy efficiency andlogistics efficiency ofits operations and hasaggressivelyimplemented energyefficiency initiatives inits stores. Massmarthas implementedvoluntary carbonemissions reductionsmeasures whichinclude: theinstallation ofindependentprogrammable checkmeters and BuildingManagement Systemsin its stores and DC’sand the installation ofa range of energyefficiencytechnologies acrossits facilities. Inaddition, Massmartproactively engageswith the NBI andEskom and otherpolicy makers toidentify and prioritiseopportunities to makeuse of energyefficiency subsidies toincrease the pace ofinvestment in greenand energy efficienttechnologies.Massmart hasengaged localrenewable energyservice providers andwe are currentlyimplementing a pilotphotovoltaic (PV)project at ourstandalone stores anddistribution centres.Grid-tied onsiterenewable energyprojects have thepotential to greatlyreduce our energycosts and scope 2carbon emissions. Todate we havecompleted 40successful BMS's. Todate we havecompleted 40successful BMS's.

The costsassociated withmanaging thisopportunity areassociated withthe collectionand analysesof the Group'senergyconsumptiondata. BuildingManagementSystems(BMS) andenergymetering costsare on-goingand range frombetweenZAR200000 -220000 persite. To datewe havecompleted 40successfulBMS's.Managementcostsassociated withsolarinstallationsthrough apowerpurchaseagreement areminimal. Thereis an estimatedcost implicationof ZAR20-30million shouldMassmartdouble PVcapacity atexisting storesand roll-outincreasedgenerationcapacity toinitially, about30 new stores.This wouldhowever, allowfor the sale ofexcessgeneratedrenewableenergy backinto thenational grid.

Cap andtradeschemes

The proposed carbontax by the SAGovernment makesan allowance for up to10% of emissions tobe offset byinvestment into localemission reductionprojects. As such,companies such asMassmart couldpotentially register anemission reducingproject as a localproject that couldhave credits sold tothe local SA market.This could beparticularly viableshould Massmart beexempt from the tax,as any reducingactivities will not bedouble accounted.

Increase incapital availability

3 to 6years Direct

About aslikely asnot

Low-medium

The proposedoffset schemeimplies thatthere will be asignificantmarket forcarbon creditsat anythingbelow theZAR120 per tonvalue of the tax.Massmart maybe able toregister acarbon projectat one ormultiplelocations, suchas a programmeof solar PVactivities, andsell the resultingemissionreductions.ShouldMassmartdouble thecapacity of justone of its smallpilot PV plantsapproximately 2000 tonnes ofCO₂e would beavailable fortrade annually.At the currentcarbon tax rate,sale of suchcredits couldgenerate up toZAR240000 peryear.

Massmart managesboth risks andopportunities with aphased PV roll-outapproach.Implementing pilotprojects beforeundertaking large,costly initiatives alsoprovides for mitigationof risk while exploringthe feasibility ofopportunities. Pilotprojects are alsodesigned with long-term objectives andexpectations in mind.Current pilot PVprojects are grid-tiedand are net-meteringcompatible inexpectation ofEskom’s new net-metering scheme.Projects have alsobeen designed insuch a way as toallow for expansionand integration whennew regulations andenergy-generationprovisions areinitiated.

Themanagementcosts ofparticipating incarbon tradinghave not beenfully evaluatedat this stage asthere are anumber ofchanges whichare expectedafter theCarbon Tax Billcomes intoeffect as wellas throughadjustments toregulation byindustry.Massmart alsoconsiderscarbon tradingas currently along-termopportunityhowever,managementcosts per sitemay currentlyincludeexpensesrelating todesigndocumentdevelopment(~ZAR150000),validation andregistration(~ZA250000)as well asmonitoringcosts ofexisting sitesand annualverificationprocedures(~ZAR150000).

Productefficiencyregulationsandstandards

New legislation insupport of energyefficiencyinterventions andheightened mediacoverage regardingmore environmentallyfriendly products andpractices may assistin creating greaterconsumer awarenessabout the need forresponsibleenvironmentalconsumerism, whichhas the potential tostimulate demand forenvironmentallyresponsible productsand enable Massmartto increase the sizeand scale of ourenvironmentallyresponsible productoffering

Increaseddemand forexistingproducts/services

1 to 3years Direct More likely

than notLow-medium

The financialimplications ofthis opportunityhave not yetbeen quantified.

Massmart hasimplemented a varietyof consumerorientated initiatives tosupport moreenvironmentallyconsciousconsumerism. Theseinclude; Greenproduct aisles inMassbuild stores, theintroduction of acomprehensive rangeof high efficiencylighting technologiesand appliancesoffered in BuildersWarehouse, Gameand Makro stores. Wehave also installedwater harvestinginitiatives across 72Builders and Makrosites. In addition, wehave introduced aconsumer advocacypanel on pack throughour Eco-wise productrange to call attentionto products that areenvironmentallysensitive or that play arole in saving waterand energy. Inaddition, Massmartengages its supplychain regardingenergy efficiencylabelling on largeappliances. We alsoengage withgovernment and withsuppliers regardingregulations thatgovern productefficiency andsustainability.

The costsassociated within-storecustomerawarenesshave been builtinto the productmerchandisingbudget. Thecostsassociated withimproving in-store energyefficiency areincorporated inthe storedevelopmentbudget. Waterharvestingplants costZAR60000 -100000 perstore.

CC6.1bPlease describe your inherent opportunities that are driven by changes in physical climate parameters

Opportunitydriver

Description Potential impact Timeframe

Direct/Indirect

Likelihood

Magnitudeof impact

Estimatedfinancial

implications

Managementmethod

Cost ofmanagement

Inducedchanges innaturalresources

Climate change induced changes innatural resources may require a reviewof the origins and manner in whichMassmart sources products. Changesmay prompt a change in logisticspractices for example becausealternative food sources are sourcedfrom further afield and require theCompany to innovate and strategise inorder to keep costs down so as toreduce impact on consumers. Thesenew innovations may be rolled outacross the Group logistics operationsthus providing a benefit holistically.This review could highlightopportunities to improve internalefficiencies with regards to processes,logistics and sourcing, and potentiallylead to new product development andrange expansion.

Newproducts/businessservices

>6 yearsIndirect(Supplychain)

Likely Low-medium

It is difficult toquantify thefinancialimplicationsassociatedwith thisopportunity.However,using salesfigures basedoncomparableproduct rangeexpansions,this couldpotentiallyincreaseGroupturnover bybetween0.05-0.1%based on2016 financialresults, thiscan beestimated ata potentialadditionalZAR500Million Randrevenue.

We managetheseopportunities byproactivelyengaging oursuppliersthoughenvironmentalsurveys, directengagementswith NGO’s. In2016 weengaged over380 suppliersthroughenvironmentallyfocusedadvocacysurveys. Byunderstandingour supplychain andsupplierpractices weare better ableto identify andact on newsourcing,logistics andmanufacturingopportunities.

The costassociatedwithmonitoringsupplierenvironmentalpractices,NGOexpectationsandmonitoringconsumerpreferencesand demandsare built inMassmart’sstakeholder,research andmarketingbudget.Annually,costsassociatedwithstakeholderengagementare betweenZAR100000-ZAR200000.

Change inprecipitationextremesanddroughts

Southern Africa has been identified asone of the region’s most vulnerable toclimate change. Changing rainfallpatterns, desertification and increasedtemperatures have the potential todisrupt food production and supply.However these challenges provideopportunities to re-evaluate groupsourcing strategies and buildresilience.


1 to 3years

Indirect(Supplychain)

Likely Low-medium

Fresh foodretail isexpected tocontribute agreaterproportion toMassmart’sapproximatelyZAR91 billionturnover.Disruptions tothe fresh foodsupply chainhave thepotential tosignificantlyaffect theGroup'sprofitability.

Massmart hastrained over760 farmersand included139 smallholder farmersinto our supplychain. Acomponent ofthis supportwas aimed atassistingfarmers toproduce foodmoresustainably andimprove overallproducerresilience.Although thisprogrammewas concludedin 2015, itprovides anexample of oneof the manysupply chaindevelopmentinitiatives thatwe haveimplemented toimprovesupplierproductivity andincrease supplyresilience.

As part of theSupplierDevelopmentProgramme,established in2011 as aresult of theWalmart-Massmartmerger,Massmart hasto date,disbursedapproximatelyZAR17millionsince theinception oftheprogramme,ZAR2.3million ofwhich wasdisbursed in2015, acomponent ofwhich wenttowardsustainablefarmingpractices andfarmertraining.

CC6.1cPlease describe your inherent opportunities that are driven by changes in other climate-related developments

Opportunitydriver

Description Potential impact Timeframe

Direct/Indirect

Likelihood

Magnitudeof impact

Estimatedfinancial

implications

Managementmethod

Cost ofmanagement

Reputation

Media and NGO discourseregarding the impacts and causesof climate change has thepotential to alter customer opinionregarding good corporategovernance. The role thatMassmart plays in dealing withissues like climate changeprovides Massmart with anopportunity to strengthen itsconsumer base by reactingtimeously and responsibly tothese issues. Reducing emissionsand acting against climatechange can enhance Massmart’sreputation amongst customers,investors and employees.



The estimatedfinancialimplicationsassociated withthis opportunityare difficult tocalculate.However, giventhat 35.9% ofMassmartconsumerssurveyed in2013expressed astrongpreference forenvironmentallysensitiveproducts it isnotunreasonableto expect thatconsumersshopping at ourcompetitorsshare similarviews.Attractingenvironmentallyconsciousconsumersaway from ourcompetitorsmaysignificantlybenefit sales.Should soundenvironmentalpractice arise inan increasedmarket share ofonly 1% - thiscould result inincreasedrevenue of overZAR900 million.(based on 2016revenue)

We recognizethat advocacyto suppliers andcustomersoffers significantopportunity tolimit harmfuleffects ofconsumerismon theenvironment.We thereforecontinue tofocus onintensifyingenvironmentaladvocacyefforts withthesestakeholders.This includessurveying theenvironmentalpractices ofsuppliers andincreasing thenumber of Eco-wise productswe offer tocustomers. Inaddition, wefocus onproactivelycommunicatingourenvironmentalpriorities andinitiatives in ourstores, on theMassmartwebsite andthrough directcommunicationswith keystakeholderssuch as NGO’s,industry thoughtleaders andGovernment.

Engagementcosts are on-going and ashas alreadybeen noted,range fromZAR100000-ZAR200000, acomponent ofwhich goestowardsenvironmentalsurveys ofsuppliers,environmentalworkshops,supplier sitevisits andenvironmentallyorientatedcommunications.In addition, issuespecific GroupUpdates thatdetailMassmart’ssustainabilityand climatechange relatedinitiatives costan estimatedZAR3500 perupdate.

Otherdrivers

Due to Massmart's size it iscapable of democratising theprice of environmentallyresponsible goods and growingits market share in this area. Thiscould happen mainly throughprice negotiation as part of moreaffordable private label productofferings. E.g. Builders new LEDlight bulb range which offers LEDproducts at reduced prices and inbulk packs.


3 to 6years Direct More likely

than not Medium

The financialimplications ofthis opportunityhave not beenquantified.However, to putthis opportunityin perspectivesales energyefficient lightsonly in 2016amounted toover ZAR40Million in Whileconsumerspending onsolar geysershas lead theexpansion ofthe range.

Massmart hasimplemented avariety ofconsumerorientatedinitiatives tosupport moreenvironmentallyconsciousconsumerism.These include;Green aisles innew Massbuildstores and acomprehensiverange ofalternative highefficiencylightingtechnologiesoffered incertain BuildersWarehouse,Game andMakro stores.

Managementcosts areminimal andincluded withinthe divisionalproductmerchandisingbudgets. Thesecosts will beallocatedannually as partof the budgetingprocess.

Otherdrivers

Waste degradation at landfill is amajor source of greenhouse gasemissions. Programmesdeveloped to reduce emissionsrelated to waste disposal mayresult in additional focus beingplaced on waste diversionopportunities that incentiviserecycling, recovery and reuse ofwaste. These programmes couldreduce waste management anddisposal costs and help lowertotal emissions.

Reducedoperational costs


Massmart'swastemanagementcosts are highlyvariable.However,industry wastedisposal costsrange fromZAR1000 -ZAR1200 percollection. Inaddition, toensurerecyclables arerecovered,onsite sortingstaff arerequired at acost ofapproximatelyZAR7000 permonth alongwith compactorcosts ofZAR2400 permonth. Thesecosts arehowever offsetthrough theintroduction ofsubsidisedrecycling leviesand tariffs. Notonly would thisreduce the totalcost of wastemanagementacross theGroup, but itcould alsoprovide anadditionalsource ofrevenue. In thisregard aZAR0.5 subsidyincrease per Kgof paper couldpotentially bringthe Group anadditionalZAR12m inrevenueannually.

To facilitate thediversion ofwaste fromlandfill.Massmart hasdrafted a wastemanagementguidance note.The guidancenote requiresthe mandatoryrecycling ofpaper, boardand plastic at allMassmartstores.Massmartconducts anannual store-level onlinewastemanagementsurvey toquantify theamount ofrecyclable andnon-recyclablewaste currentlygenerated atour stores aswell as toensurecompliance withnational andmunicipalstandards andregulations.Based on the2016 surveyand subsequentwaste datasampling weestimate thatwe divertedapproximatelyan additional 25000 tonnes ofwaste fromlandfill.

The costassociated withmanaging thisopportunity isincorporated intheenvironmentalsustainabilityand compliancefunction, and adedicatedresource whosetime spent onwastemanagement isestimated to beover ZAR200000per annum.Onsite wastemanagementcosts can varyfrom ZAR1000 -9200 per site permonth. Althoughthese costs areon-going, upfrontinvestments inwastecompactors, toassist withrecycling, arealso madewhereappropriate fornew stores.

Changingconsumerbehavior

Climate change could sensitiseconsumers to the need to makemore environmentally consciouspurchasing decisions. This couldresult in an increase in consumerdemand for more sustainable andless environmentally harmfulproducts. Over the years, forexample, we have noted anincrease in sales in alternativeenergy products such as gasgeysers, cookers, heaters, solarlights and energy saving LEDlights. Consumer-demand drivenhighlights in 2014 includeincreased sales in alternativeenergy products, Massmart cancapitalise on this opportunity byexpanding the range of suchproducts, thus driving up sales,as we did in 2016 where Builderslaunched a new range of privatelabel LED light bulbs which offercustomers high value for money.

Increaseddemand forexistingproducts/services


Given thatconsumerdemands arecomplex, wide-ranging andhighly variablethe potentialfinancialimplications aredifficult toquantify.However, anincreasedmarket share ofonly 1% couldresult inincreasedrevenue of overZAR900 million(based on 2016revenue).

We manageconsumerexpectationsthroughsustainablesourcinginitiatives forexamplerelating toseafood andenergy efficientproducts andproactivecommunicationto customersregarding oursustainabilityefforts in store,on theMassmart andindividual brandwebsites, and inthe annualreport.Massmart alsocommunicatesnewsworthyachievementsthroughjournalisticpublicationssuch asEngineeringNews and CityNews. Inaddition, allMassbuildprivate labelproducts havesince 2013 anEco-wiseconsumerinformationpanel. Buildersintroduced aprivate labelLED light bulbwhich offershigh value formoney.

The costassociated withcommunicatingwith ourcustomers isbuilt into theGroup’scommunicationand marketingbudget. GroupUpdates thatdetailMassmart’ssustainabilityand climatechange relatedinitiatives costan estimatedZAR3500 perupdate.

Further Information

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

Page: CC7. Emissions Methodology

CC7.1Please provide your base year and base year emissions (Scopes 1 and 2)

Scope Base year Base year emissions (metric tonnes CO2e)Scope 1 Fri 01 Jan 2010 - Fri 31 Dec 2010 15521.8Scope 2 (location-based) Fri 01 Jan 2010 - Fri 31 Dec 2010 297133.71Scope 2 (market-based) Fri 01 Jan 2010 - Fri 31 Dec 2010 0

CC7.2Please 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 useDefra Voluntary Reporting GuidelinesThe Greenhouse Gas Protocol: A Corporate Accounting and Reporting Standard (Revised Edition)

CC7.2aIf 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 2emissions

CC7.3Please give the source for the global warming potentials you have used

Gas ReferenceCO2 IPCC Fourth Assessment Report (AR4 - 100 year)CH4 IPCC Fourth Assessment Report (AR4 - 100 year)N2O IPCC Fourth Assessment Report (AR4 - 100 year)HFCs IPCC Fourth Assessment Report (AR4 - 100 year)

CC7.4Please 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 ReferenceDiesel/Gas oil 2.67620 metric tonnes CO2e per liter DEFRA 2016

Further Information

Only location based scope 2 emissions were include in the base year. Market based scope 2 emissions are therefore submitted as "0". Although MM does have some market basedscope 2 emissions in the reporting year, location-based result has been used as a proxy since a market- based result cannot be calculated for the base year. Please refer to theattached list of emission factors for all scope 1 and scope 2 emission factors used in our calculations.

Attachments

https://www.cdp.net/sites/2017/20/11420/Climate Change 2017/Shared Documents/Attachments/ClimateChange2017/CC7.EmissionsMethodology/MM_Emission_Factor_2017.xlsx

Page: CC8. Emissions Data - (1 Jan 2016 - 31 Dec 2016)

CC8.1Please select the boundary you are using for your Scope 1 and 2 greenhouse gas inventory

Operational control

CC8.2Please provide your gross global Scope 1 emissions figures in metric tonnes CO2e

75113

CC8.3Please describe your approach to reporting Scope 2 emissions

Scope 2, location-based Scope 2, market-based CommentWe 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 areunable to report a Scope 2, market-based figure

CC8.3aPlease provide your gross global Scope 2 emissions figures in metric tonnes CO2e

Scope 2, location-based Scope 2, market-based (if applicable) Comment468879 0 We have responded as "0" to market based emissions, as per our answer to section cc8.3 above.

CC8.4Are 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 notincluded in your disclosure?

Yes

CC8.4aPlease 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

Relevanceof Scope 1emissionsfrom thissource

Relevance oflocation-based

Scope 2emissions from

this source

Relevance ofmarket-based

Scope 2 emissionsfrom this source (if

applicable)

Explain why the source is excluded

Stationary Fuel emissions excluded for allRhino Stores. This accounts for 19 out of431 stores or 47,693 m2 out of2,461,392m2 of total GLA (less than 2%)

Emissionsare notevaluated

No emissionsexcluded


Activity Data was not available for calculations. It is estimated that theseemissions would represent less than 2% of Massmart Group StationaryFuel Emissions, which would be far less than 1% of total scope 1 andscope 2 emissions, and are therefore not material

Fugitive emissions for all Rhino Stores.This accounts for 19 out of 431 stores or47,693 m2 out of 2,461,392m2 of totalGLA (less than 2%)

Emissionsare notevaluated



Activity Data was not available for calculations. It is estimated that theseemissions would represent less than 2% of Massmart Group StationaryFuel Emissions, which would be far less than 1% of total scope 1 andscope 2 emissions, and are therefore not material

CC8.5Please 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 Uncertaintyrange

Main sourcesof

uncertaintyPlease expand on the uncertainty in your data

Scope 1More than 10%but less than orequal to 20%

Data GapsExtrapolationDataManagement

Data Management & Data Gaps: For some stores/facilities systems are not yet in place to collect generator fuel usage andrefrigerant gas loss data. Consumption of mobile and stationary fuels could not always be separated. Extrapolation: Wherepossible, estimation was used to fill data gaps.

Scope 2(location-based)

More than 10%but less than orequal to 20%

Data GapsExtrapolationMetering/MeasurementConstraintsDataManagement

Data Management & Data Gaps: For some stores/facilities systems are not yet in place to record monthly kWh consumption.Extrapolation: Estimation was used for data gaps and/or unreliable data. Metering/ Measurement constraints: Online metering isnot yet installed in all stores/facilities.

Scope 2(market-based)

More than 10%but less than orequal to 20%

Data GapsExtrapolationMetering/MeasurementConstraintsDataManagement

Data Management & Data Gaps: For some stores/facilities systems are not yet in place to record monthly kWh consumption.Extrapolation: Estimation was used for data gaps and/or unreliable data. Metering/ Measurement constraints: Online metering isnot yet installed in all stores/facilities.

CC8.6Please indicate the verification/assurance status that applies to your reported Scope 1 emissions

Third party verification or assurance process in place

CC8.6aPlease provide further details of the verification/assurance undertaken for your Scope 1 emissions, and attach the relevant statements

https://www.cdp.net/sites/2017/20/11420/Climate%20Change%202017/Shared%20Documents/Attachments/ClimateChange2017/CC7.EmissionsMethodology/MM_Emission_Factor_2017.xlsx

Verificationor

assurancecycle in

place

Status inthe

currentreporting

year

Type ofverification

orassurance

Attach the statement Page/section reference Relevantstandard

Proportionof

reportedScope 1

emissionsverified

(%)

Annualprocess Complete Limited

assurance

https://www.cdp.net/sites/2017/20/11420/ClimateChange 2017/SharedDocuments/Attachments/CC8.6a/MassmartFY16 Verification Statement_20170607.pdf

Verification Standard - Introduction (Page 1) VerifiedEmissions - GHG Assertion (Page 1) Specific Exclusions -Specific Exclusions from Reporting Boundary (Page 2)Qualifications - Final Verifier Opinion and Qualifications(Page 3)

ISO14064-3 100

CC8.7Please 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

CC8.7aPlease 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 ormarket-basedfigure?

Verificationor

assurancecycle in

place

Status inthe

currentreporting

year

Type ofverification

orassurance

Attach the statement Page/Section reference Relevantstandard

Proportionof

reportedScope 2

emissionsverified

(%)

Location-based

Annualprocess Complete Limited

assurance

https://www.cdp.net/sites/2017/20/11420/ClimateChange 2017/SharedDocuments/Attachments/CC8.7a/MassmartFY16 Verification Statement_20170607.pdf

Verification Standard - Introduction (Page 1)Verified Emissions - GHG Assertion (Page 1)Specific Exclusions - Specific Exclusions fromReporting Boundary (Page 2) Qualifications -Final Verifier Opinion and Qualifications(Page 3)

ISO14064-3 100

CC8.8Please 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 andCC14.2

Additional data pointsverified Comment

Year on year change inemissions (Scope 2)

Electricity consumption for 2015 was verified by an independent 3rd party. A different independent 3rd party verified the 2016 results, and also verifiedchange in electricity consumption between the two years based on the fact that 2015 data was independently verified.

CC8.9Are carbon dioxide emissions from biologically sequestered carbon relevant to your organization?

No

Further Information

Page: CC9. Scope 1 Emissions Breakdown - (1 Jan 2016 - 31 Dec 2016)

CC9.1Do you have Scope 1 emissions sources in more than one country?

Yes

CC9.1aPlease break down your total gross global Scope 1 emissions by country/region

Country/Region Scope 1 metric tonnes CO2e

South Africa 70609Africa 4504

CC9.2Please indicate which other Scope 1 emissions breakdowns you are able to provide (tick all that apply)

By business divisionBy activity

CC9.2aPlease break down your total gross global Scope 1 emissions by business division

Business division Scope 1 emissions (metric tonnes CO2e)Massbuild 3854Masscash 22584Massdiscounters 28744Masswarehouse 18420Massmart Services 1511

CC9.2dPlease break down your total gross global Scope 1 emissions by activity

Activity Scope 1 emissions (metric tonnes CO2e)

Company-owned vehicles and mobile equipment 25860Stationary Fuels (Generators) 4320Fugitive Emissions (HFCs/PFCs) 44933Fugitive Emissions (non-Kyoto gases) 11336

Further Information

We operate in Botswana, Ghana, Kenya, Lesotho, Malawi, Mozambique, Namibia, Nigeria, Swaziland, Tanzania, Uganda and Zambia. However, for reporting purposes we discloseas per our market areas - South Africa and Africa (which includes all of these countries collectively) only. Please note: Values provided for CC 9.1 and 9.2a exclude non-Kyoto gassesas per the guidance provided by the GHG protocol. We do however measure these gasses as they are considered direct emissions and these have been reported under CC9.2d asFugitive Emissions from non-Kyoto sources (11336 tonnes CO2e).

Page: CC10. Scope 2 Emissions Breakdown - (1 Jan 2016 - 31 Dec 2016)

CC10.1Do you have Scope 2 emissions sources in more than one country?

Yes

CC10.1aPlease break down your total gross global Scope 2 emissions and energy consumption by country/region

Country/RegionScope 2, location-

based (metric tonnesCO2e)

Scope 2, market-based (metric tonnes

CO2e)

Purchased and consumedelectricity, heat, steam or cooling

(MWh)

Purchased and consumed low carbon electricity, heat, steamor cooling accounted in market-based approach (MWh)

South Africa 431609 0 431609 0Africa 37270 37270

CC10.2Please indicate which other Scope 2 emissions breakdowns you are able to provide (tick all that apply)

By business divisionBy activity

CC10.2aPlease break down your total gross global Scope 2 emissions by business division

Business division Scope 2, location-based (metric tonnes CO2e) Scope 2, market-based (metric tonnes CO2e) Massbuild 48297 0Masscash 124458 0Massdiscounters 180663 0Masswarehouse 102108 0Massmart Services 13353 0

CC10.2cPlease break down your total gross global Scope 2 emissions by activity

Activity Scope 2, location-based (metric tonnes CO2e) Scope 2, market-based (metric tonnes CO2e)Purchased Electricity 468879 0

Further Information

We operate in Botswana, Ghana, Kenya, Lesotho, Malawi, Mozambique, Namibia, Nigeria, Swaziland, Tanzania, Uganda and Zambia. However, for reporting purposes we discloseas per our market areas - South Africa and Africa (which includes all of these countries collectively) only. Massmart does not have market based scope 2 emissions, and hastherefore reported these as zero in the tables above, due to the lack of clarity in the CDP guidance document.

Page: CC11. Energy

CC11.1What percentage of your total operational spend in the reporting year was on energy?

More than 0% but less than or equal to 5%

CC11.2Please state how much heat, steam, and cooling in MWh your organization has purchased and consumed during the reporting year

Energy type MWhHeat 0Steam 0Cooling 0

CC11.3Please state how much fuel in MWh your organization has consumed (for energy purposes) during the reporting year

116836

CC11.3aPlease complete the table by breaking down the total "Fuel" figure entered above by fuel type

Fuels MWhDiesel/Gas oil 87514Motor gasoline 28982Liquefied petroleum gas (LPG) 340

CC11.4Please 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 emissionfactor

MWh consumedassociated with low carbonelectricity, heat, steam or

cooling

Emissions factor (inunits of metric

tonnes CO2e perMWh)

Comment

Off-grid energy consumption from an on-siteinstallation or through a direct line to an off-sitegenerator owned by another company

589 0On site third party solar installation. All energy is consumed onsite.An emission factor was not available from the third party companiesand an emission factor of 0 has been assumed.

CC11.5Please report how much electricity you produce in MWh, and how much electricity you consume in MWh

Totalelectricityconsumed

(MWh)

Consumedelectricity that is

purchased(MWh)

Totalelectricityproduced

(MWh)

Total renewableelectricityproduced

(MWh)

Consumed renewableelectricity that is

produced by company(MWh)

Comment

469468 469468 0 0 589Apart from location based electricity consumption form national grids,Massmart currently purchases renewable energy generated from solar PV attwo sites. This energy is supplied by an onsite third party.

Further Information

Page: CC12. Emissions Performance

CC12.1How do your gross global emissions (Scope 1 and 2 combined) for the reporting year compare to the previous year?

Increased

CC12.1aPlease 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

ReasonEmissions

value(percentage)

Directionof

changePlease explain and include calculation

Emissionsreductionactivities

3 Decrease

Massmart has the strategy imperative of increasing its operating efficiency. As per this objective, Massmart is driving to reduce itselectricity consumption, and has embarked on a range of energy efficiency and renewable energy programmes (as outlined in question3.3) to achieve this objective. Although Massmart grew organically by 6%, electricity (and emissions from electricity) consumptionincreased by only 2.5%. FY2016 scope 2 emissions equated to 468879 tonnes CO2e, and FY2015 Scope 2 emissions equated to456024 tonnes CO2e. our calculation of a 3.2% reduction is based on the following equation: [468879-(456024*1.06)]/456024

Divestment 0 Nochange There have been no divestments during the reporting period.

Acquisitions 0 Nochange There have been no acquisitions during the reporting period.

Mergers 0 Nochange There have been no mergers during the reporting period.

Change inoutput 6 Increase Organic growth resulted in an overall increase of 6% in total GLA across all Massmart operations.

Change inmethodology 0 No

change No change in methodology occurred

Change inboundary 0 No

change No change in boundary occurred (other than normal organic growth)

Change inphysicaloperatingconditions

4 IncreaseSome of Massmart divisions (specifically Game, Makro and Dion Wired) has been on a path of transforming operations towards a moreintensive food-based retail model. This has resulted in an increase in refrigerant gas usage. Emissions from fugitive emissionsincreased.

Unidentified 0 Nochange no other changes

Other 0 Nochange no other changes

CC12.1bIs 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

CC12.2Please describe your gross global combined Scope 1 and 2 emissions for the reporting year in metric tonnes CO2e per unit currency total revenue

Intensityfigure =

Metricnumerator (Grossglobal combined

Scope 1 and 2emissions)

Metricdenominator:

Unit totalrevenue

Scope 2figureused

%change

fromprevious

year

Directionof

changefrom

previousyear

Reason for change

0.000005962 metric tonnesCO2e 91250000000 Location-

based 1 Increase

Although revenue increased 7.7%, scope 1 and scope 2 emissions increased 8.8%,resulting in an overall increase in emissions intensity of 1%. The main reason for theincrease in emissions intensity is due to the fact that Massmart is transitioning many ofits traditional retailers into a more energy intensive food retail space. Emissions fromrefrigerant gases increased by an additional 4% (after taking organic growth intoaccount).

CC12.3Please provide any additional intensity (normalized) metrics that are appropriate to your business operations

Intensityfigure =

Metricnumerator (Grossglobal combined

Scope 1 and 2emissions)

Metricdenominator

Metricdenominator:

Unit total

Scope 2figureused

%change

fromprevious

year

Directionof

changefrom

previousyear

Reason for change

0.2132 metric tonnesCO2e square meter 2551431 Location-

based 2.8 Increase

Although GLA (square meters) increased by 6%, scope 1 and scope 2emissions increased 8.8%, resulting in an overall increase in emissionsintensity of 1%. The main reason for the increase in emissions intensity isdue to the fact that Massmart is transitioning many of its traditional retailersinto a more energy intensive food retail space. Emissions from refrigerantgasses increased by an additional 4% (after taking organic growth intoaccount).

0.183 metric tonnesCO2e square meter 2551431 Location-

based 3 Decrease

This intensity metric is a measure of our scope 2 emissions only per GLA,across the group. Although GLA (square meters) increased by 6%, scope 2emissions increased 2.8%, resulting in an overall decrease in emissionsintensity of 3%. The main reason for the decrease in emissions intensity isdue to the fact that Massmart has embarked on an energy efficiency andrenewable energy drive.

Further Information

Page: CC13. Emissions Trading

CC13.1Do you participate in any emissions trading schemes?

No, and we do not currently anticipate doing so in the next 2 years

CC13.2Has your organization originated any project-based carbon credits or purchased any within the reporting period?

No

Further Information

Even though the implementation of the South African Carbon Tax is being slated to be implemented/completed in 2017, Massmart does not expect to be liable for any taxes and thuswill not be required to participate in the proposed Carbon Trading Scheme whereby companies are able to reduce up to 5% of the taxable emission through the purchase of approvedcredits

Page: CC14. Scope 3 Emissions

CC14.1Please account for your organization’s Scope 3 emissions, disclosing and explaining any exclusions

Sources ofScope 3

emissions

Evaluationstatus

metrictonnesCO2e

Emissions calculation methodology

Percentageof

emissionscalculatedusing dataobtained

fromsuppliersor value

chainpartners

Explanation

Purchasedgoods andservices

Relevant,calculated 2859

Although the emission sources under this category include packaging materials, water consumption,and embedded emissions in all products from suppliers; Given the inherent complexity of calculatingthese emissions for the purposes of these calculation only standard A4 and A3 paper and waterconsumption was included in this assessment. Emisison factors for paper were from EnvironmentalPaper Network figures for South Africa. It was assumed that one ream of A4 paper weighs 2.5 kg.Water consumption data was provided in Rands spent and was thus estimated according to the RandWater tariffs (average for the year and region-specific). The Corporate Value Chain (Scope 3)Accounting and Reporting Standard was also used to guide calculations. Emissions from paperconsumption accounts for 1603 tonnes CO2e, and emissions associated with water consumptionaccount for 1256 tonnes CO2e. Emission factor from water consumption was based on a study byFriedrich, E. & Trois, C. (2013) - (0.925 kgCO2e/kL)

100.00%

Purchased goodsand services havebeen classified asMassmart's waterconsumption andpaper usage.

Capital goods

Notrelevant,explanationprovided

0 N/A 0.00%

Massmart doesnot manufactureany productsdirectly, andcapital goods aretherefore notconsidered to bea material scope3 emissionsource.

Sources ofScope 3

emissions

Evaluationstatus

metrictonnesCO2e


Percentageof



chainpartners

Explanation

Fuel-and-energy-relatedactivities (notincluded inScope 1 or 2)

Relevant,not yetcalculated

0 N/A 0.00%

Massmart doesuse a significantamount of energy,specificallyelectricity (scope2). Currently, noacceptedemission factorsare available fortransmission anddistribution lossesin South Africa,and Massmartdoes not includethese in theemissionsinventory. Theseemissions may beincluded in futureinventories.

Upstreamtransportationanddistribution


Data was disaggregated into Road Freight, Air Freight and Sea Freight. For all sea freightconsignments the average container vessel size was 4000 TEU, and so the emission factor forcontainer vessel between 3000 4999 TEU was used. For all local land (road) freight it was stated thatthe emission factor for a 3.5 33 tonne articulated truck was used for all estimations. The tonne.kmmethod of emissions estimation was used for all three freight modes of travel. The Corporate ValueChain (Scope 3) Accounting and Reporting Standard was also used to guide calculations. DEFRA2016 emission factors were used

100.00%

Upstreamtransportation anddistribution hasbeen classified asMassmart's road,air and seafreight.

Wastegenerated inoperations


Waste was reported under Recyclable waste and non-recyclable waste (waste to landfill). All densityvalues were calculated using a tool developed by Victoria State of Australia. The Corporate ValueChain (Scope 3) Accounting and Reporting Standard was also used to guide calculations.

100.00%

Waste generatedis primarily splitinto twocategoriesrecyclable wasteand waste tolandfill. Furtherseparation ofrecyclable wasteis made accordingto the following(when no suchdata exists):paper/cardboard(80%), mixedplastics (18%),metal (1%) andglass (1%).

Businesstravel


Only flights and car hire were included. Car Hire: Data was provided by Bidvest, Europcar and Avis.Avis, Bidvest and Europcar provided the actual emissions in grams per kilometer travelled per car type.This data was used instead of the various Defra (2016) emission factors, as it is more accurate. Aradiative forcing index (RFI) was applied to the emission factors of flights. This means overall effects,such as contrails, are included in the emission factors. Included was both the 8% distance uplift and a90% increase in the CO2 factor to account for radiative forcing (the influence of the other climatechange effects of aviation (water vapour, contrails) were included in the emission factor. It is importantto note that radiative forcing was not included in any previous reporting periods, and this many accountfor a significant increase in flight emissions. All flights with a distance of up 463 km were classified asDomestic flights. Those between 464 km and 3700 km were classified as International Short Haul, andall flights with a distance greater than 3700 km were classified as International Long Haul, inaccordance with DEFRA. Flights were further grouped according to class travel where available. TheCorporate Value Chain (Scope 3) Accounting and Reporting Standard was also used to guidecalculations. DEFRA 2016 emissions factors.

100.00%

Business travelhas beenclassified asMassmart staffcar hire and flighttravel.

Employeecommuting


0 N/A 0.00%

This has beenexcluded from ourtotal emissions,due to both thecomplexityinherent incalculatingemployeecommutingemissions andgiven that it hasnot been deemedmaterial in thecontext ofMassmart’scarbon footprint.Additionally, allcompany ownedvehicles used forstaff commutinghave beenincluded in ourScope 1emissions.

Sources ofScope 3

emissions

Evaluationstatus

metrictonnesCO2e


Percentageof



chainpartners

Explanation

Upstreamleased assets


0 N/A 0.00%

Upstream leasedassets, e.g. Officespace has beenaccounted for andreported underScope 1 andScope 2emissions.

Downstreamtransportationanddistribution

Notevaluated 0 N/A 0.00%

Emissions fromleased vehiclesutilized for thedelivery of soldproducts tocustomers wasreported underScope 1 andScope 3“Downstreamleased assets”depending on thetype of leaseagreement storeshave with fleetmanagementagencies. Due thecomplexity ofseparating thisdata it has notbeen calculated tocustomer specificdeliveries.

Processing ofsold products


0 N/A 0.00%

Massmart is abusiness toconsumer retailoutlet, andalthough theremay be emissionsassociated withthe use of someof our products,our products arenot deemed forany additionalprocessing, andso this category ofemissions is notrelevant to us.

Use of soldproducts

Relevant,not yetcalculated

0 0.00%

Emissions fromthe use ofelectricityconsumed byappliancespurchased andutilised by ourcustomers hasnot been includedin our calculation,as the accuracy ofsuch a calculationwould bequestionable.

End of lifetreatment ofsold products


E-waste (Electronic Waste) generated as a result of e-consumer waste collection and disposal byDesco Electronic Recyclers (DESCO) at 19 of our Makro stores. The metric tonnes of CO2e wereprovided by Desco. The Corporate Value Chain (Scope 3) Accounting and Reporting Standard wasalso used to guide calculations.

100.00%

End of lifetreatment of soldproducts hasbeen classified aselectronic waste(e-waste). Forexample: thefollowing items,among others,would beclassified as e-waste; televisionsets, washingmachines andfridges.

Downstreamleased assets


Where data was provided in kilometres driven the tonne.km method was used (tonnes of freightmultiplied by distance covered in kilometres) for a medium sized rigid truck. Distance-based emissionfactor from DEFRA, assuming 50% load, were used. Where data was provided in litres of dieselconsumed the volume method was used to calculate emissions. Where litres were of diesel wasprovided the volume method was used to calculate emissions. The Corporate Value Chain (Scope 3)Accounting and Reporting Standard was also used to guide calculations.

100.00%

Downstreamleased assetswere classified asdelivery vehiclesused by but notowned orcontrolled byMassmart.

Sources ofScope 3

emissions

Evaluationstatus

metrictonnesCO2e


Percentageof



chainpartners

Explanation

Franchises


0 N/A 0.00%Massmart doesnot have anyfranchisees

Investments


0 N/A 0.00%

AlthoughMassmart hassome additionalinvestments,these were notquantified as theywere deemed notmaterial in thecontext ofMassmart'soverall carbonfootprint.

Other(upstream)


0 N/A 0.00% N/A

Other(downstream)


0 N/A 0.00% N/A

CC14.2Please indicate the verification/assurance status that applies to your reported Scope 3 emissions

No third party verification or assurance

CC14.3Are you able to compare your Scope 3 emissions for the reporting year with those for the previous year for any sources?

Yes

CC14.3aPlease 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 ofScope 3

emissions

Reason forchange

Emissionsvalue

(percentage)

Directionof

changeComment

Upstreamtransportation& distribution


44 DecreaseMassmart has been consolidating logistics throughout the business. We started this process last year, with theintention of having divisions share logistics, in an attempt to increase logistics efficiency. This observed may be as aresult of this.

Downstreamleased assets


26 DecreaseAs above, Massmart has been consolidating logistics and use of contractor trucks throughout the business. We startedthis process last year, with the intention of having divisions share logistics and contracted vehicles, in an attempt toincrease efficiency.

Businesstravel Unidentified 16 Increase Business travel fluctuates year on year depending on annual circumstances. This increase may be a result of an

increase in business activity associated with organic growth.Wastegenerated inoperations


1 IncreaseThe very slight increase in absolute emissions actually translates into reductions of waste per square meter, or perstore. This is a result of Massmart proceeding with the effective waste management programme, in an attempt to divertas much waste form landfill as possible.

Purchasedgoods &services

Change inmethodology 61 Increase

Change in emission factors when calculating emissions from water, as well as having a more complete list of storesproviding water data. Paper methodology also changed, as in past years some omissions were identified due to themethodology and assumptions applied in the previous years. This year's calculations are therefore more accurate.

CC14.4Do 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

CC14.4bTo 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 ofengagement

Numberof

suppliers

% oftotal

spend(direct

andindirect)

Impact of engagement

Activeengagement 593 45%

Massmart conducts an annual Supplier Environmental Survey to track supplier environmental performance. Among other environmentalindicators, the survey addresses issues such as; climate change, energy and water consumption at manufacturing facilities, logisticsefficiency, environmental attributes of product packaging and the environmental attributes of products supplied to Massmart. A total of 385suppliers were contacted as part of the last assessment that was circulated of which 330 responses were analysed. Results from the 2016survey indicate for example, that of those suppliers who responded to the survey, over 58% indicate that they actively consider energyefficiency in their operations and 33.7% have invested in energy saving practices and technologies.

Further Information

Module: Sign Off

Page: CC15. Sign Off

CC15.1Please provide the following information for the person that has signed off (approved) your CDP climate change response

Name Job title Corresponding job categoryBrian Leroni Group Corporate Affairs Executive Board/Executive board

Further Information

CDP: [D][-,-][D2]