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Planet

Pepco Group is committed to minimising our environmental impact and advancing sustainability across our operations. We have embedded environmental stewardship into our business practices and decision-making processes. Below, we outline our approach to environmental sustainability through our strategic pillar, Planet. We recognise that addressing environmental challenges requires us to not only reduce our own footprint but also to work collaboratively with our stakeholders, including suppliers, customers, and communities.

Priorities

  • Reduce our carbon footprint
  • Use less materials
  • Minimise waste

Associations and accreditations

  • Responsible Business Forum Poland
  • Forestry Stewardship Council (FSC)
  • Programme for the Endorsement of Forest Certification (PEFC)
  • Oekotex™ Standard 100 (certification for textile product safety including organic cotton)

Policies

  • Pepco Group Environment Policy
  • Pepco Group Packaging Policy

Reducing our carbon footprint

Our activities generate greenhouse gas (GHG) emissions through our operations (stores, warehousing and shipping), products and product packaging. We are committed to minimising the environmental impact involved in the manufacturing, transportation, storage and consumption of the products we sell.

As part of our new 2030 ESG strategy, we have set new Group-wide goals against which we will measure progress. In this first year of Scope 3 baseline calculation, we have used transaction data to get a spend analysis and identify hotspots. The data comes from supplier invoices and covers purchased products and services, capital goods, upstream transport and distribution, and business travel. Moving forward, we will collect actual carbon data from key suppliers (starting with top annual spend) which will provide an increasingly accurate picture of progress against our goals.

In FY24, we have established baselines for Pepco Group across scopes 1, 2 and 3.

The significant increase in absolute emissions from FY23 to FY24 is due to a number of factors, several of which are one-off actions in FY24:

  • We continue to improve and extend our carbon reporting. We have closed several reporting gaps from FY23 to include less estimations and more actual data, for example the employee car fleet in Pepco and Dealz Poland store heating emissions.
  • For several months in FY24, our new Spanish distribution centre was generating electricity from on-site diesel generators while waiting for connection to the national grid, resulting in much higher emissions than expected from 76,364 litres of diesel. Going forward, all our Spanish operations (office, stores and DC) will source renewable electricity.
  • In FY24, Poundland took over 61 stores from Wilko. These stores had a non-renewable gas energy contract and increased Poundland’s scope 1 stationary combustion carbon emissions by 270% from FY23. Scope 1 emissions from diesel transport also increased due to the increase in store footprint.
  • More stores were opened in high carbon-emitting countries: 50% of net new store openings were in Poland, Czechia, Serbia and Bosnia. The electricity in these countries is predominantly generated from coal which has a carbon emission factor of 0.806 tCO2e vs natural gas (Italy: 0.455 tCO2e) or renewable electricity (Spain: 0.134 tCO2e).
Tonnes CO2e% of total emissions
Scope 120,4771%
Scope 2129,0994%
Scope 32,944,53695%
FY24: absolute and intensity results scope 1 and 2FY22FY23FY24% change FY23-FY24
Absolute tCO2e106,214101,674149,600+ 32%
Intensity tCO2e/€m turnover22.018.024.0+ 25%

Goals

We have established the following absolute GHG emissions reduction goals which have been approved by both the Executive Committee and the Board:

  1. Reduce scope 1 and 2 carbon emissions by 50% by 2030 (against a FY24 baseline).
  2. Reduce supply chain carbon emissions by 25% by 2035 (against a FY24 baseline).

These goals form interim targets for our net zero strategy as described in the next section. Progress against the goal on Scope 1 and 2 emissions reduction forms part of the 10% ESG element of the Executive LTIP performance conditions.

Net zero strategy

The Pepco Group net zero strategy was agreed by our Board and senior business leaders early in 2024. Our long-term ambition is to reach net zero as defined by the Science-Based Targets Initiative (SBTi). The SBTi’s Corporate Net Zero Standard enables companies to set robust and credible net zero targets in line with a 1.5°C future. Net zero focuses on reducing GHG emissions as much as possible before neutralising any emissions that cannot be avoided using permanent carbon dioxide removals.

Progress against these long-term goals is supported by the ESG 2030 strategy carbon emissions interim goals described on the left. Below describes how we intend to reach net zero interim and long-term goals. Further details will be described in our Climate Transition fact sheet available in the ESG section on our website.

Pepco Group net zero carbon transition action plan

  1. Emission reduction targets:

Pepco Group commits to ambitious and science-based emission reduction targets encompassing scope 1, scope 2, and scope 3 emissions.

Targets will be set in accordance with the latest climate science and will be regularly reviewed to ensure alignment with global efforts to limit temperature rise.

  1. Renewable energy adoption:

Pepco Group will transition to 100% renewable energy for its operations. This involves investing in on-site renewable energy projects, purchasing Renewable Energy Certificates (RECs), and exploring Power Purchase Agreements (PPAs) for renewable energy sources.

  • Energy efficiency measures:

Implementation of energy-efficient technologies and practices to reduce overall energy consumption. Regular assessments will be conducted to identify emerging efficiency solutions.

  • Supply chain engagement:

Collaborative efforts with suppliers to set emission reduction targets and promote sustainable practices.

  • Innovation and research:

Partnering in research and development to explore and adopt innovative technologies that contribute to emissions reduction.

  • Circular economy practices:

Integration of circular economy principles into product design, manufacturing, and end-of-life management to minimise waste and reduce environmental impact.

  • Employee and stakeholder engagement:

Inclusive programmes to educate and engage employees, customers, and other stakeholders in sustainable practices. Regular communication will keep all stakeholders informed about our progress and goals.

  • Reporting and transparency:

Pepco Group is committed to transparently reporting its progress toward net zero goals. This includes regular disclosure of emission data, progress against targets, and the impact of sustainability initiatives.

  • Offset and removal strategies:

Where emissions cannot be eliminated by other means, Pepco Group will invest in high-quality carbon offset projects and explore carbon capture technologies.

Resources and circularity

Beyond GHG emissions, the Planet pillar within our 2030 strategy sets targets with regard to packaging and waste as part of our priorities to use less materials and reduce waste, contributing to a low-carbon circular economy.

At Pepco Group we focus on reducing resource consumption by designing our own-brand product packaging for circularity and minimising weight. We define “packaging designed for circularity” as packaging that is designed to be easily reused, recycled, or composted to ensure that materials are kept in use for as long as possible. We emphasise the use of fewer resources by setting a goal to reduce packaging weight and volume while maintaining product protection and usability. In addition, we request recycled content in our product specifications and use standard labelling to indicate how and which materials can be easily recycled by consumers.

Our revised packaging goals are designed to be more specific and measurable and will enable us to track progress more effectively:

  1. 100% of own-brand product packaging is designed for circularity by 2030
  2. 20% reduction in product packaging intensity by 2030.
GoalKPIFY23Baseline FY24
100% of own-brand1 packaging designed for circularity by 2030% of packaging that is reusable, recyclable or compostableNew goal in FY2499.4%
% reduction packaging intensityNew goal in FY240.053 kg/ unit sold

1 Own-brand is defined as products offered to consumers under the Pepco, Poundland and Dealz brands, and manufactured by selected suppliers with design, qualities and packaging specified by Pepco Group.

Our FY24 baseline for recyclable own-brand packaging is already high. The goal will ensure that we maintain this performance and focus on recyclable materials in our own-brand packaging. We will therefore concentrate our efforts on reducing the overall amount of packaging around our own-brand products. The combination of the two goals will bring attention to the reduction of packaging weight, while discouraging any regrettable substitutions with lightweight, but difficult to recycle materials.

Waste

The Group’s activity generates waste through both products and product packaging in the supply chain, in store, distribution and office operations and through waste in customer households.

As part of our 2030 ESG strategy, we have a new, Group-wide goal for operational (store, distribution and office) waste reduction.

GoalKPIBaseline FY24
By 2030, reduce operational waste by 20% by 2030 from a FY24 baselineTonnes of operational waste115,291 tonnes

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