Climate change is material for the group since we rely on long and complex supply chains that require natural resources to manufacture and deliver our products to our customers. As a result, we continued our TCFD journey by integrating climate and broader sustainability risks and opportunities into enterprise risk management (ERM) processes and the operating businesses’ risk registers.

We have identified sustainability risks and opportunities linked to several of the group’s top 10 risks. This includes climate-related risks and opportunities related to the physical risks caused by severe weather events and transition risks as a result of the global shift towards a low carbon economy.

The sustainability risks and opportunities that could result in a financial impact on the group and operating businesses and overall group strategy include the following:

Pepkor historically managed and reported its emissions using the financial control approach. This year we changed to an operational control approach to consolidate all emissions within the specified boundary. The reporting boundary includes all Pepkor operating businesses, excluding Avenida. The group’s environmental performance is measured across operating business locations including head offices, distribution centres (DCs), hubs and stores. As our climate journey and data maturity progresses we will set reduction targets within the next year and start proactively tracking and monitoring emissions.

Energy efficiency

With the group’s extensive store footprint, we rely heavily on municipal power and property owners for electricity. South Africa continues to face significant challenges in consistent and trusted energy supply, with a sharp rise in load shedding over the past five years. To ensure uninterrupted operations and keep our stores open, we have prioritised energy-efficiency, back-up power generation and investment in renewable energy.

Electricity has historically been the main source of the group’s Scope 2 carbon emissions, leading to significant financial costs. This year, to offset reduced Eskom power, generator diesel consumption has increased, which contributed to higher Scope 1 carbon emissions compared to previous years.

While we do not always have direct control over our electricity sources due to tenant/landlord relationships, we proactively make changes where possible. This includes adopting energy-efficient technologies and promoting behaviour change. Some stores have access to solar power through their tenant premises (mostly larger shopping centres), and some of our businesses have switched to energy-efficient LED lighting to reduce electricity consumption and costs. In 2023, the group’s electricity consumption from the grid amounted to 223 657 MWh, reflecting its operational needs. This surge in the adoption of LED lighting generated savings, resulting in a total of 17 303 MWh in 2023. These savings equated to a reduction of carbon emission by 28 192 tCO2e (carbon dioxide equivalent), which is the equivalent electricity saving required to charge 3.4 billion cell phones. Our next step is to find more energy-efficient air conditioning solutions, as it accounts for 70% of our electricity usage.

Initiatives include:

Extensive LED lighting projects
All PEP stores and most Ackermans stores have been retrofitted with specially designed LED lights, while the same lights are installed in all new stores across the CGM segment. These lights save up to 34% in electricity use from lights in stores. Lighting projects were also completed during the year at PepClo and head offices.

Power outages
To mitigate the risk of downtime in stores as a consequence of electricity interruptions or lack of services, stores were equipped with stand-by generators. This has been reviewed and most of these generators have been replaced by more environmentally friendly solutions such as inverters. In FY23, 1 257 new inverters were installed.

PEP Africa
51 PEP Africa stores have been fitted with solar power to mitigate power outages and minimise the use of diesel generators. Wind generators have also been used in some locations.