CHALHOUB SUSTAINABILITY REPORT 2014
Sustainability Through Group Culture About this report
We are hereby pleased to against these ten principles operations and initiatives, which present our annual sustainability and serves as our annual is evident not only in the UAE report, which highlights our Communication on Progress but in all other countries we impact and progress on (COP). operate in as well, in the MENA environmental and social region and India. In this report, The context index for both the initiatives from January- we talk about four material UN Global Compact and GRI December 2014. Reporting issue areas in which we believe can be found at the end of this a thorough and transparent we are a driving force. We aim report. story on where we stand to broaden our scope and today as an organisation, our G4 – 17, G4 – 23 boundaries for the next reports sustainability agenda and our to come by including other This report covers our UAE future ambitions. This report not countries. operations: M.C.T. FZE, Real only aims to share knowledge, Emirates, 3D and Real FZE, but more importantly engage Chalhoub Group Retail and Feedback our internal and external UAE companies. We did not Your feedback is important stakeholders as well. The title experience any significant to us. Please contact us at Sustainability through Group changes during the reporting [email protected] for any Culture is a reflection of us as an period with respect to our size, feedback on this report. organisation and how we live structure, ownership or supply through our values. chain. Global Reporting Our drive for sustainability is Guidelines (G4) imbedded within our values, Our report has been drawn UNGC Principles together in accordance, ‘Core’, with the Global Reporting Human Rights Initiative (GRI-G4) Reporting i. Businesses should support and respect the protection of Guidelines, a highly recognised internationally proclaimed human rights; and framework for reporting ii. Make sure that they are not complicit in human rights abuses. on economic, social, and Labour environmental performance iii. Businesses should uphold the freedom of association and the globally and in the region (Over effective recognition of the right to collective bargaining. 65 companies in the MENA iv. The elimination of all forms of forced and compulsory labour. region used the GRI to guide v. The effective abolition of child labour; and their reporting in 2013). vi. The elimination of discrimination in respect of employment and UN Global Compact occupation. Environment We have expressed our vii. Businesses should support a precautionary approach to commitment to uphold the ten environmental challenges; basic universal principles of the viii. Undertake initiatives to promote greater environmental United Nations Global Compact responsibility; and (UNGC). Our adherence to the UNGC is part of our firm ix. Encourage the development and diffusion of environmentally friendly technologies. commitment to sustainable development. Our report Anti-Corruption addresses our performance x. Businesses should work against corruption in all its forms, including extortion and bribery.
2 Chalhoub 2014 Sustainability Report Executive Summary 4
CEO Statement 6
Welcome from Strategy & Innovation 7
About Us 8
How We Conduct Our Business 10
Governance 12 About Chalhoub Group About Chalhoub Group Sustainability: What matters to us 14
Family Business 18
Education 20
Innovation and Entrepreneurship 22 Our Focus
Gulfanisation 24
Social 26
Health, Safety and Environment 28
People 30
Our Performance GRI and UNGC Content Index 34
3 Executive Summary
Our Achievements 17.5% Increase in total Number of 101 Employees (Group level) in 2014 Nationalities 18.4% Increase in total Number of of our Employees (UAE level) in 2014 % 6.6reduction of tonnes employees (Male: 2558, Female: 2793) of CO2 in 2014 were 10 engaged % through sustainability efforts 30% New Group Increase in Policies: donations for the environment, supply Hope for Cancer chain and Patients Campaign All UAE warehouses are sustainable stores ISO 9001, ISO 14001 3 checklist OHSAS 18001 certified, one of our warehouses The new ‘Gift of Giving’ have received the LEED education retail campaign Silver accreditation was launched
Hosted two Job employees Shadow Days for received scholarships for 24 34 internships in higher education UAE nationals 9 Chalhoub UAE
4 Chalhoub 2014 Sustainability Report Our Targets for 2015
60 Family Ownership years
excellence in 2 Management of 015
teachers and Working towards a shift in Rolling out the supervisors recruited governance Retail Front liner Learning 6 with Jusoor in Syria Ladder programme Kuwait, Bahrain, Qatar to receive a full Integrated To establish a 500 Management System risk management students enrolled in school practice at the Group
14 Our White Paper on Emiratis and Sustainability will be 7 released Saudi Graduate The Launch of Wojooh’s 21,160 Programme strategy that focuses on Total Number candidates targeted ‘love’ for women. It promotes of training their role in society through hours Retail Academy to officially entrepreneurship and training launch the pre-assessment encouraging their inclusion programme, targeting UAE in the workforce/business/ Nationals economy
187,476 KG Level Shoe District and Wojooh Back office staff working hours Carton & Plastic will launch digital platforms to be reduced recycled by 30 minutes per New innovative retail concepts day, front liners to be rolled out across the UAE to have two day at Yas Mall in Abu Dhabi and weekends (from Car free day City Walk in Dubai one day only) CO2 reduced by The Corporate Social Responsibility function will move from Corporate Communications to an independent department with the name Sustainable Engagement 200kg to highlight its importance to Business Strategy
5 CEO Statement
Anthony Chalhoub Patrick Chalhoub Co-CEO Co-CEO
Dear Readers, As a family, and as a family campaigns and training business, we have spent sessions have increased the It is with great pleasure almost sixty years developing understanding of environmental that we launch the second partnerships and trusted sustainability across the Group. edition of Chalhoub Group’s relationships with our key 2014 Sustainability Report, Sustainability more and more stakeholders. We have worked ‘Sustainability through Group is integrated into all business to enable local talent to Culture’ in which we will share functions, working towards become the next business efforts made to further embed creating a model that is leaders through internal sustainability into our culture, in effective in the region, makes initiatives such as our Emirati line with the Global Reporting substantial progress but focuses and Saudi graduate program, Initiative G4 ‘Core’ guidelines on the future. Everyday our and external initiatives with and to embrace, support and teams work collaboratively to organisations like the Khalifa enact on the ten universally identify and execute sustainable Fund, Activet and Injaz. accepted principles of the UN business practices one step at Global Compact. Our values We also have continued to a time. of respect, excellence and lead community development We believe in the importance of entrepreneurial spirit guide our initiatives in 2014 that seek respect, delivering excellence environmental and social actions to address social challenges and fostering development by demonstrating a deep rooted related to unemployment, crisis, constantly challenging ourselves. synergy between sustainability education and environmental We encourage leadership and and our Group culture. awareness. Our scholarship entrepreneurship, and share program and literacy centre in In 2014, we were driven knowledge to build good the Bekaa Valley are a result by engaging our teams, practice for joint success. We of this desire to support the encouraging energy and hope this report will spark off education system in the region. keeping education at the heart meaningful dialogue with you of our efforts. We empower our Our environmental and other stakeholders who people to take ownership for achievements this year include believe sustainability to be a part their roles and responsibilities, the implementation of a Group- of their value system. with courage, discipline, wide green supply chain policy, commitment and integrity to environmental policies and Warmest Wishes, strive for their full realisation and sustainable stores check lists. Anthony and Patrick Chalhoub providing them with the right Moreover, environmental and educational platforms to learn energy efficiency awareness and excel.
6 Chalhoub 2014 Sustainability Report Welcome from Strategy & Innovation
Marie-Hélène Straus General Manager Strategy & Innovation
The mission of Strategy & Sustainable business practices all our team members, partners Innovation is to enhance Group are our values demonstrated and clients on the importance of equity and sustainable long- in practical action. It is not only sustainability. term development. In order words but what we do and Our priority is to engage and to do so we are combining how we do it. Our values are educate our stakeholders high level expertise in several what bind us as a Group and throughout the sustainability key domains: architects, give us a clear and shared journey. We are convinced designers, strategy, research, perspective on how to behave, that true impact comes with communication, marketing take appropriate decisions and the coming together of many and sustainable engagement conduct business. They are minds, talent and a great deal to deliver insights, advice and the inherent beliefs that have of passion. direction. I am a strong believer guided us since our inception in the power of collective and continue to serve as the intelligence generated by these cornerstone of our business various perspectives. Our role practices and principles looking is to advise and recommend beyond short-term. Respect, directions to our co-CEOs Excellence and Entrepreneurial and business units, always Spirit are embraced and taking into account the short- accepted at all levels as being term and long-term impact an integral part of our DNA and of our decisions. Having both therefore the fundamentals of sustainable engagement and our Group culture. Group strategy under one Our United Nations Global umbrella sends a clear message Compact membership is an from the family and the Group effort to ensure we are guided that these are not independent and audited so that we may but strongly interlinked. The always benchmark ourselves. Group does not consider The membership has served sustainability as an activity but as a key tool in engaging all positions it as a key direction our stakeholders. We have for the 11,000 team members worked intensively on aligning internally as well as for all our our operations to the UNGC partners externally. standards, aiming to engage
7 About Us
Our business is driven by and in turn, have become a Our Vision strong values, embedded into key driver between the beauty, To be the leading partner for our culture and professional fashion and gift industries in both luxury across the Middle East behaviour. We live by our values the West & the East. and achieve sustainability With a regional coverage of Our Mission through our culture. By principle, 14 countries in the Middle By blending our Middle we want to run a sustainable East and India, we manage a Eastern expertise and ultimate business knowing that it will knowledge of luxury, we foster an opportunity to create growing number of over 600 build brands in the region by value whilst giving back to our retail outlets through more than offering service excellence community. It is our mandate numerous companies. We strive to our partners and unique to become an agent of to provide excellence to all our experience to our customers sustainability. partners and a unique retail experience to our customers The Chalhoub Group was Our Values with a talent pool of founded in 1955 and has been more than Respect, Excellence and leading the luxury market in 11,000 employees across the Entrepreneurial spirit the Middle East ever since. Group. The Group has pioneered Our core business activities Our activity the beauty, fashion, and gifts are in the areas of distribution, sectors across the region whilst retail and communication. It maintaining expertise in retail, is through distribution that we BEAUTY distribution and communications facilitate market access via 47% through its head office based our distribution companies in Dubai. This has not only and strategic alliances with FASHION allowed us to build brands in international groups. In retail, 40% the region, but also to design our aim is to offer a unique GIFTS and offer our services to our experience, and through our 5% partners and customers. Our partnership with Havas Group, long-term relationships with our OTHERS we offer a broad range of 8% international partners and our communication services. clients have been nurtured,
Group market share Some of our brands
Baccarat Christian Dior Marc Jacobs Berluti Christian Louboutin Michael Kors Carolina Herrera Fendi Saks Fifth Avenue Céline Lacoste Sephora Chaumet L’Occitane Tory Burch 40% Christofle Louis Vuitton Tumi FASHION INDUSTRY We share, with our brands, a vision and the knowledge to 25% leverage our joint venture model through commercial and BEAUTY INDUSTRY marketing powerhouses.
8 Chalhoub 2014 Sustainability Report The diagram below displays an overview of our operations in the UAE. Quality management M.C.T. FZE Our warehouses are ISO 9001, ISO 14001, OHSAS 18001 certified and our
Chalhoub Real Free Zone Allied and Real FZE regional About Us Group Retail Establishment Sister Real Emirates warehouse is LEED (CGR) (Real FZE) Companies Silver certified
Regional UAE Local Market Real KSA received ISO 14001 and G4 – 17 Our commitment to our stakeholders is evident through OHSAS 18001 M.C.T FZE (FZE: Free Zone the long-term partnerships that Expected in 2015 Establishment): provides all stand today. We have signed Group support services, such as Kuwait, Bahrain, Qatar to membership agreements with receivefull IMS HR, IT, Administration, Finance, recognised organisations, Logistics, Legal, Strategy & ranging from European luxury Governance Innovation. goods creative industries The Chalhoub Group companies organisations to those that that have been covered under strive to implement responsible the scope of this report include: business practices, such as: »» United Nations Global »» Real Emirates: offers the Compact (UNGC) maintenance, support services, warehousing and »» Dubai Chamber of administration to Chalhoub Commerce CSR Label companies in the UAE »» CSR Arabia Network (excl. JAFZA). It includes »» Dubai Chamber of
the Burjuman offices, the Commerce Sustainability Sustainability Dubai Investment Park (DIP*) Network offices and the Abu Dhabi »» Comité Colbert operations. »» Fondazione Altagamma »» Real FZE: offers the »» Walpole British Luxury maintenance, warehousing We pride ourselves for our and administration to innovative acumen. We identify Chalhoub companies in market needs and trends. Jafza. It includes Head Office Produce insight reports and 1 & 2, Main Warehouse and quantitative and qualitative Warehouse 1.
studies on the Middle East Our Focus markets and consumers. Our »» Chalhoub Group Retail Market (CGR): oversees all retail internal online platform EDGE activities across the region. provides teams with marketing methodologies and techniques, Consumer »» Allied and Sister Companies: Along with inspiration and manage the local UAE training. In addition we support Trends distribution and retail brands in the adoption of cause operations. marketing to meet the needs Inspiration of the region. Moreover we ensure regulatory compliance Methodologies of the countries in which we are operating. Training Our performance
9 How We Conduct Our Business
CODE OF ETHICS We maintain high ethical We continually strive to raise standards, reflected by our the bar for businesses in the behaviours and actions within region, especially in terms of the Group and when dealing compliance with all of the with our external stakeholders. laws and regulations that Our Code of Ethics (CoE) is are applicable to us and go deeply established in our family beyond the bare minimum business culture. Our COE is a requirement. Since we are in the framework to help us manoeuvre retail industry, and maintain a business opportunities in line with database of customer records our vision, values and strategy. containing sensitive information, we consider it extremely We abide by all national and important to safeguard our international human rights, customers’ confidential or labour laws and regulations proprietary information and including those specified in the reassure our suppliers and The Code of Ethics (CoE) can UN Global Compact. We have partners that we take strong be found online and in print at strong policies against forced measures to do so. our offices or compulsory labour, anti- discrimination, and child labour, In cases of alleged breaches of All team members must which are all reflected in our the Chalhoub Group business confirm their understanding of COE. Our teams are advised to conduct policies, the Group the CoE raise any concerns to the Human has the power to conduct Resources Department when investigations and take We are encouraged to witnessing or being subjected disciplinary action up to and highlight areas not covered to any unethical behaviour, including contract termination, by the CoE, when identified discrimination or harassment if required. Team member or in or around the workplace. To customer complaints are being The Ethics Committee is ensure that our environment filed in a central repository made up of the Country HR protects the rights of all workers and are being treated and Manager and the Country without any discrimination, responded to on a case-by- Managing Director we have established an Ethics case basis. We have internal The Ethics Panel drive the Committee and Ethics Panel controls in place in order to investigations that conducts investigations prevent the release or potential and allows colleagues to report abuses of client information. We any violations to their human have initiated and completed or labour rights. No cases of a number of investigations in discrimination were reported in 2014 and appropriate actions 2014. We have zero tolerance were taken. In some cases, it for any form of fraud, violation, was disciplinary actions. We are bribery or corruption. We seek not aware of any claim that has to ensure that all our agents, been filed against Chalhoub contractors and suppliers do Group concerning breaches not make or receive facilitation of customer privacy in 2014. payments on our behalf, when However, we did identify one dealing with government or leak of customer data in 2014, other private organisations. which derived from one of our suppliers. The leak was detected
10 Chalhoub 2014 Sustainability Report early enough to prevent any »» Level Shoe District, the Our front liners have the most loss of customer data. Following world’s finest 96,000 square direct contact with our guests this incident, we were able to feet shoe metropolis located and are being coached to identify the weak points in our in the Dubai Mall, with a deliver this experience. Our back systems and have updated and curated space divided into office team members, on the improved our processes and 40 designer boutiques and 4 other hand, have to understand systems accordingly in order to multi-brand areas. and appreciate the importance try and prevent any future leaks We offer a range of of the experience our front liners About Us or complaints raised against the competencies within our teams. will offer to our guests. They Group. We have categorised our teams are the visual representation of our brands and values. Being Our values act as the into two categories: front liners the visual representation of our fundamental base of our and back office staff. Both brand and values. We have principles and business ethics. are vital for the growth of our been working with our Learning They are designed to ensure business. A front liner is someone and Development throughout we conduct ourselves when who works in our stores. He/ 2014 and will continue to do so representing Chalhoub Group she is an essential part of the in 2015 in order to establish the with utmost levels of integrity and bottom line and is the first point Guest Experience as a group fairness. We continuously run of contact for our customers. competence. initiatives throughout the year to On the other hand, our back remind ourselves of who we are office colleagues manage as a company, how we make the operations of our business Governance decisions and how we choose through administrative and to be progressive thinkers. We internal processes. Both are encourage our teams to seek equally important and crucial for innovative and collaborative the running of our business. ways of conducting business. UNGC 1 UNGC 2 UNGC 3 UNGC 4
Spirit of Innovation UNGC 5 UNGC 10 The spirit of innovation is also reflected in our own concepts. FROM CUSTOMERS TO Our retail concepts are GUESTS responses to the gaps identified after regular assessment in order Delivering an outstanding Sustainability to offer our customers a unique experience is at the forefront experience. of our agenda. Hospitality is rooted, not only in the culture in We measure Guest »» Tanagra, since 1980, offers a the MENA region, but also in our satisfaction through collection of refined lifestyle Group values. It is a prominent two main metrics as of gifts and art de vivre, in part of the generosity offered now: our business KPI’s Kuwait, UAE, Bahrain, Qatar to those you interact with. The (Unit Per Transaction, and Saudi Arabia - with a Guest Experience Management Average Basket and total of 9 flagship stores. Division was founded in 2012 Conversion Rate), and our Tanagra launched TDesign, to lead the business towards Performance Evaluation
offering bespoke interior Our Focus bettering the Guest Experience programme (Mystery design and decoration with in the Chalhoub stores. In 2013, Shopping), where Team limited editions, luxury design a strategy was implemented Members are being and custom-made pieces. to encourage a mind change evaluated on their in-store »» Wojooh, a beauty haven in our practice and behaviour. performance. Our first that offers a wide range of Creating an understanding that qualitative audits will start fragrance, make up and sales and financial growth are in mid-2015 to understand skincare products. In 2014, the result of an experience. Our if our efforts are in line they introduced ‘Wow’ a key objective is to deliver an with our goal: provide make up brand catering to unforgettable experience in memorable experiences needs in the Middle East. all its components. This journey to our Guests. »» Katakeet, a unique luxury builds on the expansion and children’s wear store in Abu maturity of the retail luxury Dhabi, Dubai and Jeddah. Industry, in which Chalhoub is a Joe Sejean Our performance key player. Division Manager Guest Experience Management
11 Governance Family Board Members
Non-Voting Members Chairman Co-CEO Kevin Chalhoub Michel Chalhoub Anthony Chalhoub Michel Chalhoub
Voting Members Vice Chairwoman Co-CEO Aurelia Chalhoub Widad Chalhoub Patrick Chalhoub Michael Chalhoub
Main Organisational Structure Chairman Michel Chalhoub
Co-Chief Executive Officer Anthony Chalhoub
Managing Director, UAE Chief Operating Officer Distribution Mansour Hajjar Raffi Fattal
Managing Director, KSA Chief Operating Officer Retail Bachar Sabbagh Fadi Jabbour
Managing Director, Emerging Markets Managing Director Havas Hani Jabbour Pierre Soued
Territories Activities
s a Group, we strive the representation of women in endorse the strategic directions to demonstrate good our leadership team, wherever and to define the long-term Acorporate governance, practical and achievable. visions for 2030 and 2055, when aiming to lead by example in our Similarly, we aim to gradually we will be celebrating our 100- business community. As a family introduce Gulf Nationals in our year anniversary, an eagerly business, we ensure that our leadership team to demonstrate anticipated major milestone. business strategies and decisions our commitment to the The role of the executive all support our long-term vision, community. committee (COMEX), consisting with sustainability as essential Our Board of Directors comprise of 12 members, is to oversee and part of it. of six (family) voting members, monitor all business activities We have established three and two non-voting members, to ensure achievement of the governance bodies, namely, supported by one secretary. goals set by the Co-CEOs. This the Board of Directors, the To strengthen the governance committee meets every two Executive Committee, also role of the Board, we have months to draft action-plans known as COMEX, and the initiated the process to introduce and budgets to achieve the Strategy Committee, referred three external board members objectives set at Group level. to as STRATCOM. With only in 2015. The Board officially In addition to this, COMEX also three women in these groups, meets twice a year to assess identifies and reports on risks we aim to gradually increase the Group’s development, to to be better prepared for any
12 Chalhoub 2014 Sustainability Report MD, S&I Co-CEOs Communications CHRO: Chief Human Michel & Widad Chalhoub Resources Officer CIO: Chief Information Officer MD, COO, CLO: Chief Legal Officer Emerging Distribution S&I: Strategy and Innovation Markets Executive Strategy committee committee (COMEX) (STRATCOM) CEO: Chief Executive Officer COO, COO: Chief of Operations MD, KSA Retail MD: Managing Director
CFO: Chief Financial Officer About Us CAO: Chief Administration CLO COMEX Officer MD, UAE CFO CHRO CAO
Vice Chairwoman Widad Chalhoub
Co-Chief Executive Officer Governance Patrick Chalhoub
Chief Financial Officer Chief Human Resources Officer Marcus Freeman Wassim Eid
Chief Administrative Officer Chief Information Officer Katia Chalhoub Elie Choueiri Sustainability This sustainability report Chief Legal Officer Strategy & Innovation is an initiative driven by Ramzi Modad Marie-Hélène Straus the S&I team
Competence Centres
challenges ahead, primarily succession strategy, we have business intelligence, strategy, in the areas of health and welcomed Michael Chalhoub creative design and marketing safety, CSR and environmental into the STRATCOM in 2014. innovation. This is the second standards. year running in which the
In 2015, we are planning Our Focus Sustainable Engagement team Finally, the strategy committee to combine COMEX and has overseen the collection (STRATCOM) plays the role STRATCOM to ensure better of sustainability data for the of the Group’s think tank by alignment between day-to-day Group, in order to measure our meeting three times in the business activities and long-term impact and to launch initiatives year. STRATCOM, consisting strategies. to continuously improve our of 14 committee members, is Sustainability is driven by performance. Looking forward, the body that observes the a dedicated Sustainable we aim to put into place a challenges, opportunities and Engagement team within centralised system to monitor works to define our medium-to Strategy & Innovation, our our performance in the most long-term (3-15 year) strategy. corporate “research and efficient way, so that the Acknowledging that we development” centre, Sustainable Engagement team need to look ahead and start responsible for fostering long- can become the knowledge introducing the third generation
term equity of the Group through centre for this data in the next Our performance into the business in line with our corporate communications, few years.
13 Sustainability: What matters to Us
OUR APPROACH TO not responsible for the design and production of the items SUSTAINABILITY we sell in our stores, we strive to Our Strategy influence sustainable operations throughout our supply chain lthough sustainability through carefully selecting our is being managed partners. The items highlighted in through our Sustainable A the graphic demonstrate where Engagement team, the our largest impacts occur. implementation and 1 Design responsibility rests with each We are aware of the and every one of us. Chalhoub sustainability related risks and IMPACT, our social initiative, threats to our value chain. As works with our colleagues such, we implemented a supply and communities to spread chain policy in 2014 in order awareness and execute social to further expand our policies development projects that meet and values to our suppliers, their needs and offer innovative influencing their decisions and solutions to complex regional ensuring that sustainability is challenges. At the same time, being maintained throughout our teams work to create, our value chain, both from 2 Production implement and continuously an opportunity as well as risk improve our policies, so that perspective. In our operational we are able to report on planning, we assess and Environmental, Social and manage risks in the face of Economic related data in the uncertainty. In order to better most efficient and appropriate integrate risk management way. We have 80 plus principles in our business, we 3 Distribution ambassadors across the region are planning to establish a risk representing our various business management practice in 2015 units to advocate our social and that will enable us to define a environmental agenda. strategy and process for risk management. Value chain We acknowledge that a wide Stakeholder engagement and range of partners and other materiality OUR IMPACT stakeholders are affected by G4 – 18, G4 – 25, G4 – 26 our services and operations. Our value chain goes beyond our Engagement is key to the 4 Sales own operations, and includes success of the Group. We our partners, our suppliers and nurture our relationships and their production chains, as well partnerships with our key as the logistics to transport the stakeholders as they help us to products from our suppliers to better understand our strengths the warehouses for storage. and weaknesses and identify Transportation is also utilised from our key material impact areas. our warehouses to our shops, We have made a conscious 5 Customer where the end customer will buy decision to only report on those our products. Although we are material aspects that are most
14 Chalhoub 2014 Sustainability Report G4 – 18, G4 – 25, G4 – 26 important to our internal and external stakeholders. In 2014, we conducted an in-depth strategy and materiality review, including a peer review and an examination of areas where opportunities exist to demonstrate About Us leadership through innovation. With input from our colleagues, we identified and prioritised our key external stakeholder groups, based on level of interaction and intensity as well as relevance for sustainability. We communicate with these stakeholders on a regular basis, through meetings, events, interviews, telephone and email communications throughout the year. We talked to our stakeholders and asked Governance them to let us know which sustainability impacts they consider most important for our business. We conducted one internal and one external stakeholder session in order to obtain feedback on the 2013 report and our stakeholder engagement and materiality process so that we can cover the most applicable issues in the 2014 Sustainability report. A third party consultant facilitated the workshops to ensure objectivity and to allow the participants to provide honest feedback. In addition, we have received feedback through a survey, which was conducted for our 30 most significant internal and external stakeholders.
“For generations, we have focused on the individual drivers to progress, but today through the Our Focus lens of sustainability we witness something dramatically different. We witness that in the face of an uncertain and sometimes bleak vantage point, a multi sectorial approach allows for optimism. It has inspired us to work with community partners and local authorities while using our own teams’ expertise and time to innovatively design projects that effectively respond to social challenges relevant for the region. While we have made substantial progress in our efforts towards decreasing unemployment and enhancing education & entrepreneurship opportunities, reducing our carbon footprint is an ongoing process. We continue to challenge ourselves by optimising, listening, sharing and working together with all our business units to create shared value. We hope, through this systematic approach and our commitment to the UNGC principles, to be able to make the desired impact.” Ayla Bajwa, Department Manager, Sustainable Engagement Our performance
15 G4 – 18, G4 – 19, G4 – 24, G4 – 27
Stakeholder Material aspects Why this matters Our Response
Board of Economic On the one hand we need to be able to Governance Directors performance maintain a healthy bottom line, have good Focus on: Family corporate governance practice in place and Market presence business have appropriate succession plans in order to grow our business. On the other hand we are Focus on: conscious of the indirect economic impacts Gulfanisation we have in the economies of our operations. Therefore by hiring local Nationals, providing salaries that support our team members and their families and contributing towards our communities through the various community programmes and partnerships, we attempt to make positive impact.
Team Employment Our team members are our biggest assets. We About us Members have policies and procedures in place to ensure Occupational Focus on: their health and safety is not jeopardised and Health & Safety Education team members as well as new recruits have Training and been given equal opportunities. Moreover, we HSE education invest in training and education to ensure we Our people maintain best in class. Diversity and equal opportunity
Business Economic We highly value our long-term relationships with About us Partners performance our business partners that, we believe, have Focus on: Family remained strong because they have been Market presence business founded on the consensus of similar values and trust that exist in our family business.
Customers Product and In a region where we have fully contributed About us service labelling to the expansion and maturity of the retail (customer luxury Industry, we understand that the path satisfaction) to a sustainable growth will come from the experience we deliver to our customers. We Customer have set ourselves high standards to maintain privacy customer satisfaction. We have policies and Customer health processes in place to protect our customers’ and safety privacy and data.
Suppliers/ Supplier We have implemented a supply chain policy About us Contractors environmental and sustainable stores checklist in 2014, as we HSE assessment are aware of our impact through supply chain. It will not be easy but we have a significant Supplier opportunity to improve our environmental and Assessment for social impacts through sustainable procurement labour practices and supply chain policies. Supplier human rights assessment
16 Chalhoub 2014 Sustainability Report G4 – 18, G4 – 19, G4 – 20, G4 – 21, G4 – 22, G4 – 23, G4 – 24, G4 – 27
Stakeholder Material aspects Why this matters Our Response
Government Compliance Though our policies and procedures, we strive About us to meet and exceed compliance with local Focus on:
applicable laws. Our extensive community About Us Gulfanisation programmes and partnerships support governments goals for social and economic Focus on: development. Innovation & Entrepreneurship
NGOs Education Through Chalhoub Impact, we focus on Focus on: and Local humanitarian, environmental and educational Education Local community community projects and initiatives that allow Community HSE us to work with and for our local communities. Energy We actively engage team members in these Community programmes. Engagement Water Emissions Governance Effluents and waste
Each of the above listed our reporting process and material aspects and its sustainability strategy in the respective impacts have been upcoming years, we are hoping identified and restructured as to extend the boundary to other material for the whole Group. locations, as well as to include Based on the feedback we our suppliers and other external received from our stakeholders stakeholder groups. on the 2013 report, we have While we report on many of the Sustainability set UAE operations exclusively GRI G4 KPIs, we have four key as the boundary for each of focus areas for sustainability these material aspects. No that we focus on: Family major restatements or significant Business, Education, Innovation changes in the scope and and Entrepreneurship and aspect boundaries in this report Gulfanisation. have occurred as compared to the 2013 report. As we develop Our Focus Our performance
17 Focus on Family Business
“I am sure the future is safe because the flame that ignites you will pass on to the next generation, who will follow in yourMichel footsteps. to Patrick Thanks and Anthony to your Chalhoub: talent, your “I am intelligence, sure the future youris safe vision because and the your flame capacity that ignites for work, you youwill passed have on to becomethe next generation, a true business who will leader follow and in your a great footsteps. manager, Thanks to your talent, your intelligence, your vision and your capacity whilefor work, remaining you have very become human. a true You business know howleader to and share a becausegreat manager, it is an while illusion remaining to think very you human. can be You happy know without how othersto share or because without itthe is an desire illusion to to serve think andyou canhelp.” be happy without others or without the desire to serve and help”. Michel Chalhoub Chairman
THE CHALLENGE and private) and ubiquitous corruption. All aforementioned he foundation of the social challenges are heavily structure in the MENA region prevalent in the region. Strong Tis based on family and tribal dependence on expatriates connections and trust, which further creates challenges to are rooted in the strong family maintain a stable business. traditions and culture that are characteristic for the region. It is through the strong Therefore, family networks act foundations of family business as a security net to provide and their cultural values that the financial and emotional support structural political turbulence to the community. and economic reform can be turned into opportunities. At There are two sets of challenges Chalhoub Group, we believe it is that are intrinsically linked with because of our strong family ties family business in the MENA and family business structure that region: the challenge of passing we have been able to thrive for on leadership and ownership so many years. to the next generation through “We have endless respect succession planning; the for our father, who founded appointment of non-family OUR SOLUTION this Group, and we will members; defining core values With almost sixty years to always try and fulfill his and clarifying the role. stand for, Chalhoub Group wishes for generations The second set of challenges has lived through political to come.” are economically related. instability, witnessing structural Anthony and Patrick Interdependent structural political change across the Chalhoub challenges such as decelerated region’s geographies as well Co-CEOs growth of the private sector; as economic reforms. We fragile governance (public believe in the potential of
18 Chalhoub 2014 Sustainability Report this region. We want to make success planning and good Statistics on family business sure that our Group will still corporate governance in the GCC be here in the generations to mechanisms we are working come. Our business, despite to enable an alignment, 1st generation 48% the volatile region continued transparency and accountability to stay strong in the market, amongst all family members, always guided by our values. in order to make this transition
As a family business we have as smooth as possible. We About Us a long term approach even want Board level discussions to 2nd generation 33% if we face short term market be about global challenges, pressures. We have formed growth, strategy, operations, strong partnerships based on profitability and sustainability trust and are recognised within rather than family issues. It is the societies we operate in. We through our family governance 3rd generation 15% practice transparency through structure that we create an open door policy and corporate protocols and multiple communication tools address key ownership issues. transmitted to all our teams. We have the ambition to act as Helping to foster a positive a role model for the region to 4th generation % corporate culture driven by the ensure a sustainable future for 4
values of Respect, Excellence generations to come. Governance and Entrepreneurial Spirit. Our well-established relationships with key stakeholders enables us * Source: Campden Wealth, 2013 to negotiate the best locations in the malls for our partner retail stores. Our market leadership has been possible with an innovative approach and concern to stay relevant for our customer. 90 Our family business model is of companies% in the result of the cultural values the Middle East Sustainability imbedded in the private sector are family-owned in the region. Business culture “My cousins, my brother relies on commodities such as businesses, constituting and I have at a very trust, partnerships, social ties and over three-quarters young age understood relationships. The pattern for private family businesses in the of economic activity that life can throw MENA region is to reinvest in the in the private sector unexpected and difficult business for generations to come challenges at you. without the need to focus on With our parents and short-term goals. grandparents, as well as the people that work
Our founders have created Our Focus a stable base for the second with the Chalhoub Group generation, a company that is The family business that we happily call our loved by its employees through model has become extended family, we the personal relationships each a culturally appropriate have learnt that through and every team member has vehicle for the region’s courage, determination, with the family members. It is sustainability. perseverance, and the second generation who being able to follow your now have the responsibility Professor Bjorn Kjerfve passion without sacrificing lying ahead to manage Chancellor of American University of Sharjah your principles and the generational transition values, you can ultimately generational transition to the succeed.” third generation. Through Michael Chalhoub, Family Board Member Our performance
19 Focus on Education
Q What has been the biggest educational achievement for the Group in 2014? We encourage leadership through a 70:20:10 model, which represents On Job Learning:Informal Training:Formal Learning. We A developed a powerful coaching programme to positively influence our teams. 9 of our employees are studying for their MBA/EMBA this year, and we implemented the internal accredited centre for ILM. Q What is the key ambition for the future? By furthering the Group’s vision of becoming a learning organisation, A through coaching for both behavioural and functional development across the Group. Wassim Eid, Chief Human Resources Officer
THE CHALLENGE On-going education reforms will help, but will not resolve these ducation is crucial for mismatches within the next ten the socio-economic years. development of the region. In the company that E Being part of a competitive Many countries in the Middle my father founded, East face structural challenges sector wherein the biggest I have wanted to give such as high unemployment challenge is continuously everyone the same and low female labour force attracting and retaining talent, chance. To put that participation rates. According to we believe that investment in in place, we have a the International Monetary Fund education for all our employees progressive human (IMF), more than 50 million jobs and the community at large resource strategy and will be needed in the region over is the only solution. Our team. Nothing is more the next decade to ensure social commitment to developing the important for me than and political stability. region goes hand in hand with our educational programmes training people and The unemployment challenge and activities. understanding their is mainly due to the existing skills aspirations, which is why mismatch between the skillset we set up a training available on the market and the OUR SOLUTION programme to build actual availability of jobs. Rapid In order to truly practice on technical skills and population growth will remain sustainability through Group personal strengths concentrated in cities such as culture, we believe that while also developing a Dubai, Doha and Abu Dhabi. an investment in people is This will continue to put pressure research programme to necessary, not only internally but on public services, infrastructure also through partnering with our help us to discover the and housing in urban areas. It external stakeholders. Chalhoub talent and competency will also create a large pool of Group’s knowledge sharing and of each individual. labour that may be difficult to training can begin from as early Patrick Chalhoub absorb into the private sector, as 18, the minimum hiring age. In CEO owing to mismatches not only of 2014, Chalhoub hired 34 interns/ skills, but also of expectations of trainees, either fresh out of wages and working conditions. university or still in university.
20 Chalhoub 2014 Sustainability Report Mindful of the challenges have witnessed the evolution of Ways in which we engage surrounding youth our performance management through education (internal unemployment, we have and learning practices. As developed partnerships with a further contribution to this and external) universities across the Middle evolution, we are now moving East region and Europe through forward by engaging our 1 Scholarship programme which students are offered workforce, top to bottom,
scholarship opportunities, and optimising their talents by About Us Internships mentorship and a general providing the means and system 2 emphasis on exchange to accelerate this development. between academia and As a result, DRIVE was launched 3 Guest Lectures industry. The Chalhoub in 2014 and covered 900 team Scholarship Programme members with a goal of covering 4 Seminars and Roundtables goes beyond funding and 10,000 by September 2015. embraces the scholarship DRIVE will act as a holistic talent 5 Mentorship recipient as an ambassador of management solution that will the Chalhoub values. Through encompass and capture an 6 Retail Academy the scholarship the student automation of our performance, has preferential treatment for KPI and learning processes. This 7 RISE Retail programme internships, mentorship and system will allow team members
eventual employment. Through to analyse, access and monitor Governance 8 START Induction Programme the Chalhoub Luxury Brand progress, updates and general Management professorship information at any time in with the American University regards to their HR talent file of Sharjah, students are and/or that of their team. offered courses in luxury brand One of our most beloved management, fashion marketing projects is the Retail Academy and basics in luxury principles. present in both the UAE and Students have been mentored Saudi Arabia, created for the by eight senior executives of the education of our front line Group, and delivered twelve teams. The Retail Academy Chalhoub guest presentations launched in 2007 was the first of in 2014, offered to share real life Sustainability its kind in the region. insights and case studies. More than 70 students have gone In 2014 we have introduced through the senior level courses a new course, ‘coaching for since the launch in 2013. excellence’, a motivational programme that strives to inspire In 2014, we initiated a participants to reach their partnership with Jusoor, a individual goals. Colleagues non-governmental secular are being paired with an “Ever since our first organisation, with a mission internal & external coach, who introduction a year and a aimed at helping young people will work with front liners and in Syria realise their potential. A half ago, Chalhoub Group
managers towards building Our Focus result of Chalhoub’s partnership has been an instrumental the right environment for with Jusoor is the Chalhoub donor to Jusoor and an successful endeavours that will Literacy Centre, encompassing anchor benefactor to support in contributing to the both a scholarship programme its refugee education organisations vision. as well as vocational workshops. programme. I have Our scholarship programme Moreover, we support our worked with the wonderful offers tuition fees, full board employees during their pursuit team at Chalhoub and and flights for five students to of higher education. Chalhoub I’m very impressed with offers financial assistance complete their higher education both their passion and in the UK. and study leave for chartered their commitment to the certifications and members Within the Group, our HR have the opportunity to attend Jusoor cause.” division remains committed to external courses with universities enhancing its functions to meet Dania Ismail, in the region, Europe and the our business needs and best Jusoor Our performance US that will best fit their needs practices as we continue to such as ESA,HULT, IESE, LBS and grow. During the past years, we Harvard. 21 Focus on Gulfanisation
Q What has been the most effective Gulfanisation initiative in 2014? A The Emirati Graduate Programme (EGP) has proven to be an excellent tool to attract young and talented Emiratis
Q What is the key ambition for the future? My dream for the future is to see the EGP candidates grow A within the Group, understanding and living our values and moving onto senior positions Mansour Hajjar Managing Director, UAE
THE CHALLENGE innovation and expertise. The gap between government government began developing and private sector financial here is a region wide Emiratisation initiatives for offerings, a creative approach apprehension about promoting employment and for integration is necessary. Thigh unemployment employability of the national rates amongst nationals, youth within the private sector. predominantly amongst the Prominent barriers for the private OUR SOLUTION rapidly expanding younger sector are the generous public We are continuously working to population. Across the region, sector salaries and benefits attract, support and motivate governments are urging the defined for local employees, the the local workforce to adjust private sector to play an difference in working standards to the private sector school important part in integrating and the hours per workday as of thought. Our aim, in our the local community into their well as the cultural climate in medium to long-term strategy, industries by providing job which the national population is maintaining continuity opportunities and developing can feel alienated. Along with by employing a majority of experiential programmes. They the Emiratisation effort, there nationals in our respective have also been encouraged to has also been a big push to countries along with focusing collaborate on initiatives that encourage and integrate on attracting high calibre adapt academic standards to women in the employment employees. With respect to the private sector requirements. system. In the UAE, according feminisation law, we are already In the UAE, there will soon be to the world population well on the way in Saudi Arabia, no capacity to create jobs in review (2014), out of the 9.44 as we had a representation the public sector. The local of over 50% Saudi nationals population need to help sustain million inhabitants, 13% are the private sector to reduce the local nationals. Between the in 2014, of which 90% were dependency on expatriates for cultural difference and the women. In the UAE the situation
22 Chalhoub 2014 Sustainability Report is more complex, however, as In 2014, we also focused on amongst GCC candidates. our team consisted of 4% GCC deployment of a referral For our current GCC national nationals in 2014, of which 2.16% programme. Through the referral employees, we have a goal to (65) were Emiratis. With the programme, employees were organise more regular gatherings enthusiasm of our team and with encouraged to recommend in order to ensure we proactively numerous Gulfanisation initiatives potential UAE National integrate and create an open in place, we are confident we candidates. Three new forum to share feedback and
can attract more nationals and recruitments took place in 2014 ideas. About Us subsequently enhance our local through the referral programme. Gulfanisation continues to talent pool in the process. In addition, we organised an remain a top priority on our list ‘Ask Ali’ (Ali Al Saloum) workshop In 2013, we developed our and we are working efficiently for middle management in Emirati and Saudi Graduate and sustainably to reach our order to share knowledge, Programmes, also known as goals. raise cultural awareness and EGP and SGP. Our HR Talent to encourage managers to Management team launched further embrace nationals in the programmes in 2014 to their teams. The results of our provide graduates with the collective actions has been the opportunity to experience the hiring of 48 GCC nationals. diverse and multiple facets of our business through a 12-18 Our motivation has also been month career programme. The demonstrated by our continued Governance graduates undergo four rotation involvement with the Abu Dhabi streams; Centre for Technological and Vocational Education and »» Marketing Training (ACTVET) in support of »» Finance ABSHER’s ‘yes to work’ initiative. »» HR The initiative offers young high »» Commerical Development school Emirati students 2-3 weeks of professional experience in In 2015 we are expecting the private sector, creating a the EGP to grow from 9 to 14 bridge between education and graduates and the SGP from 3 to employment and changing the 7 graduates. Sustainability perception of the private sector, “In my short experience In 2013, our steering committee particularly that of the service with Chalhoub I have had designed a roadmap to define industry. This year, we have had many great experiences. the Gulfanisation strategy a great participation rate of Firstly with a very for the Group. In 2014, the 100 students, compared to 46 welcoming and friendly Committee met regularly to students in 2013. work environment and ensure thorough review of our Our Retail Academy aims culture where everyone is national population, develop to officially launch our pre- new initiatives for the attraction, willing to spend the time assessment programme in 2015, integration and retention of to teach you and guide targeting UAE nationals applying nationals. Our recruitment team you. Secondly, being
for frontline positions. They will be Our Focus participated in a wide range surrounded by great introduced to the roles and train of career and university fairs talents and experienced them for the assessment centres, to engage with young people people gave me the thereby increasing their chances in the UAE, such as Tanmia, opportunity to learn in a of being selected. Tawdeef, UAE Career Fair, ENDP, very short time. Finally, Zayed University, American In 2015, we also intend to open door for suggestions University of Sharjah and the organise more open days for and new initiatives is Higher College of Technology. UAE and GCC nationals. We aim really unique to have as it A strong effort was put into the to reinforce our sourcing team always pushes me to think Chalhoub Group employer to focus on attracting qualified branding to introduce and candidates and expanding out of the box.” develop collateral specifically for the advertisement about our Faisal Alshehhi local recruitment efforts. vacancies to KSA, Oman and EGP Candidate
Bahrain in order to gain interest Our performance
23 Focus on Innovation and Entrepreneurship
What has been the most innovative achievement in 2014? Q Level Shoe District is has become reference for innovation globally. It was A recognised as ‘Retailer of the Year’ by Footwear News Achievement, ‘The Most Innovative Retail and Leisure Concept’ by Global RLI Awards and ‘Best Retail Project’ by MENA Interior Design Awards. Also launched was ‘Wow by Wojooh, a beauty brand, through a collaboration of great minds.
What do you aim to achieve in the future? Q In line with our three year plan, we will further invest in analysing the gaps in the A region with the ambition of constructing innovative retail concepts that can be placed on the international map. With that, the integration of e-commerce is next in line, with the launch of a new oriental fragrance concept in 2015.
Fadi Jabbour Chief Operating Officer, Retail
THE CHALLENGE region. To tackle that, jobs must be created for the youth. t was Joseph Schumpeter who The emerging markets we first noticed that entrepreneurs operate in lack home-grown Iare agents of innovation, initiatives and creativity, which through their enthusiasm, drive, is of concern, along with the creativity and willingness to saturated regional job market. take risks, and by contributing Chalhoub actively engages to economic progress*. with local talent, empowering Wow by Wojooh is a stylish To battle unemployment, local entrepreneurs to find their and trendy line of professional fostering and supporting the potential and by creating new makeup inspired and targeted spirit of entrepreneurship has retail concepts to match market at the Middle East’s beauty encouraged young people to needs. muses! Wojooh realised the create work for themselves. region’s consumer had no Business is a driver for social, Entrepreneurship programmes real choice when it came to economic and environmental share a common philosophy: a tailor made, Middle-Eastern change in the MENA region, providing young people the oriented makeup line, and and entrepreneurship is a resources to create their own decided to change that. growing trend that develops companies so that they can Wojooh blended consumer our economies and improves take agency over their own feedback with European the communities in which we economic futures. In the MENA knowledge and regional live by providing, private sector region it is a critical learning market expertise to create growth, youth employment experience for young people. a line tailored to the desires opportunities and diversity. of the Middle Eastern beauty According to the International OUR SOLUTION lover. Wow by Wojooh offers Labour Organization (ILO), half At Chalhoub Group, we believe 140 unique products and of the regions’ youth population that it is this entrepreneurial spirit is growing. It ranges from are under the age of 25 and that drives innovation within the heatproof foundation to an 26.4% are unemployed. The ILO Group. Our values shape our extreme wear lip lacquer to calculates youth unemployment strategy and our initiatives. We breathable nail polish – and so to rise to 28.4% by 2017 in the much more! believe in empowering youth, * Pol, E. & Carroll, P., 2006, “An introduction to economics with an emphasis on innovation”, Thomson
24 Chalhoub 2014 Sustainability Report by developing their skill set for a Dhabi to create the region’s Khalifa Fund: Three phases competitive market to prepare largest department store of the partnership them to be the next leaders. Our experience, comprising of long-term vision is to encourage 200,000 square feet of prime private sector involvement and retail space within Yas Mall, diversification of the economy. expecting to be rolled out in 2015. This concept would be In order to foster
creating a unique shopping About Us entrepreneurship, we leverage and leisure destination on Yas and share our business expertise Screening Island and a first of its kind for wherever we can. Chalhoub Access to Retail expertise by Abu Dhabi. The new store would partnered with the Khalifa Khalifa Fund (KF) showcase 200 global brands Fund, a public entity based with concessions and designers in Abu Dhabi, well known for covering beauty handbags and its drive to develop a culture an extensive children’s selection. of entrepreneurship and to Another new retail concept work towards private sector that has been signed off in 2014 enrolment. Our partnership features a children’s district in model has a three pronged the Dubai based community Sharing Knowledge approach, involving screening retail project called City Walk, in order to shortlist retail Training KF Teams
which will have a variety of Governance projects that are presented Guest Speakers children’s wear brands under by entrepreneurs, knowledge one roof. Retail Workshops sharing through trainings, workshops and guest lecture Innovation is also reflected in sessions for the entrepreneurs, the way we conduct business. and incubation: shadowing our We always keep up with the teams, receiving support from times when it comes to offering Chalhoub mentors, and observe training to our colleagues as Incubation back end store operations to well as experiences we offer seek inspiration. to customers in our stores. In Access to retail expertise detail a region where we have fully Our creative retail concept Shadow/Mentorship of an contributed to the expansion entrepreneur stores are an accurate Sustainability and maturity of the retail luxury example of innovation and Industry, we understand that the entrepreneurship. The Tanagra path to sustainable growth will concept offers lifestyle gifts and come from the experience we art de vivre and was born from deliver to our customers. Our a vision Widad Chalhoub had in Guest Experience Management the 1980s. There was an array of Division works to enhance concepts stores that followed to the competence of our front name a few, Woojoh, Katakeet liners by coaching our Store and Level Shoe District. The Managers. In 2014, 700 hours concepts are examples of how of individual coaching were
we continuously strive to be Our Focus conducted in UAE stores, with 23 one step ahead of the market Area Managers. Alignment at all by addressing consumer levels will create a culture where expectations. Level Shoe “Chalhoub Group not only we are able to see and feel a District is one of our most iconic talks the talk but walks difference in Chalhoub stores. concepts, spanning 96,000 the walk in cultivating an square feet in The Dubai Mall, entrepreneurial spirit in its Local Designers in Level and being recognised as a employees thus allowing global fashion destination with them to develop new and » Nour Jensen a curated space divided into 40 “out of the box” initiatives » Emma Boutros designer boutiques and 4 multi- with full support from the brand areas, out of which a » Private Collection Group” number are local designers. » Tamashee Patricia Khoury In 2014, Chalhoub signed a » Aennis Eunis Our performance partnership with Aldar in Abu Operations Manager
25 Community Engagement
HOW WE WORK WITH OUR the CSR Label Award for the Group and Goumbook “Give second consecutive year, with a Ghaf program” with which COMMUNITIES TO MAKE A an overall score that saw a rise we organised tree planting, POSITIVE CHANGE from 68 to 72%. Additionally, we underwater and beach clean- The engagement of our team are committed to adhering to ups. In collaboration with members and partners are key the ten universally accepted Injaz, we organised two Job for the growth of “IMPACT”, principles of the UN Global Shadow Days, where 24 Local our agent for community Compact. Furthermore, we have UAE nationals were paired with development. IMPACT is a extended our global outreach Chalhoub team members to regional strategy that aims to as part of the Chalhoub better understand the corporate enhance team synergy, give Scholarship Programme with two world. We have supported back to the community and additional university partnerships. local entrepreneurship through influence a movement towards We also raised funds to build our partnership with Khalifa socially responsible behaviour two schools in Gaza with our Fund, engaged local youth through initiatives in the areas partner Dubai Cares in 2014 through an initiative with Dubai of education, environment and by selling custom designed Carbon Centre of Excellence humanitarian assistance. magnets in all our stores. As and partnered with Jusoor to part of our environmental alleviate humanitarian crisis We have been recognised efforts, we teamed up with through education. by the Dubai Chamber with Emirates Marine Environmental
AUS luxury brand management professorship
In partnership with the American University of Sharjah, Chalhoub Group hosts a luxury brand management professorship, where students are offered courses in luxury brand management and fashion courses. The course merges industry best practices with academic theory, aimed at developing and encouraging local talent in the field of luxury management by offering real life experiences, knowledge sharing and mentorship.
Scholars day
The Chalhoub Scholars Day was held for the second consecutive year in 2014. Chalhoub scholars were given the opportunity to meet with senior management of the Group and gained an insight on our business and values. The event was attended by nine students, three more participants than the previous year.
26 Chalhoub 2014 Sustainability Report Our Initiatives
Donations collected for the Hope for Cancer Patients campaign New University Partnership with Jusoor USD 204,386 About Us Partnerships
USD 110,022 2014: USD 86,300 * Jusoor scholarship programme (Syria) Literacy Centre opened in Lebanon: 6 teachers and supervisors recruited,500 students enrolled between 2014: the age of 5-11 Bocconi and Effat University * Vocational Workshop: attended by 30 Current: Zayed, AUS, Polimoda, people AUB, University of Saint Joseph, * 5 UK higher education scholarship Sciences Po opportunities provided to students 2012 2013 2014 Governance
Khalifa fund Chalhoub’s scholar Gift of Giving: donation of school day; students receiving packs to underprivileged in the region scholarships and sharing and the Philippine community fund insights Sustainability 2014: Bag collection: 13,335 stationary items collected and distributed In store fund raising: * 6,234 magnets sold * 100,990 USD raised 2014: Attended by 40 entrepreneurs 2014: 9 students * 154 stores participated 2013: New 2013: 6 students 2013: 12,716 stationary items distributed
Hope for Cancer Earth Day rituals Annual beach clean up – 54% Patients campaign increased participation Our Focus
2014: * 582,200 AED raised through the sale of daffodil pins:14,200 pins 2014: sold, 153 stores participated * Lights switched off in 420 stores in 79 * 28,280 AED raised though book malls in 9 countries. 2014: sales * 58% increase in mall participation Vs UAE: 135 volunteers and 1 tonne rubbish collected Colleagues from UAE, Kuwait, India, 2013. KSA: 120 volunteers Bahrain and Qatar participated in * Energy efficient light bulb campaign: awareness campaigns 147 conventional light bulbs collected Kuwait: 83 volunteers 2013: from employees QataR: 43 volunteers Our performance * 404,147 AED raised * Car free day – CO2 reduced by 200kg – 2013: * 43,550 AED raised 36 people took the metro 130 volunteers in the UAE
27 Health, Safety & Environment
e are striving to reduce Group values. All facts & figures installed solar panels for lighting our environmental provided in the messages are in our parking areas (which have Wfootprint through related to the Middle East been removed temporarily for engagement, awareness and keeping in line with our regional renovation of the area). Sourcing maintaining efficiency in our approach to sustainability. energy from renewables is one operations. Our objective is to of our long-term environmental We track and mitigate our promote behavioural change goals. environmental impacts through that starts at home. In 2014, we a register of all the significant In order to further reduce our continued undertaking several impacts associated with our greenhouse gas emissions initiatives to promote greater internal activities, such as water through our fleet (consisting environmental responsibility; usage, offloading, printing of 73(Real Emirates) vehicles), through team member and waste disposal. We are we focus on route optimisation engagement during many of very conscious of the energy and fuel reduction through our our events, our policies and consumption on our premises fuel reduction programme. In our outreach programmes. We and encourage environmentally addition, we encourage our ran an energy efficiency friendly technologies. In addition drivers to become more energy campaign across eight countries to the LEED certification we efficient and environmentally with Chalhoub-centric messages have in our main warehouse, aware through training. In 2014, in order to underline the link we replaced lighting systems 18 vehicle operators have been between environmentally with environmentally friendly trained. responsible behaviour and alternatives such as LED and had Encouraging Energy Efficiency through Visuals in and around our offices
New Group policies Supply chain policy: Our supply chain policy enables us to collaborate with our suppliers from the onset through a supply chain questionnaire which helps us understand the current level of risk and performance in our supply chain. Moreover, the policy encourages our suppliers to improve their environmental and social performance and to maintain effective management systems in line with legal and regulatory requirements, UNGC and GRI principles, integrating environmental, occupational health and safety, human rights, ethics and labour policies into business and decision-making processes. Environment policy: we endeavour to reduce our footprint through continuous improvement of the environmental performance of all our activities. We are committed to design and implement an energy management system to reduce the use of water, electricity and waste consumption at all our offices and stores where possible. A comprehensive checklist, based on the standards set by Leadership in Energy & Environmental Design (LEED) was drafted and implemented to integrate green concepts into the design and operations of our stores in order to reduce our carbon footprint and to save energy. The key areas covered are indoor environmental quality, waste management and sustainability in logistics.
UNGC 7 UNGC 8 UNGC 9
28 Chalhoub 2014 Sustainability Report Total Electricity Consumed, KWH 2014 2013 2012 Covers: Real FZE (includes new Head Office (HO2), Abu Dhabi (AD), DIP (Burjuman excluded) 14,174,422 13,543,547 13,193,068 * Values are higher in 2014 due to the new HO2
Total CO2 – Electricity, Tonnes of CO2 Emissions Covers: Real FZE (includes new HO2), AD, DIP (Burjuman excluded) 11,623 10,818 11,106 * Values are higher in 2014 due to the new HO2
Total Water Consumption, Litres (converted from IG,CM) Covers: Real FZE (includes new HO2), AD, DIP (Burjuman excluded) 56,829,864 43,128,602 45,087,924 * Values are higher in 2014 due to the new HO2
Non-recyclable waste collected, cbm About Us * main warehouse and DIP only 162,492 192,666 –
Incident Rate, [No. of Total incidents x 100,000 hrs. /No of working hrs.] Covers: Total UAE (Real Emirates & Real FZE – logistics only) * Incidents calculated per 100,000 working hrs. 4.28 3.95 – * Includes any incidents regardless of severity. Small cuts & wounds, traffic accidents, major Accidents, accidents that caused only property damage, etc.
Total Recordable Incidents [No. of Total incidents x 100,000 hrs./No of working hrs.] Covers: Total UAE (Real FZE & Real Emirates – logistics only) 0.06 0.23 – * Recordable Incidents does not include any first aid injury. * The benchmark used is 2.60 incidents at 100,000 hrs. worked. Reference: News
Release on 4th Dec 2014 of Bureau of Labor Statistics – US Department of Labor Governance Paper Consumption, KG Covers: Real FZE, Real Emirates 56,648 40,401 – * Values are higher in 2014 due to the new HO2 and inclusion of Abu Dhabi
Plastic, KG Covers: Real FZE & Real Emirates 24,984 19,283 – * Values are higher in 2014 due to the new HO2 Non-recyclable waste collected, cbm Covers: Main Warehouse and DIP only 2,713 1,880 –
Total CO2 – Transport, Tonnes of CO2 Emissions Sustainability Covers: Real Emirates, Real FZE, * Includes Abu Dhabi 1,263 1,352 1,485 * Audit of drivers route is conducted monthly. The decrease in fuel consumption is attributed to route optimisation. [There is a difference in the 2013 number we received this year – the calculation and comparison has been made on the figures received this year and not from last year.] Fire Evacuation & headcount time 2014 Covers: (Real FZE & Real Emirates – logistics only) Real FZe: Best time recorded: 3.46 * The policy is to conduct 4 drills per year in all logistics facilities with an evacuation 223 persons were evacuated target time of 4 minutes. The drills are repeated if the target time is not achieved. Real Emirates: Best time recorded: 3.48 107 persons were evacuated Our Focus Fatalities DART Rate* [days away, restricted, or transferred] [No. 2014 2013 of DART Days x 100,000 hrs. /No of working hrs.] Covers: All Covers: Total UAE (Real FZE & Real Emirates – logistics only) locations * DART Days calculated per 100,000 working hrs. * Benchmark: 1.85 days at 100,000 hours worked. Reference: 0.19 0.66 News Release on 4th Dec 2014 of Bureau of Labor Statistics – US Department of Labor
Over 6000 colleagues have used the shuttle service Over 1000 team members engaged in since September 2013, an initiative to reduce our environmental awareness campaigns and carbon footprint and to encourage use of the metro programmes
18,565 kg paper 3 tonnes 2000 trees planted, 13,663 recycled of rubbish 216 attended movie screenings, CO2 saved from car
316 trees saved collected 420 stores involved in earth hour free initiative Our performance
* * There is a difference in the DART Rate reported last year due to a miscalculation. This has been corrected and is reflected in this report
29 Our People
COMMITTED TO We believe that the most & Development, external effective learning can be consultants and/or universities to EXCELLENCE - LEADING done on the job, as well as offer the best in market practice THROUGH HUMAN through coaching. Therefore, for our members. we introduced the 70:20:10 CAPITAL DEVELOPMENT Other programmes we are methodology in 20141. The expecting to roll out in 2015 True to our commitment to 70-20-10 model suggests that include a new retail front liner excellence, the Group prioritises lessons learned by successful Learning Ladder consisting the professional development of and effective managers are of programmes that support our people through skills training, derived roughly 70% through jobs the Retail Competency team building seminars and (learning through experience), Framework launched in 2014. leadership programmes to help 20% from other people The programmes will address individuals develop, grow and (feedback mostly provided the needs of employees at achieve. by superiors), and 10% from each level of career ladder. courses and reading. Throughout We provide an extensive array In addition, we will roll out 2015, we will be rolling out this of learning opportunities and a “Beyond Make-up Expert methodology, running over one programmes, including our Training”, which is aimed at hundred workshops to ensure Advanced Management developing our front liners/ our staff members know how Programme, Advanced beauty advisors and increase to fill their Performance and Leadership Programme and team members’ make-up skills Development Review (PDR) Executive Education. We also in line with the beauty advisor with examples of how they partner with some of the world’s career ladder. We will also achieved their learning during best business schools such as introduce the Level 1 Career the year. In 2015, we will also be IESE, London Business School, Advancement Programme in formally launching a functional INSEAD and Harvard to develop 2015, aimed at supporting sales consultancy as per the 70:20:10 our leaders and leaders of the executives in retail in their efforts methodology, a collaboration future. We also offer courses to move to the next level in their between functional expertise approved by the Institute of career. Leadership Management (ILM). in the business, Learning
Chalhoub Retail Academy Established in 2007 in Dubai, the Chalhoub Retail Academy is the first of its kind in the region with the aim of inspiring “Excellence in Retail”. The Academy proposes a complete career path to all our sales associates, by building on their strengths whilst enhancing their prospects for internal growth. In collaboration with the world’s largest qualification body “Edexcel”, the Retail Academy delivers an internationally accredited certification in all aspects of the retail process. The Retail Academy is the realisation of the vision of the Chalhoub Group to offer its employees an international standard of learning. The goal is developing a talent pool of qualified and professional sales associates who are the ambassadors of our retail business.
* * Lombardo & Eichinger (1996)
30 Chalhoub 2014 Sustainability Report Total Number of employees, Total Male & Female, Total Number of Group level Group level Employees by UAE level 2014 6,008 Top Management
2014 About Us 11,727 2013 2012 2014 5,421 4,792 2013 67 9,979 2014 2013 2012 5,719 58 8,642 2013 2012 * COMEX, GMs 4,558 3,850 Middle Management
Total Number Employees, Total Male & Female, 2014 UAE level UAE level 419
2013 Governance 2014 365 5,351 2014 2013 2,558 * Department Managers, Division 4,521 2013 2012 Managers and Sr. Division Managers 2012 2,256 1,882 Back-office teams 3,762
* 34 student trainees work under a 2014 2014 limited contract of 6 months as per 2,793 1957 university requirements, on Chalhoub’s sponsorship 2013 2012 2013
* All employees are full time 2,265 1,880 1243 Sustainability
New Employee Hires, Total Male & Female, Retail Front liners total (UAE) total (UAE) 2014 2896 2014 601 2013 2014 2852 1,601 Our Focus 2014 People Turnover 1000
* 272 left during probation 2014 1240 Total Number of Employees 85% that took Maternity Leave of the 67 GM’s * These are a mix of resignations, terminations 2014 and others that have failed to complete their opted for higher probationary period. 176 Employees education * Employees who leave the organisation voluntarily or due to dismissal, retirement or death in service. Our performance
UNGC 6
31 We are committed to excellence Philosophy that recognises over- In 2014, an effort has been made in all that it undertakes. This achievements. to improve the work life balance commitment is met, in part, by of front liners, by implementing Recognising the value that team treating our people fairly and a two day weekend, from one. members bring to the table, equitably by providing a total Our back office teams’ working our reward philosophy consists compensation package that hours, on the other hand, have of a blend of all three main enables the Group to attract been reduced with 30 minutes components of compensation, and retain highly talented per day. These changes will be which are being readjusted people at all levels. implemented in 2015. on an annual basis based Our structured performance on inflation and economic Chalhoub Group is committed management system fosters circumstances: base pay; to ensuring our people have the and rewards excellent incentive pay and benefits. time to take care of themselves performance across the Group We provide a competitive and their families, through our by aligning the objectives of benefits package. Some of the flexible working hours policy, team members with the Group’s benefits include health care, life provision of recreational areas goals. It promotes consistency insurance and discounts with 3rd and many out of office social in performance assessment and party partners including, car hire, and sporting events and motivates all team members insurance, gym membership, activities. to perform at their best. We travel and hotels. also support a Total Reward UNGC 6
Total Number of training in 2014 2014 2013 Number of trained front liners that received 210 1038 qualifications QCF Level 2 diploma in Retail Skills 23 68 21,160 hours QCF Level 2 certificate in Retail Skills 142 106 QCF Level 3 certificate in Assessing Vocational 45 64 Achievement 52-week training 42 77 START Induction Programme 312 496 Front liners Male Female Distribution Excellence 0 33 2014 2014 RISE Retail Refresher Programme* (number of 441 19 590 819 participants) 2013 2013 Standardisation Day 29 12 523 399 START Distribution 160 80
Beyond Make-Up (Elementary) Level 1 Career Advancement Higher education opportunities (New) Programme (New) Number of Team Members that pursed their MBA/Masters with the support of 2014 Chalhoub 25 2014 Team Members 87 2014 Team Members 9 2013 13
* An annual retail refresher programme that was aimed to all retail front liners in UAE with the specific key focus learning areas: Group Values; Health and Wellbeing at work; Customer Experience; Handling Multiple customers; Standard operating procedures; Security procedures and Telephone etiquette.
32 Chalhoub 2014 Sustainability Report The Advanced Leadership Programme (ALP) Number of Course was intentionally designed for the sole purpose attendees of developing our 75 General Managers across the Group to establish a coaching culture that ALP- Advanced Leadership Programme 15 encourages knowledge sharing. Almost all GMs will AMP: Advanced Management 19 have completed this course by 2015. In line with Programme that, we are Institute of Leadership Management CFE: Coaching for Excellence 14
(ILM) accredited and offer a suite of courses that About Us focus on communication, self-management and NLP: Practitioner and Certified Coach 32 leadership, as well as conflict management. The ILM- Certified Courses 205 Advanced Management Programme (AMP) Insights Psychometric Practitioners 13 brings an active learning experience to the table, but also helps shape the transition of middle EMBAs Academic year 2013-2015 3 management to senior management. Our other EMBAs Academic year 2014-2016 9 programmes, Coaching for Excellence and NPL, focus on coaching and fostering the right Exec Education 2 environment to grow within the organisation. Exec Education completed in 2014 4 UNGC 6 * * 2015 graduation class is the final ALP batch
Total Number of Emiratis Total Male & Female Distribution of UAE Nationals Governance
2014 Sales Operations/ 12 Front liners 2014 2013 2012 2014 2013 65 11 9 37% 43% 2013 68 2014 Back office/ Support 53 services 2012 2014 2013 59 2013 2012 63% 21% * 83 total with non-pension Emiratis 57 50 Sustainability
Employees by Nationality (%)
Europe Russia
MENA Asia Our Focus Americas Oceania
Africa (Sub-Saharan Africa)
1.8 14.4 8.9 25.8 47.6 1.14 0.3 2.3 13.9 8.6 28.7 44.8 1.3 0.4 2.5 13.7 7.9 28.5 45.6 1.4 0.4
2014 2013 2012 Our performance
33 GRI Index and Materiality Disclosures Service
This Report has been prepared in accordance with the Core level requirements in the G4›s reporting standards as defined by the Global Reporting Initiative (GRI). This report has also undergone the Materiality Disclosures Service by GRI.
GENERAL STANDARD DISCLOSURES General Page External Standard Comments UNGC Number Assurance Disclosures
Strategy and Analysis G4-1 6 no Organizational profile G4-3 8 no G4-4 8 no G4-5 8 no G4-6 8 no G4-7 9 no G4-8 8 no G4-9 8, 31 no G4-10 31,33 no 6 N/A- Collective bargaining agreements are not currently permitted G4-11 – no 3 in the UAE G4-12 14 no G4-13 2 no G4-14 28 no 7 G4-15 9 no G4-16 9 no Identified material aspects and boundaries G4-17 2, 9 no G4-18 14-17 no G4-19 16-17 no G4-20 17 no G4-21 17 no G4-22 17 no G4-23 2 no Stakeholder engagement G4-24 16-17 no G4-25 14-15 no G4-26 14-15 no G4-27 16-17 no
34 Chalhoub 2014 Sustainability Report General Page External Standard Comments UNGC Number Assurance Disclosures
Report profile About Us G4-28 2 no G4-29 2 no G4-30 2 no G4-31 2 no G4-32 2 no No external assurance has been sought for this year’s report. We G4-33 – aim to put an assurance process in place for our future sustainability no reports Governance Governance G4-34 12,13 no Ethics and integrity G4-56 10 no 10 SPECIFIC STANDARD DISCLOSURES Reason(s) Explanation DMA and Page Identified External Comments for for UNGC Indicators Number Omission(s) Assurance Omission(s) Omission(s)
Economic
Economic performance Sustainability G4-DMA 32 no G4-EC3 32 no Market presence G4-DMA 33 no G4-EC6 33 no 6 Environmental Energy Our Focus G4-DMA 29 no G4-EN3 29 no 7, 8 G4-EN6 29 no 7, 8, 9 Water G4-DMA 29 no G4-EN8 29 no 7, 8 Emissions G4-DMA 29 no 7, 8 G4-EN16 29 no 7, 8, 9
G4-EN19 29 no 9 Our performance
35 Reason(s) Explanation DMA and Page Identified External Comments for for UNGC Indicators Number Omission(s) Assurance Omission(s) Omission(s)
Effluents and waste G4-DMA 29 no G4-EN23 29 no 8 Compliance G4-DMA 29 no G4-EN29 29 no 8
Transport G4-DMA 29 no G4-EN30 29 no 8 Supplier environmental assessment G4-DMA 28 no G4-EN32 28 no 8 Social Labor practices and decent work Employment G4-DMA 31 no G4-LA1 31 no 6 Occupational health and safety G4-DMA 29 no G4-LA6 29 no Training and education G4-DMA 32 no G4-LA10 32 no G4-LA11 32 no 6 Diversity and equal opportunity G4-DMA 31 no G4-LA12 31 no 6 Supplier assessment for labour practices G4-DMA 28 no G4-LA14 28 no Human rights Child labour G4-DMA 10 no G4-HR5 10 no 5 Forced or compulsory labour G4-DMA 10 no G4-HR6 10 no 4
Supplier human rights assessment G4-DMA 10 no G4-HR10 10 no 2
36 Chalhoub 2014 Sustainability Report Reason(s) Explanation DMA and Page Identified External Comments for for UNGC Indicators Number Omission(s) Assurance Omission(s) Omission(s)
Society About Us Local communities G4-DMA 27 no G4-SO1 27 no 1 Anti-corruption G4-DMA 10 no G4-SO4 10 no 10 The Standard Disclosure or part of the Standard G4-SO5 10 Disclosure is not applicable no 10 There has been no incident of anti-corruption
Product responsibility Governance Customer health and safety G4-DMA 10 no The Standard Disclosure or part of the Standard Disclosure is not applicable There has been no incident G4-PR2 10 of non-compliance with no regulations and voluntary codes concerning the health and safety impacts of products and services Sustainability Product and service labeling G4-DMA 11 no G4-PR5 11 no Marketing communications G4-DMA 10 no The Standard Disclosure or part of the Standard Disclosure is not applicable G4-PR7 10 There has been no incident no of non-compliance with regulations and voluntary Our Focus codes concerning marketing communications Customer privacy G4-DMA 11 no G4-PR8 11 no Our performance
37 Our Sustainability Timeline
60 New innovative retail concepts will years
2015 be initiated across the UAE of excellence in 2015
Membership to the UN Global Compact
2014 Publication of Chalhoub’s first annual sustainability report
Tanagra opens TDesign REAL FZE obtains OHSAS 18001 certification REAL EMIRATES obtains OHSAS 8001 certification Chalhoub receives CSR award from the Dubai 2013 Chamber of Commerce Chalhoub launched its first White Paper Chalhoub Group Environmental Policy
Inauguration of Level Shoe District Allied Enterprises receive Bukhatir
2012 REAL FZE obtains LEED Silver certification Community Opening of Katakeet Spirit, Employer REAL FZE obtains ISO 14001 certification of Choice and
2011 Company of the REAL EMIRATES obtains ISO 9001 certification Year awards
REAL FZE obtains ISO 9001 certification 2010
Opening of Chalhoub Retail Academy in Saudi Arabia
2009 Launch of Chalhoub IMPACT
CHALHOUB RETAIL ACADEMY
Launch of Chalhoub Retail INSPIRING Academy in the UAE EXCELLENCE 2007 IN RETAIL
Chalhoub Group’s
1990 headquarters moved to Dubai
Opening of the first Faces beauty concept store,
1989 now known as Wojooh
Launch of Tanagra 1980
1955 Michel and Widad Chalhoub open the first Christofle boutique in Damascus, Syria
38 Chalhoub 2014 Sustainability Report 39 www.chalhoubgroup.com