THE KNOWLEDGE WE BUILD IS KNOWLEDGE WE SHARE

LEADING PARTNER FOR LUXURY ACROSS THE MIDDLE EAST 2015 SUSTAINABILITY REPORT

www.chalhoubgroup.com

This is an environmentally friendly brochure, printed with 100% recycled paper and vegetable oil.

CO2-EMISSIONEN GEPRÜFT

TÜV AUSTRIA SERVICES GMBH At the Chalhoub Group, the knowledge we build is knowledge we share. Throughout the years, we have built our expertise in luxury, intimate knowledge of Middle East markets and deep understanding of the region’s consumers. We share this OUR SUSTAINABILITY PERFORMANCE knowledge with our partners and together, we build successful brands in the region. Sustainability Highlights 2015...... 5 Value Chain...... 6 Education...... 8 We believe that building and sharing our knowledge on Gulfanisation...... 12 environmental and social issues help us make our business more Our Employees...... 15 sustainable. A few examples of how knowledge sharing makes UNGC Membership...... 18 Chalhoub IMPACT...... 20 our business better and stronger are: optimising the way we use Environment, Health and Safety...... 28 energy and natural resources, promoting quality, health and safety Our Journey...... 30 practices, responsible behaviour such as recycling, supporting education, engaging and encouraging our employees to take THE CHALHOUB GROUP ownership and participate in volunteering activities. About Us...... 32 How We Conduct Our Business...... 36 After 60 years of development in the region, we are committed Stakeholder Engagement...... 38 to continuously building and sharing our knowledge with our CEOs Statement...... 41 partners and colleagues. GRI G4 Content Index ...... 43 FOREWORD SUSTAINABILITY Michel Chevalier, former HIGHLIGHTS 2015 chairman of Paco Rabanne, is an expert in luxury brand Sustainable engagement strives to make a positive IMPACT management and retail. on society and the environment, while adding value to the A well-known figure in the business and making the Chalhoub Group a stronger, more luxury industry, he teaches at innovativeOUR and PEOPLE successful business.OUR PEOPLEWe do this by committing INSEAD, ISML and HEC in Paris, to sustainable business practices, engaging our employees and has co-authored various and supporting the communities. 250 women hired luxury business management in KSA Chalhoub retail OUR PEOPLE12,680 %56.5 80 Emirati employees

women hired 86% INCREASE 39,282 books. 250 GCC countries UAE in the UAE (from 65 in 2014) employees in KSAnationals Chalhoub retail 21,160 59 out of 80 of our Emirati 2014 2015 OUR PEOPLE employees in the UAE are women 12,680 250 women hired Training Hours %56.5 in KSA Chalhoub retail80 Emirati employees

86% INCREASE 39,282 Michel Chevalier joined the Chalhoub Group Board in 2015. GCC countries UAE in the UAE (from 65 in 2014) employees nationals 21,160 80 Emirati employees OUR PEOPLE in the UAE (from 65 inout 2014 of) 80 of our Emirati 2014 2015 59 %86 INCREASE 39,282

employees in the UAE21,160 are women “Learning does not necessarily come from a set of official textbooks. As commercial activities are 2014 2016 Training Hours 59 out of59 80out of 80 of our 250 women hired%56.5 Emirati employees Training Hours changing very fast, and as customers constantly evolve, it is very useful to exchange ideas and 250 womenin KSA Chalhoub GCC retail countriesof our Emiratiin the UAE are women 12,68012,680 56.5% nationals processes from one sector to another or from one product category to the other. %56.5 hired in80 KSA Emirati employeesemployees in employees GCC nationals GCC countries UAE in the UAE (from 65 in GIVING2014) BACK TO OUR COMMUNITIES86% INCREASE 39,282

employees 21,160 nationals250 womenin retail hired the UAE in KSA Chalhoub retail 12,680 59 out of 80 of our EmiratiareMore womenthan 50 regional initiatives 2014 2015 But there is much more to “sharing knowledge”. Just speaking and exchanging ideas can also employees in the UAE are women 8,181 Al Elem pins sold as part of 12,680 during 2015. Training Hours %56.5 80 Emirati employeesemployees the Education Retail Campaign,

86% INCREASEraising AED 409,050, building39,282 provide a useful experience. The more one staff member speaks about the way he or she feels GCC countries UAE in the UAE (from 65 in 2014) 2,677 participants

employees 21,160 two schools in Gaza. nationals volunteering 3,800 hours. about a given task, the more he or she realises what are the different elements or challenges of this 59 out of 80 of our Emirati 2014 2015 employees in the UAE are women Training Hours 5,389 donations from employees task; in other words, to understand why this task is more meaningful. 8,181 Al Elam pins sold as part of supporting 37,530 people in need, 13,685 school backpacks the Education Retail Campaign (ERC), families with children and refugees donated to children in the region. GIVING BACKraising TOAED 409,050 OUR buildingaffected COMMUNITIES two schools by natural in disasters.Gaza It is well known that when individuals broaden their scope and see their activities as part of the More than 50 regional initiatives 13,685 school backpacks GIVING BACK TOMore OUR than COMMUNITIES50 regional initiativesdonated to childrenAED8,181 in 1,853,476the Al region Elem in funds pins raised sold as part of2,677 participants big picture, they become more effective. Everybody knows the value of experience. Sharing the (440,638 from employees, during 2015. the Education Retail Campaign,volunteeringEducation 3,800 for hours. 550 refugee AED 554,525 from ourGIVING customers, BACK children in our learning centre knowledge of different members of the same group is a nice way to speed up the experience More than 50 regional initiatives and AED 858,313 from the Chalhoub 8,181 Al Elem pins sold as part of raising AED 409,050TO OUR, building in Jusoor, Lebanon. during 2015. 2,677 participantsthe Education Retail Campaign, Group to match the donations). Education for 550 refugee children two schools in Gaza. building of everybody. GIVING BACK TO OUR COMMUNITIESvolunteeringraising 3,800 AED hours. 409,050, building COMMUNITIES 5,389 donations from employees 2,677 participants two schoolsin our in literacyGaza. centre in Jusoor Lebanon supporting 37,530 people in need: volunteering 3,800 hours. Families with children and refugees More than 50 regional initiatives 8,181 Al Elem pins sold as part of 14,000 pins sold as part of Hope affected by natural disasters. during 2015. When one compares different independent groups of companies, it seems that those which have the5,389 Education donations Retail Campaign, from employees for Cancer Patients campaign, 5,389 donations from employees raising AED 409,050, building AED 1,853,476 funds raised 2,677 participants raising AED 832,000 donated to Friends supporting 37,530 people in need,supportingtwo schools 37,530 13,685in Gaza. people school backpacks in need, (440,638 from employees, been built on the sharing of individual knowledge, the development of individual staff members and volunteering 3,800families hours. with children and refugees of Cancer Patients (including group13,685 match) school backpacks donated to children in the region. AED 554,525 from our customers, affected by natural disasters. families with children and refugees donated to children in the region. affected by natural disasters. and AED 858,313 from the Chalhoub Group the building of a team seem to have much better operating performances. The Chalhoub Group to match the donations). 5,389 donations from employees supporting 37,530 people in need, believes it is and wants to remain part of this group of companies.” AED 1,853,476 in funds raised 13,685 school backpacks families with children and refugees donated to children in the region. 17,158,034 kWh of electricity affected by natural(440,638 disasters. from employees, Education for 550 refugee AED 554,525 from our customers,AED 1,853,476children in funds in our learning raised centre and AED 858,313 from the Chalhoub in Jusoor, Lebanon. (21% increase from 2014 (14,174,422 kWh). Group to match the donations).(440,638 from employees, Education for 550 refugee AED 1,853,476 in funds raised AED 554,525 from our customers, children in our learning centre (440,638 from employees, Education for 550 refugee 52,989,111 litres of water Michel Chevalier AED 554,525 from our customers, childrenand AED in our 858,313learning centre from the Chalhoub in Jusoor, Lebanon. and AED 858,313 from the Chalhoub 17,158,034 kWh of electricity Group toin Jusoor, match Lebanon. the donations). (7% reduction from 2014 (56,829,864 litres). %70 Advisor to the Board Group to match the donations). (%21 increase from 14,174,422) 2014 kWh).

8,579 tonnes of total CO2 emissions.

52,989,111 litres of water OUR PEOPLE (%7 reduction from56,829,864) 2014 litres).

17,158,034 kWhENVIRONMENTAL of electricity 55 FOOTPRINT new stores fitted with LED lighting employees

(21% increase from 2014 (14,174,422 kWh). 8,579(increasing tonnes of CO from2 emissions. 26 in 2014 to 81 in 2015). 12,680 17,158,034 kWh of electricity 52,989,111 litres of water 55 187,058new stores fittedkg of with cardboard LED lighting and paper recycled, saving about 3,180 trees (21% increase from 2014 - 181,057 kg). 358 145 21,892 187,058 55 8,579 52,989,111 17,158,034 (increasing from 26 in 2014 to 81 2015 ). (7% reduction from 2014 (56,829,864 litres). (21% increase from 2014 (14,174,422 kWh). during 2015 More than (21% increase(7% reduction from 2014 from (14,174,422 2014 (56,829,864 kWh). litres). (increasingabout from3,180 26 treesin 2014 (21% to 81 inincrease 2015). fromGroup to match the donations). and AED 858,313 2014AED 554,525 ( 440,638 AED 1,853,476 - 181,057 by natural disasters. affected families with children and refugees supporting 37,530 people in need, 5,389 kg).volunteering 2,677 %70 GIVING BACK TO OUR COMMUNITIES donations from employees participants kWh of electricity new stores fitted with LED lighting

17,158,034 from employees,

52,989,111 litres of waterused recycled toners (from 96 in 2014 ). used IT devices donated to charity. 50 regional initiatives 21,892 Kg of kg cardboard of plastic and recycled. paper recycled, saving .

187,058 from our customers,

2 3,800 8,579 tonnes of total CO emissions. tonnes of total CO (7% reduction from 2014(21% (56,829,864 increase litres). from 2014about%70 3180 (14,174,422 trees (%21 increase fromkWh). 181,057 - 2014kg). in funds raised kg of plastic recycled. from the Chalhoub kg of cardboard and paper recycled, saving hours.

55 new stores fitted with LED lighting kg of plastic litres of water recycled. kWh of electricity 8,579 tonnes of total CO52,989,1112 emissions. litres of water21,892145 used IT devices donated to charity.

(increasing from 26 in 2014 to 81 in 2015). GCC countries % 56.5 (7% reduction from 2014 (56,829,864 litres). nationals 55 new stores fitted with LED lighting %70 187,058 kg of cardboard and paper recycled,145358 used saving used IT devices recycled donated toners to charity. (from 96 in 2014).

(increasing from 26 in 2014 to 81 in 2015). FOOTPRINT ENVIRONMENTAL donated to children in the region. the Education Retail Campaign, about 3,180 trees (21% increase from 2014 - 181,057 kg). 8,181 children in our learning centre children in our learning raising AED 409,050

8,579 tonnes of total CO2 emissions. Al Elem pins sold as part of

358 used toners recycled (from 96 in 2014). Education for 187,058 kg of cardboard and paper recycled, saving 13,685 2 ENVIRONMENTAL FOOTPRINT ENVIRONMENTAL 21,892 kg of plastic recycled. emissions.

about 3,180 trees (21% increase from 2014 - 181,057 kg). two schools in Gaza. in Jusoor, Lebanon. school backpacks UAE employees in the UAE are women 59 250 5 in KSA Chalhoub retail 21,892 kg of plastic recycled.55 new stores fitted with LED lighting 550 , building refugee out of 80 our Emirati in the UAE (from 65 in 2014 ) 145 used IT devices donated to charity. 80

(increasing from 26 in 2014 to 81 in 2015). women hired Emirati employees 145 used358 IT devicesused recycled donated toners to charity. (from 96 in 2014). ENVIRONMENTAL FOOTPRINT ENVIRONMENTAL 187,058 kg of cardboard and paper recycled, saving 358 used recycled tonersabout (from 3,18096 in 2014 trees). (21% increase from 2014 - 181,057 kg). ENVIRONMENTAL FOOTPRINT ENVIRONMENTAL 21,892 kg of plastic recycled. % 70

145 used IT devices donated to charity. 2014

358 used recycled toners (from 96 in 2014). 21,160 Training Hours ENVIRONMENTAL FOOTPRINT ENVIRONMENTAL 86% INCREASE

2015 39,282 VALUE CHAIN Sustainability affects each and every stage of our value chain, Together with our business partners, we aim to achieve sustainable which is composed of three main operational areas: growth built on a foundation of mutual trust. We strive to evaluate purchasing and partnership, warehousing and distribution, the risks associated with each phase of the value chain and to and retail. Although we are not directly responsible for the convert them into opportunities through effective strategies and design or production of the items we sell in our stores, we strive sustainable initiatives. to influence our supply chain and our stakeholders to ensure sustainable business practices.

Some of our luxury partners already strongly consider social, environmental and ethical In 2015, our DIP logistics To promote energy efficiency issues; while others are just taking their first warehouse operations’ water across our stores, our retail design steps on the sustainability journey. Either consumption was 2.75 litres per wing, 3D is installing LED lighting for way, the Chalhoub Group extends a man-hour - a all new fit-outs across the MENA helping hand to our partners to achieve 50.71% reduction from 2014. region. In 2015 nearly 55 stores were greater results. fitted with LED lighting - increasing the number of Chalhoub Group We also put in place a Supply stores with LED installations Chain policy and a Sustainable from 26 to 81. Suppliers Questionnaire, which will be rolled out to our partners and suppliers in 2016.

Purchasing/ Warehousing/ Retail CONSUMPTION PRODUCTION partnership Distribution

Two of our warehouses in Kuwait We support a third generation and Bahrain received the full Kuwaiti perfumer whose brand, Integrated Management System Ne'emah, is marketed through (IMS) certifications in 2015 for quality our stores. Through this health, safety and environment collaboration, we added a touch (ISO 14001 and OHSAS 18001, of luxury to the brand whilst respectively). Environment retaining its traditional significance and identity. IMS NE’EMAH

7 GROUP LEARNING & DEVELOPMENT (L&D)

EDUCATION As part of the Chalhoub Excellence Awards, the Group’s L&D team launched the Learning Excellence Award in 2015 to recognise the effort of individuals and teams that go above and Employee development is an intrinsic part of the beyond their scope of work in developing, implementing and promoting learning initiatives.

Chalhoub Group culture. We believe that building The Retail “Good to Great” programme and sharing knowledge is key to sustainable growth - was launched in 2015 with the overall goal regardless of whether the learning experience takes of equipping all employees in Buying &

Brand Analysis and Retail Management L

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place in a classroom, shadowing an expert or by rolling a o roles with new tools and techniques to i d t Executive in a up your sleeves and taking on a challenge. drive efficiency to the next level. g is t n Education he Orga

Executive MBA ALP Our goal is to offer impactful activities, programmes, practices and knowledge-sharing workshops AMP to ensure that each employee has access to the best learning programmes and takes ownership L e rs Situational Leadership of their career development. We promote self-driven learning, where people are pro-active and a e ding Oth Training Catalogue choose the right path to further pursue their career ambitions within the Group. ILM Certification in Leading & Management We manage our back office learning and development (L&D) through our Group Learning and Programmes from specific Functional Development Department and our frontline/store staff learning through the Chalhoub Retail Programmes through Public Enrolment Academy (CRA). While the training for frontlines is fairly standardised and offers a straightforward development ladder, back of house employee education is approached on a case-by-case basis; ILM Award in Leadership and Management Programmes from 2015 Training Catalogue and Specific ensuring continuous knowledge sharing with our colleagues. Le lf ading Se Functional Programmes through Public Enrolment Through the launch of our new HR Performance Management Portal “DRIVE”, we have integrated our learning and performance management review process. DRIVE’s non-paper based system is in line with our commitment to environmental best practices. We also provide on-going educational opportunities through collaboration and partnerships with some of the world’s best business schools, such as IESE, London Business School, INSEAD, To ensure that our training programmes are relevant and have positively impacted the performance Harvard and Hult International Business School. Our MBA graduates are constantly engaged in of the employees, we run 3600 feedback for our Advanced Leadership Programme (ALP) and the discussions with our Group’s CEO to best understand how to transfer this knowledge back to Coaching for Excellence Programme (CFE). the business.

CHALHOUB RETAIL ACADEMY (CRA) 70-20-10 MODEL OF LEARNING The Retail Frontline Learning Ladder was launched in 2015 in the UAE with the purpose of unifying training and development programmes through a single, clear framework. This helps employees To abide by our principle of sharing knowledge, we continue to educate our employees through excel in their current roles while preparing them for future roles and professional growth. trainings and workshops but we also push for on-the-job skill development, which is why we instituted the 70-20-10 model. CRVQ Diploma Level 1 CRVQ Certificate (6 months) Career Advancement Start - All new joiners (6 months) Senior Sales Programme(6 months) START F&B Programme Sales Executive and Sales Executive Sales Executive (New in 2015) (New in 2015) high end to Shop Supervisor (New in 2015) (Catch-up Programme launched in 2015) 10% 20% from 70% of learning on the job from coaching classroom Level 2 Career and mentoring or e-training Individual Training Individual Advancement Programme Modules training Store Manager Shop/Store Manager plan to Area Supervisors or Supervisor In 2015, we have rolled out over 100 workshops to ensure our employees take ownership of their (New in 2015) career development. 9 EMPLOYEE TRAINING Engaging with our knowledge partners The Chalhoub Group’s front-of-house and back-office training programmes

2014 Training Hours 21,160 “My vision is for AUS to become a centre of excellence for luxury teaching and research in the Middle East, and the partnership with the Chalhoub Group is critical to achieving this vision. 2015 Training Hours 39,282 (back-office 33,243 and 6,039 Frontlines) We delivered the first senior level Luxury Brand Management Number of Attendees – Chalhoub L&D Training Programmes 2015 Professorship in 2012, where students had the opportunity to work on a practical luxury brand management project alongside a mentor from the Chalhoub Group. This mentoring support system provided Leading others students with many benefits including learning from the experience of others, understanding real-world decision-making and developing Advanced Leadership Programme (ALP) 16 communication and personal skills.

Advanced Management Programme ESA (AMP) 19 Since the launch of the Professorship in 2012, over 170 students studied luxury courses at AUS and benefited from internships and full-time employment opportunities.” Executive MBA 7 Professor Nicholas J. Ashill Professor of Chalhoub Luxury Brand Management, Leading Self American University of Sharjah

Coaching for Excellence Programme (CFE) 12

NLP Certified Coach & Practitioner 13 Chalhoub Jusoor Scholarship: Resonating the spirit of sharing knowledge

ILM Certified Courses 196 “The Chalhoub Jusoor scholarship was a turning point in my life. Due to the unfolding events in Syria, I had to leave Damascus University and pursue undergraduate studies in Turkey. I applied for the Chalhoub Number of Attendees – Retail Academy Programmes Jusoor Scholarship and was chosen as a scholar for the year 2014. I knew this would be the key to achieving my dreams. Edexcel QCF (Qualification and Credit framework) Level 2 Diploma in Retail Skills 238 The opportunity to pursue a Masters’ degree in Engineering and Finance at the reputed UCL, located in London, was invaluable. The programme QCF Level 2 Certificate in Retail Skills 164 was a boost to my engineering skills and to build up my knowledge of the financial industry. I took advantage of the latter and began working Chalhoub Retail Vocational Qualification Enrolees 228 as a junior analyst, moving on to become an Investment Solutions Analyst with an investment management firm. QCF Level 3 Certificate in Assessing Vocational Achievement 58 Thanks to Chalhoub and Jusoor, I met talented people from multiple backgrounds, travelled across borders and discovered new ideas. This experience changed the way I look at things, helped boost confidence in my abilities 52-week training 41 and improve my entrepreneurship skills – all while living on my own for the very first time. I got a lot more than a great education.” Standardisation Day 13 Tarek Sabbagh Chalhoub - Jusoor Scholar START Induction Programme 438

START Distribution 173

START F&B Programme 92 OUR APPROACH FOR 2016 Our priority is to push hands-on learning, demonstrate proactive involvement in self-learning and Beyond Make-Up (Elementary) 51 sharing sector-specific best practices. Our action plan is based on increasing satisfaction and enhancing leadership skills - reinforcing our talent pipeline through the leadership competency Beyond Make-Up Advanced 13 framework.

Level 1 Career Advancement Programme 40 At the Chalhoub Retail Academy, the focus is to further strengthen the regional training capabilities and focus on frontline leadership as agents of change for communicating the Retail Competency Level 1 Career Advancement Programme (Catch Up) 128 framework and Guest Experience initiative in the UAE, KSA and other countries. We also plan to strengthen the F&B learning portfolio. Level 2 Career Advancement Programme 47 11 GULFANISATION

We are committed to offering work opportunities “When I joined the Chalhoub Group, I felt welcomed. The feeling of being to the most talented nationals of the countries we new among experts was overwhelming at the beginning. However, the encouragement and teaching energy surrounding me had a positive operate in. Our strategy is to drive Gulfanisation through reflection on my performance at work. Every person I have dealt with added our programmes and build a quality workforce of GCC value to my work experience.” nationals. Our Gulfanisation recruitment experts support us in Hadeel Bogary - Candidate of Saudi Graduate Programme, now made permanent as Marketing Executive, Wojooh KSA attracting the right talent to gain competitive advantage. In 2015, we successfully held the first Open Day for GCC nationals.

“After my graduation, I wanted to undertake a challenging job in a dynamic environment like the private sector, but faced hurdles as I lacked the required experience. I was fortunate to be given the opportunity to participate in “As a Gulfanisation officer, I am proud to help the Chalhoub Group’s Emirati Graduate Programme in 2014. I encountered the Chalhoub Group build partnerships in the supportive teams at all my rotations. They advised and supported me and UAE, champion our Gulfanisation programmes, trusted me with more responsibilities. Before the end of the programme, I was improve the retention of our GCC nationals and offered a position with Allied Distribution. I aim to become a Senior Marketing build a strong talent pipeline.” Executive and pursue my Masters in Marketing and Strategic Management in the future.” Mohammed Al Hajri Hamda Alfahim - Candidate of Emirati Graduate Programme, Gulfanisation Officer, UAE now made permanent as Marketing Executive, Allied Distribution, UAE

GULFANISATION PROGRAMMES We ensure that our Gulfanisation programmes are relevant to all our local talent pools. EMIRATI EMPLOYEES BREAKDOWN We implement them at two levels:

Emirati Total number Emirati employee GRADUATE PROGRAMMES employees FRONTLINE PROGRAMMES of Emirati hires in 2015 employees - UAE Established in 2015, these programmes Our Emirati and Saudi Graduate by position - UAE provide high school graduates programmes were established in 2013 2015 2014 2013 2015 2014 2013 2015 with practical exposure to frontline and the Kuwaiti Graduate programme launched in 2015. Throughout the commercial roles, with the goal of 0 0 becoming supervisors at the end of the 18-month programme, graduates gain 22 80 65 68 18-month programmes. exposure and training to accelerate their Top career within the Group. management 2 0

2016 TARGET Middle Emirati Graduate Frontline Retail Programme 15 EGP 21 12 11 management Programme

2015 (FRP) 5 5 SGP (EGP) 13 49 41 14 Back-office teams

Beauty Development male Emirati employees - UAE Total Saudi Graduate Programme 15 FRP Programme 5 BDP 59 53 57 29 24 29

(SGP) 5 female Emirati employees - UAE Total (BDP) 5 Frontlines

13 ENSURING SUCCESS THROUGH PARTNERSHIPS We look beyond our in-house programmes and work with local partners and government organisations to promote and improve our Gulfanisation efforts. Our main partnerships and external OUR EMPLOYEES programmes in 2015 included: We employ more than 12,000 people across the Group a) Partnering with the Emirates Nationals Development Programme (ENDP) to publicise our Group as an employer of choice for UAE nationals. The ENDP operates under the Dubai Government’s from over 100 nationalities. The knowledge and passion Knowledge and Human Development Authority (KHDA) and encourages Emiratis to join the private of our employees enable us to be the leading player in sector. our field, making our people the biggest contributors to b) Participating in a skills council with other large retail companies (such as Al-Futtaim Group and our success. Al Tayer Group) to discuss the challenges in attracting, hiring and retaining Gulf nationals, and steps to overcome these challenges. c) Continued partnership with the Khalifa Fund, an entity of the Abu Dhabi Government that In order to further motivate our workforce to develop and share their expertise and go the extra supports local entrepreneurs through training and mentorship. mile, we have instituted a number of awards such as: the Chalhoub Excellence Awards, Loyalty Awards, Guest Experience Excellence Awards (GEAA) and the Chalhoub Logistics Awards (CLA).

Kuwaiti Perfume Entrepreneur supported by Chalhoub Group Employees across the Group also participate in an Employee Satisfaction Survey every other year. These surveys enable us to gain an insight into the overall satisfaction of our employees with the “My journey as a perfumer began at the age of 17. Being the third generation Chalhoub Group, their jobs, managers and other aspects of their workplace. pursuing this craft, the art of perfumery and the tradition of the Orient are within my family roots and I believe it is my destiny. I have entrusted my brand Ne’emah to Chalhoub Group, an organisation I truly believe has the vision and dedication to elevate Ne’emah to another dimension in the Middle East. GENDER EQUALITY AND WORK/LIFE BALANCE They have shouldered the operational burden that comes with managing a The Chalhoub Group ensures gender-equality practices by aligning all benefits between our male brand and have respected and maintained its identity. This has opened the and female employees. door for me to finally be able to take a step back and re-focus on the creative development of the brand.” In 2015, as a part of our strategy to improve the work/life balance of our employees, we reduced Mohammed Ne’emah the working hours for our back-office employees by 30 minutes, and our warehouse team now Kuwaiti Perfumer enjoys a two-day weekend instead of one. We also provide our employees with discounts from 3rd party partners including restaurants, fitness clubs, beauty salons, car rentals, clinics and nurseries, amongst others. REACHING OUT TO GCC EMPLOYEES In 2015, we launched the pre-assessment workshop to prepare our GCC candidates for the Chalhoub Group assessment centres. The aim of the workshop is to introduce the candidates to the “The Chalhoub Group supports its women employees on the same level as Group and help enhance their basic soft skills such as teamwork and interview skills. their male counterparts. This encourages women executives to opt for long term careers within the Group.” The Chalhoub Group is one of the main supporters of YES to Work, a three-week national initiative, Rania Masri - General Manager, Level Shoes launched by the Abu Dhabi Centre for Technical and Vocational Education and Training (ACTVET). This initiative introduces school students to a working environment and the private sector, in particular the service industry.

In 2015, 78 students participated in the YES to Work initiative. “Two days off a week helps me get rested physically and mentally, and spend time with my family. Professionally, I am able to focus more on my work and am eager to learn more about the operation of the warehouse.” OUR APPROACH FOR 2016 Joselito Banadera - Warehouse Staff member, UAE We plan to participate in Aon Hewitt’s 2016 Qudurat Survey. Focused on understanding what drives and motivates talent in the region, and with an emphasis on understanding national talent, this survey will enable us to benchmark our Gulfanisation performance and success against industry standards, and gain insight into potential areas of improvement.

We will continue to work with top universities in the UAE and actively participate in career and university fairs. In 2016, we plan to extend our recruitment efforts to attract nationals from the Northern Emirates. We also intend to launch overseas recruitment campaigns in Bahrain and Oman to attract GCC nationals for our recently launched food and beverage division. 15 +

EMPLOYEES - GROUP

2015 2014 2013 2015 2014 2013 TOTAL NUMBER 12,680 11,727 9,979 TOTAL EMPLOYEES OF EMPLOYEES BY LEVEL IN THE UAE + TOTAL MALE TOP + EMPLOYEES 6,268 6,008 5,421 MANAGEMENT + 69 67 58

TOTAL FEMALE 6,412 5,719 4,558 MIDDLE EMPLOYEES MANAGEMENT 452 419 365 BACK-OFFICE TEAM 2,252 1,957 1,243

EMPLOYEES BY NATIONALITIES (108 NATIONALITIES) RETAIL FRONT-LINERS 3,038 2,896 2,852 0.5% 7.3% 58 922 1.1% 32.9% 141 4,170 RUSSIA 56.5% WOMEN EMPOWERMENT IN SAUDI ARABIA EUROPE 7,166 In 2015 we hired 250 women for Chalhoub Retail in the KSA. In order to support and coach our AMERICAS ASIA new hires and help them adapt to their jobs, we created the role of a trainer in our KSA offices. To overcome transportation difficulties, we assigned our female employees in stores close to their home and increased their travel allowances. We further motivated them by showcasing case studies of MENA 1.6% the career growth of women at the Chalhoub Group from shop-level positions to managers. 197 0.2% 26 AFRICA Noura Al Pakisstani began working as a coach and assessor for our KSA Retail Academy in 2014. (SUB-SAHARAN AFRICA) While she had prior work experience, she was apprehensive about starting to work at the Chalhoub Group as the new role was a challenge. However, the detailed training plan provided by the OCEANIA Chalhoub Group put her at ease and she greatly benefited from the comprehensive three months training provided by the Retail Academy.

“From a professional point of view, working at the Chalhoub Group helped me become stronger, communicate easily with people from different EMPLOYEES - UAE cultures, accept new ideas and be more open-minded. I have also learned a lot about the field I am in.” 2015 2014 2013 Noura Al Pakisstani TOTAL NUMBER 5,811 5,351 4,521 OF EMPLOYEES Her next career step is to become a trainer at the Retail Academy. She intends to study further in HR and return to the Chalhoub Group. TOTAL MALE EMPLOYEES 2,795 2,558 2,256

TOTAL FEMALE 3,016 2,793 2,265 EMPLOYEES OUR APPROACH FOR 2016 + We will continue implementing initiatives to promote better work/life balance and engage employees in initiatives outside the workplace. To encourage this balance, we increased maternity NEW EMPLOYEE + 1,977 1,601 leaves from 45 calendar days (as per labour law) to 70 calendar days, as well as a new paternity HIRES + leave of three days, which can be taken prior to or after the birth. TOTAL NUMBER OF EMPLOYEES WHO TOOK 122 176 MATERNITY LEAVE

PEOPLE TURNOVER 1,291 1,240 17 UNGC MEMBERSHIP The Chalhoub Group values the importance of conducting We also have a Code of Ethics (COE), available online and in our business in an ethical and responsible manner. This is why offices, which sets the expected behaviour from all employees, in 2014 we committed to uphold the universal sustainability and complements existing rules and regulations such as local principles of the United Nations Global Compact (UNGC). labour laws and our policies. It is introduced to our employees during their newcomer orientation and all employees must confirm their understanding of the COE.

UNGC PRINCIPLES POLICIES, SYSTEMS & MEASURES

HUMAN RIGHTS ENVIRONMENT

• We abide by all national and international human Principle 1: Businesses should rights labour laws and regulations. support and respect the • Code of Ethics: Covers our commitment to protection of internationally • Environment and Supply Chain policies (refer to deploying lawful human resources policies Principle 7: Businesses should proclaimed human rights; and Environment, Health and Safety for further details). and practices, in terms of human rights and support a precautionary • All our UAE, Kuwait and Bahrain Warehouses are ISO employment. approach to environmental Principle 2: Make sure that they 9001 and ISO 14001 certified. • Ethics Panel: Conducts investigations challenges; are not complicit in human rights • Implementation of route optimisation to reduce fuel abuses. of any concerns about non-compliance or intent of non-compliance to our code. Principle 8: Undertake initiatives to usage and associated emissions. promote greater environmental • Energy efficiency campaigns and retrofits across responsibility; and our operations. • Efficient waste management through recycling Principle 9: Encourage the LABOUR development and diffusion • Chalhoub IMPACT promoted environmentally of environmentally friendly responsible behaviour through initiatives such technologies. as tree planting and Can Collection Family Day amongst others. Principle 3: Businesses should • Code of Ethics: Covers our commitment against uphold the freedom of forced or compulsory labour, non-discrimination, association and the effective 18 years old minimum working age, and our recognition of the right to commitment to diversity and equal opportunity. collective bargaining; • Reporting channels: Employees can raise any concerns related to any unethical behaviour, Principle 4: The elimination of all ANTI-CORRUPTION discrimination or harassment in the workplace forms of forced and compulsory to our Human Resources Manager, the Country labour; Manager, Ethics Committee or through the Group Ethics email address. No cases of discrimination • Zero tolerance of any form of fraud, bribery and Principle 5: The effective abolition were reported in 2015. corruption. of child labour; and Principle 10: Businesses should • Training programmes: Retail Academy’s work against corruption in all its • Code of Ethics: Covers our commitment to Principle 6: The elimination of programmes, Coaching for Excellence, and forms, including extortion and ensuring that we do not offer or receive facilitation discrimination in respect of Advanced Management Programme among bribery. payments and neither do our agents, contractors employment and occupation. others. and suppliers do so on our behalf, when dealing with any government or private company.

19 Education Retail CHALHOUB IMPACT Campaign UAE

To provide education for Chalhoub IMPACT is our CSR strategy to drive employee underprivileged children engagement and give back to society. It is based on three living in the Arab region, we collaborated with Dubai pillars: Education, Environment, and Humanitarian. We bring Cares in the Education these pillars to action by establishing partnerships, organising Retail Campaign UAE. We raised AED 204,525 volunteering initiatives and always striving to make a positive by selling 8,181 Al Elem impact on the communities in which we operate. (Education) pins. The Group matched this amount and donated a total of AED In recognition of our commitment towards a sustainable future, the Group was awarded in 409,050 to build two 2015 the CSR label from the Dubai Chamber of Commerce for the third consecutive year. The schools in Gaza. Chalhoub Group ranked amongst the top 10% of applicants, achieving a total score of 75.9%, 4.2 points higher than our score of 71.7% in 2014.

Over the years, we have partnered with multiple local charities and NGOs who supported our Gift of Giving on-going community level commitment through IMPACT. In 2015, we strengthened ties with the Emirates Environmental Group and the Masdar initiative to continue operating with a sense of social and environmental responsibility. Generous contributions towards 2015’s Gift of During 2015, a total of 2,675 colleagues participated in 50 different IMPACT initiatives across the Giving Campaign allowed region and together, dedicated 3,800 hours to volunteering. us to distribute a total of 13,685 school backpacks to underprivileged children across the region. EDUCATION KSA raised funds to pack and deliver 6,000 school backpacks, 2,000 of which INJAZ UAE Job INJAZ Kuwait Entrepreneurship Master Class were given to Palestinian Shadow Day refugees in Jordan through a new partnership with the UNRWA (United Nations Emirati University students Habchi & Chalhoub Group employees’ children were Relief and Works Agency). were paired with the provided with a unique opportunity to brainstorm their Chalhoub Group own business ideas through collaboration with Injaz. 50 employees in Burjuman children aged 12 to 14 were involved in an educational offices for on-the-job work Entrepreneurship Master Class. Chalhoub IMPACT through recycling experience. Through Injaz, a non-profit organisation, all 12 students received We strive to lead by example and establish commercial relationships with mentoring by job- people and organisations that are environmentally aware and lead the sustainability journey. A good example is our supplier DGrade, managed shadowing 15 employees, by Kris Barber, who provides recycled school backpacks for our Gift of preparing them for a career Giving campaign. in the luxury retail industry.

Every year, hundreds of millions of plastic bottles are consumed in the UAE, leaving an irreversible negative impact on the environment. In light of this fact, DGrade manufactures clothing and bags from plastic bottles. The products use 50% less energy, 20% less water and produce 55% fewer carbon emissions required to produce conventional polyester. Since 2012, we purchased and distributed 49,113 school backpacks made out of 100% recyclable material. 21 ENVIRONMENT

AUS Luxury Brands Symposium Tree Planting

We launched the first Luxury Brand Through three tree-planting Symposium focusing on the topic of events held in UAE and Sustainability in the Gulf. Experts from the Kuwait, 150 Chalhoub Chalhoub Group, professors and academics Group employees planted from AUS and abroad, in addition to 594 Ghaf trees contributing industry and sustainability experts, shared to the native vegetation of their expertise and knowledge with the the region, supporting bio- AUS students and alumni on the topic of diversity and preserving the sustainability. An essay competition was run environment. We estimate involving 150 enthusiastic students and three the sequestration of 23 groups were awarded. metric tons of CO2 as a result.

One Young World AUS Guest Lectures Recycling For the 6th consecutive Campaign Under the Luxury Brand year, Chalhoub IMPACT Management professorship, provided opportunity for a Environment.. Chalhoub Group employees In order to promote delegation of employees gave guest lectures to 26 sustainable practices and and students to attend the students from the American encourage colleagues One Young World Summit University of Sharjah (AUS) to recycle, we ran held in Bangkok. in the Business of Luxury educational recycling Twelve delegates took part course. exhibits across ten offices. in this inspiring event, where We also placed 74 new world leaders addressed recycling bins in our UAE pressing international social buildings for paper, plastic, and environmental issues. cans, glass and e-waste. AT CHALHOUB, Jusoor Scholarship WE RECYCLE! & Learning Centre (Lebanon) Did you know that, on average, UAE residents produce 3.5 KILOGRAMS OF WASTE a day?

With the aim of empowering youth in the region through This makes the UAE’s per-capita ecological education, the Chalhoub Group has partnered with Jusoor footprint one of the highest in the world. in a scholarship programme. This collaboration has enabled At Chalhoub, we already recycle most of the Group to provide scholarships to six Syrian students since our waste, including paper, cardboard, batteries, printing toners, etc. Now we 2014, giving them access to higher education in prestigious want to go further and recycle even more. universities in Europe. A learning centre was also opened in Lebanon in 2014 to CAN WE COUNT ON YOU? help Syrian refugee children between the ages of 5 and 14 to assimilate into the formal education system. This centre comprises 24 staff including 19 teachers and 550 students. Education.. Environment.. Humanitarian....

23 Can Collection Family Day MASDAR Experience

Chalhoub Group In line with our commitment employees got together to the environment and for a can collection family pursuing knowledge, 16 of day in Dubai. Over 550 the Chalhoub Group’s top aluminium cans were executives (COMEX) visited collected from Masdar City in Abu Dhabi employees. The event to learn more about the was made successful world’s soon-to-be most through live recycling- sustainable city. stations by the Emirates Environmental Group.

Beach Clean Up

Around 70 volunteers participated at the annual Chalhoub Group Beach Clean Up that took place at the Jebel Ali sanctuary (Ghantoot reserve), in collaboration with EMEG (Emirates Marine Environmental Group). Two tonnes of garbage were collected!

Earth Hour Save food KSA

We celebrated Earth Hour by switching off the lights To celebrate World for one hour in our stores Environment Day, our across eight countries to colleagues in the KSA raise awareness about launched a food saving climate change. campaign during the holy month of Ramadan. We packed and delivered more than 80 Ramadan dry food bags to underprivileged families in Jeddah and Riyadh.

25 Breast Cancer HUMANITARIAN Awareness Month

Compassion for The Chalhoub Group ran the Levant multiple campaigns during Breast Cancer Awareness Month in October 2015, across India, Lebanon, This fundraising campaign Kuwait and Qatar. was launched in response Employees ran the 10km to millions of Syrian refugees Peace Runners marathon, who had to overcome a celebrated Wear Pink to harsh winter in January Work day, and took part 2015. Employees donated in the 5 km Walkathon AED 205,653 and the Group amongst other initiatives. matched the amount, giving a total of AED 411,314 to the Emirates Red Crescent and UNHCR. In solidarity with the Hope for cause, Chalhoub Cancer Patients Group employees also participated through the Wear White to Work The Daffodil symbolises initiative. hope, and as moral and financial support to those suffering from cancer, Daffodil motif pins were Solidarity for Nepal sold in over 270 stores across the UAE and the KSA. 18,500 pins were sold over a span of two months, In April 2015, Nepal raising AED 416,000 which suffered one of the worst was matched by the earthquakes of its history, Chalhoub Group. leaving 8,000 dead A total of AED 832,000 and 17,000 injured. The was donated to Friends of Chalhoub Group ran Cancer Patients (FOCP), a solidarity campaign a local charity based in raising AED 197,837 from Sharjah. employees and Group match. The money was donated to CARE, an international NGO that through our donation Make-up tutorials gave food for 15 days to for women with cancer 346 Nepalese, provided clean drinking water to 1,393 families and offered Our make-up artists and skincare specialists emergency shelter to 59 conducted a session with female Cancer more families. patients at the Al-Sidra Association Centre in Kuwait. The goal was to boost their morale by making them feel better and restoring their confidence.

27 17,158,034

14,174,422 Higher electricity consumption in ENVIRONMENT, 2015 due to newly 13,543,547 occupied warehouse Total electricity extension of approximately HEALTH AND SAFETY consumed (kWh) 5,000 m2 area. 2013 2014 2015

Our Group is strongly committed to the continuous The decrease improvement of our environment, health and safety 11,623 in CO2 emissions in 2015 compared to performance. We are proactively engaged in retrofitting 10,818 previous years is due to 8,579 considering a more Total CO2 – electricity, robust way of allocating for energy efficiency, tracking resource consumption, CO2 tonnes of CO2 emissions. the emission factor encouraging sustainable on-going purchases and waste through the DEWA bills. management strategies to add value to our operations. 2013 2014 2015

Reduced water We continue to act upon our Group environmental policy in parallel with the supply chain 56,829,864 consumption due to rectified leakage in policy, bearing in mind that our commitment to social responsibility extends to our supply base. Fire Evacuation43,128,602 and Headcount52,989,111 Timewater storage tanks at These policies ensure that suppliers adhere to applicable national laws and regulations, confer warehouses and due to Total water water conservation to environmental performance improvement17,158,034 and maintain effective management systems in 2014 measures adopted2015 at compliance with UNGC principles. consumption, litres the Group. 14,174,422 Higher electricity consumption in 2013 2014 20153.48 minutes 3.28 minutes 2015 due to newly Real Emirates We understand that some13,543,547 of the highest environmentaloccupied impacts warehouse of our Group are caused by our logistics operations.Total electricity Our drivers have maximised the Radioextension Frequency of Identification (RFID)/Vehicle Paper Non-recyclable waste Cardboard and paper approximately collected, cbm recycled (kg) Identificationconsumed (VID) based(kWh) fuel retailing system at service5,000 stations m2 area. in UAE through fill on the go using consumption (kg) 2013 2014 2015 Fire EvacuationReal and HeadcountFZE Time(In 3.462014, only minutes the main warehouse 3.38 minutes VIP Technology (Vehicle Identification Pass). and DIP were reported.) 2015 25,802 20142015 4,676 2015 2015 187,058 The logistics department for Real Emirates owns a total ofThe decrease50 vehicles in 2015. Truck drivers’ route 2014 35,102.5 3.48 2014minutes2,713 3.28 minutes 2014 181,057 in CO2 emissions in Real Emirates planning and optimisation have enhanced11,623 operational efficiency through lesser fuel consumption. 2015 compared to 2013 40,401 2013 1,880 2013 192,666 Vehicles on the administration10,818 and operations side at previousReal yearsEmirates is due to FZE use the green special fuel 8,579 considering a more Total CO2 – electricity, robust way of allocating Real FZE 3.46 minutes 3.38 minutes that has a safer environmental impact.CO2 tonnes of CO2 emissions. the emission factor through the DEWA bills. Plastic CO2 emissions We have achieved the full-Integrated2013 2014 management2015 systems in quality health, safety and the Toners recycled recycled (kg) from transport environment (ISO 9001, ISO 14001 and OHSAS 18001) for two of our logistics sites in Kuwait and (number) (tonnes) Bahrain in 2015. Reduced water 2015Incident21,892 rate 2015 358 CO2 2015 1,217 consumption due to 2015 2014 2013 56,829,864 (Number of total incidents x The training programme for health and safety inductionrectified was leakage launched in in 2015 across all of the 2014 24,984 2014 96 2014 1,263 43,128,602 52,989,111 water storage tanks at 100,000 hours/number of working hours) 3.77 4.28 3.95 Chalhoub Group’s logistics sites. A total of 3,082 hourswarehouses were spent and due on to health and safety training for 2013(Real19,283 Emirates and Real FZE - UAE only) 2013 0 2013 Total water water conservation 1,352 100% of our direct staff in the UAE (this included free zones).measures adopted at consumption, litres Incident rate 2015 2014 2013 the Group. (Number of total incidents x 2013 2014 2015 Total100,000 recordable hours/number incidents of working hours) 3.77 4.28 3.95 (Number(Real Emirates of recordable* and Real FZE incidents - UAE only) x 100,000 hrs 2015 2014 2013 / number of working hours) Paper Non-recyclable waste Cardboard and paper (Real Emirates and Real FZE - UAE only) collected, cbm recycled (kg) Total recordable incidents 0.19 0.06 0.23 consumption (kg) (In 2014, only the main warehouse * Recordable Incidents = Incidents which and DIP were reported.) (Number of recordable* incidents x 100,000 hrs 2015 2014 2013 required/ number medical of working treatment hours) and days off work 2015 25,802 2015 4,676 2015 187,058 (Real Emirates and Real FZE - UAE only) 0.19 0.06 0.23 * Recordable Incidents = Incidents which 2014 35,102.5 2014 2,713 2014 181,057 DARTrequired Rate medical treatment and days off work (Days away, restricted, or transferred) 2015 2014 2013 2013 40,401 2013 1,880 2013 192,666 (NumberDART Rate of DART days x 100,000 hours / number(Days away, of working restricted, hours) or transferred) 2015 20140.45 2013 0.19 0.70 (Real(Number Emirates of DART and days Real x 100,000 FZE – hours the /UAE only) number of working hours) 0.45 0.19 0.70 (Real Emirates and Real FZE – the UAE only) Plastic Toners recycled CO2 emissions recycled (kg) (number) from transport (tonnes) For 2016, our key target for QHSE is to continue to maintain a zero recordable incident rate while 2015 21,892 2015 358 CO2 2015 1,217 continuing to evaluate incident recording mechanisms with clear improvement targets. We are 2014 24,984 2014 96 2014 1,263 constantly upgrading our QHSE performance and will be developing our management system to 2013 19,283 2013 0 2013 1,352 conform to the recently released new version of 9001 and 14001 standards. Our longer-term targets are to get Qatar, Egypt and India warehouses certified by 2017. 29 OUR JOURNEY CHALHOUB GROUP – THE “NEW NORM” 2015 posed multiple challenges on the geopolitical and economic front, primarily because of the drop in oil prices and fluctuating exchange rates. This has led to significant revenue shortfalls in energy-exporting nations and subsequently, the acceleration of reforms and structural changes that were already discussed or under way. Taxation projects, a modernisation of labour laws and consumer protection are part of the structural changes that are impacting the way business is Kevin Chalhoub is the youngest son of Patrick done in the region. Chalhoub (co-CEO of Chalhoub Group). He is 22 and studying Environmental Engineering These major changes are also reshaping the Gulf’s luxury sector, resulting in lower growth rates, at Stanford University, California. more savvy consumers and increased competition, leading to a more mature market. With all these challenges shaking the foundations of a well-established environment and questioning Kevin proudly represents the Chalhoub family’s business as usual across local markets, the Chalhoub Group is adapting to what we call the third generation, and he is determined to keep “New Norm”. In 2016, we are prepared to welcome this new paradigm with an agile, resilient and embedding sustainability into the heart of the innovative approach. Our commitment to sustainability is stronger than ever and will enable us to luxury business. conduct our business operations in an efficient and cost-effective manner with minimal adverse environmental and social impacts.

“Luxury and sustainability are two words you may not particularly expect to find in the same sentence. But stop and think: ‘What is luxury?’ As many would simply define luxury as an inaccessible state of great comfort or elegance, Chalhoub Group would like to think of luxury goods as accessible goods sustainable in their consumption. After all, many of the things that we MAPPING OUR PROGRESS IN 2015, AND THE FUTURE PATH FOR KEY STRATEGIC AREAS: all take for granted today were once considered a luxury, such as owning a phone or a printer. In the Middle Ages, having access to basic educational principles such as reading or writing was even considered a luxury. FOCUS WHAT WE WANT WHAT WE DID WHAT WE PLAN AREAS TO DO IN 2015 TO DO IN 2016 Increasingly, leading luxury brands are taking steps in this direction and are introducing the idea of ‘sustainable luxury’ as an integral part of their own brand image. The client’s increasing awareness in the Middle East region suggests they are progressively seeking to buy fewer Create a strong, Gradually introduce Gulf Introduced three products that are more luxurious and durable. As such, the Chalhoub family’s third generation diverse and transparent nationals and increase advisors to the governance and women representation in would like to think luxury goes hand in hand with sustainability and embrace the Group’s social Chalhoub Group Board. leadership team. our leadership team. and environmental responsibility. Operating model Chalhoub IMPACT aims to engage in Educational, Environmental and Humanitarian endeavours and turn regional challenges into opportunities to give back to the Middle Eastern community. The Released a White Paper Implement a •Economic Group’s third White Paper released on Sustainability, the deployment of the United Nations Global on sustainability. sustainability software Sustainability tool. Compact principles across the GCC, the launch of digital platforms for our own concepts Level Sponsored keynote speakers at the Responsible Further engage with Shoes and Wojooh as well as the launch of Tryano, a new innovative retail concept in Abu Dhabi, Become a role model for •Business Ethics Business Summit (London) brands and partners on were some of the Group’s biggest achievements in 2015. However, while the Group is adapting sustainability. and other national and sustainability initiatives. to a new norm, the third generation would like to further develop its social engagement in the •Compliance international events. decades to come, tying the basic principles of luxury to sustainable ends.” Continue involving with local laws Increased sustainability our employees in employee engagement. volunteering activities. •Customer satisfaction Reported in line with the (Product GRI G4 guidelines and Gradually extend the safety) UNGC. scope of our future Enhance our sustainability reports to include all of reporting approach. Included case studies from our regional the Group’s operations in operations in the 2015 all countries. sustainability report.

31 ABOUT US The Chalhoub Group has been the leading partner for luxury across Our concept brands highlight our innovative spirit and commitment to the Middle East since 1955. As an expert in retail, distribution and our customers. We have six concept brands, including two new ones communication based in Dubai, the Group has become a major developed in 2015 - Level Kids and TRYANO. player in the beauty, fashion and gift sectors regionally. is a destination for timeless luxury, offering an inspiring, refined and edited array of lifestyle gifts and art de vivre under one roof. Tanagra launched TDesign, a multifaceted space located in Dubai that features a showroom for bespoke limited editions, luxury design and custom- By blending its Middle East expertise and intimate knowledge of luxury, the Chalhoub Group made pieces. is building brands in the region by offering service excellence to all its partners and a unique experience to its customers through its passionate teams. With a growing workforce of more than 12,000 people in 14 countries and over 650 retail stores, the Group’s success is attributed to “Your Face of Beauty” offers a sophisticated fusion of luxury with its most valued asset: highly skilled and dedicated teams. Professionalism and passion fuel the unconventional niche and specialty brands, its own make-up line Wow by Wojooh and hundreds Chalhoub Group’s competitive edge in today’s market. of beauty experts. We provide a unique and unparalleled experience to our partners and customers through our core This children’s wear store, conceived around storytelling, offers a unique retail activities in the areas of distribution, retail and communication. experience for both children and parents.

Distribution Facilitate direct access to regional markets through our distribution companies and their strategic alliances with major international groups operating across beauty, fashion Located in Dubai, Level Shoes is the world’s finest shoe metropolis targeting the luxury and gifts sectors. consumer through its unparalleled collection of exclusive footwear and bespoke services. Retail Operate in the retail sector through our own retail concepts, franchises, joint ventures and travel retail. is a 20,000 sqm specialised store dedicated to three categories: Beauty, Communication Provide a broad range of communication services perfectly adapted to suit Bags and Children’s. Located in Yas Mall, Abu Dhabi, TRYANO is inspired by a Garden of Imagination. regional tastes through our partnership with Havas Group. is the first concept of its kind devoted to children’s luxury. It offers a comprehensive selection of children’s wear, shoes, accessories, toys and specialised services.

Fashion Beauty 49% Group industry Our Market 36% Activity Share Beauty Fashion Carolina Christian GCC industry Baccarat Berluti Celine Chaumet 34% 30% Herrera Dior

Note: Gifts This means that Chalhoub Group Some of Christian Louis Christofle Fendi Lacoste L’Occitane Louboutin Vuitton Others 4% captured 36% and 30% of the our Brands (including F&B) Fashion and Beauty industries total 13% sales in the GCC, respectively.

Marc Michael Sephora Tory Burch Tumi Jacobs Kors

33 TIMELINE OF OUR GROUP

1955 1967 1980 1983 Michel and Widad First local partnership Birth of Tanagra, a Opening of the Louis Vuitton Chalhoub open the first in Kuwait and regional timeless luxury concept boutique in Kuwait, the first Christofle boutique in distribution of beauty, store in Kuwait. in the Middle East. Damascus, Syria. fashion and gift brands.

2004 1999 1997 1990 Joint venture with Puig. Regional deployment Chalhoub Group’s Introduction of of the Faces beauty headquarters moves to Saks Fifth Avenue. concept store, now Dubai. Joint venture with Coty. known as Wojooh.

2006 2007 2008 2009 Joint ventures with Dior Launch of Chalhoub Opening of over 90 Couture, Dior Parfums Retail Academy in shops, making the Opening of Chalhoub and Sephora. the UAE. Group one of the key Retail Academy in Regional collaboration retailers in the region. Saudi Arabia, with Havas Group. Launch of Chalhoub IMPACT.

2015 2014 2013 2011/12 Launch of the Group’s Chalhoub Group Chalhoub receives Opening of White Paper on becomes a member CSR award from the Katakeet, sustainability. of the UN Global Dubai Chamber of children’s Opening of TRYANO, Compact. Commerce. luxury apparel a speciality store. Publication of Chalhoub publishes its concept store, and Venture into the Chalhoub’s first annual first White Paper. Level Shoes, food and beverage sustainability report. a unique shoe world. Publication of metropolis in Chalhoub’s second Dubai Mall. sustainability report.

35 Michel & Widad HOW WE CONDUCT Co-CEOs CO S&I CLO CHRO Chalhoub MD, Communications EXECUTIVE CFO STRATEGY OUR BUSINESS COMMITTEE COMMITTEE MD, Emerging (COMEX) CAO (STRATCOM) Markets OUR VISION To be the leading partner for luxury across the Middle East. MD, KSA MD,UAE COO, Retail COO, COMEX Distribution OUR MISSION Our passionate teams build brands in the Middle East. By blending our Middle East expertise and intimate knowledge of luxury, we offer service excellence to all our partners and a unique CEO: Chief Executive Officer experience to all our customers. COMEX: Monitors all business activities to ensure MD: Managing Director achievement of the goals set by the co-CEOs. Also identifies potential risks and countervailing measures OUR VALUES COO: Chief of Operations mainly in the areas of sustainability, health, safety and environmental standards. Respect, Excellence and Entrepreneurial Spirit. CAO: Chief Administration Officer CFO: Chief Financial Officer CHRO: Chief Human Resources Officer OUR GOVERNANCE BODIES AND STRUCTURES STRATCOM: Observes challenges and opportunities As a family business, we understand that good corporate governance enables us to establish CLO: Chief Legal Officer and works to define the Group’s medium-to long-term (3-15 year) strategy. sustainable business practices and explore growth opportunities. To help build trust in our Group, CO S&I: Chief Officer Strategy and Innovation we ensure that our strategies are aligned to the interests of all our stakeholders. We have four governance bodies: Family Board, Group Board, the Executive Committee (COMEX), G4-17 and the Strategy Committee (STRATCOM). To strengthen our governance, in 2015 we added three highly experienced Advisors to the Board to the Chalhoub Group Board. Sustainability is managed by a dedicated, sustainable engagement team within the Strategy and Innovation division. The OUR UAE OPERATIONS team oversees the collection of sustainability data for the Group in order to measure our impact Our UAE operations can be grouped under Distribution, Retail, Communication, Competence and to launch initiatives to continuously improve our performance. Centres and Support Services.

Competence Support Distribution Retail Communication Centres Services ELECTS FAMILY BOARD GROUP BOARD Regional Chalhoub M.C.T FZE – Real FZE – Havas Distribution Group competence operation REGIONAL Middle East companies Retail centres centres Chairman Vice Chairman Michel Widad Family members Advisors to the Chalhoub Chalhoub Board Michel Chalhoub Local Widad Chalhoub Thierry Lombard Havas Real Co-CEO Co-CEO LOCAL Distribution Allied Retail Anthony Chalhoub Michel Chevalier (UAE) UAE Emirates Anthony Patrick Patrick Chalhoub Charles Hage companies Chalhoub Chalhoub Michael Chalhoub Voting members HR, IT, Michael Chalhoub Maintenance, Local and Administration, Local and Support services, Aurélia Chalhoub Regional Communication Finance, Regional retail Warehousing Michel Chalhoub distribution Services Logistics, Legal, activities and services Strategy Kevin Chalhoub Administration & Innovation

37 STAKEHOLDER OUR COMMUNICATION PLATFORM ENGAGEMENT G4-24, G4-25, G4-26

We consider stakeholder engagement crucial to achieving our business objectives. We extensively engage both our internal and external stakeholders in order to identify our strengths, weaknesses and key sustainability topics. In 2015, we introduced two new public relations tools to help promote the Group and reinforce our INTERNAL EXTERNAL • Corporate events - Group seminar (yearly), • Corporate video and advertising visuals. position as the leading partner for luxury across the Middle East. Regional General Management Meetings • LinkedIn. (twice a year). • e-MAC – Our Group’s intranet provides our • Interviews with the Group’s spokespeople. team members with Group information, • Participation in conferences and round tables. enhances Group cohesion and is used as an • White Papers. administrative/HR tool. Board of • Fact Sheets - short documents with some key Directors • MAClines - Our internal magazine, issued information and figures about the Group. three times a year, contains information about • Flashmails – three flashmails were sent to our the Group, from the latest launches and Business media mailing list on different topics related Employees events to our people and our sustainable Partners to the Group (60th anniversary, sustainability, engagement. employer of choice). We demonstrate our commitment to implement Customers CUSTOMER AND MARKET INSIGHTS Local Suppliers/ The Chalhoub Group exemplifies its innovation and dedication to customers and knowledge sharing Charities Contractors through our internal online platform “Edge”. Edge provides the Group with: and NGOs • Information on our markets and our consumers OUR • Inspiration from brand activities internationally and regionally STAKEHOLDERS • The latest creative and communication trends Government • Operation tools to support the Business Units Authorities Mall Owners/ Property Management ENSURING THE SATISFACTION OF OUR GUESTS Universities We consider every retail shopper as a Guest and aim to make their shopping a unique experience through outstanding service and quality products. We believe our business performance is the Media prime measurement of our Guest satisfaction. Our three business KPIs (Unit Per Transaction, Average and Press Basket and Conversion Rate) are communicated to all our stores on a daily basis through an UN Agencies automated system. Apart from our business KPIs, we also use a Performance Evaluation Programme and to delve deeper into our performance and identify areas of improvement. International Organisations PRIVACY AND SECURITY In line with our 2014 learning, we added the Customer Privacy Policy into all our on-going and new 3rd party supplier contracts as a measure of safe guarding our customer database. We applied We demonstrated our commitment to sustainability through memberships with a diverse range European Data Protection standards to our data collection and usage policies with transparent of organisations. CSR Arabia Network, Dubai Chamber Sustainability Network, Comité Colbert, opt in/out on all customer communication. We had no data breaches in 2015 and will continue to Fondazione Altagamma, United Nations Global Compact and Walpole British Luxury are a few review our security measures to ensure we keep up with the demands of an ever-growing business of our many partnerships. and commercial landscape. 39 MATERIAL ISSUES AND ASPECT BOUNDARIES G4-18, G4-19, G4-20, G4-21, G4-27 CEOs STATEMENT In 2015, we conducted 13 interviews with our external stakeholders including brands, NGOs and academic institutions. Internally, we held one workshop and three focus group discussions with Dear Partners, our employees to collect feedback on key topics like the 2014 sustainability report and overall sustainability approach. To ensure objectivity and allow the participants to provide honest Passion and audacity have allowed us to grow our Group and our activity in the Middle East region feedback, an external consultant conducted the meetings and compiled and analysed the results. for the last 60 years. We are developing our Group on the strong values of Respect, Excellence The outcome provided us with vital feedback on our sustainability performance, engagements, and Entrepreneurial Spirit. We are building our expertise in our categories through solid partnerships initiatives and future endeavours. with our brands and thanks to the hard work and dedication of our team members. It is important for us to share what we have learned and transmit knowledge. Our third sustainability report “The knowledge we build is knowledge we share” highlights our commitment to Education. Operating Model Employees • Economic sustainability As a UN Global Compact mem- • Employee • Business ethics ber since 2014, we are sharing our awareness/training • Compliance with local commitment and continuous effort on sustainability laws made by our teams to embed • Employee skill • Consumer satisfaction Sustainability in our Group culture, developement (product safety) and to integrate, support and advo- • Employee welfare • Innovation cate the ten universally accept- • Diversity and Addressed in section: ed principles of the UN Global inclusion at the External About us, How We Conduct Compact and the 17 Sustainable workplace Our Business Development Goals. Addressed in section: Internal Our Employees In 2015, we focused on engaging our Regional team members and encouraging their creativity, passion and energy to create a positive and sustainable impact on the business and society. UAE The education of our team members is a point of focus and part of our investment priorities in our yearly budget. We are striving to provide them with the right educational platforms to excel in their roles, taking full ownership and responsibility, acting with courage, consistency, Community Value Chain dedication and integrity. • Gulfanisation • Supply chain We are determined as a Group to go further in our support of Education, Environment and • Community management Humanitarian challenges. We are determined to build a strong Sustainability Governance. We development/ • Reduce believe that sharing and transmitting good practices, awareness and knowledge are the pillars philanthropy environmental of sustainability. As a mindset, it requires a collaborative effort to be integrated into all business • Support of women footprint of value functions, making sure it is adapted to the region we operate in and create a positive impact for entrepreneurs chain the future. To achieve this goal, the involvement and effort of each and every team member is • Partnership trust crucial. We are determined to keep on sharing our knowledge with our team members, business Addressed in section: • Brand engagement Chalhoub Impact partners and all our stakeholders to, together, continue our journey to start creating from today a and Gulfanisation Addressed in section: more sustainable future. Value Chain, Environment, Health and Safety Environment Anthony Chalhoub Patrick Chalhoub • Water management Co-CEO Co-CEO • Energy management • Waste management • Protect natural resources Addressed in section: Environment, Health and Safety

41 GRI G4 CONTENT INDEX

This Report has been prepared in accordance with the reporting standards as defined by the Global Reporting Initiative (GRI) G4’s Core option. This report has also undergone the Materiality Disclosures Service by GRI. REPORT SNAPSHOT GENERAL STANDARD DISCLOSURES G4-17, G4-22, G4-23 General Standard Description Page No UNGC Comments Disclosures This is the third Sustainability Report of the Chalhoub Group. Data in this STRATEGY AND ANALYSIS report covers the period from January to December 2015. Statement from the most senior decision-maker This report has been prepared in accordance with the Global G4-1 about the relevance of sustainability to the 41 organization Reporting Initiative (GRI) G4 Core option. ORGANIZATIONAL PROFILE

G4-3 Name of the organization front cover

We have expressed our commitment to uphold the ten basic universal G4-4 Primary brands, products, and services 32-33 principles of the UN Global Compact. This report addresses our G4-5 Location of the organization’s headquarters 32 performance against these ten principles (please refer to the ”How We Number of countries where the organization Countries of operation: operates, and names of countries where either UAE, Saudi Arabia, Qatar, Kuwait, Conduct Business” section of this report). G4-6 the organization has signifcant operations or that 32 Bahrain, Lebanon, Egypt, Iraq, Oman, are specifcally relevant to the sustainability topics Yemen, Jordan, India covered in the report Our report covers our UAE operations: Chalhoub Group Retail, Allied G4-7 Nature of ownership and legal form 36-37

Retail, Havas, M.C.T FZE, Real FZE, Real Emirates and regional and local G4-8 Markets served 32-33 distribution companies. We did not experience any significant changes G4-9 Scale of the organization 32-33 during the reporting period with respect to our size, structure, ownership G4-10 Breakdown of workforce 16 6 N/A- Collective bargaining or supply chain. In 2015, no significant change was made to the scope Percentage of total employees covered by G4-11 3 agreements are not currently collective bargaining agreements or coverage compared to our 2014 Sustainability Report. We have also permitted in the UAE not restated any information provided in our earlier reports. G4-12 Describe the organization’s supply chain 6-7 Report any signifcant changes during the reporting G4-13 period regarding the organization’s size, structure, 42 Your feedback is important to us. Please contact us at ownership, or its supply chain We address the precautionary G4-14 Addressing precautionary approach or principle 28-29 7 [email protected] for any feedback on this report. principle throughout our report External charters, principles, or other initiatives G4-15 38, 42 endorsed Memberships of associations and advocacy G4-16 38 organizations IDENTIFIED MATERIAL ASPECTS AND BOUNDARIES Entities included in organization’s fnancial G4-17 37 statements Process for defning the report content and the G4-18 40 aspect G4-19 Material aspects identifed 40

43 General Standard Description Page No UNGC Comments SPECIFIC STANDARD DISCLOSURES Disclosures For each material Aspect, report the Aspect General G4-20 40 Boundary within the organization Standard Description Page No UNGC Comments Disclosures For each material Aspect, report the Aspect G4-21 40 Boundary outside the organization CATEGORY: ECONOMIC The effect of any restatements of information G4-22 42 MATERIAL ASPECT: ECONOMIC PERFORMANCE provided in previous reports G4-DMA 15-17 Signifcant changes from previous reporting period G4-23 42 in the Scope and Aspect Boundaries The benefts received by the Chalhoub Group employees Coverage of the organization›s defned beneft plan STAKEHOLDER ENGAGEMENT G4-EC3 15-17 include transportation, housing, obligations List of stakeholder groups engaged by the ticket allowance, school allowance, G4-24 38 organization medical and life insurance We identifed our key stakeholder MATERIAL ASPECT: MARKET PRESENCE G4-25 Basis for identifcation and selection of stakeholders 38 groups through interactive workshop and interviews G4-DMA 13 G4-26 Approaches to stakeholder engagement 38 Proportion of senior management hired from G4-EC6 the local community at signifcant locations of 13 6 G4-27 Response to key topics and concerns raised 40 operation REPORT PROFILE CATEGORY: ENVIRONMENTAL G4-28 Reporting period 42 MATERIAL ASPECT: ENERGY

G4-29 Date of most recent previous report 42 G4-DMA 28-29

G4-30 Reporting cycle 42 Annual G4-EN3 Energy consumption within the organization 29 7, 8

G4-31 Contact point for questions 42 G4-EN6 Reduction of energy consumption 29 7, 8, 9 No reduction achieved “‘In accordance’ option, the GRI content index G4-32 43 MATERIAL ASPECT: WATER and external assurance” G4-DMA 28-29 No external assurance has been Policy and current practice regarding external sought for this year’s report. We aim G4-EN8 Total water withdrawal by source 29 7, 8 G4-33 - assurance to put an assurance process in place for our future sustainability reports MATERIAL ASPECT: EMISSIONS G4-DMA 28-29 GOVERNANCE Energy indirect greenhouse gas (GHG) emissions G4-EN16 28-29 7, 8, 9 G4-34 Governance structure of the organization 36-37 (Scope 2) G4-EN19 Reduction of greenhouse gas (GHG) emissions 28-29 9 ETHICS AND INTEGRITY MATERIAL ASPECT: EFFLUENTS AND WASTE Describe the organization’s values, principles, G4-DMA 28-29 G4-56 standards and norms of behavior such as codes of 18-19 10 conduct and codes of ethics G4-EN23 Total weight of waste by type and disposal method 28 8 MATERIAL ASPECT: COMPLIANCE ​Report the internal and external mechanisms for reporting concerns about unethical or unlawful G4-DMA 28-29 behavior, and matters related to organizational G4-58 18-19 We have not received any fnes nor integrity, such as escalation through line Monetary value of signifcant fnes and total number have been imposed any non-monetary management, whistleblowing mechanisms or G4-EN29 of non-monetary sanctions for non-compliance with 8 sanctions for non-compliance with hotlines environmental laws and regulations environmental laws and regulations

45 General General Standard Description Page No UNGC Comments Standard Description Page No UNGC Comments Disclosures Disclosures MATERIAL ASPECT: TRANSPORT Operations and suppliers identifed as having signifcant risk for incidents of child labor, and We adhere by a minumum hiring age G4-HR5 5 G4-DMA 28 measures taken to contribute to the effective of 18 years abolition of child labor Signifcant environmental impacts of transporting products and other goods and materials for G4-EN30 28 8 MATERIAL ASPECT: FORCED OR COMPULSORY LABOR the organization’s operations, and transporting members of the workforce G4-DMA 18 - 19 MATERIAL ASPECT: SUPPLIER ENVIRONMENTAL ASSESSMENT Operations and suppliers identifed as having signifcant risk for incidents of forced or compulsory None of our operations and suppliers G4-HR6 4 G4-DMA 6-7 labor, and measures to contribute to the elimination use forced or complusory labor of all forms of forced or compulsory labor Percentage of new suppliers that were screened G4-EN32 6-7 8 using environmental criteria Percentage of new suppliers that were screened G4 - HR10 18 - 19 2 using Human Rights criteria CATEGORY: SOCIAL SUB CATEGORY: SOCIETY SUB CATEGORY: LABOR PRACTICES AND DECENT WORK MATERIAL ASPECT: LOCAL COMMUNITIES MATERIAL ASPECT: EMPLOYMENT G4-DMA 20-27 G4-DMA 16 Percentage of operations with implemented local Total number and rates of new employee hires and G4-SO1 community engagement, impact assessments, and 20-27 1 G4-LA1 employee turnover by age group, gender and 16 6 development programs region MATERIAL ASPECT: ANTI-CORRUPTION MATERIAL ASPECT: OCCUPATIONAL HEALTH AND SAFETY G4-DMA 18 - 19 G4 - DMA 29 Communication and training on anti-corruption G4-SO4 18-19 10 Type of injury and rates of injury, occupational policies and procedures diseases, lost days, and absenteeism, and total G4-LA6 29 The Standard Disclosure or part of the number of work-related fatalities, by region and by Confrmed incidents of corruption and actions Standard Disclosure is not applicable. gender G4-SO5 10 taken There has been no incident of anti- MATERIAL ASPECT: TRAINING AND EDUCATION corruption G4-DMA 8-10 SUB CATEGORY: PRODUCT RESPONSIBILITY Average hours of training per year per employee by MATERIAL ASPECT: CUSTOMER HEALTH AND SAFETY G4-LA9 10 gender and by employee category G4-DMA 39 Percentage of employees receiving regular The Performance and Development There has been no incident of G4-LA11 performance and career development reviews, by 8-10 6 Review is a yearly process done for all Total number of incidents of non-compliance with non-compliance with regulations gender and by employee category employees of the group regulations and voluntary codes concerning the G4-PR2 and voluntary codes concerning health and safety impacts of products and services the health and safety impacts of MATERIAL ASPECT: DIVERSITY AND EQUAL OPPORTUNITY during their life cycle, by type of outcomes products and services G4-DMA 15, 17 MATERIAL ASPECT: MARKETING COMMUNICATIONS Composition of governance bodies and breakdown of employees per employee category G4-DMA 39 G4-LA12 16 6 according to gender, age group, minority group The Standard Disclosure or part of the membership, and other indicators of diversity Total number of incidents of non-compliance Standard Disclosure is not applicable with regulations and voluntary codes concerning There has been no incident of MATERIAL ASPECT: SUPPLIER ASSESSMENT FOR LABOR PRACTICES G4-PR7 marketing communications, including advertising, non-compliance with regulations G4-DMA 18-19 promotion, and sponsorship, by type of outcomes and voluntary codes concerning marketing communications Percentage of new suppliers that were screened G4-LA14 18-19 using labor practices criteria MATERIAL ASPECT: CUSTOMER PRIVACY SUB CATEGORY: HUMAN RIGHTS G4-DMA 39 MATERIAL ASPECT: CHILD LABOR Total number of substantiated complaints regarding G4-PR8 breaches of customer privacy and losses of 39 G4-DMA 18 - 19 customer data