Working across the Group and with our partners and stakeholders to drive efficiencies and minimise the environmental impacts of our business, our value chain and our products.

Climate and emissions

The Group’s activity generates greenhouse gas emissions through operations (stores, warehousing and shipping), products and product packaging. We are committed to minimising the environmental impact involved in the manufacturing, transportation, storage and consumption of the products we sell.

The main direct sources of emissions within our value chain are electricity in our stores, warehouses and distribution centres (DCs) and fuels used in the transportation of goods.

By taking a responsible and appropriate approach to environmental management both within the Group and working with our partners and stakeholders, we can reduce environmental risks and negative impacts.

Energy efficient stores and DCs

Poundland has upgraded its whole refrigeration fleet with doors, increasing energy efficiency by 80%. We are also using messaging on the fridge doors to communicate to our customers about energy savings. Almost all of our stores are now using energy efficient LED lighting and all our new stores install LED lighting. In FY24, solar panels will be installed at two of our UK DCs.

Sustainable energy

Poundland sources 100% renewable electricity. The Pepco Energy Committee is developing renewable energy sourcing strategies across all 21 European markets. This is quite challenging as there is often a lack of renewable energy availability in some markets.

Efficient logistics: DC to store, employee commuting and fuel sourcing

We have banned the use of airfreight for own-brand product shipping and are enforcing this through our Airfreight Policy. Poundland now only provides electric vehicles in the employee company fleet. In the UK, we have invested in gas-powered tractor units and long-semi and double-deck trailers; these are higher capacity which enables us to deliver more and reduces miles driven. In the next year, we will further investigate alternative, lower-carbon fuels for our logistics operations and continue to work on logistics planning efficiencies to reduce road miles and transport-related carbon emissions. In Pepco, about 750 shops are serviced directly by DCs, which additionally lowers costs of trans- shipment and number of kilometres driven.

Waste

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

Efficient and effective stock management is the most important tool the Group uses to minimise product waste in our stores and distribution lines and reduce our impact on the environment while ensuring commercially efficient operations. We are also conscious of the fact that wasteful packaging can contribute to pollution in a variety of ways and customers increasingly seek more sustainable packaging.

Avoiding or minimising waste is a key element of our approach to sustainability.

However, it is also important to note that packaging can play an important role in minimising waste – particularly related to food. We work with our specialist waste management suppliers to ensure that waste is recycled correctly and, within our Poundland stores, we achieved our zero waste to landfill goal two years early and have now set a goal to reduce all waste by 50% by 2024, from a baseline set in 2019.

Responsible waste management

In the UK, once again we hit our zero waste to landfill goal. In FY23, 21,327 tonnes of waste was generated, with 99.7% of this being diverted from landfill and 55 tonnes directed to disposal.

Below we describe some of the activities we have undertaken to reduce waste and increase recycling.

In March and April 2023, we organised a second clothing collection event in selected stores in Italy and Spain. This was the second edition of the campaign “#Old clothes, New stories” held in collaboration with our social partner Humana People to People.

In total, we collected 1,316 kg of used clothing in over a month, of which as much as 70% will be reused. Reuse and recycling can have many positive environmental impacts which include avoiding CO2 emissions, water consumption and use of pesticides and fertilisers.

Environmental training and awareness

• “Every footprint is better than a carbon one” is a campaign organised by Pepco Croatia, the aim of which was to educate customers and young people about the importance of caring for the environment. The event included: interactive workshops for students conveying the importance of forests in our lives and voluntary action of reforestation, in which 3,000 trees were planted.
• “WE DO” was a one-day environmental clean-up campaign organised by our colleagues from Pepco Lithuania. Its aim was to remove rubbish and waste from public areas on the shoreline of a local lake in Vilnius. This initiative not only had a positive impact on the environment and the local community, but also provided a great forum for team integration and working together outside the Company.
• At Poundland, we trained our store staff in optimising recycling practices, with new bins to separate waste streams and posters explaining what goes where. We have also updated our packaging handbook to make it more user-friendly and trained 100% of our buyers in its use.

Avoiding waste – product packing

Clear packaging materials labelling provides our customers with information on how they can better recycle packaging at home – in the UK we have adopted the OPRL guidelines and are rolling them out across our own-label products.

Pepco Group has three main aims when it comes to packaging:

• 100% of our packaging to be recyclable in all the markets we operate in;
• reduce the amount of packaging produced by 20% by 2025; and
• use 30% recycled materials in packaging.

We implemented a comprehensive packaging policy in FY23 in response to the need for collective action in limiting plastic pollution and driving towards a circular economy.

Additionally, in order to learn about the best industry standards, we joined the Polish Plastic Pact in February of 2023.

Environmentally responsible production

Some of our own-brand clothing has been a member of the Better Cotton Initiative (BCI) for a number of years. We have extended this further across the whole Group, with Pepco achieving membership in FY23 for all own-brand clothing and textiles. Through our retail partnerships with Better Cotton, the tonnage of cotton sourced under the BCI scheme is recorded via the BCI membership platform each calendar year, independently assessed and subsequently reported at Group level, providing an external membership validation of this data point.

Our clothing range also includes organic cotton items sourced under the Global Organic Textile Standard (GOTS) and the Organic Content Standard (OCS).

In addition to responsibly sourced cotton, we provide our customers with a range of affordable, sustainable product options across our clothing, general merchandise and FMCG lines including Oeko-Tex and Forest Stewardship Council (FSC) eco-certified products, recycled polyester clothing and vegan and vegetarian ranges. We label those products accordingly, to help our customers clearly identify more sustainable choices and show our commitment to environmentally responsible production.