The agreement represents the second phase in Chalhoub Group’s journey to attaining Net Zero by 2040.
“The Middle East is among one of the biggest luxury markets globally and has demonstrated growth and resilience despite supply chain disruptions and worldwide affairs. Our partnership with Schneider Electric is testament to our commitment to a more sustainable future for this sector. We recognize the challenges posed by reducing Scope 1, 2 and especially Scope 3 emissions, and this partnership is poised to accelerate our sustainability journey and meet our net-zero commitments," said Florence Bulté, Chief Sustainability Officer, Chalhoub Group.
"Incorporating climate action into core business strategies is no longer an option; it's a necessity. We are proud to play an integral role in Chalhoub Group's sustainability journey and are confident that we can set new benchmarks in decarbonization and sustainability, not just for the company, but for the entire industry," said Farrukh Shad, Head of APAC/MEA, Schneider Electric’s Sustainability Business.
Chalhoub Group aims to reduce absolute Scope 1 and 2 GHG emissions by 50.4% by 2032 from a 2021 base year*. The company also commits to reduce absolute Scope 3 GHG emissions from purchased goods and services, upstream transport and distribution, upstream leased assets and investments by 30% within the same timeframe. These include emissions associated with activities such as purchasing goods and services, transportation and distribution (both upstream and downstream), waste generated, business travel, employee commuting, and the end-of-life treatment of sold products.
The collaboration with Schneider Electric will primarily target selected suppliers in the 'Purchased Goods and Services' category, who account for most of the Group's Scope 3 emissions. In 2023, a diagnostic mapping of Chalhoub Group’s suppliers was conducted to identify those with high emissions that had yet to establish science-based carbon reduction targets. After categorising the supplier base, a service agreement was signed to mark the next major milestone, the launch of a supplier engagement programme.
Schneider Electric’s decarbonization consultancy services will include monthly training sessions for selected suppliers, data collection and gathering through extensive surveying, a tool to track Scope 3 emissions, as well as guidelines to complement suppliers’ decarbonization journeys.
According to a survey issued by Boston Consulting Group, the Middle Eastern luxury goods market, estimated at nearly $15.85 billion in 2023, is expected to double in size by 2030 and grow to $32-$37 billion, driven by the UAE and especially Saudi Arabia. However, the sector is responsible for over $2 billion in greenhouse gas emissions annually, which amounts to approximately 4% of the world’s total output, according to a report by McKinsey.
Countries across the Gulf region have set ambitious targets for developing more sustainable economies. In 2021, Schneider Electric launched a new range of decarbonization and sustainability consulting services for companies based in the Gulf. These services include the identification of energy efficiency savings, carbon offset programs, offsite renewable energy sourcing, electric mobility advising, and supply chain optimization.