Annual Report 2023

Substantial Contribution (SC) and Do No Significant Harm (DNSH)

Once the eligible activities had been identified, the technical screening criteria were analysed in order to establish whether those activities Substantially Contribute (SC) to the objective of Climate Change Mitigation, and simultaneously, the technical screening criteria were also analysed to certify that they Do No Significant Harm (DNSH) to any of the other five environmental objectives.

This analysis was performed for the three main countries in which we have operations. It is important to stress that the majority of our investments in Colombia are not aligned due to the absence of guidance from the European Commission on how to transpose the technical requirements linked to the European directives and regulations to non-European countries. We also found that the technical criteria defined for some activities (e.g., 7.7. “Acquisition and ownership of buildings”) may not be applicable to the weather conditions in some regions of that country. The combination of these two factors prevents the assessment of a potential alignment of around 15% of the Group’s CapEx.

Some of the criteria analysed for the three activities identified as eligible are highlighted below.

Activity 6.5. Transport by motorbikes, passenger cars and light commercial vehicles

Criteria

 

Description (non-exhaustive)

 

Alignment analysis

SC

 

Category M1 and N1 vehicles meet the following requirements:

  • Until 31/12/2025, specific CO2 emissions of less than 50g CO2/km (light commercial vehicles with zero or low emissions)
  • From 1 January 2026, specific emissions of CO2 are zero.

 

In 2023 we contracted service vehicle leasing operations in Portugal, Poland and Colombia. For the vehicles in which it was possible to collect all the necessary technical information, we evaluated and validated their alignment with the technical criteria. For cases where it was not possible to obtain all the information regarding their characteristics, we have chosen to consider these investments as non-aligned.

DNSH

 

Climate change adaptation:

  • Appendix A.

 

See Appendix A application analysis below.

DNSH

 

Transition to a circular economy:

  • Vehicles of categories M1 and N1 are both of the following:
    a. reusable or recyclable to a minimum of 85% by weight;
    b. reusable or recoverable to a minimum of 95% by weight.
  • Measures are in place to manage waste both in the use phase (maintenance) and the end-of-life of the fleet, including through reuse and recycling of batteries and components, in accordance with the waste hierarchy.

 

Despite our commitments to promoting a circular economy and waste management, we have not been able to collect the evidence needed to ensure that 85% (by weight) of vehicles are reusable or recyclable and 95% (by weight) are reusable or recoverable. Thus, we opted to adopt a conservative approach and assume that we do not align with these NPS criteria.

DNSH

 

Pollution prevention and control:

  • Vehicles comply with the requirements of the most recent applicable stage of the Euro 6 emissions;
  • The vehicles comply with the established emission thresholds for clean light-duty vehicles;
  • For road vehicles of categories M and N, tires comply with external rolling noise requirements in the highest populated class and with rolling resistance coefficient (influencing the vehicle energy efficiency) in the highest two populated energy efficiency classes.

 

The data collected to verify compliance with the associated requirements is still insufficient to ensure their alignment.

Activity 7.2. Renovation of existing buildings

Criteria

 

Description (non-exhaustive)

 

Alignment analysis

SC

 

Complies with the applicable requirements for major renovations or leads to a reduction of PED (primary energy demand)1 of at least 30%.

 

In 2023, we carried out some major renovations on our stores in Portugal and in Poland. These comply with the major renovations classification criteria in these countries.

DNSH

 

Climate change adaptation:

  • Appendix A.

 

See Appendix A application analysis below.

DNSH

 

The sustainable use and protection of water and marine resources:

  • Appendix E.

 

The data collected to check compliance with the requirements linked to Appendix E are still insufficient to guarantee their alignment.

DNSH

 

Transition to a circular economy:

  • At least 70% (by weight) of the non-hazardous construction and demolition waste generated on the construction site is prepared for reuse, recycling and other material recovery;
  • Building designs and construction techniques support circularity (ISO 20887).

 

Notwithstanding the commitments we have undertaken to promote a circular economy and waste management, we were not able to collect the necessary evidence to guarantee that 70% of non-hazardous construction and demolition waste on the construction sites is prepared for reuse, recycling or other material recovery. As such, we chose to adopt a conservative approach and acknowledged that we are not aligned with these DNSH criteria.

DNSH

 

Pollution prevention and control:

  • Appendix C;
  • Building components and materials used in the construction that may come into contact with occupiers2 emit less than 0.06 mg of formaldehyde per m3 of material or components.

 

We regularly carry out indoor air quality assessments, namely for major retail and services buildings. In addition, during construction or maintenance works, we adopt appropriate measures to reduce noise, dust and pollutant emissions. However, the assessment carried out does not allow us to validate all the requirements set out in these criteria, namely those indicated in Appendix C. As such, we have chosen to consider that there is no alignment.

1

Quantity of energy calculated as necessary to meet the energy demand linked to the typical consumptions of a building (in kWh/m2).

2

Applicable to paints and varnishes, ceiling tiles, floor coverings, including associated adhesives and sealants, internal insulation and interior surface treatments (namely those to treat damp and mould).

Activity 7.3. Installation, maintenance and repair of energy efficiency equipment

Criteria

 

Description (non-exhaustive)

 

Alignment analysis

SC

 

Complies with minimum requirements set for individual components and systems in the national measures and, where applicable, are rated in the highest two populated classes of energy efficiency.

 

For those energy efficiency equipment measures where it was possible to collect all the necessary information on their technical characteristics, we assessed and validated their alignment with the technical criteria. For the cases where all the information relating to their characteristics could not be obtained, we chose to consider these investments as not being aligned.

DNSH

 

Climate change adaptation:

  • Appendix A.

 

See Appendix A application analysis below.

DNSH

 

Pollution prevention and control:

  • Appendix C;
  • In case of addition of thermal insulation to an existing building envelope, a building survey is carried out in accordance with national law.

 

In 2022, no investments were made related to thermal insulation.

Activity 7.6. Installation, maintenance and repair of renewable energy technologies

Criteria

 

Description (non-exhaustive)

 

Alignment analysis

SC

 

Consists in the installation, maintenance and repair of solar photovoltaic systems when they are installed on-site as technical building systems.

 

In 2023, we invested in the installation of solar photovoltaic equipment in our buildings1.

DNSH

 

Climate change adaptation:

  • Appendix A.

 

See Appendix A application analysis below.

1

More information is available in “Water and Energy Consumption Management”.

Activity 7.7. Acquisition and ownership of buildings

Criteria

 

Description (non-exhaustive)

 

Alignment analysis

SC

 

For buildings built after 31/12/2020, the buildings meet the SC of activity 7.1.:

  • The primary energy demand (PED) is at least 10% lower than the threshold set in the requirements for nZEB1.

For buildings built before 31/12/2020, the buildings have at least an EPC2 class A or are within the top 15% of buildings of the national or regional building stock expressed as operational PED percentage, comparing the performance of the relevant asset with the performance of the national or regional building stock built before 31.12.2020.

 

For buildings built after 31.12.2020:

  • In Portugal, within our exercise of ownership rights, we made investments in 2023 that comply with the SC requirements (validated by the existence of type A+, A and B energy certificates);
  • In Poland, the criteria are certified using a methodology equivalent to the energy certificate, based on the energy performance of the stores;
  • In Colombia, we were unable to validate alignment due to the absence of guidance for transposing the technical criteria required by the applicable European Directives and Regulations.

For buildings built before 31/12/2020:
  • In Portugal, according to official databases, the top 15% of buildings in the national building stock built before 31/12/2020 have an EPC of B or higher, and so we have considered that the investments in buildings built before 2020 with an EPC of at least B, comply with the substantial contribution criteria;
  • In Poland, according to the Polish Central Energy Performance Register, the value of the PED of the top 15% of non-residential buildings corresponds to 118.26 kWh (m2/year), and so we have considered that the investment in buildings built before 2020 with an EPC below that value, comply with the substantial contribution criteria;
  • In Colombia, we were unable to validate alignment due to the absence of guidance for transposing the technical criteria required by the applicable European Directives and Regulations.

DNSH

 

Climate change adaptation:

  • Appendix A.

 

See Appendix A application analysis below.

1

Standard building used by countries of the European Union as the value for the minimum construction requirements.

2

Energy performance certificate or equivalent

Application of Appendix A “Climate change adaptation”

We adopted the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD1) in 2020, in a process of continuous improvement in the identification, assessment and management of climate-related financial risks and opportunities in our value chain. In order to reduce the impact of our business activities on the climate, we have established a Climate Transition Plan2 which reflects our ambition to contribute to limiting the increase in average global temperature to 1.5°C. We also continue to improve the assessment of short-, medium- and long-term climate risks throughout our value chain and involving our Private Brand and perishables suppliers, so as to increase the climate resilience of the supply chain and assess business opportunities in primary production and the use of low-carbon technologies.

Among the risks assessed are rising average temperature and extreme temperatures, changing precipitation patterns, prolonged water shortages and flooding in coastal and inland regions. The risks and opportunities of transitioning to a low carbon economy were also assessed, which, among the risks of energy transition, contemplates an increase in the costs of energy linked to the targets of the Paris Agreement. More than 5,700 of the Jerónimo Martins Group’s establishments3 were included in this assessment, in risks and opportunities identified were considered non-material. In 2023, we continued to respond to identified risks such as extreme weather events, refrigeration gases used for compliance with environmental legislation, and to maximise opportunities related to the energy transition. As regards the latter, we have invested in acquiring guarantees of origin in Portugal, establishing long-term renewable energy purchase contracts in Poland, increasing the number of stores and distribution centres with photovoltaic energy production systems in the countries where we operate, implementing energy recovery systems in industrial units, and refurbishing the store network to reduce energy consumption. In addition to investment in energy efficiency and renewable energy, we continue to replace refrigeration equipment with technologies using natural refrigerant gases to reduce the potential of global warming linked to the operation of such equipment in the case of leaks. By 2023, 52% of our stores and 67% of our distribution centres and industrial units had this refrigeration technology installed, which is also being used in 85% of the standalone refrigeration and freezing equipment in our stores.

The conclusions of the TCFD study will enable us to adjust the mitigation and adaptation strategy of our businesses and will be considered when defining the plans for the transition to a low carbon economy. In “Climate-related risks and opportunities”, we provide detailed information on the application of the TCFD recommendations, namely climate scenarios used, and time horizons considered.

1 The TCFD is an initiative promoted by the financial sector that helps businesses quantify and disclose climate-related financial risks and opportunities, and their respective action plans.

2 More information can be found at www.jeronimomartins.com/cr-documentos-2023.

3 Establishments are considered to be stores, distribution centres, head office buildings and manufacturing units (central kitchens and soup or fresh dough factories).

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