Marks and Spencer Group Plc. PAS 2060:2014 Specification for the demonstration of carbon neutrality Qualifying Explanatory Statement in support of PAS 2060:2014 self-certification May 2014
Contents Introduction... 2 Illustration of the M&S PAS 2060 Application Periods... 3 Declaration of achievement of carbon neutrality... 4 Declaration of commitment to carbon neutrality... 6 Appendix A Carbon Footprint Assessment... 7 Appendix B Carbon Footprint Management Plan... 9 Appendix C Carbon Offset Strategy... 11 Appendix D Scope 3 Emissions... 12 Page 1 of 15
Introduction This document forms the Qualifying Explanatory Statement to demonstrate Marks and Spencer Group Plc. (M&S) has achieved carbon neutrality under the guidelines of PAS 2060:2014 and is committed to achieving carbon neutrality under the guidelines of PAS 2060:2014. PAS 2060 Information Requirement Entity making PAS 2060 declaration: Subject of PAS 2060 declaration: Description of Subject: Rationale for selection of the subject: What type of conformity assessment has been/is to be undertaken? Information as it relates to M&S Marks and Spencer Group Plc. The stores, offices, warehouses and delivery fleets operated by Marks & Spencer in the UK, Republic of Ireland and internationally 1. Marks and Spencer is one of the UK s leading retailers, selling high quality, great value clothing and home products as well as outstanding quality food. M&S has nearly 86,000 employees worldwide and over 1,200 stores. The scope and subject of this PAS2060 includes all emissions based on the operational control principle defined in the WBCSD / WRI GHG Protocol Corporate Standard. Self-certification Baseline date for PAS2060 programme 1 st April 2011 31 st March 2012 Achievement Period 1 st January 2012 31 st March 2014 Commitment Period 1 st April 2014 31 st March 2015 This Qualifying Explanatory Statement contains information pertaining to the subject s carbon neutrality. Any and all information herein is believed to be correct at the time of publishing. Should any information come to light that would affect the validity of the statements herein, this document will be updated to accurately reflect the current status of any carbon neutral statement made by M&S. 1 In AP3 the scope was extended to included international operations, and this scope will be maintained for future application periods. Page 2 of 15
PAS 2060: 2010 Specification for the demonstration of carbon neutrality Illustration of the M&S PAS 2060 Application Periods This diagram demonstrates how the application periods for Marks and Spencer Group Plc. s carbon neutrality have been applied. The baseline period for the carbon neutrality programme was not equal to the first application period. Rather, the first application period takes place over the final 3 months of the baseline period. This three month application period allowed for subsequent periods to align with financial reporting years, whilst still meeting our objective to be carbon neutral from the beginning of 2012. This report details our carbon neutrality over Application Periods 1, 2, 3 and 4. Baseline Period AP 1 (131,523t CO2e) Application Period 2 (569,460 tco2e) Application Period 3 (566,034 tco2e) Application Period 4 1 st Apr 11 1 st Jan 12 1 st Apr 12 1 st Apr 13 1 st Apr 14 1 st Apr 15 Achievement of carbon neutrality, 1 st January 12 31 st March 13 Achievement of carbon neutrality, 1 st April 13 31 st March 14 Commitment to reduce emissions and achieve carbon neutrality, 1 st April 14 31 st March 15 Page 3 of 15
PAS 2060: 2010 Specification for the demonstration of carbon neutrality Declaration of achievement of carbon neutrality PAS 2060 Information Requirement State the period during which the entity is demonstrating achievement of carbon neutrality of the subject. Gross carbon footprint of the subject for the period stated above. Which method, as defined by PAS 2060, has been followed to achieve carbon neutrality? How have the reductions in GHG emissions during this period been achieved? Location of the GHG emissions report supporting this claim. Location of the details describing internal reductions achieved during the period. Location of the details describing the carbon offsets. UK economic growth rate over application period Information as it relates to M&S 1 st January 2012 31 st March 2014 Application Periods 1, 2 & 3 (see page 3) Application period: AP1: 131,523 tco2e AP2: 569,460 tco2e AP3: 566,034 tco2e Total: 1,267,017 tco2e Method 1 Demonstrating carbon neutrality Internal reduction and offset Appendix A of this document Appendix B of this document Appendix C of this document 3.1% Page 4 of 15
Name of senior representative Signature of senior representative Mike Barry, Director of Plan A Date: 30 th April 2014 Page 5 of 15
Declaration of commitment to carbon neutrality PAS 2060 Information Requirement State the period during which the entity commits to achieving carbon neutrality of the subject. Which method, as defined by PAS 2060, will be followed to achieve carbon neutrality? Has there previously been a declaration of commitment to carbon neutrality for the above subject in line with PAS 2060? Confirm the carbon footprint of the subject for the period immediately prior to the start of commitment period. Location of GHG emissions report supporting this claim. Location of the Carbon Footprint Management Plan Information as it relates to M&S 1 st April 2014 31 st March 2015 Application Period 4 (see page 3) Method 1 Demonstrating carbon neutrality Application period: AP1: 1 st January 2012 31 st March 2012 AP2: 1 st April 2012 31 st March 2013 AP3: 1 st April 2013 31 st March 2014 See illustration on page 3 Statement of achievement is included within this document AP3: 566,034 tco2e AP3: 1 st April 2013 31 st March 2014 Appendix A of this document Appendix B of this document Name of senior representative Signature of senior representative Mike Barry, Director of Plan A Date: 30 th April 2014 Page 6 of 15
Appendix A Carbon Footprint Assessment Summary GHG Emissions split out by emissions Scope 1st Janurary 2012-31st March 2014 6% 31% Scope 1 Scope 2 Scope 3 63% Greenhouse Gas Emissions Period 1 st January 2012 31 st March 2014 CO 2 e Scope and Definition Application Periods AP1 AP2 AP3 Total tco2e tco2e tco2e tco2e 1 Direct GHG emissions from vehicles/premises under control of Marks and Spencer Group Plc. 2 GHG emissions arising from the consumption of electricity on premises under control of Marks and Spencer Group Plc. 39,299 181,348 168,747 389,394 88,872 371,633 338,807 799,312 3 Other indirect GHG emissions 3,252 16,479 58,481 78,212 Total 131,523 569,460 566,034 1,267,017 Page 7 of 15
Standard and methodology used M&S categorises its Greenhouse Gas (GHG) Emissions as Scope 1, 2 or 3 as referred to in the WBCSD-WRI Greenhouse Gas Protocol (revised edition, dated March 2004) emissions in carbon dioxide equivalent (CO 2 e) for Scopes 1 and 2 and selected Scope 3 are calculated using the conversion factors listed in the latest Guidelines to DEFRA/DECC's Greenhouse Gas Conversion Factors for Company Reporting (published in May 2012). These methodologies are widely recognised to be the standard for corporate GHG accounting and were applied in accordance with their provisions. Key assumptions and estimations in the carbon footprint calculation Waste Emissions Calculations assumed worst case figures for food waste from cafes. The uncertainty from this calculation is not considered to be material. Electricity and gas usage, March 13 and March 14 - Exact usage figures were unavailable at the time of completion of this GHG emissions assessment. In lieu of exact figures, the usage statistics for March were estimated by interrogating previous years data to ascertain what percentage of the year total figure March had represented on average. This percentage was then added to this reporting year s data to derive a robust estimate. This is common practice where report completion timelines prevent primary data inclusion. Data Quality/Confidence In general, confidence in the quality of the data supporting this GHG Assessment is high. Marks and Spencer Group Plc. has been conducting GHG Assessments since FY 2006/07, applying the learning from each period to subsequent assessments. Data from GHG emissions sources contributing over 90% of the group footprint was obtained via direct metering or derived from fuel consumption, with appropriate National or International emissions factors applied. This allows for a high confidence in the data. Where direct metering or fuel consumption figures were not available (e.g. business travel provided by third parties), GHG emissions were calculated from secondary metrics, such as distance travelled, with appropriate National or International factors applied. This is common best practice in situations where direct consumption data is unavailable and does not materially affect the results of this assessment. Page 8 of 15
Appendix B Carbon Footprint Management Plan Historical Emission Reduction Progress for the Previous Period Emission reduction activity to date is summarised below: Marks and Spencer Group Plc. have undertaken various activities as part of the Plan A initiative. The Plan A initiative including targets relating to Climate Change and will act to reduce our Greenhouse Gas emissions over time.. For a detailed breakdown of our actions, please see the document titled Plan A Report 2014, which is publicly available on our website. However, some of our significant achievements relating to our Carbon Footprint are detailed below o Since 2006/07, we ve reduced annual emissions by over 160,000tCO2e an improvement of 24% overall, or 37% per sq ft of sales floor o We ve achieved a 34% improvement in store, office and warehouse energy efficiency since 2006/07, after an adjustment for weather o Fuel efficiency of Food delivery fleets has been improved by 32% compared to 2006/07 o Store refrigeration and air conditioning emissions have been reduced by 60% or 67% per sq ft since 2006/07. o We become the first major retailer to be certified to the ISO 50001 Energy Management standard in 2013. o In 2014, we become the first retailer to be certified to the Carbon Trust s Triple Standard on Carbon, Water and Waste. o We have conducted trials of electric, compressed natural gas/ diesel hybrid and electric/ diesel hybrid delivery vehicles and hydrogen cell powered delivery trucks. On-going Emissions Reduction Plan For the PAS 2060 Commitment Period The on-going plan to reduce emissions over the commitment is summarised below: Marks and Spencer Group Plc. s on-going activity is detailed in the document titled Plan A Report 2014, which is publicly available on our website. We currently have on-going targets to: Improve energy efficiency in our stores, offices and warehouses by 35% by 2015 and 50% by 2020. Improve fuel efficiency in our food delivery fleets by 35% by 2015. Phase-out HFCs by 2030 and reduce emissions by 80% by 2020/ All M&S products to have a Plan A quality (some of which will be low carbon) by 2020 (50% by 2015) For more information on these specific objectives, please refer to Plan A Report 2014. Page 9 of 15
Conformance to the Carbon Footprint Management Plan The following measures will be followed to assess performance against the plan. Marks and Spencer Group Plc. has implemented the following measures to assess our on-going performance against this plan: o Our How We Do Business Operating Committee meets monthly and our How We Do Business Executive Committee meets every two months. o The monthly Operating Committee ensures that environmental issues are integrated consistently into everyday activities and also reviews progress against our Plan A targets, which includes objectives relating to the management of our Carbon Footprint. For more details regarding the governance of our commitments, please see our publicly available document Plan A Report 2014. Page 10 of 15
Appendix C Carbon Offset Strategy The following information covers the predicted offset strategy for the period of carbon neutrality. Predicted quantity of GHG emissions to be offset: 570,000 tco2e Carbon offset strategy o M&S hold a portfolio of Carbon Instruments in excess of the Group s predicted footprint for the period. o The CarbonNeutral Company manage this portfolio on behalf of M&S. o On a quarterly basis M&S advise The CarbonNeutral Company on the volume of carbon instruments that need to be retired to cover the operational emissions for that period. o Carbon Instruments relating to the application period 1 st April 2012-31 st March 2014 have already been retired (details below). Carbon Instrument details for: Application period 1 of carbon neutrality 1 st January 2012 31 st March 2012 o In total 131,523 carbon credits relating to the period were offset. o 90% of these carbon credits were verified to the Voluntary Carbon Standard and were retired in NYSE Blue VCS Registry, which can be found here: http://vcsregistry.apx.com/registry-reports.htm o 10% of these carbon credits were verified to the Gold Standard and were retired in NYSE Blue Gold Standard Registry, which can be found here: http://goldstandard.apx.com/resources/accessreports.asp Application period 2 of carbon neutrality 1 st April 2012 31 st March 2013 o In total 569,460 carbon credits relating to the period were offset. o 78% of these carbon credits were verified to the Voluntary Carbon Standard and were retired in NYSE Blue VCS Registry, which can be found here: http://vcsregistry.apx.com/registry-reports.htm o 22% of these carbon credits were verified to the Gold Standard and were retired in NYSE Blue Gold Standard Registry, which can be found here: http://goldstandard.apx.com/resources/accessreports.asp Application period 3 of carbon neutrality 1 st April 2013 31 st March 2014 o In total 263,845 carbon credits relating to the period were offset. o 100% of these carbon credits were verified to the Voluntary Carbon Standard and were retired in NYSE Blue VCS Registry, which can be found here: http://vcsregistry.apx.com/registry-reports.htm Page 11 of 15
Appendix D Scope 3 Emissions In preparing our organizational GHG inventory for the purpose of carbon neutrality Marks and Spencer Group Plc. adopted a traditional organisational boundary that includes all scope 1, 2 and a number of scope 3 emission sources. The scope 3 emissions included are those that M&S has the greatest level of control over, such as emissions arising from business travel and waste from operations. PAS 2060 recommends including all scope 3 emission sources that are technically feasible and cost effective to quantify. For the purpose of clarity the following table categorises all scope 3 greenhouse gas emissions in alignment with the GHG Protocol Corporate Value Chain (Scope 3) Accounting and Reporting Standard, which is deemed to be current best practice when reporting scope 3 emissions. Where a Scope 3 emission source has not been included in our subject boundary, the reasoning is provided. Upstream Scope 3 emissions Scope 3 Category Category Description Included / (with reasoning) 1. Purchased goods and services 2. Capital goods 3. Fuel- and energyrelated activities (not included in scope 1 or 2) 4. Upstream transportatio n and distribution Extraction, production, and transportation of goods and services purchased or acquired by the reporting company in the reporting year, not otherwise included in Scope 3 Categories 2 8. Extraction, production, and transportation of capital goods purchased or acquired by the reporting company in the reporting year. Extraction, production, and transportation of fuels and energy purchased or acquired by the reporting company in the reporting year, not already accounted for in scope 1 or 2. Transportation and distribution of products purchased by the reporting company in the reporting year between a company s tier 1 suppliers and its own operations (in vehicles and facilities not owned or controlled by the reporting company). Transportation and distribution services purchased by the reporting company in the reporting year, including inbound logistics, outbound logistics (e.g., of sold products), and transportation and distribution between a company s own facilities (in vehicles and facilities not owned or controlled by the reporting company) Marks and Spencer Group Plc. purchase over 35,000 product lines from a large number of suppliers each reporting year and it would not be cost effective to quantify emissions for all products. GHG emissions data pertaining to the extraction/production/transportation of our capital goods are not generally available Included - Transmission and Distribution losses of electricity purchased or acquired - Extraction, production and transportation of fuels and energy purchased or acquired - Marks and Spencer Group Plc. purchase over 35,000 product lines from a large number of suppliers each reporting year and it would not be cost effective to quantify emissions for all products. Page 12 of 15
Scope 3 Category Category Description Included / (with reasoning) 5. Waste generated in operations 6. Business travel Disposal and treatment of waste generated in the reporting company s operations in the reporting year (in facilities not owned or controlled by the reporting company). Transportation of employees for businessrelated activities during the reporting year (in vehicles not owned or operated by the reporting company). Included Included 7. Employee commuting 8. Upstream leased assets Transportation of employees between their homes and their worksites during the reporting year (in vehicles not owned or operated by the reporting company). Operation of assets leased by the reporting company (lessee) in the reporting year and not included in scope 1 and scope 2 reported by lessee. Marks and Spencer Group Plc. has limited control over the mode of employee commuting Difficulty of accurately assessing for many thousands of employees quantify such emissions. Downstream Scope 3 emissions Scope 3 Category Category Description Included / (with reason) 9. Downstream transportation and distribution 10. Processing of sold products 11. Use of sold products 12. End-of-life treatment of sold products Transportation and distribution of products sold by the reporting company in the reporting year between the reporting company s operations and the end consumer (if not paid for by the reporting company), including retail and storage (in vehicles and facilities not owned or controlled by the reporting company). Processing of intermediate products sold in the reporting year by downstream companies (e.g., manufacturers). End use of goods and services sold by the reporting company in the reporting year. Waste disposal and treatment of products sold by the reporting company (in the reporting year) at the end of their life. This category is not applicable Almost all products and services sold by Marks and Spencer Group Plc. are sold direct in store. Marks and Spencer Group Plc. owned storage facilities are included in scope 1 and scope 2 emissions sources Marks and Spencer Group Plc. owned transport is included in scope 1 emissions This category is not applicable: Almost all products and services sold by Marks and Spencer Group Plc. are finished products that do not require further processing. The majority of products and services sold by Marks and Spencer Group Plc. have no direct in use emissions. In-use GHG emissions data of our sold products are not generally available. Marks and Spencer Group Plc. has limited control over the in-use emissions of our sold products. Marks and Spencer Group Plc. has limited control over the disposal of our sold products. It is not cost effective to gather robust information regarding the disposal of our sold products. Page 13 of 15
Scope 3 Category Category Description Included / (with reason) 13. Downstream leased assets 14. Franchises 15. Investments Operation of assets owned by the reporting company (lessor) and leased to other entities in the reporting year, not included in scope 1 and scope 2 reported by lessor. Operation of franchises in the reporting year, not included in scope 1 and scope 2 reported by franchisor. Operation of investments (including equity and debt investments and project finance) in the reporting year, not included in scope 1 or scope 2. quantify such emissions Marks and Spencer Group Plc. has a small number of franchise stores Without operational control of these stores it is not cost effective to accurately quantify such franchise stores emissions Page 14 of 15