Chalhoub Group driving climate action in the Middle East’s luxury retail sector

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 GHG emissions annually, which amounts to approximately 4% of the world’s total output, according to a report by McKinsey.

To drive climate action in the Middle East, regional luxury powerhouse Chalhoub Group has initiated a sustainability services agreement with Schneider Electric to transform its suppliers’ carbon footprint roadmap across the region.

The agreement represents the second phase in Chalhoub Group’s journey to attaining Net Zero by 2040. In this context the Group’s Chief Sustainability Officer Florence Bulté said, “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 recognise 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.”

Chalhoub Group aims to reduce absolute Scope 1 and 2 greenhouse gas (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 decarbonisation 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’ decarbonisation journeys.