OUR ROADMAP TO CIRCULARITYINTRODUCING UNLOCKING VALUE: MAJID AL FUTTAIM’S CIRCULAR ECONOMY STRATEGY

LEADING BY EXAMPLE: SUSTAINABILITY THOUGHT LEADERSHIP SERIES

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However, there is a solution. In 2012, Dame Ellen MacArthur presented the opportunities of an alternative economic approach, a circular economy, to global business and political leaders at the World Economic Forum in Davos. A circular economy – the opposite of the current linear approach – decouples resource use from economic growth and is based on three principles: designing out waste and pollution, keeping products and materials in use and regenerating natural systems. A circular economy enables us to do more with less and is restorative and regenerative by design4. At Majid Al Futtaim, we realise that embracing more circular business models is too good an opportunity to let go to waste.

RETHINKINGRESOURCES

We DARE TO rethink our use

of resources to make a net

positive impact

IN THIS REPORT

1 BUILDING THE CASE FOR A CIRCULAR ECONOMY

2 NOW IS THE TIME TO ACT

3 WHAT IS A CIRCULAR ECONOMY?

4 THE FUTURE IS CIRCULAR

6 MAJID AL FUTTAIM’S FIRST STEPS TOWARDS CIRCULARITY

7 OUR CIRCULAR ECONOMY VISION

8 DEVELOPING OUR CIRCULAR ECONOMY STRATEGY

10 UNLOCKING VALUE: MAJID AL FUTTAIM’S CIRCULAR ECONOMY STRATEGY

12 WE DARE TO CLOSE THE LOOP

13 REFERENCES AND CITATIONS

LEADING THE WAY

Ibrahim Al-Zu’bi Chief Sustainability Officer Majid Al Futtaim

CIRCULAR ECONOMY

All Operating Companies must embed circular

economy principles into business operations to

minimise harmful impacts on the environment and generate new revenue

streams

BUILDING THE CASE FORA CIRCULAR ECONOMY

The linear model of ‘take-make-waste’ is no longer fit for purpose. As a global society we extract the resources we need from the environment around us, manufacture products which we use until they break, or we no longer want them, and then we dispose of them. We cannot continue this way; the impacts of resource depletion and climate change are being felt across the globe. According to the United Nations, by 2050 we could need three times more resources as a global society than we currently use1. But even our current situation is unsustainable, globally we require 1.7 earths to meet our demand for natural resources2.

Our climate is changing and so is our way of business. At Majid Al Futtaim, we believe that we not only have the opportunity to embrace the circular economy movement but also the ability to lead the way so that others can follow. This report introduces exactly how we plan to do this and highlights the key areas of our business where we have already incorporated some of the principles of a circular economy. Moving towards a circular economy requires a full systemic change in which everyone must work together to turn theory into practice at scale. Circular economy makes business sense but most importantly, it is becoming crucial to ensuring our world can adapt to emerging climate risks. I hope you are inspired by this movement, and join us in daring to close the loop.”

OUR STRATEGY

In 2018, we launched our Company-wide sustainability strategy, Dare Today, Change Tomorrow. Our bold strategy will transform the way we do business and embed sustainability thinking in everything we do. The strategy also sets 11 ambitious Sustainable Business Commitments across three strategic focus areas: Transforming Lives, Rethinking Resources and Empowering Our People.

OUR SUSTAINABLE BUSINESS COMMITMENT.....

WE ARE ALIGNING WITH.....

In the UAE alone, we need 5.8 earths to meet our needs3

2 3

WHAT IS A CIRCULAR ECONOMY?

One thing is clear, now is the time to act. We are facing rising costs of raw materials, the increasing scarcity of some and widespread environmental degradation. As a result, it is becoming ever clearer that a linear approach to the economy cannot work in the long term. The need for action has never been as urgent as it is today – but our ability to bring about change is also greater than ever before. A number of circular economy enablers have come into place: technology advancements allow us to better capture and maximise resource value; consumers are increasingly concerned about the impact of their choices and increasingly prefer access to services rather than ownership, resulting in

NOW IS THE TIMETO ACT

higher product utilisation rates; urban populations continue to rise, and the increase in cities’ densities facilitates the logistics of closing resource loops; finally, governments are introducing progressively stringent regulations in the areas of material use and waste.

Importantly, these trends mean that the business case for a circular system is increasingly compelling. A recent study estimated that the transition towards a circular economy could unlock a $4.5 trillion global growth opportunity5. We have begun our journey towards becoming circular, but this is not something we can achieve alone. A successful transition will require collaboration across value chains, industries and geographies.

We, at Majid Al Futtaim, are committed to

changing the way we do business and welcome others joining us on our

journey. Together, we can create a circular future.

1/4 TO 3/4 RESOURCE RETURN

of annual resource inputs to industrial economies

are returned to the environment as waste within just one year7

Circular economy has the potential to introduce new ownership models, develop closed resource loops and foster innovation and entrepreneurship.

CIRCULAR ECONOMY

$4.5 TRILLION GENERATED

In 2015, it was estimated that the circular economy

could generate $4.5 trillion of additional economic

output by 20305

$138 BILLION SAVINGS

In 2019, it was estimated that the GCC countries could save by 2030 by

adopting a circular economic model6

4 5

The future is circular and forward-thinking organisations are already showing the exciting opportunities that can be uncovered by rethinking current linear business models.

ReTuna, in Sweden, is the world's first recycling mall where everything sold is recycled or reused or has been organically or sustainably produced. The mall opened its doors in August 2015 and is run by the municipality-owned company EMM. Visitors can drop off different items and materials like toys, furniture, clothes, decorative items, and electronic devices. The staff at the mall sort through the items to decide what to repair, fix up, convert, refine – and, ultimately, sell. ReTuna also organises events, workshops, lectures, theme days, and more – all with a focus on sustainability. It’s proven to be a successful model; in 2018, the mall achieved over 4 million AED in sales for recycled products. It has also generated over 50 new jobs.

RETUNA

Loop is a zero waste platform founded by recycling firm TerraCycle. The scheme is a new way to shop - it enables shoppers to purchase refillable versions of food and drink, health and beauty products, cleaning products and office supplies, all online. Once the product is finished, the packaging is collected, cleaned, refilled and reused. The initiative is being supported by some of the world’s largest brands including Unilever, P&G PepsiCo, Nestlé and many more. A trial of the scheme launched in Paris and New York in May 2019, with international expansion plans to follow in 2020.

Blue City in the Netherlands was once a building used for a subtropical swimming pool. Now it is an incubator for circular entrepreneurs. The building itself was made to be as circular as possible, re-using old elements and materials both from within the swimming pool and from other abandoned buildings. However, what is the particularly interesting about the site is that it hosts 16 innovative, circular companies which exchange their residual materials. Blue City is a great example of collaboration, with the different businesses working together and complementing each other. Waste coffee grounds produced by the Aloha Bar-Restaurant on site serve as nutritious soil to grow mushrooms by RotterZwam, while fruit waste from the market is collected by Fruitleather and turned into strong leather-like material that can be used for bags and books.

Net-Works is a cross-sector initiative designed to close the loop by recycling discarded fishing nets into carpet tiles. Interface has partnered with the Zoological Society of London to develop an integrated supply chain solution to tackle the problem of marine waste. Discarded fishing nets are initially collected in some of the world’s poorest coastal regions. The nets are then sold through Net-Works and are subsequently recycled into new yarn for carpet tiles by Aquafil, a global producer of nylon yarn. Finally, Interface purchases this recycled yarn and turns it into new carpets. The initiative supports Interface’s ambitious Mission Zero goal to source 100% recycled material for their carpet tiles by 2020. It also provides fishing communities with a source of income through community banks.

LOOP

BLUE CITY

NET- WORKS

THE FUTURE IS CIRCULAR

An increasing number of international organisations – as well as local governments – are publishing their circular economy strategies. All strategies include broad commitments based around each organisation’s most material resources. They also acknowledge the importance of reaching out beyond their own operations and engaging with relevant bodies, suppliers, customers and the wider public.

PwC’s “Going Circular” strategy divided its journey towards becoming a fully circular business into three stages: zero waste to landfill (2007-2012), 100% reuse and recycling (2013-2017) and circular solutions (2018-2022)9.

PwC

M&S “Plan A” sets out four key objectives around circular economy: becoming a zero net waste business (tackling operational and transit packaging waste); supporting suppliers to reduce and recycle waste; creating partnerships to help customers reuse and recycle; and prioritising business model innovation to put circular economy into practice. M&S’s efforts are focused around their most material resources: food waste, packaging and clothes10.

M&S The Scottish Government’s strategy, “Making things last: A Circular Economy Strategy for Scotland”, sets out priority areas due to their environmental impact and their importance to the Scottish economy. The strategy is also focused on exploring a new approach to producer responsibility through a single framework for all product types, with the potential to significantly influence producer and consumer choices.

SCOTTISH GOVERNMENT

Google’s “Circular Google” circular economy strategy is based around one overarching goal - to maximise the reuse of finite resources across Google’s operations, products and supply chains. Five key areas of focus are: data centres, workplaces, consumer electronics, consumer engagement and supplier engagement.

GOOGLE

CIRCULAR INITIATIVES

CIRCULAR STRATEGIES

6 7

In developing Majid Al Futtaim’s circular economy strategy, we are looking to make a step change in our speed of transition towards circularity and to formalise our commitment and approach across each of our businesses. However, there are a number of exciting circular initiatives that are already in place across Majid Al Futtaim.

MAJID AL FUTTAIM’S FIRST STEPS TOWARDS CIRCULARITY

OUR CIRCULAR ECONOMY VISION

At Majid Al Futtaim, we realised that now is the ideal time to accelerate our adoption of circular economy principles across our Company. That is why we have been rethinking the way we use resources and, to support this, we have put together an ambitious circular economy strategy.

The launch of our Dare Today, Change Tomorrow strategy marked the evolution of our sustainability journey. Similarly, the launch of our new circular economy strategy represents a major step in our journey towards more circular business models. At Majid Al Futtaim, we know that to secure a positive future in which everyone gets the chance to enjoy great moments every day, we must achieve more than

just incremental improvements. Closing the loop on our resource flows will be a challenge but it is one we are excited to take on.

Taking meaningful action towards this commitment will require a transformational shift in the way we conceptualise the flow of resources across our value chain. We will be attempting to address three fundamental issues:

• How we procure with circularity in mind

• How we use resources effectively

• How we maximise the value of waste

To truly support the transition to a circular economy, our vision is: all Operating

Companies to have circularity at the core of their operations. We actively engage with our suppliers, customers and the wider business and government communities to bring about

systemic change and impact.”

FASHION BAZAAR

To minimise waste, we launched our own ‘Fashion Bazaar’ concept where our employees can buy products from previous seasons’ stock. We have sold hundreds of thousands of items including clothes, toys, homeware and furniture. These are items which would otherwise typically be sent to a warehouse where they would take up space and energy, and eventually be disposed of. By removing the need for warehouses we will reduce the energy expenditure on aspects including heating, cooling and lighting. Not only does this save these items going unused, but it has also generated thousands in AED for our business.

HUNDREDS OF THOUSANDS OF ITEMS SAVED FROM LANDFILL THROUGH FASHION BAZAAR

REPURPOSING SOAP FOR HOPE

At our Pullman City Centre Deira Hotel and Residences, used soap is collected from the rooms and instead of being sent to landfill is given to the charity project Soap for Hope – a soap recycling initiative developed by Diversey. A typical 400-room hotel generates 3.5 tonnes of solid soap waste each year. However rather than going to waste, the soap is hygienically recycled and distributed to communities that have limited access to basic hygiene amenities.

3.5TONNES OF SOLID SOAP WASTE COLLECTED PER YEAR

PROMOTING RECYCLING THROUGH REVERSE VENDING MACHINES

In a bid to encourage customers at City Centre Deira to recycle we have installed a reverse vending machine at Vox Cinema. Customers can now recycle their plastic water bottles through a reverse vending machine and in the process get rewards in return. Every time a bottle is put into the machine, the receipt allows our customer to enter a competition through a rewards app; the more bottles recycled, the higher the chance of winning. Our customers have jumped at the opportunity to recycle more than 800 plastic water bottles every week - that’s the equivalent of 500kg of plastic being diverted from landfill every month. We will be trialing further reverse vending machines across the business.

800+PLASTIC WATER BOTTLES DIVERTED FROM LANDFILL EVERY WEEK

COOKING UP NEW IDEAS WITH KITCHEN WASTE

At Majid Al Futtaim - Cinemas, we had the chance to explore an exciting recycling opportunity that sees waste cooking oil being used to power vehicles. Large entertainment venues like ours often include commercial kitchens and restaurants, which use a high volume of cooking oil on a daily basis. This creates a real waste disposal issue because cooking oil cannot be reused indefinitely and it is difficult to dispose of responsibly when it is no longer fit for purpose. We knew there must be a better solution, so in 2017, we teamed up with Habtoor which now collects and recycles more than 100,000 litres of grease a year from restaurants and fast food chains at Majid Al Futtaim - Cinemas in Dubai. Every drop of used cooking oil that’s collected is recycled into fuel that can be used to run buses, heat homes and even generate electricity.

100,000LITRES OF GREASE RECYCLED PER YEAR

Understanding the current situation

Identifying areas of greatest impact

Establishing the level of ambition

Procurement and waste data review

• Identifying resource inputs, outputs and disposal routes

• Identifying most material resource groups

• Identifying sources of significant value loss

• Deciding the most meaningful actions to address the areas of opportunity identified

Circular economy workshop

• Uncovering existing circular economy initiatives across our Company

• Harnessing knowledge of workshop participants to identify circular economy opportunities within the business

• Establishing goals which build on and scale up the potential of existing circular economy initiatives

Interviews with key stakeholders in the business

• Understanding current processes and procedures

• Establishing the current level of circular economy knowledge

• Discussing key areas of impact as perceived by the stakeholders

• Identifying existing processes and procedures for embedding and scaling up circular economy principles

• Establishing stretching but feasible goals with consideration of identified material areas, leverage points and challenges

Best practice review

• Understanding current best practice across the sectors in which Majid Al Futtaim operates

• Cross checking and benchmarking our current activities against those of international leaders to identify areas for improvement

• Identifying examples of best practice which may be applicable to our businesses and which could be explored further

• Learning from challenges identified by other organisations

Policy and market review

• Understanding policy and market practices in Majid Al Futtaim’s markets to understand current availability of infrastructure and political support for more efficient resource use

• Identifying areas where our strategy could align with legislation to maximise impact

• Identifying locations where the legislation and the market support higher level of ambition

DEVELOPING OUR CIRCULAR ECONOMY STRATEGYOur circular economy strategy provides the framework for our transition towards more circular business models. In putting it together, we sought to understand Majid Al Futtaim’s role in a circular economy and to ensure that the most relevant and meaningful areas of impact were addressed in the most effective ways. To develop our new strategy, we followed the four-stage process set out below.

STEP 1: UNDERSTANDING THE CURRENT SITUATION

The first step we took was to examine resource flows within Majid Al Futtaim. This allowed us to identify key resource inputs, outputs and disposal routes and in doing so, highlighted existing circular initiatives already taking place within our Company. In addition, we reviewed the wider context in which Majid Al Futtaim operates, looking at legislation, market readiness and best practice.

STEP 2: IDENTIFYING THE GREATEST AREAS OF IMPACT

Building on the information gathered in Step 1, we were able to identify the areas within Majid Al Futtaim that have the largest impact on resource use. Importantly, this allowed us to identify where we should focus our efforts and where the greatest opportunities are.

STEP 3: ESTABLISHING THE LEVEL OF AMBITION

The results of Step 1 and Step 2 allowed us to determine our starting point and decide what needs to be achieved in each of the key impact areas, considering the wider context. The first two steps demonstrated the huge potential of a transition to more circular business models across all areas of our business operations. This is reflected in our ambitious strategy, through which we hope to lead the way and demonstrate the benefits of a transition to more circular ways of doing business. To inform steps 1 - 3, we carried out a range of activities which are illustrated in the table opposite.

STEP 4: DECIDING ON ACTIONS, RESPONSIBILITES AND MEASURES OF SUCCESS

Once the direction of travel is clear, specific actions, timelines, responsibilities and key performance indicators are critical to ensure effective implementation. That is why we have put together a comprehensive roadmap towards a more circular future.

STEP 1

ASSESS CURRENT

SITUTATION

STEP 2

IDENTIFY IMPACT AREAS

STEP 3

SET TARGETS

STEP 4

DEVELOPACTION PLANS

AND MEASURES OF SUCCESS

THE 4 STEPS TO ADOPTING A CIRCULAR ECONOMY STRATEGY:

UNLOCKING VALUE: MAJID AL FUTTAIM’S

CIRCULAR ECONOMY STRATEGY

Majid Al Futtaim’s circular economy strategy, Unlocking Value, is based on five pillars which address the key areas of our impact and aim to leverage the relationships between our key stakeholders. The process of embedding circular economy principles into our business practices will be driven by innovation from across the Company.

> RESOURCE MAPPING

We will improve the understanding of resource flows through our organisation to reduce waste.

It is a universally accepted truth that what is not measured cannot be managed. The foundations of our circular economy strategy are based on improving our understanding of how resources flow through the organisation – what products and materials are brought in, how they are used and what happens to them when they are no longer of use. Accurate and complete information, which includes procurement data, asset inventories and waste data, allows us to pinpoint key areas for action, monitor resource flows and measure progress towards circularity.

> MAXIMISING VALUE

We will implement internal systems to maximise the value of resources within our organisation.

The ultimate goal of a circular economy is to eliminate waste and retain products and materials in the value chain. To us, this means using all products and materials to their highest potential and moving them efficiently across our Company. It also means seeing value in what until now was considered as waste, and capitalising on it.

> CLOSED-LOOP SUPPLIES

We will support our supply chain to progress towards circularity.

Majid Al Futtaim does not have direct control over the design and manufacture of the products and materials it procures – but design and manufacture are precisely when many decisions affecting circularity take place. It is therefore essential that we work together with our suppliers to improve resource efficiency and close the loops within the supply chain.

> CIRCULAR LIFESTYLES

We will engage with our customers to help them make circular choices.

Our mission is to create ‘great moments for everyone, everyday’ – which means the entire business focuses on engaging with customers and enabling them to enjoy their lifestyle. This puts us in a strong position to make circular, sustainable choices easy and accessible for the wider public. By including circularity in our customer offering, we can show true integration of circular economy principles in our business strategy.

> COLLABORATE TO ACCELERATE

We will support research and innovation to accelerate the global transition to a circular economy.

Transitioning to a circular economy requires systemic change and all parties have to work together to turn theory into practice at scale. To act as a catalyst in this process, we need to engage with other organisations to learn from them but also share the lessons learned during our own journey. Majid Al Futtaim can also play an important role in creating circular markets by supporting the development of innovative start-ups.

ROADMAP TO 2030: OUR TARGETS

20212021

20222022

20232023

20252025

20302030

20202020Sign up to the CE100 initiative

Develop partnerships with organisations that

maximise the value of waste

Embed circular economy

principles into our procurement

process

Engage with and support our

customers in making more

circular choices Establish a system

of circular start ups

Reduce delivery packaging and

product packaging from our top

suppliersWork to improve the circularity of our product

ranges

Phase out single-use plastics within our operational control

Spearhead a regional thought leadership group

on Circular Economy

Reduce food waste by 50%

Embed circular principles in all

new developments and major

refurbishments

It is crucial to integrate lifecycle thinking into all business planning and decision-making. This approach allows Majid Al Futtaim to link up different elements of the value chain and, in its simplest form, can be summarised in three key questions below. We have set targets for our business that respond to these questions and address circularity across our value chain in Majid Al Futtaim’s roadmap to 2030.

How to maximise the value of your

waste?

How to use resources

effectively?

How to procure with circularity

in mind?

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REFERENCES AND CITATIONS

1 https://news.un.org/en/story/2011/05/374942

2 https://www.footprintnetwork.org/our-work/ecological-footprint/

3 https://www.footprintnetwork.org/content/images/uploads/Pre-reading_English.pdf

4 https://www.ellenmacarthurfoundation.org/circular-economy/concept

5 https://newsroom.accenture.com/news/the-circular-economy-could-unlock-4-5-trillion- of-economic-growth-finds-new-book-by-accenture.htm

6 https://www.strategyand.pwc.com/m1/en/reports/putting-gcc-cities-in-the-loop.pdf

7 http://pdf.wri.org/weight_of_nations.pdf

8 https://www.pwc.co.uk/corporate-sustainability/going-circular/pwc-going-circular- fourth-edition.pdf

9 https://corporate.marksandspencer.com/sustainability/business-wide/waste-and- circular-economy

10 https://www.circularity-gap.world/

With resources continuing to deplete at an ever-increasing rate, a rethink is needed. We need to go back to the drawing board and

rework our linear economic models. The power of innovation offers us exciting opportunities to close the loop and in doing so design out waste and extract the maximum value from resources when in use.

The transition to more circular ways of doing business is a win-

win solution. It can unlock business opportunities as well as deliver environmental and societal benefits. The most obvious business benefits of a circular approach are associated with the cost savings resulting from

the more efficient use of materials. It can also generate new revenue streams by extracting value out of what was previously considered waste and by encouraging innovation. In addition, a circular economy improves

business resilience by reducing dependency on virgin resources and volatile supply chains. At Majid Al Futtaim, we want to accelerate our

transition towards circular business models and in doing so demonstrate the benefits they can unlock for all stakeholders.

The launch of our strategy demonstrates Majid Al Futtaim’s commitment to rethinking resources and embed circular economy principles in the

way we do business. However, there is still long way to go. A recent report revealed that our world is still only 9% circular; meaning that over 90% of the 92.8 billion tonnes of minerals, fossil fuels, metals and biomass that enter the economy annually are not re-used. The scale of the challenge is clear, and our strategy is a starting point. But we will not be able to

achieve the change required alone – a successful transition to a circular economy requires system change. That is why we are calling on our

suppliers and customers to join us on this journey. We are excited about the opportunities this journey holds and look forward to

reporting back on our initiatives to close the loop.

WE DARE TO CLOSE THE LOOP

MAJID AL FUTTAIM

Majid Al Futtaim Tower 1 City Centre Deira Complex PO BOX 91100 Dubai, United Arab Emirates

T +971 4 294 9999 majidalfuttaim.com