To our stakeholders,

I am pleased to confirm that Majid Al Futtaim reaffirms its support of the Ten Principles of the United Nations Global Compact in the areas of Human Rights, Labour, Environment and Anti-Corruption.

At present, we are conducting a sustainability materiality and risk review across the entire Group (Majid Al Futtaim Holding; Majid Al Futtaim Properties; Majid Al Futtaim Retail - the sole franchisee of the Carrefour brand in the MENA and Central Asia regions; and Majid Al Futtaim Ventures). This review will identify and provide details on our key sustainability risks and impact areas. This process will allow us to develop an overarching policy, reporting framework and governance structure for sustainability for Majid Al Futtaim Holding & its subsidiary companies. This strengthening of our corporate mechanisms to address sustainability will support our commitment to uphold the principles of the United Nations Global Compact.

In this first Communication on Progress we focus on Majid Al Futtaim Properties where we have made the most systematic progress since 2010 in integrating sustainability and the Ten Principles into our business strategy, culture and daily operations.

In addition we include instances where our Holding company has overarching responsibility for ensuring the business meets the Ten Principles, as well as some of the initial actions taken by Majid Al Futtaim Retail and Majid Al Futtaim Ventures to embed the principles of the United Nations Global Compact into operations. Further information on all businesses will be reported in next year’s communication on progress.

Yours Sincerely,

Iyad Malas
Chief Executive Officer, Majid Al Futtaim Group

Majid Al Futtaim Group

Majid Al Futtaim aims to uphold the principles in the Universal Declaration of Human Rights and expects all employees to abide by these principles. We employ people from more than 86 nations.

Majid Al Futtaim Properties

Majid Al Futtaim Properties’ Code of Business Conduct sets out the company’s values which include ethical actions, honesty, respect for others, and teamwork. Their exercise requires an environment that is open, supportive, and interdependent. No action could be more contrary to our values than discrimination.

Majid Al Futtaim Properties’ policies prohibit discrimination and harassment of any kind, and each employee needs to meet this obligation. Discrimination, harassment, slurs, or jokes based on a person’s race, colour, creed, religion, national origin, citizenship, age, sex, sexual orientation, marital status, or mental or physical disability are not tolerated.

Majid Al Futtaim Properties’ Code of Business Conduct also includes a health & safety section which requires all staff to contribute to promoting a safe environment and which asserts that Majid Al Futtaim Properties respects the right of all individuals to work in a safe working environment that promotes wellbeing.

In some of the countries we operate in there are quotas for the employment of local people in order to support local skills development and economic growth. Majid Al Futtaim Properties aims to meet or exceed these quotas wherever possible.

Majid Al Futtaim Properties has also set minimum standards for labour conditions and the health and safety for the supply chain workers on our construction sites and in our assets, and has special criteria for those supply chain staff resident in labour accommodation camps. Contractors are required to comply with Majid Al Futtaim Properties’ standards and labour accommodation audits follow International Labour Organisation (ILO) guidance.

Majid Al Futtaim Retail

As the sole franchisee of the Carrefour brand in the MENA and Central Asia regions, Majid Al Futtaim Retail applies many of Carrefour’s international standards, including those that relate to procurement and our global supply chain. Carrefour’s own requirements relating to the United Nations Global Compact are set out in its Code of Business Conduct and its Ethical and Social Charter for Suppliers.

Our Human Resources Policies and Procedures Manual include details of our equal opportunities commitments and are the principal way in which the practical implementation of our commitments are met.

Details of the implementation of our labour conditions and health and safety commitments are included below in Section 3.

Details of the measurement of outcomes of our labour conditions and health and safety commitments are included below in Section 3.

This section focuses on the actions taken by Majid Al Futtaim Properties to support the United Nations Global Compact labour principles. It also sets out actions taken by Majid Al Futtaim Retail.

Assessment

With labour conditions in the regions in which we operate lagging behind international best practice and scrutinised by the press and NGOs, there are considerable risks if we do not manage and improve labour conditions in our supply chain. We also recognise the need to prevent child labour in all of the countries that we operate and source materials from.

Majid Al Futtaim Properties

Majid Al Futtaim Properties has 909 staff; the company’s assets and development sites are supported by 1864 contractor staff, of which 1313 are resident in labour accommodation camps. A significant proportion of Majid Al Futtaim Properties’ work at construction sites and assets is delivered by contractors, and therefore supply chain standards and auditing is key to the upholding of the UN Global Compact Labour Conditions Principles.

With over 11 million construction hours worked in 2013 alone, health and safety is a constant management challenge and underpins Majid Al Futtaim Properties’ license to operate. Majid Al Futtaim Properties has put in place many of the building blocks of a robust health and safety system but more work is needed to put place a holistic and systematic approach across all activities to minimise this risk to our organisation.

Policies and procedures

Majid Al Futtaim Properties

Majid Al Futtaim Properties’ Code of Business Conduct includes a health & safety section which requires all staff to contribute to promoting a safe environment and which asserts that Majid Al Futtaim Properties respects the right of all individuals to work in a safe working environment that promotes wellbeing.

The Code of Business Conduct sets out Majid Al Futtaim Properties values which include ethical actions, honesty, respect for others, and teamwork. Their exercise requires an environment that is open, supportive, and interdependent. No action could be more contrary to our values than discrimination.

In some of the countries we operate in there are quotas for the employment of local people in order to support local skills development and economic growth. Majid Al Futtaim Properties aims to meet or exceed these quotas wherever possible.

Majid Al Futtaim Properties has also set minimum standards for labour conditions and the health and safety of workers on Majid Al Futtaim Properties construction sites and in labour camps. Contractors are required to comply with Majid Al Futtaim Properties’ standards. Labour conditions audits follow International Labour Organisation (ILO) guidance.

Majid Al Futtaim Retail

As the sole franchisee of the Carrefour brand in the MENA and Central Asia regions, Majid Al Futtaim Retail applies many of Carrefour’s international standards, including those that relate to procurement and our global supply chain. Carrefour’s own requirements related to the United Nations Global Compact are set out in its Code of Business Conduct and its Ethical and Social Charter for Suppliers.

Long term goals

Majid Al Futtaim Properties

By 2018, Majid Al Futtaim Properties aims to achieve public recognition for transforming labour conditions in the MENA region, both through our work with government authorities and the delivery of a best practice management system.

By 2018, Majid Al Futtaim Properties strives to achieve zero fatalities and have in place a certified health and safety management system covering all activities.

Majid Al Futtaim Properties

Majid Al Futtaim Properties performs bi-annual audits to assess levels of compliance with our labour conditions and health and safety standards and make improvements to health and safety systems. 55 labour accommodation camp and health & safety audits were conducted in 2013.

Majid Al Futtaim Properties uses a staff satisfaction survey to solicit the views of employees on their happiness working at Majid Al Futtaim Properties.

In 2014 Majid Al Futtaim Properties will employ a dedicated health and safety resource. This will ensure that robust and consistent procedures and systems are put in place in 2014.

Majid Al Futtaim Retail

Majid Al Futtaim Retail audits social standards in their supply chain to ensure that Carrefour’s Ethical and Social Charter for Our Suppliers is respected. To ensure employees have the opportunity to voice concerns, Majid Al Futtaim Retail has a supplier and employee hotline through which feedback can be given.

Majid Al Futtaim Retail uses a management survey to solicit the views of employees on their satisfaction working at Majid Al Futtaim Retail.

To ensure a safe working environment for employees, all hypermarkets and supermarkets have been certified to the ISO 18001 Occupational Health and Safety Standard and a hygiene training programme is given to employees. In addition, Hazard Analysis and Critical Control Point (HACCP) certification is used to further improve the occupational conditions of hypermarkets and supermarkets.

Majid Al Futtaim Properties

Majid Al Futtaim Properties assesses the progress of all its sustainability activities including those related to labour. To ensure the delivery of long term sustainability goals, Majid Al Futtaim Properties sets and tracks annual targets and key performance indicators which are externally audited on a quarterly basis. Progress is directly reported on a bi-annual basis to the Board and publicly in our annual financial and sustainability reports. To ensure continual improvement, we have established a Sustainability Steering Group, which includes the CEO, and is supported by national sustainability groups. The Sustainability Steering Group meets quarterly to review our progress and implement changes where required.
Majid Al Futtaim Properties met its 2013 target of performing at least two labour conditions audits and two health and safety audits at all assets and sites. In 2013 24 labour camp audits and 31 health and safety audits were conducted at Majid Al Futtaim Properties’ developments and assets.

Majid Al Futtaim Properties captures data on localisation rates and in 2013 over 350 local people received an average of 27 hours training.

Case study: Small changes, big impacts

Audits of labour camps don’t always bring about dramatic changes: sometimes they lead to small improvements that nonetheless have a significant effect on the quality of people’s lives.

Thanks to Majid Al Futtaim Properties recommendations, many contractor-run accommodation centres now provide organised activities such as painting competitions and games leagues, free laundry facilities, the use of quiet areas and libraries, and hot meals seven days a week.

These adjustments have been well received not just by workers but by the contractors who run the camps, and as a result Majid Al Futtaim Properties’standards are beginning to become the benchmark across the region.

“It’s refreshing that contractors no longer see us as auditors but as a client coming to help with labour conditions for the benefit of the workforce,” says Ali Al Khalaf, Director for Project Management. “They actually look forward to our visits.”

Majid Al Futtaim Retail

In accordance with Carrefour international standards, Majid Al Futtaim Retail regularly audits suppliers to ensure that its labour standards set out in the “Ethical and Social Charter for Our Suppliers” are respected.

This section focuses on the progress made by Majid Al Futtaim Properties to implement the UN Global Compact’s environmental principles and also describes some of the ways Majid Al Futtaim Retail and Majid Al Futtaim Ventures are acting to support these principles.

Assessment

Majid Al Futtaim Properties

Majid Al Futtaim Properties operational portfolio has an absolute carbon footprint of 585,448 tonnes of CO2e and in 2013 we spent AED 250 million purchasing energy for our malls alone. This is only set to increase as Majid Al Futtaim Properties continue to rapidly expand its portfolio across the region.

As a market leader in the development of world class shopping malls and communities in the Middle East, Majid Al Futtaim Properties wants to build high performance assets to international standards. For us this means using best practice green building standards. However, this continues to be challenging in our operating markets where environmental standards are yet to be enshrined consistently in building codes and regulations.

We operate in some of the most water-scarce countries in the world where energy-intensive desalinisation is common place. Majid Al Futtaim Properties needs to minimise its water footprint to protect the long term availability of water and to reduce associated carbon emissions.

Poor waste infrastructure across the markets in which we operate, and a waste footprint of 38,150 tonnes per year, means waste management is an ongoing challenge for our business. If managed properly, this could become a net positive income stream for our business.

With Majid Al Futtaim Properties malls and hotels receiving over 160 million visitors per year, Majid Al Futtaim Properties has a huge opportunity to engage with customers and visitors to help them live sustainable lives. This represents a significant opportunity for us to operate as a sustainability ‘change agent’.

Policies and procedures

Majid Al Futtaim Properties

Majid Al Futtaim Properties Sustainability Policy sets out Majid Al Futtaim Properties’ broad, high level commitment to delivering our sustainability strategy.

The Majid Al Futtaim Properties Green Building Policy specifies detail on the minimum green building standards which all Majid Al Futtaim Properties projects must achieve during design, delivery and operation, and provides guidance on how to achieve these standards. A target of achieving LEED Gold/equivalent accreditation has been set for all assets.
Majid Al Futtaim Properties Pre-Acquisition Sustainability Checklist seeks to identify major environmental risks and to ensure that these are properly considered as part of the due diligence undertaken before the acquisition of development sites, new land or new buildings. Our Sustainability Implementation Plans will now be developed for each new project to ensure that all developments are created in line with the Sustainability Policy.

Majid Al Futtaim Retail

As the sole franchisee of the Carrefour brand in the MENA and Central Asia regions, Majid Al Futtaim Retail applies many of Carrefour’s international standards, including those that relate to procurement and our global supply chain. Carrefour’s own requirements related to the United Nations Global Compact are set out in its Code of Business Conduct and its Ethical and Social Charter for Suppliers.

Long term goals

Majid Al Futtaim Properties

Majid Al Futtaim Properties aims to create and manage resource efficient assets, communities and infrastructure.

We will build and operate all assets to best practice green building standards in the MENA region.

Concrete actions to date

Majid Al Futtaim Properties

In 2010, Majid Al Futtaim Properties put in place energy, water and waste baselines and since then has invested AED 25 million in improving the energy and water efficiency of assets. This includes measures such as the installation of energy efficient equipment including LED lighting and efficient building services plant.

To engage tenants Majid Al Futtaim Properties has developed a Green Star Rating system to assess the environmental credentials of tenant shop fit outs. The system appraises the measures taken by the tenants of shopping malls to reduce their impact on the environment and takes into considerations energy, water and waste efficiency. By 2013, Majid Al Futtaim Properties had also incorporated green clauses in over 300 tenant leases. Green leases require tenants to meet resource efficiency standards. During 2013 Majid Al Futtaim Properties trialled a full year of data collection at the Mall of Egypt construction site, enabling better understanding of resource efficiency in construction and how we can reduce our footprint in this area. As a result we have finalised our construction data collection methodology for roll out across all sites.

Majid Al Futtaim Properties has engaged millions of customers through environmental communications in malls and hotels. In October 2013 we held a third annual Sustainability Summit where over 100 stakeholders discussed sustainability opportunities and challenges across the region, including environmental responsibility. Majid Al Futtaim Properties supported Earth Hour in 2013.

Finally, as part of Majid Al Futtaim Properties’ commitment to green buildings, we are enabling the diffusion of environmental technologies in our region, with a recent example being the green roof at Beirut City Centre mall in Lebanon. Majid Al Futtaim Properties is also investigating the business case for renewables investment.

Majid Al Futtaim Retail

In 2013, Carrefour announced the launch of its Eco-Friendly shopping bags; reusable bags made entirely of recycled material. The bags are available to purchase at a nominal fee of 5 AED from all Carrefour stores and will help reduce plastic bag usage and waste contributed in the UAE.

As part of its environmental CSR programme, Carrefour has been involved in a number of beach and desert clean-ups throughout the GCC. Volunteers from Carrefour’s workforce took time out of their weekends to help pick up rubbish along coastlines and desert areas, reducing the amount of litter that damages wildlife and helping to preserve these eco-systems.
Majid Al Futtaim Retail is benchmarking the utility performance of its portfolio of stores and trialling closed refrigeration to improve the resource efficiency of its operations.

Majid Al Futtaim Ventures

Majid Al Futtaim Ventures has put in place a waste reduction programme and enacted initiatives to reduce water and energy use at Ski Dubai.

Next steps

Majid Al Futtaim Properties

Majid Al Futtaim Properties has set a range of long term environmental and green building targets, aiming to reduce like for like energy and water use and waste production. The company will continue to invest in capital projects to improve environmental performance.

In addition, Majid Al Futtaim Properties will produce a metering strategy that will provide a blueprint for best practice metering across all new assets. This will allow Majid Al Futtaim Properties to accurately measure energy and water use and effectively monitor the financial impact of new technologies.

Approach

Majid Al Futtaim Properties

Majid Al Futtaim Properties assesses the progress of all its sustainability activities. To ensure the delivery of long term sustainability goals, Majid Al Futtaim Properties sets and tracks annual targets and key performance indicators which are externally audited on a quarterly basis. Progress is directly reported on a bi-annual basis to the Board and publicly in our annual financial and sustainability reports. To ensure continual improvement, we have established a Sustainability Steering Group, which includes the CEO, and is supported by national sustainability groups. The Sustainability Steering Group meets quarterly to review progress and implement changes where required.

Our annual Sustainability Report is aligned with the Global Reporting Initiative principles & we participate in the Global Real Estate Sustainability Benchmark (GRESB) through which we, and our stakeholders, are able to better understand our performance in comparison with that of our peers. We provide a separate report on environmental data in line with the European Public Real Estate (EPRA) Sustainability Best Practice Recommendations. This can be downloaded from our website.

Majid Al Futtaim Properties’ environmental targets for the period 2010 to 2013 are detailed in the 2013 Sustainability Report. Following the completion of the period for which the targets applied, Majid Al Futtaim Properties has set new environmental targets which are set out in the 2013 Sustainability Report.

Performance

Majid Al Futtaim Properties

Full details on Majid Al Futtaim Properties’ environmental performance are detailed in the 2013 Sustainability Report. A summary of achievements is provided below.

In 2013, LEED Gold accreditation was achieved at Beirut City Centre. The Kempinski Hotel at the Mall of the Emirates became the first hotel in the UAE to receive the LEED EBOM (Existing Building Operation and Management) which is awarded to buildings achieving operational excellence.

To measure the resource efficiency of assets, Majid Al Futtaim Properties set long-term targets from either 2009 or 2010. We fully achieved the following targets:

• 20% like for like reduction in mall water consumption on a 2010 baseline (target: 15%)
• 17% reduction in hotel water consumption on a 2009 baseline (target: 15%)
• 26% like for like reduction in office water consumption (target 15%; Tower 2 only)
• 19.9% like for like reduction in hotel energy consumption on a 2009 baseline (target: 15%)
• 18.3% like for like reduction in office energy consumption on a 2010 baseline (target: 10%)
• 68% of office waste diverted from landfill in 2013 (target 40%; Tower 2 only).

A number of other targets were partially achieved. Full details can be found in our Sustainability Report 2013.

Case Study: Aiming for the gold standard

One important aim of construction work at our Mall of Egypt shopping mall in Cairo is to achieve gold certification under the LEED green building standard when it’s completed in 2015.

With this in mind we’ve set up a partnership with the American University in Cairo and the Egyptian waste management company Ertekaa. Working with both partners, we’ve made sure all construction waste on the Mall of Egypt site is tracked and documented and that site staff have been trained in how to segregate waste.

As a result, the recycling rate for construction waste at Mall of Egypt stood at 93% by the end of 2013, and the recycled content of materials used in construction was more than 30%.
 

The business’ approach to corporate governance is predominantly set at Majid Al Futtaim Holding level. This section therefore focuses on the actions taken at group level with discussion on how these actions feed into the operations of Majid Al Futtaim Properties, Majid Al Futtaim Retail and Majid Al Futtaim Ventures.

Assessment

At Majid Al Futtaim we recognise that the countries we operate in can present challenges related to bribery and corruption. This can be a result of political conditions or the lack of good corporate governance in the markets in which we operate. Corruption presents a risk to the success of our business and we resolutely seek to minimise our exposure to corruption.
Long term goal

Majid Al Futtaim places considerable emphasis on governance and transparency. We believe strong corporate governance is fundamental to making better commercial decisions over the long term and ensuring that risks, including those related to bribery and corruption, are reduced to the greatest extent possible. Our goal is to maintain international best practice corporate governance.

To demonstrate our commitment to corporate governance, Majid Al Futtaim became a founding partner company of the Pearl Initiative in 2012. The Pearl Initiative is a GCC based private sector-led not-for-profit organisation set up in collaboration with the UN Global Compact. We aim to support the Pearl Initiative’s objective to drive the adoption of best practice in corporate governance throughout the GCC and to tackle issues including bribery and corruption. We count this objective among our own goals.

Policies and procedures

To ensure effective governance, we have voluntarily adopted the principles of the UK’s Combined Code on Corporate Governance. The code sets out principles that inform how the management and board of an organisation are structured, remunerated, held accountable and engage shareholders.

Across the Group we implement a robust risk management framework which covers corruption and bribery risks. As an example of how this translates down into our operations, each Majid Al Futtaim subsidiary business uses country risk registers. The risk registers assess the quality of governance in each country and the risk that staff may be exposed to corrupt behaviour. Where risk is identified, the Majid Al Futtaim business assesses its strategy for managing the risk and, where necessary, takes action to improve procedures and protocols.

Concrete actions to date

To comply with the UK’s Combined Code on Corporate Governance we have put in place world-class boards at all our operating companies, chaired by and with a majority of independent non-executive directors.

We conduct due diligence and regular audits to ensure that all applicable laws and regulations in the countries in which we operate are complied with including those related to corruption and bribery.

As part of the Pearl Initiative, Majid Al Futtaim actively contributes to roundtable discussions and thought leadership on the challenges of bribery and corruption within the GCC region. At these meetings, we share our insights and learning to help improve the policies and actions of other organisations to mitigate the risk of corrupt practice in GCC markets.

Majid Al Futtaim Retail

Majid Al Futtaim Retail, which controls Carrefour operations in the MENA and central Asia regions, operates in accordance with Carrefour’s international standards and supports Carrefour’s Code of Business Conduct and Social and Ethical Charter for suppliers which require all employees, suppliers and sub-contractors to refuse all forms of corruption.

Next steps

In 2014, Majid Al Futtaim intends to continue to implement international best practice in corporate governance by further developing the risk management framework within all businesses. In particular, in 2014, Majid Al Futtaim Properties will develop a sustainable procurement policy.

We have clear codes of business conduct across our operating companies. We expect our staff to sign these codes annually. The Group also has clear governance with transparent terms of reference.