Protecting Environment 2022 Activity

Roadmap towards environmental sustainability

Dufry is committed to conduct business in an environmentally conscious manner. Dufry regularly assesses the environmental reach of its commercial activity and works towards minimizing the impact. Due to the special nature of the travel retail industry in which Dufry operates, we closely collaborate with third parties, in particular with concession partners, brand suppliers and logistics providers, towards reducing the environmental impact of the business and contribute to implement circular economies where possible.

In this regard, Dufry closely collaborates with its partners to become a more sustainable business by promoting effective use of resources – especially energy – across the operations and supply chain, minimizing the generation of unnecessary waste, adopting new technologies that contribute to the reduction on environmental impacts, and supporting our customers in their objective of choosing more sustainable products.

Dufry operates shops in highly regulated, third-party owned premises such as airports, train stations, cruise ships & ferries, seaports and downtown resorts. This means that for most of the stores, a large proportion of the utility consumption, such as water or energy usage, and sourcing in the shops, cannot be directly changed or influenced by Dufry, as these factors are predetermined by the concession partners and the given building construction. Likewise, Dufry does not develop its own products, does not operate any of its own manufacturing sites, and only sells third-party products directly sourced from its brand partners.

The company therefore concentrates its energy-saving and emission reduction efforts mainly in the areas of product sourcing, supply chain & logistics, its own office premises and in the planning of new stores, or in the refurbishment efforts of existing shops. With respect to shop design, the focus is on the related construction materials, fitting equipment and lighting, in accordance with several sustainability criteria.

Dufry recognizes the importance of international initiatives to promote action around environmental sustainability. In this regard, Dufry is firstly a signatory member of the UN Global Compact, adopting the commitment of taking a precautionary approach to its operations; secondly supports the UN Nations to drive awareness about the Sustainability Development Goals (SDGs), and thirdly participates in a number of industry initiatives, such as the ACI Europe Climate Task Force.

Dufry's environmental management system

Dufry has established an environmental management system that permits the company to assess and understand its impact on the environment with a systematic and consistent approach, subsequently enabling the company to define the main lines of our goals and actions. In some areas, where we have direct and stronger possibilities to influence our footprint, we have already actioned specific initiatives to reduce our footprint, such as the replacement of plastic bags (see below). In other circumstances, where our business model provides less potential of directly influencing our footprint, Dufry significantly increases its stakeholder dialogue – mainly with airports and supply chain – to explore opportunities to reduce the impact further.

As a signatory member of the UN Global Compact, Dufry has formally adopted the precautionary approach principle to its operations. The company follows a consistent process to assess its operations from an environmental perspective, to identify current or future environmental impacts of its activities and to promote initiatives that respect the environmental balance and comply with existing environmental laws and regulations.

Dufry's environmental management system, supervised and implemented by the ESG Committee, hence permits placing the environment at the center of decision- making through:

• Assessment of environmental risks of its activities, facilities, products and services on a regular basis, improving and updating the mechanisms designed to prevent, mitigate or eradicate them
• Ongoing identification, assessment and mitigation of the environmental impacts of the Group’s activities, facilities, products and services
• Management of risks and impacts by establishing objectives, programs and plans that promote the continuous improvement
• Environmental training of the Group’s professionals.

In this regard, we regularly engage in constructive dialogue with stakeholders in the areas in which we can actively influence the environmental footprint, to assess the impact and eventually implement measures to minimize or even offset the impact. As a complement to Dufry´s Environmental Management System, Dufry has a set of Environmental Management Guidelines that define the environmental principles that Dufry follows when it comes to Climate Change and Energy Efficiency, Resource Consumption and Shop Development.

Reducing resource consumption

To better assess and understand the environmental impact of Dufry´s activity when it comes to resource consumption and emissions, we have identified five different areas of our business that permit the company to track and, in a second stage, implement the necessary measures and goals to minimize the impact. These include the third-party production of the goods sold in our stores (supply chain), goods transportations, warehouses, shops and office environments.

With respect to the types of resources used and the information collected, electricity and fuel consumption are the most material aspects of our footprint; water consumption is marginal and restricted to normal use by our employees and cleaning services within our premises.

Stores

Most of the electric energy consumption of Dufry's activity happens in the store environment. Lighting, refrigeration and air conditioning of over 2,200 stores are the largest contributors to our energy consumption and, consequently, to our CO₂ footprint. The direct influencing capability of Dufry on these is however limited, due to the nature of our business. Dufry stores are mostly located in third-party owned premises and in highly regulated environments, where Dufry has little or no choice when selecting power sources. The concern for reducing the CO₂ footprint from energy consumption has been raised in a large number of airports where Dufry operates and concession partners have initiated plans to move to green energy sourcing. Although this move works towards the reduction of our Scope 2 emissions, Dufry has defined – as further described below – its own CO₂ reduction plan to achieve Climate Neutrality in Scope 1 and 2 emissions by 2025, regardless of the efforts already initiated by some of our airport partners. See also dedicated section below.

Based on the utility invoices issued by concession partners for the year 2022, we have identified emissions and resource consumption for operations covering over 90 % of total retail space. By reaching such a high figure, we have been able to extrapolate the information and estimate total emissions for all of our retail space.

Distribution centers and warehouses

The second-largest contributor to Dufry´s environmental footprint is the transportation of goods. Dufry operates three main distribution centers in Uruguay, Switzerland and Hong Kong, which then operate additional warehouses in Hong Kong, Runnymede (UK), Barcelona (Spain) and Miami (USA), to provide timely shipping of goods to our operations. These main logistics centers receive major shipments from the suppliers and further distribute products to our respective operations. Whenever possible, freight is carried by sea and we aim to consistently select the most efficient means of transport in terms of CO₂ emissions. Furthermore, the vast majority of our long-haul logistics partners are either ISO 14001 accredited and / or have strong environmental management procedures in place.

Additionally, we have over 25 local warehouses, which redistribute goods received from the central warehouses to the operations. These are located where Dufry holds several significant operations within the same country in terms of volumes transported. In general, distribution to individual stores is done by road. These road transports are mostly outsourced to national and international specialized partners, some of which have implemented their own environmental strategies. Only a minimal part of the company’s transportation – mostly in the UK – is done with a Dufry-managed transportation fleet. Through the high efficiency in our logistics chain, we ensure that the environmental impact of transporting goods is kept to a minimum.

The vast majority of shipments of goods from the supplier’s site to Dufry’s Distribution Centers is excluded from the assessment, as these emissions lie within the ESG responsibility of the suppliers. As part of its own emission reduction targets, Dufry actively engages with suppliers to discuss and encourage footprint reduction opportunities.

Office environment

Beyond stores and warehouses, Dufry has office premises in a number of operations across the world. Main ones include the Group´s Headquarter offices in Basel (CH), Bedfont Lakes in Feltham (UK), Madrid (ESP), East Rutherford (US), Miami (US) and Rio de Janeiro (BR). Within these premises, energy consumption is mostly related to lighting and heating. A number of individual measures, such as automatic switch off for lighting and heating systems, presence detector activators and staff awareness campaigns, have been implemented in Dufry offices to reduce utility consumption. Additionally, we advise our employees to question the necessity of any travel and consider using alternatives to travel, such as virtual meeting systems (videoconferences, teleconferences, computer live meetings, etc.) and we promote more environmental alternatives for our employees’ daily commuting, such as public transport offers.

Our CO₂ Footprint

Dufry follows the Greenhouse Gas Protocol (GHGP) standards to report CO₂ emissions. This protocol is the most widely used international accounting tool for governments and businesses to understand, quantify and manage greenhouse gas emissions and classifies emissions into three scopes:

• Scope 1: Direct greenhouse gas emissions from sources owned by the company. For Dufry, Scope 1 emissions are limited to those from the fuel used by Dufry-managed transportation fleets and fossil fuels used mainly for heating purposes.
• Scope 2: Indirect greenhouse gas emissions from electricity use. In the case of Dufry, these include electricity consumption in stores, offices and warehouses.
• Scope 3: These are the emissions released by third parties when they provide their services to Dufry. For Dufry, Scope 3 emissions are dominated by purchased goods (Scope 3 category 1). Other relevant emissions are related to capital goods (category 2), upstream transportation & logistics (category 4), and employee travel (category 7), and use of sold products (category 11).

Compared to other companies, Dufry has a singular emission structure and, unlike other businesses where Scope 1, 2 & 3 emissions are in a similar order of magnitude, Dufry’s carbon footprint is vastly dominated by the carbon emissions caused by the production of its purchased goods that are sold to our customers (in the base year 2019 e.g. about 90 % of total emissions).

¹ The consumption levels of the reporting years 2022, 2021 and 2020 are not directly comparable to 2019, as 2022, 2021 and 2020 in particular are impacted by temporary shop closures due to the Covid-19 pandemic. Also, an increased coverage and scope extension of the data collection in additional Dufry entities has to be taken into account (2022: 91% of sales / 2021: 80 % of sales / 2020 64 % of sales / 2019 64% of sales are covered).

² Includes consumption of Dufry-managed goods transportation in the UK, Jordan and Morocco as well as diesel and gas of heating.

³ Scope 2 emissions for year 2022 includes the contribution or purchased Renewable Energy Certificates (RECs). Without considering, Scope 2 emissions would be 23,844 tons CO₂-eq.

⁴ Scope 3 emissions include data from logistics partners accounting for 83 % of total volume of good transported globally in 2022 (2021: 64 %; 2020 & 2019: 55 %) as well as global employee's business flight emissions. Not included here are the product purchasing related Scope 3 emissions or other Scope 3 emission categories.

⁵ Carbon intensity calculated over the total square meters of commercial surface operated by Dufry in m² (2022: 471,591 / 2021: 469,581 / 2020: 469,041 / 2019:469,990).

Delivering on our SBTi reduction targets

Dufry has defined science-based emission reduction targets, thus recognizing the crucial role the business community can play in minimizing the climate change risk. Science-based targets are greenhouse gas emissions reduction targets that are in line with the level of decarbonization required to meet the goals of the Paris Agreement – to limit global warming to 1.5°C. After committing to the Science Based Targets initiative in spring 2022, Dufry handed in emission reduction targets following the SBTi guidance (SBTi Target Validation Protocol). SBTi validated Dufry’s emission reduction targets in early 2023.

Based on a comprehensive analysis of its business model and emissions profile commissioned to a thirdparty consultant, Dufry has established an emission reduction strategy for Scope 1 & 2 emissions which follows SBTi`s 1.5°C pathway. It will eliminate emissions from its own operations through energy efficiency measures and commits to increase annual sourcing of renewable electricity from 0 % in 2019 to 100 % by 2025. In addition, Dufry wants to achieve climate neutrality of its own operations (Scope 1 & 2 emissions) by 2025 by compensating unavoidable emissions with carbon offsetting initiatives to be defined in the near future.

For Scope 3 emissions, Dufry follows SBTi's well below 2°C pathway with two separate objectives to be achieved through both supplier engagement programs, and the collaboration with its logistic partners.

Our progress in 2022

Scope 1 & 2 objective – During 2022, Dufry has purchased Renewable Energy Certificates (RECs) to substitute 20% of our electrical energy consumed with renewable energy (using 2019 as a baseline). These RECs cover the equivalent of our total electricity consumption of our operations in Brazil, Greece, Switzerland and the UK and have permitted Dufry to compensate over 4.9 tons of CO₂-eq. Dufry will continue with its RECs purchasing program during 2023 to cover, at least, an additional 20 % of its electricity consumption and taking a next step towards its 2025 objective to use 100 % renewable energy.

Scope 3 objective – In 2022, Dufry has already engaged with its main logistic partners to design an emissions reduction plan for our goods transportation. The objective will be achieved by rationalising the shipments of goods and by selecting means of transportation with a lower carbon footprint. On the latter, we will give preference to lower impact means of transportation (like rail) when possible; will prioritize the use of sustainable fuels for our air transportation; and will prioritize the delivery of goods using Liquefied Natural Gas (LNG) carriers. A detailed plan is to be delivered during 2023 that will permit Dufry to gradually achieve its established target.

When it comes to our suppliers, during 2022 Dufry has conducted a preliminary assessment of our main suppliers to revise their emission reduction strategies towards reducing emissions and committing to SBTi. While the findings are yet preliminary, Dufry is confident to achieve the committed target on time.

Progress on move to non-plastic shopping bags

Starting in the last quarter of 2020, Dufry gradually began replacing existing plastic carrier bags – which already contained more than 70 % of recycled plastic – in all its duty-free operations globally, with more environmentally friendly ones made of biodegradable and recyclable materials. The only exception for the time being is that of STEBs (Secure Tamper Evident Bags). These are necessary for certain airport purchases such as liquor or tobacco, as per the requirements of the International Civil Aviation Organization (ICAO) and regulations of certain airports. For this type of bag, Dufry is also exploring recyclable or degradable alternatives that will meet ICAO's and airports' regulations. Once the substitution of the single-use plastic bags is fully completed, the company will be able to reduce plastic usage by 7.3 tons per annum.

Dufry currently offers non-plastic bags in 26 countries, and introduces paper or other biodegradable bags in additional countries as soon as the existing stock of plastic bags is depleted.

The plastic bag phase-out is coupled with point-of-sale communication campaigns to raise awareness and encourage customers to reduce plastic consumption and replace it with more sustainable alternatives. The company has also agreed to adopt a global price scheme for carrier bags, as an additional way of raising awareness and reducing bag consumption overall.

This formal decommissioning of single-use plastic carrier bags follows other measures adopted in previous years, geared at reducing plastic consumption across our operations, such as offering more sustainable alternatives, including re-usable or jute bags.

Waste and recycling

Avoiding any waste in the first place or recycling it, is an effective way to save valuable resources. In our warehouses, packaging materials, which mainly consist of cardboard, paper, plastic film and wood, as well as electronic and plastic consumables such as neon lamps and PET, are sorted into different containers and sent for recycling. The recycling process is outsourced to specialized service providers.

In the shops, waste produced by our operations is mostly packing material handled through the concession partners’ waste disposal system and recycled accordingly where possible. In many of our locations, we are taking measures to reduce single-use plastic film, such as replacing roll containers used to move products from warehouses to the stores. The new models, which include closures on four sides and at the top, drastically reduce consumption of the plastic film needed for the covering and the plastic shrink wrapping used with the old system.

With regard to cartons and pallets used to transport and protect products, Dufry reuses the same units as much as possible, thus consistently reducing consumption of new resources.

In our offices, the reduction of paper consumption is one of our ongoing challenges. Dufry has put in place local initiatives to reduce paper and other office material consumption, including tips to reduce paper usage, such as printing double sided, avoiding printing of the legal text at the bottom of emails, and encouraging people only to print when necessary. The adoption of IT solutions, such as the electronic invoice management system, is also helping to reduce the amount of paper used in the day-to-day work of our staff and contributing to the protection of resources.

Food waste

Food waste is not a material topic for Dufry for two main reasons. First, the majority of food products sold by Dufry belongs to the food & confectionery category, which all have a fairly long shelf life and are not exposed to short expiry dates. Second, with respect to the food offering in our F & B formats, we source locally and with short lead-times allowing us to flexibly adapt quantities and products to the specific needs of the individual operation. The impact of food waste following the business combination with Autogrill will be assessed in 2023.

Store development and sustainable construction

Dufry takes a sustainability approach when designing, constructing and refurbishing stores. In the design phase and the selection of materials, we choose the most environmentally friendly options and use locally sourced furniture and materials whenever possible, to reduce environmental impact. The shop design department is centrally organized at the Group level. It develops guidelines and defines several industry standards enabling us to create attractive shopping environments, while at the same time reducing energy consumption by using renewable or recycled materials. To this end, specific policies are in place to manage the use of materials: timber policy, cement and virgin aggregates policy, hazardous chemicals policy, guidelines and energy targets for brand partners for the supply of branded display devices. These guidelines have to be followed by local construction teams and their respective sourcing of materials.

Following LEED principles

During the shop development and refurbishment phase, Dufry follows the principles established by leading green-building certification programs, such as the Leadership in Energy and Environmental Design (LEED) recommendations. In this regard, Dufry:

• Sustainably designs and plans new store developments and refurbishments considering all aspects, from visioning to renovation preparation, including:
• Comprehensive metering of existing energy consumption
• Introduction of solutions to improve traffic flow, introduction of smarter construction materials (easier to clean, anti-bacterial, etc.)
• Undertakes a collaborative sustainable approach for the design process by engaging with all stakeholders involved in the process (designers, contractors, concession partners, material suppliers, etc.)
• Prevents construction pollutions by protecting the site during the construction
• Reduces use of natural resources by re-using materials and equipment by giving modular and recyclable design to furniture and other mobile elements of the stores
• Encourages recycling for all users – employees, customers and other stakeholders
• Reduces energy consumption of stores and increases equipment’s lifespan
• Conducts selective sourcing of materials (natural materials from sustainably managed sources and / or recyclable materials)
• Selects resource-efficient equipment and fixtures (energy efficient, water efficient, etc.)
• Prioritizes local sourcing of materials.

Dufry's biggest impact on the environment when it comes to shop development, is in relation to its energy consumption. Being a public space, airports have to provide well-lit facilities and naturally, this is a substantial part of their energy consumption. The main focus therefore is on substituting traditional lighting for more energy-efficient lighting systems (e.g. LED) on ceiling and furniture displays, and on using A- or A+-rated electronic devices (e.g. air conditioning, refrigerators) in our stores, resulting in a significant drop in the overall energy consumption.

The sustainability approach to store construction however goes beyond the environmental dimension. Besides complying with the provisions of the Dufry Supplier Code of Conduct when selecting local construction partners, we ensure that they also comply with social and environmental regulations, hence, ensuring that the efforts initiated in our design studio also result in truly sustainable environments and spaces for our customers.

Engaging in partnerships at operations level

Dufry engages with its stakeholders to promote environmental protection practices wherever this is possible. We actively participate in sustainability committees with our airport partners, with the aim of identifying areas where we can collectively reduce the environmental footprint of our operations. In an increasing number of our operations, Dufry has a designated sustainability manager in charge of liaising with landlords and other airport stakeholders to drive sustainable practices. Either through innovative technologies, adaptation of passenger flows or rethinking the recycling processes in place, we are contributing to the common goal of making airports a more sustainable space.

Airport Carbon Accreditation

The Airport Carbon Accreditation is an Airport Council International (ACI) Europe certification program that independently assesses and recognizes the efforts of airports to manage and reduce their carbon emissions. It defines six different levels of certification: ‘Mapping’, ‘Reduction’, ‘Optimization’, ‘Neutrality’, ‘Transformation’ and ‘Transition’.

In order to achieve the Optimization accreditation (level 3 of 6) and above, airports need to actively engage with airport stakeholders, as they need to develop a more extensive carbon footprint to include specific Scope 3 emissions and the formulation of a Stakeholder Engagement Plan to promote wider airportbased emission reductions. In many cases, these plans also involve Dufry as the operator of airport stores.

In 2022, according to information from Airport Carbon Accreditation, 76 airports reached the optimization level; 49 airports achieved carbon neutrality; and 49 the superior accreditations (Transformation and Transition). Considering these groups, Dufry operates stores in 59 of these 174 airports, including Dallas Fort Worth, Athens, Helsinki, Stockholm Arlanda, Vancouver, Zurich, Basel, London Heathrow, London Gatwick, Abidjan and Queen Alia Airport in Amman, Jordan.

ACI Europe Climate Task Force In 2019, Dufry joined the ACI Europe Climate Task Force as the representative of the travel retail industry. The mission of the Climate Change Task Force is to follow up on the implementation of ACI Europe’s Climate Resolution from June 2019, which includes the preparation of guidance material for members, to support them in achieving the Net Zero 2050 commitment. Net Zero aims to reduce emissions under the airport´s control down to zero. This is achieved by reducing energy and fuel consumption through the design of new energy-efficient infrastructure, amongst other recommendations. Retailers play an important role in the airport ecosystem and Dufry, as the largest global travel retailer, contributes to the work of the task force with its vision, experience and recommendations in the regular meetings held.

Member of ACI ANARA

ESG workgroup Since 2022, Dufry is also a member of the ACI ANARA (Airport Non-Aeronautical Revenue & Activities) ESG workgroup, working to define ESG recommendations and best practices for the airport community.

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