For a company whose own operations account for less than a tenth of its emissions footprint, the question of how to decarbonize becomes, by necessity, one of influence rather than control. Nowhere is that truer than in retail and distribution, where the environmental cost of a product is largely determined before it ever reaches a shelf.

Chalhoub Group, one of the largest distributors of luxury brands across the region, operates squarely within that reality. Roughly 91 percent of its footprint falls under Scope 3, woven into the sourcing, manufacturing, and logistics decisions made by the brands it represents, decisions the Group itself does not make but must still shape.

Closing that gap depends less on direct ownership than on a different kind of leverage, built through data, sustained partnership, and the willingness to keep raising the same questions over time. In practice, that has meant assessing thousands of suppliers against a common set of ESG benchmarks, and using those results to shape an ongoing dialogue rather than a one-time audit. Florence Bulte, Chief Sustainability Officer at Chalhoub Group, talks about how that influence plays out in practice, where its limits lie, and what the road to the Group’s 2032 interim emissions target looks like from here.

THE ROAD TO 2032

The majority of Chalhoub Group’s emissions footprint sits upstream in the value chain, Bulte explains, which means meaningful progress depends on collaboration that extends beyond the company’s own operations. Recognizing this, the Group updated its ESG operating model this year to embed sustainability more deeply across the organization and strengthen the connection between the sustainability team and the wider business. The aim, she says, is to ensure emissions reduction “is integrated into commercial decision-making, partner engagement and operational planning across the Group,” rather than treated as a standalone workstream.

With Scope 3 accounting for around 91 percent of the Group’s footprint, brand engagement has become a key focus. The team has carried out detailed mapping of its emissions data to identify the most significant sources of Scope 3 emissions, along with the brands and categories that contribute most materially, allowing it to prioritize engagement where it can have the greatest impact.

Rather than taking a one-size-fits-all approach, Bulte says the Group works closely with brand partners “to understand their decarbonization journeys better, share data and identify practical opportunities” to cut emissions across the value chain. These conversations span product sourcing, logistics, packaging, renewable energy adoption, and broader climate commitments, depending on each brand’s specific context.

The Group does not directly control much of its upstream footprint, but Bulte argues that influence can still be a powerful lever. By combining robust emissions data, targeted engagement, and long-term partnerships, the team is working to accelerate decarbonization in the areas where impact will be greatest. Reducing Scope 3 emissions, she adds, ultimately requires collective action, with the Group’s role centered on using its position in the value chain to drive transparency, encourage progress, and work alongside partners toward measurable reductions over time.

A formal evaluation mechanism backs that approach: through the Group’s UN Global Compact-aligned Supplier ESG Scorecard, more than 3,000 suppliers have been assessed on key ESG and responsible business practices, with lower-scoring suppliers engaged through follow-up discussions and improvement actions, and supplier forums used to communicate expectations and strengthen performance across the value chain.

As the Group looks beyond supplier engagement and towards its longer-term commitments, attention is increasingly turning to how those efforts translate into measurable progress against its climate targets.

With six years remaining until the 2032 interim target, the Group is still in the midst of a gap assessment, work that Bulte frames not as a question of intent but of precision. The exercise, she clarifies, is “not about determining whether we will act,” but about ensuring the Group has the most accurate pathway to its SBTi-aligned targets across a diverse retail portfolio.

With that groundwork underway, the focus is shifting from target-setting into operational execution, translating group-level ambition into business-unit roadmaps with clear accountability for the emissions drivers each business can influence, whether that’s energy consumption, logistics, refrigeration, store operations, procurement, or supplier engagement.

In this framing, carbon is no longer treated as a separate sustainability metric. Instead, emissions considerations are increasingly built into business planning, capital allocation, and operational decision-making, to improve carbon efficiency alongside growth. When evaluating new opportunities, the Group weighs commercial value against emissions impact. Where a project is likely to increase emissions, it considers how to avoid, reduce, or mitigate those emissions through design choices, technology, renewable energy, supply chain interventions, or operational efficiencies.

That principle has already taken concrete form. All of Chalhoub’s own brands have been onboarded to comply with an Eco-Design Checklist, embedding energy, material, waste, and lighting requirements into new store developments and renovations. ESG has also been integrated into due diligence for all new investments, including sustainability-related data disclosure and GHG reporting requirements. At the same time, a Group-wide Renewable Energy Certificate strategy allocates costs across business units to accelerate renewable energy adoption and shared accountability for decarbonization. Together, Bulte says, these initiatives help ensure sustainability considerations are embedded in how the Group designs, invests, and grows.

The objective, she stresses, is not to choose between growth and decarbonization, but “to decouple emissions growth from business growth” so that expansion stays aligned with the Group’s long-term climate commitments. With six years remaining until the interim target, Bulte sees this as the critical window to embed those mechanisms across the organization, so that emissions performance becomes a core business discipline rather than a parallel sustainability exercise.

That ambition also raises a broader question about the kind of targets businesses ultimately need to pursue. Chalhoub Group’s 13 percent Scope 3 reduction target is, by design, an intensity metric intended to drive improvements in the value chain’s carbon efficiency as revenue, product volumes, and market presence evolve. But Bulte is direct about where the conversation eventually leads: “We fully recognize that the long-term climate challenge is ultimately about reducing absolute emissions.” That recognition is driving a detailed assessment of emissions pathways and reduction levers across the business and supply chain, as the Group works out what an absolute target framework would look like in practice.

For Bulte, growth and decarbonization are not in conflict. The question is how growth happens. More efficient operations, increased use of renewable energy, lower-carbon logistics, responsible sourcing, and deeper engagement with brand partners and suppliers, she says, determine whether expansion adds to the emissions burden. The recent addition of LATAM to the Group’s direct operational scope is framed as a test of that logic: rather than a new source of emissions risk, it’s an opportunity to apply the efficiency measures and optimization approaches already implemented across existing markets, enabling more sustainable growth with lower resource intensity.

That philosophy is also reflected in the Group’s own operations. Scope 1 reductions remain centered on fleet optimization and electrification. The share of electric vehicles across the Group’s B2B and B2C fleet rose from a low base to 12 percent in 2025, with a target of 20 percent by the end of 2026. Scope 2 efforts focus on energy efficiency and the adoption of renewable energy. Thirty percent of the energy consumed across four UAE buildings now comes from solar power. In contrast, investments in building management systems, energy optimization measures, and LED lighting conversions continue to improve performance across operations in eight countries in the region.

As for whether an absolute target is on the horizon, Bulte stops short of committing to a date. As transition planning matures and data quality improves, she says, the Group will continue to evaluate the most appropriate target framework, one that remains aligned with both business strategy and climate science.

NATURE AND ACCOUNTABILITY

As luxury faces growing scrutiny over its reliance on nature-derived materials, from leather and mined metals to rare botanicals, Bulte acknowledges that Chalhoub Group does not directly control the sourcing decisions of many of the brands it represents. “As a retail and distribution partner, we do not directly determine sourcing decisions for many of the brands we represent,” she says.

However, she argues that influence within a value chain extends beyond contractual control. “Our role gives us a platform to engage with brand partners, share expectations, support industry best practices, and encourage greater transparency around sourcing and biodiversity impacts.”

Bulte notes that sustainability and responsible sourcing are increasingly business priorities across the luxury sector, driven by regulation, investor expectations, consumer demand, and the industry’s reliance on healthy ecosystems and resilient supply chains. Biodiversity has consequently become a key focus within Chalhoub’s Planet Pillar. In 2025, the group engaged expert ecologists to conduct its first biodiversity impact assessment, establishing a baseline of its most significant nature-related impacts and dependencies across the value chain. It has also begun strengthening material traceability and verification mechanisms through certifications and supply chain data collection.

That process has involved working with brand partners at different stages of maturity, offering insights into their nature-related practices. Brands such as L’Occitane have helped establish benchmarks for biodiversity management and traceability that could shape future KPIs, guidance, and engagement strategies across the wider portfolio. Building on these learnings, Chalhoub is developing a biodiversity scoring framework to improve visibility across its brands, identify priority areas, and enable targeted, category-specific action plans.

“Our approach is therefore focused on collaboration and engagement,” says Bulte. “We work with partners to improve visibility into supply chains, promote responsible sourcing practices, and support initiatives that strengthen environmental stewardship across the value chain.” While no single company can transform complex global supply chains alone, she adds that “meaningful progress comes from aligning expectations and working collectively with brands, suppliers, and industry stakeholders.”

If collaboration is one side of the equation, governance is the mechanism that determines whether sustainability commitments translate into action. As companies increasingly tie executive pay to ESG outcomes, questions remain over whether these mechanisms have real consequences or simply signal intent. Bulte says Chalhoub Group’s Executive Committee has ESG-related KPIs embedded within its annual objectives, and that these are linked to both performance evaluations and incentive outcomes.

“This helps ensure that sustainability priorities are owned by business leaders across the organization and are integrated into day-to-day decision-making, rather than being confined to a dedicated sustainability function,” she says.

For the past three consecutive years, targets related to energy and fuel reduction, women in leadership, and nationalization have been incorporated into the Group scorecard and reviewed at the EXCOM level alongside HR and commercial performance.

According to Bulte, this approach keeps sustainability high on the leadership agenda while enabling senior management to mobilize resources, address barriers, and drive progress towards strategic goals.

“This is not about treating sustainability as a standalone metric,” she says. “It is about recognizing that long-term business performance increasingly depends on how effectively organizations manage environmental and social risks and opportunities.” By linking ESG objectives to executive performance, the group aims to create “a clear line of accountability between our commitments and their execution.”

Bulte says evidence of this can already be seen in the increased integration of sustainability considerations into strategic planning, operational priorities, investment decisions, and cross-functional collaboration. While incentives remain an important governance tool, she argues that “the real measure of success is whether sustainability is influencing how decisions are made across the business.” That, she says, is the culture of accountability Chalhoub Group continues to strengthen.

BIODIVERSITY BY DESIGN

Scaling circularity across more than 950 stores and eight markets presents a challenge beyond simply replicating a successful pilot. The question, Bulte says, is whether initiatives can expand without merely shifting the waste burden elsewhere in the value chain. “The real test of any circularity initiative is not performance in a single market, but whether it can be replicated and scaled while maintaining environmental integrity,” she says. For Chalhoub Group, the 90% waste diversion rate achieved through its RESOLVE program in the UAE is “an important proof point, but it is not the end goal.”

As the model expands across the group’s network, the focus is not solely on keeping materials out of landfill but on rethinking the entire lifecycle of retail display materials. “It is about redesigning how retail display materials are sourced, used, recovered, and reintegrated into new applications,” says Bulte, adding that “a circular solution only works if there is visibility and accountability across the entire value chain.”

To achieve that, the group places significant emphasis on traceability, partner selection, and material recovery pathways, continuously assessing where materials end up after collection and prioritizing reuse and recycling solutions that deliver genuine environmental value rather than transferring impacts elsewhere.

For Bulte, that distinction is critical. True circularity requires a fundamental redesign of systems so materials remain in use for as long as possible, whether through reuse, resale, refurbishment, or recycling into new raw materials. RESOLVE, she says, was designed not simply to manage waste but to transform the lifecycle of visual merchandising materials and furniture.

By rethinking how assets are designed, sourced, moved, reused, and recovered, the program has helped embed circularity into business decision-making. In its first year alone, RESOLVE avoided 37 tCO₂e, equivalent to the emissions from approximately 86 barrels of oil, highlighting the environmental value of keeping materials in circulation for longer.

Translating that model across multiple markets inevitably requires adapting to different infrastructure, regulatory environments, and recycling capabilities. Even so, Bulte says the underlying principle remains unchanged: keeping materials in circulation for as long as possible and reducing reliance on virgin resources.

“We see RESOLVE not as a standalone project, but as a platform for embedding circularity into retail operations at scale,” she says. “The objective is to build systems that reduce waste generation in the first place, increase material recovery, and create measurable outcomes that can be replicated across our footprint.”