Read the case study below and answer ALL the questions.

South African Retailer Shoprite Takes Out Biggest Sustainability Loan & First Green Loan In Retail Sector

Remeredzai Joseph Kuhudzai

September $20,2022$

South Africa$$s Shoprite Group is expanding its key environmental programs as part of its sustainability strategy. One the

major components of this strategy is the accelerated rollout of solar PV at its supermarkets and distribution centers.

Shoprite operates in $11$ African countries. The Group has more than $2,900$ stores across Africa. Some of the Shoprite

Group$$s famous customer facing brands include Checkers, Shoprite, USave, OK$,$ and House & Home. The total installed

capacity from these onsite solar plants so far now stands at $26\mathrm{.}6$ MW$!$ This is enough to meet $2\mathrm{.}8\%$ of the group$$s

electricity needs. Shoprite has a target of increasing this to meet $5\%$ of its electricity needs by the end of this financial

year.

Shoprite plans to meet all its electricity requirements from renewables by $2050$ through a combination of onsite solar,

offsite solar, offsite wind, and other renewables. The Shoprite Group is also growing its solar$-$assisted fleet of trailers for

its trucks. The Group now has $903$ trucks and $1,360$ trailers. Of these, $1041$ trailers now have solar panels installed on

the roof to support refrigeration loads. The solar panels are also used to power tail lifts for the rest of the non$-$refrigerated

fleet. The solar panels on its refrigerated trailers allow operators to switch off the diesel engine when the trucks are

stationary. The solar panels on the trailers have helped to reduce the company$$s carbon footprint and $3,290$ tCO$2$ have

been saved from avoided diesel use by the solar$-$powered fleet.

To further accelerate its sustainability program, the Shoprite Group has finalized sustainability$-$linked loans worth R$3\mathrm{.}5$

billion $($$$200$ million$)$ for investments to expand its key environmental projects. The loans include a R$2$ billion $($$$113\mathrm{.}7$

million$)$ loan from Standard Bank, which is the bank$$s biggest in the South African retail sector to date, an R$800$ million

$($$$46\mathrm{.}5$ million$)$ sustainability$-$linked loan and a R$700$ million $($$$39\mathrm{.}8$ million$)$ green loan, a first in the retail sector from RMB

for investment in environmental projects. A further sustainability$-$linked loan is in the pipeline.

The Shoprite Group will use the loans to boost investment in renewable energy and the increase of energy from

renewable sources as a percentage of total electricity consumption. The loans will also be used to accelerate the

recycling of cardboard and plastic as well as increasing the use of sustainable packaging including reusable, recyclable,

and compostable packaging. Energy efficiency initiatives including LED lighting, plus a monitoring system for refrigeration

to reduce energy consumption and waste will also be included.

These investments will enable the Group to expand on the substantial investments it has already made. In the previous

financial year, the Shoprite Group:

$$ Reduced carbon emission intensity by $3\mathrm{.}3\%$ and water use intensity by $7\mathrm{.}5\%$

$$ Increased the installed capacity of its solar photovoltaic $($PV$)$ systems by $82\%$

$$ Reduced electricity consumption by $150$ million kWh through its LED lamp replacement project since inception

$$ Recycled $46102$tons of cardboard from stores and distribution centres, and diverted $10241$ tons of plastic waste

from landfills

$$ Paid R$2\mathrm{.}2$ million in rebates to customers for reusing their Planet bags since inception

Sanjeev Raghubir, the Group$$s Sustainability Manager, said $$The loans enable us to continue on the road to reduce our

environmental footprint by using more renewable energy and sustainable packaging, and recycling more waste. These

environmental programmes are key in our fight against climate change, and we are able to increase the pace and

intensity of our actions with these loans.$$

According to Raghubir, the Group$$s record to date has provided funders with demonstrable evidence of the nature and

scale of its sustainability projects and ambitions and enabled the retailer to access a preferential cost of funding.

$$The loans allow us to continue to make a sustainable, positive environmental impact and improve our operational

efficiencies, which in turn result in additional ongoing savings that we can pass on to our customers.$$ The Shoprite Group

is South Africa$$s largest retailer by market capitalization, sales, profit, number of employees and customers.

Question $1(25$ Marks$)$

Based on the above article, determine how the Shoprite Group evaluated the market potential for their target

market.

Question $2(30$ Marks$)$

$2\mathrm{.}1$ Demonstrate with an example from the article, what is meant by sustainable competitive advantage. $(15$ marks$\}$

$2\mathrm{.}2$ Based on the above article, has Shoprite adopted a Corporate Level strategy? Substantiate your answer

using an example

$(15$ marks$\}$

Question $3(25$ Marks$)$

$$South Africa$$s Shoprite Group is expanding its key environment