X5 Retail : Group Sustainability Report

Contents

3 Chairman's statement

4 X5 President and X5 CEO's statement

01 About this Report

7 Scope of the Report

02 About the Company

1. Company profile
2. Geography of operations

12 2023 ESG highlights

03 Sustainable development and the Company's business

16 Sustainability strategy

19 Diagram of X5 Group's business model

21 Sustainability management

1. Risk management system
2. Innovations
3. Respecting human rights

04 Responsible business conduct

28 Compliance and business ethics

1. Privacy and data protection
2. Responsible supply chain

35 Incorporating customer feedback

05 Product quality and healthy lifestyle

37 Product quality and safety assurance

45 Promoting healthy lifestyles

06 The planet

1. Our approach and 2023 highlights
2. Reduced climate impact and energy efficiency

52 Waste management and sustainable packaging

1. Responsible water consumption
2. Caring for plants and animals

07 Employees

1. Our approach and 2023 highlights
2. Efficiency improvements

61 Employer brand, candidate recruitment, and onboarding

1. Inclusion and equal opportunity
2. Motivation and fair remuneration

1. Training and development
2. Engagement and feedback

1. Occupational health and safety
2. Occupational risk management

08 Care for the community

75 Our approach and 2023 highlights

77 Charitable programmes

80 Corporate volunteering

09 Appendices

1. Determination of material topics
2. Key risks
3. Stakeholder engagement

86 TCFD compliance statement and index

1. EU Taxonomy for sustainable activities
2. 2023 key sustainability highlights

111 GRI content index

118 SASB content index

1. Independent practitioner's assurance report
2. Contacts

Dear stakeholders,

This is our fourth annual report detailing progress on our sustainable development strategy, which demonstrates X5 Group's commitment to its environmental, social, and governance ambitions, and transparency in reporting hereof.

First of all I would like to express my deep gratitude for the unwavering support of our employees, customers, investors, and partners, without whom we would not have achieved the significant success in our sustainability projects and initiatives. We plan to continue following the principles of responsible business conduct and setting ourselves ambitious sustainability targets.

Sustainability principles and responsible business conduct are embedded into X5's business model and strategy. This enables the Company to work towards sustainable long- term value creation for its stakeholders, and make a meaningful contribution to the UN Sustainable Development Goals and national development goals of the Russian Federation.

During 2023, X5 Group paid particular attention to developing its social programmes and bolstering community well-being: priority areas included programmes such as food aid, promotion of a healthy lifestyle and proper nutrition as well as fostering inclusion through accessible stores and services. We are proud that X5 Group is actively involved in addressing global challenges, with a particular focus on the effects of climate change and the contribution it can make as a business to reducing environmental impact. As part hereof, the Company actively promotes responsible practices among its suppliers and instils eco-friendly habits among its customers, as such strengthening its social impact and building a safe and sustainable living environment.

Despite new challenges, sustainability will remain a core pillar of X5's strategy over the longer term. We continue to be guided by the principles of transparency across all our ESG activities, as we strongly believe that this is key to building trust with our stakeholders, including employees, customers, investors, and partners. It goes without saying that we highly value your feedback and opinions, and remain open to dialogue under all circumstances.

Dear stakeholders,

We are pleased to present our fourth annual sustainability report, in which we detail the Company's sustainability performance and progress towards our strategic ESG targets in 2023.

We at X5 are committed to constantly improving our internal processes and implementing new projects to achieve and exceed the goals of our sustainable development strategy while setting ourselves new ambitious targets. In 2023, X5 Group's Supervisory Board approved an updated Sustainable Development Strategy setting out sustainability targets to 2025.

Our Company adheres to responsible business practices and contributes to the development of local communities through a variety of charitable and social projects. In 2023, we increased our support for those in need by an order of magnitude, providing free food aid to more than 469,000 people through our food-sharing initiative and our Basket of Kindness charity project. We recognize that X5 has an important role to play not only in providing quality products and services to our customers but also in supporting socially vulnerable groups by unlocking access to a wider range of products.

We continue to support pensioners, people with special needs, and families with children in difficult circumstances. As a prime example, we distributed more than 936 tonnes of food and non-food items to such groups during 2023. We have also made further progress on our Local Community Centres project, expanding its geography to transform Pyaterochka stores into places where people can unite together. Over 1,300 Pyaterochka stores joined the project in 2023, with more than 5,000 events held in total, attended by over 7 mln people.

Reducing our environmental impact and promoting environmental conservation remain at the very top of our sustainable development strategy. In addition to updating its environmental targets to reflect 2025 ambitions, the Company also updated its sustainability strategy with new goals. This includes reducing other indirect (Scope 3) GHG emissions intensity, improving water efficiency, and reducing pressure on water resources. In 2023, we worked to reduce greenhouse gas emissions intensity, prevent food waste, and step up the rollout of energy-efficient solutions across our retail chain stores. We have been able to reduce our climate impact by ramping up the use of renewable and low-carbon energy as well as by switching to natural refrigerants and optimising logistics.

We continue to focus on employee well-being by boosting employee engagement, providing development opportunities, and instilling safe working policies. We also pay special attention to promoting inclusion in our stores, making them even more convenient for customers and employees with disabilities.

Our Company continues to maintain all available ESG ratings and remains committed to sustainability transparency. In turn, rating agencies have repeatedly noted our robust social investments, availability of policies, procedures, and measurable performance metrics to manage key industry-specific ESG risks as well as our strong compliance with best practice in corporate governance. We set ambitious targets, closely track their progress, and regularly report our achievements across all strategic areas within the sustainability agenda. We will also incorporate customer feedback on our initiatives into the Company's framework for assessing performance against its targets.

Igor Shekhterman

X5 GROUP CHIEF EXECUTIVE OFFICER

Ekaterina Lobacheva

X5 GROUP PRESIDENT

ABOUT THIS REPORT

This Sustainability Report

(the "Report") details the economic, environmental, and social performance of X5 Group ("X5", the "Company") for the period between 1 January and 31 December 2023, as well as plans for the medium term.

2-22-42-14

The Report was prepared based on the following standards and recommendations:

Reporting principles

INTERNATIONAL

Global Reporting Initiative (GRI) Standards

Sustainability Accounting Standards Board (SASB)

RUSSIAN

Recommendations of the Bank of Russia for public joint stock companies to disclose non-financial information related to their activities

Task Force on Climate-related Financial Disclosures (TCFD)

EU Taxonomy

Recommendations of the Russian Ministry of Economic Development to prepare sustainability reporting

Reference Performance Indicators. Recommendations for Corporate Non- financial Reporting Use by RSPP

The information presented in the Report is internally audited, approved by the Company's senior management, and verified by an independent external auditor in accordance with accepted international standards

The Report has been approved by the Company's management and verified by TSATR - Audit Services Limited Liability Company. The approach to determining the Report's material topics is available in the appendix Determination of Material Topics.

CENTRAL FD

8,534

+10.5% year-on-year

NORTHWESTERN FD

2,316

+11.0% year-on-year

VOLGA FD

5,936

+12.4% year-on-year

URAL FD

2,202

+16.4% year-on-year

SOUTHERN FD

2,919

+31.8% year-on-year

NORTH CAUCASUS FD

491

+13.1% year-on-year

SIBERIAN FD

1,982

+16.7% year-on-year

FAR EASTERN FD

154

+165.5% year-on-year

TOTAL

24,534

+14.8% year-on-year

1 A special warehouse format for fulfilling online orders.

Developing e-commerce is X5's key strategic priority. Thanks to its reliable IT infrastructure, X5 continues to successfully scale up digital business services

10