WESFARMERS SUSTAINABILITY REPORT 2018

Ethical sourcing of our products and services

Kmart acknowledges its responsibility to respect human rights and promote environmental sustainability within its supply chain.

It is committed to ensuring that the workers who produce its products and services are treated with dignity and respect and can live and work in a safe and healthy environment.

During this year, Target and Kmart continued their efforts to strengthen the combined Kmart and Target Ethical Sourcing (ES) Program, which was first established in 2017. Milestones achieved this year included:

  • Strengthening the environmental criteria within the ES audit checklist.
  • Development of a Department Stores Standard Operating Procedure to support the program.
  • Agreement on a uniform ES program scope across Kmart and Target goods for resale.
  • Development of a strengthened ES approach across Kmart and Target for goods and services not for resale.

In addition, the Kmart and Target ES Governance Committee approved a three-year ES program roadmap. The road map identified six strategic areas and associated tasks to be actioned over the next three years. This will transition the program from an audit and compliance approach to a model with more focus on factory capacity building (e.g. training), supplier compliance ownership (e.g. factory ES program) and industry partnerships.

Kmart officially joined the ILO/IFC Better Work Program as a buyer partner last year. The Better Work program aims to make sustainable improvements in working conditions within the garment industry and make the sector more competitive overall. At the end of this year, 45 out of 60 eligible factories had been engaged in the Better Work program. Kmart aims to have transitioned all eligible apparel factories in Bangladesh, Cambodia and Indonesia to the program by the end of next year. Kmart’s ES team will work in partnership with the Better Work program on long-term improvement plans for factories. No critical issues have yet been identified to date.

At the conclusion of this year, Kmart had 866 active factories within its ethical sourcing audit program. The Kmart audit program and ongoing monitoring efforts identified eight critical breaches of the Kmart and Target Ethical Sourcing Code in the past year. Six of these breaches related to factories subcontracting Kmart production to unauthorised subcontractors, and two breaches related to factories offering bribes to a Kmart team member or third-party auditor. All eight factories will be deregistered after last shipment (meaning no further orders can be placed).