WESFARMERS SUSTAINABILITY REPORT 2017

The UN Guiding Principles on Business and Human Rights

Wesfarmers is committed to human rights. The UN Guiding Principles Reporting Framework is the first comprehensive guidance for companies to report on human rights issues in line with their responsibility to respect human rights. This responsibility is set out in the UN Guiding Principles on Business and Human Rights, which constitute the authoritative global standard in this field.

This Reporting Framework developed by Shift and Mazars LLP provides a concise set of questions to which Wesfarmers strives to have answers in order to know and show that it is meeting its responsibility to respect human rights in practice.

IndicatorDisclosureWesfarmers document
Part A: Governance of respect for human rights
Policy commitment
A1 What does the company say publicly about its commitment to respect human rights?

At Wesfarmers we respect human rights. Human rights is an area of growing importance to our employees, shareholders, customers, and the communities where we operate. There is therefore both a business and a moral case for ensuring that human rights are upheld across our operations and supply chain.

Wesfarmers Human Rights and Modern Slavery Statement
A.1.1 How has the public commitment been developed
  1. Stakeholder engagement: We regularly and openly listen to our stakeholders to understand their expectations and how these might change.
  2. Our commitment and support of the following globally recognised declarations, principles and goals:
    • Universal Declaration on Human Rights
    • United Nations Guiding Principles on Business and Human Rights
    • United Nations Global Compact
    • International Labour Organisation Declaration of Fundamental Principles and Rights at Work
    • United Nations Women’s Empowerment Principles
    • United Nations Sustainable Development Goals
  3. Our policies:
    The policies and frameworks that support our day to day operations are designed to ensure all relevant universally recognised human rights are observed and safeguarded. Consistent with the principles in our Code of Conduct and Ethical Sourcing Policy, Wesfarmers is committed to making positive economic, social and environmental contributions to society, consistent with the principles of honesty, integrity, fairness and respect. We prohibit discrimination, forced, trafficked and child labour and are committed to safe and healthy working conditions, including the right to freedom and collective bargaining. Our Group-wide Ethical Sourcing Policy sets the minimum standards expected of our divisions and each division has its own ethical sourcing policy appropriate to its business which it communicates to its suppliers. Our suppliers must agree to remedy any non-compliance with our ethical sourcing policy, and to pursue continuous improvement. 

Wesfarmers Ethical Sourcing Policy

Wesfarmers Human Rights and Modern Slavery Statement

Materiality Process

A.1.2 Whose human rights does the public commitment address?
  1. Our employees: We have policies which embed the importance of respects for the rights of all. Wesfarmers strives to create a work environment which is inclusive of all people regardless of gender, age, race, disability, sexual orientation, cultural background, religion, family responsibilities or other areas of potential difference. 
  2. Workers in our supply chain: Taking a risk based approach, the decision to conduct detailed human rights due diligence on a supplier is based on the goods or services, country of origin and vendor. We assess our key human rights risk to be ethical sourcing and labour issues in our tier one factories supplying own brand products and have reported on this since 2014. 

Wesfarmers Ethical Sourcing Policy

Wesfarmers Human Rights and Modern Slavery Statement

Code of Conduct

A.1.3 How is the public commitment disseminated? Our public commitment to human rights is disseminated through:
  1. Wesfarmers Ethical Sourcing policy
  2. Wesfarmers Human Rights and Modern Slavery Statement
  3. Wesfarmers Sustainability Report

Wesfarmers Ethical Sourcing Policy

Wesfarmers Human Rights and Modern Slavery Statement

Wesfarmers Sustainability Report

Embedding respect for human rights
A2 How does the company demonstrate the importance it attaches to the implementation of its human rights commitment?  Refer A.1.1 Wesfarmers Human Rights and Modern Slavery Statement
A.2.1 How is day-to-day responsibility for human rights performance organized within the company, and why? All sustainability issues at Wesfarmers including human rights are managed at a divisional level by senior management with teams in place to identify and manage sustainability issues relevant for their business including modern slavery and human rights risks. Senior management in our businesses is also responsible for managing human rights issues with their suppliers. Each business has its own process and triggers for identifying human rights risks and impacts and makes use of platforms like the Supplier Ethical Data Exchange (SEDEX) to streamline ethical and human rights compliance and monitoring. Our businesses also conduct audits and make use of risk tools to understand potential human rights violations in our supply chain where appropriate.

Ethical sourcing and human rights issues are overseen through regular reporting to the Wesfarmers Audit and Risk Committee, a committee of the Wesfarmers Board.
Wesfarmers Human Rights and Modern Slavery Statement
A.2.2 What kinds of human rights issues are discussed by senior management and by the Board, and why? We assess our key human rights risk to be ethical sourcing and labour issues in our tier one factories supplying own brand products and have reported on this since 2014. We therefore undertake a lot of work in this area. These issues are overseen through regular reporting to the Wesfarmers Audit and Risk Committee, a committee of the Wesfarmers Board. Wesfarmers Human Rights and Modern Slavery Statement
A.2.3 How are employees and contract workers made aware of the ways in which respect for human rights should inform their decisions and actions?
  1. Code of conduct

    Our Code of Conduct applies to all employees, consultants, contractors and suppliers. We also strive to ensure these principles are respected by our joint-venture partners and non-controlled companies. Any form of recrimination against a person using our whistle blower mechanisms will not be tolerated.

  2. Training and capacity building

    We deliver training on up to date ethical sourcing requirements to relevant team members, third party auditors, suppliers and factories so that they understand ethical sourcing risks and the standards expected by our businesses. During the year, our divisions delivered more than 3,700 hours of training.

Wesfarmers Ethical Sourcing Policy

Wesfarmers Code of Conduct

A.2.4 How does the company make clear in its business relationships the importance it places on respect for human rights? The Wesfarmers businesses conduct human rights due diligence assessments regularly and, at a minimum, annually. While our operations and supply chains are complex our aim is to ensure that human rights are understood and upheld. We recognise that the complexity of our supply chains make it challenging to effectively manage business and sustainability issues. Accordingly, a risk-based approach is adopted to human rights due diligence, with a focus on protecting the human rights of our own employees and, as far as practicable, the rights of those within the supply chain who are providing own brand products to our businesses. To safe-guard against modern slavery across our supply chain, and ensure human rights are upheld, Wesfarmers regularly undertakes the following:
- Detailed due diligence on new suppliers and those considered high risk, based on the goods or services, country of origin and vendor
- Working only with suppliers who agree to operate in line with our Ethical Sourcing Policy
- Ensuring that all suppliers, take all reasonable steps to comply with our minimum standards, which include:
o No forced or bonded labour
o No child labour
o Legal minimum wages and benefits
o Transparent record keeping
o Working hours that comply with applicable local laws
o No bribery
o No discrimination
o No harassment or abuse
o Freedom of association
o Providing a safe and hygienic working environment that is without risk to health, taking into consideration knowledge of the relevant industry and any specific hazards
o Approved sub-contracting and no sub-contracting unless previously approved by Wesfarmers and/or divisions/business units (note this does not apply to providers of proprietary products)
o Environmental compliance

Wesfarmers Ethical Sourcing Policy 

Wesfarmers Human Rights and Modern Slavery Statement

A.2.5 What lessons has the company learned during the reporting period about achieving respect for human rights, and what has changed as a result?

While high risk jurisdictions mainly correlate to our suppliers from emerging markets, we know human rights issues can happen anywhere. We accept that we cannot consider suppliers low risk if they operate in more regulated countries, like Australia. 

The Coles Agronomy Group was launched during the year, with 12 growers volunteering their time to work together with Coles to address industry challenges around varietal development, agronomy, water use and labour practices in the fresh produce industry. 

Coles is also committed to working with key stakeholders to help transition fresh produce and Coles brand suppliers to the Supplier Ethical Data Exchange (SEDEX) platform. Coles continually engaged and assists suppliers with queries regarding Ethical Sourcing and Supplier Requirements and SEDEX through its ethical sourcing helpdesk.

We are also working with industry to provide better frameworks for managing labour providers in primary sectors.

Wesfarmers Human Rights and Modern Slavery Statement

Code of Conduct

 
IndicatorDisclosureWesfarmers Document
B. Defining the focus of reporting
B.1 Statement of salient issues:State the salient human rights issues associated with the company’s activities and business relationships during the reporting period. Refer A2.2 Wesfarmers Sustainability Report
B.2 Determination of salient issues:Describe how the salient human rights issues were determined, including any input from stakeholders.

To identify which issues to address as a business, we undertake a robust materiality process, at a Group level and for each division, each year. Each division gathers feedback from its stakeholders, then prioritises its most material issues, which are then addressed in our Sustainability Report, in accordance with the disclosures required under the Global Reporting Initiative Standards.

At a Group level, we draw on a range of sources to identify our material issues. These sources include internal interviews with external stakeholder touchpoints, traditional and social media reviews, external reputational survey data, AGM questions, institutional and retail investor inquiries, non-governmental organisation interactions, employee feedback, peer reporting and an external stakeholder survey.

Identified issues are then prioritised according to their potential financial or reputational impact on the company, the size and nature of impact on stakeholders and the perceived societal importance of the issue.

Wesfarmers Human Rights and Modern Slavery Statement

Materiality process

B.3 Choice of focal geographies:If reporting on the salient human rights issues focuses on particular geographies, explain how that choice was made. Our businesses have different modern slavery risks depending on various factors, including the level of human rights protection and enforcement in the country where they are operating or sourcing from. We use risk assessment tools to better understand local human rights contexts as well as exposure to related issues.

While high-risk jurisdictions mainly correlate to our suppliers from emerging markets, we know human rights issues can happen anywhere and we accept that we cannot consider suppliers low risk if they operate in more regulated countries, like Australia.

Wesfarmers Human Rights and Modern Slavery Statement

Wesfarmers Sustainability Report

B.4 Additional severe impacts:Identify any severe impacts on human rights that occurred or were still being addressed during the reporting period, but which fall outside of the salient human rights issues, and explain how they have been addressed.  N/A  
 
IndicatorDisclosureWesfarmers Document
C. Management of salient human rights issues
Specific policies
C.1 Does the company have any specific policies that address its salient human rights issues and, if so, what are they? See item A.1.1

Code of Conduct

Ethical Sourcing Policy

C1.1 How does the company make clear the relevance and significance of such policies to those who need to implement them? We deliver training on ethical sourcing requirements to our team members, third party auditors, suppliers and factories to ensure they understand ethical sourcing risks and the standards expected by our divisions. During the year, our divisions delivered more than 3,783 hours of training which is 32 per cent more hours than last year, demonstrating our commitment to improving our teams understanding of this issue.

Our divisions continuously review and make enhancements to ensure our ethical sourcing programs are run effectively and are up to industry standards and the expectations of our customers and stakeholders. The ethical sourcing teams in the divisions participate in forums and seminars and have regular discussions with other stakeholders including retailers, industry associations, non-government organisations and third-party audit firms to understand emerging trends and risks. 

Our cross-business ethical sourcing forum meets quarterly to share best practice and audit program outcomes, and ethical sourcing practices are reported regularly to the Wesfarmers Audit and Risk Committee.

Wesfarmers Sustainability Report 

Wesfarmers Human Rights and Modern Slavery Statement

Stakeholder engagement
C.2 What is the company’s approach to engagement with stakeholders in relation to each salient human rights issue?

We regularly and openly listen to our stakeholders to understand their expectations and how these might change.

At a Group level, Wesfarmers considers the interests of a wide cross-section of stakeholders in a variety of ways, determined by the actual or potential impact of our business on their interests. These stakeholders include media, suppliers, non-government organisations, trade unions, government, shareholders, customers and employees.

We will engage with stakeholders differently and at different times as appropriate for the nature of their concern.

Wesfarmers Sustainability Report: Stakeholder Engagement 

Wesfarmers Human Rights and Modern Slavery Statement

C2.1 How does the company identify which stakeholders to engage with in relation to each salient issue, and when and how to do so?

See C2

Wesfarmers Human Rights and Modern Slavery Statement

Wesfarmers Sustainability Report – Stakeholder Engagement

Wesfarmers whistleblower policy

C.2.2 During the reporting period, which stakeholders has the company engaged with regarding each salient issue, and why? See C2 Wesfarmers Sustainability Report – Stakeholder Engagement
C.2.3 During the reporting period, how have the views of stakeholders influenced the company’s understanding of each salient issue and/or its approach to addressing it? Refer B2. Following our robust materiality process which involves capturing the views of our stakeholders as outlined in B2, all our businesses set their strategy and approach appropriate to their operations. This also includes determining appropriate disclosures.

Wesfarmers Sustainability Report: Stakeholder Engagement 

Wesfarmers Human Rights and Modern Slavery Statement

Assessing impacts
C.3 How does the company identify any changes in the nature of each salient human rights issue over time?  Refer C.1.1

Wesfarmers Sustainability Report 

Wesfarmers Human Rights and Modern Slavery Statement

C3.1 During the reporting period, were there any notable trends or patterns in impacts related to a salient issue and, if so, what were they?  Refer A.2.5  

Wesfarmers Human Rights and Modern Slavery Statement

Code of Conduct

C3.2 During the reporting period, did any severe impacts occur that were related to a salient issue and, if so, what were they?

This year we identified 81 critical breaches across 66 factories in our audit program. During the year, we identified 81 critical breaches across 66 factories in our audit program. During the year the major critical breaches identified included no health and safety policy or injury records, fire extinguishers not functioning or training not provided, no first aid kits, chemicals stored incorrectly, no emergency lighting, inaccurate attendance records, goods obstructing emergency exit path, attempted bribery, forced labour, unauthorised subcontracting and child labour. Where a non-compliance is identified, the factory is required to fix the issue, within an appropriate period of time, depending on the nature of the non-compliance. We were able to remedy 44 of these issues immediately, eight had action plans that were on track at the end of the reporting period and no further supply orders were placed on the remaining 29. 

Where a non-compliance is identified, the supplier is required to fix the issue, within an appropriate period of time, depending on the nature of the non-compliance. Suppliers are ‘conditionally approved’ if non-critical non-compliances have been identified and notice has been given that they must be fixed. If a supplier then addresses a non-compliance, it can move to becoming an ‘approved’ supplier site. In this way, our audit process is contributing to improving conditions for workers by working with supplier site owners to address any issues. If a supplier site is not willing or able to address a critical breach, our business will not continue to buy from that supplier site.

Wesfarmers Sustainability Report - Ethical Sourcing and Human Rights
Integrating findings and taking action
C4 How does the company integrate its findings about each salient human rights issue into its decision-making processes and actions? Refer  A.2.1 Wesfarmers Human Rights and Modern Slavery Statement
C4.1 How are those parts of the company whose decisions and actions can affect the management of salient issues, involved in finding and implementing solutions?  Refer  A.2.1 Wesfarmers Human Rights and Modern Slavery Statement
C4.2 When tensions arise between the prevention or mitigation of impacts related to a salient issue and other business objectives, how are these tensions addressed? We do not expect that tensions would arise between the prevention or mitigation of impacts related to salient issues and other business objectives. Wesfarmers acknowledges the role and responsibility of the business to safeguard human rights through ethical and sustainable business practices across Wesfarmers operations and supply chain. It recognises that human rights is an area of significance to Wesfarmers employees, shareholders, customers, and the communities in which it operates. There is therefore both a business and a moral case for seeking to ensure human rights are upheld across our operations and supply chain. Wesfarmers Human Rights and Modern Slavery Statement
C4.3 During the reporting period, what action has the company taken to prevent or mitigate potential impacts related to each salient issue?  

To mitigate the risk of unethical practices occurring in our supply chains, the relevant Wesfarmers businesses (Coles, Bunnings, Target, Kmart, Officeworks and Industrial and Safety) apply an ethical sourcing audit program to certain suppliers. Suppliers are considered lower risk if they are supplying recognised international brands. While high-risk jurisdictions mainly correlate to our suppliers from emerging markets, we know human rights issues can happen anywhere and we accept that we cannot consider suppliers low risk if they operate in more regulated countries, like Australia.

This year, our audit program covered 5,455 factories or supplier sites used to produce products for resale across our retails businesses.

Factories in the audit program are required to have undertaken an assessment as mandated by our business. They may then be required to undertake further assessments including having a current audit certificate, which means they have been audited by us or another party whose audits we accept. The audits identify a range of non-compliances, from minor non-compliances such as minor gaps in record keeping to critical breaches, such as incidences of forced labour or bribery.

Wesfarmers Human Rights and Modern Slavery Statement
Tracking performance
C5 How does the company know if its efforts to address each salient human rights issue are effective in practice? We measure Wesfarmers businesses’ human rights performance against a number of key performance indicators including:
  1. Coverage of our ethical sourcing audit programs including total factories in audit program and number and nature of critical breaches
  2. Training and capacity building
  3. Effectiveness of grievance mechanisms
  4. Remediation
  5. Stakeholder engagement

Wesfarmers Sustainability Report: Stakeholder Engagement 

Wesfarmers Sustainability Report: Ethical Sourcing

Wesfarmers Human Rights and Modern Slavery Statement

C5.1 What specific examples from the reporting period illustrate whether each salient issue is being managed effectively?
  1. Ethical sourcing audit programs
    To mitigate the risk of unethical practices occurring in our supply chains, we apply an ethical sourcing audit program to higher risk suppliers. Suppliers are considered lower risk if they are providers of recognised international brands. Forced labour indicators, such as restriction of movement, intimidation and threats, retention of identity documents, withholding of wages, debt bondage, abusive working and living conditions and excessive overtime are explored as part of the ethical audit formats approved under our audit program. Total factories in audit program This year, our audit program covered 5,455 supplier sites used to manufacture house-brand products for resale, across our international and local supply chain. Factories in the audit program are required to have a current audit certificate, which means they have been audited by us or another party whose audits we accept.

    Depending on the division’s policy for auditing high risk suppliers, these audits are typically completed before an order is placed with a supplier and if no findings are made, it will be repeated each year. If findings are made, an audit will be repeated three months later to confirm that any findings have been addressed.
    Total number and nature of critical breaches This year we identified 81 critical breaches across 66 factories in our audit program. These concerned issues (or suspected issues) of attempted bribery, forced labour, unauthorised subcontracting, transparency and child labour. We were able to remedy 44 of these issues immediately, eight had action plans that were on track at the end of the reporting period and no further supply orders were placed on the remaining 29.

    Where a non-compliance is identified, the supplier is required to fix the issue, within an appropriate period of time, depending on the nature of the non-compliance. Suppliers are ‘conditionally approved’ if non-critical non-compliances have been identified and notice has been given that they must be fixed. If a supplier then addresses a non-compliance, it can move to becoming an ‘approved’ supplier site. In this way, our audit process is contributing to improving conditions for workers by working with supplier site owners to address any issues. If a supplier site is not willing or able to address a critical breach, our business will not continue to buy from that supplier site.
  2. Training and capacity building
    We keep our buying and sourcing teams up-to-date on our ethical sourcing and human rights commitments and how their actions may impact worker rights. We train relevant employees on how to manage the tension between respect for human rights and other business interests, making employees aware of the impact their actions can have on human rights. For example, we train relevant team members about the implications of making short notice purchasing decisions on potential human rights risks.

    We deliver training on ethical sourcing requirements to relevant team members, third party auditors, suppliers and factories so that they understand ethical sourcing risks and the standards expected by our divisions. During the year, our divisions delivered more than 3,000 hours of training.
  3. Grievance mechanisms
    We place importance on the provision of effective remedy wherever human rights impacts occur through company-based grievance mechanisms. We continue to build the awareness and knowledge of our employees on human rights, encouraging them to speak up, without retribution, about any concerns they may have, including through our grievance channels. We also promote the provision of effective grievance mechanisms by our suppliers.

    Information about our company based grievance mechanisms which are accessible by both our employees and external community and stakeholders may be accessed here.
    We have also established specific grievance mechanisms for our suppliers. For example, Coles has set up the Coles Wages and Conditions Hotline for Farm and Factory Workers. In Australia, employees who work for a Coles supplier can call 1300 532 515 between 8am-8pm, seven days a week to understand more about their conditions of employment or to report unfair labour practices. For workers where English is not a first language, there is an email, wageline@coles.com.au. Workers can provide their telephone number, preferred language and a brief description of their concerns.

    Bunnings buying agents are responsible for building relationships with suppliers and providing grievance channels. This is introduced within their Trading Terms, which includes specific expectations on Modern Slavery.
  4. Engaging with stakeholders
    We regularly and openly listen to our stakeholders to understand their expectations and how these might change. For example, Bunnings engages different stakeholders regularly in person to provide their views and share their expectations.

    We will track and publicly report on progress on an annual basis in our Sustainability Report.
 

Wesfarmers Sustainability Report: Ethical Sourcing

Wesfarmers Human Rights and Modern Slavery Statement

Wesfarmers whistleblower policy

Remediation
C6 How does the company enable effective remedy if people are harmed by its actions or decisions in relation to a salient human rights issue? Refer C3.2 Wesfarmers Sustainability Report - Ethical Sourcing and Human Rights
C6.1 Through what means can the company receive complaints or concerns related to each salient issue? Refer C2.1  

Wesfarmers Human Rights and Modern Slavery Statement

Wesfarmers Sustainability Report – Stakeholder Engagement

Wesfarmers whistleblower policy

C6.2 How does the company know if people feel able and empowered to raise complaints or concerns?  Refer C2.1  

Wesfarmers Human Rights and Modern Slavery Statement

Wesfarmers Sustainability Report – Stakeholder Engagement

Wesfarmers whistleblower policy

C6.3 How does the company process complaints and assess the effectiveness of outcomes?  Refer C5.1 Grievance mechanisms  

Wesfarmers Human Rights and Modern Slavery Statement

Wesfarmers Sustainability Report – Stakeholder Engagement

Wesfarmers whistleblower policy

C6.4 During the reporting period, what were the trends and patterns in complaints or concerns and their outcomes regarding each salient issue, and what lessons has the company learned?  Refer C3.2 Wesfarmers Sustainability Report - Ethical Sourcing and Human Rights
C6.5 During the reporting period, did the company provide or enable remedy for any actual impacts related to a salient issue and, if so, what are typical or significant examples? Refer C3.2

Wesfarmers Sustainability Report - Ethical Sourcing and Human Rights

GRI 102-12