Ethical sourcing and human rights audit programs
To mitigate the risk of unethical practices occurring in our supply chains, the Wesfarmers businesses procuring goods for resale apply a human rights and ethical sourcing audit program to certain suppliers. Suppliers are considered lower risk if they are supplying recognised international brands.
This year, our audit program covered 4,003 factories or supplier sites in Australia and overseas used to produce products for resale across our retail 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.
More than 4,000 factories in the audit program
Factories are ‘conditionally approved’ if non-critical non-compliances have been identified and notice has been given that they must be fixed, or if it is a recently on-boarded factory that has not yet been audited. If a factory then addresses a non-compliance, it can move to becoming an ‘approved’ factory. If critical breaches are identified, they must be addressed immediately. If they are addressed satisfactorily, a factory can then become approved. In this way, our audit process is contributing to improving conditions for workers by working with factory owners to address any issues. If a factory is not willing or able to address a critical breach, our business will cancel its order and not continue to buy from that factory.
At the end of this reporting period, there were 1,849 approved factories in our audit program. A further 1,815 factories were conditionally approved and 257 were due to be re-audited.
During the year, we identified 114 critical breaches across 82 factories in our audit program. The major critical breaches identified included excessive overtime, transparency, safety, unpaid wages and unauthorised subcontracting. 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 43 of these issues immediately, 50 had action plans that were on-track at the end of the reporting period, one was exited immediately and no further supply orders were placed at the remaining 20.
Our businesses regularly engage with workers in tier one factories in our supply chain through factory visits (either announced and unannounced), our audit program and our grievance mechanisms. Through these engagements, we seek feedback on how well the policies and procedures outlined in our Modern Slavery Statement work in practice.