WESFARMERS SUSTAINABILITY REPORT 2018

Increasing supply chain transparency

Global supply chains are inherently complex, diverse and dynamic. During the year we continued to focus on supply chain transparency as the key to ensuring modern slavery is not occurring in our supply chains. Our due diligence process has revealed unfair working conditions is a risk in supply chains all over the world including OECD countries such as Australia.

During the year Target, Kmart and Coles maintained their commitment to supply chain transparency by continuing to publish the details of the factories that directly produce their own brand products.

Kmart has published details of all factories that directly produce Kmart apparel and general merchandise on its website.

Coles has published details of the factories that supply its Mix clothing range on its website

Target has published details of all factories that directly produce Target apparel and general merchandise on its website.

Coles, Bunnings, Officeworks and Wesfarmers Industrial and Safety use Sedex (Supplier Ethical Data Exchange) to streamline ethical compliance and monitoring, and provide efficiencies to their suppliers. Sedex facilitates risk assessments and information-sharing across its platform for social compliance audits. This maintains visibility and drives consistency across supply chains.

Kmart and Target have a three-year ethical sourcing (ES) program roadmap. The road map identifies six strategic areas and associated tasks to be actioned over the next three years. This is transitioning Kmart and Target's program from an audit and compliance approach to a model with more focus on factory capacity building, supplier compliance ownership and industry partnerships.

During the year our businesses undertook a number of initiatives to further their ethical sourcing programs:

  • Bunnings direct supplier base increased by 4.3 per cent and 100 per cent were screened through its Ethical Sourcing Program. Bunnings enhanced its Code of Conduct by expanding from product suppliers to also include service providers. The business also conducted a review into green life supplier labour contract hire, cleaning services, and commenced work on raw materials such as stone.
  • Coles developed supplier capabilities to better manage risk within Australian agricultural and meat processing supply chains. Coles also worked with Australian suppliers to support their understanding of the Federal and New South Wales governments' modern slavery bills, and the Queensland, South Australian and Victorian state governments' labour hire licensing legislation.
  • This year Target joined Kmart to become a buyer partner of the International Labour Organisation/International Finance Corporation Better Work Program. 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 of Kmart's 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. Meanwhile,Target commenced transition of its eligible factories to Better Work in June 2018 and aims to have transitioned all eligible apparel factories in Bangladesh to the program by the end of next year. The focus will then shift to transitioning Target factories in Cambodia, Indonesia and Vietnam. Kmart and Target's ethical sourcing teams 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.
  • Officeworks developed a three-fold approach to ensure that suppliers are complying with its Ethical Sourcing Policy. Firstly, Officeworks seeks to understand what policies and mechanisms suppliers have in place to ensure that they are adequately monitoring and addressing human rights within their own supply chain, and that it aligns to the Officeworks Ethical Sourcing Policy. Secondly, if these policies don’t meet the same standards and requirements, suppliers are required to register with Sedex, and complete the self-assessment questionnaire. This gives Officeworks an insight into the working conditions at the site where the goods are produced. Finally, Officeworks may request third party audits that provide an independent detailed assessment of the conditions in the factory. Upon review of these audits, Officeworks seeks to work with its suppliers and factories to address any issues through a remediation process, which involves a follow-up audit to ensure that corrective actions have been implemented.
  • Wesfarmers Industrial and Safety established a full-time team to execute its Ethical Sourcing (ES) strategy, which conducted monthly meetings with the ES Governance group to ensure that the strategy met divisional requirements and 271 team members participated in ES training activities.