Closer every day. Corporate Responsibility Report 2011 - Woolworths Group
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Woolworths Limited Corporate Responsibility Report 2011 CONTENTS Key Indicators – 2011 2 Statement from the CEO and CEO Designate 4 Understanding our Stakeholders and What is Important to Them 6 Issues of Public Interest 8 Our Business 10 Responsible Retailing 12 Our Community 20 Our Environment 24 Our People 34 Our Approach to Corporate Responsibility and Sustainability 49 Independent Assurance Statement 51 United Nations Global Compact 54 Global Reporting Initiative 55 Store and Trading Area Analysis 57 Glossary 58 Company Directory 59 www.woolworthslimited.com.au ABN 88 000 014 675
Scope of Awards and Report Recognition Unless otherwise stated, —— Woolworths Supermarkets —— Association of Chartered —— Woolworths and CHEP won this report covers all of our is Australia’s most valuable Certified Accountants the 2011 NZ Environmental operations in Australia and brand, valued at $7.59 billion (ACCA) Australia and and Packaging Award for New Zealand for the 2011 by Brand Finance in New Zealand Sustainability Supply Chain Influence on financial year (1 July 2010 accordance with the Reporting Awards 2010: Best Packaging Systems with our to 30 June 2011). Data for International Organization for Report in the Retail Sector. reusable produce crates. Croma (our electronics joint Standardizations’ (ISO) —— Carbon Disclosure Project venture with Tata in India International Standard on (CDP) Carbon Disclosure which provides wholesale Brand Valuation. Leadership Index 2010: one services to 64 stores) is only —— 2010 Manukau Business of seven Australian companies, included in the Our Business Excellence Awards: the and the only Australian and Our People sections Accident Compensation retailer, to be listed. (excluding Safety). Data Corporation (ACC) Workplace —— Woolworths Limited is listed for global sourcing offices Safety Award was won by in the Dow Jones Sustainability in Hong Kong and China is Progressive Enterprises Index in both the World and only included in the Our People Limited (NZ) for leadership Asia/Pacific Indexes. We’re section (excluding Safety). demonstrated by senior also ranked as a Sustainability With only 25% ownership management, their passion Leader in the Food and Drug and no operational control to make ‘Progressive’ a safer Retailers Sector. of Gage Road Brewery, there place for our team, customers is no information reported and contractors, as well as the for this business. speed at which the business had turned around its performance and culture. 1
Woolworths Limited Corporate Responsibility Report 2011 Key Indicators – 2011 RECONCILIATION ACTION PLAN EBIT Woolworths launched its Reconciliation Action Plan in June 2011 to advance $3,276.4m opportunities for Indigenous Australians. CARBON INTENSITY (T CO2 -E/$ MILLION EBIT) 2011 881 2010 956 Opportunities Relationships 2009 981 Reporting Respect Energy Intensity (MJ/m2) 3,178 3,092 3,006 The plan is a practical pathway towards greater inclusiveness in the Company, leading towards our long-term goal to have a workforce that represents Australia’s diverse population. 2009 2010 2011 The four key pillars in the plan are relationships, respect, opportunities and reporting. Note: Supermarkets Australia, Stationary Energy 2
LOST TIME INJURY FREQUENCY RATE (LTIFR) EMPLOYEES RECEIVING PAID MATERNITY LEAVE 1,545 1,436 15.77 12.08 1,080 8.51 2009 2010 2011 2009 2010 2011 COMMUNITY INVESTMENT ($ MILLION) 2011 62.3 2010 36.3 2009 27.5 $60m WATER SAVINGS (ML) DEVELOPING TALENT 180 318 invested in learning and 342 2009 2010 development training. 2011 3
Woolworths Limited Corporate Responsibility Report 2011 Statement from the CEO and CEO Designate “I’m enormously proud of what we have achieved at Woolworths Limited and firmly believe we have the team in place to achieve even greater things in the future.” In 2011, Woolworths continued represented and paving the way for areas we know we can improve 400,000 direct shareholders, to take a strong lead in corporate other retailers to follow and adopt on but we work hard to strike a we offer long-term, sustainable responsibility and made excellent more sustainable working practices. balance and to operate in a fair, value creation (increasing progress towards the achievement Woolworths Limited is a diverse open and conscientious manner dividends by 6.1% this year). of our sustainability targets. and complex organisation that – ever mindful of the broader And as a community neighbour Both domestically and globally, touches the lives of literally resonance of our decisions. we do our best to be a shoulder Woolworths is quietly earning millions of people either as Woolworths is a company I am to lean on in a crisis and make respect and recognition for the customers, investors, suppliers, very proud of and one that I know a positive difference every day integrity and depth of its corporate employees or members of the has an overall positive impact on (contributing $62.3 million responsibility programs, and communities in which we operate. society. As an employer of more to the community including through our close association with We do our utmost to provide the than 190,000 people, we strive to $21.5 million in emergency relief, global organisations such as The very best choice, value, quality provide security and opportunity including the Queensland floods Consumer Goods Forum and the and service possible and to deliver for them to realise their potential and Christchurch earthquake). United Nations Global Compact these as responsibly as we can. (spending $60 million this year There are many achievements Network, we are at the forefront Of course, as a highly visible, on training and development). in this year’s Corporate of debate and central to the diverse and consumer-facing As a customer of many thousands Responsibility Report. positive change taking place in business, we fully accept and of suppliers, we aim to be Of particular note are the launch critical areas such as ethical welcome scrutiny. Undoubtedly, collaborative, fair and focused of our Reconciliation Action Plan, sourcing. Working collaboratively the scale and breadth of our on mutual benefit (further a 30% reduction in Lost Time with the world’s best retail business activities attract criticism advancing our Fresh Food Futures Injury Frequency, the launch of organisation, Woolworths is from time to time. We fully program during the year to an industry leading sustainable actively ensuring that Australian acknowledge that we don’t always improve agricultural sustainability). fish and seafood policy and a 10.9% and New Zealand interests are get it right and there are many As an investment for more than reduction in carbon emissions. 4
My congratulations go to all our My commitment to Woolworths’ For example, since 2007 we have stakeholders, we will continue employees who have helped drive Corporate Responsibility agenda invested $55.7 million in energy to drive positive change for our these important changes and is integral to my vision for the efficiency projects right across our business, our community and demonstrate Woolworths’ long-term success of this company. business – an investment that will our society. leadership. I have been a staunch advocate on realise approximately $93 million Embedding sustainable principles key areas of responsible retailing, in savings by 2015. On every remains a key focus for our particularly in relation to measure, our efforts are certainly organisation and, as I hand the responsible service of alcohol, paying dividends. CEO baton onto Grant O’Brien, during my time leading our liquor I am very pleased our Corporate I am extremely confident he will business and I know first hand how Responsibility Report has once important it is to use your size and Grant O’Brien uphold those principles and lead again achieved an A+ rating from scale to make a positive difference Incoming CEO the next generation of Woolworths the Global Reporting Initiative, towards a more sustainable and to constantly raise the bar. reflecting our ongoing commitment retail future. I am also aware of the fact that to transparent and accountable good corporate responsibility reporting practices. equals good business management, Woolworths has achieved a great with a very real return on our deal but there are many more investment. opportunities open to us. By listening closely to our Michael Luscombe customers and working Outgoing CEO collaboratively with our Woolworths is a signatory of the United Nations Global Compact and a member of the Global Compact Network Australia. 5
Woolworths Limited Corporate Responsibility Report 2011 Understanding our Stakeholders and What is Important to Them The following stakeholders are critical to our business and influence our decision making. Stakeholder group Our engagement in 2011 What they told us they expect Customers We monitor consumer sentiment and issues impacting on shopping behaviour Value for money, choice, quality, through continuous qualitative research with focus groups and reviews of issues good service and healthy options. online, in social media and through our Customer Contact Centre. New products and brands are tested through concept clinics and workshops; we explore consumer reaction through online communities and quantitative research with our online panel of shoppers. Supermarket specific focus studies are undertaken where certain stores are placed on the customer feedback program and the Store Manager reviews ratings and verbatim feedback and follows up directly with all customers who require feedback. The Customer Contact Centre receives feedback via phone, email, online and The most common queries or in-store. Our systems monitor and track customer feedback and our responses feedback to our Contact Centre to feedback. The goal is to respond to all our customers within 24 hours. are regarding products, general queries and customer service. Investors Quarterly investor briefings, Annual General Meeting (AGM) open to all shareholders, Competitive returns on their investor call centre service, direct contact in writing with our CEO, Chairman and investment. Company Secretary and an email contact page on the Investor Centre on the Received 318 written submissions website. from shareholders for the November 2010 AGM, with the most frequently raised topics being executive remuneration, gaming, shareholder incentives and Australian products. Submitted reports to the Carbon Disclosure Project on Carbon Disclosure and Disclosure on risk identification Water Disclosure. and mitigation in areas of climate change and water. Employees Focused on developing, building and diversifying the capability of our people Professional development and for current and future opportunities. Invested over $60 million in learning and training, career opportunities development initiatives. Training programs include mentoring, networking, and a safe and healthy workplace. cross-divisional learning opportunities and targeted leadership programs. Launched Reconciliation Action Plan to advance opportunities for Indigenous Australians. Regular employee engagement surveys are conducted, with staff in Progressive Enterprises Limited, Dick Smith and Liquor surveyed in 2011. Suppliers Hold regular planning meetings or develop Shared Objective Plans with our largest Fair treatment, the opportunity to suppliers in Supermarkets and BIG W. develop long-term trade relationships, Quarterly supplier newsletters on Trading and on Logistics, and a dedicated secure and ready access to, and prompt vendor website providing up-to-date trading information for better planning and responses from, our people who more effective use of resources. deal with them. Annual trading performance measurement program and awards event to recognise innovation and celebrate partnerships. Supplier of the Year in 2010/11 was Coca-Cola Amatil Pty Ltd. The winner of the $100,000 Fresh Food Grant in 2010/11, awarded for a sustainable product, packaging or process, was Beak and Johnson Pty Ltd. 6
Stakeholder group Our engagement in 2011 What they told us they expect Communities Woolworths is committed to supporting quality, grassroots initiatives with Be good neighbours and invest sustainable outcomes. This is done by supporting partnerships with community in local communities. organisations and charities in four core areas: —— Health and wellbeing —— Sustainability and environment —— Education and employment —— Rural and regional Governments and regulators Woolworths engages with government and regulatory officials regarding emerging Compliance with laws and current retail, business and employment issues and economic, social and and regulations. environmental policy matters. In 2011, Woolworths lodged 19 formal submissions to state and federal government Proactive engagement in inquiries in Australia and New Zealand. These submissions can be viewed at public policy discussions www.woolworthslimited.com.au and constructive advice. Non-government organisations During the year, we continued our dialogue and engagement with many NGOs, Leadership on sustainable and (NGOs) some examples are: ethical sourcing by influencing —— Drinkwise Australia, which promotes a responsible and safer drinking culture. our supply chain. —— Anaphylaxis Australia and Diabetes Queensland on food allergens Clearly communicated policies and nutrition. and principles on issues of interest to society. —— Sustainable Fisheries Partnership Foundation, Marine Stewardship Council and Taronga Conservation Society on our Sustainable Seafood Targeting our investment to sourcing strategy. adoption of sustainable farming methods and capacity building —— Landcare Australia on sustainable agriculture and food production. in the sector through supporting —— Nuffield, Primary Industry Education Foundation, Primary Industries Centre education and training. for Science Education, Australian Rural Leadership Foundation on building capacity and leadership in the primary industry sector. —— Foodbank and other food relief charities on food provision to those in the community in need of assistance. —— WWF and Roundtable for Sustainable Palm Oil (RSPO) on implementation of our Sustainable Palm Oil policy. 7
Woolworths Limited Corporate Responsibility Report 2011 Issues of Public Interest Cost Competition Liquor Gaming of living and farm- retailing gate prices Our response Our response Our response Our response Inflation across a range of Woolworths supports strong As a responsible retailer The ALH Group, a joint venture utilities and living costs has competition in the retail market. of alcoholic beverages, between Woolworths Limited grown considerably since Competition keeps prices low Woolworths goes beyond and the Bruce Mathieson mid-2010, significantly for customers and drives regulatory compliance with Group, is committed to dampening consumer demand improvements in products, a strict set of processes and providing responsible gaming and slowing the retail economy. range and services. Increasing procedures that govern all in our venues. The Group In Australia, there have been competition has been present in aspects of our liquor operations acknowledges that problem very large increases in electricity all categories in which Woolworths to help protect individuals gambling is a serious and water charges. These operates. In supermarkets, the and society from the harm community concern. increases have hurt families entry of global retailer Costco, caused by excessive alcohol ALH complies with all applicable and those people on fixed or as well as the continued growth consumption. responsible gambling legislative low incomes, such as pensioners and improvement from Coles, Our processes include annual requirements and participates and self-funded retirees. ALDI and the Metcash IGA audits of licensing and in many government gambling Woolworths is committed to group, has increased discounting responsible service compliance, working groups to assist in bringing downward pressure activity. Retailers have also taken our ID25 policy for serving identifying and developing on prices in both Supermarkets full advantage of the high alcohol, point of sale campaigns appropriate responsible and BIG W. We have continued Australian dollar to pass through and a range of measures to gambling initiatives. our campaign in Woolworths’ cost savings in better prices. better manage alcohol related ALH’s objective, supported by Supermarkets to reduce shelf Woolworths has developed strong issues in some communities. our Hotel and Gaming Charter, prices on thousands of products. long-term direct relationships with In specific communities, is for the Group’s facilities to be We have also adjusted the prices producers and suppliers across the Woolworths has worked with enjoyed as a social recreation across our private label ranges primary industries sector. Some local community representatives by responsible individuals who to ensure they meet or beat pricing action initiated by other to adjust the liquor range and choose to use them in a safe branded product. Private retailers, for example private label eliminate problem products and supportive environment. label has proven to be a key milk reductions, has caused such as cask wine. ALH also supports voluntary alternative for families looking considerable concern among initiatives that allow individuals for value when shopping, and suppliers that long-term to better exercise control over the range has increased in profitability will be impacted. their spending. Australia and New Zealand. Whilst Woolworths did not initiate In many key categories, such as this pricing we took the decision food and consumer electronics, to match it so that we continued to consistent price deflation has offer our customers competitive been the norm and reported to prices. A Federal Parliamentary the market by many retailers, Inquiry has been held to consider which has benefited consumers. these issues. Woolworths has participated fully in the Inquiry process, and has argued that delivering value to consumers has to be balanced with a sustainable return for the producer. 8
Use of palm oil Food imports Food waste and import protections 97.3% of fresh fruit and vegetables sold in our stores was Our response Our response Our response grown in Australia. Woolworths is a member of Woolworths is committed to Woolworths has a target of 2m+ the Roundtable on Sustainable giving preference to domestic zero food waste by 2015. All Palm Oil and has committed sourcing for our fresh produce. efforts are made to sell the food to use only certified sustainable We have hundreds of direct and products in our stores, and palm oil by 2015 for all private trading relationships with the where products cannot be sold, label products. very best fruit, vegetable and our first choice is to donate meat farmers and growers in surplus fresh food to local food Woolworths has commenced Australia and New Zealand. relief organisations. In 2011, meals from food donated listing palm oil and derivatives greater than 5% on pack In 2011, in our Australian we donated enough food to to food relief charity labelling for all private label Supermarkets, 100% of our produce over two million meals. partners. products to facilitate customer fresh meat was sourced from We are also implementing choice. We have also introduced Australian producers and other diversion programs sustainably-sourced palm 97.3% by weight (96.5% by for composting and waste oil for our in-store bakery value) of our fresh fruit and to energy. products. vegetables was grown in Australia. In 2011, in our New Zealand Supermarkets, 100% of our fresh chicken, pork and lamb, and 90% of fresh beef, were sourced from New Zealand. 9
Woolworths Limited Corporate Responsibility Report 2011 Our Business Since 1924, Woolworths Limited has grown 414,591 from a single store in Sydney’s Pitt Street into Number of shareholders a company with stores in most metropolitan and regional areas of Australia and New Zealand. In 2011, we celebrate our 87th year in retailing. Woolworths has been listed on the Australian Securities Exchange since 1993, under the 45,000+ Number of employee shareholders code WOW. 190,723 Total number of employees 171,416 employees in Australia. 19,104 employees in New Zealand. 203 employees in India and China. 20 th in global retailing, based on sales revenue – highest ranking Australian retailer. 10
Our Market Share in New Acquisitions 27m Food Retailing Average number of weekly customers During 2011, Woolworths Woolworths is the largest acquired Magnet Mart in the Australian retailer, by sales Australian Capital Territory revenue; however, competition in and Flatman’s Home Timber food and grocery retailing is strong and Hardware in Victoria, and the Australian consumer has as part of its growth into the benefited from competitive pricing Home Improvement sector. 3,241 in some staple products. Roy In May 2011, we completed the Number of retail stores Morgan research showed that acquisition of the Cellarmasters 72.5% of weekly spending on fruit Group, which will accelerate and vegetables takes place outside growth in the liquor industry of a Woolworths store. through new and enhanced capabilities in production, operational services and private label supply chain, enabling $54.1b the Company to serve a new Sales revenue customer segment in the direct marketing channel. Direct economic Indirect economic contribution contribution $6.3b $101b $3.3b EBIT in wages and benefits for our indirect contribution to employees, 5.0% increase from 2010. the Australian economy. $2.0b in taxes to the government. 686,000+ full-time equivalent jobs. $2.1b Net Profit After Tax $62.3m investment in local communities, $711m contribution to Australian economy a 71.6% increase. from construction expenditure. Global ranking of supermarket chains with stores in Australia 2009 (52 weeks) ranking Costco Wholesale Corp (USA) 7 Aldi Einkauf GmbH & Co oHG (Germany) 8 Woolworths Limited 20 Wesfarmers Limited (owns Coles supermarkets) 23 Source: Deloitte, Global Powers of Retailing 2011. 11
Woolworths Limited Corporate Responsibility Report 2011 Responsible Retailing We believe in earning our customers’ trust and respect by acting responsibly both inside and outside our stores and enabling them to make informed choices. Buy and sell responsibly. Source sustainably and ethically. Ensure quality and safety. Deliver value and choice for customers with focus on health and wellbeing. 12
265t Health and Wellbeing Woolworths’ Macro Wholefoods on the dangers of secondary Market range has increased to supply of alcohol to minors. Woolworths is committed to more than 220 products under the Woolworths continues to helping customers make informed Organic, Gluten Free, Free Range, participate with police, local health, ethical and environmental Natural and Mini Macro ranges. councils and community groups decisions when buying Woolworths brands. We do not want to dictate in initiatives to tackle problem salt removed from what customers should and Responsible Selling drinking. After extensive in-store bakery bread. community consultation, shouldn’t eat but we can help them Selling alcohol responsibly we have implemented measures to make more informed decisions As a responsible retailer of alcoholic that include the removal of lower for themselves and their families. beverages, we go beyond regulatory priced wine products for sale in Woolworths is a member of the some communities and voluntarily compliance with a strict set of Australian Federal Government’s reducing trading hours. processes and procedures that Food and Health Dialogue, which govern all aspects of our liquor Woolworths has approximately works with industry on a range operations to help protect 514 licensed stores involved in of voluntary reformulation of individuals and society from local liquor accords, where commonly consumed foods, the harm caused by excessive licensees and other stakeholders including bread and cereals. alcohol consumption. take action to improve safety and The Daily Intake Guide (DIG) was reduce alcohol-related anti-social All Woolworths Liquor Group staff created to give customers more behaviour. Commitment to these are trained in Responsible Service information about the pre-packaged accords involved an estimated of Alcohol and regular refreshers food and drink they buy and $468,000 in wages and 15,420 of this training occurs. Compliance consume. The DIG front-of-pack labour hours to attend local with responsible service and labelling provides a simple graphic liquor accords. licensing is assessed in annual showing the energy, fat, saturated audits of our licensed outlets. Our Charter for ranging alcohol fat, sugars and sodium content as To limit the risk of selling alcohol in our stores includes 10 principles a proportion of the recommended to underage customers, or to people that we assess any alcoholic or daily intake amount. supplying them, we continue to alcohol branded products against, Already more than 65% of private before considering them for sale. apply the ID25 policy, which label products have the DIG These principles send a strong requires staff to ask customers thumbnails and Woolworths message against products that for identification if they appear has committed to front-of-pack target minors or encourage to be aged 25 or younger. The nutritional information labelling irresponsible drinking. ‘Don’t buy it for them’ point of on 100% of our private label sale campaign provides awareness products by June 2012. Our Charter for ranging alcohol in our stores Principle 1 Principle 2 Principle 3 Principle 4 Principle 5 The product should not The product should not The product should not have The products should not draw The product should not have the potential to appeal have an appearance that could an appearance which may lead any association with drug encourage illegal or to minors. potentially lead to confusion to confusion about its alcoholic culture, narcotics or other illicit immoderate consumption with confectionery or soft drinks. nature or strength. drugs or drug paraphernalia. such as binge drinking, drunkenness or drink‑driving. Principle 6 Principle 7 Principle 8 Principle 9 Principle 10 The product should not The product should not The product should not feature The product should not Ready to drink products suggest any association suggest that consumption imagery or language that suggest that any physical containing more than two with dangerous, violent, can lead to social, sporting could be deemed offensive on or mental health benefit standard drinks per single aggressive or antisocial or sexual success. cultural, religious, ethnic or can be obtained by serve container will not be behaviour. gender grounds. consumption. ranged by Woolworths Liquor Group. 13
Woolworths Limited Corporate Responsibility Report 2011 Responsible Retailing 71.5% Responsible service The ALH Group works with David Ethical Sourcing Schwarz, a well known former of Gaming AFL footballer and reformed Labour conditions The ALH Group continues problem gambler, as its Responsible in our supply chain to be committed to providing Gambling Ambassador. David Woolworths is committed to audit completions in responsible gaming in its venues. provides employee education and upholding human rights, not only ALH is aware that problem customer awareness about the 2011 of factories making gambling is a serious community importance of ‘being honest with with respect to its own employees Woolworths branded concern and that the Productivity yourself about your gambling’. but also in its supply chain, and products.(1) Commission report into gambling it has an Ethical Sourcing Policy which includes four key risk areas: (June 2010) estimated that between Responsible Buying bribery and corruption; labour 0.5% and 1% of adult Australians are problem gamblers. Woolworths publicly undertakes rights; working conditions; and to deal fairly, act reasonably, and environmental compliance. The Industry, government, community to negotiate outcomes with all its policy is available on our website. and individuals have a shared trade partners. We are committed Woolworths is also a signatory responsibility for the promotion, to fair dealings with our partners to the United Nations Global development and practice of while seeking the best deal for our Compact (UNGC). UNGC responsible gambling. ALH wants customers. This is written into our signatories embrace, support to ensure its hotels provide a corporate Code of Conduct. and enact, within their spheres safe and supportive environment of influence, a set of core values where its customers make Across our business, we abide in the areas of human rights, informed decisions about gambling. by voluntary codes of conduct labour standards, the environment in supplier trading relationships. ALH complies with all applicable and anti-corruption. We were a founding member responsible gambling legislative of the voluntary Produce and Our policy is based on International requirements in each state and Grocery Industry Code of Labour Organisation (ILO) participates in many state and local Conduct, promoting fair trading conventions and the principles government gambling working practices and building better of the United Nations Universal groups to assist in identifying and business relationships. Declaration of Human Rights. developing appropriate responsible gambling initiatives. Our Hotel and Gaming Charter – We strive to provide a safe and friendly environment in which all customers can socialise and enjoy themselves in a good atmosphere. – We provide good value, good quality meals and family friendly dining experiences. – We restrict gaming room access to adults and ensure gaming rooms are screened or separated from other areas of the hotel, so as to not attract children. – We ensure responsible service of alcohol and provision of gaming, by making sure management and staff adhere to all applicable rules and regulations and are trained to encourage and promote responsibility. – We believe we have a shared responsibility, along with individuals, governments, families and the community, to prevent harm. – We actively support campaigns that warn of the dangers of drinking and gambling to excess and that inform people where to get help. – We ensure that ATMs provided for the convenience of all patrons are in a safe, central location and not in gaming areas. – We are committed to introducing voluntary pre-commitment – a system that helps players stick to their limit by nominating spending or time limits on gaming machines. (1) – We do not engage in promotions that could encourage irresponsible drinking or gambling or that are directed Factories in high risk regions at minors or vulnerable groups. and emerging economies. 14
All Woolworths’ suppliers are Suppliers are categorised as expected to comply with ‘approved’, ‘conditionally approved’ requirements of our policy, which or ‘at risk’ depending on the is complemented by a compliance audit outcome and compliance audit program predominantly for with policy requirements. suppliers of our own branded Our approach is to work with products. Audits are conducted suppliers to help improve their by experienced third-party labour and environmental certification bodies. All audit practices no matter which criteria have been assessed category they are in. according to the level of risk The most common area of and categorised as critical and non-conformance is in safety and non-critical non-conformances. health, and working hours. Non-critical is further categorised Woolworths is an active member as ‘high’ or ‘low’ in severity. of the Global Social Compliance Areas of significant risk deemed Program (www.gscpnet.com), to be critical include specific a multi-stakeholder program criteria relating to child labour, aimed at delivering a shared, imprisoned or bonded labour, consistent approach for health and safety, or bribery and continuously improving working corruption. Breach of any specific and environmental conditions critical criterion will result in a across all categories and sectors. request for immediate resolution or corrective action by the supplier. Audit results Audit results – Factory classifications in 2011 – Corrective actions raised in 2011 Approved 42% Critical 2% Conditionally approved 54% Non-critical high 75% At risk 4% Non-critical low 23% Note: As at 12 September 2011. Woolworths works with suppliers to address any issues that are identified in ethical audits. During the audit of an apparel factory, an incident of child labour was reported. Seven local students were found to be working in the factory during their summer vacation. The children were aged from 13 to 15 and had sought work during their free time. The factory employed the children as temporary staff, they did not sign labour contracts and could come and go freely. The factory’s management addressed this issue by paying out the underage workers with relevant wages, and establishing business rules prohibiting underage workers from working in the factory. 15
Woolworths Limited Corporate Responsibility Report 2011 Responsible Retailing 52% Animal welfare Our free-range pork range has Genetically modified foods increased significantly in the We are committed to continually past 12 months. However, we are Woolworths is absolutely improving animal welfare constrained by supply as industry committed to food quality standards in our supply chain builds its supply capacity. and safety. We also know that in line with expectations of our customers expect food of fresh pork is estimated our customers. Free-range pork is now available labelling and advertising to to be produced in sow Woolworths’ approach to animal in 513 (or 61%) of our Australian Supermarkets. Primo brand be clear and accurate. stall free conditions welfare is monitored through the RSPCA Approved pork is stocked Woolworths is committed to – to increase to 66% Woolworths Quality Assurance in 240 stores in New South Wales, meeting very high standards, by end-2012 and 94% (WQA) program. All vendors Australian Capital Territory and through: by end-2013. supplying private label products to Woolworths are required to Victoria, the Plantagenet brand is —— A standard policy of avoiding stocked in 36 stores in Western genetically modified (GM) participate in the program and Australia and the Riverview material in our private to meet our standards and are Farms brand has now been label food range; Fairtrade Australia and New audited by third-party added to 246 stores in South —— Requiring suppliers to declare Zealand awarded Woolworths certification bodies. Australia and Victoria. GM ingredients; Mordialloc, in Melbourne, Our animal welfare criteria Free-range and barn-laid eggs —— If GM ingredients are declared, the Most Fairtrade Friendly encompass whole-of-chain continue to grow in sales in working with suppliers to Major Supermarket Award, practices, including farm, Australian Supermarkets, replace the GM ingredients; transport, saleyard and after it was nominated by but 59.8% of egg sales by volume —— Contractually binding all processing, and set clear objectives are still caged eggs. This was a our customers. Woolworths that require verification by trained suppliers to adhere to agreed reduction of 2.6% compared to Balmain, in Sydney, was voted auditors in order for industries product specifications and not 2010. Our Select branded eggs Leichhardt’s Most Fairtrade to supply livestock products are only free-range and barn-laid changing any ingredients Friendly Supermarket. to Woolworths. The criteria without our consent; and and most caged eggs sales are currently cover poultry meat, in Home Brand. —— Complying with all relevant eggs, pork, sheep and beef. national, state and territory We continue to work closely with food standards. Fairtrade our trade partners, supply chain, Woolworths also fully complies certification bodies and industry The demand for Fairtrade with the Food Standards Australia experts to help ensure that our Certified™ products has steadily New Zealand prescribed Fairtrade Certified™ products all carry the Fairtrade Label. standards, procedures and increased in recent years and our mandatory labelling requirements practices are in keeping with supermarkets range a number of for GM foods. These standards the community’s expectations. Fairtrade Certified™ products in recognise the possibility of tea, coffee and chocolate categories. unintentional minor traces 16
of GM material to be present and In New Zealand, 100% of the fresh On-pack labelling of palm oil in all therefore don’t require labelling if there is an unintentional trace chicken, pork and lamb sold in Countdown stores is produced Woolworths private label products is progressing, and as of August We are a of less than 1% of an ingredient. in New Zealand, whilst 90% of beef is produced locally. 2011, 46% of our private label products that we know include member of the Roundtable Under these standards, Woolworths has had no private label products palm oil are labelled as containing palm oil. on Sustainable labelled with GM ingredients in Palm oil the last year. However, to ensure Woolworths will be submitting its Woolworths is committed to we are absolutely correct with our labelling, we do not use the sourcing only Roundtable on Sustainable Palm Oil (RSPO) first annual report to the RSPO and will be declaring that an Palm Oil. term ‘GM-free’ or ‘genetically estimated 4,400 tonnes of palm certified sustainable palm oil by engineered-free’, because it is oil was used in our private label 2015 for all Woolworths private not possible to give an absolute food and in-store bakery products. The Consumer Goods Forum label products. guarantee that there could never Certified Sustainable Palm Oil Woolworths has been conscious Woolworths is a member of be such an unintentional, minor will be sourced for use in our of concerns about the impact that The Consumer Goods Forum and trace of GM material. We also in-store bakeries from late 2011, the growing demand for palm oil a signatory to its Board resolution acknowledge we are unable to with an estimated 450 tonnes is having on rainforest areas in to achieve zero net deforestation give an absolute guarantee that being used each year. South-East Asia, West Africa through the consumer goods supply all stock feed used in the supply chain by 2020 through sourcing chain is completely GM free. and South America. Deforestation commodities like palm oil, soya, beef, in Indonesia is threatening the paper and board in a sustainable survival of many native species Sustainable Sourcing and the draining of peatlands is fashion. The Consumer Goods Forum is a global industry network that brings Local fresh produce contributing to climate change. together the CEOs of global retailers Palm oil is an efficient crop with and consumer brand owners with Woolworths supports Australian significantly higher yields of oil per combined sales of EUR 2.1 trillion. farmers by sourcing local fresh hectare than soya beans, rapeseed produce. In our Australian or sunflowers. On 5% of the world’s Supermarkets in 2011, 97.3% vegetable oil farmland it produces of fresh fruit and vegetables by 38% of output, more than any weight (and 96.5% by value) was other oil crop, and any substitute grown in Australia. Woolworths would need more land(1). Therefore, only sells Australian produced banning the use of palm oil could fresh meat, and sells 7% of the cause more deforestation as other beef and 15% of the lamb oil crops have considerably less produced in Australia. yield per hectare. Growth for animal welfare products (Supermarkets Australia) Percentage increase Percentage increase Percentage of total of volumes of volumes category of volumes in in 2010 (%) in 2011 (%) 2011 (%) Free-range chicken (Macro meat) 66.8 35.0 12.8 Free-range chicken (Macro deli) 359.1 212.9 2.3 Free-range eggs 51.5 12.8 27.6 Barn-laid eggs 138.2 8.7 10.7 Organic Macro meat 21.4 36.4 0.9* All previous reporting has been based on the value of sales. Trends in volumes are reported this year. (1) * Percentage of category estimated from sales. The Economist, 24 June 2010. 17
Woolworths Limited Corporate Responsibility Report 2011 Responsible Retailing PEFC certified Select toilet tissue. FSC certified outdoor furniture from the Patio by Jamie Durie range at BIG W. Timber, pulp and paper Fish and seafood Council (MSC) standards (or For farmed seafood, our aim is certified to equivalent schemes to have all the products certified Woolworths is committed to Global consumption of fish is at that comply with the United sustainable by credible third party purchasing timber, pulp and a record high. There has been Nations Food and Agriculture certification schemes by 2015. paper from legal, well managed a seven-fold increase in global Code of Conduct for Responsible The certification schemes or sustainable sources. We are fishing volumes over the past Fisheries and International Social recognised by Woolworths progressively working through 50 or so years – from 19 million and Environmental Accreditation at this time are: our range of products and tonnes in 1950 to about and Labelling guidelines for revising specifications for 142 million tonnes in 2008(1). —— The Global GAP Aquaculture; certification standards). purchasing of these products. Demand for fish and seafood is —— The Global Aquaculture We recognise that certification Our Select facial tissues, toilet increasing as our customers Alliance; and takes time and resources and tissue and kitchen towels are all look for healthier options and, we will work with our suppliers —— The Aquaculture Stewardship Programme for the Endorsement in response to this demand, we to achieve this goal. Council. of Forest Certification (PEFC) want to grow our seafood business. While we are working towards We may add other certification certified. The pulp is sourced Woolworths is a successful food our long-term goal, we will: schemes to this list based on from Brazil, Chile, Canada and retailer committed to providing advice from experts in aquaculture Australia and the product is —— Increase our existing MSC quality fresh food at affordable fisheries management. made in Australia. certified products available prices. We want to remain in our stores; Our Policy is available on our Our copy paper used internally is successful in food retailing website www.woolworths.com.au/ certified by the Forest Stewardship long into the future. —— Partner with experts in this sustainableseafood Council (FSC) mixed source and field to have our range assessed Our business prosperity depends our catalogue paper in Australia for sustainability based on on the availability of a secure and is PEFC certified. continued supply of quality fresh objective and credible scientific information and evidence; Our aim is to ensure that BIG W retails exclusively an food offer to our customers. FSC-certified outdoor furniture —— Communicate the sustainability Sustainable seafood is part of this brand, ‘Patio by Jamie Durie’. Our home improvement business, equation and we want to be part of our products to our customers; and all our seafood products come of the solution in promoting Masters, has a detailed wood sustainable seafood choices. —— Where the assessments show procurement policy available on www.masters.com.au, Our long-term goal is to have all concerns with fisheries, assist suppliers to develop improvement from sustainable sources. our wild-caught seafood range with its first store opened plans and adopt more certified to Marine Stewardship in September 2011. sustainable fishing practices. (1) United Nations (UN) Food and Agriculture Organisation (FAO) State of the World’s Fisheries and Aquaculture report, 2010. 18
Feature: Feature: any Masters products with FSC logo showing. Select MSC products canned tuna, salmon and frozen fish range images + MSC logo. MSC certified Select tinned and frozen fish. Quality Assurance, labels, care instructions, —— Home Brand Lemon Flavoured environmental and country Crumbed Fish 500g – Product Safety, of origin claims are correct, undeclared allergen; Information and properly verified and described —— Home Brand Fruity Rings 585g Labelling in a way that does not mislead our – metal contamination; and The Quality Assurance (QA) customers or the general public. —— Almond Kernels 750g – function is an integral part of salmonella detected. the Woolworths Limited business Product Recalls Apparel and General Merchandise with over 70 staff engaged in Woolworths conducts consumer recalls in 2011: quality assurance activities in product safety recalls in line with —— Dick Smith: DSE brand 7 inch Australia, New Zealand and Asia. the Food Standards Australia and portable DVD player model Private label, fresh food and New Zealand (FSANZ) Product numbers G7152 and G7153 – exclusive brand products sold Recall Protocol and the Australian internal lithium-ion rechargeable in Australia and New Zealand Competition and Consumer battery may overheat; are governed by a comprehensive Commission (ACCC) Product process which ensures we meet —— BIG W: Tinkers Pull-A-Long Recall Guidelines. Protecting our all regulatory and Woolworths’ Snake & Dog – dropping the customers from potential product requirements. product some parts may break safety hazards is very important off into small pieces; Assessments are completed to us. Many product recalls are throughout the life of the product, initiated by suppliers when they —— BIG W: Tinkers Wooden Toy which includes evaluation at become aware of safety issues or Animal Car – dropping the concept, pre-production, artwork, by our quality assurance team product some parts may break production, pre-shipment and as a result of compliance checks off into small pieces; on-shelf stages. of products. —— BIG W: Pink Sugar Sundresses Product packaging and labelling Woolworths has comprehensive – beading on dresses found to for our own brands are assessed processes for conducting recalls have sharp points and edges; at various stages of product in a speedy and efficient manner. and development to ensure compliance Food and liquor recalls in 2011: —— BIG W and Supermarkets: with regulatory requirements. Abode and Home Collection —— Home Brand Frozen Mini Products are assessed to ensure Oscillating Fan Heater – Vegetable Spring Rolls 12PK all required warnings, age grade manufacturing assembly fault. 600g – undeclared allergen; recommendations, measurements, 19
Woolworths Limited Corporate Responsibility Report 2011 Our Community Woolworths Limited has the simple philosophy of demonstrating corporate leadership by doing the right thing. Our community investment aims to create a positive impact for both the community and the business. $62.3m was contributed to the community in 2011. 20
$13.5m Our Community Our Programs Working with schools and Investment Strategy Fresh Food Rescue Indigenous kids in the area, the program encourages attendance Target Focus area: Sustainability/ through live link-ups with some of the Australian Rules football We have a target of the equivalent Health and Wellbeing players in Melbourne. The cash. of 1% of pre-tax profits going Woolworths has a proud record $25.0m curriculum was developed by our towards supporting our of food donation in partnership community partner and endorsed communities. Our businesses with food relief organisations in by the Northern Territory achieve this by supporting Australia and New Zealand. Department of Education. As organisations, programs and We work with many food relief well as financial support of the initiatives in our core focus charities that collect food from pilot, Dick Smith leveraged its leverage. areas in a manner that is relevant our stores and provide meals for relationship with suppliers to $6.7m to their business objectives, people in need in our communities. organise interactive white boards strengths and skills. Organisations that collect from for the participating schools. our stores include Foodbank, Focus of our investment OzHarvest, SecondBite, FareShare, Fresh Food Future Churchlands, House of Hope and Our initiatives are governed The Salvation Army. Focus area: Rural and Regional in kind. by four priority focus areas. $17.1m Communities/ Sustainability Each of our businesses will and Environment address these focus areas in Fresh Food Kids Hospital ways that relate to their Appeal The United Nations Food and Agriculture Organisation (UNFAO) customers and key stakeholders. Focus area: Health and Wellbeing estimates that feeding a global The priority focus areas are: Thanks to the generosity of our population that is projected to in staff and —— Sustainability and environment; customers and commitment of reach 9.1 billion in 2050 would management time. —— Health and wellbeing; our staff, $9,063,176 was raised require a 70% increase in food —— Education and employment; for the Woolworths Fresh Food production. The UNFAO and Kids Hospital Appeal in 2011. projections indicate that 90% These funds will help children’s of the gains in production needed —— Rural and regional hospitals and children’s wards will be achieved by increasing yield communities. around Australia. growth and cropping intensity on existing farmlands rather than Evaluating and reporting Technologies in the by increasing the amount of land our community investment Territory brought under agricultural production(1). Woolworths Limited is an active Focus area: Education and The challenge of boosting crop member of the London Benchmark Employment yields is made more pressing by Group (LBG). The LBG provides a process for measuring, Through its partnership with climate change. In Australia, benchmarking and reporting our Richmond Football Club’s there is the additional concern of investments, with transparency Tigers in the Community the ageing of the farm population Grab a piece of fruit and donate to in Australia and New Zealand. program, Dick Smith supported which has been evident in official Woolworths Fresh Food Kids Hospital Appeal. an education pilot Technologies statistics in Australia since 1981(2). For more information, go to in the Territory. The pilot aimed Our Fresh Food Future program www.lbg-australia.com to increase attainment levels in aims to contribute to developing six schools in Alice Springs. A snapshot of the causes we supported in 2011 Fresh Food Kids Hospital Appeal $9,063,176 Fresh Food Future Program $2,282,837 (1) How to Feed the World in 2050 was the BIG W Big Heart Appeal $1,331,764 theme of the UN Food and Agriculture Employee Matching Award Scheme $86,796 Organisation’s (FAO) expert forum in Muirfield High School taking part in October 2009. the Art4Agriculture Archibull Prize. Head Office – Charity of the Month $648,958 (2) Stock donations – food and emergency relief $2,250,201 Garnaut & Helali 1999. 21
Woolworths Limited Corporate Responsibility Report 2011 Our Community solutions for these challenges and Foundations for the Future and the carbon footprint of NSW, every year Woolworths it reaffirms our commitment to We have commissioned a of farming businesses. has offered 30 young Australians investing in the future of rural comprehensive study in food the opportunity to attend the Sustainable fisheries Australia and food security. security and future of food Woolworths Agricultural In 2011, we invested and Business Scholarship program. Fresh Food Future draws together production in Australia. The committed to investing a total of In 2011, $140,000 was invested a number of initiatives to address study will investigate major $110,000 in partnerships focusing in this program. two main objectives: impacts on food production and on promoting sustainable fishing. —— The advancement of help us understand the overall The 12-day course at the Woolworths partnered with agricultural sustainability; and policy landscape and the competing Woolworths support office in Sustainable Fisheries Partnership interests which impact the food north-west Sydney gives —— Building leadership capacity Foundation, a US-based not-for- production, future demands and participants valuable insights in the sector. profit promoting sustainable consumer preferences, quality, into key issues and opportunities Fresh Food Future has four fishing and Taronga Conservation supply availability and prices. on the business of agriculture from program areas which help direct Society’s Fish4Life campaign to academics, Woolworths’ business our initiatives and investment. Powering Productivity raise community and consumer leaders and other industry experts. These are: In partnership with Landcare awareness with regard to Australia, Woolworths has invested sustainable seafood consumption. Investing in Youth Studentship —— Foundations for the Future – over $6.5 million to support over We also provided a grant of program includes research to support 150 projects around Australia $25,000 to Northern Prawn Woolworths funded $38,000 sound policy development. since 2007. Landcare oversees the Fishery Industry group for one participant in this program —— Powering Productivity – focuses to help them achieve Marine progress of the projects and works run by the Rural Industries on adoption of sustainable Stewardship Council certification. to communicate the outcomes Research and Development agriculture practices and For more information, refer to with the broader industry. Corporation. The studentship increasing production capacity. the Fish and Seafood section in offers, the undergraduate student —— Leaders for the Future – focuses Sustainable horticulture Responsible Retailing on page 18. financial support and a mentor on supporting training, capacity projects Leaders for the Future who can provide valuable career building and leadership in the In 2011, we committed a total advice. Under the program we rural sector. investment of $724,000 supporting Woolworths Agricultural offer relevant industry placements —— Consumer Connections – sustainable agriculture in the Business Scholarships to gain experience in the student’s provides our customers the horticulture sector across Australia. Since 2007, in partnership with chosen field of study. information they need to make The projects funded improved the University of Western Sydney more sustainable choices. water use, nutrient management and the Royal Agriculture Society Cassia Ferguson, from Mudgee, was one of 30 young people to take part Outgoing CEO Michael Luscombe presents a cheque in the Woolworths Agricultural Business Scholarship Program. for $15.8m for the Salvation Army’s Flood Appeal. 22
2,247t of food, equivalent to 2,027,900 meals, Across New Zealand (left) and Australia (centre) our operations were affected by extreme weather events and earthquakes. donated to food relief In the aftermath of the earthquake, Auckland based staff don Canterbury colours in solidarity with those people affected (right). charity partners. Art4Agriculture Archibull Prize management skills and techniques supermarket customers and team During 2011, Australia and New Art4Agriculture provides in the primary production sector. members to the Pike River Miners’ Zealand were struck by significant secondary school students with These scholarships give Australian Trust Fund. The funds raised natural disasters, including flooding agricultural and environmental citizens the opportunity to study supported the families of the in Queensland and Victoria, awareness through art, creativity farming practices in New Zealand, miners lost at the Pike River Cyclone Yasi in Queensland and and teamwork. Woolworths has Europe, Asia and the Americas coal mine. earthquakes in Christchurch. been a sponsor of the program and those countries best suited In Christchurch’s time of need These events provided challenges for the past two years, providing to the scholar. following the series of devastating to the communities we operate $15,000 in funding in 2011. Consumer Connections earthquakes, Countdown helped in, our customers, employees raise funds for the Salvation Army and suppliers, but also led to an Primary Industry Centre for Our partnership with to support those communities outpouring of support from the Science Education (PICSE) Art4Agriculture and Taronga affected. Customers and team public, businesses and government. In partnership with PICSE we Conservation Society’s Fish4Life members gave generously and promote agricultural sciences as campaign are designed to help In Australia, our staff and over NZ$735,000 was raised. part of the secondary school increase consumer awareness customers, through BIG W, Progressive Enterprises also curriculum. We provided $68,000 about sustainable food and Dick Smith and Woolworths contributed NZ$100,000 towards in support of this program. PICSE agriculture. We will continue Supermarkets, donated the Salvation Army Canterbury judged and awarded the Science to develop more targeted $10,377,916. Woolworths’ Earthquake Appeal. Investigation Awards during partnerships and campaigns own contribution was a further September 2011. in the coming years $7,900,000, with an additional Overseas emergency relief $250,000 donated by ALH. Australian Rural Leadership Emergency Relief for and general aid A total contribution of $18,527,916 Foundation was donated to the Salvation Army Natural Disasters Oxfam Australia is our official flood appeal to families in need of Woolworths has been a long-term partner in the case of overseas supporter of the Australian Rural Australian emergency relief immediate financial assistance, natural disasters. Oxfam Australia Leadership Foundation, funding financial counselling and long-term The Salvation Army is our official has the experience and knowledge one scholarship annually. In 2011, community rebuilding projects. partner in the case of domestic required to run community we provided one scholarship to the programs in developing countries, Our customers and staff in New value of $55,000. The Foundation natural disasters. During a severe including an understanding of the Zealand and Australia, through is committed to enhancing the domestic disaster, such as political situations and the ability Supermarkets and Dick Smith, nation’s social, economic and bushfires and floods, our stores to ensure funds are monitored raised over NZ$1.48 million for environmental viability and also mobilise in-kind support and and go to the intended recipients. the Salvation Army Canterbury resilience. To this end, it provides resources for their communities. During 2011, $14,587 was donated Earthquake Appeal. leadership programs for individuals, Woolworths Limited businesses will only channel donations to Oxfam. As a business we hope that we never businesses, communities and through the Company’s appeals. face these situations again, but nature organisations that have a is unpredictable. We will remain commitment to rural, regional Impact of emergency relief prepared to implement our programs, and remote Australia. New Zealand emergency on community investment ($m) whether it is providing an avenue Nuffield Australia Farming relief $ (million) for donations or ensuring our stores 10 36.30 are stocked to meet the needs of our Scholarships In the face of a series of natural disasters and the tragic events 10 36.37 customers in affected areas. Woolworths is a Nuffield sponsor and we funded one Scholarship of the Pike River Mine disaster, 11 40.83 in 2011 to the value of $52,800. the team at Progressive 11 62.31 Nuffield Australia provides a Enterprises reacted quickly scholarship scheme with the to the needs of the community. Total (Excl Emergency Relief) 98 objective to increase practical Over NZ$235,000 was raised Total farming knowledge and through donations from 23
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