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 a human rights and 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 in Australia and overseas 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.
More than 5,000 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 2,686 approved factories in our audit program. A further 2,416 factories were conditionally approved and 287 were due to be re-audited.
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 at the remaining 29.