Wesfarmers human rights and modern slavery statement
Wesfarmers Limited (Wesfarmers) opposes slavery in all its forms. This statement, which is intended to meet the requirements of s54 of the United Kingdom’s Modern Slavery Act 2015 (Act), describes the steps taken by Wesfarmers and all its subsidiaries during the financial year ending 30 June 2017 to seek to ensure that slavery and human trafficking are not occurring in any of our businesses or their supply chains. It uses the United Kingdom government’s definition of “modern slavery”, which includes slavery, human trafficking and forced labour.
At Wesfarmers we acknowledge our role and responsibility in seeking to safeguard human rights through ethical and sustainable business practices. We also recognise that 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 seeking to ensure that human rights are respected across the Group’s operations and supply chain.
We are committed to respecting and supporting 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
Wesfarmers has adopted a risk based approach to human rights due diligence and has focused on protecting the human rights of our direct employees and the rights of those in our supply chains who are supplying own brand products.
Our structure, business and supply chain
This statement extends to all Wesfarmers’ wholly owned businesses described on our website here.
From its origins in 1914, as a Western Australian farmers' cooperative, Wesfarmers has grown into one of Australia's largest listed companies. With headquarters in Western Australia, our diverse business operations cover: supermarkets, liquor, hotels and convenience stores; home improvement; office supplies; department stores; and an industrials division with businesses in chemicals, energy and fertilisers, industrial and safety products and coal.
Wesfarmers employs more than 223,000 people in Australia, New Zealand, the United Kingdom, Ireland, Portugal, and several countries in Asia including Bangladesh and China. In the financial year ending 30 June 2017, Wesfarmers paid AU$46.4 billion to our more than 18,000 suppliers in more than twenty countries.
Wesfarmers’ businesses work within large, diverse supply chains of partners and stakeholders. We recognise that each entity in this chain has its own independent duty to respect human rights in all areas of its operations.
Our businesses directly source products for resale from a range of locations outside Australia, with the largest volume sourced from China, Bangladesh, Hong Kong, New Zealand, India, Thailand and Vietnam. While our operations and supply chains are complex, our aim is to ensure that human rights issues are understood, respected and upheld. We expect our partners and stakeholders to adhere to ethical business conduct consistent with our own, and are committed to working with them to fulfil this common goal.
Policies and governance
The policies and frameworks that support the Group’s day to day operations are designed to ensure all relevant universally recognised human rights are observed and safeguarded. Consistent with the principles detailed 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 of association and collective bargaining. Our Group-wide Ethical Sourcing Policy sets the minimum standards expected of our divisions. Each division has its own ethical sourcing policy appropriate to its business which it communicates to its suppliers.
All sustainability issues at Wesfarmers, including human rights, are managed at a divisional level by senior management. Each division has strategic teams which identify and manage sustainability issues relevant for their business including modern slavery and human rights risks. Senior management in each business is responsible for managing human rights issues with their suppliers. Each business has its own process and triggers for identifying human rights risks and impacts. For example, some businesses use platforms such as the Supplier Ethical Data Exchange (SEDEX) to streamline ethical and human rights compliance and monitoring. The businesses also conduct audits and use risk tools to understand potential human rights violations in their supply chains 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.
Our due diligence process
Wesfarmers has adopted a risk based approach to human rights due diligence and is currently focused on respecting the human rights of our direct employees and the human rights of those in our supply chains who are supplying own brand products in tier one factories or supplier sites. The due diligence processes are in varying degrees of development across the Group’s businesses. We recognise we are on a continuous journey to improve our human rights due diligence processes.
Our businesses conduct human rights due diligence assessments regularly. More about these due diligence processes is explained below.
Respecting the human rights of our employees
We have policies which embed the importance of “respect for the rights of all”, including our employees. 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.
Each division/business unit must establish and communicate policies, procedures and programs that are in line with our Equal Opportunity Policy.
Some of our businesses have gone beyond the minimum expectations set out by Wesfarmers' Equal Opportunity and Diversity policies, to develop policies specific to their workplace. Coles, for example, has introduced Gender Affirmation and Transition Guidelines to promote a supportive working environment for its transgender and gender diverse team members. Bunnings has an established Respectful Workplace Policy, as its culture is founded on values that go hand in hand with diversity: respect and innovation. Bunnings recognises that a diversity of cultures, backgrounds, experiences and education provides for a diversity of thought.
Freedom of association and collective bargaining
We recognise the right of those we employ to negotiate either individually or collectively, with or without the involvement of third parties. Collective agreements typically include provisions for notice periods and the provisions for consultation and negotiation. We also believe in maximising the flexibility of workplace arrangements available to our employees and their managers.
Respecting human rights in our supply chain
While our operations and supply chains are complex, our aim is to ensure that human rights are respected and understood. We regularly undertake the following due diligence actions to seek to ensure that modern slavery is not occurring in our supply chains and that human rights are being upheld:
Establishing which suppliers to work with
Taking a risk-based approach, the decision to conduct detailed due diligence on an own-brand supplier of goods for resale is based on the goods or services, country of origin and vendor. Before we contract with a new supplier who has been identified as high risk we require it to complete a self-assessment questionnaire. We investigate the supplier to understand risks of bribery, money laundering, human rights breaches, ethical sourcing and modern slavery. We also consider whether there may be any sanctions that may be in place against that supplier or the country in which it is located.
Communicating our ethical and responsible sourcing policy to suppliers
We will only work with suppliers to supply goods for resale who operate in line with our Ethical Sourcing Policy. This is communicated in our terms of reference with suppliers. Suppliers must agree to act transparently, to remedy any issues, and to drive continuous improvement. Each division/business unit must adopt policies and procedures so that suppliers engaged by the division/business unit to supply goods take all reasonable steps to comply with our minimum standards. These minimum standards include:
- No forced or bonded labour
- No child labour
- Wages, benefits and transparent record keeping
- Working hours. Working hours must comply with applicable local laws
- No discrimination
- No harassment or abuse
- Freedom of association
- Working conditions. Suppliers shall provide a safe and hygienic working environment that is without risk to health, taking into consideration knowledge of the relevant industry and any specific hazards
- No bribery
- Approved sub-contracting. There shall be no sub-contracting unless previously approved by Wesfarmers and/or divisions/business units*
- Environmental compliance
All suppliers producing goods for resale must agree to comply with these minimum standards in their agreements with our businesses.
Mapping our supply chain
To manage business and sustainability issues with such a complex supply chain we are working to map our suppliers beyond tier one (supplier producing the final product for resale) to include, where possible, tier two and three suppliers (suppliers producing components which go into a final product e.g. cotton suppliers).
Building long-term relationships
We aim to build long term direct relationships with suppliers as this may have a number of benefits. For example, a long term relationship may provide increased certainty for their businesses, may lead to increased efficiencies and productivity, and may result in the delivery of enhanced services and products while safeguarding human rights.
- Coles’ Australian fresh produce suppliers form a significant component of its supply chain. Coles has an Australian First Sourcing Policy, which aims to support Australian farmers and manufacturers when sourcing fresh produce and Coles brand products. At 30 June 2017, 96 per cent of fresh fruit and vegetables sourced for Coles’ customers are Australian-grown, along with 100 per cent of fresh milk, 100 per cent of eggs and 100 per cent of fresh meat from the meat department.
- Bunnings source 40 per cent of their products from businesses who manufacture in Australia and New Zealand. The countries and communities from which Bunnings source products are very important to Bunnings. Bunnings is committed to ensuring the products it sells comes from legal and sustainable operations, with good working conditions and fair treatment of people. Bunnings merchandising team and buying agents are responsible for building long term relationships with suppliers with a common vision towards a responsible and sustainable sourced supply chain.
Risk assessment and mitigation
We recognise that we must take steps to identify and address any actual or potential adverse impacts with which we may be involved whether directly or indirectly through our own activities or our business relationships. Our businesses have different modern slavery risks depending on various factors, including the level of human rights protection and enforcement in the countries where they operate or source from.
Our businesses use a number of tools and processes to better understand and manage these risks. For example:
- Country Risk Ratings to better understand local human rights contexts as well as exposure to related issues;
- Integrating responses to our due diligence into our internal systems, acting on the findings, tracking our actions, and communicating with our stakeholders about how we address impacts;
- Some of our businesses use the internationally recognised platform, SEDEX, to assess risk in the supply chain under this framework. Some suppliers complete an assessment and based on the results of the assessment, are deemed to be low, medium or high risk. This rating then determines future monitoring and assessment criteria.
As part of these processes, the apparel and agricultural industries have been identified as carrying a higher risk of child labour, forced labour and freedom of association, due to the lower skill level required in the manufacturing and farming processes. In addition, in recent years we have recognised that increased due diligence around human rights, including modern slavery, may be needed when our suppliers engage with third party labour hire companies, especially those who are lower skilled and providing physical labour.
To address these risks and to better respect and uphold human rights, we have undertaken a number of activities, including:
- To manage the risks in the agricultural sector Coles has introduced a new Ethical Supplier Policy. While the previous policy covered only high-risk suppliers, the new policy is aimed at ensuring that all Coles Brand suppliers are compliant with its expectations on ethical sourcing.
- Coles recognises that increased due diligence around human rights and modern slavery may be needed when our suppliers engage with third party labour hire companies. Coles has sought to monitor supplier risk through its use of the SEDEX platform and establish open engagement with external stakeholders including unions and government and relationships with suppliers through the Coles Agronomy Group.
- Coles previously sub-contracted its cleaning and trolley collection requirements. To minimise the risk of underpayment by subcontractors, Coles has moved all of its daily cleaning requirements and 90 per cent of trolley collection in-house. Third-party contractors responsible for the remaining 10 per cent of trolley collection are subject to a range of measures to monitor compliance. These include use of an approved payroll to maintain records, operations of a hotline to allow employees to report issues and annual reporting to the Fair Work Ombudsman.
- Bunnings continues to work towards mitigation of modern slavery within its supply chain. Bunnings established Timber policy provides transparency on human rights and sustainable outcomes within the supply chain. Bunnings is confident that more than 99 per cent of timber products are confirmed as originating from low-risk sources including plantation, verified legal, or certified responsibly sourced forests.
- Bunnings has conducted a review of its cleaning contractors to provide assurance that forced labour is mitigated. During the year, Bunnings became a key signatory to the European DIY Retailer Association (EDRA), linking DIY retailers together to share ideas on best practice in ethical and sustainable sourcing. The initiative allows retailers to come together to promote better labour and environmental conditions in the global home improvement supply chain.
- To manage the risks in the apparel industry Kmart and Target have joined the ILO/IFC Better Work program as a Buyer Partner. The Better Work program aims to make sustainable improvements in working conditions within the apparel industry and make the industry more competitive overall.
- Kmart and Target have continued their participation in the Action, Collaboration, Transformation (ACT) living wage collaboration. In the past year, ACT was established as a foundation in the Netherlands, an Executive Director was hired and secretariat established in Berlin, and ACT was formally recognised at the G20 Labour Ministers meeting in Hamburg.
- Kmart and Target along with other brands signed an Agreement with IndustriALL Global Union and Union Network International Global Union to extend the Bangladesh Accord on Building and Fire Safety to 2021.
Methodology used to track and measure performance
We measure Wesfarmers businesses’ performance in respect of ethical and sustainable practices against a number of key performance indicators including:
1. Coverage of our ethical sourcing audit programs including the total number of factories audited program; the number and nature of critical breaches; and the speed of remediation and improvement
2. Training and capacity building
3. Effectiveness of grievance mechanisms
4. Stakeholder engagement
1. Coverage of our 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 own brand suppliers. This year our ethical sourcing program covered more than 5,400 suppliers. Suppliers are considered lower risk if they are providers of recognised international brands.
The audit considers a number of factors, including 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.
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, and child labour. We remedied 44 of these issues immediately, formulated eight action plans that were compliant at the end of the reporting period and ceased supply orders relating to the remaining 29.
Where non-compliance is identified, the supplier is required to fix the issue within an appropriate period of time depending on the nature and severity 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 remedied. If a supplier then addresses non-compliance, it is deemed to be 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 stop buying 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 workers’ rights. The findings from our audit program and stakeholder engagements are fed into this training to ensure our teams improve their understanding of ethical sourcing and human rights. We train relevant employees on how to incorporate respect for human rights into all business decisions, 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 financial year ending 30 June 2017, our divisions delivered more than three thousand hours of training.
Cross-functional teams in our businesses regularly collaborate, as in our quarterly ethical sourcing forums, to discuss what types of goods which we procure may present higher risks for human rights breaches including modern slavery.
3. Effectiveness of grievance mechanisms
We place importance on the provision of effective company-based grievance mechanisms to escalate issues wherever human rights impacts occur in our operations. We continue to build the awareness and knowledge of our employees on human rights, encouraging them to speak up about any concerns they may have, without fear of retribution and with full confidentiality if required. They can speak up informally or through our whistle blower and human resources grievance channels. We also promote the provision and implementation of effective grievance mechanisms by our suppliers.
Our company based grievance mechanisms are accessible by our employees and external community and stakeholders. Information on the mechanisms may be accessed here.
We have also established specific grievance mechanisms for workers in our supply chain. 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, firstname.lastname@example.org. 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. Stakeholder engagement
We regularly engage with our stakeholders to understand their expectations.
Non-government organisations: Our divisions work collaboratively with non-government organisations (NGOs) on a range of projects. This year NGOs engaged with us on ethical sourcing and human rights generally as well as on the possible introduction of a Modern Slavery Act in Australia, which Wesfarmers supports. For example, Kmart and Target are members of ACT (Action, Collaboration, Transformation) a partnership between brands, retailers, manufacturers and IndustriALL (the global union) aimed at achieving living wages in apparel-sourcing countries.
Suppliers: Our businesses are committed to building strong and collaborative relationships with suppliers. By supporting our suppliers and producers, and helping them to grow their businesses and become more efficient, we are further enabling the delivery of great products to our customers.
For example, 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 (fertiliser & pesticides), water use and labour practices in the fresh produce industry.
Workers in our supply chain: Our businesses regularly engage with workers in tier one factories in our supply chain through factory visits (both announced and unannounced), our audit program and our grievance mechanisms (outlined elsewhere in this document).During the year our apparel businesses, Kmart and Target, participated in the following key initiatives aimed at enhancing their ethical sourcing programs and improving human rights in supply chain:
- Kmart joined the ILO/IFC Better Work program as a Buyer Partner. The Better Work program aims to make sustainable improvements in working conditions within the garment industry and make the sector more competitive overall.
- Kmart and Target continued their participation in the Action, Collaboration, Transformation (ACT) living wage collaboration. In the past year, ACT was established as a foundation in the Netherlands, an Executive Director was hired, a secretariat established in Berlin, and ACT was formally recognised at the G20 Labour Ministers meeting in Hamburg.
- Kmart trialled a wage monitoring system for suppliers in Bangladesh to improve transparency and enable tracking of wage movements over time.
- Kmart and Target along with other brands signed an agreement with IndustriALL Global Union and UNI Global Union to extend the Bangladesh Accord on Building and Fire Safety to 2021.
We track and publicly report on progress on an annual basis in our Sustainability Report.
Richard Goyder AO
Managing Director and Director Wesfarmers
13 October 2017
*Note this does not extend to Coles proprietary brand suppliers