In 2004 Wesfarmers celebrates two historical milestones – the 90th year since its foundation as a Western Australian farmers’ cooperative and the 20th year of life as one of the most successful companies listed on the Australian Stock Exchange.

Wesfarmers is a good example of a sustainable corporation. Sustainability, in the business context, requires a company to deliver good returns to its owners and to conduct itself in other ways that help contribute to its longevity. These include treating employees with fairness and respect, acting ethically and demonstrating a willingness to engage with the community beyond the primary contribution of job and wealth creation.

One of the ways in which a company can show it takes these issues to heart is to report publicly on performance in areas other than in respect of its legal obligations to disclose financial outcomes. This is the seventh such report we’ve produced and it incorporates some important new features, as I discuss below.

Before that, I want to thank all our employees for their dedication and constant efforts to improve performance in everything they do. Much has been achieved again this year and a couple of aspects deserve special mention.

The first is the decision by Bunnings to introduce a levy on plastic bags. Everyone agrees that disposal of these bags is a real issue for the environment. Bunnings has done something about the problem in a very practical demonstration of social responsibility.

We are proud also of the recognition of the work by our employees at the Premier coal mine in Western Australia. During the year, Premier won the mining section of the national Banksia Awards for sustainable development leadership.

On the safety side, three of our businesses – Kleenheat Gas, CSBP, and Wesfarmers LPG – achieved the group’s annual target of reducing accident rates by 50 percent. All our employees know the importance we place on working safely and while a lot remains to be done there have been very significant improvements over recent years.

REPORTING FORMAT

I mentioned earlier that this report contains some new features.

We have added a section at the front which covers key aspects of the whole group across a range of issues. For the first time, available data relevant to environmental, community or social impacts have been aggregated. And we’ve included information about economic impacts as well as aspects of the company’s approach to corporate governance. We hope that these changes will help readers who wish to assess the operations of the company in a wider context.

The name of the publication has been changed to reflect developments since 1998 when it focused entirely on environment, health and safety issues. These remain core corporate obligations but they need to be seen as part of a broader assessment of a company’s overall performance with respect to social responsibility and sustainability.

These initiatives, combined with refinements in the business unit texts such as clearly indicating success or failure in meeting priority targets and relating greenhouse emissions and energy use to units of production or a financial indicator, are part of the ongoing improvement of our reporting process.

We will continue to look at how the way we report might relate to the Global Reporting Initiative (GRI), an evolving international benchmark in this area. In the past year we sought advice from two external consultants about this and the changes to which I have referred incorporate some of their suggestions.

Where we will end up with respect to the GRI or similar reporting standards is not clear given that, consistent with our operating structure, this report will always be business unit-focused. There are real issues for a company such as ours in doing otherwise, in view of the very extensive sector and geographical diversity of our operations.

For example, stakeholder engagement is highly relevant and readily reportable for our coal mines at Collie in Western Australia and Blackwater in Queensland but difficult to address and measure for businesses like Bunnings and Blackwoods which have outlets in hundreds of different communities throughout Australia and New Zealand.

Similarly, we have a group-wide safety target but setting of other group goals may be less meaningful given the very different nature of our separate businesses. Some of our business units are also not yet at a point where they are able to measure accurately a number of indicators, although improvements were made this year with respect to reporting electricity use. A requirement for more specific individual business unit targets may be a better way to go.

Whether you are reading this report in hard copy form or accessing it via our website, I hope it will improve your understanding of how we approach many of the issues that are part of the social responsibility agenda of progressive companies in Australian and across the world. As always, we welcome your comments either by way of the reply paid form in the back of the report or electronically via our website.

Michael Chaney
Managing Director