The business unit reports outlined in this document include a significant amount of information on the environmental, safety and health performance and community interaction across the business operations of the Wesfarmers Group. There have been some changes to the treatment of data and these changes have been highlighted and explained.
This scorecard section provides:
- snapshots of key data that summarise Wesfarmers’ overall sustainability contribution related to economic impacts and outcomes which are referred to in detail in the company’s Annual Report for 2008/09 available at www.wesfarmers.com.au;
- a summary of the sustainability performance of those parts of the Wesfarmers Group that do not fall directly under the nine operating divisions.
Starting as a farmer’s co-operative in 1914, the company has progressively evolved and diversified to become one of Australia’s largest publicly-listed companies and one of the country’s largest private-sector employers, with more than 500,000 shareholders and more than 207,000 employees at the report date.
In addition, as at June 2009, there were 51 Australian superannuation funds, each of which held more than 100,000 shares in Wesfarmers and which together held 7.99 per cent of our issued capital. Together with many funds holding smaller parcels of our shares or those investing in Wesfarmers through fund managers, this means that many Australian investors have a shared interest in the sustainable future of Wesfarmers and our capacity to continue to provide satisfactory returns to shareholders.
Our major operating business interests in the full year covered by this report include supermarkets, liquor and convenience stores; home improvement and office supplies; general merchandise and apparel; coal mining; insurance; industrial and safety products distribution; chemicals and fertilisers manufacture; and gas production and distribution and power supply.
In the year to 30 June 2009, our company recorded a net profit of $1,535 million, compared to $1,063 million in 2007/08. Key indicators of the Group’s financial performance indicators are summarised in figure 1.
Overall, our operations make a significant contribution to the economies of Australia and New Zealand. These contributions included more than $6,535 million paid in salaries and wages to employees, dividends to our shareholders totalling $1,102 million and $1,216 million paid to governments at all levels in the form of taxes, levies and royalties. More than 95 per cent of our revenues and earnings are derived from our Australian operations.
We are one of 19 Australian companies selected for inclusion in the Dow Jones Sustainability World Index for 2009 (as at 31 August 2009). The Index includes the top 10 per cent of the 2,500 biggest companies in the Dow Jones World Index in terms of corporate sustainability after assessment against economic, environmental and social criteria. We were also one of 30 Australian companies selected for inclusion in the Dow Jones Sustainability World Indexes for the Asia Pacific region (DJSI World – Asia Pacific).
The DJSI assessment (with assessments against the DJSI criteria) of Wesfarmers over the past three years has been shown in figure 2.
Wesfarmers’ diversified structure, in terms of the range of its businesses and the Group’s geographical spread across Australia and New Zealand, means the company is responsible for managing a wide range of environmental issues. Because of this diversity, the Group’s overall environment policy requires business units to develop policies and procedures that are relevant to their particular circumstances while ensuring that these policies and actions are in line with the Group’s overarching guideline of ‘placing strong emphasis on protection of the environment’.
Across the Group a number of significant environmental programmes are being developed and implemented, ranging from Bunnings’ commitment to become carbon neutral by 2015, initiatives to promote greater energy efficiency, renewable energy sourcing and carbon offsets, the commissioning of CSBP’s ammonium nitrate expansion project which includes significant pollution abatement, the expansion of CSBP’s nutrient-stripping wetland at Kwinana, and successful waste reduction and recycling programmes, focused particularly in our retail businesses. For example, Target and Officeworks removed single-use plastic bags from their stores in 2008/09 and instead encourage the use of alternatives.
We recognise that the use of fuels other than petrol and diesel is becoming increasingly important in the context of both achieving lower overall pollution levels and the climate change debate. We encourage the purchase of vehicles suitable for liquefied petroleum gas (LPG) use where practical in recognition of LPG’s environmental benefits over petrol1 and diesel2. We continue our efforts, through our Energy division, to expand the market for liquefied natural gas (LNG) as a substitute for diesel in the heavy duty vehicle and remote power generation sectors. The successful commissioning of a 175 tonne-per-day LNG plant at the Wesfarmers LPG site at Kwinana and investment in distribution infrastructure and two remote area power stations has increaded the availability of LNG as an alternative fuel in Western Australia.
1. Lower greenhouse emissions
2. Lower particulate emissions
Group environmental indicators
The information in this section includes data from three years wherever possible. Some of our businesses find that issues such as water and waste are difficult to accurately measure because of the shared location of their facilities, and some of the former Coles group of companies did not collect some of this data prior to being acquired by Wesfarmers in November 2007.
Greenhouse gas emissions
In previous years we have based our greenhouse gas emissions measurement on the AGO methodology. However, for 2008/09 Wesfarmers has registered as a controlling corporation under the National Greenhouse and Energy Reporting Act (NGERs) for which has been published a very complex set of reporting determinations that we are required to follow. This means that some of our data is not directly comparable year on year but where possible this is explained in the text. At the time of this report’s preparation Wesfarmers reported 5,708,687 tonnes CO2e in our NGERs report, whilst this report declares 6,546,026 tonnes CO2e (a difference of 837,339 tonnes CO2e). The difference is created by the definitional and legal requirements of NGERs with the major components (all quoted as approximate data in tonnes CO2e) comprising Scope 3 electricity transmission emissions (397,000); refrigerant gases excluded from NGERs (130,000); Air Liquide WA, which is reported in NGERs by Air Liquide Australia (82,000); New Zealand-based emissions (20,000); Coles Express and liquor small inventories of refrigerant gases not reportable under NGERs (57,000); and, the Coregas air separation unit at Port Kembla, New South Wales, which is deemed for NGERs purposes not to be under the operational control of Coregas (46,500). Other emissions included in figure 3 include gas transmission factors and waste-related emissions and some industrial emissions not able to be recorded in the NGERs regulatory system (40,000).
Our total direct and indirect greenhouse emissions for the Group in 2008/09 (converted to carbon dioxide equivalents or CO2e) were estimated at 6.55 million tonnes (see figure 3). This was 227,376 tonnes above emissions reported for last year.
The increase this year is in net terms and almost all due to increases in our Resources division reporting further fugitive emissions from coal mining as required by NGERs and the full year operation of CSBP’s ammonium nitrate expansion project. The increase in emissions would have been larger except for the Varanus Island incident in Western Australia in June 2008 which constrained gas supplies to several of our businesses during 2008/09.
Wesfarmers was again a respondent to the Carbon Disclosure Project (CDP) in 2009. Our submission is publicly available on the CDP website www.cdproject.net and provides full disclosure on our greenhouse emissions and our overall approach to climate change issues. In addition, Wesfarmers made several submissions to the Federal Government’s various policy processes related to the proposed Carbon Pollution Reduction Scheme (CPRS) for Australia. Wesfarmers supports the establishment of a national trading scheme. We believe while such a scheme will provide an effective market-based platform for reducing emissions, it must also carefully factor in economic conditions and ensure that the CPRS is aligned with similar schemes in other countries, while encompassing as many gases as possible. Our submissions outlined what we believed were important changes that needed to be considered to minimise the impact on Australia’s economic performance.
During 2008/09, the Board reviewed the proposal to prepare internal carbon emission targets for the Group. These targets will be achieved through a mix of energy efficiency, emission reduction and other related activities. The Federal Government’s deferral of the proposed CPRS start date to 2011 means that we are still reviewing how we will approach this important subject.
As part of our overall efforts to reduce emissions, we continue to contribute to a major emissions reduction initiative, the Coal21 Fund, which levies coal producers to fund research into low emission coal technologies. Our contribution to this fund is likely to reach $30 million over 10 years.
In addition, for the first time we will report the emissions related to our use of commercial air travel which were 31,253 tonnes of carbon dioxide equivalent (this number was calculated based on actual emissions from fuel burnt, the agreed National Greenhouse Accounts factor for ground support, and the forcing factor to account for emissions at altitude).
The total estimated energy use for our Group in 2008/09 was 29.76 million gigajoules, a decrease of about 4.2 per cent on last year. Again, most of the decrease was due to the Varanus Island incident in Western Australia which constrained supplies of natural gas to our Energy and Chemicals and Fertilisers divisions. Our energy usage is summarised in figure 4.
Wesfarmers is registered under the Federal Government’s Energy Efficiency Opportunities (EEO) laws, with an Assessment and Reporting Schedule (ARS) for our Group gaining regulatory approval in 2008. We subsequently submitted a revised ARS for the Wesfarmers Group, to suggest the removal of many small facilities from the formal assessment process. The revised ARS incorporates assessment of at least 92 per cent of all Wesfarmers energy use, covering the Group’s large energy users across the retail, industrial and insurance operations and is under consideration by the regulator.
We submitted our first public and government reports under the EEO legislation in December 2008, and the public report is available on our website at www.wesfarmers.com.au
As part of the preparation for the introduction of a national carbon emissions trading scheme, the Federal Government commenced the NGERs on 1 July 2008. This system will record the majority of Australia’s greenhouse emissions and energy use. Wesfarmers registered for NGERs in October 2008 and has implemented a new Group-wide, internet-based, information management system (Wesfarmers Greenhouse and Energy Reporting System – WESGERS) to both manage our NGERs reporting obligations, and also to inform and monitor our many energy efficiency programmes in the future.
The energy figure in our NGERs report will be different to the number in figure 4 below. The difference relates to legal and definitional issues required by NGERs and will be explained in this report next year.
Estimated water use (scheme and bore water) across the Group totalled 9,704 megalitres (see figure 5). Last year’s estimated total Group consumption was 9,966 megalitres with the reported decrease largely due to reduced water use at our mine sites and at Bunnings through their efficiency programmes. This decrease is offset by growth in Coles’ estimate of its water use.
We are continuing to seek methodologies to enable us to report at least estimated water use across the Group.
Solid and liquid waste data is presented, to the extent it is available and can be verified, in each of the divisional reports. In each of those reports there are comments on many of the waste reduction and recycling initiatives undertaken. As a result of these programmes and initiatives, our retail businesses alone recycled more than 175,000 tonnes of consumer packaging materials during the year.
All of our retail businesses are signatories to the National Packaging Covenant (NPC) through the registration of Wesfarmers Limited in 2009, which aggregated their previous individual registrations. The NPC is a voluntary packaging waste reduction and recycling initiative underpinned by a National Environment Protection Measure, and all retail businesses except our Industrial and Safety division reported publicly on their activities in late 2008 – these reports are available at www.wesfarmers.com.au. The Industrial and Safety division registered for the first time with the NPC through the Wesfarmers registration and will report publicly on its NPC action plan with our other retail businesses in October 2009.
Data on waste disposed to landfill is not complete, although several gaps in past recording and monitoring have been addressed for this year’s report. These improvements include the Coles business, which has developed reliable estimates of its waste disposal impact. We are not yet in a position to reliably report on our liquid waste disposal, particularly because we have so many retail stores in shared facilities without individual waste water invoicing.
We are not aware of any significant non-compliance with environmental regulations or any prosecutions relating to environmental issues during the year other than disclosed in the various business reports. In several of the business reports, there are detailed comments dealing with interactions with the various regulators during the year.
National Pollutant Inventory (NPI)
All of the Group’s Australian businesses required to report under the NPI (Resources, Chemicals and Fertilisers, and Energy) do so each year. Full details are available on the NPI website www.npi.gov.au, with 2008/09 data available at the end of January 2010.
Total environmental expenditure, including land remediation costs for the full 12 months, is $38.4 million (see figure 7). This compares with a 2007/08 total of $31.1 million. These costs include salaries and overheads, specific environmental projects and any other costs (such as fees paid to consultants) for an environment-related purpose.
Remediation of site contamination is an issue for some of our businesses and details are provided in the individual divisional reports. The most significant of these involve our Chemicals and Fertilisers business (CSBP), some former forest products operations of Sotico and some sites formerly operated by Wesfarmers Transport, a business that was sold several years ago. Wesfarmers is responsible for this remediation and financial provision has been made to cover the estimated cost of these activities.
CSBP is engaged in remediation of a former fertiliser site at Bayswater in Western Australia, details of which are outlined in its divisional Sustainability Report.
During the year Wesfarmers made some significant progress at the Pemberton and Manjimup sites formerly owned by Sotico in Western Australia, with extensive investigation, monitoring and review efforts. The report by the Appointed Independent Expert for Sotico and the Western Australian Government on our Pemberton site was completed after the report date, but does conclude that the remediation project has met the original objectives. Near the Manjimup site there are several properties owned by third parties that have been classified as Contaminated – Remediation Required under the Western Australian Contaminated Sites Act 2003. Our efforts this year have continued to be directed at investigating and modelling groundwater in the area to demonstrate that the risk to these properties is minimal and allow consideration for the site classification to be amended. We anticipate that our appointed site auditor will report on this issue to the regulator before the end of 2009. We have also decided on a remediation technology to be used at this site in 2009/10 and will report on this next year.
Monitoring and risk assessment continued variously at the former Wesfarmers Transport sites in Carnarvon and Port Hedland in Western Australia, together with additional remediation activities.
Wesfarmers is one of Australia’s largest private sector employers. More than 99 per cent of our over 207,000-strong workforce is located in Australia and New Zealand (see figures 8A and 8B) with this number growing by nearly 9,000, largely in our retail businesses, from the 2008 report date. A liquefied petroleum gas import terminal and distribution facility in Bangladesh, operated by a joint venture in which we are the majority partner, employs about 35 people, approximately 380 people are employed at our retail offices in Asia and over 100 people in our Insurance business in the United Kingdom. Many additional people are employed in businesses where we are an investor, but not the operator. Overall, in 2008/09, we paid $6.5 billion in salaries, wages and other benefits and our employees worked over 216 million hours (see figure 9).
In terms of workplace relations, we recognise the right of those we employ to negotiate either individually or collectively, with or without the involvement of third parties. The large majority of our employees are covered by collective agreements. At the same time, the company believes in maximising the flexibility of workplace arrangements available to employees and their managers.
Wesfarmers operates an employee share scheme and during the year 77 per cent of employees from eligible businesses took up the award of shares, while 14 per cent of employees from eligible businesses participated in the salary sacrifice share plan.
Gender diversity remains an important issue. Approximately 57 per cent of our employees are women and women occupy 953 (24 per cent) of the company’s management positions. At the senior management level there were 34 women, comprising 16 per cent of the total. At year’s end, our 19-strong Executive Committee had three women members. The Board of Wesfarmers has 10 directors, two of whom are female.
We have established policies across the Group aimed at ensuring that each person has equal access to employment opportunities, and that the benefits of employment are based on the principle of merit. Each business unit is required to complete an annual report to the Equal Opportunity for Women in the Workplace Agency. These reports outline strategies implemented to enhance the representation of women in our businesses.
Given our autonomously-operating business unit structure, training is one of the key human resource issues within the direct responsibility of business units. At the same time, key human capital development policies and processes apply across the Group. These include remuneration policies for the Group’s senior managers and workplace anti-discrimination and succession planning. For the first time in these reports we have collected Group-wide data on our training and development investment in our people which is explained to an extent in this report. Our recorded commitment in training and development was 1.56 million hours but we expect this to increase in future years, both through increased development activities and through better recording of expenditure.
We have a code of ethics and conduct that covers employee behaviour and while business units are encouraged to adopt standards that align best with their activities, these must embody the principles laid down in the Group code, which is available on our website. The code also contains a specific provision to protect whistleblowers.
Workplace safety remains one of the Group’s highest priorities. We believe we have an obligation to do all we can to ensure the safety in the workplace of everyone who works for our company, our visitors and customers.
We have a Group target of reducing accident rates by 50 per cent each year towards a goal of zero. The primary measure is the Lost Time Injury Frequency Rate (LTIFR).
This year saw an overall worsening in the Group’s reported safety performance, as measured by the LTIFR. For the reporting period, the Group LTIFR was 13.06, up from 9.94 for the previous corresponding period (this figure now includes Coles). There were 2,825 Lost Time Injuries over the period, including Coles.
On a business-by-business basis, Air Liquide WA, Wesfarmers LPG and enGen maintained a zero LTIFR and the Resources, Energy, Insurance, and Industrial and Safety divisions all improved or maintained their safety performance as measured by the LTIFR. Details of individual business safety outcomes are found in figure 10 and their individual reports (to allow for comparison between 2007/08 and 2008/09 figure 10 also includes data on the same basis as we reported in 2008).
While the LTIFR remains the main Group-wide measure of safety performance, operating businesses are encouraged to use a range of broader measures to promote a more pro-active approach and support a culture of safe work practices. These include statistics on all injuries, near misses and restricted work cases. Details, where applicable, are available in their individual sections of this report, or their own divisional reports on the websites.
The number of workers’ compensation claims for the year is shown in figure 11.
Details of instances where individual divisions are the subject of potential regulatory breaches are included in the various business reports.
In our 2009 Annual Report (available at www.wesfarmers.com.au) we provide a very detailed account of the governance structure and responsibilities of Wesfarmers Limited.
The Board’s charter requires it to have a majority of non-executive independent directors, a non-executive independent Chairman and different people filling the roles of Chairman and Chief Executive Officer.
Three standing Board committees (Nomination, Remuneration and Audit) review matters on behalf of the Board and make necessary recommendations.
The Board’s Market Disclosure Policy, which covers announcements to the Australian Securities Exchange, prevention of selective or inadvertent disclosure, conduct of investor and analyst briefings, media communication and other issues, is supported by an education and training programme overseen and monitored by the Audit Committee.
Community contributions and partnerships
The continuing successful operation of the Group’s businesses, in an ethical and socially responsible way, is the cornerstone of our contribution to the community. Through the creation of employment opportunities and the flow of economic benefits to employees, shareholders, and suppliers, and through the payment of taxes and royalties to governments, we are committed to having a positive impact in the broader community.
In addition, we believe in supporting the local and broader communities in which we operate by direct and indirect assistance to organisations and activities that provide a public benefit. That support is delivered by direct financial assistance and partnerships with Wesfarmers Limited, the parent company, and through financial contributions, sponsorships and other direct and indirect assistance from the Group’s individual businesses. The scope of many of these community investments is outlined in each of the various business sections in this report.
The Board of Wesfarmers Limited contributes up to 0.25 per cent of the Group’s before-tax profit each year (in 2008/09 over $4.78 million was contributed to community organisations, including through the Arts programme in this way). In deciding the distribution of these funds, the Board gives preference to activities focused on medical research and health, indigenous partnerships and education and the Wesfarmers Arts programme.
With the expansion of our retail businesses in 2007 through the acquisition of the former Coles group, our overall contribution to the Australian and New Zealand communities increased substantially. For this report, in order to more consistently report on our overall community contribution, Wesfarmers joined the London Benchmark Group (LBG). The LBG operates an assessment and verification process for organisations wishing to define their community contributions according to standard definitions and policies that are developed collaboratively by the LBG and its members. Further details are available at the LBG websites (www.lbg-australia.com and www.lbg-nz.com) but essentially the LBG process assesses community contributions in two main dimensions: firstly the direct cash, in-kind and product contributions or support made by the organisation that are not commercial in nature; and, secondly the community contribution facilitated by the organisation through assisting other community-based organisations to raise money or support through activities such as collections at point of sale, community functions, provision of space for fundraising activities and the like.
LBG undertakes a verification process across the Wesfarmers Group (with the exception of the Home Improvement and Office Supplies division, whose community contributions were assured by Net Balance as part of its overall assurance of this report – please note its Assurance Statement for specific comment on our community contributions) and provides us with a report on which the data in figure 12 are based, as well as the verification statement in the Sustainability scorecard.
The scope of many of our contributions is explained in the various divisional reports, or in the case study relating to the Victorian bushfires tragedy in February 2009 in this section of the report. However, some significant activities during the year included the first of five annual contributions of $900,000 to the Western Australian Institute of Medical Research; the Bunnings community barbeques that allowed community groups to raise approximately $12 million during the year; the Kmart Wishing Tree Appeal which helped to deliver over 400,000 gifts in late 2008 to our charity partners for distribution to families in need; and the Resources division’s support for Life Education Australia with its drug and alcohol education programmes.
London Benchmark Group verification statement
(Reproduced from the original provided, by Haystac Positive Outcomes, the LBG agents for Australia/New Zealand.)
‘The LBG model helps businesses to improve the measurement, management and reporting of their corporate community involvement programs. It moves beyond charitable donations to include the full range of contributions (in time, in-kind and cash) made to community causes, and assesses the actual results for the community and for the business (see www.lbg-australia.com for more information).
As managers of LBG Australia/New Zealand, we have worked with Wesfarmers Limited and its subsidiaries to review its understanding of the LBG model and how it has applied the model to a range of community programs. Our aim has been to ensure that the valuation principles are correctly and consistently applied. Having conducted an assessment involving scrutiny of a significant sample of contributions, we are satisfied that this has been achieved. Our work has not extended to an independent audit of the data.’
Wesfarmers supports a number of Australia’s leading arts companies through the award-winning Wesfarmers Arts sponsorship programme. This involvement stems from a belief that a vibrant cultural sector makes a positive contribution to the life of the community. The company’s nationally-recognised collection of Australian art is shared with the public through exhibitions and loans to galleries. During the year works from the collection featured in prominent exhibitions, including the nationally-touring Culture Warriors: Indigenous Art Triennial from the National Gallery of Australia.
We believe that the democratic process is strengthened if political organisations have the resources to develop sound public policy positions to put to the electorate. Financial contributions to parties can be made only by Wesfarmers Limited and not by any of our business units. During the year we donated a total of $113,181, split between the Liberal Party, the Australian Labor Party and the National Party. All donations are disclosed in November after the end of the financial year concerned to the Australian Electoral Commission which publishes this information on its website, www.aec.gov.au
In this report we provide detailed information on all the businesses we operate in Australia, New Zealand and other countries, whether they are fully or part owned by Wesfarmers. There are, however, a range of significant businesses in which Wesfarmers is a major investor, and some brief details are provided here, together with the relevant website address which includes more detailed information.
Queensland Nitrates Pty Ltd (QNP): Through our Chemicals and Fertilisers division (CSBP), we own a 50 per cent interest in QNP, located at Moura in the Bowen Basin in Queensland, an ammonium nitrate producer and supplier to the mining industry. For further information please visit www.csbp.com.au
Bengalla coal mine: Through our Resources division, we own a 40 per cent interest in the Bengalla coal mine in the Hunter Valley in New South Wales, through a joint venture with Coal and Allied, a member of the Rio Tinto group of companies. The Bengalla mine produces steaming coal for domestic and export markets. For further information please visit www.coalandallied.com.au
Gresham Partners Group Limited: Wesfarmers owns a 50 per cent interest in the Gresham Partners investment banking activities. Through several Gresham Private Equity funds, we are involved in the ownership and development of several companies including Silk Logistics Group, Barminco Limited, Witchery fashion, and the Geon group in the printing sector. For further information please visit www.gresham.com.au
Bunnings Warehouse Property Trust (BWPT): Wesfarmers owns 22.7 per cent of BWPT, which develops and owns properties for our Bunnings business and other retail/commercial companies. For further information please visit www.bwptrust.com.au
Wespine Industries: Wesfarmers owns 50 per cent of the Wespine plantation softwood sawmill at Dardanup in Western Australia, which has capacity to process in excess of 400,000 cubic metres of logs annually to produce more than 190,000 cubic metres of structural and appearance grade timber for Australian and export markets, although market demand was lower in 2008/09 due to reduced housing industry activity.
Wespine employs about 150 people, a reduction of over 30 per cent since 2007, due to operational efficiencies and reduced market demand. Wespine incurred only one Lost Time Injury in 2008/09, an improved safety performance compared with the previous year.
In December 2008, Wespine extended its plantation log supply agreement with the Forest Products Commission until 2033, thus providing long-term resource security for the business. In anticipation of increased demand for pest-resistant timber due to the detection of the European house borer in Western Australia, a new facility to produce treated structural timber (Wespine Blue) in-line, instead of via an off-site batch process, was completed in September 2009.
For further information, please visit www.wespine.com.au
Sotico: Wesfarmers owns and operates Sotico Pty Ltd, which has a large landholding of some 11,800 hectares at Boddington, 110 kilometres south of Perth, on which Sotico manages 3,300 hectares of pine plantation land and leases a further 1,000 hectares for eucalypt plantations. The balance of the land comprises native forest which is not logged currently. Sotico supplies over 20,000 cubic metres of pine log products to customers annually, including to Wespine. Sotico maintains annual certification of its Boddington site to Australian Standards ISO 9001 and 14001 and, in February 2009, its certification was upgraded to the 9001:2008 Standard.
In addition, Sotico owns approximately 10 hectares of land in the Pemberton townsite in Western Australia. Some 4.7 hectares of contaminated land has been subdivided and remediated in preparation for transfer to the State. The balance of the land has also been subdivided and individual commercial and residential lots are progressively being sold.