The UN Guiding Principles on Business and Human Rights

Wesfarmers is committed to human rights. The UN Guiding Principles Reporting Framework is the first comprehensive guidance for companies to report on human rights issues in line with their responsibility to respect human rights. This responsibility is set out in the UN Guiding Principles on Business and Human Rights, which constitute the authoritative global standard in this field.

This Reporting Framework developed by Shift and Mazars LLP provides a concise set of questions to which Wesfarmers strives to answer in order to know and show that it is meeting its responsibility to respect human rights in practice.

IndicatorDisclosureWesfarmers document
Part A: Governance of respect for human rights
Policy commitment
A1What does the company say publicly about its commitment to respect human rights?

At Wesfarmers we respect human rights. 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 ensuring that human rights are upheld across our operations and supply chain.

Modern Slavery Statement

2019 Annual Report

A.1.1How has the public commitment been developed
  1. Stakeholder engagement: We regularly and openly listen to our stakeholders to understand their expectations and how these might change.
  2. Our commitment and support of 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
  3. Our policies:
    The policies and frameworks that support our day-to-day operations are designed to ensure that all relevant universally recognised human rights are observed and safeguarded. Consistent with the principles 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 and collective bargaining. Our Group-wide Ethical Sourcing and Modern Slavery Policy sets the minimum standards expected of our divisions and each division has its own ethical sourcing policy appropriate to its business which it communicates to its suppliers. Our suppliers must agree to remedy any non-compliance with our ethical sourcing policy, and to pursue continuous improvement. 

Ethical Sourcing and Modern Slavery Policy

Inclusion Policy

Modern Slavery Statement

Materiality Process

A.1.2Whose human rights does the public commitment address?
  1. Our employees: We have policies which embed the importance of respects for the rights of all. 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. 
  2. Workers in our supply chain: Taking a risk-based approach, the decision to conduct detailed human rights due diligence on a supplier is based on the goods or services, country of origin and vendor. We assess our key human rights risk to be ethical sourcing and labour issues in our tier-one factories supplying own brand products and have reported on this since 2014. 

Ethical Sourcing and Modern Slavery Policy

Modern Slavery Statement

Code of Conduct

A.1.3How is the public commitment disseminated?Our public commitment to human rights is disseminated through:
  1. Wesfarmers Ethical Sourcing and Modern Slavery Policy
  2. Wesfarmers Modern Slavery Statement
  3. Wesfarmers Sustainability website
  4. Wesfarmers Annual Report

Ethical Sourcing and Modern Slavery Policy

Modern Slavery Statement

Sustainability website

2019 Annual Report

Embedding respect for human rights
A2How does the company demonstrate the importance it attaches to the implementation of its human rights commitment? Refer A.1.1

Modern Slavery Statement

2019 Annual Report

A.2.1How is day-to-day responsibility for human rights performance organized within the company, and why?All sustainability issues at Wesfarmers including human rights are managed at a divisional level by senior management with teams in place to identify and manage sustainability issues relevant for their business including modern slavery and human rights risks. Senior management in our businesses is also responsible for managing human rights issues with their suppliers. Each business has its own process and triggers for identifying human rights risks and impacts and makes use of platforms like the Supplier Ethical Data Exchange (Sedex) to streamline ethical and human rights compliance and monitoring. Our businesses also conduct audits and make use of risk tools to understand potential human rights violations in our supply chain 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.
Modern Slavery Statement
A.2.2What kinds of human rights issues are discussed by senior management and by the Board, and why?We assess our key human rights risk to be ethical sourcing and labour issues in our tier-one factories supplying own brand products and have reported on this since 2014. We therefore undertake a lot of work in this area. These issues are overseen through regular reporting to the Wesfarmers Audit and Risk Committee, a committee of the Wesfarmers Board.

Modern Slavery Statement

2019 Corporate Governance Statement

A.2.3How are employees and contract workers made aware of the ways in which respect for human rights should inform their decisions and actions?
  1. Code of Conduct

    Our Code of Conduct applies to all employees, consultants, contractors and suppliers. We also strive to ensure that these principles are respected by our joint-venture partners and non-controlled companies. Any form of recrimination against a person using our whistle-blower mechanisms will not be tolerated.

  2. Training and capacity building

    We deliver training on up-to-date 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 businesses. During the year, our divisions delivered more than 3,000 hours of training.

Ethical Sourcing and Modern Slavery Policy

Code of Conduct

A.2.4How does the company make clear in its business relationships the importance it places on respect for human rights?The Wesfarmers businesses conduct human rights due diligence assessments regularly. While our operations and supply chains are complex, our aim is to ensure that human rights are understood and upheld. We recognise that the complexity of our supply chains make it challenging to effectively manage business and sustainability issues. Accordingly, a risk-based approach is adopted to human rights due diligence, with a focus on protecting the human rights of our own employees and, as far as practicable, the rights of those within the supply chain who are providing own brand products to our businesses. To safe-guard against modern slavery across our supply chain, and ensure human rights are upheld, Wesfarmers and its businesses:
- undertake risk based due diligence on new suppliers and those considered high risk, based on the goods or services, country of origin and vendor;
- focus on suppliers who agree to operate in line with our Ethical Sourcing and Modern Slavery Policy; and
- as far as practicable, use in their operational and supplier contract terms a requirement that suppliers comply with our minimum standards, which include:
o No forced or bonded labour
o No child labour
o Legal minimum wages and benefits
o Transparent record keeping
o Working hours that comply with applicable local laws
o No bribery
o No discrimination
o No harassment or abuse
o Freedom of association
o Providing a safe and hygienic working environment that is without risk to health, taking into consideration knowledge of the relevant industry and any specific hazards
o Approved sub-contracting and no sub-contracting unless previously approved by Wesfarmers and/or divisions/business units (note this does not apply to providers of proprietary products)
o Environmental compliance

Ethical Sourcing and Modern Slavery Policy 

Modern Slavery Statement

A.2.5What lessons has the company learned during the reporting period about achieving respect for human rights, and what has changed as a result?

While high-risk jurisdictions mainly correlate to our suppliers from emerging markets, we know human rights issues can happen anywhere. We accept that we cannot consider suppliers low risk if they operate in more regulated countries, like Australia. 

We are also working with industry to provide better frameworks for managing labour providers in primary sectors.

Modern Slavery Statement

Code of Conduct

 
IndicatorDisclosureWesfarmers Document
B. Defining the focus of reporting
B.1Statement of salient issues: State the salient human rights issues associated with the company’s activities and business relationships during the reporting period.Refer A2.2Sustainability website
B.2Determination of salient issues: Describe how the salient human rights issues were determined, including any input from stakeholders.

To identify which issues to address as a business, we undertake a robust materiality process, at a Group level and for each division, each year. Each division gathers feedback from its stakeholders, then prioritises its most material issues, which are then addressed in our Sustainability website, in accordance with the disclosures required under the Global Reporting Initiative Standards.

At a Group level, we draw on a range of sources to identify our material issues. These sources include internal interviews with external stakeholder touchpoints, traditional and social media reviews, external reputational survey data, AGM questions, institutional and retail investor inquiries, non-governmental organisation interactions, employee feedback, peer reporting and an external stakeholder survey.

Identified issues are then prioritised according to their potential financial or reputational impact on the company, the size and nature of impact on stakeholders and the perceived societal importance of the issue.

Modern Slavery Statement

Materiality process

B.3Choice of focal geographies: If reporting on the salient human rights issues focuses on particular geographies, explain how that choice was made.Our businesses have different modern slavery risks depending on various factors, including the level of human rights protection and enforcement in the country where they are operating or sourcing from. We use risk-assessment tools to better understand local human rights contexts as well as exposure to related issues.

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.

Modern Slavery Statement

Sustainability website

B.4Additional severe impacts: Identify any severe impacts on human rights that occurred or were still being addressed during the reporting period, but which fall outside of the salient human rights issues, and explain how they have been addressed. N/A 
 
IndicatorDisclosureWesfarmers Document
C. Management of salient human rights issues
Specific policies
C.1Does the company have any specific policies that address its salient human rights issues and, if so, what are they?See item A.1.1

Code of Conduct

Inclusion Policy

Ethical Sourcing and Modern Slavery Policy

C1.1How does the company make clear the relevance and significance of such policies to those who need to implement them?We deliver training on ethical sourcing requirements to our team members, third party auditors, suppliers and factories to ensure they understand ethical sourcing risks and the standards expected by our divisions. Our divisions delivered more than 3,000 hours of training to more than 2,500 people demonstrating our commitment to improving our teams' understanding of this issue.

Our divisions continuously review and make enhancements to ensure our ethical sourcing programs are run effectively and are up to industry standards and the expectations of our customers and stakeholders. The ethical sourcing teams in the divisions participate in forums and seminars and have regular discussions with other stakeholders including retailers, industry associations, non-government organisations and third-party audit firms to understand emerging trends and risks. 

Our cross-business ethical sourcing forum meets quarterly to share best practice and audit program outcomes, and ethical sourcing practices are reported regularly to the Wesfarmers Audit and Risk Committee.

Sustainability website

Modern Slavery Statement

Stakeholder engagement
C.2What is the company’s approach to engagement with stakeholders in relation to each salient human rights issue?

We regularly and openly listen to our stakeholders to understand their expectations and how these might change.

At a Group level, Wesfarmers considers the interests of a wide cross-section of stakeholders in a variety of ways, determined by the actual or potential impact of our business on their interests. These stakeholders include media, suppliers, non-government organisations, trade unions, government, shareholders, customers and employees.

We will engage with stakeholders differently and at different times as appropriate for the nature of their concern.

Sustainability website: Stakeholder Engagement

Modern Slavery Statement

C2.1How does the company identify which stakeholders to engage with in relation to each salient issue, and when and how to do so?

See C2

Modern Slavery Statement

Sustainability website: Stakeholder Engagement

Whistleblower Policy

C.2.2During the reporting period, which stakeholders has the company engaged with regarding each salient issue, and why?See C2Sustainability website: Stakeholder Engagement
C.2.3During the reporting period, how have the views of stakeholders influenced the company’s understanding of each salient issue and/or its approach to addressing it?Refer B2. Following our robust materiality process which involves capturing the views of our stakeholders as outlined in B2, all our businesses set their strategy and approach appropriate to their operations. This also includes determining appropriate disclosures.

Sustainability website: Stakeholder Engagement 

Modern Slavery Statement

Assessing impacts
C.3How does the company identify any changes in the nature of each salient human rights issue over time? Refer C.1.1

Sustainability website

Modern Slavery Statement

C3.1During the reporting period, were there any notable trends or patterns in impacts related to a salient issue and, if so, what were they? Refer A.2.5 

Modern Slavery Statement

Code of Conduct

C3.2During the reporting period, did any severe impacts occur that were related to a salient issue and, if so, what were they?

During the year, we identified 127 critical breaches across 90 factories in our audit program. The major critical breaches identified included allegations of excessive overtime, transparency, safety, forced labour, unauthorised subcontracting and bribery. Where a non-compliance is identified, the factory is required to fix the issue, within an appropriate period of time, depending on the materiality of the non-conformance.

We were able to remedy 69 of these issues immediately, 43 had action plans that were on track at the end of the reporting period, five were exited immediately and no further supply orders were placed at the remaining 10.

Our businesses regularly engage with workers in tier one factories in our supply chain through factory visits (either announced and unannounced), our audit program and our grievance mechanisms. Through these engagements, we seek feedback on how well the policies and procedures outlined in our Wesfarmers Modern Slavery Statement work in practice.

Sustainability website: Ethical Sourcing and Human Rights
Integrating findings and taking action
C4How does the company integrate its findings about each salient human rights issue into its decision-making processes and actions?Refer  A.2.1Modern Slavery Statement
C4.1How are those parts of the company whose decisions and actions can affect the management of salient issues, involved in finding and implementing solutions? Refer  A.2.1Modern Slavery Statement
C4.2When tensions arise between the prevention or mitigation of impacts related to a salient issue and other business objectives, how are these tensions addressed?We do not expect that tensions would arise between the prevention or mitigation of impacts related to salient issues and other business objectives. Wesfarmers acknowledges the role and responsibility of the business to safeguard human rights through ethical and sustainable business practices across Wesfarmers operations and supply chain. It recognises that human rights is an area of significance to Wesfarmers employees, shareholders, customers, and the communities in which it operates. There is therefore both a business and a moral case for seeking to ensure that human rights are upheld across our operations and supply chain.Modern Slavery Statement
C4.3During the reporting period, what action has the company taken to prevent or mitigate potential impacts related to each salient issue?

To mitigate the risk of unethical practices occurring in our supply chains, the relevant Wesfarmers businesses (Bunnings, Target, Kmart, Officeworks, and Industrial and Safety) apply an 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 3,773 factories across our international and local supply chain. The number of factories audited this year has fallen, relative to last year, in part due to the Coles demerger. In addition, some of our businesses have continued to reduce their supplier numbers. This reflects their preference for longer-term strategic partnerships with fewer suppliers and factories.

Audits are undertaken by third party audit firms from a list of our division’s approved audit lists or by our team. 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 critical breaches are found, an audit will be repeated within six months depending on the situation to confirm that any findings have been addressed.

Modern Slavery Statement
Tracking performance
C5How does the company know if its efforts to address each salient human rights issue are effective in practice?We measure Wesfarmers businesses’ human rights performance against a number of key performance indicators including:
  1. Coverage of our ethical sourcing audit programs including total factories in audit program and number and nature of critical breaches
  2. Training and capacity building
  3. Effectiveness of grievance mechanisms
  4. Stakeholder engagement

Sustainability website: Stakeholder Engagement 

Sustainability website: Ethical Sourcing and Human Rights

Modern Slavery Statement

C5.1What specific examples from the reporting period illustrate whether each salient issue is being managed effectively?

1. Ethical sourcing audit programs

To mitigate the risk of unethical practices occurring in our supply chains, the Wesfarmers businesses procuring goods for resale apply a human rights and ethical sourcing audit program to certain suppliers. Suppliers are considered lower risk if they are supplying recognised international brands. 

This year, our audit program covered over 3,000 factories across our international and local supply chain. The number of factories audited this year has fallen, relative to last year, in part due to the Coles demerger. In addition, some of our businesses have continued to reduce their supplier numbers. This reflects the preference among some of our businesses for longer-term strategic partnerships with fewer suppliers and factories. Audits are undertaken by third party audit firms from a list of our division’s approved audit lists or by our team. 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 critical breaches are found, an audit will be repeated within six months depending on the situation to confirm that any findings have been addressed. 

During the year, we identified 127 critical breaches across 90 factories in our audit program. The major critical breaches identified included allegations of excessive overtime, transparency, safety, forced labour, unauthorised subcontracting and bribery. Where a non-compliance is identified, the factory is required to fix the issue, within an appropriate period of time, depending on the materiality of the non-conformance. We were able to remedy 69 of these issues immediately, 43 had action plans that were on track at the end of the reporting period, five were exited immediately and no further supply orders were placed at the remaining 10.

Our businesses regularly engage with workers in tier-one factories in our supply chain through factory visits (either announced and unannounced), our audit program and our grievance mechanisms. Through these engagements, we seek feedback on how well the policies and procedures outlined in our Modern Slavery Statement work in practice.

2. Training and capacity building 

We deliver training on modern slavery and 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 2019, our divisions delivered more than 3,000 hours of training.

Cross-functional teams in our businesses regularly collaborate, including through our quarterly human rights forums, to discuss what types of goods we procure which may present higher risks for modern slavery.

We recognise that one company cannot work on modern slavery issues in isolation so we collaborate with government, other companies and the NGO sector to tackle this issue. During the year, Wesfarmers Chairman Michael Chaney represented the company at the Bali Process Government and Business Forum. He said “Our participation in important forums like the Bali Process reflects the unfortunate reality that modern slavery is a growing and extremely complex problem, best tackled by a collective commitment and responsibility to bring it to an end. But companies cannot do this alone: it requires governments to recognise the problem and work with companies involved in their countries to end modern slavery.” 

3. Grievance mechanisms 

We place importance on the provision of effective company-based complaints or grievance mechanisms to escalate issues wherever human rights impacts occur in our operations. We continue to build the awareness and knowledge of our team members on human rights, encouraging them to voice their concerns without fear of retribution and with full confidentiality if required. The Wesfarmers Whistleblower Policy is public, sets minimum standards for our businesses and contains details of how to make a report under the policy. Each division has external and internal whistleblower grievance channels and the number and nature of the contacts are reported annually to the Wesfarmers Audit and Risk Committee. We also promote the provision and implementation of effective grievance mechanisms by our suppliers.

Our company-based whistleblower hotlines are accessible by our team members, suppliers, the external community and stakeholders.  

This year we received around 300 reports from whistleblowers through our hotlines and direct to protected disclosure officers across the Group, which were mostly work related grievances, with other disclosures relating to potential fraud, breaches of our code of conduct, harassment and bullying and discrimination.

4. Engaging with stakeholders 

We regularly and openly listen to our stakeholders to understand their expectations and how these might change. For example, Bunnings engages different stakeholders regularly in person to provide their views and share their expectations.

We will track and publicly report on progress on an annual basis in our Sustainability website.

 

Sustainability website: Ethical Sourcing and Human Rights

Modern Slavery Statement

Whistleblower Policy

Remediation
C6How does the company enable effective remedy if people are harmed by its actions or decisions in relation to a salient human rights issue?Refer C3.2

Sustainability website: Ethical Sourcing and Human Rights

2019 Corporate Governance Statement

C6.1Through what means can the company receive complaints or concerns related to each salient issue?Refer C2.1 

Modern Slavery Statement

Sustainability website: Stakeholder Engagement

Whistleblower Policy

2019 Corporate Governance Statement

C6.2How does the company know if people feel able and empowered to raise complaints or concerns? Refer C2.1 

Modern Slavery Statement

Sustainability website: Stakeholder Engagement

Whistleblower Policy

2019 Corporate Governance Statement

C6.3How does the company process complaints and assess the effectiveness of outcomes? Refer C5.1 Grievance mechanisms 

Modern Slavery Statement

Sustainability website: Stakeholder Engagement

Whistleblower Policy

2019 Corporate Governance Statement

C6.4During the reporting period, what were the trends and patterns in complaints or concerns and their outcomes regarding each salient issue, and what lessons has the company learned? Refer C3.2Sustainability website: Ethical Sourcing and Human Rights
C6.5During the reporting period, did the company provide or enable remedy for any actual impacts related to a salient issue and, if so, what are typical or significant examples?Refer C3.2

Sustainability website: Ethical Sourcing and Human Rights

GRI Standards reference: GRI 102-12