Ethical sourcing and human rights
We strive to source products in a responsible manner while working with suppliers to improve their social and environmental practices.
For Wesfarmers, long-term success requires that we engage fairly with our suppliers, sourcing ethically and sustainably, and that we work with them to ensure human rights are understood and respected.
Wesfarmers is committed to respecting internationally recognised human rights as set out in the Universal Declaration of Human Rights, the International Covenant on Civil and Political Rights, and the International Covenant on Economic, Social and Cultural Rights.
Our aim is to ensure our team members and workers in our supply chains work in safe, fair workplaces, where rights are respected. We recognise modern slavery is a complex problem and best tackled through collaborative action by like-minded organisations.
Our Approach to Human Rights details Wesfarmers most salient human rights issues. The Wesfarmers Ethical Sourcing and Modern Slavery Policy sets out minimum standards to ensure the Group sources products and services in accordance with legal obligations and community expectations, while working with suppliers to improve their social and environmental practices. It seeks to prevent, mitigate and where appropriate, remedy instances of modern slavery in our operations and supply chains.
Among other matters, our minimum standards prohibit forced and bonded labour, require adherence to laws governing working ages and working hours, seek to ensure safe and healthy working conditions, transparent record keeping, recognise the rights to freedom of association, collective bargaining and grievance mechanisms. The policy also details minimum standards for management of modern slavery risks.
Wesfarmers supply chain
Across the Group, Wesfarmers has nearly 31,000 suppliers producing goods and providing services in more than 40 countries. The divisions directly source products from about 15,500 third-party suppliers and procure services from about 15,500 service suppliers. Our top five sourcing locations in the 2023 financial year were Australia, Bangladesh, China, India and the Republic of Korea.
Our divisions’ supply chains are often complex with multiple tiers, sometimes spanning multiple countries. The divisions do not own the supplier sites or factories where own-brand products are manufactured, rather we engage suppliers to manufacture goods for us.
Our 15,500 service suppliers provide transport and logistics, maintenance and repair, cleaning and waste removal, property and security, training and other professional consulting services. Some categories of service suppliers are in areas with potentially more vulnerable workers – across the Group this includes cleaning contractors and personal security contractors.
Detailed supply chain mapping, including beyond tier one suppliers, helps to mitigate ethical sourcing risks and leverages our scale and partnerships to deepen awareness and respect for human rights. Our contractual arrangements are principally with our tier one suppliers.
Each division has mapped its tier one suppliers and undertaken an initial risk assessment for own-brand goods to determine which suppliers are included in their ethical sourcing programs. This process includes consideration of information about the supplier, spend with the supplier, the type of product being sourced (including any assessed risks) and country of origin. To increase transparency, some divisional ethical sourcing teams are investigating value chains to tier two and even tier three suppliers and, in some cases, progressing the public disclosure of tier two suppliers in their supply chains.
Supplier due diligence, monitoring and reporting
Our divisional ethical sourcing due diligence programs vary, consistent with their diverse operations and industries, however, they share a broadly common methodology to assess, identify, manage and mitigate human rights risks, which are in line with leading international practice.
Across the Group, suppliers complete mandatory pre-qualification questionnaires and depending on their assessed risk level, ongoing monitoring if they are included in the ethical sourcing program.
Our divisions also monitor emerging human rights issues and identify opportunities to influence the actions of our suppliers to mitigate risks, including through collaborations with other organisations.
This year, our divisional ethical sourcing programs monitored 3,050 sites and 1,895 suppliers (recognising that a supplier may source through many sites), from a total of 4,563 sites and 2,880 suppliers in divisional ethical sourcing programs. Approximately 67 per cent of sites and 66 per cent of suppliers in the program were monitored in the 2023 financial year, an increase from 61 per cent of sites and 63 per cent of suppliers in the prior year. Monitoring seeks to ensure compliance with the Wesfarmers Ethical Sourcing and Modern Slavery Policy.
Monitoring activities include self-assessment questionnaires, supplier endorsement processes, supplier visits, independent and extensive third-party audits, and reports through grievance mechanisms. The frequency of monitoring varies from three to 24 months, depending on prior audit findings and the level of assessed risk.
Where monitoring identifies instances of non-conformance with our standards, these are classified as minor, major or reportable breaches. During the year, our ethical sourcing due diligence program identified a total of 410 reportable breaches. The reportable breach classification is based on the Wesfarmers Ethical Sourcing and Modern Slavery Policy and the Sedex Members Ethical Trade Audit (SMETA) methodology. It captures any imminent threat to a worker’s safety that presents a risk to life, evidence of fraud, coercion, deception or interference, or certain repeat findings that have not been addressed over time.
This year, the main reportable breaches were related to:
- health, safety and hygiene (30 per cent of reportable breaches)
- working hours (28 per cent of reportable breaches)
- wages and compensation (20 per cent of reportable breaches)
- management systems
- environmental management.
Further details on the due diligence and reporting process can be found in Wesfarmers Modern Slavery Statement, due for release in late 2023.
See Our data for additional ethical sourcing and modern slavery metrics.
Actions taken to address human rights risks identified
When a non-conformance is identified, whether through monitoring, grievance mechanisms or worker voice channels, the divisions work in partnership with their suppliers and manufacturers on ways to remediate concerns. Examples include additional targeted capacity building and training, open discussions with a supplier, changes to a division’s sourcing practices or involvement in industry-based initiatives. Our response depends on the severity of harm (or potential harm). It may include immediate rectification, making good any harm experienced by an individual and work to prevent future harm.
All sites with non-conformances, whether minor, major or reportable breaches, are subject to ongoing due diligence monitoring. The type of non-conformance also determines the follow-up. During the year, 39 per cent of reportable breaches were remediated and 49 per cent were being remediated. This year, we exited seven suppliers or their sites where remediation of a reportable breach could not be achieved.
It is rare for divisions to exit a site or supplier for non-conformances, including reportable breaches. Instead, the divisions aim to engage closely with the supplier to support remediation through a corrective action plan.
Consistent with our policies, the United Nations Guiding Principles on Business and Human Rights (UNGPs) and International Labour Organization conventions, we aim to have effective grievance mechanisms available for workers in our supply chains, to confidentially raise concerns including business-related human rights risks. Grievance mechanisms are deployed at 1,634 sites in 10 countries.
Ethical sourcing training
Training team members is a key strategy to increase alignment with our minimum standards and reduce the risk of non-conformances. This year, more than 3,300 hours of training and education was delivered to team members on human rights (as established by the Universal Declaration of Human Rights and other international instruments), ethical sourcing risks and mitigation strategies, and ethical buying practices. Training was also provided to selected supply chain partners throughout the year, including as a component of the rollout of grievance mechanisms at new sites.
Salient human rights risk assessment
In 2021, Wesfarmers undertook a process with an independent human rights adviser to determine the salient human rights issues for all our divisions.
This analysis considered the concept of severity and its component parts of scale, scope and irremediability, as elaborated in the Reporting Framework of the UNGP on Business and Human Rights. Identifying our salient human rights issues helps to focus our efforts on the management of human rights risks across our operations and supply chains. The assessment identified the importance of maintaining safe and fair workplaces for our team members across our operations. The divisions’ operations are primarily conducted in low modern slavery risk countries, such as Australia and New Zealand. The divisions monitor and address human rights issues in their workforces under the Wesfarmers Code of Conduct and Diverse, Inclusive and Respectful Workplaces Policy.
GRI 2-6, GRI 2-23, GRI 3-3, GRI 407-1, GRI 408-1, GRI 409-1, GRI 414-2