Wesfarmers completes an annual sustainability materiality assessment to understand which issues and topics matter most to and have the greatest impact on our stakeholders, the external environment and our business. We have regular engagement with our stakeholders to identify, understand and prioritise the sustainability issues and topics that matter most.
We present our material issues using the GRI Sustainability Reporting Standards 2021. We monitor issues to determine if they are becoming more or less important, identify emerging issues, and ensure we are broadly aligned with our stakeholder expectations.
Divisional materiality process
We are a diverse conglomerate and our business operations include: home improvement, outdoor living products and supply of building materials; general merchandise and apparel; office and technology products; health, beauty and wellbeing products and services; management of a retail subscription program and shared data asset; wholesale distribution of pharmaceutical goods; manufacturing and distribution of chemicals and fertilisers; development of an integrated lithium project, including mine, concentrator and refinery; industrial and safety product distribution; gas processing and distribution; and management of the Group’s investments.
As each of our autonomous divisions face unique challenges and operate in different environments, each division conducts its own annual materiality assessment by gathering feedback from its stakeholders and prioritising its most important sustainability issues. Wesfarmers then consolidates these divisional materiality assessments by scoring them according to how often they are identified as a material issue. An average is then taken of individual material issues. This score of each division-identified material issue is an input to the Group materiality assessment.
Group materiality assessment process
1. Gather inputs to develop a list of issues
Wesfarmers’ materiality assessment methodology is based on research and engagement. We source information on potential issues that our Group might face or impact. Wesfarmers engages with external and internal stakeholders during the year and draws on their feedback as an input to the materiality assessment.
Internal stakeholder feedback is sourced from the above divisional materiality assessments, risk appetite statements reflecting managements’ assessment of material risks, issue coverage in policies and procedures, director feedback from executives and team member surveys.
Externally, we collect stakeholder inputs through feedback from investor engagement, media coverage assessments, lender and analyst research, non-government organisations, campaigners, and feedback from government conversations.
As Wesfarmers’ structure evolves through acquisitions and divestments, the peers benchmarked are updated to reflect our current portfolio of businesses. In the 2023 financial year, two new peers were added in our benchmarking assessment to reflect the new risks and opportunities that have come from the inclusion of Wesfarmers Health.
2. Prioritise issues
The identified issues are prioritised according to their potential financial or reputational impact on Wesfarmers and our ability to influence the issue. Each year, we apply the same scoring methodology for all stakeholder groups, which we believe provides consistency in our annual assessment to compare and monitor issues across time. Each issue is scored against a set of criteria and a weighted average for internal and external stakeholder groups is applied in order to determine a ranking of the identified issues.
The top 10 ranked issues according to this process become our priority material issues.
The issues are reviewed during and at the end of the process. Independent sources of information, including the UN Sustainable Development Goals and World Economic Forums Global Risks Report, are used to validate the issues identified during the process.
4. External review
Our methodology for undertaking a materiality assessment and the outcomes of the issues prioritised are reviewed by a third party.
Our materiality process was carried out in accordance with the GRI Sustainability Reporting Standards. Ernst & Young provided limited assurance on the process this year.
5. Wesfarmers Board approval
Once the materiality assessment report is completed, it is reviewed by Wesfarmers executives and presented for discussion and consideration by the Wesfarmers Audit and Risk Committee, then the Wesfarmers Board.
In the 2023 financial year, our internal and external stakeholders were broadly aligned on our most material sustainability issues, which is also consistent in recent years. Climate change is the most important issue and includes emissions reduction and energy use. For our businesses, the safety and health of our team members remain our highest priority, and we remain focussed on ethical sourcing and the human rights of workers in our supply chains.
The top 10 Wesfarmers material sustainability issues were:
- climate resilience
- ethical sourcing and human rights
- health, safety and wellbeing
- data and cyber security
- governance, compliance, conduct and ethics
- people development, diversity and inclusion
- circular economy
- advancing reconciliation
- product quality, safety and standards
- economic and community contributions.
Outside the top 10 issues, we noted two additional emerging material sustainability issues. Firstly, our potential impact and our reliance on nature is rapidly becoming a key area of focus, as nature is acknowledged as a key link to climate change. Wesfarmers expects the importance of natural ecosystems and the focus on nature-related impacts, opportunities, risks and reliance will increase. Wesfarmers will continue to monitor this issue.
Secondly, animal testing and welfare has been identified as an emerging material sustainability issue with the addition of health and wellness to the Wesfarmers portfolio. Wesfarmers Health has updated its Ethical Sourcing and Modern Slavery Policy to reflect its expectations of suppliers to address animal welfare.
GRI 2-2, GRI 2-14, GRI 3-1, GRI: 3-2, GRI: 3-3