Objective

As part of Wesfarmers’ commitment to sustainability, we produce an annual Sustainability Report. This is a voluntary document developed to communicate our company’s philosophy and commitment to sustainability. The objective of this report is to provide information to interested stakeholders about the economic, environmental and social impact of Wesfarmers and the businesses we operate.

What do we mean by ‘sustainability’?

In 1984, Wesfarmers set the provision of satisfactory returns to its shareholders as its key priority. Over the past 25 years, the role and responsibilities of business – particularly large companies such as Wesfarmers – have changed significantly. They are no longer judged solely on the quantum of their financial returns, but also on how they manage various external inputs and impacts that contribute to a strong bottom line.

As a result of these changing investor and other stakeholder expectations, the inputs that now drive a company’s commercial success have become broader and more complex. Every organisation will have different views and definitions as to what constitutes sustainability and the measures to define their sustainability objectives and performance, depending on the nature and scope of their business operations.

Wesfarmers believes that providing satisfactory returns for its shareholders in 2009 and beyond involves a focus on five key principles and actions. They are:

  • Our people: As one of the largest private sector employers in Australia, the quality and diversity of our employees is a key competitive advantage for our company. We aim to provide a safe, stimulating and ethical working environment that encourages high levels of personal and professional development.
  • Carbon/energy management: In an increasingly carbon-constrained world, reducing our carbon footprint is both a commercial priority and an environmental imperative. In line with proposed national emission reduction strategies, we seek to actively set both short-term and longer-term objectives to reduce our carbon footprint, while investing in new technologies that will contribute to the transition to a low carbon economy, as both a technology user and supplier. At the same time, we continue to set internal benchmarks that ensure the efficient and sustainable use of all our energy inputs.
  • Community investment: A first-rate business environment needs to be underpinned by a cohesive and inclusive community environment. Wesfarmers invests in and recognises those areas of community endeavour which it believes are necessary to contribute to building long-term community cohesion, leadership and innovation.
  • Our net environment footprint: In addition to energy and emissions, there are a number of inputs and outputs that are part of Wesfarmers commercial operations which have both direct and indirect environmental impacts. These include water usage, packaging, emissions to air, solid and liquid waste, and land rehabilitation. Each of these will be subject to ongoing planning and management to ensure that Wesfarmers continues to reduce its overall environment footprint.
  • A strong economy: A strong business environment and a strong economy go hand in hand. Wesfarmers seeks to maximise its contribution to the economy through long-term business growth that increases overall economic activity and its capacity to generate additional direct and indirect employment (we currently employ more than 207,000 people), our tax and royalty contribution that enables governments to invest in growing economic and social capital, as well as providing dividends and other investment returns to our more than 500,000 shareholders.

What this report covers

Timing

Coverage is for the financial year ended 30 June 2009. In a few cases where there have been developments subsequent to the end of the reporting period, but prior to the printing deadline, we have included and identified this information to make the report more time-relevant.

The structure

All wholly-owned and/or operationally-managed businesses as at 30 June 2009 are included.

In line with our commitment to continual improvement, changes have been made to the structure of this report. Each of the business unit reports summarises activities across the five key principles listed above, and which highlight their sustainability performance over the reporting period. In many instances, the business units have developed divisional sustainability reports which are available through our website www.wesfarmers.com.au, or on their own websites as specified in their section of this report.

In addition, to improve the collection and reporting of meaningful and accurate data across a variety of different operations, this year each business has supplied information across 13 common core indicators, which all contribute to the five principles: greenhouse gas emissions; energy use; water consumption; solid waste; liquid waste; environmental non-compliance; ethical sourcing; the National Pollutant Inventory; environmental expenditure; contamination; employee data, health and safety; and community contribution and support (in some cases data has been difficult to collect and these situations are described in the report). These indicators and their measurement were developed with the assurance providers for this report, Net Balance Management Group (Net Balance).

The assurance statement appears at the end of this report. The external assurance process, to the standards specified in the statement, is an important part of Wesfarmers’ commitment to transparent reporting of our activities.

The data collection and reporting of our community contribution and support has, for the first time this year, been conducted primarily using the London Benchmarking Group (LBG) methodology. The LBG is an international framework to record and measure an organisation’s community investment beyond its financial contribution. The LBG model recognises community contribution in four main categories: cash; time; in-kind contributions; and leveraged contributions where the organisation assists others to achieve objectives. These contributions must be made primarily for the benefit of the community, usually through community groups and charities. The LBG methodology was used for all businesses except Home Improvement and Office Supplies – in these cases the community contributions were verified by Net Balance as part of its broader assurance processes for this report.

Each of our businesses has a specific section in this report. A range of other part-owned businesses such as the Bengalla coal mine in New South Wales, Wespine softwood sawmill in Western Australia, Queensland Nitrates in Queensland and Gresham Partners Group Limited are grouped in the Wesfarmers section of the report. We provide links to websites for readers wishing to find out more about their activities. Within the report we also cover the operations of entities we do not fully own but for which we have operational control in the relevant divisional reports.

Safety data

Readers will notice in the safety performance graphs a reference to statistics being for the year to 30 June but ‘as at 30 September 2009’. This is because we adjust the numbers to take into account workers’ compensation claims lodged or lost time that has been reported up to 30 September relating to injuries sustained in the financial year under review, thus allowing for delayed impacts. It can mean that the numbers reported for a particular year have to be changed in subsequent reports, and also that they could be different to those in the 2009 Wesfarmers Annual Report which is prepared at an earlier date.

Lost Time Injury Frequency Rate (LTIFR – please refer to the glossary) numbers now include contractors unless otherwise specified in the reports of the individual businesses. Where it is possible to calculate a LTIFR for contractors – that is, where there is regular engagement and hours worked are available – the business is required to include this information.

Greenhouse emissions

Greenhouse emissions information contained in this report is generally based on the National Greenhouse and Energy Reporting (Measurement) Determination 2008 (NGERs – as applied in 2008/09), although for indirect emissions (such as Scope 3 electricity emissions, waste and air travel not included in the NGER Act) calculations are done in accordance with the Australian Greenhouse Office (AGO) Factors and Methods Workbook November 2008 version. Readers should note that some of the AGO’s (and now NGERs) emissions factors have changed from time to time and, accordingly, year-to-year changes in emissions data may in part be due to this rather than a change in the performance of a business unit in relation to greenhouse emissions. Further information is available at www.climatechange.gov.au

We have used an emission factor for New Zealand-based electricity generation and consumption from the Energy Greenhouse Emissions 1990-2006 document. Further information is available at www.med.govt.nz. These comments mean that the emissions we report here will be different to our NGER Act report which does not include New Zealand, or some other emissions summarised in the Sustainability scorecard.

Report preparation

Data collection and report drafting is the responsibility of business unit environmental, safety, sustainability and community relations representatives who are part of a working group convened by our corporate office. Drafts were reviewed by the corporate office prior to detailed discussions with the contributing authors.

This process ensures that ultimate ownership of the report lies with the business units. While this report does not include specific case studies from each of the business units – unlike in previous years – in many instances these have been included in the longer version of the business unit reports which are available online. However, we have included a detailed case study on Wesfarmers’ response and contribution to the Victorian bushfire tragedy in February 2009.

Glossary

Within each separate report we aim to eliminate as much jargon and technical terminology as possible and to spell out the names of organisations when they are first mentioned. A general glossary forms part of this report.

Completeness

We do not claim that this report provides 100 per cent coverage of our sustainability performance. Any gaps in our knowledge will be reduced as our systems improve. This document is a best-endeavours attempt to report openly and honestly based on our current state of knowledge.

Assurance

Internal verification

This report’s accuracy and completeness is important and every effort is made to ensure that all statements are properly authenticated. Once the final draft of each business unit report was agreed upon, business unit representatives were required to compile detailed checklists linking report content to documented source material. Representatives from our Corporate Solicitors Office and Group Risk Management department then conducted sample verification checks through site visits and desktop audits and prepared reports for senior management.

External assurance

Assessors from Net Balance carried out an independent assurance on this report using the AA1000 Assurance Standard 2008. The Assurance Statement forms part of this report. This is the third year that Net Balance has assessed the Wesfarmers report. It provides a detailed report to management and the Board’s Audit Committee on its assessment of the reporting process, which Wesfarmers will respond to. In addition, most of the information contained in this report about our community contribution has been independently verified by the managing organisation for the London Benchmarking Group model, and the verification statement can be found in the Sustainability scorecard. However, as noted earlier, the Home Improvement and Office Supplies data in this area was assured by Net Balance.

Wesfarmers endorsement

Senior management at each of the business units are involved in the preparation and sign-off of the internally-verified report. Each Managing Director and Board of the respective business units signs off on the final, externally-assured report. In addition to the internal and external verification process, the Wesfarmers Audit Committee (a sub-committee of the Wesfarmers Board) reviews the entire document prior to its publication. Richard Goyder, our Managing Director, endorses the final report.

Stakeholder engagement

Wesfarmers and its businesses have an extensive reach throughout Australia and New Zealand and interact with millions of customers each week, as well as many regulators and policy makers, non-government organisations, suppliers and contractors and community-based organisations. Many of these interactions are described in the various sections of this report (and the separate divisional reports). As part of the external assurance process for this report, we understand the AA1000 Standard 2008 requires certain formalisation of these processes, including the mapping of stakeholders which we elected not to pursue this year, and our assurance providers assess the extent to which we are inclusive of our stakeholders. Stakeholder engagement remains a central part of Wesfarmers’ obligations and we will work with our assurers through 2009/10 to address those parts of the Standard in this area that are most relevant to our businesses.

Feedback

Wesfarmers welcomes your feedback on this report. A form has been provided for you on the inside back cover; alternatively, you can email info@wesfarmers.com.au; or you can contact any of our business units about their individual reports at the websites listed in their sections.

Other public reports

In addition to this Sustainability Report, information regarding Wesfarmers’ activities can be found in:

This report uses only summarised financial and governance information with much more detail available in our 2009 Annual Report at www.wesfarmers.com.au