The Asia Century.

Chair: Robyn Leeson, Director, Net Balance Foundation;

Member, GRI Stakeholder Council

Amanda Keogh, Sustainability Manager, Fuji Xerox Australia

Kane Hardingham, Environment Manager, Woolworths Limited

James Porteous, Communications Advisor, MMG

Kane Hardingham Environment Manager

GRI ConferenceEthical and Sustainable Sourcing in Asia

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woolworths limited brands

ALH Group

woolworths limitedbrands

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sustainability strategy 2007–2015

zero food wasteto landfill by 2015

200m litres Reduce water usage by at least 200m litres a year by 2010

25% reduction in carbon emissions per carton delivered by Woolworths-owned trucks by 2012

40% reduction in carbon emissions on projected growth levels by 2015, bringing emissions back to 2006 levels

Up to

30% reduction in carbon emissions from our company fleet by 2010(from 2006 fleet emissions)

Targets and commitments

Ethical & Sustainable SourcingDevelop and implement policies for:

Ethical sourcing (fair labour and Fairtrade)Animal welfare Palm oilTimber, pulp and paperFish and seafood

sustainability strategy2007-2015

Targets and commitments

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Doing the right thing by our business and Creating shared value

– Create economic value for our business by addressing social and environmental challenges we face.

the business case for sustainability

productivity new markets

longtermprofitability

cre

at i

ng

shared value

employeewellbeing

employeedevelopment

investing incommunity

addressing environmental

impacts

sustainable sourcing

supporting suppliers

customers

productivity

productivity

marketshare

new markets

resource/cost efficiency

longterm security

of supply

supply chain security/efficiency

Working with our suppliers to ensure seafood supplies are available to feed the needs of our customers today and for future generations.

Providing the right information helping our customers to make informed choices about the sustainability of the seafood they buy from our stores.

Our long-term aim is to ensure that all our seafood is sourced from sustainable sources

We are committed to:

sustainable seafood

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- Global demand for palm oil is being attributed to continued deforestation

- Palm oil is an efficient crop and it’s cheap

- Woolworths was the first Australian retailer to join the Roundtable on Sustainable Palm Oil (RSPO)

- Woolworths aims to use only RSPO certified palm oil in its private label products by 2015

- 95% of Select products are palm oil free

- Woolworths has introduced on-pack labelling of palm oil , with 46% of products containing palm oil labelled as such (August 2011)

- Its an opportunity to drive market transformation but this needs to be managed in a responsible and sustainable way

palm oil

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- Some concerns about sustainable timber sourcing in Asia

- Woolworths increasing requirements for certified sustainable paper and wood products

- Select paper goods range is Programme for the Endorsement of Forestry Certifications (PEFC) certified

- All catalogues produced on PEFC certified paper

- Patio by Jamie Durie (trademark symbol) outdoor furniture range at BIG W is Forestry Stewardship Council (FSC) certified

- Not-for-resale office paper is FSC certified

- Masters’ wood procurement policy

sustainable forestry and timber sourcing

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animal welfare

We support and seek continuous improvement in standards of animal welfare

Poultry- Select branded eggs are all free range or barn laid

Fresh pork meat- Aim to move to 100% sow stall free pork- 52% of all fresh pork supplied to Woolworths are

produced from pigs born to sows reared in a sow stall free environment, and this will increase to 94% by 2013

Sales Growth for Free Range Products

ProductPercentage increase

in volumes in 2011* %Percentage of total

category volumes in 2011%

Free range chicken (Macro meat) 35.0 12.8

Free range chicken (Macro deli) 212.9 2.3

Free range eggs 12.8 27.6

Barn laid eggs 8.7 10.7

Organic Macro meat 36.4 0.9

* Percentage increase based on increased volume from previous financial year.

Woolworths is working with Landcare Australia to identify issues impacting on the security of production and supply of food in Australia.

Projects are supporting farmers to improve farming practices, water use efficiency, nutrient management and reduction of carbon footprint to

support a sustainable food supply.

Woolworths is also providing more than $150,000 of funding towards a grants program to help farming groups develop or implement sustainable farming practices.

Following on from significant stakeholder consultation in 2010, Woolworths and Landcare Australia pinpointed three key areas where support relating to on-farm practices was needed. The recommendations endorsed projects that would support farmers in the adoption of technology or practices to improve water use efficiency, nutrient management and their carbon footprint. These grants are being awarded to seventeen projects that are addressing one of these key areas.

Pat McEntee Woolworths General Manager Fresh Food believes that the grants will provide opportunities across many agricultural sectors for farmers to improve the sustainability of their operations.

“The Woolworths Fresh Food Future program is an important investment by Woolworths to continue supporting the sustainable production and supply of Australian food and farming groups or organisations involved in the primary production sector. “

Landcare Australia CEO, Heather Campbell, hopes that the grants will enable farmers to investigate the new innovations available in the sustainable agriculture sector.

“We are delighted to be involved with the Woolworths Fresh Food Future program. It is an opportunity for Landcare to provide further support for sustainable agriculture practice. It is giving farming groups the funding they need to explore new and improved methods of increasing sustainability”.

Fresh Food Future Grants Woolworths Landcare Sustainable Farming Project Highlights

NSW - Bega CheeseRestructuring dairy operations

WA - Rob Grylls trialling new fodder species for sheep

SA - Eyre Peninsula NRMProtecting large paddocks from drought

QLD - Boyne Calliope Catchment Group chasing parthenium

WA - Morawa Farm Imp.Group - Brine shrimp turn a salty liability into a resource

NSW - SNAGManaging soils through drought conditions

TAS - John & Wendy GeeSheep’s playgroundpays off

NSW - Murrumbidgee Landcare Network Hanging onto soil moisture during drought

NSW - GLENRAC Back to grass roots

FOLD

Our Fresh Food Future program aims to contribute to developing solutions for these challenges and it reaffirms our commitment to investing in the future of rural Australia and food security.

Fresh Food Future draws together a number of initiatives to address two main objectives:

– The advancement of agricultural sustainability; and

– Building leadership capacity in the sector.

fresh food futureobjectives

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fresh food futureour investment

Advancing sustainable agriculture

– Since 2007, we have invested over $6.6 million to support over 160 projects around Australia in partnership with Landcare

– $400,000 through our Fresh Food grants for suppliers.

Help build leadership capacity in the sector

– Annual investment of over $1.4 million in 2011 with several partners all working on attracting talent to the sector, retaining talent and developing leadership.

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labour conditions in a global supply chain

While 97% of our fresh food offer is sourced locally in Australia we source other product categories from a global supply chain.

Objectives:

– protecting corporate and brand reputation

– responding to our customers expectations

Scope:

– all Woolworths Limited’s businesses and brands

– environmental and socio-economic criteria

– all products or services imported whether sourced directly or through agents

– first tier suppliers/vendors

Policy applies to all suppliers but monitoring program applies to own brands

what does it mean in practice?

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- Don’t buy just by visiting showrooms and expos

- Visit the factory where product is made

- Simple observations and checks when you visit a factory:

- look for the age of the workers

- the safety measures around equipment – safeguards, personal protective equipment

- access to and cleanliness of facilities – toilets in the factory

- kitchen area and lunchrooms

- access to drinking water

- ask to visit the dormitory

- Do a pre-order audit before placing an order

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the real world

- We operate in a real world with no ‘Black and White’ simplicity

- Our focus is to improve the suppliers’ practices. We are also conscious that contract termination threats will only increase the practice of double books

- But we do have our tolerance threshold:

- Zero tolerance for bribery

- Existing suppliers – we expect improvements to be made in timely manner.

- New factories – we won’t place an order until improvements are made.

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progress so far

Human Rights and Labour Conditions

– Policy requirements have been communicated to all suppliers and form part of our Trading terms

– We have trained our buying and sourcing teams

– We have a comprehensive third party auditing program for suppliers of our own brands

71.5% of in-scope factories have been audited.

Audit Results – Factory Classification in 2011

Approved 42%

Conditionally Approved 54%

At Risk 4%

Audit Results – Number of Corrective Actions Raised in 2011

Critical 2%

Non-critical - high 75%

Non-critical - low 23%

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what do we find?

Bad

Good

Men’s bathroom facility left in a poor hygienic state

Clean, well maintained kitchen and canteens

Completely blocked fire exit

Workers demonstrating correct use of PPE Exit showing emergency lighting

No PPE beside eye protection for a worker using grinding equipment

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why we joined the Global Social Compliance Program (GSCP)?

- To support harmonisation of standards and convergence

- To give clarity to suppliers as to the expected benchmark

- Convergence is important as it reduces cost in the supply chain

- Systemic problems in countries with significant governance issues are beyond one company – power of collaboration

- Collaboration with other global brands increases our influence to make improvements

- The Equivalence Process provides the ability and confidence for us to accept other companies audits and move focus from auditing to helping with improvement programs

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what underpins this?

- How do we conduct our business to support ethical manufacturing?

- Simple measures can help factories to avoid excessive overtime:

- better planning and scheduling of orders

- be aware of cultural celebrations and Public holidays

- build these into your order timeframes

- Build long term relationships with the ‘Good’ suppliers

- give suppliers continuity of orders = job security for workers

- Consolidate sourcing to fewer factories

- larger order volumes create better incentive to collaborate in measures such as productivity improvements

We need to take responsibility too

- Woolworths have now issued four annual Corporate Responsibility Reports

- Last three were classified as A+ in the GRI application level checks

- Our ethical and sustainable sourcing policies and results help us meet many of the Human Rights and Environmental indicators in GRI

disclosure through the GRI

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Questions?