Independent Assurance Statement

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To the Directors of Wesfarmers Limited:

Wesfarmers Limited (Wesfarmers) commissioned Net Balance Management Group Pty Ltd (Net Balance) to provide independent assurance of its 2013 Sustainability Report (the Report). This statement provides a brief summary of the assurance outcomes. A full copy of the assurance statement is provided at www.wesfarmers.com.au/sustainability-reporting

Assurance standards, objectives and scope

  1. Net Balance provided Type 2 assurance in accordance with AccountAbility’s AA1000 (2008) Assurance Standard (AA1000AS). This involved assessing the organisation’s adherence to the AA1000 AccountAbility Principles (2008) of Inclusivity, Materiality and Responsiveness and assessing the reliability and quality of the sustainability information contained within the Report. 
  2. Net Balance also assured selected performance data in accordance with Australian Standards on Assurance Engagements ASAE 3000 Assurance Engagements other than Audits or Review of Historical Financial Information (“ASAE 3000”). The selected performance data included the performance data detailed in the Databank, subject to the limitations below, as well as disclosures on Aboriginal employee numbers and responsible sourcing. The relevant criteria are the GRI indicator protocols and Wesfarmers’ reported criteria for the relevant Databank metrics detailed in footnotes in the Databank

Assurance level and limitations

The level of assurance provided under the AA1000AS was moderate, as defined by the scope and methodology described in this assurance statement. 

The assurance covered the whole of the Report and focused on systems and activities of Wesfarmers during the reporting period, with the following exceptions:

  • The scope of work did not involve verification of financial data, other than those relating to environmental, social or broader economic performance.
  • Assurance of Scope 1 and 2 greenhouse gas emissions reportable under the National Greenhouse and Energy Reporting Act 2007 (NGER legislation) in Australia was undertaken by another external auditor. This work was not replicated and Net Balance’s opinion in the area of greenhouse gas emissions relies in part on the assurance opinion issued by the external auditor. Net Balance’s assurance of greenhouse gas emissions covered all other data not reported under the NGER Legislation (Scope 3 emissions, non-Australian operations, and operations outside of Wesfarmers’ operational control for the purposes of the Legislation).
  • Assurance of Bunnings’ waste and water data collection system and estimation methodology was undertaken by another external auditor. This work was not replicated and Net Balance’s opinion in relation to the waste and water data relies in part on the assurance opinion issued by the external auditor.
  • Assurance of detailed community contributions data for all divisions was undertaken by the London Benchmarking Group, with the exception of community contributions data for Home Improvement and Office Supplies, which was reviewed as part of Net Balance’s assurance process.

In addition, the assurance of selected performance data in accordance with ASAE 3000 was limited.

Our independence

In conducting this assurance engagement, Net Balance has met the requirements of our Independence Policy (www.netbalance.com/services/assurance). Net Balance confirms that we are not aware of any issue that could impair our objectivity in relation to this assurance engagement. Net Balance has not had any part in collecting and calculating data, or in preparing report content covered by the scope of the engagement. 

During the reporting period, Net Balance staff not involved in the assurance engagement undertook work for some of Wesfarmers’ divisions. Net Balance assisted Bunnings with a waste and water data collection system. Where this occurred, the relevant processes have been excluded from the scope of this engagement and assured separately by a third party, Clear Environment, whose assurance statement is on the Wesfarmers website. Based on a review of the other unrelated work conducted for Wesfarmers’ divisions against the requirements of our Independence Policy, Net Balance and Wesfarmers do not believe that our independence has been impaired. 

Our competency

The Wesfarmers assurance engagement was carried out by an experienced team of professionals led by a Lead Sustainability Assurance Practitioner. The project included personnel with expertise in environmental, social and economic performance measurement across a range of industry sectors. Net Balance is a global leader in the use of the AA1000AS, having undertaken more than 180 assurance engagements in Australia over the past seven years.

Findings and conclusions 

Adherence to AA1000 Principles
Inclusivity

Wesfarmers is to be commended for taking important steps this year to engage more proactively with stakeholders. For example, Coles held ‘Meet the Buyer’ events in a number of states as part of its Australia First Sourcing Policy and signed several longer term contracts that have resulted in greater certainty for suppliers and fuelled new investment. At Target, information around the business restructure and resulting redundancies was communicated sensitively to employees. 

We commend Kmart for its pledge to publish the addresses of all its clothing supplier factories in all countries. This response to the Rana Plaza factory collapse in Bangladesh demonstrates a strong commitment to improving transparency in the supply chain. Further, Kmart and Target, through the signing of the Accord on Fire and Safety in Bangladesh, are setting a benchmark for the Group and working to improve conditions for suppliers. This has contributed to addressing media attention received by Wesfarmers businesses during the year. We recommend that other divisions continue to strengthen their own approaches to ethical sourcing in a way that is relevant to their respective sectors and supply chains.

Finally, at a Group level, key stakeholder groups have been identified within this report. Key issues raised by each group have also been reported. This is an important first step and, in the future, we recommend that Wesfarmers provides more granular detail on the issues raised by each key stakeholder group.

Materiality

The Report was found to have appropriately addressed Wesfarmers’ key environmental, social and economic material issues in a balanced way. Wesfarmers has made significant progress this year through the development of its new Group-wide sustainability approach. This approach, outlined on the Our sustainability approach page of this website, has helped Wesfarmers to shape its report into a more concise document which still covers the business’ material issues. Each division has also been given the freedom to nominate its most material issues, which are presented in the ‘Divisions’ section of the Report. In the future, it is recommended that Wesfarmers also align the decisions relating to the Report content to the corporate strategic planning process.

The move this year to a leaner sustainability report has enabled Wesfarmers to provide more focused reporting on sustainability performance, and the divisions an opportunity to respond to key stakeholder concerns and material issues through their own detailed narratives. Net Balance noted that some divisions have published their own detailed sustainability reports and we recommend that other divisions look to Target, Resources and Bunnings as effective examples. On the important issue of ethical sourcing, we note that a number or retail divisions have implemented systems to collect data on the number and value of international suppliers that have been directly engaged in ethical sourcing programs. We recommend that Wesfarmers disclose these metrics in future reports.

Responsiveness

In general, Wesfarmers appears to address the needs, concerns and expectations of its stakeholders in a timely way. This was demonstrated through a range of formal and informal communication mechanisms across the business, as well as using this Report to respond to issues raised by key stakeholder groups. Responsibility for developing responses was found to be spread across the Group and business divisions. 

The business should also use stakeholder feedback to better inform strategic planning and decision-making processes at both the Group and business division levels. With some aspects of retail operations increasingly being portrayed negatively in the media, clear communication of stakeholder engagement outcomes is particularly important. For example, how Coles deals with its suppliers, and the retail divisions’ approach to ethical sourcing, have been areas receiving significant internal focus partially in response to stakeholder concern. There are a number of examples in the Report where divisions have engaged directly with stakeholders on issues of concern.

Reliability of performance information

Based on the scope of the assurance process, the following was observed with regard to performance information:

  • The findings of the assurance engagement provide confidence in the underlying systems and processes used for managing and reporting sustainability performance information. 
  • The level of accuracy of sustainability performance information was found to be acceptable.
  • Data trails selected were identifiable and traceable, and the personnel responsible were able to reliably demonstrate the origin(s) and interpretation of data.
  • The sustainability performance disclosures presented within the Report appropriately reflect environmental, social and economic performance achieved during the period.
  • The GRI application level check classified the Report as Level B+.

Opinion

Overall, it is Net Balance’s opinion that the information presented within the Report is fair in all material respects, and the Report was found to present a reliable account of Wesfarmers’ sustainability performance during the reporting period.

Based on the ASAE 3000 procedures performed, nothing has come to our attention that would cause us to believe, that the selected performance data contained within the Report (and detailed in Assurance Standards, Objectives and Scope, above) are not prepared and presented in all material respects in accordance with relevant criteria.

The way forward

To ensure continued improvement of Wesfarmers’ sustainability performance reporting, Net Balance has provided suggestions for reporting improvement in the Assurance Report presented to Wesfarmers’ management.

On behalf of the Assurance Team 

27 September 2013

Melbourne, Australia 

 

Kim Farrant sig

Kim Farrant

Associate Director, Net Balance 

Lead Certified Sustainability 

Assurance Provider

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VERIFIED LOGO

Verification Statement from LBG Australia & New Zealand – 2013

The LBG model helps businesses improve the measurement, management and reporting of their corporate community investment programs. It covers the full range of contributions (cash, time and in-kind donations) made to community causes.

As managers of LBG Australia & New Zealand, we can confirm that we have worked with Wesfarmers Ltd* to verify its understanding and application of the LBG model with regard to the wide range of community programs supported.

Our aim has been to ensure that the evaluation principles have been correctly and consistently applied and we are satisfied that this has been achieved. It is important to note that our work has not extended to an independent audit of the data.

We can confirm that Wesfarmers Ltd* has invested $47,142,615* (exclusive of management costs) in the community in this 2013 reporting year as defined by LBG methodology.

*LBG verification did not include verification of data from the Home Improvement and Office Supplies division

 

Verified by Simon J. Robinson & Jessica Pattison

On behalf of LBG Australia & New Zealand

October 2013