2016 SUSTAINABILITY REPORT Contents

XX 2016 SUSTAINABILITY REPORT Contents OUR APPROACH 3 Sustainability at Wesfarmers 4 Managing Director’s welcome OUR PRINCIPLES OUR BUSINESSES People Coles 5 Safety 35 Coles 7 Diversity Home Improvement 10 People development 43 Bunnings Sourcing Department Stores 12 Suppliers 47 Kmart 15 Ethical sourcing 51 Target Community Officeworks 19 Community contributions 55 Officeworks 22 Product safety Industrials Environment 59 Chemicals, Energy & Fertilisers 24 Climate change resillience 63 Industrial and Safety 27 Waste and water use 67 Resources Governance 71 Other businesses 30 Robust governance This is an edited extract of our 2016 sustainability report. Our full sustainability report contains numerous case studies and data available for download. It is prepared in accordance with the Global Reporting Initiative’s G4 standard and assured by Ernst & Young. It is available at sustainability.wesfarmers.com.au 2016 SUSTAINABILITY REPORT 2 OUR APPROACH Sustainability at Wesfarmers WESFARMERS HAS BEEN COMMITTED This year, we are proud of our progress in the following areas: TO CREATING VALUE FOR ITS SHAREHOLDERS, EMPLOYEES AND Our total recordable injury frequency rate was 33.4 COMMUNITIES FOR MORE THAN A which is 15.2 per cent lower than last year. CENTURY We have worked to promote diversity in our workplaces, with more than 3,300 employees Long-term value creation is only possible if we play a identifying as Indigenous. positive role in the communities we serve. At Wesfarmers, sustainability is about understanding and managing the ways We have improved the transparency of our supply we impact our community and the environment, to ensure chain with more than 3,200 factories in our audit that we will be creating value in the future. program. We acknowledge that the world is changing. Climate change is here. Increased weather volatility, more frequent extreme Directly and through support from our customers weather events, higher average temperatures and drier and team members, our community contributions climates all have the potential to impact our operations and exceeded $110 million. supply chains. The changes have already affected people all over the world and will continue to have serious implications We reduced our greenhouse gas emissions by more for our customers, the community and the economy. These than two per cent in the last year and decreased the are risks we are managing because investing in Australia’s emissions intensity of our business by 30 per cent response to climate change will deliver significant economic, since 2012. social and environmental benefits for us all. We acknowledge that we can always do better. Wesfarmers is committed to minimising our own footprint – While Wesfarmers’ workforce is made up of 55 per cent and to delivering solutions that help our customers and the women and 45 per cent men as at 30 June 2016, a key community do the same. We endeavour to continuously opportunity for the Group is to increase the percentage of improve our performance and publicly report on our progress leadership positions held by women. in our annual sustainability report. – Despite our efforts, ongoing reduction in waste disposed and water use is hard to maintain as our businesses Our performance in 2016 continue to grow. We will continue to seek opportunities Wesfarmers has recorded an 11 percentage point increase in to do this. the Dow Jones Sustainability Index (DJSI) to score 82 out of – We will continue to focus on ethical sourcing, 100, the highest score Wesfarmers has ever received. especially supply chain transparency. Strengthening our relationships with suppliers ensures that we can The DJSI annual review is based on a thorough analysis contribute positively in this area. of Wesfarmers’ economic, social and environmental performance. The assessment recognises Wesfarmers as a With a diverse range of autonomous businesses, setting global leader in sustainability, with our strongest performance targets at a Group level is impractical and, consistent with in the areas of health and nutrition, environmental policy, financial performance metrics, we assess performance at a information and cyber security and labour practice indicators divisional level. Each business sets its own internal targets and human rights. appropriate to its operations. To see our sustainability metrics over time with a breakdown by division, click here. GRI Reference: G4-15, G4-17, G4-18, G4-20, G4-23, G4-28, G4-29, G4-30, G4-32, G4-33. G4-34 2016 SUSTAINABILITY REPORT 3 OUR APPROACH Managing Director’s welcome Video transcript Welcome to the 2016 Sustainability Report. At Wesfarmers we maintain our commitment to the UN Global Compact which has 10 sustainability principles which underpin our sustainability strategies. For the year just passed we’ve made progress on a number of fronts. On the safety front, we’ve had a 15 per cent reduction in our total recordable injury frequency rate and improved performance across most of our businesses. That is terrific, but we are still injuring people and we still have a lot of work to do to ultimately get to our goal of no injuries. We have a very strong focus on safety and will continue to pursue strategies that lead to less injuries across the Group. On (greenhouse gas) emissions, we had lower emissions intensity across the Group for the last five years and Wesfarmers is absolutely committed to continuing to make progress on that front because we believe it is essential for the communities in which we operate. Our businesses have more work to do now to take the next step in reducing emissions intensity in our business and we will do that. One of the key areas of focus for us in sustainability is ethical sourcing and that is all about increasing transparency across the supply chain whether products are sourced internationally or domestically. We have strategies in place in all our businesses to improve our sourcing and ensure where we source our products it is done ethically and sustainably. On diversity, we have made progress in getting more women into management roles at the Group but we have more to do on that front. We have strategies in place in all of our businesses and the appropriate mechanisms to ensure that the focus from senior management down is on getting more women into more management roles across the Group. It is important for the long-term sustainability and performance of the Wesfarmers Group that we do that. We are making really pleasing progress on Aboriginal employment across the Group. Last year, Coles increased Aboriginal employment by 30 per cent and across the Group we increased numbers of Aboriginal employees by 20 per cent. Sustainability is really important to Wesfarmers and we will continue to work on these issues and we will continue to make a real contribution to the communities in which we operate. We pay significant sums to our suppliers - $45 billion last year. We employ around 220,000 people and we pay $8 to $9 billion in wages and salaries to those people. We pay over $1 billion in taxes, we invest back into the businesses we operate and we make significant contributions to our communities. Last year, Wesfarmers and our businesses contributed around $110 million to the communities in which we operate. That’s really important because we want these communities to be stronger and healthier and we want Wesfarmers to be a big part - a vibrant part - of those communities into the future. Richard Goyder AO Managing Director GRI Reference: G4-1 2016 SUSTAINABILITY REPORT 4 OUR PRINCIPLES People Safety We maintain a relentless focus on providing safe workplaces. Maintaining a safe workplace for our employees and keeping our customers, suppliers and other visitors safe across all our sites is our highest priority. Sustainable improvements in safety will continue to be core to our operations and we remain focused on safety leadership, strategies targeting risk reduction and improving physical and mental health. Our safety performance still requires improvement but we are pleased that we are seeing the benefits of this relentless focus on making our workplaces safer. Safety performance Smart technology improves safety at CSBP Read more Across the Group, our safety performance is monitored by measuring total recordable injuries and lost time injuries. This year we had 1,632 lost time injuries, where team members required time away from work (full shift) as a result of an injury. This is a 0.2 per cent improvement from last year. We had 7,570 total recordable injuries, which includes lost time injuries and medical treatment injuries (e.g. where a doctor’s visit is required, but the injury does not require time away from work). This is a 14.1 per cent improvement compared to last year. To monitor our historical safety performance, we use total recordable injury frequency rate (TRIFR) and lost time injury frequency rate (LTIFR), which show injuries per million hours worked by employees and long-term contractors. This year, our TRIFR decreased by 15.2 per cent from 39.4 to 33.4, with improvements across most divisions. Our LTIFR also improved by 1.6 per cent from 7.3 to 7.2, driven by improvement most notably at Officeworks, Target and Bunnings. There were no team member fatalities across the Group during the year, and team member safety continues to be our highest priority. 15.2 PER CENT IMPROVEMENT IN TRIFR We were pleased that our workers’ compensation claims decreased by 3.4 per cent to 7,315. 2016 SUSTAINABILITY REPORT 5 OUR PRINCIPLES People Safety initiatives Each of our divisions have undertaken safety initiatives this year that target their particular safety risks. Some of those initiatives include: ‘Kiss the carton’ safety campaign Read more – Bunnings engaged its team in driving a simplified safety strategy.

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