Our strong economic, environmental and social performance, within a sound governance framework, is central to our objective of providing value to shareholders, customers, employees, suppliers and community partners.

Our businesses interact with millions of people every day and our sustainability performance is central to maintaining and enhancing our reputation, which in turn allows us to make a substantial positive contribution to the communities in which we work.

The climate change debate

In our very first report on sustainability issues back in 1998, we said climate change was one of the most significant issues facing our company and our community. That remains the case today.

I believe there is sufficient evidence to support the assertion that human action is affecting the climate and that we need to develop strategies internally to reduce our CO₂ emissions, mitigate risk around climate change generally, and take advantage of the business opportunities that will inevitably arise.

The impact of climate change is both an opportunity and a threat to our businesses.

Wesfarmers will continue to work cooperatively and collaboratively with Government to bring certainty and clarity to this aspect of our economic future.

While the policy debate continues in Australia, and New Zealand already has legislation in place, we are responding to the challenge of reducing greenhouse emissions by investing in energy efficient technologies and systems. This will continue for many years.

A major area of energy efficiency investment has been in the Coles business to improve the efficiency of refrigeration systems and reduce refrigerant gas losses.

Sustainability and the Wesfarmers way

At the heart of the Wesfarmers way of doing business is a commitment to create value for all our stakeholders in a sustained and responsible way in every community in which we operate. It is not a commitment we give lightly; nor is it one easily achieved or measured in such a large and diverse company.

We have more than 500,000 shareholders, around 200,000 dedicated employees, a portfolio of excellent businesses, and a very strong reputation both for business success and as a responsible corporate citizen. We operate out of more than 3,900 locations in six countries.

Since our listing as a public company in 1984, we have emphasised a clear, single commitment ‘to provide a satisfactory return to shareholders’.

This is an important objective as shareholders own the company, and will reinvest for growth if performance is satisfactory. That leads to more employment, more taxes and generally more wealth creation for the communities in which we operate.

That commitment remains as strong today as it was a quarter of a century ago, but contemporary society also demands that the modern corporation is more than just an economic entity. It must also be a contributor to society generally and with a particular responsibility to the communities in which it operates.

This has to be, and indeed most certainly is for us, a serious commitment, not a public relations exercise.

Every year since 1998, Wesfarmers has produced a report that measures our progress in managing sustainability and community issues across all our divisions and provides the basis on which the company will expand and improve its sustainability efforts into the future.

The principles we operate within include:

• maintaining and enhancing the physical environment in which we operate including strategies to minimise our carbon emissions; improve water and energy efficiencies and minimise our commercial by-products and waste;
• providing a safe and secure work environment for all our employees, customers and other stakeholders;
• treating all our stakeholders – employees, customers, shareholders, suppliers and the broader community – with respect and decency;
• investing in the community through partnerships, programs and sponsorships over and above the direct economic and commercial benefits Wesfarmers provides; and
• acting in accordance with high ethical standards.

We probably could get a short-term spike in our earnings by squeezing down on our suppliers, cutting back our people development programs, or reducing our community outreach activities. But we believe that by delivering on our commitments to all of these important stakeholders, Wesfarmers has been able to succeed in the past as it will continue to do in the future.

In short, we believe that our value-creation capability is inextricably linked to our value-distribution commitments.

We firmly believe that to have a healthy business you must have strong and vibrant communities in which to live and work and we are enthusiastically meeting the challenges such an objective presents.

We are major supporters of the arts in Australia, health and medical research, Aboriginal programs like the Clontarf Football Academy, and education programs from school to university and beyond. In late 2009 we launched our Reconciliation Action Plan and are committed to providing employment opportunities for Aboriginal Australians wherever we can. Putting a dollar measurement on the benefit of our support for communities is an inexact science, but the London Benchmarking Group has assessed Wesfarmers total community contributions, both direct and facilitated with our support, at $45 million for the last financial year.

The importance of safety

I had a terrible phone call in late August this year when the Managing Director of our Resources Division, Stewart Butel, advised me there had been a workplace accident and subsequent death at our Curragh coalmine, in Blackwater, Qld.

We have many people to look after at work and send home safely from work.

Nothing is more important than that.

I, and the Board, recognise the need for everyone in our organisation to redouble our efforts to ensure that we honour this obligation.

Pleasingly in the year under review the Group’s overall LTIFR was reduced from 13.06 to 10.95 with improvements in most divisions. It is a move in the right direction, but as Australia’s largest private sector employer, we recognise there is much more work to be done to further improve our safety performance. We are totally committed to achieving that improvement.

Looking forward

There has never been a time when responsible and ethical behaviour has been more critical for our organisation. We need the assistance of all our stakeholders in this regard.

If we are to continuously improve our performance in everything we are seeking to achieve, it is vitally important for us to get feedback on our efforts.

To help you provide us with the feedback we need, a form has been included on the inside back cover of this document. Alternatively, please contact us through our website www.wesfarmers.com.au

I want to thank everyone within Wesfarmers for their efforts in achieving the sustainability outcomes detailed in this report.

Richard Goyder Managing Director