To the Directors of Wesfarmers Limited:

Wesfarmers Limited (Wesfarmers) commissioned Net Balance Management Group Pty Ltd (Net Balance) to provide independent assurance of this Sustainability Report (the Report). The Report presents Wesfarmers' sustainability performance during the period 1 July 2010 to 30 June 2011. Wesfarmers Group and Wesfarmers' business divisions were responsible for the preparation of the Report and this statement represents the assurance provider's independent opinion. Net Balance's responsibility in performing its assurance activities is to the Board of Directors and management of Wesfarmers alone and in accordance with the terms of reference agreed with them. Other stakeholders should perform their own due diligence before taking any action as a result of this statement.

Assurance Standard and Objectives
The assurance process was undertaken in accordance with the AA1000 2008 Assurance Standard (AA1000AS). The standard provides a comprehensive way of ensuring an organisation is responsible for the management, performance and reporting of its sustainability issues. This is achieved through evaluation of the organisation's adherence to the AA1000 AccountAbility Principles (2008) and by reviewing the reliability and quality of disclosed sustainability performance information.

The AA1000 AccountAbility Principles (2008) used to assess Wesfarmers' processes include:

Inclusivity: An assessment is made as to whether the organisation has included stakeholders in developing and achieving an accountable and strategic response to sustainability.

Materiality: An assessment is made as to whether the organisation has included in its report the material information and data required by its stakeholders to make informed judgements, decisions and actions.

Responsiveness: An assessment is made as to whether the organisation has responded to stakeholder concerns, policies and relevant standards and adequately communicated these in its report.

Assurance Type and Scope
Net Balance provided Type 2 assurance in accordance with the AA1000AS (2008). This involved assessing the organisation's adherence to the AA1000 AccountAbility Principles (2008) and assessing the accuracy and quality of the sustainability information contained within the Report.

The review of adherence to the principles was undertaken using the criteria outlined in the AA1000 Assurance Principles Standard (2008), while assessment of the accuracy and quality of sustainability performance information was undertaken using Wesfarmers' indicator protocols and the Global Reporting Initiative's (GRI) G3 Reporting Principles for Defining Quality.

Assurance Level and Limitations
The level of assurance provided is 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 that 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 (NGER) Legislation was undertaken by another external consultant. 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 other party. 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 detailed community contributions data for all divisions except Home Improvement and Office Supplies was undertaken by London Benchmarking Group. Community contributions data by Home Improvement and Office Supplies was reviewed as part of Net Balance's assurance process.

Assurance Methodology
The assurance engagement was undertaken between June and October 2011, and involved:

• Preparation of a materiality register (list of key sustainability issues) using the five-part materiality test. This included a comparison of Wesfarmers and its business divisions against their peers, a risk review, an industry review, a review of selected Australian media reports and a policy review.
• Interviews with senior managers to better understand how Wesfarmers Limited and each of the business divisions is addressing key sustainability challenges and how sustainability is integrated within the organisation.
• Independent engagement with stakeholders of Wesfarmers Limited at a corporate level and a review of stakeholder engagement activities undertaken by each of the business divisions. This included reviewing how stakeholder engagement informs the sustainability strategy and performance of the organisation.
• A review of the key sustainability strategies, policies, objectives, management systems, measurement and reporting procedures used by Wesfarmers Group and each of the business divisions.
• Interviews with key personnel responsible for the Report to ascertain their views, understanding and response to material sustainability issues faced by the business divisions.
• Interviews with key personnel responsible for collating and writing various parts of the Report to substantiate the reliability of selected claims. Representatives of each of the wholly-owned business divisions were interviewed by members of the assurance team as part of a series of site visits. Interviews were conducted with representatives of Bunnings, Coles, Curragh Coal, Industrial and Safety, Insurance, Kmart, Officeworks, Premier Coal, Target, and Wesfarmers Chemicals, Energy & Fertilisers. In addition, interviews were also conducted with representatives of Wesfarmers Group.
• A review of the Report for any significant anomalies, particularly in relation to claims as well as trends in data.
• Verification of more than 240 data points and statements selected from the Report and examination of the systems and processes that support the claims.
• Collecting and evaluating evidence to support the assurance work undertaken.
• A Global Reporting Initiative (GRI) G3 Application Level Assessment.

Our Independence
Net Balance was not responsible for preparing any part of the Report. During the reporting period Net Balance has assisted in the development of data management forms for Wesfarmers to increase consistency in reporting between the business divisions. Net Balance has also worked with Bunnings, Officeworks and Kmart on on-ground implementation projects. Both Wesfarmers and Net Balance have determined that these projects are not in conflict with Net Balance's role as the independent assurance provider.

Our Competency
The Wesfarmers assurance engagement was carried out by an experienced team of professionals led by two Lead Sustainability Assurance Practitioners (Lead CSAP). 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 100 assurance engagements in Australia over the past five years.

Findings and Conclusions
Adherence to AA1000 Principles

Inclusivity:
Wesfarmers demonstrates its commitment to be accountable to its stakeholders through its Company Values and the sustainability reporting process. Responsibility for engaging with stakeholders rests primarily at the business division level. As a consequence, there is variation across Wesfarmers in the extent and quality of engagement undertaken. There are examples of innovative and proactive engagement in the business (eg. 'Tell Coles' and Bunnings' engagement with Timber suppliers), however, there are also examples where engagement is more reactive and the business is missing opportunities to genuinely engage directly with stakeholders. This could be overcome by making engagement more systematic. In the future, Wesfarmers should work to map its key stakeholders and use the stakeholder feedback to better inform its strategic planning and decision-making at both the Group and business division levels.

Materiality:
Wesfarmers has this year again reported in line with five key themes. These were developed in consultation with the business divisions to reflect the range of impacts of Wesfarmers' businesses. In parallel with this process, we understand that the issues covered in the report partly reflect those identified through the corporate planning process. In future reporting periods, it is recommended that decisions relating to the report content more closely align to the corporate planning process. Further, consistent with the current trend of Wesfarmers' business divisions towards reporting that focuses on their specific material issues, this process should be carried out at the business division level and result in a prioritisation of issues that is clear and replicable. Notwithstanding, Wesfarmers appears to have appropriately addressed its key environmental, social and economic material issues in a balanced way. To ensure that the key themes used to structure the report reflect the organisation's material risks, these should be reviewed and updated on a regular basis. To illustrate, themes identified by stakeholders as important (eg. sourcing and customers) are not always adequately covered by the framework.

Responsiveness:
In general, Wesfarmers appears to address the needs, concerns and expectations of its stakeholders in a timely fashion. This was demonstrated through a range of formal and informal communication mechanisms. Responsibility for developing responses appears to spread across the organisation (and across divisions) and in several instances it was clear that material issues are considered as part of the regular business planning processes. In some cases, however, Wesfarmers' response to issues concentrated only on a single facet of the issue. Wesfarmers should focus on considering the full range of impacts associated with a particular issue in order to ensure that it provides a comprehensive and balanced response to stakeholder issues raised.

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.
• Data trails selected were generally 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+.

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

The Way Forward
Over the past 12 months, Wesfarmers has made significant progress in presenting a consolidated view of Group performance within the Sustainability Report. Building upon a strong foundation of a core set of indicators, Wesfarmers has continued to expand upon the reporting of Group level issues and performance, providing detail on the organisation's progress in addressing company-wide issues. While the consistency and completeness of core indicators is now high, continued effort is required in the areas of Scope 3 greenhouse gas emissions, waste and management figures.

Given Wesfarmers' diverse operations, the challenge is to foster a Group-wide approach to the integration and importance of sustainability in strategy development and execution. Net Balance understands that a Group Sustainability Policy is currently under development. To support this document, Wesfarmers should also consider developing a Group Reporting Methodology. This document could provide guidance to divisions on principles and processes for stakeholder engagement, including how to use stakeholder feedback to inform the corporate planning process; as well as a process for materiality assessment which links to the corporate planning process and results in a prioritisation of issues that is clear and replicable. Wesfarmers should also continue to respond to issues raised through its own engagement such as requests for inclusion of information on targets, prioritisation of sustainability issues, links between sustainability and business strategies and people management.

With an increased focus on materiality and stakeholder engagement at the business division level, it is also recommended that Wesfarmers undertakes assurance against the principles at the business division level in addition to the Group level. Net Balance believes that this will assist business divisions to better focus on their key material and stakeholder considerations.

In order to continue to improve the usefulness of future reports to stakeholders, Net Balance encourages Wesfarmers to give some issues more context in the report and to consider whether each statement is material to stakeholders and what the results mean for the business. Wesfarmers should also ensure that its commitments and targets are 'SMART' – specific, measureable, attainable, relevant, time-bound – to enable progress against these commitments to be more easily monitored.

Net Balance has provided additional suggestions for reporting improvement in the Assurance Report presented to Wesfarmers' management.

On behalf of the assurance team
18 October 2011
Melbourne, Australia

David Simpson
Lead CSAP

Kim Farrant
Associate Director, Net Balance
Lead CSAP