Wesfarmers and its businesses have a large number of stakeholders with varying interests across a number of different countries. Engaging these stakeholders is an important part of our business.

All of our business units nurture and manage their own relationships specific to their operations – whether it’s in stores, at mine sites, offices or industrial facilities. In the business unit reports (which start on page 28) there are many references to these different types of engagement with customers, suppliers, regulators, community groups, or public interest groups relevant to each operation. All of our businesses operate in accord with the ethical approach required by our Code of Conduct (available on our website), including having a transparent and honest approach when working with stakeholders.

At a Group level, Wesfarmers is also engaged with a wide cross-section of stakeholders. In addition to the various ongoing connections we have with these stakeholders, the following summary covers the major contact we have had.

• Customers – feedback via letters, email and website.
• Employees – various business involvement groups (such as the Community Involvement Committee and the Wesfarmers Indigenous Network), regular updates from the Group Managing Director available online via webcast, the ‘big Aussie BBQ’ for the Queen during the Commonwealth Heads of Government Meeting in Perth, Leadership Conference, the Wesfarmers Arts program.
• Shareholders – annual general meeting, meetings with institutional investors, bi-annual investor briefings, quarterly retail sales briefings and other updates.
• Suppliers – meetings with key industry groups, audit and review systems for responsible sourcing.
• Government and regulators – meetings with state and federal government representatives, federal regulators, trade associations.
• Non-government organisations – joint projects and initiatives, visits and meetings.

During the year, Wesfarmers also engaged a third party to conduct a Stakeholder Engagement Survey in relation to its sustainability performance and reporting. The executive summary of this report is published on our website. Some of the key outcomes and comments from the report are set out below.

• The survey indicated we currently have positive stakeholder relationships.
• WesCEF’s sourcing of some of its rock phosphate (for the production of superphosphate fertiliser) from the Western Sahara region in north west Africa was raised by some stakeholders. Wesfarmers and WesCEF have engaged with the representatives of the Saharawi people from Western Sahara for several years, and our trade with Western Sahara is in accordance with applicable laws and with the Australian Government’s stance. However, WesCEF has invested more than $5 million in a technology seeking to reduce odours created by the manufacturing process when using phosphate rock from other sources, which has assisted in broadening the range of phosphate rock that can be sourced. Phosphate rock from the Western Sahara is not part of WesCEF’s import program for the coming production year. WesCEF reports more fully on this issue in its business unit report.
• The role of Coles in the milk supply chain in Australia was subject to questioning and criticism from some stakeholders. The issue related to Coles reducing the shelf price of its own brand milk across Australia as part of the ‘Down Down’ prices campaign and the suggested impact this may have on some dairy farmers. Coles and Wesfarmers have spent considerable time and resources working through this issue and Coles reports on the matter in more detail in its business unit report.
• Stakeholders requested more detail on employee satisfaction information collected by the Group. Each of our businesses regularly conducts employee satisfaction or other surveys for a variety of purposes consistent with the business objectives and the issues they are managing. There are several different styles of surveys used, with varied objectives and different timings so it is difficult to provide a snapshot of employee satisfaction in the Group at any one time.
• The stakeholder survey also suggested that each business unit should disclose material issues specific to their business, and also more information on how we are improving our supply chains.

The survey also demonstrated that our performance on sustainability issues was important to the future of our company.

Our Code of Conduct and the executive summary of our Stakeholder Engagement Survey is available on our website www.wesfarmers.com.au

As one of Australia’s largest private employers, with diverse domestic and international businesses, we consider people to be central to our success. Employing outstanding people and providing opportunities for them to apply their talents is critical to our sustainability. While strong assets and strategies are important, it is our people who deliver results.

Who are we and where do we work?
The majority of our workforce is located in Australia and New Zealand (see figure 1) and our employees worked more than 219 million hours. This equates to approximately 115,000 full-time equivalent team members.

Wesfarmers is committed to continually improving the attraction, development and retention of talented people. We do this by providing great job opportunities, rewards for good performance, and safe working environments. Wesfarmers recognises the importance of being an inclusive employer, because a diverse workforce delivers significant social and commercial value.

We establish inclusive cultures through a variety of Group-wide policies and processes, including a Code of Conduct, a Group Whistleblower Policy, and Equal Employment Opportunity Policy.

Gender diversity continues to be a priority for the Group. As at 30 June 2012, approximately 57 per cent of our employees are women. Two of our eight non-executive directors (25 per cent), 21 per cent of Wesfarmers’ senior executives (general manager level or above), and 28 per cent of all management and professional employees across the Group are women. The Wesfarmers Diversity Policy outlines four core objectives which are used to measure performance in this area.

• Foster an inclusive culture – Wesfarmers divisions undertake different initiatives and practices based on the needs of their business, such as flexible work practices at senior levels and paid parental leave. Specific targets are linked to senior executive key performance objectives under the annual incentive plan.
• Improve talent management – at least once a year, the Group Managing Director meets with each division to review: senior leader performance and development; succession plans for critical roles; and the pipeline of high-potential leaders. During the 2012 financial year, talent reviews were conducted with all divisions for senior manager level employees and above and included 138 women. This is in addition to detailed talent reviews conducted with employees by individual businesses within the Wesfarmers Group. Throughout the Group, all high-potential leaders benefit from development opportunities, such as internal and external development programs, stretch assignments, action learning projects, coaching, mentoring and 360-degree feedback.
• Enhance recruitment practices – during the year, 37 per cent of externally recruited positions and 30 per cent of internal promotions (all manager level and above roles) were filled by women.
• Ensure pay equity – a pay audit is conducted annually on a Group basis (which includes a review of gender pay equity). Results are reviewed by the Board and divisional managing directors. In addition, a pay equity review of all Wesfarmers divisions was undertaken during the year, in line with previous years, which did not indicate any observable discrepancies in pay across each level, after taking into account performance, experience, location and job nature.

In respect to workplace relations, we recognise the right of those we employ to negotiate either individually or collectively, with or without the involvement of third parties. The large majority of our employees, (more than 80 per cent) are covered by collective agreements. At the same time, the company believes in maximising the flexibility of workplace arrangements available to employees and their managers.

Investing in our people
Given the autonomous nature of our Group operating structure, training and development is a core responsibility of the business units. Our recorded commitment in training and development exceeded 2.2 million hours across the Group. In addition, key human capital development policies and practices, including those focused on senior management remuneration, development and succession planning, are managed at a Group level.

Innovation is also important to the success of our businesses. If our people continually innovate, providing better products, services or solutions to our customers, sustainable growth will be generated.

Wesfarmers seeks to develop a culture that encourages the boldness and creativity necessary to drive innovation. This year, for the first time we implemented an Innovation Awards program. The initiative was run across the Group and focused on five categories: environment, customer, commercial, safety and people. The response was excellent, with the entries all reflecting a high level of innovation quality.

In September 2012 we held the Wesfarmers Leadership Conference, which brought together approximately 400 senior leaders from across the Group. The conference provided an opportunity to reinforce expectations for our leadership culture, introduce key leadership insights into and opportunities for growth, share best practices across the businesses, and recognise the Innovation Award winners.

Workplace safety remains Wesfarmers’ highest priority and we have an obligation to do all we can to ensure the safety in the workplace of everyone who works for our company, our visitors and customers. To that end, we have implemented a Group-wide review focused on safety performance, workplace safety behaviour and improving outcomes.

We have a Group target of reducing accident rates by 50 per cent each year towards a goal of zero. The primary measures are the lost time injury frequency rate (LTIFR) and the total recordable injury frequency rate (TRIFR).

For the reporting period, the Group LTIFR was 10.90 (see here), down from 12.89 for the previous year. The TRIFR at year end had increased to 42.67, compared to 40.94 in July 2011.

There were 2,395 lost time injuries (LTIs) over the year across all businesses in the Group and 9,378 total recordable injuries (TRIs), which include LTIs and medical treatment injuries. While the improvements in LTIFR and the number of LTIs are pleasing, we continue to believe that greater performance is both possible and necessary.

LTIFR and TRIFR remain the main Group-wide measures of safety performance. However, operating businesses are encouraged to use a range of broader measures to promote a more proactive approach and support a culture of safe work practices.

The number of workers’ compensation claims increased slightly from 9,334 in 2011 to 9,380 this year and the Group data is shown here.

To meet the ongoing challenges of creating a safe environment for all the people in our workplaces, there have been a number of initiatives across the Group which have resulted in positive change. Some of the highlights included:

• the team from the Blackwoods Protector distribution centre in Highbrook, New Zealand, developed a drum trolley to move heavy drums. This has had a significant effect in reducing the number of manual handling injuries.
• a new positive performance safety indicator was introduced at Kmart. It was implemented to provide feedback to stores on their compliance to the operational safety plan. This assisted with focusing store efforts and identifying opportunities for improvement.
• at CSBP, a business within WesCEF, a strategy was completed to move to a best practice solution for medical, health, injury management, fitness to work and manual handling risk management in an industrial environment.
• the launch of a ‘Target your Safety’ DVD at Target, raising team member awareness of the major mechanisms of injury; manual handling, hitting stationary objects and slips, trips and falls.
• a campaign titled ‘Simply Safer’ was run across Bunnings in March 2012 to seek ideas from team members on improving health and safety. More than 1,200 ideas were received with many being implemented immediately.

The safety outcomes of our business units, and the Group data, can be found in the Data Bank.

Wesfarmers has long held the belief that to have a healthy business, you must have strong, vibrant communities in which to live and work.

Community contributions and partnerships
The continuing successful operation of the Group’s businesses, in an ethical and socially responsible way, is the cornerstone of our contributions to the community.

We believe in supporting the communities in which we operate by direct and indirect assistance to organisations and activities that provide a public benefit. The Wesfarmers Board, in relation to its direct community contributions, gives preference to activities focused on medical research and health, Indigenous partnerships, education and the Wesfarmers Arts program. Our individual businesses may also provide support in these general areas, but in addition have community support programs tailored to their business activities, customer base and the communities in which they operate.

Our direct and indirect community partnerships and contributions were $72.24 million in 2011/12. Our direct community contributions were 0.9 per cent of earnings before interest and tax ($3,549 million) and 1.5 per cent of net profit after tax ($2,126 million).

To ensure consistent reporting on our Group community contributions, Wesfarmers engages the London Benchmarking Group (LBG). This allows organisations to define their community contributions according to standard definitions and policies.

LBG undertakes a verification process across the Wesfarmers Group excluding Home Improvement and Office Supplies (HIOS) and provides a report, as well as a verification statement which can be found here.

The community contributions from HIOS were assured by Net Balance as part of its overall assurance of this report. The Assurance Statement provides specific comment on their community contributions.

Our total direct community contributions this year decreased from 2011, primarily because fortunately there have not been any large-scale disasters in Australia and New Zealand. In the previous years, Wesfarmers and its businesses made significant contributions to emergency relief and recovery following major fire, flood and earthquake disasters.

The large majority of our indirect community contributions were focused on community support, but we are unable to assure this to the level necessary, because most of the funds we facilitate are spent by our partner organisations.

The business unit sections in this report provide more detail on the major community partnerships that our businesses are involved with. The major partners are a large number of community, education and sporting groups in local communities, organisations supporting children, community support and welfare organisations, organisations supporting health outcomes and research and support for education and literacy initiatives.

More information on LBG’s standard definitions and policies is available at the LBG website www.lbg-australia.com

Further information on our community contributions can be found in the Data Bank.

Wesfarmers Arts
The award-winning Wesfarmers Arts program continues to provide major ongoing support to a number of premier Australian arts companies. With a focus on increasing the opportunities for the community to experience quality art and culture from Australia and the world, Wesfarmers has been working in partnership with both national and Western Australian arts companies since 1985. Our belief is that a vibrant cultural sector makes a positive contribution to the lives of all Australians.

Highlights of the Wesfarmers Arts program included the launch of Wesfarmers Arts as Indigenous Art Partner with the National Gallery of Australia, presenting the Gallery’s national schedule of exhibitions and public programs and Indigenous art education to communities across Australia. Wesfarmers Arts was also announced Principal Partner of the West Australian Symphony Orchestra from 2012 and took on the role as Lead Donor in the development of the new State Ballet Centre in Western Australia.

In addition to the arts support program, the company’s nationally recognised Collection of Australian Art is shared with the public through exhibitions and loans to galleries across the country. In recent years, in recognition of the company’s increasing business presence in New Zealand, the scope of the collection has broadened to encompass the work of significant contemporary New Zealand artists.

Wesfarmers also supports the arts through various business unit initiatives such as sponsorship of the Queensland Theatre Company’s regional program by our Resources division and the acquisition of Indigenous art works by the Industrial and Safety business unit.

While the majority of our expenditure on products, employee costs and services is in Australia and New Zealand, many of our businesses source products from other countries, predominantly Asia and India, but also from Europe, Africa and South America. In our industrial businesses, this sourcing is mainly complex engineering products, bulk fertilisers and chemicals or other raw materials.

Most of our sourcing of products from other countries is undertaken by our retail businesses and Wesfarmers Industrial and Safety. Each of these businesses has detailed policies and codes that govern their responsible sourcing activities in other countries, whether the sourcing is directly through manufacturers working for our businesses, or indirectly through other suppliers. These policies and codes are supported by extensive audit and review systems conducted either by our businesses themselves, or through relying on mutual accreditation audit systems with other international retailers. Each retail business provides some detail on their approach to responsible sourcing in their section of this report and our progress in this area is regularly reported to the Wesfarmers Board through the Audit Committee.

At 30 June 2012 we had approximately 3,316 direct importers across the Group and during the year 1,497 of these (45.1 per cent) had been engaged in our verification or audit processes.

Audit processes were completed either by our employees or qualified auditors acting directly for our businesses. The purpose of the audits is generally to check compliance and work with suppliers to rectify any issues found. During the year, 11 factories were deregistered due to poor social compliance or other reasons. These instances are reported in the relevant business unit section of this report.

In addition, the phosphate rock (a key input for superphosphate manufacture) sourced from a mine in Western Sahara (where CSBP buys about three per cent of the mine output) is the subject of international comment in relation to the status of the Indigenous Saharawi people of the region. We have reported on this in previous reports and the WesCEF section of this report again provides an update on our approach.