Ethical
sourcing

We are one of Australia’s largest retailers employing more than 114,000 team members across Coles Group.

As a business, Coles Group respects and supports the dignity, wellbeing and human rights of our team members, the workers in our direct and extended supply chains, and the communities in which we operate.

Our commitment to human rights is reinforced in our Code of Conduct and our Better Together program which recognise the importance of providing an inclusive environment for all team members and customers, and reflect the diverse community which we serve.

We are committed to building knowledge and awareness on human rights and encourage our team members to speak up, without fear of retribution, about any concerns they may have. We have a Whistleblower Policy which encourages the reporting of any suspected unethical, illegal, fraudulent or undesirable conduct, or any breach of the Coles Code of Conduct.

Our team members can provide comments to the business at any time through our Always Open feedback tool and a range of social media tools. We regularly survey team members to understand their level of engagement and to obtain feedback.

Coles uses all reasonable endeavours to ensure that any team member or employee of a contractor, supplier or third party who makes a report can do so without fear of intimidation, disadvantage or reprisal.

We are committed to upholding the rights of workers to form and or join trade unions, or to refrain from doing so, and to bargain collectively.

As at 30 June 2018, across our supply chains we engaged with more than 750 Coles Brand, fresh produce and meat suppliers, operating at over 2,200 sites and located in more than 40 countries.

Coles supermarkets has an Australian-first Sourcing Policy to provide Australian-grown fresh produce as a first priority. In FY2018, more than 88 per cent of Coles branded food and drink was sourced from Australian suppliers, including 96 per cent of fresh produce and 100 per cent of fresh lamb, pork, chicken, beef, milk and eggs.

We acknowledge the importance of safeguarding human rights through ethical business practices within these supply chains.

Coles takes a risk-based approach to ethical sourcing and human rights due diligence, with a focus on direct suppliers in our Coles Brand, fresh produce and meat supply chains. It is our expectation all suppliers engaged to supply Coles Brand, fresh produce and meat take all reasonable steps to comply with our minimum standards.

Coles was the first major Australian supermarket to adopt the Supplier Ethical Data Exchange (Sedex), a global ethical supply chain management platform, in 2016. Sedex facilitates risk assessments, and information and social compliance audit sharing across its platform. This maintains visibility and drives consistency across supply chains.

To monitor compliance with the Ethical Sourcing Policy, we require all Coles Brand, fresh produce and meat direct supplier sites to register on Sedex. We determine direct suppliers to mean any site which substantially contributes to the final form of the product and provide examples in section 11 of the Ethical Sourcing Supplier Requirements.

Sedex requires suppliers to complete a comprehensive risk assessment following which they are rated as low, medium or high risk. Medium and high-risk sites are required to be audited by an independent external provider with major non-conformances closed out.

Audit timeframes are specified by Coles and vary depending on peak times for each industry. For example, fresh produce audits would take place during harvest season when workers are on site.

Coles also undertakes direct audits to confirm risk assessments, randomly verify independent audit outcomes and respond to specific issues.

These requirements provide Coles with increased visibility of our suppliers’ employment practices and enable us to proactively monitor human rights risks and compliance with the Coles Ethical Sourcing Policy.

Our Ethical Sourcing Policy also states that suppliers must comply with local and national environmental laws and regulations and use reasonable endeavours to comply with international standards on environmental protection. Australian environmental law covers resources such as land rights and water use.

As of February 2019, 97 per cent of all direct suppliers were registered on Sedex and monitored under our ethical sourcing program. Due to the seasonal nature of our supply chain we are continually working with new suppliers and on-boarding them onto our ethical sourcing program. As our supply base is dynamic, we are unlikely to achieve 100 per cent registration at any one time.

In selected Coles supermarkets we sell our own brand apparel range – Mix. We work with apparel suppliers to build strong relationships throughout the supply chain and monitor performance against our Ethical Sourcing Policy and requirements. The names and locations of the factories producing the Mix clothing range are available here.

To mitigate the risk of unethical practices occurring in our supply chains, we require medium and high-risk sites to undergo an independent audit. In FY18 more than 420 direct supplier sites were independently audited.

Coles may accept audit formats that align with our Ethical Sourcing Policy. The audits must be carried out by third party auditors that are certified to ISO 9001:2015 by an independent accreditation body or are approved by the relevant audit format owner to undertake these audit formats.

Where major or critical non-conformances with our Ethical Sourcing Policy is identified through the independent audits, the supplier is required to remediate the issue within an appropriate period depending on the nature and severity of the non-conformance.

We classify non-conformances based on risk of harm to workers in the supply chain.

Critical non-conformances include:

• Policy requirements
• Legal requirements
• Forced/ bonded labour
• Child labour
• Illegal labour
• Harsh or inhumane treatment
• Business integrity

Major non-conformances include:

• Wages and Benefits
• Working Hours
• Freedom of Association
• Sub-Contracting and Indirect Suppliers
• Safe Working Conditions

Suppliers are ‘conditionally approved’ if non-critical non-conformances have been identified and notice has been given that they must be remedied through auditor verified corrective action plans. If a supplier then addresses the non-conformance, it is deemed to be an ‘approved’ supplier site.

To support suppliers to remedy non-conformances, we have designed specific remediation processes for critical non-conformances such as child labour, forced and/or bonded labour, and major supplier issues such as workers’ wages and benefits.

Our audit process is contributing to remediating supplier non-conformance and improving conditions for workers by working with suppliers to address the root cause of the issue. If a supplier site is not willing to address a critical non-conformance, Coles will suspend supply and reserve the right to terminate the trading agreement.

In FY2018, Coles did not identify any critical non-conformances of our Ethical Sourcing Policy.

Coles understands that third-party labour hire organisations provide an essential service to Coles’ suppliers, however they can also introduce human rights and workplace compliance risks into these supply chains.

To help suppliers and the recruitment and staffing industry to reduce risk, Coles has supported the development of the StaffSure labour hire certification program.

StaffSure is an independent industry-led certification program that assesses labour hire providers against six key risk elements:

1. Fit and proper persons own and run the labour hire business;
2. Fair remuneration to ensure workers receive legal employment entitlements;
3. Financial assurance to operate the labour hire business sustainably;
4. Safe work for all workers;
5. Immigration and visa laws are complied with; and
6. Accommodation supplied by employers or clients is suitable and rent is fair.

Suppliers can find StaffSure certified labour providers through an online registry.

In addition to supporting the development of the StaffSure program, Coles has developed a Third-party Labour Provider Guidance for our suppliers. This tool is available for all Coles’ suppliers and outlines practical advice for managing labour hire, including detailing what good and best practice looks like to support suppliers on their continuous improvement journey.

In 2015, we established the confidential Coles' Wages and Conditions Hotline for workers in our supply chain including farms, factories and service providers.

In Australia, workers of Coles suppliers can call 1300 532 515 between 8am-8pm, seven days a week to understand more about their conditions of employment or to report unfair labour practices.

Posters promoting the Coles Wages and Conditions Hotline service are available in three different languages. They have been sent to all Coles Brand fresh produce and meat processing sites for display in tea rooms and communal areas.

Workers, for whom English is not a first language, can email wageline@coles.com.au with their telephone number, preferred language and a brief description of their concern.

Coles has a Whistleblower Policy  that encourages the reporting of any suspected unethical, illegal, fraudulent or undesirable conduct, or any breach of the Coles Code of Conduct.

Coles commits to investigating all reported matters. Part of this process involves a risk assessment to determine the risk of harm to people. If the risk of harm is determined to be high, the matter is immediately passed on to the relevant authorities.

The Whistleblower Policy  provides details of reporting options including StopLine (1300 304 550), an independent and confidential reporting line that Coles' team members, suppliers and others may use to report theft, fraud or other serious trading breaches.

Coles seeks to encourage an environment in which any team member, contractor, supplier or third party who makes a report shall do so without fear of intimidation, disadvantage or reprisal. If appropriate, the whistleblower will be informed as to the progress and resolution of an investigation through their preferred communication channel.

The policies and framework which support the Coles Group’s human rights due diligence program are designed to make sure all relevant universally recognised human rights are safeguarded throughout our supply chains and operations.

We acknowledge that Coles Group has a role and responsibility in seeking to safeguard human rights through ethical business practices consistent with the principles detailed in our Ethical Sourcing Policy.

The implementation and governance of the Coles Ethical Sourcing Policy is overseen by a Human Rights Steering Committee which is chaired by our Chief Legal Officer and includes representatives from across the Coles Group including responsible sourcing, procurement, legal, corporate affairs, merchandise and operations. The Committee meets monthly to support management of human rights issues and impacts throughout Coles Group operations and supply chain and is accountable for strategy development and execution in this area.

Day to day management of human rights in the supply chain is overseen by the Ethical Sourcing team which is responsible for identifying human rights risks, conducting and reviewing supplier audits, remediation of non-conformances through corrective action plans and tailored processes, as well as building capacity throughout the supply base and training suppliers and team members on human rights risks and practical mitigation strategies.

We aim to build strong, collaborative and long-term partnerships with our suppliers. This can have multiple benefits including providing the opportunity to work with them to safeguard human rights.

To drive continuous improvement across our supply chains we have a multi-stakeholder engagement approach to human rights due diligence that includes supplier capacity building and investment in supplier training.

During 2018, we held training sessions in Australian rural and regional areas to help our suppliers understand their ethical sourcing obligations and have plans for more sessions in 2019 including an ethical sourcing webinar for all suppliers.

Coles formed the Coles Agronomy Group with approximately 20 growers volunteering their time to work together with Coles to address industry challenges around labour practices in the fresh produce industry, varietal development, sustainable farm practices and water use.

In addition to the guidance provided through Ethical Sourcing Policy and Ethical Sourcing Supplier Requirements Tools binder, suppliers can access a range of Coles’ supplier on-line tools and guidance to build their capacity to manage human rights risks including:

• Continuous Improvement supplier guidance;
• Safety instructions and training checklist;
• Worker accommodation supplier guidelines;
• Safety instructions and training checklist templates;
• Cherry pickers hazard checklist; and
• Packing shed hazard checklist.

We keep our buying and sourcing teams up-to-date on our ethical sourcing and human rights commitments and how their actions may impact workers’ rights. We aggregate the findings from our audit program and feed these into our internal training to ensure that our teams understand ethical sourcing and human rights relevant to their category.