Human rights and ethical sourcing in our supply chains

We identify and map our in-scope tier one and two suppliers for Coles Own Brand products, fresh produce (both own brand and proprietary), Coles Liquor Own Brand products, and selected Goods not for resale (GNFR) products and services. This includes selected services used in our operations, such as logistics, transport, cleaning, trolley collection and store infrastructure installation services. Country and product category information for in-scope suppliers is disclosed in our Modern Slavery Statement.

The diagram below shows the key supplier groups in scope of our Program across Goods for resale (GFR) and GNFR including services.

The diagram shows the Program scope across:

• GNFR, including direct suppliers of finished goods and services, selected services, and selected subcontractors.
• Coles Own Brands, including Coles Supermarkets and Coles Wholesale, selected goods, and packing or manufacturing sites.
• Fresh produce, including fresh produce suppliers and produce packing sites.
• Coles Liquor Own Brands, including Coles Liquor suppliers and bottling sites.

For the purpose of this Program:

1. Fresh produce means unprocessed fruit, vegetables, and flowers, and includes Coles Own Brands as well as proprietary brands.
2. Produce packing includes packing sheds, as well as farms that pack produce on site. In cases where the farm harvests produce then sends it to a packhouse, only the packhouse and supplier of final products are in scope of the program.
3. Packing/manufacturing refers to sites that manufacture or pack Coles Own Brand products into their final retail form.

Coles also has a limited range of Coles Own Brand apparel sold under the Mix brand, which we source from overseas. We work with apparel suppliers to build relationships throughout the supply chain and monitor performance against our Policy and Program Requirements.

Our supply chain includes many suppliers and workers who contribute to producing, packing, transporting and providing the goods and services we use and sell.

In line with our commitment to the UNGPs, we take a risk-based approach to human rights due diligence in our supply chains. This means focusing our resources on areas where there is a greater likelihood of labour and human rights issues, where potential impacts may be more severe, and where we have greater ability to influence change.

Through our Program, we work collaboratively with our direct suppliers, and selected suppliers within our extended supply chain, to improve performance, address issues when they arise and strengthen systems that help prevent harm to workers.

We seek to understand where risks to people may exist, the root cause of those risks and how to prevent the risks from becoming an issue. To identify, assess and monitor human rights risks and impacts, we use a range of inputs, including:

• our salient human rights assessment
• new supplier screening
• supplier site visits
• independent third-party audits of suppliers
• worker voice feedback
• review of grievance and concerns raised through our grievance channels
• information from public reporting on key human rights issues
• information from tools such as Supplier Ethical Data Exchange (SEDEX), Fair Farms, SAP Ariba and Dow Jones Risk and Compliance

Suppliers that are in scope of our Program, including selected suppliers within our extended supply chain are required to complete risk assessment questionnaires to help us understand their activities and potential ethical sourcing risks. This also includes monitoring of GNFR suppliers providing selected services used in our operations such as logistics, transport, cleaning, trolley collection and store infrastructure installation services. The questionnaires include an assessment of the supplier’s inherent risk based on location, sector, and industry, as well as site-specific questions around workforce composition, working hours, contractual arrangements, and recruitment costs.

Depending on their risk classifications, in scope tier one and two suppliers may be required to undertake a desktop assessment or site audit, administered by Coles or an independent third party. Audits can be announced, semi announced or unannounced.

Audits can include:

• reviews of relevant documentation,
• site tours,
• private and confidential worker interviews,
• assessment of labour, health and safety conditions
• closing meetings with site management

Worker interviews include targeted questions to explore labour risk areas and modern slavery indicators such as recruitment fees, holding of personal identity documents or passports, accommodation, and deductions from wages and benefits and other employment conditions.

We use ethical audits to help identify and monitor potential human rights issues in our supply chain. Where risks or non-compliances are identified, we work with suppliers to mitigate, remediate and help prevent recurrence. In-scope suppliers with non-conformances from ethical audits are required to address and remediate these in line with our Program Requirements, and we monitor and support them through this process.

The Ethical Sourcing team also conduct supplier site visits as part of monitoring and understanding risks. When we receive grievances via our grievance mechanism channels, we may conduct specialised investigations to understand the situation further and determine appropriate action.

We monitor our audit, grievance mechanism data and other Program information to help identify common issues, trends and emerging risks. These insights help us determine where further action may be needed, including supplier engagement, training, capacity building, targeted site visits, investigations, policy updates or changes to Program requirements.

Our risk profile is not static. It changes as our business, supply chains, operating environment and external risk landscape evolve. Because of this, we regularly review risks and the actions we take to mitigate them.

Human rights due diligence is an ongoing process that requires attention at different points in our business activities. For example, when we enter new areas of business or engage new suppliers, we seek to understand the countries, sectors, products, materials, or services involved, and whether these may increase human rights risks.

Before commencing new engagements with suppliers, we conduct due diligence as part of our Own Brand Product Development (OBPD) process for GFR suppliers supplying Own Brand products or as part of our Third-Party Risk Management process for GNFR suppliers.

This helps us embed human rights considerations in our business processes and ensure that our expectations for human rights, labour rights, health and safety, and environmental standards are addressed at the earliest stages of the third-party selection process.

We take a range of steps to assess the effectiveness of our response to human rights risks. This includes reviewing our Policy and governance frameworks, monitoring our risk profile, reviewing supplier performance, analysing audit and grievance data and assessing the performance of our Program.

Our Policy and Program Requirements are reviewed regularly in consultation with stakeholders to support alignment with regulation, stakeholder expectations and best practice. Coles’ Board reviews and approves any changes to the Policy.