Coles provides fresh food, groceries, general merchandise, liquor and fuel via more than 20 million customer transactions on average each week through its store network and online.
We have more than 101,000 team members and operate a national store network of 776 supermarkets, 858 liquor stores, 90 hotels and 662 fuel and convenience outlets.
During the year, Coles sought feedback about its performance from a range of stakeholders. The two most frequently mentioned issues were how Coles supports Australian-made food, and product quality and safety. Our material issues covered in this report are:
- Australia sourcing
- Labour rights
- Community partnerships and support
- Supplier collaboration
- Product quality and safety
- Certification and labelling
- Energy efficency
- Managing waste and recycling
- Health and safety
- Employee career development
- Economic contribution
- Job creation
Working with and supporting our suppliers
Australia First sourcing
Coles is proud of its Australia First sourcing policy. We always seek to buy Australian produce in the first instance, when it is available in sufficient quantities and appropriate quality and at a fair and reasonable price.
This policy has resulted in us being able to source 96 per cent of fresh fruit and vegetables from Australian growers over the past year, along with 100 per cent of fresh milk and 100 per cent of fresh meat from the meat department.
We also sought some new contracts, such as with Bundaberg Sugar, to supply the whole Coles brand range so we could guarantee customers 100 per cent Australian grown sugar. As a result of the contract, Bundaberg Sugar will invest approximately $2.5 million in new machinery in its packaging plant.
We struck a 10-year agreement with Sundrop Farms in South Australia to secure tomatoes 365 days of the year from 2016.
This year, Coles and Western Australia's largest agribusiness, Milne AgriGroup (MAG), entered a four-year agreement to source all Coles Finest free range pork from the Plantagenet region of Western Australia. This is expected to lead to a trebling in Great Southern Pork’s free range pork production with eight pork businesses to supply approximately 1,200 pigs each week by mid-2015.
Coles Nurture Fund
In April 2015, we announced the launch of the Coles Nurture Fund to help small Australian producers, farmers and manufacturers to innovate and grow their business. Over the next five years, the Nurture Fund will allocate $50 million in grants and interest-free loans to fund the development of new market-leading products, technologies and processes.
Open to businesses with 50 or fewer full-time employees and less than $25 million in annual revenue, the Nurture Fund is one way Coles can offer support and encouragement to small Australian businesses looking to take the next step in creating more productive and innovative ways of working.
$50 million Nurture Fund to support small business innovation or growth
Fair and transparent dealings with suppliers
We have taken many steps over the last several years to improve our relationship with thousands of suppliers, including the implementation of a formal Supplier Charter. The Charter sets out what merchandise suppliers can expect when they work with us. It is our formal commitment to dealing in good faith, treating our suppliers with respect and providing greater transparency throughout our relationships.
The Charter includes an independent third party framework for dealing with complaints. This includes three procedures and recourse to an independent arbiter. In August 2014, former Victorian Premier The Honourable Jeff Kennett AC was appointed independent arbiter to resolve disputes with Coles.
Further information about the changes we have made to improve our relationships with suppliers and the settlement of the ACCC action against Coles relating to the Active Retail Collaboration program is covered in the principles section of this report.
Ethical sourcing and labour rights
Coles has a range of own brand products, which includes Coles, Coles Finest, SmartBuy and Mix apparel. We source most of our fresh food for these brands locally and also import, mainly for grocery, apparel and general merchandise. Air, road and rail transport are used to move products to and from stores and to and from distribution centres located around Australia. As at August 2015, we directly operate nine distribution centres and another 11 are operated by third parties. Our Ethical Sourcing Policy for the supply and manufacture of Coles brand products is clearly communicated to all suppliers as part of our trading terms and conditions.
Our policy is based primarily on the Ethical Trade Initiative (ETI) and International Labour Organisation (ILO) conventions and requires independent third party audits of high risk suppliers, such as those operating in non-Organisation for Economic Cooperation and Development (OECD) member countries. In the past year, our audit process identified three critical breaches of our policy, which related to forced labour issues in our Malaysian and Singaporean supply chains. These were successfully resolved by correcting processes on site and providing training which was directly delivered to factory management by Coles.
We also engage with social justice non-government organisations and other stakeholders and participate in key social improvement programs to address poor labour practices in specific countries and industries.
We work with Better Work as Buyer Partners. Better Work is a joint program between the ILO and the International Finance Corporation, and our membership helps strengthen our oversight of factories from which we source our MIX clothing range. This year, we continued to work with the ILO to pilot a meals program at one of our factories based in Cambodia. Coles also publishes the names and addresses for the majority of its apparel factories in Cambodia and Vietnam and will continue to add to this over time.
In May 2015, the ABC’s Four Corners program aired an episode reporting unfair labour conditions in Australia’s fresh produce and meat industries related to the use of labour hire contractors and workers on temporary visas. Coles does not condone the abuse of workers’ rights. We have responded by writing to all our fresh produce and meat suppliers reminding them of their obligations under Australian workplace laws and we have commenced inquiries into a number of suppliers identified on the Four Corners program.
Coles is working collaboratively with the National Farmers Federation and PMA Australia-New Zealand Ltd to develop an industry-accepted best practice guideline for the management of contracted labour within the Australian fresh food supply chain.
Every year Coles supports national and local charities with fundraising, food donations and disaster relief. Our areas of focus are families and children, and programs that contribute to health and wellbeing. This year our direct community investment was $36.6 million, and an additional $7.2 million was contributed by customers, team members and suppliers.
Since 26 January 2013, we have raised more than $14 million for Redkite, a charity which supports children and young people with cancer and their families. In the past year, we have funded 16,000 hours of counselling and practical care for families in nine hospitals across Australia. Our support also enabled Redkite to provide critical financial assistance to families and deliver new education and career support services to teenagers and young adults.
In April 2015, we supported the Australian Defence Force (ADF) Assistance Trust with an Anzac Day fundraising campaign, raising more than $800,000 through customer fundraising and increasing awareness of the issues facing our service men and women. Sales of Coles Brand Spring Water since October 2014 have raised an additional $1.2 million for the ADF Assistance Trust.
$14 million raised for Redkite
Approximately 1,000 Coles Express team members supported the Indigenous youth charity, Red Dust Role Models, through regular payroll deductions which help deliver healthy living programs to the remote community of Daly River in the Northern Territory. Over the past two years more than 15 team members have visited Daly River as role models to generously give their time.
Since 2014, our supermarkets in Queensland have joined together with their customers to fundraise for Hummingbird House, Queensland's only children's hospice due to be opened in 2016. To date, the Coles team and customers have raised over $240,000 which will be used to help furnish five family accommodation units, allowing families to stay together while their child receives respite or palliative care.
This year we supported relief efforts linked with the fires in the Adelaide Hills of South Australia and Cyclone Marcia near Rockhampton in Queensland. In South Australia, we launched a public fundraising campaign with Australian Red Cross which contributed $450,000 to help communities prepare, respond and recover from disasters. We also worked with Red Cross, the Royal Flying Doctor Service and GIVIT to provide food, water and other supplies to those assisting with the relief effort or affected by Cyclone Marcia.
High quality healthy products
Coles’ Manufacturing Supplier Standards for food were updated this year and will be relaunched to suppliers in the coming year. Our food standards cover product safety and quality, packaging and all claims, such as animal welfare and sustainability. They are based on world’s best practice and go beyond Australian regulatory standards.
As part of our commitment to delivering great quality affordable products, we regularly review our own brand products and make changes where required. Nearly 100 improvements were undertaken with Coles Brand suppliers, including relaunching Coles Little Explorer nappies with a stronger outer material.
During the year, only one Coles Brand product was recalled and 163 products received industry accolades. For example, our dairy range achieved 20 awards including seven gold medals at the 2015 Royal Sydney Cheese & Dairy Produce Show.
Coles is a signatory to roundtables hosted by the Food and Health Dialogue and through these we have completed sodium reductions in our bread, breakfast cereals, processed meats, simmer sauces and soups. In the past year, we reduced the sodium for Coles Brand savoury pies and sausage rolls, with an average of 17 per cent reduction in sodium across eight products.
We removed added monosodium glutamate and artificial colours from Coles Brand products early in 2012 and since this time all new products launched have not contained any artificial flavours.
Health Star front of pack nutrition labelling was introduced in 2014 and nearly 400 products now feature this labelling. This is supported by a page on our website, which explains how to use Health Stars to make healthier choices.
During the year, we expanded the number of foods which carry a low glycaemic index logo to 35, with further products in the pipeline.
In response to customer feedback, we changed the way food allergens are labelled on Coles Brand products, where a supplier or process change has meant additional allergens need to be declared. As well as complying with legal requirements outlined in the Food Standards Code and the Food Industry Guide to Allergen Management and Labelling (produced by the Australian Food & Grocery Council), any additional allergens will be called out in a rondel on the front of the pack, to ensure customers with allergies are fully aware of the change.
In response to customer feedback, we introduced expanded country of origin labelling for Coles Brand products such as fresh produce, meat and dairy. This labelling calls out the specific countries of origin of key ingredients, particularly in products with mixed ingredients.
Responsible sourcing, certification and labelling
Responsible sourcing, certification and labelling
This year we achieved our aim to have Coles Brand seafood independently assessed as responsibly sourced. From the end of October 2015, fresh, frozen and canned Coles Brand seafood will meet one of the following: Marine Stewardship Council (MSC) certification, Aquaculture Stewardship Council (ASC) certification or Coles Responsibly Sourced Seafood criteria, which has been developed in conjunction with independent sustainability specialists MRAG Asia-Pacific.
Meat and eggs
In September 2014, we launched our Coles Brand Grass-fed Beef Range, called ‘Graze’. Graze gives customers the assurance that they are buying premium 100 per cent pasture-fed beef produced by Australian farmers at an affordable price. We developed ‘the Graze standard’ with industry bodies as well as some of our grass-fed producers. The standard governs on-farm practices and systems, animal traceability, feed and water requirements, animal welfare and handling practices and farm management. Over 115 beef producers are operating to this standard.
Many other categories in our Coles Brand range must meet specific sourcing requirements or be independently assessed to an animal welfare or sustainability standard. For example:
- Coles Brand fresh beef range – no added hormone beef since January 2011
- Coles Brand fresh eggs range – cage free since January 2013
- Coles Brand RSPCA Approved Barn Laid eggs – since January 2013
- Coles Brand fresh chicken – RSPCA Approved since January 2014
- Coles Brand whole turkey – RSPCA Approved since December 2014
- Coles Brand fresh pork – sow stall free since January 2014
We are also extending these requirements into other products, e.g. no added hormone Coles Brand Sausages, cage free eggs for Coles Brand mayonnaise and sow stall free Coles Brand ham and bacon.
The whole Coles Brand Australian sugar range was relaunched with BonSucro environmental certification in June 2015. This was made possible as a result of shifting our supply to Bundaberg Sugar to supply Coles over two years with 40,000 tonnes of Australian grown and made white, brown, icing, caster and raw sugar.
Coles brand food and drinks now use sustainable palm oil. More than 3,000 tonnes of palm oil used by Coles comes from a sustainable source. The conversion program for our non-food products is also underway and in May 2015, we launched Coles Hand Sanitisers with sustainable palm oil. The use of palm oil in Coles Brand non-food products has been offset with GreenPalm certificates while the conversion program take place.
Coles increased the number of Coles Brand paper products that are certified to sustainable forestry standards during the year with the launch of Coles Brand party goods. All paper products in this range carry either Forestry Stewardship Council or PEFC certification.
Fairtrade and UTZ
Coles launched 15 new products which were ethically certified by Fairtrade or UTZ, including four lines of block chocolate certified to the Fairtrade Cocoa Program. In 2014, Coles was awarded the Fairtrade National Retailer of the Year for the second year in a row.
Reducing our environmental impact
Our energy use increased 1.2 per cent this year compared with last year, in line with the growth of our business. We continue to invest in energy efficiency projects and work towards reducing our energy use.
We have introduced an energy centre which provides 24-hour central monitoring of our supermarkets so that any anomalies can be immediately identified and corrected by technicians. During the year, 3,300 issues were identified and corrected, helping to save 13 million kilowatt hours - enough energy to power 2,200 homes for a year.
Coles achieved the first Green Star rating for an Australian supermarket in 2015. Coles Hallam in Melbourne’s south east was awarded a 4 Star Green Star rating from the Green Building Council of Australia (GBCA). Coles Hallam uses natural refrigerant, combined cooling for more efficient temperature control, LED lighting and has extra insulation in the ceiling.
We are trialling the use of solar power, adding panels to a new store at Coburg (Victoria) which opened in August 2015 and to the roof of an older supermarket at Budgewoi (New South Wales) in 2014 to confirm that solar power could be integrated with older electrical infrastructure without disrupting store operations.
Over the past year we have continued to install LED lights at our convenience stores and supermarkets to further lower energy use and costs.
"Coles was determined to develop a 'supermarket of the future' - and in doing so, has set a new benchmark for sustainable supermarket design in Australia"
Romilly Madew, CEO GBCA
Managing waste, recycling and packaging
Total waste recycled for the year increased by 9.4 per cent and our waste to landfill was relatively unchanged on last year. Overall our recycling rate was 70 per cent of total waste compared to 68 per cent last year.
Our main sources of waste are food, cardboard and plastic in our supermarkets and we have recycling programs for all of these.
Cardboard recycling by our stores was higher this year along with our diversion of food waste from landfill due to finding alternative uses, such as animal feed for farmers.
Our food donations via Foodbank and SecondBite increased by 14 per cent during the year, to more than 5,200 tonnes. We also expanded our donations to SecondBite to include frozen meat at more than 200 stores.
Approximately 278 tonnes of plastic (including plastic bags and product packaging) was returned to our supermarkets by customers for recycling via our REDcycle program.
Coles regularly reviews product packaging in line with the Sustainable Packaging Guidelines set by the Australian Packaging Covenant. Our current focus is to use recyclable packaging and where possible packaging that is recycled and recyclable.
This year we introduced labelling for Coles brand products packaged with soft plastic to promote our in-store REDcycle (recycling) program available at 477 locations.
Last year we reported we had adopted Plantic eco Plastic™ for packaging Coles Brand fresh beef, pork and lamb mince. The packs combine the use of renewable corn and recyclable plastic material to deliver a meat pack that is compatible with kerbside recycling streams. If recycled, we would reduce meat trays sent to landfill by 35,099 cubic metres per year, equivalent to 14 Olympic-sized swimming pools.
70 per cent of waste recycled
This year we extended the use of eco Plantic to our broader meat category including the new Coles Graze beef range and our skin meat packs during the year, using 2,076 MT of eco Plantic. This has saved the equivalent to the emissions of 1,477 cars for a year or planting 628,196 trees.
Coles Brand vinegar is now packaged with 15 per cent high density recycled plastic, replacing new plastic. The change will save 21 tonnes of virgin plastic a year and follows our move to convert all Coles Brand Spring Water bottles to fully recycled plastic bottles in 2014.
GRI Reference: G4-12
Responsible sale of alcohol and gaming
We participate in industry-wide initiatives and other partnerships that are designed to minimise harm and achieve better health outcomes for our stakeholders. For example, Coles Liquor is a signatory to the Alcohol Beverage Advertising Code (ABAC), whereby our television advertisements are independently reviewed to ensure they carry and portray responsible alcohol consumption messages. ABAC’s standards for alcohol advertising (and packaging) have been incorporated into the Coles Liquor Responsible Advertising/ Responsible Ranging Guidelines.
We have also participated in Drinkwise since 2011, an industry-led not-for-profit organisation aimed at bringing about a healthier and safer drinking culture in Australia and promoting responsible drinking. Drinkwise pregnancy labelling has been introduced for our exclusive and private label liquor products.
Coles participates in more than 190 liquor accords across Australia where community groups, councils and businesses
work together to minimise harm. In particular, during the year we responded to the rise in 'sly grogging' from Broome in Western Australia into Halls Creek, where the sale of alcohol is restricted, by introducing a policy designed to upskill our store teams to be more aware and manage this risk.
Once again this year our hotel business, Spirit Hotels, supported Responsible Gambling Week in Queensland. For more information about our responsible gaming approach, click here.
In a small number of communities, we have ongoing issues of vulnerable minors, accessing products from our supermarkets that can be used as inhalants (e.g. deodorants). This year we updated our Responsible Sale of Solvents policy and have drafted a supporting internal guide to support the management and mitigation of substance abuse.
Building great careers
Our total workforce slightly increased during the year to 101,008, mainly due to the in-sourcing of trolley and cleaning services for our supermarkets.
We continue to invest in our store network and this is creating employment opportunities, such as bakers at 68 new in-store bakeries.
We expanded our graduate intake, recruiting 73 graduates and a further 148 are confirmed to commence in the coming year. More than 950 team members also took part in our Retail Leaders Program, which is the key training platform for a career in store management.
We are the proud employer of this year’s winner of the prestigious Joe Berry Australian Retail Industry Executive Award 2015. Sarah Hughes, who works as a category manager in our merchandise team, won the award for her essay, The Growth of Discount Retailing.
Diversity and accessibility
Coles’ self-identified Indigenous team members increased by more than 900 this year, to a total of 1,765. This was partially driven by hiring 500 Indigenous team members through our First Steps Indigenous employment program and direct recruitment.
We launched our first Accessibility Action Plan 2015-2017 with team members and will soon lodge this with the Human Rights Commission. The plan demonstrates a commitment to improve the accessibility of our stores, sites and services.
During the year, we worked with the Australian Network on Disability to participate in the Stepping Into Internship Program which provides paid work experience specifically designed for university students with a disability.
We also introduced an additional needs trolley at more than 400 supermarkets to make shopping easier for parents and carers of children with a disability.
Pay and conditions
Coles Store Team Enterprise Agreement 2014-2017 commenced in July 2015, following the approval of the Fair Work Commission and delivers a range of benefits, including an average three per cent wage rise per annum to more than 75,000 team members.
More generous eligibility for Coles’ paid parental leave commenced from July 2015. Introduced two years ago, team members can be eligible after 12 months employment, instead of the previous two year requirement. Eligible team members receive a payment immediately on their return from parental leave to permanent work.
950 team members in our Retail Leaders Program
Keeping our team members, customers, suppliers and other visitors safe across all our sites is important to us. This year, Coles discovered an inaccuracy in how incident reporting systems were being used at a supermarket store level. This year's total recordable injury frequency rate (TRIFR) uses a more accurate approach and last year's TRIFR has been restated using the same methodology from 37.2 to 57.2. Using the same data capture system, this year our TRIFR was 54.0, a 5.6 per cent improvement on last year. Our lost time injury frequency rate (LTIFR) was eight.
During the year, we introduced a national 'nurse on call' injury care service for team members working in our supermarkets, to provide expert advice on treatment following an injury and management of injuries while working. We also commenced working with transport providers, such as Linfox and Toll, to jointly address safety issues linked with stock deliveries and the movement of stock from the back of a truck to the back dock of a supermarket.
As part of creating a mentally healthy workplace, ‘Mind your Health’ will be launched across the division in August, focusing on bringing the conversation on mental health into our everyday language and providing managers with the skills to respond and assist their team members as required.
Coles Express launched a range of DVDs, called Think Healthy, Act Healthy focusing on nutrition, movement and wellbeing during the year, along with a fitness challenge, called Express Steps, which encourages team members to make regular movement part of their everyday activity.
Coles Liquor continued to focus on reducing manual handling risk through its use of the Mini Pallet Beverage Handling System. Liquor achieved a significant reduction in its workers’ compensation premium, reduced manual handling claims and achieved its best LTIFR on record.
54.0total recordable injury frequency rate
2This number has been restated from 37.2 to 57.2
Coles is committed to providing customers with everyday low prices and quality fresh food. Achieving this in a responsible and sustainable way is important to us and in the coming year we will continue to focus on:
- Building stronger, deeper relationships with suppliers through fair dealings and long term contracts
- Increasing the transparency of our supply chain
- Working with industry and government to improve contract labour practices for Australia's fresh produce industry
- Driving responsibly and ethically sourced products for Coles brand
- Diverting more waste from landfill, expanding our use of recyclable packaging and maximising store recycling programs
- Making our stores more energy efficient
- Increasing the diversity of our workforce with greater Indigenous representation and providing workplace flexibility
- Engaging our stores and operations to make a step-change improvement in safety performance
- Promoting mental health amongst team members
GRI Reference: G4-DMA (Product and Service Labelling), G4-12, G4-EN33, G4-PR3