We are committed to working towards a sustainable environment. 

I am delighted to be able to write this introduction to Woolworths’ first sustainability review.  Not only does publication of this review bring us firmly into line with world best practice but it also gives us an opportunity to talk about some of the values, principles and practices that Woolworths has embraced for many years.

The moment Max Sonnenberg opened the doors to the first Woolworths store in 1931, the company’s commitment to offering customers only the highest quality merchandise at reasonable prices was entrenched.  Over the years, whilst continually striving to meet this commitment, we have built a sustainable business.  A business that recognises the need to balance economic prosperity and growth with a deep understanding of our impact on our environment and the society in which we operate.

I was privileged to be invited to chair the newly-formed committee on sustainability, a team of senior, dedicated Woolworths people who passionately believe that unless we are an actively responsible organisation, we will not remain relevant in this changing world.

The first task for this committee was to formalise the company’s sustainability strategy, gathering together the many initiatives throughout the business that support this strategy and clarifying the future direction.

Our sustainability strategy is informed by three clear guidelines;-

• that integrity and honesty are the non-negotiable values that
  underpin everything that we do;

• we will nurture and build lifetime relationships with our customers and our behaviour will demonstrate the respect we have for our shareowners, employees, customers, suppliers and their employees and the communities in which we are privileged to operate; and

• we will work hard to use natural resources as efficiently as possible, minimising waste and reducing our use of substances and resources that are harmful to people and the environment.

Within these demanding guidelines, the team is formulating a sustainability strategy that will focus our efforts in the areas of delivering sustainable products and services, energising and inspiring our people to develop and perform at their best as well as the way in which we will extend our influence for positive social, economic and environmental change.  In reporting on our progress in these areas, we will be guided by an internationally acceptable reporting standard that will enable us to benchmark our progress against best practice worldwide.

In the course of the next year, this strategy will be embedded within the business strategy and actively communicated throughout the company, enhancing our employees and suppliers’ understanding of their role and responsibilities in building a sustainable business.

Our employees and our suppliers play an important role in informing our strategy so listening to and understanding their concerns and issues is a vital aspect of our communication.

Building a sustainable business is a neverending journey, a long and often complex route but one where the rewards, we believe, far outweigh our substantial investment.  We invite you to join us on this journey and support our efforts to be, at all times, a responsible corporate citizen.     Brian Frost Non-executive director

 
where does sustainability fit within the woolworths business?

The simple answer is everywhere.  Throughout the business, at every decision point, we are training Woolworths staff to stop and ask themselves how what they are doing impacts on the quality of our goods and services, our people and the environment in which we operate.

No business can survive unless the communities within which it operates embrace its presence socially, economically and environmentally.  Our heritage includes strong organisational values that support sustainability – long-term supplier relationships, independent auditing procedures that minimise risk from our supply chain, best practice product safety measures and the creation of a diverse workforce.  Building on this firm foundation, the sustainability committee guides and informs the business, providing direction for the active management of a sustainable business.

The measurement of Woolworths’ performance in this critical area will be how the organisation’s behaviour is improved in the key focus areas.  We will regularly evaluate how sustainable our products and services are, ask ourselves whether we are creating an environment where our people can develop and perform at their best, and check if our business practices and influence are making a positive contribution to the world about us.

Most importantly, we understand that sustainability is not a monologue.  To be effective it must be a conversation.  A dialogue where Woolworths listens in order to be heard, understanding the concerns of the broader community and, based on this understanding, develops informed and confident policies.

Our Stakeholders   How we listen

Employees Internal communication including an employee magazine, regular business updates and team briefings; Senior management store visits; Communication forums in stores; Regular surveys in stores of staff satisfaction; Training opportunities for staff; Community involvement initiatives.   Customers Sales information; Surveying customers at stores; Customer panels; Customer help line; Information desks in-store; E-mail and website communication.

Shareowners Annual report; Annual general meetings and general meetings; Meetings and presentations with institutional investors; Surveys of investor satisfaction; E-mail and website communication.  Business partners  (including product  and service suppliers  and franchisees). Regular visits and meetings; Regular surveys of supplier and franchisee satisfaction; Attending major shows and exhibitions; Direct relationship with important raw material suppliers; Independent audits of business partners to ensure that their employees are managed in a socially responsible way and that negative impacts on the environment are minimised.

Communities Working on a wide range of community initiatives, both urban and rural; Representation on key community bodies such as Central Improvement Districts; Regular meetings with NGO partners.

Environment and   animal welfare groups Meetings to discuss key issues with relevant groups including Compassion in World Farming, the SPCA, Organic Agricultural Association of SA, Cape Organic Produce Association, Packaging Council of SA and the Red Cross Children’s Hospital; Partnership initiatives with recognised experts providing guidance and endorsement for Woolworths practices in areas such as food safety and child accident prevention.

Government/regulators Regular meetings with food standards authorities such as the Department of Health, Department of Agriculture and the SA Bureau of Standards; Meetings with SA Police Services, Fire Inspectors, Health Inspectors.

delivering sustainable products and services with care and concern

Producing the highest quality merchandise at reasonable prices sounds simple but it is the additional care and commitment that goes into each Woolworths’ product that really makes the difference in the long term.

Sourcing raw materials from sustainable stocks, concern with product safety, reducing energy, water use and waste in production and abiding by strict codes of ethics when dealing with animal welfare issues are but a few of the challenges that face all buyers and technologists at Woolworths daily.

What Woolworths has achieved to date in this area may make interesting reading but we recognise that in the context of what is possible, we have only just embarked upon an infinite voyage of discovery.  Sustainable and safe development of products and services is a business imperative for Woolworths and will continue to be a hallmark of our quality into the future.

product safety
Woolworths ensures that where the products we sell could affect any customer’s health and well being, we take bold steps to make a difference.  The systematic removal of nickel from all Woolworths products will make them safer for the 15% of our customers who are allergic to nickel while regular random testing across our food ranges in our own, SANAS-accredited, food laboratory substantially reduces the risks of food-related illness for all of our customers.

Full-time teams of professional technologists are employed in all aspects of the business to constantly monitor international best practice and innovate locally.  Woolworths is leading the way in South Africa by removing all unnecessary additives and preservatives from foods.  Our chicken feed is free of all animal by-products and our Ayrshire dairy products are free of rBST growth hormones.  All our produce suppliers are introducing integrated pest management practices and we make sure that we can trace the source of all of our ingredients.

Woolworths is committed to the EUREPGAP standard, an initiative started in 1997 by a group of European Retailers driven by the desire to reassure consumers, principally on issues of food safety, that has become a common internationally
recognised standard for Good Agricultural Practice (GAP).  Although the main focus is food safety, EUREPGAP also covers worker welfare and environmental protection issues.  Many Woolworths' suppliers have already been audited and certified and a number of our produce technologists were trained in the protocol.  Our intention is to EUREPGAP-certify our entire fresh fruit and vegetable supplier base.

Providing easy-to-understand product information for customers empowers the consumer to make an informed selection.  Alongside carefully monitored traditionally produced foods, the organic and free range offerings in Woolworths stores are constantly being extended, giving Woolworths customers an opportunity to make the most natural choice possible.

With effect from this summer, no child’s garment will leave a Woolworths manufacturer without passing through a metal detector which picks up any broken needles or pins left in the garments, substantially reducing the risk of injury.  All buttons on children’s garments are lock-stitched, hood cords are sewn into the garment to prevent the possibility of children choking and any battery used in a child’s toy is put into a screw-controlled casing.

Active engagement with policy-makers and experts who directly or indirectly affect our business is sound sustainable policy.  The Child Accident Prevention Foundation, Red Cross Children’s Hospital Poisons Information Centre, the Organic Agricultural Association of South Africa, the Sport Science Institute of South Africa and the SPCA are only a few examples of the organisations with which Woolworths is actively engaged.  We are also working with our suppliers to ensure that they adopt the European Union regulations on banned dyestuffs that can be heavily polluting.

reducing waste from packaging and products
Woolworths has put in place a number of initiatives aimed at reducing waste from using recycled board wherever possible, recycling as much paper and plastic hangers as possible and minimising the use of PVC.

Enhancing our community investment strategy, we donate all proceeds from paper recycling initiatives at head office to organisations promoting sustainable food gardens in low-income townships and the Hangerman job creation scheme, established 18 years ago, continues to collect Woolworths clothes hangers from our stores and resell them to major clothing factories after sorting and cleaning them.  Approximately four in every ten hangers are re-used and the balance is recycled.  This rate of re-use is optimum as hangers become brittle and discolour over time.

animal welfare
Working closely with the SPCA,Woolworths has developed a Code of Practice for Animal Welfare which takes into account Woolworths experience of many years of humane animal practices and combines this with the expertise of the SPCA.

All Woolworths honey products only come from beekeepers that do not trap honey badgers and our tuna products are procured from fleets that use dolphin-friendly fishing techniques.  Woolworths does not sell endangered fish species.  We promote the use of humane, free range and organic farming methods, and are against testing on animals unless required by law for human safety.

responsible energy usage
A heat-reclaim system that takes the heat generated by the refrigeration condensers and pushes this "free heat" back into the store is being installed in all new Woolworths food markets.  This efficient use of existing energy will be the norm in the future.

the well-being of our employees

Making Woolworths a great place to work is perceived as a non-negotiable component of the business strategy.  Woolworths takes a holistic approach to employee well-being, delivering beyond statutory requirements in many aspects of human development to ensure that our employees receive the best possible attention.

a great place to grow
Woolworths believes that learning should extend beyond the workplace and encourages employees to take the initiative to learn and grow continually.  Study assistance is available through trust funds such as the Ernst Loebenberg Education Trust Fund and the Employee Education Fund.  Employees can apply for study grants from the Self Development Scheme, and the Employee’s Children’s
Bursary Fund for tertiary education offers assistance to promising
family members.

Growth and development lead to increased commitment and better performance, which is rewarded by Woolwor ths.  Woolworths recognises the vital role that employees play in delivering outstanding results and more can be read about this in the human resource report.  Going forward, Woolworths has introduced a performance-based incentive scheme to reward all employees for outstanding contribution.

a great place to belong
The safety, health and wellness of all employees is fundamentally important to us.  From the design of a Woolworths store to the stringent operating processes and practices, safety is of paramount importance.  Most of our workplace accidents are slips and falls on sales floors.  We are concentrating on reducing these sorts of injuries.  Woolworths performance is monitored and audited by out-sourced professionals.

Woolworths employs ten Occupational Health Practitioners who manage an extensive health offering that covers health education, family planning, free health screening and provides employees with psycho-social assistance through the Employee Assistance Programme (EAP).

hiv/aids
Despite an estimated current prevalence well below the national average,Woolworths remains deeply concerned about the effect of the advancing HIV/AIDS pandemic.  (The prevalence estimate was arrived at through an actuarial impact analysis and an anonymous prevalence survey conducted within our distribution network.)

Woolworths recognises the devastating effect of the loss of a loved one can have on a family.  For many years we have been actively engaged in programmes to educate and address HIV/AIDS in the workplace including running comprehensive peer education programmes and distributing condoms throughout all corporate owned stores and head office.  In recognition of these efforts,Woolworths’ best practices are listed in the UNAIDS/International Organisation of Employers’ Handbook on HIV/AIDS – a Guide to Action, which has been made available to corporates all over the world.

With the pandemic advancing, and the provision of anti-retroviral treatment becoming more affordable, a more comprehensive set of AIDS related benefits is being considered.  As the complexity and cost of such an offer requires much detailed investigation, an HIV/AIDS Steering committee has been established which includes our occupational health team and senior representatives from across the business.  This forum is updating Woolworths’ HIV/AIDS strategy and will be making key recommendations around education, testing and the distribution of anti-retroviral and other HIV/AIDS related interventions.

a great place to work
Listening to our employees enables Woolworths to be responsive to their needs and better meet the commitment to provide an inspirational working environment.  Weekly, monthly and bi-monthly employee communication informs staff of developments in the business and encourages employees to respond and interact with areas outside of their immediate work environment.

Regular, bi-annual surveys are conducted with store staff to measure employee satisfaction and commitment.  In general, each of the three surveys conducted to date, showed an increasingly positive trend on both indicators.  The survey will be rolled out to the rest of the business, providing a better and more holistic understanding of employee satisfaction and commitment and indicating areas for
improvement and development.

employment equity
Woolworths’ employment equity policy has enabled us to build a diverse workforce by recruiting and developing black, female and disabled staff.

Although our employment equity strategy has achieved significant gains in terms of overall numbers of black staff, more than 80% of all employees, we recognise the need to develop and recruit more senior black managers.  In the last three years, the percentage of black employees in management positions has increased from 18% to 32%.  Recruiting the best, providing extensive training, development and mentoring opportunities and retaining these valuable people by rewarding and recognising individuals for achieving results is core to meeting this requirement.

Disability week became more than a note in the diary at head office in 2003.  An interesting and innovative programme of speakers, both internal and external, was put in place and the challenges of disability were highlighted in a communication campaign throughout the building.  Only by building employee awareness of disability and the needs of the disabled, can we hope to create an environment where disabled employees can work effectively and where we can better meet the needs of our disabled shoppers.

black economic empowerment
The development of Woolworths own BEE Scorecard will provide the business with a clear measurement of its contribution to Black Economic Empowerment.

Woolworths recognises that for the long-term sustainability of our economy and business, we need to create and sustain opportunities for black people within our employees, supplier base and the communities in which we operate.

Our Black Economic Empowerment strategy encourages procurement from black businesses especially SMMEs.  As we actively search for the best possible suppliers, and become increasingly aware of the value of our African heritage in the interpretation of international trends,Woolworths is intent on helping to create a representative supplier base that competently meets exacting quality standards.

The business is currently undertaking a baseline review to assess our core and non-core spend with black suppliers.  From this information we will establish targets for 2004 and develop a supporting supplier development programme to assist suppliers to meet our quality standards.

Woolworths Black Economic Empowerment strategy extends beyond a concentration on the supply chain to include employment equity and receives individual attention elsewhere in this document.

extending our influence

Woolworths is acutely aware of the impact any organisation has on the communities that surround it and, more importantly, that the organisation can only survive with the support and endorsement of those communities.

Our relationships with our customers, suppliers and other important stakeholders are critical to our success and to the creation of a sustainable future for all.  These relationships are developed and extended on the basis that Woolworths seeks to establish sustainable empowerment through successful partnership with all relevant stakeholders and communities.

a sustainable supply chain
As one of the few retailers in the world with a "single brand" philosophy, Woolworths relies on close co-operation and sound relationships with its suppliers.  We encourage our suppliers to think of themselves as "shopkeepers without stores" and we like to think of ourselves as "manufacturers without factories".  Thinking like this has made us acutely aware of the environmental and social challenges facing our supply chain.  In many instances, this knowledge enables us to add value and minimise the risks involved in dealing with these suppliers.  Our influence is felt deeply and we see potential in the future for increasing this influence for positive change.

We are committed to ensuring that, in all our business interactions including sourcing, franchising and commercial operations, we only deal with entities and organisations that apply ethical and legal employment and environmental practices similar to our own.  All suppliers are bound to the Woolworths Supplier Code of Business Principles that encapsulates legal, ethical and environmental requirements.  This ensures that their employees are treated with respect and fairly rewarded and that the impact on the environment is carefully and appropriately managed.

Each supplier is independently audited for compliance with this code.  In the previous financial year, almost 90% of Woolworths clothing and home suppliers were audited.  Corrective action is required and monitored to address any area of non-compliance or concern identified during the audit and a communication process has been established to ensure that key learnings from the audits are shared throughout the business and supplier base.

engaging with government
We believe that a vibrant economy that supports the upliftment of all South Africans depends to a large degree on close co-operation between government, civil society and the private sector and a sound understanding of each one’s roles.The private sector’s responsibilities include support for government initiatives by providing expertise and input where applicable and appropriate.

Woolworths has traditionally had good working relations with relevant government departments.  We continue to identify areas within government where our influence will promote economic development that is both socially equitable and environmentally responsible as well as being prosperous for business.  Woolworths participates in bodies such as the National Business Initiative, Consumer Goods Council and SACOB.

Woolworths does not make any financial contributions to political parties nor do we engage in party-political activities.

the woolworths trust
Making a difference in the community where we operate has always been important to Woolworths.  Over the lifetime of the business, we have quietly supported the community by providing funding, expertise and in-kind support for many worthy community projects.  More than R2 million in cash is committed annually to investments in society.

This year we launched the Woolworths Trust (the Trust), established to provide a focused channel for our substantial investments and efforts.  We believe the activities of the Trust will, through the development of effective partnerships, make a meaningful and sustainable socio-economic contribution to society over and above our commercial trade.  It should also develop employee pride and inspire them to become more involved in their communities.  For our customers we hope it will expose another carefully considered and substantial facet of the Woolworths brand.

Managed by a board of trustees, representative of the business and the society in which we operate, the Trust evaluates the changing needs of society and sets relevant parameters for the consideration of requests.The Trust is responsible for evaluating the requests received by the business against its focus areas and, in turn, managing the distribution of funds to sustainable projects.

Woolworths has decided in future to focus on fewer but larger funding opportunities where a truly sustainable difference will be experienced in the community as a result of the activities of the partner organisations.

During the course of the last financial year a number of potential projects were evaluated and it was agreed that Food & Trees for Africa (FTFA), South Africa’s leading greening organisation, would be the major beneficiary of the Trust.  The flagship investment for the new financial year (over R1.5 million) will be made in FTFA’s Eduplant programme.  This programme reaches thousands of schools in South Africa situated mainly in the disadvantaged areas.  The programme motivates schools and their communities to grow their own organic foods, learn about good nutrition, alleviate poverty, build capacity and develop skills.  A hungry child does not make a good student – in a country where over half the children are malnourished, this programme meets a real need in society.

The programme mirrors many of the values present in the Woolworths business – good food, good nutrition, care for the environment and people development.  Major partners in the programme include the Department of Education, the Department of Water Affairs and Forestry and the Department of Agriculture.  It is the intention of the Trust to support the Eduplant programme on a medium to long-term basis, creating a sustainable and meaningful involvement.

paper recycling
Our relationship with FTFA goes back over 10 years to when we first started paper recycling at Head office.  The proceeds from the sale of the waste paper were donated to FTFA.  I nitially the funds were used to plant trees in previously disadvantaged areas.  More recently sustainable food gardens have been established in these areas and the communities have received training in growing their own crops.  Examples of these gardens can be found at Thoho-ya-ndou primary school in Atteridgeville and Lehumo permaculture project at Pimville Clinic in Soweto.  As an extension of this relationship,Woolworths is currently working with the Cape Argus newspaper to raise further funds for this programme through the annual Noon Day Gun Run.

employee involvement
Cash funding is only one of the ways in which Woolworths supports the communities in which it operates.  Significant quantities of surplus clothing and food, valued at more than R100 million per annum continue to be donated to various charities throughout the country from our stores.

Woolworths is proud to be a founding partner in the MySchool project, which enables schools to raise funds through parents’ spend at MySchool business partners such as Woolworths.  During the last financial year, approximately a million rand was given back to participating schools.  In the next financial year this programme will be rapidly expanded to involve more schools and stores.

Recognising the need to not only secure South Africa’s cultural heritage but also to provide much needed economic support for developing artists,Woolworths is currently buying art from local artists to decorate the re-usable shopping bags we sell in stores.

the way forward
This year has been one of consolidation.  The business has worked hard to identify critical aspects within our core focus areas of our products and services, our people and our areas of influence, and to focus on consolidating and building sustainable practices within these areas.  Whilst the effort is positioned as a corporate initiative,Woolworths encourages each and every employee to contribute and participate.

Over the next two to three years, we will build on this work and embark on a broad stakeholder dialogue programme, ensuring that we remain relevant to, and engaged with, the society in which we operate.  Sustainable values translated into sustainable business practice at every single touchpoint within Woolworths will deliver sustainable returns to the bottom line.