THE WAREHOUSE 2008 SOciETy And EnviROnmEnT REpORT
Transcription
THE WAREHOUSE 2008 SOciETy And EnviROnmEnT REpORT
THE WAREHOUSE 2008 Society and Environment Report The Warehouse will make a difference to people’s lives by making the desirable affordable and supporting New Zealand’s communities and the environment. By putting the customer first, we will succeed. Everything we do flows from this principle. We enjoy success through working together as one team. People choose to work for us because we care about and recognise individuals. CONTENTS 01 Our Core Purpose 02 Scope and Boundaries 03CEO and Managing Director’s Report 05 Company Profile 06 The Warehouse Dollar 07 Sourcing Profile 08 People 10 Employment Statistics 11 Our Customers 15 Community Fundraising 16 Community Support 172008 Supplier Awards 18 Ethical Sourcing 20 Green Households 21New Environmental Legislation 23Environmental Performance 26 More Information Scope and Boundaries This Society and Environment Report relates only to the operations of The Warehouse Limited and unless otherwise stated covers activities for the financial year 30th July 2007 to 27th July 2008. The Warehouse Limited is the largest subsidiary of The Warehouse Group Limited. The Warehouse Limited’s sales comprise 88 per cent of the Groups sales. For convenience and clarity the convention used throughout this report is to describe The Warehouse Ltd as ‘The Warehouse’. Society and Environment reporting is not provided for other subsidiary companies of The Warehouse Group: Warehouse Stationery Limited, Eldamos Investments Limited, The Warehouse Cellars Limited (90.0 per cent shareholding), or our partly owned associates, Waikato Valley Chocolates Limited (50.0 per cent), The Warehouse Financial Services Limited (49.0 per cent), or Pharmacy at The Warehouse (49.0 per cent). This year’s report has been informed in the main by the G3 Global Reporting Initiative Guidelines. These guidelines serve as a robust framework for reporting on our economic, environmental, and social performance. The framework itself is designed for use by organisations of any size, sector, or location, and factors in the practical considerations faced by entities ranging from small enterprises to those with extensive and geographically dispersed operations. In preparing this report, we have also taken account of those areas of social and environmental impact that we believe to be of most interest to our stakeholders. The information itself is derived from a variety of sources, including The Warehouse’s data warehouse, sales and inventory systems, financial reporting system, payroll system, and energy management system. Specialist third parties, such as our waste and recycling providers and our social auditors, also provided information used in this report. Where relevant, we have explained how some calculations have been derived. Assurance The financial information contained in this report has been extracted from The Warehouse Group Limited 2008 Annual Report. This Society and Environment Report 2008 carries no external assurance statement apart from that pertaining to our financial performance. An auditors’ report pertaining to this information only is published on page 84 of The Warehouse Group Limited’s 2008 Annual Report. Previous Society and Environment or Triple Bottom Line reports can be found in the Investor Section of www.thewarehouse.co.nz Contacts For more information about this Society and Environment Report contact: Sustainability Manager The Warehouse Limited P.O. Box 33470, Takapuna Auckland 0740, New Zealand Email: [email protected] Cover: Orepa Ligaliga of the Blenheim Store. 2008 Society and Environment Report // 2 CEO and Managing Director’s Report millions of plastic bags our customers still request. We will launch new initiatives in this area to further improve these statistics. As New Zealand’s largest general merchandise retailer we believe it is our responsibility to demonstrate leadership where we can. In this, our eighth annual Society and Environment Report, we detail how we are making a difference. Improving our environmental performance is important for its own sake. But it makes good business sense to do so; it saves the business money and appeals to our customers and our team who, increasingly, want to shop with and work for a company that ‘does the right thing’. Committed to Leadership For many years we have monitored and improved practices around the environment, the way in which we source products, and the way we leverage our size and marketing strength to fundraise and support our communities. Recently we have begun extending this responsibility into promoting better labour and environmental standards in our supply chain, Encouraging our customers to adopt more eco friendly practices like composting, household recycling and home vege patches, and offering more sustainable choices such as our forest friendly outdoor furniture. Although the interest of New Zealanders’ in these matters is undoubtedly growing, practical steps taken are still quite modest. For example, despite heavy promotion and low cost customers only purchased 80,000 reusable bags this year. Contrast this with the This year, as a part of our strategic planning and review process we confirmed that leadership in the community and environment area remains a key platform of our ongoing business success. We agreed a number of new community and environment targets and prioritised initiatives that will enable us to meet these objectives. Responsibility for these achievements is captured in managers’ performance incentive plans. Responsible Retailing The Warehouse is already well known in New Zealand for the work it does to support communities and the environment. But it was especially pleasing this year to receive international recognition and be named as a finalist in two categories of the 2008 World Retail Awards – ‘Responsible Retailer of the Year’ and ‘Employer of the Year’. As a finalist, we were recognised for the work we do to responsibly manage our impacts in many areas: waste and recycling, measuring our carbon footprint, ethical sourcing, and our comprehensive human resources policies and initiatives, along with our year-round fundraising efforts in support of local and national charities. 2008 Society and Environment Report // 3 CEO and Managing Director’s Report (continued) In addition, Greenpeace recognised our sustainable timber sourcing policies by placing The Warehouse at the head of their ‘Forest Friendly – Good Wood Guide’. We are also proud to retain our FTSE4Good listing in 2008 despite a further tightening of the FTSE4Good supply chain criteria. The Environment We are pleased to be making progress on our environmental initiatives. Since we began our drive to reduce plastic bags in 2004 we have achieved a 19.0 per cent decrease in bag numbers relative to sales. In addition, we have been piloting dedicated bag-recycling stations at some of our stores. We will locate these at more stores in the coming year. We plan further measures to reduce plastic bag volumes this year. In the policy area, The Warehouse has been working with other industry stakeholders designing a product stewardship scheme for electronic waste in preparation for new waste legislation which has just been passed by the New Zealand Parliament. In addition, we have strengthened our own internal policies and practices in regard to ‘e-waste’. Another highlight for the year was the Highly Commended Award received jointly by The Warehouse and Enviroreel, our plastic recycler, at the Packaging Council of New Zealand’s Bi-annual Environmental Packaging Awards. Our award was in the ‘Recovered Packaging Materials Utilised in the Manufacture of a Secondary Product’ category. Our Team Our people are our most important asset. Last year we reported on significant changes to the way we recruit new team members. The launch of our careers website has subsequently proven incredibly successful for us with over 30,000 on line applications, reduced waiting time for candidates and a reduction in costs to the business. In addition, we have delivered new leadership and capability programmes. We provide more detail on progress later in this report. Our latest engagement survey, to which 85.0 per cent (6,326) of our permanent employees responded, gives us real clarity about what matters to the people who work for our organisation. Charities and Fundraising We are very pleased to report that again this year we were able to raise and distribute over $2.0 million to our key charity partners and smaller community groups. Thanks to our customers and suppliers for helping us to make a real difference to the causes we support. I would also like to thank all of our team for their ongoing support and commitment; without their efforts we could not achieve the results we are so proud of. We invite you to read on and welcome your feedback on our progress to date. Ian Morrice Group Chief Executive Officer and Managing Director 2008 Society and Environment Report // 4 Company Profile The Warehouse is New Zealand’s largest general merchandise retailer with approximately 4.4 per cent of the total New Zealand retail market (excluding vehicles, meals and accommodation). We are part of The Warehouse Group Limited, a publicly listed limited liability company. Nonetheless there are some very positive aspects to this year’s performance. Customers are responding to product innovation and improved quality especially in apparel (+5.8 per cent growth). Sales in grocery, pharmacy and health and beauty also grew (+9.1 per cent) but were offset by weaker general merchandise sales (–4.7 per cent). Our Presence and Reach We have continued our format and channel development with 10 store upgrades completed including one store extension and one relocation. The Warehouse has 85 stores nationwide with general merchandise, apparel, and grocery products. Approximately 95.0 per cent of the country’s population lives within a 30 minute drive of a Warehouse store. The chain serves 58 towns and cities, giving it unrivalled coverage in New Zealand retailing. Business and Financial Performance Sales for the year were $1.53 billion: a slight decline on last year, operating profit also fell to $112.7 million. The results, whilst below those of last year, need to be viewed in the light of the slow-down in economic activity in New Zealand. Trading conditions in the last two quarters have been especially challenging with the New Zealand economy in recession and households struggling with dramatic increases in the prices of food and petrol and falling property values. It is anticipated that a high degree of uncertainty will continue to be a feature of the New Zealand economy over the coming year, influencing consumer attitudes toward spending. However as a value or bargain retailer The Warehouse is well positioned to meet consumers’ needs in this environment. More detailed information and commentary on The Warehouse’s financial performance can be found in the 2008 Annual Report. 2008 2007 CHANGE Sales ($m) 1,534 1,547 –1.0% Operating Profit ($m) 112.7 147.2 –23.0% 85 83 2.0% 465,530 455,361 2.0% 368.1 347.1 6.0% 30.60% 42.40% –28.0% Stores Retail Space (m2) Operating assets ($m) Return on assets (%) 2008 Society and Environment Report // 5 The Warehouse Dollar The ‘Warehouse Dollar’ is a reporting tool we have developed to approximately illustrate our economic impact and the way in which our revenue is distributed across some readily understood segments. This year 36.7 cents in every Warehouse sales ‘Dollar’ was spent on New Zealand goods and services. Wages and salaries accounted for a further 10.0 cents, enabling us to employ 8,0001 staff. 8.9 cents was passed to Government as taxes and duties. 37.9 cents went to overseas manufacturers and suppliers. 3.8 cents was paid to shareholders by way of ordinary dividends – a significant local impact as most shareholders reside in New Zealand. In addition to the ordinary dividend payout of $65.3 million a special dividend of $108.8 million was also paid to shareholders. The special dividend is not included as part of the Warehouse ‘Dollar’ set out below. Basis of Calculation: New Zealand Goods and Services – The direct costs of local products sourced in New Zealand and resold through The Warehouse; the purchase of non-trade NZ goods & services; depreciation expense and the estimated value of locally retained margins in instances where we purchased an imported product through a New Zealand wholesaler. All costs include GST. Overseas Product – Includes the cost of products manufactured outside of New Zealand including freight, commissions and royalties paid overseas. Includes an estimate of the money going offshore in instances where The Warehouse has purchased an imported product through a NZ wholesaler. All costs include GST. Excludes NZ customs & duty. Salaries and Wages – The direct cost of wages and salaries paid to team members of the Warehouse Limited, (excluding related employer and employee taxes). The Warehouse Dollar 2008 Dividends – represents the amount of ordinary dividends paid to shareholders, excluding any special dividends. 3.8c 8.9c Group Contribution – the amount of residual profit retained and used to fund other group activities. 2.7c 10.0c 36.7c Duties and Taxes – Includes corporate taxation, GST, custom duties payable on direct overseas sourced product, PAYE and ACC levies paid by The Warehouse. 1 5,259 Full time equivalents 37.9c 2008 Society and Environment Report // 6 sourcing profile UK USA China Pakistan H Hong Kong Thailand Malaysia Australia N New Zealand 2008 2007 New Zealand Made Sales $ MILLION China 56.5% 56.1% 2008 220.0 New Zealand Made 14.3% 14.2% 2007 219.9 Australia 7.7% 7.9% 2006 214.9 United States Of America 6.8% 6.1% 2005 222.1 United Kingdom 1.7% 2.0% 2004 230.4 New Zealand Assembled 1.6% 1.8% Thailand 1.4% 1.3% Pakistan 1.2% 1.1% Hong Kong 1.1% 1.3% Malaysia 0.8% 1.1% Country of Manufacture Share of Sales (TOP 10) 2008 Society and Environment Report // 7 People would attract people from within a range of key employment groups, such as parents returning to the workforce and students seeking part-time work or joining the workforce for the first time. We wanted to ensure The Warehouse could best meet their employment needs and at the same time promote retail in general as a great career opportunity. The Warehouse continues to employ a significant number of New Zealanders. This year we employed 7080 permanent and 921 temporary team members. A key resource in our recruitment strategy is our careers website www.thewarehousecareers.co.nz which was launched in August 2007. The site has subsequently received over 30,000 applications. The site has also enabled us to develop a database of potential future team members to speed up our recruitment processes and minimise cost. In addition, the site gives us the ability to demonstrate varied and real-life examples of career paths inside The Warehouse and reinforces the career opportunities within our business. Developing Leaders Christine Thompson of the Blenheim store. The tight employment market of recent years has meant it is vital we continue to focus energy and resources on attracting, developing and retaining the best people for The Warehouse. This year we focused on building capability, refining and further developing our talent and leadership development programmes, formulating plans to further increase engagement within our team, and working hard throughout the business to improve retention levels. Last year we launched our employment brand, ‘Start Here, Go Anywhere’, as part of our overall strategy of attracting great people to join The Warehouse team. As part of this we analysed the key factors that The company recognised a need to build capability to meet both our customer-focused strategy and the changing needs of the business. Key talent from within senior leadership roles were identified and we are now half-way through an intensive programme which will greatly increase our internal succession capability at the most senior level. Key-note sessions have included senior business leaders and members of our own board of directors. Leadership capability in-store has been significantly improved by the introduction of our ‘Store Manager Development’ and ‘Fast Track Manager’ programmes, while for our merchandising teams we developed a programme specifically to improve category management skills. 2008 Society and Environment Report // 8 PEOPLE Steve Robertson of the Sylvia Park store. (continued) Workplace Wellbeing Engagement Survey 2008 We delivered over 23,000 training hours this past year to team members across our stores, distribution centres and support office. Just over 200 team members used our Employee Assistance Programme (EAP) to receive free professional counselling for personal issues. We believe that team engagement is critical to the current and future success of our business. Our managers play a critical role in engagement and they have this as a measure of their own personal performance. Our ACC partnership programme continues to retain tertiary accreditation status, the highest level available. This status clearly recognises our commitment to workplace safety. This year saw a major drive to rebrand and launch safety and wellness initiatives across the business. A number of initiatives were rolled out including ‘Teamsafe Movesafe’ which is The Warehouse’s Manual Handling Programme designed to minimise the incidents of sprain and strain injuries. We survey our team members regularly to help us understand how we can make The Warehouse an even better place for them to work. This year we used a number of channels to do this, the most significant being an engagement survey. The JRA/Unlimited ‘Best Workplaces Survey’ uses 65 questions to capture employee attitudes to important organisational features such as its culture and values, communication, learning and development, performance and recognition. These features, or drivers, are known to impact employee engagement, the level of ‘connectedness’ employees feel towards their organisation and their willingness to strive to ensure the organisation reaches its goals. The ‘Best Workplaces Survey’ involved 23,000 employees across 207 organisations, 16 of which are in the retail sector. 85 per cent of our employees responded giving us quality data in order to better understand which drivers we should focus on to improve levels of engagement among our team members. Our employee engagement level of 72.7 per cent placed us above the retail sector benchmark. 2008 Society and Environment Report // 9 Employment Statistics FULL-TIME EQUIVALENTS 2008 2007 5,259 5,385 HEADCOUNT 2008 2007 Headcount 8,001 8,126 WORKFORCE DIVERSITY 2008 2008 MALE FEMALE 2007 2007 MALE FEMALE 2006 5,444 2006 8,103 2006 2006 MALE FEMALE Stores Store Managers 73% 27% 77% 23% 81% 19% Asst Store Managers 64% 36% 63% 37% 67% 33% Administration Centre Senior Managers 73% 27% 68% 32% 69% 31% Middle Managers 49% 51% 59% 42% 73% 27% Retention Rates 2008 2007 2006 67.10% 67.80% 69.30% Union Membership (% of Permanent Workforce) 42.30% 34.60% 32.70% Lost-Time Injury Frequency Rate 21.08 19.3 18.4 Total Injury Rate 44.41 44.9 46.3 24,790 26,782 26,103 OSH Prosecutions Working Days Lost Due to Illness nil nil nil Workplace Fatalities nil nil nil ACC Accreditation Tertiary Tertiary Tertiary Team Members Training Hours 23,020 n/a n/a 203 195 194 EAP – Team Members Using Tracey Rondel from our Blenheim store helping a customer. 2008 Society and Environment Report // 10 Our Customers Our many forms of customer engagement and research are coordinated and managed by our customer Insight Manager who reports to our General Manager Marketing. Our Customer Insight programme has six primary objectives: • To assist us make branding decisions • To help improve in-store experience for customers • To assist marketing event analysis • To provide feedback on our advertising and other communications • To research a new or existing category • T o respond appropriately to customer queries, complaints, product recalls and suggestions. Understanding our Customers We use tools such as customer focus groups, internet surveys, a continuous tracking survey where we interview 1,000 people online each month, a mystery shopper programme, and our customer call centre to help us build better relationships with our customers. This year we conducted a customer segmentation project including an online survey and a number of focus groups, to help us understand the different types of customers we have. The insights that emerged from the research now help guide decisions across the whole business. A number of segments were identified in the research; however, our focus is on three core groups, each with differing needs and shopping habits. Mystery Shopper Programme This programme receives feedback from an anonymous shopper in order for us to evaluate some key measures of our in-store experience from a customer’s point of view. The six performance areas assessed monthly are: Telephone, Store Impressions, Entertainment, Jewellery, Checkouts, and Product Returns. The standards in each section measure the quality of the customer experience by reviewing standards such as presentation, pricing, team friendliness/helpfulness and speed of service. The introduction of new customer service and checkout training modules this year has contributed to positive improvement overall against the previous year, with the Mystery Shopper results being a key performance measure for stores. For example, two important areas that improved in the past year were Store Impressions and Checkouts scoring 89.2 per cent and 88.8 per cent respectively. Store Managers review performance and agree a plan for ongoing improvement with their teams each month as their results become available. 2008 Society and Environment Report // 11 our customers (continued) The Customer Care Team The Warehouse operates a dedicated customer call centre called Customer Care. The role of the centre is to respond to customer queries and to work with them and our team to resolve any complaints or service failures and to provide information on products and services of The Warehouse. Customer Care Centre manager Christine Main responds to a customer query. CONTACTS LOGGED BY CUSTOMER CARE 8,000 7,000 6,000 5,000 Our Customer Care team members are specially trained to ensure that the interests and rights of our customers are protected. The call centre received around 24,000 calls last year and around 8,000 enquiries via our website. 4,000 They work to ensure that calls are followed up and closed within a reasonable time frame, so that our customers receive both information and resolution as quickly as possible. 0 3,000 2,000 1,000 Complaintcompliment feedbackgeneral information servicesrequest feb 08 – sep 08 The Customer Care Team provide regular reports and problem records to our buying, marketing and operations teams alerting them to any actions they need to take. The following graphs profile the reasons for Customer Care calls and the different kinds of product complaints. Calls are made directly by customers, or by team members on behalf of customers. TYPE OF PRODUCT COMPLAINTS RECEIVED 70 CONTENT 60 DAMAGED 50 FAULTY 40 HAZARDOUS 30 ILLNESS 20 OTHER PRICE 10 QUALITY 0 RANGE jan FEB MAR APR MAY jUn JUL AUG JAN 08 – AUG 08 2008 Society and Environment Report // 12 our customers (continued) Product Recalls and Withdrawals If a product is identified by customers, team members, or suppliers as potentially faulty, or hazardous in any way, we take immediate action. The product will be removed from sale until a decision is made either to issue a public recall notice or permanently withdraw product from sale. A recall is when a product has been released for sale but a problem has subsequently been identified that may pose a public health or safety risk, or the product is not fit for purpose. A recall involves communication with consumers – for example, through a public recall notice placed in newspapers and sometimes a company media release warning consumers of the fault and asking them to return the product to us for refund or replacement. This year there were three recalls all of which involved products distributed widely by retailers including The Warehouse. Nightware advice label. Mattel undertook a comprehensive recall in the wake of concerns about lead levels in surface paints on toys that exceeded standards. Twentyseven Mattel lines that The Warehouse carried were removed from sale, barcodes deactivated to prevent sales, and all returned and withdrawn stock returned to Mattel. As a precaution, we carried out our own lead testing on other toys not captured by the recall. All these results were within safe limits. Another toy recall was undertaken by Hasbro in relations to its ‘Moose Bindeez’ product which had been found to contain a potentially toxic chemical. Thirdly, a ‘Cancer Society’ Sunscreen which had failed to meet its own purported sun protection factor levels was recalled. In all cases of public recall we follow a standardised process, the most senior management is informed and we co-operate fully with relevant authorities such as the Department of Consumer Affairs. Product withdrawals are internal recalls and do not involve public communication or return of sold product. Priority withdrawals must be acted upon immediately. These occur where we have any concern about the potential hazard to the public or any significant breach of our quality standards. This process includes mandatory reporting and traceability of all actions taken. A Standard withdrawal does not represent any risk to the public or reputation but occurs for other commercial reasons. Children’s Nightwear Standard Clarified A clothing safety issue to hit the headlines was the flammability of childrens’ nightwear. The Warehouse worked vigorously again with Consumers Affairs and other industry stakeholders to develop a new labelling standard for children’s nightwear. The previous standard, with which we were already fully compliant, had led some parents to underestimate the risks associated with the flammability of nightwear when close to heaters or fires. Commencing in April 2009 the most commonly available nightwear will carry the new label in a highly visible orange colour stating ‘Caution Not Heat or Flame Resistant; Wear Snug-Fitting to Reduce Risk’. This label must be used when nightwear is made of a higher-fire-risk fabric but is styled to fit snugly to reduce fire risk. Nightwear in this category includes cotton and flannelette pyjamas. Regardless of the label, the best advice to parents is to always ensure children remain a safe distance from fires and heat sources – at least a metre. 2008 Society and Environment Report // 13 our customers (continued) Formaldehyde Scare Unfounded Fines or Prosecutions Another high-profile consumer concern to emerge this year was in regard to supposedly unsafe levels of formaldehyde in clothing. In this case a local television programme raised concerns about formaldehyde levels. As a precaution, we withdrew all suspected garments from sale, undertook our own testing and cooperated fully with the Department of Consumer Affairs’ investigations. Occasionally at The Warehouse we make mistakes interpreting the laws and regulations that govern our industry. These are regrettable, but we make every effort to learn from these errors and to minimise the likelihood of their recurring. It transpired that none of our garments exceeded generally accepted thresholds for formaldehyde and the matter was concluded when the Ministry announced that their test results showed there was no health or safety issue with the levels of formaldehyde in clothes and that the broadcaster had tested to the wrong standard. Later a successful complaint was made to the Broadcasting Standards Authority who found that the broadcaster had misled and unnecessarily alarmed viewers in its presentation of its test results of formaldehyde in clothing. This resulted in the broadcaster being fined only $4,000, which is disappointingly low when contrasted with the unjustified damage to consumer confidence, subsequent loss of sales, and the significant costs retailers incurred in product testing and managing the overall issue. As at the end of the past financial year we had some outstanding matters pertaining to some Fair Trading prosecutions bought against us by the Commerce Commission. Some actions were abandoned and we expect those we accepted liability for to be resolved in November 2008. Five complaints about our advertising were made to the Advertising Standards Authority in the last year. Two of these were not upheld. Two were resolved through direct communication with the complainant. One complaint about misleading advertising was upheld and, as a consequence, we have implemented procedural changes to minimise the likelihood of making this mistake again. To clarify the situation the government then released a product safety policy statement confirming acceptable levels of formaldehyde in clothing. The Warehouse followed up on this by promoting this standard to all applicable suppliers. 2008 Society and Environment Report // 14 Community Fundraising Over $2.0 million were raised and distributed to New Zealand community service groups and national charities during the year. We are passionate about supporting as many people as we can through our store network with our philosophy of giving a ‘hand up’ rather than a ‘hand out’. We contribute to this is by providing groups across the country with the opportunity to use our community barbecues to hold sausage sizzles outside our doors. Nearly every weekend of the year customers can find community and sporting groups working hard to raise funds for their activities. Individual stores support a variety of organisations within their local communities through point-of-sale coin collection boxes and other local fundraising activities. This financial year just over $700,000 was raised and distributed locally. We continue to proudly support selected national charities which have wide appeal and reach, and the potential to significantly benefit a large number of people. The Warehouse Fundraising 2008 CHARITY Cancer Society of New Zealand DATE AMOUNT RAISED Aug 07 $255,000 National Foundation for the Deaf Oct 07 $100,000 Surf Life Saving New Zealand Feb 08 $286,000 Starship Foundation Apr 08 $338,000 Variety – The Children’s Charity Jun 08 $102,000 Store Fund-raising – National Campaign Total $1,080,100 Barbecues and Coin Collections (estimate) $700,000 Starship Foundation – Bob Tindall Classic Golf Aug 07 $70,000 Surf Life Saving – Supplier Dinner Aug 07 $530,000 Starship Foundation – World T-shirt campaign Feb 08 $110,000 Total $2,491,000 2008 Society and Environment Report // 15 Community Support Red Shirts in Schools The Warehouse and SKIP The Warehouse has been a supporter of Red Shirts in Schools since 2002. This is a retail training and workplace experience programme for secondary school students, which can be linked to the Government Gateway Programme. Students can also gain NCEA credits through the programme. In the last year 269 students went through the programme. Earlier this year, we began working with SKIP, a government programme that promotes positive parenting. SKIP works with community groups like Plunket to give parents the practical information and skills they need to build strong relationships with their children. Top: Red Shirts in Schools participants. (left to right) Princey Singh, Pio Patterson, Sulesa Tautolo, Christina Papeau, and Megan Dodds. Bottom: “Take time to be a Dad...it’s life changing” SKIP. The programme enhances the school curriculum through work experience and training, and provides a safe and managed introduction into the workplace, positive learning experiences for both students and team members, and offers the students the choice of a career in retail. For The Warehouse, the programme provides access to a pool of pre-qualified employees and forges positive connections between team members and local secondary schools. Research conducted by the Retail Industry Training Organisation of 242 retail and wholesale sector employees, who had completed a National Certificate in Retail or Wholesale, found the course not only provided them knowledge of retail but led to an increase in confidence at work, and gave them the qualification to secure retail employment. To find out more about this project go to: www.diyfather.com/fathersday2008 WHO WOULD HAVE THOUGHT A SAUSAGE COULD SAVE A LIFE? Add a few onions, some sauce, a large dollop of community spirit provided free of charge by The Warehouse, like support for Napier and you’ve got all the ingredients you need to make a big difference. Blue Light and the Marlborough Community Hospice. And last year, And while you might not think of the humble sausage sizzle as The Warehouse was the single largest contributor to Surf Lifesaving the cutting edge of fundraising, for the last 15 years it’s how your New Zealand, providing over $500,000 of the funding that helped local Warehouse store has been helping community projects get save the lives of more than 350 Kiwis. If it benefits New Zealanders, the funds they need to make things happen. Each year over half we’ll help any way we can. Doing your part is as easy as handing a million dollars is raised for local initiatives through barbeques over a gold coin. And enjoying a really good sausage. TWL1052 Participating students study four basic retail modules – Health and Safety, Loss Prevention, Customer Service, and Merchandising. When all four are completed, an Achievers’ Certificate is awarded. Training is combined with workplace experience where pupils put their learning into practice. The course takes six hours per week over 20 weeks, and students have support from an on-the-job coach or mentor at all times. Many graduating participants have gone on to paid part-time or fulltime employment within The Warehouse or have been encouraged by their experiences to pursue further studies. Over 50 dads from our North Island Distribution Centre (NIDC) have been helping SKIP pull together stories, ideas, tips and photos about what it means to be a great dad. This information forms the basis of a campaign that was launched through the rest of our stores in July 2008. SundayMagazine_Sausage.indd 1 3/9/08 2:26:32 PM Advertisement from the series: ‘where ever yone makes a difference’. 2008 Society and Environment Report // 16 2008 Supplier Awards and Charity Dinner The Warehouse’s success is founded on our relationships with our many merchandise and non-trade suppliers. Our supplier base ranges from large multi-national corporations to small domestic manufacturers. Our sourcing channels include New Zealand manufacturers, local importers and buying agents, and suppliers associated with our Shanghai Representative Office. Each year in August, The Warehouse recognises outstanding suppliers at its annual Supplier Awards and Charity Dinner. The Warehouse offers five award categories – General Merchandise, Apparel, Grocery, and Non-Trade, along with the Sustainability Leader of the Year Award. The winners are those who our judges determined consistently exceeded our expectations for service, quality, and price. In addition to the recognition given at our Supplier Awards and Charity Dinner, each winner receives a certificate and a $5,000 cheque to be used for the benefit of their own workforce. Top: Apparel supplier of the year: Topline. This event serves an additionally important role as it raises a significant amount of money each year on behalf of our chosen national charity. Over the last two years, a total of $938,000 has been raised at this event and donated to Surf Life Saving New Zealand to help them continue their great work in keeping us safe on our beaches. We congratulate the 2008 Supplier of the Year Award Winners: General Merchandise Supplier of the Year: Zealandia Nurseries Green Garden Supplier Apparel Supplier of the Year: Topline Clothing Specialist Hosiery Supplier Grocery Supplier of the Year Award: Masterpet Pet Supplies Non-Trade Supplier of the Year: Jade Software Corporation Core Software and Data Management Sustainability Leader of the Year: Taos Network China Supplier Workplace Standards Monitoring and Training Bottom: Guests and sur f life savers at 2008 Supplier Awards and Charity Dinner. 2008 Society and Environment Report // 17 ethical sourcing Supplier Workplace Standards Inspections This year we completed 111 supplier factory labour inspections; 25 of these were follow-up inspections. We ceased trading with 15 factories that were unable to meet our standards after a probationary period. The average inspection score for 2008 was 74.0 per cent compared with 70.0 per cent in 2007 and 54.0 per cent in 2006. The most persistent areas of difficulty remain in working hours and remuneration. Labour standards vary from product category to category depending on market pressures, and established industry norms for that category or region. Our highest-scoring factory for the year achieved a 98.0 per cent result with no critical standard failures. This was a knitwear factory in Guangdong province China. Our most successful remediation effort this year, also in an apparel factory, resulted in a score improvement from 55.0 per cent to 93.0 per cent with no outstanding critical standard failures. Most corrective action agreements yield smaller incremental improvements over a 12 to 24-month period. Variable Standards Manufacturing and labour standards vary from sector to sector according to factors such as local laws, prevailing industry norms, labour availability, commodity and energy prices, and market demand. China’s standards in capital-intensive sectors such as electronics or highly mechanised forms of manufacturing would be equivalent to most in western environments. Practices in the highly competitive light manufacturing and apparel sectors are more localised. This is where The Warehouse focuses most of its monitoring and supplier development work. The Chinese government has been progressively raising legal minimum wages in many provinces in part to protect workers from cost-of-living increases and to rebalance some internal migration pressures wherein migrant workers flood to provinces with higher wages. The Warehouse addresses this wide variation in the manufacturing environment by ensuring our Workplace Standards Policy settings are at levels which take local norms into account while still representing a challenge for many factories. This makes it much easier for our inspectors to gain accurate information because factory managers are not confronted by an unrealistic western-derived standard that they must attain in order to retain business. Factories, which do not meet our standards at the time of the initial inspection, have an opportunity through dialogue and corrective action plans to improve their performance. Where we can see credible improvements over time, we continue to trade with that factory. In cases where critical issues go unaddressed or disclosures remain inconclusive, we discontinue business with that factory. Executive Awareness In an effort to better understand these dynamics, The Warehouse’s Chief Financial Officer accompanied by the Sustainability Manager visited a number of factory owners, managers, and suppliers in China in April 2008. A key factor emerging from discussions during these visits was that of the very strong inflationary pressure affecting the Chinese manufacturing sector. Factory managers cited dramatic increases in the price of steel, and synthetic fabrics, and labour and energy costs and the falling value of the US dollar as generating real stress for their businesses. These pressures along with slowing demand have 2008 Society and Environment Report // 18 Ethical Sourcing 2008 (continued) working to improve standards in developing economies along with local governments, other importers, and non-government organisations. created a lot of factory closures. However, many managers and factory owners we spoke to saw this as positive overall, for quality and labour standards, as more business is being consolidated into successful and mature manufacturing enterprises. In our experience the Chinese manufacturing sector is a highly dynamic and entrepreneurial environment, whose competencies far exceed typical western stereotypes. Conclusion The workplace standards assurance we can offer stakeholders is limited to those factories we have inspected as we cannot visit all factories. However we are not acting alone; many other brands and retailers are We will continue resourcing our Ethical Sourcing Programme at current levels. We have now inspected over 260 of our most significant factories. We plan to monitor the effectiveness of existing corrective action plans and to inspect new factories that have more recently entered our supply chain. The objective of our Ethical Sourcing Programme is to play our part in raising standards for the broad community of workers within our supply chain. Reports such as this are intended to inform interested stakeholders about the responsibilities and challenges that accompany global sourcing. FY07 – FYO8 factory standards Top: The Warehouse auditor Kevin Huang reviews payroll documents with the factor y personnel manager Ms Wang. Bottom: Worker inter views are used to cross check management disclosures and discover worker perspectives. NUMBER OF FACTORIES 25 20 15 10 5 0 0-25 2007 2008 25-30 30-35 35-40 40-45 45-50 50-55 55-60 60-65 65-70 70-75 75-80 80-85 85-90 90-95 95-100 DISTRIBUTION OF SCORES – 0 - 100% 2008 Society and Environment Report // 19 Green Households One of the earliest environmental policy decisions we took at The Warehouse, was to source only legally harvested, sustainably managed, hardwood timber for our outdoor furniture range. At the time we were the only major New Zealand retailer with such a policy. Whilst other retailers are now beginning to adopt similar policies, The Warehouse is still recognised as a leader in this area. This year we led the Greenpeace ‘Good Wood Guide’ which ranks New Zealand retailers for their timber sourcing policies and practices. The eradication of the world’s tropical rainforests is one of today’s great environmental problems. This causes adverse impacts on climate change, biodiversity, and indigenous cultures. The fact is that much of the tropical hardwood furniture on sale in New Zealand is still derived from illegally logged or unsustainably managed forests. Top: Tropical Forest Trust outdoor furniture settings available from The Warehouse. Bottom: Tropical Forest Trust representative Boris Saraber with local foresters at the Borneo TFT forest. One of the most common illegally logged tropical timbers imported into New Zealand is Kwila. Recently, the New Zealand government consulted with importers and retailers about the possibility of providing information at point of sale regarding the legality of Kwila timber and timber products. The Warehouse stocks no Kwila products. Our TFT (Tropical Forest Trust) labelled furniture is Kapur a hardwood species from a TFT forest in Sabah Borneo. Our FSC (Forest Stewardship Council) branded outdoor furniture is Eucalyptus which we source from Malaysia. Independent verification from organisations like Tropical Forest Trust and the Forest Stewardship Council provides assurance that these products are making a positive contribution towards better management of these precious forests. Our timber sourcing policies also extend to the specification of low formaldehyde grades of MDF (Medium Density Fibre Board) – based indoor furniture, and even our outdoor umbrella poles and park benches contain only renewable timber from plantation forests. Vege Patch The Warehouse ‘Vege Patch’ was launched throughout our store network this year. Our intention is to encourage our customers to be more eco friendly. A great place to start is in their own sections growing vegetables. It not only saves money on grocery bills but is good for the planet. Vege Patch delivers everything needed to create a vegetable garden – tools, seedlings and citrus trees, along with compost, fertilisers, and even greenhouses. Customer response to this has been very pleasing resulting in a strong lift in sales of these lines. We are seeing a groundswell in the number of people returning to the backyard tradition of grow-your-own vegetables and crops. GREENS ARE THE NEW BLACK. When it comes to saving the earth many would say the best place And you’ll reap the rewards in the form of fresh produce home- to start is your own backyard. Well, we couldn’t agree more. Which grown by your own hand. Just imagine, fresh fruit and veges straight is why we’re happy to introduce Vege Patch. The latest initiative from the backyard to your table. Whether you were born with a from The Warehouse to help Kiwis become that little bit more green thumb or not, The Warehouse has everything you’ll need to sustainable. Vege Patch encourages people to get back to basics and create your own vegetable garden – from tools to seedlings and create their own garden by sowing seeds and planting trees for fruit citrus trees to compost and fertilisers, we’ve even got greenhouses. and vegetables. Not only will it save you money on your grocery The Warehouse Vege Patch. It’s good for you, good for your pocket bill, but you’ll also be doing something good for the environment. and good for the planet. And that makes it a pretty good idea. TWL1049R Forest Friendly Timber SundayMagazine.indd 1 Tell us how you’re making a difference, visit www.thewarehouse.co.nz 31/7/08 4:16:48 PM Advertisement from the series: ‘where ever yone makes a difference’. 2008 Society and Environment Report // 20 New Environmental Legislation The Waste Minimisation Act This important new piece of environmental legislation was passed in September 2008. It was originally a Green Party private member’s bill. However, after significant public consultation, including submissions from The Warehouse, and modification via a Government supplementary order paper it was passed into law as the Waste Minimisation Act with widespread multiparty support. Bulk recycling from stores awaits processing. The value of these materials does not always exceed the cost of processing them. In the proposed product stewardship scheme, supported by The Warehouse, a small disposal fee will be set aside to fund the scheme. The objective of the Act is to encourage waste minimisation via economic incentives and a range of special regulatory powers which encourage industry and local authorities to ‘Reduce – Reuse – Recycle.’ Two key features which will affect The Warehouse are the introduction of new landfill levies, and new powers which enable the Minister for Environment to declare ‘Priority Products’. These will carry special obligations such as: the establishment of product stewardship schemes to manage their end-of-life effects; the prohibition of certain materials; special labelling; the provision of take-back facilities; or the charging of refundable deposits. Electronic Waste A very likely class of ‘Priority Products’ will be electronic goods such as televisions and computers. The Warehouse has been working actively with other industry stakeholders to develop a proposed product stewardship scheme for these kinds of products. Once finalised and approved by the government this will become an accredited product stewardship scheme under the new Waste Minimisation Act. Practically speaking, this means that producers and sellers of these kinds of electronic goods will have to provide a way for the valuable resources, or toxic components, embedded in these products, to be processed in an environmentally responsible way at the end of their useful life. Discarded computer monitors and televisions await recycling. 2008 Society and Environment Report // 21 New Environmental Legislation (continued) The Emissions Trading Scheme After prolonged public and political debate the legislation establishing New Zealand’s Emissions Trading Scheme was passed into law in September 2008. The purpose of the Emissions Trading Scheme is to assist the New Zealand Government to meet its liabilities under the Kyoto Protocol and to create a financial incentive for emission reductions by assigning a ‘cost to carbon’ within the New Zealand economy. Road transport accounted for 8 per cent of The Warehouse’s greenhouse gas emissions. Although The Warehouse’s emissions are not significant enough for the company to be directly captured by the scheme, we, along with other businesses and households, will notice the effect of the scheme in the form of increased electricity and transport costs from 2010. We calculate that this could result in cost increases of up to $1.0 million each year once the scheme is fully implemented – depending on the eventual price of carbon. THE WAREHOUSE CO2 EMISSIONS PROFILE 2008 The Warehouse emitted 27,678 tonnes of CO 2 Warehouse Vehicles 4% Electricity 52% Rentals & Private KM claims 1% Sea Freight 20% NZ Road Freight 8% NZ Rail Freight 8% Employee air travel 7% This makes our efforts to constrain our energy consumption and maximise the efficiency of our distribution processes all the more important. Some businesses and even individuals will choose to offset some or all of their carbon footprint by purchasing carbon credits. However, under the present scheme design, the voluntary purchase of credits by businesses not directly involved in the scheme does not allow them to avoid the increased electricity and transport charges they will face as a result of the scheme. At present, The Warehouse does not intend to purchase any voluntary credits. 2008 Society and Environment Report // 22 Environmental Performance Landfill Plastic Bags In our last report, we stated we would conduct research to understand our escalating landfill volumes. To date, the only means we have of viewing our landfill volumes is via a simple count of bin pick-ups provided by our waste collector. We have been concerned for some time that this system does not provide accurate data about the actual mass of landfill being generated at each branch. In 2004 The New Zealand Packaging Accord was signed, establishing multi-sector objectives for packaging waste reduction. The Warehouse’s commitments are represented in the Brand Owner and Retailer sector action plan. As part of this plan, The Warehouse committed to a plastic bag reduction target of 20.0 per cent by 2008, adjusted for growth in sales. As at 31 July 2008 we have achieved a reduction of 19.0 per cent in bag numbers relative to sales when compared to the same measure for 2004. Other key measures in relation to plastic bags can be found in the table below. In an effort to clarify this situation, we asked our waste collector to provide an analysis of the density of our bin pick-ups where this data was available. The analysis indicated a wide variation of density from a low of 60kg per cubic metre pick-up, to a high of 160kg. This variation is too large to meaningfully indicate the actual mass of what we are sending to landfill. Until we can provide a more robust landfill measure, we will not be reporting these figures externally. However, we continue to use the bin count provided by our collectors as an indicator of store performance and we have recently reset our ‘on target’ benchmark for landfill volumes for stores. We will continue to monitor this important environmental measure and have set reduction targets for all stores to meet or improve upon their current performance. We will further improve performance by reducing the range of bags we issue, continuing to promote reusable bags, and expanding our take-back of unwanted bags for recycling. We are also assessing the extent to which customers are willing to pay for bags when they require them. Plastic Bag Statistics 2008 2007 2006 2005 2004 # Bag’s Issued 42,732,500 51,207,000 56,671,500 51,237,000 50,179,000 Total kg of bags (HDPE) issued 281,903 302,063 343,421 317,392 312,266 Items per bag 4.69 4.07 3.69 3.90 3.90 Items per kg HDPE 710 689 609 629 627 Re-usable Bag Sales 80,000 n/a n/a n/a n/a Bag Re-use and Recycling Station 2008 Society and Environment Report // 23 Environmental Performance (continued) Recycling In December 2007, a South Island recycling factory processing The Warehouse’s waste plastic was destroyed by fire. As a result we have diverted all our plastic recycling from the South Island to our Auckland plastic recycler. This creates additional transport costs and emissions. However, we mitigate these effects by reverse hauling our recycling using apparel stillages (large collapsible plastic crates). These were previously full of clothing on their outward journey to stores. This helps offset some emissions and costs associated with recycling transportation. We hope to return to South Island recycling again once we have identified a suitable recycler. Another change to our recycling was the decision to temporarily revert to land filling unwanted polystyrene and polypropylene strapping. In both these cases we had been unable to find reliable or economic recycling solutions for these materials and we felt that the additional costs and transport emissions associated with their recycling were not warranted. We are currently working with suppliers to reduce unnecessary use of these materials at source. Top: The Warehouse’s Trevor Johnston, Enviroreel’s Valentine Picton and Gabriela Casey, receive their joint Award from Energy Minister David Parker. Bottom: Waste plastic from our distribution centre arrives at Enviroreel for recycling. We improved our approach to paper recycling this year by partnering with our cardboard recycler ‘Full Circle’ to install mixed paper recycling bins in most stores. There is continued interest from our customers about plastic bag recycling. We have offered a number of options for this over the years but have difficulties protecting the recycled bag waste stream from contamination with rubbish. This year we introduced dedicated bag recycling stations (see photo on previous page) at some of our stores and we intend on installing more of these in the coming year. We have a closed re-use and recycling loop for most types of apparel hangers and are now assessing the feasibility of extending this to cover those hangers not yet captured by this scheme. A highlight for the year was the Highly Commended Award received by The Warehouse and Enviroreel, our plastic recycler, at the Packaging Council of New Zealand’s Environmental Packaging Awards. Our award was in the ‘Recovered Packaging Materials Utilised in the Manufacture of a Secondary Product’ category. Our process involves a patented way of converting low-grade plastic film recovered from stores, into industrial plastic products. In describing our approach, the Awards’ judges said: “This project was exciting and stood out. It demonstrated identification of an issue, a supply chain approach to addressing it that went beyond all borders, demonstrating global responsibility. The key component was the incorporation of social responsibility – a full quadruple bottom line approach to the issue and in the solution.” Recycling Cardboard collected and recycled (tonnes) 2008 2007 2006 7,210 7,337 6,383 400 456 462 (All recycled in New Zealand) Soft Plastic (tonnes) Almost all our soft plastic waste is recycled and remanufactured in New Zealand. Note: due to the fire at the South Island recycler’s factory it was difficult to accurately estimate South Island volumes in FY08. 2008 Society and Environment Report // 24 Environmental Performance Greenhouse gas emissions for the year declined by 5.0 per cent from 29,000 tonnes to 27,600 tonnes. (continued) Greenhouse Gas Emissions Despite increased electricity consumption in the past year our Greenhouse Gas emissions for the year declined by 5.0 per cent from 29,000 tonnes to 27,600 tonnes. In the main, this is because the most current factor used to calculate electricity emissions is derived from the previous calendar year. This year’s factor was linked to a year with a relatively high share of hydro-generation and hence a lower factor for emissions compared with that used for our 2007 report. Emission factors vary from year to year dependent on variations to the source generation profile of New Zealand’s electricity supply. Emissions associated with sea freight declined this year as the number of containers we shipped declined by 5.0 per cent. However, our road and rail based volumes increased with a corresponding rise in emissions. How we Calculate our Emissions The Warehouse uses E-Manage, a web based Greenhouse Gas Calculation tool developed by Landcare Research. Raw data, provided to us by our transport and energy providers, is entered into the E-manage tool, which calculates the CO2 equivalencies according to an internationally and nationally agreed set of protocols and factors. In setting reporting boundaries on emissions from its operations, The Warehouse has adopted the approach recommended in the GHG Protocol – namely, we categorise emissions into various ‘scopes’ or groupings. Scope 1 emissions are generated from sources owned by The Warehouse Limited. Scope 2 emissions are those arising from electricity consumption. Scope 3 emissions are generated from sources that are not directly owned by The Warehouse but are relevant to the operations of the business, such as the inward shipping of The Warehouse’s direct imports from China. Note: Warehouse Vehicle Emissions shown below for 2007 vary slightly from that published in our 2007 Report because of updated data provided by our supplier this year. Scope Source of emission 2008 One Warehouse Vehicles Two Electricity Three Rentals & Private KM claims 2007 2006 1,185 1,258 967 14,316 16,833 15,276 219 298 273 Three Sea Freight 5,614 5,894 5,977 Three NZ Road Freight 2,164 2,070 2,346 Three NZ Rail Freight 2,158 2,043 2,139 Three Employee air travel 2,022 695 710 Total Tonnes CO2 27,678 29,091 27,688 Electricity Total Kw Kw per $1m sales Kw per 1m units sold 2008 2007 2006 79,534,298 73,188,644 66,418,344 51,742 48,453 44,073 397,219 351,362 317,327 2008 Society and Environment Report // 25 MEMBERSHIPS EXTERNAL RECOGNITION For more information on our social and environmental policies and previous reports visit: New Zealand Business Council for Sustainable Development Leadership in Good Wood Survey World Business Council for Sustainable Development PACKAGING COUNCIL OF NEW ZEALAND [INC] [PACNZ] more information Carbon Disclosure Leadership Index 2006, 2007 and 2008 www.thewarehouse.co.nz – Suppliers – Society and Environment – Investors Or contact: Sustainability Manager The Warehouse Limited, P. O. Box 33470, Takapuna, Auckland 0740, New Zealand. Email: [email protected] Finalist World Retail Awards Highly Commended 2007 New Zealand Packaging Awards 2008 Society and Environment Report // 26