Coles Supermarket

FAIRR Commentary

Coles has around 25% share of the fresh meat market in Australia. As one of the largest grocers in Australia and given the country’s high per capita meat consumption, the company is exposed to Australia’s significant vulnerability to climate change impacts on agriculture.

• The company recognises growing consumer demand and their CEO recently acknowledged plant-based products as being better for the environment relative to meat at an Investor Day in June 2019. The company’s sustainable sourcing programmes Coles sustainable sourcing programmes are focused on local sourcing, animal welfare, and in some cases supporting suppliers affected by extreme weather events including drought to mitigate impact through grants and fair pricing.
• We would encourage the company to publicly discuss its programmes for adaptation and mitigation in its animal protein supply chain beyond animal welfare in greater detail in order to bring Coles in line with the rest of its peers.
• Despite this exposure, the company has been silent on their role in enabling dietary shifts. Further, the sustainable sourcing of animal proteins lags that of its peers such as Woolworths. The company recently demerged from Wesfarmers, and it has yet to set climate targets or commit to a TCFD-linked scenario analysis, including for their supply chains.
• On the product development and consumer engagement side, the company has a strong offering of own-brand as well as external brand plant based and alternative protein/food product options. They have also opened some small format stores with a wide selection of plant-based options.
• Overall, the company does not demonstrate a strategic, company-wide programme to transition its portfolio. It does not have any group-wide metrics that give an indication of its exposure to animal-based foods.
• The company has made a strong start by growing its product portfolio of alternative options. We would encourage the company to continue to broaden their sustainability focus on animal proteins as well as build a more strategic plan to transition its product portfolio (through, for example, category-based targets) to ensure their exposure to animal proteins is in line with a low-carbon strategy.

Company Comment

As you know, Coles demerged from Wesfarmers last November and was listed on the Australian Securities Exchange. As we have not yet published an annual or sustainability report, some of the information you are seeking is not yet publicly available but will be when we publish these reports in September. I can confirm that protein diversification will be included in the sustainability report and climate change will be included in the annual and sustainability report. Coles acknowledges the physical and transitional risks associated with climate change and will be responding in our annual and sustainability reports due for release in September 2019 which will detail adaptation and mitigation responses.

We have recently been significantly more proactive in communicating these achievements with radio, television and print advertisements in national media, and instore communications. Attached is one of the television advertisements (only one attached because the files are large) and some of the print advertisements as examples. We have also been promoting our Australia First sourcing policy and our fresh produce range.

In regard to addressing environmental issues facing the beef industry from a national and industry-wide perspective, we participate in the Australian Beef Sustainability Framework, an initiative of the Red Meat Advisory Council and managed by Meat and Livestock Australia. The Framework has identified six priority areas and Coles is a member of the Working Group for one of the priority areas. We consider the Framework as the most appropriate way to address the issues facing the industry.

We are also supporting Australian producers and growers mitigate the impacts of climate change. In July 2018, Coles pledged to provide $5 million from the Coles Nurture Fund to drought-affected farmers and opened a dedicated round of funding for drought relief. As part of this commitment, 16 farmers and food producers across Australia received grants to embark on plans to help protect their businesses against drought in the long-term. The projects range from building dams, storage sheds and silos to innovative plans to grow fodder indoors and reduce water use through new technology.

We also work with suppliers impacted by extreme weather events. In early 2019 and early 2018, apple suppliers in South Australia were impacted by severe hailstorms. As a result, we introduced the ‘hailstorm heroes’ apple range providing suppliers with the opportunity to sell the impacted fruit. An excessively hot 18/19 summer also impacted the growth of citrus and apples. We amended our fruit specifications to enable these to be sold in our stores.

Many thanks for providing us with the opportunity to respond to the assessment.