Coles Group

In FY22 Coles conducted scenario analysis under 4 different IPCC scenarios, 1.8C, 2.7C, 3.7C and 4.4C. Coles has used this scenario analysis to understand the vulnerability of the company based on its exposure to 10 commodities including red meat and dairy. Through its scenario analysis, the company has identified 4 transition and 7 physical risks, these include changing stakeholder expectations, regulatory changes and supply chain resilience. To minimize the physical risks to Coles' business the company is looking to build resilient meat, dairy and seafood supply chains. However, the company has not recognised protein diversification as an opportunity factor to generate value or to mitigate emissions. In FY23 the company expanded its commodity risk assessment to include the commodities with the highest environmental impact including: meat, eggs, dairy, and soy for livestock feed. However, it is unclear if the company assessed these risks through TCFD-aligned scenario analysis.

Coles has not reported a full breakdown of its Scope 3 emissions derived from animal agriculture, including a breakdown by protein type. However, the company has reported that 90% of its emissions are Scope 3 and has reported a breakdown of these emissions using the 15 categories outlined by the Greenhouse Gas Protocol Scope 3 Reporting Standard.

Coles does not have an approved emissions reduction target for its Scope 3 emissions. Instead, the company has a supplier engagement target that 75% of its suppliers by spend will establish science-based targets by 2027. The company does however have an SBTi approved 1.5C aligned scope 1 and 2 emissions reduction target. This target is a 75% reduction in Scope 1 and 2 emissions by more than 75% by 2030 from a 2020 baseline.

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While Coles has introduced a range of plant-based and vegan-friendly products, there is no evidence that the company has set a protein diversification target or incorporated it into its climate transition strategies.

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Coles does not have a protein diverisifcation target and therefore does not have board-endorsed support or periodic oversight in meeting a target. The company's board oversees its strategic direction and evaluates the effectiveness of sustainability and governance policies, including climate change and other environmental and social risks.

Coles disclosed that 7 directors out of 9 have expertise in sustainability and the environment.

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Coles discloses six example areas where the company engages with governments, however, the company does not disclose a comprehensive list of lobbying actions.

Of the six government engagement examples Coles has disclosed, one of these focuses on health and one focuses on climate. The company is promoting public health through its partnership with the Australian Government's Healthy Food Partnership and is working to promote improved sustainability of the Salmon industry through its participation in the Tasmanian Government's Tasmanian Salmon Industry Plan 2023.

Coles has disclosed 51 examples affiliations with associations, alliances, coalitions, think tanks, and other organisations the company supports or has collaborated with.

Of the 51 affiliations, Coles has disclosed involvement with six that address climate and two that address nutrition. These climate-related topics include: reducing methane in cattle production, regenerating the Great Barrier Reef, decarbonizing energy use, carbon markets, and climate leadership. The nutrition related topics the company is involved in through its affiliations include: promoting healthy eating habits with school age children, and promoting fruit and vegetable intake for all Australians.

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Coles has initiatives in place to upskill its workers, providing them with the understanding and skills required to adequately operate and maintain low-emission technology. However, there is no evidence that the company has not made a commitment to retain, reskill, redeploy and/or compensate animal agricultural workers affected by its decarbonization efforts.

Coles is supporting its suppliers decarbonise through its Sustainable Dairy Development Group (CSDDG), Nurture Fund, and Dairy Farm Sustainability Accelerator. Coles CSDDG has invested AUS $3.78 million to support dairy farmers decarbonise through on-farm initiatives. The company's Dairy Farm Sustainability Accelerator Fund is investing AUS $1.5 million for FY24 and FY25. Eligible dairy farmers can apply for funding through this fund to implement sustainability changes in farms. Additionally, Coles completed its pilot testing of Bovaer® and is working with selected feedlots to implement this technology. Although the company has awarded AUS $3.6 million in grants to farmers through its Nurture Fund, it is unclear what portion of this grant is dedicated to decarbonising its animal agriculture supply chains.

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Coles has disclosed that the company has been expanding its own plant-based product range since 2019, adding 47 products across the company's stores through its Nature's Kitchen range. Coles disclosed that it launched the following vegan products; meat-free mince, cauliflower pizza bases, chia pudding mixes, banana bread slices, and nutritional yeast seasoning available in its supermarkets. As part of the company's Wellness Road campaign the company further disclosed it was launching vegan products but did not disclose on the amount. Although Coles did not disclose evidence of external brand launches, 3 examples of external product launches were found on news websites. These launches included KitKat Plant Based, Get PLant'd Ham and Steak Slices, and Monde Nissin Deli-Licious Meat Slides.

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Although Coles has a nutrition policy and is collaborating with the Australian Government to reduce salt sugar and saturated fat in its products, it is unclear how it is dedicating resources to improve the nutrition of the company's plant-based products. Coles has not disclosed evidence of resource allocation to improve the sustainability of its alternative protein source products

It is unclear from Coles disclosure how the company is reformulating its plant-based products to improve their nutrition attributes despite reformulating its own brand products to remove 73 tonnes of salt in FY23. The company has reformulated these products as part of its participation with the Australian Government's Healthy Food Partnership (HFP), increasing the contribution of the company's own brands products for this target to 78%.

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The company has used marketing campaigns to further support customers to add more seasonal, healthy produce to their shopping baskets. However, the company has not made a commitment to developing and delivering marketing and merchandising strategies related to alternative protein sources.

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Coles is promoting the nutrition of its plant-based products on its website. For example, its Wellness Road Textured Vegetable protein is marketed as "high in fibre" and the company's Vanilla Plant Protein Powder is marketed as "high in protein". Although the company has implemented Health Star rating and front of package labelling for trans fats for 1,134 products, and packaging claims for high in fibre and products that support gut health, it is unclear how many of these products are plant based.

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The company has expanded its plant-based product line, catering to the increasing consumer appetite for vegan, vegetarian, and flexitarian choices. However, there is no evidence that the company conducts consumer research relating to alternative protein sources.

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