Coles Group

Coles still does not acknowledge that a lack of protein diversification poses a material risk to its business; this limits the company’s ability to maximise the financial opportunity and carbon abatement potential that alternative proteins can provide. FAIRR could not find any evidence on the results of the CSIRO assessments that began last year, nor any disclosure around the specific environmental impacts of the company’s product supply chains, including those of meat, dairy, and seafood. During FY21, the company began a high-level scenario analysis to assess how climate change could impact the Coles Group strategy. This strategy includes the company's vision and purpose to ‘sustainably feed all Australians to help them lead healthier, happier lives’. The goal was to identify possible responses to increase Coles’ resilience to future climate change under three possible climate change 2030 scenarios. However, no evidence was found to show that supply chains were included in this analysis. Coles lacks transparency around the risks associated with its animal protein supply chains and has not yet publicly disclosed a roadmap or associated action plan which aligns with the recommendations of the TCFD.

Coles' ambition is to be Australia’s most sustainable supermarket. Yet, there is an inconsistency in the statement, as Coles lacks a target to reduce the carbon footprint of its supply chain. Coles has not set a protein diversification target, and its sustainability strategy does not outline any intention to shift to diversified protein sources. Coles’ FY21 Sustainability Strategy primarily focuses on workers’ rights, community outreach, and animal welfare. Despite having a specific focus on Scope 1 & 2 emissions and other environmental initiatives such as food waste and plastic use, Coles does not address the environmental impacts of its animal agriculture supply chain (manure management, sustainable feed sourcing, water scarcity, among others). By ignoring the potential of portfolio diversification, the company continues to miss the opportunity to tackle its supply chain emissions and remain competitive with consumer behavioural change. The company values its products' nutritional content and works to improve the healthiness of its own-brand items; however, it does not have any specific targets regarding the health and nutrition of its alternative proteins and plant-based products. Coles’ FY21 greenhouse gas reduction targets do not address Scope 3 emissions. The company has announced an intention to develop a Scope 3 target in the future, but FAIRR could not find evidence on a solid timeline or what this target will include. Coles is significantly behind its competitors, specifically Woolworths, by not setting an SBTi-approved Scope 3 emissions reduction target. The lack of transparency around when this target will be disclosed and what it will entail highlights the slowness of the company in committing to pathways of action.

In FY21, Coles expanded its range of plant-based and alternative protein products but did not provide specific figures around the total size and growth of its plant-based portfolio. The company became the first Australian supermarket to stock plant-based meat company v2food’s plant-based sausages. It also expanded its Herb & Sons range which now includes five plant-based meat alternatives. Since launching in 2019, the company’s Nature’s Kitchen brand has grown to more than 40 products, including meatless burgers, pizza, and ready meals. Despite increasing its plant-based offerings, Coles continues to take a reactive approach to protein diversification and acknowledges that its plant-based expansion is driven by consumer demand. Once again, the company is limiting its potential to be a leader in the plant-based market. Coles’ resistance to acknowledging the climate mitigation potential associated with a protein transition emphasises the company’s stagnant approach. In FY21, Coles reformulated many of its products to remove unnecessary salt and sugar. Additionally, at the end of FY21, the Coles own-brand standard range contained more than 2,390 products with no artificial flavours or colours. The company also aligns with the Australian Government’s Health Star Rating system, and at the end of FY21, Health Star Ratings were displayed on more than 2,940 Coles own-brand products, a 22.5% increase from Phase 5. Despite this effort to improve the nutritional content of its products, Coles’ approach to product reformulation is centred around removing unhealthy additives; it does not include reducing high-risk meat and dairy exposure.

Coles continues to lag in promoting plant-based products and alternative proteins within its consumer engagement strategy. FAIRR did not find any evidence to show that the company has a defined plan to increase consumer uptake of its plant-based items. The company works with healthier living campaigns to increase consumer consumption of whole foods, mainly fruits and vegetables. For example, Coles has a free monthly magazine that includes plant-based recipes, products, and tips on vegan and vegetarian options. However, the company does not share any metrics on the success of its campaigns, so it is unclear what kind of impact the magazine and other promotions have on consumer choice. There is no evidence that Coles is trying to shift consumers towards more sustainable diets. The ad hoc promotion of whole foods such as fruits, vegetables, and grains is purely from a health perspective. When looked at in conjunction with some of Cole’s other campaigns, it becomes clear that sustainability is not part of the engagement strategy. For example, Coles is a major sponsor of Rockhampton’s Beef Week, one of Australia’s most significant beef cattle events. Additionally, Coles’ own website proudly declares that it is “doubling down support for [the] Aussie beef industry”. These messages suggest that Coles is directing more resources towards supporting the beef industry than its plant-based products. The lack of disclosure around plant-based marketing spend relative to total also leaves investors without a clear view of the company’s forward-looking protein diversification goals.

Once again, Coles continues to lag behind its competitors by not disclosing Scope 3 emissions from purchased goods and services. The only Scope 3-related emissions disclosed in FY21 were from business air travel, other transmission-related activities, and waste disposal from stores and sites. Coles’ lack of progress towards tracking and reporting its Scope 3 emissions emphasises how the company’s animal agriculture supply chains are not receiving the consideration they require. By not publicly disclosing its emissions to the CDP, Coles limits investor insight into its practices.

Coles did not attend the roundtable or agree to meet for a dialogue with FAIRR and investors this year; resulting in an automatic negative score for this section. However, the company did review and provide feedback on the assessment. The company decided not to meet due to the Group Sustainability Manager leaving. The rotation of the sustainability leadership could suggest a lack of continuity and succession on middle-management executioners of the climate strategy, however, Coles has clarified that a new Head of Sustainability Reporting and Engagement has been hired. Additionally, the General Manager, Sustainability and Property Services has been in the role for many years. The company stated it would be willing to resume engagement with the coalition during the next assessment period.