Woolworths Group Limited

FAIRR found no material evidence that Woolworths achieved considerable progress in the development of its protein commitments, nor publishing climate mitigation and adaptation plans for its animal agricultural supply chains following its goal to lead the ‘Future of Protein’. Woolworths shared with investors that it is in the process of finalising its board-endorsed sustainability roadmap, with further details to be included in its September report. Material themes identified include sustainable proteins, natural capital, and biodiversity. Through the Sustainability Sub-committee, the company committed to report progress to the board every quarter. The company did not provide specific details of the strategy that will be included in its roadmap of action for goal #4 to ‘Lead the Future of Protein’ nor the metrics it will use to track progress. Woolworths did, however, state that it has looked at it in a holistic sense, aiming to deliver animal proteins in a more sustainable way, and by nudging customers to consume more plant-based proteins. Further details will be disclosure in the company’s September report. Following the completion of its qualitative TCFD-aligned scenario analysis, Woolworths is now conducting a preliminary quantitative scenario analysis. Woolworths has identified its top commodities at risk, these include beef, fruits, and vegetables, however it stated that there is more work to do to fully understand these risks and it therefore will not be sharing this work in its upcoming annual report. To mitigate climate risk in its supply chain, the company shared with investors that its commercial teams are working to diversify supply. The company provided an example of drought in Australia affecting the strawberry supply. Additionally, the company stated it collaborates with suppliers to support practice change, however, it did not provide any examples of this.

Woolworths has not achieved material progress in the strategy behind the inclusion of protein diversification as a climate mitigation tool, supplier engagement aiming decarbonisation or towards its scope 3 targets. Woolworths shared with investors that it will not include a target on protein diversification as part of its climate roadmap. While having strong business support and internal alignment, the company stated it is not ready to set such a target. Instead, Woolworths will include some metrics on tracking customer baskets, however, it did not provide detail as to what this would look like. It is currently challenging to understand how the company expects to ‘Lead the Future of Protein’ without a clear protein diversification strategy to drive increased uptake of alternative proteins and transition away from high carbon proteins. The company shared with investors that its direct sourcing model for beef, lamb and pork supply chains enables Woolworths to influence suppliers’ sustainability practices. However, the company did not provide any examples or specific outputs. Compared to peers in the engagement, the company’s sustainable sourcing practices primarily focus on animal welfare, and it is unclear how these practices feed into the company’s overarching climate mitigation strategy. To achieve its 2025 target of no deforestation linked to soy, the company has committed to ensuring all soy sourced from high-risk areas meets the standards set by the Roundtable on Sustainable Soy. The company stated it is tracking the percentage of soy sustainably sourced and that it will report in the future, but it could not provide a baseline at this point. Positively, Woolworths shared with investors that it has improved its sustainability team’s headcount and invested in ESG data and analytics, with a focus on nutrition, animal welfare and climate. The company states this will enable it to gain a better understanding of its sustainability practices and track progress. The company did not report progress towards its health goal, to have 100% of its own-brand products meeting at least one health or sustainability attribute by 2025. Woolworths refrains from reporting on its Scope 3 progress in its annual report. Instead, it discloses emissions linked to its facilities in its appendix document and reports total Scope 3 emissions to the CDP. The company’s emissions have remained flat from 2020 to 2021.

Woolworths maintains the expansion of its product offering and the company’s venture arm continues to invest in alternative protein companies. In February 2022, W23 Ventures invested in All G Foods, a plant-based meat start-up in Sydney. Additionally, it invested in a company that creates flavourings, including for plant-based products. In March 2022, Woolworths became the first Australian retailer to sell Impossible Foods products. Additionally, the “Plantitude” range continues to grow, with over 25 products launched in 2021. The company shared with investors that the product development team is dedicated to growing the range, with the team having an innovation chef looking at future trends in plant-based products. The company continues to reformulate its products, using the Health Star Rating, to improve nutrition. Since the Phase 5 assessment, Woolworths has reformulated over 190 own brand products to remove 31 tonnes of salt, 131 tonnes of saturated fat and 137 tonnes of sugar. There is no evidence that the expansion of plant-based offerings is shifting the overall product portfolio and there continues to be no evidence that at least 10% of its product categories contain alternative proteins or plant-based foods. We have a dedicated team in commercial, product development and commercial who manage and expand our plant based portfolio

Woolworths’ consumer engagement strategy has not evolved significantly since Phase 5. The company shared with investors that since the pandemic it has increased its consumer engagement on the benefits of plant-based and sustainable proteins. However, it did not provide examples and stated that it does not explicitly draw out the link between plant-based proteins and lower emissions in its marketing. Compared to competitors, the company’s consumer engagement on the sustainability benefits of plant-based is lacking. The company continues to use the terms ‘vegan’ and ‘vegetarian’, despite consumer research indicating that plant-based is favoured by a wider range of consumers. Woolworths stated it plans to nudge consumers into purchasing more plant-based foods. While the company could not provide examples specific to plant-based, it stated it would use a similar approach as the one it uses for health; for example, providing healthy swaps when shopping online, instore messaging and recipes. It is also encouraging customers to consume less meat through its ‘meat and more veg’ brand which focuses on blended proteins. Regarding measuring the success of consumer engagement campaigns, the company does not provide any metrics or examples. However, it stated that Woolworths tracks sales growth for product ranges, such as Plantitude. The company has individual marketing campaigns for new products and brands, using multiple channels, to increase awareness. Plant based now sits along side traditional proteins in store

Woolworths has not disclosed metrics to track protein diversification, nor provided investors with a Scope 3 emissions breakdown. Woolworths shared with investors that it will not be disclosing the percentage of plant-based in its product portfolio or providing a sales breakdown. Woolworths will disclose some metrics yet did not provide further detail. Nevertheless, the company showed interest in learning about how other retailers disclose their protein portfolios. Woolworths refrains from reporting on its Scope 3 progress in its annual report. Instead, it discloses emissions linked to its facilities in its appendix document and reports Scope 3 emissions data in its 2021 CDP questionnaire. Its absolute emissions increased by <1% year-over-year. In its FY22 annual report, Woolworths will increase its disclosure on Scope 3 emissions, with a dedicated headcount now working full time on this topic. Since establishing a team for sustainability data the company has a better understanding of its emissions. The company will disclose a breakdown of purchased goods and services, such as emissions from meat and dairy, but will not break this down to species level.

The company did not attend FAIRR’s technical roundtable. It met with FAIRR and the investors for an engagement dialogue. The company was receptive to the investor’s feedback and transparent about the challenges the company faces. Woolworths did not provide a response to the follow-up questions.