Environment

Environment

CLIMATE CHANGE

We have retail businesses in Australia and New Zealand. Both are signatories to the Kyoto Protocol and committed to implementing a globally consistent emissions trading scheme.

Australia's national greenhouse gas inventory was an estimated 553 Mt CO₂-e in 2008 ⁽¹⁾. It was 75.6 Mt CO₂-e in New Zealand in 2007⁽²⁾. This is equal to 28.6 tonnes CO₂-e per capita in Australia⁽⁶⁾, making it the fifth largest per capita emitter in the world⁽³⁾, and 18.8 tonnes CO₂-e per capita in New Zealand in 2005, making it the eleventh highest per capita emitter.

While these quantities are not significant in the global context - Australia contributes 1.5% and New Zealand 0.2% of global total emissions - the effect of climate change in the region could indeed be significant if an international agreement is not reached to reduce global greenhouse emissions.

Why is this material to our business?

Climate change and its impact on food production is the most critical environmental issue facing Woolworths and the sustainability of our business. The effects of drought and severe weather events on the availability and pricing of staple food items are becoming more common, making a compelling case for reducing our carbon footprint and promoting the same through our supply chain.

The main carbon emissions from our business arise from facilities (existing and new stores, Distribution Centres and offices) and transport. Electricity and fuel costs are rising and the advent of carbon pricing in the near future could add significantly to these costs. So there is a strong business case to find ways to reduce our electricity and fuel use and support the development of renewable energy and alternative fuels. By reducing the price impact of carbon on our business we can be more cost competitive and deliver better value to our customers.

Beyond pure business and cost considerations, Woolworths is highly aware of the steadily growing public and media awareness of climate change and its potential long-term effects on the planet and food supply. We understand, too, that these concerns are shared by our customers and the communities we serve and that they will expect, and appreciate, steps we can take to be part of the solution.

What is our commitment?

In our Sustainability Strategy 2007-2015 we set the following commitments and targets:

Facilities

• Reduce our CO₂-e emissions by 40% by 2015 (from projected growth levels), bringing our emissions back to 2006-07 levels
• Build all new supermarkets opening from September 2008 to conform to our sustainable design guidelines to minimise energy use and environmental impacts
• Achieve 25% reduction in CO₂-e emissions per square metre for new sustainable store designs compared with business-as-usual designs.

Transport

• Establish accurate baseline data in 2007-08 for all modes of transport
• Establish a forum with major transport suppliers to develop a low-carbon strategy for our third-party distribution network
• Trial the use of hybrid-powered trucks for home deliveries
• Reduce CO₂-e emissions per carton delivered by Woolworths owned trucks by 25% by 2012
• Reduce 2006 levels of CO₂-e emissions from company car fleet of 3,100 cars (dependent on mix of car size and fuels chosen) by 30% by 2010 (and adjust for growth in the business).

How are we performing?

In 2009 our total carbon emissions in Australia and New Zealand was 4.05 Mt, which is higher than our baseline total emissions of 3.7 Mt. In 2008 we reported total emissions of 4.3 Mt which has now been found to be an overestimate and the emissions for that year have been recalculated to be 4.19 Mt.

Our emissions reported for this year are the most accurate we have reported as we improve our measuring and estimating processes to meet the standards required by the National Greenhouse and Energy Reporting (NGER) legislation. As well as improving estimations, which are required for some parts of our business, reduced refrigerant loss and developing new stores with efficient designs has reduced emissions. Electricity usage has increased in almost all parts of the business due to business growth but the carbon impacts from synthetic refrigerants, transport fuels and waste have reduced.

We are continuing to expand as a business and the impact of that expansion is starting to reduce as we benefit from initiatives in our stores and within logistics.

Facilities

Emissions from our facilities (stores, Distribution Centres and offices) totalled 3.45 Mt which is a 3% decrease compared to the recalculated emissions for 2008.

Existing stores

As well as building new supermarkets to meet our sustainable guidelines we have also included energy efficient innovation in the planned retrofits and refurbishments of existing stores. Project CO₂ involved a trial on retrofitting eight stores resulting in reductions in carbon emissions and cost savings. Store refits now include installation of high efficiency fans in refrigeration cases, improved heating control in freezers' glass doors to minimise fogging and adding heat into the case, installing small glass fences to the front of open multi-shelf refrigeration to reduce the spill of cold air, and installing glass lids onto island freezers.

Woolworths' Petrol division continues to benefit from the rollout of LED canopy lighting at petrol stations, reducing both the energy use associated with lighting and maintenance costs. This business also implemented a "Lights Off" energy efficiency program, involving a traffic light colour code system where light switches are colour coded depending on whether they are never turned off (Red) for safety or security reasons, turned off at close of business (Amber) or off when not required (Green).

In our Distribution Centres, Logistics have installed daylight switches in non-refrigerated "sheds" with skylights, allowing the lights to switch to 50% lighting or off during sunny days. A range of compact fluorescent and LED lighting has been trialled in high-bay areas to determine if adequate lighting levels can be delivered with this technology.

Green stores

Woolworths opened 28 supermarkets after 1 September 2008 and 24 were built and fitted to our sustainable guidelines. Four stores - Redcliffe (Queensland), Glen Innes (NSW), Campbelltown Mall (NSW) and St Georges Terrace (WA) - did not meet these guidelines. The latter three stores were identified in the 2008 Corporate Responsibility report. Redcliffe was scheduled to open in August 2008 but the opening date was postponed to early September. These stores included technologies such as efficient refrigeration, refrigerants with lower global warming potential, LED signage, T5 lighting and automated after hours lighting controls.

Our green store guidelines have been adapted for application in Woolworths Liquor Group stores with other divisions to follow in 2010.

Transport

In 2009, we reduced our carbon emissions per carton delivered by a further 6%. This was achieved by improving the efficiency of our Victorian fleet through investment in more fuel efficient fleet prime movers and trailers and through consolidating deliveries between Distribution Centres and stores.

We continue to roll out the Euro 5 prime movers, which comply with the strictest international emissions standards and tested a new aerodynamic trailer designed to reduce drag, improve fuel efficiency and cut noise. If approved, the latter would allow deliveries outside regular times, which in turn would take trucks off the roads during peak times.

In the second half of 2009 we will be contracting a third party carrier which operates a fleet on 20% biodiesel, made from reclaimed waste tallow (non food based). Our own use of alternative fuels, including biodiesels, liquified natural gas and compressed natural gas continues with some changes expected in the coming year.

In 2009, the carbon emissions from our company car fleet reduced by 13% compared to the previous year. This occurred, even though the size of our total fleet increased by 241 vehicles, because over half the fleet has been converted to fuel efficient options. The ongoing roll out of new vehicles will continue to reduce carbon emissions.