IFM Investors’ engagement with Woolworths

Briefing background

A key principle in IFM Investors’ Responsible Investment Charter is to protect the rights of working people. IFM Investors put this principle into action in October 2016 when it initiated an engagement process demanding improved human rights management in the fresh food supply chain, particularly relating to labour hire practices. Two of its primary targets were supermarket chain owners Woolworths Group Ltd. (ASX: WOW) and Wesfarmers Ltd. (ASX: WES).

IFM Investors called for i) greater disclosure of human rights and labour management risks in the supply chain; and ii) an industry-led pre-qualification process for labour hire companies supplying workers to agricultural companies.

Since IFM Investors’ initial engagement with Woolworths Group and Wesfarmers there has been significant activity around the issue of supply chain human rights and labour risk, including:

• Queensland, South Australian and, most recently, Victorian state governments’ legislative changes to reduce exploitation of workers and bring greater integrity to the labour hire industry; and

• Shareholder resolutions made during last year’s AGM season aimed at Woolworths and Wesfarmers requesting annual disclosure on management of human rights risks within the supply chain. The resolutions were ultimately withdrawn with both companies agreeing to greater disclosure and stronger controls to manage supply chain human rights and labour issues.