Wesfarmers commits to ‘ambitious’ net zero emissions agenda across businesses

The move follows heightened expectations from the group’s shareholders and staff.

The group announced a net zero target for its retail operations, including Bunnings, Kmart and Officeworks, by 2030.

Wesfarmers has committed to an ambitious net zero emissions agenda across its diversified businesses, citing heightened expectations from the group’s shareholders and staff.

The group announced a net zero target for its retail operations, including Bunnings, Kmart and Officeworks, by 2030, with its chemicals, energy and fertilisers businesses set an aspirational goal of 2050, recognising that technological advances were needed.

As in the past, the targets cover Scope 1 and 2 emissions, from both owned or controlled sources and purchased energy.

Managing director Rob Scott said Wesfarmers was well-positioned to contribute to the global objective of net zero emissions by 2050, in line with the Paris Agreement.

“Wesfarmers has, for many years, managed its businesses with deep carbon awareness, and we take responsibility for improving the energy efficiency of our operations, transitioning to renewable power, investing in new technologies and working with our suppliers and customers to help them do the same,” Mr Scott said.

Wesfarmers CEO Rob Scott. Picture: Colin Murty

“(We are announcing) clearer, more ambitious commitments, including net zero targets or aspirations for all our businesses.

“It is important to highlight that action to reduce emissions makes good commercial sense - we see the opportunities to operate our businesses more sustainably as being completely aligned with our objective of delivering a satisfactory return to shareholders.”

The Wesfarmers annual report, also lodged on Wednesday, revealed that Mr Scott received statutory remuneration of $7.8m in 2020, up from $6.7m.

Chief financial officer Anthony Gianotti received an increase in statutory pay from $3.6m to $4.3m.

For the first time, the CEO and the CFO received all of their variable remuneration in the form of deferred shares, which are restricted from trading for 4-6 years, or performance-based shares subject to further performance hurdles.

Statutory pay for 2020 reflected share-based, variable payments from previous years, based on the value when they were granted as well as the probability of vesting.

Similarly, the shares to be awarded in 2020 would be recognised in the 2021 annual report and beyond.

Mr Scott and Mr Gianotti did not achieve the group’s threshold financial targets in 2020, and therefore did not qualify for the share-based bonuses linked to the targets.

Wesfarmers failed to meet the targets, based on 2020 profit and return on equity, because of impairments and restructuring costs at the Target and industrial and safety businesses.

Bottom-line net profit in 2020 after one-off items was down 69 per cent to $1.6bn in 2020 from $5.5bn in 2019, which included $3.2bn of post-tax gains from asset sales.

Mr Scott said in the annual report that the impact of COVID-19 would be felt for a long time, including in customer demand, the group’s operations and across the broader economy.

“Without question, the income and fiscal support provided by federal and state governments to individuals and businesses, including through JobKeeper, have played a critical role in supporting jobs and households,” he said.

“The group’s retail businesses will maintain their focus on meeting changing customer needs and delivering even greater value, quality and convenience.

“Recent investments in digital capabilities will continue and are expected to improve our customer value proposition, expand our addressable markets and deliver operating efficiencies.”

Officeworks

While consumers spending more time at home during the pandemic might support demand in some of Wesfarmers’ businesses, Mr Scott said retail sales could also be affected by any trading restrictions and the gradual removal of stimulus, particularly if unemployment remained high.

Meanwhile, the performance of the group’s industrial businesses would depend on international commodity prices, foreign exchange rates, competitive factors and seasonal outcomes.

“The group will also continue to develop and enhance its portfolio, building on its unique capabilities and platforms to take advantage of growth opportunities in existing businesses, recently acquired investments and to pursue transactions that create value for shareholders over the long term,” Mr Scott said.