Kmart Australia together with Target Australia (comprising the Kmart Group) opposes slavery in all its forms, including: human trafficking; slavery; servitude; forced labour; deceptive recruiting for labour or services; debt bondage; forced marriage; and the worst forms of child labour.
We publicly report on our modern slavery risks and mitigation approach as part of our parent company (Wesfarmers Group), through the Wesfarmers Group Modern Slavery Statement. The statement is made in accordance with the reporting requirements of Australia’s Modern Slavery Act 2018 (Cth) and associated guidelines.
As a retail group operating more than 450 stores (Kmart and Target) across Australia and New Zealand, employing more than 50,000 team members and with an extensive global supply chain, we recognise the importance of mitigating the risk of modern slavery in our operations and supply chains.
Our modern slavery risks are assessed as part of an ongoing and overarching human rights risk management process (See details here). In the 2021 financial year, Wesfarmers engaged a third-party human rights consultant to conduct a salient human rights issues assessment across the Wesfarmers Group, including Kmart Group. This assessment included:
Discussions in cross-functional human rights working groups;
Overarching human rights and modern slavery risk management gap analyses;
Human rights risk mapping for operations, supply chains and other business relationships; and
An assessment of each risk based on scale, scope, irremediability and likelihood of potential or actual human rights impact.
The findings of this risk assessment illustrated at a general level how Wesfarmers businesses may impact human rights in their operations and supply chains. Supporting labour rights of workers in our value chain was listed as one of the six most salient human rights issues. Understanding our salient human rights issues provides an important starting point for Kmart Group in identifying our modern slavery risks.
Kmart Group has assessed the risk of modern slavery in our operations as low because our workforces are predominantly in low-risk countries and maintain robust human resources policies and grievance mechanisms, which create greater transparency of modern slavery issues. Our supply chains, on the other hand, are complex and multi-tiered that span across various countries. Our suppliers may include suppliers of retail merchandise, goods not for resale (GNFR) and services. See details about our supply chain here. This can limit the ability to have clear oversight of working conditions, which creates a greater risk of modern slavery issues.
A key inherent modern slavery risk identified in our supply chain is suppliers not complying with Kmart Group’s ethical sourcing standards, including excessive working hours, unpaid work, below legal minimum wages, forced labour, child labour, unethical recruiting practices, limited or no freedom of association and unauthorised subcontracting. Modern slavery risk is heightened by sourcing particular products from certain countries. The table below summarise examples of modern slavery risk we have identified in our supply chain.
| Country | Risk | Example Product/Service Sourced |
|---|---|---|
| Australia | Migrant labour exploitation* | Cleaning, maintenance and security contractors, general merchandise |
| Bangladesh | Excessive overtime | Apparel |
| Cambodia | Excessive overtime | Apparel |
| China | Freedom of association, excessive overtime, forced labour at factory level, raw materials | Apparel, electronics, general merchandise, office supplies |
| India | Forced labour, bonded labour | Apparel, general merchandise |
| Indonesia | Forced labour, excessive overtime, bonded labour, migrant labour exploitation | Apparel |
| Malaysia** | Forced labour, bonded labour, migrant labour exploitation, excessive overtime | IT products, office supplies, electronics, general merchandise |
| Thailand** | Migrant labour exploitation, excessive overtime | General merchandise |
| Vietnam | Excessive overtime | Apparel, general merchandise |
*Cross border migrant labour exploitation is considered a risk among our Australian service providers, not suppliers of retail merchandise.
**A review of our ethical sourcing audit reports found that cross border migrant labour is not currently used in our retail merchandise apparel factories. However, cross border migrant labour is used in onegeneral merchandise factory located in Thailand.
***Our third-party audit reports have found no instances of workers affected by recruitment fees or costs in the past year.
As a large user of cotton fibre, we have identified through our traceability activities that we have significant exposure to regions and countries with high risk of forced labour. As a result, improving visibility of the origins of our cotton fibre, and strengthening supplier awareness and compliance with our ethical standards all the way down to raw materials level, is a priority for our business.
Modern slavery risk mitigation and remediation is a key objective underpinning the design of the Kmart Group Ethical Sourcing (ES) Program. The ES Program is applicable to all vendors, factories or authorised subcontractors (“Suppliers”) of the Kmart Group. This includes suppliers of retail merchandise, goods not for resale (GNFR) and services. Key elements of the program that assist in modern slavery risk mitigation and remediation include, among others:
A comprehensive Ethical Sourcing Code, which includes the minimum standards of conduct that all suppliers must meet as a condition of doing business with Kmart Group. The ES Code contains specific wording prohibiting conduct associated with modern slavery, including child labour, forced labour, human trafficking, non-compliance with local wage laws and unauthorised subcontracting. The Code also includes protections for migrant workers and prohibitions on charging workers recruitment fees;
A robust audit and monitoring program that requires all registered Kmart Group supplier factories to have an approved ethical sourcing audit (or equivalent) prior to onboarding;
Additional random unannounced audits of our supplier factories against the requirements of our ES Code;
Corrective action processes (supported by documented corrective action plans and follow up audits) to remediate non-compliances with our ethical sourcing standards;
A critical non-compliance process to guide our response to critical non-compliances with our standards (including withdrawal from factory);
An ES Transparency Policy setting out clear requirements under which Kmart Group suppliers, when requested, must disclose information about their supply chain. This includes information about any tier in the supply chain, including finished goods manufacturers, processing facilities, component manufacturers, down to suppliers of raw materials;
A Factory List disclosing all Tier 1 factories that produce our own brand apparel and general merchandise finished products. From July 2022 this list also includes all tier 2 and 3 processing facilities used in the production of our clothing, towel and bedding products;
A Standard Operating Procedure documenting the ES program’s governance structure, program objectives, internal roles and responsibilities, operational aspects of the audit program, and processes to assess program effectiveness, including through an internal reporting and an annual review process;
A whistleblower line through which factory workers can report actual or suspected violations of our ES Code to Kmart Group.
Ongoing training and capacity building for key team members and suppliers to better identify, prevent, mitigate and manage the risk of modern slavery in our supply chain.
In response to the modern slavery risk in our cotton supply chains, Kmart Group has also introduced a half yearly cotton, fabric and yarn declaration and survey process, which must be completed by own and licensed brand suppliers of apparel and home textile products. The declaration and survey requires, among other things, suppliers to confirm that they have undertaken modern slavery risk due diligence and asks the supplier to disclosure their cotton country/region of origin as well as fabric and yarn manufacturers. The results enable us to focus our engagement with suppliers operating in high risk countries and regions so that they are aware of, and following, our ethical sourcing standards.
We report on our ethical sourcing performance in the Wesfarmers Group Sustainability Report. This includes the number of Kmart Group suppliers audited in the financial year (1172 in FY22) and the number of sites with critical breaches identified or reported (193 in FY22). None of the critical breaches identified via our program in FY22 came within the definition of modern slavery as defined under Australia’s Modern Slavery Act. This includes child and forced labour. For more information, see our most recent ethical sourcing data.
Further information on the Kmart Group ES program is available here