Welcome to Ansell's first sustainability webcast. We're excited that you've been able to join us today and hope that you find the session insightful. For those of you who don't know me, I'm Anita Chow, Head of Investor Relations and Treasury at Ansell. Joining me on the webcast today, we have Neil Salmon, our Managing Director and CEO, John Marsden, our Senior Vice President of Operations and Supply Chain, and Catherine Stribley, our Vice President of Corporate Governance and Social Responsibility, and also is our Company Secretary. At the end of today's presentation, there will be the opportunity to ask questions. For those on the webcast, you can type your questions in the Q&A box and click on New Question to submit it. While for those on the telephone, please press star one during the Q&A session. Thank you.
With that, I will now hand over to Neil to start the presentation.
Thank you, Anita, and thank you to you all for your interest in this topic today and making the time available to listen to this presentation. Also, a thank you to my Ansell colleagues. What you'll hear in the next hour or so is a summary of what I think is significant progress made over the last 12 months. Those of you who follow Ansell reasonably closely will know that it's been a complex world in this time period. The fact that we've remained focused on these perhaps longer-term topics is a credit, I think, to our team's commitment and desire to address these issues that are very, very important for the world in which we live. We'll cover four sections here. I'll provide an overview and an introduction and a summary of the progress made in the last 12 months.
I'll hand over to Catherine, who will go into further detail on our progress on labor rights, both in our internal operations and across our supply chain. I'll then hand over to John, who will summarize the environmental commitments that we've recently announced and made. And then I'll conclude with a couple of words on innovation and product stewardship, and then we'll take your question. Now let's go to the summary slide. This slide really sets the agenda also for the presentation today. Firstly, against the priority of keeping our employees safe and also ensuring that we have a diverse and inclusive culture. I'm proud of our safety record in the last 12 months. Looking at our medical treatment injury rate, that's the lowest we've seen in a long time. Certainly for 10 years, perhaps ever.
That's come through different safety strategies that I'll summarize in a moment. We've made progress towards our gender diversity targets and actually set new and more ambitious targets, but we're also broadening our diversity focus to equity and inclusion. We've made significant progress in improving working conditions across our supply chain. That's both enhancing our awareness of what's happening across different facilities supplying Ansell through enhanced audit practices. Our supply management framework, setting the framework in which we engage with suppliers on these issues, but we'll also be reporting to you today substantial progress in eliminating the risk factors across those members of Ansell's supply network. There's a lot of comment and still appropriate attention to previous conditions in factories across the world, especially Malaysia.
We want to bring you up to date today with the progress made more recently in addressing those risk factors. We announced ambitious and significant environmental goals in the last couple of months. John will summarize those, but including a net zero commitment by 2040. I always think it's not the net zero that is really the most significant part of this commitment. It is the 90% reduction in our operations emissions that we have committed to in order to meet that science-based benchmark. We've also redone and replaced our water intensity reduction targets with new water stewardship commitments, and we're making rapid progress against our zero waste landfill objective. Our whole innovation and product stewardship team have reinvented how they develop products and are making significant progress.
We now have a much better understanding of how our products impact the environment from cradle to grave, grounded in life cycle analysis done to the highest ISO standards relevant to this field of study. We're starting to launch products that benefit from that approach. Our first compostable glove, a food service single-use glove, and our first HyFlex glove with recycled nylon, comprising the majority of the liner. These are significant and seeing significant customer interest, but they're also only the start. Finally, the Ansell community across the world has needed support at times. Of course, the other aspect of environmental change is extreme weather conditions and also pressures on economies, particularly emerging economies. We've stepped up significantly in Sri Lanka, providing significant financial and non-financial support to our over 5,000 employees in that country. I was in Sri Lanka two weeks ago.
It's great to see the country making progress, that some of the pressures of the last few months are easing, but there's still a long road back for the country before it resumes normalcy. I'm proud of the work that Ansell has done to provide support to Ansell employees during this time period. In many other countries around the world, flood events and other severe weather events have created stress on our employees, and we've helped out in a number of different ways when needed most. The rest of the presentation will go through those 12-month accomplishments in a little more detail. Before getting to those, let me talk to the governance framework that we've put in place across Ansell.
Of course, this begins with the Ansell Board of Directors, who takes a very active role in the sustainability agenda. They oversee and review management's targets, the administration and governance of our policies, and review and approve our overall strategic direction. Two sub-committees of the board then take a closer focus on their own areas of responsibility. We enhanced the risk committee to be the sustainability and risk committee about a year ago, and significant time for this committee is on the review and implementation of our risk management system, our sustainability policies, and progress against our objectives. The audit and compliance committee has focused on compliance with TCFD. As we announced with our year-end results, we're now fully compliant with the requirements of TCFD reporting. My management team has significantly increased its time spent on sustainability topics.
My ELT meets dedicated to the sustainability agenda in the form of the Sustainability Council, and that's the group that's developed the net zero ambition that we announced a couple of months ago. When we meet specifically on labor rights topics, we have a subset of the ELT, that John, who's on this call today, leads, and also includes functional leads reporting to the ELT who manage labor rights across our supply chain. At the next level, we have a series of working groups targeted to people, planet, and product, which is how we think about sustainability and driving progress across those areas. What you'll not see on this slide is a sustainability function. It's my view that that's not the most effective way to go. I think sustainability needs to be incorporated into the overall business objectives.
Yes, we have sustainability experts who provided us key input on some of the decisions we've taken, but ownership of sustainability goes top to bottom through the company, and of course, that very much goes to myself as well. Now let's start walking through those summary points that I went over earlier, beginning with, of course, safety. Here I'm showing lost time injuries, the more serious category of injuries versus medical treatment injuries. Some of you will have seen this graph before, in which the bolder line shows Ansell's lost time injury track record benchmarked against a whole series of global leading companies. The visual comparison is clear. Ansell at best in class against this group of comparators. It's always a feature of best in class companies that they're never satisfied.
In fact, our focus right now is on rejuvenating our safety culture. Safety always needs to be refreshed, that you always need new approaches to safety. What we've already done is strengthened the role of non-EHS specialists and senior managers around with a focus on high-risk tasks and mitigation of hazards. Now we're looking again at how we bring new life to ensure safety is continually top of mind, in Ansell factories worldwide. If I now turn to diversity. Good progress, and in fact, we've already met our previous gender diversity targets. The Board of Directors, I don't show that graph here, but, was at 50, 50%, the non-executive population, female, male. But that will always move plus, minus as board roles rotate.
It's a little less than 50% at this time, female representation, but I think we'll get back to 50%, as the next evolution of the board continues. We have now set a new target of 40% female representation across our management levels in the company, and we target to get there by 2025. With regards to other measures of diversity, as you know, Ansell is a very globally diverse organization, and here you can see the mix of our professional staff across the different regions. That weighting to APAC is because of our manufacturing presence in Asia, where, of course, we also have a lot of professional staff managing the manufacturing activity and also sourcing in other activities.
Although we are diverse by structure, we know we need to be more diverse within each country. As with any organization, we need to focus on ensuring that people from different backgrounds, whether racial or sexual orientation or other aspects of diversity, that every individual feels fully included at Ansell, that they can be successful, their careers can develop as they wish. As with all organizations, we've got more work to do here. This has been a focus for the last 12 months as we've developed a regional network approach. I'm in Canada currently. I was reviewing that with our team yesterday. I'm pleased with the progress we've made, but I also see a lot of opportunity for the future.
Of course, this is essential as Ansell has to be a home for the best talent, globally, and we can't afford to have some communities within the territories in which we recruit people, feeling that they can't be successful at Ansell. This is essential for our future. We set ambitious targets, and I think we're making good progress. Now let me hand it over to Kathryn to take you in more detail through the next section related to treatment of people in both Ansell operations and across our supply chain.
Thank you, Neil. If we can go to the next slide. Ansell's committed to respecting human rights, and identifying, remediating, and preventing modern slavery. We align with the United Nations Guiding Principles on Business and Human Rights and also the ILO Core Conventions. The industry Ansell operates in and the location of many of our internal operations and also third-party suppliers, does expose us to a higher risk of labor exploitation. These are complex issues, and as a market leader, we're actively promoting decent work across our own operations, our third party supply chain, and the wider industry. We've established frameworks and governance structures to uphold a culture based on trust, respect, and open dialogue, so that we promote positive and transparent employer-worker relations.
Our labor standards management framework. It unifies the management of labor rights across our internal operations to ensure all our plants operate and adopt a consistent approach. Strong policies, training, accessible grievance mechanisms, and ongoing monitoring are the key controls we use to mitigate risks of modern slavery. Our core labor focus areas at our own operations fall under the five headings shown on this slide. Firstly, grievance monitoring. We acknowledge the importance of effective grievance mechanisms and its role in our modern slavery risk management process. We encourage employees to speak up when they have a complaint or concern about unjust, unfair or disrespectful treatment, harassment, or also a health and safety issue in the workplace.
Importantly, we have a no retaliation policy to reassure employees that there will be no adverse consequences for reporting concerns in good faith. Last year, so in FY 2022, we established our global grievance policy covering Ansell employees, but also our contractors. This policy is supported by grievance channels across the business, including the Ansell Compliance Hotline, which is operated by an independent third party. We also introduced two new mobile application grievance mechanisms to enable workers to raise grievances in their native languages. We've also started to introduce the Suara Kami hotline to our plants, and this is an external grievance channel managed by the Responsible Glove Alliance, and I'll talk a little bit more about the RGA later in this presentation.
We're gonna continue to focus on grievance mechanisms in FY 2023 as we acknowledge the importance of worker-driven monitoring of conditions in the workplace. Next is worker engagement and we know engaging with our workers helps build a culture of trust, transparency, and openness. During the year, we introduced regular skip-level meetings between workers and plant general managers. We also introduced what we call as the HR Corner, and that's for workers to regularly meet with HR in person to raise any queries or concerns. We're gonna continue to build on these engagement channels to encourage an open dialogue with workers. We also recognize the importance of freedom of association and collective bargaining. We do see this as a fundamental point to maintaining healthy industrial relations and social dialogue.
It is of particular importance in countries with vulnerable worker populations. Our approach to facilitating worker unions and councils is managed through plant-specific policies. Worker councils and worker committees are established where workers choose not to join unions. To date, we currently have either worker councils, committees, or unions at 10 of our plants, and we are looking to establish worker committees at the remaining Ansell plants in this financial year. On risk assessment and monitoring, as Neil discussed a minute ago, the board, its committees and the ELT have oversight of sustainability risks, including labor and modern slavery risks. We have established an executive-level labor rights committee, and they review, test, and challenge Ansell's labor rights and modern slavery management, and then also provide recommendations to the ELT.
We monitor labor rights compliance in our own operations through external audits and internal assessments. Third-party audits are conducted according to the SMETA audit framework. This year we have moved to a two-year audit rotation. But where previous audits have identified any risks or if the plant is a new addition to our portfolio, more frequent audits would be conducted. In between our SMETA audit, our internal teams also conduct their own assessments and audits. Importantly, a new category of audits called forced labor assessments or also known as FL11 audits are now available. FL11 audits are more specifically focused on the 11 indicators of forced labor, and they have a much more extensive interview process with workers. We have started to use these FL11 audits in the audit program for our own operations.
On accountability and awareness, Ansell understands the importance of raising awareness and driving accountability for labor rights and modern slavery risks across the business. We've conducted training at various levels in the organization. Topics have included grievance mechanisms, the ILO indicators of forced labor, and the general management of labor rights. We also have a quarterly compliance meeting attended by senior management, HR, and plant managers. This includes a discussion on internal labor rights performance to ensure full compliance with our own labor standards. Various frameworks, policies, and commitments underpin Ansell's management of modern slavery and labor rights risks at our own operations. This includes our global code of conduct and our ethical recruitment policy.
Our zero recruitment fee policy is based on a commitment to ensure that we pay all recruitment costs incurred by migrant workers, and migrant workers are not incurring any costs to come and work for Ansell. In 2019, Ansell was one of the first organizations in the glove industry to reimburse migrant workers in Malaysia who had paid recruitment fees to agents in their home countries. Since Ansell's remediation in 2019, many organizations have followed our lead. In 2021, to ensure that we're sort of still meeting leading practice, we commissioned a third-party consultant, ELEVATE, to review our remediation program. ELEVATE concluded that while our initial approach to remediation was aligned with best practice at the time, the amounts remediated to migrant workers from a couple of countries were lower than the current average industry benchmark.
This year we decided to adopt a new higher industry benchmark amount and have made additional reinvestment payments to affected workers. Additionally, in FY 2023, we will extend the recruitment fee remediation program to former workers at our Malaysian operations. Our ethical recruitment program is a three-stage gate process, and it's designed to protect migrant workers and prevent unethical demands of recruitment related fees from agents in their home countries. The hiring practices of our labor agents are now reviewed during the third-party SMETA audits at our plants. We ensure that we only engage with labor agents who we are confident that comply with our zero recruitment fee policy and essentially are doing recruitment the right way. If we just go to the next slide.
I'll just touch a bit on generally how we engage with our suppliers. We consistently communicate to suppliers our expectations that they have adequate and effective systems in place to ensure high standards of health and safety for all workers, to ensure the prevention of human rights abuses, and also to remediate any abuses identified in their supply chain. Our supplier code of conduct outlines Ansell's strict standards on protecting human rights. We seek to drive meaningful change in our supply chain and strengthen relationships with our suppliers, and this is done through a series of engagement activities. We regularly engage with our suppliers. We share leading practices. Sorry, my light's gone. Leading practices and support them with training.
In addition, Ansell requires suppliers to transparently and openly communicate on its performance on labor rights, and we regularly monitor labor rights performance in our supplier sites through third-party audits. I think it's important to note that, and you can see it from this slide, is that supplier engagement is not solely focused on audits. Audits will only ever be a point in time assessment, so collaboration and partnership are essential elements. You know, Ansell is looking to engage with like-minded suppliers who share our values and where upholding human rights and eliminating modern slavery is fundamental to their values as an organization. Next slide, please. On Ansell's Supplier Management Framework. This was established to drive meaningful change in our third-party supply chain. It takes a risk-based approach and assigns appropriate measures and activities to target risks.
Under the SMS, SMF, as we call it, we prioritize suppliers into different waves based on industry, location of sourcing, criticality to the business, inherent modern slavery risks, and also spend. The SMF is being implemented in three waves, and we roll out first to the highest priority suppliers. Implementing in waves has also enabled us to smoothly onboard suppliers to the program and apply learnings from one wave to the next. The implementing of the SMF is expanding our already existing due diligence program, increasing our existing activities to ensure that we cover a more significant proportion of our supplier population.
We commenced the Supplier Management Framework with suppliers in wave one, and these were suppliers of finished goods, suppliers of cotton products, recruitment agents, suppliers of branded packaging, as well as suppliers of inputs such as natural rubber latex and biomass. We also include support services such as cleaning and security services. The onboarding of wave two suppliers commenced this financial year, and we have used a refined process based on the learnings from the wave one suppliers. We're also rationalizing our supplier base in phases as part of our procurement strategy. As a result, a leaner supplier portfolio will enable us to develop stronger relationships with suppliers and increase our leverage on supplier sustainability performance.
Currently, our highest risk, so our Wave 1A , as you can see on this slide, suppliers are required to undergo annual SMETA audits by third parties. We're looking to introduce unannounced SMETA audits as well as FL11 audits into our program this year, and this would apply for selected suppliers. The different audit programs provide depth and transparency on supplier practices and just help us identify any non-conformances requiring corrective action. Ansell works with suppliers to monitor and close out non-conformances in accordance with agreed timeframes. Selected audit findings may be escalated to the ELT and the board, depending on severity. The supplier management framework details how to identify and categorize labor rights non-conformances into varying levels of severity.
The severity of a non-conformance informs the timeframes for action and the consequences for suppliers, and also the required level of engagement and approval within Ansell. The SMF sets out the escalation pathways and ultimately the consequences for suppliers who fail to close out severe non-conformances, and this gives the business a structure to follow when making decisions. It's something that we're very strong about, but in line with the UN guidelines and human rights experts, Ansell does not automatically terminate upon allegations of forced labor. Instead, we provide the suppliers with an opportunity to demonstrate a commitment to improve working conditions through meaningful action.
By staying engaged and seeking improvement through our influence as a customer with this supplier, the aim of our approach is to allow continued employment for the supplier's workforce and also hopefully improve workers' conditions. However, there is a limit to how long we will give suppliers to improve. Where a supplier is not progressing their labor standards compliance, we will take further action, which may include termination. Just the next slide. Just to discuss in a little bit more detail the Malaysian glove industry and the industry progress we have seen more recently. As probably most people on this call are aware, the Malaysian glove industry has been the focus of increased scrutiny due to allegations of adverse labor rights impacts.
Ansell's enhanced approach, together with an important increase in attention and focus in this area from multiple stakeholders, has definitely contributed to the significant progress in working conditions for workers, particularly over the last couple of years. These industry challenges cannot be solved by a single company in isolation. There are several key drivers of change and progress. You can see on this slide these include Ansell and other glove suppliers, purchasers and end users, investors, regulators and government, as well as activists. Ansell is seeking out partnerships that drive collaborative and industry-wide action. A good example of this is the Responsible Glove Alliance, which we call the RGA. In March this year, the RGA was launched with seven founding members, one of which is Ansell.
The alliance aims to drive transformational change on labor rights in the Malaysian glove industry. The RGA's focus is on recruitment transformation, collective influence on labor rights management among suppliers, and also the application of aligned due diligence standards, tools and programs. Importantly, purchasers and end users also play a really important role here. Purchasers and end users should have consistent methods in place to ensure they're buying products are free from forced labor. Purchasing products from suppliers who are transparent as to what they're doing to combat modern slavery in the supply chain, and honest about the challenges and the progress still to be made. We welcome further steps by governments to introduce guidelines and regulations to ensure that products entering countries are free from forced labor.
The U.S. Customs and Border Protection and their withhold release orders against some Malaysian glove companies is a really good example of how government involvement in this area has driven significant improvement across the industry. In terms of the improvements we've seen across our own Malaysian supplier base, we wanted to give you a sort of summary of some of the key improvements. We've seen an increase in third-party audits. Over the last two years, Malaysian finished goods suppliers, which represent 99% of Ansell's total finished goods spend in Malaysia, were audited either under a SMETA audit or an FL11 audit. This includes five finished goods suppliers, which represents 40% of our total finished goods spend completing an FL11 audit.
Malaysian suppliers representing 98% of Ansell's total finished goods spend have declared that they've completed their recruitment fee reimbursement program for currently employed migrant workers. Based on these supplier reports, these suppliers have reimbursed approximately $30 million to more than 18,000 migrant workers in Malaysia. In recent years, there has been public scrutiny and audit findings have resulted in legislative reform pre-prescribing minimum standards of housing, which applies to migrant worker hostels. We have seen Ansell suppliers implementing measures to improve conditions in compliance with these local requirements. Audit reports from all Ansell finished goods suppliers audited in the last two years have shown that passports and other legal identification documents have been returned to migrant workers and measures implemented to prevent any reoccurrence. Earlier audits of suppliers had uncovered restrictions on freedom of movement.
These findings had included passport withholding, incorrect or expired work permits, or control of worker movements at hostels and manufacturing plants. Recent audits show a general increase in implementation of corrective action by suppliers and definitely an increase in overall awareness of worker rights. Earlier audits of suppliers also found non-compliance with local laws on overtime and rest days. To date, based on supplier engagement and our recent audits, overtime and rest day non-compliances with local laws are now isolated incidences and suppliers are moving towards longer-term corrective action programs. While we've seen, you know, some really good improvement in the industry and corrective actions are being implemented in the areas that we've just discussed, we still do remain very vigilant and continue to support the ongoing progress and improvement in the glove industry in Malaysia.
I think now I'll pass over to John to talk about our environmental commitments.
Thank you, Catherine, and hello to everyone. I'm gonna be talking about our new commitments on our Scope 1 and Scope 2 footprint. I'm gonna talk about how we are going to reduce our footprint through reducing our dependency on fossil fuels for Scope 1 and Scope 2. How we're leveraging that across our total end-to-end footprint, which is our Scope 3, and the work that we're doing and collaboration we're doing with our customers and our suppliers. Also looking at water and how we are reducing our water usage across our network, and again, how we've made big strides in terms of reducing our waste to landfill and getting to zero waste to landfill target. Next slide, please. We have been monitoring our Scope 1 and Scope 2 targets for many years.
I think we started to have a formal inventory of Scope 1 and Scope 2, which is the direct energy that we use in our factories since 2017. Our footprint is independently verified, and that's currently done by Control Union, and we have been reporting to CDP since 2017. We used to have an intensity target. What does that mean? That is the amount of carbon per dollar of our cost of goods sold, which, you know, is a good indicator and a good way to prioritize activities. You can see we've made progress since we set that target. In line with the Paris Agreement, in line with science-based targeting, we decided to move to an absolute target, the absolute metric tons of carbon dioxide equivalent.
We've through our inventory again in line with the science-based targeting of 4.2% reduction year-on-year, we're now going to set ourselves a target for zero by 2040. What is that gonna mean? It's gonna mean by the end of this decade that we get to 42% reduction in our emissions and then to a minimum of 90% decarbonization, and any residual that we would then use offsets. Again, the majority, the vast majority of any reduction is because of our decarbonization. We're using three strategies to do that. One is reducing our dependence on fossil fuels, which I'll talk about in a second. The second is actually looking at how we.. The products, product design, you'll hear Neil talk about that, our process and that we use, and also how we innovate in terms of our business model.
T hen the third part is how we collaborate with partners, direct and indirect, again, sharing our knowledge and know-how to reduce the impact and also being a strong advocate for change. Next slide, please. In terms of our current energy mix, we protect and one of the fundamentals protection is creating a barrier system, so most of the energy input is thermal energy to create that barrier in our products. Over 80% of the energy we use is used for thermal processes, and then the rest is electricity.
Focusing on those thermal processes, one of our key strategies is the use of biomass. We've been using biomass to generate high pressure hot water since 2009. Over that time, we've been increasing the number of biomasses. We currently have five, and we have plans to add more in the near future to more of our factories. We're also learning how to manage these units in a way that can increase our sustainable energy input. The second thing we've been doing is to work on getting to sustainably sourced materials, and obviously using the standards of FSC and RSB to ultimately get to certified sustainably sourced biomass materials. In India, this is part of the brief as we build our new unit.
In Sri Lanka, we've been working with both biomass providers that we source directly from, but also our colleagues have been part of the technical committees in Sri Lanka to help define what sustainably sourced biomass will mean for Sri Lanka. In Thailand, we're working on trials for sustainably sourced product, as well as again, the brief for any of our new projects to get to that. We will be also the other lever that we've been using is solar, so photovoltaic, and we currently have got nine times more solar power generation than we did when we started this program. We are, and we will be installing Sri Lanka's biggest single installation of photovoltaics anywhere on the island.
We'll be putting in implementations in Sri Lanka, in Malaysia, in Thailand, completion in our next financial year. We've also been, you know, where opportunities arise using renewable and prioritized renewable grid electricity, and this is done for 100% of our operations in Portugal and Lithuania. A major step forward, over 90% of our operations in Malaysia now use renewable grid electricity. We don't forget about the pure efficiency. Our energy management systems and our commitment to that is something that we're doing through our production system to again make sure that we're reducing any energy waste and also fundamentally redesigning our processes, so that we take out the energy component where we can. Next slide, please.
With all that work, I think this is, you know, enables us to have a better conversation with our customers and also with our supply partners, because we're deeply understanding how we can define a robust plan to get to 90, over 90% reduction. Our Scope 3, which is our total emissions over our full end-to-end value chain, 80% is in the end of life, so what happens to our products at the end of life, and then 47% is what we purchase in.
Again, we're working both with customers and with our suppliers to look at how we can get environmentally raw materials, how we can change the production process, how we can share what we are doing and we're going to do again to make significant change across our supply base. We're also looking outwards in terms of the with CDP, and in CDP, as I said, we've had a relationship in reporting since 2017. We're now deepening that with a supply chain model. We're gonna be using the tools to be able to better inventory what's happening with all our suppliers, and that's something that we're doing through this year.
We're also working with leading-edge organizations like the Renewable Thermal Collaborative to understand these new technologies that could bring us different ways to be able to produce the thermal energy, as I just talked about before. Our work, our projects, our know-how that we are generating in our Scope 1 and Scope 2, we're using that to be able to influence and educate and work with. As Catherine said, you know, we have a supplier management framework, and environmental reduction of our supplier Scope 1 and Scope 2 is now formally part of every discussion that we would have together. Great progress on Scope 3.
We're working through to again get to the same level of plan as we have for Scope 1 and Scope 2, and that's our work in progress for this year. Next slide, please. Carbon is one part of our footprint, but also water. We operate across the world in many different locations. We also operate in some areas that are under high water stress. We've been working with the World Resources Institute in our financial year 2021 to understand our footprint, understand where the different classification of water stress, and then having a tiered targeting dependent on where our factories sit to reduce our water load. We've been bringing in water recycling technologies and learning how to do that across our many different production bases.
You can see our big ambitions to half our water footprint or up to a quarter reduction, again, for our smaller users. Again, part of our you know, ability as a manufacturer is to be able to use this across our plants, but also again, to influence across our supply base. Our commitment is to reduce our water withdrawals by 35% in our financial year FY25. The last part of our program is around our waste. Next slide, please. This is the waste that we would generate through our normal production processes. In December 2019, we set ourselves a big ambitious goal that by 2023 we would have zero waste to landfill for all our factories.
As Neil said, we're proud to say that we have made fantastic progress in this. Already, five of our plants are certified by Intertek in terms of we are effectively getting to 99% and above diversion rates. At the end of our financial year, our plants are operationally effectively zero. In July, we had 99% diversion from our factories, and which is up from the 96% over the average of 2022. Look, this is back to the commitment of our colleagues, the employees of Ansell because this has been hundreds and hundreds of ideas about how to reduce waste at source, and then how to recycle and then how to reuse. This is working with partners.
Each of our countries are in different situations. Each of our countries are in different levels of infrastructure. We've been able to work through those problems. We are now working to certify all our factories in this financial year, and this will be a massive achievement, and again, showing our dedication in the day-to-day, 'cause this is by changing day-to-day behaviors and how we have done it within our plants and, again, you know, rolling out that program across all the activities that we do.
Again, what our commitments were, how do we reduce our dependence on fossil fuels, how we're working on extending that across our full Scope 3 work plan, what we've done in terms of water so far and our plan to reduce our water footprint, and again, how we have made massive strides in this big goal of zero waste landfill for all our factories. Part and parcel of this is also looking at our product and innovation. I'm gonna hand back to Neil to talk you through that. Thank you very much.
Thanks, Catherine, and thanks, John. Yes. Let me wrap up with some comments on innovation and product stewardship, and then we'll take your questions. This gives you a schematic of the different elements of product innovation that we are working on in order to try to deliver products to our customers that at the same time as protecting our wearers, do so without any cost to the environment. You'll see that the green are accomplishments, benefits already delivered, and the blue are areas of focus for the future. Firstly, as John highlighted within our Scope 3 footprint, the biggest piece is the environmental footprint of our raw materials. We are now starting to launch new products that include recycled components that previously were not available to market.
11-842, the first of these, and we see significant customer interest as we start to launch this product. Our goal is that 30% of new products will have a sustainability benefit versus the next best equivalent, and we expect to meet that goal from this fiscal year going forward. The single-use category is perhaps the biggest challenge and opportunity for use of fossil-based materials, but we have some very interesting ideas underway and in evaluation and development with raw material partners. The second is around efficient manufacturing processes, and John has covered this in detail.
Our latest manufacturing investment in India will in fact be zero liquid discharge, the first site in Ansell's family, perhaps the first site in the glove industry, to be built to that standard. Sustainable packaging is key. After the product is made, of course, how it gets to the customer is key. We had really nothing on packaging, merely eighteen months ago, and now we have a comprehensive plan with targets over the next five years, to deliver on our sustainable packaging commitment, which is that 100% of packaging materials will be recyclable, reusable or compostable by the end of that time period. That 11-842 product that I mentioned is being launched in a plastic-free packaging set, with only recyclable materials used in the packaging process.
We're making changes across our product footprint to reduce the carbon impact and waste impact of packaging. Consumer use is then key. Now, the simplest and most significant difference we can make, and this has always been central to Ansell's product advantage, is durability. We've always created products that last longer and simply by helping customers understand the benefits of longer-lasting products, that by itself can make a big impact on customers' carbon footprint. But we want to be able to quantify that. We want to be able to give customers data so that they can see the carbon difference between different product portfolio choices. This fits very well within our overall Guardian safety audit methodology, and we're looking to build that out now into also a carbon assessment.
Perhaps the hardest challenge in our industry is the end of life. It's hard because particularly in a healthcare setting, there are very tight controls over contaminated or potentially contaminated products that have to be disposed as hazardous waste. There are ways to capture value from our products after they've been used for protection purposes. We have a series of initiatives underway, waste to energy, converting products post-use into other materials, that can have a second use or even looking at how we recover the raw material or the yarn content and form those again into new products. That's a longer-term initiative, but our teams have got some very exciting ideas on this.
As I mentioned earlier, the product launch today with a significant end-of-life benefit is our food service product, where we see very, very strong interest from some large end-use customers for whom this would be a major change in their own waste impact. A lot of great work in a short period of time. Still early in terms of our impact on the market, but we believe we can bring significant benefits to customers here. We want to do this in a, again, a science-based way. We are staying away from some of the easier claims that perhaps it's possible to make around products, but which in our view, don't really stand up when tested in real-world conditions to actually achieving a comprehensive end-to-end sustainability benefit.
We're taking the harder route, which generally means it takes longer to launch products where we're confident there is a genuine benefit, but that's always the way that Ansell has done things. I know our customers appreciate that approach. A significant change to come and significant opportunity coming from product innovation. Now, let me finally give you a few more details on our packaging pledge. This is around the use phase and then also the disposal phase. You can see the 12 action areas on the bottom right of the slide in which we have made progress.
Removal of zero-use plastic packaging in particular, less material, sustainable configurations, reducing the volume that we ship, moving information where possible from paper form to digital form, and also influencing regulatory bodies to allow that, ensuring that we're using recyclable or compostable packaging materials, and then starting to work with customers on innovative circular solutions. Moving away from disposable packaging to packaging containers that travel back and forth through the supply chain. Those are more concepts at this stage, but quite interesting as they bring other benefits to the supply chain. Packaging will be one of the first areas in which we will be able to fully adopt a carbon-neutral approach, and therefore we are prioritizing it. Now let me conclude with a few comments before we take your questions.
We think about our sustainability goals under these three headings. Ansell protect has always been our mission and of course, that protection mission readily extends from protecting the wearers of our products to protecting, the people involved in Ansell and also our supply chain, to ensure that the products themselves are protective, and have no harmful consequences to their manufacturer. To ensure, as John outlined, that our manufacturing operations and those of our suppliers cause no harm to the environment. I'm convinced by doing this that all stakeholders will benefit, including shareholders, because I believe it creates a meaningful differentiation for us. As I have conversations with customers around the world, the level of interest and also enthusiasm for the work that Ansell is doing is significant, and that creates opportunities for us for the future.
Now let me hand over to Anita, who will manage the Q&A section of this call.
Thanks, Neil. Just a reminder, for those on the telephone and would like to ask a question, please press star one, and then for those on the webcast, please submit any questions that you have through the Q&A box. I'll start off with the questions on the telephone. First off, Gretel Janu from Credit Suisse. Gretel, please go ahead.
Thanks, Anita, and good morning, all. Thanks a lot for the presentation. Just firstly on labor rights. In terms of the three waves of the supplier management framework, I guess what proportion of the suppliers are in Wave One, Two, and Three? What have been the results to date from that first wave? I guess what I'm trying to work out here is how many non-conformities have you seen and how quickly are you anticipating any improvements? Thanks.
Thank you. I think all that detail is in the sustainability report, and now I will test Catherine's ability to remember some of those statistics and help you out with that, Gretel. Catherine, can you respond to some of those questions?
I might have to actually call on John to remind me of the spend, but essentially the wave one is a pretty big part of our supplier spend. I think John, is it around 80%?
Yeah. It's the bulk of our spend-
Yeah
I s already in the Wave One. Yeah.
Yep.
The non-conformances are tracked. I think I remember the non-conformance closeout statistics, which generally we see around 30% of non-conformances closed out by the end of the fiscal year in which the non-conformances were reported. That improves to 70%-80% with 12 months after that. The number of non-conformances reported has come down. That's also partly a feature of a more consolidated supplier base. And certainly, also the high non-conformances have come down over previous years. We can come back to you with some more specifics there, Gretel.
Okay, thanks. Appreciate it. And then just secondly, just in terms of YTY, what is the status of that withhold release order? Because I think at the time, when it was announced, you were quite surprised that they did get that withhold release order. As you've done more work, have you got greater clarity on some of the issues that led to that?
Let me make some summary comments. John, you can add any more detail if I miss any key points. YTY, as we understand it, is still in the process with CBP. The CBP has not reached a determination. Now, a reminder that the CBP acts not on a finding, but on a reasonable concern, and then goes through the process that YTY is going through to establish if there is an actual finding or if not, then the supplier will be released. We know that YTY has conducted very extensive audits to the standards, the high standards that Catherine described earlier. We're not aware, because that's confidential between YTY and the CBP, of the specific audits that have been shared with the CBP.
We're not aware of what information led the CBP to take the original action. YTY has also shared a separate set of audits that they are able to freely share with their suppliers. These indicators, we always thought a very high degree of compliance by YTY to the indicators, of course, labor. We're still at this point, yes, no determination by the CBP. Nothing has come to our attention in this period of WRO that would create a reason for the WRO at the point that WRO was issued. Although we acknowledge that there were issues previously, and this is a year plus previously, that perhaps were the reason that the CBP acted. But that's a speculative comment. You know, I can't give specifics of the discussions between the CBP and YTY. John, have I summarized that correctly or is there anything else to add there?
Yeah. No, very well, Neil. Look, we are in close contact with YTY management who are updating us. As Neil said, a lot of this is still, you know, within discussion, so they're not free to broadly discuss. They're hopeful that they will get a resolution and as I say we're working with them and will work with them as soon as that becomes public.
Thanks. Appreciate those comments. Just one final question. What is the financial cost of achieving the net zero emissions in the short term?
Yes. It's not significant. In many of the initiatives that we've adopted actually are cost reduction initiatives also. Biomass is usually the cheapest source of thermal energy in the countries in which we have adopted it. Our water consumption water-saving initiatives are in many countries cost-saving, in some other countries where water is not priced at commercial rates, then it can be a moderate cost increase to install reverse osmosis systems, but not material. Overall, it's a relatively modest financial P&L impact, and the capital cost is in the $10s of millions. Again, over this time period, not material.
These numbers are moving all the time, so based on current energy, fossil fuel energy cost rates and based on what we are starting to see in terms of countries applying a more appropriate cost to water consumption, then against a more pessimistic, if you like, projection of the cost of these inputs than the financial benefits will increase over that general direction that I gave you.
Great. That's all I had. Thanks very much.
Thanks, Gretel. Next up, we have Vanessa Thomson from Jefferies. Vanessa, please go ahead.
Thanks. Thanks, Anita, and thanks, Neil, Catherine, and John for the call. I wanted to ask about the compostable gloves, and I wondered if they cost more than the comparable non-compostable MICROFLEX gloves?
Yes. You're going, of course, to the question of the green premium and is there one? This product is more expensive, yes, and yet it is still attracting. In fact, this is a market category which we don't participate in with a standard product because it's one of the cheapest types of gloves in existence. Yet, in this case, because it's such a high waste item, the advantage of a compostable product is significant enough to draw in major customer interest. Now, this is still early, so the product is not yet qualified, and it's possible it won't be successful. Let me be clear, I'm not staking our future to this individual product.
It's more an example of where if we do go against a major sustainability benefit that's high on the priority list of our customers, we get significant engagement even when there is a cost premium in this case. Now, I don't think that will be the case for all products, and in many cases what we will be able to do is develop and launch or upgrade existing products with improved sustainability characteristics and not require a premium in order for that to be economic to our customers. It's a variety of different characteristics.
What is clear and what we're in discussion with customers about is how do we enable them to make choices, particularly if there is a cost element, so that they can properly see what are the benefits of one product versus another, including that clean manufacturing component, which is perhaps less easily marketable versus a biodegradable claim, but in our view is actually more significant. We're trying to develop a framework which would allow customers, whether in the healthcare or in the industrial space, to benchmark the sustainability characteristics, both environmental and also social compliance, and allow them to make informed decisions between different product options for the best overall sustainability outcome.
Thank you. Could other MICROFLEX gloves be made compostable, or you said it may not be successful, so I guess that's around an integrity kind of issue, is it, or?
Well, they could, yes. The technology to do so isn't yet available, isn't confirmed. There are options for bio-based raw materials. There are options for components where the glove can be deconstituted, if that's the right term, and then reconstituted into a polymer for reuse in the manufacturing process. But these are at the early stage of the innovation process, but they could be significant if we're successful with any of these innovations, yeah.
Thank you. If you were to sell more compostable, if it was successful, you sell more compostable gloves, would that reduce Scope 3 emissions from the benefit of the end of life?
Yes.
Yeah. Okay. I just have one last question on the forced labor issue. The discussion is all around Malaysia. I understand there's migrant labor used in other locations. Is there a risk of forced labor in other countries?
John, do you want to address that?
Obviously it's a key part of the Malaysian sort of industrial economy, also in Thailand as well. We see in other locations it tends to be people moving within country rather than moving across borders. Our standards, the way we audit, is independent of location. We take a universal approach in terms of how we manage that. You know, wherever we would see risks, we would try to take control and to improve our sort of ability to see and supervision. That's certainly something that we've been looking at within our Thailand operations. From where we sit. This is something that's under constant diligence.
In our big locations it's Thailand is the other. I'm talking about for us and the rest, it's more movement within country. And again, that's something that we are, you know, we check through audits because even movement within country can bring up risk to the individuals and we want to do everything to prevent that.
Thank you. That was all I had. Thanks very much.
Thanks, Vanessa. Now I'll turn over to some of the questions coming from the webcast. We've got a few from Emily Whelan. The first one is the grievance hotline tool available for suppliers too? Is it anonymous? Is it translated into languages in which Ansell sources from?
Catherine, do you want to take that?
Catherine.
At the moment, our grievance hotlines are not available to suppliers, but we are working with the RGA through the Suara Kami hotline, and that the plan there is to roll out these hotlines to supplier members essentially. While not currently available, there is the intent to have suppliers connected to these grievance mechanisms much more easily. Our grievance tools are. They can be anonymous, and they are translated in all languages, native languages of our workers.
Thanks, Catherine. Next one, maybe one for John. How much of your workforce-
Yeah.
Do you include contractors in your safety numbers?
Yeah, sure. As of August, we had just under 5%. Just under, just over 600 people. They are included. We use the United States OSHA reporting guidelines. Anyone under our direct supervision is included in our accident stats. Yeah. About 5% and anyone under our direct controls would be working in our plants would be included.
Yeah. Thanks, John. Next one. Last one from Emily. Is modern slavery training mandatory for all employees?
Do you want me to-
Catherine, do you want to take that?
Sure.
Yeah, in the context of what is mandatory. Yeah.
Yeah. So at the moment, you know, all employees do our global code of conduct training and that really sets the tone for our general standards. In terms of modern slavery training, we definitely have focused more in our operations areas, HR leads, but we continue to roll out training. At the moment, I wouldn't say it's mandatory for all employees. There's definitely other training where modern slavery fits in that all employees have done, like the code of conduct. More specific modern slavery training is definitely a focus for our operations staff. I'm sure we'll expand to further in the organization as we move forward.
Thanks, Catherine. There's 2 similar questions from Terry Tolich and Sue Lyn Stubbs, maybe one for Neil. It relates to has Ansell terminated any suppliers as a result of audits or has Ansell terminated any suppliers under its supplier management framework? Who are they?
Yes, we have. That's the first part of the question. We typically don't go into the specifics of current or former suppliers and the decision framework as we find it more effective to keep those conversations confidential. Yes, we have terminated supply situations where audits were a key factor in the decision to do so.
Thanks, Neil. We've got the next two questions come from Claudia Ma and [Ian McAreeve. They relate to Brightway. You haven't mentioned the Brightway-related litigation. How is Ansell working with Brightway on this? And then how long are you giving Brightway to improve its ethical conduct?
I'll give some general comments and ask Catherine to come in if there's further details to provide. The nature of the litigation is such that we can't work with Brightway. It's a case where, you know, we're now very limited in what we can or can't do, given we are in a litigation situation. We have no further updates on the case to provide beyond that we provided at the time we announced that we have been subject to this lawsuit. We still feel that the legal case does not have merit under the law on which, and the court in which it's been filed, and we're seeking to defend Ansell accordingly.
That also means that because of the lawsuit, there's a limit to what I can say about our independent and ongoing discussions with Brightway. It's difficult, but I won't be able to get into more specific questions around Ansell's relationship with Brightway, unfortunately, at this point.
Okay. Thanks, Neil. Next one for John. Does Ansell engage third parties for the carbon reduction journey?
Yes. In a number of different ways. We are working extensively with our suppliers. We have surveyed our suppliers in terms of what is their Scope 1 and Scope 2 emissions journey. We're also doing that formally through the CDP Supply Chain module, where we'll get a quantitative view, and also for some of our suppliers who are already reporting into CDP. It's part of the top to top discussions. In terms of what are they doing, but also as Neil talked about, the sort of innovation from you know sustainable biomaterials as an example that's bringing through. It's very much part of our integrated approach.
One of the things that we're trying to leverage is what we have done and are going to do on our Scope 1 and Scope 2, because if you think about a Scope 3 supply chain, it's little Scope 1s and Scope 2s all the way through. How do we better sort of influence and work with in terms of developing programs to again reduce that footprint? You know, doing similar discussions with our customers, which Neil referenced in terms of the end of life. Yeah, very active in terms of direct relationships.
Also some of the bodies that we're partnering with, you know, in terms of looking at what is the latest sort of technology for new thermal green methods, you know, hydrogen, et cetera, thermal storage. Again, we're reaching out to expert bodies to get that information. With our suppliers, it's now a core part of every conversation. In the last round of top to tops that I was part of, again, you know, after the modern slavery, this was number two on the agenda in terms of their programs and how we can work and collaborate better together.
Thanks, John. Next one is from Michael Middleton, mainly for Neil. Improvement will increase cost. Will this reduce profits or will selling prices increase?
Yes. This goes to that green premium question that I was addressing a little bit earlier. Improvement doesn't always increase cost, first of all. There are some occasions on which we can achieve a lower carbon or waste impact and reduce cost. Let me take that statement as true, because it is true, probably in the majority of cases. Indeed, there are two ways in which we can ensure that even with a higher cost product portfolio, we actually increase Ansell's profits rather than reduce. The first is by passing on the additional cost to customers. The second is more significant.
I think there is a big share gain opportunity if we are first to market with these solutions, and also have the credibility in giving customers confidence that they're buying a real improvement. That all comes to that grounding of our initiatives, the scientific analysis that we do behind products, the benchmarking that we will be able to provide between a particular portfolio and an alternative portfolio. I'm firmly committed to this journey. Yes, because it's the right thing to do, and because it will be a benefit to the environment, but also because I think it will be a significant source of differentiation and growth for Ansell. This is not a case where investors will have to grin and bear a profit hit from our sustainability goals.
This is where I believe we will actually be able to advance our financial objectives as well as our sustainability objectives. The exact formula and how much a higher price is acceptable, as I said earlier, that's still to be tested and will vary according to market conditions and the product differentiation that we're bringing to market.
Thanks, Neil. The next one comes from Dan Hurren from MST Marquee. Ansell distributors tell us there is a trend among corporate buyers of protective equipment in Australia that they prefer or require suppliers to have businesses with indigenous representation within their supply chain. Is this a meaningful part of the market, and can Ansell work towards addressing that opportunity? Are there similar initiatives from customers in other countries?
Do you want me to-
Let me start, and I'll have Catherine come in with some more details. Yes, I would agree. Remember that Ansell's operations in Australia are fairly limited, so we don't do any manufacture in Australia, which does reduce some of the opportunity for indigenous participation in our supply chain. We have launched some initiatives, including using packaging materials with indigenous designs. But that's of course only a start. As we develop some of these newer technologies, they do actually open the door potentially to greater indigenous involvement in aspects of the supply chain and bringing them to market, and we're evaluating those opportunities as part of our overall Australian go-to market.
I'd say it is a theme in other countries, although I think Australia is ahead of other countries at this point in putting a focus on indigenous participation in the supply chain. I think it's an important trend and of course, it also fits as part of our overall diversity initiative. Catherine, would you add any details to what I said there?
I mean, just in terms of the indigenous program that we have running at the moment, which again is a small one, but it's a start, and this did come about with discussions with our distributors. We have engaged with a not-for-profit with some financial contributions as well as special packaging and some proceeds from those product sales go to this organization as well. The organization was chosen based on distributor election, essentially. We're definitely engaging with our distributors on this topic and doing what we can. Keeping the dialogue open on this, on this subject.
Next one comes from Joanne Beatty. Maybe for John. Has the company made a formal commitment to the Global Platform for Sustainable Natural Rubber?
Yeah. Thanks for the question. No, not yet. We are working with GPSNR and others to understand the framework. Obviously within the global rubber market, we're, you know, very, very small player. We're trying to leverage contacts within some of the major tire companies to understand what they're doing and also with our suppliers. Evaluating, you know, for example, the GPSNR framework on how that would fit in within our own supplier management framework and working, you know, effectiveness of working with our suppliers. Something we're exploring in terms of how do we certify, and that's what we're doing a number of our commodity areas. We will come back whenever we've concluded and ready to make the right commitments.
John. Next one comes from Elise Weatherby. Rising forced labor in the Malaysian rubber glove industry demonstrates a need for improved legislation and policy measures to address these risks. Is Ansell and the Responsible Glove Alliance engaging with the Malaysian government on this issue?
Let me tackle the first part of that statement and then I'll ask John to come in on the second part. Elise, I'd say it's rising attention perhaps to forced labor, but I hope as you listen to the presentation, you would've heard and seen some pretty specific evidence from us that the incidents of forced labor and or the incidents of risk factors arising that give rise to the risk of forced labor has reduced significantly over the last 12 months. If we go back to that slide that Catherine summarized. I'm far from declaring a success and mission accomplished on this. There's a lot of work still to do, but significant progress in the and improvement. 18,000 workers, as Catherine mentioned, have meaningfully better employment conditions today than 12 months or 24 months ago.
We're proud of that progress. That may not be as it appears in other reporting on the issue. You know, we welcome continued attention to this problem because we need all industry participants to adopt similar measures. There's a lot of work still to do. I just wanted to correct that statement of rising forced labor 'cause that's not what we see in our supply chain. We do see rising attention, which is a good thing. To the point of the engagement with the Malaysian government, not directly, yes, the RGA is. John, maybe you could pick that up and provide a little more detail on that.
No, I guess as a fundamental concept in the RGA is engaging with all the stakeholders. RGA have met with the Malaysian government, other interested governments as well. Look, this was at the heart of a series of like-minded companies who wanted to make change. Because obviously the Malaysian government has got to work on policy across all its industrial sectors. I think because of the particular focus, then that's where the RGA came into being and on the back of what was done very, very successfully in the electronics industry. Yes. There is engagement, and there's engagement with both Malaysian government and other governments, and all the stakeholders who are involved in improving in a systematic way the conditions for everyone working in the supply chain. Fundamental part of what RGA is about already has happened and will continue through the program together.
Comes from Saul Hadassin from Barrenjoey. One for Neil. Is there an end target for internalization of third-party manufacturing? If 80% of single-use exam gloves manufactured is outsourced, what will this figure look like in two to three years time?
This is an active area of review currently as we update our strategic plans internally. We see a path forward to 50/50 in this time period. We have not yet committed to the actions that would result in that outcome. We see increased benefits versus even a year ago to moving to a more balanced insourced, outsourced network. Part of that is also around protecting the IP linked to innovation in exam glove manufacturing. It's an active area of review, and we will look to update you once we do have a clearer commitment and communication. We are clear that the Ansell made value proposition is only increasing in our customers' minds. Of course, for the rest of our portfolio, that's always been the case that we are predominantly insourced.
Previously, we felt there was less advantage to insourced manufacture of the less differentiated single use exam gloves. That equation is changing really because of the topics that we've discussed on this call. We'll come back to you with further details when we have them.
Okay. Thanks, Neil. That takes us to the end of the Q&A session. I will now pass over to Neil to provide some closing remarks.
Well, thank you again for your attention, for your interest, for some good questions that have, I hope allowed us to to develop further our strategies and focus with you. To reiterate, I'm proud of the progress we've made in the last 12 months. I think we have made a difference to workers across our supply chain, to workers at Ansell, and we are starting to make a difference in the environmental footprint of our business. Significant work ahead, significant goals that we've committed to, and this will be a central part of my time as CEO of Ansell to ensure continued progress against these objectives. Thank you to Anita for suggesting and arranging our first sustainability webcast, and I hope you found it informative and relevant to your areas of inquiry. That concludes the call for now.