Good morning, and may I start by also taking the opportunity to acknowledge the Wurundjeri Woi Wurrung people of the Kulin Nation, the traditional custodians of the land we are meeting on, and pay my respects to their elders, past, present and emerging. I would also like to extend this respect to all Aboriginal and Torres Strait Islander people and recognize their rich cultures and continuing connection to land and water. Ladies and gentlemen, my name is James Graham and as the Chairman of Coles Group Ltd. It's my great pleasure to welcome you to this annual general meeting. Thank you to those who are attending in person, and thank you to all shareholders, proxy holders and guests who are attending online via the Lumi platform.
As a courtesy to everyone, can I ask those physically present to please ensure your mobile phones and other electronic devices are silenced until the conclusion of the meeting? In the event of an emergency, an evacuation will be announced over the loudspeaker with further instructions from the Melbourne Park staff. As we have a quorum, I now declare the meeting open. I would like to start our proceedings by introducing my fellow board colleagues. Joining me here in Melbourne, starting from my far right, are Wendy Stops, Scott Price, Abi Cleland, Jacqueline Chow, standing for re-election at today's meeting, Richard Freudenstein. Richard is the Chairman of our People and Culture Committee and he also will be standing for re-election today. On my left, Daniella Pereira, our Group Company Secretary. Our Chief Executive, Leah Weckert. Andy Penn, who is the Chairman of our Audit and Risk Committee.
Andy will also be standing for election at today's meeting, Peter Allen, who will be standing for election today as an incoming new director, Jacqueline Chow and Terry Bowen. I note that the members of the Coles Executive leadership team are also here with us in the front row and will be available to meet with shareholders at the conclusion of the meeting. For those here physically present, I'm also pleased that Mr. David Thurin, representing the company's auditor, Ernst & Young, is also present with us. Before we move to the formalities, I would like to explain the meeting procedures for today's hybrid meeting as outlined in our notice of meeting. Shareholders were able to cast a direct vote or appoint a proxy before the meeting. Shareholders were also able to submit questions before the meeting and we thank those shareholders who have done so.
We have sought to address the common themes from these questions in the formal addresses which will be made shortly. Voting on all resolutions will be conducted by way of a poll and I now declare the poll open. The poll will remain open until the conclusion of the meeting. Tim Hughan of Computershare will act as the Returning Officer for the poll and will oversee the counting of the votes. The final results will be made available after the meeting to the ASX and will be displayed on our website. We will now play a short video outlining some further procedural matters relating to asking questions and voting during today's meeting.
Good morning. This video provides an explanation of how to vote and the procedures around asking a question. Shareholders, proxy holders, attorneys or corporate representatives may vote and submit a question during today's meeting, either in person or using the Lumi Online meeting platform. The Chairman will address questions relating to a particular item of business during discussion on that item. If you are attending online, we encourage you to submit written questions at any time from now for those attending the meeting in person. As you registered today, you were issued with a voting handset or a yellow or white card. Holders of a handset may speak and vote. Holders of yellow cards may speak but may not vote. If you hold a white card, you are a visitor and are welcome to attend, but you are not entitled to speak or vote.
You will see there are various microphones located in the room. Once we come to question time, if you would like to ask a question, please make your way to the closest microphone, give your name to the attendant and show your handset or yellow admission card. If you are unable to make your way to a microphone, please raise your hand and a microphone will be brought to you as a courtesy to all shareholders. Please also state your affiliation. If you are not attending today in your personal capacity, your name will be announced to the meeting. Shareholders, proxy holders, attorneys or corporate representatives may also ask both written and live audio questions through the Lumi online meeting platform. Detailed instructions on how to ask questions are set out in the online meeting guide available on Coles Annual General Meeting webpage.
A link to this guide is also available if you click on the Documents tab at the left hand side of your screen. If you are using a desktop or laptop device or at the bottom of your screen on a mobile device to ask a written question, click on the messaging icon which can also be found on the left hand side of your screen for desktop or laptop user or at the bottom of your screen for mobile users, type your question in the text box and click Send to submit your question. A copy of your submitted questions can be viewed by selecting My Messages.
If you would like to ask a live audio question, we recommend you wait until the relevant agenda item is being discussed, as you will only be able to hear and not see the meeting. While you are queuing to speak, click on the Request to Speak button at the top right corner of the broadcast window. This will pause the broadcast, enter your name and the topic of your question and click Submit Request. You will then be taken to a new page where you are asked to confirm if you are ready to join the live audio facility. Click Join Queue and follow the instructions to test your microphone. You will then hear the meeting broadcast. When it is your turn to speak, the moderator will introduce you to the meeting and a beep will indicate your microphone is live.
All questions at the meeting today must relate to an item of business under consideration and to the company as a whole. In order to enable all shareholders a reasonable opportunity to be heard, we ask that shareholders restrict themselves to no more than two questions or comments initially. If we receive a number of online questions that are similar, we may answer those questions collectively. If the questions are too lengthy, we may need to summarise them in the interest of time. If your question is of a personal nature relating to your shopping experience at any Coles Group business and you are here with us today, please visit the customer booth located in the foyer where the attendants will be delighted to assist you. Our executive leadership team will also be available in the foyer following the meeting to answer any questions you may have of them.
For any questions relating to your personal shareholdings, please make your way to a Computershare attendant who will be delighted to assist you with any questions you may have. If you are participating online, please contact our Customer Care number or the Computershare registry number shown on the screen. Moving on to voting for those attending the meeting in person and are eligible to vote, you would have been given a handset at registration. This handset should have at its top a white plastic card inserted. If the card is not inserted into your handset, please do so now. Your name should also be displayed across the top of the screen of your handset and you should see the resolutions displayed on the handset screen. To vote, use the trackball in the middle of the handset to navigate to a resolution.
Press the trackball to select the resolution you would like to vote on. You will then see the full text of the resolution. Press the green square button to view the voting options, then cast your vote by pressing 1, 2 or 3. You can change your selection by highlighting the resolution and pressing 1, 2 or 3. You can press the green square button to move on to the next resolution or press the red triangle to return to the full list of resolutions. The final selection on your device at the close of polling will be counted as your vote. Please ensure that you return the handset to one of the assistants stationed near the exit when you leave today's meeting.
For shareholders and proxy holders attending the meeting online via the Lumi platform, a voting icon will appear on the left hand side of your screen if you're using a desktop or laptop device or at the bottom of your screen if you are using a mobile device. Click on the voting icon to display each proposed resolution. To submit your vote on each proposed resolution, select either for, against or abstain. The selected option will change color. There is no Submit or Send button. Your selection is automatically recorded. You can change your vote at any time during the meeting until the Chairman closes the poll. If you encounter any technical issues with the Lumi platform, please refer to the online meeting guide available on the Coles Annual General Meeting webpage or on the Lumi platform via the Documents tab.
Alternatively, please call Lumi using the phone number shown on the Home tab. Computershare's number and the Coles Customer Care number is also available on this tab. Thank you.
I trust you found that useful. It's a little bit procedural, but hopefully helpful. If anyone requires assistance with the use of your handset or have any questions regarding the procedures for voting or ask any questions at the meeting, please raise your hand now and one of the attendants will be more than happy to assist you. I will now move to the formal part of the meeting. This last financial year has been a year of considerable progress for Coles across all strategic pillars of the business. Our focus has been on delivering value for customers with improved execution both in stores and online. This has been underpinned by strong supplier partnerships, improving availability and quality, supported by our investment in new technology and programs to reduce costs and improve efficiency.
The external environment has, however, been challenging, marked by cost of living pressures on customers and rising input costs on suppliers. These have been driven by high rates of inflation in prior periods, disrupted supply chains and the volatility of seasonal and commodity prices. The impacts of these external factors on supermarkets shelf prices have not been restricted to Australia. As noted in the interim report of the Australian Competition and Consumer Commission's inquiry into supermarkets, the price increase for a basket of food and non-alcoholic beverages in Australia over the last five years from March 2019 until June 2024 was 24%.
This increase was, however, lower than that experienced in each of New Zealand, Canada, the United Kingdom and the United States and compares with an average price increase for OECD countries of 39% over the same period. Coles Group's total sales revenue for the five years to June 2024 increased by 14% and our profit margin as measured by the after tax profit as a percentage of group sales revenue remained essentially constant at 2.6% throughout. That is, on average, for every dollar of sales throughout the period, our profit was AUD 2.6 which was either distributed as dividends to our more than 420,000 direct shareholders and millions more indirectly through their superannuation funds or reinvested in the business to more efficiently meet customer expectations.
In this environment, our focus has been to use the benefits of our improved operating performance to support investments in shelf value and to provide customers with wider product choices and more convenient purchasing options to addressing changing preferences and shopping patterns. With more than 1,800 retail outlets serving over 14 million customers a week across the whole of Australia, supported by the everyday commitment of our 115,000 team members, we are well aware of the economic pressures on customers and we continually seek to find ways to respond and build customer trust. In this context it has been disappointing to see how cost of living issues have been politicized and targeted at supermarket operations. This is in sharp contrast to the level of engagement and support of supermarkets by governments and regulators during the COVID lockdown years.
That experience and the results of working together in the face of floods, bushfires and other natural disasters have shown the benefits of constructive engagement between business and governments which is hopefully the template for the future when it comes to addressing the impacts of complex issues like inflation. Turning now to our financial results and business operations in this our 110th year since our establishment as an Australian retailer when our first store was opened in Smith Street, Collingwood, it is pleasing to note that the group's sales revenue from continuing operations increased by 5.7% and our after tax profit by 2.1% measured on a 52 week basis. As a result, and in line with our dividend payment policy, 81.1% of our profit for the year was paid to shareholders as fully franked dividends totaling AUD 0.68 per share, a 3% increase on the prior period.
During the year we were able to invest AUD 1.4 billion in new stores, store renewals, growth efficiency and maintenance initiatives while maintaining our balance sheet strength, so important in underpinning our future operations. Continuing to reinvest in our business is an essential part of our being able to improve operating efficiencies, meet customer needs and build long-term shareholder value. Towards the end of the 2024 financial year and early into this new year we have pleasingly seen the progressive commencement and ramp up of our second automated distribution center or ADC located at Kemps Creek in Sydney as well as our two online customer fulfillment centers in Melbourne and Sydney. Each of these has been built with world-leading technology and is the result of investment decisions taken five years earlier in 2019.
These long-term investments of scale will deliver both operational and customer benefits and in lowering costs, increasing team member safety, and improving product availability. In each of these three major new facilities we have constructed large rooftop solar facilities which will in aggregate add installed capacity of 7.5 MW to our network. We are encouraged by the early performance and impact of each of these transformational investments and two weeks ago announced our decision to proceed with a third ADC based in Truganina to serve our stores in Victoria and Tasmania, continuing the exclusive partnership we enjoy with German technology provider. The estimated capital investment of this new facility over a five-year period is AUD 880 million. At the center of our ambition to build trust and create long-term shareholder value is sustainability.
Since becoming a listed public company in 2018, we have focused upon assessing the impact directly and indirectly of our business operations on the environment and the community. As a result, we have set and disclosed targets to lower emissions, reduce waste, remove unnecessary packaging, enhance our ethical sourcing compliance and are developing guidelines and targets in relation to the wider impacts of our business on nature. During the year we saw further progress in reducing our Scope 1 and Scope 2 Emissions which are now 34.5% below our 2020 baseline and on track to achieve a 75% reduction by the end of the 2030 financial year. In August 2023 we announced our Scope 3 supplier engagement target which is that by the end of financial year 2027, 75% of suppliers by spend will have science-based emissions reduction targets.
This is important, recognising that these indirect emissions which occur in our supply chain represent some 90% of our total emissions profile and as at the end of June this last financial year, 35.5% of our suppliers have Scope 1 and Scope 2 science-based emissions reduction targets. We've also continued to make progress in diverting waste from landfill with an increase in diversion of 2.7% to 86.7% by year end and in our own brand packaging across our supermarkets and liquor businesses, we increase the recyclable packaging by 3.6% to 87.4%, albeit this level remains well below our target of 100% by the end of the current financial year. Before moving to my concluding remarks, I would like to make brief mention of the current regulatory reviews of and ACCC litigation.
Over the last 12 months, Coles has participated in nine separate federal and state government reviews and ACCC review into some aspect of supermarket operations. In all cases we have provided information to assist those undertaking the review in relation to the Dr. Emerson Food and Grocery Code of Conduct review. As a foundation participant in the voluntary Code, we have supported the recommendation that the code be made mandatory and will welcome its extension to other large companies that retail groceries. As regards the ACCC Supermarkets inquiry, we have provided extensive operational information and have made certain proposals where we felt in some cases industry-wide standards may enhance transparency and simplify communication. We have also provided the ACCC with detailed information regarding the intensity of competition in the Australian food and grocery market as the presence of more recent international participants increasingly expand their physical and online penetration.
We will continue to assist this inquiry through to its scheduled completion in February 2025. In this context, I also note the commencement of proceedings by the ACCC in the Federal Court of Australia in September 2024 alleging that we misled consumers about price discounts which it alleges were illusory. The matters raised by the ACCC are related to a period of significant inflation leading to sharply increasing levels of supplier cost price increases. The subsequent discounts offered to customers on these items were the result of promotional investment by the supplier and Coles which delivered a reduction in the shelf price at a time when households were under significant cost of living pressure. We are very conscious of the significance of these allegations as they go to the heart of customer trust.
We take compliance with Australian consumer laws seriously and it is always our aim to ensure discounts and specials are genuine. As previously advised, we are defending these allegations and we will continue to keep shareholders informed. Pleasingly, the 2024 financial year saw material progress in reducing safety-related incidents with a further 8.8% reduction in the Total Recordable Injury Frequency Rate. We also achieved a further increase in our women in leadership across the group to 42.5% and a 0.1% increase to 3.6% of team members who identify as Aboriginal or Torres Strait Islander. These results further reflect the success of our management team in constantly seeking ways to improve our operating performance in every aspect of our business.
This is only possible because of the capability and leadership of our senior management and in that regard I particularly acknowledge our Chief Executive Leah Weckert in setting the tone from the top with great distinction. I also pay tribute to those team members who every day are the face of Coles, delivering for customers across our entire store, distribution and support center network. In this year, which has been marked by positive progress on so many fronts, but with considerable external challenge, I extend my special thanks to my fellow board members for their unwavering support and their participation throughout the year. And finally to you, our shareholders, I convey our thanks for your trust and support of Coles Group.
I would now like to invite our CEO Leah Weckert to address the meeting and as she does so to show a short video on our community engagement during the year.
2024 has been another big year for supporting communities across Australia. In the past financial year we're proud to have provided AUD 38.5 million in community support, improving health outcomes and building resilience in our communities. From raising funds for children's home hospitals to participating in fun runs to support Redkite and staging Ice Bucket challenges for FightMND, our team members have been the driving force behind our success. We've also worked hard to reduce food waste, partnering with SecondBite and Foodbank to ensure that surplus food reaches the plates of those who need it most. FY 2024, our stores and distribution centres donated the equivalent of 39.8 million meals to our food rescue partners. We are proud of our fundraising efforts this year together with our customers, team members and suppliers.
Coles raised AUD 9.5 million for FightMND to help find a cure for motor neuron disease, AUD 7 million for SecondBite to help feed Aussies in need, AUD 2.4 million for Redkite to support families facing childhood cancer and AUD 1.9 million was raised for Hospitals United for Sick Kids. At Coles, we have an opportunity to inspire our youngest community members to stay fit and healthy. Last financial year our stores donated over one million bananas to Little Athletics centres across Australia to help fuel our next generation of Aussie athletes. We also provided AUD 150,000 in sports equipment grants to 40 grassroots Little Athletics centres through the Coles Little Athletics Community Fund.
While over 50,000 children had the chance to learn footy stuff, skills and healthy eating through the Coles Healthy Kicks program, we continued our support of AFL legend Eddie Betts and his foundation educating indigenous kids around the importance of healthy eating. While our work with the Essendon Football Club provides opportunities for talented female footballers from the Tiwi Islands. In April we announced a new partnership as the naming rights partner for Football Australia's MiniRoos. Coles will be helping introduce football and healthy habits to more than 260,000 children each year. Finally, for the fourth consecutive year, we were recognized as one of Australia's top corporate givers, highlighting our genuine commitment to communities across Australia. Thank you James, and welcome to everyone joining us for our AGM this year.
Over the past 12 months our dedicated team members have been working hard to advance our purpose of helping Australians eat and live better every day. In doing so, this year has certainly not been without its challenges as the Chairman has already touched on, but we have continued to focus on delivering great value and exceptional service to our customers every day and that will never change. So I would like to take this opportunity up front to thank our more than 115,000 team members for their commitment to our customers this year. Thank you for exemplifying our Coles values. Care for each other, have courage to make the right choices, deliver for our customers and create for the future in every act of customer service, be it large or small. I will now move on to our operational highlights.
We know that the current cost of living environment is tough for Australians, particularly as increasing household costs make it more difficult to balance the household budget. This means our commitment to delivering value has never been more important and with this in mind, we have made significant investments in our value offering over the past 12 months. Through our value campaigns, our weekly specials, our exclusive to Coles and exclusive liquor brand portfolios, as well as our loyalty programs and collectible campaigns, we have been able to help customers fit more into their weekly budget. Flybuys continues to be a favorite among Australian households and remains key to helping us deliver added value to our customers. In FY 2024, Flybuys active members increased by 5.3% to 9.5 million and more than 2 million members redeemed points for the first time at Coles, demonstrating the program's growing impact.
Our exclusive to Coles range is another way customers have continued to seek out value. We now have around 6,000 products ranging from affordable basics through to unique and indulgent premium items to help customers more easily find key value owned brand items. FY 2024 we launched the Coles Simply brand with bright yellow redesigned packaging. With 111 products in the range, Coles Simply offers great value, ensuring customers can find quality items at low prices within the category. And for those looking for a more premium offering within the own brand stable, our Coles Finest range offers premium options across categories such as meat, bread, ready meals and pantry staples like vinegar and maple syrup. FY 2024, Coles Finest sales grew by 20%, highlighting the demand for ingredients to help customers create restaurant quality meals. At home, customers are increasingly shopping both in store and online.
Our investments in our E-commerce offering mean shopping online is easier and more convenient than ever. Upgraded app and web features, greater availability, reduced click and collect wait times and increased personalization have all resulted in a 22% improvement in online NPS. This has supported strong sales growth in our online channel. At the end FY 2024 we reported a supermarkets' e-commerce sales growth of 30.1% for the financial year and in Q1 this year we reported supermarkets E-commerce sales growth of 22.4%. We continue to grow our Coles360 retail media business including through the rollout of in-store screens and new measurement tools for advertisers. This will be an important growth adjacency for Coles in the future. Our team's dedication and commitment to the communities they serve are the backbone of our success.
FY 2024 we provided AUD 38.5 million in community support and donated the equivalent of almost 40 million meals to our food rescue partners SecondBite and Foodbank. We also awarded AUD 3.7 million through our Coles Nurture Fund to help Australian producers innovate and grow. We remain committed to investing in community support and this year we continue to support Little Athletics centers across Australia. In addition to the Coles Healthy Kicks program, we also announced a new partnership with Football Australia's MiniRoos, the official junior grassroots program for soccer in Australia. Within Coles, we were pleased to achieve our highest ever engagement score in our mySay survey placing Coles in the top quartile of Australian companies with a 3 percentage point improvement versus the prior year.
The physical and psychological safety of our team is a high priority, and as the Chairman has already mentioned, we were pleased to report an improved injury frequency rate FY 2024, but we also focused on mental health initiatives, conducting training across the business and celebrating R U OK? Day. We are, however, increasingly concerned by the rising trend of threatening situations directed towards our frontline team over the past 12-18 months. We are working with industry to address this worrying trend happening across many retailers while continuing to roll out de-escalation training to our team members to help reduce the number and severity of incidents. Moving now to our financial results FY 2024, we delivered group sales revenue growth from continuing operations of 5.7% on a normalized basis.
This was supported by positive customer response to our value campaigns and the successful execution of key events including Christmas and Easter. EBITDA and EBIT growth on a normalized LFL basis from continuing operations was 5% and 5.7% respectively. Our Simplify and Save to Invest program continued to drive efficiencies with the primary purpose of offsetting inflationary cost pressures and enabling investment back into the business. We realized efficiencies of AUD 238 million FY 2024 and are on track to deliver in excess of AUD 1 billion in benefits over four years. Pleasingly for customers, Supermarkets inflation continued to moderate with inflation FY 2024 at 2.5%, a significant reduction on the 6.7% we saw in FY 2023. Moving on to FY 2025, our Q1 sales growth was 3.5% in supermarkets while liquor sales remained flat.
Total supermarkets price inflation remained steady at 1.5% in the first quarter, and when we exclude tobacco, inflation moderated to just 1%. Now hearing carols on Coles Radio is a sure-fire sign that Christmas is only a few short weeks away, and with more customers telling us that they will be celebrating with loved ones at home this year, we are excited to be a part of many Christmas celebrations. We have sourced more than 400 own-brand products and exclusive specialty drinks to make Christmas easy, delicious, and affordable. As we look forward to the year ahead, we will continue to deliver in line with our purpose with our two new customer fulfillment centers and our second automated distribution center now in operation.
We look forward to progressing with the planning of our recently announced Victorian Automated Distribution Centre which once completed will service Victoria and Tasmania as well as integrating into our existing supply chain in parts of South Australia and Western Australia. We also remain focused on operational execution and continuing to improve availability and loss. In closing, I would like to extend my thanks to James and the Coles Board for their support and guidance to our customers. Thank you for your loyalty and to our 115,000 team members. Thank you again for your commitment and dedication. And finally to our more than 420,000 shareholders, your continued support is invaluable. We wish you all a wonderful and safe Christmas and New Year. And before handing back to James, I'd like to share two videos with you.
The first highlights our new customer Fulfillment Centers while the second showcases some of our suppliers and the beautiful fresh produce and products that we're offering at Coles this festive season. Thank you.
Welcome to one of our new customer fulfillment centers or CFCs. Our Sydney and Melbourne sites have a footprint of more than 87,000 square meters each and can hold three million units of stock while having the ability to process more than 10,000 customer orders per day. When running at full capacity, these CFCs use cutting edge technology utilizing artifacts, artificial intelligence, advanced robotics and automation to transform the way Coles online. My grandmother used to do some traditional recipes and one was a dessert called Zuppa Inglese. It's a little bit like a trifle. The variation I've done is add mango into each layer on top of the sponge with that luscious mango.
People rave about it.
Our Coles brand product developers worked hard.
To create products that will be the.
Heroes of your Christmas table.
Our main consideration when developing a product is our customer. We've done all the work, we've created these beautiful products for you to enjoy like the crackling ham roast so you can relax at Christmas.
Delicious food is at the heart of Australian Christmas celebrations, which is why we work with our partners to make sure.
It's food you can be proud to serve.
When Aussies buy banana prawns at Coles, they can expect one of the best prawns in quality, texture, taste. A wild caught banana prawn means prawns caught wild at sea.
We are the biggest prawn fishery in.
Australia to be certified under Marine Stewardship Council guidelines. It's a lot of work to get these prawns from boat to plate, so now it's over to you to use our fresh produce and Coles brand products to make your Christmas table one to remember.
Merry Christmas everyone. I hope that gave everyone some good ideas. I now turn to the formal agenda of business today and the Notice of Meeting sets out the information regarding the items for consideration. At today's meeting, I will introduce each item of business separately and then invite questions and comments for that item. In the interest of all participants, please ensure that your questions are relevant to the resolution being considered and are also relevant to all shareholders at each instance. To best manage the interface between questions in the room and via the Lumi platform in writing and verbally, I will first ask for questions from the floor. I will then address questions received via the Lumi platform, first addressing those in writing and then those from the audio facility.
Sally Fielke, our Group Corporate and Indigenous Affairs Officer, will introduce the questions received via the Lumi platform. If you are attending online, we encourage you to submit your written questions at any time from now. The Notice of Meeting set out information regarding the items for consideration at today's meeting, of which items 2 to 7 require a shareholder vote. Your Board supports items 2 to 6 and recommends that shareholders vote in favor of these resolutions. The Board does not support items 7.1 to 7.3 and recommends that shareholders vote against these resolutions. Following discussions on each item of business, details of the proxies and direct votes received for each item will be shown on your screen and handset. I will then ask shareholders and proxy holders to vote on the item, noting that you may have already done so.
As set out in the notice of meeting, I intend to vote all available undirected proxies held by me as the Chairman of the meeting in favour of items 2 to 6 and against items 7.1 to 7.3. If you leave the meeting early, please ensure you have submitted your votes. Voting on all resolutions can be done in advance via your handset or online at any time until the poll is closed immediately before the conclusion of the meeting. I now turn to the first item of business, which is to receive and consider the financial report of the company and its controlled entities and the reports of the directors and auditor for the year ended 30 June 2024. These reports were included in the annual report and are published on our website.
While there is no requirement to put this item to a vote, this is an opportunity for shareholders to ask questions relating to the company's financial report and the reports of the directors and the auditor. Mr. David Thurin, representing the company's auditor, Ernst & Young, is also available to answer questions in connection with the audit. I would now like to invite questions or comments from shareholders regarding the financial report of the company and the reports of the directors and the auditor. The text of this first item of business is now shown on the screen and I would like to invite any questions from the room regarding the financial reports of the company. Thank you very much.
Number three, Mr. Chairman, I would like to introduce shareholder Ms. Jolene George.
Good morning to the Chair, to the Board and to the CEO. Coles was recently spotlighted extensively in media coverage from a report uncovering deforestation linked to beef production in Australia and was highlighted as an industry outlier for not having set a new deforestation target as Woolworths and Aldi have done. Given the reasonable risk that there's beef linked to deforestation in Coles's supply chain, how are you managing that risk to the business? And would you like me to ask my follow up or to wait so you could address them at the same time? Go ahead.
Yep. No, no, no. I have your second question, Ms. George.
Thank you very much. Can Coles say for certain that it has not sold beef from properties linked to deforestation and if not what steps is business taking to have that information for the future? Thank you.
Thank you very much, Ms. George. I'm extremely conscious of the significance of the item that you raise. Let me just, if I may, provide a bit of context. In 2024, we actually refreshed our whole sustainability strategy and we have really tried to say what are the four areas that are most impactful that we should be focusing upon when we look across the breadth of our very substantial business. With those four areas we have classified as energy and emissions, waste, packaging, and sourcing and farming. Now, it happens that all of these areas to some extent come together and intersect with each other in the area of sourcing and farming. We are extremely concerned about the impact of our business on nature more broadly, and we're also concerned, conscious of the need to ensure animal welfare.
So we've been very much alert to the issue you're raising about deforestation and the potential impact of that on nature across the business. As far as deforestation is concerned, there are probably five main commodity areas that our business intersects with that are relevant and they are timber, pulp and paper, palm oil, cocoa, soy and beef. In relation to timber, pulp and paper, there is a fairly well established legislative framework that we are engaged with as far as palm oil is concerned. We've been committed for many, many years to the Roundtable on Sustainable Palm Oil and I think we are well advanced in meeting our commitments in that area. There is a framework in cocoa, and as far as cocoa appearing in our food items, again, I think we're well advanced in pursuing the framework that is set for cocoa on soy.
Soy used in our food and drinks area is extremely closely regulated in terms of any impact on deforestation, because the soy for those tends to come from areas other than South America. The South American source of soy is, however, used for livestock feed, and for that livestock feed is for aquaculture and for the beef industry. And we are working on better mapping of the South American suppliers to try and address that issue. As regards beef, we've very much recognized the importance of this area in terms of nature and the cyclical way in which all of the impacts of nature and climate change and deforestation and land care all come together. So you may have seen, Ms.
George, that in the middle of this year we published on our website a status report on our progress in protecting forests, because we are very clearly aligned to the importance of this issue and we are working to make sure that we have a framework which is well and truly accepted in terms of the way forward. We are developing a nature roadmap at the present time and we are engaging with a wide cross section of stakeholders, including governments, those involved in the beef industry, not-for-profit NGOs, non-government organisations. We are developing a framework which we think is important because there are issues in the area of deforestation where there is some ambiguity in terms of the definition of how that is defined in Australia compared with some of the international standards that have been developed and those are being worked out.
There are issues regarding traceability, which is also an important factor in terms of being able to have an appropriate identification of what are the targets, what are the measurements, and how then we account for it. So where we're at the present time is that we're actively involved in developing those arrangements. And I would hope that you would have been able to assess the way in which we have approached our worldwide sustainability charter is that when we make a commitment, we make a commitment. Having done a great deal of assessment of what are the issues, what are the risks, and have put in place a set of arrangements where we feel that we know how we can go about progressively meeting those targets. So we are working actively on is an extremely important area.
We have teams of people who are engaged in assessing the whole scope of this area. As our nature roadmap is advanced, we will be able to provide further information. In relation to the second part of your second question, we did do some satellite imaging some years ago and were able to reference back from that work against I think a 2020 baseline that the beef that we had sourced had not been the subject of sourcing from areas that were subject to deforestation risks. But there is a lot more taking place. I'm glad you've raised it because it is an important issue and we're very clearly aware of it. We will make sure that like all our other commitments in sustainability, it gets appropriate attention.
Thank you.
Yes, microphone one.
Mr. Chairman, I would like to introduce shareholder Mr. Stewart Byrne from the Australian Shareholders' Association.
Morning, Mr. Byrne. Good morning, Mr. Chairman. Thank you for the ability to ask you some questions. We have two on behalf of the Australian Shareholders' Association. The first is that Coles Liquor has been a perennial underperformer. Can you please advise what steps are being taken to remedy its performance? And would you like the second question now or later? Why don't you let me have it now, Mr. Byrne? Coles shareholders like stability. Recently Coles has been involved in a number of controversial issues as you outlined in your talk today. That is the Senate, the ACCC shrinkflation, etc. Can you please advise what steps the Board are taking to minimize the involvement of Coles in such issues and what steps have been taken to mitigate any adverse findings that any of these organizations will come with for Coles? Well, thank you, Mr. Byrne.
Let me first address the issues you raise about the status of the Coles Liquor business. Coles Liquor is in fact in a very strategically interesting position for us as a major participant in the supermarkets and liquor business in that we have the benefit of the integration of being able to serve customers in both the liquor market and the food and grocery market, and that is something which we believe is a template that others have followed in the international market very successfully, and we see that strategically that does actually provide a point of commercial significance for our operation. In terms of the more recent trading to which I think you're referring, everyone is aware of the cost of living pressures that we've seen within the community as a whole over the last several years and I referred to some of those in my opening remarks.
The issue in liquor is that I think it has provided optionality for customers in terms of at what price point they can participate in the market. There has been an ability perhaps to see an engagement with still the liquor purchases but at a lower dollar value. That obviously has an impact upon our reported sales results. We have, however, as you would have seen in our recent announcement to the Stock Exchange for the first quarter of the current financial year, seen a sense of a stable sales position in our liquor. I think it's important that you understand that part of the issue also goes to the quality of the underlying business there.
We have actually over the last 18 months or so reduced some of what might have been higher volume bulk items that were actually not necessarily achieving our ambition of long-term value for shareholders, and we've migrated those out of the business and increased our exclusive liquor business lines inside Coles Liquor. That has been quite an encouraging move in terms of the potential runway for the future, and you might also have noticed that only I think in the last month we are running a pilot of rebranding our liquor business using the Liquorland brand as the dominant participant in our network in the Australian market and migrating some of the other brand names to have a single brand umbrella.
We see this as being appropriate and attractive to customers and it may provide further enhanced efficiency in the way we can operate our business and ensure that as we deliver for customers, we're delivering quality.
Forwards. And how exactly are you going to do that?
I think it comes back to what I said earlier in relation to Ms. George's question, that we have reset our whole sustainability framework. We've tried to address those issues, areas which we think are most impactful in terms of how we intersect with all other participants on the landscape or seascape. And in that regard we're focusing on energy and emissions, waste packaging and sourcing and farming. I'm not in a position to provide details today of each and every one of those elements, but what I am in a position to tell you is that this is a matter which is the subject of a great deal of focus at the present time and we will be progressively being able to provide more insight in terms of those areas. I've tried to touch on the commodity risks that we're seeing as high risk, commodity risk issues.
We are concerned about animal husbandry, as I mentioned, it's part of our sourcing and farming and that goes to animal welfare, and we have an extensive engagement in the visibility of how animals are treated that are in any way impacted by our supply chain, so it's a very wide charter, as I'm sure you're aware of. And we will be reporting and updating all stakeholders and providing further information and more sustainability updates as we move forward. If I look back in terms of, I've been lucky enough to be involved with Coles Group since it was demerged in 2018, and the clarity of risk assessment, the focus on addressing issues, the resources that are being brought to bear to ensure that we are meeting our commitments is significantly higher than it has ever been.
I'm very optimistic about our being as a large Australian company, a party that others will look up to and be able to see standards that are set that can be benchmarked by others who perhaps unfortunately don't have the scale and the opportunity that we have.
Thank you.
Microphone number one.
Mr. Chairman, I would like to introduce shareholder Ms. Hannah Schuch.
Good morning, Chair, and thank you for the opportunity to ask the question. I come from Queensland. I'm not sure if there's any other Queenslanders in the room, but unfortunately every year in the sunny state, 300 hectares of forest and bushland is bulldozed, and we've run the analysis that shows that 65% of that over the last five years was to make way for beef pastures. Coles is one of the biggest purchases of Australian fresh beef in the country. Woolworths and Aldi have set science based targets to go deforestation free, so signaling that they are recognizing deforestation as not a potential risk, as you've said, Chair, but a material risk in their supply chains. I acknowledge your roadmap that's being developed.
But I'd like to know what sets Coles apart from Woolworths and Aldi, seeing as though they have aligned their deforestation free targets with credible, verifiable, international best practice deforestation free targets. Thank you.
Thanks very much, Ms. Schuch. I'm not in a position to talk about how other participants in our industry set their operating model. What I can tell you about is how we Coles set our model. And we are of course alert and aware of the wider community interest in this area. And as I was trying to make the point earlier, we are recognizing the importance of this area. We're engaging with every stakeholder who we feel can give further clarity and add value to how we set the targets, how we frame the opportunity and how we make sure that we understand what are the steps that will deliver the best outcomes.
I acknowledge that others have made different announcements, but I can only tell you that what we're doing we believe will lead to the best long-term foundation for the Coles Group Limited business as we intersect with the whole community and the broader impacts on nature. I'm not able to make any comment about the Queensland 300 hectares, I'm afraid.
Thank you very much.
Microphone number two.
Mr. Chairman, I would like to introduce shareholder Ms. Adele Chasson.
Good morning Chair. So Coles has committed to net zero emissions by 2050. And in its sustainability report this year it stated it made a Scope 3 supplier engagement target that has been verified by the Science Based Targets Initiative. As you probably know, the Science Based Targets initiative also requires companies in the forest, land and agriculture sectors, including food retailers like Coles, to set no deforestation commitments in order to limit temperature rise to 1.5 degrees. The Coles 2024 Sustainability R eport says deforestation is a contributor to climate change and a driver of embedded emissions within Coles' supply chain. And as you mentioned, a big part of Coles' overall emissions Scope 3 emissions that includes deforestation are usually the lion's share of emissions for retailers like Coles.
For some supermarkets it's around or above 95% of their overall emissions. So my question is what is Coles plan for achieving net zero emissions and as it states it does, supporting the Paris Agreement without a no deforestation target? Thank you.
Thank you very much Adele for your insightful question. We're very well aware of the FLAG Forest, Land and Agriculture target to which you have referred to in terms of Scope 3 emissions. Certainly methane gas emissions are probably the most significant individual component part of those emissions. You would have clearly read our sustainability report. You would have seen how we're working with farmers. We had undertaken trials with Mort & Co Feedlot and the University of New England in trialing feed supplement Bovaer, which we're very encouraged with. It's been shown to reduce methane gas emissions by some 45%. So we are working on our Scope 3 emissions in a number of ways.
But your question about the intersection of FLAG and deforestation—we are fully aware of it. And we are, as I said, consistently with my answers to the other questions of similar nature. We are addressing those as part of our nature roadmap, and I understand the SBTI implications of that. In the meantime, we are trying to do the right thing in terms of making sure we provide the right assurance with the right commitments and the right steps, so that the market will have great confidence in how we outline our way forward. Thank you. Microphone three.
Mr. Chairman, I would like to introduce shareholder Mr. Howard Pascoe.
Good morning, Mr. Chairman and the board. I've just got back from Western Australia from Perth 10 days ago. I'd like to congratulate you and your board and all the staff for feeding WA. Now, the reason why I've asked that question, mentioned it, is that I had a wonderful opportunity of visiting your store in Midland. There was Goulburn Valley or Goulbur n River fresh trout in the supermarket. There was canned fruit from Shepparton. There was dairy product from the Western District. There was lamb from the Eastern States. It was just marvelous. What happens when the supply chain stops?
What happened recently is that the enormous rain depression came down and hit the outback and the Transcontinental railway was completely closed for quite a long time. We're up for a huge cost to try and make that railway line floodproof.
And would you believe the outback at Eyre Highway was blocked for weeks? So you've got a huge problem that if you can't get your product from the eastern states to WA, God help our colleagues in Western Australia, they'll starve to death. If I could exaggerate a little bit. So when I was over there, Marble Bar hit a temperature of 44 degrees in October. You've seen on TV the floods in Spain, where there's unbelievable amount of water flooding through Valencia and other parts. So what happens when we see where the temperatures hit 50 degrees and the railway gets buckled and they can't operate trains in the middle of summer, what happens if the Nullarbor is completely flooded and you're out? You can't get any product into Perth for weeks.
So my suggestion to the board is, in a terrible situation where that happens, do what Australia Post does and you have a cargo plane or invest in cargo aircraft and get your product into Perth by air. So I think that's a challenge that the Board's facing. And thank you once again for feeding WA. Well, thank you very much, Mr. Pascoe, for your update on the West Australian food supply chain. We do have the benefit Mr. Terry Bowen, who many of you may know is a resident of Perth, brings to our attention some of the unique features of living in Perth and how we're addressing those.
One thing I would say is that understanding the supply chain risk that you raise, we have over the last year or so moved to 100% on our meat sourcing in Western Australia to ensure that all of our meat sold in Western Australia is in fact sourced in Western Australia. And that has been with a view to ensuring that some of the risk issues that you refer to, which can be challenging to address in the case of rail disruptions or massive floods, has been able to be overcome. We've obviously experienced a number of challenging natural disasters in Australia over recent years and on one occasion I remember we even had to send goods by ship. Now it's many, many, many decades since I think Coles had to send goods by ship to get them to WA. But we're very conscious of the supply chain challenges.
We manage that very carefully through how we think about our distribution center network and all of our logistics arrangements that are in support of those. But thank you very much for your question bringing the matter to our attention. Microphone one.
Mr. Chairman, I would like to introduce shareholder Mrs. Christine Cook.
Mr. Chairman, the board, senior management and ladies and gentlemen, thank you for the opportunity to ask the speaker. I'm sorry my eyes aren't as good as all the young people. I have to have a bigger screen. I'm really sorry about that. I've been a shareholder of Coles through its various manifestations and amalgamations and de amalgamations for over coming up to 30 years. And mostly a loyal customer, not always, but mostly for much longer than 30 years actually. And I'm going to ask similar questions to what many other people have asked, but I'm a long term shareholder. I am really concerned about the business, about my shares, about my grandchildren's future and that they will inherit something of worth from me. I congratulate the board on the moves they've made in terms of sustainability.
It is a massive move since seven years ago when I asked the first, first question at a Coles AGM and I got laughed at and booed. So there's been huge progress, but there's a lot more to do and you are the people who can do it. You can make huge changes. All of you sitting up there have huge influence and power, much more than me. All I can do is come and ask you folk to do stuff. I don't have that much power even though I'm a businesswoman. So I'm talking as a businesswoman and a shareholder, but also somebody who cares about the future, and my take on this is it's really important that we think about the future for all those children that you're providing fruit for, et cetera, and that we care about the business model and that means sustainability.
There's increasing evidence that taking steps towards the environment and sustainability is actually good business practice. I can show you the example of CommBank. Look how well they've gone since they stepped outside from the rest of the banks and took serious action. I'm really concerned about the reputational damage that's been done to Coles in the last little while. This time last year Coles was in the top 10 in terms of trusted brands. It's dropped 220 something places just in this year to be the sixth worst least trusted brand. Now that's a real worry as a business model and I think that's a serious problem that has to be addressed. For me one of the ways of addressing that, sorry, is to think about what it is we need to do as adults, as responsible, as powerful citizens as you folk are.
There are a number of things and I have two serious parts to this and I'm sorry I'm going to repeat some of the stuff but that's because I don't think very well on my feet. I have to read what I already prepared to a large extent. It's imperative that Coles monitors and ensures products in the supply chain. That's the deforestation stuff. Do not breach or contravene the Science Based Targets initiative. You may not be signatories to it, but it is going to be really important across the world or that they that you adopt or work towards the EU due diligence laws. I say that because as a customer, customers have a right to easy access to information about where and how the products they buy are sourced. This is about labelling as well as taking action to fix the climate.
Not all beef sold in Coles comes from properties with the highest ethical environmental values. Even though your practices have improved, there's still a long way to go. There's still stuff that needs to be done. Not only is this unfair to customers and the environment, but it's truly unfair to the graziers and the farmers who do the right thing. We have to think about them and help them to continue seeing that it's best that we all do the right thing. I will reiterate that Woolworths 12 days ago at their AGM accepted the targets, the science-based targets, and they did that after Aldi. Those two major competitors of Coles and this is business, those two major competitors have already taken action and I think Coles needs to be seen to be ahead of the pack all the time.
That's business being ahead of the pack and doing the best thing for the business model.
So.
On this first question, will you, the board and management act to fix this and ensure no meat sold in Coles is sourced from deforested land for the sake of shareholders, the business and future Australian citizens? And I have another shorter question, will you do that now?
Yes, please.
This is also a labelling issue and it's empowerment of our customers or your customers. There are only about 140 Maugean Skate in the world and they're all in Macquarie Harbour.
Just in relation to that particular issue, there is a standalone resolution. If I could encourage you, if you wouldn't mind delaying that until that matter is the agenda item. Okay, well, thank you very much for your comments. And there is no. We are entirely aligned in terms of the importance of trust and that sustainability is such a central part of ensuring that we create trust with all stakeholders in order that we can build long-term shareholder value. The two go hand in hand together. And I think that was your point about being mutually connected. Just so that shareholders are aware, sustainability is a whole-of-Board responsibility. So we accept that responsibility.
3There is a formal presentation to the board at least once a quarter of a review of the whole sustainability metrics of the engagement with all of the outside stakeholders so that we are able to identify what progress is being made in meeting our commitments. The Board is assisted in its process by the Audit and Risk Committee which I mentioned earlier, Mr. Penn chairs, and that committee looks at some of the detailed numerical and quantifiable support for the progress that's been made across the full breadth of our sustainability areas. There is a sustainability committee or executive committee which the Chief Sustainability Officer chairs, and that is, the Chief Sustainability Officer is one of Leah Weckert's, our Chief Executive's executive leadership team.
They review all aspects of our operation on the basis of performance risk and where areas we need to be able to enhance our engagement in the market and participation. I've made a note of your recommendation that we're ahead of the pack. We want to be certainly on top of our game here and we very much focus on that. I don't think I can add much more to my comments about deforestation. I think I've answered about six questions in relation to that and at the risk of being somewhat repetitive, I think I'd ask you to accept those as my response.
I accept that, but I think it's a message about how important the issues are to the community and growing.
Thank you very much, and I'm sorry if you felt that your meeting seven years ago you weren't taken seriously because it is a serious issue and it's a serious issue inside Coles Group Limited, microphone 2, Mr. Chairman.
I would like to introduce shareholder Ms. Amelia Young.
Yes, Ms. Young, good morning, Chair, Directors, and Senior Management. My question also relates to nature risk and I acknowledge all of the responses you've already given. However, my question is specifically about timber, pulp, and paper and third-party certification. You have referenced ethical sourcing as a priority for Coles and earlier you pointed to relying on Australia's legal framework for mitigating deforestation risk. The fact is that the production of timber pulp and packaging here in Australia is exempt from national environmental law, so that legal framework cannot be relied on for assurance, and this points to the role of third-party certification schemes for timber, pulp, and paper.
Coles mentions the Program for the Endorsement of Forest Certification, the PEFC in Australia known as Responsible Wood, as part of its quoted achievements to supporting sustainable production and the exclusion of deforestation. This certification scheme has not proven to prevent deforestation in Australia. My questions are what verification has Coles undertaken to ensure the suitability of PEFC and Responsible Wood to genuinely assure its customers and shareholders of the absence of deforestation in its supply chains? And my second question is what investigation and verification has Coles undertaken in relation to the comparatively better respected and more credible Forest Stewardship Council certification scheme? Thank you.
Thank you, Ms. Young, for your question. It is, if you don't mind my saying, a little detailed for my being able to address in the context of this broader shareholder meeting. What I would like to propose, if you wouldn't mind, is that sitting in the front row is Brooke Donnelly, who is our General Manager of Sustainability, who is all over the details of each and every one of the certification arrangements that we have. I would ask, if you wouldn't mind, if you would speak with her at the conclusion of the meeting. Brooke will be available .
And it's important to us because we are committed to building trust and we're doing that by doing the right thing so that we can be the subject of external assessment and review and our progress can be marked appropriately. But thank you for your question.
Mr. Chairman, I would like to introduce shareholder Mr. David Ritter.
Mr. Ritter, thank you, Chair. My question is about time.
In asking the question, I do.
want to acknowledge the patience of all shareholders here this morning. I'm very grateful to you for hearing a number of questions on the same subject, but I ask the question really without any sense of apology or embarrassment, because it is a matter that is of great concern to the hundreds of thousands of Australians who are represented by the three organizations that had a presence outside the AGM. I, of course, am speaking here now holding a proxy shareholder capacity, and my question is about urgency. We've heard a number of responses in relation to deforestation.
None of them have reflected with respect.
An urgency, a frame of urgency. In the time it took to respond to the first question from Ms. George, more than an MCG's worth of bushland and forest were demolished because every two minutes, that's what happens in this country. I have stood next to one of Australia's leading native animal veterinarians who has looked me in the eye and expressed deep worry that in the middle of this extinction crisis, he might see the extinction of koalas and his patch of the country. In his professional life, when you are in the middle of a crisis, you deal with matters with urgency, with respect, that is what Aldi and Woolworths have done with their commitments to eliminate deforestation from their supply chains by 2025. That's what they have looked their shareholders.
And their customers in the eyes and committed to.
Will you acknowledge that frame of urgency and look your shareholders and customers in?
The eye and say you will eliminate.
Deforestation from your supply chain by 2025?
Thank you, Mr. Ritter. Thank you for your question. I think we all understand across the whole suite of sustainability measures, the importance of identifying them and working out how best to move forward to address and progress them. As I said to you in relation to a number of the earlier questions that were asked. We are well engaged. We have made a clear statement that you would have read on our website about our progress being made across the protection of forests. That is something that we are continuing to work on in the context of our nature roadmap. As I indicated earlier, we will have more to say.
I am not making a comment about the arrangements that others have entered into or committed to, but I am saying we are taking the matter urgently and when we are in a position to say more, we will do so. Microphone 2.
Mr. Chairman, I have a question on behalf of shareholder Ms. Anita Wong. Will Coles plan to recollect soft plastic bags and will Coles support more vegan suppliers?
The issue of soft plastic is one which is. This is a truly industry-wide issue that is being addressed.
The unfortunate collapse of REDcycle about two years ago, which had been pivotal to the programs that the major supermarkets were following in terms of recycling of soft plastics, has led to a situation where, with the approval of the regulatory bodies, the support and engagement of the Australian government, there is an industry-wide committee who have been set up to trial different ways to address the recycling of soft plastic. There are a number of projects that are relevant to that endeavor. We are still developing. It is early days. I mean, the scale of the recycling program that we had previously was very large and it is not simply replaced. There is work between government and all of the supermarket bodies to address this issue and we will no doubt update all community participants in the progress of that as we move forward.
In relation to the second question about vegan food, I might ask our Chief Executive to address that.
Thank you. Thank you for your question. Thank you for your question, Ms. Wong. We are definitely aware that vegan eating as a food preference is something that is growing in popularity. As such, it is something that we are seeking to range more products into the store available to customers who do engage in that dietary preference. I would encourage you to have a look at our Nature's Kitchen range, which is part of our own brand range, where there is actually a wide variety of both vegan and vegetarian options that are available in store and we are looking to expand that over time.
Okay.
Mr. Chairman, I would like to introduce shareholder Mr. Ron Guy.
Mr. Guy, thanks. Regional trade unions, human rights group, and just before I ask a question, I guess the Coles and Woolworths have been under attack for a lot of things just recently. But in this forum here, maybe it's a good example of where having a big corporation like this is where change can be driven in the appropriate way. So I'll give that as a compliment. But my question is around modern slavery, and two years ago the United Workers Union showed up at the AGM with a few complaints and with itinerant workers that had been mistreated. And so I was just wondering for a bit of an update of whether there's been any reports in the last 12 months.
The problem that unions usually have, and that's across the whole sector of workforce, is that we usually find out when the abuses happened beforehand because sometimes we're locked out of different sites for the obvious reason. I think Ansell is a good example of their changes they've made. They've only got about one case at the moment that's being argued in the American courts. Giving people time with audits, usually they get notice beforehand. That's a difficulty. Just a bit of an update on that.
Thank you very much Mr. Guy for your question. I still greatly remember the annual general meeting in November of 2019 with the United Workers Union presenting a number of examples of situations where there were concerns about labor engagement at different suppliers, particularly in the fresh produce area.
I'm pleased to say that I think over the intervening five years we have really made enormous progress in terms of our focus on this area. We have a professional team of 12 people who are in the business working on this area. We have over the last three years provided AUD 3.7 million I think is the number to underwrite the development of independent auditors because there was a dearth of independent auditors available previously and that has made a significant contribution. We have developed an accord with the Transport Workers Union, the Shop, Distributive and Allied Employees Association and the Transport Workers Union. That accord has resulted in Coles, in conjunction with those three unions making joint presentations at various worker forums across particularly the eastern states of Australia to enhance awareness of workers' rights in all situations.
We're currently working with that accord addressing the issues of accommodation, which is another important area in terms of the employment, particularly where we're dealing with employment of persons who may well have come from islands surrounding Australia to work in Australia, assisting in our whole fresh produce supply chain for limited periods of time. So I think we report this matter directly to the board and in the last financial year, if my memory serves me right, we 18 cases were evaluated where we cancelled and ceased arrangements with the supplier because of an inability to have the supplier address what we saw as a shortcoming in the ethical sourcing area. And in the absence of an agreement to adhere to the standards that are set, we discontinued engagement with those suppliers. So but it's progressing and has progressed in a very positive way.
I think today we would feel that we are well structured in maintaining and addressing that important issue.
Thank you. If I could, if I may, on procurement, and that's probably, I guess, a little bit more sensitive, I guess. But recently the European legal ruling upheld Western Sahara in regard to importation of such things as fish from occupied Western Sahara. And the Polisario is the official recognized authority representative of Western Sahara. So in Australia, the fertilizer, so the natural resources being imported, the farmers are ethical there, but in New Zealand, unfortunately, they're still importing phosphate from there. So that ends up in the produce in the marketplace by default, I guess. So it's a concern of human rights that is ongoing in Western Sahara in the occupied zone, which is many examples that can be given.
I guess the more sensitive one now is what's been happening in the West Bank and in Gaza last year. I did mention ceasefire now and it was sort of not met with much. Anyway, 12 months after, we're still going on and there's just horrific things happening in that area. As you'll be aware, there's a concern about product coming from Israel that might be coming from the illegal settlements, et cetera. I was wondering whether the Risk Board, especially after the ICJ, has made rulings on many occasions of whether the board has ever been discussing this issue in the supply chain.
Mr. Guy, I can't go into the detail to which I think you're really referring there, but what I would say is that the board does address the structure of all of our assessment in relation to supply chain, because we see that risk. We're not in a position to impact global political situations, but we certainly maintain the formality and structure to ensure that, whether it's an Australian based supplier or an international based supplier, that the work practices of those suppliers are appropriate and meet the relevant standards. So we have a surveillance program. It is harder internationally, but we do have an international surveillance program for the benefit of shareholders. We're frequently dealing with international suppliers with goods not for resale. So it may be uniforms or solar panels or something of that kind.
So we do have a very wide supply chain and we are certainly alert to doing the right thing across all elements of it.
Mr. Chairman, I would like to introduce shareholder Mr. Jeffrey Favaloro.
Hi, thank you and good morning. Jeffrey Favaloro, shareholder. Thank you all for your service over the year and also for your great range of products, which I really love going to, as opposed to alternatives. And I can look forward to, you know, good products and had some sliced beef yesterday. Delish. Thank you. I did raise with my local Elsternw ick store the fact that, and this is a very small issue, but I thought I might just bring it up. The plum puddings that come in the red tubs, I didn't think they were alcoholic years ago, contain alcohol, but recently they do contain alcohol. And if, Leah, you could pass on to the appropriate persons, some of us who are looking after our health these days is reducing alcohol in our diet. I'd appreciate it. Thank you again.
Thank you very much for your support as a customer as well as the shareholder. I'm sure Leah will take those comments on board. Microphone three.
Mr. Chairman, I would like to introduce shareholder Mrs. Julie Spragg.
Good morning, Chairman and the board.
When I'm shopping at different stores of Coles, occasionally I've witnessed theft, and I'm wondering what cost does this come to at total cost per annum to Coles and what can be done about it?
Good question. This issue is a challenging one across the whole of the community. Shareholders might be aware that in August of last year, when we were releasing our financial scorecard on the year ended June 2023, we noted that there had been a material increase in the amount of goods that were leaving the store unpaid for, and since that time, we have done a number of things to try and address the issue, which I think is driven by pressure on the community, and it's extremely unfortunate to see people in a position where they feel that that is an appropriate way for them to move forward. What we've tried to do is a number of things. We're very aware of the financial impact of loss or theft, but we're also extremely concerned about the safety of everyone in a Coles store.
We've tried to come forward, and I think we've done so actually quite successfully with using technology to be the interface that makes it far less likely that someone will leave the store with goods that haven't been paid for. There are a number of forms of technology which are identifiable at the checkout which make it less likely that a customer will leave without paying because the checkout machine will stop and ask, "Have you missed an item that hasn't been paid for?" There may be, in some stores, gates that don't open unless the items have all been paid for. There might be in some stores cameras that can see there's something on the bottom of the trolley that hasn't been scanned.
We can have technologically based prompts to try and ensure that customers either unintentionally or intentionally leave the store with items that they haven't paid for. In the year ended 30th of June, this last 24 financial year, we had a 44 basis points improvement, that is reduction in loss relative to every dollar of sales in our supermarket. So that's a very substantial, substantial improvement. But it's a. This issue is not going away when people are under pressure, unfortunately, I think we will continue to see it's an issue which we have to constantly be focusing on safely through education and technology and we will continue on that journey.
Mr. Chairman, I would like to introduce shareholder Dr. Peter Cook.
Thank you Chair and Board for the opportunity to ask this question. I'm a very long term shareholder. I think I probably know the answer to my question ahead of time but want to ask it anyway. I'm extremely concerned about growing wealth inequality in Australia. We saw in America last week that the disenfranchised will vote for change at almost any cost. And there's a rise in authoritarian governments across the world. This is the tide that Hitler rose on. Coles has suffered enormous reputational damage over the last 12 months and those in front of me have earned many hundreds of times at the rate of floor staff and those in the supply chain.
So I want to ask, and this may be more about remuneration packages, but will you limit executive salaries and tie them to sustainability targets and will you recognise Coles social responsibility and increase the wages of staff and those in the supply chain so that we reduce wealth inequality and the potential for distrust and unrest in Australia?
Thank you Dr. Cook, thank you for being a long-term shareholder and for your question. When we get to the remuneration component part of the meeting, Mr. Freudenstein, as Chairman of the People and Culture Committee will talk a bit about how we set remuneration and the linkages of remuneration with performance outcomes. So I will leave that component part to him.
Let me say that we are, as a major Australian company and an employer of 115,000 people, very conscious that we need to do the right thing for Coles Group Limited and our participation in the community. It's absolutely fundamental that we have strong, able, talented, committed leadership and that environment is a competitive environment that we participate in to ensure that we have the best talent. So whether the talent is driven to focus on how we address a sustainability outcome, an ethical sourcing issue, a prevention of loss in the stores issue, it's across the board and we believe that we are very responsible in how we address that because we know how important it is to have high quality people in the organization.
As far as the breadth of the team members, we have obviously passed through all of the recent award level increases recommended by the Fair Work Commission. We pay above the award we provide. In fact, we've just recently entered into a new EBA with some 90,000, I think it is, of our team members. And in that one of the benefits of that is not only underpinning the financial contributions that are made and the arrangements made with team members, but there is an increase in flexibility in a number of areas. And one of the important issues for our team members is desired hours. And you can imagine that in a business like ours there are people who participate and want hours that happen to suit their other lifestyle, engagement and commitments and we've made quite a significant progress on those issues.
So the issue of team member remuneration, team member, the framework of the whole engagement with that team members, and the comment that Leah made earlier about the significant increase in our team member engagement score, putting us very much at the upper quartile of Australian companies doesn't happen by accident, it happens because of this engagement throughout the organization. We certainly would aspire to meet those standards of performance. Could I just make a follow up comment and that is that my conversations with your staff don't reflect what you've just said. There is a great deal of disgruntlement about inequities within the pay scale. Thank you. Thanks very much. Dr. Hook, microphone three.
Chairman, I would like to introduce shareholder Mr. Jim Schembri.
Hi. I've actually got two questions for you. One is the one that I planned, the other one came up as I was entering the venue, so I'll give them to you both. Firstly, over the past year in the United States a number of very, very big companies such as John Deere, Brown-Forman, Molson Coors, Tractor Supply, Jack Daniel's, Harley-Davidson, Lowe's, Ford and Toyota have walked back their DEI policies. I'd like to know what Coles response is to this growing trend in the United States and if you are thinking of redrafting the current policy to be more in line with the basic concept of equal opportunities for everybody.
The second point I bring up reluctantly, and that is when I arrived here this morning, there was a small, very well behaved gathering of protesters who I went and spoke to because I was interested to see what they were up to. Had very pleasant conversation with a number of them and I asked them for a pamphlet so I could read it later. Now, after checking into this venue, the security staff here asked me to surrender that pamphlet. They wanted me to go through my bag and give up any, quote, paraphernalia that I had picked up at the protest. Naturally, I refused to surrender anything, making the point that it was a violation of someone's rights to have to surrender a piece of literature that someone had given to them at a protest.
Apart from it being rather insulting, it was utterly pointless because I then put to them, are you now going to ask to go through my emails through my notebook as well? I'd like an assurance from the board of Coles that no one will ever be asked this ridiculous request again. I regard it very generously, describe it very generously as overzealous security. And while security is very, very important at an event like this, I think such matters are utterly trivial, utterly pointless and insulting to everybody here. So I want to get a commitment from Coles that such a measure will never ever be asked of anyone again.
Thanks, Mr. Schembri, for your comment and question. In turn, I'll deal with your, what you call DEI, diversity, equity and inclusion.
I think the communities around the world have constantly changed and I think you're referencing some different jurisdictions where that change may have occurred in a different way. We at Coles are very committed to the policies that we have about ensuring that everyone feels comfortable at Coles, and part of that is ensuring that at all times there is going to be a wide cross section of participation in our team membership, and we see great benefit of having targets to ensure that we've got appropriate balance between male and female staff, appropriate engagement of Indigenous community support for people who are in some way disadvantaged in their capacity to move easily, that we are inclusive of the whole community. As I mentioned in my opening remarks, we have 14 million customers a week.
They are Australia and we are Australian and we will set our policies to enrich the well-being of our business within that broad community of Australia, and so we are certainly very, very committed to continuing to pursue those policies which are currently very readily observed by looking at any of our publications, websites, meetings such as this. Dealing with your second question, I think you put your finger on the pulse, that is, there is an element in the current community about security risks. I'm sorry if you felt that you were treated in a way which was inappropriate. There will always be judgment calls that are made. I can only assure you that I'm sure everyone who is here today is interested in being here in the knowledge that they are welcome and they are safe and they are very free to speak. Thank you very much.
Thank you very much. Again, just to make a quick note on that, the idea of having to surrender a pamphlet which you could easily photograph on your. You can easily photograph on your iPhone and bring that in, it's just a pointless measure and just wanted to just reinforce the pointlessness and the insulting nature of such a measure. Thank you very much and thank you for your stamina too and to the signers who are doing a great job. Thank you. Mr. Schembri, are there any further questions on the floor? I don't think there are any more in the room. Sally, are there any other questions?
Thank you, Chairman. We've received a number of online questions. The first online question comes from Mr. Stephen David Mayne, who asked, did any of the five main proxy advisors, ACSI, Ownership Matters, Glass Lewis, ISS and ASA, recommend a vote against any of today's resolutions? If so, what reasons did they give? And will you disclose the proxy votes before the debate on each resolution so shareholders can ask questions about the reasons? If there have been any protest votes, please don't say they are confidential. It is standard for companies to be across the detail on the voting recommendations and inform shareholders where relevant without publishing the full proxy advisor reports, of course. And why not publish the proxy position to the ASX along with the formal addresses like many other companies now do to avoid questions like this one.
Mr. Mayne, thank you for your question. Sorry, you may be disappointed in my answer that in relation to the proxy advisers, they are private information between the proxy adviser and their clients. We do not see it's our role to intervene into that process and we will not be making available information about what any particular proxy adviser from wherever they may come seeks to comment upon. Coles Group Ltd. That's a matter between the proxy adviser and their clients.
In relation to the second issue, which is I think your point is when do we show the proxy voting that has been received in advance of the meeting in the context of each resolution as it is put, our approach is to table what the matter is, the agenda item for discussion, allow full, open, transparent discussion across all shareholders in the room and online and not try to fetter in any way that open discussion by providing the weight of what might be a significant influence on the ultimate outcome of the resolution. To the extent that some shareholders will have voted by proxy or by direct vote in advance of the meeting. So we will continue to follow our current process which we think is more respectful of the opportunity for shareholders who are here or are online to ask their questions in an open free way.
Thank you. Is there any other questions?
Chairman, the next online question also comes from Mr. Stephen David Mayne, who asks. Australia is currently in the midst of an unprecedented deluge of takeovers that has contributed to listed entities on the ASX falling by 170 or 7.4% to 2,124 since June 2022. Including 21 straight months of declines. There have already been 27 major takeovers above AUD 200 million completed so far this calendar year. The ASX is losing long standing names such as CSR, Boral, Blackmores, Newcrest and Crown, which have all disappeared over the past three years. There is a clear mispricing between public markets and private markets. Why are public markets not valuing ASX listed companies like ours more highly? And what are we doing to avoid being gobbled up like so many other companies?
Does the Chair agree this is a problem for the nation, particularly with so few new floats replenishing the ASX ranks? And do we have any takeover protections apart from FIRB and the ACCC? Does the Chair believe the FIRB would approve a foreign private equity takeover of Coles?
That's quite a long list of issues, Mr. Mayne. I think the characteristic which has underpinned the success of Coles over its 110 years to be a thriving Australian, relevant Australian owned retailer has been its commitment to performance. And I think the issue for a company like Coles as a public company with over 420,000 direct shareholders and millions more indirectly is to make sure that we stay true to our own vision of behaving in a way which builds trust and creating long term shareholder value. That is our responsibility as a company. Open capital markets around the world are part of a healthy economy. Open capital markets will work in different ways from time to time and will see different benefits from time to time in different businesses. That is just an observation which we can make. As far as Coles Group is concerned.
Our job is to grow the long term value of this business. And so long as we do that and do that well, our shareholders will be well protected in terms of their interests. And as to what happens in the future in terms of how companies engage with each other, that will be something for the future, Mr. Mayne. And it's not something which unfortunately I have a crystal ball that I can look at and provide a better level of information than you might otherwise do. Thank you, Chairman.
We have a further online question from Mr. Stephen David Mayne, who asks when disclosing the outcome of voting on all resolutions today, could you please advise the ASX how many of your 420,000 shareholders voted for and against each item? Similar to what happens with a scheme of arrangement, this will provide a better gauge of retail shareholder sentiment on all resolutions and insight into the chronically low retail shareholder participation rate. Others have already blazed the trail as this was voluntary disclosure initiative adopted by the likes of Qantas, ASX, Metcash, AUI, Webjet, Suncorp, Tabcorp and Myer in recent years. You've got the data, so why not let the sunshine in?
Thanks again, Mr. Mayne. I'm sorry if I again disappoint you. If my memory serves me right, Mr. Mayne, you may have asked this same question on previous annual general meetings and I hope my answer is consistent. It certainly is the same and that is that we see our obligation is to do the right thing in Australia, conform with the Australian Corporations Act, meet the Australian Securities Exchange Listing Rules and in doing so to provide the data which is required and relevant to shareholders in that context. So we are not required, nor do we see it as appropriate for us to be making further disclosures about how our shareholders vote, other than to provide the details of the voting outcomes. Thank you.
Chairman. The next online question comes from Mr. Henry Kay. "What is going to be done to clear items close to use by dates which are not sold?
I'm not quite sure where you're going with that question, Mr. Kay. I think one of the observations which our Chief Executive made in her earlier address is the wonderful engagement which we have built up with both SecondBite and Foodbank over. In the case of SecondBite, I think it was since 2011 and the case of Foodbank, I think it might be 2003, where we work with those food rescue organizations to make sure that food is, whilst it's still attractive for human enjoyment, is not lost, is not wasted, but is in fact moved from our supermarkets or our distribution centers to the food rescue organizations who have engagement with around well over a thousand charities across Australia and are providing meals to fellow Australians in need as a result of the level of donation of that food that we make.
Last financial year, between SecondBite and Foodbank, that was the equivalent of almost 40 million meals that we were able to provide. Are there any further questions? Sally?
We have also received an online comment from Mr. Henry Kay. His comment is with regards to advertising: use larger font. This way those with visual impairments will be able to read them.
I understand the comment, Mr. Kay. I think from time to time we've all struggled with font. Fortunately, so much of the way in which data is communicated these days, it comes to you on a screen and you have the ability to manage your own font size. But to the extent that we are involved in some form of print communication or print advertising, clearly it's in our interest to make sure it's easy for people to read. And to the extent that there are areas for us to improve in that domain, I'm sure that that will be the focus of ongoing attention because we want our customers, our shareholders, our community colleagues to all be able to understand what we're saying and how we're performing and how we're contributing to the wider community. So thank you very much.
Chairman. The next online question comes from Mrs. Michelle Joy Muller. She asks if Coles is so aligned with its values, caring about employees, customers, then why isn't this reflected in the profits tested supplier relationships, employee underpayments, Senate inquiries, ACCC at the door appear all to undermine the company performance. Would this really be happening if Coles was truly living its values? From Taronga to Tom Price?
Mrs. Muller, it's a complex world and with so many different component parts in our business, our management team have to every day draw together an extraordinary array of business activity to be able to ensure that we are delivering on those commitments. I can assure you that throughout the whole of the Coles Group, those values and the commitment to be doing the right thing underpins the way in which we operate, the way in which we recruit, the way in which we train people, the way in which we mark our own card. Occasionally we will make a mistake and where we do make a mistake, we will rectify that as quickly as we possibly can and make sure that any party that has been adversely affected is compensated. But our objective is very much trust and value, hand in hand, going together.
As I said earlier, questions, trust and sustainability are very, very central to each other. Any further questions?
Chairman? We have a number of further online questions from Mrs. Michelle Joy Muller. Her next question she asks. My local store has recently undergone refurbishment with tighter aisles. I'm constantly battling other customers and the online shopping cart. I then head to the checkouts and am faced with less manned checkouts and more self checkouts. Essentially prices have gone up but service is diminishing, as is the human connection in an everyday activity. Has Coles underestimated its social responsibilities in the communities, especially regional, in which it operates?
We certainly haven't in any way lost sight of our responsibilities. If you're marking our card and you think that we have lost our way in some particular area, we would very much like to hear about that because this is our business making sure that we meet the values that we set. You may not have seen Ms. Muller because you weren't in the meeting physically, but maybe you saw it online. The video which was shown following Leah's address earlier of our customer fulfillment center which showed that in the Greater Sydney and Greater Melbourne areas where we're able to operate online next day home delivery, a very large part of the online market from those high technology customer fulfillment centers.
One of the benefits of that is not only the quality of the outcome for the customer getting the product that was wanted on time and complete, but it also means that the online activity which was previously being undertaken through the stores and perhaps did cause you to occasionally come upon an online team member who was gathering an order for a home delivery, that those orders are now being handled for the next day home delivery market through our customer fulfillment centers in Sydney and in Melbourne. Simple things in one sense like that mean that there's a lot of benefit arising from this new technology, and there are an enormous number of other things going on inside the Coles Group to try and address the issues you raise.
Store renewals. We have a very, very active program of store renewals where we say, is there an appropriate time where a store's presentation can be updated and improved? We identify those stores, we measure the performance, and we believe that across the group we are very focused on ensuring that customers come first.
We have a further question from Mrs. Muller. While it's commendable that the business donates millions to big name charities, what are stores doing or able to do at the community level to support local clubs and people? Why haven't they been advertised today?
I think, Ms. Muller, that the experience actually is that each of the stores does have an engagement with their local community. Some of those are supporting community specific local programs. We also have a program to ensure that some food that is past its use by date, past its appropriateness for personal consumption, is used for engagement with the producers, the farmers. As a feed input. We have programs with people to collect bread that is unused and has passed its value date where that bread can be recycled into a feed supplement. So we're looking always to be engaged with the local community, find ways that there is no waste, ensure that where good opportunities arise, our team members are well placed to be able to participate as strong, active participants in their own community.
Chairman, the next online question is also from Mrs. Muller. It is commendable that Coles has increased the female leadership to 42%. However, with cases of maternity leave not being paid to workers, how does Coles propose to remain a great employer of choice? Why isn't the Coles maternity leave policy written into the agreement to solidify its commitment to working mothers?
I think the most appropriate person to answer that question may be our Chief Executive, Leah Weckert.
Thank you for your question, Mrs. Muller. We take our support of working families very seriously. We have a large number of them within Coles and we do have a parental leave policy which is formalized, part of our People and Culture policies that our team members have access to that if you had specific cases where you had details of something not being paid out under that policy, I encourage you to contact us separately on those matters. But it's something that we take very seriously and we continue to improve over time. So for example, over the last couple of periods we have removed the 12-month service leave obligation in order to qualify for leave.
We've introduced things like coaching support and our carers hub to provide more resources for working families as they come back to work after having a new addition to the family.
Sally, are there any further questions online?
Yes, we have a further question from Mrs. Muller who has addressed her question to Ms. Leah Weckert. Ms. Muller asks Leah, you've inherited quite the crown. Do you think you're doing a good job?
Thank you Mrs. Muller for that question but I will take the question as put and then to the extent it's appropriate that some other person address that question, I will ask them to. I will make the comment that I think Leah Weckert has been involved as Chief Executive for the last 18 months and it follows really a career which is now of around 13 years with Coles Group. Across that 13 year period, Leah has shown great leadership in every area that she has been involved in, whether it was Victorian store operations, in human resources, in Chief Financial Officer, in Chief Commercial Officer and since the 1st of May last year as Chief Executive Officer of the Coles Group in every area.
Leah has provided great strength, great vision with great empathy for people and we are, I think it's a company extremely fortunate to have a person of Leah's standing as our Chief Executive Officer and I look forward to the success of the business with the strength of our full leadership team. Are there any further questions?
Sally, thank you, Chairman. There are no more online questions or comments on this item.
If there are no further questions on this item, then we will move on to item two on today's agenda. This item of business relates to two directors who are being considered for election and two directors standing for re-election. Each of these Directors will shortly provide an address to you which will include some information on their background. Before they do so, I would like to make a few brief remarks about the Board's composition and renewal process. The Board recognizes the importance of having directors who possess a broad range of skills, background, experience, diversity. Our Board Skills Matrix, which is available in our Annual Report and Corporate Governance Statement, outlines the skills and experience of our Board. This year we revised our matrix to provide additional insight into the relative levels and experience of each of the Directors.
Each year the Board, on the recommendation of the nomination committee, reviews the Board's skills to ensure that collectively we have the right composition of skills and experience to address both existing and potential future issues and to ensure we provide for Board renewal. Peter Allen and Andy Penn, who are being considered for election today, were appointed to our Board subsequent to last year's Annual General Meeting. Peter's appointment commenced in September this year and Andy's in December last year. Both appointments followed a detailed non-executive search. Both Peter and Andy bring relevant experience from large Australian listed companies. Peter has considerable commercial experience as the former Chief Executive of Scentre with its significant retail shopping centre business as well as extensive background and expertise in property development and management from his tenure at the Westfield Group.
Andy's background spans telecommunications and financial services and most recently as the former Chief Executive of Telstra. Andy brings deep understanding of the risks and opportunities arising from technology, digital disruption and cybersecurity and was appointed the Chairman of the Audit and Risk Committee upon his commencement. Abi Cleland and Richard Freudenstein were initially appointed to the Coles Board upon the demerger of Coles in 2018 and are standing for re-election today. Both contribute significantly to the Board's assessment of opportunities and risk. Abi's areas of expertise include corporate strategy and M&A across a range of sectors as well as technology, digital disruption and innovation. Richard brings substantial experience in large technology companies and consumer-facing businesses, including in the areas of regulatory and public policy. Richard is the Chairman of our People and Culture Committee, a position which he has held since the merger.
In this context, I remind shareholders of my advice at our 2022 Annual General Meeting of my intention to retire during my current term of office. I note that a Board process has commenced to ensure a smooth transition of Chairman at the appropriate time during 2025. I now turn to the specific items to be discussed and voted on today. Firstly, item 2.1. This item relates to the election of Peter Allen as the Director of the company. In accordance with the company's constitution, Peter offers himself for election today. The text of the resolution is now displayed and Peter's details are set out in the notice of meeting. I now invite Peter to address the meeting.
Thank you, Chairman and good afternoon, shareholders and guests.
I'm honored to have the opportunity to represent you on the board of Coles Group and as a team member, work on achieving our purpose, helping Australians eat and live better every day. Coles is a business that I've respected for a number of years for its reach and positive influence on the Australian economy and community, including its innovation and investment to ultimately benefit the shopper. I bring to Coles my experience as CEO of Scentre Group Westfield in Australia, the largest and most successful retail property business, where the focus was creating extraordinary places, connecting with communities and engaging the customer to engage with our business partners, the retailers. My time as CEO provided multiple learnings on how to positively engage with all stakeholders, including customers, staff, shareholders, government and communities, to operate a successful and sustainable growing business.
This, together with my prior executive experience in international banking with Citibank, establishing Westfield in the UK and Finance Director of the Westfield Group, has provided me over 30 years experience in business strategy, culture, real estate, corporate finance and customer engagement. And I look forward to bringing these attributes in, representing you on the Coles Board and supporting the Coles team. Thank you.
Thank you very much, Peter. The Board, with Peter abstaining, unanimously recommends in favor of the election of Mr. Peter Allen as the Director. I would now like to invite any questions that you may have on this item of business. I think that's a personal comment which we don't need to pursue. Are there any questions from the floor? If not, Sally, are there any questions online?
Chairman? There are no online questions or comments on this item.
Thank you. If there are no questions, we have finalised any discussion we were going to have on this item of business. The details of the proxies and direct votes received in relation to this item are now being displayed. Please now enter your votes for item 2.1, if you have not already done so. Moving on to item 2.2. This item relates to the election of Mr. Andy Penn as the Director of the company. In accordance with the company's constitution, Andy offers himself for election today. The text of the resolution is now displayed and Andy's details are set out in the notice of meeting. I now invite Andy to address the meeting.
Thanks very much, Chairman, and good afternoon. I'm very pleased to be standing for election today after joining the Coles Board almost a year ago.
Since that time I've also served as the Chairman, as mentioned as the Chair of the Audit and Risk Committee. The skills and experience that I bring to the company include 20 years as either the CEO or the CFO of two of Australia's largest ASX listed companies, i.e. AXA Asia Pacific Holdings and Telstra. Subsequently, I have also been serving as a strategic advisor to both governments and companies. These skills and experiences aligned to the Coles Board Skills Matrix, which the Chairman mentioned, are predominantly in five areas. Firstly, strategic thinking. During my time at both AXA and Telstra, I held responsibility for strategy and as the CEO of both companies, I led major strategic reviews and oversaw their implementation. Secondly, leadership and commercial acumen. I have led large complex organizations with many tens of thousands of employees through significant transformations and change. Thirdly, financial acumen.
I am a qualified accountant and I have been the CFO of two major listed companies. Fourthly, corporate governance. I've been involved in the boards of large listed companies for the past 20 years and have held responsibility for audit and risk management at different times, including considering important ESG issues which have been much the subject of discussion today, and finally, in digital technology and innovation. My roles have required me to develop a deep understanding of complex technologies such as cloud and quantum computing. I also chaired the Government's expert advisory boards for both the 2020 and 2023 Australian National Cyber Security Strategies, and finally, and additionally, I believe I have a deep understanding of the responsibility of leading a nationally important company such as Coles, which is delivering essential services to millions of Australians, every community.
And if elected, I'm committed to supporting James and Leah and the whole of the Coles team in this endeavor. Thank you for your support.
Thank you very much, Andy. The board, with Andy abstaining, unanimously recommends in favor of the election of Mr. Andrew Penn as the Director. I would now like to invite any questions that you may have on this item of business. I don't think there are. Microphone 1.
Mr. Chairman, I would like to introduce shareholder Mr. Simpson.
Mr. Simpson, this electronic device may be great for some people, but there's no direction on how to use it to cast a vote. So that becomes a point of order. Mr. Simpson, there's a gentleman who's coming right behind you now to assist you with using the device. Thank you. I don't think there are any questions on this resolution from the floor. Sally, are there any questions online?
There are no online questions or comments on this item.
Thank you. If there are no questions from the floor or online, then the details of the proxies and direct votes received in relation to this item are now being displayed. Please now enter your votes for item 2.2 if you have not already done so. Moving on now to item 2.3. This item relates to the re-election of Ms. Abi Cleland as the Director of the company. The text of the resolution is now displayed and Abi's details are set out in the notice of meeting. I now invite Abi to address the meeting.
Thank you, Chairman, and good afternoon, fellow shareholders and customers. I'm honored to stand for re-election to the board of Coles Group today. My career spans over 20 years in corporate roles followed by more than a decade as a non-executive director. My corporate experience includes senior strategy, M&A, digital and leadership roles with some of Australia's top industrial and retail organizations where I've helped them successfully navigate disruptive change. As a non-executive director I've served on the ASX boards of Sydney Airport, Orica, Bendigo Bank and Computershare. In many ways Coles is very similar today as when I joined at the demerger, but in many ways it is quite different. We pride ourselves on an offering to offer superior range to our customers and superior value so that customers can live a healthier, happier life. However, we have also evolved significantly.
We now have a high growth online retail business and have built four state-of-the-art distribution and fulfillment centers to transform our operations and help us better meet consumer demand. We also have our own meat processing and milk processing plant to deliver quality to our customers. Of course we also have our new CEO, not so new now, Leah Weckert, who has been a pleasure to support. I'm particularly proud of how the Coles team supports Australians during COVID and how they've continued to assist many charity and community partners helping people in need. However, we continue to work on building our trust with our customers and our stakeholders and we're committed to drive this further over the coming years. There remains so much opportunity ahead for Coles and I'd be honoured to receive your support to continue to serve as a Director. Thank you.
Thank you very much, Abi. The Board, with Abi abstaining, unanimously recommends the re-election of Abi Cleland as the Director. I would now like to invite any questions that you may have on this item of business. If there are no questions from the floor, are there any questions online?
So, Chairman, there are no online questions or comments on this item.
Thank you. There being no questions. The details of the proxies and direct votes received in relation to this item are now being displayed. Please now enter your votes for item 2.3 if you have not already done so. Turning now to Item 2.4, this item relates to the re-election of Mr. Richard Freudenstein as the Director of the company. The text of the resolution is displayed and Richard's details are set out on the notice of meeting. I now invite Richard to address the meeting.
Thank you, Chairman, and good afternoon everyone. I've had the privilege to serve on the Coles board for the past six years. During that time I've met many of the wonderful team members at Coles. Their hard work, resilience and desire to do the right thing by our customers is inspiring.
I believe I have a range of skills that enable me to add value to the Coles Board. In particular I've worked as a CEO of both a large customer-facing subscription business and a fast-growing digital business. I am currently a board member of two highly innovative ASX-listed digital businesses which operate in Australia and internationally which has provided me with insights into technology-led and digital-first businesses. I have served on a range of ASX-listed boards for 17 years giving me a good understanding of corporate governance and I have international experience having worked in the U.K. for many years and served on boards in Asia. At Coles, as James has mentioned, I chair the People and Culture Committee.
I'm excited about the Coles purpose to help Australians eat and live better every day and our vision to become Australia's most trusted retailer and grow long-term shareholder value. I would be honored to be re-elected to continue to serve the interests of Coles shareholders. Thank you.
Thanks very much, Richard. The board, with Richard abstaining, unanimously recommends in favor of the re-election of Mr. Richard Freudenstein as the Director. I would now like to invite any questions that you may have on this item of business from the floor. I think there are no questions from the floor, Sally. Are there any questions on this item from online?
There are no online questions or comments on this item.
Thank you. The details of the proxies and direct votes received in relation to this item are now being displayed. Please enter your votes on item 2.4 if you have not already done so. I now turn to item three, which is an advisory vote on the 2024 Remuneration Report. The Remuneration Report can be found on pages 62 to 80 of the 2024 Annual Report, and I will invite Richard, Chairman of our People and Culture Committee, to speak to the meeting.
Thank you, James. The Coles executive leadership team is rewarded through the payment of a benchmarked fixed compensation, a Short-Term Incentive based 60% on financial measures and 40% on strategic measures, and a Long-Term Incentive dependent on performance over a three-year period.
The Board maintains discretion across all remuneration aspects to ensure that outcomes are appropriate in the context of our performance and the expectations of our shareholders, customers, team members and the community for the 2024 financial year. The executive team's continued focus on delivering value for customers has helped deliver a solid financial result. All targets for the 2024 financial year were set and assessed on a 53 week basis aligned to the 2024 retail calendar year. The short term incentives payable to Executive KMP for the 2024 financial year range between 71.5%-76.2% of the maximum opportunity for the Managing Director and Chief Executive Officer. The short term incentive payable was equal to 72.2% of the maximum opportunity. The 2022 financial year long term incentive which covered performance over a three year period between the 2022 and 2024 financial years vested on 30 August 2024.
Performance is measured against two equally weighted metrics being cumulative return on capital and relative total shareholder return. This year, 76.1% of the performance rights allocated to the Executive KMP vested. Performance rights allocated to the cumulative return on capital metric vested at 48.9% out of a possible 50% as performance was between the target and the maximum set by the Board. The cumulative ROC result excluded Coles Express sale and transaction impacts and was further adjusted for changes in the phasing of capital investments relating to major projects including our ADCs and CFCs. These adjustments reduced the final vesting outcome. Performance rights allocated to the relative total shareholder return metric result in a 27.2% out of a possible 50% vesting. The company performed at the 52nd percentile against the LTI comparator Group which represented performance just above threshold.
When setting targets for incentive plans, the Board considers alignment of the targets to our strategy, risk framework and commitments made to our shareholders, delivering strong earnings through the business cycle and ensuring strong sustainable returns for shareholders, macroeconomic conditions as well as the market competitive environment and consumer and retail trends and finally striking the right balance between achievability and an appropriate level of stretch. The cumulative ROC target could not have been met if management had not stretched themselves each year to actively respond to the numerous challenges they face daily. These are not limited to, but include availability, staff shortages and absenteeism, network outages and increased competition.
The Board considers the outcomes of both the Short-Term Incentive and Long-Term Incentive to be appropriate considering the rigor of which the process by which targets were set and the financial performance and strategic achievements delivered by management in the 2024 financial year. The Board particularly feel the outcome for the 2022 Long-Term Incentive appropriately reflects Ms. Weckert's contribution to the company in the role of managing director and CEO over the past 18 months. It reflects her extremely strong performance in the public domain and in driving Coles financial results as well as her achievements internally in creating a positive work culture. Within the 2024 remuneration report, the Board announced two changes to the metrics for the Short-Term Incentive for the 2025 financial year. Firstly, customer NPS will be measured wholly on store NPS.
Secondly, the sustainability objective has been evolved into a broader assessment of progress against the refreshed sustainability strategy of creating a more sustainable future. The Board determined these adjustments to the managing director and CEO's scorecard aligned to their expectation of her to continue to improving the experience of Coles customers every day and ensuring we deliver on our sustainability commitments to our shareholders and the Australian community. Finally, the Board determined to increase the minimum shareholding requirement for the managing director and CEO to 200% of total fixed compensation. I would also like to take this opportunity to speak to resolutions 4 and 5 relating to the allocation of equity to our managing director and CEO Leah Weckert. Resolution 4 relates to the approval sought to allot 50,467 shares to Ms. Weckert pursuant to the 50% deferral into equity of the short term incentive earned in the 2024 financial year.
These shares will be subject to a two year deferral. Resolution 5 relates the approval sought to allot to Ms. Weckert 203,963 performance rights being equivalent to 175% of Ms. Weckert's total fixed compensation. The terms of this long term incentive grant are set out in the Notice of meeting and importantly they are entirely performance based. This long term incentive structure has been set by the Board in recognition of the importance of aligning remuneration outcomes with long term returns to shareholders. Thank you.
Thank you very much for that comprehensive summary of a very complex area, Richard. Turning to this item now on the notice paper, item 3, the text of the resolution is being displayed.
While the vote on this item of business is advisory only, the Board takes account of the discussion and when voting will review the votes in the context of the remuneration practices and policies going forward. The Board recommends that shareholders vote in favor of the adoption of the remuneration report. I now invite any questions that you may have on this matter, starting with any questions from the room. I don't believe there are any questions from the room. Sally. Are there any questions on this matter online?
There are no online questions or comments on this matter.
Thank you very much for allowing us to move forward. Therefore, with no further questions. The details of proxies and direct votes received in relation to this item are now being displayed. Please enter your votes for item three if you have not already done so. I now turn to item four, which is the approval of the grant of the short term incentive shares to our Managing Director and Chief Executive Officer Leah Weckert as the deferred component of her short term incentive award for the 2024 financial year. The text of the resolution is now displayed. Details of the proposed grant are set out in the notice of meeting. As outlined in the notice of meeting.
The purpose of Leah's short term incentive is to provide incentive increased focus on and reward for performance against those areas that most significantly drive the delivery of the company's strategic initiatives to which Mr. Freudenstein has already spoken. The Board, with Leah abstaining, considers the grant of STI shares to be appropriate in the interests of shareholders and unanimously recommends that shareholders vote in favor of item four. I now invite any questions that you may have on the approval of Leah's short term incentive grant. Are there any questions from the floor? If not, are there any questions online?
Sally: There are no online questions or comments on this item.
Thank you. The details of the proxies and direct votes received in relation to this item are now being displayed. Please enter your votes on item 4 if you have not already done so. I now turn to item five, which is the approval of the grant of performance rights to Leah Weckert as her long-term incentive award for the 2025 financial year. The text of the resolution is now displayed. Details of the proposed grant are set out in the notice of meeting. As outlined in the notice, the purpose of Leah's long-term incentive is to ensure that her interests are aligned with the long-term interests of shareholders by providing her with the opportunity to be awarded an equity interest in Coles, subject to the achievement of the performance targets as set out in the notice of meeting to which Mr.
Freudenstein has already referred to the Board, with Leah abstaining, considers the grant of performance rights to be appropriate in the interest of shareholders and unanimously recommends that shareholders vote in favor of item five. I now invite any questions that you may have on the approval of Leah's long-term incentive grant. Are there any questions from the floor? If not, Sally, are there any questions online?
Chairman, we've received an online comment from Ms. Natasha Michelle Lee who says the LTI remuneration hurdle is set at three years. Many companies are moving to longer time frames and I request the Board to consider a longer performance time frame.
Thank you very much, Ms. Lee, for your question. This is an issue which has been the subject of considerable review and discussion by the Board of the People and Culture Committee since the time of Coles demerger. The reason why it is set at three years is perhaps industry specific, having regard to the nature of the retail industry and also having regard to the structure of like kind incentive arrangements with other retailers in Australia and globally. We've found that three years is in fact the right period of time to rely upon to assess, measure and reward good performance, and we've found that that has served us well, as you'll be aware, Ms. Lee, that we seek to make these awards for senior leaders in the company each year, and so you do get a rolling three year period consecutively from year to year.
I think it served us well. We do debate it, we do consider it. We assess what's going on in the marketplace more broadly at the present time. Our view is that three years is the right period. Are there any further questions? Sally?
Chairman, there are no more online questions or comments on this item.
Thank you. Then the details of the proxies and direct votes received in relation to this item are now being displayed. Please now enter your votes on item five if you have not already done so. I now turn to item six, which is the renewal of the proportional takeover provisions in the Constitution. The text of the resolution is shown on the screen. The proportional takeover provisions were adopted with effect from 21st November 2018 when Coles was listed on the Australian Securities Exchange and were last renewed with effect from 10 November 2021 under the Corporations Act. These provisions must be renewed every three years or they will cease to have effect.
The proportional takeover provisions are intended to allow shareholders to vote on any takeover bids received by Coles, where an offer is made to each shareholder to buy a proportion of that shareholder's shares and not the shareholder's entire shareholding. Unless a majority of shareholders support such a bid under the company's constitution, the transfer of shares would not be able to proceed. These provisions are intended to reduce the risk of effective control of Coles being passed without shareholders having the opportunity to sell all of their shares to the bidder, as well as the risk of the bidder being able to acquire control of Coles without paying an adequate premium to shareholders. The proposed provisions are identical to the existing provisions in the Constitution, and on balance, the Board considers that the potential advantages of these provisions for shareholders outweigh the potential disadvantages.
This is a special resolution which means that in order for it to pass, at least 75% of the votes cast on the resolution must be in favour. Details of the proposed renewal of the Proportional Takeover Provisions in the Constitution are set out in the explanatory memorandum accompanying the notice of meeting and a copy of Coles Constitution is available on our website. The Board unanimously recommends that shareholders vote in favour of item six. I now invite any questions you may have on the renewal of the Proportional Takeover Provisions in the Constitution. Are there any questions from the floor? I think not. Are there any questions online in relation to this matter? Sally?
There are no online questions or comments in relation to this matter.
The details of the proxies and direct votes received in relation to this item are now being displayed. Please now enter your votes on item 6 if you have not already done so. I now move on to item 7 which is in three parts 7.1, 7.2 and 7.3. I would like to address item 7.1 first. Item 7.1 seeks an amendment to Coles Constitution. After item 7.1 has been addressed and discussed we will proceed to the substantive matters in items 7.2 and 7.3 which we will address together. All three items have been requisitioned under section 249N of the Corporations Act by a group of shareholders holding approximately 0.0018% of Coles shares on issue. I understand a representative from the requisitioning group, Mr. Adam Verwey is present today and would like to speak to the matters to be discussed and items 7.2 and 7.3.
At that time I will invite Mr. Verwey to the microphone when I open the floor for discussion on those items. Item 7.1 concerns a special resolution proposing to amend Coles' constitution to include a provision that would enable shareholders by ordinary resolution to express an opinion or request information about the way in which a power of the company vested in the Board has been or should be exercised. The text of the resolution is shown on the screen. The Board unanimously recommends that shareholders vote against this resolution. Detailed reasons as to why the Board does not support this item 7.1 are set out on page 16 of the Notice of Meeting. In summary, the Board considers that it is not necessary or desirable to amend the constitution given the existing rights conferred on shareholders under the constitution and the Corporations Act.
The Board also believes that the proposed amendment to the Constitution could increase the scope for requisitioned resolutions to be used by groups of shareholders whose interests are not aligned with and may be contrary to the Company. Generally, the power to manage the business of Coles is vested in the Board. Under Coles' Constitution it is important that the Board at all times be responsible for its actions and be focused on creating long-term value for shareholders. The Board has an overriding duty to proceed at all times in what the Board considers to be the best interests of the company as a whole. Shareholders are able to hold the Board to account for their decisions by voting on the appointment and removal of Directors at each annual general meeting and by raising matters of concern either directly with the Company or at the annual general meeting.
The resolution proposed is a special resolution. This means that it will only be passed if at least 75% of the votes cast by shareholders on this resolution are in favor of the resolution. Irrespective of the vote on item 7.1, there will be the opportunity for discussion of item 7.2 and item 7.3. Following the completion of item 7.1, I ask that you hold your questions on Coles farmed seafood sourcing practices until I open the floor for discussion on items 7.2 and 7.3. At this stage I would like to invite any questions or comments that shareholders have only on item 7.1 which relates to the proposed amendment to Coles Constitution. I now invite any questions or comments that shareholders may have on this item 7.1. Are there any questions from the floor? I think not. Are there any questions, Sally, online in relation to this matter?
There are no online questions or comments on item 7.1.
Thank you. Then the details of the proxies and direct votes received in relation to this item are now being displayed. The Directors unanimously recommend that shareholders vote against the resolution. Please enter. Now enter your votes on this item 7.1 if you have not already done so. Based upon the proxy and direct votes received ahead of the meeting, and the number of votes that I have been informed are represented on the floor and online today, it is apparent that item 7.1 for the amendment of Coles constitution of the Company will not be passed. Therefore, items 7.2 and 7.3, which are contingent on amending the constitution, will not be put to the meeting. However, while these items are not being put to the meeting as previously mentioned, I will shortly invite shareholders to ask questions or comment upon items 7.2 and 7.3.
The text of the resolutions for both items 7.2 and 7.3 are shown on the screen. Item 7.2 requests that Coles prepare a report by no later than 30 April 2025 on the impacts of farmed seafood that Coles procures for its own brand products on endangered species. Item 7.3 requests that Coles cease procuring farmed salmon for its own brand products from Macquarie Harbour by no later than 30 April 2025. These items were not supported by the Board. Detailed reasons as to why are set out on pages 16 and 17 of the Notice of Meeting. I would now like to make a few comments on these items. I would like to begin by confirming that we take responsible sourcing very seriously in all areas of our business.
Our procurement approach for our own brand products, including with respect to farmed seafood, is disclosed in our 2024 Sustainability Report and the 2024 Notice of Annual General Meeting as well as on our website. We continue to update our processes and procedures on a regular basis, including in consultation with stakeholders to ensure they remain appropriate and are delivering the right outcomes. Each of our own brand seafood suppliers are required to comply with regulatory and licensing requirements in Tasmania. This includes specific conditions relating to farmed salmon in Macquarie Harbour as specified by the Tasmanian Environmental Protection Authority or EPA. The salmon we source from Macquarie Harbour is also certified as responsibly sourced by Best Aquaculture Practices, sometimes known as BAP, and GLOBALG.A.P.
In our 2024 sustainability report, we noted that concerns have been raised with respect to salmon farming in Macquarie Harbour and that it is an important and complex issue which we are closely monitoring. As part of this process, we have been engaging directly with a range of stakeholders to inform our understanding of the matter. This engagement has included involvement with the federal and state governments, non-government organizations, scientists, Salmon Tasmania and our suppliers. We also note that we have been steadily reducing the volumes of salmon from Macquarie Harbour, with plans to continue this transition in the coming year. We have also been closely monitoring regular reporting published by the Tasmanian EPA and ongoing studies that are being undertaken as outlined in our Notice of Annual General Meeting. There are already a number of current government-led reviews in relation to the Maugean skate.
Additionally, the Tasmanian EPA undertakes quarterly monitoring of oxygen levels in the harbour, with the salmon industry also required to undertake its own monthly monitoring. The Tasmanian EPA's most recent report was released on 13 September 2024 and indicated an overall improvement in dissolved oxygen levels in recent years, noting that they are now close to the range observed in 2010 when the Maugean skate population first began to decline. Since Coles' Notice of Meeting was released. The University of Tasmania's Institute for Marine and Antarctic Studies also released its second interim report on the Maugean skate population on 20 September and in it, noting positive signs as well as highlighting the importance of continuous monitoring to understand population trends and inform future conservation actions. Coles is closely monitoring the processes and reports outlined above and is continuing to engage with all stakeholders.
Our position is that the Federal and Tasmanian governments and various independent research bodies are more appropriately placed to assess and access the available scientific evidence and manage the interests of all affected stakeholders. In relation to item 7.2, our view is that commissioning any further report by Coles would duplicate existing reviews currently underway with less comprehensive data access. In relation to item 7.3, we note that the number of stakeholders involved in seafood farming includes seafood farmers and local communities in Tasmania as well as other supermarkets, food service companies and exporters. Given the broader impact beyond our own organization, a multi-stakeholder approach to seafood farming in Macquarie Harbour is necessary. We will continue to engage with relevant stakeholders and consider all views and recommendations on our sustainability reporting. We will also continue to review our procurement policies in light of scientific research and best practices.
We will of course continue to publicly report to our shareholders about our impacts on sustainability and nature through our sustainability report. If I may, before inviting the questions from shareholders from the floor, and I'm not sure how widely this is known, but earlier this morning the Prime Minister of Australia, the Honourable Anthony Albanese MP, the Minister for Agriculture, the Honourable Julie Collins, and that's the Federal Minister for Agriculture, Fisheries and Forestry and the Senator for Tasmania, Senator Ann Urquhart, released a joint media announcement and I think it would be helpful for shareholders to be aware of that announcement in the context of the discussion which we will now have. That was the announcement and if I may just read a few extracts from it, that the Albanese government wants to see a sustainable industry that supports workers and their families right into the future.
The Government is investing more than AUD 28 million in new measures to boost water quality and improve environmental conditions at Macquarie Harbour, and I'm just trying to summarize if I may. I'm not reading every word of the funding. AUD 21 million will be committed to improving and scaling up oxygenation in Macquarie Harbour. Another AUD 5 million will expand the current Maugean Skate breeding program's work on hatching eggs and raising juvenile skates for release. AUD 2.5 million will be committed to skate population and environmental monitoring compliance as well as community engagement, and quotes attributable to the Prime Minister making sure we have a sustainable salmon industry and deliver stability for workers and their families into the future, and quotes attributable to Minister Collins. That's why I'm pleased to announce these measures today to increase efforts to improve the health of Macquarie Harbour.
These measures will protect our state's unique environment and support sustainable salmon farming in Macquarie Harbour. Tasmania's independent environment regulator has already confirmed oxygen levels in Macquarie Harbour are rising and the Albanese government is pleased to be supporting measures to continue these improvements, and then a quote attributed to Senator Urquhart who was a Tasmanian Senator. We know that engineered oxygenation has worked overseas and a trial already underway in Macquarie Harbour is showing increasing levels of dissolved oxygen. The current oxygenation trial by the Australian Government's Fisheries Research and Development Corporation and Salmon Tasmania is supporting conservation efforts for the Maugean skate.
This obviously was very current update of information and I think what it serves to remind us all is that the state government of Tasmania, the federal government and the agencies and scientific bodies working on this project are all focused on achieving a great outcome for Australia, and in that regard the focus is clearly upon a sustainable salmon industry in Macquarie Harbour and the longevity and well-being of Maugean skate residing uniquely in Macquarie Harbour. I thought it was only fair to make that information available to all shareholders. I'm sorry that it only I think was released earlier this morning that we haven't had the opportunity to otherwise circulate that information to shareholders, but against that background I now hand over to any questions from the floor. Microphone two.
Mr. Chairman, I would like to introduce shareholder Ms. Kelly Roebuck from Six. Thanks.
Thank you, Ms. Roebuck. Nice to see you in person.
Yeah, likewise. And thank you for everyone who's still here. I know it's a long meeting. I appreciate everyone's patience. So I have traveled here today from Palawa Country Tasmania to speak directly to the board and shareholders. Firstly, I want to acknowledge the significant number of fellow Tasmanian shareholders who added their support to ensure this resolution made it to the highest levels of our company. Allow me to briefly explain why Tasmanians and numerous other Coles shareholders felt the need to submit the world's first shareholder resolution aimed at stopping an extinction event. A world first that no company should be proud to have on the record. Macquarie Harbour, overlapping the Tasmanian Wilderness World Heritage Area is the last remaining home for a 60-million-year-old animal found nowhere else on earth. The endangered Maugean skate.
From 2014 to 2021 the Maugean skate population crashed by nearly 50% placing it ever closer to extinction. Macquarie Harbour is also one source of Coles' own brand salmon. Australia's peak scientific body, the Threatened Species Scientific Committee, has assessed Macquarie Harbour salmon farms as being catastrophic to the Maugean's skate survival. The committee has called for the urgent removal of salmon farms from the harbour. The same salmon farms that supplies some of Coles' own brand salmon. The same salmon that goes on to be marketed with Coles' responsibly sourced label. Surely selling and labeling a product as responsible that is associated with an extinction event is creating an unnecessary brand risk to our company. A significant large brand risk for a product that makes up just a small percentage of Coles overall own brand salmon.
Moreover, government processes should not preclude Coles from taking responsibility for its own supply chain. Government processes and delays do not change the reality that the Maugean skate is just one extreme weather event away from extinction. According to the Institute for Marine and Antarctic Studies, leading Maugean skate researchers. In fact, arguably government delays place greater onus on Coles to step up and protect shareholders. The prudent course of action, given the urgency and catastrophic situation would be to act now. While we welcome Coles' public statement that it has begun reducing the salmon sourcing from Macquarie Harbour, the company is yet to commit to a date by when all own-brand salmon will be sourced from other sources.
So, Chairperson, my question for you is, can the board confirm, without divulging commercial sensitivities, that it is making a full transition away from Macquarie Harbour salmon and, if so, by when?
Thanks very much indeed, Ms. Roebuck. I did have the benefit of link up with Mr. Roebuck and a few others discussing the importance of this issue the other day, and let me firstly say how pleased I am that as a shareholder you're bringing forward issues which you think are important that we as a company are addressing. This is exactly the healthy structure that we want. We are very much engaged with the whole of the community and as I said in my earlier comments, we are meeting with all stakeholders who can assist in ensuring we have a comprehensive understanding of the status of where we are and the opportunities of the way and the way ahead.
I think when we completed our sustainability report in August of this year, which was obviously well ahead of this matter being placed or requested to be placed on the agenda for this meeting, our Chief Executive myself indicated the complexity of the salmon farming and the multiplicity of interests and stakeholders and the different levels of information that are inherent with the research taking place. What we felt and continue to feel is that the Federal government and the Tasmanian government and the Environmental Protection Authority and the scientific bodies who are really heavily focused and engaged in this area and are able to take account of all stakeholders are the ones who are appropriately determining the process, the timescale and the support that the industry and the harbour and the communities that are involved in the sector are appropriately taken into account.
I think the announcement this morning just further highlights the relevance of that approach. As far as your specific question, Mr. Roebuck, which goes to where are we in relation to salmon farming in Macquarie Harbour? We have said that we had reduced our level of salmon coming from Macquarie Harbour and that we would anticipate further reduction in the coming period. We have not set any timelines about the long term continuation of salmon farming. Drawing from Macquarie Harbour, I think you would be well aware that at its peak, if my memory serves me right correctly, there was about 20,000 tons of salmon coming out of Macquarie Harbour, maybe in 2014. Somewhere around there, I think, was the peak. My recollection is it's about 9,500 tons of salmon came out of Macquarie Harbour last year.
It's really pleasing to see the comments from some of the researchers about the levels of dissolved oxygen. I know it's not necessarily comprehensive and in fact the researchers are very focused on the importance of measurement, measurement of numbers, measurement of dissolved oxygen, and you are more than well aware of the program for the captive breeding program which the Chief Executive and myself were fortunate enough to meet with the persons responsible for that program from the Institute for Marine and Antarctic Studies last week, and there is certainly some positive progress being made and I'm delighted to see that this morning's announcement is adding further financial backing to that project, so we're conscious of the importance of this issue. We will continue to involve and discuss with all relevant stakeholders to make sure that we do the right thing.
I believe that the course of action that we're currently pursuing is the right one.
Thank you. And if I can just comment about today's announcement, if I anchor it back to the conservation advice that was from the independent peak body advising the Australian government. The conservation advice explicitly says the fastest and simplest way to bring up oxygen levels in the harbor is to remove salmon farming. That has not been done by the government. And so while we welcome that there is captive breeding money going in as well as to help add oxygen to the harbor, those are just band-aid measures. The best captive breeding program you can have is one that doesn't exist and isn't necessary.
Thank you very much for your comment. Are there any further questions from microphone one?
Mr. Chairman, I would like to reintroduce shareholder Mrs. Christine Cook.
Yes, Mrs. Cook, thank you for coming back.
Staying. Staying is what you mean, staying. Thank you for the opportunity to speak again. I'm not going to say what I had prepared to say. I want to support Ms. Roebuck. She probably knows more about this than I do.
Except.
Except I want to add to what she has said. There are only about 140 of this rare skate left that's in the whole world. The only place they exist is in Macquarie Harbour. The story this morning from the government's AUD 28 million. The headline in ABC News is the government will provide AUD 28 million to stop the skate going extinct. It's not about cleaning up Macquarie. Yes, it is about cleaning up Macquarie Harbour. But there is incredible fear that this rare species that only exists here, well in Tasmania, in Macquarie Harbour is about to go extinct. You are all powerful people. There are other things you can't supply. I just ask you first of all to reduce the amount of salmon coming out of Macquarie Harbour to put pressure on those farmers to stop doing it.
I ask you to start labeling especially the salmon but all other products with the source so customers are informed and know where they're buying products from. And if you proceed with this and don't speed up the process of reducing the salmon farming in Macquarie Harbour to save this rare species. I'm sorry, I'm really distressed at this stage about this. What will the board do when the skate goes extinct? What would your positions be? Will you all resign?
Thank you very much Ms. Cook, for your passion and for your questions. I've got very little additional information to add to that which I've already added and I would rather not repeat it. But we are working with everyone. We will continue to work with everyone. We have made a statement about our own way in which we've sourced salmon from Macquarie Harbour and the way that has moved over the last year. And we will. Obviously in the light of today's announcement, there will be opportunities for further engagement with parties who may make a difference to the wellbeing of the wider environment and the communities who are also involved in Tasmania associated with this industry.
Thank you. Just please take it seriously. It's not.
Thank you very much. Okay, microphone two.
Mr. Chairman, I would like to introduce shareholder Mr. Adam Verwey from Six.
Mr. Verwey, nice to have you here.
Good to be here and thanks everybody for their patience in sticking around and.
Hearing about the skate. Actually proposed a similar resolution to Woolworths.
Two weeks ago which received one of the highest votes in favor of a shareholder resolution globally this year, so I think there's a lot of shareholder support, particularly for Resolution 7.2. I've been working in ethical and ESG investment for 20 years. That includes leading the investment team at.
One of the 20 largest superannuation funds.
In the country and also being on the responsible investment committee at Australia's largest ETF manager.
Previously, Coles has been excluded from a.
lot of ethical and ESG portfolios due to holding a lot of assets in gambling and tobacco and alcohol, and obviously that's changed over the last few years as you've divested some of these activities.
Companies that demonstrate strong ESG performance and that appear in ethical and ESG.
Portfolios tend to benefit shareholders by creating a premium on the share price.
This might be short-lived if the.
Management of nature risks is not taken seriously by the company, and if there's an association with an extinction event. When I was first introduced to this.
Issue, I was surprised that we would have to go as far as putting.
A shareholder resolution to get the company.
To act on moving just one small.
Part of its salmon supply for just one of many thousands of products that Coles stocks.
When we've been engaging with fund managers.
Super funds and proxy services from Australia.
Also from overseas, they've also shared our disbelief.
But we've had to go as far as proposing a shareholder resolution to stop.
An association with an extinction event at.
A company that values its sustainability as part of its brand. My question for the chair you mentioned.
At the start of this meeting in.
Your opening statements that sustainability was a very core part of the shareholder value and share value. So my question is, has a company quantified how much of its brand value?
Is linked to perceptions around being green.
Responsible and sustainable and the potential costs of association with an extinction event.
Thanks very much, Mr. Verwey. I mean, I think the issue that you raise, we all agree is important. The question is how we're all addressing the matters that are in front of us. We believe that we're doing the right thing in the way that we are seeking to cooperate with, work with each of the parties who are the principal determinants of activity in salmon farming in Tasmania, principally the involvement of the Environmental Protection Authority of Tasmania. You will be well aware that the director of the EPA has been terribly involved in addressing this issue and looking at the way in which the different licensees operate within Macquarie Harbour. You'll be very aware of all the scientific research that's taking place.
We are committed to continuing to work with all stakeholders in this area. The reason we do not support 7.2 is we don't think it's helpful for us to write a report about something where those who are far more involved, far more expert, far more access to the information are able to provide the relevant insights to the wider community that will be helpful as we as a nation work out seafood farming, salmon farming and Macquarie Harbour. In terms of reputation, reputation is something which can change very quickly. You can have a wonderful. I think, in fact the matter was drawn to our attention by Mrs. Cook earlier. Reputation can happen because someone does the wrong thing, and across our whole group we are very sensitive to making sure how we can do the right thing on the balance of the constituency of all of our stakeholders.
And when you are in business, it's complex. There are lots of participants, there are lots of parties who we're satisfying and we are accountable to all stakeholders. So we have to find that way of engaging with all the stakeholders and doing the right thing. That's what we're seeking to do here. And I appreciate you have a view that it could be done differently.
Thank you for that, Chair. Just one small statement around item 7.2 is that it seems like you haven't mentioned any of the other threatened species.
That are negatively impacted by your seafood.
Sourcing, which I think is important for shareholders to know that you understand all of the impacts and all of the.
Threatened species that are being affected by your seafood supply.
Thanks, Mr. Thurin. The white shark, right whale is the only other species that we could find on the endangered list that may be impacted by any of our farm seafood operations. That is where it may be caught up in a net or associated with farms, seafood operations or other farming activity. We have done a review though, and that was the only other item that we could find on the list. If you've got other matters that you would like to separately bring to our attention, please do so so that we can more specifically address.
Mr. Chairman, I would like to introduce shareholder Ms. Phoebe Rountree from Six.
Ms. Rountree.
Good afternoon all. Naturally, this is a related question, but I do want to take it to the question of leadership on the topic of sustainability, which has been quite a theme through this afternoon's and this morning's conversation. Just two weeks ago, the federal government published an extension of one year to the decision to reclassify the skate from endangered to critically endangered. However, as Callie has explained quite clearly to the room, the scientific advice tells us that the skate doesn't have time.
For delay in action.
It's one bad weather season away from a potential extinction and it's critical to remove significant salmon farming from Macquarie Harbour. Now, when a shareholder raised this issue with the other big Australian supermarket at the Woolworths AGM a couple of weeks ago, the board's disappointing response was that they would be waiting on the now delayed bureaucratic processes to play out before they made their decisions. I want to take this opportunity to urge the Coles Board not to take this same approach and follow Woolworths response to this. Not to wait on delayed government processes, but to be a leader here and act to stop your company being involved with an extinction event.
So my question to the board is, are you waiting on the government for further information before you act on this issue or will you step up and be a leader and help to save the skate? Thank you.
Thanks Ms. Rountree, for your question. I think you would see that this is a complex issue where a lot of stakeholders are involved. There are different views about how skate population affects oxygen levels, causes of what's happening with the oxygen levels. I think the announcement this morning from the federal government adds real impetus to what is going to, as I said in this announcement, lead to sustainable seafood, salmon farming in Macquarie Harbour and a stable, attractive environment for skate in Macquarie Harbour. We will work with all of those parties, but we will not try to preempt the science, nor will we be preempting the success that we believe lies behind the announcements which are being made, and we will cooperate with all stakeholders and assess in the light of new information that comes to our attention.
I would just like to briefly respond and say it is quite concerning to hear these comments around the confusion around the science and would really encourage the board to come and speak to Kelly. Come and speak to Jess, our next speaker, who are quite across the science and can also connect you with others to understand this more.
Thank you. Thank you very much.
Mr. Chairman, I would like to introduce shareholder Ms. Jessica Coughlan from Neighbours of Fish Farming.
Yes, Ms. Cowland, good morning or good afternoon.
Sorry, it's Coughlan.
Oh, Coughlan.
Sorry, it's Irish. So I will just quickly address the spend. You know, I mean, it's pretty obvious by now that the skate, especially going into an election cycle, has become a political football and a very expensive one at that. It has been rather simplified, that issue, in the media. The captive breeding program to date has lost 50% of its adult breeding specimens that were collected from the wild. And the numbers in the wild being what they are now means that extraction of further adults could really, really damage the viability of a wild population reestablishing and being successful into the future. The other issue as well is that that AUD 21 million that's going to be spent on the oxygenation program is propping up what is a dying industry in that region.
I'll go into more about that in a minute when I talk about certifications. Essentially the three companies that all farm salmon in Tasmania in our waterways are foreign owned and they have not paid corporate tax in the last three years. Our government has just pledged AUD 21 million of taxpayers' money to support their activities. Those companies have abysmal environmental track records overseas. The EPA, also the Tasmanian EPA, oversaw the expansion in Macquarie Harbour by this industry which resulted in the catastrophic decline in skate numbers, a loss of almost 50% of numbers in that population. There is no way that that's sustainable and I think it's poor that Coles is using the term sustainable in relation to the management of what's happening in that waterway.
Two weeks ago, my organization uncovered documents via the Right to Information Act revealing that salmon farming operations in Macquarie Harbour lost 1.15 million kg of fish to premature death between September 2023 and March 2024. What these mortality figures amount to is 12% of death before harvest out of the annual production lost in just six months. This is not the first time an incident like this has happened. 1.35 million fish died over six months in 2018. Environmental impacts and welfare issues rife in this region are widely known. In fact, ASC Aquaculture Stewardship Council, which is considered the gold standard of aquaculture certification, and RSPCA have both stopped certifying that region entirely. The ASC actually notes of Macquarie Harbour finfish farming and I quote, "farms are still certified to other standards that have lower environmental requirements.
In this statement, ASC is referring to two other certification bodies, BAP and GLOBALG.A.P. The two certifications that Coles is leaning on and continues to lean on to prop up our responsibly sourced seafood label. Both of these certifications are facing calls from more than 80 global groups to stop giving a misleading tick of approval to Coles Macquarie Harbour salmon and trout farms. The increasingly inhospitable nature of Macquarie Harbour as a fish farming region is demonstrated both through the impacts to the skate and the welfare of the farmed fish. And this brings the credibility of these two schemes into question. In addition to this, just 10 days ago the U.S. Federal Trade Commission received a petition to investigate BAP for deceptive marketing following evidence that banned antibiotics, environmental degradation and forced labor were associated with BAP certified farms and facilities.
What I'm bringing to the attention of shareholders is risk being reliant on these questionable certifications in Macquarie Harbour for Coles' own brand salmon has resulted in our company as shareholders receiving an ACCC formal complaint alleging false, misleading or deceptive representation of our own responsibly sourced claims. It has also resulted in Coles having to testify on this very issue at the Senate inquiry into greenwashing. You have publicly recognized the environmental harm caused by farmed seafood from Macquarie Harbour and publicly stated that you have reduced your supply in the region. Given this, how can you justify to shareholders why you are continuing to label products from Macquarie Harbour as responsibly sourced?
Thanks very much Ms. Coughlan for your observations and questions. I think you are well aware of our seafood policy requiring independent certification. We have recognised three groups who are relevant to provide that certification. I'm not going to stand here and make comments about the matters you reference about those globally accepted parties in terms of that certification upon whom we rely. But you should be assured that we are closely involved in the whole of our business and that includes where we are relying upon independent certification. We are engaged with those parties to ensure that we understand the standards to which they hold themselves accountable and upon which we rely. The issue as to the ownership and other matters that you refer to in relation to the three salmon farming operations that are active in Macquarie Harbour.
I.
Things are maybe interesting for some, but I mean what counts here is, are we doing the right thing? And we believe in having regard to all of the information in front of us, we are responding correctly in the interests of our shareholders and the reputation risks that are associated with the whole of our business. And we're also focused on ensuring that we're dealing fairly and properly in the provision of our goods to our customers, who rely upon us every day to make sure that we're meeting their needs, particularly in this attractive and important source of protein.
I do appreciate the difficulty of the board in being in this particular position. I do, however, think that customers and shareholders deserve to know where their food is coming from. And in this regard, I mean, when it comes to wine and cheese and dairy products and other products, there's like a. What do you call, like a pride that comes in this, the place of origin. And coming from Macquarie Harbour is not worthy of pride. It's something that will. It will be a shame. It will be a stain on everybody who has supported what is going on over there. We've already seen the thylacine go into extinction, a very closely monitored extinction. And there is great concern from scientists that this is exactly the same path we are on our way to with this skate.
Thank you very much indeed for your comments. Microphone one.
Mr. Chairman, I would like to reintroduce shareholder Dr. Peter Cook.
Dr. Cook, I'll be very brief. We're talking about risk here. If we have that extreme weather event prior to the next AGM and the skate goes extinct, will the board resign en masse because there'll be a massive effect on the share price? Well, thank you, Mr. Cook, for the question. It's not something which I'm anticipating that we'll be in a position of, but we will respond to whatever criticism that is made against the company at any point of time on any matter. And we will always behave in the interests of our shareholders. That is our duty and obligation and we carry that very seriously in terms of the discharge of every element of how we conduct our business.
And we believe that we are conducting our business in the best interest of our shareholders in each and every one of the endeavours that we are undertaking. I appreciate the extent of the position that you're presenting, but we will behave appropriately in all circumstances and respond to any third party situation that addresses our reputation accordingly. Well, good luck to you and good luck to the skate. Thank you. Are there any further questions? Sally, are there any questions online in relation to this matter?
No questions online, Chairman, but we have an audio question from Mr. Andrew Wright. Mr. Wright, please slowly ask your question after you hear the beep.
Good afternoon, Chairman, board and shareholders. As you've heard, my name is Andrew Wright, speaking on proxy for Emma Dawson. I'm joining this important meeting because I have a long history of professional involvement in the management of complex fisheries in changing environments with the overall objective of securing sustainable outcomes. Recently, together with 33 eminent scientists, including five fellows of the Australian Academy of Science, Australia's most eminent scientific professionals, I signed an open letter to the Minister for Environment, Tanya Plibersek, appealing to her to remove salmon farming from Macquarie Harbour. The reason for this appeal is the irrefutable scientific evidence that the key contributor to the potential extinction of the Maugean skate is salmon farming in the harbour. A 47% decline in the skate population. Since salmon farming in 2014 is not scientifically contested, the status of the skate population in Macquarie Harbour is dire.
The Chairman's informative statement in introducing item 7, particularly item 7.2 and 7.3, as with industry and government announcements, ignores the urgency of needing to act immediately to avoid the extinction of the skate. Operations that contribute to the global extinction of a species are unsustainable. As such, all actions from production to consumption, including retailing of salmonids sourced from Macquarie Harbour, are promoting the continuation of unsustainable practices and are totally at odds with Australia's international commitment to a precautionary approach. Throughout the discussion this morning and into the early afternoon, the word precaution has not yet been raised. Precaution means uncertainty or lack of evidence is not a reason to delay a decision designed to conserve a threatened species or ecosystem and that risks need to be managed.
These commitments from Australia include the FAO International Plan of Action for the Conservation of Sharks, which includes rays and skates, and the 1992 Convention on Biological Diversity. In addition, these unsustainable practices threaten the Tasmanian Wilderness World Heritage Area declared by UNESCO for industry, that is, for Coles. There is related international guidance provided through the OECD's due diligence for responsible business conduct. Coles' unwillingness to commit to not support sustainable industries and responsibly source its business products by sourcing salmon from Macquarie Harbour means that it will potentially be complicit in adding its name to the list of companies that could contribute to the removal of a species from this planet that has been here for 60 million years. Shareholders should hang their heads in shame if that eventuates. Thank you, Chairman.
Well, thank you very much, Mr. Wright, for your online voice question.
I note the matters that you raised. I think there are some elements of the outcome of that which are not in line with the assessment that we're making. I've done my very best to try and advise all shareholders of the importance of how we are adopting our approach on all matters of sustainability and in the context of this resolution, importantly the matters of salmon farming and particularly in Macquarie Harbour, and I don't think I can add further to that which I previously stated. Are there any other questions?
Sally, Chairman, there are no more online or audio questions or comments on this item.
For your information, the details of the proxy and direct votes received in relation to 7.2 and 7.3 are now on display. As previously mentioned, noting that item 7.1 was not passed, items 7.2 and 7.3 will not be put to the meeting for voting. Before I close the meeting, I would like to pause to give shareholders a final opportunity to enter their votes. While we pause, are there any remaining questions in the room or online?
There are no further questions or comments online.
Thank you to everyone. If there are no further questions, we have now finalized our discussion and that concludes the formal business of this annual general meeting. If you have not already done so, please ensure that you submit your vote for each resolution in person or through the online platform. I now declare the poll closed. The final results of the poll will be advised later today to the Australian Securities Exchange and will be published on our website as soon as possible. That concludes our business today. Thank you very much indeed for your attendance at Coles Group's annual general meeting and for your support of Coles. We very much look forward to your continuing support as we enter the busy Christmas trading period and I wish everyone a very joyful festive season. I now declare the meeting closed.
For those of us in Melbourne, I invite you to join the board and executive leadership team for some refreshments which we serve just outside the entrance to this meeting room. Thank everyone very much indeed.