Good afternoon, and welcome to our inaugural Good Business Journey investor session. We've set up today's session, which we in fact intend to make an annual event, to share with you how deeply sustainability is embedded in our organization and across our value creation model. There has been a notable increase in the level of interest in how businesses approach environmental and social issues, and we see this as a great opportunity to take you through what we're doing in this regard. I'm joined today by Simon Susman, the visionary behind and the founder of our Good Business Journey, or what we refer to as our GBJ. Also with us today is Belinda Earl, who is the Chair of our Sustainability Committee, and Thembisa Skweyiya, Chair of our Social and Ethics Committee.
Together, we look forward to sharing our GBJ history, our progress, and accomplishments in this space, and also outline our targets and commitments going forward. We'll also have the opportunity to address any questions you may have, which you're welcome to begin posting online during the course of the presentation. Woolworths is, and always has been, deeply committed to our vision of being one of the world's most responsible retailers. Our GBJ is fundamental to this. It is a critical component of who we are, what we do, and what we stand for. In fact, this is one of the reasons why I joined the group. It's because it is so much more than simply a business. It has real purpose, and it plays a crucial role in positively impacting the lives of our employees, their families, our business partners, and the communities in which we operate.
As you may know, this October at Woolworths, we're celebrating our 90th birthday. Nine decades of making a difference. Since 1931, Woolies has deeply embraced its pioneering spirit, always finding ways to do better, to think bigger, to inspire more, and to care more.
90 years ago, there were no footsteps to follow, no blueprints, no instructions. Just us and our vision. Inspired by the trailblazers. Lifted up by our heroes. Never giving up, even when everyone else has gone home. Since 1931, Woolworths has found ways to do better, think bigger, inspire more, care more. Led by the ground breakers into a new tomorrow.
Thank you.
Celebrating 90 years of making a difference.
Sustainability has certainly become a central strategic theme for all businesses, and there is a lot of debate regarding the potential trade-offs and even the business case for investing in sustainability. I think it's wrong to assume that we, or any other company for that matter, must choose between business performance and responsible conduct. The most successful and purpose-led companies, in fact, do both. It is how we strengthen our brands, and it's how we keep both our people and our customers inspired and engaged to ensure sustainable growth to the benefit of all stakeholders. Why are these issues so critical to business in general, and to us more specifically?
Firstly and most importantly, we believe as a corporate we have a real responsibility, in fact, an ethical obligation towards the people in our value chain, towards the communities in which we operate, and towards their broader environment. Secondly, we have an instrumental role to play in addressing issues from social justice through to climate change. Thirdly, to secure our long-term viability as a business, we need to manage and mitigate risks across our supply chain, from water supply through to packaging and waste, and through to modern slavery. When it comes down to it, it also makes great business sense. In fact, we've achieved over ZAR 1.4 billion of sustainability-linked savings over the past 5 years alone. Finally, it's also become an important focus for our customers and investors.
A company's commitment to sustainability is increasingly influencing which brands or products customers choose to buy, where they choose to shop, and also which companies they choose to work for or invest in. For us, this clear and compelling imperative isn't new. It's been an integral part of who we are since the inception of our pioneering GBJ, and it is embedded in everything we do. In fact, we see this as being one of our key differentiators and a significant source of competitive advantage. Through our GBJ program, we've been able to lead the way in a number of critical sustainability initiatives, whether it's being the first major retailer to introduce plastic bag-free stores, or the first to remove sweets from our checkout aisles, or the first to embrace science-based targets for the reduction of CO2.
We've been well recognized externally for some of this work that we've done through various international sustainability awards over the years. We have also been included in various global sustainability indices, such as the FTSE4Good Emerging Index, where we are the only SA retailer in the Global Retail Top 5. We're also very pleased to have been the top-ranked African company in this year's GlobeScan Sustainability Leaders Survey. There's a lot that we're doing in this space, and a lot that we've achieved, but we know that we probably haven't done enough to keep you up to date on the key sustainability issues that are relevant to us and our industry, and the progress that we're making against the targets we've set.
Today is a great opportunity to begin to do more of that. At this point, I'd like to hand over to Simon Susman, who needs very little introduction, having been part of Woolworths for almost 40 years prior to him stepping down from the board in November 2019. Simon is the group's honorary president, and his contribution to the group has been invaluable. He was the architect and driving force behind our iconic food business and has been instrumental in inspiring and implementing our Good Business Journey. Simon, over to you.
Thank you, Roy. Roy has asked me to give a bit of the history and a bit of the context of the Good Business Journey. What always surprises me is when I think back quite how far back in years this journey goes. Indeed, if you think that Woolies, particularly in the 1950s to really the 2000s, had this very, very close relationship with Marks & Spencer. Our history has been intertwined, and it was really from Marks & Spencer that we got the seeds of building a business based on principles and values. They were founded in 1884, and they grew unbelievably well based on beautiful product, great value for money, and in particular, good human relations. Here was a business in Britain that survived through the Depression, when its staff were really jobless and in many cases foodless and in some cases homeless.
They started even then in the 1930s, helping their staff to live a better life. From that really came this base of values that influenced them so strongly, and then in the 1940s, when they bought 20% of Woolies, it started to influence Woolworths. Their real impact on us happened in the 1950s, where they sent a team out from Britain to really put Woolworths on the road of a business based on principles and values. We started at the time building the local clothing industry. That in turn was focused on great value for money and very, very good quality. Interesting, when I look at Roy's strategy today, Woolies then was producing a narrow range of high-quality, stylish merchandise, exactly what we're trying to do today.
The clothing industry in the Western Cape grew around Woolies, and that particularly grew in the 1960s, and enabled us to get the supply chain that could provide the quality that we required. In the 1970s, South Africa was an unhappy place. As a business, we had to survive and we had to continue, and at the time, we took very strong anti-apartheid stances. There were rules about Black people managing, not managing white people. We resisted those rules. We had to separate the dining rooms. We resisted that. We had to separate the toilets. We resisted that, and hundreds of other horrible, from small to large things we resisted based on this principle of values. Through all of these years, the concept of basing our business on doing good, whether in our product or our community or for our own people, was unbelievably strong.
It formed, as I say, over 100 years, the foundation of the business's thoughts, so that when we came to start the proper food business in the 1980s, it was clear we had to develop that business on the same principles. I remember a journey that I took with four of our top product developers to look at the world's best food, to Paris, to London, to San Francisco. In San Francisco, I was shown my first ever Whole Foods Market. Now, many of you will know that Whole Foods has been bought by Amazon, ostensibly to get into food distribution, I think to give Amazon some of the magic that it doesn't have, because Whole Foods is a magical business.
When we looked at that store, it was the store in Sausalito, I was blown away by the sense of what they were trying to be. They were selling organic foods. That was new. They were talking about their suppliers, their farmers. That was new. They were explaining what organic meant and how they were doing it, and their product was absolutely beautiful. I came back to South Africa, persuaded our then rather terrifying marketing director, Carol Broman, to come with me back to San Francisco to look at this Whole Foods Market. She walked around the store and said, "Simon, we have to do this." Those two trips to San Francisco were the genesis of what we called the Good Food Journey. That in turn has become the genesis of the Good Business Journey.
The next decade was the 1990s. Indeed, the 1990s saw us acquire Country Road. The interesting question is why Country Road? At the time, our chief executive, Syd Muller , had asked each of his Exco to go to Australia to look at a number of businesses, in particular, to look at Country Road. There was a unanimous view to acquire Country Road if we could. The issue was that Country Road represented in Australia what we felt we were trying to represent here. That same word, be, I said what Whole Foods wanted to be, we're trying to be. We saw Country Road as trying to be the same kind of value-driven business as Woolies was. That's why we bought Country Road. Tough start, but I have to say it's now doing exactly what it was supposed to do.
The years that followed that, the 2000s, came a time when a lot of the generation that had gone before were retiring, and it was Zyda Rylands who said to me, "Simon, we need to encapsulate what we stand for the business." We then created the values in a very conscious manner. Put the words on paper, made speeches about it, talked to our people about it, talked to our suppliers. The MySchool project came out of that, and it was the start of measuring consciously these values, and I think it stood us in enormous stead over the years. It's made us different in the marketplace, it's made us different to our customers, and it's made us different to our communities. The 2010s, we then coined the phrase, we wish to be the most sustainable retailer in the Southern Hemisphere.
That covers Australia, covers South Africa, covers New Zealand, and I think we are doing that, and we're doing that because we measure what we set out to do. At the same time, we started the concept of Farming for the Future, where we were consciously farming in a different way and measuring how we did that.
In certain areas in South Africa, we've got some of the most harsh weather patterns you can think of, and that brings a whole new dimension to farming. You easily fall into the trap to just add a lot of stuff into the soil just to maintain the plant.
If farmers are not going to look after the environment, we will have a very big problem.
We might look at a situation where we won't have enough food in this country.
One farmer cannot make the difference. Farmers together can make a big difference. If they have a tool to assist them in that, everybody would benefit from that.
We didn't have really an assessment of what is our impact on the environment, and that's where Farming for the Future was born, to fill that gap. Farming for the Future is an assessment. It is all about what is your decision-making process and how do you evaluate your decision.
It's based on science. We assist the producers to implement practices, maybe change practices, but it's all based on continual improvement over time. The initial part of Farming for the Future for a farmer is to start to measure. If you do not know what you're working with, you don't have any data, you cannot manage anything.
You need to establish your own baseline. We cannot compare one farmer to the next.
What we're trying to do is to get them to measure their own actions, to understand their own soil analysis, to understand their own water analysis. They are then more informed before they make decisions. As soon as they start with believing in their own decisions with the assistance of people that are totally independent and don't have any additional benefits from that farmer apart from sharing advice, then you can see they want to have a sustainable farm that their children can also farm on later. Farming for the Future is an holistic approach. Most of your practices are interrelated. What we're trying to do as scientists is to avoid the contamination of water instead of treating it afterwards. It's a more sustainable and more cheaper option than to put up a treatment plant that can cost you a few million ZAR.
Obviously that's directly linked to the costs, but it's also directly linked to environmental risk.
Farming for the Future is more about looking at the cause of the symptom than looking at the symptom itself. If you only look at the symptom, you are reactive. We need to be proactive. Instead of maintaining the plant, we are going in a direction to maintain the soil. The soil will take care of the plant. We don't play the marketing game. We really want to make a difference at the ground level. Figures that farmers shared with me, the amount of water they've saved while increasing production, I think Farming for the Future contributes quite a lot.
By measuring on a farm, you're getting data of your own on-site issues, and from there on, you can then make very good decisions that can save a lot of money, and eventually you can be sustainable.
It's also about resilience. When we do go through a drought, we are able to withstand the challenges better. To be a supplier to Woolworths takes you a long time. You just don't get to be a supplier to Woolworths. You need to prove that you can do what they require. Once you're in, it's like a marriage and divorce is not an option. For a farmer to have the logo on his product is the ultimate. We need to know what is happening, what's the story behind for the environment of each product. If the consumer picks up that potato, they know that every aspect in terms of environmental impact was assessed and there is a program. That is the most important thing for a farmer. What am I selling? What is my business?
We just assist the producer to get on a specific path, and then they take their own information and they make their own decisions. 10 years of Farming for the Future, it sounds long, but it's only the beginning. The goal of Farming for the Future program is to radically improve soil health and plant health, preserve resources like water and soil, and protect the biodiversity. The benefits of a company leading the sustainability way, balancing rigorous environmental standards while being independently assessed, creates a direct effect in a world which requires we conserve it. Those that hold the key to the majority of South Africa's environmental challenges simply are farmers. Welcome to Farming for the Future.
Now we sit in the 2020s, indeed, the team have put together what they term the Vision 2025 Plus, which doesn't just look five years ahead, it looks five years ahead and then beyond and beyond and beyond. This really fits into Roy's passion to become one of the world's, not the Southern Hemisphere's, the world's most responsible retailers. When I look at this, it just says to me the Good Business Journey continues. It has very long roots in the heart and the psyche of the business. It's very powerful. I think it motivates our teams enormously, and as I've said earlier, it gives us a critical role in society and dictates what we want to be now and into the future. Thank you, and let me please introduce Belinda Earl, who chairs our Sustainability Committee.
Thank you, Simon. I'd really like to acknowledge your extraordinary vision that inspired the Good Business Journey and led to its implementation some 14 years ago now. It's been an enormous honor for me to step into the committee chair after you, and at a time when the committee's so well positioned to move into the next phase of our sustainability journey with the recent launch of our Vision 2025+ goals. I personally am thrilled to be leading the committee at a time like this, not just to tackle the challenges that lie ahead, Really, to also push ourselves further into new and exciting sustainability territory. Fortunately, we will continue to have the benefit of your knowledge and your experience as you remain with us on the committee.
Our role on the committee is to ensure effective oversight of our sustainability strategy and its execution so that we can continue to position the group as a leader in responsible retailing. Our committee members include our group chairman and several members of the board, both executive and non-executive, with senior management also attending our meetings. Last year, we celebrated the conclusion of our 2020 Good Business Journey goals and commitments. We contributed a cumulative ZAR 4 billion to communities versus a target of ZAR 3.5 billion. This achievement was driven primarily by surplus food donations to approximately 1,300 beneficiary organizations across South Africa. We achieved 175% improvement in our energy productivity against the 2005 baseline.
This was also part of our commitment to the EP100 initiative, a global initiative which brings together companies working to improve their energy productivity in order to lower their carbon emissions and improve their competitiveness. In fact, we were the first major retailer in the world to sign up to the EP100 in 2017. We reported good progress against our target to responsibly source all key commodities such as cotton, leather, man-made cellulose fibers, cocoa, palm oil, soya, and coffee by 2020. Notably, 92% of Woolworths and 80% of the Country Road Group's cotton was sustainably sourced in that year, a significant achievement off a zero base in 2015. Woolworths' sustainable cotton commitments were recognized with a Better Cotton Initiative Retailer Award at the South African Cotton Indaba in 2019.
During the current year, in support of local Australian businesses, the Country Road Group reissued its iconic '90s collection using only Australian-grown cotton. Here's a video which shares some of the work we're doing across our Country Road Group in their biodiversity project.
G'day. I'm Andrew Watson. My family have farmed here at Boggabri since 1965, and my wife and I have taken over the farm from my parents. Isn't that good? The project we're involved with with Country Road involves planting 3.7 kilometers of tree lines along the Namoi River. This is on a property we've recently purchased. The banks were denuded, and high river flow was actually causing turbidity in the river. By doing this, we're going to increase the ecology along the riverbank by planting trees and grasses and trying to get it to be a much more stable environment.
If we get some good season, they could be this high within a year. In the '70s, we had lots of floods and the riverbank was washing away badly. I decided to plant corridors of trees along the riverbank to try and stop that erosion. Once the trees started growing, we found that the biodiversity of the whole farm became much more intense, and it's given us great ecosystem services with the cotton growing.
Cotton, along with all the other crops we grow, do have pests that predate and cause trouble with those crops. Previously there'd been a lot of control work using chemicals, and one thing for me is I don't want to use chemicals unless I have to. Right, you both had enough? The idea of being able to have beneficial insects actually kill the pests in our crops rather than have to use chemicals is one that is just majorly appealing. I think we're starting to really prove that there's an economic outcome as well as a massive ecological outcome. We're really grateful that there are organizations like Country Road and Landcare who are willing to help fund these works, which actually are improving the ecology on all our land.
Woolworths came very close to achieving its target to have at least one sustainability attribute for all its directly sourced products by 2020. With fashion, beauty and home, and foods achieving 96% and 91% respectively, while the Country Road Group achieved north of 70%. Working with its branded partners, David Jones recently launched its Mindfully Made initiative, which provides a platform for customers to shop their chosen sustainable and community-minded products, as well as having recently launched a designer resale platform in partnership with a luxury reseller, Blue Spinach. We've also made significant improvements in packaging across the group, and increasingly incorporated recycled content into our fashion and homeware products, reducing the dependency on virgin materials while also contributing towards the circular economy.
In the last three years, Woolworths has eliminated in excess of 350 tons of plastic per annum from our shelves through a variety of initiatives, and we've also begun phasing out single-use shopping bags throughout the Woolworths business. Currently, all the Country Road Group and over 240 of the Woolworths stores are plastic shopping bag free. David Jones and the Country Road Group also launched initiatives towards the circular fashion economy, partnering with companies to offer clothing rental options to our customers. Both companies also published their first-tier supplier lists in a move towards greater supply chain transparency. 90% of Woolworths' cotton, cocoa, coffee, palm oil, and seafood was responsibly sourced, while 80% of the Country Road's cotton was responsibly sourced. Country Road also opened the first 5-star, green-rated fashion retail outlet store in Australia, while Woolworths achieved a 6-star rating for one of its stores, the highest rating possible.
All in all, significant progress on a number of initiatives really underpins our Good Business Journey accomplishments. Earlier in the year, we launched our new Good Business Journey strategy called Vision 2025+, together with related group-wide goals to 2025 and beyond. These goals address our most material sustainability challenges and are aligned with global sustainability commitments and initiatives. Our ambition is to address the complex and interconnected sustainability challenges and opportunities we face both now and into the future. We also want to ensure that our Good Business Journey continues to keep us at the forefront of sustainability leadership, pushing us to innovate, drive awareness, and collaborate with others, just like we've done with a sustainability-linked loan, the first retailer in South Africa to do so.
We believe that by fostering collaboration between all our stakeholders, including our competitors, it'll be possible to make a meaningful and enduring impact on our collective sustainability concerns. Delivery against our new GBJ goals is a key focus area for the committee, as is the continued monitoring of our ethical sourcing strategy and expanding our approach to the circular economy. We've also reported on our climate-related risks and opportunities using the Task Force on Climate-related Financial Disclosures, or TCFD, for the first time this year in an appendix to our GBJ report. In 2022, we'll continue to monitor the effects of climate change and the risks and opportunities in relation to our value chain. In addition, we'll oversee management's process for the enhanced TCFD implementation and reporting going forward.
This focus on proactively managing our environmental and supply chain impacts has been a bedrock of our program to date and is something of which we're immensely proud. Our approach has always been an all-encompassing one with an equal focus on managing our social impact. We therefore work in collaboration with our Social and Ethics Committee to ensure that our sustainability program is implemented in a manner that fosters a diverse and inclusive business and enhances the wellbeing of our employees, our customers, and our communities. On that note, I'm delighted to hand over proceedings to Thembisa Skweyiya, our Chairman of the Social and Ethics Committee, who will provide an overview of that committee's mandate and their focus areas as they relate to the Vision 2025+ goals.
Thank you, Belinda. As you have noted, both our committees work closely together to ensure effective oversight on a variety of important sustainability and social focus areas. This is facilitated by having cross-membership on both committees as well as a collaborative working culture. I was also honored to step into the role of committee chair during the 2021 financial year. I'm pleased that my predecessor, Pinky Moholi , will continue to be present to provide her continued support and guidance as she remains a committee member. Taking on the role of chairmanship is an exciting opportunity for me, as Woolworths has always been a meaningful player in the sustainability and social development spaces. One of the things that impressed me when I joined the board was the way in which the core ethics and values are so deeply entrenched throughout the business, along with a sustainability vision.
I stepped into the role of chair of the committee during another challenging year for our business, given the ongoing COVID-19 pandemic, as well as the deeply disturbing consequences of the civil unrest that gripped certain provinces of South Africa in July 2021. These events have affected our people and leaders throughout our business in so many ways, with our people having to constantly face scenarios involving personal loss, grief, and fear. They remain resolute and motivated to show up each day to do their best. We are inspired by them and are determined to do our best to ensure they are able to work in a diverse and inclusive business and to enhance their wellbeing. We want to share with you a short video of our Woolworths Fill a Bag community initiative, in which we have provided 2 million meals over the past 18 months.
Ever since COVID-19 lockdown started, we, like I think many South Africans, have seen an increase in the number of families that are desperate for food within our communities. Woolworths has taken a stand against hunger for many years now already through various initiatives all over South Africa, partnering with different organizations to reach communities. For this pandemic, though, we saw the need to partner with Gift of the Givers. We have always believed that caring is about taking action.
I'm particularly proud of what the team has come up with in living our purpose, which is about making the difference that inspires and cares.
You must see the energy in the business with these packs. These packs are really focused on families that are either in quarantine or self-isolation, so they really can't go and purchase what they need.
We obviously would like to thank our teams, together with our suppliers and partners, who have made this amazing initiative possible.
Me, we'd like to thank you for providing for the kids. They quite need it. Thank you.
Thank you. Thank you.
The role of the Social and Ethics Committee is really about setting the tone for an ethical organizational culture and overseeing the socially orientated focus areas of the new GBJ goals. Similar to the Sustainability Committee, our committee comprises the group chairman and several members of the board, both executive and non-executive. A key focus area for the group and our committee is the Inclusive Justice Initiative, a natural evolution of the people and socioeconomic aspects of our Good Business Journey. This program is aimed at realizing our bold transformation vision of inspiring inclusive growth for all our people. Developed as a South African initiative, the IJI has been extended group-wide, paving the way for each business to take region-specific action to address local systemic inequality in locally relevant ways. We know that each of our regions across the group are at various stages in this journey.
Africa, for instance, continues to grapple with embedded racial and gender divides, while in Australia, the focus is on supporting indigenous reconciliation through David Jones and the Country Road Group's Reconciliation Action Plans. We believe that as an organization, we have a responsibility to be an agent for change for good. We aim through the Inclusive Justice Initiative to transform and redefine a system where different forms of discrimination and injustice are evolved into a culture that advances dignity, freedom, and equality for all. The committee will continue to monitor the implementation and ongoing impact of IJI activities related to diversity and inclusion, as well as performance relative to the group's 2025 transformation vision. This will include monitoring the group's achievement of the long-term transformation targets with a view to advancing the triple B rating over the next 5 years.
The board and committee reviewed the wellness and measures related to workplace protocols to continue to ensure the safety of employees during the COVID-19 pandemic. In this financial year, we will continue to monitor the effectiveness of practices to promote employee mental health and wellness. Our social development initiatives span across four pillars: education, food security, community resilience, and employee involvement, and are aligned to our overall business strategy, while being relevant in relation to national development priorities and key social issues in the market in which we operate. I hope Belinda and I have been able to share some insight with you into the shared responsibilities of our respective committees as they relate to our Good Business Journey. With that, I'd like to hand back to Roy.
Thank you, Thembisa. As I mentioned upfront, for us, sustainability is an imperative. It ensures that our business is not only resilient and adaptable to change, but it also is pivotal to our longer-term viability. The GBJ program was groundbreaking in South Africa when launched in 2007. It has been the key driving force that has significantly reduced the group's environmental impact and enabled us to have a positive social and economic impact across our entire value chain. As Belinda and Simon mentioned, we recently announced our new GBJ strategy and outlined an ambitious set of goals to 2025 and beyond. Our strategy centers around 3 key pillars: a thriving and resilient environment, a fully transparent, traceable, and ethical supply chain, and then the third area has a very strong people focus, and it deals with issues related to diversity and inclusivity, which we're addressing through our Inclusive Justice Initiative.
These three key pillars really shape what we've defined as our GBJ strategic framework. Having made substantial progress in delivering on our 2020 GBJ goals, we are now stretching and challenging ourselves even further with the launch of our new sustainability targets that will take us to 2025 and beyond. These targets include a fully transparent and traceable supply chain by 2025. This includes, among other things, publishing supplier lists on our corporate websites and ensuring traceability of all of our key commodities. By 2025, all of our private label fashion and home products will be designed to be reused, repaired, repurposed, or recycled. All our energy requirements will be met by renewable sources by 2030, and very importantly, we're committing to net zero carbon emissions by 2040.
In addition, we have an approved science-based target to halve our Scope 1 and 2 carbon emissions by 2030 and have also committed to work really closely with our top suppliers to set their own reduction targets. Whilst these goals that you see now on the screen in front of you are really our primary goals, we have also challenged ourselves in other areas such as water usage, food waste, packaging, regenerative farming, responsible sourcing of commodities, and of course, our commitment to a just wage. To support this, we have over 200 internal KPIs that we use to track our performance against these goals. Whilst these goals focus on environmental and supply chain impacts, the profound effect of the COVID-19 pandemic on humanitarian issues has again highlighted the widespread socioeconomic disparities in our communities and the imperative to deliver meaningful societal change.
As a company, we are actively engaged in improving the quality of life for all our employees, our customers, and in fact, all of our stakeholders. We do so by choice, not because we're obliged to by legislation, but because we believe it's the right thing to do. In South Africa, Woolworths continues to work to address the concept of a just wage and to ensure that our employees are able to earn a salary that enables a fair standard of living. Last year, the Woolworths base pay was 47% higher than the South African minimum wage rate and 13% above that of the retail sector. To further improve the livelihoods of our store-based employees, we will be investing an additional ZAR 120 million over a 3-year period to increase our hourly base pay by over 20%.
Through our recently launched Inclusive Justice Initiative, we're also working towards addressing systemic inequality and injustice and ensuring inclusive growth for all our people. We look forward to sharing more of this journey with you in due course, including the specific goals we've set for ourselves in this regard. In closing, we believe that setting ambitious GBJ goals not only stretches and challenges our own business to do more, but it also inspires others to collaborate with us and join this cause for good. Profound and sustainable impact requires deliberate collaboration amongst all stakeholders. It's also not enough for companies to simply talk about it or to just set targets and to think that these alone will get us to where we need to be. We have to move beyond plans to action if we are to truly hold ourselves accountable, which is exactly the approach we're taking.
With that, I would like to open the floor to questions. Joining me today to assist in this Q&A session is Thembisa and Feroz Koor, our Group Head of Sustainability, and we also have Belinda with us online from the U.K.
Moving straight over into our Q&A. Roy, we have a couple questions around the funding of our new GBJ goals and our Just Wage initiative. Do you expect to see a step change in your CapEx and OpEx profile as a result?
All right. No, thank you. Thank you for the question. Our investment in GBJ is not new. It's been something we've been at for some time now. Sustainability and the investment behind sustainability is not something we do in addition to the business. It's really the way we run our business. No, I don't anticipate any significant step change in either CapEx or OpEx on a go-forward basis, certainly not. I think it's important, though, also to remember that any of the investments and capital allocation decisions we make are typically against a business case, which needs to render an appropriate sort of return. If I maybe give you one example, we made very significant investments, just over ZAR 100 million worth of investment, in our fridge door program.
You'll know when you go into one of our Woolies food stores, we have a level of doors put onto our refrigeration. In fact, the payback on that ZAR 100 million investment was in less than 2 years. A very significant sort of business case opportunity there. There's also compound benefits of that. The payment really comes through not only the savings in electrical and energy efficiency, but also just the overall ambient temperature of the store. You don't have to crank it up in the middle of winter or when things get cold and so on. There's a whole lot of other spin-off benefits. Fundamentally, a lot of the investments that have been made to date and continue to be made are built off a business case.
I think one other important perspective, though, is there's a significant cost in the event of us not doing what we're doing in sustainability, and that's worth thinking about.
Roy, thank you. Our next question. You've performed well in the sustainability arena in South Africa, but how do you compare to international best practice, and where do you look to from both an inspiration and benchmarking perspective?
All right. No, thanks for that question. In fact, if I can ask Belinda to come in on that. Belinda, would you like to respond? Then we may add.
We're able to very much keep abreast of everything that's happening, both in food and in fashion, and we're constantly mindful, as I say, of what's happening across the globe. Maybe, Feroz, you'd like to add a bit more in terms of some of the detail behind some of the comparisons in which we constantly measure ourselves.
We usually benchmark ourselves through the year against both local and international organizations, retailers, companies doing great work in sustainability in other industries and so on. We work with a number of international organizations. We're members, for example, of the United Nations Global Compact. We are founding member of the Textile Exchange, which is a leading global organization for responsible sourcing of textiles, and the list goes on. The reason we do that is we ensure that we continuously work with best in class, and that we benchmark our program at that level so that we don't just try to be the best in the South African market. We try to be competing with the best in the world.
Thanks, Feroz. Roy, we have a few questions as well with regards to our sustainability-linked loans. Perhaps if you could just provide a bit of color on the proportion of our funding in those sustainability-linked loans and exactly how the mechanism works.
Yeah, no, thank you for the question. This is something that we're very excited about. As you may be aware, it was the first of a loan of this nature in the retail industry, certainly here in South Africa. The facility is around ZAR 1.7 billion. It really amounts to about a third of our total gross debt. The loans have a sustainability-linked sort of KPI attached to them. Clearly, as long as we meet those particular targets, there's a fairly significant pricing benefit that comes with that.
Roy, thank you. It seems a lot of the focus on packaging is at a customer or store level. What are you doing behind the scenes in your value chain to reduce transit packaging?
Feroz, would you like to pick that one up?
Sure. Thanks, Roy. I think as customers, we can see a lot of the packaging changes happening in store in the products that we take home. Our packaging commitments that we went out with in 2018 apply across the business, so that applies to our supply chain as well. Our supply chain teams are working with the suppliers on a number of initiatives. For many, many years, for example, our fresh produce has always been moved between suppliers and our stores via reusable lugs, so there's no packaging waste there. More recently, our FBH supply chain has been focusing on FBH packaging, which comes in from longer supply chains from the East and so on, and there's been significant reuse of cardboard boxes and so on.
In fact, we're seeing savings in the last financial year of ZAR 17 million just from the reuse of supply chain cardboard boxes. There's really a lot of work going on behind the scenes as well.
Thanks, Feroz. Our next question. You've launched your Inclusive Justice Initiative, which is a bold commitment to transformation. Would you say your employment equity scores align to this commitment?
Thembisa, would you like to take that question?
Thank-
That's squarely in your area.
Thank you, Roy. That's a great question. I think the very intention of IGI is for it to be a bold initiative. It really was born from the fact that we had to have a hard look at ourselves as to how we were doing in the transformation arena. We realized that several years ago, we were in a position where we were happy with the progress, and then there was regression. The team got together and really put important minds together to establish what was the way forward in terms of really tackling the transformation agenda, and really to move beyond the aspect of it being just a legislative requirement. What has really happened now is that people have owned this particular initiative. It really allows us to show our vulnerability as an organization, that we haven't met the targets as initially envisaged.
We now look at each individual from a different perspective. We do hope that in the future, that this initiative will be embraced by all. Thanks. Over to you, Roy.
Thanks, Thembisa. Maybe if I can just add one or two points. I think in terms of the Inclusive Justice Initiative, our initial focus as we launch that, currently as we speak, it's going live across our group. Our initial focus is really on advancing equality and inclusivity, specifically as it relates to women. More than 70% of our employees in the group are, in fact, women. The numbers don't really tell the story. Clearly, ticking the boxes and putting gender into boxes is not the answer. The fundamental issue for us is really about transforming the experience that women have working for our company. It's what I call the lived experience of women in our organization. Really what we mean by that is, are women given full access to every opportunity? How are they acknowledged?
They need to be certainly not just heard, but absolutely listened to. In terms of remuneration, there needs to be zero discrimination, et cetera. What does it feel like? How inclusive is it really if you're a woman working for our organization? We want to really get to the fundamental issues that underpin that. Really creating a culture and an environment that is genuinely inclusive in every sense of the word.
If I may add to that, Roy, it really is about looking at all aspects of inequality and diversity and inclusion beyond just women. Really getting to understand what it means to be a person and a human and human-centered organization. In order for us to mine the productivity within the organization, we want people to realize their full potential within the group. How you realize that full potential is really meeting people where they're at and understanding the journey. Many people didn't understand some of the journey, even within our own history in the South African context. Many colleagues got around the table, began to understand each other's stories as people, and it really was cultivated within the mindset of a COVID setting that allowed people to embrace that level of vulnerability.
These are hard questions, difficult to discuss, and within the context, too, of the global change with regards to some of the protests that were happening globally. It was really our response there to say as an organization, what are we really doing? We have to look beyond transformation in the South African context. We have to look within a global context. The reality is that we are a global group, and we have to be able to extend this initiative there, too.
Thanks, Thembisa.
Thank you.
Thank you. There's been quite a bit of recent media coverage around your disclosure of the lowest-paid people in your business. Can you give us a bit more detail on this?
Yes. There was a little bit of media, I guess, sort of exposure relative to what went out regarding our Just Wage initiative. I think it's very important to note that we've been on a journey for some years now, really focused on elevating pay levels for our frontline employees across the group. We have around 20,000 employees on the frontline, certainly here in South Africa. Woolworths today currently pays around 50% higher than the minimum hourly rate or legislative hourly rate in the country, and around close to 15% higher than the retail sector in South Africa. For us, a just wage is philosophically more about making sure that meaningful pay for meaningful work is the real driving force behind this initiative. We certainly sense for us that a minimum wage, in fact, is not a living wage, and a living wage is not a just wage.
A Just Wage is really an aspiration we have of getting people into a place where they can actually secure a standard, an appropriate standard of living. That's the journey we are on. Yes, we have announced recently around an investment of around ZAR 120 million, which will certainly take the wage rates that we have today up by around 24% over the next three years. Something we're really committed to delivering against as we continue with that journey.
Thanks, Roy. Are you working on a plastic bag-free solution to online groceries?
Yes, in fact, we are. You'll probably see, those of you that do shop us online, in certain of our markets and associated with certain of our stores as early as next week. We're going out with different solutions, either going to be a no bag or a paper bag or 1 of our now world-famous black recyclable bags. Absolutely, we see that as an important opportunity for us to align with the rest of what we're doing in this space. You'll know we're one of the first and most aggressive retailers relative to taking single-use plastic bags out of our stores. We're now 240 stores in, and we continue to move along with that particular journey, something that we've, as I say, signed up for a couple of years ago, but now are really close to delivering on.
Thanks, Roy. What % of Woolworths clothing in South Africa is locally made or sourced currently, and how much of its cotton is local?
Yes, that's a good question. When we look at our fashion or our clothing business in South Africa, around 30% of what we sell in the country is locally sourced from South Africa. If one takes a broader look at the SADC region, it's closer to 50% of our product range comes from out of the SADC region. I guess the second part of the question related to what percentage of the garments were sourced with South African produced or locally produced cotton. That's a little bit more difficult to answer. You'll know that in South Africa, we don't really have a vertically integrated industry, and we don't have the spinning capacity and capability that many of our supplier markets, in fact, do have. We actually import a lot of our fabric.
We do, obviously, in terms of the fabric bases that we use that are locally made, they're all made essentially with local cotton. A lot of our fabric bases, up to 10%, in fact, are imported. It's a significant number, but there's opportunity for us to grow that going forward.
Thanks, Roy. While we're on supply chain, we have a question asking for more color, please, on what is meant by traceable supply chain. What are you planning to do more of here?
Sure. We have announced that as one of our big goals going forward, both in terms of transparency and traceability. Feroz, do you want to come in on that and give us a little bit of color there?
Thank you, Roy. Yeah, as Roy mentioned, there's 2 parts to our commitment in this space. There's transparency and traceability. For transparency, we're talking about disclosing where we source our product from. If you know company names and countries in which we source particular products or commodities. Traceability goes further down at a product level. When you go into store, the ability to, on product, get information around the provenance of the product, either country, supplier, or information around its source, so that as a consumer, you have a deeper understanding of the nature of the product in your hand and ultimately who made it and where it came from. That's where we're working towards. It allows us to have better visibility through the supply chain as a company as well as customers in store.
Feroz, maybe a follow-up question on that. When you talk about energy from renewable sources, what other sources besides solar are you looking at?
Sure, that's a good question, especially given the energy mix in South Africa or lack of mix, given that we rely so heavily on Eskom. I think the idea behind this commitment, which is not a new one, in fact, if I might just say that our commitment towards 100% renewable energy was made out in 2015, is to work within the broader industry, and which we are doing. We're working with a number of organizations, looking at what opportunities exist in the market. We've seen that there's recently been some regulatory easing around embedded energy generation from 1 MW to 100 MW with easier licensing requirements. We're quite satisfied that working together with government is committed to looking at the broader energy mix as well. That working with our partners, our landlords, and others, that there's opportunity to source renewable energy from a variety of sources.
We are primarily a tenant in third-party properties, so we'll be working a lot with our landlords and other third-party service providers. There's opportunity, for example, for wheeling from independent bulk producers. Eskom has got some capacity it's bringing online as well. I think there's a lot happening. It's not easy, but certainly it needs to be done, and the commitment needs to be made to allow us to start working in that space.
Thanks, Feroz. Another question, could you discuss the value of the WHL board Sustainability Committee and whether you think a standalone board sustainability committee should become a minimum standard for all major listed companies in South Africa? Roy?
Yes. No, that's a question I think we do get from time to time, and I think Belinda certainly as the Chair of our Sustainability Committee. Belinda, do you want to come in on that one?
We believe that sustainability is not something that's really separate to the business. It's very much integral to the business, and therefore, it's important that we manage it with the most senior level of leadership. We place a huge amount of importance on sustainability, and it really does mean it galvanizes the organization, and it means that the broader issues can be discussed at board level. The human aspect is still very important, and hence, the close collaboration that Thembisa and I have as chairs of the Sustainability Committee and the Social and Ethics Committee ensures that we're able to effectively raise at board level the key issues that the business wants to address. This has really stood us in good stead, and we continue to assert a driving force in this field. It's really sustainability at the heart of the organization.
yeah, we really cherish the value that it gives us in terms of having these two areas separately looked at board level.
How do you envisage manufacturers and suppliers plugging into your GBJ goals?
Yeah, certainly. We work very closely with our suppliers in everything we do. Fundamentally, the achievement of our Good Business Journey goals is intrinsic to us working with our supply chain. In fact, with our new set of commitments, we've made a bigger commitment to going further and deeper into our supply chain. The previous question around traceability, for example, talks to that. We have to work with our suppliers. Everything we do in delivering our targets, it requires us to work with our suppliers very closely. They currently do. The Farming for the Future is an example, we've got various other examples across our program and throughout the business. The short answer, they're fundamental to the achievement of our program.
Feroz, thank you. Right. We're just going to refresh and see if we've got any more questions coming through. Any thoughts around fast fashion and sustainability? Can the two coexist in your view? Not suggesting in any way that Woolies clothing is fast fashion.
No, we certainly wouldn't consider ourselves as fast fashion. We would certainly like to believe that when you buy one of our garments, they certainly stick around for a number of years. No, I think the fast fashion industry has certainly played a significant role in expanding the growth of apparel globally, and they do fulfill a particular consumer need. In the context of what we're discussing, this has really become something that a real spotlight has been turned upon. I think there will be a continuation of fast fashion going forward. Absolutely, I think the two can coexist going forward. There's certainly some clear challenges that folks in the fast fashion industry face.
In terms of what we're seeing increasingly, coming from a consumer or customer perspective, who are really much more discerning in deciding which brands and which companies they shop based on sustainability credentials. That's a real factor, I think, for the folks in fast fashion to consider. Did you want to add anything to that, Feroz?
No, I think you've covered it quite comprehensively, Roy. I think it's a big challenge, and there's a lot of work to be done in that space fundamentally.
We have a question. Can you talk us through the outlook for inflation, both food and clothing, in light of currency port delays, et cetera? I'm happy to answer that.
Yeah, sure. Jump in, Jenny.
We've guided to inflation both in our clothing and foods business of around 3%-4% for the half.
Yeah.
We expect the impact of increased freight and shipping rates to add about 1 percentage point to that. In the case of FBH, about 5%-6%.
Thanks, Jenny.
Another question. Feroz, perhaps for you. Textile production contributes more to climate change than international aviation and shipping combined. Added to this, the majority of clothing is landfilled or burned within one year of production. Please can you elaborate on the initiatives for a circular economy for textiles?
Sure, that's a really good question. I think it cuts to the heart of one of the biggest issues in global fashion industry is the level of reliance on raw materials, virgin raw materials, and then the waste throughout the process, the production process and then end of life. Because of that, I think we've addressed it in a number of ways. One of them is, as part of our new Vision to 2025 and beyond, we set 4 principles that underlie all goals and commitments. One of those principles is circularity. The idea being that we want to embed the concept of circular thinking and circularity in everything we do. We've taken it further than that. We've got specific targets in our fashion or in the FBH business. Particularly around, we've got a target to 2025, our first target, which is a design target.
Which is saying that all our product needs to be designed in order to be reusable, recyclable, or repurposed. It sounds like a fairly vague commitment, but it's quite an intense one because it's one of the few design commitments that we've come across, locally or internationally. It essentially requires our teams to re-look at the entire product development processes, right from the design, the inception phase, to build in the principles of circularity so that it is not an end-of-life conversation. Circularity is not about putting collection bins in stores. It's around how products are designed so that they ultimately don't have to end up in a collection bin.
Besides the principle that I've spoken about earlier, we've got this firm commitment, and then we've got a second commitment out to 2030, where every product has to have a material input, which is either recycled or repurposed or reused so that we don't rely 100% on virgin materials. These are two very bold and tough commitments to meet, but we think they're the right ones in order to challenge the business to work towards a more circular way of operating.
We have a question on third-party brands. Can you comment on the outlook for additional third-party brands within your store base? For example, Levi's, et cetera.
Yes. No, we can, and I'll sort of bring that back into the sort of sustainability theme. As we've sort of spoken about and shared with you, we've identified several key categories within our apparel business that we certainly are wanting to be known as a destination and certainly have category authority around. Certainly denim, you've mentioned Levi's, is one of those categories. It is our intent to sort of bring in a number of guest brands or third-party brands to really augment our total proposition. As we've said a number of times, these brands would probably never account for much more than 10% of our total sort of turnover in the apparel business. They do bring certain credentials. They bring footfall, and they create a halo around the particular category that we're talking about.
One of the criteria, we go through a very specific series of criteria in evaluating which brands we do in fact bring into our business. One of the criteria, apart from the financial contribution and the value accretive commercials that we would be looking for, is in fact whether our values fundamentally align with theirs. Certainly in the case of Levi's, for example, you would know they're also one of the global leaders when it comes to all things sustainable or sustainability, and that's an important criteria as we assess these brands that we do bring into the business. Yeah.
What are Woolworths doing to expand and diversify the supply chain to include new suppliers who can compete and reduce supply chain costs for Woolworths?
Right.
Can you give us the trend of the percentage of total procurement by, say, B-BBEE level as a proxy for new suppliers?
Sure. A big, complicated question. I'm going to hand that to Thembisa.
Well, I'll take a first stab at it, Roy, and then I'll hand it back to you. Essentially, it really is an important question. It really goes to the heart of what we're also trying to achieve within IGI. We've talked about the gender parity issues. The next level is really talking about the value chain. We have to find a way to ensure that we expand our supplier base, given the fact that Woolies traditionally has long-established relationships with suppliers, which are deeply entrenched. We obviously work with those particular suppliers to ensure that they are also on the same journey that we are.
In essence, what we're doing internally to alleviate some of that particular pressure is within the IGI initiative, we have developed what we call the Woolworths Development Institute, where we will somewhat incubate SMMEs, assist them in terms of their governance structures, and really ascertain how they will be sustainable in the future. Not just the current dynamics in terms of what we have within the ESD space, really grow their businesses to be meaningful players within their particular industries, too. It is a journey. We obviously have been in this space for the past 11 years, we have grown it, obviously not enough. We don't have a particular figure in mind in terms of a %, we do hope that we will grow it beyond what we currently have. Over to you with regards to %, Roy.
No, thank you. I think that was a very comprehensive answer. Thank you. Thanks, Thembisa.
Thanks, Thembisa. How do you plan to influence consumer behavior in the context of protein consumption, given the evidence and facts around the high GHG emissions associated with the production of red meat?
Feroz, do you want to take that?
Should I take that?
Yeah.
Certainly. Thanks. I think consumer behavior, I like how the question is framed because I think a lot of what we do is trying to change consumer behavior. This would be one area of it, or packaging or plastic bag use, for example, would be another. In this case, we are continuously increasing our ranges in our plant-based meals in store. I think we're driving significant innovation in that space. We've won global awards for best innovation in those products in the last few years as well. I think the type of product ranges, it's driven strongly by innovation, backed by sustainability, and so the size of the ranges are continuously increasing. The variety is increasing, and it's something that we see is very important to our foods business and to the delivery of our broader sustainability targets.
Thanks, Feroz.
Maybe a final question. Roy, clearly sustainability is topical for most companies, but do you think it is exploitable as a competitive advantage?
Yeah, I think that's a very interesting question. I think we're certainly seeing, and I mentioned this briefly earlier, that consumers or customers are increasingly making purchase choices, purchase decisions, in favor of companies and brands that have gone down the sustainability track and that are building their credentials in the area of sustainability. We're seeing that more and more often. Whether they're prepared to pay more for it or not , but they're certainly making the choices as to which brands and companies to shop. We're also seeing, in fact, employees choosing to work for organizations, particularly folks that were born in this particular century are particularly discerning about what types of companies they work for and what sort of credentials they have from a values and particularly from a sustainability point of view.
Also obviously investors, we're having this day today to sort of bring you up to speed with a number of things we're doing. There's an increasing interest and, in fact, a requirement from the investment community around areas of sustainability. Given the fact that I think we've been on this journey, as you've heard now for some time. We've certainly built a lot of credentials in this space. As I mentioned early on, sustainability isn't something we do in parallel to running the business. It is the way we run our business. It is central to a lot of the key decisions we make, and certainly as we contemplate where we put investments, et cetera, it features as a key component of our decision-making process.
Given that we're this far down the track, I think it is probably something that we could exploit as a competitive advantage, certainly relative to our peers in the space. I think in the end, it's not sort of the way we look at it. I think we see ourselves as merely one company in this large ecosystem. Whilst we can do a lot, and we are doing a lot, the real profound collective impact is really what's going to count at the end of the day. Our orientation is to be extremely collaborative, open source what we've done, share, there should be no secrets here, in a sense, and really get as many people join hands and get as many of our peers in this space, other stakeholders in the space to work with us in collaboration and us with them as we go forward.
That's really the way that I think we're going to make a difference here. Not going down the course and holding it as proprietary. I think this is an area that is counterproductive from a competitive advantage perspective to the greater good. As I've said before, we have a greater purpose as a business beyond just our own self-interest. There's a real impact that we'd like to have on the world around us. Yeah, thanks, Jeanine.
Roy, thank you. I think we'll leave the Q&A there. Any closing remarks that you'd like to make before we round off?
Yeah. Well, firstly, I think as we do round off, it's been really great to have had an opportunity to engage with you on what is a critical business imperative. I think the last time we engaged, in fact, was our year-end results presentation. Of course, the focus there was much more on our financial performance and the progress that we were making against our various strategic initiatives. As I've said before, our purpose is so much more broader than that. We certainly see our focus on sustainability as a key imperative. Not only because it is the right thing to do, but because it is a critical enabler to our ability to deliver sustained financial performance over the long term. It's really about pursuing profitable growth, but in a principled way. Absolutely in closing, let me say thank you very much for joining us today.
Even if it is only virtually for the time being. We hope that that changes in the foreseeable future. Certainly in terms of today, I really hope that it has not only given you some insight into what we’ve accomplished so far, but also what we’re still looking to achieve. Thank you. We certainly look forward to engaging with you again, if not sooner, certainly at our interim results presentation in the new year. Thank you to everyone.