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Responsible Retailing

Responsible retailing

We take our responsibility for the products we sell seriously, and we are committed to listening to our customers’ feedback. Our Marketing Code of Practice sets out the standards we follow in our promotional activity, marketing and advertising. In practice this ensures we sell products that are safe, fit for purpose, meet legal standards and are never described in a misleading manner, particularly for products designed for children.

We carry out regular reviews of product ranges, displays and promotions to ensure that they meet our responsible marketing guidelines and undertake regular benchmarking against other convenience retailers and newsagents to ensure we are meeting industry standards. We rotate our promotions on a regular basis so that they include a wide range of products, ranging from water and new book releases to seasonal items like adhesive or stamps.

We continue to focus on extending our healthy ranges, giving our customers a wider choice when they buy food or drink from WHSmith. We extended our Munch Better chilled food range this year, and we now have 25 lines under the sub brand. Sales have grown this year to 55 per cent of our chilled food sales and we continue to innovate in this area. All of our Munch Better lines are under 400 kilocalories and amber or green on the nutritional traffic light system. Our queuing system now includes a range of protein bars, graze products and own brand Munch lines that span raw nuts and fruit, and we have moved fresh fruit to front of store in all hospital sites. Initiatives like this, together with our improved ranges, have contributed to healthier snacking sales growing by over 18 per cent within Travel last year.

Within Hospitals we have fully complied with the Commissioning for Quality and Innovation (CQUIN) criteria in England and the Healthcare Retail Standard (HRS) criteria in Scotland, which set out requirements for all retailers operating on NHS sites. In compliance with these criteria, we ensure that there are no price promotions, advertisements or till point positioning of sugary drinks and foods high in fat, sugar or salt in our hospital stores, and that healthy options are widely available. This year we have also fulfilled our commitment to NHS England to have a sales mix of low sugar drinks to high sugar drinks in the ratio of 90:10 of all volume sold.

Product safety is one of our key priorities and our quality teams in the Far East and the UK conduct a rigorous quality and safety assessment process to ensure that all products are safe, fit for purpose and meet legal standards as well as our brand standards. We pay particular attention to products designed for children. We closely monitor developments in legislation to ensure that products are compliant and have recently revised our product recall process to ensure that we act quickly should a product be found not to meet our high standards.

Some of the products we sell carry age restrictions, for example, some adhesives, tobacco and lottery products. This year we have also voluntarily introduced measures to restrict the sales of energy drinks to under-16s. All staff take part in training sessions at least twice a year to ensure that they are informed of the latest legislation and selling guidelines.

We closely monitor the chemicals used in our own-brand products, specifically with regard to the European legislation known as REACH (Registration, Evaluation, Authorisation and Restriction of Chemicals). We work with our suppliers to ensure that they understand their obligations under the legislation and that they provide us with the information we need to ensure compliance and product safety.

Paper sourcing

Paper-based products are a core part of WHSmith’s business and sustainable timber sourcing is one of our key CR priorities. We are committed to minimising the environmental impact of the paper used in our own-brand products, and aim to ensure that all virgin (i.e. non-recycled) material used in our products is from known, legal, well-managed and credibly-certified forests.

As part of our work towards this objective and in line with the requirements of the EU timber regulations, we carry out an in-depth and rigorous assessment of supplier forest sourcing systems. We have set certified or recycled timber as a minimum standard, which gives additional assurance that pulp is from low risk sources. We use the two leading global standards developed by the Forest Stewardship Council (FSC) and the Programme for the Endorsement of Forest Certification (PEFC) for certification. Our sourcing teams both in the UK and the Far East work with our suppliers to help them understand our requirements and how the data they provide is needed to demonstrate that the pulp used in a WHSmith product is sourced from a certified or recycled source.

We have made significant progress and this year we are able to report that we have achieved our 2020 target, moving our percentage of certified and recycled material to 95 per cent from last year’s value of 90 per cent. This progress has been made by continued dialogue with our suppliers and getting more of them to move to using certified or recycled materials. This improvement has been delivered as a result of the efforts of our buying teams both in the UK and the Far East, working to communicate our forestry requirements to suppliers and increasing the number of products produced from certified or recycled papers.

Ethical trading

Ethical trade is a key part of our CR programme and one of the most important risks for us to address. Our ethical trade activities are designed to support our commercial strategy, so helping to manage and reduce risk and build stronger and more transparent relationships with our suppliers. Our ethical trade programme has three elements – training for buyers so that they understand the role they need to play, factory audits to assess risk, and supplier engagement projects to improve conditions for workers.

WHSmith is a member of the Ethical Trading Initiative (ETI), an alliance of companies, trade unions and NGOs that promotes respect for workers’ rights around the globe. Our Ethical Trade Code of Conduct is based on the ETI’s Base Code and underpins our ethical trade strategy and programmes. We will only place orders with suppliers who are committed to working towards compliance with this Code. Our objective is then to work with our suppliers to bring about incremental change through our programme of factory audits and ongoing engagement.

The Group Board reviews our ethical trade strategy annually, looking in detail at our audit and engagement programmes, emerging trends and risks, targets and performance. The Board also reviews WHSmith’s modern slavery risks, policies and controls. Each quarter the Business Unit Risk Committees review key ethical trade KPIs, including latest audit results, factory gradings, completed corrective actions and engagement projects.

We focus on suppliers of own-brand stationery products in the Far East, which is a strategically important part of our business and also where we can have most influence. Our supply chain comprises around 250 first tier suppliers, mostly based in China. We have the strongest relationships, and most influence, with our top 15 suppliers by value, where we buy a high proportion of their supply and tend to have longer-term commercial relationships. Outside of this supply base, we tend to be a small customer, buying relatively small quantities, often of seasonal product. Our ability to influence supplier activity is limited, but we seek to raise awareness of the business case for better working conditions to encourage suppliers to work with us.

We have an in-house ethical audit team based in Hong Kong, Shenzhen and Shanghai, reporting into the Director of Asian Sourcing. This team carries out both audit and engagement work, with the two roles combined so that there is an end-to-end process for identifying any labour standard issues and continuing the dialogue with the factory to agree and implement solutions. The Head of Corporate Responsibility works closely with the team, in development of ethical trade strategy and monitoring of progress. The Trading Directors in the UK are regularly briefed on ethical trade issues specific to the suppliers they work with. Monthly ethical trade review meetings take place, where audit findings are reviewed and engagement plans agreed.

Our team audits suppliers of our own-brand goods in Asia at least every two years for compliance with our Code of Conduct, grading them Black, Bronze, Silver and Gold. A factory must achieve a Bronze grading or above if we are to work with them. We use a mix of announced and unannounced audits. We are increasing the number of unannounced audits to ensure that we are seeing as a true a picture as possible of the factory conditions. The most frequent issue identified in our audits is in the area of health and safety practice. We are members of SEDEX (Supplier Ethical Data Exchange) which provides additional risk assessments and audit data for some of our suppliers.

Our team spends a significant part of its time delivering our engagement work to support suppliers as they seek to improve working conditions. Engagement focuses on resolving specific issues identified during audits, as well as wider projects working with a range of suppliers on a key issue, for example, worker representation or health and safety. We see these as being key issues for workers in China, and ones which can deliver business benefits for our suppliers.

Our Worker Representation Initiative has been extended this year to 14 factories. We work with factory managers in China to develop better worker representation and engagement. The aim of the project is to help some of our key suppliers to have fully functioning worker management committees, representing workers on any matter affecting their rights and resolving issues with management. Nearly 100 issues have been raised across the 14 factories this year, with a number of grievances being successfully addressed and remedied.

This year, we have introduced a new hotline service provider, Clear Voice, into our factories. Clear Voice specializes in the design of worker hotlines and grievance handling procedures and has helped us to make factory workers aware of how to make use of our worker hotline to raise issues they are concerned about. We have been able to investigate and follow up on some of these issues to improve worker conditions. Raising worker awareness of the hotline is a priority for us in the year ahead to ensure that employees are aware of the hotline and know how to use it if they have any concerns.

Finally, our understanding of modern slavery risks continues to grow, and we have developed a due diligence process to make sure we are identifying and assessing any potential and actual risks, and then providing appropriate risk control, mitigation and remedy where needed. We have reported on this area in detail in a separate Modern Slavery Statement.