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Listening and respondingWm Morrison Supermarkets PLCCorporate Responsibility Report 2016/17

Strategy and approachAbout this Report 2Welcome to the 2016/17 Morrisons Corporate Responsibility Report 3Focusing our strategy on the top priorities 4What we achieved in 2016/17 5Farm to fork sustainability 6What’s important to our customers 7Understanding our changing world 8Our Corporate Responsibility strategy 9Working towards a global agenda 10

Our focus areasHelp British farmers to be competitive, affordable and sustainable 11Ensure authenticity, provenance and safety of our products 13Reduce general operational waste and carbon emissions 15Reduce food waste 17Look after our colleagues 19Source responsibly 21Ensure fair working conditions for suppliers 23Make it easier for our customers to live healthier lives 25Make a positive difference to the communities we serve 27

Why it matters to MorrisonsMateriality 29Stakeholder engagement 30Governance 31

Performance summaryOur focus areas explained 32Closing out our commitments 37

AssuranceAssurance statement 39Feedback and contact information 43

This is Morrisons eleventh Corporate Responsibility Report. It reports on our corporate responsibility programme progress and activity from the previous financial year. This Report should be read together with our 2016/17 Annual Report and Financial Statements, which can be found at www.morrisons-corporate.com. If you would like to comment on our corporate responsibility programme, the report itself or any of the issues we highlight, please drop us a line at [email protected]

Selected KPIs within this year’s Report has been independently assured by our auditors PricewaterhouseCoopers LLP using ISAE 3000 (revised). The assurance statement can be found on page 39 of this Report.

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Corporate Responsibility Report 2016/17Wm Morrison Supermarkets PLC

2

About this Report

Go to main contents page

Strategy and approach AssurancePerformance summaryOur focus areas Why it mattersContents

Welcome Chief Executive introduction Highlights Our value chain Global contextCustomer insight survey At a glance


3

Welcome to the 2016/17 Morrisons Corporate Responsibility ReportWe are a British born and bred value-led grocer. We have grown from a market stall to the UK’s fourth largest supermarket group with 491 stores.We’re food makers and shopkeepers, which makes us different from our competitors. Our focus on fresh is supported by our ‘farm to fork’ business model. We buy many of our fresh products direct from farmers and fishermen, through our own food processing sites and abattoirs and distribute through our own network, the only British supermarket to do so. This gives us more control over the provenance and quality of the food we sell in our stores.

We have more skilled specialists on hand to prepare fresh food in store than any other retailer, with over 9,000 fully trained crafts people including butchers, bakers, fishmongers and cheesemongers.

Every week, over 11 million customers pass through our doors and shop online and more than 112,000 colleagues across the business work hard each day to deliver a great service. Our aim is to give our customers more of what matters to them, offering great quality food at low prices.

Established in

1899

112,000colleagues

5,628customers surveyed in our annual corporate responsibility survey

£337munderlying profit

11mcustomers in store

and online each week

16manufacturing sites

2.5%LFL sales

491stores

9focus areas suggested

by customers


Welcome Chief Executive introduction Highlights Our value chain Global contextCustomer insight survey At a glance


4

Focusing our strategy on the top priorities

“We have good plans in place to minimise our risks and exposure and I’m confident that we will continue to lay down the solid

foundations we’ve achieved in the ‘Fix’ stage of Morrisons turnaround

and offer great service to customers and our local communities.”

David Potts, Chief Executive

We’re making good progress on the issues that matter most to our customers. The top issues remain unchanged – food safety, supporting British farmers, looking after our colleagues and buying British products.

How we address them is part of our six priorities; they’ll help to shape what we do and why we do it.

Our first priority is to be more competitive, as well as reducing thousands of prices, we’ve also expanded the ‘Morrison Makes It’ range, and launched ‘The Best’ premium range offering customers more choice. We’ve continued to invest in our award winning fresh food manufacturing and specialist in-store colleagues.

To serve our customers better, alongside shortening queues, we’ve improved availability through our biggest new initiative, the Morrisons ordering system for Grocery and Fresh categories, as a result we have both reduced gaps on shelves and, of critical importance, we have at the same time improved supplier ordering patterns and reduced waste.

Our customers want local solutions, so we have introduced even more locally sourced products, particularly fresh produce where we have gone direct to greater numbers of growers and farmers. We’ve launched our Nation's Local Foodmakers initiative to find 200 new smaller suppliers. Working collaboratively we will provide an opportunity for smaller businesses to grow and provide great local products for our customers.

To develop popular and useful services we’ve updated our cafes and worked hard to provide even better food and customer service. We were crowned National Cafe Chain of the Year. Timpson are now in 150 stores, and we have Amazon lockers in 400 stores so that customers can pick up their Amazon delivery while doing their grocery shop.

To simplify and speed up the business, we’ve focussed on providing our colleagues with the tools and training to provide the best service. All Store Managers attended MyJob, our biggest ever colleague training programme, to strengthen their knowledge and skills.

As part of our priority to make our core supermarkets strong again we’ve undertaken our Fresh Look refit programme in 100 stores A major part of this included making our foodmaker skills more visible to customers so we can offer just what customers need whether that is a single cut of meat by our butchers or fish prepared and filleted by our fishmongers.

Looking ahead, the trading environment will remain competitive. We have good plans in place to minimise our risks and exposure and I’m confident that we will continue to lay down the solid foundations we’ve achieved in the ‘Fix’ stage of Morrisons turnaround and offer great service to customers and our local communities.

At Morrisons we are all foodmakers and shopkeepers. It’s during the next stage of our turnaround ‘Rebuild’ and ‘Grow’ that we will focus on our ‘why’, our core purpose, what drives our business and motivates our people. We believe our Core Purpose is...

To make and provide, food we’re all proud of, where everyone’s effort is worthwhile, so more

and more people, can afford to enjoy eating well.

All of the issues our customers care about are captured within our core purpose and this framework will help to drive our responsible business agenda.

There’s still much more to do and plenty to look forward to. I’d like to thank all of our colleagues, for everything they do.

David PottsChief Executive

AssurancePerformance summaryOur focus areas Why it matters

Highlights Our value chain Global contextCustomer insight survey At a glance

Strategy and approachContents

Chief Executive introductionWelcome


5

What we achieved in 2016/17A snapshot of our progress over the last 12 months.

Courtauld

2025commitment

signatory

26.9%absolute reduction

in operational carbon emissions (2005 baseline)

1,000ethical trade audits undertaken in 2016

Over

500key supplier colleagues

attended modern slavery awareness training

British Morrisons brand fresh beef, chicken, pork,

lamb and turkey

100%£5.1m

extra income generated for farmers through ‘For

Farmers’ range

Help British farmers

£7.5mdonated by the

Morrisons Foundation to local charities

£7.3mraised for our charity

partner Sue Ryder (£2.7m raised in 2016/17)

Support communities

Campylobacter levels in chicken

0.8%Supplier

Academyroll out

Authenticity, provenance and safety

75.6%colleague

engagement scoretraining delivered to all Store Managers

Look after our colleagues

93%FSC, equivalent or

recycled home and leisure products

Sustainable Seafood Coalition

founder members

Source responsibly

Supplier working conditions Reduce carbon and waste

new healthier eating brand

‘Eat Smart’ launched

88tonnes of sugar

removed from own brand breakfast cereals

Healthy customers

2.3munsold food products

from stores donated to local community groups

25,000tonnes of

Wonky Veg sold during 2016

Reduce food waste

MyJob


Our value chain Global contextCustomer insight survey At a glance


Chief Executive introductionWelcome Highlights


6

Farm to fork sustainabilityValue creation across our supply chain.

What we rely on

1 Natural resources 2 Financial resources 3 Physical resources 4 Our experts 5 Our people 6 Our suppliers 7 Our communities

Six priorities

To be more competitiveMorrisons is a value for money brand. Customers tell us they want the great Morrisons range at low prices.

To serve customers betterGood customer service is part of Morrisons. Market Street and our skilled colleagues make Morrisons different from other supermarkets.

Find local solutionsMorrisons has almost 500 neighbourhood supermarkets that can serve local customers better.

Develop popular and useful servicesPopular and useful services will give our customers more reasons to visit their local Morrisons.

To simplify and speed up the organisationMorrisons is building a culture based on speed and teamwork, so we become agile and responsive.

To make core supermarkets strong againCustomers tell us what Morrisons stands for – good quality fresh food, great value for money, good customer service and authentically British.

What makes us successful

• We have a strong cash flow, a strong and improving balance sheet, a largely freehold property portfolio and pension schemes in surplus.

• We are a British grocer, with a strong heritage dating back to 1899.

• We are vertically integrated, which means we are able to create efficiencies and reduce waste, improve the security and integrity of supply and our exposure to price volatility.

• We are a foodmaker and shopkeeper, making good quality fresh food and great value for money.

• Half of what we sell is fresh food and half our fresh food we produce ourselves, providing unrivalled provenance from our own manufacturing capacity.

• We’re focused on operational efficiency which including savings in costs, production time and resource input.

• Our colleagues are our greatest asset – highly skilled and passionate about their company.

• The personal relationships we have with farmers and other suppliers means we can ensure responsible sourcing to guarantee the integrity and quality of the products we sell.

The value we create

• We provide our customers with good quality fresh food.

• We support, train and develop our people.

• We support the local communities in which we operate and buy many of our products from.

• Income to reinvest in our business.

• We reduce our environmental impact and help to protect the natural resources we’re dependent on wherever possible.

Our approach

SellWe sell products to our 11 million customers in our 491 stores and online. Any edible unsold food from our operations is donated where possible to local community groups for social benefit or via Company Shop. We must provide our customers with healthy, responsibly sourced products with clear information and guidance to help them reduce food waste in the home.

MoveWe move products through our own transport fleet. We operate seven regional distribution centres and one national centre, servicing our supermarkets. We must move goods in the most efficient way, reducing our operational environmental footprint where possible.

MakeIn fresh UK supply chain we manufacture many of the products ourselves through one of our 16 manufacturing sites processing meat, fish, bakery, fruit and veg, deli and flowers. Our in-store butchers, bakers and fishmongers are also on hand to create fresh products for our customers. We must ensure our sites and stores make products both efficiently and safely with the minimum amount wasted.

BuyWe work with suppliers in the UK and around the world to buy products made responsibly. Our challenge is to ensure that our suppliers have the correct management procedures in place in order to reduce social and environmental risks in their supply chain.

Alignment with our focus areas Alignment with our focus areas Alignment with our focus areas Alignment with our focus areas

For more information read our business model in our Annual Report.


Highlights Global contextCustomer insight survey At a glance


Chief Executive introductionWelcome Our value chain

For the second time, we asked for feedback from our customers on their views on various responsible business issues. We increased the number of customers surveyed from 1,051 in 2015/16 to 5,628 in 2016/17. In January, customers were asked to complete a seven minute online survey.

We used a Max Diff method to analyse the results from our customer responses. In the exercise, customers are shown several sets of statements, with each set they are asked to select the options they consider to be the most and least important.

This provides each statement with a score out of 100 based on its importance to our customers. “A greater range

of fresh products available to those

on low income like 'wonky veg' which

in turn helps reduce food waste.”

Female customer, aged 36

“Respect the right and dignity of your employees. Ensure

good working practices. Offer the best quality

of product. Reward good customers.”

Male customer, aged 62

“Buy local (British) products where

possible. Support local causes.”

Female customer, aged 57

5,628regular customers were surveyed

(1,051 2015/16)

Customers surveyed Results: the top 12 issues that matter most to our customers

1. Fo

od s

afet

y

2. S

uppo

rtin

g Br

itis

h fa

rmer

s

3. L

ooki

ng a

fter

em

ploy

ees

4. B

uyin

g Br

itis

h

5. T

radi

ng fa

irly

wit

h su

pplie

rs

9. S

ellin

g lo

cal p

rodu

cts

6. R

educ

ing

food

was

te

10. A

ntib

ioti

cs in

mea

t far

min

g

7. A

ccur

ate

and

deta

iled

la

belli

ng

11. R

educ

ing

pack

agin

g

was

te

8. A

nim

al w

elfa

re

12. R

educ

ing

gene

ral

was

te

0

100

50


7

We surveyed our customers to understand the issues that mattered most to them. Listening to our customers


Highlights Our value chain Global context At a glance


Chief Executive introductionWelcome Customer insight survey


8

Understanding our changing world

It’s important that we recognise and respond to the global challenges and trends that face society. From climate change and the finite resources we depend on to the injustice and inequality of the communities where we source and sell our food, we understand the importance of managing our own business to reduce global risks and maximise the opportunities that may come as a result of these challenges.

Climate change and resource scarcity

Climate change is a direct result of human activity, from population growth, demand and consumption patterns increasing emissions into the atmosphere. It is already affecting the way we live today, we see this through severe weather patterns, rising temperatures and sea levels causing food and resource scarcity and devastation to communities.Business impact• Security of food supply• Loss of food quality through changing climate patterns• Food price inflation• Loss of livelihoods for Morrisons suppliers • New markets • Changing buying habits.

Increasing transparency

Our stakeholders rightly expect us to be transparent about how we operate. They want access to information, our policies on topical issues, how strategic decisions are made and how we are responding to business challenges.Business impact• Reputational impact• Stakeholder scrutiny and engagement • Change in productivity.

Population increase and urbanisation

The world’s population is expected to reach over 9 billion people by 2050. It is also predicted we will also see a shift in the way the world lives, moving from rural areas in favour of urban. These changes could have potential impacts environmentally, socially and economically

Business impact

• Food security• Increased agricultural production• Industrial adaptation• Pressure on finite resources• Price increases• Greater number of customers• Increase in store openings.

Demand for responsible goods

Customer awareness and demand for responsibly made goods continues to grow. It’s our responsibility to ensure that the decisions we take about how we operate and where we buy from are undertaken with care. It’s about taking responsibility for as many stages of the production and supply chain that we are able to control or influence.Business impact• Ill managed supply chains and management systems• Illegal activity• Security of supply • Poor quality goods • Greater transparency.

Human rights

As a business, we are accountable for ensuring that the human rights of the people that make and sell our products are protected. This includes fair working conditions, health and safety in the workplace, equal treatment and respect for the diverse communities in which we operate. Business impact• Reputational impact• Exploitation of vulnerable workers in our supply chain• Liability for illegal activity.

Data security

Customer and colleague privacy is extremely important. They rightly want to know exactly what kind of information we collect and how it’s used. It’s important that we are transparent about the data we keep, and the policies and procedures we have in place in order to ensure information security.Business impact• Legal repercussions • Reputational impact• Ill managed management systems• Cost implications• Robust management systems.


Highlights Our value chain Customer insight survey At a glance


Chief Executive introductionWelcome Global context

Read about how we are aligning our focus areas to the UN Sustainable Development Goals on page 10

Our commitments should reflect the material issues that really matter to our business and our customers.Our Corporate Responsibility strategy

This Review sets out our key focus areas for our programme.

New and existing commitments are in place to ensure we’re delivering positive change year-on-year.

Helping British farmers

Working with our suppliers to keep them competitive, profitable and sustainable

Reduce food waste

Following the food waste hierarchy to reduce, reuse

and recycle

Our colleagues

Train, engage and retain our people to provide great customer service

Authenticity, provenance and

safety Traceability and integrity of

the products we buy

Reduce waste and emissions

Reducing operational impact and

creating efficiencies

Sourcing responsibly

Working with suppliers to reduce environmental

and social risk

Supplier working conditions

Protection of workers’ rights and good

relationships with suppliers

Healthy customers

Helping our customers to make healthier choices

CommunitiesSupporting causes that

matter to our customers and colleagues


9AssurancePerformance summaryOur focus areas Why it matters

Highlights Our value chain Global contextCustomer insight survey


Chief Executive introductionWelcome At a glance

Read about our approach to materiality on pages 29

Read more on p11

Read more on p21

Read more on p17 Read more on p19 Read more on p13 Read more on p15

Read more on p23 Read more on p25 Read more on p27 Go to page 32 to see the full list of our commitments.

Why is it important?

The UN Sustainable Development Goals officially came into force in 2015. The Goals universally apply to all and aim to end all forms of poverty, fight inequalities and tackle climate change on a global scale. These Goals can’t be realised without participation from all sectors including business. We recognise the importance of these goals and the true value of collaboration in order to create change.

At Morrisons, we want to address these global challenges in a meaningful way that is relevant and aligned to our business strategy. We’ve reviewed our focus areas and ensured we are aligned to at least one Goal where possible. As the use of the Goals develops we will adapt and build connections so that we stay connected to best practice where possible.

Our focus areas

Helping British suppliers

Our colleagues

Authenticity, provenance and safety

Sourcing responsibly

Reduce carbon and waste

Supplier working conditions

Reduce food waste

Healthy customers

Communities


10

Collaboration is the key to ensuring sustainable change.Working towards a global agenda


Chief Executive introduction Highlights Our value chain Global contextCustomer insight surveyWelcome At a glance

Our commitments and performance summary A full list of our commitments and performance figures can be found on page 32

Financial priorities alignment

To be more competitive

To develop popular and useful services

To serve our customers better

To find local solutions

Customer insight survey 2016/17 ranking

Supporting British farmers – 2nd

Buying British products – 4th

Selling local products – 9th

UN Sustainable Development Goals alignment

We will establish Beef Shorthorn as the breed for our ‘Best’ range of beef in all stores by 2019

We will establish a programme to improve the eating quality for fresh British pork by 2018

We will create a reference guide for all our pig farmers on environmental enrichment by 2017

100%British fresh Morrisons branded beef, lamb, pork, chicken and turkey sold in our stores

All shell eggs will be from non-caged hens by 2025

Additional funds direct to farmers through our dedicated ‘For Farmers’ range

Over £5m


11

Help British farmers to be competitive, profitable and sustainableWe know our customers care about buying affordable British products. British farming is also essential to our business as it keeps supply chains short and efficient. It’s important that we support suppliers to create profitable, affordable, high quality products for our customers.

CommunitiesCustomer wellbeingSupplier wellbeingSource responsiblyOur colleaguesFood wasteCarbon and wasteFood safetyCompetitive supply chain

AssurancePerformance summaryWhy it mattersOur focus areasStrategy and approachContents


12

2016/17 focus

Buying British

We’ve continued to support the British farming industry by maintaining our 100% British on fresh Morrisons brand beef, lamb, pork, chicken and turkey. In addition, we also sell 100% British Morrisons branded fresh milk and eggs. This has been in place for many years and we were one of the first retailers to make this commitment, as a result we are now one of the market leaders on fresh British meat and produce. The challenge is ensuring British farming and production remains competitive with other international markets. We continue to address the barriers British farmers face on this issue through our supplier working groups to promote efficiency throughout these supply chains.

Local foodmakers

The British Food report, published by the University of Leeds and commissioned by Morrisons, revealed that only 52% of the food eaten in the UK comes from UK farmers. We also know from our customer insight survey that buying locally sourced products is something that they really care about. As a result, we’ve focused our efforts on providing our customers with a range of products tailored to their local area. We’ve launched our search for The Nation’s Local Foodmakers, looking for the best local food producers in the country. We will recruit more than 200 new suppliers from across England, Scotland and Wales throughout 2017 to create local products for sale in our stores.

Promoting rare breeds

The British Shorthorn cow was once a protected rare breed. We found from our research that the meat

eating quality of this breed was high. By offering to pay a premium for this breed, this encouraged farmers to invest in this breed. As a result of our promotion and demand for this product, the breed is now safely off the breeds at risk list. British Shorthorn is now used within our fresh beef ‘The Best’ range in 100 stores and we will continue to roll this range out across all stores in the next two years.

‘For Farmers’ range

In response to stakeholder challenge on the issue of dairy pricing for farmers, we launched our ‘For Farmers’ range in 2015 and became the first UK retailer to create a range where part of the retail price of the products goes directly back to farmers.

‘For Farmers’ fresh milk is 23 pence more than Morrisons branded fresh milk. This additional premium is donated to our milk processor, Arla, a farmer-owned cooperative, which is then distributed between UK and EU milk farmers. ‘For Farmers’ Cheese is 34 pence more than our standard Morrisons branded cheddar, all of this premium goes back to the British farmers who supply the milk to create the cheese via our cheese supplier, Lactalis McClelland. Since the ‘For Farmers’ launch, we’ve raised over £5m extra premiums for British and European farmers and have recently extended the range to include cream, butter and bacon.

Improving fresh British pork

As part of our commitment to fresh British meat, we’re keen to improve the eating quality and customer perception of British pork. As a result, we established our tender pork supplier group, which looks at different pig breed lines that offer great

quality British pork. In addition to this, the working group is also looking at different welfare systems for the pig industry.

Intelligent tagging

Morrisons co-managed a project with the Agriculture and Horticulture Development Board to deliver a fit for the future system of tracing pigs back from farm to fork called Radio frequency identification technology. This type of technology allows farms to tag animals and the information can be carried throughout the food chain process. The data allows farmers to trace back different types of information to help improve their herd production including date of birth, daily live weight, vaccine and medicine techniques or precision breeding. The project is in its infancy but is deemed to give productive data back to suppliers.

Prince’s Countryside Fund donation

We donated £250,000 through the Morrisons Foundation to The Prince’s Countryside Fund and its Farm Resilience programme. The programme aims to support and develop vulnerable family farm businesses through a series of business skills workshops, competitor benchmarking as well as one-to-one support and resources.

Help British farmers to be competitive, profitable and sustainable continuedOur approach

We buy animals and whole crops direct from British farmers. Owning our own abattoirs, manufacturing and packing facilities enables us to utilise the whole animal and all of the crop, meaning farmers get a fair price and we’re reducing waste. Our Farming Programme also works with producers to promote profitable, responsible farming through collaboration and supply chain initiatives.

“We are thrilled with the launch of the ‘The Best’ Shorthorn Beef brand, which will help to connect farming with consumers. We established our working partnership with Morrisons in 2010 which is adding value to the steers – once a by-product, registrations of Beef Shorthorn and Beef Shorthorn cross cattle have increased by a massive 64%.”Milly FyfeBeef Shorthorn Society

Listening to our suppliers...

What’s next?

Focus on further developments for fresh British pork project including welfare systems.

Further development of

dairy beef farming projects.

Focus on local and regional sourcing offer within our

stores.

Competitive supply chain Food safety Carbon and waste Food waste Our colleagues Source responsibly CommunitiesSupplier wellbeing Customer wellbeing


Read more about our work with British farmers at www.morrisons-farming.com

http://www.morrisons-farming.com


We will meet Food Standards Agency (FSA) targets on campylobacter levels year-on-year

Roll outCulture of Excellence programme

We will establish monitoring of antibiotic use and continuous improvements in chicken, eggs and pork by 2017

0.8%Levels of campylobacter found in Morrisons branded chicken, 6.2% below the FSA target of 7%





Food safety – 1st Antibiotics in farming – 10th


We will build closer working relationships with our international growers through engagement with our dedicated ‘at source’ Technical team


13

Ensure authenticity, provenance and safety of our productsIt is a priority that our products and services meet all food safety and legal standards. This significantly reduces risk and meets customer expectation for quality and value.

CommunitiesCustomer wellbeingSupplier wellbeingSource responsiblyOur colleaguesFood wasteCarbon and waste


Food safetyCompetitive supply chain


14

2016/17 focus

Closer to source

We are committed to ensuring the fresh fruit and vegetables we sell are of the highest quality, from growers we know and trust. When sourcing fruit and vegetables from outside of the UK, we now have dedicated ‘at source’ international technical teams in place to work closely with our growers. This creates longer-term relationships and helps to deliver consistently high quality products for our customers.

Antibiotics in farming

We recognise the potential risks to human health as a result of overuse of antibiotics in farming production. With increased attention on antibiotic resistance and antibiotic use in livestock farming, we feel it is important that our producers have an understanding of the problem and why it is important that we take a proactive approach in tackling this issue.

We have established a programme to effectively monitor and improve the use of antibiotics in fresh meat and egg production. We are also encouraging our suppliers to ensure the responsible use of antibiotics is observed, that antibiotics aren’t used on healthy animals and if use is necessary suppliers should only use Critically Important Antibiotics as a last resort. This will be a focus for the business in 2017/18.

Campylobacter Action Plan

Since 2013 we have been working hard to reduce Campylobacter levels in fresh Morrisons branded chicken. We have worked with our suppliers to introduce a detailed Campylobacter Action Plan which has successfully reduced campylobacter levels in our chickens.

We have established our own monitoring programme, carried out by an independent accredited laboratory. Our tests are based on a larger sample size than the FSA survey and results show levels of campylobacter steadily reducing. We continued with our initiative to reduce the number of incidences and levels in our fresh chickens.

FSA targets require levels of campylobacter to be no higher than 7%. Results of our testing programme throughout 2016 showed over the year contamination in our fresh chicken was at 0.8%, down from 4.2% last year. Our overall results for the last nine consecutive quarters have also been below the 7% FSA target.

Supplier audits

All manufacturing sites of Morrisons own brand food and drink must meet our food manufacturing standard and maintain certification against the BRC Global Standard for Food Safety, which is internationally recognised.

We conduct approval audits to ensure suppliers meet our food safety standards before supply commences and then hold routine audits to monitor ongoing compliance. The frequency of these routine audits is determined by supplier performance and product risk.

Morrisons Supplier Academy

We continued with our Supplier Academy to promote greater awareness of food safety and Morrisons requirements across our extensive supply base. Suppliers attended courses designed to achieve a clear understanding of our Manufacturing Standard’s requirements, our product development processes and measures needed to protect our products from food fraud risk.

Culture of Excellence

We have completed the roll out of our Culture of Excellence programme within our Morrisons manufacturing sites and continue to drive further improvements in food safety and quality. Action plans are in place with all 15 site teams to drive improvements and monitored for progress.

Acrylamide toolkit

Acrylamide is a chemical that is created when many foods, particularly starchy foods like potatoes and bread, are cooked for long periods at high temperatures, such as when baking, frying, grilling, toasting and roasting. The scientific consensus is that acrylamide has the potential to cause cancer in humans.

We have actively engaged with our key own brand suppliers to comply with the ‘Acrylamide Toolbox’ to reduce the amount of acrylamide formed during food processing. Applying such methods allows acrylamide levels to be kept below ‘indicative values’ deemed consistent with good practice and minimise the risk to health.

Ensure authenticity, provenance and safety of our products continuedOur approach

We set high standards for our own brand suppliers, manufacturing sites and stores to ensure the delivery of safe and legal products that meet the demands of our customers. All manufacturing sites of Morrisons own brand food and drink must meet our food manufacturing standard and maintain certification against the British Retail Consortium (BRC) Global Standard for Food Safety, which is internationally recognised.

“I would expect a responsible retailer to ensure the health and safety of both their staff and customers, and use only trust worthy suppliers.”Morrisons customer

Listening to our customers...

What’s next?

Action plans delivered for all manufacturing

sites for Culture of Excellence programme.

We will continue to meet FSA’s

target for campylobacter levels in fresh

chickens.

Our ‘at source’ technical teams will continue to work with our international

growers.

Carbon and waste Food waste Our colleagues Source responsibly CommunitiesSupplier wellbeing Customer wellbeing


Competitive supply chain Food safety

Read about our work to reduce campylobacter levels at www.morrisons-corporate.com/cr

https://www.morrisons-corporate.com/cr/


WRAP’s Courtauld 2025 Commitment signatory

Waste direct to landfill in our manufacturing sites

Store waste diverted from being sent direct to landfill

Stores fitted with LED lighting as part of our ongoing stores refresh







Reducing packaging waste – 12th

Reducing energy use – 19th

Reducing water use – 23rd


Absolute reduction in operational carbon emissions against (2005 baseline)

Zero

26.9%

90

95%Corporate Responsibility Report 2016/17Wm Morrison Supermarkets PLC

15

Reduce general operational waste and carbon emissionsClimate change significantly affects our business through its impacts on agricultural yields, food prices and supply. It’s important that we minimise environmental risks to our business, protect natural capital and create efficiencies. As a food maker it is also important that we show respect and value for the food we serve to our customers whilst operating efficient supply chains.

CommunitiesCustomer wellbeingSupplier wellbeingSource responsiblyOur colleaguesFood wasteFood safety


Carbon and wasteCompetitive supply chain


16

2016/17 focus

Progress against our 30% target by 2020

As a result of our efforts to reduce energy use across our estate, our operational carbon emissions were 1,175,685 tCO2e, which represents an overall absolute reduction of 26.9% in operational carbon emissions against our 30% target by 2020.

Store refresh programme

As our stores continue to be refreshed as part of our wider ‘Fresh Look’ programme, we have ensured that energy usage levels are minimised where possible, for example:

• New LED Lighting has been installed in over 90 stores including Cafe and display areas of our stores.

• New refrigeration equipment has been installed in over 30 stores. We have also included doors on a number of new fridges, and will continue to roll this out where space allows.

Listening to our customers

Across the UK we host customer listening groups in our stores. This provides us with useful insight on how we can improve the customer experience. Where energy maintenance complaints are flagged by our customers, we explore potential new initiatives to resolve these issues.

For example, feedback from the listening groups informed us that customers thought our stores were too cold. We listened and responded, increasing the temperature by two degrees in stores where applicable. To reduce impact and monitor usage, our heating control system is centrally managed and allows us to allocate energy to particular areas of each store where required.

Energywise programme

Our colleague energy awareness programme energywise has been refreshed in all stores and sites. The aim of the programme is to ensure that colleagues are mindful of energy consumption in their workplace and make conscious efforts to reduce usage. Since 2012, colleague engagement in the Energywise programme has helped to save over £7m for the business.

Working with our suppliers

We are working with our electrical, refrigeration, mechanical and utility suppliers to identify opportunities for greater efficiencies and ongoing maintenance.

Maintenance Surveyors visit our stores each month to run energy audits, educate colleagues around energy usage and monitor the overall appearance and maintenance of each store.

Waste to landfill

95% of our store waste is diverted from landfill, we have also achieved zero waste direct to landfill in all 15 of our manufacturing sites. Waste is delivered to third party intermediaries for processing, allowing for a proportion of the waste to be reclaimed, recycled or otherwise used for another purpose. Store and manufacturing waste is defined as waste generated and collected from operations.

A breakdown of our store waste data can be found on page 41.

Waste reduction initiatives in manufacturing

• Produce – Surplus fruit and vegetables not suitable for sale in our stores are sold to a wholesale company and market traders.

• Bakery – Surplus bread is donated to a local soup kitchen for the homeless.

• Fish – Whitefish and salmon bi-products are sold for pet food or exported.

• Meat – Blood is processed into fertiliser, waste not fit for human consumption is processed into pet food, hides are processed into luxury car seats and mucosa, a membrane that surrounds internal organs, is used in pharmaceuticals.

• Reducing packaging waste – We have launched returnable ‘bins’ to supply our fish products to reduce the use of poly boxes in the supply chains. Produce cardboard boxes are sold to local market traders to be re-used in local supply chains whilst citrus cardboard boxes are distributed onwards within our own supply chain. At our abattoir in Winsford we have reduced the thickness of the film and trays used for our meat packaging, which consequently reduces the temperature and time taken to seal the product.

Reduce general operational waste and carbon emissions continued Our approach

We were the first major supermarket to be awarded the Carbon Trust Standard, which reflects our commitment and continued reductions in carbon emissions since 2005. We have a range of projects to deliver carbon savings throughout our supply chain. Reducing operational waste and carbon is part of what we do everyday. This makes sense not only from an environmental perspective, it ensures efficiency throughout our operations.

“Morrisons has held the Carbon Trust Standard since 2008, providing recognition of the ongoing and real achievements made by Morrisons in reducing the environmental impact of the business. This has been accomplished by establishing challenging targets, having a well-structured approach to measurement and monitoring, and effectively implementing energy efficiency initiatives throughout the Company’s operations.”Darran Messem,Carbon Trust

Listening to organisations...

What’s next?

Refresh our colleague energy

awareness campaign to drive

awareness and energy saving

behaviour across the business.

Carbon Trust Standard

re‑certification for 2017/18, which has been achieved

since 2007.

Further reduce energy use

through new investments and

initiatives.

Food safety Food waste Our colleagues Source responsibly CommunitiesSupplier wellbeing Customer wellbeing


Competitive supply chain Carbon and waste

Read our carbon management policy at www.morrisons-corporate.com/cr/policy

https://www.morrisons-corporate.com/cr/policy/


To double the amount of food redistributed by 2020 (2015 baseline)

Help to reduce UK household food waste

Wonky Veg sold in stores

Surplus food in our supply chain redistributed to Company Shop

Unsold food products donated to local community groups







Reducing food waste – 6th


Business in the Community’s Responsible Business Awards finalist for Environmental Leadership

1,572 tonnes

25,000 tonnes

2.3 million


17

Reduce food wasteBy building smarter supply chains we reduce avoidable food waste. We follow the food waste hierarchy of prevention, optimisation, recycling, recovery and, as a last resort, responsible disposal. This reduces environmental risk, creates efficiencies and its important for a range of our stakeholders.

CommunitiesCustomer wellbeingSupplier wellbeingSource responsiblyOur colleaguesCarbon and wasteFood safety


Food wasteCompetitive supply chain


18

2016/17 focus

Household 71

Manufacturing 17

Retail 2

Hospitality and food service 9

Food waste in litter 1

Wholesale <1

Food waste in the UK (%)

Unsold food programme

As part of our unsold food programme, our stores partner with local community groups to donate any unsold food that is safe to eat. In 2016, we donated over 2.3 million unsold food products, with 80% of our stores working with over 420 community groups. Utilising our data and analysis provided for us by WRAP, we estimate that in 2016 food redistributed to local community groups from our stores under the ‘unsold food donation programme’ alone made a positive environmental impact equivalent to around 2,500 tonnes CO2e.

Company Shop

In our direct distribution supply chain, our main redistribution partner is Company Shop. In 2016, Company Shop collected 1,572 tonnes of product from suppliers or our distribution network that would otherwise have been wasted.

Wonky Veg

We launched our Wonky Veg range in 2015 with initially four lines: potatoes, carrots, onions, and parsnips. Working directly with our farmers and processing through our own manufacturing sites, ‘Wonky Veg’ was trialled in a selection of stores and sold separately to our standard range at a cheaper price. In 2016, this range was extended to include cabbage, cauliflower, courgettes and peppers. In total, we sold over 25,000 tonnes in 2016. We are now selling on average over 500 tonnes of ‘Wonky Veg’ to over 500,000 customers every week across all of our stores and online. In 2017, we will extend the range further to include wonky swede, apples, pears, sprouts, asparagus and leeks.

Working groups

We are working with industry to deliver further food waste reduction through WRAP’s Courtauld 2025 working groups. We are currently members of the Surplus Redistribution Working Group and the Customer Engagement Working Group aiming to reduce UK household food waste.

Labelling changes

WRAP has supported our business focus on waste resource management and importantly provided valuable additional insight into consumer food waste. This helps to inform decisions on how to help customers further reduce waste and save money. For example, in early 2017, we began changing our freezing advice on pack moving away from ‘freeze on day of purchase’ messaging to help customers better manage their food through more effective storage.

Customer insight survey

Although there has been an overall 12% reduction in household food waste from 2007 to 2015, WRAP’s Courtauld Commitment 3, of which we were signatories, failed to meet the target to reduce household food and drink waste by 5% by 2015 compared with 2012.

As a food retailer, we have a responsibility to ensure that we help our customers to reduce food waste by providing them with tools and information.

We surveyed our customers in early 2017 to understand what makes them waste food in the home and wheter there is more we can do to help them. Results of the survey showed the top three reasons our customers waste food are change of plans to their week, short shelf life on products and preparing too much food. These results will enable our business to make changes where possible to help our customers at home, building on our work with WRAP and our support of their Love Food Hate Waste campaign.

Reduce food waste continued

Our approach

We are committed to providing food we are proud of with the minimum wasted so that our customers enjoy eating quality fresh food at great value. We have to take an active approach to use more of what we buy and consequently the management and reduction of associated waste is our responsibility. By having a greater degree of control over more of our fresh UK food chain through our vertical integration model we believe we are also able to drive efficiency from farm gate through our more direct supply chain to our customers.

“Morrisons supply surplus food to our projects which cook and serve three course hearty meals for people who are hungry and lonely. Morrisons are now a supplier partner in 12 of our 30 projects. This partnership helped to contribute towards a total of 23,747 community meals in 2016.”Mary McGrath FoodCycle

Listening to our communities...

What’s next

We will look at new ways to

increase the amount of unsold food redistributed

addressing key barriers.

We will take the insight from the customer insight survey as well as WRAP’s Retailer Survey to help

drive change in the business to help our customers

reduce their food waste in the home.

We will continue to engage with WRAP through their signatory working groups

to create further food waste

reductions in the business.

Food safety Carbon and waste Our colleagues Source responsibly CommunitiesSupplier wellbeing Customer wellbeing


Competitive supply chain Food waste

Watch our unsold food video at www.morrisons-corporate.com/cr

https://www.morrisons-corporate.com/cr/


Your Say colleague forums launched

We will continue to increase overall engagement through Your Say forums year-on-year

In 2017, we will establish a wellbeing programme tailored to specific challenges within each function

We will improve preventable colleague absence year-on-year

We will review colleague benefits to improve financial wellbeing by end of 2017

We will continue to invest in My Job training, providing colleagues with the skills to do their job properly

We will deliver programmes across the business to enable colleagues to progress in their career

We will hold a career conversation with every colleague each year to establish their career aspirations and how we can support those aspirations

Colleague engagement score in 2016 Your Say colleague survey

MyJob training delivered to all storesFinancial priorities alignment



To make supermarkets strong again


To simplify and speed up the organisation


Looking after employees – 3rd

Equality in the workplace – 11th

Employee volunteering – 25th


We will fill 70% of appointments internally

70%

75.6%


19

Look after our colleaguesThe success of Morrisons is dependent on recruiting, developing and retaining the right people. It’s important that our colleagues reflect the communities in which we operate, and feel supported and engaged to enable us to deliver great customer service and meet our strategic objectives.

CommunitiesCustomer wellbeingSupplier wellbeingSource responsiblyFood wasteCarbon and wasteFood safety


Our colleaguesCompetitive supply chain

2016/17 focus

We’re listening

We completed customer and colleague listening groups as part of our Fresh Look Programme in 127 stores across the business. Listening to over 1,500 customers and over 1,000 colleagues throughout the year has enabled us to improve stores with the right local solutions for them. We introduced Your Say Forums in July 2016 across all business areas, these are colleague driven discussion groups to generate ideas to speed up, simplify and make Morrisons a better place to work and shop. The forums are monthly meetings held in stores, sites and at Head Office.

Your Say survey

Our 2016 Your Say Survey was completed by 65.7% of all colleagues across the business and included over 69,000 free text comments. Our measure of overall colleague engagement improved from 75.2% in 2015 to 75.6% in 2016. This included improvement in all four business areas – Retail, Logistics, Manufacturing and Head Office.

Tools to do the job

We designed our MyJob programme which has been delivered to all of our store managers and 160 commercial buying teams. They spent time understanding their roles and developing their technical and leadership skills. This has been so successful that we intend to continue the programme throughout 2017 and will extend to all our store management teams, people teams and to Manufacturing and Logistics. Alongside our training calendar for 2016 in order to support food-makers

and shopkeepers we trained 6,200 colleagues on fruit and veg. On the back of structure improvements within Retail we trained 2,500 new team managers on the technical skills for their role.

Career conversations

We made a commitment to all colleagues across the business that they will have a career conversation with their line manager. This has supported us in managing our talent and succession plans more effectively, leading to successfully placing individuals into key roles across the business.

Supporting EU colleagues

Following the decision for the UK to leave the EU we have worked hard to reassure, engage and support our EU colleagues. Our multi-cultural sites and stores will continue to offer all our colleagues the same commitments of respect, opportunity, training and fair pay.

We have improved our ways of working to make our business accessible for our EU colleagues through better English language training, translation support, simplified processes and more opportunities to progress.

Gender diversity

Board7 in total

Female representation (2) 29%

Male representation (5) 71%

Senior management

79 in total

Female representation (14) 18%

Male representation (65) 82%

We have continued to build a workforce that reflects the communities we serve. In 2016/17, Morrisons employed 61,973 men and 75,361 women.


20

Look after our colleagues continued

Our approach

Our people are at the forefront of everything we do. Recruiting and retaining the right people means we deliver our strategic objectives and provide excellent customer service. At Morrisons, we aim to create long term partnerships by giving colleagues the time, qualifications and support needed to grow and develop their skills.

“Morrisons graduate scheme has enabled me to experience roles which I had never before considered. I have been given lots of responsibility early on. All colleagues are very welcoming and have spent time developing me, whether I am working in store or head office.”Morrisons colleagueGraduate Scheme

Listening to our colleagues...

What’s next

Deliver MyJob training in

manufacturing and commercial.

Continue to increase colleague

engagement through Your Say forums.

Accelerated learning

programme team manager to store

managers.

Food safety Carbon and waste Food waste Source responsibly CommunitiesSupplier wellbeing Customer wellbeing


Competitive supply chain Our colleagues

For more information on what it’s like to work at Morrisons visit morrisons.jobs

https://www.morrisons.jobs/


All Morrisons branded products are required to use RSPO certified sustainable mass balance or segregated palm oil and derivatives

Continued participation in Sustainable Fisheries Partnership’s Ocean Disclosure Project

Morrisons branded household and beauty products are FSC, equivalent or recycled

Members of the Round Table on Responsible Soy






Animal welfare – 8th

Protecting natural habitats – 15th

Supplier working conditions – 16th

Responsible fishing – 17th

Fairtrade products – 20th


We will maintain seafood policies and improvement projects to reduce the environmental and social impacts of the seafood we buy

86%

since 2011


21

Source responsiblyIncreasing global demand and pressure for key commodities can lead to ill-managed supply chains, erosion of land, illegal logging and the destruction of natural habitats and ecosystems. We must ensure that our supply chains remain sustainable and that we conserve the natural capital we’re dependent on.

CommunitiesCustomer wellbeingSupplier wellbeingOur colleaguesFood wasteCarbon and wasteFood safety


Source responsiblyCompetitive supply chain


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2016/17 focus

Seafood

The marine ecosystem remains under ever increasing pressure driven by a growing global population, overfishing, climate change and pollution.

We recognise this risk, understand the challenges being faced across the industry and work closely with our supply chains to source responsibly and improve current practices to provide a sustainable, secure supply. We aim to source fish which is caught or farmed using methods which are the least detrimental to the marine environment and provide good working conditions to those employed within them.

Each species that we stock has to meet a set of conditions before it goes into our stores. Important sustainability criteria, such as stock levels, fisheries management and where and how the fish is caught are properly considered as part of our rigorous “decision tree” process.

Where issues are identified in either existing or new supply chains we work hard with our suppliers to understand the challenges being faced and agree action plans to address them, even if they might take many years to deliver.

We continue to work closely with a range of NGOs and look to address risks in our supply chain by supporting fishery improvement work.

Project UK Fisheries Improvement Project – We are supporting Project UK which was established in August 2016 and is helping to deliver improvements in six UK fisheries. Many UK fisheries are particularly well managed but this project is supporting those which need help and are of particular importance for the UK market, helping to make our supply chains more

resilient. You can find out more about the project at www.seafish.org/industry-support/fishing/project-uk

Sustainable Fisheries Partnership’s Ocean Disclosure Project – For the second year running we have published details on the wild capture fisheries we source from making our sources more transparent. More information can be found at www.sustainablefish.org/Programs/Professional-Guidance/Ocean-Disclosure-Project

Seafood Task Force – We have continued to support efforts to tackle forced labour and human rights abuses as part of our membership and ongoing commitment to the Seafood Task Force in Thailand.

Sustainable Seafood Coalition (SSC) – As a member of the SSC we source and label all our seafood in line with their voluntary environmental sourcing and labelling codes of conduct.

Aquaculture – All of our farmed products come from independently assessed and certified farms, hatcheries and feed mills.

Palm oil

Palm oil is an important ingredient in a range of everyday products. Rising global demand for palm oil has fuelled deforestation in parts of south east Asia, which is why we have set targets to ensure that the palm oil we use comes from sustainable sources. All own brand products containing palm oil and derivatives must be sourced through an RSPO certified supply chain system of either segregated or mass balance systems. Palm kernel oil and derivatives used in own brand products must be covered through an RSPO certified supply chain system with Book and Claim as a minimum.

From our most recent survey, 56% of palm oil was certified segregated with 31% mass balance. For palm oil derivatives, 11% was certified segregated with 44% from mass balance systems. We will continue to work with our suppliers to ensure compliance to our policy.

Timber

We want to ensure that the wood used in our products originates from responsibly managed forests, because we know that unregulated deforestation is a significant factor in climate change and the depletion of biodiversity. We are committed to sourcing wood and wood derived products from third party certified sustainable sources.

During 2016/17 86% of wood and wood derived products were Forest Stewardship Council certified or recycled in own brand household and beauty products and 93% FSC or recycled in own brand home and leisure products.

Soy

We are members of the Roundtable on Responsible Soy, which is a certification scheme to help prevent the environmental impact of unsustainable soya production. The challenge going forward is to establish and promote certified soy usage of own brand products outside of Europe and North America, where deforestation risk is higher.

Source responsibly continued

Our approach

We are committed to responsible sourcing and use supply chain systems, which minimise the environmental impact associated with the production of important raw materials. We work with our suppliers to improve the social and environmental performance of our supply chain and ensure they are meeting our high sourcing standards. We encourage and promote responsible practices and a longer term view.

“Project UK Fisheries Improvements is an ambitious project aiming to achieve an environmentally sustainable future for key commercial UK fisheries. This project would never have got off the ground without the support of Morrisons, along with other companies, coming together in a pre-competitive partnership.”Chloe NorthUK Fisheries Outreach OfficerMarine Stewardship Council

Listening to NGOs...

What’s next

We will look at how we can implement the RTRS soy

production standard into our own operations.

We will continue to work with industry and NGOs to make environmental and

social improvements to the fishing industry.

Food safety Carbon and waste Food waste Our colleagues CommunitiesSupplier wellbeing Customer wellbeing


Competitive supply chain Source responsibly

Read more about our responsible sourcing of seafood at www.morrisons-corporate.com/cr

https://www.morrisons-corporate.com/cr/seafood/


Prepare and publish Morrisons Modern Slavery statement by the end of June 2017

Deliver bespoke ethical trading and modern slavery awareness training to commercial and supply chain colleagues in the UK and Hong Kong

Ethical trade audits undertaken

Tackling Modern Slavery Toolkits to be implemented at all Morrisons manufacturing and logistics sites by June 2017

ETI membership

Tier one produce suppliers visible and sharing ethical trading information






Supplier working conditions – 16th

Fairtrade – 20th


All high risk tier one sites to hold current ethical audits by the end of 2017

100% 1000

99%


23

Ensure fair working conditions for our suppliersOur customers expect us to take responsibility for fair working conditions in our supply chain, protecting workers’ rights and maintaining good relationships with our suppliers. We face increased scrutiny on our approach to tackling and preventing important issues such as forced labour and human trafficking in our business and supply chains.

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CommunitiesCustomer wellbeingSource responsiblyOur colleaguesFood wasteCarbon and wasteFood safety


Supplier wellbeingCompetitive supply chain

2016/17 focus

Modern Slavery Act

Modern Slavery Act compliance was a key responsible sourcing issue for the UK government this year, and a priority for Morrisons as we prepared to publish our first Modern Slavery Statement. Forced labour, human trafficking and the exploitation of vulnerable workers are abuses of basic human rights which we will not tolerate in our business or supply chains.

We are a founder sponsor of the anti-slavery initiative Stronger Together, and worked closely with them and and other external stakeholders to identify the risks posed in our business and supply chains. This highlighted a key requirement for increased awareness and capacity building to ensure our suppliers and colleagues can spot the indicators of modern slavery and understand how to protect vulnerable workers.

We collaborated with Stronger Together to develop and roll out training workshops on modern slavery to our manufacturing and logistics colleagues.

We supported this training with the implementation of a Modern Slavery toolkit to ensure due diligence continues across all our sites. We also encouraged our key suppliers to consider Stronger Together training and over 200 of their employees attended courses in 2016.

Collaborative working

We joined the Ethical Trade Initiative (ETI) as a foundation member in 2016, publicly demonstrating our commitment to ethical trading and our aim to drive improvement in our supply chains. We are currently actively involved in a number of ETI programmes including:

– Spanish agriculture– Vulnerable workers– The Italian tomato industry – Accommodation standards for UK Agriculture

workers– Migrant workers’ rights in Thai poultry farms

We are also active members of the BRC Ethical Labour Working Group and the Sedex Strategic Supplier Forum, which enables us to collaborate with other retailers, suppliers, audit bodies and NGOs to drive improvement and best practice in social compliance assessment.

Ethical Trading policy development

We have continued to engage with our suppliers and colleagues to ensure that our recently revised (2015/16) Ethical Trading Policy has been clearly communicated and to overcome any initial issues where our compliance requirements have changed. This included the publication of an updated Supplier Ethical Trading Handbook in June 2016 in response to feedback from suppliers for increased clarity around our audit grading methodology.

We are expanding the scope of our Ethical Trading Policy to include own brand Goods Not For Resale (GNFR) and tier one suppliers to our Produce and Manufacturing operations. This will bring circa 1500+ new supplier sites into the remit of our audit programme and require us to work closely with the relevant Commercial teams to ensure our policy requirements are maintained.

Our approach

Our Ethical Trading Code (ETC) sets out key rights for workers, including guidance on wages, working hours, safe and hygienic conditions and discrimination. Compliance with the code is part of our standard terms of supply and applies to all providers of goods and services, including branded products and goods not for resale.

We are members of the Supplier Ethical Data Exchange (Sedex), and use this web-based system to share common ethical information and reduce audit burden and cost for suppliers.

All tier one suppliers of own brand and exclusive products are required to join Sedex and complete a detailed self assessment questionnaire.


24

Ensure fair working conditions for our suppliers continued

“Morrisons’ work in monitoring and responding to issues is an excellent example of why the Supermarkets and Suppliers Protocol was set up and the support they have demonstrated is much appreciated.”Neil CourtHead of Compliance at the Gangmasters and Labour Abuse Authority

Listening to our suppliers...What’s next

We will publish our first Modern Slavery statement

and work closely with key stakeholders to

ensure we deliver the key improvement actions

identified for 2017.

We will deliver dedicated Ethical

Trading and Modern Slavery awareness

training to all applicable Commercial colleagues.

We will continue our progress towards full

membership of the ETI after being accepted as Foundation Members in

June 2016.

We will recruit addition al Ethical Trading

resource to enhance our approach

to tackling modern slavery risk in our Nutmeg

clothing business.

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Food safety Carbon and waste Food waste Our colleagues Source responsibly CommunitiesCustomer wellbeing


Competitive supply chain Supplier wellbeing

Read our Ethical trading policy at www.morrisons-corporate.com/cr/policy/ethical-trading

https://www.morrisons-corporate.com/cr/policy/ethical-trading/


Working towards Public Health England’s Sugar Reduction guidelines, reducing sugar in key categories which contribute to children’s sugar intake by 20% by 2020, including a 5% reduction in year one

Creation of Nutrition and Health Strategy

Removal of sugar from own brand breakfast cereals

New healthy eating brand, Eat Smart launched

Implementation of a Nutrition and Healthy Strategy






Selling healthy products – 14th Responsible alcohol promotions – 22nd


Continued roll out of Eat Smart ‘endorsed’ products through 2017, making it easier to identify the healthiest products within categories and across the stores

20%

88 tonnes


25

Make it easier for our customers to live healthier livesThe UK consumes more sugar, saturated fat and salt and less fruit, vegetables, fibre and oily fish than is recommended. As a food retailer, we must provide healthier choices to our customers. We continue to be challenged by the Government, media and consumer groups to improve the nutritional profile of our products. Providing our customers with healthier options and reformulating our products reflects the social need of our customers. It can also increase sales and further enhance our brand perception.

CommunitiesSupplier wellbeingSource responsiblyOur colleaguesFood wasteCarbon and wasteFood safety


Customer wellbeingCompetitive supply chain


26

2016/17 focus

Working with industry

Regular attendance at British Retail Consortium meetings ensures our voice is heard through the industry body. We engage directly with Public Health England, a Department of Health executive agency with responsibility to protect and improve the nation’s health and wellbeing.

The IGD, a research and training charity, helps to promote best practice in nutrition, food and farming. As active members we’re involved in their healthy eating programme, which covers reformulation, nutrition labelling communication and healthy food provision in the workplace. In particular, we’re part of the pilot of healthier workplace eating initiatives, drawing on behaviour change science.

We will provide nutritional training to our buying teams to give them a better understanding of the impact of nutrition and have some context around reformulation and nutrition policies.

Salt reduction

We continue to work towards the Government’s 2017 salt reduction targets, which have a deadline of December 2017. All suppliers are required to adhere to our policy which states that all own brand products must meet the salt targets. There remain technical challenges which make it unlikely that we will be 100% compliant with the targets but our progress is in line with the market and we have been praised by the consumer group CASH for low salt levels in our noodles.

Improving our options for customers

Eat Smart is our new health and well-being range for customers who are looking for healthy and convenient food. Customers told us they want to see the nutritional details at a glance, so they’ll find clear, easy to read information on the pack helping them to buy the right product for them.

Listening to our customers, we’ve created choice within the Eat Smart range:

Eat Smart Counted is for customers who are counting calories. It will help them with their goals, like weight loss through a Weight Watchers or Slimming World diet. Eat Smart Counted packs will show Weight Watchers SmartPoints to make shopping simpler.

Eat Smart Balanced are complete meals, and will always contain one of your ‘5 a day’ and a source of protein.

We’re also updating the way we highlight healthier products across our range of Morrisons food. An Eat Smart logo on the pack will help customers find the healthiest products in store, whether they’re looking for fruit and veg, wholemeal bread, reduced fat cheese or more.

Responding to Government Obesity Plan

There has been considerable attention on sugar in recent years and in March 2016 the Government announced its intention to introduce a ‘Sugar Tax’ on the soft drink industry, which comes into force in April 2018. We’ve committed to reduce or remove sugar in all soft drinks (excluding adult soft drinks) to make us ‘sugar tax-free’.

In addition, in August 2016 the Childhood Obesity Plan challenged all sectors of the food and drinks industry to reduce overall sugar across a range of products that contribute to children’s sugar intakes by at least 20% by 2020, including a 5% reduction in year one. Along with other sectors of the industry, we feel this target may not be achievable in all relevant categories in the proposed timeframe; however, we have begun work and have already made good progress, reducing sugar in our own brand cereals by 88 tonnes.

Promotions on healthy products

We continue to include thousands of offers on fresh fruit and vegetables within our stores, making it more affordable for our customers to eat healthier.

Healthier living section of website

We’ve made it easier for our customers to find healthier options when online shopping with a dedicated healthier living section of our website. Along with healthier option products, the pages also include healthy eating recipes and links to reduced sugar products.

Make it easier for our customers to live healthier lives continued Our approach

We are taking a range of measures to help our customers make healthier choices, including product reformulation, clear nutritional information, healthier ranges, and strong promotions on fruit and vegetables. To help customers make quick and informed decisions about the food they buy we are rolling out colour coded nutrition labels to our own brand pre-packed food and drink. In addition, we display calorie information on our customer café menus.

“As signatories to the salt pledges under the Responsibility Deal we applaud Morrisons on their public commitment and encourage them to continue with their efforts in producing lower salt products across all their own brand range.”Professor MacGregorProfessor of Cardiovascular Medicine and Chairman of Consumer Action on Salt and Health


What’s next

We will improve the healthy eating

section of our customer website to ensure it’s more

user friendly.

Provide nutritional training to our

buying teams to help them with

reformulation and development of new products.

We will continue to make progress

on sugar reduction in key categories as laid out in the

Government Childhood Obesity

Plan and Public Health England

guidelines.

Food safety Carbon and waste Food waste Our colleagues Source responsibly CommunitiesSupplier wellbeing


Competitive supply chain Customer wellbeing

Visit the healthier living section of our website at www.morrisons.com

https://groceries.morrisons.com/webshop/getSeasonalCategories.do?tags=%7C154629&Abutton=2&fromSearchTerm=healthier+living


Helped to raise £1.65m for the Royal British Legion’s 2016 Poppy Appeal through in store collections

Respond quickly to opportunities to support other causes close to the hearts of our colleagues and customers

Raised £2.7m for Sue Ryder last year, bringing our three-year charity partnership total to £7.3m



Find local solutions



Good causes in the community – 21st

Raising millions for charity – 24th


The Morrisons Foundation donated more than £7.5m to charities across England, Scotland and Wales last year

Support the causes our colleagues care about by donating £250,000+ in match funding through the Morrisons Foundation

£250,000+

£7.5m

Raise at least £2.5m each year for our new charity partner CLIC Sargent

£2.5m+

£7.3m

£1.65m Corporate Responsibility Report 2016/17Wm Morrison Supermarkets PLC

27

Make a positive difference to the communities we serveOur stores play an active and positive role in their local community. Doing so helps us support causes close to the hearts of our colleagues and customers.

Customer wellbeingSupplier wellbeingSource responsiblyOur colleaguesFood wasteCarbon and wasteFood safety


CommunitiesCompetitive supply chain


28

2016/17 focus

Community Champions

We have a network of Community Champions based in our supermarkets. Community Champions work as ambassadors, linking each store with its local community.

They work to ensure that stores are used as community hubs, through the effective use of facilities like the customer café and training rooms. They support local charities and community groups as well as conducting store tours and giving talks to local schools. They coordinate fundraising activity for our national charity partner and other causes important to our customers and colleagues.

Morrisons Foundation

In 2016/17 the Morrisons Foundation donated over £7.5m to charities making a difference in the communities we serve. Most of this income came from the single-use carrier bag charge in stores, which we have committed to donate to good causes deducting only the VAT.

Last year the Morrisons Foundation awarded grants ranging from £500 to £500,000 for more than 400 charity projects which are helping to improve people’s lives in England, Scotland and Wales. 91% of our grants were awarded to charities within 7.5 miles of a Morrisons store, driving the localisation of Morrisons and supporting our aim to be a force for good in local communities.

In addition to grant funding, the Morrisons Foundation also provides match funding to Morrisons colleagues, boosting the money they raise for their

chosen charities. Match funding supported hundreds of colleagues last year to the tune of £250,000.

We regularly use internal communications channels to raise colleague awareness about match funding and encourage applications.

We are in the process of delivering roadshows raising the Foundation’s profile at a regional management level, and we also update the senior management team on high value grants and positive news stories generated through the Foundation. Match funding has benefited hundreds of colleagues so far and over 250 different stores have been involved in presenting a grant to a local charity.

A copy of the Morrisons Foundation Annual Review 2016/17 – including details of how charities can apply for grant funding – can be found at www.morrisonsfoundation.com

Sue Ryder

We completed our final year of our national charity partnership with Sue Ryder. Thanks to the generosity of our customers and colleagues we raised £2.7m, bringing the final total of the overall partnership to £7.3m. Funds raised will go to improve end of life care and support for families throughout Britain.

The partnership has enabled the charity to establish community-based healthcare services as well as family and bereavement support teams. The charity has also been able to launch an innovative space called the

Online Community and Support, to help people get expert and peer to peer support on terminal illness, end of life care and bereavement.

Local and national charities

In addition to our national charity partner, we are working with a range of local and national charities to support causes that make a difference and resonate with our customers.

This ranges from well-known campaigns like the Poppy Appeal and Children in Need, to local community projects. We also support overseas relief appeals with fundraising for the Disasters Emergency Committee, which brings together 13 leading UK aid agencies at times of humanitarian crisis in poorer countries.

Make a positive difference to the communities we serve continuedOur approach

We use our position at the heart of local communities to raise millions of pounds for charity every year. Both at a national and local level we support good causes that are important to our customers and colleagues.

“Being the charity partner of Morrisons for the last three years has been an incredible experience for Sue Ryder, and the £7.3m Morrisons have raised has made a vital difference. Through our Morrisons-funded community healthcare services and our Online Community, we’ve helped more people spend their final days at home, while creating a lifetime of memories for those left behind.”Heidi TravisChief Executive, Sue Ryder


What’s next

Work with our new charity

partner, CLIC Sargent over the next three years to raise funds to help stop cancer

destroying young lives.

Continue to make a positive

difference in communities by donating over £7.5m in grant

awards.

Continue to support high profile

partnerships in our stores such as the Poppy Appeal, Children in Need and Walking With

The Wounded.

Food safety Carbon and waste Food waste Our colleagues Source responsibly Supplier wellbeing Customer wellbeing


Competitive supply chain Communities

For further information on Morrisons Foundation visit www.morrisonsfoundation.com

https://www.morrisonsfoundation.com/

Our corporate responsibility activity and reporting is determined by an analysis of social and environmental issues. Each issue is reviewed by the following factors:

• Materiality of the issue based on importance to stakeholders and relevance to the business

• Alignment with the Company’s six priorities

• Relevance to the UN Sustainable Development Goals

• Ranking in our customer insight survey.

We monitor the wider issues that affect our business, take specialist advice and actively engage with our stakeholders. We then analyse business risks and opportunities and flag this within our wider leadership. Specific commitments are then developed to drive and measure change throughout the business. Each commitment is kept under review on a regular basis.

Selected material KPIs from this Report have been independently assured by PricewaterhouseCoopers LLD. Please see p39 for further details.

What factors determine the issues that are material for Morrisons?

Internal

• Strategic priorities

• Business change

• Financial, social and environmental performance

• Risk register

• Advice from colleagues

External

• Market changes and performances

• Stakeholder engagement

• Competitor benchmarking analysis

• Regulation

• International media focus and news

• Reporting trends

Help British farmers to be competitive, affordable and sustainable

Ensure authenticity, provenance and safety of our products

Reduce general operational waste and carbon emissions

Reduce food waste


Source responsibly

Ensure fair working conditions for suppliers

Make it easier for our customers to live healthier lives

Make a positive difference to the communities we serve

Focus areas


29

The issues that matter most

GovernanceStakeholder engagementMateriality



30

Engaging with our stakeholders enables us to identify issues and opportunities and respond to changing needs.

Ongoing engagement with our stakeholders

STAKEHOLDERS HOW WE LISTENED WHAT OUR STAKEHOLDERS CARE ABOUT 2016/17 EXAMPLES OF ENGAGEMENT

Communities Council correspondence, letters and surveys, local news, social media.

Our communities want us to be an active neighbour, to support the causes that matter to them and make a positive difference acting responsibly and thoughtfully.

• £7.5m donated to community causes through Morrisons Foundation

• 2.3 million unsold food products donated to local community groups through the Unsold Food Programme.

Customers Customer listening groups, sales of products, customer insight survey, social media, correspondence.

We know that customers recognise sustainability issues are important. They want us to make it easier for them to be supportive through healthier and more responsible buying habits, without additional cost.

• We continue to sell 100% Morrisons branded fresh beef, lamb, chicken, pork and turkey in our stores

• We refreshed our healthier eating range ‘Eat Smart’.

Colleagues Colleague Your Say forums, internal communications, Your Say surveys, colleague social media platforms, CR initiatives.

Our colleagues care about how we look after them, from their progression within the business to their engagement. They want to be treated equally and be rewarded by their commitment.

• Your Say colleague engagement forums launched• MyJob training introduced• Career conversations commitment for all colleagues.

Government and regulators

Formal enquiries, meetings, trade associations, social media, visits.

Government policy implemented through legislation, regulation and increasingly sector specific voluntary agreements forms the back drop to our operational activity.

• Written and verbal evidence on food waste submitted to Environment and Rural Affairs Committee.

Investors Enquiries, surveys, Annual General Meeting, meetings. Investors scrutinise our activity on a range of environmental and social measures as well as financial performance, to ensure investment risks are limited.

• We completed Carbon Disclosure Project’s annual carbon management survey which is made available to the investment community.

Non‑Governmental Organisations (NGOs)

Enquiries, surveys, collaborative projects, visits, meetings, blogs, social media.

NGOs care about the impact we have on the environmental and society. They ask us to make changes to the way we operate to help address a particular topical issue.

• We joined the Ethical Trading Initiative to collaboratively help tackle supplier working conditions in our supply chain working alongside business, NGOs and suppliers.

Suppliers GSCOP, conferences, meetings, visits, audits and surveys. We trade with companies all around the world and our challenge is to ensure that their operation is aligned with our values, policy and responsible business practices. Through our terms of trade, monitoring processes, technology, supply chain management, certification and auditing we work hard to ensure compliance.

• We continue to work with UK farmers through our farming programme to help keep them profitable and sustainable

• We introduced Wonky Veg in our stores to provide farmers with a market for fruit and vegetables that previously may have been surplus to requirements.

Governance


Stakeholder engagementMateriality


31

Corporate governance facilitates effective, entrepreneurial and prudent management that delivers long term success. It is driven by the leaders of a Company who come together regularly. They operate within established values to determine strategy as distinguished from the day-to-day operational management. Our corporate responsibility programme is formally incorporated into our governance structures.

Embedding sustainability into our business

Executive CommitteeImplementation measures and performance are reported to the Executive Committee which is chaired by our Chief Executive.

The Executive Committee is responsible, amongst other matters, for the development and implementation of strategy (subject to the overall supervision by the Main Board), financial performance, reporting and control, risk management and the development of corporate policies and procedures for the Group. The central commitments and KPIs for the corporate responsibility programme are managed on an ongoing basis under the stewardship of relevant Executive Committee Directors who are assessed alongside their wider performance as part of their Professional Development Review (PDR).

Corporate Responsibility commitments and KPI owners Across the business we have a key contact for each commitment and KPI.

These contacts are responsible for day-to-day management and progress. They work alongside our stakeholders to ensure we are effectively managing the issues that matter to our business. Each contact is required to provide updates to the Corporate Responsibility team and their relevant Executive Committee Director.

Corporate Compliance and Responsibility CommitteeDevelopment and progress in our sustainability agenda are reported at the highest level to the Corporate Compliance and Responsibility Committee (CCR).

The CCR meets at least three times a year and performs an oversight, monitoring and advisory role for key areas of corporate governance and development including health and safety, environment, competition, regulatory ethical compliance and corporate responsibility.

Store ManagersCR is embedded in a Store Manager’s operational activity in a variety of ways.

For example, stores are measured on their waste and markdowns as a percentage of sales, and water and energy use as profit and loss. Responsible business strategy is communicated to Store Managers via training, Internal Communications and retail operations.

Store Managers provide feedback on their performance centrally via reports, surveys and data management systems.

Shop floor colleaguesShop floor colleagues are asked to take part and drive Morrisons CR agenda through various internal initiatives and campaigns. For example, Energywise, unsold food to charity, community champion activity.

Site colleagues Site colleagues drive Morrisons CR agenda through various on-site initiatives. For example, there are waste champions in every site that are responsible for removing unnecessary waste from their operations. Your Say forums are also in place to improve engagement and generate ideas for business efficiencies.

Site ManagersSite Managers are aware of the issues that are most prevalent for their site operations.

For example, health and safety, animal welfare, energy and waste are high on their agenda. Sites are required to report environmental data to the Environment Agency as part of their legal requirements. Health and Safety reporting is through line management and reported/collated by HR on site.

Responsible business strategy is communicated to Site Managers via training and Internal Communications.

“ At our store we take corporate responsibility very seriously. It’s part of business as usual, whether its reducing our energy, removing unnecessary food waste, keeping our colleagues happy and motivated or working with local charities and food banks through our Community Champion activity.”

Morrisons Store Manager

“ We are encouraged to put forward ideas to make our workplace better, it can be anything from colleague engagement to reducing waste or energy”

Morrisons Manufacturing colleague

Stakeholder engagement


GovernanceMateriality

FOCUS AREA AND ASSOCIATED COMMITMENTS WHY IT MATTERS TO MORRISONS

Help British farmers to be competitive, profitable and sustainable

To secure 10,000 dairy cattle per year through alliances with our milk processors and their farmers by 2018. Dairy beef already contributes to over 50% of the UK beef supply. Building more integrated dairy beef supply chains adds value to dairy farmers and is an outlet for pure dairy bull calves that have, in the past, been shot at birth or exported live, creating greater efficiencies and opportunity.

Establish Beef Shorthorn as the breed for our 'Best' range of beef in all stores by 2019. The British Shorthorn, once on the ‘at risk’ breed register, provides great eating quality. By promoting the breed to our farmers, we can create a high quality and competitive range.

To establish a programme to improve eating quality of British fresh pork in stores by 2018. By creating a greater eating experience will help to build sales and reputation as well as provide support for our pig farmers.

Create a reference guide for all our pig farmers on environmental enrichment to improve animal welfare by 2017.

Animal welfare is important for our customers and our farmers. Enhancing the welfare of pig production can enhance our reputation, increase sales and secure the best suppliers.

Create a reference guide for all our pig farmers on free farrowing to improve animal welfare by 2018.

All Morrisons branded fresh shell eggs will be from non-caged hens by 2025.

To roll out Red Tractor Plus standard across our fresh British pork by 2018. Red Tractor Plus provides enhanced standards on food safety, animal welfare, hygiene and environmental protection.

Ensure authenticity, provenance and safety of our products

To establish monitoring of antibiotic use and continuous improvements in chicken, eggs and pork by 2017. Antimicrobial resistance is an emerging issue in human medicine and we recognise the role that antibiotics in livestock can have in tackling this issue.

We will meet FSA targets on campylobacter levels year-on-year. Campylobacter is the most frequent cause of bacterial foodborne illness in the UK, with the number of cases reaching up to half a million a year. It’s important that we take responsibility for the products we purchase and sell to our customers.

We will build closer working relationships with our growers through engagement with our international ‘at source’ Technical team.

Customers care about the provenance of the food we sell. We must work with our suppliers to ensure they are meeting our high sourcing standards, taking responsibility for as many stages of the production and supply chain.


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Our focus areas explainedWhy it’s important to our business and how we measure our success.

Performance summary



Reduce general operational waste and carbon emissions

WRAP Courtauld 2025. WRAP’s Courtauld commitment is an industry collaborative commitment which aims to reduce waste and associated emissions from food and drink across the supply chain from farm to customer homes.

30% absolute reduction in operational carbon emissions by 2020 (2005 baseline). This can minimise environmental risks to our business, protect natural capital and create smart ways to reduce emissions across our operations. This makes sense not only from an environmental point of view but also from a cost perspective.

20% absolute reduction in operational water consumption by 2020 (2012 baseline). Responsible use of water throughout our operations effectively manages our environmental impact and associated costs to the business.

Reduce food waste

We will report publicly on our operational food waste data. Clarity on our figures will create opportunities for greater efficiencies, transparency as well as cost savings.

To double the amount of food redistributed by 2020 (2016 baseline). Food waste redistribution remains topical with stakeholders. Where surplus occurs, we must redistribute where possible to provide social benefit. Doing so can create efficiencies, enhance brand reputation and create greater links with local communities.

Food waste hotspots projects delivered through WRAP. 3 million tonnes of food waste in the UK occurs at farm level and 3.9m in manufacturing. Reviewing current specifications for produce, smarter ways to forecast and opportunities to improve storage and transportation can create cost savings and reduce risk.

We will help to reduce the amount of food and drink our customers waste in the home. Half of UK food waste occurs from households. As a responsible business we must allow customers to get the most value from the food they buy through labelling, packaging and communications.


33

Our focus areas explained continuedWhy it’s important to our business and how we measure our success.

Performance summary




We will continue to invest in My Job training, providing colleagues with the skills to do their job properly. Recruiting, developing and retaining the best colleagues is essential to our business.

Our challenge is to provide investment into attracting and training people so they can develop as we continue to grow as a business.We will hold a career conversation with every colleague each year to establish their career aspirations and how we can support those aspirations.

We will deliver programmes across the business to enable colleagues to progress in their career.

We will maximise the potential of our apprenticeship levy to enable colleagues to gain new skills and progress in their career.

We will fill 70% of appointments internally.

We will continue to increase overall engagement through Your Say forums year-on-year. Happy and healthy colleagues drive better performance for our business, create better working environments and improve retention.

It is important that we measure and improve engagement to ensure our colleagues are motivated, positive and delivering the best service to our customers.

Your Say survey – Continued improvement scores on ‘My manager cares about me’ year-on-year.

In 2017, we will implement wellbeing calendars tailored to each divisional need.

In 2017, we will establish a wellbeing programme tailored to specific challenges within each function.

We will review colleague benefits to improve financial wellbeing by end of 2017.

We will improve preventable colleague absence year-on-year.

Through our career programme, we will continue to progress a diverse range of colleagues reflective of the communities we serve.

The most successful businesses are those that nurture talent from people with diverse backgrounds. Different people tackle challenges with a different perspective and this is important for an innovative workplace. Our customers are diverse; we need to be diverse too.


34


Performance summary



Source responsibly

Maintain seafood policies and improvement projects to reduce the environmental and social impacts of the seafood we buy.

Seafood stocks globally remain challenged with the marine ecosystem under pressure as a result of overfishing, climate change and pollution. It’s important that we sustain and protect the fishing industry by working with our supply chains to improve current fishing methods and secure supply.

All timber and timber derived products must be third party certified sustainable. Forests play a key role in the world’s environmental and economic health. Every year, millions of acres of natural forest are destroyed due to illegal logging, poor forest management practices and a growing global demand for forest and agricultural products.

Continue to monitor supplier compliance to RSPO certified palm oil, palm kernel oil and derivatives. The demand for palm oil has led to ill-managed production in some regions, resulting in serious environmental and social consequences. This includes loss of valuable natural habitat biodiversity, conflict and threat to local farming livelihoods.

Support the work of Project UK for six UK fisheries to achieve Marine Stewardship Council certification by 2018.

Improvement projects for commercially less important species not receiving funding from other sources to fill in the scientific data gaps which is acting as a barrier to achieving a ‘sustainable’ rating. The UK seafood industry will benefit from improved fishery management, increased harvests and improved access to markets.

Ensure fair working conditions for our suppliers

Publish the Modern Slavery and Human Trafficking statement by the end of June 2017. Statutory requirements following high profile incidents of modern slavery. The statement is an opportunity to communicate the work we undertake to protect our business and improve outcomes for workers in our supply chains.

Deliver bespoke Ethical Trading training to Commercial and Supply Chain colleagues in the UK and Hong Kong.

Increased awareness of Ethical Trading issues will enable Commercial and Supply Chain colleagues to make more informed purchasing decisions. This can help reduce business risk at source whilst increasing product quality and consistency.

People Management representative from each Manufacturing and Logistics site to attend a Stronger Together Workshop. Tackling Modern Slavery Toolkits to be implemented at all sites by June 2017.

There is a high risk of modern slavery in the UK food manufacturing sector. It is therefore critical that we prepare our own People Teams to identify and tackle this effectively. Stronger Together workshops coach to spot the signs of modern slavery, advise how best to report it and provide victim support.

Recruit additional Ethical Trading resource to enhance our approach to tackling modern slavery risk in our Nutmeg clothing business.

Customers expect us to take responsibility for fair working conditions, protection of workers’ rights and good relationships with our suppliers. It’s important that we carefully monitor and manage our supply chains in high risk areas such as clothing.


35


Performance summary



Make it easier for our customers to live healthier lives

‘Eat Smart’ Counted, Balanced and Endorsed range to be launched and rolled out in 2017. To improve the quality of our healthier eating range for customers following customer feedback.

Working towards Public Health England’s Sugar Reduction guidelines, reducing sugar in key categories which contribute to children’s sugar intake.

We have a role to play in meeting customer needs to provide healthy and nutritional products. Selling healthier food options can attract a wider customer base, provide greater choice and in turn create brand loyalty.

Health and wellbeing strategy launched and delivered in 2017. As a food business, we take responsibility to promote health and wellbeing to both our colleagues and customers. We want to make it easier for them to make healthier informed choices.

Make a positive difference to the communities we serve

Raise at least £2.5m each year for charity partner CLIC Sargent. We have a track record of delivering outstanding charity partnerships. This is something we will continue to do and be renowned for within the sector. We’ll make a huge impact with our partnerships providing fantastic opportunities to increase our brand reputation.

Support important campaigns including Poppy Appeal, Children In Need, Marie Curie Daffodil Appeal and Walking With The Wounded.

Our colleagues and customers expect us to support campaigns they care about and being at the forefront of them is the best place to be.

Respond quickly to opportunities to support other causes close the hearts of our colleagues and customers.

Continue to make a positive difference in local communities by donating over £7.5m in grant awards through the Morrisons Foundation.

Morrisons operates at the heart of local communities throughout the country. Morrisons Foundation’s grant programme provides an effective way to give something back to those communities, helping to boost stores’ local profile and improve our corporate image.

Support the causes our colleagues care about by donating £250,000+ in match funding to the charities closest to their hearts through the Morrisons Foundation.

Use the positive sentiment generated by grant donations to engage with the media and strengthen relationships with local communities.

Many of our colleagues dedicate their time and effort to raising money for the charities that mean the most to them. Match funding enables us to support their hard work and engage with colleagues across our stores and sites.


36


Performance summary



37

Closing out our commitments

COMMITMENT REPORTED IN 2015/2016 2016/17 UPDATE STATUS

Establish applied farm research programme to support British farming. Farm research programmes delivered. Further information can be found at www.morrisons.co.uk/farming Completed

Enhance farm animal welfare policies and auditing processes. Morrisons farm standards policy established with specific standards for fresh meats. Completed

Review relevant categories to find opportunities to increase Forest Stewardship Council (FSC) certified (or equivalent) coverage. By 2015, we aim to be FSC certified or alternative approved certificate.

We have revised our policy to ensure that timber or timber derived wood used in our products comes from legally and sustainably managed forests, or from 100% recycled materials.

Removed

Continue to grade ethical audits to track suppliers’ continuous improvement and report on their performance.

This is now an ongoing business as usual process. Completed

Supporting collaborative projects to improve working conditions. Examples of collaborative projects during 2016/17 include; Ethical Trading Initiative programme, Bangladesh Accord signatories, BRC Ethical Labour Working Group and Sedex Strategic Supplier Forum.

Completed

All Morrisons own brand suppliers to be audited against our own Food Manufacturing and Product Manufacturing Standards.

Food Manufacturing and Product Manufacturing Standards audits now embedded into business as usual. Completed

Review utilisation of Roundtable on Responsible Soy (RTRS) or equivalent sourced soy in own brand products and in animal feed.

RTRS members since 2012. We will continue to review our policy on soy and the purchase of certified sustainable soy.

Removed

Effective management of emissions from haulage as part of our overall emissions target. Commitment now embedded in wider carbon emissions commitment. Completed

Ongoing carrier bag reduction year-on-year. Number of Morrisons carriers bags have reduced by 80% since the Government’s carrier bag charge was implemented. Reporting of carrier bags figures can be found at www.morrisons-corporate.com/cr

Completed

Build on the training and technical support available to suppliers as well as promoting integrated pest management and careful monitoring of Maximum Residue Levels (MRLs).

Monitoring of MRL levels now incorporated as business as usual working with Pesticide Action Network. Completed

Refresh current local community strategy so engagement better supports the needs of local people. Local strategy refresh completed including the launch of Morrisons Foundation and dedicated store Community Champions in placed.

Completed

Effective community engagement through store Community Champions. Community Champions donated over £730,000 of Morrisons products to good causes in their local community. They also organised thousands of in-store charity collections, engaged with local schools with Foodmaker & Shopkeeper tours and offered local community groups free use of our cafes and training rooms.

Completed

Raise funds for Sue Ryder, providing support and care for people with life-changing illness. £7.3m raised for Sue Ryder during three year partnership. Completed

Continually developing our approach to nutrition and formulation of products. Providing customers with clear, consistent advice.

Formulation review part of every new product development process. Moved to traffic light labelling on Morrisons branded products in 2014.

Completed

Performance summary



38

COMMITMENT REPORTED IN 2015/2016 2016/17 UPDATE STATUS

Revive and further improve healthy product range in line with the re-launch of our chilled meal solutions. Healthy products range NuMe launched in 2014. Following customer feedback, we changed our healthy eating range to Eat Smart.

Completed

Extend calorie labelling at the point of choice for products made and prepared in store. Provide calorie information on our website.

Calorie information on Market Street products will be refreshed during 2017/18 through our new recipe management system to provide customers with detailed and accurate calorie information.

Deleted

Continue with Market Street deals on fresh produce, making it easier and more affordable for customers to make healthy choices.

Continued promotions on thousands of fresh fruit and vegetables across Martet Street every week. Completed

Treat colleagues fairly and appropriately in accordance with our Values. We treat all our colleagues, customers, job applicants, contractors, suppliers and visitors fairly and equally; we do not tolerate any form of discrimination, victimisation, bullying or harassment due to someone’s difference. This forms part of our ‘Respect in the Workplace’ policy which is detailed in our colleague handbook.

Your Say colleague survey 2016 results:

‘Colleagues in my team are treated fairly and with respect’ 61% postive and 21% neutral.

Completed

Monitor, measure and improve colleague conditions and workplace experience across the Group. We continue to monitor and improve colleague conditions and experience as part of an ongoing process. Your Say forums are in place across the business to improve engagement and address colleague concerns.

Your Say colleague survey 2016 results:

• ‘I have the tools I need to do my job’ 71% positive and 21% neutral.

• ‘Where I work colleagues work well together’ 77% positive and 14% neutral.

• ‘I am proud to work here’ 69% positive and 21% neutral.

Completed

Great place to work, flexible benefits and policies. Flexible benefits, discounts and gift cards, payroll giving, healthcare scheme, sharesave, pension, service awards and colleague bonus in place and available to all colleagues after a qualifying period.

Completed

Develop and deliver an ‘unconscious bias’ programme to assist our managers responsible for store recruitment to assist recruitment of a diverse workforce.

Programme completed. Now incorporated into business as usual. Completed

Undertake specific activity to target hard to reach youth unemployment. IGD Schools Programme – As participants in IGD’s Feeding Britain’s Futures schools programme, Morrisons colleagues volunteered to provide workshops for year 9 and year 12 students in schools across the UK. The range of workshops covers a range of topics including skills, subjects to support all careers and interview techniques.

Mosaic Group Mentoring Programme – Morrisons colleagues have volunteered in Mosaic’s mentoring programmes, working with secondary school children in Bradford. The programme creates opportunities for young people growing up in some of the most deprived communities in the UK. The aim is to offer students positive role models, helping to improve their confidence and employability.

Completed

Closing out our commitmentscontinued

Performance summary



39

The Board of Directors of Morrison (WM) Supermarkets plc (“Morrisons”) engaged us to provide limited assurance on the information described below and set out in Morrisons’ Corporate Responsibility Report 2016/17 for the 52 weeks ended 29 January 2017.

Independent Limited Assurance Report to the Directors of Morrison (WM) Supermarkets plc

Our conclusion

Based on the procedures we have performed and the evidence we have obtained, nothing has come to our attention that causes us to believe that the Selected Information for the 52 weeks ended 29 January 2017 has not been prepared, in all material respects, in accordance with the Reporting Criteria.

This conclusion is to be read in the context of what we say in the remainder of our report.

Selected Information

The scope of our work was limited to assurance over the information on page 41 and 42 within the section titled ‘KPIs assured and Basis of Preparation’ in Morrisons’ Corporate Responsibility Report 2016/17 (the “Selected Information”).

The Selected Information and the Reporting Criteria against which it was assessed are summarised in the table below. Our assurance does not extend to information in respect of earlier periods or to any other information included in the Corporate Responsibility Report 2016/17.

Selected Information Reporting Criteria

Selected information consists of the 6 KPIs on page 41 and 42 of the Corporate Responsibility Report 2016/17 within the section titled ‘KPIs assured and Basis of Preparation’.

The reporting criteria (the “Basis of Preparation”) as included on pages 41 and 42 of the Corporate Responsibility Report 2016/17 within the section titled ‘KPIs assured and Basis of Preparation’.

Professional standards applied and level of assurance

We performed a limited assurance engagement in accordance with International Standard on Assurance Engagements 3000 (Revised) ‘Assurance Engagements other than Audits and Reviews of Historical Financial Information’ and, in respect of the greenhouse gas emissions, in accordance with International Standard on Assurance Engagements 3410 ‘Assurance engagements on greenhouse gas statements’, issued by the International Auditing and Assurance Standards Board. A limited assurance engagement is substantially less in scope than a reasonable assurance engagement in relation to both the risk assessment procedures, including an understanding of internal control, and the procedures performed in response to the assessed risks.

Our Independence and Quality Control

We applied the Institute of Chartered Accountants in England and Wales (ICAEW) Code of Ethics, which includes independence and other requirements founded on fundamental principles of integrity, objectivity, professional competence and due care, confidentiality and professional behaviour.

We apply International Standard on Quality Control (UK & Ireland) 1 and accordingly maintain a comprehensive system of quality control including documented policies and procedures regarding compliance with ethical requirements, professional standards and applicable legal and regulatory requirements.

Our work was carried out by an independent team with experience in sustainability reporting and assurance.

Understanding reporting and measurement methodologies

The Selected Information needs to be read and understood together with the Reporting Criteria, which Morrisons is solely responsible for selecting and applying. The absence of a significant body of established practice on which to draw to evaluate and measure non-financial information allows for different, but acceptable, measurement techniques and can affect comparability between entities and over time. The Reporting Criteria used for the reporting of the Selected Information are as at 29 January 2017.

Assurance statement Feedback and contact information



40

Independent Limited Assurance Report to the Directors of Morrison (WM) Supermarkets plc continued

Work done

We are required to plan and perform our work in order to consider the risk of material misstatement of the Selected Information. In doing so, we:

• made enquiries of Morrisons’ management, including the Corporate Responsibility (CR) team and those with responsibility for CR management and group CR reporting;

• obtained an understanding of the design and operation of the controls in place in relation to the collation and reporting of the selected information, including controls over third party information (where applicable);

• made enquiries of relevant company management, personnel and third parties;

• performed analytical procedures related to the selected information;

• considered the significant estimates and judgements made by management in the preparation of the selected information;

• performed limited substantive testing on a selective basis of the Selected Information at corporate head office and in relation to a number of sites to check that data had been appropriately measured, recorded, collated and reported; and

• considered the disclosure and presentation of the Selected Information.

Morrisons’ responsibilities

The Directors of Morrisons are responsible for:

• designing, implementing and maintaining internal controls over information relevant to the preparation of the Selected Information that is free from material misstatement, whether due to fraud or error;

• establishing objective Reporting Criteria for preparing the Selected Information;

• measuring and reporting the Selected Information based on the Reporting Criteria; and

• the content of the Corporate Responsibility Report 2016/17.

Our responsibilities

We are responsible for:

• planning and performing the engagement to obtain limited assurance about whether the Selected Information is free from material misstatement, whether due to fraud or error;

• forming an independent conclusion, based on the procedures we have performed and the evidence we have obtained; and

• reporting our conclusion to the Directors of Morrisons.

This report, including our conclusions, has been prepared solely for the Board of Directors of Morrisons in accordance with the agreement between us, to assist the Directors in reporting Morrisons’ corporate responsibility performance and activities. We permit this report to be disclosed in the Corporate Responsibility Report 2016/17 for the 52 weeks ended 29 January 2017, to assist the Directors in responding to their governance responsibilities by obtaining an independent assurance report in connection with the Selected Information. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Board of Directors and Morrisons’ for our work or this report except where terms are expressly agreed between us in writing.

PricewaterhouseCoopers LLP Chartered Accountants Central Square 29 Wellington Street Leeds LS1 4DL

11th May 2017




41

KPIs assured and Basis of Preparation

KPI BASIS OF PREPARATION

1) GHG emissions of 1,175,685 t CO2e. • Calculated GHG emissions consist of the combined Scope 1, Scope 2 and Scope 3 emissions within the organisational boundaries of the group.• Scope 1 emissions relate to the combustion of natural gas and diesel and fugitive emissions resulting from the use of refrigeration and air conditioning equipment.• Scope 2 emissions relate to purchased electricity.• Scope 3 emissions relate to diesel combustion in relation to food delivery vehicles.• The organisational boundary of the 2016 footprint is aligned with the GHG Protocol ‘Operational Control’ approach under which a company accounts for 100%

of emissions from operations over which it or one of its subsidiaries has operational control.• Operational control is defined as any operation over which the Group has the full authority to introduce and implement its operating policies at the operation.• CO2e emissions for the Group have been determined on the basis of measured or estimated energy and fuel use, multiplied by the relevant emission factors

from the UK Government GHG Conversion Factors for Company Reporting (2016).• Where actual energy electricity use for any operation or period of time is not available, an estimate of usage is made based upon the best available information.• Where subsidiaries, sites or joint ventures are deemed not to be under operational control of the Group or are not material to the Group their energy and fuel

usage have not been included within the scope of the GHG emissions reported.

Emission sources included in the scope of GHG emissions reported which are deemed material to the Group include:

• Electricity consumption.• Gas consumption.• Refrigeration – static sites and haulage.• Transportation – haulage, staff travel, business miles and delivery.• Waste – landfilled, rendered, recycled.

Emission sources not included in the scope of GHG emissions reported as they are not deemed material to Group include:

• Fuel oil.

2) 95% store waste diverted from being sent direct to landfill. The percentage of waste generated from stores diverted from being delivered direct to landfill. Waste is delivered to a third party intermediary for processing, allowing for a proportion of the waste to be reclaimed, recycled or otherwise used for another purpose. Store waste is defined as waste generated and collected from store operations. Weight of waste is calculated upon container size using an industry standard of 438 kg of waste per 8 cubic yards of waste.

3) Zero waste direct to landfill in our manufacturing sites. All waste generated from manufacturing sites is diverted from being delivered direct to landfill. Waste is delivered to a third party intermediary for processing, allowing for a proportion of the waste to be reclaimed, recycled or otherwise used for another purpose.

15 manufacturing sites include: Farmers Boy Bradford, Rathbones, Winsford, Colne, Spalding, Turriff, Deeside, Grimsby, Cutler, Derby, Flaxby, Gadbrook, Rushden, Thrapston, Worsley.

4) 2.3 million unsold food products donated to local community groups. A single ‘product’ is defined as an item or multiple items packaged together as follows:

• A single product which is sold in our stores with a price per unit, for example a mango.• A multi-pack, for example a pre-packaged bag of apples.• A package of multiple items, for example a punnet of strawberries.• Multiples of loose produce of the same type packaged into one back, for example loose onions.

The following KPIs have been prepared for the 52 weeks ended 29 January 2017, except for KPI 1 relating to GHG emissions which has been prepared for the year ended 31 December 2016.


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42

KPI BASIS OF PREPARATION

5) 100% British fresh Morrisons branded beef, chicken, pork, lamb and turkey. Applies to all Morrisons branded fresh meat. “Fresh” means all meat sold to the ultimate consumer in a refrigerated condition (including that in vacuum-packs or protective atmosphere packaging) that has neither undergone any preserving process other than chilling nor had any non-meat ingredients added.

6) 99% tier one produce suppliers visible and sharing ethical trading information. Tier one is defined as the final stage of supply at which fresh produce is processed (e.g. packaged) prior to receipt into depot. Visible suppliers are deemed to be those over which a risk assessment has been performed and have completed a self-assessment questionnaire which includes ethical trading information.

KPIs assured and Basis of Preparationcontinued

Additional information regarding GHG emissions (KPI 1)

Note that the following is for information purposes only and does not constitute part of the Basis of Preparation above.

Assurance has been obtained over the current year GHG emisisons figure of 1,175,685 t CO2e which represents 26.9% absolute reduction against our 30% absolute reduction in operational carbon emissions by 2020 (2005 baseline). The baseline and reduction was not in the scope of assurance.

In 2017 we have elected to change the way we present our GHG emissions. Since 2005 we have reported our progress against a target of 30% reduction by 2020. Our business and wider industry has changed since then and we recognise the need to consider our wider impact on the environment. As a result we have introduced Scope 3 GHG emissions into our reporting. We’re proud to announce that even though we have expanded the scope of our emissions we are still approaching our reduction target. To increase transparency we are now reporting the absolute emissions figure alongside the reduction.

GHG emissions are prepared internally in partnership with Jacobs who also independently verify the Group Carbon Footprint. We have reported for the calendar year 1 January to 31 December for all years in order to remain consistent with our historical footprint reports. We have used the UK Government’s ‘Environmental Reporting Guidelines’ (June 2013)’ to prepare these numbers, and the latest emissions factors from the UK Government GHG Conversion Factors for Company Reporting (2016).

With respect to the reduction against our 2005 baseline, the 2013 Environmental Reporting Guidelines state that the baseline year should be recalculated if there have been structural changes that would significantly impact on the organisation’s base year figures, therefore in the 2016 update, we have revised our historical emissions figures given the sale of a number of sites.

Additional information on waste direct to landfill from stores 2016/17

Card 104,590.31Confidential paper 1,050.49Polythene 7,362.88ABP 4,778.56Light tubes 4.03Oil 4,022.85Other recycleables 28.41Diverted trade waste 54,301.00Total reprocessed 176,138.53 95.05%Landfill 9,167.48 4.95%Total waste produced 185,306.01 100.00%

Reprocessed waste is delivered to a third party intermediary, allowing for a proportion of the waste to be reclaimed, recycled or otherwise used for another purpose.

Management’s Statement

The Directors of Morrison (WM) Supermarkets PLC are and shall be responsible for this Management’s Statement and for reporting the 6 KPIs as at 29 January 2017 in accordance with the reporting criteria set out on pages 40 and 41. In doing so we have:

• designed, implemented and maintained internal controls and processes over information relevant to the measurement and preparation of the 6 KPIs that is free from material misstatement, whether due to fraud or error;

• established objective reporting criteria for measuring and preparing the 6 KPIs and applied them consistently;

• presented information, including the criteria, in a manner that provides relevant, reliable, comparable and understandable information; and

• measured and reported the 6 KPIs based on the reporting criteria.

Steven Butts Head of Corporate Responsibility On behalf of Morrison (WM) Supermarkets PLC

11th May 2017



Wm Morrison Supermarkets PLCHilmore House, Gain Lane

Bradford BD3 7DLTelephone: 0845 611 5000

Visit our website: www.morrisons.com

Our 2016/17 Annual Report and Financial Statements can be found at:

www.morrisons-corporate.com/annual-report-2017

Designed and produced by Radley Yeldar. ry.com

Photography by Richard Moran unless otherwise stated


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