morrisons corporate responsibility review 2011

Corporate Responsibility Review 2010/11

Taking good care for tomorrow

Wm Morrison Supermarkets PLC

Introduction

Retail Employer of the Year

Food is at the heart of what we do and we are passionate about it. Perhaps not surprising for a food retailer, but what is unusual is the way our business is structured. Uniquely, we source and process most of the fresh food we sell through our own manufacturing and packing facilities. This gives us close control over provenance and quality and means that we are able to provide fantastic food at affordable prices.

With 439 stores, we are the UK’s fourth largest supermarket as well as the second largest food manufacturer. We serve 11 million customers each week, preparing more fresh food in-store than any other major UK food retailer.

Scope of this ReviewThis document reports primarily on progress in our corporate responsibility programme from our financial year (1 Feb 2010 to the end of Jan 2011) unless otherwise stated. More details can be found online.

A sample of awards from 2010

Visit www.morrisons.co.uk/today

Different and better than ever

Morrisons – About us

Best Green Educational Project for ‘Let’s Grow’

Large End User of the Year, Refrigeration Innovation and Collaboration Awards

Compassion in World Farming Most Improved Supermarket

Carbon Trust Standard

National Training Awards Best Large Employer

Multiple Retailer of the Year Store Manager of the Year, Fresh Produce Retailer of the Year and Meat Retailer of the Year.

Contents

1 Chief Executive’s statement2 Responsible retailing 3 Stakeholder engagement4 Business 5 Championing British farming 6 Meet our farmers 7 Sourcing with integrity 8 Fair working conditions 9 Focused on the things that

matter 10 Creating opportunities 11 Achieved today12 Society 13 Making it easier to eat healthily 14 Working together 15 Promoting fresh food in the

community 16 Good neighbours 17 Achieved today18 Environment 19 Making the most of our food 20 Reducing and recycling

trade waste 21 Helping customers to reduce

and recycle 22 Reducing carbon emissions 23 Refrigeration 24 Effective logistics 25 Achieved today

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Morrisons CR Review 2010/11

Chief Executive’s statement

‘Different and Better than Ever’

At Morrisons, we think that access to affordable fresh food should be a right, not a privilege. Everyone should be able to buy high-quality, fresh food and eat well. Walk into any one of our stores and you can purchase fresh meat, fish and produce to make balanced meals for less than £1 per person.

Our business model is different and allows us to be streamlined and flexible to the needs of our customers as well as reducing unnecessary waste and costs. We pass the benefit on to our customers through the prices we charge at the till.

One of our greatest challenges is how we continue to serve our customers fantastic affordable food in a competitive market against a backdrop of complex and often interlinked sustainability issues.

This Review is a summary of some of the work we undertake to ensure that in going about our business, we meet our customers’ expectations of corporate responsibility. We see the commitments we have made as an investment in our future. We’re certainly not going to claim we have all the answers, so we also flag some of the challenges and explain our approach to addressing them.

Our responsibility focus is on food. Sounds simple doesn’t it? However, when you consider that we have over 35,000 products in a typical store and 132,000 people involved in buying, making, moving and selling that food it inevitably gets more complicated.

So what have we been up to over the last year and where are we going? In terms of our products we’ve focused even more keenly on how we support customers to make healthy choices. To underline this, we’ve signed up to the Government’s Public Health Responsibility Deal.

We’ve worked even harder on being a leading supporter of British farming. In addition to our commitment to fresh British meat, milk and produce the Morrisons Farming Programme is now delivering tangible results; supporting the

industry by sharing best practice and helping to develop products that our customers can enjoy.

I’m delighted that our Let’s Grow campaign was recognised as the Best Green Education Project by the Green Awards. Having completed its third year, the programme continues to support pupils and teachers by helping them to grow their own fresh food.

We’ve invested heavily in training to support our people and give our customers an even better shopping experience. This year we will be the UK’s largest provider of apprenticeships. In addition, over the last year we’ve trained 48,000 colleagues to a nationally recognised qualification in retail skills.

Our long term commitment to carbon emissions reduction continues on track. Our work was recognised this year with a series of awards. We were the leading supermarket in the ENDS Carbon FTSE CDP Index for Carbon Management and received four Cooling Industry Awards for our refrigeration programme.

Despite the complexity, what it adds up to is, in fact, relatively simple. It’s trust. Our customers trust that we will find the right balance, acting responsibly and, at the same time, offer great food at a fair price.

By helping customers to make healthier and greener choices we’re also making it easier for them to play their part.

I said at the outset that we are different. I believe that in many ways our differences make us better able to tackle sustainability issues. However, we recognise there is more to do. As a business we are reinforcing our differences because we believe it makes us better. The challenge I have set out for our business is to be better than ever.

439stores.

11 millioncustomers per week.

132,000employees.

Dalton Philips Chief Executive

Morrisons – About us

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Responsible retailing

At Morrisons, we care about where our food comes from, how it is produced, the people who make it and how it is moved and sold. We want our customers to be confident that food bought at Morrisons is food they can trust.

Food for thoughtIn some ways we are a relatively straightforward business. We buy, make, move and sell food. Much of the complexity comes from the scale of our operation because we sell to 11 million people every week.

Our continual challenge is to provide quality food at a fair price through supply chains which are sustainable over the long term. Quality and affordability are part and parcel of what we offer every day. The difficulty is that sometimes, in relation to sustainability, there are tensions between competing issues and conflicting views of different stakeholders as to what is the ‘right’ thing to do. Our approach to responsible business means that we can tackle these issues more effectively.

Our ‘Business’ programme is concerned with how we buy, make and sell food. In championing British farming, for example, we shorten our supply chains, support our national and local economy and are buying into standards that people trust. Our programme also ensures that we apply similar standards and ensure responsible sourcing whoever we buy from and whatever we buy on a global basis. Making and selling food, with great service, requires extensive investment in people. Our strategy to continually develop our people through industry-leading training is helping us to differentiate ourselves in the sector.

‘Society’ is where we share our passion for fresh healthy food with our shoppers and the wider community. We’ve focused a great deal of time and attention on providing advice and support for customers on fresh food preparation, nutrition and healthy eating options through our website, social media, customer magazines and in store. Our point of difference is that our colleagues have a wealth of experience and knowledge about food, particularly our experts on our Market Street counters. We’ve taken this a stage further through campaigns like Let’s Grow, which enables us to encourage the next generation to think about where food comes from, understand its value more clearly and share this knowledge with others.

‘Environment’ is centred on how we manage food, operate efficiently and reduce waste. Where we make, package, move and store food we have to ensure the effective use of resources. These issues aren’t just important in our business, they are universal in their application. As well as our own extensive carbon and waste reduction programmes, we are also helping customers to play their part, whether that be through the latest packaging innovation or by reducing food waste with our Great Taste, Less Waste Campaign.

“In some ways we are a relatively straightforward business. We buy, make, move and sell food. Much of the complexity comes from the scale of our operation because we sell to 11 million people every week.”

Martyn Jones Group Corporate Services Director

About this ReviewThis Review highlights some of the many activities we undertake as part of our corporate responsibility programme. We feature a range of relevant issues from across our business. It does not cover all of the work we do but instead gives the reader an overview of the progress we are making – as well as highlighting areas in which we aim to make further improvements in the future.

Performance management and governanceTargets are an important part of driving and measuring progress. In 2010 we set out commitments for the second major phase of our corporate responsibility programme. We report our progress in this Review and online. Responsibility for those commitments rests with key members of our Management Board and is also reported to our Corporate Compliance and Responsibility Committee.


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Stakeholder engagement is vital to ensuring our approach to sustainable business is both relevant and effective. It enables us to identify issues and opportunities, respond to changing needs and adhere to best practice by incorporating different views and feedback into our business operation.

All of our stakeholders recognise the importance of sustainable business. Each group has their own particular focus.

Customers – want quality products at a fair price with good service.

Communities – are where our operations have the most immediate impact. They require us to be a good neighbour and bring employment and investment.

Investors – expect a good return on their money and that we grow, find opportunities and mitigate risks.

Employees – want good working conditions, job security and satisfaction and opportunities to develop a career.

NGOs – (Non-Governmental Organisations) ask us to follow their advice, change or adapt the way we operate.

Government – sets the rules and regulations but also asks for support to deliver government policy.

Suppliers – want our custom, a reliable trading relationship and the best price.

Customers

Government

Suppliers

NGOs

Community

Investors

Employees

Stakeholder engagement

See some of the things that stakeholders say about us throughout our Review.

Our Values

Our Values are at the heart of everything we do, defining what we expect of each other and what our customers can expect of us. Our Values help us to shape our corporate responsibility commitments.

Can doCan do is about making things happen. It’s about getting the job done and delivering results. It’s about being positive and rising to a challenge.

One teamOne team is about working together to reach a common goal. It’s about keeping our promises, building trust and respect, and valuing each other’s contribution.

Bringing the best out of our peopleBringing the best out of our people is about developing ourselves and those around us. It’s about constantly learning so we can improve the way we work and the experience we give our customers.

Great selling and serviceGreat selling and service is about delivering a great experience for our customers. It’s about sharing our knowledge and know-how and always striving to do better.

Great shopkeepingGreat shopkeeping is about setting high standards and taking care of every detail. It’s about having pride in our work and making quality our top priority.

Fresh thinkingFresh thinking is about finding new and better ways of working. It’s about greater awareness, asking questions and coming up with bright ideas that give us the edge.

Responsible retailing – continued

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We want to help our customers enjoy great quality, fresh food. So at Morrisons, our business isn’t just about getting food in and out of stores as fast as possible. It’s about taking responsibility for every stage of the production and supply chain, from the farmer’s field all the way to the customer’s plate.

Business

The starting point for the food that we buy or make has to be quality. Then we must be able to buy it in sufficient quantity at a price that our customers can afford. But this is far from the whole story.

Where we can we will source British food first. This is why the vast majority of our produce and all of our fresh beef, lamb, pork, poultry and milk is British. Being closer to source means we are well placed to ensure these products are responsibly produced. This means that their environmental impact is properly managed, workers’ rights are upheld, animal welfare standards are maintained and suppliers are treated as partners.

Customers also want choice and availability all year round. In practice, this means that we also sell food that comes from around the world. Our challenge is to make sure the high standards we set are applied globally, not just at home.

We’ve long recognised the issue of climate change and have a leading emissions reduction programme. However, this is only part of the solution because, for example, at the start of the supply chain we also need to ensure that we aren’t adding to deforestation through the sourcing of key commodities such as palm oil or soy. This is why we are changing products so that they only contain palm oil from certified sustainable sources.

We know there is always more to do. It is not the case that you could ever say ‘we’ve done this’. Corporate responsibility is about continuous improvement. We keep ever vigilant and strive for best practice at home and overseas. By upholding these standards we will ensure our customers can trust that the food we sell is food with thought.

Our approach

Most British supermarkets rely heavily on third party companies throughout their supply chain. This reduces control over the way their food is sourced and produced. At Morrisons, we do things differently.

We run our own production facilities and buy fresh food directly from British farmers we know and trust. We are also farmers in our own right. Through our ‘vertically integrated’ business model, we have direct control over the production and supply of food than other supermarkets do.

What’s more, our care for food doesn’t end once it arrives in our supermarkets. We have more trained butchers, bakers, fishmongers and other food professionals on hand than in any other supermarket. So we don’t just sell food; we offer traditional craft skills and expert advice so that customers can really make the most of it.

By cutting out the middleman and staying in direct control of our supply chain, we keep unnecessary costs down and get quality fresh food onto our shelves faster. So we can give our customers the freshest, best quality food possible, at a great price, and prepared in a way that they will enjoy.

We think this is a responsible way of doing business. This section of the Review highlights some of the work we’re doing to build on this approach and explains why.

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The Morrisons Farm at Dumfries HouseOur business approach is based on getting as close to the source of food as possible – so it seemed like a natural step to have our own farm. As well as rearing cattle and sheep, the 1,000-acre farm in Ayrshire, Scotland aims to deliver best practice in sustainable farming on a practical level.

Following substantial restoration, the farm is now ready to become a base to trial new farm projects. Current projects include calculating the carbon footprint of the farm through a full sustainability audit and a breeding initiative designed to improve farm productivity.

We believe that great quality food starts with great farming. As one of the UK’s biggest food retailers, with close working relationships with suppliers all over the country, we’re supporting the long term viability of British farming and making sure the industry is innovative, competitive and sustainable.

The Morrisons Farming Programme Now in its second year, the aim of the Programme is to help build a British farming industry that is able to feed future generations and save costs, whilst minimising its impact on the environment.

All of this leads to a better deal for our customers as we help to drive down costs without creating more burden for our farmer suppliers.

Farm researchMorrisons is working with universities and other research institutions in the UK to investigate new and more effective methods of production. All our research is led by experts, but ideas come from many sources: from the farmers themselves, from people in our own business and from our own farm.

We launched 12 new research projects over the last year. For example, we commissioned the UK’s first independent report into renewable energy options for dairy farms.

The report suggested that renewable energy has the potential to cut dairy farm electricity costs by a third and offers farmers the chance to generate and capture energy that can be sold back to the grid, creating a new source of income.

Championing British farming

Business – continued

We have set ourselves the challenge of making the Morrisons Farm both commercially and environmentally sustainable. By sharing whatever we learn with our fellow farmers there’s real potential to benefit farm businesses.

Dalton PhilipsChief Executive

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David WestwoodWestwood Rhubarb Growers, West Yorkshire David Westwood has been supplying Morrisons with rhubarb for over 20 years from his family run farms in West Yorkshire. David is part of a long legacy of rhubarb growers. His great-great-grandfather and great-great-uncle were some of the first rhubarb growers in the mid 1800s.

David Brass Meg Bank Farm, CumbriaOn Meg Bank farm, hens have acres of woodland and grassy glades, enabling them to forage on land that is rich in clover, wild flowers and herbs. David’s dedication to producing free range eggs has seen his farm named Poultry Farmer of the Year at the Farmers Weekly Awards.

Our business is built on strong, long-lasting working relationships with great British farmers all over the country. Here are just a few of them. Visit www.morrisons.co.uk/our-suppliers

Mark StrawsonStrawsons Leeks, Newark, NottinghamshireMark Strawson is the third generation of the family to work on the farm. Since he started, the Strawson farm has diversified from potatoes and cereals into other crops including leeks and carrots. The family is also committed to promoting biodiversity and encouraging wildlife to prosper on their land. It’s a way of working that has helped them become LEAF Marque accredited.

Meet our farmers

We started working with Morrisons over 20 years ago. We’ve maintained this close relationship over the years and speak to Morrisons nearly every day about how the crop is progressing.David Westwood

We’ve got a good relationship with Morrisons and we’ve been working with them for more than 15 years. They appreciate the fact that farmers have to deal with something as unpredictable as the weather.Mark Strawson

Working with Morrisons is refreshingly simple. In my opinion they have an industry-leading approach to sourcing quality British food.

David Brass

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One of our farming stakeholders is Compassion in World Farming. They work with the industry to monitor and promote welfare-based farming systems. In 2010, they gave us an award for the continual improvements we have made working with livestock farming suppliers.

Sourcing with integrity

Free range eggs

One example of our responsible approach to farming is the way we source eggs.

From 2010, we became the first top-four retailer in the UK to switch to 100% British free range for own brand eggs. Morrisons sells more than 10 million eggs every week, so this switch will make a substantial difference to the welfare of laying hens throughout the UK.

We also introduced an ‘Online Egg Tracker’ to our own brand Nature's Nest range. Each egg comes stamped with a special code, allowing customers to trace the egg’s provenance and find out about the farm where it was laid.

Over the year, we’ve made great strides by introducing free range eggs into other own brand products, including all of our ready meals, pasta, quiche, mini eggs and scotch eggs and in 2011 our mayonnaise. All of the eggs used in our in-store cafes are now also free range.

From a sourcing perspective there are numerous issues that we carefully consider. Many of the issues are complex and stakeholders are not all in agreement about how best to tackle them.

Where we are able to influence the supply chain we do so by balancing economic, environmental and social considerations as well as the interests of our customers, shareholders and suppliers.

All of our fresh meat and poultry is British – supporting British farmers and working to further enhance welfare standards.

All of our fresh milk is British. We do not operate a dedicated supply pool which we believe is fairer because all of the farmers our processors buy from get a premium rather than a ‘select few’. We gave our processors longer term contracts to guarantee income over a settled period. We undertook a major research project into renewable energy options for dairy farmers through our Research Farming Programme.

Enhanced sourcing policy. Fish counters certified under the Marine Stewardship Council chain of custody programme with species such as Cape Hake, Mackerel, Dover Sole and Wild Alaskan Salmon certified under the scheme. We encourage customers to buy different types of fish and joined the Sustainable Seafood Coalition to promote this and clearer labelling. We moved our tinned tuna policy in line with our fresh sourcing so that all own brand fish will either be pole and line caught or from Fish Aggregating Device (FAD) free fisheries.

We progressed our policy to move to 100% certified (RSPO) palm oil. By 2015 we will use fully segregated palm oil in own brand products. All new products now have to support an RSPO certified palm oil supply chain system.

We are undertaking more detailed analysis where soy is used in our products. We are supporting WWF’s call to work with a certification system under the Round Table for Responsible Soy. We have not yet committed to sourcing under the system until we can assess the impact – particularly on UK farmers (the majority – around 80% – is used for animal feed). We have committed to research under our Farming Programme to look at alternatives to soy used in feed in relevant livestock farming.

We have a longstanding commitment to manufacture all own brand timber-based products (such as paper and garden furniture) from FSC or equivalent sources.

Our ongoing response and last year’s activityIssuesDescription

Concerns over welfare, extended supply chain and land use

Concerns over extended supply chain, welfare, and prices paid to farmers

Concerns over sustainability but increased interested from customers as a healthy option

Concerns over deforestation and biodiversity



Fresh beef, lamb, pork and poultry

Fresh milk

Fish sourcing

Commodity sourcing

Commodity sourcing

Commodity sourcing

Livestock

Dairy

Fish

Palm oil

Soy

Timber

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We audit suppliers of Morrisons own brand products through our Fair Working Conditions (FWC) programme. We make sure that our suppliers comply with our Ethical Trading Code and monitor their employees’ general health, well-being and satisfaction. All our audits are carried out independently.

We choose candidates for audit based on a risk-assessment process. This means that we focus on areas where there may be concern – such as emerging markets, or labour intensive sectors such as agriculture. In the past year, for example, we looked carefully at Indian and Kenyan tea gardens, our UK meat and poultry supplier base and packers of prepared food products. Instead of simply relying on factory

documentation or information from employers, our audit approach is based on the views of employees themselves.

Although we normally audit external suppliers, one of our main focuses this year was on our own manufacturing sites. Our independent FWC assessments have now been successfully completed at most of our own facilities ensuring we apply the same high standards across the board.

See www.fairworkingconditions.ie

By building strong, long term relationships with our external suppliers and auditing them regularly, we maintain the same high standards and aim to develop good working practices across our entire supply chain. This drives best practice and improves conditions for workers at home and abroad.

“The traditional checklist/box-ticking approach alone does not provide a reliable insight into the real working conditions; a vital source of information is overlooked – employee experience. Fair Working Conditions is fundamentally changing ethical auditing by promoting employee engagement.”

Dermot KennyFair Working Conditions


Fair working conditions

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The Morrisons AcademyThe award-winning Morrisons Academy provides a suite of training and development tools to bring out the best in our people at all stages in their career.

The academy is built on strong partnerships with leading academic accrediting, training and development providers.

On the shop floor, the opportunities begin immediately. New store recruits can achieve a QCF Level 2 Retail Skills qualification (equivalent to 5 GCSEs at grade C level or above) while doing their day job. Last year nearly 48,000 colleagues were successfully accredited with this nationally recognised qualification.

In 2010, the standard set by our Academy was recognised externally at the National Training Awards, winning the top prize. The judges praised our training best practice, the Academy’s unique scale and our exceptional commitment to embedding the programme right across our stores. This means better opportunities for our people and a better service for Morrisons customers.

Our success in offering great food expertise to our customers depends on our colleagues, so we’ve made sure that we have some of the most motivated, talented and skilled employees in food retail. We strive to create a rewarding working environment in which people have the opportunity to develop new abilities, achieve career ambitions and realise their full potential.

Management trainingAt management level, our Coaching for Performance Programme draws on learning from the world of sport to help our business leaders maximise the potential and performance of their teams. More than 1,000 of our senior leaders will take part in the programme in the next 12 months.

At the top floor, our Advanced Leadership Programme prepares our senior management team to be the executive directors of the future. In 2010, 20 senior managers joined this programme and three of them have recently progressed to the Management Board.

95% of our Store General Managers are promoted from within and 30% of our Senior Management Team started on the shop floor.

Our approach to recognising talent, rewarding hard work and creating opportunities for progression saw productivity increase by 7%, labour turnover decrease by 6% and a 0.3% fall in absence. All of this contributes to a higher level of service and expertise in our stores.

In Market Street we have more highly trained and experienced colleagues with craft skills on hand than any other supermarket. Whether our customers are looking for recipe ideas, advice about what’s in season, or a certain cut of meat for their family Sunday roast, our expert staff will be happy to help. We’re able to respond quickly to changes in demand, which means we can cut down on unnecessary waste while giving more of our customers what they want.

Focused on the things that matter

The best thing about being a butcher for Morrisons is that we offer the full traditional butcher’s shop service. We don’t just sell meat, we offer advice and help on how to cook it.

Brian Hill Morrisons butcher

1 milliontraining days delivered to our people in 2010/11.

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18,000apprentices will be trained in 2011 (largest apprenticeship provider in the UK).

48,000colleagues trained in Retail Skills QCF Level 2.

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This initiative will help give disadvantaged people to get their lives back on track. We look forward to taking this approach nationally and we would encourage other British businesses to join us in this initiative.Norman Pickavance Group HR Director

Big problems require big solutions. Partnerships between large corporates and social enterprise are the way to help society work and do business for good.Gary Stott CREATE Foundation

An employer of choice offers better customer serviceIn 2010, we opened 14 new stores, creating 3,500 jobs. As well as investing in the skills of our people, we believe that it is important that our employees are representative of the communities in which we operate.

As part of our commitment to being a good employer and an active member of the community, we want to create job opportunities for people who might otherwise find it a challenge to find employment. Our aim in 2011/12 is to give up to 10% of new jobs at our new stores to vulnerable people.

Last year we set up a working partnership with CREATE, an award-winning Leeds-based charity supporting disadvantaged people.


Creating opportunities

We are proud to have a diverse workforceDiversity means that our employees reflect the communities in which we operate. This means that we are better able to serve our local customers and are more likely to meet their expectations. We are turning our attention ever more keenly to ensuring that our workplace provides equal opportunity for all.

One example is our new programme to unlock the talent of women working at Morrisons. We’ve set ourselves the target to ensure that we have at least 30% female representation in our Senior Management Group within three years (13% by February 2011).

Why? Because it’s the right thing to do and it will help us to accelerate growth in our business. Women have an increasingly important position as consumers and companies with a higher proportion of women on their Boards outperform competitors.

Helping school leaversThis year we launched the Morrisons Manufacturing Sponsored Degree Programme – a programme for 18-year-old school leavers that aims to create the manufacturing business leaders of the future.

The programme gives students a chance to earn a competitive salary while receiving vocational training without paying university fees. While working in Morrisons manufacturing business, students will also study for a BSc (Hons) in Management and Business at Bradford University. It’s an approach that gives students the chance to gain industry-relevant skills that are aligned with our business objectives.

Through our association with CREATE, we’ve already started to recruit and train people from homeless backgrounds. The jobs we’re providing will get their lives back on track and create loyal and committed team members. It’s our aim to provide 1,000 jobs through our partnership with CREATE over the next three years.

New starters taking part in the scheme receive three months of training, both in the classroom and on-the-job, leading to a QCF Level 1. Successful applicants will then become fully employed by Morrisons, and given the opportunity either to gain an QCF Level 2 in Retail Skills, or take up an apprenticeship to learn a craft skill – for example, as a baker, butcher or fishmonger.

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responsible commercial trading which would be expected of us as a major UK retailer. We do this because, as well as being environmentally and socially responsible, there are clear benefits for customers and our business today and in the future.

Target Commitment Update

Responsible sourcingBe a leading supporter of British farming

Establish applied farm research programme.

Implement Farm Programme initiatives.

Share research projects and experience from Morrisons Farm at Dumfries House with the farming industry.

• Reports published on renewable energy in the dairy sector, cross-breeding and free range hen activity.

• New workstreams established. Four reports to be published in 2011/12.

Extend 100% British pledge. Introduce more 100% British fresh own brand lines.

• Further commitments to British food, with new lines including all British sausages.

Raise standards in the supply chain

500 own brand suppliers to achieve Morrisons ‘Gold Standard’ for quality of supply by 2013.

Set a ‘Gold’ standard to identify leadership in quality of supply.

• Currently rolling out with suppliers.

• Developed the standard in line with Morrisons Values.

600 site audits for Ethical Trading Code compliance to be completed by 2013.

Apply auditing on a risk rated basis and using priority indicators.

• Focus on manufacturing in 2010.

Enhance animal welfare policies and auditing processes by 2013.

• Review completed for all major livestock groups in 2010.

• First retailer to introduce CCTV into abattoirs.

Positively influence sustainability within our supply chain

We will work with our suppliers to ensure that 100% of the palm oil used in our own brand products is sourced through a Roundtable for Sustainable Palm Oil (RSPO) recognised supply chain system by 2015.

Through product specification and supplier auditing ensure procurement from sources able to be maintained in the long term, or able to regenerate with intervention, support and careful management.

• Suppliers notified, new products now must comply with an RSPO endorsed system.

• Own manufactured products compliant by end of 2011.

Avoid harm to vulnerable natural habitats and wild native species

No product/ingredient from areas subject to unregulated deforestation.

No sourcing of raw materials or ingredients from areas of recognised ecological or environmental value and proven to be at risk of long term harm.

Work with recognised, independent third parties and suppliers to gain independent certification and accreditation.

• Focus on soy in 2011/12 with supply chain analysis and farming research (in relation to soy alternatives for livestock).

• Joined Round Table for Responsible Soy.

Sustainable seafood policies to apply universally across all own brand ranges by 2013.

• Application of policy to tinned tuna and freshly prepared food (e.g. sandwiches and salads) in line with fresh so that it is pole and line caught or from FAD free fisheries by the end of 2013.

Excellence in selling: Our peopleDelivering sector-leading training and skills development

100,000 colleagues trained to nationally recognised qualification by 2011.

Further develop Fresh Food Academy to provide nationally recognised qualifications, apprenticeships and skills training programmes.

Build colleague stability and retention through engagement with Vision and Values.

Application of our Values across the business.

• Over 48,000 colleagues trained.

• Over 1 million training days provided.

• Morrisons is now the largest provider of apprenticeships in the UK.

• Labour turnover reduced by 6%.


Achieved

Commentary on targetsOur responsible ‘Business’ targets are a non-exhaustive set of commitments that we believe capture material issues that relate to how we operate in terms of buying products (sourcing) and then how we best prepare and support our people to sell them. This is in addition to the regulatory framework, best industry standards and

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Food is part and parcel of our society. What we eat and drink has a direct affect on our health and well-being and our stores are part of the neighbourhood. We see this as an opportunity to make a difference.

Society

How do we do it? It comes back to food; after all we are a food business. This includes promoting healthier eating as an essential part of daily life.

We don’t dictate to our customers what they should and shouldn’t do. Ultimately, customers will exercise their choice, but we can make it more attractive to eat fresh and healthy food by making it affordable and accessible.

Whilst supermarkets are sometimes criticised for promoting ‘unhealthy’ food, at Morrisons, over the last year, we have always had a minimum of 50 promotions on fresh produce every week.

These include promotions on items such as stew packs, which make eating healthily not only more affordable but also more convenient. We can do this because we buy most of our produce direct from growers and pack it in our own facilities.

We’ve taken our ‘passion for produce’ into the community with our hugely successful Let’s Grow campaign which has reached over half the schoolchildren in Britain.

For all our success, we know there is much more we can do. We are reviewing our work this year as we look to play an even more active and positive role in our communities.

We touch the lives of 11 million shoppers a week. That is 11 million people and, in most cases, also their families. Add to that the communities in which our shops are based and our employees and you start to capture the effect our business can have at a social level.

Our approach

We depend on the communities which are home to our stores, so it is in our interest to ensure that we maximise the value we provide for them. That means being a good employer, a good neighbour and an active part of the community.

Equally, we can have an impact on our customers’ behaviour, so it can sometimes be important for us to take a lead in helping those who shop with us to make positive, healthy choices.

Morrisons has a range of initiatives to help fulfil these responsibilities. This section of the Review includes details of some of them.

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Smoked Haddock and

Tomato Breakfast

Omelette

• 100g piece smoked haddock fillet

• 1 tsp sunflower oil

• 1 tsp butter

• 6 cherry tomatoes, chopped

• 2 medium eggs

• 2 tbsp semi-skimmed milk

• brown bread, to serve

1 Snip the haddock into strips with

scissors. Heat oil and butter in a

frying pan and fry the fish for 2-3

minutes. Add cherry tomatoes and

fry for a minute.

2 Beat the eggs and milk together and

pour into the pan. As the egg begins to

set around the edges, lift the omelette

and let the runny egg pour underneath.

3 Cook over a medium heat until set.

Serve immediately with brown bread.

ServeS

2

Cook

7-8MinS

PreP

5MinS

246Calori

esSugar

FatSatura

tesSalt

1.5g 19g 5g 1.3g

12%2%

27%25%

22%One serving provides...

of your guideline daily amount

62 morrisonsmagazine

Light bitesTuck into one of these simple, tasty

and

nutritious meals. All show the GDAs per

serving, to help you plan your daily menu

and monitor your food intake

Photography Charlie Richards

Food styling Cara Hobday Styling Wei Tang

Providing nutritional advice and information for customersWe clearly display nutritional information on the front of all relevant pre-packed food and drink products. This includes the amount of calories, fat, saturated fat, sugar and salt per serving alongside their contribution as a percentage to the guideline daily amounts.

We are establishing similar details for our Market Street products which are made and prepared fresh in-store each day, including our pizzas, sandwiches, bread and cakes as well as on our Deli Café menus.

Cutting down on salt and fatWe have developed detailed guidance on the nutrient composition (fat, salt and sugar) of our own brand food. Our suppliers and developers must make sure that, as well as complying with all the relevant legislation, any products they supply to us have credible nutritional information in line with our best practice guidance.

The effect of the guidance and further work with our suppliers has been to reduce the salt and saturated fat content of products without compromising on taste.

For example, last year we reduced the saturated fat in all of our own brand crisps by 75%. Our baked crisps have only 5% of GDA.

Over the last year, we have also extended and reformulated our ‘Eat Smart’ (low and lower fat) range and developed new products such as our crustless quiche, which has 60% less fat than our standard range.

As well as consistently driving up the quality of our food, we also want to make it easy for our customers to make healthy choices. Last year, we set out a number of commitments on health and well-being and we’ve been making steady progress towards achieving our goals. Here are a few examples.

Helping customers achieve healthy, balanced lifestyles

We want our customers to know that eating healthily doesn’t have to be time consuming, costly or complicated, so we provide a raft of help and advice.

One great example is the healthy eating page on our website.

Here customers can find useful tips covering everything from how to cut down on salt, to advice about starting your day with a healthy breakfast. We also provide an explanation of our front of pack (GDA) nutrition labelling.

With our published recipes also containing detailed nutrition information they can help customers plan a balanced diet.

We provide similar information in-store with recipe cards and in our free Morrisons magazine.

See www.morrisons.co.uk/food-and-drink/healthy-eating

95%of the FSA’s 2010 salt category reduction targets have been met.

Making it easier to eat healthily

Society – continued

14



Some issues are best addressed when business and government work in partnership. Whilst competition drives progress, collaboration can deliver a wider social impact.

It was on this basis that we signed up to the Department of Health’s Responsibility Deal, which was launched in early 2011, with pledges on food, alcohol, health at work and physical activity. Our commitments build on the longstanding approach we have taken to promoting healthy lifestyles. We believe we can offer expertise and leadership to help bring about positive change.

We have signed up to all the relevant pledges and will report on our progress. These pledges are based on the following core commitments. We:

• recognise that we have a vital role to play in improving people’s health;

• will encourage and enable people to adopt a healthier diet;

• will foster a culture of responsible drinking, which will help people to drink within guidelines;

• will encourage and assist people to become more physically active; and

• will actively support our workforce to lead healthier lives.

We are signing these pledges because we are committed to making healthy choices easier and more affordable.

Martyn JonesGroup Corporate Services Director

“The Responsibility Deal is a significant development bringing together industry, the Government and campaign groups to help promote healthy eating and drinking habits.” Andrew OpieFood Director at the British Retail Consortium

Working together

Treating alcohol responsibly

Alcohol is a product for adults. It can be enjoyed socially but it can also be a cause of harm. We want our customers to be able to choose to enjoy quality alcohol products responsibly and at a sensible price.

Task 25 We take our legal responsibilities with regard to selling alcohol very seriously. Task 25 is our scheme to help us make sure we never sell alcohol to people under the legal drinking age.

Under Task 25, any member of staff who believes that a customer wishing to purchase alcohol may be under the age of 25 will ask that customer to provide recognised proof of age documentation.

Offering our customers choiceWe ensure that our range includes a good choice of low-alcohol products. We do not stock products that could unduly appeal to people under the age of 18.

Sensible pricingMorrisons set a policy of not selling alcohol below the rate of duty plus VAT over two years ago. We proposed this as a wider policy to the Government in June 2010. Since then the Government has implemented this policy and made it a legal requirement for all UK retailers.

For the first time this gives the Government a lever to get a guaranteed floor price for alcohol sales.

“

“

15



Promoting fresh foodin the community

Highlights from our last three years:

Let’s Grow and Cook

Alongside the Let’s Grow gardening equipment available in the catalogue, last year we also trialled Let’s Grow and Cook programme kits in 40 schools throughout the UK.

Each of the programme kits contained a teacher’s classroom pack, recipe cards, cook-along guides, learning posters, kitchen essentials and Morrisons gift vouchers. In addition, we offered a 25% discount off the price of selected recipe ingredients within our stores.

“

5millionschool children have access to gardening equipment.

450,000people can be fed with the amount of potatoes grown by Let’s Grow schools.

14 million carrotsgrown by schools taking part in Let's Grow.

I am passionate about encouraging schools to teach children about where their food comes from. It was wonderful to visit Over Primary School’s gardening club and hear about them growing their own carrots, potatoes and even strawberries.

Rt Hon. Jim Paice MP Minister for Agriculture and Food

“

Let’s GrowAt Morrisons, we believe one of the best ways to encourage healthier eating is to promote a better understanding of real cooking and fresh ingredients.

There is growing concern that many children have little understanding or interest in the story of fresh food and the importance of eating well. That’s why we created Let’s Grow – a community benefit programme designed to help reconnect people with food, inspire children to follow a healthier lifestyle and get them excited about fresh produce.

Having completed its third year, Let’s Grow currently has 18,417 schools registered, with 67% of all primary schools and 47% of all secondary schools in the UK actively taking part.

Let’s Grow has continued to develop. The programme now has:

• an enhanced catalogue – introducing living plants and cookery equipment;

• even more technical resources available to teachers;

• opportunities for schools to visit Morrisons stores and farms to further their education; and

• increased communications to strengthen relationships with teachers.

As well as schools, nurseries and registered childminders can now also join the campaign.

See www.morrisons.co.uk/letsgrow

16


Being good neighbours. At Morrisons we have a range of valuable skills and expertise, not to mention heaps of enthusiasm, to offer the communities in which we operate. Here are just a few of the ways we’ve been making a difference during the past year.

Supporting people with terminal illnessesUnder our Raise a Smile campaign, we support one national charity every year. In 2010, our colleagues nominated Help the Hospices as our charity of the year.

Help the Hospices works with children and adults living with a life-limiting or terminal illness. The charity twinned each of our stores with a local hospice, which meant the money raised in each of our stores directly helps our local communities.

Thanks to the fantastic generosity of our customers and colleagues, we raised over £1.3 million for the charity.

Supporting ethical productsAt Morrisons, we support the work of the One Foundation by stocking its products within our stores. 100% of their profits go towards funding vital projects by providing sustainable clean water supplies, HIV/AIDS counselling and testing, nutrition, hygiene and sanitation facilities.

By buying One products, Morrisons customers have so far funded 12 vegetable gardens, a sanitation block, eight HIV testing days and 34 water PlayPumps, providing over 68,000 people with access to a sustainable supply of free, clean drinking water and crop irrigation in Africa.

Good neighbours

3,470projects registered in the UK

13,000new trees planted

18,000bags of litter collected

Improving local communitiesThe CSV Action Earth campaign challenges local communities to find ways in which they can protect and enhance their environment, improve their quality of life and safeguard the environment for future generations. We have supported the campaign for the last four years.

Our support has helped the charity provide many small grants to local voluntary and community groups. These grants go towards purchasing tools, equipment and materials needed for projects that make a positive difference to their community and environment.

Some of the highlights of our four-year partnership include:

+63,000volunteers have been directly involved

“The partnership with Morrisons has been a huge success and we are absolutely delighted to have raised over £1.3 million for hospice care. This is a fantastic achievement and is testament to the dedication of Morrisons’ colleagues, who have really taken the hospice cause to their hearts.”

David PraillChief Executive, Help the Hospices


17


Commentary on targetsOur responsible ‘Society’ targets are a broad set of objectives that we believe demonstrate our real commitment to addressing health and well-being and extending our positive influence in the communities in which we operate. These targets are non-exhaustive and indicative of our intention constantly to improve our social responsibility performance. They are in addition to the regulatory framework, best industry standards and responsible commercial trading which would be expected of us as a major UK retailer. In other words, it is all the work we do on top of what might be expected. We do so because as well as being socially responsible, there are clear benefits for customers, communities and our business today and in the future.


Achieved


Health and well-being

Contributing to food education to support healthy, balanced lifestyles

Develop nutritional policies and adopt best practice to provide useful and relevant advice for customers.

Develop and provide information to help with education on what we eat and drink.

Give support and guidance for achieving healthy, balanced lifestyles to customers and colleagues.

Manage policy development and implementation for own brand products on health and nutrition issues related to matters such as salt and saturated fat reduction.

• Continued development – over 95% of product categories meet FSA 2010 salt reduction targets.

• Launched a minimum ‘50’ fruit and vegetable promotion guarantee.

• Signed up to the Government’s Public Health Responsibility Deal, including all the core commitments. We:

• recognise that we have a vital role to play in improving people’s health;

• will encourage and enable people to adopt a healthier diet;

• will foster a culture of responsible drinking, which will help people to drink within guidelines;

• will encourage and assist people to become more physically active; and

• will actively support our workforce to lead healthier lives.

Community Investment

Supporting the development of fresh food know-how and cooking confidence

Develop the ‘Let’s Grow’ scheme to increase participants’ skills and knowledge.

Build food skills knowledge by enabling practical expertise and advice.

• 18,417 schools registered.

• Let’s Grow and Cook trialled in 40 schools.

• Won Best Green Education Award in 2010.

Support national and local good causes for community benefit.

Establish ‘Raise a Smile’ brand to encourage support for charity fundraising.

• Raised £1.3 million for Help the Hospices and numerous local causes through our stores; for example, £0.4 million for the Pakistan Flood Appeal.

18


As one of the UK’s biggest supermarkets and a major food producer, we have a significant environmental footprint. We work constantly to reduce our impact and help our customers to play their part.

Our environmental considerations fall mainly into two parts. First, is all that we do to ensure food is produced, moved and sold with minimal waste and help customers reduce, reuse and recycle. This is about making the most of food.

Second, is the major issue of carbon emissions reduction, which is a key overarching benchmark for environmental performance. When people think of emissions, they tend to think of energy, but in fact refrigeration, transport and waste are also significant factors. Increasingly, attention is turning to carbon in the wider supply chain, which commentators highlight as being the greatest challenge. We agree, but from a practical point of view we believe strongly that our focus should remain on our direct emissions where we can exert the most control.

Our business model means that we own a greater part of the supply chain than other supermarkets. Our emissions programme (and the efficiencies we gain from the extent of our network) means that there are inherent carbon benefits from the way we are set up to operate.

Wider supply chain issues, emissions associated with agriculture, global food supply and water use all present challenges that we will have to tackle as an industry, working with government at all levels. Clearer scientific research, like that undertaken in our Farm Research Programme, will be an important part of this collaboration.

Environment

Our approach

We recognise that it is important to our business, as well as society at large, to play our part in protecting the environment. Climate change, resource depletion, waste and pollution affect us all.

As well as protecting the natural environment, reducing the impact of our operations can produce cost benefits by improving efficiency, allowing us to be more competitive in the marketplace.

We have made good progress in many key areas. This section of the Review outlines some of the measures we have taken over the last year to improve our environmental performance further, focusing in particular on our stores where the majority of our impact is created.

1stsupermarket to be awarded the Carbon Trust Standard.

1stplaced supermarket in the 2010 ENDS Carbon FTSE CDP Carbon Strategy Index.

All new stores are benchmarked under the BRE Environmental Assessment Method (BREEAM).

19


Too much of the food produced in the UK ends up as waste. At Morrisons, we minimise waste through better food management and close control throughout our vertically integrated supply chain.

Environment – continued

Making the most of our food

MeatInstead of buying cuts of meat, we buy the whole animal; we buy the pig not the pork chop. As a result of the great relationships that we have built with farmers, our buyers can buy British cattle, lambs and pigs and then transport the livestock to one of our own abattoirs. We are then able to use every single cut of meat.

Large cuts of meat, called primals, are transported to our stores where our trained butchers can expertly prepare smaller cuts exactly how customers want them. We also supply our own food preparation sites to make our own pies, sausages, cooked meats and other products.

It all adds up to a better deal for farmers, great quality food, less waste and efficient use of valuable resources. Our customers gain the benefits of quality at a keen price.

ProduceAs with fresh meat, we buy most of our fruit and vegetables direct from the farmer. The vast majority of the vegetables we sell throughout the year are British. When in season we are 100% British for strawberries, carrots, broccoli, swede, cauliflower, peas, cabbage, onions, potatoes, parsnips and sprouts.

Food waste – FareShare schemeOur policy, at every stage in the supply chain, is to minimise food waste. In 2010, we joined forces with the community food network FareShare. FareShare aims to tackle two of the most urgent issues that face the UK – food poverty and food waste. By working with our suppliers, they redistribute any surplus food that can’t be sold to a community-based network of organisations working with the most vulnerable people in society.

This food encourages disadvantaged people into an environment (such as hostels, day centres and night shelters) where they can receive appropriate support. It also enables these organisations to focus their funds on other services, such as housing advice, training and medical support, which in turn help people rebuild their lives. Produce going through our own pack houses

is washed, sorted and graded so that it arrives in store quickly and as fresh as possible. We buy whole crops from farmers and can utilise all of the food we buy.

Take, for example, the great British potato. Other supermarkets ask a third party to pack certain sizes for them, to a certain specification based largely on how it looks rather than how it tastes. We take smaller potatoes out of the load and sell them as baby roasters or, if really small, as animal feed. Out-grades with skin blemishes or odd shapes can be sold in value packs. Nothing is thrown away.

For a given tonnage of potatoes we can make use of 20% more of the crop than other supermarkets. Farmers sell their whole crop, customers save money and we reduce food waste.

It’s great that Morrisons has asked their manufacturers to redirect their own brand surplus food to FareShare so that we can use it to feed disadvantaged people. We hope that many of them will take this opportunity to make sure that good food isn’t wasted and we look forward to continuing to work together to fight food poverty and support local communities throughout the UK.

Lindsay Boswell Chief Executive FareShare

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20


At Morrisons we work hard to reduce the amount of packaging we use and recycle as much of our own waste as we can.

Is packaging bad?Packaging is not in itself ‘bad’. Packaging actually has a positive impact, reducing food waste by extending shelf life and protecting food in transit. When you consider the energy and resources used to make food and the greenhouse gases produced when it spoils, it’s clear that protecting food has to be a priority.

As part of our Great Taste, Less Waste campaign, we introduced the Morrisons ‘Keep it Fresh’ test, which scrutinises the use of packaging against set criteria. It’s not always obvious what makes ‘good’ packaging. Take, for example, the humble cucumber. Adding 1.5 grammes of film may seem unnecessary but can extend its life from three to 14 days (before it goes dull, limp and most people won’t eat it).

Reducing impactWhere the use of packaging is necessary, our in-house technologists work closely with our trading colleagues to offer advice on how to reduce the environmental impact of the packaging for new (and existing) product lines.

In 2010, we signed up to the second phase of the Courtauld Commitment, alongside other retailers, collectively to reduce the carbon impact of packaging in the food retail sector, by 10% by the end of 2012. This means we have committed to reducing our packaging by weight, increasing the amount of packaging that can be recycled and increasing the recycled content.

• Over the last year alone we’ve cut nearly 4,000 tonnes of packaging from our products. For example, by replacing the punnet lids with a sealed film across a variety of our strawberry lines we have saved 138 tonnes.

• We have saved a further 100 tonnes by reducing the thickness of the film on our loose fruit and vegetable easypick bags.

• We have increased the levels of recycled plastic in our packaging. For example, the higher recycled content of our mince and sausage trays has saved the carbon reduction equivalent of over 290 tonnes of packaging.

• The redesign of our café sandwich trays from foamed plastic to card has improved recyclability and saved over 42 tonnes.

Key performance indicatorsStore waste analysis

Total waste generatedYear 2010/11 2009/10 2008/09 2007/08 2006/07

192,846 tonnes (including new

stores)


stores)


stores)


stores)


stores)

Waste per storeYear 2010/11 2009/10 2008/09 2007/08 2006/07

Tonnes per store Diversion per store Landfill per store

439 stores439 tonnes 360 tonnes

79 tonnes

422 stores447 tonnes 346 tonnes 101 tonnes

382 stores 493 tonnes 361 tonnes 132 tonnes



Waste stream Tonnes % Tonnes % Tonnes % Tonnes % Tonnes %

Cardboard/paper 112,961 71 109,685 75 112,787 82 111,286 83 119,000 84

Plastics 8,015 5 8,261 6 7,608 6 8,436 6 13,000 9

Other recovered 37,029 23 28,008 19 17,472 13 14,656 11 10,000 7

Recycled total 158,004 82 145,953 77 137,867 73 134,378 72 142,000 72

Waste to landfill 34,842 18 42,690 23 50,509 27 53,395 28 56,500 28* Shaded area above is all material that is recycled.


Reducing and recycling trade waste

Recyclopedia to Recycle NowWe recognise that customers can find the myriad of labelling confusing and that this can reduce the likelihood of them recycling packaging. With this in mind we’ve been moving our recycling labelling from ‘Recyclopedia’ to the On Pack Recycling Labelling scheme to help customers make the right recycling choices.

82%of waste in our stores is recycled.

0%store waste direct to landfill by 2013.

21


Helping customers reduce food wasteWe’ve highlighted how our business model significantly reduces waste as food is transported through the supply chain, but a lot of food waste happens at our customers’ homes. WRAP reports that consumers spend £12 billion a year buying and then throwing away good food. 8.3 million tonnes of household food and drink waste is generated every year in the UK. Most of this could be avoided.

Through the Courtauld Commitment, we’re supporting WRAP’s collective target to reduce household food and drinks waste by 4% by the end of 2012. Overall, this will help to avoid an estimated 1.2 million tonnes of CO2e and save consumers £800 million.

Our Great Taste, Less Waste campaign has a number of elements that we use to help customers to prevent waste and enjoy the food they buy from us.

‘More meals for your money’ provides customers with simple and nutritious recipe ideas which include advice on how to make the most of leftovers. These are available through our customer magazine,

recipe cards in stores and a dedicated section on our website. During 2010, we expanded the campaign by launching an interactive Facebook page, more focused point-of-sale materials and a feature series in the bi-monthly Morrisons magazine.

See www.morrisons.co.uk/GreatTasteLessWaste

‘Best Kept’ labels have been successfully introduced on fresh produce packaging on the front of pack to show clearly how best to keep them in the home so that they taste better and last longer. Did you know, for example, that tomatoes are best kept at room temperature? 83% of us store them in the fridge.

We added to this simple concept this year by rolling out the labelling on more produce and printing advice on our easy pick bags used for loose items.

Research shows that 55% of customers throw away food before they need to. We’ve provided more advice on pack for customers about when they can freeze fresh produce and the potential impact of freezing and defrosting on ‘best before’ and ‘use by’ dates.


Helping customers to recycle Increasing the amount of packaging that we recycle ourselves is important, but we also have a responsibility to encourage our customers to recycle the packaging they take home with them when they shop with us. The most efficient and effective way for customers to recycle it is through council operated kerbside recycling schemes. However, we recognise that, at present, there is not a unified system and that some of our customers benefit from having the chance to recycle when they come to our stores.

To help, where possible, we aim to provide customers with facilities to recycle paper, aluminium, glass, clothing, carrier bags and certain types of plastics. By the end of 2010, we had increased the number of collection banks to over 4,200 across 346 stores and 274 council districts.

In 2010, we designed and rolled out Morrisons textile banks to support our charity of the year and the Salvation Army from sales of old clothing. By the end of 2010 we placed over 100 banks in our store car parks.

Here are just some highlights of what we achieved last year:

Helping customers to reduce and recycle

225 tonnesof Christmas cards collected from our Christmas card recycling scheme.

300 tonnesof batteries recycled in our customer collection scheme.

5,179 tonnesof cooking oil was collected to be used for biofuels.

22


Store carbon reduction projects Our stores are one important area where we are targeting savings. Our work on refrigeration is central to this (see page 23) but we also have other exciting plans for our stores this year.

• Voltage optimisation – reducing incoming voltage to a lower value can save up to 7% of total store energy demand. We’re trialling this in 50 sites in 2011, aiming to save around 6,300t CO2e, with a view to rolling this out across our entire estate.

• Ventilation control – by balancing the amount of air being brought into stores and the amount of CO2e produced by its occupants, it is estimated we will save 12,200t CO2e on electricity alone, with additional savings made on the gas used to heat the incoming air.

• Peterborough Stanground concept store (due for completion this year) will be our latest ‘eco-store’ and will trial technologies including an air-source pump for heating,

We are pleased to see Morrisons working to achieve its bold targets for the reduction of its carbon footprint. The company has shown particular commitment and leadership in addressing the problem of greenhouse gas emissions from refrigerant leakage – a key issue for the food retail sector.

Tom Delay Chief Executive, Carbon Trust

a fully natural-refrigerant refrigeration system, solar panels and full-LED lighting.

• LED lighting on chilled display cabinets Installing low-power display lighting into cabinets will give us savings of 11,400t CO2e.

Other projectsFrom stores to manufacturing, logistics and our people, we’re always looking at ways to reduce emissions.

• New lighting at manufacturing and logistics sites (with a survey to look at more) will save around 11,200t CO2e by introducing energy-efficient lighting.

• Major employee awareness campaign We’re delivering our third major carbon awareness programme in 2011 to get colleagues on board to contribute to our reduction target.

Emissions figures have been updated to be aligned with the Greenhouse Gas Protocol, developed by the World Resources Institute and World Business Council for Sustainable Development. They have been updated with the latest electricity and waste conversion factors issued by DEFRA. SKM Enviros (Environmental Consulting)

20102008 2009200720062005

1,4

17,3

76

1,4

18,6

97

1,4

98,2

55

1,4

57,0

98

1,5

49,0

89

1,6

03,2

73

Total carbon footprint (t CO2e/yr)

Emissions by type (%)

1. Electricity 56%2. Gas 9%3. Haulage 10%4. Waste 3%5. Employees

work travel 3%6. Business miles 1%7. Refrigeration 18%

1

2

3

456 7


Reducing carbon emissions

Our ambitious carbon reduction plan will see us reduce our total operational footprint by 30% by 2020 (from a 2005 baseline). We aim to achieve this despite the new stores, manufacturing and distribution centres that we continue to build. This means that, as we grow with each successive year, we have to work even harder to keep on track.

30%target to reduce operational carbon emissions by 2020.

“

“

The graph below shows the steady progress that we are making, even as we grow our business.


23

Cooling Industry Awards

• Large End User of the Year

• Small End User of the Year (Rathbones)

• Environmental Collaboration of the Year (Morrisons & WR Refrigeration for setting up the National CO2 Refrigeration Academy)

• Refrigeration Innovation of the Year (Morrisons & Arctic Circle Portable CO2 Plant).

In the last three years we’ve invested over £100 million in new and replacement systems. The net effect is that, since our 2005 baseline, we’ve reduced direct refrigeration emissions by over 40%. We’re not finished yet.

Refrigerant types vary and have different effects. We’ve focused on replacing the more harmful gases with more environmentally friendly ones. More modern systems use carbon dioxide as the refrigerant because its global warming potential is far less than that of other gases. Over 70 stores were fitted with CO2 based central plant units in 2010, giving greater coverage than any other supermarket. More are planned in 2011.

We set up a joint venture, the Natural Refrigerant Technology Centre, based in Hereford. The aim of the facility is to put the best available natural refrigerant equipment through detailed analysis to ensure it’s up to the task.

This approach has led to some real innovations. We’ve developed equipment that is, in effect, a portable CO2 plant. It can service a whole store by being ‘plugged in’ whilst we refurbish or refit existing equipment. This won Refrigeration Innovation of the Year in 2010.

We’ve also had to look beyond just the equipment. A lack of suitably trained engineers to service the machinery has been an issue. We’ve helped to address this by developing industry-leading training for all our engineers to help them to maintain the efficiency of our equipment and further reduce emissions.

Our work featured prominently in a best practice case study conducted and published by the Carbon Trust in 2010. We also picked up the Refrigeration & Air Conditioning Cooling Industry ‘Large End User of the Year’ Award.

Refrigeration is a big environmental issue for supermarkets. It is a really important component in keeping our food fresh and preventing waste, but the gases used in the refrigeration equipment have very high greenhouse gas emission factors. That means that a small amount of leakage is equivalent to a large amount of carbon dioxide being released into the atmosphere. We’ve made reducing the impact of our refrigeration central to our carbon reduction strategy.

Refrigeration


Morrisons… has made rapid progress in the past year on its refrigeration programme, introducing new carbon dioxide plant, cracking down on leakage, delivering a hydrocarbon integral specification and setting out to reduce energy consumption.

Judge’s comment, Cooling Industry Awards 2010

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24


Over the last 12 months, we’ve gone even further in supporting our target to reduce company emissions by 30% by 2020. Despite continued growth, we’ve reduced our haulage emissions once again, through better fuel efficiency in our modern fleet, driver training and the effective management of our road miles.

In 2010/2011, the increased use of double deck trailers saved us 4.1 million kms. These streamlined, supersize trailers enable us to transport up to 80% more volume per trip. The goal for this year, with an additional 44 double decks in the fleet, is to save a further 83,000 kms per week. This would equate to an annual saving of 4.3 million kms.

90% of our current fleet utilises the latest Euro 5 engine emissions technology. This is an increase of 13.8% compared with January 2010 and we anticipate that 100% of the fleet will be Euro 5 compliant by the end of 2011. Euro 5 engines help to limit nitrogen oxides (NOx) emissions.

We have a new initiative on trial to further reduce our fuel consumption. We are rolling out across our network the use of mains

power for our refrigerated trailers, rather than using diesel. Over the next year, we expect this programme to save up to 400,000 litres of diesel.

In logistics, we measure route planning efficiency in terms of how many cases per kilometre we are able to move. Over the last two years we have increased the number of cases per km by 12.7%.

Following our successful completion of Sittingbourne in the South East we’re now fully underway with the construction of our new distribution centre in Bridgwater in the South West. As well as delivering greater transport efficiency to our network we are also working to make Bridgwater one of the greenest sites we have ever built. Some of the environmentally friendly features include extensive coverage of solar panels, rain water recycling, LED lights that dim when no movement is detected and recycling across all areas of the site. When operational from Autumn 2011, we anticipate that Bridgwater will be one of the most energy efficient distribution centres in Europe.


Effective logistics

The Morrisons distribution fleet is vital to our supply chain and gives us flexibility in how we move products from suppliers to Regional Distribution Centres and from our food manufacturing sites to our stores.

illustration to be placed here

500,000kmsaved through efficient transport planning.


Commentary on targetsOur responsible ‘Environmental’ targets are formed from a non- exhaustive set of commitments that we believe capture material issues that relate to waste prevention and reduction and climate change. This is in addition to the regulatory framework, best industry standards and responsible commercial trading which would be expected of us as a major UK retailer. In other words, as with our ‘Business’ and

‘Society’ targets it is all the work we do on top of what might be expected. The efficiencies we gain provide clear benefits for customers and our business today and in the future. Critically, our wider carbon emissions programme is part of a recognised collective response to the global issue of climate change.


Achieved

25


Waste prevention

Enabling customers to reduce food waste

Further development of ‘Great Taste Less Waste’ campaign.

Research, development, packaging, storage and cooking advice. • Extended communication via in-store magazine, website and social media.

Reduce the carbon impact of our packaging

Reduction in the carbon impact of our packaging by 10% by the end of 2012.

Packaging to be ‘best fit for purpose’, considering:– weight saving– type of material– recycled content– recyclability.

• Saved over 4,000 tonnes in 2010.

Diversion of waste to landfill

Zero waste direct to landfill from stores by 2013.

Collection and processing back of store waste through a national waste management framework.

Diversion of supply chain waste for processing through Anaerobic Digestion.

Minimising waste from our own supply chain.

• Achieved original target of 50% reduction (by volume).

• On target to achieve zero waste direct to landfill target.

Carbon management

Emissions reduction 30% absolute reduction (CO2e) by 2020 (2005 baseline).

Contributing to a low carbon economy:

Refrigeration efficiency: – convert to CO2 (natural refrigerant)

– install Heat Reclaim technology

– implement store refrigeration energy efficiency programme

50 more stores planned in 2011.



Energy efficiency: – roll out Combined Heat & Power (CHP) to new stores, where

efficient to do so

– further development of renewable energy sources and projects

– improve lighting in-store

40 stores completed. No new planned expansion.

Extensive photovoltaic coverage at Bridgwater as part of a programme to make it one of the most environmentally friendly RDCs in Europe.

Feasibility study of LED lighting to be rolled out through stores following on from pilot at Halifax store.

Resource efficiency: – conversion of waste to energy through Anaerobic Digestion

– continue carbon awareness programme

Extended engineering feasibility study underway.

Launch of ‘Summer of Savings’ campaign with EDF in May 2011.

Find out more about our approach to CR, our policies, targets and to view previous reports:

Contact us:Corporate Responsibility Corporate Services Wm Morrison Supermarkets PLC Hilmore House Gain Lane Bradford BD3 7DLTelephone: 0845 611 5000

Visit www.morrisons.co.uk/today

Design and consultancy by Salterbaxter Printed by Pureprint Group

morrisons corporate responsibility review 2011

Documents

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fresh produce retailer

largest food manufacturer

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