Foreword

Business performance

Corporate governance & compliance

Improving customer experience

Providing customers with a responsible solution

Engaging employees

Influencing sustainability outcomes

Minimising our environmental impact

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Independent assurance statement

Fuji Xerox Australia 2010 sustainability report

To Fuji Xerox Australia's stakeholders, Banarra Sustainability Assurance and Advice (Banarra) was commissioned by Fuji Xerox Australia (FXA) to assure its sustainability report 2010 (the report) against the AA1000 Assurance Standard (AA1000AS) 2008. Banarra also validated the report against the Global Reporting Initiative (GRI) Sustainability Reporting Guidelines. This is Banarra's fifth reporting cycle with FXA, so we have built on our previous understanding of the organisation and its progress.

Assurance scope

The assurance scope is a Type 2 engagement under AA1000AS (2008) and the scope includes:

1) assessing, to a high level of assurance, the nature and extent to which FXA adheres to AA1000APS (2008) principles of inclusivity, materiality and responsiveness and how it communicates this adherence in the report

2) assurance of the performance information, to a moderate level of assurance, within the material issue areas outlined below. The performance information was assured using the criteria in the GRI G3 Sustainability Reporting Guidelines and FXA's own criteria where this is stated in the report.

Improving customer experience

  • customer satisfaction surveys, net promoter score
  • percent of customer issues resolved without a site visit
  • onsite maintenance hours per million prints.

Engaging employees

  • employee numbers
  • employee engagement rate (by type and region )
  • occupational health and safety: Lost time injury frequency rate (LTIFR).

Providing customers with a responsible solution

  • material utilisation
  • parts manufactured and number of manufacturing programs
  • paper sales by weight.

Minimising our environmental impact

  • emissions by source and actual energy usage
  • waste sent to landfill and recycled waste
  • paper usage and proportion of recycled paper used
  • total water consumption.

3) The assurance also included validation of FXA's self-declared GRI G3 application level as disclosed in the report.

Banarra assurance methodology

Our methodology included:

  • interviews with a) eight of the executive board, including managing director Nick Kugenthrian, concerning sustainability performance, governance and strategy; b) nineteen FXA staff at corporate, divisional and site levels concerning sustainability performance, strategy, policies for material issues, and implementation of responses; and c) five external stakeholders concerning sustainability performance
  • review of FXA information including sustainability and divisional strategies, executive board minutes, materiality and stakeholder engagement documentation and records as well as sustainability program management systems, documentation and records
  • visits to FXA's headquarters in North Ryde, NSW and two FXA sites: the National Supply and Training Centre in Mascot, NSW and the Supplies division in Homebush, NSW
  • an independent check of FXA's material issues and stakeholder views on these issues, including analysis of peer reports, media articles on FXA in 09/10, FXA's own documentation and engagement records and issues identified from Banarra's interviews
  • checks of the methodology, completeness and accuracy of quantitative and qualitative performance information in scope and the processes for capturing, aggregating and reporting this information, through document review and interviews
  • a review of the report to check consistency with the GRI application level requirements of B+ and that it is consistent with the nature and extent of FXA's adherence to the AA1000 AccountAbility Principles.

Findings and recommendations

Inclusivity — has FXA a stakeholder engagement and participation process?
Banarra is pleased that FXA has improved its stakeholder engagement framework in the reporting period. There is an opportunity to enhance the value of this framework by sharing and embedding it across the business in a way that allows managers to take ownership of their respective stakeholder engagement plans. FXA management should review this framework periodically to ensure it remains inclusiveand effective.

FXA's executive and management have an informal commitment to be accountable to its stakeholders. A formal commitment is included in the draft Code of Conduct, which is due to launch in 10/11.

Materiality — has FXA identified its most important sustainability issues?
Banarra found FXA's materiality process to be transparent and credible. The annual, formal materiality process inputs into FXA's sustainability strategy and informs the content of the sustainability report. All of the material issues that FXA identified are included in the report.

FXA's materiality process has been improved in the last year and could be further enhanced by including a method for identifying emerging issues. While the materiality process feeds into the sustainability strategy, there is an opportunity for FXA to get greater value from the process by having it more systematically input into risk management and wider business planning processes.

Responsiveness — has FXA responded to these issues?
FXA has developed planning processes to respond to its material issues, the primary mechanism being the mid-range divisional plans. With the exception of ISMD, all divisions addressed some element of sustainability in their mid range plans.

However, the comprehensiveness of the response varies considerably between divisions. Banarra notes that FXA is currently reviewing the business planning process and this represents an opportunity to strengthen accountability in relation to comprehensiveness and execution.

FXA has developed responses to all of its material issues. In particular, Banarra was impressed with FXA's revision of the Sustainable Paper Purchasing Policy. We look forward to the complete implementation of the paper supplier assessment program in the coming year, and encourage FXA to measure progress towards meeting the policy's objectives and communicate this to stakeholders.

FXA's responses to three material issues in particular could be improved:

  • In relation to OHS, Banarra is pleased with a range of improvements over the reporting period, including the formation of OHS Committees and the reporting of a lost time injury frequency rate. However, in light of the increasing severity of safety incidents over four years of OHS assurance recommendations, culminating in a near fatality in this reporting period, we are disappointed in the timeliness of FXA's OHS responses. While significant work has both been completed and planned, FXA needs a fundamental strengthening of its safety culture. This can only be achieved through whole of company ownership and response and not reliance on key individuals.
  • FXA has comprehensive customer satisfaction measures for each customer segment. There is currently no cross-divisional approach to customer satisfaction, such as a higher level measure of the quality of FXA's relationship with customers. With the strategic move towards one FXA there may be value in having such an overarching measure. Banarra found that customer satisfaction data is not used consistently across divisions and we are pleased that FXA is focused on embedding greater ownership of customer satisfaction results in the business. We recommend that customer satisfaction responses be embedded more systematically in the mid range planning process.
  • Whilst FXA has a renewed focus on communicating with suppliers via the sustainability newsletter, we believe supplier engagement could be enhanced by developing opportunities to collaborate with suppliers on sustainability challenges and opportunities.

We believe FXA has appropriately communicated the nature and extent of its adherence to the AA1000APS (2008) Principles in the report.

Performance information assurance

Based on its methodology, Banarra concludes that:

  • there is no evidence that the performance information included in the assurance scope is not correct in all material aspects and is not a fair representation of FXA's performance in these areas during the reporting period. This is with the exception of scope 3 transport logistics emissions.
  • Banarra was not able to come to a view on the accuracy of the scope 3 transport logistics emissions due to lack of clear boundary definition and the relative immaturity of reporting in this area. However, we believe FXA's focus on measuring and reducing greenhouse gas emissions from transport logistics is progressive and presents significant opportunities to reduce environmental impacts. We recognise that reporting in this area will continue to improve and recommend that FXA undertake a value chain mapping and boundary setting exercise.

Banarra identified inaccuracies across a number of datasets during the assurance assignment, which were subsequently corrected.

During the reporting year, FXA invested significant resources in procuring and implementing an environmental data management system. Once fully implemented, we expect this will increase the robustness of FXA's environmental data reporting processes and we encourage FXA to continue to prioritise migration of all key environmental data to the new system, including product returns and transport logistics. In the interim, we recommend that clear audit trails are maintained and internal checks are undertaken for all manually collated data.

GRI application level

Banarra concurs with FXA's own assessment that it has achieved GRI application level B+.

Responsibilities and independence

FXA was responsible for preparation of the report, stakeholder identification and engagement, as well as material issue identification and response. Banarra's responsibility was to provide an independent assurance opinion of the report against the AA1000 standard. This opinion is provided to FXA management and any reliance third parties may place on this statement is entirely at their own risk. Banarra has provided FXA with a management report containing more details on the findings and recommendations in this statement.

Banarra was paid by FXA to conduct this assignment. Other than this payment, the assurance team declares itself independent in relation to FXA and its stakeholders. A detailed statement on our independence, impartiality and competencies can be found at www.banarra.com

Richard Boele
Certified Lead Sustainability Assurance Practitioner
IRCA No. 1188527

Ashley Hamnett
Assurance Practitioner, Banarra Sustainability Assurance
and Advice, Sydney, Australia, August 2010

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