Appendices

Independent assurance statement

To the Management and Stakeholders of Fuji Xerox Australia Pty Limited:

Fuji Xerox Australia Pty Limited (Fuji Xerox Australia) commissioned Net Balance Management Group Pty Ltd (Net Balance) to provide independent assurance of the ‘Sustainability Report 2011’ (the report).

The report presents Fuji Xerox Australia’s sustainability performance over the period 1 April 2010 to 31 March 2011. Fuji Xerox Australia was responsible for the preparation of the report and this statement presents our opinion as independent assurance providers. Net Balance’s responsibility in performing its assurance activities is to the Management of Fuji Xerox Australia in accordance with the terms of reference agreed with them. Other stakeholders should perform their own due diligence before taking any action as a result of this statement.

Assurance standard and objectives

The assurance engagement was undertaken in accordance with the AA1000 AS (2008) assurance standard (AA1000AS). The standard provides a comprehensive way of evaluating whether an organisation is responsible for its management, performance and reporting on sustainability issues. This is achieved by evaluating the organisation’s adherence to the AA1000 AccountAbility Principles (2008) and by reviewing the accuracy and quality of disclosed sustainability performance information.

The AA1000 Accountability Principles (2008) used to assess Fuji Xerox Australia’s processes include:

Inclusivity: How does the organisation include stakeholders in developing and achieving an accountable and strategic response to sustainability?

Materiality: How does the organisation include in its report the material (most important) information required by its stakeholders to make informed judgements, decisions and actions?

Responsiveness: How does the organisation respond to stakeholder concerns, policies and relevant standards and adequately communicate these in its report?

Assurance type and scope

Net Balance provided Type 2 assurance in accordance with the AA1000AS (2008). This involved assessing the organisation’s adherence to the AA1000 AccountAbility Principles (2008) and assessing the accuracy and quality of the sustainability information contained within the report, which focused on the following material areas:

  • health and safety
  • customers
  • product end-of-life
  • paper sourcing
  • environment
  • human resources.

Assurance level and limitations

Net Balance provided a high level of assurance over the Principles of Inclusivity, Materiality and Responsiveness and a moderate level of assurance over data and statements in the report. The assurance scope covered the online report and the printed report and focussed on systems and activities of Fuji Xerox Australia during the reporting period with the following exceptions:

  • Net Balance did not verify financial data, other than that relating to environmental, social or broader economic performance.
  • Net Balance did not conduct any site visits other than to the head office at Macquarie Park, Homebush and the remanufacturing centre at Zetland. The majority of interviews with data owners were conducted face-to-face and, only where required, by phone.

Assurance methodology

The assurance engagement was undertaken in May to August 2011, and involved:

  • Preparation of a materiality register (list of key sustainability issues) using the five-part materiality test.
  • Interviews with the Managing Director, Executive General Manager Corporate Affairs, Executive General Manager Human Resources, Executive General Manager Supplies, National Manager Office Solutions Business, State General Manager NSW Integrated Sales and Marketing Division (ISMD), Operations Manager Eco Manufacturing Centre, Manager Environment and Sustainability, Manager Customer Satisfaction and Quality, National Environmental Management Systems (EMS) Manager and National Manager Health and Safety, to understand how sustainability is integrated within the organisation.
  • A review of the materiality process and stakeholder engagement activities undertaken by Fuji Xerox
  • Australia during the reporting period and how this informs the sustainability strategy and performance of the organisation.
  • A review of Fuji Xerox Australia’s key sustainability strategies, policies, objectives, management systems, measurement and reporting procedures.
  • Interviews with key personnel responsible for collating and writing various parts of the report to substantiate the reliability of selected claims.
  • A review of the report for any significant anomalies, particularly in relation to claims as well as trends in data.
  • Verification of over 110 selected data points and statements and the systems and processes that support the data.
  • A Global Reporting Initiative (GRI) G3.1 application level assessment.

Our Independence

Net Balance was not responsible for preparing any part of the report. Our team’s independence was ensured by selecting team members with no other involvement with Fuji Xerox Australia during the reporting period that could impair the team’s independence or objectivity.

Our competency

The Fuji Xerox Australia assurance engagement was carried out by an experienced team of professionals led by a Lead Sustainability Assurance Practitioner (Lead CSAP), accredited by the International Register of Certified Auditors UK (IRCA UK). The project included personnel with expertise in environmental, social and economic performance measurement across a range of industry sectors. Net Balance is a global leader in the use of Accountability’s AA1000AS, having undertaken over 100 assurance engagements in Australia in the past four years.

Findings and Conclusions

Adherence to AA1000 Principles

Inclusivity:

Fuji Xerox Australia has a diverse range of stakeholders and multiple processes in place for engaging stakeholders from across the business including the materiality process and customer surveys. To further embed sustainability at Fuji Xerox Australia, Net Balance would like to see improvements in the management of sustainability (nonfinancial) risks and their inclusion into business strategies and plans. A key mechanism to improve risk management is through a corporate risk register that incorporates sustainability risks identified across a number of different processes including:

  • the materiality register; aspects and impacts register of the Environmental Management System (EMS)
  • risks identified in managing health and safety
  • risks identified in developing the corporate and business strategies
  • risks identified as part of the Quality Assurance system under ISO 9001.

Establishing a corporate risk register will provide Fuji Xerox Australia with a central view of the financial and nonfinancial risks that require close management to reduce their negative impact on business performance.

Materiality:

Net Balance found Fuji Xerox Australia addressed its sustainability material issues including, but not limited to diversity, paper sourcing, eco manufacturing, environmental management and customer satisfaction. The process used by Fuji Xerox Australia to identify material issues included engaging representatives from across the business in a role play exercise, weighting material issues based on defined criteria and engaging the Sustainability Advisory Board to review the weighted issues. Whilst this was a thorough approach to materiality, Net Balance believes a number of material issues relating to business fundamentals need to be elevated due to their importance in managing business risks and achieving the strategic vision of the organisation. These issues include management of health and safety, quality assurance systems, risk management and governance of sustainability issues. Moving forward Net Balance suggests Fuji Xerox Australia:

  1. includes the Sustainability Advisory Board in developing the initial material issues;
  2. reviews the system for weighting issues to ensure business fundamentals are fairly weighted;
  3. includes the feedback from a broader range of stakeholders in developing the issues, including customers;
  4. aligns the materiality register to the organisation’s risk register and;
  5. releases the updated Code of Conduct.

In addition, Net Balance recommends the inclusion of Fuji Xerox Australia’s procurement systems and processes in next year’s non-financial assurance.

Responsiveness:

Fuji Xerox Australia is committed to responding to issues raised by stakeholders. During the reporting period Fuji Xerox Australia began actioning audit findings from last year’s sustainability assurance including: improving its safety culture; improving reporting of Scope 3 GHG emissions from transport and; mapping GHG emissions across its value chain.

To improve Fuji Xerox Australia’s responsiveness to sustainability issues and drive further improvements in performance, Net Balance would like to see Fuji Xerox Australia improve the governance framework for sustainability. Particular areas of improvement include:

  1. material sustainability risks are reported to the Executive Board on an agreed periodic basis
  2. ownership of sustainability issues by the Executive Leadership Team and their direct reports
  3. inclusion of sustainability issues in divisional business plans, and (d) establishing processes for assessing customer feedback and escalating important issues to senior management for action.

Reliability of Performance Information

Based on the scope of the assurance process, the following was observed with regard to performance information:

  • The findings of the assurance engagement provide confidence in the systems and processes used for managing and reporting sustainability performance information, with the exception of Lost Time Injury Frequency Rate (LTIFR) and Injuries by Job Function. Net Balance was unable to verify the LTIFR and Injuries by Job Function due to insufficient records to support the results for the reporting period. Fuji Xerox Australia has made substantial changes to how health and safety are managed including the appointment of a National Health and Safety Manager, establishing a new team to support the Manager, undertaking an external audit of the Workers Compensation Claims process and the development of an OHS Manual and Policy.
  • The level of accuracy of sustainability performance information was found to be within acceptable limits.
  • Data trails selected were generally identifiable and traceable, and the personnel responsible were able to reliably demonstrate the origin(s) and interpretation of data.
  • The sustainability performance disclosures presented within the report appropriately reflect environmental, social and economic performance achieved during the period.
  • The GRI application level check found that the report was classified as B+ in accordance with the GRI 3.1.

Overall, it is Net Balance’s opinion that the information presented within the report is fair and accurate. The report was found to be a reliable account of Fuji Xerox Australia’s sustainability performance during the reporting period.

The way forward

Net Balance found the report appropriately addresses Fuji Xerox Australia’s environmental, social and economic material issues. To ensure Fuji Xerox Australia continues to improve, Net Balance has identified the following key areas for improvement:

Safety

During the last six months of the reporting period Fuji Xerox Australia implemented a number of substantial changes to improve the management of health and safety of employees. However, a review of safety reporting systems shows there is room for further improvement in particular, the systems and processes in place for managing workers compensation claims. Improvements are required in the system for tracking the progress of claims, filing of medical certificates and workers compensation letters.

Paper sourcing

A strategic focus for Fuji Xerox Australia has been improving relationships with paper suppliers to provide confidence in the sustainability of operations and products. Whilst Fuji Xerox Australia has made improvements to its processes during the reporting period, Net Balance believes Fuji Xerox Australia could further improve its management of paper suppliers, including reducing some current duplication of efforts, by facilitating greater regional management of paper sourcing. As part of a regional approach, Fuji Xerox in the Asia-Pacific could:

  1. apply a common risk management and supplier assessment framework for paper suppliers;
  2. more proactively engage with key suppliers to support performance improvement;
  3. better verify self-reported supplier performance by utilising data from existing third-party auditors of suppliers; and
  4. provide guidance on reporting sustainability information and a consistent format to suppliers to enable them to provide consistent and comparable data of a high quality.

Fuji Xerox Australia staff with paper sourcing and management responsibilities could gain timely access to regional supplier data and management processes via suitable IT systems. An enhanced regional approach will provide Fuji Xerox Australia with improved efficiencies and increased assurance of the sustainability of its supply chain. Additionally, with higher quality and verified data, Fuji Xerox Australia will be able to improve its disclosure of supplier performance to stakeholders.

Customers

Each business within Fuji Xerox Australia received ‘good’ to ‘excellent’ customer satisfaction results during the reporting period. However, a review of quality assurance processes including customer surveys highlights the need for a high level customer strategy to establish the purpose and areas of focus for customer engagement across all business divisions. The strategy will help to inform the development of meaningful customer experience KPI’s and help to ensure customer engagement delivers value to Fuji Xerox Australia in terms of continuous improvement, efficiency gains and maintaining a leadership position. As part of the strategy, Net Balance would like to see a process for assessing customer feedback and prioritising issues that need to be escalated for action and directed to senior management.

On behalf of the assurance team,

Terence Jeyaretnam, FIEAust
Director, Net Balance & Lead CSAP (IRCA UK)
12 August 2011, Melbourne, Australia