sainburys customer service by Andrew Clegg

CONTENTS Introduction CEO Introduction

Anna Ford Introduction

Commitments and next steps

Our approach

Reducing our carbon footprint

Our goal

Reducing Waste

Our reporting

Working with our suppliers

Forum for the Future statement

Our business

Commitments and next steps

Our products

Promoting healthier lifestyles

Responsible sales

Commitments and next steps

Working in partnership

Best of British

Animal welfare

Fairtrade

Suppliers and the environment

Commitments and next steps

Our economic impact

Our social impact

Commitments and next steps

Equality, diversity and inclusion

Engagement and recognition

Health and wellbeing

commitments and progress Next steps 2010

Progress against our 2009 commitments

Progress against outstanding 2008 commitments

Our awards

Organisations we engage with

Corporate Responsibility Report 2010

CEO introduction

With over 19 million customers visiting our stores each week, 150,000 colleagues and in excess of 2,000 suppliers, Sainsbury’s has a real impact on the economy, environment and society. Our values underpin our goal to provide healthy, safe, fresh and tasty food at fair prices. These values are at the heart of our business; they determine our priorities and guide us in ensuring that we conduct ourselves in an honest, ethical and sustainable manner. We operate in a challenging commercial environment and while many of our customers are increasingly price-conscious, they are not prepared to compromise on the values and principles that they believe in. We know they want us to make it easier for them to shop ethically and sustainably so we’re making every effort to live up to their expectations and exceed them if we can. This is why we’re so pleased to have been recognised by the Consumer Focus ‘Green to the Core’ survey, which praised our engagement with customers on green issues. It also recognised our excellent sustainable farming and fish policies, as well as the high proportion of sustainable products available in our stores. As we look forward, there is an increasingly complex set of issues that we will need to address for our business, our customers, the environment and the communities in which we operate. The right thing to do is rarely clear cut, as good intentions in one area can create unintended consequences in another. It’s also an agenda that’s constantly evolving. We must work collaboratively with our colleagues, customers, stakeholders and industry experts to develop forward-thinking programmes that are aligned with our core values and that help our customers enjoy excellent quality food at affordable prices. In such a period of uncertainty and economic recession, we are really proud of what we have achieved over the past year. Our industry-leading positions in Fairtrade, Freedom Food and Marine Stewardship Council fish are real and tangible accomplishments. Likewise, our work on energy efficiency and sending zero food waste to landfill demonstrates environmental leadership and in many cases has also helped us to achieve significant cost savings. We continue to ensure that internal programmes like ‘You Can’ make it possible for our own people to develop new skills and an even wider range of new recruits to join us. Finally, our sponsorship of the Paralympics, the UK school games and our support of Comic Relief ensure that we continue to make a positive difference to all our communities, wherever they are. The values on which our company was founded in 1869 remain the same today. Through our commitments to Corporate Responsibility we are ensuring that these values will continue at the heart of our business for many years to come.

Justin King Chief Executive Chair of CR Steering Group

Corporate Responsibility Report 2010

Anna Ford introduction

As chair of the CR Committee, I report to the Board twice a year on our plans and the progress made against each of our values. Sainsbury’s approach to Corporate Responsibility is not just an add-on; these values are embedded in the company’s daily planning and actions and are right at the heart of its policy and decision-making. This work has already been recognised by awards from a variety of professional bodies. We know that the last year has been particularly difficult for many families, but despite this, our customers are just as interested as they ever were in health, the environment, Fairtrade, responsible sourcing and the sustainable use of natural materials. In fact the bar has, if anything, been raised as issues like climate change and sustainability have moved into the mainstream. So what have we achieved this year? As part of our drive to be Best for food and health, we re-launched both our ‘Be Good to Yourself’ and ‘Freefrom’ ranges, increasing the number of new and improved lines by 60 and 100 respectively. As an example of our commitment to Sourcing with integrity, we were named the largest retailer of Fairtrade in the world by the Fairtrade Foundation, with sales topping £218m in 2009/10. We are also the largest retailer of RSPCA endorsed ‘Freedom Food’ in the UK, both by value and range, reflecting our commitment to being the number one supermarket for animal welfare. We also made significant progress in showing Respect for our environment, by increasing the number of our eco-stores and launching environmental innovations within these stores, such as Europe’s first biomass generator and creating BeeHotels to protect the UK’s decreasing bee population, which in turn protects many species of plants and flora. Making a positive difference to our community has long been part of the Sainsbury's ethos. Over the past year we have successfully launched our ‘Local charity partnerships’ and as a result, all our stores, offices and depots now support their own dedicated local charity. At the same time, we created over 6,500 new Sainsbury's jobs by opening 38 new supermarkets and 51 new convenience stores across the UK, playing our part to help build growth back into the UK economy.

Corporate Responsibility Report 2010

Being a great place to work means giving people the chance to get the skills and experience they need to succeed. Rewarding our colleagues is just as important and I am delighted that a record of 127,000 colleagues shared a bonus of over £80 million this year. Justin and I have hosted a number of roundtable discussions this year, with a wide variety of stakeholders, including farmers, charities, Scouts, Government departments, NGOs, the National Union of Students, Which?, school leaders, the National Farmers Union, food journalists and many others. We’ve had free and open discussions, which have given us some valuable feedback on our business and I would like to thank everyone for their contribution. Our stakeholders trust us to act responsibly on their behalf: this is an integral part of the Sainsbury’s brand. It’s our values at the very heart of our business that have made us what we are today and I am confident that they will continue to differentiate Sainsbury’s in the future.

Anna Ford Non-Executive Director Chair of CR Committee

Corporate Responsibility Report 2010

Our approach Corporate Responsibility & Sainsbury's

For Sainsbury's, corporate responsibility is about providing our customers with the widest choice of quality food, at fair prices.It is also about paying our suppliers a fair price and giving them the reassurance of knowing that they have a buyer for their products on reasonable terms; enriching our communities through employment and career development opportunities; growing our business profitably for our shareholders; making the most effective use of our valuable resources like water and electricity; and respecting the local environment. Strategy As a leading supermarket retailer, we face a wide range of issues and challenges. Many of these are complex, interrelated, and increasingly global in nature. Some of them we can directly control, others we can influence, but some, unfortunately, are beyond our reach. Sometimes we have to make difficult decisions to balance conflicting priorities. We believe that by considering the wider social, environmental, and economic impacts of our business we will deliver longterm shareholder value. This is because we will be better able to meet all our stakeholders' expectations. Our five values have guided our company for over 140 years, and provide the practical framework for doing this. They guide us in everything we do – from key business decisions to day-to-day activities.

Materiality When we set our goals and priorities we are guided by a ‘materiality’ process. This helps us to focus on where our greatest impacts are, or that substantively influence stakeholders and where our efforts can make the most difference. This process of focusing on the most material issues and opportunities helps us to make a more direct link between the sustainability challenges we face along with our commercial strategy.

Corporate Responsibility Report 2010

1 Analyse We analysed a wide range of information to understand the key issues for different stakeholder groups. The information included our engagement with stakeholders, research and surveys of stakeholder opinion.

2 Prioritise

We then mapped these issues according to the level of stakeholder concern and potential to impact our business.

3 Act The outputs of this process have been used to inform our CR strategy, set new commitments and select the topics covered in this report. We also use the materiality process to inform our ongoing stakeholder engagement.

Stakeholder engagement As a leading national supermarket with a global supply chain, we have significant scale and influence. This means we also have a role to play in tackling issues and finding solutions. We know we cannot always do this on our own. We therefore work in partnership with key stakeholders, including Government, NGOs and academics, as well as our customers and colleagues. We engage with our shoppers on a daily basis, from customer service feedback to more formal customer surveys, two of which have been carried out in the last 12 months, focusing specifically on corporate responsibility. We talk with our colleagues as well, whether through daily meetings on the shop floor, or ‘Talkback’, our annual survey. We also engage with NGOs and Government agencies on a wide range of specific issues. We are members of a number of groups, including Business in the Community, the Ethical Trading Initiative, the Roundtable on Sustainable Palm Oil and the World Wildlife Fund Forest and Trade Network. Membership of groups like these helps inform our thinking and allows us to exchange views with stakeholders on areas of common interest. Justin King, our CEO, and Anna Ford, the chair of our Corporate Responsibility Committee and Non-Executive Director, conduct five formal stakeholder meetings every year. One of these is dedicated to each of our five values and we use them to test whether we are pursuing the right strategy on certain issues and ask for advice if we are not. Developing and maintaining relationships like this helps us to gain a deeper understanding of complex issues, develop our business and manage our risks better. There will be times when we will take a different view from other external groups and we would never change our policies unless we believed that would help us serve our customers better. But we will always listen.

Corporate Responsibility Report 2010

Commitments & targets We are setting bold targets to drive real change on the most important issues facing our business. Our current commitments cover specific issues relating to each of our five values. They have been developed by reviewing our previous targets and activities, as well as the outputs of our materiality process and ongoing customer research. These commitments are not the only things we are focused on. We also continue to implement improvements across a much broader range of issues that, for us, constitute ‘business as usual’. These wider-ranging improvements are detailed throughout this report under the ‘Next Steps’ headings.

Governance Our values are part of the way we do business at Sainsbury’s. This is reflected in our corporate responsibility governance structure, as shown below. As you can see, members of our Operating Board have responsibility for each of our five values and they also sit on our Corporate Responsibility Steering Group:

Corporate Responsibility Report 2010

Our goal At Sainsbury's we will deliver an ever improving quality shopping experience for our customers with great products at fair prices. We will exceed customer expectations for healthy, safe, fresh and tasty food making their lives easier every day.

Corporate Responsibility Report 2010

Our reporting About our report This website covers the corporate responsibility activities of J Sainsbury plc in the fiscal year to 31 March 2010. The Report contains details of our five values, which are the guiding principles for our company. For each value, the website covers our approach to the key issues and progress in 2009/10, and our commitments and next steps for the future. The key issues were identified through a structured process, which incorporated stakeholder feedback and research. At the beginning of 2010, we changed the way we wanted to communicate with our stakeholders. Corporate Responsibility to us underpins the way we do our business and how we communicate our values. It isn't static, or a one-way push of information. And the publication of a 'CR Report' didn't fully represent the full extent of what we do and the people we work with on a daily basis. This website is the result of our new strategy for communicating about our Corporate Responsibility, which will have three ongoing activities:

Quarterly reporting Since January 2010, we have been reporting progress on our corporate responsibility (CR) initiatives with our quarterly financial updates. As our stakeholders become more knowledgeable about sustainability issues and how they affect the retail industry, they demand greater information about the claims we make publicly. Quarterly reporting allows us to be more transparent, timely and accountable for what we say and what we do. And most importantly, we believe that quarterly reporting will shorten the feedback loops with our stakeholders so that we can act and respond with increased agility.

Online content The information contained in the responsibility section of our website is Sainsbury's CR Report. This year we have integrated the report within the responsibility section of our website so that stakeholders can find all the information in one place. This allows people to pick and choose content of interest to them or select all of the web content as a customisable PDF file. This means that what you save and print is most relevant to you, and the most recent information available.

Connected reporting Since 2008, Sainsbury's has been a participant of the Prince of Wales' Accounting for Sustainability project, which is a business-led initiative to integrate non-financial metrics (such as social and environmental goals) so that they are connected to key financial targets and the long-term success of a business. The result is a more concise, rounded and balanced picture of our overall performance, which reflects our business strategy and the way it is managed on a day-to-day basis. This website, and the quarterly reporting, represents the first step in Sainsbury's journey to connected reporting. Over the coming months, we will further develop the framework so that investors, and all our stakeholders, have measurable assurance about Sainsbury's commitment to responsible business, which has guided our values for over 140 years. You can 'Create your own' report by using the report tools to save any page(s) and then print, email or download them as a PDF. There is also a summary of our CR activities in the J Sainsbury Annual Report and Accounts.

Corporate Responsibility Report 2010

Forum for the Future statement This report vividly brings Sainsbury's Corporate Responsibility programme to life. This report vividly brings Sainsbury's Corporate Responsibility programme to life. The sheer wealth and diversity of activity and initiatives that sit under each of Sainsbury's five values are a clear demonstration of Sainsbury's deep commitment to Corporate Responsibility. Despite continued economic uncertainty and the ever-price conscious consumer, it's heartening to see that 2009 saw key strands of Sainsbury's CR programme go from strength to strength. The highly successful Dairy Development Group model – a genuine partnership with UK diary farmers – has been extended to other key categories, including beef, pork and poultry. Sainsbury's also continues to be an important engine for local economic growth, with its commitment to the long-term unemployed of huge importance in these economically challenging times. 2009 also saw Sainsbury's step up a gear in terms of how it measures and manages its environmental impact. There are now ambitious targets in place for packaging and waste, and the company is on-track to meet its carbon reduction target, actually delivering an absolute reduction in direct emissions in the last year. This is an important achievement, although we would like to see ever more ambitious targets for Sainsbury's direct and indirect carbon emissions. It would also be in keeping with Sainsbury's stated ambition to lead the way to a low carbon economy to express such targets, for its stores, its supply chain and in its customers, in absolute terms. When it comes to its customers, Sainsbury's takes its commitment to be the 'best for food and health' extremely seriously. From helping its customers choose healthier ingredients, to enabling its customers to love their leftovers, Sainsbury's brings the health and well-being, and the broader sustainability agenda, to life for the millions of people that pass through its stores. Sainsbury's has the potential to encourage all of its customers to lead sustainable lives. This isn't just about health and nutrition though, this is also about helping customers reduce their environmental footprint. A key challenge for Sainsbury's is to deploy its' multiple, and hugely effective, communication channels with its customers to make sustainable living affordable and desirable. But what does sustainable living really look like for the mainstream consumer, both now and in the future? We're delighted to see that Sainsbury's is serious about finding the answer to this question, and is undertaking research with key suppliers in 2010, to provide the understanding and insights to accelerate the pace at which Sainsburys takes sustainability to its customers. Sally Uren Deputy Chief Executive Forum for the Future

Corporate Responsibility Report 2010

Our business

Promoting healthy eating and active lifestyles.

Corporate Responsibility Report 2010

Our goal is to offer our customers great quality food at fair prices and, as a leading food retailer, we are committed to being ‘Best for food and health’. Our approach is to inspire and help customers to eat a healthy, balanced diet by promoting healthy eating and active lifestyles. It’s also about making healthy, high-quality and tasty food easily available in our stores. But it’s about having clear and straightforward labelling that helps people make more informed choices. We were the first UK retailer to apply frontof-pack Multiple Traffic Light labelling in 2005 to all relevant products, making it easier for customers to make healthy choices at a glance. We recognise that customers consistently seek value for money which is why we focus on making healthy food affordable and inspiring customers to cook and ‘try something new’. Through our initiatives such as ‘Feed Your Family for a Fiver’ and the ‘Try Team’ we continue to help customers to cook on a budget and we encourage them to waste less food through initiatives such as ‘Love Your Leftovers’ and ‘Make the Most of your Roast’ tip cards. Nutrition is a complex and ever-evolving science, which makes it especially important to test the scientific rigour of our thinking with experts in the field. This is why we set up a Nutrition Science Advisory Group three years ago which is made up of external health and nutrition experts who provide us with advice and guidance on nutrition and health.

“We welcome the approach of using an independent panel of experts for advice and guidance on nutrition and health. This supports a commitment to taking responsibilities on health seriously by approaching such issues with scientific rigour.” Members of Sainsbury’s Nutrition Science Advisory Group

Commitments and progress Title Healthier baskets for our customers

Description

Progress

We will make the most popular items in our customers' baskets healthier, focusing on products that contribute the most saturated fat, salt or sugar to the UK diet, to deliver a real impact on the nation's health

Ongoing – we continue to make the most popular items in our customers' baskets healthier

Corporate Responsibility Report 2010

Commitments and next steps

Healthier baskets for our customers We will make the most popular items in our customers' baskets healthier, focusing on products that contribute the most saturated fat, salt or sugar to the UK diet, to deliver a real impact on the nation's health.

We will introduce calorie labelling into our cafes, across all foods so that our customers know how many calories they are consuming We will roll out to all stores where there is a pharmacy nutrition training to our pharmacists so they can help our customers with dietary advice and guidance We will launch an industry leading, online dieting service, which will help customers manage their weight responsibly, eat healthy food and incorporate exercise into their daily lifestyle We will host a live UK stakeholder debate on health and cooking to raise awareness of the important role cooking plays in tackling the UK's public health challenges We will define the percentage of promotions that are healthy and given prominence in store

Corporate Responsibility Report 2010

Our products We aim to make our products as healthy as possible without compromising on taste or quality. In order to do this, we employ a range of different methods, from reformulating the ingredients in products to providing better nutritional information on packs.

Making nutritional information clearer We are committed to providing clear nutritional information on our products, which helps our customers make informed choices about the food and drink they buy. In 2005 we were the first UK retailer to launch Front of Pack Multiple Traffic Light labelling (MTL) and we now have them on over 5,000 of our own brand products - more than any other retailer. These labels give customers at-a-glance nutritional information in a simple, accessible format, allowing them to make informed purchasing decisions. Our customers like Front of Pack labelling and our most recent research in May 2010 shows that: *92% of them are aware of our Multiple Traffic Light labels; over two-thirds (or 81%) are influenced by them when deciding what to buy and one third actively seek them out. In 2008 we extended the use of Multiple Traffic Lights to our online groceries website and our Kids range. The Kids labelling is specially designed for the needs of the children actually eating it. We know the Kids range is eaten by children as young as four, so we have adapted both the labelling and some of the formulations to reflect this. This means our Kids range meets some of the strictest nutritional standards in the industry. Although the Multiple Traffic Light system is very popular, there is still a lot of debate about the best way to convey nutritional information. We try to get the best of both worlds by including these labels on the front of our packs, as well as Guideline Daily Amount (or GDA) information on the back. * (Ipsos MORI Customer Insights Report, May 2010)

Corporate Responsibility Report 2010

Making our customers’ baskets healthier Making food healthier is about reducing some nutrients and increasing others. Some of these are too prevalent in a typical diet, while others are too low, such as fibre and omega 3. We have over 100 product developers and technologists working to progressively reduce levels of fat, saturated fat, sugar, salt and additives. They are also looking at removing some of the more common allergens so that our food can be enjoyed by customers with special diets. At the same time, we are improving on how best to communicate portion guidance to our customers so that they can better manage their overall food consumption.

Reducing saturated fat Fat reduction has always been a key point in our reformulation strategy. Back in 2007, we removed hydrogenated vegetable oil (the manufactured form of transfat) from all our products. Saturated fat intake remain high in the UK population so we have made this a key area of focus for us. Dairy products are one of the major contributors of saturated fat to the UK diet, which makes them a high priority for us. You can see from the case study how much progress we’ve made in this area. These are all real examples of our commitment to the UK Food Standards Agency’s Energy and Saturated Fat Intake Programme and to making our customers’ baskets healthier.

Case study Dairy We launched 1% fat milk in April 2008, and since then we have sold 64.3 million litres. Following this success of our own brand 1% fat milk, we have now introduced a branded organic version and a UHT version and together with our own 1% fat milk we estimate that we've helped our customers reduce their saturated fat consumption by over 140 tonnes*. We have worked over the past year to reformulate existing dairy products and introduce new, healthier ones: 1. In September 2009 we introduced fat percentage labelling on the front of our own brand yogurt helping customers make informed choices. 2. Starting January 2010, we re-launched a range of 20 cheese products, all of which have between 30% and 50% less fat than standard versions. 3. Since March 2010 our flavoured milk has been made from semiskimmed milk, not whole milk. 4. In June 2010, to help our customers manage portion sizes, we introduced portion markings on cream cartons. *Based on 12 months, sales of 1% fat milk, assuming all these customers transferred from semi-skimmed milk

Reducing salt We were one of the first retailers to set tough targets for salt reduction for our own brand ranges and have been reducing salt in these products for over 12 years. Salt reduction remains an important focus for us when developing and redeveloping products. The taste, safety and quality of our products is incredibly important to us and we strongly believe that our customers should not have to compromise; this is why we have a step-by-step approach to salt reduction. We are striving to achieve and make progress against the Food Standards Agency's original 2010 salt targets.

Corporate Responsibility Report 2010

Reducing sugar We are reducing the amount of sugar in our products wherever we can find a way to do so without compromising on taste and quality. For example, we have reduced the sugar content of all our own brand squash lines by 10%.

Removing additives For the past four years we have been working hard to remove artificial colours and flavours, flavour enhancers, intense sweeteners (excluding sucralose) and the benzoate group of preservatives from all our own brand food and drinks. We do not use the benzoate group of preservatives in any of our finished products, nor do we use flavour enhancers such as MSG and the only intense sweetener we use is sucralose. We have led the way in removing additives from our products and are particularly proud of our achievements in confectionary, soft drinks, breakfast cereals, stocks, gravies and yogurts. We were the first retailer to remove sulphite ammonia caramel (E150d) from cola drinks, and our lime cordial was the first to use only natural colour. We no longer use any of the colours identified in the Southampton study, and the only own brand foods that still contain artificial colours are our canned peas and mint sauce, and a small number of products containing cherries.

Allergies and intolerances We aim to be the first choice for customers with special diets, and were the first major retailer to develop a ‘freefrom’ category as far back as 2002. This has now been relaunched with the backing of major online and in-store support. We have improved taste, quality and packaging, and added over 100 new and improved lines. With 228 products in all, this is by far our biggest ever freefrom range. In addition, customers will now be able to print off monthly updated lists and our new coeliac leaflets from our website, which will make it easier for them to see which of our own brand products are suitable for their allergy or intolerance. *at February 2010 (Nielsen Market Analysis Report, February 2010; 52 weeks)

“We are very encouraged by the efforts of Sainsbury’s in improving the provision of gluten-free products for people with coeliac disease and in increasing awareness of the condition. More choice and better availability makes life easier for people who have to follow a strict gluten-free diet.” Sarah Sleet, CEO Coeliac UK

Case study Be Good to Yourself We re-launched our 'Be Good to Yourself' range in January 2010 and have now introduced 60 new and improved lines. The main focus was to make sure that our products tasted even better than they did before, even products like cheese, houmous and coleslaw, which are traditionally high in fat. We now have 250 lines in the range, from classic favourites such as chicken arrabbiata and sticky toffee pudding, to newer dishes like Singapore noodles all of them either less than 3% fat or with 30% less fat than a standard version. Within the range, 67% of products are low in saturated fat. It’s proving extremely popular already, with our market share up to 27.3%

Corporate Responsibility Report 2010

Promoting healthier lifestyles Our ambition is to be ‘best for food and health’. As it suggests, this is not just about supplying good, healthy, affordable food but also inspiring people to live a healthier life style.

We want people to try new food, and cook more of their own, balancing the food they eat with the exercise they take. This is why we have invested so much in our Active Kids scheme and why we try to inspire our customers to cook with confidence. There’s more on this in the ‘Making a Positive Difference to our Community’ section.

Affordability The recent economic situation has made people understandably more price-conscious. But that does not mean they want, or need, to compromise on the quality of their food. Sainsbury’s opened with a belief in ‘quality perfect, prices lower’, and this ethos is just as strong now as it was when we began in 1869. Eating healthily does not have to be expensive, and we have been encouraging customers to try our basics range if they want great quality at affordable prices. We extended the basics range last year, adding over 134 new lines. It offers such good value by, for example, using different cuts of meat, unusual shapes and sizes, or simpler packaging. Our brand standards and ethical values are the same for our basics range as they are for all our products. For example, all our fresh and smoked basics farmed salmon is 100% Scottish and meets the Freedom Food standard developed by the RSPCA. And all the products are free from hydrogenated fats and artificial flavour enhancers. In addition, there are 50 different ways for our customers to meet their ‘Five-a-day’ using basics alone. This means our customers can still have great quality food at affordable prices. Outside our basics range, we also use in-store promotions to encourage our customers to eat healthily.

Corporate Responsibility Report 2010

Case study Five-a-day We know it can be difficult to fit the recommended amount of fresh fruit and vegetables into a busy lifestyle, and the current economic downturn is not making that any easier. We try to help by:

Running frequent fruit and vegetable promotions on everyday items, as well as seasonal produce

Promoting 'mix and match' price offers

Locating our fruit and vegetables at the front of our stores, making them easy for customers to find

Making sure that over 25% of the 69 million Tip card recipes we printed over the past 12 months had at least one portion of Five-a-day fruit or vegetables

Using a special Five-a-day logo to help our customers identify products containing fruit and vegetables

Our overriding commitment is to help make it easier and more affordable for all our customers to get their Five-a-day. A recent survey showed that the average amount of fruit and vegetables eaten dropped to only 2.6 a day between 2008 and 2009*, the comparable figure for Sainsbury's customers has risen over the past four years to 2.84 a day. An example of where our values make us different. *5-a-day purchasing survey by Kantar Worldpanel, April, 2010.

Cooking There have been some quite marked changes in consumer behaviour during the economic downturn, and one of these is a willingness to cook more from scratch at home. Our Tip recipe cards have proved so popular that we have printed 69 million of them over the past 12 months. Over 25% of these recipes contain at least one portion of Five-a-day fruit or vegetables, and 50% feature healthier recipes, with only green or amber ‘traffic light’ ingredients. And at least two Tip cards in every set of 12 are aimed specifically at kids. We also have ‘Make the Most of your Roast’ and ‘Love your Leftovers’ Tip cards that encourage customers to use up their leftover food and save waste and money. 'We continue to inspire our customers through the award-winning Sainsbury's Magazine, with over 550 recipes created every year, as well as our quarterly customer loyalty magazine 'Fresh Ideas' which features 20 recipe ideas every month, along with information about new products and money off coupons. This year we launched the ‘Try Team’, a dedicated team of cooking ambassadors. They travel across the country visiting our stores and their local communities, inspiring our customers to cook. They are also online on our ‘Trynation’ website, which shows them cooking from our Tip card recipes, and bringing them to life. Another recent idea is the ‘Fool Proof Cooking’ range, which is aimed particularly at people who want to cook more, but don’t have a lot of time. Likewise the new ‘Ingredients for Cooks’ range provides easy-to-use store cupboard products to make classic dishes like Mediterranean risotto and Moroccan tagine, even when time is short.

Corporate Responsibility Report 2010

We continue to inspire our customers through the award-winning Sainsbury’s Magazine, with over 550 recipes created every year, as well as our quarterly customer loyalty magazine ‘Fresh Ideas’ which features 20 recipe ideas every month, as well as Jamie Oliver recipes, information about new products and money off coupons. Over the past three years our ‘Active Kids Get Cooking’ programme has reached 11,200 schools, providing teachers with thousands of pounds worth of free cooking equipment, lesson plans, cooking certificates and awards. There’s more information on Active Kids Get Cooking in ‘Making a Positive Difference to our Community’ section.

Case study Little Ones launch Our Little Ones baby and toddler club was launched in October 2009 and aims to provide parents of children up to four years old with targeted, nutritional advice and recipes through direct mail and a fully interactive website. All of the 180+ recipes are approved by the British Nutrition Foundation and our online experts like Dr Dawn Harper and nutritionist Sara Stanner (BNF) are available online to give the 300,000 registered users comprehensive health and nutrition advice for children. “Pregnancy, infancy and early childhood are vital times for getting a healthy varied diet. Mums and mums-to-be therefore need accurate, reliable and practical information regarding the best balance of foods and drinks to choose for themselves and for their children in order to support their health, development and general well-being.” British Nutrition Foundation

Corporate Responsibility Report 2010

Responsible sales Being ‘best for food and health’ means selling our food and drink in a responsible way. It’s about clear, accurate labelling, and doing everything we can to prevent children under 18 buying alcohol.

It’s also about ensuring that we place certain products in specific locations within each store and that we run ongoing promotions on healthier products. For example, we do not put confectionery at our main store checkouts, to reduce impulse purchases.

Alcohol We want to help our customers make informed choices about their alcohol consumption through clear and transparent labelling. We were the first retailer to place alcohol labelling on our own brand beers, wines and spirits, in advance of government guidance. The labels, which are approved by the Department of Health, are now on all our own brand alcohol products and include information on:

Recommended maximum daily intake

Number of units per glass

Number of units per bottle

Drinking while pregnant

The labels also direct people to the Drinkaware website for more information.

We now provide information on alcohol units at the point of sale. In October 2009 we launched our permanent alcohol education point of sale notices in all stores. The notices are designed to give practical information on units and measures helping our customers easily understand how many units are in the drinks they enjoy. We also recognise it’s important to offer our customers choice. We sell a number of low and reduced alcohol products to give our customers a range to choose from. We have had a 'Think 21' policy in place for some time, which means that our staff will check the age of any customer buying alcohol if they look under 21. Building on the positive feedback we received about this from customers and colleagues alike, we introduced a more rigorous ‘Think 25’ policy nationwide in September 2009. This was accompanied by new in-store signage for customers.

Corporate Responsibility Report 2010

We are committed to the Community Alcohol Partnership (CAP) model, which is a targeted approach to tackling under age drinking by bringing together retailers, police, local authorities, schools, clubs and the press. We chair the Retail of Alcohol Standards Group (RASG), which pioneered this model. Building on the success of the St Neots CAP, an agreement was reached with Kent County Council to roll out a county-wide approach to CAP. We lead the CAPs in Maidstone and Thanet. Independent research conducted by the University of Kent in 2009 found that in the three pilot areas included in the scheme, recorded offences of criminal damage fell by 28% overall. In one area of the pilot – Thanet – the proportion of residents who said they felt safe at night when walking alone increased by 10%.

Promotions and product placement Good promotions provide shoppers with better information, and encourage them to try new things. We are one of the UK’s biggest retailers of fresh fruits and vegetables, which are some of our most important products. We locate them at the front of the store and run frequent promotions on everyday items as well as seasonal produce. The biggest offers are on aisle ends at the front, making them immediately visible to customers as they enter the store. We are also great believers in the value of ‘mix and match’ price offers – offering, for example, a free bag of apples with every bag of pears.

Case study Sainsbury’s Cafés We are always looking to improve the healthiness of our café menu and provide more nutritional information. For instance, we have taken part in the Food Standards Agency’s calorie labelling trial in some of our stores to give customers full nutrition and recipe breakdowns for everything our cafés sell. We have also signed up to the Food Standards Agency’s Healthy Catering Commitments, making a number of commitments to improve the nutritional make up of our products. For example, we have now converted the cooking oil we use in the café to sunflower oil, which reduces the saturated fat in every product cooked in oil in-store. As a result we have reduced the saturated fat of these meals by an estimated 5 tonnes.

Corporate Responsibility Report 2010

Making Our Customers’ Baskets Healthier We made a commitment last year to make the most popular items in our customers’ baskets healthier, with a particular focus on our most popular 1,300 lines, and tackling those that contribute the most saturated fat, salt or sugar to the UK diet.

Some of our key results include: l

Extensively reformulating some of our most popular dairy products, as outlined in the Dairy case study, and launching a number of new ranges

Reformulating all of our own brand products to remove the benzoate group of preservatives and flavour enhancers, as well as artificial colours*

Developing 60 new and improved lines for our 'Be Good to Yourself' range, which was re-launched in January 2010 (please see full details in the case study)

Launching a range of products which are a good source of fibre, including ‘whole and white’ pasta

Reducing the sugar content of some of our most popular drinks, for instance by 10% in our squash lines

Making some of our most popular bakery products healthier, for instance reducing the fat, saturated fat, sugar and salt content of our most popular loaf cakes by an average of 13g sugar, 7g fat, 21g saturated fat and 40g salt per product

* with some exceptions, please see our 'Additives' section.

Working with our suppliers to ensure the sustainability of our products.

Corporate Responsibility Report 2010

‘Sourcing with integrity’ means forming mutually productive partnerships with our suppliers that help them raise environmental and social standards, and move towards genuine sustainability. It’s about fairly-priced products that are healthier for our customers and minimise the impact on the environment. And it’s about producing the food we sell in a way that is better for the animals, farmers and growers involved. Sourcing with integrity is central to our ability to deliver great products at fair prices. In practice it means working with our suppliers to ensure the sustainability of our products in the round, taking into consideration their economic, environmental and social impacts. In the past few years sourcing has become one of the most high-profile issues for our industry. Our customers are much more aware of where their food and household products come from, and they expect us to exert a positive influence on the firms and farmers in our supply chain. And that is exactly what we are doing. We offer over 30,000 total products in our stores – which makes sourcing a complex and challenging task. We have a team of Brand Sustainability and Agriculture & Health experts dedicated to improving the sustainability of the products we sell. We have also established a series of industry leading Development Group schemes designed to help our farmers and suppliers produce more sustainably. (Read more about our Development Groups) We have been supporting British farming for over 140 years, and we are committed to offering British products at their best, when in season and when the quality meets customers’ expectations. We have also been working more extensively with other farmers across the world, helping them improve their skills and position their businesses for the long term. As the world’s largest retailer of Fairtrade products, we know that we make a positive impact by not only providing trade but also through the payment of social premiums to local communities that improve schools, healthcare and local infrastructure among other projects.

Commitments and progress Title

Description

Progress

Being best for British

We will source great-tasting British products when in season, wherever these meet our customers' expectations for quality and authenticity

Achieved and Ongoing – we remain committed to supporting UK farmers and continue to source British products, both when in season and in certain categories all year round

Being number one supermarket for animal welfare

We will offer the widest range of higher welfare products of any UK retailer

Achieved – we both offer the widest range of Freedom Food higher welfare products and sell more than any other UK retailer

Sourcing responsibly and ethically

We will be the largest UK retailer of Fairtrade products (by sales value)

Achieved – we are the world's largest retailer of Fairtrade by value

Corporate Responsibility Report 2010

Commitments and next steps

Being best for British We will source great tasting British products when in season, wherever these meet our customers' expectations for quality and authenticity

Being number one supermarket for animal welfare We will offer the widest range of higher welfare products of any UK retailer

Sourcing responsibly and ethically We will be the largest UK retailer of Fairtrade products (by sales value)

We will continue the roll-out of the Development Groups to pork, beef, chicken and lamb suppliers

We want our five biggest-selling fish species to be MSCcertified or green-rated against our own sustainability standard by the end of 2010 Our long-term target is to have all our wood sources certified by the Forest Stewardship Council (FSC) and we aim that 90% of our wood products will be FSC certified by 2012 We aim to be the largest user of FSC-certified cork in the world by early 2011 We will only use certified sustainable palm oil by the end of 2014 We will work with informed stakeholders to research and identify best practice in water usage across our supply chain We are looking to expand the number of Fairtrade products across our ranges, in particular in chocolate We are aiming to increase the number of supplier visits we carry out every year, and open more non-food supply offices in the Far East, which will help us to get closer to our suppliers there

Corporate Responsibility Report 2010

Ethical trading and working in partnership Codes of Practice

We have two formal documents that cover the commitments we make to our suppliers, and the standards we expect of them in return.

We pride ourselves on having good supplier relationships. We were the first supermarket to implement a voluntary code of conduct that went beyond the obligations contained in the previous Supermarkets Code of Practice. We have consistently supported the strengthened and widened Grocery Supply Code of Practice (GSCOP) which came into force in February 2010 following the Competition Commission report into the grocery market. We made significant investments to implement GSCOP throughout our business. Our Supplier Handbook, which is issued to all suppliers, is our legally binding code of commercial practice. It incorporates GSCOP and also our 'Code of Conduct for Socially Responsible Sourcing', which includes the Ethical Trading Initiative (ETI) Base Code. Where there have been disagreements with suppliers about a particular trading practice or decision we have a proven record of effective internal escalation and resolution. We support effective GSCOP enforcement, but we remain of the view that an additional enforcement body is unnecessary, as the strengthened provisions in the GSCOP and the existing enforcement regime are already self sufficient and fully address the areas of concern identified by the Competition Commission.

Ethical trading Our customers want to be confident that the people who make our products are not being exploited, or exposed to unsafe working conditions. Our Code of Conduct for Socially Responsible Sourcing covers the employment practices we expect from our suppliers, both in the UK and abroad. We work with a number of organisations to ensure that we are able to support our suppliers to meet these requirements. For example, we continue to work closely with the Gangmasters Licensing Authority on the food side of our UK supply chain. They regulate the use of temporary labour, and we are signatories to their Supermarkets and Suppliers’ Protocol, which was published in March 2010. Our overseas supply chains present different challenges, including the use of homeworkers, ensuring the payment of living wages or ensuring workers donI’t work excessive hours. We are founder members of the Ethical Trading Initiative (ETI) and we are working with them and other partners to address issues like these, and develop collaborative best practice models. The ETI’s Homeworkers Working Group is a good example and is looking at how fair treatment, appropriate pay and decent working conditions can be ensured in a homeworking model. We are also currently working on a pilot project in Bangladesh, which looks at how our suppliers can improve their management, communication and productivity systems and become more efficient. We believe that this should result in an increase in wages for the workers. We conduct risk assessments on our suppliers to determine how much they need to do to comply with our standards. Lower risk suppliers will self assess against our Code of Conduct and higher-risk suppliers are required to have an independent third party audit.

Corporate Responsibility Report 2010

Supplier training We recognise our responsibility to support the skills and development of our suppliers to ensure they can continue to operate efficiently and meet our requirements for quality and sustainability. We achieve this through continuous dialogue and knowledge sharing as well as newsletters, supplier conferences and working groups. In addition, a formal training programme is provided to Sainsbury’s suppliers through our Technical Management Academy (TMA), established in 2006 in partnership with Campden BRI, a leader in food and drink research and training. Our technologists work with suppliers to identify where teams or individuals would benefit from training and the Academy provides a modular approach to tailor this to their needs. In the past year, over 150 additional suppliers have been trained in areas such as packaging, quality management and our key technical requirements. In addition, in 2009/10 we launched the TMA in China, where we trained over 100 suppliers based in Asia. We have taken all our non-food buyers and technical teams through detailed training in purchasing practices to ensure all our dealings with our suppliers are fair and ethical. Supplier capability is a key responsibility for our product technologists and they visit suppliers throughout the year to ensure exact quality and ethical requirements are met. Over 1,700 audits and site visits were conducted at Sainsbury’s suppliers last year. In early 2010 our first ethical non-food workshop brought together 60 clothing suppliers in London and we aspire to have all our non-food suppliers included in this by 2011.

Working in partnership One of the most important ways we are making progress in sourcing is through active collaboration with our suppliers and farmers, both in the UK and overseas. Our Development Groups and new Crop Sustainability Groups are practical working partnerships where we pool our knowledge about supply chains, and work together to develop the skills and resources our suppliers need. It is initiatives like these that set us apart from other retailers, therefore our values make us different.

Development groups Dairy Our Dairy Development Group was the first to be set up, and dates from 2006 and we invested £15 million to establish the group. In January 2010 we committed a further £40 million for use over the next three years. The aim of the Group is to help our 325 dairy farmers reduce their on-farm costs by improving efficiency, animal health and welfare and reducing their impact on the environment. In exchange for this commitment, we offer them a premium for their milk. The group focuses on four key areas: herd health and husbandry, environment and energy, collaborative working and business improvement. For example, we have developed a carbon footprinting tool specially designed for dairy farming, which has the potential to reduce farmers’ energy costs and also farmers’ carbon footprint by 10% a year. The tool was developed in partnership with the Carbon Trust and achieved the PAS2050 standard. For herd health and husbandry we use an 'outcome based’ system to ensure we focus on the cow’s health. The Dairy Development Group was extended in September 2009 to include 98 dairy farmers who produce milk made into cheese by Milk Link, the UK’s leading farmer-owned dairy co-operative and the largest producer of British cheese.

“The SDDG has undoubtedly made my farm more profitable, and if more farmers are joining the group, it can only be a good thing for the dairy industry.” William Goodwin, SDDG Dairy Crest farmer Pork, beef, lamb and eggs During 2009/10 we extended Sainsbury’s successful Development Group model to beef, pork, poultry, lamb, cheese and egg suppliers. We launched the new Pork Development Group, which is still in development but already includes 60 Taste the Difference farmers. The Woodland Egg Development Group was also set up in 2009, and includes 180 farmers from all of the UK regions. The Woodland Trust is working with us to provide Woodland Training days, which will help farmers maintain their trees, and start reducing their carbon footprint.

Corporate Responsibility Report 2010

Crop Sustainability Groups We launched our Crop Sustainability Groups last year. These are an extension of our well-established Crop Action Groups and use the successful Development Group model to cover Field Crops, Protected Crops and Orchard Crops looking in particular at climate change, carbon reduction through better energy use, water and soil health, pesticide reduction, biodiversity waste management and the welfare of people in our supply chains. Pesticides Our Pesticide Policy actively encourages our suppliers to minimise their use of pesticides, and employ Integrated Crop Management techniques. We know how vital soil health is, and we have and will continue to work with our suppliers through the Crop Sustainability Groups to develop best practice in this complex area.

Supplier feedback Communication and transparency are crucial to our relationships with suppliers and our trading and technical teams are in continuous dialogue with them. Good communication is a vital aspect of all our supplier relationships, which means honesty and transparency on our part, and a willingness to listen to feed back and then act. In 2009 we brought together around 1,000 supplier representatives at both our Trading and Technical Supplier Conferences. This gave suppliers the chance to share best practice, hear updates on our business strategy and share their own perspectives with our senior management team. Our technical teams are in constant contact with our suppliers and we have also run quarterly supplier ‘Talkback’ surveys since 2007. In addition there is a confidential and independent whistleblower hotline, Sainsbury’s ‘Right Line’, for colleagues, contractors and suppliers to report issues of concern. We will be launching something similar in some of our key factories in China in 2010.

Supplier Talkback survey How likely would you be to recommend Sainsbury’s as a retailer to work with (on a scale of 1-10): l

Own brand suppliers: 8.0 (up from 7.4 in 2008)

Branded suppliers: 7.7 (up from 7.4 in 2008)

November 2009 Ipsos Mori

We also communicate key technical initiatives, product development successes and business developments to our suppliers in our 'Working Together' magazine, issued to own brand suppliers every four months.

Corporate Responsibility Report 2010

Best of British We have been supporting British farmers for over 140 years. We are proud to offer high-quality British products, and we work hard to buy British whenever we can.

British products Our commitment to providing great-tasting British products means offering customers these products when they are in season, and at their best. In many cases we are buying a particularly large share of the total British crop, such as one third of all British apples and pears, and a significant number of our products are 100% British all year round such as our fresh chicken, eggs and fresh and UHT milk. We operate a strict country of origin labelling policy, and will only label meat as British if the animal was born, reared and slaughtered in the UK. If products contain meat that is not British, we label the product clearly to reflect this and include the country of origin of the meat. We recognise that customers today seek more information about the provenance of the food they buy. We are on course to be the first retailer to use 100% British flour in our own label sliced bread, matching our commitment to have 100% British flour in store bakeries. We sell nearly 40 million loaves of our own label bread every year, not including what we make in our in store bakeries. We are now sourcing an additional 1,500 tonnes of wheat from UK farmers every week – which is a real boost to the industry, and gives us a guaranteed traceable supply. In 2009 we launched the 'Best of British' apple bag, which gives customers the opportunity to discover more unusual UKgrown varieties such as Laxton Fortune, Jonagored and Cripps Red.

Corporate Responsibility Report 2010

Case study Concept Orchards Our Concept Orchards were developed as a way to help halt the decline of the traditional British apple and pear orchard. We are using the new orchards to develop new varieties and increase yields through new and innovative growing practices.

Apples l

We are the largest retailer of British apples in the UK, selling more than 200 million during the British apple season and over 45 varieties. One in every three British apples bought in the UK comes from a Sainsbury's store

We are the only retailer to sell Bramley apples that are direct descendants of the original Bramley apple tree

Our Concept Orchards project has helped us to increase yields from 20 tonnes per hectare to 60 tonnes

Pears l

We are the largest retailer of British pear in the UK, with more than a third of all British pears purchased in the UK sold through our stores

We offer at least five varieties of British pears and we are the market leader in British Conference pears

Our Concept Pear Orchard at East Malling is identifying which growing system is most productive under UK growing conditions

Supporting British farmers We work with 4,500 British farmers through partnership initiatives such as our Development Groups, Crop Sustainability Groups and Farm Connections schemes. These help the farmers who supply our business to become more efficient and make their operations more sustainable in the long term. They also give us a more sustainable source of high-quality produce. Read more about the different Development Groups and Crop Sustainability Groups

Corporate Responsibility Report 2010

We source 100% British for: l

Our milk

Our fresh and frozen chickens

The meat in our fresh sausages

Our fresh eggs, which are all from British cage-free hens

The potatoes in own brand crisps

The milk in our own brand dairy ice cream and yoghurt (except French set)

Our fresh turkey and duck

Our fresh ham (excludes Parma)

Our fresh farmed salmon and smoked salmon

Regional ranges We continue to see increased demand from our customers for regional products, primarily because they want us to help them support their local economy in this tough environment. Our dedicated Regional teams, along with buying offices in Scotland and Northern Ireland, continue to search out the best local products, and we currently sell over 3,000, both own label and branded. We have plans in place to grow this range in 2010 and beyond. In addition, we try to make it easy for our customers to seek out these regional and local products both within store, through press and leaflets and online. We are also helping local and small suppliers to develop their business where we see real potential. Last year, 11 Scottish suppliers successfully completed our Scottish Supplier Development Programme, which consisted of workshops and visits to stores and our Scottish depot. We have also helped transform small branded suppliers into national own brand suppliers where the products meet our customer expectations for quality. We continue to seek out new suppliers using our 'Supply Something New' programme and we are actively campaigning for new bakery and desserts suppliers to get in contact with us.

Case study Doherty and Gray Our supplier Doherty and Gray began their relationship with us by supplying local branded sausages for our customers in Northern Ireland. As this relationship has grown, they now supply us with our ‘Taste the Difference’ sausages in Northern Ireland and also supply our national lines including Butcher's Choice Beef Sausages. This has transformed their turnover with Sainsbury's from £20,000 to £5 million over a five-year period, enabling them to reinvest £1.5m into their factory.

Corporate Responsibility Report 2010

Animal welfare Animal welfare continues to be one of our customers' top concerns. They are looking for value for money, but they also want food that is reared to high animal welfare standards. We have been committed to this for many years and we were one of the first retailers to launch Freedom Food Chicken in 2004.

In February 2009 we became the first major retailer to stop selling eggs from caged hens, a year ahead of our 2010 target and more than two years ahead of Government legislation. On top of this, we are committed to using only cage free eggs as an ingredient by the end of 2011.

Woodland eggs and chickens We are the only retailer to offer high welfare Woodland eggs and chickens. These eggs are produced by hens that have the freedom to roam in an environment that closely matches their natural habitat. Two pence from every Woodland chicken sold, and one penny from every dozen Woodland eggs is donated to the Woodland Trust to support the planting of native woodland across the UK. In addition, all of our ‘Taste the Difference’ turkeys are 100% Woodland.

“The partnership between Sainsbury’s and the Trust has certainly come a long way since we first started working together in 2004. Not only has it been pioneering in pushing forward hen welfare, but has also led to more than 200,000 trees being planted. Thousands of these trees have been planted by schoolchildren and community groups through the Trust’s hedge and copse packs which Sainsbury’s now completely funds. So this coming year, 10,000 schools and 300,000 children living in the UK will be able to plant a tree thanks to Sainsbury’s contribution to the Trust’s work! This is an enormous achievement and one which will grow and grow as our relationship continues to develop. From a Woodland Trust point of view, we feel Sainsbury's is an ethical brand which we are very happy to be associated with. Together we really are making a real difference.” Sue Holden, Chief Executive of the Woodland Trust

Corporate Responsibility Report 2010

Freedom Food We are proud that not only do we offer the widest range of Freedom Food products of any UK retailer, but we also are the largest retailer of Freedom Food in the UK by value. This year, total Sainsbury’s Freedom Food sales have hit £143 million, according to Kantar Worldpanel, and 60% of our customers have purchased at least one Freedom Food labelled item in the past year. Sainsbury’s sells 62% of all Freedom Food in the UK, and sales have doubled in the past year. This comes despite tough economic conditions, with customers continuing to seek out value without compromising what they believe in. Sainsbury’s data shows that volume sales of Freedom Food chicken increased by 90% between 2009 and 2010 and it is growing at a faster rate than all other fresh chicken ranges. In 2010 we moved all our fresh and frozen duck to 100% freedom food (excludes prepared duck).

“It is clear farm animal welfare is of paramount importance to more people than ever before. And the fact that Sainsbury's customers have stood firm by animal welfare through some of the most difficult economic times only reinforces that it is an issue that is here to stay. Our thanks go to Sainsbury's for its continued commitment to Freedom Food and expanding the range, and its customers for increasingly putting welfare at the top of their shopping lists.” Leigh Grant, Chief Executive of Freedom Food

Corporate Responsibility Report 2010

Fairtrade We were the first major UK supermarket to offer Fairtrade food back in 1994, and we are still expanding our Fairtrade range. This makes a positive longterm difference to farmers, growers and local communities in developing countries across the world.

According to the Fairtrade Foundation, we are the world’s biggest retailer of Fairtrade products, with sales last year reaching £218 million. That equates to one in every four pounds spent on Fairtrade in the UK being spent at Sainsbury’s.

Fairtrade products We currently offer over 800 Fairtrade products, and now sell more Fairtrade bananas than all the other major supermarkets combined, according to Kantar Worldpanel. Our own brand tea is Fairtrade (except speciality teas) and all our own brand roast and ground coffee became Fairtrade in September 2009. We are still growing our range of Fairtrade clothing, and all our men’s and women’s standard T-shirts – our best selling clothing line – are made of Fairtrade cotton.

We offer 100% Fairtrade: l

Bananas

Sugar

Tea

Roast and ground coffee

Men’s and women’s plain crew neck T-shirts

Kenyan roses

Café tea and coffee

Corporate Responsibility Report 2010

Volume of Fairtrade bananas sold in the UK

Rest of the UK Sainsbury's

“Now farmers have one strong voice to talk to our buyers and leaders. We have one united platform which makes it easier to get health care and agricultural extension services, business training and to obtain micro finance loans. With this kind of organisation the quality and quantity of our products has greatly improved.” James Babumba, Chairman Fruits of the Nile Growers Association

The Fair Development Fund Since 2007, the Sainsbury's Fair Development Fund has been helping farmers and growers in the developing world benefit from Fairtrade, by setting up international partnerships between producer groups, NGOs and retailers. It supports small producers to increase their competitiveness and improve their sustainability and to raise their revenues by bringing new products to market. The Fair Development Fund is managed by Comic Relief and was launched with an investment of £1 million. Last year we launched new Christmas nut lines produced by Fair Development Fund farmers, and their dried fruit was used in bars sold to raise money for Sport Relief 2010. We have also helped fund the development of new Fairtrade standards for pulses and vegetables, with Fairtrade green beans launching in store this year.

Case study Fairtrade We were the first supermarket in the world to buy Fairtrade certified tea from Sukambizi in southern Malawi. This 6,000member co-operative received its first Fairtrade premium payment in May 2009 and it put towards subsidising purchases of fertilisers, which are often too expensive for small-scale farmers to buy. Used properly, they can raise crop yields by up to 30%. Some of the money is also being spent on the provision of piped water and training for farmers on good agricultural practice, soil management and sustainability. The co-operative members plan to use future premium money for projects like building schools, buying ambulances, providing electricity to rural areas and constructing safe play areas for children.

Corporate Responsibility Report 2010

Suppliers and the environment Climate change, water scarcity, over-exploitation of resources and unsustainable farming practices are all serious factors threatening our food security and the long-term sustainability of agricultural production.

Source: Marine Harvest

Our ability to continue to supply our customers with high quality food and drink at fair prices depends upon the long term sustainability of our business. Failure to address the social and environmental impacts of our food supply chain will, in the long term, undermine the economic success of our business. We can only have a genuinely resilient food supply if our products are produced and cultivated in a sustainable manner. We are already working with our suppliers to do just that – to manage key resources like fish, timber, palm oil and water more responsibly and minimise the impact on the environment. This is good for us, good for our customers and good for our suppliers too since it helps make their businesses more efficient and more sustainable in the long term.

Fish According to the ‘State of World Fisheries and Aquaculture’ report produced by the UN Food and Agriculture Organisation in 2008, between 75% and 80% of the world’s major fisheries are fully exploited, over-exploited or depleted. This is why we are so committed to sourcing our fish in a sustainable and responsible way. We offer the largest range of own label Marine Stewardship Council certified fish in the UK. We sell over 60 MSC products and in 2009 our sales of MSC-certified fish reached over £62 million, an increase of 65% on the year before. MSC certification is only available on some fish products, and in other cases we use our own unique fish sustainability rating system. We developed our traffic light sustainability rating system in 2006, by working closely with the Marine Conservation Society, suppliers, campaigners and industry experts. Our sourcing system considers the health of the fish stocks, how well the fishery is being managed and the impact of fishing on the environment. All our fish is now covered by this traffic light rating system, and we are on track to convert our top five fish species to green status by the end of 2010. These five species cod, haddock, tuna, salmon and prawns represent 80% of our sales.

Corporate Responsibility Report 2010

Highlights so far: l

We were awarded an ‘A’ rating in the Consumer Focus ‘Green Supermarket Survey’ in November 2009, achieving ‘Excellent’ in the fish category

All our fresh and smoked farmed salmon is ‘Responsibly Sourced’, 100% Scottish and meets the Freedom Food Standard

All our wild salmon is MSC-certified, including canned wild salmon

All our Yellowfin tuna is line caught

All our fresh and frozen haddock and Atlantic cod is line-caught, from responsibly managed fisheries in Iceland and Norway

All our canned tuna is caught by pole and line

Timber We are very aware of the important contribution trees have on our planet and communities. Forests cover 30% of the planet's total land area and six million hectares of forest are lost every year through deforestation and degradation. Trees are of paramount importance to our business and as such we have recently committed to plant one million trees over the next five years. We are working with partners like Woodland Trust to support UK woodland regeneration and national tree planting. We were a founding member of the WWF Forest and Trade Network, which is committed to responsible certification of the world’s forests. We expect our suppliers to hold detailed Chain of Custody for any wood or fibre used in our products so that we can be sure no illegal materials have been used. We are also working with our suppliers around the world to help build their capacity to manufacture products with sources that are traceable, from tree to shop. In 2009, 88% of the wood used for Sainsbury’s products was made from Forest Stewardship Council (FSC) or recycled sources. By the end of 2010, all the natural corks used to bottle our own brand bottles of wine, spirits and beer will be FSC certified.

“We continue to applaud Sainsbury’s commitment to FSC and the example it is setting by reaching such high percentages of FSC-certified timber-based products on their shelves. The decision to continue with natural cork closures deserves special praise. Others are turning to the screw caps and synthetic closures, but Sainsbury’s recognises that cork is one of the most sustainable of all natural products. A cork oak tree is happy to surrender its bark every nine years and will still live for centuries, throughout which time a cork oak forest helps to support a host of rare and endangered animals.” Charles Thwaites MBE, Executive Director, FSC UK

Corporate Responsibility Report 2010

Sainsbury’s products made from FSC-certified or 100% recycled materials l

Tissues

Cork

Toilet rolls

Paper tableware

Stationery

Kitchen towels

Christmas cards and wrapping paper (apart from metalised products where this was not possible)

Garden furniture

Barbeque charcoal and briquettes

Case study Forest Stewardship Council cork Natural cork is still used in a wide variety of wines, spirits and beers, and we sell over six million bottles sealed with cork closures every year. For the wines where we choose to use natural cork, we ensure that all the cork we use comes from sustainably managed forests. By switching the sourcing of our natural corks to FSC certified cork, we aim to be the largest user of FSC-certified cork in the world by early 2011. Cork oak trees have a unique ability to regenerate after their bark has been harvested, which means the forests create exceptionally valuable eco-systems. FSC certification looks in detail at a producer's conservation and harvesting practices, and is the best way to encourage biodiversity and protect this special environment for the long-term benefit of local communities.

Water Water is already a significant social, environmental and economic issue and is becoming more so. Unlike carbon, the impact of water use is specific to a particular locality. Knowing this, we are taking a leading and active role in industry groups like IGD, who are food and grocery experts, to promote a better understanding among our suppliers of the issues relating to water usage, both direct and indirect. We are also engaging with growers and local stakeholder groups in water shortage 'hotspots', through our Crop Sustainability Groups. We are developing a comprehensive Water Strategy and plan to launch it later in 2010. In the meantime we are working with our suppliers, farmers and growers to understand and improve their water efficiency and encourage better water stewardship by those firms that supply products where water use is a particularly sensitive issue.

Corporate Responsibility Report 2010

Carbon footprinting We are also building on our experience with carbon footprinting from the Sainsbury's Dairy Development Groups and are rolling out the tool to other species. This year we will be carbon footprinting beef, lamb, pig and poultry farms to help them reduce their energy costs and carbon footprint.

Palm oil Increased demand for palm oil is a major contributor to deforestation and climate change; this is why we have set ourselves the goal of using only certified palm oil across our entire product range by the end of 2014. In May 2008 our 'basics' frozen fish fingers were the first British supermarket food product to use palm oil from certified Roundtable on Sustainable Palm Oil (RSPO) sustainable sources. We were also the first retailer to make all of our own brand digestive and rich tea biscuits using only RSPO certified product. We sell over 300 million of these biscuits every year, so this is a significant contribution. Since we started using only sustainable palm oil in our 'basics' fish fingers, sales doubled within 12 months. We also want to make it easier for customers to see whether there is palm oil in our products, instead of using the more generic term 'vegetable oil' as many other companies still do. We were the first supermarket to identify palm oil on the labels of all fresh and chilled food and completed similar labelling on all Sainsbury's food products in 2009. All the same, we still need to source higher quantities of sustainable palm oil and as part of this effort we are working with our suppliers on the ground to drive industry-wide changes in sourcing practices. We have established our own tracker to identify the sources of palm oil in our own products. This has helped us to identify our top 20 major users of palm oil and we are now working with them to make the move to certified supplies.

“Sainsbury's has been a strong support in the development of the Roundtable for Sustainable Palm Oil (RSPO) since the beginning. By making its public commitment of using only certified palm oil by 2014, it sent a strong signal to the market. Sainsbury's is walking the talk on palm oil sustainability, setting an example to others.” Jan Kees Vis, President RSPO

“Sainsbury's can be proud of its record on palm oil. It is an active member of the Roundtable on Sustainable Palm Oil and it has been one of the earliest movers on sourcing certified sustainable palm oil - which is the only way to guarantee that the palm oil a company is using has not caused unacceptable forest loss or damaged valuable wildlife like the orang-utan. Sainsbury's scored well in WWF's Palm Oil Buyers' Scorecard in 2009, which reflects this good work and shows others that it is possible to do the right thing. However, like every other palm oil user, it still needs to do more to reach its target of using only sustainable palm oil by 2014.” Adam Harrison, Senior Policy Officer: Food and Agriculture, WWF Scotland

In the way we run our business and making it easy for customers to be environmentally responsible.

Corporate Responsibility Report 2010

At Sainsbury’s we are committed to reducing our impact on the environment and aim to be leaders in the UK for environmental innovation. This means being environmentally responsible in the way we run our business, using innovation where we can in stores, products and packaging but also making it easier for our customers and colleagues to make more sustainable choices. Climate change is one of the greatest challenges we all face. We source products from all over the world, which means we have an important part to play, both in the evolving environmental debate, and in doing what we can to reduce our carbon and wider environmental footprint. Every major business has both direct and indirect impacts, but in retail the distinction is particularly significant. It means we don’t just have to think about our own environmental performance, but need to take into account the carbon that goes into the construction of our buildings, and the environmental consequences of the products we sell and how they are used. During the past year we have evolved our approach on environment to a Climate Change Strategy. It divides the business into three elements: Our Operations, Our Products and Our Customers. In the past year we have been concentrating as much on the way our stores and distribution systems manage issues like waste, carbon and water as on our product range and the crucial work we can do to help our customers shop and live more sustainably. We have already been given an 'A rating' in the Consumer Focus 'Green to the Core?' survey which ranked the major supermarkets according to how easy they made it for consumers to go green. In the survey we were praised for having 'excellent sustainable farming and fish policies' and the 'high proportion of sustainable products available'. Looking to the future, our strategy will help us to put in place new targets, aims and ambitions in relation to our operations, products and customers to 2020 and beyond. To help us achieve our ambitions we are investing in a partnership to help secure our position as leaders in environmental innovation. In March 2010 we announced a new five-year partnership with Imperial College, London and the Grantham Institute for Climate Change. The aim is to research the latest ideas in engineering and building design, which could dramatically help us to reduce our carbon footprint. This might include developing ‘carbon positive’ stores or providing heat and recycled water to customers’ homes. We also hope to extend the partnership to help reduce the environmental impact of products, supply chains and packaging.

Corporate Responsibility Report 2010

Commitments and progress Title

Description

Progress

Reducing energy

We will reduce our CO2 emissions per m2 by 25% by 2012, against a 2005/06 baseline

Ongoing – our commitment on refrigeration, Eco-stores and reset programme are helping us to progress towards this target

Reducing packaging

We will reduce our own brand packaging weight, relative to sales, by 33% by 2015 against a 2009 baseline

Ongoing – making progress both incrementally through packaging redesign and through packaging innovation like milk bags

Reducing food waste

We will have all supermarkets and depots connected to a zero food waste to landfill programme by the end of 2009

Achieved and ongoing – we now have all of our supermarkets and depots connected to a zero food waste to landfill programme. In 2010/11, we will further embed this into the business by connecting our convenience stores to the programme and provide additional colleague training on zero waste

Reducing waste

We will have all supermarkets and depots connected to a zero waste to landfill programme for operational waste by the end of 2010

Ongoing – making progress by using our back-hauling process more efficiently and ISO14001 at depots. By the end of 2010, all supermarkets, convenience stores and depots will be connected to our zero waste to landfill programme

Corporate Responsibility Report 2010

Commitments and next steps

Reducing energy

We will install five new biomass boilers

We will reduce our CO2 emissions per square metre by 25% by 2012, against a 2005/06 baseline

Reducing packaging We will reduce our own brand packaging weight relative to sales, by 33% by 2015 against a 2009 baseline

As well as focusing on reducing our packaging, this year we will also be focusing on depot ready packaging to remove unnecessary packaging from the overall supply chain We will work with all the stakeholders to make more of our packaging recyclable We will launch hundreds more products where we have reduced the packaging

Reducing food waste We will have all supermarkets and depots connected to a zero food waste to landfill programme by the end of 2009

Reducing waste We will have all supermarkets and depots connected to a zero waste to landfill programme for operational waste by the end of 2010

We will deliver a new iconic anaerobic digestion partnership We will find a solution to diverting convenience food waste from landfill We will find a solution to colleague vending machine recycling We will work with Imperial College to develop innovative 'natural' building materials We will work with the packaging industry to further the use of recycled materials in packaging

Corporate Responsibility Report 2010

Reducing our carbon footprint – Our operations We are supportive of the Government’s leadership position to reduce the UK’s carbon emissions by 80% by 2050.

In practice this means we support the UK government’s attempts to make progress beyond EU targets through initiatives such as the Carbon Reduction Commitment. It is encouraging to see broad political agreement on the challenge of climate change. We welcome opportunities to work with Government where applicable and appropriate, though we recognise there are times when we are aligned and occasions where our interests differ or where the policy is less clear. In those circumstances we make our own informed decisions and commitments and take leadership positions beyond those set by Government. We are committed to reducing our carbon emissions and are on track against our target to reduce our store carbon footprint by 25% per m2 squared by 20121 . Using an updated measure of our total direct carbon footprint2 , our emissions this year were 844,234 tonnes. This year we have reduced our direct carbon emissions by 12,723 tonnes compared to last year and we have done this despite growing our supermarket space. The Carbon Trust verified this and we were given the Carbon Trust Standard at the end of 2009 in recognition of our achievements in reducing carbon emissions from our supermarkets.

Total tonnes of CO2 (Supermarkets only) Total tonnes CO2 (including Green Purchase)

Our aim is to be a leader in the journey towards a low carbon emissions and more sustainable economy, both within our own industry and across British business as a whole.

Corporate Responsibility Report 2010

Energy efficiency – Our operations The energy our stores use in refrigeration, lighting, heating and ventilation accounts for some 60% of our supermarket carbon footprint, which means energy efficiency is one of the single most important ways in which we can reduce our footprint going forward.

Energy efficiency of Sainsbury's supermarkets Kg CO /m2 (including Green Purchase) 2

One of the ways we are doing this is by continuing to push the boundaries on the use of new technology. In developing new stores we incorporate as many energy efficiency measures as possible so that they become standard features. We trial and then take advantage of the latest developments in building design such as natural lighting through sun-pipes, intelligent heating and ventilation systems and LED lighting in fridges. In the future we will be considering environmental and natural building materials. Using a range of innovations like this can make a significant impact on the energy efficiency of our stores. For instance this year we added an extension to our Durham store that created 50% more space, but cut overall energy use for the whole store by 10%. Add in the impact of biomass energy generation, ground-breaking refrigeration technology and wooden panel construction, and we believe our Durham extension will actually be "carbon-negative" after just two years. Improving our existing stores can be just as valuable as bringing in new technology. A good example is our Energy Reset programme. Over half of our main stores have now been through this programme, and nearly 5,000 individual energy savings initiatives have been identified since it started. The average energy saving for stores that were 'reset' last year was an impressive 17%. Reset will be extended to a further 60 stores in 2010/11 and we will also be running a trial of automated building management systems at 20 of our convenience outlets. Engaging our colleagues is another important way of tackling climate change, and one where small changes can add up to a significant difference. We encourage our colleagues to push for improvements at their own store by giving them access to a dedicated website, which has information about their local environmental performance. This means they can see how much energy their building is using, and how much waste it is producing. This allows our colleagues to target their efforts where they will make the biggest impact. Last year alone, the website had 12,000 hits. We are also very much aware that our 150,000 colleagues are consumers of energy in their own homes. This is why we are one of five major companies to have joined the ‘Insulate Today’ scheme, through which we offer the most cost effective home insulation deal in the market to our colleagues and is part of the Government’s ‘Act on CO2 ’ campaign (there is more on home energy efficiency in the case study). 1 Against a 2005/06 baseline. 2 Scope 1 and 2 of the Greenhouse Gas Protocol methodology.

Corporate Responsibility Report 2010

Case study Refrigeration Refrigeration accounts for approximately a third of our direct carbon footprint and even more than that when the necessary energy consumption is factored in. However, we will always need effective fridges to ensure that our products are kept fresh from field to fork, which also helps reduce unnecessary food waste. In 2009, we were the UK's first retailer to make a firm commitment to phase out harmful refrigeration gases from our stores, pledging to switch all our fridges to new CO2 technology by 2030. We have already earmarked 135 stores to use this technology by 2014 and it will now be installed in all our new stores. By 2030, this will help us cut our carbon footprint by more than a third. This is because the harmful gases we are replacing contribute far more to climate change than CO2 - 3,000 times more, in fact. Fridges also use a lot of energy and the new versions are more energy efficient. Our leadership announcement was recognised by Greenpeace UK: “Sainsbury’s announcement of a timetabled phase-out of these dangerous chemicals is a signal that their removal is economically feasible as well as environmentally necessary. The leadership the company is showing on F-gases stands in stark contrast to our political leaders’ timid reluctance to be the first mover on anything - they must learn from this.” Doug Parr, Chief Scientist, Greenpeace UK

Case study Our electric fleet With 70 in use already, we believe we have the world’s largest fleet of electric vans. They keep inner city air clean and the energy that powers them produces 100% less carbon than diesel at the point of use. They also use regenerative braking, which recaptures the energy used while the vehicle is slowing down to help recharge the batteries. We now have an electric recharge point network at our ten of our London stores, which allows customers to charge their electric vehicles free of charge, while they shop.

Corporate Responsibility Report 2010

Renewable energy – Our operations We want to use the lowest-carbon sources of energy as possible. Our primary approach is to reduce energy demand by installing conventional efficiency measures and then invest in renewable energy systems in our stores where possible. We have been trialling different renewable technologies since our first environmental store in Greenwich opened in 1999 including wind power, solar power and hydrogen fuel cells. We have five ‘environmental stores’ across the UK and most of these now have such renewable energy systems. One of the most successful innovations we have introduced has been to use biomass boilers and generators that use wood chip pellets instead of gas and so are much lower in carbon. By burning wood pellets in biomass boilers instead of gas we estimate that stores can generate up to 30% of their energy requirements from renewable sources. We have already installed six biomass boilers and have plans to introduce another five this year. We recently installed a biomass combined heat and power generator at our store in Westhoughton, which we believe is a European first. This will allow the store to generate not only its own heat but also its own electricity. Looking forward into the future we expect our stores to integrate more renewable energy technologies and continue to carry out trials and tests on the latest innovations. Across the business as a whole we now purchase 1% of our electricity requirements directly from renewable sources instead of buying from ‘green energy tariff’, and we aspire to increase this to 20% by 2012.

Case study Renewable energy Our new Westhoughton store is our first to be equipped with ‘clean’ refrigeration and we have also included a number of other environmental features designed to reduce our carbon impact. This includes the introduction of Europe’s first biomass generator, which uses wood pellets from renewable sources to generate heat and electricity to power the store. We predict that this will produce approximately 50% of the store's energy, making it one of the most carbon efficient stores in the country. Likewise, more than 90% of the waste generated during construction was reused or recycled rather than being sent to landfill. Other environmental features at Westhoughton include: l

A rainwater harvester that will provide water to flush the toilets

‘North lights’ that are north-facing windows designed to maximise daylight

Automatic dimmer to reduce energy use on brighter days

LEDs in place throughout the store and car park – another first for Sainsbury’s – which use less energy

Blinds over our fridges that can be pulled down at night. This saves 5% on our energy consumption per year, which is the equivalent of making 2.5 million cups of tea

The retrieval of cold air from our fridges that is re-used to keep the checkout areas cool

A ‘cyclepod’ that makes it easier for customers to shop by bike. The cyclepod is made from over 12,500 recycled aluminium cans, which has saved enough energy to power a TV for 600 hours

Energy monitoring via web-based technology that shows how much energy is being consumed in each part of the store

We are working to implement the same high energy management standards at all our stores, including a trial of automated building management systems at 20 convenience stores.

Corporate Responsibility Report 2010

Water – Our operations We want to use less water and our aim is to cut usage by 50% per m2 of sales area by 20123. This starts with a programme to assess water consumption in both stores and depots, which helps us identify leakage areas and possible watersaving projects, like reclaiming the water used in our car washes. We are fitting low-flush toilets, waterless urinals and percussion taps in all our stores. Rainwater harvesting is also now a standard specification for new stores. Once again, engaging with our colleagues is making a huge difference here. We are encouraging colleagues across the business to help us save water, both those on the shop floor, and those with specific responsibilities in areas like facilities management.

Logistics – Our operations Moving goods from suppliers to stores is a complex process and involves moving products via sea, air, rail and road to our depots and then to stores. This process of course contributes to our carbon footprint. At the same time, our depots, like our stores, use energy and water and must therefore be managed as efficiently as possible. All of our depots are certified to the environmental management system ISO 14001, which provides the framework for us to manage our impacts more effectively. Efficient logistics operations are delivered by ensuring that the right stores are linked geographically to the right depots, which helps to reduce transport miles in the first place. Other initiatives such as introducing double-decker lorries allow us to transport more food in a single journey and we also train our drivers to drive in the most efficient way possible. We have completed the introduction of our industry leading Integrated Transport Management System to help cut our CO2 emissions across both our primary and secondary transport operations. In our primary operations (supplier to depot) this year we are more effectively utilising empty trucks that pick up produce from suppliers en-route back from store deliveries. In our secondary operations (depot to store) we have reduced our CO2 per 1,000 cases transported to 121.6kgs per 1,000 cases transported this year, a reduction of 6.4% on the year and nearly 16% over the last 5 years, meaning we have already reached our 2012 target. By utilising both our own and suppliers' fleet more efficiently we have delivered a reduction of around 1,174,046 vehicle kilometres this year. 3 Against a 2005/06 baseline.

Corporate Responsibility Report 2010

Reducing Waste - Our operations We are committed to reducing the amount of waste we create in the first place, by being more resource efficient. We do this through better stock control management and more accurate sales forecasting.

This ensures that our stores stock the right quantity of food to satisfy customer demand at any one time. If we are then left with excess food, we sell as much of it as possible at a discount, which keeps waste to a minimum. The final step is to re-use what we can by donating surplus food to local charities such as FareShare (there’s more on this in the section on Making a Positive Difference to our Community). Only at this stage do we consider what is left ‘waste’. We are working towards zero waste to landfill, and are well on track to complete the first phase of this journey by connecting all our stores and depots to anaerobic digestion or combustion plants by the end of 2010. It is our ambition to be a zero waste business overall, by finding new ways to re-use or recycle not just food waste but operational and construction waste. As signatories we are committed to helping WRAP achieve Target 2 of the Courtauld Commitment 2, a 5% reduction in food and drink waste within the supply chain.

Reusing waste – Our operations While our first aim is to reduce waste as much as possible, we next try to find opportunities to re-use it. Under our Zero Waste to Landfill programme we have connected all our main stores to our zero food waste to landfill network where we send food waste back to our depots. The waste is then collected together and sent to anaerobic digestion or combustion plants. As a result, we are now diverting nearly 30,000 tonnes of food waste from landfill every year, and will be extending the network to our convenience stores during 2010/11. Looking to the future, we hope to send all our food waste to anaerobic digestion, because we believe this is a more environmentally sustainable solution than combustion. Finally, our depots and new store development programme are also part of the Zero Waste to Landfill programme and through the use of the ISO14001 management system we are reducing and reusing operational and construction waste.

Waste diverted from landfill Diverted from landfill Landfill

Corporate Responsibility Report 2010

Recycling waste – Our customers This is another area where our colleagues and customers play a huge role. Every year colleagues recycle 125,000 tonnes of cardboard and 8,500 tonnes of plastic film, plus all of our point-of-sale materials and office paper. Working in partnership with bio-fuel suppliers we also recover and recycle over one million litres of cooking oil annually from our stores. We were the UK's first retailer to offer battery and light-bulb recycling facilities to customers in every store, alongside more general recycling bins. Over a quarter of a million batteries have been recycled since this started in February in 2010, which is more than any other UK supermarket. We also now recycle customer mobile phones, satellite navigation devices, printer cartridges and clothing. This is only one way in which we try to encourage our customers to recycle more themselves. We also use the widely recognised 'on pack recycling logos' on most of our own brand products and we are the only UK supermarket to offer recycling facilities for polythene packaging like grape, cereal bags and plastic carrier bags. In fact, we led the first ever mixed plastics recycling trial in the UK, funded by WRAP. The aim was to identify the most practical and economical way to collect different types of plastic packaging at a single collection point. We are now awaiting the final results of the trial. This is all good progress but there are some things that remain real challenges beyond our control. For example, we are trying to reduce the volume of our packaging and make as much of our packaging recyclable as possible, but local authorities who manage recycling at our stores cannot offer a single, national and consistent collection scheme nationwide. This makes it very difficult for our customers to know exactly what they can recycle and makes it difficult for us to communicate a clear, 'one size fits all' message about recycling. We will continue to work with Government to find a satisfactory solution to this problem.

Carrier bags – Our customers We know that plastic bags are a concern for many people and our customers, colleagues and stakeholders often tell us they would like us to do more to reduce the number they use. We believe that encouraging customers to change their behaviour is the best way to reduce the numbers of bags, rather than introducing a ban or tax. In 2009 we successfully contributed to the retail sector voluntary initiative to reduce the number of bags given out by 50% and all our bags have a lower environmental footprint with 50% recycled material. We encourage customers to reuse their bags by giving them a Nectar point each time they reuse either their own bag or one of ours. Last year, we gave out approximately 70% more Nectar points than the year before for bag reusage, a total of over 462 million. We have also seen a 12% increase in the sale of our 'Bag for Life' range which further shows our efforts at helping customers to reuse bags are having real results. We are now trialling new signage to remind customers to bring their bags from the carpark.

Corporate Responsibility Report 2010

Working with our suppliers - our products The food and drink supply chain is an important part of the UK economy, but there’s no denying it has some significant environmental impacts.

For example, according to the Government's Food 2030 report, published in 2009, around 22% of UK greenhouse gas emissions are related to food production and consumption. We completely accept that a company as large as ours has a responsibility to do what it can to make a positive difference here. We want to be part of the answer, not part of the problem. Using water to grow crops is a necessary part of the food supply industry but we are all too aware of the scarcity of this precious resource and the pressure this puts on the world’s ecosystems. We take water reduction in our supply chain very seriously and even though this is a complex issue involving many stakeholders we are actively working with our suppliers, particularly in our crop supply chains, to map our key water hotspots. Our long-term aim is that our products should have the lowest embedded water footprint possible. Reducing the embedded carbon in products is another huge issue and, like with water, we are seeking better ways of working with suppliers. Our pioneering Dairy Development Group proves that reducing carbon can actually help suppliers become more profitable (see Sourcing with Integrity section) and we are rolling out the same approach with our other key raw materials supply chain both in our food and non-food business. For more information on our suppliers and the environment please visit our Sourcing with Integrity section.

Packaging We believe we are pushing the boundaries on packaging reduction and our target, a 33% reduction in packaging by 2015, is the most stretching in the retail sector. We have been introducing packaging innovations in our ranges for many years, but this year we've made some major improvements to our biggest-selling products. We are now selling our 'basics' tinned chopped tomatoes in Forest Stewardship Council tetrapak cartons rather than cans, reducing packaging by half a million kilos every year. This is the biggest selling non-fresh item in the store, which makes it the first time such a high-volume tinned product has ever been switched to cartons. This is the latest innovation in our 'basics' range and will reduce carbon emissions by 156 tonnes per year – not least because it will require fewer journeys to transport the same quantity of product. This year alone we made a 4.4% saving in packaging weight towards our target, which is the equivalent of an estimated 8,000 tonnes. Significant packaging successes with our range that have contributed to this saving include: l

Selling 'basics' white and dark rum in a plastic bottle, which is an 85% packaging reduction, saving an estimated 118 tonnes of packaging per year

Redesigning our egg boxes to reduce packaging by 9.4%, saving nearly 19 tonnes of packaging per year

Reducing the outer sleeve on chilled ready meals, saving 34 per cent of packaging or 33 tonnes of packaging per year

Removing the box from both our own brand Cornflakes and Fruit and Fibre, saving 126 tonnes of cardboard per year

Cutting the packaging on the family biscuits selections, which means 70% less packaging per 100g of biscuits

Corporate Responsibility Report 2010

Case study Milk bags Milk is one of our best-selling products, selling over 436 million litres a year. Our semi skimmed or ‘2% milk’ is particularly popular. Milk bags offer customers an alternative to plastic bottles and are a great way to reduce the plastic involved in packaging this essential product. Bags are now used by around 60% of consumers in Canada, the US and Australia. The UK has been slower to adopt them, but we led the way in rolling them out to all our stores. The two pint version uses 75% less packaging than the equivalent plastic bottle and if all our customers switched from bottles to bags it would save 1400 tonnes of packaging every year. The bags will also save customers money and will be easy to recycle at any of our stores. Since launching the milk-bags, sales have exceeded expectations and now account for over 10% of all our milk sales - which demonstrates that customers really like the lower packaged version. Alongside the bags, we are now planning to use 10% recycled material in our plastic milk bottles. We will be the first big retailer to do this and it will save 900 tonnes of virgin packaging a year.

Case study One Stop Energy Shop In December 2009, Sainsbury's Energy took its first steps towards creating a 'One Stop Shop' for customers' home energy requirements. We are working in partnerships with EDF Energy to pilot three Home Energy Centres in our Watchmoor Park, Kidderminster and Glen Road Stores where customers can buy a range of renewable products and services. As a result, we are now the first UK retailer to sell solar PV systems, solar thermal and air-source heat pumps, as well as other services that help customers save money and energy, like energy contracts, DIY insulation, fitted insulation and home energy audits. Since the launch we have completed over 900 audits and 80 micro-generation surveys. We have also launched a scheme called the Sainsbury’s Energy Savings Challenge, every customer that signs up to Sainsbury’s Energy will automatically join this scheme, and will receive regular information, tips and advice on how to save money on their energy bills and reduce their own carbon footprint.

Providing great service, quality products and being a good neighbour.

Corporate Responsibility Report 2010

Our stores are at the heart of the communities they serve. For us, this is not only about providing great service and quality products, it's also about making a positive difference to our communities and being a good neighbour. There are practical and economic aspects to this, as well as charitable ones. We provide local jobs for local people, we buy from local suppliers and we help to protect the local environment and make it safer. We support good causes through our Active Kids and Local Charity of the Year schemes and our longstanding partnership with Comic Relief.

Commitments and progress Title

Description

Progress

Generating a positive economic impact on communities

We will provide 6,500 new Sainsbury's jobs in 2009/10 through our planned opening of 28 supermarkets and 55 new convenience stores

Achieved – over 6,500 new jobs were created by opening 38 new supermarkets and 51 new convenience stores

We will provide 6,500 new jobs in 2010/11 through our planned opening of 17 supermarkets and over 75 new convenience stores

New commitment

Supporting local communities

We will launch our Local Charity of the Year scheme, linking every store, Sainsbury's depot and our support centres to a local charity partner each year

Achieved – we have supported over 750 local charities through the scheme this year

We will support community based fundraising and colleague volunteering, encouraging our customers and colleagues to make a positive difference in the local community

New commitment

We will offer local groups and charities space in our stores to support community activities and events, helping bring the community together

New commitment

Corporate Responsibility Report 2010

Commitments and next steps

We will provide 6500 new jobs in 2010/11, through our planned opening of 17 supermarkets and 100 new convenience stores

We intend to expand our Employer Supported Policing intitative subject to agreement by launching a pilot in the east of England. This will see Sainsbury's colleagues volunteering to be special constables and being given time to conduct their police duties in combination work with their Sainsbury's work

Supporting local communities

We will host community meetings in our stores to help bring community groups together and discuss local issues

Generating a positive economic impact on communities

We will offer local groups and charities space in our stores to support community activities and events, helping bring the community together

We will encourage local community groups to use our stores as a safe place to meet We will support community based fundraising and colleague volunteering, encouraging our customers and colleagues to make a positive difference in the local community

Corporate Responsibility Report 2010

Our economic impact Any company with 150,000 colleagues and over 800 stores is always going to make a major economic impact and even more so in tough economic times, when other sources of employment are being stretched or reduced.

We have an ambitious new store development programme for 2010, which will provide 6,500 new jobs, new opportunities for local businesses and the prospect of some important improvements to local environments and facilities.

Engaging with our communities Like any other form of communication, good engagement is a two-way process, with benefits to both sides. By listening to the people in our communities we get a better understanding of what they want from our stores and they get the opportunity to tell us about any issues they would like us to address. Early and thorough consultation is always a central part of any planned store development or expansion. A typical consultation programme starts with a series of meetings with local groups and key figures like the local authority and local community leaders. We follow this up by publicising details of our proposals through leaflets, dedicated websites and a free telephone service. The next step is a public exhibition over 2-3 days, which we advertise to the community through thousands of invitations and adverts in the local media. We want to show people that the store will complement their town and illustrate how it could attract further investment into the area. It's only after this event – and after we have gathered all the feedback from it – that we go ahead with a formal planning application.

Corporate Responsibility Report 2010

Case study Engaging with local communities – the Wombourne new store consultation In late 2007 we hosted a public exhibition to unveil plans for a new food store in the village of Wombourne, near Wolverhampton. Following consultation with local people, a planning application was submitted, but despite high levels of public support our plans were initially rejected by the council. The plans were then improved, taking into account feedback from the council and the local community. The size of the food store was reduced, a customer café added and new ideas incorporated, such as a 'hopper bus' and local traders' website, which would promote links to the shops in the village centre. Consultation with local residents and traders continued and the latest proposals were explained at a large public meeting as well as at a series of smaller ones. Later that month the new plans were unveiled, supported by a 700strong petition from local residents. As a result, the Council granted planning permission in summer 2008 and the store opened in spring 2010.

Economic regeneration Last year we created around 6,500 new jobs in 38 new supermarkets and 51 new convenience stores across the UK. This was on top of the 15,500 temporary jobs on offer in our stores over the Christmas season. Similar to last year, we expect to create around 6,500 new jobs at 17 new stores and 75 to 100 new convenience stores in 2010/11, which will make a significant contribution to the UK economy. In addition, through our store openings and extensions we have indirectly created jobs in construction, engineering and other disciplines. Our recently launched Supplier Trainee Partnership scheme works in conjunction with sixty of Sainsbury's top construction, engineering, facilities management and retail suppliers to provide training and employment. When we develop a new site, it's not just about building a new supermarket. It often includes investment in local roads and pedestrian access, as well as other new facilities like shops, sports centres and community centres. We also look to work with local suppliers where we can – local companies and producers are currently supplying us with over 3,500 products, and we would like to see this number increase.

Corporate Responsibility Report 2010

Our social impact Being a good neighbour is about more than the positive economic impact we bring to communities.

We work with local charities and community groups to support local good causes and larger nationwide charities like Comic Relief and the Scouts, to name but two. We also support disadvantaged groups and help tackle some of the social problems we all face, like childhood obesity.

Local Charity Our 'Local Charity' scheme lets our colleagues and customers select a local charity to support each year. Nominations are taken in the store, and our local Colleague Councils selects three charities that they feel address local needs. One charity is then selected from these three by our colleague councils. After positive feedback from customers and colleagues, we will be running the scheme for the second year in 2010. We will support and encourage our colleagues to get even more involved through volunteering and fundraising.

Case study St Anne's Hospice Last May, the Colleague Council at our store in Romiley, Manchester, picked St Anne’s Hospice as its local charity partner. The store manager, Allen Wales, organised a 10km Manchester Midnight Walk to help raise funds and over 100 colleagues took part, raising £100 each. This figure was matched by Sainsbury’s, resulting in a total of £20,000 for the hospice. “Working with Sainsbury’s has been such a positive experience.” Chrissie Baldock, responsible for fundraising at the hospice

So far, we've supported over 750 local charities through this scheme and as we promised in our 2009 report, all our stores and depots are taking part. These partnerships have helped us raise over £1 million for charity and our colleagues have volunteered over 3,500 days, equivalent to nine yearsbetween them. The scheme has also helped us raise awareness of our community activities with both customers and colleagues – our Talkback survey shows that this has risen by over 4% among our own people.

Corporate Responsibility Report 2010

Case study South Camden Community School Last year we set up a partnership with South Camden Community School in north London to help it to relaunch its ‘Behaviour for Learning’ programme. This is about finding better ways of working for the leadership team that will ultimately improve overall school performance. We shared some of the things we have learned as a major retailer and helped the school get local government funding. Some of our graduates also ran a workshop for year 7 students starting at the school. We have expanded our involvement in 2010, with a mentoring scheme for sixth-form students. “The partnership which we have been developing with Sainsbury’s over the past two years has been extremely beneficial to the staff and students of SCCS in many ways. The support Sainsbury’s has been able to offer – including organisational development, staff training and primary-secondary school transition as well as individual mentoring and work experience for students – has been extremely effectively targeted.” Rosemary Leeke, Headmistress, South Camden Community School

'More than just a store' Being part of our local communities can mean a lot of different things. We pride ourselves on providing efficient, well-run supermarkets with everything local people need for their weekly shop. This is a good place to start, but we feel we have more to offer the local community. At their best, our stores are genuine community spaces, where people can access a whole range of different services and meet together in a safe environment. Our shorthand for this is 'more than just a store', and it's the reason we have opened seven police offices at our stores in Maidenhead, Ealing, Milton Keynes, Taplow, Leamington Spa, Fallowfield and Lordshill in Hampshire – the latter is the first to be situated right inside the shop. Having the police on-hand like this every day helps make our stores a genuine hub for the whole surrounding area. During 2009 a new Metropolitan Police Training Centre was opened at our store in Barkingside, east London. It's located directly above the store, which means that they get a free training facility in the heart of the neighbourhood and we get the reassurance of a local police presence, which is very much welcomed by our customers. We have extended our offer of partnerships with the police to all suitable new and refurbished supermarkets. The idea of 'more than just a store' extends to a whole range of other community activities. It's about inviting the community to use our space (from scout groups to speed dating), and going out into the neighbourhood ourselves, which might take the form of mentoring local schoolchildren, visiting the elderly, or volunteering for local charities. We have also hosted 'community dinners' with local stakeholders in three different locations recently. They are a great opportunity to get to know people better and understand any issues they may have. We will be doing more of this across the country in the coming year. We look forward to working together on further initiatives to get Scouts in store and together to put fun and value-added volunteering into communities.

"The Scouts are really pleased with our synergy with Sainsbury's, both nationally for brand and mission, and locally for community engagements. As a growing, fun-filled and active movement for all the family, we share many values with Sainsbury's. Our Big Adventure this year is outdoors activity, healthy eating and recruiting volunteers: Sainsbury's support has been tremendous. Our local groups' involvement with in-store bag-packing and the Active Kids programme across the UK has really helped them provide the equipment and opportunities that give young people their 'everyday adventure'. Derek Twine CBE, Chief Executive, Scout Association

Corporate Responsibility Report 2010

Active Kids Childhood obesity remains a serious concern in the UK. There is no quick and simple answer to this, but it can be tackled long term by encouraging children to eat more healthily and to take more exercise. This means getting the right balance between 'energy-in' and 'energy-out'. This is what our Active Kids scheme is all about. Active Kids is based on providing vouchers to customers that schools and other organisations can exchange for sports, cooking and gardening equipment, and active experiences. Last year over 39,000 nurseries, schools, Scout and Girlguiding groups across the country took part in Active Kids, and we donated £16.8 million of equipment and experiences. That brings the total to over £86 million since 2005, which means we are on track to deliver our commitment of £100 million by 2011. Our Active Kids Get Cooking scheme is the largest food award scheme available to UK schools, with over 13,000 now registered. We are helping all these schools teach children about cooking and healthy eating, and we are continually adding to and improving the scheme. Active Kids Get Cooking scheme is a partnership between Sainsburys, the Design and Technology Association, and the British Nutrition Foundation. There's more information at www.activekidsgetcooking.org.uk As part of our commitment towards getting the right balance between 'energy in and energy out', we recently ran a pilot with nine schools in Burnley, providing them with the food and supplies they need to run breakfast clubs. It was a great success and showed the children how important it is to start the day with a proper breakfast, so they are ready for the day and can channel all their energy into learning.

Case study Sainsbury’s UK School Games Sainsbury's Active Kids is the main sponsor of the UK School Games. We are excited to be part of this huge event for schoolage athletes, which brings together some of the UK’s most talented young sports people. This will give them a real life experience of a major sporting event and help them to prepare for future success in their discipline. The 2010 UK School Games will be held in September and will involve over 1,600 young people in ten sports: athletics, badminton, cycling, fencing, gymnastics, hockey, judo, swimming, table tennis and volleyball with three disability events in swimming, athletics and table tennis.

Corporate Responsibility Report 2010

Comic Relief We have been the official supermarket sponsor of Comic Relief for 11 years now and we are also their largest corporate partner, having donated over £48 million since 1999. The Sainsbury's Sport Relief Mile 2010 was the biggest ever, attracting more that 175,000 participants in more than 330 mile events up and down the country. We ordered 90 tonnes of Fairtrade certified cotton to produce the Sport Relief merchandise, which included a range of tshirts exclusively designed by the Beckhams. Our colleagues raised over £1.8 million, which contributed towards the total of more than £5.4 million donated to Sport Relief this year.

“We are absolutely delighted with the £5.4 million raised by Sainsbury's for Sport Relief 2010, taking the total raised for Comic Relief by Sainsbury's to date to a staggering £48 million. Our 11 year partnership continues to go from strength to strength thanks to the fantastic ongoing commitment and enthusiasm of each and every Sainsbury's colleague.” Kevin Cahill, Chief Executive of Comic Relief

Case study Visiting Comic Relief projects in Bangladesh Over the past year we gave some of our top charity fundraising colleagues the chance to see for themselves what difference their efforts can make. We took some of them to Bangladesh to see some of the Comic Relief projects being funded there. Here’s what some of them had to say: “We started by visiting the main railway in Dhaka. Right beside the track we saw families living in squalor; we walked past what looked like a bundle of rags, but were actually people asleep. Round the corner, however, was hope. The Aparajeyo project offers a 24-hour shelter for children to live in. It was amazing to see how our fundraising can stop these children having to live on the street.” Mike Sullivan, Holborn Store Support Centre “On the way home I couldn’t help but feel proud about the difference our fundraising is making to people’s lives. The extremes that people are dealing with was mind-blowing, but the work the projects do with the money we raise is life-changing. It’s really inspired me to get more involved this year.” Kevin Davies, Bexhill Store Other visits took place in the UK, where much of the funding raised by Comic Relief is spent.

Corporate Responsibility Report 2010

Food donations We have been donating surplus food to local charities since 1998, and in the last year alone we gave over £1.3 million worth to a network of organisations across the UK. At present we have 800 stores working with local charities who take and actively use our surplus food. We always endeavour to work with local charities but when it is not possible we work with FareShare. FareShare takes on the distribution of food that is past its sell-by date, but within its use-by date. Not only is this a great way of making a positive difference, it also reduces the waste we send to landfill, builds stronger relationships with local charities and helps our stores get a better understanding of some of the issues in their community. We are also encouraging our suppliers to do the same.

“The partnership with Sainsbury's has continued to be central to the impact and growth of FareShare over the past 12 months. Sainsbury's has made it clear that it is committed to completing its ethical supply chain and has been at the forefront of exploring ways to ensure that no good food goes to waste. Sainsbury's was the first retailer to write to its suppliers promoting FareShare back in 2007 and the funding support we received from Sainsbury's in 2009 helped FareShare to deliver food for over 350,000 meals, benefiting disadvantaged people across the UK.” Tony Lowe, CEO, FareShare

Employee volunteering Our ‘Local Heroes’ scheme recognises and rewards colleagues who support charities and other good causes in their spare time. Those who volunteer on a regular basis, or who fundraise for charity, can claim up to £700 through our matched funding scheme. Over the past year we have matched our colleagues' contributions to the value of over £240,000.

Case study Cockermouth After the devastating floods that hit the Cumbrian town of Cockermouth in November 2009, we stepped in to make sure the local community had supplies of staple items like water, bread, milk, newspapers and nappies, as well as emergency items like candles and torches. We also gave £2,000 worth of food to the emergency services involved in the incident, as well as over 1,700 Wellington boots and 600 items of underwear and socks. Customers joined in by contributing both money and clothes at the checkout. £2,000 was raised in total and the sale of local charity CDs and charity cards raised another £1,000. We also set up a free local bus service for those stranded on the other side of the river and put up a map at the front of the store showing which other local businesses were still operational.

Corporate Responsibility Report 2010

Case study Make the Difference Days Over the past year we have run six ‘Make the Difference Days’, with each one addressing a different issue that concerns both our customers and colleagues, whether that’s food waste or health. As the name suggests, every ‘Make the Difference Day’ focuses on showing people how a small shift in behaviour can add up to a significant change. The October 2009 ‘Make the Difference Day’ focused on Active Kids and stores showcased activity equipment from tennis rackets to gardening trowels. There were also displays showing how local schools and Girl Guide and Scouts Groups had benefited from donations of equipment. A further £200,000 worth of equipment was donated across the UK, as a result of the day. In January 2010 the ‘Make the Difference Days’ focused on food waste, and encouraging customers and colleagues to 'love their leftovers'. We handed out three million food ’wheels' with handy tips to help transform leftover meat and vegetables with common store cupboard ingredients. We also gave out two million food storage boxes to help keep leftovers fresh along with some handy food safety tips. This year we wanted to make our ‘Make the Difference Days’ even more compelling and engaging for colleagues and customers alike, so we invited suggestions for themes from our colleagues. We received over a thousand suggestions and are currently in the process of developing them.

Making Sainsburyâ&#x20AC;&#x2122;s a great place to work helps our 150,000 colleagues achieve our business goals.

Corporate Responsibility Report 2010

Being ‘a great place to work’ is rooted in Sainsbury’s heritage and values. It also plays a crucial role in achieving our business goals. We rely on our 150,000 colleagues to deliver great service to our customers every single day. We have always wanted to be ‘a great place to work’. It’s what has made us the great company we are today and it’s helping us to build the business for tomorrow. We are all about great food at fair prices and exceeding our customers’ expectations and the people who deliver this to our customers every day are the 150,000 colleagues who work in our stores and depots. They are in every sense the face of the company. This means we have to find the best people and then treat them in the right way, so that not only will they want to stay but are inspired to do the best job they can for our customers. We do this by living up to our principles of equality, diversity and fairness, communicating regularly and listening genuinely. We also give everyone the chance to reach their full potential and recognise them when they go the extra mile. We were proud to be awarded the 'People's Organisation' by the CBI in their 2009 Human Capital Awards. This award was in recognition of our broad ranging HR and people management excellence.

Commitments and progress Title Supporting the development of our colleagues

Description

Progress

We will provide over 10,000 colleagues with job opportunities, skills and qualifications through our 'You Can' programme by 2010

Achieved and Ongoing – We have exceeded our commitment to provide 10,000 colleagues with job opportunities, skills and qualifications through our ‘You Can’ programme by 2010. We remain committed to ‘You Can’ and will continue to support opening Sainsbury's up to a wide range of new recruits and to help our colleagues develop new skills through our ‘You Can’ programme

We will improve our leadership capability by investing in a development programme that will touch every manager across the business by the end of the 2010/11 financial year

New commitment

Corporate Responsibility Report 2010

Commitments and next steps

Supporting the development of our colleagues

We will offer all colleagues the opportunity to join our cycle to work scheme launching Summer 2010

We will provide over 10,000 colleagues with job opportunities, skills and qualifications through our 'You Can' programme by 2010. We will improve our leadership capability by investing in a development programme that will touch every manager across the business by the end of the 2010/11 financial year

We will continue to offer all of our colleagues the opportunity to gain an externally recognised qualification

Corporate Responsibility Report 2010

Equality, diversity and inclusion We are a team of 150,000 committed individuals. We know that everyone is different and we value this because it brings us so many diverse perspectives and ideas.

It also helps us serve our customers better because the people who work for us are also our customers. Having a workforce that spans so many aspects of age, gender, disability, ethnicity, religion and sexual orientation helps us to understand what our customers want from us now, and how this is likely to change in the future. Inclusion has become a fashionable word in recent years but it has been at the heart of our ways of working ever since the business was first established in 1869. Everyone at Sainsbury’s has the same opportunities to come and work with us and they are all treated fairly and equally when they do. We are very proud of our continued progress in this area but we know we can always do better so we make sure we spend time talking with our colleagues on a regular basis, so that we can tackle any issues, and break down any barriers that may still remain.

‘You Can’ ‘You Can’ is our umbrella brand for the work we are doing to help our existing colleagues develop new skills, and make ourselves more accessible to a wider range of new recruits such as the long-term unemployed. This year, we have exceeded our commitment to provide 10,000 colleagues with job opportunities, skills and qualifications through our ‘You Can’ programme by the end of 2010.

Job opportunities We know some people struggle to find work or return to it. That is why we were one of the first employers to sign up to Local Employment Partnerships in April 2007. These aim to help the long-term unemployed back into the workplace and last year alone we recruited over 800 people through Job Centre Plus and another 250 through the London Employer Accord. Our stores regularly support both of these organisations with skills sessions for local people looking for employment. We look for colleagues who have the right skills to serve our customers and can work as part of a team in a busy environment. Training like this helps people build their confidence and knowledge about some of the more technical aspects of the jobs we have across our business. We are also working with the London Employer Accord to help ex-offenders back into jobs – there are 254 people on this scheme now. In 2010/11 we are expanding our ‘You Can’ framework to help former military personnel start a new job with us through Career Transition Partnership.

Corporate Responsibility Report 2010

Case study ‘You Can’ gives Lyn a second chance Lyn O’Dwyer is a 53-year-old, lone parent with four children and had not been in paid employment for 24 years before starting in our Purley Way store. With her youngest child turning 15, she felt the time was right to get back into the workplace. “I was getting bored. My children are now selfsufficient and are starting their lives. It’s about time I have a second shot and start doing something for myself.” Lyn felt that retail would be a good place to start as she had worked in supermarkets in the past, but her length of time out of the workplace was proving to be a barrier. Lyn’s Jobcentre Plus Advisor told her that Sainsbury’s was recruiting and she was attracted by the possibility of working at night as it would give her the chance to balance work with her family needs. At the end of the selection process Lyn was offered a threenight work trial. “After that, that was it. I got my 30 hours a week. It was brilliant.” She feels that there are two key reasons why she was successful in her application: “her complete flexibility with hours and her friendly personality”. Lyn says that she loves her new job and would like to work for Sainsbury’s until she retires.

Job prospects for young people have been hit particularly hard by the current recession and this is one reason why we have given our support to ‘Backing Young Britain’. This is a national campaign that brings government, business and other organisations together to create new opportunities for young people. It’s a great fit with what we are already doing in our ‘You Can’ skills programme where we are giving young people the chance to get the skills and experience they need to succeed in retail. New for 2009 was the ‘Try Before You Buy’ scheme which gave over 100 temporary colleagues recruited for the Christmas period the chance to join our new trainee management programme. As long as they met our selection criteria (two or more A-levels), they could complete our fast-track scheme and become one of our Department Managers leading a team within a year. We also increased our graduate programmes and placements this year and welcomed more than 60 graduates in September. We continue to offer paid placements for students during their summer break or a one-year placement to help them decide on their future career. It’s a great way to help us attract potential candidates for our graduate programmes. ‘You Can’ works well for young people, but it also helps those with a learning disability. We work closely with both Mencap and Remploy and through them we have employed over 250 new colleagues with disabilities last year. We are proud to be a ‘Two Tick’ company, which means we guarantee an interview to any applicant with a disability as long as they meet the minimum requirements for the job.

Corporate Responsibility Report 2010

Case study Supplying Colleagues with disabilities John Smith, who is 37, used to work for an industrial manufacturer but lost his job as a result of the recession. He cites his physical disability as the reason why his countless job applications were unsuccessful, and he began to think he would never work again. However, John visited Remploy’s specialist recruitment services branch in Sheffield, and that’s when his prospects improved. Remploy has an excellent relationship with Sainsbury’s, and has placed many candidates with the supermarket all over the UK. John is working at the Crystal Peaks store near Sheffield, and he is undertaking a range of duties, including operating the checkouts at what is one of the company’s busiest shop floors. Hazel Walker is the store's HR manager. “Our success with Remploy is based on our past experience of the quality of their candidates. Disability is not an issue with us; amongst all our colleagues, an ability to do the job and offer fantastic service to our customers are our only concerns.” “It’s a privilege to be working in partnership with Sainsbury’s. This agreement is about connecting local people with local employers.” Craig Lewis, Operations Director, Remploy

Development opportunities “Training is at the heart of the company’s vision and is integral to our business development activity.” In June 2009 our ‘You Can’ skills programme was inspected by OFSTED and judged to be ’Good’ with two areas rated as ‘Outstanding’. The report found that our people enjoy their training, acquire good skills and are highly motivated to succeed.

We want to help our existing colleagues develop their skills and gain nationally recognised qualifications. Options range from apprenticeships, to job-related qualifications and to more general ‘Skills for Life’. Our apprenticeship schemes last for 12–18 months and offer vocational experience as well as a Level 2 qualification equivalent to five GCSEs at grade A* – C. We currently have over 400 colleagues learning new skills on Bakery, Meat and Fish apprenticeships and over 100 people over the age of 60 working towards a job-related qualification – in fact the two oldest trainees are 72 years old. All in all, 60% of our new recruits are studying for a nationally recognised qualification. We remain committed to ‘You Can’ and will continue to support opening Sainsbury’s up to a wide range of new recruits and to help our colleagues develop new skills through our ‘You Can’ programme.

Corporate Responsibility Report 2010

Case study Sainsbury’s Bakery College We launched this in March 2010 in partnership with the flour supplier, Whitworth, based at their flour mill. We are confident that the outstanding facilities, technical skills programme and individual one to one coaching will halve the time it takes for our new bakers, bakery managers and apprentices to complete a first rate training. “The scheme was great, I learnt a great deal and it improved my confidence, as well as my professional reputation with customers. I can give much better service to my customers, can answer all their questions, even details about what ingredients go into products and give advice on what is suitable for various diets or medical conditions.” “The bakery college and apprenticeship scheme is a great area to get involved in; you learn so many different skills and develop the ability to apply that knowledge.” Sam Carlos, Bakery Apprentice, London Colney store

Diversity We firmly believe in the benefits that a diverse workforce can bring; it helps us to understand and adapt to the changing needs of our customers and offers new and different perspectives on the challenges we may face. We want to increase the number of female managers leading our stores. The number has grown over the past three years particularly in our smaller convenience stores where over 30% of the store managers are female. We would like to have women in 20% of our Store Manager positions across the business by 2011 and as things stand we are well on track. That said, there is always more we can do to promote women and people from ethnic minority groups to management level jobs. We have updated the coaching we offer to line managers to include diversity awareness and this is working extremely well. Another important factor here will be the new ‘You Can’ Careers framework. This gives every colleague the opportunity to discuss their career aspirations and options and it has given many of them the chance to join a development programme or sign up to a job-related qualification. We are also proud to work with our external partners including Employers Forum on Disability and Employers Forum on Age who share their expertise with us and we then translate this into our policies and coaching for managers. We do not have a compulsory retirement age, preferring instead to let colleagues decide for themselves when they wish to retire.

Flexibility It’s the flexible working hours that attract many people to working in retail, especially those caring for young children, relatives or other dependants. Everyone at Sainsbury’s has the opportunity to request flexible working because we believe a good work/life balance makes for a more positive and productive workplace. We know that circumstances can sometimes change literally overnight and if our colleagues need either short-term support or a permanent change in hours, we will work with them to find a mutually satisfactory and workable solution bearing in mind the needs of our customers and our business.

Corporate Responsibility Report 2010

Engagement and recognition We have always known that our colleagues are more committed to giving great service when they’re more engaged. They achieve more when they understand how their efforts are contributing to a wider goal and when they are recognised for the contribution they make.

Engagement Good communication is like a great conversation – it’s about talking to our colleagues openly and simply and it is also about really listening to them and responding to their feedback and suggestions. It’s sometimes about telling colleagues things that they may not agree with personally but if a clear rationale is provided they will have a better understanding of the reasons behind that decision. Each month Justin King, our CEO, writes a letter to every colleague across the business sharing with them how we are performing and updating them on our future plans. We know that Justin’s letters are well received by our colleagues. We supplement this with a Monthly Briefing and include a DVD to help bring the key messages to life. We have a variety of mechanisms to capture feedback across the business. ‘Talkback’ is a key measure of employee engagement, and we invite every colleague to complete the questionnaire once a year. We carry this out on a rolling basis so that we have a regular ‘temperature check’ on how colleagues feel which allows us to pick up any emerging issues throughout the year. We then use the information gathered to create action plans, at a company and local level. Acting on feedback in this way has helped to move our engagement index up by 1% over the past 12 months. In 2010/11 we will introduce an updated version of Talkback based on what our colleagues have told us is really important to them. ‘Tell Justin’ is our colleague suggestion scheme which is still thriving over five years after its launch. We have just received our landmark 30,000th suggestion. Our colleagues interact with customers every day, which means they often have the best ideas about how to improve our service to them. Many of their suggestions have already resulted in some real improvements including, for example, the changes we have made to our ordering systems to make it quicker and simpler for colleagues to order in store advertising. Listening to colleagues is becoming a way of life for us and we actively encourage all levels of management to spend time doing this. Every month our CEO and other operational board members meet with a group of colleagues from across the business to find out what is currently on their minds and to get feedback on recent company initiatives. Over the past year we have simplified the structure of our Colleague Councils and adjusted how they work. They provide a mechanism for two-way communication between managers and colleagues at every site and they act as a consultative body. The new framework has made it easier for our Council members to focus on what really matters to their colleagues, and share ideas that will improve their business.

Corporate Responsibility Report 2010

Case study Sainsbury’s Annual Colleague Conference We use our annual conference to communicate a full business update to colleagues and inspire them about our future plans. In the past, this was a manager-only event, which meant we were missing the chance to really engage with the people who serve our customers every day and are our greatest brand ambassadors. In 2009 colleagues outnumbered managers at the conference by two to one. We also know how important it is to feel valued and the conference is an ideal venue to celebrate success and acknowledge a job well done. Our annual 'Stars Awards' recognise colleagues from across the business who have gone the extra mile and throughout the year our managers can present Shining Star Awards to people on their teams.

Reward We want people to enjoy working at Sainsbury’s, but that’s only part of the whole package. Our colleagues get competitive pay and benefits, and the possibility of a good bonus too. 127,000 colleagues shared a bonus of over £80 million in 2010, bringing the total amount paid out over the past five years to over £290 million. The bonus scheme is based on sales and profit measures, as well as some of the key factors that drive our business, like great service and product availability for customers. We also have a Sharesave share option scheme and a wide range of voluntary benefits through our ‘You Choose’ savings and discount programme, in addition to the 10% discount all eligible colleagues receive.

Corporate Responsibility Report 2010

Health and wellbeing We are committed to maximising the health and wellbeing of our colleagues by promoting and supporting healthy lifestyles. We believe wellbeing is not simply about the prevention of sickness or injury but the promotion of an equitable work-life balance. We all want our colleagues to feel supported on issues they may face both in and outside work.

A healthy workplace is always a more productive one. Health & Safety is a key part of all our training and management systems, and over 85% of our colleagues believe that Health & Safety is taken seriously here

Health & Safety training and policy 2009/10 was a year of steady improvement in this area. We continued to implement our revised Health & Safety Policy, which aims to make these issues an integral part of our everyday business activities. We also continued the roll-out of our two-day ‘Managing Store Health & Safety’ course for store managers and extended our ‘Safety in Sainsbury’s for Senior Executives’ training. Our general safety training is now equivalent to the Retail level 2 for Health & Safety. On a day-to-day basis another important programme is our ‘Safe ‘n’ Sound’ programme, which supports our supermarket managers to promote a safety culture and check that all the necessary training programmes are in place. Progress is monitored through store audits. Overall, we have reduced our colleague reportable accident rate by 5.5% in 2009/10, which represents a cumulative fall of 13.5% over the past three years.

Promoting healthy lifestyles for our colleagues Whether it is our customers or our own people, we believe wellbeing is not simply about preventing illness, but promoting a balanced and healthy lifestyle. We play a big part in the communities we serve and we are continuing to strengthen our relationships with the local Primary Care Trusts near our stores. We want our colleagues to know where to go for information and advice on both work and personal issues. Likewise we encourage our managers to support the people in their teams and give them the skills training that will help them do this. We will continue to do more of this in 2010/11. Throughout 2009/2010 we worked actively with our catering providers at each store, office and depots encouraging them to offer colleagues a number of healthy alternatives in their menus.

Corporate Responsibility Report 2010

Commitments and progress

Title

Description

Progress

Ongoing – we continue to make the most popular items in our customers' baskets healthier

Description

Progress

Being best for British

We will source great-tasting British products when in season, wherever these meet our customers' expectations for quality and authenticity

Achieved and Ongoing – we remain committed to supporting UK farmers and continue to source British products, both when in season and in certain categories all year round

Being number one supermarket for animal welfare

We will offer the widest range of higher welfare products of any UK retailer

Achieved – we both offer the widest range of Freedom Food higher welfare products and sell more than any other UK retailer

Sourcing responsibly and ethically

We will be the largest UK retailer of Fairtrade products (by sales value)

Achieved – we are the world's largest retailer of Fairtrade by value

Healthier baskets for our customers

Title

Corporate Responsibility Report 2010

Title

Description

Progress

Reducing energy

We will reduce our CO2 emissions per m2 by 25% by 2012, against a 2005/06 baseline

Ongoing – our commitment on refrigeration, Eco-stores and reset programme are helping us to progress towards this target

Reducing packaging

We will reduce our own brand packaging weight, relative to sales, by 33% by 2015 against a 2009 baseline

Ongoing – making progress both incrementally through packaging redesign and through packaging innovation like milk bags

Reducing food waste

We will have all supermarkets and depots connected to a zero food waste to landfill programme by the end of 2009

Reducing waste

We will have all supermarkets and depots connected to a zero waste to landfill programme for operational waste by the end of 2010

Corporate Responsibility Report 2010

Title

Description

Progress

Generating a positive economic impact on communities

We will provide 6,500 new Sainsbury's jobs in 2009/10 through our planned opening of 28 supermarkets and 55 new convenience stores

Achieved – over 6,500 new jobs were created by opening 38 new supermarkets and 51 new convenience stores

We will provide 6,500 new jobs in 2010/11 through our planned opening of 17 supermarkets and over 75 new convenience stores

New commitment

Supporting local communities

We will launch our Local Charity of the Year scheme, linking every store, Sainsbury's depot and our support centres to a local charity partner each year

Achieved – we have supported over 750 local charities through the scheme this year

We will support community based fundraising and colleague volunteering, encouraging our customers and colleagues to make a positive difference in the local community

New commitment

We will offer local groups and charities space in our stores to support community activities and events, helping bring the community together

New commitment

Description

Progress

We will provide over 10,000 colleagues with job opportunities, skills and qualifications through our 'You Can' programme by 2010

We will improve our leadership capability by investing in a development programme that will touch every manager across the business by the end of the 2010/11 financial year

New commitment

Title Supporting the development of our colleagues

Corporate Responsibility Report 2010

Next steps 2010 Best for Food and Health Healthier baskets for our customers We will make the most popular items in our customers' baskets healthier, focusing on products that contribute the most saturated fat, salt or sugar to the UK diet, to deliver a real impact on the nation's health

We will introduce calorie labelling into our cafes across all foods, so that our customers know how many calories they are consuming We will place into all stores (where there is a pharmacy) nutrition training for our pharmacists so they can help our customers with dietary advice and guidance We will launch an industry leading, on-line dieting service, which will help customers manage their weight responsibly, eat healthy food and incorporate exercise into their daily lifestyle We will host a live UK stakeholder debate on health and cooking to raise awareness of the important role cooking plays in tackling the UK's public health challenges We will define the percentage of promotions that are healthy and given prominence in store

Sourcing with Integrity Being best for British We will source great tasting British products when in season, wherever these meet our customers' expectations for quality and authenticity

Being number one supermarket for animal welfare We will offer the widest range of higher welfare products of any UK retailer

Sourcing responsibly and ethically We will be the largest UK retailer of Fairtrade products (by sales value)

We will continue the roll-out of the Development Groups to pork, beef, chicken and lamb suppliers

We want our five biggest-selling fish species to be MSC-certified or green-rated against our own sustainability standard by the end of 2010 Our long-term target is to have all our wood sources certified by the Forest Stewardship Council (FSC) and we aim that 90% of our wood products will be FSC certified by 2012 We aim to be the largest user of FSC-certified cork in the world by early 2011 We will only use certified sustainable palm oil by the end of 2014 We will work with informed stakeholders to research and identify best practice in water usage across our supply chain We are looking to expand the number of Fairtrade products across our ranges, in particular in chocolate We are aiming to increase the number of supplier visits we carry out every year, and open more nonfood supply offices in the Far East, which will help us get closer to our suppliers there

Corporate Responsibility Report 2010

Respect for the environment Reducing energy

We will install five new biomass boilers

We will reduce our CO2 emissions per square metre by 25% by 2012, against a 2005/06 baseline

Reducing packaging We will reduce our own brand packaging weight relative to sales, by 33% by 2015 against a 2009 baseline

As well as focusing on reducing our packaging, this year we will also be focusing on depot ready packaging to remove unnecessary packaging from the overall supply chain

We will launch 100s more products where we have reduced the packaging

We will work with all the stakeholders to make more of our packaging recyclable

Reducing food waste

We will deliver a new iconic anaerobic digestion partnership

We will have all supermarkets and depots connected to a zero food waste to landfill programme by the end of 2009

We will find a solution to diverting convenience food waste from landfill

Reducing waste We will have all supermarkets and depots connected to a zero waste to landfill programme for operational waste by the end of 2010

We will find a solution to colleague vending machine recycling We will work with Imperial College to develop innovative 'natural' building materials We will work with the packaging industry to further the use of recycled materials in packagin

Making a positive difference to our community Generating a positive economic impact on communities We will provide 6,500 new jobs in 2010/11, through our planned opening of 17 supermarkets and 100 new convenience stores

Supporting local communities We will support community based fundraising and colleague volunteering, encouraging our customers and colleagues to make a positive difference in the local community We will offer local groups and charities space in our stores to support community activities and events, helping bring the community together

We will encourage local community groups to use our stores as a safe place to meet

A Great Place to Work Supporting the development of our colleagues We will provide over 10,000 colleagues with job opportunities, skills and qualifications through our 'You Can' programme by 2010. We will improve our leadership capability by investing in a development programme that will touch every manager across the business by the end of the 2010/11 financial year

We will offer all colleagues the opportunity to join our cycle to work scheme over the next year

We will continue to offer all of our colleagues the opportunity to gain an externally recognised qualification

Corporate Responsibility Report 2010

Progress against our 2009 commitments Each year we set ourselves stretching targets to drive positive improvements and change. The following section gives our progress against the targets we committed to in our 2009 Corporate Responsibility Report.

Best for food and health Key Target exceeded or met ahead of schedule

Target almost or partially met

Target met or on track

Target not met

2009 Next Steps

Progress

25% of our Tip card recipes will continue to be healthier (i.e. only green or amber traffic lights)

50% of our Tip cards feature healthier recipes, with only green or amber traffic light ingredients

50% of our Tip card recipes will contain one portion of the recommended 5-a-day

Over 25% contain at least one portion of 5-a-day fruit or vegetables

100% of relevant* new products will display MTL labelling

We remain the most extensive adopter of MTLs, with the labels on over 5,000 of our own brand products

We will display MTL labels on recipes, including those featured in Tip cards, Sainsbury's Magazine, Fresh Ideas Magazine, Try Something New Magazine and other promotional materials

We display MTL labels on our Tip cards, Fresh Ideas Magazine and Try Something New Magazine. However, we're yet to roll this out to our Sainsbury's Magazine and some other promotional materials

We will print over 60 million recipe Tip cards in the next year

We have printed 69 million Tip cards over the past 12 months

We plan to launch a cooking competition for all our colleagues, 'The Big Cook Off'

We launched the competition to all colleagues in March 2009. 250 colleagues entered the competition, with our winner, Amberina Mohammed from our Cameron Toll store in Edinburgh, cooking her Kofta Curry with a twist. All our finalists' recipes are now being collated in a special cook book which will be given to all our colleagues

* Non relevant products are primarily single ingredients, e.g. bags of sugar

Corporate Responsibility Report 2010

Sourcing with integrity Key Target exceeded or met ahead of schedule

Target almost or partially met

Target met or on track

Target not met

2009 Next Steps

Progress

We aim to enhance our relationships through more frequent supplier visits. On the non-food side of our business, we will be opening new offices which will be located closer to our supply base in the Far East

This is an ongoing target. In 2009, we opened nonfood sourcing offices in Hong Kong and Shanghai

We plan to expand our Development Group model to beef and cheese farmers

Progress is ongoing. We have rolled out the model to beef, cheese and egg suppliers

We plan to extend Farm Connections to chicken farmers

We have not extended Farm Connections. Instead, we have focused on developing the Development Groups

100% of our own brand tea and roast and ground coffee will be Fairtrade by 2010

All of our own brand tea (except speciality tea), roast and ground coffee is Fairtrade

Our long-term target is for all our wood products to come from certified well-managed forests with the Forest Stewardship Council (FSC) being our preferred certifier, although a firm deadline has yet to be established

We have set a long-term target of having all our wood sources certified by the Forest Stewardship Council (FSC) and aim that 90% of our wood products will be FSC certified by 2012

Our aim is for the big five fish species, representing 80% of our sales, to be MSC-certified or green-rated against Sainsbury’s sustainability standard by end of 2010

We are on track and working hard to meet this target by the end of 2010

We will complete labelling the use of palm oil on all ambient and frozen food by summer 2009, meaning all packaging produced after this time will feature the new labelling

The use of palm oil is labelled on all fresh, chilled, frozen and shelf-stable food

Sainsbury’s will use only certified sustainable palm oil by the end of 2014

We have added digestive and rich tea biscuits to our list of own brand products made from Roundtable on Sustainable Palm Oil certified palm oil. A new tracker has helped us to identify our top 20 users of palm oil and we are working with them to move to certified supplies

We will work with informed stakeholders to research and identify best practice in managing the water footprint of our supply chain

We continue to work with our suppliers on water management. We are on track to develop a comprehensive water strategy

We will continue to increase the amount of pesticide residue free produce we offer

Our progress is ongoing. Our Pesticide Policy actively encourages our suppliers to minimise their use of pesticides

We will continue to develop best practice and further tools to measure the ‘in the round’ sustainability impacts of our products

This is ongoing as part of our overall commitment to sustainability and sourcing with integrity

Corporate Responsibility Report 2010

Respect for our environment Key Target exceeded or met ahead of schedule

Target almost or partially met

Target met or on track

Target not met

2009 Next Steps

Progress

We will continue to reduce our depot to store transport CO2 emissions (CO2 per case of product) by 15% by 2012 against a 2005/06 baseline

Target has been met

We plan to open a minimum of two green supermarkets every year plus a greener Sainsbury's Local

Target has been met

Extensions to existing stores will use a range of environmental measures

Over half of our stores have been through the energy 'Reset' programme to introduce a range of energy-saving initiatives – with almost 5,000 individual initiatives having been completed across more than half of our stores

We will continue to reduce our water usage measured as cubic metres per square metre of sales space by 50% by 2012 against a 2005/06 baseline

We are making good progress against this target

Making a positive difference to our community Key Target exceeded or met ahead of schedule

Target almost or partially met

Target met or on track

Target not met

2009 Next Steps

Progress

By the end of 2010, we aim to have a further 15 stores with ‘Safer Neighbourhood’ space, taking the total to over 40 stores

During the past year, we have engaged with a further ten police forces on taking the neighbourhood policing initiative forward. We now have 33 stores with police bases or offices within them, provided to police without payment of rent. In addition, in December 2009 our CEO Justin King, and the HR Director of the Metropolitan Police formally opened the UIT’s first police recruit training facility in our supermarket in Barkingside, east London. Once again, provided at no rent. This allows huge savings to be made on police recruit training while providing the reassuring presence of police to the colleagues, customers and citizens of Barkingside

We will increase participation in Active Kids Get Cooking so that even more teachers have access to resources and materials to help them teach young people cookery skills and the importance of healthy eating

Our Active Kids Get Cooking scheme is the largest food award scheme available to UK schools, with over 13,000 now registered

Corporate Responsibility Report 2010

A great place to work Key Target exceeded or met ahead of schedule

Target almost or partially met

Target met or on track

Target not met

2009 Next Steps

Progress

25% of our colleagues to have a Nationally Recognised Qualification by 2013

This target was achieved

We aim to have a ‘You Can’ placement in every supermarket store by 2011

This target was achieved

In 2009/10 we plan to introduce two new apprenticeship schemes for Pharmacy and Beers, Wines and Spirits

This has been superseded by bakery, butchery and fish

We will introduce a new NVQ Level 3 Team Leader qualification in 2009/10

This initiative has been suspended

In 2009/10 we will be conducting a piece of work to better understand the issues holding back colleagues from ethnic minorities in their careers and will develop a programme of work to ensure we can address these issues appropriately

We are starting to monitor career progression relating to Diversity / Age and Ethnicity. The analysis of which will be used to underpin our continuing commitment to provide development opportunities across our business

We will be reviewing our diversity training in 2009/10 to ensure it remains fit for purpose

Our Managers have attended our coaching programme – Respect for the Individual

We aim to increase the percentage of females at Store Manager level to 20% by 2011

The number has grown over the last three years particularly in our smaller convenience stores where over 30% of the store managers are female.

Corporate Responsibility Report 2010

Progress against outstanding 2008 commitments Each year we set ourselves stretching targets to drive positive improvements and change. The following section gives our progress against the targets we committed to in our 2008 Corporate Responsibility Report.

Sourcing with integrity Key Target exceeded or met ahead of schedule

Target almost or partially met

Target met or on track

Target not met

2008 Next Steps

Progress

We will extend our Concept Orchard scheme into UK Conference pears; first planting to commence November 2008

In April 2009 planting began on our third Concept Orchard for pears.We are also looking to introduce tasty new varieties, helping to secure the future of the UK pear industry

By Autumn 2008, we aim to sell only 100% Scottishreared chicken in Scotland

Over 85% of the chicken we sell in Scotland is now Scottish reared. Currently we are unable to source corn-fed birds from Scotland, but continue to look for a supplier

We are committed to working within the UK government's target to reduce peat in all growing media by 2010

Progress is on hold until the Government's new rules are clearer

Corporate Responsibility Report 2010

Respect for our environment Key Target exceeded or met ahead of schedule

Target almost or partially met

Target met or on track

Target not met

2008 Next Steps

Progress

By September 2008, 20% of our supermarkets’ online deliveries will be made using electric vans

Despite a delay to this programme we expect to have 70 electric vehicles in our online fleet, which will deliver approximately 60% of our online orders within the M25

We aim to improve the amount of insecticide residue free* primary fruit and vegetables by end 2008/09. We will assess the wider sustainability impacts of other fruit and vegetable categories using the Accounting for Sustainability tool and will report our findings in 2009

In 2008/09 we completed a comprehensive review on orange production and identified the key issues relating to crop and supply chain sustainability including insecticide use. In the next phase we will identify practical implementation strategies with affected stakeholders

We aim to improve the amount of herbicide residue free* primary fruit and vegetables (except salads) by end of 2008/09. We aim to improve herbicide residue free status on salads year on year *By pesticide residue free, we mean no residue detections above the Pesticide Residue Committee reporting limits (April 2008). The Pesticide Residue Committee is part of the Pesticide Safety Directorate, which is a government body

The application of herbicides has been reduced, although residue detections continue to be found due to more targeted sampling and improved detection methodology. Several produce areas, including citrus orchards, have reduced the use of herbicides as part of programmes to improve biodiversity

We aim to reduce our use of fungicides in key primary areas by 2012. As part of this we are assessing all options in line with the Accounting for Sustainability tool. We will report on the findings of these assessments in 2009

In 2008/09 we completed a comprehensive review on orange production and identified the key issues relating to crop and supply chain sustainability including fungicide use. In the next phase we will identify practical implementation strategies with affected stakeholders

We will update, revise and improve our banned and restricted list of pesticides by July 2008 to reduce the use of older, less specific, higher impact pesticides

We have updated our banned and restricted list of pesticides as planned. The document was launched behind schedule in March 2009, due to extensive consultation with research bodies and agrochemical manufacturers

Removal of parabens from all own brand baby toiletries commencing January 2009

Progress is being made towards this target. However, due to a change in suppliers, we had to start the work from scratch with a new supplier. The rigorous testing of products means that the new products free of parabens are expected to be available in stores in October 2009

We will drive down carrier bag usage by 50% by April 2009, against an April 2008 baseline

We achieved a reduction in the number of free carrier bags issued in the last year by 35%, as a comparison of April 2009 versus April 2008, issuing 312 million fewer bags in 2008/09 than in 2007/08

We will replace 150 million trays and bags with compostable packaging on Sainsbury’s ready meals and organic food by September 2009

We have moved our focus to reducing packaging because we encountered significant technical difficulties with sealing technologies and the costs of compostable packaging have remained high compared with conventional packaging. We are therefore not currently pursuing this target

Corporate Responsibility Report 2010 We will offer a comprehensive range of home composting solutions by Spring 2009

We have launched our range of home composting solutions, which consist of six lines and can be bought online and will continue to review the range

Making a positive difference to our community Key Target exceeded or met ahead of schedule

Target almost or partially met

Target met or on track

Target not met

2008 Next Steps

Progress

We aim to increase participation in Active Kids Get Cooking to 12,500 schools, with over 150,000 children participating in the scheme

Considerable progress has been made towards reaching this target, with 11,248 schools currently participating in Active Kids Get Cooking

We will install charity donation boxes in all our main stores by end 2008

Given the rollout of our Local Charity of the Year scheme we are now focusing on promoting a wider range of ways for supporting local charities, other than simply cash donations

By end of 2009, we aim to install a further four fully operational Police Bases in our stores outside the London Metropolitan area (in Warwickshire Police, Merseyside Police, Thames Valley Police and Norfolk Constabulary), plus an additional six operational bases within the Metropolitan Police area

By the end of 2009 we had 31 police bases in our stores, either built, planned or in progress. Fully operational facilities will be available in the Hampshire Police, Warwickshire Police and Thames Valley Police areas. Plans to open six operational bases within the Metropolitan Police area have been put on hold due to legal constraints, proceeding as soon as these are resolved. While legal and financial constraints have meant that further London police stations have not been built, we are working on a plan to build a facility at our refurbished Whitechapel Store

A great place to work Key Target exceeded or met ahead of schedule

Target almost or partially met

Target met or on track

Target not met

2008 Next Steps

Progress

Our 'Colleague Engagement Index' has been set at 75%. This year we have made significant changes to our Colleague Survey with the aim of raising the bar on our own performance. This provides a considerable level of stretch on last year and supports making Sainsbury's a great place to work

This year we achieved a Colleague Engagement Index score of 73% which, while 2% lower than targeted, represents substantial progress given the significant stretch made to the criteria we are now applying

We will provide access to a wellbeing toolkit for colleagues in all locations by January 2009

Target partly met. We prepared a wellbeing toolkit for colleagues in 2008/09 and we are currently reviewing the best way to launch this

Corporate Responsibility Report 2010

Our awards Featured awards

We are proud to be recognised as the global industry leader in the Dow Jones Sustainability Index 2009/10.

We continue to be included in the FTSE4Good Index, in recognition of our management of environmental, social and ethical issues.

For the 2nd year running we are Platinum members of the BITC CR Index for our commitment to responsible retailing.

Recognition of our supermarket division's reduction of CO2 year on year.

Best for food and health Sainsbury’s sees gold at the Grocer Awards Sainsbury’s is proud to announce a win of seven gold and three silver gongs at The Grocer Own-Label Food & Drink Awards 2010. Each product was tested against competitors for taste, texture, appearance, packaging, value for money and clarity of labelling. The judging panel included: development and celebrity chefs, industry experts and consumer magazine editors with retail buying experience. Read the release to learn more about Sainsbury’s winning products.

Sourcing with integrity IGD Food Industry Award This Award recognises positive initiatives developed by food or non-food companies with regard to their impact on environmental sustainability. We received the Tetra Pak Environmental Sustainability Award in recognition for the usage of our innovate carbon footprinting tool in our Dairy Development Group. RSPCA Good Business Awards These Awards recognise the food industry's best restaurants, pubs, supermarkets and catering that go the extra mile for animal welfare and help tackle issues including: standards of animal care on farms; live transport and slaughter; import of meat and eggs and clearer labelling of produce. We are proud to have won the award for most improved supermarket for offering the widest range of Freedom Food labelled products.

Corporate Responsibility Report 2010

Respect for our environment Carbon Trust Standard Organisations are awarded the Carbon Trust Standard for measuring, managing and genuinely reducing their carbon emissions and committing to reducing them year on year. We were recognised for our supermarket division's reduction of CO2 year on year. Consumer Focus ‘Green to the Core?’ We received an industry leading overall ‘A’ rating by Consumer Focus, scoring highly on packaging, organics and sustainable fish. This report rated and identified which supermarkets are doing more to help their customers shop sustainably. Environment award for Sainsbury’s Northampton building Sainsbury’s distribution centre at Pineham, Northampton has won a Green Apple Award for the Built Environment and Architectural Heritage. The building includes an on-site recycling unit and the rainwater harvesting system saves 16 million litres of water a year. The distribution centre was developed by Prologis and the planning authority was the West Northamptonshire Development Corporation (WNDC). The 618,000 sq ft building is energy efficient and a carbon neutral building.

A great place to work CBI Human Capital Award The Human Capital Awards celebrate the impact of people and HR-led programmes on the business performance and profitability of organisations across the UK. We won the ‘People’s Organisation’ award for our broad-ranging HR and people-management excellence. Simon Ross is The Grocer’s Store Manager of the Year Sainsbury’s is proud to announce that Simon Ross from our Stirling store has won The Grocer’s Store Manager of the Year 2010 award after one of the Awards’ fiercest contests. Simon beat off stiff competition from Asda, Morrisons, Tesco and Waitrose for the award. Simon showed how attention to availability, staff training, engagement with the local community and an entrepreneurial spirit could overcome competition from nearby supermarkets. Sainsbury’s HR team crowned Best HR Team at HR Excellence Awards 2010 We’re excited to announce that our HR team has won top honours at the HR Excellence Awards 2010. What impressed the judges was the way HR is now seen as part of the business team, playing a crucial part in the overall turnaround. Major HR initiatives include simplification of the staff scheduling process - resulting in a benefit delivery of £8 billion a year; the introduction of HR shared services in Manchester, which has freed up HR teams to focus on the value-adding side of their role; online recruitment - producing a saving of over £1.6 million in costs; and the new Oracle Colleague Administration HR payroll system.

Corporate Responsibility Report 2010

Organisations we engage with To understand issues more fully and make better decisions, we talk regularly with customers, colleagues, NGOs and the Government and its agencies.

Corporate Responsibility Report 2010

Design and Technology Association European Commission London Employer Accord

Northern Ireland Executive Remploy Scottish Government

Shaws Trust Welsh Assembly Government Woodland Trust

We hold a series of Corporate Responsibility dinners throughout the year to promote dialogue on each of our Corporate Responsibility principles, inviting key stakeholders for discussions with our CEO, Justin King, as well as CR Committee Chair, Anna Ford, and relevant executives. This year, attendees included: Cadbury World Centre Point Charity Commission Confederation of British Industry Consumer Focus DairyCo Department of Energy and Climate Change Department for Environment, Food and Rural Affairs Department of Health Department of Work and Pensions Department of Business, Innovation and Skills Employment and Skills Commission Environment Agency Equality and Human Rights Commission Ethical Trading Initiative

Food Standards Agency GHK Guardian/Observer HSBC IGD Imperial College London Institution of Mechanical Engineers Kimberly Clark Europe Kings College Kings Fund MRC National Farmers Union National Trust Nestle Suisse SA Netmums NHS Oxford Brookes University

Produce World RSA SABMiller School of Public Health and Population Science Smith School of Enterprise and the Environment St George's Hospital Sustainability Ltd Sustainable Development Commission UK Energy Research Centre University College London University of Twente Which Work Foundation WRAP WWF International