Announcement PDF Monday 13 November 2023 2023 Sustainability Report Attached is the Elders Limited (ASX:ELD) Sustainability Report for the 12-month period ended 30 September 2023. Further Information: Mark Allison, Managing Director & Chief Executive Officer, 0439 030 905 Authorised by: Elders Limited Board of Directors Elders Limited ABN 34 004 336 636. Registered Office: Level 10, 80 Grenfell Street, Adelaide SA Australia 5000 SUSTAINABILITY REPORT 2023 For Australian Agriculture Elders Limited ABN 34 004 336 636 1 Contents Message from the Managing Director and CEO 2 Sustainability Performance 4 Sustainability at Elders 6 Health and Safety 10 Sustainable Farming 16 Employee attraction and retention 22 Climate change 27 Animal Welfare 41 Governance 44 Community Impact and Investment 49 Waste Management 51 Environmental Management 55 Performance Tables 58 Assurance Statement 61 TCFD Index 63 GRI Index 64 Definitions and Topic Impacts 68 2 2023 Sustainability Report Message from the Managing Director and CEO Safety We have dedicated ourselves to continually evolving and improving our safety performance, focusing on four fundamental pillars: • work health and safety risk management • incident and injury management • regulatory compliance • training, education and communication In 2024, we will move into our 185th year of dedicated service to the agriculture industry. We acknowledge our role as a steadfast partner in advancing the synergy of Australian farm productivity, profitability, and sustainability. I am pleased to present the performance of our team in the past year through our 2023 Sustainability Report. This year, we reported a decrease in lost time injuries (LTIs) to three, compared to six in FY22. We also made progress reducing our total recordable injury frequency rate from 12.6 in FY22 to 10.1 in FY23. It is unacceptable that any of our people are harmed at work, and we continue our pursuit of creating a ‘zero harm’ work environment. One of the highlights of our safety initiatives was our annual ‘Safety Week’, where each day was dedicated to addressing key risks and products. This comprehensive approach covered critical areas like traffic management, livestock safety, safety in our real estate business and safety in our agronomy business. Our commitment to wellbeing extended beyond safety measures. We organised resilience training sessions and held a national staff step challenge. This challenge saw an impressive participation of over 630 employees across the country, collectively taking over 171 million steps over a sixweek period. Communities Our commitment to rural and regional communities runs deep. We take pride in actively supporting local organisations, employing local workers, maintaining physical presence in the communities we serve, and providing the goods and services our local customers and clients need at any given time. In the past year, we channelled $3.33 million into sponsorships and donations, including $1.42 million to local communities and $1.52 million to the agriculture industry and innovation. Our people gave $38,000 through our matched employee Give It program, benefiting major charity partners like the Royal Flying Doctor Service, the Foundation for Rural and Regional Renewal and Beyond Blue. Additionally, our Staff Foundation disbursed over $57,000 to support our staff members through challenging times. To further extend our community outreach, we introduced our Community Giving Project, set to launch in March 2024, inviting applications for grants of up to $20,000 from community organisations and not-for-profits. These grants will support initiatives spanning people, environmental consciousness, innovation, healthy lifestyles, diversity and safety – with a focus on sustainability and creating tangible impacts within the communities we proudly serve and operate in. Additionally, we have forged a valuable partnership with the Regional Australia Institute (RAI) to support its vision to ‘rebalance the nation’. We recognise the pivotal role that a thriving regional Australia plays in bolstering our national economy. I am honoured to collaborate closely with the RAI in our shared mission to build a more equitable future for our local communities, working toward a brighter tomorrow for our country. Message from the Managing Director and CEO Climate change We remain committed to playing our part in reducing emissions and supporting our clients and customers in managing the physical and transition risks and opportunities presented by a changing climate. This year, we maintained our target of 100% renewable electricity in our Australian sites, increasing our ability to generate more solar power onsite through the installation of 30 solar panel systems, and our investment in Australian-generated renewable energy through the procurement of Large-scale Generation Certificates (LGCs). Our total Scope 1 and 2 emissions decreased this year by 5,221 tCO2e from 2022, driven mostly by a decrease in cattle numbers through Killara Feedlot. While this decrease represents a positive development for our emissions profile, our continued strategic focus on growing our business and market share reinforces our need to continue to monitor, and where practicable, implement developments for more efficient vehicles, and products and practices that mitigate cattle emissions. The recent declaration of El Niño by the Bureau of Meteorology is expected to bring both challenges and opportunities for Australian farmers. As a trusted product and service provider to the agriculture industry, we stand committed to equipping our clients with the necessary tools, expertise, and support to navigate the complexities of shifting climate patterns, ensuring their resilience and success in the face of climatic uncertainties. 3 Sustainable farming This year, we launched our new Eight Point Plan, reaffirming sustainability as a strategic priority and a driver of growth for our organisation. We also launched our Sustainability Framework, which reinforces our ambition to lead sustainability and productivity to benefit our customers, communities, industry, people and shareholders. It is crucial to understand the intricate connection between farm productivity, profitability and sustainability. Enhanced farm productivity, driven by efficient practices and improved yields, directly translates to improved profitability, empowering our farming communities to achieve greater economic resilience and success. Furthermore, profitability and sustainability go hand in hand. By nurturing soil health, conserving resources, and minimising environmental impacts, we can create a synergistic cycle where increased productivity, profitability, and sustainability form the cornerstone of a prosperous agricultural ecosystem. The focus of our sustainability program going forward was developed through engagement with our key stakeholders – ranging from our investors, suppliers, financiers, customers and staff. I extend my sincere gratitude to each of you for providing invaluable feedback throughout this process, aiding us in pinpointing the sustainability issues which hold the most significance to you. Your insights have been instrumental to shaping our actionable strategies. To continue supporting our clients in developing their own sustainable farming practices, Elders launched Thomas Elder Sustainable Agriculture; the evolution of Elders' existing Thomas Elder Institute, whose key focus is to enable Elders to deliver greater impact in the areas of sustainable agriculture and innovation. Examples of how our dedicated staff have supported our valued clients in enhancing the sustainability of their operations are included throughout this report; through supporting the resilience of livestock to heat exposure, supporting horticulture clients to improve yield and profitability while demonstrating stewardship of land, and partnering with clients to develop and implement carbon farming projects. We also continue to support innovation across the industry as a whole. We were a platinum sponsor of the Asia Pacific’s premier agrifood technology event, evokeAG, this year, and committed to return as a platinum partner for the next three years. As we progress, we are elevating our focus on sustainability through heightened oversight. This involves our Board and Management Safety and Sustainability Committees, which will play a pivotal role in driving ongoing enhancements in sustainability practices throughout our organisation. Our ultimate aim is to not only bolster our own sustainability efforts, but also contribute significantly to the advancement of the Australian agriculture industry as a whole. I encourage you to provide feedback to our Sustainability Team (sustainability@elders.com.au) on our performance, and I look forward to sharing with you our progress in future sustainability reports. Mark Allison Managing Director and CEO SUSTAINABILITY PERFORMANCE 4 2023 Sustainability Report CLIMATE TARGETS TO REDUCE GREENHOUSE GAS EMISSIONS1 TARGET FY23 2025 Target achieved through on-site solar generation and procurement and retirement of Large-scale Generation Certificates (LGCs) 100% renewable electricity in all Australian sites by 2025 30 new solar installations at our branches 2030 25% reduction in Scope 1 and 2 emissions intensity against baseline year of 2021 50% reduction in Scope 1 and 2 emissions intensity (tCO2e/$m revenue) by 2030, against a baseline year of 20212 2050 Net zero Scope 1 and 2 emissions by 2050 1 2 Targets are based on Elders’ financial year ending 30 September. Subject to commercially viable technology being available to address feedlot cattle emissions. 17.93 tCO2e/$m revenue in 2023 Down from 18.80 tCO2e in 2022 and 23.86 tCO2e in 2021 59,551 tCO2e this year (Scope 1 and 2) Down from 64,772 tCO2e in 2022 Sustainability Performance DIVERSITY AND INCLUSION 60% 20% Board positions held by women For more information, please see the ‘Governance’ section of this report Women in senior management Improvement programs in place HEALTH AND SAFETY 3 Lost Time Injuries (down from 6 in FY22) $2m invested in safety capital expenditure 10.1 TRIFR Down from 12.6 in FY22 COMMUNITY IMPACT AND INVESTMENT $3.33m 1,000+ Local community sports teams and events sponsored Donations and sponsorships WASTE MANAGEMENT 46,000+ Agricultural chemical containers collected for reuse or recycling 2.18t Bags collected for recycling. Elders now a member of Big Bag Recovery 5 6 2023 Sustainability Report Elders Sustainability Framework Our ambition is to lead sustainability and productivity to benefit our customers, communities, industry, people and shareholders. This is highlighted in our latest Eight Point Plan, which sets out Elders' key strategic priorities from 1 October 2023 through to 30 September 2026. Our Eight Point Plan was developed by our Board and Executive Committee through a series of workshops and strategy sessions in 2023. We provide our customers and clients with the goods and services they need We support our We do our part We operate people and to look after the ethically and to industries and environment the highest communities and animals in standard in which we our care operate 1 HEALTH AND SAFETY Prioritise the safety and wellbeing of our people 2 SUSTAINABLE 3 EMPLOYEE 4 CLIMATE CHANGE FARMING ATTRACTION AND Reduce our carbon RETENTION Enable customers to footprint and support Invest in our people achieve sustainability our customers in and productivity goals and cultivate diversity, climate adaptation inclusion and amid diverse and and resilience demanding conditions, growth for collective empowerment leveraging innovation and success and technology 5 ANIMAL WELFARE 6 CORPORATE 7 COMMUNITY IMPACT GOVERNANCE AND INVESTMENT Safeguard the wellbeing Secure our standing Support rural and of animals in our care as the most trusted regional Australia to and collaborate with our agribusiness brand by positively impact our industry to promote communities upholding ethical livestock welfare and operations responsible stewardship 8 WASTE MANAGEMENT Collaborate with industry to minimise waste for positive environmental outcomes Sustainability at Elders 7 About Elders Elders is a publicly owned agribusiness focused on creating value for its stakeholders both in Australia and internationally. Our operations1 Rural Products Elders is one of Australia’s leading suppliers of rural farm inputs, including seeds, fertilisers, agricultural chemicals, animal health products and general rural merchandise. Our Retail Products division supplies these rural products to primary producers and corporate farm customers through 242 Elders owned retail stores. Additionally, we also provide professional production and cropping advice with 256 agronomists nationwide, including additional specialists operating through Elders Technical Services. Elders also operates a Wholesale Products business supplying independently owned member stores, utilising the AIRR branding. AIRR also provides retail services through corporate owned stores and the Ag, Horse and Pet brand to independently owned member stores. Our backward integration strategy is facilitated through various brands, such as Titan AG, Optifert, Apparent, EPG Seeds and Pastoral Ag. Agency Services Elders provides a range of marketing options for livestock, wool and grain. Elders' livestock network comprises livestock employees and agents operating across Australia conducting on-farm sales to third parties, regular physical and online public livestock auctions and direct sales into Elders-owned and third-party feedlots and livestock exporters. Elders is one of the largest wool agents for the sale of Australian greasy wool and operates a brokering service for wool growers. Our team of dedicated wool specialists assists clients with wool marketing, in-shed wool preparation, ram selection and sheep classing. In 2023, Elders commenced its wool handling operations, a $25 million investment in the Australian wool industry with operations in Perth and Melbourne. Its operations are expected to reach full capacity in FY24, which will deliver greater efficiency and longer-term cost savings within the wool supply chain. Elders also has a 50% interest in AuctionsPlus, an online livestock auction platform, and a 30% interest in Clear Grain Exchange (CGX), which is an online grain trading platform. Real Estate Services Elders’ Real Estate Services include company owned rural agencies primarily involved in the marketing of farms, stations and lifestyle estates. It also includes a network of residential real estate agencies providing sales and property management services in major population centres and regional areas through company owned and franchise offices. Other services include water broking and commercial real estate. Financial Services Elders distributes a wide range of banking, finance, insurance and warranty products and services through its Australian network. We work together with a number of partners to deliver some of these offerings; Rural Bank for banking, StockCo for livestock funding products and Elders Insurance (a QBE subsidiary) for general insurance. In addition, Elders provides Livestock Funding and a Livestock in Transit Delivery (LIT) Warranty Service, both which complement our Agency business, and Home Loans and Commercial Finance Brokerage model. Collectively, these relationships and business units enable us to offer a broad spectrum of products designed to help our customers grow their business and manage cash flow and risk. Feed and Processing Services In Australia, Elders operates Killara Feedlot, a diversified business incorporating grain-fed beef distribution, grass-fattening operations, cow manure processing and irrigated corn production in Quirindi in New South Wales.1 1 In FY22, Elders made the decision to close its Shanghai-based meat distribution business, Elders Fine Foods. Its operations have been progressively wound down throughout 2023. Reporting on Sustainability Our Sustainability Report has been developed to inform our stakeholders of our actions and performance on material topics from 1 October 2022 to 30 September 2023 (referred to herein as ‘the reporting period’), except where otherwise indicated. The content of this report was determined using the GRI reporting principles for defining report content; namely: • Accuracy - report content is correct and detailed • Balance - report content is presented in an unbiased way • Clarity - report content is accessible and understandable • Comparability - report content is reported on consistently over time • Completeness - report content is based on information available and reported throughout the reporting period • Sustainability Context - report content is prepared in the context of current and emerging domestic and international trends in the agriculture industry and the ASX100 • Timeliness - Elders publishes its Sustainability Report annually • Verifiability - report content can be examined to establish its quality Ernst and Young has provided limited assurance in relation to certain disclosures in our Sustainability Report. A copy of its assurance report is available on page 61. 1 More information is available in our Annual Report, at https://elders.com.au/for-investors/performance/periodic-reports/. 8 2023 Sustainability Report Voluntary Alignment GRI Standards This report has been prepared with reference to the GRI Standards. Our GRI Content Index can be found on page 64 of this report. TCFD Recommendations We have chosen to align our climate-related disclosures with the TCFD Recommendations. Our TCFD Index can be found on page 63 of this report. United Nations Sustainable Development Goals Our approach to sustainability is informed by the following Sustainable Development Goals, which we believe we can contribute to most as part of our business: Target 2.4: By 2030, ensure sustainable food production systems and implement resilient agricultural practices that increase productivity and production, that help maintain ecosystems, that strengthen capacity for adaptation to climate change, extreme weather, drought, flooding and other disasters and that progressively improve land and soil quality. We support agricultural productivity and sustainable food production by helping farmers access productive resources and inputs, knowledge, financial services and markets and supporting and undertaking research, development and extension services. More information is available in the following sections of this report: Community Impact and Investment, Climate Change and Sustainable Farming. Target 3.8: Achieve universal health coverage, including financial risk protection, access to quality essential health-care services and access to safe, effective, quality and affordable essential medicines and vaccines for all. In Australia, access to essential health-care services, medicines and vaccines is publicly funded through the Australian Medicare scheme. In addition, at Elders, all our employees are provided with access to counselling services, discounted health insurance, free flu and Q-Fever vaccinations and paid personal leave. Within our local communities, we support several charities and non-for-profit organisations supporting access to health care for people in rural and regional communities, including the Royal Flying Doctor Service and Beyond Blue. More information is available in the following sections of this report: Community Impact and Investment and Health and Safety. Target 5.5: Ensure women’s full and effective participation and equal opportunities for leadership at all levels of decision making in political, economic and public life. Gender equality has been the focus of our diversity program for several years. We aim to promote gender equality within our organisation through our Board-approved diversity objectives, policies and training. More information is available in the Employee Attraction and Retention section of this report. Target 7.2: By 2030, increase substantially the share of renewable energy in the global energy mix. Recognising the importance of a well-established, sustainable energy system, we set a target of 100% renewable electricity in our Australian sites by 2025. We achieved this target in 2022 and 2023 through the procurement of Large-scale Generation Certificates (LGCs) and onsite solar generation. More information is available in the Climate Change section of this report. Target 8.7: Take immediate and effective measures to eradicate forced labour, end modern slavery and human trafficking and secure the prohibition and elimination of the worst forms of child labour, including recruitment and use of child soldiers, and by 2025 end child labour in all its forms. Our Ethical Contracting Framework requires us to assess suppliers for a variety of ethical risks (including those relating to modern slavery) before engaging them and our Responsible Sourcing Code sets out the minimum ethical expectations we have of the suppliers we deal with. Our actions addressing the risk of modern slavery in our operations and supply chains are published annually in our Modern Slavery Statement.1 More information is available in the Governance section of this report. Target 8.8: Protect labour rights and promote safe and secure working environments for all workers, including migrant workers, in particular women migrants, and those in precarious employment. Safety is Elders’ number one priority. Our approach to managing safety within our organisation is set out in the Health and Safety section of this report, and our expectation of our suppliers is set out in our Responsible Sourcing Code.1 Target 9.5: Enhance scientific research, upgrade the technological capabilities of industrial sectors in all countries, in particular developing countries, including, by 2030, encouraging innovation and substantially increasing the number of research and development workers per 1 million people and public and private research and development spending. We invest and participate in industry research, development and extension through our Thomas Elder Sustainable Agriculture team and EPG Seeds. More information on our contribution and work is available throughout this report, and particularly in the Sustainable Farming section. Target 12.5: By 2030, substantially reduce waste generation through prevention, reduction, recycling and reuse. We support initiatives aimed at reducing negative environmental impacts, including reducing waste and reusing and recycling products within our own operations and the operations of our clients. More information on our actions is set out in the Waste Management section of this report. Target 13.1: Strengthen resilience and adaptive capacity to climate-related hazards and natural disasters in all countries. We are taking steps to analyse and develop our resilience to the impacts of climate change and natural disasters. Our actions to date are set out in the Climate Change section of this report. Target 13.3: Improve education, awareness-raising and human and institutional capacity on climate change mitigation, adaptation, impact reduction and early warning. We are also engaging with our workforce and industry on climate change adaptation and mitigation, including through our Carbon Farming Advisory Services initiative. More information is available in the Climate Change section of this report. 1 Available online at https://elders.com.au/sustainability/ethical-conduct. Sustainability at Elders Determining our focus During the reporting period, we reviewed Elders' sustainability topics to ensure that we continue to address and report on issues that are most important to our business and our stakeholders. We conducted a materiality assessment to assess Elders' sustainability topics and their ongoing materiality. We identified eight priority topics featured within our Sustainability Framework on page 6 of this report. In addition, the materiality assessment provided us with visibility of other topics that are emerging in importance to Elders and our stakeholders, including innovation and technology, soil health, severe weather, water availability, diversity and inclusion, energy and emissions, responsible sourcing and cybersecurity. These topics are also discussed throughout this report. Our Materiality Assessment involved: 1. Extensive research 2. Stakeholder engagement 3. Impact Assessment and Prioritisation • Media analysis • Peer analysis and benchmarking • Staff workshops and surveys Interviews with a range of • Consolidating data from steps stakeholders, followed by completion one and two for qualitative and of surveys. Stakeholders included: quantitative analysis • Representatives from the • Scoring identified topics in order investment community of importance to stakeholders • Elders' customers and impacts on our business, • Financiers our external stakeholders, the • Government and economy and the environment. NGO representatives • Research and development institutions • Industry bodies • Suppliers 4. Validation and reporting • Validating prioritised topics with our Sustainability team, Executive Committee and Board • Consolidation of topics where appropriate Stakeholder Engagement Stakeholder engagement is vital to understanding the impact of our operations and is used to inform and support our Board and broader business in identifying, managing and reporting on material sustainability topics and their associated risks and opportunities. Elders’ approach to engaging with stakeholders is set out below. Not all methods are utilised annually. Stakeholder Engagement approach Investment community (including proxy advisors) Elders’ website, AGM, public reporting and announcements, briefings, conferences, regular meetings and discussions, surveys Regulators Reporting, meetings, site visits, through industry associations and responses to enquiries Customers Elders' website, surveys, meetings, industry events, information sessions and media communications Communities Elders' website, participation in community programs and events, industry events, media communications and surveys Employees Surveys, performance reviews, presentations, training, meetings, social events, email and intranet NGOs Meetings and through industry associations Financiers Regular meetings and discussions, surveys Industry bodies Industry conferences, meetings and presentations Contractors and suppliers Elders' website, meetings, supplier conferences and surveys We aim to engage with all members of our investment community, customer, communities and employee stakeholder groups to varying extents through one or more of the methods outlined above. In selecting which regulators, NGOs, financiers, contractors and suppliers to engage with, we consider their relationship with Elders, and their knowledge and experience of the markets important to our business. 9 10 2023 Sustainability Report Health and Safety Safety performance Our employees say: • My work area is safe: 93% (up from 92% last year) Safety continues to be a critical and non-negotiable objective of Elders as we continue to improve our work health and safety systems to achieve our goal of zero harm in our business. During the reporting period, Elders continued to evolve and improve its safety performance, with a focus on four key pillars: • work health and safety risk management • incident and injury management • regulatory compliance • training, education and communication We held our annual ‘Safety Week’, with each day of the week focusing on key risks and products, including traffic management, livestock safety, safety in our real estate business and safety in our agronomy business. We also focused on overall staff well-being, which included the delivery of resilience training sessions and a national step challenge which saw over 630 employees across the country compete and take over 171 million steps over the course of 6 weeks. To support members of the wider agriculture industry, Elders continued to be a gold sponsor of Trialsafe; a forum for agribusinesses convened to support the sharing of safety-related improvement ideas and outcomes specific to the agriculture research sector through seminars and podcasts. • We practice what we preach – nothing is so important that it cannot be done safely: 91% (up from 90% last year) Our key motivation is ensuring everyone goes home from work safely. Through our safety initiatives, we have seen a reduction of lost time and medical treatment injuries during the reporting period. Lost Time Injuries Total Recordable Injury Frequency Rate Health and Safety Assessing performance on safety The key indicators of our performance against our safety objectives at an organisation level include: • total Recordable Injury Frequency Rates (TRIFR), Lost Time Injury Frequency Rates (LTIFR) and Lost Time Injuries (LTIs) • improved safety culture measured through our annual Employee Effectiveness Survey • dedicated safety visits to branches by our Executive Achievement of targets relating to TRIFR are conditions of our Managing Director and Chief Executive Officer's Short-Term Incentive. More information is available in our Annual Report.1 We developed additional indicators at both an Executive and local level to align safety-related behavioural expectations with the achievement of our Eight Point Plan. Additional indicators for Executives include: ensuring actions are complete within the safety management system and 100% completion of online safety training by staff within each Executive's business unit. ‘Driving significant progress in achieving a “zero harm” workplace’ is one of the conditions of our Executive level ShortTerm Inc