Sustainability

Sustainable Procurement

Basic approach

Social issues related to the environment and human rights may arise at production sites for crops such as palm oil and cacao, which are key raw materials for the Fuji Oil Group. In addition, we consider stable procurement of high-quality and safe raw materials that have been produced in a sustainable manner to be important for fulfilling our responsibility to supply products. As a social entity, the Fuji Oil Group conducts environmentally, socially and economically sustainable procurement.

Promotion System

We view sustainable procurement as an important theme of our business strategy and conduct it as an activity theme of the Business Strategy Division under the Chief Strategy Officer (CSO) of the Fuji Oil Group. In addition, we have established the Sustainable Procurement Subcommittee within the ESG Committee, which is an advisory body to the Board of Directors, to make recommendations and reports to the Board of Directors on stable procurement and reducing environmental and human rights risks in raw material procurement.

Highlights: Incentives for Employees
As of 2016, we have established a CSR category in our management awards program to recognize departments and group companies that have made excellent efforts to contribute to society through their business activities. In this category, we presented awards to the divisions in charge that have promoted measures for sustainable sourcing of palm oil and shea nuts.

Sustainable Procurement of Main Raw Materials

Palm Oil

Basic approach

Palm oil and the Fuji Oil Group

Palm oil is oil extracted from the fruit of the oil palm, which grows in tropical regions such as Southeast Asia. Palm oil is easier to process and cheaper than other vegetable oils. For this reason, palm oil is used in a wide range of applications from foods to chemical products. Production volume of palm oil is the world’s largest among vegetable oil materials. However, as the scale of the market continues to expand, there are concerns about environmental problems caused by plantation development and human rights issues such as child labor and forced labor in areas where palm oil plantations are located.
The Fuji Oil Group has pioneered a new food culture by pursuing palm oil’s potential as a key raw material. We consider aiming for sustainable procurement of palm oil to be our responsibility to society.

The palm oil supply chain and the position of the Fuji Oil Group

The palm oil supply chain and the position of the Fuji Oil Group

Responsible Palm Oil Sourcing Policy

In March 2016, we formulated and announced the Responsible Palm Oil Sourcing Policy for the Fuji Oil Group. In this Policy, we commit ourselves to procuring palm oil produced in a responsible manner from suppliers who respect people and the global environment. We strive to conduct procurement in line with this Policy, in cooperation with our stakeholders. We will continue to promote responsible palm oil procurement to ensure that palm oil is accepted around the world as a sustainable raw material.

The Responsible Palm Oil Sourcing Policy PDF(1.62MB)

Objectives

  • Achieve “No Deforestation, No Peatland development, No Exploitation” (NDPE) in the Fuji Oil Group’s palm oil supply chain
  • 100% traceability to mills by 2020

*Peatland: A layer of land that fixes a large amount of carbon in the ground. Development on peat releases a large volume of greenhouse gas into the atmosphere.

Progress

Main progress during FY 2017 was as follows.

  • 55 palm oil smallholders in Sabah, Malaysia   who are receiving support obtained RSPOcertification in May 2017.
  • As a result of activities to improve the supply chain at Palmaju Edible Oil Sdn. Bhd. (Malaysia), a primary palm oil refining company of the Fuji Oil Group, passports were returned to 230 migrant workers at its raw material suppliers as of December 31, 2017.
  • In March 2017, explained the Fuji Oil Group’s approach to major suppliers to reach agreement and request cooperation on NDPE.
  • In May 2018, a grievance (complaint handling) mechanism based on the Responsible Palm Oil Sourcing Policy was established and announced.

Pursuant to the Responsible Palm Oil Sourcing Policy, we disclose our progress once every six months. See the URLs below for progress in FY 2017.

*RSPO: RSPO stands for Roundtable on Sustainable Palm Oil. RSPO is a non-profit organization that brings together palm oil producers, processors and traders, consumer goods manufacturers, retailers, banks and investors, and environmental, social and developmental non-governmental organizations (NGOs) to develop and implement a global standard for sustainable palm oil.

Specific initiatives

Supply chain improvement activities

Based on our Sourcing Policy, we are conducting supply chain improvement activities to resolve environmental and human rights issues at palm oil production sites (plantations). For our primary refining company (Palmaju Edible Oil Sdn. Bhd.), which is located closer in the supply chain to the palm oil production sites, we are rolling out supply chain improvement activities in cooperation with oil mills.
For the supply chain other than Palmaju Edible Oil Sdn. Bhd., we will basically endeavor to make improvements by promoting direct engagement with suppliers. In part of the supply chain, we have started improvement activities in cooperation with suppliers. In FY 2018, we began improvement activities for plantation areas in Indonesia with a high level of environmental risk and started participating in the the Ethical Recruitment Forum to protect the rights of migrant workers in Malaysia.

Overview of supply chain improvement activities

Overview of supply chain improvement activities

1. Understanding of the supply chain through improved traceability

To improve the supply chain, we consider it important to identify the region of production of palm oil purchased and used by the Fuji Oil Group. We are working with the non-profit organization The Forest Trust (TFT) and our suppliers to improve traceability with an initial target of achieving full traceability from plantation to palm oil mill by 2020.
Our traceability from plantation to palm oil mill was 95% in the second half of FY 2017.

*Traceability: The act of and framework for making apparent (i.e. traceable) the production history and distribution routes of food products to ensure their safety.

2. Palmaju Edible Oil Sdn. Bhd. supply chain improvement activities

In October 2016, the Fuji Oil Group started supply chain improvement activities at Group company Palmaju Edible Oil Sdn. Bhd. (Malaysia). First, we shared the Fuji Oil Group’s Sourcing Policy with the company’s suppliers (oil mills). Next, together with one of the suppliers, we conducted on-site inspections of the dealers and plantations related to our oil mill to assess their compliance with the Sourcing Policy and provided support for improvement or correction of issues. As a result of this support, in December 2017 passports were returned to more than 200 migrant workers at oil mills and plantations that are suppliers of Palmaju and 300 migrant workers were able to conclude employment contracts in a language they could understand. We also held two seminars to share information with suppliers other than those subject to evaluation. In FY 2018, we will promote further improvement of our supply chain by providing all of our direct suppliers with self-assessment tools and know-how for improving issues.

Note: Our improvement activities have been covered in a video. See the following URL.

https://www.youtube.com/watch?v=sUWBgu07Tp8&feature=youtu.be

3. Engagement with suppliers

We believe that engagement with suppliers is crucial for improving the Fuji Oil Group’s overall palm oil supply chain. In FY 2017, we engaged directly with major suppliers. In our engagement, we ensured that suppliers understand our Sourcing Policy and discussed supply chain risks and cooperation in our grievance mechanism in the event problems arise. In FY 2018, we plan to expand and strengthen engagement by sending self-assessment tools to all of the Fuji Oil Group’s direct suppliers of palm oil.

RSPO

The Fuji Oil Group endorses the creation of a sustainable production and consumption system, and has been a member of RSPO and used RSPO-certified oil since 2004.
Demand for RSPO-certified oil is increasing, mainly in Europe and the United States. In 2017, the sales volume of our group’s products that use RSPO-certified oil increased to approximately 120,000 tons. This accounts for approximately 17% of the total volume of palm oil handled by the Group. To meet demand for RSPO-certified oil, we are proactively implementing various measures including the installation of additional tanks in Europe, supply chain improvements at group companies and acquisition of supply chain certification at business sites.

*Check the status of our progress at

https://www.rspo.org/

Activities to support smallholders in Borneo, Malaysia

Inefficient palm plantation operation by some smallholders has been identified as one of the factors causing environmental and human rights problems. To help these farmers gain expertise in environmentally, socially and economically sustainable plantation management, in January 2016 the Fuji Oil Group joined a smallholders support project called the Wild Asia Group Scheme (WAGS), which has been implemented by Wild Asia (an NGO) and our supplier. This project has provided educational support for four years with the aim of improving the productivity and working environment of approximately 110 smallholders in the supply chain of our group.
In May 2017, 55 smallholders that receive our support acquired RSPO certification. This means that as a result of our support, the smallholders can now produce palm oil with consideration for human rights and the environment. In addition, as one smallholder commented, by receiving instruction in the proper method for using pesticides, “the amount of pesticide used has decreased, leading to lower costs.” We will continue to emphasize dialogue with and support for local residents.

Establishment of UNIFUJI SDN. BHD. (Malaysia)

Promoting sustainable palm oil sourcing and accomplishing responsible product supply to customers and consumers are important themes of the Fuji Oil Group's business strategy. UNIFUJI SDN. BHD. is a joint venture with UNITED PLANTATIONS BHD., a partner that shares our intentions regarding sustainable palm oil. Our joint venture partner UNITED PLANTATIONS conducts sustainable plantation management in consideration of the human rights of its workers and the environment. UNIFUJI will secure palm oil that is a high-quality, sustainable raw material from the plantation of UNITED PLANTATIONS to produce and sell high-value-added palm oil products using the fractionation technology that is a strength of the Fuji Oil Group. UNIFUJI’s plant, which is scheduled to start operation in the second half of 2018, is located within the plantation of UNITED PLANTATIONS and uses energy from biomass and wastewater.

Establishment of a grievance mechanism

To put our Responsible Palm Oil Sourcing Policy into practice, in May 2018 we established and announced a grievance mechanism for processing complaints. It is a mechanism for handling any problems raised with the Fuji Oil Group by stakeholders in accordance with our Responsible Palm Oil Sourcing Policy. For transparency in handling grievances, we have set up the Fuji Oil Group Grievance Web Page (English) on the Group website. We strive to update the status of progress at least once each quarter and disclose related information to our stakeholders on this web page.

See the Fuji Oil Group Grievance Mechanism webpage at the following URL.

https://www.fujioilholdings.com/en/csr/grievance_mechanism/

Breeding research

As palm oil consumption continues to grow globally, regions suitable for cultivation of the oil palm remain very limited, requiring increases in productivity and quality through improvements in oil palm varieties and higher yield per unit area. Since 2011, the Fuji Oil Group has been conducting joint research to improve palm productivity and quality with the Agency for Assessment and Application of Technology (Badan Pengkajian dan Penerapan Teknologi: BPPT), a government research organization in Indonesia, the world’s largest palm oil-producing country. This has contributed to the development of palm research in Indonesia, including success in major improvements in tissue culture techniques that have led to the production of superior oil palm seedlings and improved varieties. We intend to continue to contribute to the development of the palm oil industry and to sustainable palm oil production by working to help improve global environmental problems such as the decrease in tropical rainforests due to the expansion of palm plantations.

  • Breeding research01
  • Breeding research02

Cooperation with the industry

The Palm Oil Working Group, the Japan Sustainability Local Group of the Consumer Goods Forum

The Fuji Oil Group is participating in the Palm Oil Working Group, the Japan Sustainability Local Group of The Consumer Goods Forum (CGF), an international industry organization for consumer goods. Members from various business categories such as manufacturers of finished products and retail and wholesale companies participate in the Palm Oil Working Group to collect information and hold discussions aimed at achieving sustainable palm oil procurement in Japanese society.

Japan Sustainable Palm Oil Conference

In November 2017, we co-sponsored the Japan Sustainable Palm Oil Conference, an event for Japanese society to consider sustainable palm oil sourcing, and took part in the panel discussion. We introduced our smallholder support and supply chain improvement activities in cooperation with local NGOs and used the opportunity to share information and raise issues for Japanese society.

Cacao

Basic approach

The demand for chocolate is growing globally but there are concerns about a future tightening of supply and demand due to supply-side problems at plantations for cacao, which is the raw material of chocolate. These problems include farmers who are aging or who give up farming, the aging of cacao trees, the impact of climate change on production areas and low productivity due to a lack of knowledge and materials. Also, a complex web of human rights and environmental issues including poverty, child labor, forest destruction, and soil contamination have been identified among cacao farmers, who are mostly smallholders.
Cacao is one of the key raw materials for the Fuji Oil Group. The Group formulated the Fuji Oil Group Sustainable Cacao Sourcing Policy to continue to deliver the joys of food through products using sustainable cacao in the future. We aim to conduct sustainable cacao raw material sourcing based on this policy.

Responsible Cacao Sourcing Policy(138KB)

Objective (Formulation currently under review)

We are currently examining and formulating objectives for realizing a sustainable cacao sourcing policy.

Progress

  • Reviewed strategies for stable sourcing of cacao produced in a sustainable manner
  • Review of Sustainable Cacao Sourcing Policy

Specific initiatives

Support activities for communities

Support activities in Ghana

Ghana is one of the world’s major producers of cacao beans. Since 2014, Fuji Oil Co., Ltd. has been using a portion of the purchase price of cacao beans to provide community support along its supply chain in Ghana. The Company constructed a well in 2014 and has been conducting research to improve yield since 2016 for the communities receiving support.

Construction of a well (2014)

Before the wells were constructed, community residents did not have access to safe drinking water, and had to rely on contaminated water in ponds and rivers for water for daily use, seriously affecting the health of residents. Also, children often had to fetch water from faraway places, and this deprived some of them of the opportunity to receive school education. However, now local residents use water from wells for drinking and cooking, and some people come a great distance from neighboring villages to draw water from the wells. We have received many joyful comments from local residents, such as "I use the well every day to get clean drinking water."

Research to improve yield (since 2016)

We have selected a demonstration plantation to study the yield of cacao cultivated under different conditions. From October to December 2017, its yield increased by 18% compared with the same period a year earlier. We also conduct education on farming methods for cacao producers in the vicinity of the demonstration plantation. The content of the training includes plantation management (importance of weeding and pruning), pesticide management methods, and cacao harvesting and post-harvest management methods. When further improvement in yield at the demonstration plantation has been confirmed, we intend to provide information to nearby producers that will lead to an increase in production in the community.

We will continue to support cacao producers with the aim of establishing a sustainable cacao production and consumption system.

  • Children in the community

    Children in the community

  • Billboard at the demonstration plantation for research on yield

    Billboard at the demonstration plantation for research on yield

Participation in the World Cocoa Foundation (WCF)

Fuji Oil Co., Ltd. has been a member of the World Cocoa Foundation since 2012. The World Cocoa Foundation aims for the sustainable development of the cocoa industry and conducts activities to support farmers under the WCF’s Commitment.

The Commitment of World Cocoa Foundation

  • world Cocoa Foundation
  • WCF’s Commitment

Handling of certified cacao raw materials

Fairtrade

FAIRTRADE

FUJI OIL EUROPE(Belgium) has obtained Fairtrade certification, the aim of which is to promote the purchase of raw materials and products from developing countries. The company produces and sells products made from Fairtrade-certified raw materials according to customer requests.

UTZ

UTZ

The Fuji Oil Kanto Plant (Japan), FUJI OIL EUROPE (Belgium), and WOODLANDS SUNNY FOODS PTE. LTD.(Singapore) have obtained UTZ certification (an international certification program for sustainable agriculture) on a continuous basis. The Fuji Oil Group will promote the acquisition of UTZ certification according to customer demand.

Soybeans

Basic approach

Soybeans are cultivated in a wide range of areas from the cool temperate zone to the tropics, but there are concerns in soybean production areas about issues such as deforestation for farmland cultivation and soil contamination in agricultural areas due to spraying of pesticides. With the conviction that soybeans will relieve the global food-supply crisis, the Fuji Oil Group has been at the forefront of companies pursuing the potential of soybeans as a food ingredient since 1957. Believing that we should contribute to resolving social issues through our soybean business, we aim for procurement activities that take the global environment and society into consideration.

Specific initiatives

Production area of soybeans procured by the Fuji Oil Group

The Group procures only soybean ingredients from North America, China and Japan.

Procurement of non-GM soybeans

Genetically modified crops are viewed with suspicion by many consumers in that their cultivation methods may lead to the destruction of biodiversity. The Fuji Oil Group procures only non-genetically modified (non-GM) soybeans. In North America, both GM soybeans*1 and non-GM soybeans are distributed in large quantities. Therefore, regarding the procurement of soybeans produced in North America, we conduct strict control to ensure that non-GM soybeans shipped to us are cultivated, transported and stored separately from GM soybeans.
In China, a major procurement source of soybeans for us, cultivation of GM soybeans is prohibited, but in recent years, GM soybeans grown outside China have been imported as raw materials for oil extraction. Therefore managing non-GM soybeans by strictly separating them from GM soybeans is increasing in importance year by year. In addition to obtaining IP certification*2 in 2013, Jilin Fuji Protein (China) has continued to respond to strict management requirements by adopting management know-how from Fuji Oil Group.

*1 Genetically modified (GM) soybeans Soybeans that have been created by adding functions such as herbicide resistance by means of gene recombination, to produce more stable yields. Although GM soybeans account for more than three-quarters of the world’s soybean production, the use of GM soybeans still raises concerns about the environmental impact of their cultivation methods.
*2 IP certification: Non-GMO Supply Chain Certification

Shea Nuts*

Basic approach

To meet diversifying demand for chocolate and food products that contain it, cocoa butter equivalents (CBE) are also diversifying. Shea butter, which is produced in Africa, is an indispensable raw material for making superior CBE. Shea butter has long been used in food products, but its popularity for use in cosmetics and other applications has also risen in recent years. The Fuji Oil Group wants to contribute through its business to the sustainable development of shea nut production areas from economic, social and environmental perspectives. Group company International Oils and Fats Ltd. in Ghana carries out the nut-sorting process for shea butter in-house, thus adding value to products on-site (Ghana) and contributing to the local economy and the creation of employment opportunities.

*Shea nut: The shea nut is the seed of the fruit of the shea tree. Major producers include Nigeria, Mali, Burkina Faso and Ghana. Shea butter produced from the nuts is used in foods, cosmetics and soap.

Specific initiatives

Participation in the Global Shea Alliance (GSA)

The shea nut industry would be difficult to sustain without the harvesting work performed by what is claimed to be approximately 16 million women in West Africa. Therefore, achieving gender equality, securing living standards and ensuring worker safety at harvest are important. In addition, tree cutting to secure fuel for the local people’s daily lives is among the issues that have been identified as an environmental problem. Because these issues cannot be resolved by one company alone, discussions are being conducted at the Global Shea Alliance (GSA), which is made up of 430 members in 31 countries (as of March 2017). We network with stakeholders and gather information through the GSA. As part of these efforts, the Fuji Oil Group participated in the international conference "Shea 2017: Seeds of Change" held in Cotonou, Benin in March 2017.

Shea tree
Shea tree

Participation in a UNDP project (regional reconstruction, advancement of women and promotion of environmental protection through shea cultivation in Ghana)

Fuji Oil Holdings and FUJI OIL EUROPE (Belgium) are considering participation in the Ghana Shea Landscape REDD ++ Project organized by the United Nations Development Programme (UNDP). This project is scheduled to promote multifaceted activities including creation of job opportunities, planting activities and support for community development so that the shea nuts industry can promote community revitalization and women's advancement and reduce negative impact on the environment.

Stable procurement of raw materials

Basic approach

Crop failure due to climate change and disruption of the supply chain due to natural disasters have a major impact on stable procurement of sustainably produced raw materials. As a response to these procurement risks, we strive to build a structure for stable procurement of raw materials under normal conditions.

Basic Purchasing Policy

In 2010, Fuji Oil Co., Ltd. formulated the Basic Purchasing Policy, in accordance with which we conduct all procurement activities.

  • We stably procure high-quality raw materials from a wide variety of business partners at reasonable prices through fair and equitable deals while strictly complying with applicable laws and social norms.(Fairness, legal compliance and ethics)
  • In order to accomplish the above objectives, we achieve coexistence and co-prosperity with our business partners by deepening collaboration through joint creative activities.(Partnership)
  • In order to contribute to the realization of a society that can develop sustainably, we consider the global environment, labor, human rights, etc., in our procurement.(Social responsibility)

Objective

Build a stable procurement system by 2020

Progress

The following are ongoing measures.

  • Increase in the number of production areas
  • Purchasing from multiple suppliers
  • Introduction of a cooperative purchasing system among group companies

Specific initiatives

Response to procurement risks due to climate change

Global warming will bring about higher temperatures, a rise in sea levels and changes in precipitation patterns, resulting in increased frequency of extreme weather events such as floods, droughts and heat waves.
These climate changes are likely to affect the supply and demand of agricultural products, and therefore pose a significant threat to our stable procurement of raw materials, as our Group uses agricultural products as raw materials. To prepare for such risks, in addition to securing raw materials by concluding long-term contracts with particular suppliers who ensure a stable supply, we are promoting the procurement of raw materials from multiple sources and suppliers.

Response to procurement risks caused by large-scale disasters

It is important to ensure business continuity for the entire supply chain in the event of a large earthquake or other natural disaster. As a countermeasure for the risk of delays in raw material supply due to disasters, Fuji Oil Group companies in Japan confirm the response systems of their suppliers through questionnaire-based surveys. In a business continuity plan (BCP) survey conducted in FY 2017, 72% of manufacturers responded that they will be able to continue supply based on the measures of their respective BCPs. For the 22% of manufacturers who responded that supply would not be possible until resumption of service and the 6% of manufacturers who responded that they would have problems handling raw materials, we are conducting follow-up checks and working to create a supply chain BCP and ensure continuity with alternative products, including purchasing from multiple sources.
Due to a labor shortage in Japan in recent years, and a particularly severe shortage of drivers, conditions have emerged that give rise to obstacles to timely delivery. To procure raw materials in a stable manner and continue business, we are promoting various measures in cooperation with our business partners, including storing delivered raw materials in warehouses around our business operations. To respond to these changes in the business environment, four group companies in Japan will conduct centralized purchasing, including sharing of raw materials, as part of a revision of the Group’s supply chain to continue business.

CSR Procurement Guidelines and supplier surveys

CSR Procurement Guidelines

Under the belief that cooperation with business partners is essential to achieving sustainable procurement, we have drawn up and announced a list of matters requested of suppliers by four group companies in Japan – Fuji Oil Co., Ltd., TORAKU FOODS CO., LTD., FUJI FRESH FOODS CO., LTD., , and OMU MILK PRODUCTS CO., LTD.– as our CSR Procurement Guidelines (2nd Edition).

CSR Procurement Guidelines (2nd Edition) PDF(140KB)

Conducting supplier surveys to promote stable procurement

To ensure that procurement is undertaken in accordance with the CSR Procurement Guidelines (2nd Edition), in March 2016 we conducted a questionnaire-based survey of partner manufacturers and trading companies and identified companies that can maintain the safety of raw material supplies. In addition, in FY 2017, manufacturers and trading companies cooperated in our safety check of all the raw materials we use (factory inspections, etc.), and we confirmed that there were no major problems at 70% of manufacturers.
To improve food safety, we will make requests for reconfirmation and improvement, among other measures, at the other 30% of manufacturers, from whom we expect understanding and cooperation. In addition, based on the results of the BCP questionnaire conducted in November 2017, we will regularly disseminate our procurement policies and strengthen communication with our business partners so that we receive a “stable and continuous” supply of “reliable, safe and sustainable raw materials.”

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