Sustainability

Sustainable Procurement

Basic Concept
To fulfill our responsibilities in supplying products, we believe it is important to procure high-quality and safe raw materials in a stable and sustainable manner. In addition, 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. We promote environmentally, socially and economically sustainable procurement as we continue to develop sustainably together with society.

Palm Oil

Our Stance: The Responsible Palm oil Sourcing Policy

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. Palm oil has the largest production volume among oil materials in the world. 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.

Palm oil is a key raw material for the Fuji Oil Group, which has historically pioneered a new food culture by pursuing palm oil’s potential. We consider aiming for sustainable procurement of palm oil to be our responsibility to society.

Changes in production volume of major oils

graph Source:OIL WORLD

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

flow

Responsible Palm Oil Sourcing Policy

In March 2016, we formulated and announced our Responsible Palm Oil Sourcing Policy as the stance for the entire 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.

Responsible Palm Oil Sourcing Policy

Membership in RSPO and use of certified oil

CERTIFIED SUSTAINABLE PALM OIL RSPO-2-0009-04-100-00

Since 2004, Fuji Oil Group has been a member of RSPO* and has used RSPO-certified oil.

Demand for RSPO-certified oil is increasing, mainly in Europe and the United States. In 2016, the sales volume of our group’s products that use RSPO-certified oil increased to approximately 110,000 tons. To promote the use of RSPO-certified oil, we are proactively implementing various measures including the installation of additional tanks in Europe and supply chain improvements at group companies.

We also participated as a sponsor and executive committee member of RSPO Japan Day, held in September 2016. At this official RSPO event, representatives of Japanese industries held discussions on social and environmental issues related to palm oil. We announced the issues faced by smallholders (small-scale farmers) and our support activities, widely disseminating information to our Japanese stakeholders.

*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.

Management systems for RSPO-certified sustainable palm oil

1. Identify Preserved (IP)

Complete segregation of RSPO-certified sustainable palm oil from a single certified oil mill through to end users

2. Segregation (SG)

Complete segregation of RSPO-certified sustainable palm oil from multiple certified oil mills through to end users

3. Mass Balance (MB)

A system that allows mixing of RSPO and non-RSPO certified palm oil through to end users. Companies are required to control the volume of certified palm oil they purchase and sell in the supply chain.

4. Book and Claim (BC)

A system for trading credits for RSPO-certified palm oil. RSPO-certified plantations (producers) are issued "credits" depending on the production volume of certified palm oil. End users can support producers by purchasing credits, as money paid for credits is paid directly to producers of RSPO-certified palm oil.

Measures to improve traceability*

In implementing our Responsible Palm Oil Sourcing Policy, we consider it important to improve the traceability of palm oil purchased and used by the Fuji Oil Group, and to ensure that our suppliers understand the Sourcing Policy. In July 2016, our group became a member of The Forest Trust (TFT), a non-profit organization that provides support in the field of raw material sustainability. We are working with TFT and our suppliers to improve traceability and the supply chain, with an initial target of achieving full traceability from plantation to palm oil mill by 2020.

*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.

Activities to improve the supply chain

In October 2016, we started supply chain improvement activities at group company Palmaju Edible Oil Sdn. Bhd. (Malaysia). First, we shared our 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 its oil mill to assess their compliance with the Sourcing Policy. We will provide feedback on the assessment results to the relevant supplier to improve or correct issues. We will also share the results with suppliers outside the scope of the assessment, using case studies to enable improvements and corrections to their operations.

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 participated in the 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 some smallholders in the supply chain of our group.

In November 2016, our employees visited smallholders that had received our support and confirmed that the support, including RSPO audits, was of value to them. We will continue our support and emphasize on-site dialogue.


  • With smallholders supported
    by our group and the supervisor from Wild Asia


  • A community bulletin board
    at a supported plantation shares information
    on support plans and their progress, and on RSPO.

Comments from smallholders supported by our group

"Since joining WAGS, there have been many benefits. I have reduced my use of pesticides and fertilizers. I have had a small increase in profits."

Azmey bin Sakong

Farm owner

Comment from Wild Asia
Aiming for strong bonds through direct support for smallholders

It is exciting that Fuji Oil Group has been a supporter of this project. Wild Asia has been wanting to create meaningful relationships between smallholders and the users of palm oil, and we see this as a very important step.

Furthermore, this partnership, which links many important partners together in the palm oil supply chain provides a direct and more targeted approach to support smallholders in palm oil regions. This support has enabled us to provide better education on good farming practices, helped create stronger market links and built a better relationship between the producers and their buyers. This we feel embodies the spirit of United Nations Sustainable Development Goals "Partnerships for the Goals".

Dr. Reza Azmi

Executive Director and Founder, Wild Asia

Shea Nuts*

Sustainable procurement of shea nuts

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. Group company International Oils & 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.

Membership in the Global Shea Alliance

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, the capital of Benin, in March 2017.


  • Shea tree


  • Visiting the members of the shea nut harvesting community

Cacao

Sustainable procurement of cacao as a raw material

The demand for chocolate is growing globally but the production of cacao, which is the raw material of chocolate, is not keeping up with demand. Also, the issues of child labor on cacao farms and poverty due to unfair trade have been identified.

In response to this situation, the Fuji Oil Group has expanded the purchase of traceable cacao beans to promote the establishment of a sustainable cacao production and consumption system. Traceable cacao beans allow us not only to determine whether cacao beans are produced and distributed in a way that respects human rights and the environment, but also to support local communities because part of the payment will be used to improve local infrastructure and education.

Membership in the World Cocoa Foundation (WCF)

Fuji Oil Co., Ltd. has been a member of the World Cocoa Foundation (WCF) since 2012. Aiming to promote the sustainable development of the cocoa industry, the WCF offers technical and other support to cacao farmers under the WCF’s Commitment.

The Commitment of World Cocoa Foundation

World Cocoa Foundation WCF’s Commitment Profit: Ensuring a sustainable supply of quality cocoa that benefits both growers and users. People: Empowering farmers to make choices that help develop strong, prosperous cocoa communities. Planet: Promoting sustainable production practices that maintain and increase biodiversity and crop diversification.

Acquisition of Fairtrade Certification

Acquisition of Fairtrade Certification

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.

Procurement of UTZ-certified cacao

UTZ Better farming Better future

The Fuji Oil Kanto Plant (Japan), Fuji Oil Europe (Belgium), and Woodlands Sunny Foods (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.

Social Contribution Activities

Support activities in Ghana

Ghana is one of the world’s major producers of cacao beans. It has been three years since we constructed two wells in areas in Ghana, where our Group has purchase contracts, in 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, they often had to fetch water from faraway places, and this deprived some children 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." We will continue to support cacao producers through efforts including a plan for measures to improve yield, aiming to establish a sustainable cacao production and consumption system.


  • A well constructed by the Fuji Oil Group


  • Children in the community

Soybeans

Stable procurement of non-GMO 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-GMO) soybeans. In North America, both GMO soybeans 1 and non-GMO soybeans are distributed in large quantities. Therefore, regarding the procurement of soybeans produced in North America, we conduct strict control to ensure that non-GMO soybeans shipped to us are cultivated, transported and stored separately from GMO soybeans.

In China, a major procurement source of soybeans for us, cultivation of GMO soybeans is prohibited, but in recent years, GMO soybeans grown outside China have been imported as raw materials for oil extraction. Therefore managing non-GMO soybeans by strictly separating them from GMO 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

Stable Procurement Efforts

Basic Purchasing Policy

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

Basic Purchasing Policy (CSR procurement)

  • 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)

Cooperation with customers

Procurement in accordance with the CSR Procurement Guidelines

Under the belief that cooperation with business partners is essential to achieving sustainable procurement, we reviewed the CSR Procurement Guidelines formulated in 2012 to better reflect social demands and the Group’s policy, and published the second edition of the guidelines in March 2016, targeting four group companies in Japan: Fuji Oil Co., Ltd., Toraku Foods Co., Ltd., Fuji Fresh Foods Co., Ltd., and Omu Milk Products Co., Ltd.

CSR Procurement Guidelines (2nd Edition)

Implementation of a survey based on the CSR Procurement Guidelines (2nd Edition)

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. As of the current survey, we have added questionnaires for trading companies to identify companies that can maintain the safety of raw material supplies.

To build ongoing cooperative relationships, we will regularly disseminate our procurement policies and strengthen communication so that our partners understand the stance of the Fuji Oil Group.

Responses from trading companies

Status of supervision/direction for maintaining quality and improving safety of raw material supplies (inspections for manufacturers)
Status of audit/ascertainment of compliance with other countries’ laws and regulations for raw material supplies

For trading companies, we checked their quality assurance systems. This was because of the need to build a system with trading companies in the future. Half of the companies conduct safety maintenance activities for raw material supplies, and 45% conduct overseas legal compliance audits. We will proceed with the construction of an inspection management system centered on these trading companies, with the aim of continuous stable procurement of reliable and safe raw materials.

Responses from manufacturers

Back-up production in an emergency
Emergency supply system for disasters, etc.

Among manufacturers, most of our partners were establishing compliance systems and making efforts to stabilize quality and prices. On the other hand, they were lagging behind in their initiatives for consideration of the environment at 40% and for building a risk management system at 15%. Based on this survey, we are narrowing our focus on true partners with whom we can proceed.

Response to procurement risks

Response to the risk of climate change

Global warming will not only cause a rise in temperatures, but also bring about 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, the Fuji Oil Group confirms the response systems of its suppliers through questionnaire-based surveys. In the survey conducted in FY 2016, 86% of manufacturers who are suppliers responded that they have formulated or are planning to formulate a business continuity plan (BCP). We will work to continue operations in the event of an emergency through measures such as having manufacturers establish a BCP and strengthening collaboration with trading companies that secure alternative products and strive for stable supply.

We have recently faced a severe shortage of labor, especially drivers. To procure raw materials in a stable manner and continue business even in this situation, we are promoting various measures in cooperation with our business partners, including storing delivered raw materials in warehouses around our business operations. Four group companies in Japan are reviewing the Group’s supply chain in anticipation of environmental changes such as these, so that we can continue business by proactively responding to changes.

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