Progress report on responsible palm oil sourcing

Following the last time (January 2016 - June 2016),this report marks our second public update on our traceability scores for supply’s for July 2016 - Dec 2016. And we report the progress of the ART (Aggregator Refinery Transformation) plan that we newly started at “PALMAJU EDIBLE OIL SDN BHD, one of our group companies. We have achieved a global palm oil traceability score of 94% in the period from July 2016 - Dec 2016. This refers to a global average of 93% for all Palm Oil (PO) and 96% Palm Kernel Oil (PKO) products. (We had achieved a global palm oil traceability score of 94% from January 2016 - June 2016. This referred to a global average of 93% for all Palm Oil (PO) and 98% Palm Kernel Oil (PKO) products.)

Although the scores differ from one region to the other, we have reached high levels of traceability in most of the markets. Together with our partner we are working on a plan to engage traders and suppliers to understand our supply policy. Fuji Oil Group plans to update its public traceability report on a half-yearly basis. Our next progress report will be released in November 2017.

Traceability to the palm oil mill is Fuji Oil’s first target toward improving the responsibility of oil produced and traded within our supply chain. We are working with TFT to map our supply chain, identify risks and prioritize engagement with suppliers to improve practices on the local. And we aim to achieve full traceability to the oil mill for all palm oil purchased and processed across the Group by 2020.

Note on results

• ・Traceability levels may vary over time due to data availability, changes in sourcing or other issues.
• ・All traceability numbers are based on self-disclosed information provided by our suppliers. In some cases, the GPS coordinates of mills were shared with our partner TFT and not directly with Fuji.
• ・This scoring includes products that are considered provisionally traceable. That is, where mill lists are available that do not include latitude and longitude coordinates.
• ・Some mill data is bound to NDA’s between TFT and our suppliers, while plans for Fuji Oil Group to hold this data are being developed.

2. Progress on ART (Aggregator Refinery Transformation)Plan

We are working with TFT to implement ART (Aggregator Refinery Transformation) plan for Crude Palm Oil (CPO) and Palm Kernel Oil (PKO) suppliers in the supply chain of PALMAJU EDIBLE OIL SDN BHD, one of our group companies.

Contents of activities

The primary activity was initiated through the field assessment of a palm oil mill, their integrated estate area and primary third party supplier to confirm compliance with our policies and to identify issues to be improved. This visit has been bolstered through a literature review of NDPE (=No Deforestation, No Peat　and No Exploitation ) issues in the palm oil industry from Peninsular Malaysia.
These identified issues will form a basis of themes in the workshop (= BLE (Broad Level Engagement)) where the direct and indirect CPO and PKO suppliers of Palmaju Edible Oil widely participate. We intend to cover following topics during the BLE.

• ・Preservation of High Conservation Value (HCV)areas
• ・Preservation of High Carbon Stock (HCS) areas
• ・FPIC: Free Prior and Informed Consent
• ・Environmental impact management
• ・Labor laws and regulatory frameworks relevant to social exploitation in palm oil industry.

Summary and Next steps

This visit and research have significantly enhanced Fuji Oils awareness of the issues within its supply chain. The commonality of findings between the assessed sites and the results published in the literature from the Johor region suggests a high likelihood that many of the suppliers in the Palmaju Edible Oil supply chain also face many of the issues addressed in this report.

As the next step we will discuss and agree with them on the most appropriate way forward in addressing the identified issues. And Intensive Support for Transformation (i-SFT) will be proposed to the assessed entities to close gaps from business as usual to alignment with our Responsible Palm Oil Sourcing Policy. After this working, we will begin the Broad Level Engagements(BLE), whereby the issues , lessons and potential solutions will be shared and addressed in a workshop which involves all of Palmaju Edible Oil’s CPO and PKO suppliers(direct and indirect).