Progress report on responsible palm oil sourcing

Fuji Oil Group formulated and announced Responsible Palm Oil Sourcing Policy in March 2016. The Responsible Palm Oil Sourcing Policy commits itself to no deforestation, no peatland and no exploitation policy for all palm oil within our supply chain.
In this report, we will report the progress of initiatives to implement our sourcing policy since the previous report (November 2017).

（1）Traceability
Our Group is working to figure out traceability to grasp and improve the supply chain. We aim to achieve full traceability to oil mills for all palm oil purchased and processed across the Group by 2020.
We have achieved a global palm oil traceability score of 95% in the period from July 2017- December 2017. This refers to a global average of 96% for all Palm Oil (PO) and 94% Palm Kernel Oil (PKO) products.

Transition of traceability score to oil mills（％）

	July 2017 - December 2017	January 2017 - June 2017	July 2016 - December 2016	January 2016 - June 2016
Palm Oil	96	96	93	93
Palm Kernel Oil	94	97	96	98
Total	95	96	94	94

Although the score varies depending on each region, the Group as a whole managed to maintain the consistency of Palm Oil sourcing score compared with the previous reporting period (January 2017 - June 2017). This is mainly due to the continuous effort in strengthening the communication with suppliers in all Fuji Oil Group sourcing regions. However, there was slightly drop in Palm Kernel Oil sourcing score during the period. Fuji Oil Group fully commits to supply chain transparency as stated in our Responsible Palm Oil Sourcing Policy. Hence, we decided to stop provisional traceability which slightly bring down the score for Palm Kernel Oil during the period. We will continue to strengthening engagement with suppliers towards improving the traceability score.

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 (The Forest Trust) a global non-profit organization and not directly with Fuji.
• ・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）Supply chain improvement activities – Palm Oil Mills－
ART (Aggregator Refinery Transformation) Plan
Since July 2016, we have been partnering with TFT in the Responsible Palm Oil Sourcing Policy implementation. As part of the policy implementation strategy, we have initiated an 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, in which PALMAJU is one of our group companies and one of the 1st refineries in Malaysia.
Please see our progress article below:
http://www.tft-earth.org/stories/blog/fuji-oil-bringing-change-malaysian-palm-oil/

As shown in the above figure＜1＞, as of May 2018, we conduct two types of activities: "① Transformation activities with company A" and "② Transformation activities with suppliers other than company A"

①Transformation activities with company A
As reported in our previous Progress Report dated 27th November 2017, the transformation activities with company A had completed with achievements stated below:

・Integrated No Exploitation Policy for company A developed and adopted
・Company Grievance procedure adopted and implemented by company A
・Code of conduct for Labour Recruiter adopted and implemented by company A
・Passport return procedure for foreign workers adopted and implemented by company A
・All foreign and local workers of company A received a copy of their signed employment contract. A briefing was also provided by the company A to help workers understand the content of the contract

Please refer to the video below for further information:
https://www.youtube.com/watch?v=sUWBgu07Tp8

With the outstanding progress and commitment shown by company A, they were invited to Pioneer’s Forum, to share their progress and achievements towards Fuji Oil Responsible Palm Oil Sourcing Policy. Pioneer’s Forum is an initiative by our working partner – TFT to provide platform for forward thinking companies to share their transformation journey and as well as their good practices on the ground. We are proud that company A was invited as one of the representatives from the industry to attend this forum.

Please refer to the below for more information:
https://sway.com/pLEOS156F4OgnrC7

②Transformation activities with suppliers other than company A
Based on the knowledge and experience gained from transformation activities with company A, we have taken one step further to share the exemplary management of oil mills, plantations and smallholders with a wider range of suppliers last year. In April 2018, we held a one-day seminar for suppliers other than company A (oil mill). At the seminar, we reinstated our sourcing policy commitment and made requests to the suppliers to use the online system called Tools for Transformation – Self Assessment (T4T Self-Assessment) which is developed by our working partner – TFT. Most of the suppliers participated in the seminar have an improved understanding of NDPE (No Deforestation, No Peat, No Exploitation).
T4T Self-Assessment is a tool to help palm oil suppliers to self-assess and understand where they stand against Fuji Oil Responsible Palm Oil Sourcing Policy requirements (No Deforestation, No Peat, No Exploitation). T4T Self-Assessment is useful to both suppliers and Fuji Oil Group to understand the supplier’s current status vis-à-vis Fuji Oil Policy by sending out the questionnaire and answered by suppliers. This system will cover all PALMAJU EDIBLE OIL SDN BHD suppliers including company A.

（3）Engagement for Policy Implementation (EPI) - Refineries
Other than palm oil mills, Fuji Oil Group also committed to engage with different category of supplier, in this case refineries, to understand their supply chain progress toward implementing Responsible Sourcing Policy with EPI. EPI is a process for understanding where suppliers are in their transformation journey and in meeting our policy, and for supporting suppliers in that journey through regular updates. The EPI template is used for direct suppliers, refineries, to communicate the current status of their transformation or compliance efforts, and to capture progress over time. The template covers a range of topics considered to be important to implementing a robust responsible sourcing program.
Currently Fuji Oil Group have started this process by sending out the questionnaire to all direct suppliers (refineries). We encourage our suppliers to answer openly and accurately, which will allow us to better identify and address gaps in order to support our suppliers in progressing towards policy compliance. Our follow up with each supplier will be based on the initial supplier responses to the EPI questions.

（4）Supporting smallholders
The challenge for palm oil smallholders is that sustainable farm management is difficult due to lack of available knowledge. Fuji Oil Group supports smallholders in Kinabatangan of Saba, Malaysia with Wild Asia who is a NGO and our supplier from January 2016.
We will continue the support with Wild Asia and our supplier.

（5）Grievance Mechanism
We have established and published our grievance mechanism to carry out our NDPE policy in May 2018. The Grievance procedure and Grievance list have been published on our Sustainability WEB site.
https://www.fujioilholdings.com/en/csr/grievance_mechanism/

3. Next steps

End of report