News Release

2019.7.1Progress report on responsible palm oil sourcing

1. Purpose

Fuji Oil Group formulated and announced its Responsible Palm Oil Sourcing Policy in March 2016. The Responsible Palm Oil Sourcing Policy outlines commitments towards a No Deforestation, No Peatland and No Exploitation (NDPE) policy for all palm oil production within our supply chain – Fuji Oil Responsible Palm Oil Sourcing Policy.
https://www.fujioilholdings.com/pdf/en/csr/sustainable/160310.pdf

The progress on our initiatives to implement the Responsible Sourcing Policy is described every six months to our stakeholders. This report will provide information on new developments made since December 2018.
※Regarding traceability, its data in this report are in the period from July 2018 to December 2018.


2. Progress

FUJI OIL Group promotes 8 (eight) key activities to carry out our Responsible Palm Oil Sourcing Policy as explained in Figure 1. This report focuses on 6 activities which have made progresses since December 2018 especially.
We work together with smallholders, mills, refiners and suppliers to identify and address gaps within our supply chain.


Figure 1: Overview of main activities to improve Fuji Oil Group’s responsible palm oil sourcing policy

Overview of main activities to improve Fuji Oil Group’s responsible palm oil sourcing policy

■Traceability : (1) in the figure 1
Our Group is aiming for a transparent and deforestation, peatland development and exploitation-free supply chain whereby we are pushing for traceability in our sourcing regions. We plan 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 99% in the period from July 2018 – December 2018, which has increased 1% as compared with the last reporting period. This refers to a global average of 99% for all Palm Oil (PO) and 99% Palm Kernel Oil (PKO) products.


Transition of traceability score to oil mills(%)
  July 2018 - Dec 2018 January 2018-June 2018 July 2017-December 2017 January 2017 - June 2017
Palm Oil 99 97 96 96
Palm Kernel Oil 99 100 94 97
Total 99 98 95 96

Although the score varies depending on each region, the Group as a whole managed to maintain the tendency of improvement of Palm Oil sourcing score compared with the previous reporting period (July 2018 – December 2018). The 1% increase recorded from the previous six months is mainly from the rise of PO traceability in China. This is mainly due to the continuous efforts in strengthening communication with suppliers in all Fuji Oil sourcing regions. Fuji Oil fully commits to supply chain transparency as stated in our Responsible Palm Oil Sourcing Policy. We will continue to strengthen engagement with suppliers towards improving the full traceability score.


Earthworm Foundation
EF is formerly known as The Forest Trust and went through a major rebrand and name change earlier this year to reflect its broader mission. It is a non-profit organization which supports companies to improve sustainability in their supply chains. Since 2016, Fuji Oil Group has been working together with Earthworm Foundation (EF) to influence and scale up change among our palm oil suppliers. This includes setting targets, conducting regular monitoring and actively disclosing information.


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 Earthworm Foundation (EF) and not directly with Fuji Oil.
  • ・Some mill data is bound to NDA’s between EF and our suppliers, while plans for Fuji Oil Group to hold this data are being developed.


■Improvement activities for PALMAJU supply chain ART (Aggregator Refinery Transformation) Plan: (2) in the figure1
Since July 2016, we have been partnering with the Earthworm Foundation 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 first refineries in Malaysia. The ART plan aims to provide support to changes on the ground faced by actors in the supply chain: refiners, millers and growers.


Figure2: The ART plan process

The ART plan process

As shown above in Figure 2, we have conducted 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
Please refer to the video link below for the achievements we did with company A:
https://www.youtube.com/watch?v=sUWBgu07Tp8

Several milestones were achieved by company A, in which their good practices and progress in their sustainable transformation journey were shared at EF’s Pioneer Forum in 2018.

Pioneer forum is an event for palm oil plantations and oil mills to share good practice. The following link provides more information on company A and the Pioneer Forum:
https://sway.com/pLEOS156F4OgnrC7


②Transformation activities with suppliers other than company A
The Tools for Transformation 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), developed by Earthworm Foundation. The Tools for Transformation Self-Assessment is useful to both suppliers and Fuji Oil to understand the supplier’s current status vis-à-vis Fuji Oil Policy by sending out the questionnaire and answered by suppliers.
Efforts have been carried out in engaging with PALMAJU’s suppliers about Tools for Transformation Self-Assessment. All of PALMAJU’s direct CPO suppliers (7 oil mills) have responded by submitting their questionnaire in the system including company A.

The 2018 self-assessment is closed for verification and we obtained 100% response from all of Palmaju’s direct CPO suppliers. Based on the assessment results, we conducted field verifications at two companies which consists of three Palm Oil Mills. We will continue to undertake efforts to engage with PK suppliers to participate in this self-assessment and to better communicate Fuji Oil Group’s expectation (with regards to our Responsible Palm Oil Sourcing Policy) in order to close the gaps in our supply chain.


■Engagement for Policy Imprementation for direct suppliers other than palumaju’s suppliers : (3) in the figure 1
Other than palm oil mills, Fuji Oil Group also committed to engage with different category of suppliers, 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. The EPI questionnaire covers six main topics relevant to achieving transformation in the palm oil supply chain:

  • ・Company Policy Commitment
  • ・Traceability Status
  • ・Approaches to Changing Practices
  • ・Global Grievance Mechanism & Non-Compliant Supplier Process
  • ・Transparency
  • ・Verification

Fuji Oil Group has engaged with all direct suppliers (22 refineries) globally by sending out the EPI questionnaire in 2018. From this exercise, we found our suppliers NDPE status. We have started to further communicate with each supplier for progress update based on the results of EPI questionnaire.


■Grievance Mechanism: (5) in the figure 1
We have established and published our grievance mechanism in May 2018 to carry out our NDPE policy. The Grievance procedure and Grievance list have been published on our Grievance website on the following link:
https://www.fujioilholdings.com/en/csr/grievance_mechanism/

The Grievance List is updated on a quarterly basis, and Fuji Oil Group is currently revising the Grievance mechanism based on the incidents and experience which took place in the past year. Feedback was received from NGOs, suppliers and buyers which will be utilized to make improvements to the mechanism accordingly. The revised Grievance Mechanism will be published once this review is completed.


■APT Landscapes Initiative – Indonesia : (7) in the figure 1
In 2017, our partner, EF, launched the Areal Prioritas Transformasi (APT) or Priority Transformation Areas initiative in Aceh Taming, Indonesia. The initiative takes a ‘landscape approach’ to addressing the competing interests of stakeholders in ecologically significant areas of Indonesian Sumatra that are at risk of deforestation from palm oil expansion. These areas have been defined and selected based on their importance as key forest and habitat areas that are under threat from accelerating rates of deforestation. The goal of the APT work in Indonesia is to support government land use planning processes and leverage our supply chains connections in order to ensure that land is managed in a way that responds to local environmental, social and economic needs.

Fuji Oil Group has participated in the APT program as one of the key funders in this initiative since April 2018 because 60% of Fuji Oil’s Indonesia sourcing comes from Sumatra. Subsequently we are proud to announce that APT Programme is making progress in achieving its key objectives. As of April 2019, milestones in Aceh Tamiang and Southern Aceh include: increasing stakeholder engagement meetings and consultations, conducting field surveys and planning workshops as well as formation of task force, and actions plans with multi-government agencies and local community and society organizations. Moreover, the EF team is looking forward to positive developments that would accelerate the APT Landscapes initiative mainly:

  • ・Improved coordination among multi-stakeholder initiatives and key stakeholder groups
  • ・A concerted move towards better impact measurement

The APT Programme is currently operating in three landscapes where Indonesia’s precious tropical forests are threatened due to expanding agriculture, which includes two landscapes in Aceh, the last place on earth where orangutans, tigers, elephants and rhinoceroses still co-exist.

■Ethical Recruitment Project; Collaboration with the Malaysian palm oil industry : (8) in the figure 1
RESPECT is EF’s worker welfare programme to protect the rights of workers and their families in global supply chains. In Malaysia, EF carries out the Ethical Recruitment project which is to ensure that palm oil supply chains are free from deforestation and exploitation of workers and communities under the RESPECT. Fuji Oil Group participated in this project by supporting EF’s site visit to one of the group’s direct suppliers (Palmaju’s supplier) to trial the Human Rights Due Diligence Tool for palm oil suppliers on Ethical Recruitment. Using this tool, EF will document good practices, identify gaps or risks and provide a report of findings.

We also participated in the Multi-Stakeholder Forum on Ethical Recruitment for the Palm Oil Industry hosted by EF in June 2019. This event aims to raise awareness amongst millers and planters on good practices in ethical recruitment and to share challenges from EF and partners. Fuji Oil hopes to socialize the use of the Human Rights Due Diligence Tool to support suppliers meet international standards on ethical recruitment.


■Palm Oil Dashboard; a communication tool with stakeholders
To better communicate our sustainability journey to our stakeholders and partners, we have established a Dashboard on our website in April 2019 which tracks our progress. The dashboard inform latest supply chain data such as traceability score, sourcing regions and the number of suppliers and our brief progress,
The Palm Oil Dashboard can be accessed through the following link:
https://www.fujioilholdings.com/en/csr/supplychain_database/



3. Next step

Together with our partner, EF, we will continue our efforts in implementing our Responsible Sourcing Policy. The ART plan will be continued, and we have made progress in introducing a larger amount of suppliers to the Tools for Transformation Self-Assessment. We plan to distribute the Tools for Transformation Self-Assessment to the wider supply shed, indirect (PK) suppliers (oil mills) and even plantations, in the second half of 2019. We will engage with our refinery suppliers based on the EPI responses.

On top of this, we will continue to review and respond to grievances raised through our Grievance Procedure, in which all grievances will be listed in our Grievance List after verification. Fuji Oil Group also will continue to update our supply chain data such as our traceability score t publicly on a half-yearly basis in our dashboard.
https://www.fujioilholdings.com/en/csr/supplychain_database/

Please stay tuned for further information in our next progress report which will be released in November 2019 along with our activities on palm oil sustainability.

End of report

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