AAK Responsible growth | 19 Palm oil traceability progress 3ROLF\LQWRDFWLRQ To deliver on our sustainable palm oil policy commitments of no deforestation and no development on peatland, we have commenced tracing our palm oil back to the mill where it was produced, and back to the plantation on which it was grown. AAK believes that having traceability to a known source is an important step toward meeting the standards set by ourselves and our customers. Traceability itself is not an objective, but a tool in the process of making a proper risk evaluation of the origin of our palm oil. Our traceability process is well supported by the majority of our current palm oil suppliers, who have submitted required information to AAK. This information includes the name and location of supplying palm oil mills. As stated in AAK’s sustainable palm oil policy, the target is to have a palm oil supply chain that is 100 percent traceable to mill by the end of 2014, and to plantation level by 2017. 2XUHWHUQDOSDUWQHU On our onwards journey to ensure a sustainable supply chain for palm oil, AAK has recognized the need for external expertise. To that end, AAK has chosen Proforest as a partner. Proforest is supporting us in implementing a risk management-based approach to our supply chain assessment to provide assurance on no deforestation and no development on peatland. Initially, Proforest will focus on the information collected by AAK, and support us in identifying areas at potential risk of deforestation and peatland development in our palm oil supply chain. 7UDFHDELOLW\SURJUHVV Information is being collected from our palm oil suppliers around the world in order to trace our supply base. The majority of AAK’s palm oil suppliers have been very cooperative in sharing the location of mills from where their crude oil is sourced, enabling us to achieve VWURQJSURJUHVV%\$XJXVWZHKDYHDFKLHYHG traceability to mills of 89 percent for palm oil sourced at origin, 76 percent for palm kernel oil sourced at origin, 13 percent for palm oil and palm kernel oil sourced from outside ori- JLQDUHDVVXFKSURGXFWVDUHVXEMHFWWRPRUH FRPSOHVXSSO\FKDLQVDQGSHUFHQWIRU palm oil by-products and residuals. We still see challenges ahead to attaining within 2014 full traceability for oil sourced from outside origin areas, palm kernel oil and palm oil residuals. However, overall we are pleased at this stage to have achieved 78 percent traceable to mills. (QVXULQJVXVWDLQDELOLW\ Parallel to our on-going work to establish traceability to palm oil mills, Proforest has developed a risk management assessment methodology for AAK, based on the objective of providing assurance of compliance with AAK’s policy commitments. Using the traceability information gathered, Proforest will conduct desk-based risk management assessments of AAK’s sup- SO\EDVHLQRUGHUWRGH¿QHUHODWLYHULVNOHYHOV DQGLGHQWLI\ZKHUHWKHUHLVDQ\VLJQL¿FDQWULVN of non-compliance with AAK’s policies. Higher ULVNRULJLQVZLOOEHLGHQWL¿HGDQGSULRULWLHGIRU inclusion in a site assessment programme. The ULVNDVVHVVPHQWLQYROYHVDWKUHHVWDJHSURFHVV Qualitative risk assessment of palm oil origins based on key factors such as the country of origin. Other factors that will also be taken into consideration are rela- WLYHYROXPHVRIVXSSO\5632FHUWL¿FDWLRQ and/or membership status and any spe- FL¿FVXSSOLHULVVXHV7KLVPHWKRGRORJ\LV currently being tested and evaluated at selected locations. For higher risk origins, a more detailed risk assessment of mill locations based on geospatial data using the Global Forest Watch platform developed and maintained by the World Resources Institute :5,ZLOOEHXQGHUWDNHQ :KHUHWKHUHDUHVSHFL¿FDQGNQRZQKLJK risks, a further step will involve customized analysis of geospatial datasets for origins in Indonesia and Malaysia. 7UDFHDELOLW\WRPLOOSURJUHVV 0 10 20 30 40 50 60 70 80 90 100 Overall progress Palm oil from origin Palm kernel origin %\SURGXFWV Palm oil – others As a result of the risk assessment process, any high risk mills in the supply base will be LGHQWL¿HGDQGSULRULWLHGIRULQFOXVLRQLQDPLOO site assessment programme, where on-site assessments of policy compliance will take place. These will be integrated with AAK’s existing supplier audit programme. The assessment will be summarized in a report including guidance to the supplier regarding corrective action. This report will focus on the key DUHDVRIQRQFRPSOLDQFHLGHQWL¿HGDQGJLYH pragmatic recommendations for continuous improvement and corrective actions that need to be undertaken by the supplier. Where the result of a site assessment indicate critical non-compliance, AAK will take appropriate action and potentially suspend procurement IURPDVSHFL¿FPLOO &RQFOXGLQJUHPDUNV AAK has set its sustainable palm oil policy into action. We have established an AAK global palm oil task force to manage, coordinate, support and drive progress to achieve our sustainable palm oil objectives; achieved strong progress tracing palm oil, palm kernel oil and residuals back to mill origin; partnered with internationally recognized independent expert Proforest to assist us in implementing our sustainable palm oil policy; developed a risk management assessment methodology, currently being pilot-tested and evaluated at selected locations.
AAK - Sustainability report 2013/2014
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