AAK sustainability report 2018

AAK works with its partner Proforest to identify priority suppliers, and then works with them to improve prac- tices in environmental management, labor and other social issues. Our approach to engagement includes: Conducting outreach workshops with mills, where we help them to understand our Sustainable Palm Oil Policy and requirements to ensure compliance; Technical training, where we train mill employees on specific aspects of our requirements, such as labor; Detailed site assessments where the mill is visited, gaps are identified, and action plans are created to improve practices. In 2018, AAK focused on revisiting mills where site assessments had been conducted in previous years. Our partner Proforest revisited seven mills to follow up on how they were doing on their timebound action plans. Improving practices on the ground through supplier engagement Several mills were found to have made considerable improvements. Highlights include: The installation of effective greenhouse gas (GHG) management and monitoring systems; Development of policies on peat management, workers’ rights and health and safety, and/or increased awareness of these policies among workers; Development of clear grievance procedures for workers; Improvements in workers’ accommodation. However, other mills were found to be struggling to implement necessary changes due to operational changes, and these mills will receive further visits in early 2019 to ensure that improvements are made. In 2019, AAK will continue to engage with mills to drive implementation and transformation on the ground. Supplier engagement 2018 2017 2016 2015 2014 4 0 0 7 12 20 23 0 40 82 104 0 0 0 7 120 100 80 60 40 20 0 Mill engagement Cumulative number of on-site audits Number of follow-up visits Cumulative number of mills that attended a Proforest/AAK workshop RSPO status We see a lower volume due to volume growth in regions where RSPO needs to gain momentum Relatively stable share of RSPO certified sourced volumes compared to previous year, despite volume increase Volumes from RSPO members CSPO demand Book&Claim Mass Balance Segregated % % 75 2014 27 2014 90 Feb 2018 94 Aug 2018 84 Feb 2019 29 2018 Aug 2016 87 2017 33 92 2016 33 2016 88 2015 29 2015 100 80 60 40 20 0 100 80 60 40 20 0 2 6 19 2 6 21 1 9 23 0 12 21 0 14 15 Alongside the follow-up visits in October 2018, AAK and Proforest conducted training in Peninsular Malaysia on human rights and workers’ rights. A total of 42 participants (comprising mainly senior/middle management or technical staff) from 22 mills were present. 32 % 2014 88 Feb 2018 90 Aug 2018 86 Feb 2019 Aug 2016 88 79 2016 2015 100 80 60 40 20 0 Higher priority suppliers invited to workshops facilitated by Proforest. Palm Oil Policy Has aligned Policy (verified by Proforest) Signed AAK’s Palm Oil Policy Suppliers informed about AAK’s Palm Oil Policy 8 9 8 3 8 Volumes covered by signed Supplier Code of Conduct: % 85 2014 97 Feb 2018 99 Aug 2018 94 Feb 2019 Aug 2016 96 92 2016 86 2015 100 80 60 40 20 0 Supplier Code of Conduct Supplier code of conduct