AAK sustainability report 2018

Key findings of the coconut risk assessment: 1) Due to coastal growing areas, different islands and numerous middlemen involved, we concluded that traceability is the first concern when it comes to coconut supply chains. In AAK we do not see traceability as an achievement itself, but as a tool to understand the supply base and the different risks and issues related to it. 2) Furthermore, we found that coconut farmers are often poor and copra does not generate good prices for the farmers. 3) Lastly, we learned that about 90 percent of the coconut trees worldwide are reaching the end of their productive life cycle. Farmers are unlikely to invest in their coconut trees because they are not perceived as high-income crops. Available resources are rather invested elsewhere. In AAK we see the rejuvenation of trees as a collective challenge for the global coconut industry and we need to act now. Coconut – progressing on responsible sourcing Coconut as a raw material AAK has been sourcing coconuts from India and Sri Lanka since the 1930s. Nowadays, Indonesia, the Philippines, and India are the three biggest coconut producers with 70 percent of the global production. We source our coconut oil from the Philippines, Indonesia and partly from India. Coconuts are classified into two types based on the stature of the trees: tall palms and dwarf palms. Coconuts are harvested in bunches every 45–60 days. Coconut oil is made from the dried meat of the coconut (copra). Coconut trees are often found along the shorelines of the tropics since they can tolerate saline and sandy soils, while other plants do not thrive under these conditions. This not only means that coconuts form an important source of income growing on soil with limited fertility, but also that they take on a huge importance in protecting the sandy shorelines from erosion from the sea with their elaborate root system. Coconut-growing countries in Asia-Pacific rely on the sale of coconut products as export income. The majority of coconuts are produced by smallholder farmers. Responsible sourcing of coconut oil In 2018, AAK has identified coconut oil as one of the key raw materials for responsible sourcing together with shea and palm oil. For coconut oil the major risks in the supply chains still had to be identified and no industry-wide sustainability standard exists. Therefore, AAK has teamed up with Proforest to conduct a risk assessment for our coconut supply chains. Contributes to: 34