Sustainability report 2019

Palm oil Soybean Shea Rapeseed Coconut 29 (QJDJLQJ ZLWK VXSSOLHUV DQG IDUPHUV is the second pillar of our approach. As a processor, AAK’s role in the value chain is in the middle. We usually work with suppliers, but in selected regions, or when sourcing certain raw materials, we have a more direct connection to the farmers, producers or harvesters. We need to understand the suppliers we work with and their commitment to sustainable development as well as their willingness to drive progress. We require our suppliers to adhere to the Code of Conduct for Suppliers of Raw Materials and to have their own sustainability policies in place. Together with key partner suppliers, we co-develop trainings and workshops covering a range of topics including good agricultural practices, safety, labor and human rights. Our collaborations can also include on-the-ground engagements as well as audits or assessments to identify areas for improvement and to support our suppliers in their drive for continuous improvement. We see this as an important way we can drive transformation and implement change in our supply chain. Driving further impact beyond our supply base is relevant when issues have complex underlying causes. In such cases, we believe it is most effective to work directly with the stakeholders who are in the position to build understanding and drive effective responses. To stimulate wider change within the industry, AAK DSSURDFKHV FRPSOH[ LVVXHV LGHQWL¿HG LQ RXU VXSSO\ base at a regional, jurisdictional and business sector level. Examples of such efforts can be seen in our collabo- UDWLRQ ZLWK )RUHYHU 6DEDK WR LPSOHPHQW WKH MXULVGLFWLRQDO FHUWL¿FDWLRQ RI LQGHSHQGHQW RLO SDOP VPDOOKROGHUV LQ Sabah or the mobilization of local villages in Burkina )DVR WR UHMXYHQDWH WKH VKHD EHOW 2WKHU H[DPSOHV include industry collaborations such as the Roundtable on Sustainable Palm Oil, the Global Shea Alliance and the new industry meeting on the sustainable develop- ment of the coconut industry. To maximize our impact on the raw material industries, and to work in a holistic way with the challenges we face, we engage with our supply chains on three levels: 1) Understanding our supply base 2) Engaging with suppliers and smallholders 3) Driving impact beyond our supply base Understanding our supply base LV D FULWLFDO ¿UVW VWHS in driving sustainability. At the core of our responsible sourcing activities stands a risk assessment which helps us identify and prioritize the most important issues we face in each individual supply chain. Priorities are IXUWKHU LGHQWL¿HG E\ DVVHVVLQJ WKH YROXPHV ZH VRXUFH the general risk in the supply chains, and the potential positive impact AAK can have. In order to understand who we are buying from (and who they are buying from), we work closely with our sourcing and trading team and suppliers to obtain the SHUWLQHQW LQIRUPDWLRQ UHODWHG WR VSHFL¿F ULVNV DQG LVVXHV 'HSHQGLQJ RQ WKH FRPSOH[LW\ RI WKH VSHFL¿F VXSSO\ chain, achieving traceability can require collaboration across multiple stakeholders. In addition to under- standing the supply base, we assess if the volumes we buy meet the AAK Code of Conduct for Suppliers of 5DZ 0DWHULDOV DV ZHOO DV WKH VSHFL¿F SROLFLHV VXFK DV the AAK Group Policy: Sustainable Palm Oil. High priority* Low priority Indirect impact * Based on volumes and social/environmental risks in supply chain Direct impact Impacts and priorities in key raw material supply chains