Sustainability report 2019

Palm – progressing towards full sustainability Responsible sourcing of palm oil remains a crucial activity in our sustainability journey. The scale of the crop globally, as well as environmental and social chal- lenges in each particular region, requires a consistent and structural approach and collaboration across the supply chain. 2020 marks the deadline for companies to demon- strate deforestation-free palm oil supply chains. Ten years after this target was set, the complexity of the challenge has become apparent: the palm oil supply chain often involves thousands of companies and millions of growers. As such, we often have no direct UHODWLRQVKLS ZLWK WKH DFWRUV ZKR FDQ EHVW LQÀXHQFH change. Understanding our supply base Understanding our supply base is a critical step in furthering sustainability, providing the baseline by which we prioritize the action we take both within and beyond our supply chains. Thus, we work closely with our suppliers and stakeholders to obtain traceability data. Achieving traceability to plantation (TTP) requires sector-wide efforts by companies and other stake- holders, which AAK acknowledges and commends. Palm oil supply chains involve millions of small producers, many of whom are not responsible for FOHDUDQFH )RU WKDW UHDVRQ $$. VXSSRUWV D ULVN EDVHG approach to TTP, which maps plantations where there is a risk of deforestation at village level. :H EHOLHYH WKDW ZKLOH QRW SHUIHFW WKH 5632 FHUWL¿ - cation remains one of the most reliable ways to ensure that palm oil production meets high environmental and social standards. The adoption of the new RSPO principles and criteria in November 2018 has further VWUHQJWKHQHG WKH YDOXH RI WKLV FHUWL¿FDWLRQ :H LQWHQG WR LQFUHDVH RXU SXUFKDVH RI 5632 FHUWL¿HG YROXPHV DV part of our shared responsibility policy and to stay in line with end-user and customer demand. Additionally, we monitor progress in our supply base in accordance with the framework laid out in the no deforestation, no development on peat, and no exploita- tion (NDPE) implementation reporting framework. One new and important KPI for AAK, which we are developing together with Proforest, is to understand the SHUFHQWDJH RI YHUL¿HG GHIRUHVWDWLRQ IUHH YROXPHV 7KLV approach combines our RSPO-segregated volumes with estimates based on an equal weight from each mill in our supply base. Engaging with suppliers and farmers Because of our position in the value chain, our suppliers play a critical role in driving the implementation of our policies. This year, we have developed supplier score cards together with Proforest as part of our effort to strengthen our supplier engagement work. These score cards enable our internal organization and our suppliers to better understand the current status of where each supplier stands in regard to meeting the AAK sustain- able palm criteria, as well as potential gaps that need to be closed. 30 Contributes to: