Sustainability report 2019

Driving further impact beyond our supply base 9LD RXU FROODERUDWLRQ ZLWK )RUHYHU 6DEDK $$. FRQWLQXHV WR VXSSRUW WKH MXULVGLFWLRQDO FHUWL¿FDWLRQ approach in the Malaysian state of Sabah, where only 20 percent of the independent smallholders hold the WLWOH WR WKHLU ODQG D NH\ SUHUHTXLVLWH IRU FHUWL¿FDWLRQ 20 percent of the 53,000 independent smallholders KROG WKH WLWOH WR WKHLU ODQG WRGD\ $ NH\ IRFXV RI )RUHYHU Sabah’s work in 2019 has been the development of the )DFLOLWDWHG /DQG $SSOLFDWLRQ 3URFHVV )/$3 ZKLFK ZLOO SURYLGH WKH SODWIRUP IRU YLOODJH ZLGH FHUWL¿FDWLRQ OHDGLQJ WR GLVWULFW DQG VWDWH ZLGH FHUWL¿FDWLRQ We also support a unique project in Mexico together with Solidaridad, the objective of which is to develop the sustainability of three palm oil social enterprise cooperatives, with the ultimate ambition of achieving 5632 FHUWL¿FDWLRQ 7KH WKUHH JURXSV FRYHU RYHU smallholder members who produce their own palm fruits and own and operate their own mills. Early meetings KDYH VFRSHG WKH FKDOOHQJHV DQG LGHQWL¿HG JDSV )LHOG schools have been established with focus on imple- mentation of standard operating procedures and good practices for palm oil processing as laid out by the RSPO. In order to build and deepen common understanding of issues, industry collaboration is necessary. AAK has had a seat on the board of governors since the founding of the RSPO. This organization has played a founda- tional role in the understanding of sustainable palm production as well as in its contribution to sector-wide transformation. 31 Traceability Global 98% Europe 100% USA 100% Latin America Asia 89% Traceability to mill 100% Traceability to plantation Global 55% Europe USA Latin America Asia 65% 43% 56% 45% Supplier engagement Why palm oil? Code of Conduct 98% Signed or aligned palm oil policy 98% Cumulative number of on-site audits Number of follow-up visits Cumulative number of mills that attended a Proforest/AAK workshop 2019 2018 2017 2016 2015 120 100 80 60 40 20 0 Mill engagement among higher priority suppliers 24 104 9 Palm oil is an important raw material and crop in order to meet the growing demand for vegetable fats & oils. AAK continues to use palm oil because the crop has the highest yields compared to any other vegetable oil per ha, it contributes to global food security and it provides an income directly to local communities, since 40 percent of the palm is being produced by smallholders. Next to that it has unique functional and nutritional characteristics. Palm oil can be produced in a sustainable way, without the negative and social impacts. This requires a market transformation across all stakeholders of the palm oil value chain. AAK has been at the forefront of this change, as co-founder of the Roundtable of Sustainable Palm Oil EDFN LQ WRGD\ WKH LQGXVWU\ VWDQGDUG IRU FHUWL¿HG sustainable palm oil. 1H[W WR 5632 FHUWL¿HG SDOP RLO $$.¶V VXVWDLQDEOH palm oil policy is based on the following elements: We aim to have a palm oil supply chain that is free from deforestation (high conservation value areas, as well as high carbon stock), development on peatland and exploitation of people and human rights.