Sustainability report 2019

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, accounting for 70 percent of global produc- tion. We source our coconut oil from the Philippines, Indonesia and partly from India. Understanding our supply base ,Q $$. LGHQWL¿HG FRFRQXWV DV D NH\ UDZ PDWHULDO for responsible sourcing together with shea, palm oil, UDSHVHHG DQG VR\ )RU FRFRQXWV WKH PDMRU ULVNV LQ WKH VXSSO\ FKDLQ VWLOO KDG WR EH LGHQWL¿HG DQG QR LQGXV - try-wide sustainability standard exists. Therefore, AAK teamed up with Proforest to conduct a risk assessment for our coconut supply chains. The main priorities based on the risk assessment are listed below: 1) Improve traceability 2) Improve farmer livelihoods and keep them interested in growing coconuts 3) Rejuvenate the coconut industry Engaging with suppliers and farmers Based on priorities one and two, we have progressed on our supplier engagement in three different ways. 1) We have developed a supplier engagement work- shop aimed at the mill, middlemen and farmer levels. The workshops aim to empower supply chain stakeholders to provide the relevant traceability data as well as to inform them in detail how to adhere to our Code of Conduct for suppliers of Raw Materials. Additionally, a section on good agricultural practices has been included. We had aimed to conduct the ¿UVW ZRUNVKRS LQ 4 EXW ZH KDG WR SRVWSRQH LW due to an earthquake in the Philippines. We expect WKH ¿UVW ZRUNVKRS WR EH FDUULHG RXW LQ 4 2) We have directly engaged with our tier 1 suppliers to help them improve the traceability in their supply chains. Key suppliers have been engaged and follow-up workstreams have been initiated. We will continue to follow up on this work as well as expand our outreach during 2020. 3) We have completed the Rainforest Alliance Chain RI &XVWRG\ FHUWL¿FDWLRQ IRU RXU IDFWRU\ LQ 6ZHGHQ PHDQLQJ $$. LV IXOO\ UHDG\ WR WHVW LI FHUWL¿FDWLRQ is the right tool to improve traceability and farmer income in our direct supply chain originating in Indonesia. Driving impact beyond our supply base Because approximately 90 percent of all coconut trees globally are reaching the end of their productive OLIHF\FOH $$. KDV LGHQWL¿HG WKH UHMXYHQDWLRQ RI FRFRQXW WUHH SRSXODWLRQV DV D SULRULW\ $V D ¿UVW VWHS ZH KDYH engaged with a key supplier in the Philippines and have established a coconut nursery. AAK buys coconuts from local farmers to be placed in the nursery. The coconuts are then nurtured until they grow into strong young seedlings. Once mature enough, the seedlings are handed over to the farmers to be SODQWHG RXW LQ WKH ¿HOGV $$. LV DOVR LQTXLULQJ D SDUWQHU - ship with the Philippine Coconut Authority to increase the outreach of this initiative. Additionally, AAK has been part of the initial industry meetings on sustainable coconut production. We plan to continue contributing to these discussions in the future. 37 Coconut – further efforts in responsible sourcing Contributes to: