Sustainability report 2019

39 Soy – a versatile raw material Soy as raw material The boom of soybean utilization for industrial purposes started in the 1940s and has since then grown exponen- tially. The main producing countries are the US, Brazil, Argentina, India, and China, and the biggest consumers are China, the US, Argentina, and Brazil. Soybean oil is one of the most versatile commodities, with a large number of applications other than food. The main one is as the source of SME (soy methyl esters) or biodiesel. Soy is also used as raw material in feedstuffs, pharma, paint, personal care, lubricants, plastics, resins and more. Rich in polyunsaturated fatty acids, soybean oil is mainly relevant for AAK in regard to its use in baking fats, mayonnaise, salad and cooking oils, as an ingredient in margarine and within our Special Nutrition segment. In terms of volume, soy is a rather small commodity for AAK. However, because of the sustainability risks in the soy industry, especially deforestation, soy was included in the list of key raw materials for responsible sourcing in 2018. In 2019, we have progressed with complying to our ambitions set in our Code of Conduct for Suppliers of Raw Materials. In 2018 AAK had assessed the risk linked to our current supply chains DQG LGHQWL¿HG PRUH WKDQ SHU FHQW RI RXU VXSSO\ EDVH DW ORZ ULVN RI GHIRUHVWDWLRQ GXH WR RULJLQ RU FHUWL¿HG volumes. AAK is currently working with Proforest to develop a methodology to verify these deforestation free volumes in our supply chain. Our ambition is to achieve PLQLPXP YHUL¿HG GHIRUHVWDWLRQ IUHH YROXPHV across our soy supply chain by 2020. Understanding our supply base 7KH ¿UVW VWHS LQ HQVXULQJ VXSSOLHUV¶ FRPSOLDQFH ZLWK our Code of Conduct is to fully map and understand our supply base. In 2019, AAK has built on the work done in the previous year and engaged our tier 1 soy suppliers in regard to the traceability of supply chains as well as human and labor rights. Environmental impact, HVSHFLDOO\ LQ UHODWLRQ WR QR GHIRUHVWDWLRQ YHUL¿FDWLRQ has also been a top priority. We have gained important knowledge and in 2020 we will continue to deepen our insights into our soy supply base and strengthen the way we engage our key suppliers. Engaging with suppliers and farmers AAK Kamani (our joint venture in India) has committed to include smallholders in our supply chains, which is one of the cornerstones of the AAK Group Policy for Responsible Sourcing of Vegetable Oils. As part of that effort, AAK Kamani signed, at the end of 2018, a memo- randum of understanding to participate in the State of Maharashtra Agribusiness and Rural Transformation (SMART) project in the Indian state of Maharashtra. Headed by the Government of Maharashtra with support from the World Bank, the SMART project supports climate-resilient agriculture. AAK Kamani’s role in the project is to engage in the community-based purchase of soy and groundnuts through the SMART model. The key objectives of the project are: Supporting value addition in the post-harvest segment of agricultural value chains Developing a mechanism for productive alliances involving various stakeholders in agricultural supply chains Improving the current policy and regulatory frame- work in the agribusiness sector Developing marketing and credit linkages with community-based organizations (CBOs) like farmer producer companies, cluster-level federations and smallholder groups ,PSURYLQJ WKH HI¿FLHQF\ LQ DJULFXOWXUDO VXSSO\ FKDLQV through private sector partnerships that can be scaled up through project interventions This model creates a more direct supply chain, increases traceability and ensures improved control of quality and food safety requirements. Additionally, SMART empowers smallholder to directly engage with buyers and to become part of contract farming agreements. The program also strengthens the local infrastructure to enable smallholders’ long-term capacity building. During 2019, the foundation has been laid at AAK level to incorporate such a supply chain. We will continue to work on this project in 2020. Contributes to: