Sustainability report

Our commitments to better sourcing Protecting biodiversity and ecosystems Safeguarding forests and preventing conversion is cru- cial for biodiversity and tackling climate change. Today, deforestation accounts for 11 percent of the world’s global greenhouse gas emissions and it is one of the most severe environmental risks we face. Deforestation is typically linked to the expansion of agricultural production, as well as pulp and paper production. This in turn is caused by an increased affluence, shifts in diet and consumer patterns, and a growing population. For AAK, primary deforestation risks are related to crops grown in tropical countries, mainly palm and soy. We aim to work collaboratively on protection, and conservation, as well as improving yields on existing lands, and we are committed to achieving verified deforestation-free and conversion- free palm and soy supply chains by 2025. Empowering smallholders and women to improve their livelihoods Hundreds of thousands of farmers and families are dependent on agriculture for their day-to-day living. According to the World Business Council for Sustaina- ble Development (WBCSD), 80 percent of the world’s food is grown by 85 percent of the world’s farmers, on farms with less than two hectares. For AAK, smallholders and women in particular play a critical role across our supply chains: • About 40 percent of the global production of palm oil is being produced by smallholders in Indonesia and Malaysia • Shea kernels are being collected by women in the shea belt • Coconut production is a family-run business An important part of our sustainability work is aimed at empowering smallholders to improve their livelihoods and well-being, and we believe they have an important role to play in helping to meet the growing demand for plant-based oils. As a result, we are investing in training programs and partnerships with NGOs, industry partners and suppli- ers across many different regions, as well as through our own extension officers into local villages. Embedding the respect for human and labor rights Our guiding principles for sustainable sourcing form the foundation of the AAK Group Policy for Responsible Sourcing of Plant-based Oils, and the AAK Group Code of Conduct for Suppliers of Raw Materials. AAK is working with human rights experts to improve our human rights due diligence, monitoring, and reme- diation throughout our raw material supply chains. We will make further progress with other industry stakeholders to improve working and living conditions for all people across the supply chains. We believe that where systemic issues exist, systemic collaboration is required. AAK Sustainability Report 2020 18 Guiding principles for responsible sourcing within AAK • United Nations Global Compact Principles • International Labor Organisation (ILO) Declaration on Fundamental Principles and Rights at Work • Sustainable Development Goals (SDGs) • The Modern Slavery Act