Sustainability report

AAK Sustainability Report 2020 20 Roadmap to a sustainable palm oil supply chain Palm oil is one of AAK’s most important raw mate- rials. It accounts for more than 50 percent of our volume in business area Food Ingredients. Respon- sible sourcing of palm oil is crucial for us. The scale of the crop globally, as well as environmental and social challenges in each region, require a consistent approach as well as collaboration across the supply chain. The principal challenge for our industry is to only use palm oil that is grown without deforestation or conversion and with full respect for human rights. For many reasons, palm oil is a fantastic crop. It is a stable raw material and has been instrumental in lowering trans fat levels in different applications. It is the most effective plant-based oil in terms of yield per hectare. Alternative crops require at least five times the area of land to produce the same volume of oil. It is more affordable compared to other crops – half of the world’s population relies on palm oil as a staple part of their diet. Palm oil also brings economic benefits to poorer communities around the world including jobs, better schools and other infrastructure. Palm oil is providing a way out of poverty for many family farmers, for people that have few other options to make a livelihood. Palm oil can be produced in a sustainable way, without negative environmental and social impacts. Ending non-sustainable production and verifying more sustainable production require a continuing market transformation across all stakeholders of the palm oil value chain. AAK has for a long time been at the forefront of this change. We co-founded the Roundtable on Sustainable Palm Oil (RSPO) back in 2003, which today is the industry standard for certified sustainable palm oil. Understanding our supply base Because of our position in the supply chain, where we in most cases do not have direct contact with farmers, our suppliers play a critical role in driving the implementation of our policies. However, our aim is to make a positive contribution in the whole supply chain, within and beyond our own direct impact. We monitor progress in our supply base in accordance with the framework laid out in the No-deforestation, No-development on peat and No-exploitation Imple- mentation Reporting Framework (NDPE IRF). One new and important KPI for AAK, which we have developed together with Proforest, is to understand the per- centage of verified deforestation-free volumes. This approach combines our RSPO-segregated volumes with data from suppliers on volumes that deliver the NDPE requirements. Achieving traceability to plantation (TTP) requires sector-wide efforts by all stakeholders, which AAK acknowledges and commends. Palm oil supply chains involve millions of small producers. For that reason, AAK supports a risk-based approach to TTP, which maps plantations where there is a risk of deforestation at village level in remote areas. Going forward, we are developing this work further in close collaboration with our suppliers and by using satellite monitoring to cover AAK’s full supply base. It is our ambition to accomplish full traceability to plantation by 2025. Traceability to plantation is a prerequisite to achieve verified deforestation-free palm oil. Contributes to: