Sustainability report

AAK Sustainability Report 2020 28 Progressing on responsible sourcing of coconut Coconut oil is a key raw material for AAK. Indonesia, the Philippines, and India are the three biggest producers of coconuts, making up more than 70 percent of the global production. Coconut grow mainly in extensively managed plantations and can reach an age of 60–70, taking about 12–15 years to fully mature. More than 90 percent of coconut farmers are smallholders. Following a risk assessment with our partner Proforest, the main priorities for coconut oil are to: • Improve traceability • Improve farmer livelihoods and maintain their interest in growing coconuts • Rejuvenate the coconut industry Deeply understanding our supply base Traceability is a key challenge in the coconut supply chain. At AAK, we buy crude and refined coconut oil and are therefore dependent on our suppliers to act in accordance with sustainable practices. This also require to give information on traceability. We under- stand that suppliers and their supply chain partners need time to trace their supply chains and provide robust data. We hold our coconut suppliers responsible for trace­ ability through our supplier score cards, a new initiative launched in 2020. The score cards will be vital to drive progress in 2021 and onwards. The score cards are aligned with the key aspects of the Sustainable Coconut Charter (see page 29). Engaging with suppliers and farmers 2020 has been a challenging year for our supplier engagement plans. Due to travel restrictions, we had to delay our supplier workshops until 2021. We are closely monitoring the travel restrictions and are ready to con- tinue once we can travel safely without endangering our suppliers, farmers, partners, and colleagues. We have been able to progress our bilateral supplier engagement activities and have now engaged suppliers covering 96 percent of total volumes. Additionally, we have experienced both progress and challenges in our Rainforest Alliance coconut supply chain. In 2020, we received the first certified and fully segregated volumes of Rainforest Alliance coconut oil at our factory in Karlshamn, Sweden. At the same time, due to the pandemic, we experienced difficulties in meeting auditing schedules in the field. We are working with Rainforest Alliance to catch up on lost time. We are reporting on the number of smallholders that achieved the Rainforest Alliance certification in our supply chain and are growing this number with market demand. In 2020, 81 farmers were certified. Driving further impact beyond our supply base In November 2020, AAK joined the Sustainable Coconut Charter as a founding member, together with the United States Agency for International Develop- ment (USAID), Green Invest Asia, leaders from Barry Callebaut, Friesland Campina, Harmless Harvest Thailand, Jacobs Douwe Egberts, Nestlé, and Unilever. “Having been one of the founders of the Roundtable on Sustainable Palm Oil and an ever-present member on the Board, we recog- nize that there is a long road to achieving full sustainability for coconut. AAK cannot do this alone and strongly supports pre-competitive collaboration to drive industry transformation. We are extremely happy to join with other industry leaders to take an important step by signing the Sustainable Coconut Charter, committing us all to moving the industry for- ward. I hope and trust this will result in a new momentum and I encourage more coconut growers, processors, and end users, as well as other stakeholders, to join us in creating the critical mass required to make better coconut production really happen.” Tim Stephenson, President Global Sourcing & Trading, AAK The charter is a pre-competitive industry collaboration that defines coconut sustainability and sustainability program goals in coconut supply chains. This includes enhancing supply chain traceability, preventing deforestation, distribution of seedlings, and mitigating climate change. It also aims to harmonize buyers’ requirements for supply chain partners. On top of that, AAK encourages other supply chain partners to support the charter going forward. Contributes to: