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Beyond Traceability to the Plantation: A Responsible Palm Oil Supply Chain

Posted: Mar 06, 2018 4 minute read Lim Shu Ling 0 Likes

In today’s interconnected world, companies are judged not just on their performance but are expected to bear responsibility for their supply chain. It is not enough for a company to show that it is operating ethically and responsibly – their suppliers also have to live up to the same standards. Consumers and customers expect this to be taken seriously.

We are rising to this challenge at Golden Agri-Resources (GAR). Since 2014, we have applied the same sustainability commitments adopted by GAR to our suppliers. More than ever before, we are better positioned to help our suppliers live up to those commitments with the achievement of 100 percent Traceability to the Plantation (TTP) for all 44 GAR mills.

GAR has achieved 100% TTP for owned mills as of end 2017.

This is the culmination of a mapping process which we began in 2014. Within a year, we had mapped all mills which supply GAR’s refineries achieving 100 percent Traceability to the Mill involving nearly 500 mills. Working with those mills we set a target of reporting full TTP for GAR-owned mills by 2017 and we are helping our independent supplier mills to do the same by end 2020.

Agricultural supply chains are notoriously complex and usually involve a multitude of stakeholders. And our own mapping has shown this to be true. At GAR, we now know that aside from sourcing from our own main and plasma smallholders’ estates, we are also buying raw materials from over 70 dealers/brokers who source from 11,000 smallholders who themselves manage over 40,000 hectares of estates.

We can now guarantee the provenance of our raw materials to our customers but it doesn’t stop there. The really exciting aspect of our efforts is that by knowing the details of our many suppliers down to the plantation level we now know exactly who we have to work with to help ensure they continue to improve and adopt responsible palm oil production practices.

Smallholders are a crucial part of our supply chain

Having successfully achieved full TTP ourselves, we are also now in a better position to help our independent supplier mills work on their TTP, and from there help more of our vast and complex supply chain progressively produce palm oil responsibly.

Smallholders are an essential part of our supply chain and crucial stakeholders in our sustainability journey as there are an estimated two million small farmers controlling over 44 percent of palm oil estates in Indonesia. With the achievement of TTP on the part of GAR and our independent suppliers, we will increase our ability to spread responsible practices to the thousands of smallholders in our supply chain.

Deepening transformation through understanding our supply chain 

While we forged ahead with the technicalities of mapping our supply chain, we were concurrently working with our known suppliers to help them further along the path towards responsible palm oil.

Our extensive engagement and supplier support programme includes site visits, special training and workshops as well as specifically designed remedial action plans where needed. We carry out a planned systematic programme of site visits to our suppliers. In 2017, we visited a further 40 mills to assess their compliance with the responsible palm practices spelled out in the GAR Social and Environmental Policy (GSEP). Reports on these site visits can be viewed on our Sustainability Dashboard.

Collaboration of Transformation
Collaboration of Transformation is an intensive workshop we hold with selected suppliers to help them reshape their practices to become more sustainable.

The resulting analyses of our suppliers’ situations enable us to design the right support and intervention strategies. Key findings from these visits tell us that our suppliers need to better understand responsible practices and then they need help in building internal capacity to adopt those practices. We help them by sharing experiences, best practices and Standard Operational Procedures. We also encourage our suppliers towards certification or adopting leading industry standards such as High Carbon Stock (HCS) methodology.

Aside from scheduled site visits, we carry out ad hoc site visits as part of our grievance handling procedure when an issue is raised by an external stakeholder or discovered through our own internal monitoring. Our engagement is fully reported in our Grievance List and case studies which highlight action plans for our suppliers are published on our website and Sustainability Dashboard.

We organise SMART SEED workshops annually for our suppliers. These workshops allow us to share best practices and facilitate exchanges with other key stakeholders such as government agencies and NGOs. The themes for the workshop are based on feedback and input from our suppliers. Key themes have included labour practices, traceability and achieving ISPO certification.

Where we see a need, we also hold special workshops for our suppliers such as one for those operating near the Leuser Ecosystem in Aceh. The workshop served to heighten their awareness of the protected status of Leuser, and demonstrated how to stop sourcing palm oil from growers which may be operating in protected areas.

Finally, we believe our efforts to help our supply chain including smallholders adopt more sustainable production practices supports the United Nations Sustainable Development Goals particularly sustainable consumption and production under UN SDG12. The progressive transformation of our supply chain will help meet the goals of SDG12 which aims to increase net welfare gains from economic activities by reducing resource use, degradation and pollution along the whole lifecycle, while increasing quality of life.

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