With over 1000 direct suppliers in our supply chain, we have invested substantial resources in developing extensive programmes to socialise and implement our NDPE policy across our supply chain. As part of our full verification framework for supplier compliance, in addition to the ART approach at refinery level, the Supplier Reporting Tool, and Grievance Procedure, Wilmar has also been implementing the Supplier Group Compliance (SGC) verification programme since December 2013, to proactively monitor risk of association at supplier group level.
The SGC verification programme, was developed and is executed with support from Aidenvironment Asia. Today, the programme monitors more than 11 million hectares, which covers 117 parent groups representing approximately 1,500 individual plantations and close to 500 mills, spanning across Malaysia, Indonesia and Papua New Guinea.
Whilst our Grievance List with Progress Updates sheds some insight into the nature and impact of the SGC programme (also referred to as Wilmar’s Proactive Supplier Monitoring), the results of the monitoring were originally intended to provide us with internal information to help identify issues in real time and engage as quickly as possible with suppliers. This has enabled us to resolve many cases before they escalate to become public grievances. Many of the grievance cases that we have logged to date were already being handled prior to becoming public information.
The SGC verification programme complements our work on traceability to mill and mill assessments under the ART approach. The scope of the SGC programme is broader as it covers the supplier company group (i.e. parent company group with all subsidiaries) with whom Wilmar has a business relationship through procurement of palm oil products.
In order to provide more transparency to this process, monthly updates of the monitoring outcomes will be made available from September 2018 onwards.
As part of our contribution to the industry’s transformation to sustainability, Wilmar accepts its ‘accountability by association’. This means that Wilmar will intervene if a supplier, or a company linked by ownership, is involved in activities that are non-compliant with NDPE policy, even when we do not procure palm oil from the particular mill or plantation.
Given our pivotal role in the value chain, we recognise our ability to influence our third-party suppliers to be NDPE policy compliant throughout all their operations. In practice, this means that we engage our supplier about potential non-compliance, and we advise them to issue Stop Work Orders (SWO) to relevant management units, pending 1) implementation of the suppliers’ own NDPE policy, 2) conduct of High Conservation Value (HCV) or High Carbon Stock (HCS) studies, 3) initiation/ conduct conflict mediation and/or other corrective measures.
The SGC programme helps us screen our suppliers at the group level, document cases on potential non-compliance, engage our suppliers for compliance and monitor action on the ground.
The SGC programme departs from our publicly available supplier mill list, whereby we have already reported parent companies, which are Wilmar’s business partners at company group level Considering that we procure from about 1,000 individual mills, the first step is to verify the association of our supplying mills with their respective parent groups.
The next step is to collect, process and analyse spatial, corporate, policy and other data to map out the plantation and the landscapes in which it operates. This involves the gathering of thematic data such as: concession boundaries, forest land maps, soil maps, land use planning maps, endangered species habitat maps, community claimed lands and government allocations for social forestry and the like.
The screening furthermore involves the continuous monitoring of land use change in forested and peat areas. When change is detected, investigation commences to determine whether the development is associated with our suppliers.
The information derived from the screening work is uploaded on an online platform, Webgis, which is managed by Aidenviroment. The platform is secured with login requirements and is made available to Wilmar for internal use to establish a baseline for compliance verification. Publication of the screening maps by Wilmar is not possible as the dataset belongs to Aidenvironment and in addition, the base data requires continuous verification and updating.
(2) Compliance verification
The compliance verification involves the analysis of company group ownership structure, compilation of the group’s land bank map and presentation of evidence on potential non-compliance with our NDPE policy. To demonstrate non-compliant land development in forest and peat, desktop study (of historical and current satellite imagery as well as thematic map layers) may be complemented with field visits. Local media reports are reviewed to identify risk associated with land rights, labour relations, pollution and Occupational Safety and Health (OSH).
Aidenvironment identifies and prioritises the supplier groups that will be subject to compliance verification each year.
Since 2013, Aidenvironment has prepared 46 case reports and 27 follow up monitoring reports which Wilmar used to engage our suppliers.
Similarly, to our approach on grievance cases, we follow up on all SGC case reports through bilateral engagement with our suppliers at company group level. In the case of forest clearance, we will request the supplier to issue a SWO immediately, until HCV and HCS studies are commissioned and reviewed. In the case of peat development, any land clearing is halted immediately. In cases of social non-compliance, measures are taken to prevent further escalation whilst conflict resolution / mediation is ongoing. Field visits are often conducted to assist our suppliers to close the gaps in their operations. For the cases which are already registered and investigated through the RSPO platform, we will let the RSPO investigation run its course, while we continue to engage with the suppliers for progress updates.
The SGC programme has identified more than 50 suppliers at group level that requires intervention and engagement on the compliance to the NDPE policy. Engagements with these suppliers have yielded mostly positive responses and led to greater awareness and improved policies and practices. We strive to continue the dialogue, offer training and guidance, conduct assessments and monitor progress, in order to lead our suppliers towards more sustainable practices. However, in instances where suppliers repeat non-compliant behaviour or appear unmotivated to comply with our NDPE policy, we will suspend trade with the supplier whilst the complaint proceedings are ongoing. 16 suppliers at a group level have been suspended to date, resulting in more than 1.0 million MT loss of supply to our operation. Out of the 1.0 million MT of volume loss, only around 10% comes from our direct suppliers while the remainder was due to issues occurring outside our supply chain.