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Supply Chain Transformation

Supply Chain Overview

Our Supplier Guidelines outline the basic principles that we expect all our suppliers to uphold. They cover topics such as legal compliance and business integrity, labour and human rights, environmental protection, product quality and safety and reporting violations or misconduct. In turn, our suppliers are expected to communicate and implement the principles in our Supplier Guidelines throughout their own supply chains.

We have an extensive responsible sourcing programme to help our suppliers build capacity and meet the standards set out in our Supplier Guidelines. With strong roots in palm oil and sugar, we are particularly focused on the responsible sourcing of these two commodities through knowledge-sharing and on the ground interventions.

 

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ART is dependent on mapping all the mills supplying the refinery, as well as their FFB sources, where possible. Currently, the ART programme only focuses on Wilmar's own refineries and all direct mills supplying our refineries.

For a mill to be considered traceable, we need to be able to record all critical information, including parent company name, mill name, address, GPS coordinates, and volumes supplied to Wilmar refineries. A minority of mills are categorised as untraceable. Untraceable does not imply we do not know who we buy from but instead means that the supplier does not fully meet our traceability criteria, (e.g. parent company/group affiliation or GPS coordinates).

The ART programme does not seek to equally engage all mills in the supply shed simultaneously. Instead it adopts a Mill Prioritisation Process using spatial and non-spatial information to prioritise and target higher risk mills in a vast supply shed for deep engagement. Assessments will be carried out on the 10% high priority mills.

Spatial data is captured using GIS data overlaid with information from Global Forest Watch and Forest Monitoring for Action (FORMA) alerts. It includes legally protected areas, key biodiversity areas and peat soil areas as documented by an international body.

Non-spatial factors focus on the known sustainability policy and performance of the mills, and include companies that have their own NDPE Policy and implementation plan, RSPO certification status, volume supply to the refinery and TFT’s assessment register.

Following the mill prioritisation process, field visits are undertaken, and practices are assessed against Wilmar’s NDPE Policy requirements. Importantly, these field visits are not driven by a certification agenda or an audit; rather the visits seek to build trust and engagement for mills by providing practical recommendations for the mill and their FFB suppliers to improve practices. The site visits are supported by Wilmar’s consultants together with our internal teams.

An initial discussion at headquarter level with key management is followed up by an assessment, which includes samples of the mill’s third-party FFB suppliers such as commercial plantations, smallholders, as well as fruit collection centres. A typical visit will take three to five days, and prior to finalising the assessment report, the assessment team will meet with the mill to discuss findings. Following these three steps, an overarching report is developed, summarising issues and recommendations without identifying particular mills or growers. This report serves as a medium to provide important information about trends of issues that require attention across the region/landscape

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Supplier Reporting Tool (SRT)

Engagement with our third-party suppliers is an important part of ensuring that our No Deforestation, No Peat, No Exploitation (NDPE) policy is implemented effectively. To enable better assessment of our suppliers’ progress and their implementation of the NDPE policy, we have developed and launched the Supplier Reporting Tool (SRT) in 2017. The SRT is an online self-reporting tool that is hosted on the OnConnect system to allow suppliers to report their current compliance to environmental and social risk-related issues within our supply chain.

 

Figure 1 – Sample OnConnect dashboard in Malaysia

The SRT is an annual program required for 100% of Wilmar’s direct supplying mills (including own Wilmar mills) and their associated estates in Indonesia, Malaysia, and Latin America.

 

Figure 2 - Process Flow of SRT

Once the suppliers have completed the self-assessment online, they will receive a report with action plans. Individual action plans for all direct supplying mills that have completed the SRT is developed by Wilmar’s third-party supplier compliance team. These plans are generated using the “Action Plan” feature within the OnConnect system. This automation ensures greater consistency in recommendations, clarity on required follow-up actions, and timely completion for all direct suppliers, which helps to ensure improved sustainability performance of our direct third-party suppliers.

 

Assessing risk of non-compliance for direct mill suppliers

The SRT allows us to collate reports on specific NDPE related criteria as reported by each supplier mill. Based on the reports, we are able to utilise the SRT to identify potential risks within our direct mill suppliers. The criteria that are reported on include:

  • Legality
  • High Conservation Value (HCV), High Carbon Stock (HCS), and peat protection
  • Environmental impact management
  • Commitment to Protect and Respect Human Rights Defenders (HRDs)
  • Child protection
  • Occupational health and safety
  • Labour rights and standards
  • Recruitment Fees
  • Access to grievance mechanisms
  • Free, Prior and Informed Consent (FPIC)
  • Legal and customary (or traditional) land rights
  • Traceability

We first identify a risk assessment score based on geospatial analysis which includes legality of land use, occurrence of protected areas, prevalence of fire and/or recent deforestation, and existence of forest and peat. Mills are scored and ranked for individual indictors of risk and for their overall combination. Mill-based environmental risk is then combined with certification status and grievances for an overall mill-based risk score. The SRT results are then integrated with risk assessment scores to determine the “risk level” in order to determine which mill(s) warrant a site assessment.

 

Site assessments

Following this, site assessments are carried out to evaluate practices at the supplying mill and any plantations under its direct operations. The purpose of the site assessments is to:

(a) Evaluate the accuracy of SRT self-reported results;

(b) Measure directly performance of specific mills, as a basis for creating bespoke action plans through dialogue with mill management, and;

(c) Obtain on-the-ground insights into sustainability challenges that are widespread throughout each region or at group level, as a basis for developing approaches to address these challenges at scale (as opposed to the individual mill). 

Site assessments require us to conduct:

  • documentation reviews;
  • physical observations of practices and conditions at the mill and plantations under its direct operations, including workplaces, and housing/living quarters on-site;
  • interviews with mill/plantation management staff;
  • confidential interviews with mill/ plantation workers at working areas and/or housing areas (without the presence of management staff); and
  • action plan development.

We carry out the site assessments with the help of a digital mobile audit tool called Nimbly. Nimbly generates automated reports with time-bound action plans for the supplier mills and plantations assessed. This tool ensures that our suppliers receive assessment results and feedback from Wilmar immediately with minimal lag time.

Assessed suppliers are expected to review, clarify findings, and sign-off on the suggested time-bound action plans from Wilmar. Wilmar will then bi-annually monitor the suppliers’ progress on the agreed time-bound action plan. If egregious social or labour issues are identified as potentially present during any of the monitoring process, Wilmar will conduct further investigations, possibly through a second, longer, site assessment, which process is determined based on the potential issues found. If environmental issues such as deforestation or peat development are identified in the site assessment, Wilmar will verify the findings by reviewing data from the Supplier Group Compliance Programme (SGCP). If an issue is verified as a case of non-compliance through the SGCP or our further assessments, the case will be escalated to Wilmar’s Grievance team.

 

Nimbly

Figure 3- Nimbly APP for Site Assessment

Supplier Group Compliance (SGC)

With over 1,000 direct suppliers in our supply chain, we have invested substantial resources to develop extensive programmes to socialise and implement our NDPE policy across our supply chain. As part of our 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. As of end 2022, the programme monitors more than 23.27 million hectares, which covers over 900 parent groups representing more than 8,200 plantations units, spanning across Malaysia, Indonesia and other palm producing countries.

Please refer to our Supplier Group Compliance page for more information.


 

 

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