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Supply Chain Transformation

Aggregator Refinery Transformation

The Aggregator Refinery Transformation (ART) programme was built to strengthen every actor in the supply chain to promote transformation, providing a collaborative framework for refiners, millers and growers with an opportunity to work closely to overcome challenges faced on the ground. Through ART, our refineries provide a central point for growers and millers to progress on HCV; HCS and peat protection; environmental impact management; labour standards; Free, Prior and Informed Consent (FPIC); and traceability.

Typically, 50 to 200 mills supply one refinery and it is impossible to carry out assessments along Wilmar’s NDPE Policy requirements at every mill. With over 20 palm refineries in Indonesia and Malaysia, and hundreds of mills in our supply shed, we have adopted a risk-based approach to due diligence. Focus is first placed on identifying and creating transformation in areas with commercial importance, as well as higher risk in terms of environmental and social impact, before progressing to medium and low risk areas. Based on these initial criteria, we have chosen nine key refineries covering six key landscapes in Malaysia and Indonesia. In addition, we are also implementing parts of the programme with selected suppliers in Latin America and West Africa.

 At year-end 2017, we have conducted 69 assessments in these areas. These assessments are compiled into anonymised overarching reports by landscape, and each report summarises representative issues that may be prevalent in that landscape. Through Broad-Level Engagement (BLE) workshops, we socialise the common issues to all suppliers operating in that region and share learnings and recommendations for improvement.

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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 frombut 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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Wilmar wants to reach out as extensively as possible to ensure that our entire supply chain is included in the ART process and will be able to receive support for ongoing improvement. This is done through broad-level engagement workshops and training which all the suppliers of a particular refinery are invited to attend.

Workshops share the work that has been done in that landscape and provide an overview of what common issues were found, as well as recommendations for addressing the issues. The workshop is also complemented by a series of training sessions open to all our suppliers, as well as to their FFB suppliers. Key stakeholders, including industry experts, government agencies and our customers have actively participated in the workshop and training sessions to directly engage with our suppliers.

Supplier Reporting Tool (SRT)

As part of our progress towards covering a larger part of our supply shed, in 2017, Wilmar began a process to also cover additional medium and low risk mills, beyond those identified as the 10% high priority mills. Known as the Supplier Reporting Tool (SRT), the tool is designed to aid and align supplier operations along NDPE commitments of producers and consumers by allowing suppliers to assess themselves online. 

The launch of the SRT has been completed for Malaysia, Indonesia, Honduras and Guatemala as of September 2018, and is expected to be rolled out across the supplying regions of Colombia in Q4 2018. Based on the outcome of the questionnaire, Wilmar together with our policy implementation partners will analyse the results and select a sample number of mills for follow up verification, which is currently in progress. Subsequently, further programmes for suppliers will be implemented to assist suppliers.

 

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. 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.

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

 

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