Advancing systems and accelerating progress - Building a transparent, traceable and sustainable palm oil supply chain
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Cargill 2018 Palm Oil Annual Report July 2019 Advancing systems and accelerating progress Building a transparent, traceable and sustainable palm oil supply chain
Contents
Cargill’s palm oil 2018 progress update and 2019/2020 action plan
2 A message from
John Hartmann, 6 Strengthening our
commitments 18 Engagement
• Suppliers
26 Key learnings
Global Sustainability Lead,
Cargill Agricultural Supply 9 2018 palm impact scorecard • Landscape projects
27 2019/2020 palm sustainability
action plan
14
Chain and Cargill Global • Smallholders
Systems and processes
Edible Oils Solutions implemented • Cargill plantations
32 Abbreviations
5 Operating a global palm oil 15 Transparency
• Labor and human rights
supply chain • Traceability
• Grievances 25 Verification 33 Contact Us
Cargill 2018 Annual Sustainable Palm Oil Report 1
Achieving
transformation
requires a
willingness to
engage with
a variety of
stakeholders
globally.
Advancing systems and accelerating progress
Cargill is committed to transforming our supply chains and operations As we approach 2020, there is increasing pressure on brands,
to meet the needs of today without compromising future resources. traders and refiners to achieve the commitments set forth in “No
To do so, we seek to be deforestation-free, mitigate impacts on the Deforestation, No Peat and No Exploitation” (NDPE) requirements.
climate, expand opportunities for communities in palm producing We know more work is needed to transform the palm oil supply
countries and improve the future of the palm industry. Achieving chain, but at the same time there is value in acknowledging
these aims requires collaboration. We work closely with a variety the significant progress made. There has been unprecedented
of partners – from NGOs and industry groups to our customers, collaboration, co-creation of solutions to increase adoption of NDPE
suppliers and smallholder farmers – to improve transparency and policies, and implementation of time-bound action plans that deliver
drive positive change. on commitments to protect forests and uphold labor rights.
John Hartmann Our approach
Global Sustainability Lead
We recognize there is still much work to be done – and we believe production driven by market forces outside Europe and the U.S.,
Cargill Agricultural
that for sustainable practices to become mainstream, we must known as “leakage” markets. Rather than immediately banning all
Supply Chain and
invest to improve and reform those already engaged in the market. noncompliant producers, Cargill seeks to engage them to transform
Cargill Global Edible Oils Otherwise, the industry risks continued growth of unsustainable practices using the “verify, engage and transform” approach.
Solutions
Cargill 2018 Annual Sustainable Palm Oil Report 2
Deeper understanding
Our journey to establish and advance robust systems has placed on us a steep applied this deeper understanding in concrete ways, including reviewing and updating
learning curve. We have invested time and resources to better understand the our policies, strategies and processes to better address key challenges. Examples of
environmental and social impacts that stem from our operations, those of our supplier these developments are noted below.
partners, the constantly evolving stakeholder landscape and the improvements we
must make to become an increasingly sustainable business. Our aim is to be a leader A major driver of improvements in 2018 was the work we did on the ground to address
in promoting transformational change in the industry. the root causes of deforestation, peat and human rights issues and develop long-term
solutions. This report includes several examples of ways we worked to address those
As our understanding of the root causes of issues facing the palm industry evolves, issues through partnerships, including projects on landscape initiatives, labor and
we strive to remain agile and transparent in our response. In 2018, our business human rights, smallholder inclusion and on our own plantations.
Grievance process Monitoring Reporting
and verification
We updated our grievance We supported the development
process and developed guidance We partnered with Global Forest of an NDPE Implementation Framework
on topics such as child labor, forced and Watch to improve our monitoring process to facilitate reporting of progress toward
bonded labor, deforestation and peat using radar technology and developed stated commitments.
clearance to address instances of detailed guidelines for verifying
noncompliance in a more compliance with our
consistent and supplier policy.
transparent manner.
Cargill 2018 Annual Sustainable Palm Oil Report 3
Looking ahead during the past year. To pursue scale Sustainability remains core to our so far. We will continue working with
and greater impact, we are prioritizing operations. We believe achieving producer groups, industry peers and
We are on track to achieve our goal of key activities in line with our strategic transformation requires a willingness to others to drive change. We appreciate
ensuring a traceable, transparent and pillars of transparency, engagement and engage with a variety of stakeholders your support and collaboration on this
sustainable supply chain by 2020. In verification, which are detailed in this globally, and we applaud the efforts of our journey.
2019 and 2020, we will continue to build report and outlined in the updated palm partners and the key stakeholders who
on the robust systems we put in place oil sustainability content on Cargill.com. have been instrumental in our progress
John Hartmann
Global Sustainability Lead
Cargill Agricultural Supply Chain and
Cargill Global Edible Oils Solutions
Cargill palm sustainability timeline
Published Published Launched Palm Published 2020 Convened Collaborate
Cargill Policy first progress Sustainability Roadmap, industry to transform
Achieve
on Sustainable report and Dashboard, established collaboration the industry
industry
Palm Oil, action plan, supported the key processes, around
alignment on
began launched Palm High Carbon Stock policies, landscape
Pursue scale and principles
reporting mill Grievance Approach (HCSA) procedures approach and
traceability Procedure convergence, began development of evaluate impact
reporting plantation implementation
traceability progress
framework
2014 2015 2016 2017 2018 2019 2020 2021
Cargill 2018 Annual Sustainable Palm Oil Report 4
Operating a global palm supply chain
Our footprint
Cargill operates a global palm oil supply chain with physical assets suppliers1. We buy some of that oil directly from mills; the majority of
17
Cargill operations
in the form of plantations, mills and refineries. As a trader of major the oil we purchase is sourced indirectly on the open market through
commodities around the globe, our key activities in the palm supply traders and refiners. We also purchase smallholders’ palm oil through
chain include sourcing, trading and refining oil from third-party mill cooperatives and indirectly from independent smallholder farmers.
1 Our mill list can be found on our Palm Sustainability Dashboard.
REFINERIES
12 Hamburg
Izegem
5
MILLS Rotterdam
Sidney
Turyağ
Fullerton Charlotte
Karachi Nantong
Dongguan
Kandla Yangjiang
Tula
PLANTATIONS
22,000 *
South Sumatra
Port Klang
Westport
• 2 plantations
• 4 mills
Itumbiara
West Kalimantan
• 3 plantations
Kooragang
SMALLHOLDERS • 8 mills
(plantations
Strengthening our commitments
In March 2019, Cargill announced our updated Policy on Sustainable Palm Oil, which replaces the policy we launched in 2014. Cargill’s commitment to producing and sourcing
palm oil in an economical, environmentally sustainable and socially responsible manner is embodied in our requirements, which aim to deliver palm oil that is produced in
accordance with “No Deforestation, No Peat and No Exploitation” (NDPE) practices. Cargill commits to a traceable, transparent and sustainable palm oil supply chain that:
• Protects high conservation value (HCV)1 areas, high carbon stock (HCS) 2 forests and peatlands regardless of depth
• Respects and upholds the rights of workers, indigenous peoples and local communities
• Enables smallholders to become successful businesspeople, improving their livelihoods through responsible production, maximizing yields and improving quality
• Supports the inclusion of smallholder farmers
These renewed NDPE commitments are based on strengthened industry standards and evolving understanding about key issues and their root causes. Highlights include:
Strengthened Zero tolerance
Commitment to High standards
standards on social of retaliation and
the High Carbon for transparency
issues and human intimidation Dedicated
Stock Approach and monitoring
rights protections for section on
(HCSA) workers, indigenous smallholder
peoples and local inclusion
communities
We will work to ensure that all palm oil and palm products that Cargill produces, trades or processes are in line with these commitments (see policy for more details).
We collaborate and seek the support of suppliers, customers, governments, non-governmental organizations and other stakeholders to implement this policy.
Broader commitments
The palm oil industry faces challenges and is focused on reducing deforestation and upholding human rights, labor and land rights in the palm supply chain. In addition
to addressing these topics in our Policy on Sustainable Palm Oil, Cargill’s broader updated Forest Policy and Human Rights Commitment also govern our actions.
These documents articulate Cargill’s commitment to eliminate deforestation and protect human rights in our supply chains. Our Supplier Code of Conduct is another key
element of our palm oil policy.
2 HCV assessments are used to identify whether proposed development areas support vital natural ecosystems and biodiversity or maintain the subsistence or culture of local communities.
3 Cargill publicly endorsed the HCSA on November 8, 2016. We were active participants in the HCS convergence process and continue to contribute in the implementation framework of the approach.
Cargill 2018 Annual Sustainable Palm Oil Report 6
Commitment to the U.N.’s
Sustainable Development Goals
Cargill is committed to using our global gender equality, advancing sustainable
reach within the agriculture, food and economic development, addressing
nutrition sector to help achieve the U.N.’s climate change and ensuring prosperity
Sustainable Development Goals (SDGs), for all. For more infomation visit Cargill.
which are aimed at ending poverty, com/SDGs
improving food security, promoting
Cargill 2018 Annual Sustainable Palm Oil Report 7
2018 in review
We set a high bar
for palm sustainability.
Meeting our goals by 2020
will be challenging but we are
making solid progress as
shown in the 2018
impact scorecard.
Cargill 2018 Annual Sustainable Palm Oil Report 8
2018 palm impact scorecard
Cargill Supply Chain
Cargill buys directly from mills
BRANDS
PLANTATION
ORIGIN DESTINATION
MILLS REFINERIES SHIPMENT REFINERIES
Cargill buys indirectly from mills through traders/refiners on the global market
PROPORTION OF RSPO CERTIFIED ORIGIN OF THE VOLUMES AT DIRECT AND INDIRECT MILLS
VOLUMES OUT OF GLOBAL VOLUMES DESTINATION SOURCING
53%
18% PHYSICALLY CERTIFIED OF
ALL CARGILL VOLUMES INDONESIA
7%
OTHERS
29% EUROPE RSPO
SEGREGATED
19% 87% 13%
16% EUROPE & US RSPO
MASS BALANCE 21%
MALAYSIA
LATIN
AMERICA INDIRECT
MILLS
DIRECT
MILLS
Cargill 2018 Annual Sustainable Palm Oil Report 9Traceability scores:
PALM Q3 Q4
KERNEL Q3 Q4
100% Europe, Russia, USA, Malaysia, 100% Europe, Russia, USA, Malaysia,
92% Brazil, Mexico, Pakistan, Australia/New
Zealand
Brazil, Mexico, Pakistan, Australia/New
Zealand
Cargill Global
Traceability score Traceability India
98%
India N/A
to mill level
to Mill Level
85%
44% 92%
China China
by Market 51% 100%
PALM Q3 Q4 KERNEL Q3 Q4
74%
Europe Europe
49%
66% 43%
20% 35%
Russia 17% Russia 38%
12% 24%
USA USA
42%
17% 22%
97% 35%
Malaysia 98%
Malaysia
39%
Cargill Global Traceability Brazil 49%
77% Brazil
24%
32%
Traceability score
to plantation level to Plantation Mexico 42%
66%
Mexico
60%
73%
Level by
31%
India 53%
India N/A
27% 11%
China
Market Pakistan N/A
24% China
Pakistan
4%
35%
20%
Austalia/ 97% Austalia/ N/A
New Zealand 98% New Zealand
Other 43% Other 33%
Markets 36% Markets 39%
Cargill 2018 Annual Sustainable Palm Oil Report 10Sustainability performance:
Q4 2018
Number of third- Monitoring
party mills and Cargill is using satellite imagery
to monitor for potential land use
ref ineries in Cargill changes in 100% of our palm
supply chain 33 Third-Party
Ref ineries
1,369
Third-Party Mills
121 Segregated
Mills
supply chain.
100%
Labor &
Mill prioritization
HIGH MEDIUM LOW Human Rights 100%
30%
Human rights issues
328 470 571
have been socialized with direct
for engagement mills through Cargill programs
69% Direct trades/ref iners with
comprehensive human rights
policies
*Cargill is using the Global Forest Watch Pro Palm Risk Tool Methodology to categorize the mills from high to low
Creating Impact 65%
NDPE POLICY & 36% FIELD ASSESSMENT
with Our CODE OF CONDUCT
26% SELF ASSESSMENT
Sustainability 39%
REFINERY
24% CONTINUOUS
Programs
ACTION PLAN
IMPROVEMENT PLAN
45%
GROUP 30% NDPE WORKSHOP
ACTION PLAN
Direct Trader/Ref iner Direct Mills
44% HIGH RISK MILLS FIELD ASSESSED
Cargill 2018 Annual Sustainable Palm Oil Report 11Sustainability performance:
Smallholder Landscape Program Cargill Plantations
Program (Siak/Pelalawan) % mills RSPO certified
83%
3,384
CERTIFIED
37% 17%
MEDIUM NON CERTIFIED
New farmers certified in a Cargill % plantations RSPO certified
program in 2018
20% 43% 62%
CERTIFIED
38%
NON CERTIFIED
HIGH LOW
4
Cargill mill priority in % managed smallholders
RSPO certified
Siak /Pelalawan
73%
CERTIFIED
30
Smallholder projects (NORAD,
WildAsia, Solidaridad, Development 27%
of Smallholder Empowerment Tool) NON CERTIFIED
100% Fresh Fruit Bunches originate from
NDPE-compliant sources
Total number of mills in Cargill supply 100% Cargill Operations and surrounding
chain engaged in Siak /Pelalawan communities (5km) covered by a fire prevention
Landscape Program and awarenesss program
Cargill 2018 Annual Sustainable Palm Oil Report 12Grievances:
LOCATION OF GRIEVANCES ADDRESSING GRIEVANCES
19% Deforestation
MALAYSIA 21% Investigation
6%
Developing Action Plan
7%
Verification
6% Monitoring Implementation
3% Suspended
LATIN
78% AMERICA
60%
INDONESIA
Labor/human rights
GRIEVANCES
LOGGED
7 51 30%
Monitoring Implementation
Suspended
Direct Third Indirect Third
Parties Parties
70%
Cargill 2018 Annual Sustainable Palm Oil Report 13Systems and processes implemented in 2018
Traceability Supplier engagement
• Risk-calibrated approach for traceability to plantation • Producer groups roadmap template
• Mill traceability verification guidelines • NDPE modules for capacity building of suppliers
• Mills self-assessment template
• “Connected 4 Change” Latin America platform
Approach to deforestation
• Policy Compliance guidelines for supplier verification
• Updated environmental mills risk assessment
(GFW Palm Risk Tool)
• GFW monitoring process Grievances
• Landscape prioritization methodology • Updated grievance procedure
• Response protocol for alerts management (draft) • Guidelines addressing social and environmental issues in the
context of grievances
Approach to labor and human rights
Reporting
• Regional social risk assessment methodology
• NDPE implementation framework
• Ethical recruitment due-diligence tool
• Cargill-owned plantations labor audit checklist
• Global labor risk management system (draft)
We continue to adjust our strategies based on what we learn during implementation. We measure and regularly report our progress
(see the Palm Sustainability Dashboard on Cargill.com ).
Cargill 2018 Annual Sustainable Palm Oil Report 14Transparency
Traceability the mill level to a radius of 50 kilometers • We focus on collecting traceability- Improving traceability in India
around the mill provides a sufficient level to-plantation data in origins where
Goal: of detail, allowing us to direct resources we buy directly from mills (primarily in We are making progress by increasing
Traceability to plantations by 2020 to areas at higher risk of deforestation. Malaysia and Latin America – where traceability across our global palm oil
in high-priority landscapes By targeting high-risk landscapes and most of our volume comes from supply chain. In India, for example,
prioritizing our efforts to gather more data Brazil, Colombia and Guatemala). traceability to the mill level has grown
at the plantation level there, we are able significantly in four years – from 0% at the
Cargill is increasing the transparency of to achieve greater impact. • For indirect purchases from traders end of 2014 to 90% at the end of 2018.
our supply chain and sourcing practices and refiners, we request plantation-
in four ways: Our strategies for achieving our level information from our direct
traceability-to-plantation goal are based counterparts and support them to
1. We map our supply chain to the on the following factors: collect this data over time. “We believe there are
plantation level. • Traceability to plantations is a • In all cases, we engage our suppliers growth opportunities for
2. We share our mill list.
resource-intensive process, so Cargill
prioritizes the collection of data in high-
to disclose concession boundary
maps to improve tracking, monitoring
sustainable sourcing in
3. We disclose noncompliant suppliers priority landscapes where the risk of and responding to deforestation or India. Through a strategic
on our dashboard. noncompliance is greater. other noncompliance and grievances
in our supply base.
decision to procure palm oil
4. We engage with our direct and indirect • In 2018, we worked with partners to only from controlled and
develop a new, risk-calibrated approach
suppliers to make their concession
for collecting data. This approach is Commitment to reducing limited suppliers, we have
boundary maps publicly available by
uploading them on the GeoRSPO and
based on the principle that NDPE- deforestation consistently increased our
related risks vary among production
Global Forest Watch platforms.
regions and more detailed data is Cargill is committed to protecting traceability scores. As one of
needed on plantation locations where forests and native vegetation and the leading importers of palm
Cargill’s goal is to have all palm oil risk is higher than where it is low. For ending deforestation in our palm supply
volumes we produce, trade (ship and high-risk areas, palm production should chain. We are using various tools and
oil, we will continue to set the
physically handle) and process traceable be traceable to the individual production approaches to address deforestation, pace and engage in meaningful
to plantations in high-risk supply chains by including:
2020. While initially Cargill was pursuing
unit (e.g., the farm); for low-risk areas,
palm can be traceable to the level of a
dialogues with our suppliers
100% traceability to plantations, we village or municipality. • Mapping – We are mapping our to help ensure a sustainable
revised our approach in 2018 to focus supply chain in high-risk landscapes
on areas at higher risk of unsustainable • The risk-calibrated approach is currently to the plantation level using our risk-
supply chain.”
practices, including deforestation, being finalized and is based on defining calibrated approach.
peatland clearance and fires. We collect high-risk land and mill locations as Pratik Pattanayak,
traceability data in order to identify, areas with forest, uncultivated peat and • Reactive approach – We monitor Trader, Cargill Global
monitor and reduce risks in our supply protected areas including a 1 kilometer our supply chain for any land Edible Oil Solutions
chain. In regions where we already know buffer. development and take action when
the risk is low, expanding traceability at development is identified, including
Cargill 2018 Annual Sustainable Palm Oil Report 15verification and engagement. We have a strong grievance process in place is designed to increase transparency about the progress that has been made so far,
with clear guidelines for deforestation grievances. Any verified deforestation what still needs to be done, and the challenges that must be addressed in order for
will lead to an immediate stop-work order and moratorium followed by companies to deliver on NDPE commitments.
development of an action plan with clear milestones.
The framework’s methodology standardizes the process of researching and
• Proactive approach – We strengthen capacity at the producer group level to categorizing mills into pre-defined categories of progress to ensure consistency and
prevent deforestation from taking place through workshops to raise awareness improve accuracy. The objective is to evaluate each mill using criteria to measure
about deforestation, development of policies around no-deforestation and new progress related to deforestation, peat and labor, recognizing that progress may
development, creation of processes for implementing policies, and mapping of differ on each topic. Cargill and other stakeholders conducted pilot studies in 2018
areas to protect the supply shed. using the framework and draft indicators, then shared the results and gathered
feedback on the methodology. Leading up to the 16th annual Roundtable on
• Landscape approach – We build upon existing public and private local efforts Sustainable Palm Oil (RSPO ) meeting in Malaysia, Cargill, Pepsico and Proforest
and multi-stakeholder platforms to advance a shared vision of a sustainable, facilitated a workshop to discuss outcomes from the pilot studies and gather input
inclusive production model in order to develop scalable solutions for addressing from NGOs, brands, growers, traders and other stakeholders across the supply
deforestation in a systemic way. We pilot multi-stakeholder approaches to chain in order to further improve the methodology and process. The discussion
sustainable supply sheds and support and empower local organizations. led to further refinement of the framework as a tool to build greater transparency on
progress, highlight remaining gaps and address challenges.
We recognize that more effort will be required at the smallholder level – beyond
the work we are doing at the mill and large-scale plantation level – to address In 2019, refinement of the framework will continue as Proforest and Earthworm
deforestation. This will be one area of focus in the year to come. Foundation (formerly The Forest Trust) lead the industry effort to fine-tune
the methodology (including adding the step of allocating palm volumes to the
producers of fresh fruit bunches), scale up implementation, ensure compatibility
NDPE Implementation Framework with the Accountability Framework and develop guidance on verification. Cargill
In June 2018, Cargill began working with Proforest and other stakeholders to aims to start reporting the performance of its direct mills through the NDPE
develop a standard approach for monitoring and reporting progress on NDPE implementation framework over the course of 2019.
commitments. The resulting NDPE Implementation Framework, led by Proforest,
Cargill 2018 Annual Sustainable Palm Oil Report 16Grievances • Additional detail regarding the specific
management of deforestation and
Goal: peat development grievances: Cargill
Report on all grievances in our supply is taking a more stringent approach
chain transparently and publicly related to noncompliance on issues of
deforestation and peat development
in our supply chain. In line with our
Our approach: verify, commitment to a deforestation-free
engage, transform supply chain, we are taking immediate
steps toward swiftly putting a stop to
We hold ourselves and our suppliers any additional clearing upon detection
accountable to respond to grievances, and verification, after which we engage
set time-bound action plans to ensure with the supplier to define an action plan
progress and close the grievance in with clear timelines and milestones.
a timely manner as agreed to by the
complainant. Cargill’s Palm Grievance Our focus on industry transformation
Procedure provides a transparent, open has driven us to develop and adopt a
and robust process for dealing with “Verify, Engage and Transform” approach
grievances. Cargill does not tolerate to noncompliance. This approach
retaliation against anyone who, in good has been successful in leading our
faith, raises a concern or participates in suppliers to immediately implement
an investigation or whistleblowing. moratoriums on development, introduce Fair Labor Association ( FLA ) , Proforest and Landesa to develop guidance
policies and put in place processes to documents that provide a structured, consistent and transparent approach for
We believe procedures must be reviewed prevent any further deforestation or determining expected actions and timelines. The guidance includes information
regularly to ensure they reflect industry clearance of peatland. This approach about how to verify grievances, identify causes, develop action plans, minimize
developments and lessons learned by our requires suppliers to immediately halt further noncompliance and communicate progress to stakeholders. The guidance
team, so in 2018 we reviewed and updated noncompliant activities and suspension covers key topics, including peat development, deforestation, wages, forced
the Grievance Procedure we introduced of suppliers who are unable or unwilling labor, child labor and land rights.
in December 2015. The revised procedure to deliver on set milestones agreed upon
includes the following additions: during the engagement process. Our We believe that to make sustainable practices mainstream, we must invest in
engagement process requires suppliers improving and reforming those already engaged in the market. Otherwise, the industry
• Greater detail around the scope of risks continued growth of significant, unsustainable volumes driven by market forces
to adopt an NDPE policy, as well as the
managing indirect supplier grievances, outside Europe and the U.S., known as “leakage” markets. Limiting the market
implementation of a corrective action
group associations and non-palm access of certain producers – particularly those who have not yet received
plan and related processes. We monitor
commodities information or training on NDPE – increases the likelihood that they will continue
supplier progress on a monthly basis.
unsustainable practices unchecked. We aim to avoid the worst-case scenario
• Updated procedure flow on timelines in which these suppliers will be harder to reform without economic incentives.
To support suppliers in addressing
and activities around verification, It is our belief that the only way to ensure sector transformation is for upstream
and resolving grievances, we have
engagement and action plans as well actors to incentivize producers who are willing to advance their practices and to
engaged experts from the Global
as clear expectations on continued
Environment Centre (GEC) Foundation, reward them with a viable free market.
noncompliance
Cargill 2018 Annual Sustainable Palm Oil Report 17Engagement
Suppliers
Goal:
Direct and indirect suppliers are
88%
of our suppliers in Colombia
compliant with Cargill’s NDPE policy and Guatemala are covered
by self-assessments and
Through our supplier engagement
process, we help ensure our suppliers
are operating in compliance with our
NDPE policy commitments and our
58%
of mills are covered by
Supplier Code of Conduct. NDPE policies.
In the markets where we buy directly from
mills, we conducted field assessments
in 2018 of 58% of mills located in
high-risks areas to identify gaps in the
mills’ performance, provide support
to develop continuous improvement
plans to address those gaps and verify
compliance. We use the Aggregator/
Refiner Transformation (ART ) plan, an
approach developed by Earthworm
Foundation and the Proforest supplier
engagement approach to ramp up the
transformation process of high-priority
mills on a wider scale than simply one mill
catchment at a time, focusing on change
efforts across an aggregator/refiner’s
entire supply base.
such as deforestation, labor issues Latin America To continue moving our suppliers toward
We provided capacity-building activities and worker health and safety, and tool greater sustainability, we finalized
in 2018 to support low-, medium- and development. We hosted workshops During 2018, we saw significant progress plans for our Connected 4 Change
high-priority mills to help them meet that brought together representatives by suppliers in Colombia and Guatemala engagement program to measure supplier
NDPE commitments; 19% of our from multiple mills for training and in meeting NDPE commitments. Across progress and provide online training for
direct suppliers participated in NDPE development, providing a platform for the region, 88% of our suppliers are mills focused on reducing deforestation
workshops in 2018. Activities included them to share insights directly about covered by self-assessments and 58% and protecting human rights.
training, coaching on topics challenges and solutions. of mills are covered by NDPE policies.
Cargill 2018 Annual Sustainable Palm Oil Report 18In Guatemala, Cargill participated in based palm oil suppliers, resulting in
several capacity-building initiatives 1,858 hectares of HCV being identified
for suppliers in 2018. Cargill and other and conserved.
stakeholders supported a series of
Social License to Operate workshops We support our suppliers to ensure
developed by Earthworm Foundation their operations are free from forced
to educate suppliers about managing and bonded labor risks. We connected
social risks. Cargill shared our Earthworm with Charuk Putting Palm
experiences during the first workshop Oil Mill, one of our long-term contract
about risk assessment; subsequent suppliers to facilitate their participation
workshops focused on technical in an ethical recruitment study. Findings
capacity building and implementation. from the study were showcased in an
Workshop participants included our ethical recruitment forum in June 2019.
main Guatemalan palm oil suppliers. We In July the coalition of companies, together with Daemeter and Proforest, officially announced the
also conducted two capacity-building Social risk assessment collaboration with the Siak government to support and strengthen the transformation towards sustainable
palm oil in the Siak District.
workshops for suppliers related to methodology
human rights and water management
We worked with Proforest in 2018 environmental, land and labor issues
and we co-sponsored a conference to
to apply its social risk assessment
Landscape projects in the Siak and Pelalawan districts
raise awareness about HCSA.
methodology to approximately 2,000 Goal: of Indonesia. Cargill is one of seven
mills in our supply chain. The high-level, palm oil purchasing and consumer
Malaysia desk-based assessment covered 17 Common environmental, land and goods companies participating in a
countries in Central and South America labor issues are addressed through collaboration with local government,
We continue to encourage our suppliers and Asia, with particular focus on relevant landscape programs and NGOs, producers and smallholders
to develop NDPE policies – so far 95% Colombia, Indonesia, Malaysia and case studies to achieve sustainable land use.
of our direct suppliers in Malaysia Mexico. The methodology helps identify We are building on existing efforts
have NDPE policies in place. We labor- and land-related risks, such as to develop scalable solutions, pilot
supported our suppliers’ continuous Many of the challenges in the palm oil sustainable approaches, support local
child labor, forced labor, inadequate
improvement efforts by engaging in supply chain, such as deforestation organizations, improve smallholder
health and safety protections, land
2018 with four mills to conduct post self- and human rights concerns, are not livelihoods and share lessons learned
rights abuses and land disputes. Cargill
assessment and intensive verification specific to a single mill or to the palm with other landscape initiatives.
hosted a stakeholder workshop in
visits. From these engagements, we sector alone. These issues often are
which participants from 10 companies In 2019, we are pursuing landscape
worked with Earthworm Foundation common within a region and across
and five NGOs came together to learn programs in other areas of Sumatra and
to identify areas for improvement commodities. To drive meaningful
about the social risk methodology and West Kalimantan, including Ketapang.
and formulate action plans to close change, Cargill is focusing on supplier
provide input. Proforest is revising the We also are exploring development of
gaps. We provided funding for engagement not only at the mill
methodology based on that feedback. initiatives in Latin America to address
Earthworm’s Tools for Transformation level, but also through interventions
Cargill will continue supporting the workers’ rights in the palm sector
to give suppliers immediate access to more broadly at the landscape level,
work of Proforest to produce a tool that through collaboration with public,
resources. We also helped to fund an especially in high-priority landscapes.
delivers a higher degree of granularity private and civil society stakeholders.
HCV assessment and a social impact that will aid in making informed sourcing In 2018, we joined a multi-stakeholder
assessment at one of our Malaysia- decisions. landscape-level intervention to address
Cargill 2018 Annual Sustainable Palm Oil Report 19Smallholders In 2018, an action plan was developed to Malaysia
address issues identified during a rural
Goal: dynamics diagnostic review conducted In Malaysia, we worked with Wild Asia,
Smallholders included in our supply in 2017, which included interviews with a Tian Siang Air Kuning Palm Oil Mill and a
chain and their livelihoods improved sampling of 73 farmers and 15 stakeholder fresh fruit bunches dealer in Air Kuning,
groups. That review revealed that while Perak to help smallholders achieve
yields met or exceeded productivity RSPO certification. Through the program,
We promote the inclusion of smallholders expectations for two-thirds of the farmers, smallholders are encouraged to avoid
in our supply chain and improvement of many of them were unable to generate application of herbicides and use palm
their livelihoods. Our approach includes stable profits and required more training oil mill by-products, including empty fruit
collaborating with mills in our supply chain on key sustainability issues. The action bunches, as natural fertilizer. In 2018,
to help them deliver on their smallholder plan identifies activities for 2019-2021 to
“I can give my family more than 260 farmers participated in
transformation plans and participating in improve delivery of technical assistance the opportunities they the program, representing one third
programs focused on building smallholder of all RSPO-certified independent
capacity and promoting responsible farm
to farmers, promote more open and deserve. Two of my smallholders in Malaysia. As of June
transparent communication between
development. In 2018, we supported the supplier and the farmers, improve children have graduated 2019, the number of participating farmers
smallholders through engagement efforts social conditions, and pilot the HCSA with from college and my had grown to 335.
in Brazil, Guatemala, Malaysia and near farmers at the landscape level.
Cargill’s operations in Indonesia (see Cargill youngest is working on the Peatland restoration in Indonesia
plantations section for Indonesia details).
Guatemala farm alongside me so that
As part of Cargill’s commitment to
Brazil In Guatemala, Cargill formed an alliance
he can one day take over.” prioritizing landscapes for targeted
with Solidaridad and palm supplier action, we continued our focus in 2018
In the Brazilian state of Pará, Cargill Palmas del Ixcán to help 105 smallholder Hugo Walter Cruz, on protecting peatlands in Indonesia.
is working with our palm oil supplier palm farmer in Chisec, Guatemala who Along with our supplier Musim Mas, we
palm farmers from the regions of Ixcán participates in a sustainable farming program
Biopalma, Earthworm Foundation and and Quiché implement good agricultural with Cargill, Solidaridad and Palmas del Ixcán are supporting the work of Proforest
others to support the Rurality project practices and achieve RSPO certification. in collaboration with the Indonesian
that is helping 675 smallholder farmers The objective is to help these farmers Peatland Restoration Agency’s Peat Care
improve productivity, achieve NDPE improve social, environmental and Village program in four villages in Riau,
compliance and a better quality of life. economic sustainability at their farms and Sumatra. Cargill has helped fund a pilot
The program includes: interviewing develop a segregated, RSPO-certified program, including training of two village
farmers to understand current practices supply chain to meet market demand for facilitators, to lead community-based
and challenges; mapping plantations sustainable oils. The program includes identification, protection and restoration
using GPS data to improve logistics for use of a digital application that facilitates efforts of local HCV and HCS peatlands.
transporting farmers’ fresh fruit bunches; traceability, self-assessment and training. The next step will be to bring together
engaging with local stakeholders, such as experts in community engagement,
government entities, NGOs, companies, botany, birds and mammals to engage
trade unions and other groups; and with village members, further integrate
developing action plans to help farmers the HCV-HCS approach and scale the
improve yields and livelihoods. rollout more broadly across the Siak-
Pelalawan landscape.
Cargill 2018 Annual Sustainable Palm Oil Report 20Cargill plantations Forest conservation PT Indo Sawit Kekal, PT Maya Agro
Investama, PT Andes Agro Investama
Goal: In 2018, Cargill announced our 25-year and PT Andes Agro Lestari. The project
Cargill-owned mills/plantations (and commitment to finance the Nanga design was validated under the Plan
smallholders supplying to them) are Lauk Village Forest Conservation Vivo and Verified Conservation Area
compliant with our NDPE policy Project, a community forestry project standards.
in Indonesia’s Heart of Borneo region.
The project enables community Fire prevention
“Our partnership with members to sustainably protect and
RSPO certification manage the forest while also obtaining Cargill has committed to strengthening
for smallholders Cargill has enabled us an income from sustainable use of its processes to monitor, detect
to adopt sustainable natural resources, such as ecotourism and suppress fires in and around
At Cargill’s plantations in West Kalimantan
and South Sumatra, Indonesia, we agricultural practices. and wild forest products. The project its plantation concessions in South
is funded through the Sustainable Sumatra and West Kalimantan. During
provide support through smallholder Our yields have increased Commodities Conservation Mechanism the dry season, Cargill will improve
empowerment programs to help farmers
achieve and maintain RSPO certification
along with our ability to (SCCM) developed by Lestari Capital in transparency by publishing regular,
partnership with Cargill. online updates of its hotspot monitoring
and International Sustainability and operate more efficiently. within its plantation concessions.
Carbon Certification ( ISCC) standards. RSPO’s certification is a SSCM is a new financial mechanism
In 2018, 3,019 smallholders across eight that promotes long-term conservation Cargill has in place a comprehensive
cooperatives at Cargill’s PT Poliplant great endorsement of our through global commodity markets, system to protect against fires, powered
Sejahtera oil palm plantation in West sustainable practices and allowing companies to meet sustainability by state-of-the-art technology. Recently,
Kalimantan received RSPO certification. commitments and comply with RSPO Cargill deployed a thermal sensing
They join four other groups of smallholders
successful partnership Remediation and Compensation camera system to detect hotspots and
in Cargill’s Indonesian supply chain with with Cargill. We anticipate Procedures. SSCM addresses a critical smoke within a five-kilometer radius
RSPO certification (at PT Hindoli in South greater improvements to lack of long-term financing for conservation of our PT Hindoli plantation in South
Sumatra and PT Harapan Sawit Lestari and and restoration initiatives and ensures that Sumatra, covering a total of 9,000
PT Indo Sawit Kekal in West Kalimantan). our livelihoods, now that corporate sustainability standards and hectares. When a hotspot is detected,
To date, Cargill has helped more than our fresh fruit bunches certifications have verified impact. Cargill’s on-site team will immediately
16,500 of its 21,600 smallholders in investigate the coordinates provided
Indonesia to be RSPO certified. can feed into the global The Nanga Lauk project supports by the system and work with local
certified sustainable palm biodiversity, protection of HCV land authorities to contain and suppress the
and the livelihoods of 195 households.
oil market.” The project is expected to prevent
fire. By automatically and continually
monitoring for hotspots, this technology
deforestation and forest degradation complements existing hotspot
Suherman, while protecting carbon stocks and
head of Subur Makmur Cooperative, detection measures, such as manned
West Kalimantan, Indonesia, which achieved ecosystems. The 1,430 hectares watch towers and drones, to provide
RSPO certification in 2018 covered by the project are located in more comprehensive monitoring of
West Kalimantan, helping to support fire-prone areas.
RSPO certification for four Cargill
operations located in the province:
Cargill 2018 Annual Sustainable Palm Oil Report 21more comprehensive monitoring of monitoring and patrolling of HCV and
fire-prone areas. HCS lands with the SMART (Spatial
Monitoring and Reporting Tools)
To date, Cargill’s Fire Free Village system. Cargill’s PT Hindoli plantation
Program includes 48 villages in fire- started to deploy the SMART system
prone communities and its efforts were in 2018 through our partnership with
recently recognized by the provincial the Zoological Society London on
government of South Sumatra through landscape management and KELOLA
an award for Cargill’s comprehensive Sendang, a program protecting HCV
fire prevention, monitoring and control areas and the natural environment by
measures. supporting holistic restoration projects
in Banyuasin, South Sumatra, Indonesia.
NDPE training SMART’s approach covers three areas:
software, capacity building and site-
Cargill regularly trains our employees based protection standards.
in best practices to ensure they
understand how to implement our Cargill commits to continue deploying
Sustainable Palm Oil Policy. In October SMART software to all Cargill plantation
2018, for example, more than 40 HCV/HCS areas in order to measure,
participants attended a three-day evaluate and improve the effectiveness
workshop at our Learning Academy of our wildlife law enforcement patrols
in West Kalimantan focused on our and site-based conservation activities.
NDPE commitment and classification,
Cargill 2018 Annual Sustainable Palm Oil Report 22Labor and human rights 2018 initiatives in any of our operations anywhere in the world,
and we aim to exert a positive influence on labor
Goal: In 2018, Cargill participated in several multi-stakeholder practices on palm oil plantations owned by our
Human rights are protected in Cargill supply chains initiatives to better understand and address complex suppliers.
labor and human rights challenges in the palm supply
chain. Cargill worked with Earthworm Foundation on a
Cargill is committed to protecting the human rights of project focused on ethical recruitment to prevent
• Malaysia – The Malaysian palm oil industry faces
workers, indigenous people and local communities in labor exploitation and human trafficking in the palm
challenges, including recruitment and treatment of
our supply chains. Our approach addresses specific supply chain in Malaysia. The project included an
migrant workers, forced labor and debt bondage. As
labor challenges in our supply chain and systemic assessment of challenges, including recruitment
a result, Cargill has undertaken a proactive series of
issues requiring collaborative, industry-level actions. fees paid by foreign workers, lack of due diligence
assessments, system reviews and tool development
for our supply chain in Malaysia, including our by some companies using recruitment agents
Our labor program is tailored to fit the different roles
own refineries and supplying mills as well as more and contractors, employment conditions of
we play in the palm oil supply chain. For example,
broadly through industry discourse and research sub-contracted workers, issues of deception in
our plantations aim to lead by example in ensuring
on key issues. We worked with multiple partners in recruitment, and instances of debt bondage. We
the highest standards of labor and human rights is
2018 to help improve practices related to ethical partnered with Earthworm to develop an ethical
embodied across our operations and seek to positively
recruitment and migrant labor in Malaysia. recruitment due diligence tool based on insights
influence independent smallholders and neighboring
from the assessment so that suppliers can more
estates. In Malaysia, where we own refineries and
Cargill joined with industry partners to commission effectively analyze and adapt their approach to
therefore have direct commercial relationships with
an assessment of recruitment practices, fees and worker recruitment.
mills, our program is tailored toward assessing supplier
working conditions of migrant laborers in the palm
performance, building awareness and strengthening Cargill encourages our suppliers to conduct due
oil sector. The assessment, conducted by Embode,
capacity with aspiration for continuous improvements diligence on recruitment agents and contractors,
looked at migration of workers brought to Malaysia
and alignment with our policy commitments. Where we understand fees paid by workers, review
from Nepal, Bangladesh, India, Indonesia and
are linked to mills and plantations through our trading employment conditions, and ensure their operations
Burma by networks of recruitment agents.
program, we strive to develop resources which our are not at risk of forced labor or human trafficking.
suppliers can benefit from and cascade down their The assessment revealed how the involvement of To address the common practice of employers
supply chain. several stakeholders along the labor supply chain withholding migrant laborer passports, for
contributes to the complexity of the situation. example, we worked to raise awareness among
We believe all stakeholders have a role to play in our third-party mill suppliers about the importance
preventing exploitation of workers. Cargill does not of returning passports to their workers. In 2018,
tolerate the use of illegal, abusive or forced labor three of our suppliers declared their intention to
Our approach to protecting labor and human rights
Comprehensive and Piloting worker voice
Developing effective Championing industry
robust commitments at Proactive monitoring tools and deploying
processes and efforts to address
corporate and supply and risk identification awareness programs at
procedures systemic challenges
chain level field level
Cargill 2018 Annual Sustainable Palm Oil Report 23return the documentation. The story of one of those • Guatemala – In Guatemala, we collaborated the initiative seeks to improve the protection of human
suppliers – the first in the state of Terengganu to with Proforest and Oxfam to develop a series of and labor rights of workers in the agriculture sector and
return migrant worker passports – is featured on the three webinars for suppliers focusing on NDPE empower rural communities by establishing cross-
Earthworm website. suppliers – the first in the state and human rights for plantation workers. We industry and stakeholder partnerships to address
of Terengganu to return migrant worker passports – communicated Cargill policies and expectations barriers and going beyond compliance.
is featured on the Earthworm website. and provided our perspective on addressing
social risks. We are collaborating to advance work within the
We are participating in an additional program led by Decent Rural Living Initiative by partnering with
a customer and a labor rights organization focused • Colombia – In Colombia, we participate in three growers, consultants, trade unions and NGOs to
on assessing labor conditions in the Malaysian industry initiatives to improve NDPE practices and identify priority areas and potential solutions. In
palm oil sector, including issues related to labor and protect labor and human rights: Indonesia, our initial focus is on identifying and scaling
human rights, compensation and hours, and health solutions that improve family well-being, with a focus
– Through our participation in the multi-
and safety. The assessment includes a sampling on women’s role in their dual capacity as earners and
stakeholder Sustainable Trade Platform, we
of our supplier mills and their supply bases that primary caregivers within their families. Cargill also
are collaborating with 25 organizations to help
indirectly provide palm oil to Cargill’s Port Klang participates in the RSPO Human Rights and Labor
transform the palm oil value chain.
refinery. The assessment examines health and Working Groups and the Latin American Consultative
safety practices and identifies opportunities to – We are part of the Tropical Forest Alliance Group of the RSPO.
improve systems and processes associated with Colombia, which promotes sustainability in the
the management, monitoring and mitigation of palm oil sector, including a zero deforestation Next steps
labor and human-rights related social issues and agreement.
risks. Based on the outcome of the assessment, Moving forward, we plan to focus on rolling out tools to
capacity-building and monitoring programs will – Cargill is part of the core technical group that provide workers with an amplified voice in the effort to
be designed to improve conditions and support is establishing the national interpretation of the strengthen identification and monitoring of labor issues
compliance with labor and human rights standards. new RPSO principles and criteria in Colombia. in the palm oil supply chain. We also will conduct
a comprehensive review of our Cargill Malaysia
• Indonesia – In Indonesia, Cargill participated in an refinery and supply base, including a labor and health
assessment conducted by LINKS in collaboration Industry engagement and safety assessment to identify opportunities to
with the RSPO and trained our palm plantation improve systems and processes associated with the
To address the need for systemic changes, Cargill
employees about the UNICEF 10 Business Principles management, monitoring and mitigation of labor and
joined Golden-Agri Resources, Musim Mas, Sime
of Children’s Rights and mitigation of potential risks. human rights-related social issues and risks. We also
Darby, and Wilmar in signing the Decent Rural Living
Learn more. will participate in an ethical recruitment stakeholder
Initiative in 2018. Convened by Forum for the Future,
forum in collaboration with Earthworm Foundation.
Cargill 2018 Annual Sustainable Palm Oil Report 24Verification
Goal: to cloud cover, radar can pierce through the clouds and provide data that cannot be
NDPE compliance verified across Cargill supply chain obtained using optical sensors alone. Radar systems also are capable of capturing
data at night. The addition of radar technology provides more timely and reliable
deforestation detection.
We monitor practices and verify progress to ensure our suppliers are complying with
Cargill’s Policy on Sustainable Palm Oil and NDPE commitment. Data from both these satellite and radar monitoring technologies are integrated into
the Global Forest Watch platform to enable effective monitoring.
Satellite and radar technology
Policy compliance verification
To verify practices, we monitor for potential deforestation using Global Forest
Watch Pro, a satellite imagery system that provides alerts on deforestation-related In 2018, we began developing palm sustainability policy verification guidelines
issues within our supply chain. We actively monitor 100% of our mills using the and indicators to demonstrate the level of compliance with our NDPE policy
Global Forest Watch Pro system. If issues are identified, we engage with our commitments across our supply chain. We are partnering with independent
suppliers to develop corrective action plans. parties to perform a technical review of our guidelines and conduct relevant
stakeholder consultations to verify supplier compliance with NDPE commitments.
In 2018, we collaborated with World Resources Institute to begin using radar Our goal is to develop a common verification approach that can be adopted by the
technology to track issues across our supply chain in near-real-time and entire industry. Following the review, we will pilot this policy compliance verification
address concerns in accordance with our grievance procedure. In areas prone approach with the traders and refiners who supply palm oil to us.
Cargill 2018 Annual Sustainable Palm Oil Report 25Key learnings
As we collaborated with stakeholders Grievances
to advance robust systems in 2018, we
gained additional insights in the areas Cargill’s commitment to transform
of supplier engagement, management our supply chain drives us to support
of grievances and implementation of suppliers in the development of
landscape projects. We will apply this action plans and identification of
deeper understanding and adjust our thresholds to monitor processes
strategies accordingly as we move leading to transformation. We must
forward in 2019 and beyond. Key invest in existing suppliers so they
learnings from 2018 are listed below. adopt sustainable practices and
support them to resolve grievances
Supplier engagement rather than pushing for removal of
unsustainable volumes from the supply
For all our suppliers globally, we have chain, which could result in growth
learned that personalized one-on-one of unsustainable volumes in markets
engagement is important and more outside Europe and the U.S. Being
successful in driving transformation open and transparent with stakeholders
than engaging in a larger group setting creates an environment of trust and a
with multiple suppliers. Yet investment platform for greater collaboration. We
in one-on-one capacity building is not will identify clear indictors for potential
enough to ensure continuous progress risks and develop a proactive rather
of suppliers. We need to put in place than reactive approach to monitoring
better systems that support and measure and addressing deforestation alerts.
long-term transformation. Integrated
data management systems are Landscape projects
required to clearly understand supplier
performance and monitor progress. Investing time and resources to
There also is a need to provide incentives balance varied interests and achieve
and encourage suppliers to go beyond alignment among multiple stakeholders
national legal frameworks in order to is a valuable step when designing a
achieve sector-wide transformation. landscape project. Once alignment is
Recognizing the value of being part of achieved, it enables greater impact on
global markets is necessary to drive a broader scale.
change on the ground.
Cargill 2018 Annual Sustainable Palm Oil Report 26You can also read
