GLOBAL SUSTAINABLE PALM OIL MILESTONES January 2017 – December 2017 Data, 2018 Grievances & Actions
Table of Contents Kellogg’s Global Sustainable Palm Oil Approach
Sustainable Palm Oil Approach………….……….1 Sourcing and Engagement……………….…………2 This report builds on the first half 2017 report issued in June 2018, and captures CPO and PKO Percent Certified……………..……2 2018 grievances and actions through September. Traceability………………………………………………...2 Supply Chain Highlights………………………………3 Palm oil continues to be an ingredient of particular focus for Kellogg Company in our 2017 Metrics Highlights…………………….……....3 responsible sourcing efforts. Although Kellogg uses a very small amount of palm oil Top 5 Supplier Overview…………………….……...4 globally, we have been working since 2009 to improve the sustainability of our palm Supply Chain Details………………………….……....5 oil supply chains and we continue to support responsible sourcing of palm oil Policy Compliance and Grievances…..……..… 5 through our Global 2020 Sustainability Commitments. All of the palm oil we use Supplier Engagement on Grievances………....6 globally is sourced through a combination of the Roundtable of Sustainable Palm Oil Investigative Process……………………….……..….6 (RSPO) Certified Segregated supply chain, RSPO Mass Balance mixed-source supply Updated Grievance Tracker Detail…..…….……7 chain and the purchase of RSPO Credits. Ongoing Grievances……………..…………...…..…10 Kellogg Action…………….……………………………..11 Throughout 2017 and 2018, Kellogg has continued to engage with suppliers, stakeholders, peers, and industry groups to support efforts to reform and improve identified issues within the palm oil industry.
As we move forward, Kellogg is committed to the evolution and continued improvement of policies and methods of execution of our palm oil strategy. Kellogg supports increasing transparency of palm oil supply chains at all levels to better enable targeted action and measurable change. We will continue to engage with suppliers to ensure that they meet our expectations and requirements and support collaborative capability building efforts for continuous improvement.
To learn more about our commitments, please see our Global Sustainable Palm Oil Policy. GLOBAL SUSTAINABLE PALM OIL MILESTONES January 2017 – December 2017 Data, 2018 Grievances & Actions
Sourcing and Engagement Global Kellogg Traceability
Mill 97 3
Plantation 39 61
69.3 K 99.5 % 99.8 % 88.9 % 0% 20% 40% 60% 80% 100%
Total Volume MT % Volume from % Volume covered % Supply base Traceable Not Traceable CPO + PKO RSPO members by a supplier responding to Kellogg (2017) engagement Sustainability survey program Traceability to Mill by Region CPO and PKO Percent Certified EU Lat/S.Am 100 90 Asia 80 U.S./CAN 70 85% 90% 95% 100% 60 50 Traceability to Plantation by Region 40 30 EU 20 Lat/S.Am 10 Asia 0 U.S./CAN EU Lat/S.Am Asia U.S./CAN Global RSPO Segregated RSPO Mass Balance RSPO GreenPalm 0% 20% 40% 60% 80% 100% 2 GLOBAL SUSTAINABLE PALM OIL MILESTONES January 2017 – December 2017 Data, 2018 Grievances & Actions
Supply Chain Highlights • Since 2015, Kellogg has partnered with Proforest to engage our Tier 1 global palm suppliers in a bi-annual survey to measure traceability of supply, transparency of operations, and policy adherence. • Our suppliers vary in size and type; falling into different categories such as grower, processor, trader, distributor, and/or manufacturer. While some are only active in one category, others are active in several categories. Many provide products to multiple regions. Upstream suppliers often appear in each other’s supply chains or are linked through various types of ownership schemes. • Consistent with prior reporting, larger, global suppliers are more able and willing to provide detailed supply chain information with substantiating documentation and are able to provide information in line with the Ceres Reporting Guidance. • There is a clear difference between the upstream, backwards integrated group of suppliers and the midstream processors and ingredient manufacturers. We continue to engage with both our large and medium to smaller sized suppliers to support closing gaps in policy and implementation throughout the broader network of palm oil supply chain operations.
2017 Metrics Highlights Total Volume – MT (K) Traceability – % Total Volumes 100 100 92 97 • Traceability to mill increased from 87% in 2016 to 87 97% for 2017 80 80 69 63 • Traceability to plantation increased from 36% to 58 60 39% from 2016 to 2017 60 36 39 • Kellogg has 12 suppliers identified as grower, 40 40 processor, trader according to the Ceres Reporting 23 Guidance For Responsible Palm 20 20
• Reporting includes all palm oil and palm kernel oil 0 85% 0 sourced by Kellogg globally in 2017 2015 2016 2017 2015 2016 2017 • Total volume of palm used globally has increased Total Volume, MT Traceable to Mill Traceable to plantation 9% from 2016 and 16% from 2015 Total volume of palm product consumption Traceability to mill and plantation over the past two years has increased as a result of new acquisitions through repeated supplier engagements, improvement in in Latin America and Asia Pacific supplier traceability efforts, and better data collection 3 GLOBAL SUSTAINABLE PALM OIL MILESTONES January 2017 – December 2017 Data, 2018 Grievances & Actions
Top 5 Supplier Overview (77% Global Volume)
AAK ADM BUNGE CARGILL SIME DARBY • AAK Sustainable Palm Oil • ADM NDPE Policy • Bunge Palm Oil Sourcing • Cargill Policy on • Sime Darby Human Rights Policy • Human Rights Policy Policy Sustainable Palm Oil Charter • Corporate Social • Issues and Resolutions • Non-Deforestation Policy • Labor and Land Rights • Good Agricultural Practices Responsibility Policy Summary Table • Global Labor Policy • Direct Supplier Policies • 2018 Progress Report on • Global Palm Oil • Grievance Summary List Grievances • Sustainability Report 2016 Sustainable Palm Oil Traceability and Mill List • Global Palm Oil Sourcing • 2017 Palm Oil Report and • Global mill list disclosed • NDPE Policy and • H2 2017 Palm Progress Update 2018 Action Plan privately but not publicly disclosure information Report • Transparency Hub • NDPE requirements • Reports traceability available in annual • 98% of PO is traceable to • Global mill list disclosed included in Sustainable through Open Palm but progress report mill publicly for Bunge and Palm Policy detailed information is • Global mill list disclosed • 99% of lauric is traceable Bunge Loders Croklaan • Global mill list disclosed only available to key clients privately but not publicly to mill here publicly • Does not provide public • Does not provide public • Public grievance tracker • 96% of PO is traceable to • 96% of PO is traceable to grievance disclosure grievance disclosure but available with topic, mill mill • 99.3% of PO and 100% of acknowledges tracking subject matter, • 94% of PO is traceable to • 55% of PO is traceable to PKO is traceable to mill internally stakeholder, and mill plantation • 77.5% of PO and 84% of • 96% of PO, PKO, and progress tracked here • Acquired 70% stake in PKO is traceable to derivatives are traceable Loders Croklaan in plantation to mill September 2017
Industry Engagement • RSPO Membership and Engagement • NASPON Membership and Engagement We are committed to advancing and supporting the sustainable palm oil industry. Kellogg is an active • New York Declaration on Forests Signatory member of the RSPO Human Rights Working Group, the CGF Palm Oil Taskforce, and a founding member of • Tropical Forests Alliance 2020 Partner the North American Sustainable Palm Oil Network. Kellogg also supported the CGF with review and • Consumer Goods Forum Deforestation Signatory recommendations to the RSPO Principles & Criteria to strengthen and enhance the criteria, particularly how • Ceres Guidelines Contributor it relates to forced labor and human rights issues in addition to submitting stand alone recommendations.4 GLOBAL SUSTAINABLE PALM OIL MILESTONES January 2017 – December 2017 Data, 2018 Grievances & Actions
SupplyRSPO Supply Chain Details% of Total Volume Policy Compliance and Grievances Chain Model 2015 2016 2017 RSPO Certified 7% 16% 15% • Kellogg continues to track identified grievances for both direct and indirect Segregated supply chain relationships Mass Balance 69% 46% 59% • Larger, global suppliers continue to lead with active reporting against No Green Palm 24% 38% 26% Certificates Deforestation, No Peat, and No Exploitation (NDPE) policies • Small and medium suppliers lack adequate, or any, NDPE commitments of their own and struggle demonstrating compliance to Kellogg policies Suppliers Comprising 95% of Purchased Volume • We continue to partner with these suppliers through multiple channels to % Traceability % Traceability Supplier Region educate and train on the adoption and implementation of our NDPE policy mill plantation Cargill Global 95 - 100% 30 - 45% Sime Darby Asia 100% 97% Company Grievance Status Jomalina Primary forest clearance including Indirect exposure to Kellogg through the supply chain operations of peat land, labor issues including child Indofood/Salim multiple suppliers. Kellogg continues to directly engage with these Bunge Global 99 - 100% 32 - 38% labor, health and safety standard non- Group suppliers to track progress as Indofood and its partners work to compliances, minimum wage remediate issues. ADM U.S./Can 98% 0% payment violations Indirect exposure to Kellogg through the supply chain operations of Minimum wage payment violations, multiple suppliers. Direct exposure through trading relationship related AAK Global 96% 27% use of quotas, working hour to joint venture operations to supply palm oil for Pringles sold in China. Wilmar violations, child labor, illegal pesticide Though the procured volume represents less than 1% of Kellogg's EFKO E.U. 98% 39.5% use, gender discrimination global palm use, we are actively engaged with Wilmar to remediate issues directly and through third-party support. Document withholding, forced labour, United Oil E.U 96% 0% Indirect exposure to Kellogg through the supply chain operations of FELDA Global health and safety violations, lack of multiple suppliers. Kellogg continues to directly engage with these Olenex E.U. 100% 100% Ventures use of PPE, minimum wage payment suppliers to maintain pressure on FGV to remediate issues. violations Caravan U.S./Can 92% 7% Primary forest clearing, peatland and Indirect exposure to Kellogg through the supply chain operations of HCV development, permit multiple suppliers. HSBC funds multiple palm oil groups, including Lonza U.S./Can 97% 0% irregularities, lack of FPIC, child Indofood/Salim Group. Kellogg continues to engage with our suppliers HSBC labour, minimum wage payment associated with HSBC or its affiliate groups to maintain pressure on Remaining 5% volumes are from the following suppliers: Ajwa, violations, health and safety standard both HSBC and the individual companies to remediate identified issues Barentz, Besler, Buriti, Goodman Fielder, Hudson & Knight, IFFCO, violations, significant social conflict and amend policies and procedures. 5 Induxtra, Integro, Lipidos, Loders, Lotte, Rikevita, Shangai Oils, Solution Creation, Stratas, Team Solutions GLOBAL SUSTAINABLE PALM OIL MILESTONES January 2017 – December 2017 Data, 2018 Grievances & Actions
Supplier Engagement: Response to Grievances Investigative Process We recognize the ongoing challenges associated with deforestation and peatland development and When grievances are raised either publicly or the necessity to uphold and protect the rights of workers and indigenous people. This is why we directly to Kellogg, we begin an investigative expect our suppliers to report publicly on traceability to mill and plantation and all identify all process to evaluate and address the issues raised, grievances, including action plans and outcomes. Moving forward, we will continue to strengthen including: our engagement and support for our supply partners, and for their supply chains, to achieve full adherence to these requirements. • Convene relevant Rapid Response Team investigation team To address the endemic risks present in the palm industry, we support collaborative work to address • Internal subject matter experts with the underlying issues. This is why Kellogg has taken action with suppliers, such as Wilmar, and within the right knowledge, objectivity and RSPO to drive impactful and sustained changes to address and mitigate issues across the industry. discretion We continue to monitor reports from international and local NGOs and engage our suppliers to • Conduct investigation verify and address the critical issues that have been identified. • Determine facts through interviews, evidence assessment from NGO To fully support ongoing collective efforts to increase transparency and accountability within the partners, supplier information regarding palm oil industry, we released our full 2017 mill list in April 2018. This list includes mills which may the grievance, action plan and next steps be part of the Kellogg extended supply chain due to RSPO Mass Balance purchases of palm oil. • Corrective Action • If necessary, the team will recommend Starting in 2017, in response to investigative reports, we have been taking action with our suppliers corrective actions for the supplier and and external partners regarding palm oil supplier Indofoods. We have been working closely with our Kellogg direct suppliers to review engagement strategies and actions to remediate identified issues. Our first • Actions may include impacts to tier suppliers have assessed the direct and indirect exposure of their supply bases to Indofoods. As purchasing, supplier termination, of early 2018, indirect exposure to Indofoods within our supply chain has been eliminated as a result investment in program creation, or of supplier action with the exception of EFKO. To address this remaining gap we have engaged EFKO additional auditing leadership and continue to build awareness and capacity to aid in traceability and transparency for • Provide Feedback identifying and managing potential risk exposure from indirect suppliers within their value chain. • Inform complainant party of outcomes 85% and/or next steps In addition to decreasing exposure to Indofood, our exposure to the company REPSA has been • Monitor and reassess the situation, at a eliminated as a result of the actions taken by our suppliers. All major suppliers have suspended minimum, twice yearly basis to coincide with future business until current issues have been effectively and acceptably remediated and a Kellogg corporate tracking and reporting comprehensive action plan put in place to ensure the protection and respect of all workers and their representatives. 6 GLOBAL SUSTAINABLE PALM OIL MILESTONES January 2017 – December 2017 Data, 2018 Grievances & Actions
Supply Chain Grievance Tracker Group Parent Mill name Country Province or State District Grievance T1 supplier ADM Hudson & Knight Sarana Prima Multi The Great Palm Oil AAK Tian Siang Holding Indonesia Kalimantan Tengah Kotawaringin Timur Niaga Scandal Bunge Cargill United Oil BEST Group/TSH ADM Resources Hudson & Knight AAK Aathi Bagawathi The Great Palm Oil Bunge Abdi Budi Mulia Indonesia Sumatera Utara Labuhan Batu Manufacturing Scandal Cargill Corbion IOI Loders United Oil ADM AAK Bumitama Gunajaya Karya Bakti Agro Bunge Indonesia Kalimantan Barat Ketapang Dirty Bankers Agro Sejahtera Cargill Corbion IOI Loders ADM AAK Bumitama Gunajaya Bunge Bumitama Ladang Sawit Mas Indonesia Kalimantan Barat Ketapang Dirty Bankers Agro Cargill Corbion IOI Loders ADM AAK Bumitama Gunajaya Bumitama Gunajaya Bunge Indonesia Kalimantan Tengah Kotawaringin Barat Dirty Bankers Agro Abadi Cargill Corbion IOI Loders Hardaya Inti Deforestation Case Central Cipta Murdaya Leok Indonesia Sulawesi Tengah Buol Bunge Plantations Studies Honduras: The Deadliest AAK Planta Extractora Cargill Dinant Corporacion Dinant Honduras Colón Tocoa Place To Defend The Aguan Planet IOI Loders ADM AAK Deforestation Case Bunge Djarum Djarum Peniti Sungai Parun Indonesia Kalimantan Barat Pontianak Cargill Studies Corbion IOI Loders United Oil ADM AAK Bunge Arrtu Plantation Kelampai Indonesia Kalimantan Barat Ketapang A Deadly Trade-off Cargill Corbion Eagle High/Rajawali IOI Loders ADM 7 AAK Eagle High Plantations Adhyaksa Dharmasatya Indonesia Kalimantan Tengah Katingan A Deadly Trade-off Bunge Cargill GLOBAL SUSTAINABLE PALM OIL MILESTONES January 2017 – December 2017 Data, 2018 Grievances & Actions
Supply Chain Grievance Tracker
Group Parent Mill name Country Province or State District Grievance T1 supplier
Coalition of NGO's lead by ADM Felda Global Ventures Pasoh Malaysia Negeri Sembilan Jelebu RAN (Report The Wall Street AAK Journal) Cargill ADM Coalition of NGO's lead by AAK Bunge Felda Global Ventures Serting Hilir Malaysia Negeri Sembilan Jempol RAN (Report The Wall Felda Group Cargill Street Journal) Corbion IOI Loders ADM Coalition of NGO's lead by Bunge Felda Global Ventures Palong Timur Malaysia Johor Segamat RAN (Report The Wall Cargill Street Journal) Corbion IOI Loders Gama & Hayel Saeed Mitra Indo Cemerlang Deforestation Case ADM Korindo Group Indonesia Papua Boven Digoel Bunge Group (Tunas Sawa Erma) Studies Cargill ADM AAK The Human Cost of Bunge Indo Agri Gunta Samba Jaya Indonesia Kalimantan Timur Berau Conflict Palm Oil Cargill Corbion IOI Loders ADM Bunge Indofood/Salim Group Riau Agrotama Cargill Indo Agri Indo Agri Indonesia Kalimantan Barat Kapuas Hulu Plantation Corbion IOI Loders PP London Sumatra The Human Cost of Bunge Arta Kencana Indonesia Sumatera Selatan Lahat Indonesia Conflict Palm Oil Cargill PP London Sumatra The Human Cost of Bunge Gunung Bais Indonesia Sumatera Selatan Musi Rawas Indonesia Conflict Palm Oil Cargill ADM Bunge IOI Corporation Sukes Karya Sawit Indonesia Kalimantan Barat Ketapang A Deadly Trade-off Cargill Corbion IOI Loders IOI Group ADM Hudson & Knight Bunge WTK Holdings Pelita Sebakong Malaysia Sarawak Miri A Deadly Trade-off Cargill IOI8 Loders United Oil GLOBAL SUSTAINABLE PALM OIL MILESTONES January 2017 – December 2017 Data, 2018 Grievances & Actions
Supply Chain Grievance Tracker
Group Parent Mill name Country Province or State District Grievance T1 supplier ADM Conflict Palm Oil in AAK Kuala Lumpur Kepong Jabontara Eka Karsa Indonesia Kalimantan Timur Berau Practice Bunge Cargill Kuala Lumpur Kepong ADM Conflict Palm Oil in Kuala Lumpur Kepong Satu Sembilan Delapan Indonesia Kalimantan Timur Berau Bunge Practice Cargill Conflict Palm Oil in Karya Makmur Abadi Karya Makmur Abadi Indonesia Kalimantan Tengah Lamandau Cargill Practice ADM Dimex Selaras (Tunas Korindo Group Korindo Group Indonesia Papua Boven Digoel Burning Paradise Bunge Sawa Erma) Cargill ADM Bunge Deforestation Case NPC Resources NPC Resources Nala Palma Cadudasa Indonesia Kalimantan Timur Kutai Timur Cargill Studies Corbion IOI Loders AAK Bunge REPSA Grupo Hame Repsa I Guatemala Petén Sayaxché - Cargill Corbion IOI Loders ADM Hudson & Knight The Great Palm Oil Wilmar International Daya Labuhan Indah 2 Indonesia Sumatera Utara Labuhan Batu Bunge Scandal Cargill United Oil ADM ADM Wilmar ADM Hudson & Knight The Great Palm Oil Perkebunan Milano Pinang Awan Indonesia Sumatera Utara Labuhan Batu AAK Scandal Bunge Cargill IOI9 Loders United Oil GLOBAL SUSTAINABLE PALM OIL MILESTONES January 2017 – December 2017 Data, 2018 Grievances & Actions
Supplier Action: Indofood Supplier Status AAK doesn't source directly from Indofood, however Indofood mills are included in the list of mills from which AAK suppliers have sourced. AAK has asked their suppliers not to buy from the mills involved in the issues. AAK has sent a AAK letter to the COO and Secretary General of RSPO expressing concern about the speed of handling this complaint and the impact to the reputation of the RSPO and its members. AAK is working with the RSPO complaints panel to determine next steps. Kellogg will continue to work with AAK on their action plan. Bunge has informed its trading partners that it will not accept oil from Indofod. Indofood may appear on our mill lists Bunge as earlier shipments echo in these lists. Loders Croklaan suspended Indofood in April 2017. Loders has asked their trading partner that sources from Indofood Loders continue this suspension. Indofood may appear on our mill lists as earlier shipments echo in these lists.
In 2017, Cargill did not source directly from Indofood, but were impacted through their suppliers. As of May 2018, Cargill Cargill has indicated that Indofood is no longer in their supply chain.
Kellogg does not source directly from GAR however we have indirect exposure through our supply chain. GAR has GAR stopped sourcing from Indofood. GAR recently conducted a labor site visit to an Indofood operation and has an action plan in place to address gaps observed. No major non-compliances were observed.
Sime Darby Plantation does not purchase any supplies directly from Indofood. However, Indofood mills are linked to raw materials supplied by a third party trader to Hudson & Knight (H&K) in South Africa. Sime Darby’s supplier in South Sime Darby Africa has relevant No Deforestation, No Peat and No Exploitation policies and has recently informed us that they have ceased new purchases from Indofood. Wilmar has stopped sourcing from Indofood. Kellogg continues to actively work with Wilmar to improve policies, procedures and programs in their owned operations and across their supply chain. We have been investing in Wilmar capability training on human rights issues with Wilmar for suppliers in their supply base as well as for their own plantations. We will continue to engage them to assess their compliance to NPDE commitments. 10 GLOBAL SUSTAINABLE PALM OIL MILESTONES January 2017 – December 2017 Data, 2018 Grievances & Actions
Kellogg Action to Date: 2017 - 2018 October 2017 • Submitted extensive comments to the RSPO Principles and Criteria consultation April 2017 process focused on human rights. • Partnered with the worker voice company LaborLink to pilot November 2017 the AIM Progress/Sedex Impact Measurement tool to measure • Kellogg sustainability team met with Wilmar sustainability team to discuss and assess worker well‐being at a palm oil processing facility progress since May and interest in co‐funding the small and medium scale through direct worker feedback using mobile technology. This supplier workshop during the RSPO RT15. work was reported publicly in our Progress Against Forced • Wilmar‐BSR Supplier Workshop held in Medan Indonesia, with 60 participants Labor Milestones report issued in June 2017. Follow‐up actions representing 30 supplier companies, as well as Head of Labour Department for included additional training to address gaps found during the North Sumatra Province, with resulting report reviewed by Kellogg. assessments. December 2017 May 2017 • Became a founding member of the RSPO’s North American Sustainable Palm Oil • Joined CGF Social Committee’s Palm Oil Taskforce focused on Network, creating a dialogue in North America, focused on respecting human addressing human rights, including forced labour, in the palm and labor rights, local communities and biodiversity throughout the palm oil oil supply chain through collective action. supply chain. • Kellogg sustainability team met with Wilmar sustainability team January 2018 to discuss Wilmar’s program with Verite and how they are • Signed agreement with Wilmar and BSR to conduct small‐ and medium‐scale closing gaps, building capacity and implementing management supplier training workshops (retro‐active to November workshop), focused on systems in their own plantations. addressing and mitigating labour issues, wages, employment status and June 2017 grievances. • Joined the Roundtable for Sustainable Palm Oil’s Human Rights • Wilmar‐BSR Supplier Workshop held in Pekanbaru Indonesia, with 53 Working Group and is an active participant to drive changes to participants representing 33 supplier companies, as well as Head of Labour membership requirements for human rights issues both in Department for Riau Province, with resulting report reviewed by Kellogg. person and in phone meetings. • Published our biannual milestones update, the 2017 Global Palm Milestones • Published our biannual milestones update, the 2017 Global report, covering January to December 2016 data and progress. This report Palm Milestones report, covering January to December 2016 includes a full list of all global palm oil suppliers, as well as updates on sourcing, data and progress. This report includes a full list of all global supplier engagement, traceability, palm industry engagement, policy palm oil suppliers, as well as updates on sourcing, supplier compliance and grievance status, where you will note specific reference to the engagement, traceability, palm industry engagement, policy concerns highlighted by Amnesty International for our supply into China from compliance and grievance status. Wilmar. • Published our annual Progress Against Forced Labor Milestones March 2018 report issued in June 2017, which reported on the worker voice • Further discussions with Wilmar & BSR regarding next steps from the supplier survey with four suppliers, one of which was a Kellogg palm oil workshops as well as the continued work in response to concerns from11 supplier in Indonesia. Amnesty International.