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