Sourcing and Our Palm Oil Promise

We recognize that, for certain ingredients, the biggest environmental impacts lie outside of our direct manufacturing operations. We will establish strategies to address our usage of commodities which may be identified as contributing to significant deforestation, including palm oil, paper and pulp, and to ensure that our use of resources such as water, fuel and electricity is efficient.

Palm Oil

Last year, we published an action plan to meet our 2020 No Deforestation / No Peat / No Exploitation (NDPE) commitments on palm oil.

Palm oil supplied by producers with NDPE commitments

86%

Palm oil and palm kernel oil traced back to the mill

92%

Independent verification tools implemented

Part of our G4B strategy to drive positive change in society, our Palm Oil Promise sets out clear time bound goals to help address one of the most important sustainability issues facing our planet: deforestation.

Palm oil is one of the most widely used vegetable oils in the world and can be found in nearly 50% of the packaged products in our supermarkets. The increasing demand for palm oil has resulted in the destruction of natural habitats, particularly in South East Asia, as local growers have rushed to plant and grow new plantations. PZ Cussons is not a huge consumer of palm oil – we use less than 0.001% of the world’s supply of palm oil. However, we hold ourselves accountable for the palm oil which we source and we are fully committed to playing our part in the reform of the industry. Our 2020 action plan builds on the commitments we made in our 2014 PZ Palm Oil Promise and the progress we have made since then.

Although transformation of the palm oil industry is extremely challenging, we do not believe that switching to an alternative ingredient would have a positive impact, as alternatives, such as soy or vegetable oil, require more land to produce the equivalent amount of oil. 

Instead, our action plan focuses on how we are going to deliver on our commitment to source 100% of our palm oil from producers whose entire operations have been independently verified compliant with NDPE standards by 2020. That way, our consumers can be assured that the products which they love are not causing deforestation anywhere in the world. The plan establishes 12 detailed goals against five strategic objectives, focusing on governance, traceability, transformation, transparency and leveraging PZ Cussons’ unique position in Nigeria, to drive NDPE compliance. 

We are really pleased with the progress we have made since publishing our 2020 Action Plan in October last year, but we recognise that we still have a way to go on some of our goals. For example, we have developed an outline plan to address regeneration of cleared forests, but finalising this remains work in progress and is a priority.

Understanding where our palm oil comes from is a critical first step in delivering on our Palm Oil Promise. We can currently trace 92% of our crude palm oil and palm kernel oil back to the mill and, whilst we have not yet hit our interim goal of 80% traceability for palm oil derivatives, 90% of our derivatives are supplied by suppliers with NDPE commitments aligned with ours. We are in final stage discussions with two key derivative suppliers and are confident that we will meet our interim goal of 80% traceability very shortly.

We recognise that we are not able to meet our commitments alone, which is why we are working closely with our direct suppliers, our joint venture partners and with NGOs. Our starting point is to shift our sourcing towards suppliers which can demonstrate that they have credible systems to monitor the producers in their supply chains to ensure they are fully compliant with NDPE standards throughout their operations.

One of the most significant steps forward is the selection of Starling and Kumacaya to independently verify compliance across our global supply chain. Starling, created by our NGO partner Earthworm Foundation and Airbus, uses a combination of high resolution imagery and radar data to provide monitoring of land cover change, focusing on forest cover loss. It is a private and independent tool which allows us to monitor the implementation of our No Deforestation policy and ensure that none of our suppliers are causing deforestation. With sharp accuracy and detailed resolution, Starling’s reference maps differentiate between production forests which include palm plantations, natural forests and other areas. Kumacaya (coming from the words for “talk” and “trust” in Bahasa and local dialects) provides independent monitoring of social and environmental issues by local people.  

We have also begun transformation work by implementing Earthworm Foundation’s High Impact Supplier Programme. This will address identified non-compliance and drive change in local communities. We look forward to reporting on the outcomes in future years.  

Finally, in Nigeria, where the oil palm is indigenous and grows naturally, PZ Cussons is working alongside our joint venture partner Wilmar, to support the development of Nigeria’s palm oil industry in line with NDPE standards. For example, we are working with local banks to create access to finance for smallholders with verifiable land titles to invest in revitalising old and inefficient plantations. 

Case study: As part of our strategy to support the development of Nigeria’s palm oil sector, we are supporting 43 small holder palm oil farmers, who together cultivate 150 ha of land in Cross River State.

The Biase Plantations Limited (BPL) Outgrower Scheme is a pilot project to demonstrate how a viable and sustainable Outgrower Scheme can function in the Cross-River State, South Nigeria.

Before starting the pilot, detailed social and environmental assessments were conducted, including High Conservation Value assessments to ensure that the project areas do not fall within priority conservation areas. Farmers were also supported in forming co-operatives, opening bank accounts and obtaining legal land ownership documents. With support from BPL, detailed boundary surveys were conducted and Customary Rights of Occupancy documents acquired and approved. 

As of January 2019, planting has been completed on the farms of three of the four cooperatives, with the remaining farm expected to be fully planted by August 2019. 

     

Our 2020 action plan

Reinforcing good governance to drive NDPE compliance

Goal Action Plan Progress Deadline
number icon100% of crude palm oil (CPO) and palm kernel oil (PKO) supply from producers with NDPE commitments. Minimise the number of palm oil suppliers we buy from & work only with producers with NDPE commitments in alignment with ours. Formalise our NDPE commitments within our ‘approved supplier’ procurement process to prioritise NDPE. 86% of our palm oil is supplied by direct suppliers all with NDPE commitments aligned with ours. The remainder are smaller suppliers of PKO. We have made clear our commitments, and our requirements and expectations of our suppliers. End 2019
Interim goal: 75% of volumes of crude palm oil and palm kernel oil from suppliers with NDPE commitments. achieved iconAchieved
number icon100% of palm oil derivative supply from producers with NDPE commitments. Continue to engage with all suppliers to encourage transparency and adoption of NDPE commitments. 90% of our palm oil derivatives is supplied by suppliers with NDPE commitments aligned with ours. The remaining supplier is planning to commit. End 2020
Interim goal: 90% of volumes of palm oil derivatives from suppliers with NDPE commitments. achieved iconAchieved
number iconEstablish a process to achieve early visibility of any non-compliance within our suppliers’ entire operations. Require direct suppliers to demonstrate credible systems to proactively monitor the producers in their supply chain at group level, making use of concession maps and other relevant data. All our key direct suppliers have a public Grievance Procedure and maintain lists of reported cases of non-compliance with progress updates. These include cases highlighted by NGO campaigns. achieved iconAchieved
number iconActively monitor to achieve early visibility of any non-compliance within our suppliers’ entire operations. Actively monitor suppliers’ grievance procedures to drive compliance across their physical supply chains, including wider group company activity – via monthly calls. Started implementation of Earthworm Foundation High Impact Supplier Programme, combined with Starling satellite data, to identify non-compliance within our global supply chain. ongoing iconOngoing
number iconCreate and roll-out a consistent deforestation non-compliant supplier protocol which applies to all suppliers and third-party producers and includes a conversion cut-off date and acceptable timescales for mitigation before ultimately excluding non-compliant producers. Update our policy to include a conversion cut-off date of 31 December 2015. Work collaboratively with The Earthworm Foundation, Greenpeace and our suppliers to agree a consistent and mutually acceptable approach to mitigation and exclusion. Adopt and promote an industry-wide protocol, once one is available, to address non-compliance. Integrate new protocol into supplier selection and engagement process. Developed a non-complaint supplier deforestation protocol including a conversion cut-off date of 31 December 2015 in line with best practice.
We have integrated our approach into our supplier selection process and shared it with all our suppliers who have given it their support. Our protocol can be downloaded from our palm oil landing page. Started to integrate non-compliant supplier protocol to address labour/workers-rights issues with suppliers.
achieved iconAchieved
number iconNew target: Evaluate effectiveness of protocol via ongoing supplier engagement. Measure adoption rates via monthly monitoring calls with key suppliers. Developed a non-complaint supplier deforestation protocol including a conversion cut-off date of 31 December 2015 in line with best practice.
We have integrated our approach into our supplier selection process and shared it with all our suppliers who have given it their support. Our protocol can be downloaded from our palm oil landing page. Started to integrate non-compliant supplier protocol to address labour/workers-rights issues with suppliers.
ongoing iconOngoing

Traceability

Goal Action Plan Progress Deadline
number icon100% traceability of crude palm oil and palm kernel oil across our supply chain. Continue ongoing dialogue with all our direct suppliers and with Earthworm Foundation to trace our palm oil back to the mill. Go beyond the mill to achieve full traceability to plantation. Since 2016, we have had full traceability of our crude palm oil and palm kernel oil back to the refinery and can currently trace 92% back to the mill.

The remaining 8% comes from two suppliers both with NDPE commitments, who provide updated mill data and are progressing with their own target of 100%.

All CPO/PKO suppliers, with one exception, have provided some or all plantation data and are working on full traceability.

End 2019
Interim goal: 90% traceability of crude palm oil and palm kernel oil across our supply chain. achieved iconAchieved
number icon100% traceability of palm oil derivatives across our supply chain. Continue to engage with suppliers to achieve traceability of all ingredients containing palm oil derivatives. Work started in April 2018.

We have increased traceability back to mill to 44% (up from 35% in October 2018). We are in final stage discussions with two key suppliers and are very confident we will be able to increase this to 80% in the next few weeks.

However, we have had to delay our deadline for meeting this target until the end of the year.

End 2020
Interim goal: 80% traceability of palm oil derivatives across our supply chain. Mid 2019 – behind schedule

New deadline – End 2019

number iconFull disclosure of our crude palm oil and palm kernel oil supply chain including: all our direct suppliers, mill parent companies and mill co-ordinates. Work with our suppliers and with Earthworm Foundation to obtain permission to publish this data for 100% of our palm oil supply chain. We first published a list of our key direct palm oil suppliers in March 2018 and will continue to get agreement to publish from all suppliers, to achieve our target. End 2019
number iconFull disclosure of our palm oil derivatives supply chain including: all our direct suppliers, mill parent companies and mill co-ordinates. Publish an updated list on our website every six months. The next list will be published in December 2019. We first published our identified mills in March 2018 and updates in October 2018 and June 2019, the next update will be published in December 2019.

A list of all our key direct palm oil suppliers and the mills from which they source is already available on our website

End 2020

Transformation

Goal Action Plan Progress Deadline
number iconSupport programmes that
drive transformation and
alignment with our NDPE
commitments.

Use information from our monthly calls with suppliers to review their grievance process and progress to help us prioritise where we can best contribute to on-the-ground transformation.

Hold quarterly planning meetings with Earthworm Foundation to plan and monitor programmes.

Identify High Impact Suppliers and engage with direct suppliers and other industry players to facilitate transformation via deep engagement.

Work with our key direct suppliers to ensure that they have a time bound action plan for compliance with NDPE commitments.

Ensure that refineries at origin in our supply chain (either via direct or indirect sourcing) develop and implement an actionable time bound plan for compliance with NDPE commitments for the entirety of the refinery’s upstream supply chain. We will collaborate with our suppliers and contribute to on-the-ground transformation to advance these action plans.

Follow and monitor progress on implementation of Action Plans resulting from past assessments in our upstream supply chain.

In collaboration with Earthworm Foundation, support the implementation of landscape level, multi-stakeholder approach to ensure environmentally and socially sensitive land-use plans are in place for key geographies linked to our supply chain.

Started implementation of Earthworm Foundation High Impact Supplier Programme, combined with Starling global satellite data, to work with suppliers to address identified non-compliance. Focus areas are deforestation, exploitative labour practices, community conflicts and smallholders in Indonesia.

Supporting a Rurality Programme in Indonesia, to build the resilience of smallholder farmers and creation of scaleable solutions.

Starting programmes in Malaysia to support solutions for forced & bonded Labour activities and child labour (Child in Plantation).

Supporting Earthworm Foundation multi-stakeholder Landscape Programmes in Aceh and Riau, with long-term land use plans that:

• Meet present livelihood needs and provide a viable economic future;

• Maximise preservation of key habitats;

• Are made and implemented with full participation of local communities.

ongoing iconOngoing
number iconDevelop an actionable plan to address regeneration of previously cleared forests and conservation of forest areas within concessions. Work with Earthworm Foundation to identify and evaluate the possible regeneration
routes to understand where and how we can achieve most impact.

Engagement with key suppliers, to understand their current and planned investment programmes.

Outline Plan developed. Inclusion in the Forest Conservation Platform funding approach.

End 2018 – behind schedule

New deadline – End 2019

number iconSupport multi-stakeholder initiatives to deliver regeneration of degraded areas and conservation of forest areas within concessions. With Earthworm Foundation, we will support the pilot for forest conservation platform. Forest conservation funding approach socialised with multiple supply chain stakeholders and NGO’s, pilot in development. End 2019
number iconAchieve independent verification of NDPE compliance across supply chain.

Investigate verification methodologies and tools for social aspects as well as deforestation.

Prioritise verification of supply based on volumes, business critical nature, opportunity to partner with others and ease of verification.

Create a timetable for verification of whole supply chain based on priorities.

Confirmation of Starling and Kumacaya as our independent verification tools. Programmes started with:

Starling, satellite imagery monitoring for global supply chain. Data is used to understand deforestation issues and risks, for engagement with relevant suppliers so these can be addressed.

Kumacaya, independent monitoring of social and environmental issues by local people. Two programmes started and one in development to start in 2019.

Timetable for verification of deforestation identified and implemented. Timetable for verification of social issues started, in development.

End 2020

Nigeria

Goal Action Plan Progress Deadline
number iconMaximise our capital in Nigeria to support the development of the local palm oil industry in line with NDPE standards.

Continue to work closely with our JV partner, Wilmar to ensure that our JV’s production is fully compliant with our shared NDPE commitments.

Obtain independent verification that our JV plantations comply with NDPE standards.

Continue to work with our JV partner Wilmar to promote the sustainable growth of the sector by:

• Working with Federal, State and local governments to share best practice

• Promoting NDPE within National industry body, POFON

• Support national and local programmes to increase yields

• Support programmes to educate and assist smallholder farmers

We’re working with the Central Bank of Nigeria (CBN) and other commercial banks to create access to finance for smallholders with verifiable land titles to invest in revitalising old and inefficient plantations.

As of January 2019, there are 1,000 farmers registered and 2,500 ha of farms have been mapped and geo-referenced to ensure they are in suitable locations.

Training has been delivered for the farmers who have organised themselves into registered cooperatives with clear leadership and governance structures.

We are also supporting 43 smallholder farmers, who together cultivate 150 ha of land, in the BPL pilot sustainable outgower Scheme in Cross River State.

Environmental and Social Impact Assessments as well as High Conservation Value assessments have been conducted and farmers supported to form cooperatives, open bank accounts and obtain legal land ownership documents, including Customary Rights of Occupancy.

Three out of four cooperatives have completed planting and we expect the fourth to be fully planted by August 2019.

ongoing iconOngoing

 

 

End 2020

Transparency

Goal Action Plan Progress Deadline
number iconContinue to be open and transparent with all our stakeholders

Continue to assess our progress on an on-going basis and will report on our progress and future plans via existing annual reporting mechanisms.

Work with Earthworm Foundation to agree most effective KPIs.

Publish a progress update via our website and the Earthworm Foundation Transparency Hub every six months when we publish our supplier data.

We report on our progress and future plans via our Annual Report, our Annual Communication on Progress to the RSPO, our website and the Earthworm Foundation website.

Following publication of our Palm Oil Promise 2020 Action Plan in October 2018, we have published update in June 2019.

ongoing iconOngoing
Interim goal: we will move from annual updates to six monthly reports. December 2019
number iconProvide ongoing progress updates on our various programmes. Put in place the resources to plan and execute more frequent updates. We shared updates of the two smallholder programmes we are supporting in Nigeria. End 2020

Health and safety

We regard health & safety as a fundamental business responsibility and the Group’s health & safety performance and its regulatory compliance are scrutinised at all meetings of the Group’s Executive Leadership Team and the Board.

Our business spans diverse geographies with differing levels of regulation and we are committed to delivering globally consistent and excellent standards of health & safety in respect of all of our employees, contractors and visitors. To that end, our operations meet local rules and regulations but also comply with our robust Group-wide standards, which invariably exceed local law. We employ a team of health & safety specialists to develop, monitor and implement best practices and we empower and encourage our employees to identify and report hazards or near misses. 

We have made further progress towards achieving international safety certification for all our sites around the World. All but one of our manufacturing sites are now accredited to the internationally recognised Occupational Health & Safety Management System OHSAS18001 and all sites are presently working towards the new best practise safety standard – ISO 45001.

Reporting our progress 

The Business tracks and reports on key health & safety performance indicators, enabling us to review our progress, identify any issues and trends and develop strategies to address areas for improvement. We follow industry practise and focus on the All Accident Incident Frequency Rate (AAIFR) which includes: all reportable incidents, all Lost Time Incidents and all First Aid Cases, i.e. incidents which result in the employee being given first aid. We also continue to track and report the Lost Time Incident frequency rate (LTIFR). Lost Time Incidents include all health & safety occurrences which result in one or more days’ absence from work (excluding the day of the incident).

The frequency rate for both measures is calculated as the number of incidents per 200,000 hours worked.

Working with suppliers 

It is critical to us, particularly as we continue to increase our use of third party manufacturers to develop and make specialist products, that our suppliers, contractors and partners share our values and live up to the high ethical standards which we set for ourselves. To an extent, our reputation is in their hands and so we exercise great care to understand how third parties work whenever we are considering establishing or continuing business relationships.

 We set out our expectations of our suppliers in a Supplier Code of Conduct. This lists a number of mandatory requirements (covering a range of G4B values including Anti-bribery and Corruption, sustainability (including alignment without positions on plastic and palm oil), fair treatment of workers and Health & Safety, modern slavery and animal testing). During the year, we have continued to engage without suppliers in respect of compliance with our Code and we have developed robust process flows to ensure long term alignment with our values and/or termination of relationships with non-compliant suppliers where appropriate. 

Supplier Non-Compliance Process

Palm Oil Supplier Mill List

CSR Policies

PZ is committed to conducting all our activities in accordance with high standard of business conduct.

We have a number of policies and procedures in place that sets out specific steps that businesses within the group must take to ensure we are compliant with these standards.