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    Palm oil is the most widely used vegetable oil on the planet, and as demand grows, so does the need for transparent, traceable and sustainable palm oil supply chains. At LDC, we seek to balance the competing needs of meeting global demand for palm oil while contributing to the financial security of local communities, with ensuring the preservation of ecosystems that are rich in carbon stock and of high conservation value.

    “We work in partnership with many different stakeholders to balance competing needs, while preserving forests and conserving biodiversity, which play a vital role in the global ecosystem, and support farming communities living in and around palm plantations.”

    Jacinto Peralta Ramos

    Global Head of Palm

    Jacinto Peralta Ramos

    Committed to Zero Deforestation

    Agriculture and our world’s forests can – and must – coexist sustainably.

    To mitigate the risk of deforestation and other unsustainable practices with negative consequences for communities and the environment, we must work closely with all palm production stakeholders – growers, peers, consumer brands and retailers, NGOs, financial institutions, governments and others – to protect forests, native vegetation and peatlands, while advancing social and economic welfare.

    In line with our No Deforestation, No Peat, No Exploitation (NDPE) policy, we track progress across our palm supply chain to identify where action is needed and work alongside our suppliers to implement the necessary changes.

    LDC’s years of work on supply chain traceability and sustainability puts us in prime position to meet evolving market and legislative requirement for traceable and sustainable palm oil. In 2021, we initiated the development of a methodology to quantify deforestation-free volumes in our palm oil supply chain, to be further developed in 2022 in collaboration with our technical partners and in consultation with key stakeholders. This will be used to establish our deforestation-free baseline and measure progress going forward.

    Expanded Traceability, Verification & Monitoring

    At LDC, we make sourcing transparency a priority, aiming ultimately to trace palm oil back to plantation level. We made good progress on traceability in 2021, expanding our traceability scope to include packaged oil and India flows, and reaching 97% traceability to mill level, with the aim of closing the remaining gap by 2022. We also reached 90% traceability to plantation level for directly-sourced volumes, and 72% traceability to plantation for global volumes.

    In 2021, we also took further steps by developing our NDPE Compliance Verification Protocol. This protocol is designed to verify supplier compliance with our Palm Sustainability Policy and identify possible gaps to ensure continuous improvement. It includes a combination of desktop and onsite verifications, based on a supplier’s overall environmental and social risk exposure. It will be piloted with direct suppliers in 2022 and rolled out to all direct suppliers with high-risk exposure by 2023.

    Throughout the year, we continued to leverage technology to monitor possible deforestation and peat development in our supply base. Working with Global Forest Watch, Earthqualizer and Satelligence, we now harness data intelligence that is powered by satellites and simplified in real-time by artificial intelligence, to monitor our global supply chain. Bi-weekly land-use change alerts have allowed us to take quick action on supplier engagement when required to validate and resolve non-compliant practices.

    We also adopted a new tool, the NDPE Implementation Reporting Framework (IRF), to measure the overall sustainability performance of our supply chain towards our zero deforestation and peat development targets. We have implemented the IRF reporting with our two refineries in Indonesia, which will receive external verification in early 2022 then be publicly disclosed for transparency.

    Collaboration for Progress

    In 2021 we formed new partnerships to accelerate progress towards our NDPE commitments.

    As we grow our palm oil sourcing activities in Latin America and Africa, we entered a new partnership with Proforest – a non-profit organization that works to support responsible agricultural and forestry production and sourcing in over 30 countries around the world. Working with Proforest team, we conducted country-level assessments on key environmental and social issues in oil palm production, and ran supplier NDPE risk assessments to identify possible improvement opportunities.

    We also joined the Palm Oil Collaboration Group, which brings together companies from every stage of the palm oil supply chain, to accelerate effective implementation of NDPE commitments. Among other collaborative areas, we actively contributed to the development of the social IRF tool, to measure companies’ progress toward the “zero exploitation” element of their NDPE commitment.

    Certified Volumes

    As part of our NDPE commitment, we continued to source and sell palm oil that complies with Roundtable on Sustainable Palm Oil (RSPO) and International Sustainability & Carbon Certification (ISCC) standards.

    As in 2020, in 2021 our certified palm oil sales declined, largely due to Covid-19 impacts on demand for energy, a trend we expect to reverse as the effects of the pandemic ease.

    Smallholder Inclusion

    At LDC, we strive to include smallholder farmers in sustainable supply chains by training them to increase their production and yields safely and sustainably. We also support the development of essential infrastructure that is critical for smallholders to comply with sustainability requirements, and ultimately achieve certification required to have market access.

    Spotlight on Côte d’Ivoire

    In collaboration with the Louis Dreyfus Foundation, we launched a new project in South Comoé, Côte d’Ivoire, to train smallholder oil palm producers on sustainable farming practices, regenerative agriculture, agricultural diversification and business entrepreneurship, with particular focus on younger generations and female farmers.

    This three-year project is expected to establish a rural farm business incubator that serves as a center of knowledge exchange, learning and best practice testing. It aims to train 400 young adults (minimum 30% women) and have 300 farmers apply regenerative practices and cultivation improvements at farm level.

    Spotlight on Indonesia

    Despite COVID-19 constraints, we progressed with our existing smallholder project in Indonesia, which has been expanded to another supply shed area for our Lampung Refinery in Mesuji District, Lampung. Aiming to train 1,000 smallholders by 2022, in 2021 we provided good agricultural practices (GAPs) training to almost 700 farmers and also helped to improve the cooperative’s infrastructure, including new washing facilities and safe chemical storage.

    The project also provides a financial assessment that aims to improve smallholders’ financial access when applying for replanting loan schemes, and ongoing discussions with international donors are held to support them in this area.

    The smallholders who already received training in Phase 1 of the project were offered refreshment training on GAPs, with the addition of a horticulture module that will guide them in managing intercropping during the replanting period. They were also given a refresher course on the certification process, ahead of a 2022 audit of 300 smallholders in OKU District, South Sumatra, for an upgrade of their RSPO certification.

    Looking to the Future

    In 2022 and beyond, we will continue to strengthen palm oil supply chain traceability, due diligence and NDPE verification, with a focus on suppliers with higher risk profiles. We aim to finalize and apply our new methodology to track the volume of deforestation-free palm oil, reporting regularly on our progress.

    Targets

    Near 100% traceability to mill level for palm traded by LDC

    Completion: 2021

    Status: Complete (97%) 

    90% of volumes sourced by LDC to come from verifiably responsible suppliers*

    Completion: 2021

    Status: Complete

    * From certified RSPO or ISCC volumes, or from suppliers who are contractually bound to comply with our palm sustainability policy, or from suppliers who have their own NDPE commitments of at least equal rigor to our policy.

    100% traceability to mill level for palm sourced directly to LDC refineries

    Completion: 2021

    Status: Missed (99%)

    Suppliers representing 40% of direct volumes field-verified for NDPE compliance and GAPs

    Completion: 2022

    Status: Amended

    Train a further 1,000 South Sumatran palm smallholder farmers in GAPs

    Completion: 2022

    Status: In progress, on target

    95% traceability to plantation level for palm sourced directly to LDC refineries

    Completion: 2022

    Status: In progress, on target

    100% of mills supplying LDC refineries to provide LDC-approved NDPE self-declaration

    Completion: 2025

    Status: In progress, on target

    New Targets

    Initiate support for one landscape project in our key supply base

    Completion: 2022

    90% volumes from verifiably responsible suppliers

    Completion: 2022

    100% traceability to mill level for palm sourced directly to LDC refineries

    Completion: 2022

    Near 100% traceability to mill level for palm traded by LDC

    Completion: 2022

    100% indirect suppliers to complete LDC NDPE assessment

    Completion: 2023

    100% direct suppliers categorized as high-risk to complete field verification of NDPE compliance and improvement plan

    Completion: 2023

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