Sustainable Procurement of Palm Oil

Palm oil is a vegetable oil obtained from oil palms grown in Southeast Asia and other tropical regions. Because palm oil produces high yields per unit area and has excellent processing characteristics, it is used in a wide range of applications, from food products to chemicals. Palm oil accounts for the largest production volume among vegetable oils worldwide and is an important raw material supporting the global food system.
At the same time, concerns have been raised over deforestation and impacts on ecosystems associated with plantation development, as well as human rights violations such as forced labor and child labor. These issues have made the sustainability of palm oil a major global concern.
Against this backdrop, our Group procures palm oil mainly from Malaysia and Indonesia and uses it as one of the key raw materials in its Vegetable Oils and Fats Business and other operations. We therefore recognize environmental and human rights issues at the palm oil production and procurement stages as key management issues directly linked to our supply chain.

Traceability

Greater supply chain transparency is essential to advancing sustainable procurement. To prevent, minimize, mitigate, and manage environmental and social risks associated with palm oil production, we are working to assess and strengthen traceability across our palm oil supply chain. To confirm that the raw materials we purchase are produced responsibly, the Oils and Fats Business Headquarters collects and verifies palm oil supply chain traceability information every six months.
As of December 2025, we achieved 99% traceability to mill (TTM) and 96% traceability to plantation (TTP).
Since 2024, we have also been verifying our TTM procedures, results, and reporting, and our 2024 TTM report was verified by a third-party organization. The assessment was conducted by confirming the accuracy of the reported information based on mill-level traceability data for the year.

Satellite-based monitoring(location/scope: Indonesia, Malaysia, Papua New Guinea)

Since FY2020, our Group has been working with the non-profit Earthqualizer to use satellite technology to identify, monitor, and verify the risk of deforestation in the palm oil supply chain. Satellite images of plantations and surrounding areas are highly effective in identifying, mitigating, and preventing deforestation. We use reports provided by Earthqualizer twice a month, which include alerts on forest loss and peatland development, and based on this information, we register cases through our grievance mechanism and conduct investigations.

When identifying whether an allegation made through our grievance mechanism is linked to the Group’s supply chain, traceability data is essential. When a link is confirmed, the Group works with the relevant direct suppliers to investigate the actual situation.
We work closely with Earthqualizer to address cases of deforestation in the Group’s supply chain, including handling grievances, establishing corrective actions with suppliers, and communicating with NGOs and other stakeholders. Based on the investigation results, we update and disclose the information in our grievance list at least once a quarter.^*

• * FUJI OIL GROUP Grievance Mechanism

  https://www.fujioil.co.jp/en/sustainability/grievance_mechanism/

Supply Chain Transformation Program(location/scope: Malaysia)

In 2017, we launched a Labor Transformation Program (LTP) at Palmaju Edible Oil Sdn. Bhd. (Malaysia), a Group subsidiary, in collaboration with the non-profit Earthworm Foundation. The program aims to strengthen responsible labor practices across the palm oil supply chain by supporting supplier capacity building and identifying and addressing human rights risks. Initially focused on direct suppliers, the program has now been expanded to include indirect suppliers.

The scope of the program includes the following eight elements.

• Freedom of movement
• Contract management
• Ethical employment
• Grievance mechanism
• Wages and working hours
• Freedom of association
• Health and safety
• Accommodation

To reduce human rights risks in suppliers’ operations and supply bases, our Group provides the following support to suppliers through direct dialogue with mill operators and plantation managers. These initiatives promote practical implementation of the program and continuous improvement at the operational level.

• Provide information and documents to support suppliers to ensure compliance
• Conduct practical training of dedicated staff and departments
• Raise suppliers’ awareness of industry requirements
• Help suppliers apply international standards to their labor management
• Help suppliers obtain certification and meet customer requirements

As of March 2025, 83% of Palmaju Edible Oil Sdn. Bhd. (Malaysia) suppliers are covered by the program. Aiming to achieve coverage of 100% of target suppliers and build a supply chain free from labor exploitation, we will continue working to expand the scope of the LTP and review our KPIs in response to changes in the supply chain.
Even after all our direct suppliers are covered by the LTP, we will continue to monitor performance through our supplier due diligence process and support the ongoing implementation of responsible labor practices.

Interviewing workers through the program

Self-assessment tools(location/scope: The Group’s palm oil supply chain)

Our Group works with Earthworm Foundation to promote the use of a structured self-assessment tool among suppliers to Palmaju Edible Oil Sdn. Bhd. (Malaysia) in its palm oil supply chain. The process assesses, evaluates, and monitors the status of suppliers’ sustainability initiatives.
This process is an important mechanism supporting our Group’s supply chain due diligence, as it enables broader and more effective supplier engagement. It also helps us identify risks at an early stage, provide recommendations for alignment with our Responsible Palm Oil Sourcing Policy, and offer support to suppliers.
We will continue to monitor progress on our No Deforestation, No Peat, and No Exploitation (NDPE) commitments across the entire supply chain.

Submission rates have declined over the past two years due to the transition to a new data platform and delays in system launch. However, the rate of submission from indirect suppliers and the number of submissions from plantations have improved compared with the previous year.
To further support our suppliers, we are currently developing an easier-to-use due diligence system that enables us to obtain more accurate information.

Engagement toward zero deforestation(location/scope: The Group’s palm oil supply chain)

Our Group is actively engaging with suppliers to identify and implement the most effective approaches for achieving zero deforestation in the palm oil supply chain.

Specifically, we are taking the following approach:

The Group is working toward zero deforestation, removing suppliers who do not actively engage with zero deforestation initiatives or who show insufficient progress on initiatives. We will continue to monitor risks and implement improvement activities across the supply chain in collaboration with stakeholders to achieve this commitment.

Since 2023, we have been working to verify and report zero deforestation and conversion in our supply chain based on the deforestation- and conversion-free (DCF) approach for palm oil developed by the Consumer Goods Forum (CGF) Forest Positive Coalition of Action. This initiative ensures the effectiveness of the Group’s DCF commitment through the following three approaches:

The IRF profile is verified by a third-party organization. Our Group’s DCF score for 2024 was 94.5%.
Verification for FY2025 is currently underway, and we plan to disclose the score once aggregation and third-party assurance have been completed.

Grievance mechanism(location/scope: The Group’s palm oil supply chain)GRI: 2-25

Overview of initiatives

We established a grievance mechanism^*1 in May 2018 to enhance the transparency and effectiveness of our Responsible Palm Oil Sourcing Policy.
In March 2025, in light of the feedback from industry stakeholders and experts, we revised the system to further enhance its effectiveness. The grievance mechanism allows any stakeholder to raise concerns ― through the Fuji Oil Group Grievance Mechanism webpage (in English) ― regarding environmental, human rights, or other various issues related to the Group and its supply chain, without fear of retaliation or negative consequences.
This enables us to effectively involve stakeholders and appropriately take corrective actions in accordance with our Responsible Palm Oil Sourcing Policy.
Every quarter we disclose all the grievances we receive and our progress in addressing them on our website. In FY2025, we registered 133 grievance cases^*2 (130 environmental and three social). Of these, 52 have been resolved, 61 are under monitoring, and 20 have been found to be invalid.
We regularly review our grievance mechanism with the help of internal and external experts, and are striving to obtain the necessary information to properly address the concerns of all stakeholders.
Through these efforts, we implement a fair, just and transparent approach to addressing any suspected cases of violations of our Responsible Palm Oil Sourcing Policy.

• *1 FUJI OIL GROUP Grievance Mechanism
  https://www.fujioil.co.jp/en/sustainability/grievance_mechanism/

• *2 The number of grievances that were determined to be directly or indirectly related to the Group’s palm oil supply chain in accordance with the Group’s grievance procedures and do not conform to the Group’s Responsible Palm Oil Sourcing Policy.

Overview of the grievance mechanism

When our Group receives a grievance related to our supply chain, we respond in accordance with our grievance procedure. We first review the grievance to determine whether it is directly or indirectly linked to our palm oil supply chain and whether it concerns a matter that is inconsistent with our Responsible Palm Oil Sourcing Policy.
Grievances determined to be valid are registered and investigated. Corrective measures are then taken according to the nature of the grievance, followed by monitoring over a defined period. Once the effectiveness of the corrective measures has been confirmed, the grievance is closed.
At each stage of investigation, correction, and monitoring, we work with relevant stakeholders in the supply chain to address the matter.

Figure: Overview of the grievance mechanism

Image links to a PDF file（101KB）

APT Landscape Initiative

Indonesia: Aceh Landscape Initiative (location/scope: Aceh, Indonesia)

Since 2018, our Group has been supporting a landscape initiative in the Aceh province of Indonesia, in cooperation with the Earthworm Foundation.^*1 The program aims to support smallholders’ participation in the palm oil supply chain while helping to balance palm oil production with forest conservation and sound social and labor practices.
Aceh is home to the Leuser Ecosystem, which is considered by many scientists and conservation activists to be one of the most biologically diverse places on Earth. However, deforestation has been continuing in this region due to oil palm plantation development and other activities. Even today, it is still at risk of deforestation. Key stakeholders within the landscape including the private sector, the public sector, farmer cooperatives, local communities, and civil society work together to advance the program.
The program covers a total area of 2.3 million hectares. Approximately 74% of the area is natural forest, 11% is oil palm plantations, and less than 1% is forest plantations.^*2 The four priority areas are Aceh Selatan, Aceh Tenggara, Aceh Singkil, and Subulussalam.

Below is a summary of the program’s major activities and progress in FY2025:

Areas of landscape initiative

Based on the results of the five-year plan (2020–2025), the program committee is discussing plans for the second phase (2026–2030).

• *1 Aceh Landscape, Indonesia
  https://www.earthworm.org/our-work/projects/aceh-indonesia
  Meet Multistakeholders in Natural Resource Management ― Aceh Subulussalam (movie)
  https://youtu.be/8fvJ20TWaUQ

• *2 Functional forests that produce timber while maintaining forest functions

Malaysia: Southern Central Forest Spine Landscape program (location/scope: SCFS, Malaysia)

Oyster mushroom block cultivation by the Sg. Mok community
(photo by Supply Chain Management Team, Fuji Oil Group)

Based on the results of the five-year plan (2020–2025), the program committee is discussing plans for the second phase (2026–2030).

• *1 Southern Central Forest Spine (SCFS) Landscape, Malaysia
  https://www.earthworm.org/our-work/projects/scfs-malaysia

• *2 FFB dealers: Companies that act as intermediaries between smallholders and oil mills, providing land management support to smallholders and selling fresh fruits bunches (FFB) to oil mills

• *3 Sungai Ara Human Elephant Committee Story Map (Malay)
  https://storymaps.arcgis.com/stories/e5919bd5695744c5afaaf33f5e0faad0

Analysis

Based on our Responsible Palm Oil Sourcing Policy established in 2016, the Group set a target to realize 100% TTM by 2030. We also implemented a procedure to ensure TTP across our entire palm oil supply chain.
While there are various challenges such as information confidentiality and supply chain complexities, including procurement from FFB dealers, we are working with a number of experts and consultants to enhance our strategies for improving our Group’s performance toward achieving 100% TTP.

The challenge for smallholders, who account for around 30-40% of the entire palm oil production, is that they lack information on sustainable farming techniques and environmental considerations, as well as the funds to implement sustainable practices. To address these issues, since January 2016 our Group has been participating in the Wild Asia Group Scheme (WAGS) under Wild Asia, a Malaysian social enterprise, and has been supporting a certification program and WAGS BIO (regenerative farming) programs in Sabah (eastern Malaysia). Through these efforts, we promote solutions by helping smallholders improve their farming practices and comply with RSPO and Malaysian Sustainable Palm Oil (MSPO^*) certification standards.
There are still many issues left to address, including deforestation, land rights, and workers’ rights. Going forward, it is vital for us to increase our momentum and enhance public awareness of these issues to strengthen our procurement strategy and improve our supply chain practices.

• * Malaysian Sustainable Palm Oil (MSPO)
  https://mspo.org.my/

Next steps

Continued efforts toward NDPE are crucial for realizing sustainable procurement of palm oil. Based on this recognition, we set the following goals for FY2026 as a continuation of the previous year:

• TTM: 100%
• TTP: Over 96%
• Continue constant monitoring of the palm oil supply shed (the geographic area from which palm oil is sourced) using satellite technology to identify, monitor, verify, and eliminate deforestation
• Supply Chain Transformation Program at suppliers of Palmaju Edible Oil Sdn. Bhd. (Malaysia): 90%

For the LTP, our Group will launch a broader range of monitoring activities to support suppliers in improving labor management in line with national and international standards. These initiatives form part of our Group’s strategy to transform the palm oil supply chain and are also part of our due diligence efforts in this area.

Promoting certified palm oil(location/scope: The Group’s palm oil supply chain)

In 2025, 60% of the palm oil procured by the Group was RSPO-certified. The growing demand for sustainable palm oil has been a major contributing factor to the increase in the procurement volume of certified palm oil.
The Unifuji Sdn. Bhd. (Malaysia), a joint venture with United Plantations Bhd., a Malaysia-based oil palm plantation company, has maintained and enhanced its production capacity, enabling us to serve this growing market.
In addition, to serve this growing market, JPG Fuji Sdn. Bhd., a joint venture between our Group company Fuji Oil Asia Pte. Ltd. (Singapore) and Johor Plantations Group Bhd. (Malaysia), a palm oil and palm kernel manufacturer, is scheduled to start operation in FY2026. JPG Fuji Sdn. Bhd. is expected to be fully RSPO-certified, and it will build a simple and traceable supply system to serve markets such as Europe that demand high-quality raw materials.
Our Group has implemented the RSPO’s new Shared Responsibility (SR) rules and expanded the volume of certified palm oil we procure every year. At the same time, sustainability requirements have become increasingly stringent in recent years. Regulations such as the EU Regulation on Deforestation-free products (EUDR) have made it more difficult to expand oil palm plantations while meeting legal, regulatory, and certification requirements. It has therefore become even more important to meet demand within the existing production base. In this context, smallholders are one of the key actors in palm oil production, but they also face challenges in obtaining certification.
Against this backdrop, we are proactively supporting smallholder farmers to obtain RSPO certification, especially those in our palm oil supply chain. Since 2021, we have been actively participating in RSPO working groups to discuss these issues and reflect them in the development of solutions.
Going forward, we plan to step up efforts to meet even more customer needs, particularly in the European market where demand is increasing, by deepening our partnership with Johor Plantations Group Bhd. in Malaysia,^*1 a strategic supplier of Palmaju Edible Oil Sdn. Bhd. (Malaysia).^*2

• *1 Notice of Establishment of Joint Venture Company by Consolidated Subsidiary
  https://www.fujioil.co.jp/en/pdf/ir/library/disclosure/240125en.pdf (126KB)
  Integrated Report 2026 > High-Quality, Sustainable Supply Chains Underpin Corporate Value (pp. 38-39)
  https://www.fujioil.co.jp/en/pdf/ir/library/integrated_report/fujioil_integrated_report2026_01_03.pdf

• *2 For RSPO’s progress, see:

  https://rspo.org/

United Plantations Bhd. and Unifuji Sdn. Bhd.

JPG Fuji Sdn. Bhd. (rendering of the new facilities)

What is RSPO certification?

RSPO certification is an international third-party certification scheme that assures that palm oil is produced and distributed responsibly, with consideration for the environment and human rights.
The scheme was developed by the Roundtable on Sustainable Palm Oil (RSPO), an international multi-stakeholder organization established in 2004. RSPO brings together stakeholders from seven sectors: palm oil producers, processors, trading companies, consumer goods manufacturers, retailers, financial institutions, and NGOs. Our Group supports the purpose of this certification scheme, which is to promote the sustainable production and consumption of palm oil, and has been an RSPO member since 2004.
RSPO develops and operates global standards for sustainable palm oil production, and certified companies are required to comply with a set of environmental and social criteria. These criteria are designed to minimize the negative impacts of oil palm cultivation on the environment and local communities in producing regions, including by preventing deforestation and respecting human rights.

Main objectives of RSPO certification:^*

• Prevent deforestation and protect High Conservation Value areas
• Avoid plantation development on peatlands
• Respect human rights and workers’ rights
• Protect biodiversity and wildlife habitats
• Engage responsibly with local communities

• * Summarized based on information from the RSPO official website
  RSPO> Why sustainable palm oil?
  https://rspo.org/why-sustainable-palm-oil/

What is Shared Responsibility (SR)?

SR is the set of responsibilities adopted by RSPO members to achieve RSPO’s vision, a global partnership to make palm oil sustainable. To expand the production of sustainable palm oil and make it the norm, all RSPO members ― including supply chain stakeholders, investors, and NGOs ― must play their respective roles.
Our Group has agreed to the RSPO requirement to increase the volume of certified palm oil in its supply chain by 2% annually, and is advancing initiatives to achieve this target.

Collaboration with NGOs and industry

(1) Supporting smallholders in Sabah, Malaysia

Since January 2016, our Group has joined the Wild Asia Group Scheme (WAGS),^*1 managed by the Malaysian social enterprise Wild Asia, and supported its certification program and WAGS BIO regenerative agriculture program being conducted in the state of Sabah in eastern Malaysia.
Smallholders and medium-sized growers account for a large share of oil palm plantations, and low productivity of plantation management by some operations at this scale has been identified as one factor behind environmental and human rights issues related to the procurement of palm oil. Through our participation in WAGS, we are working to address challenges faced by palm oil smallholders, by helping them improve their farming practices and comply with standards such as those of RSPO and MSPO.

The certification support program provides smallholders with the technical support and training for acquiring RSPO and MSPO certifications. Since we joined the program in January 2016, the Group has helped a total of 1,961 smallholders to obtain the certification through WAGS (as of December 2025).

The WAGS BIO program supports farmers to introduce regenerative agriculture with the goal of raising smallholders’ income, mitigating their adverse impact on biodiversity, and conserving and restoring natural ecosystems around plantations.
In FY2025, we expanded the introduction of BIO regenerative agriculture beyond the target areas of the WAGS program to 101 plots. Key initiatives included the application of biochar and organic materials, as well as trials to compost and use organic by-products from the milling process, such as empty fruit bunches (EFB) and palm oil mill effluent (POME), on plantations. These efforts aim to help restore soil health and to mitigate climate change.
We also advanced the production and application of biochar under a certification program covering its production, verification, and distribution.
The application of biochar is expected to improve soil quality, and the carbon stored in the soil should have a mitigation effect on climate change.
In addition, Wild Asia used knowledge gained in Sabah, Malaysia, to support broader implementation under the GIZ GRASS program.^*2 A team from Sabah traveled to Indonesia and worked with local partners to foster trainers for the BIO program. Through cross-regional collaboration, we are expanding the initiative to contribute to improving sustainability across the palm oil industry.

Internal biochar audit in a BIO plot

WAGS BIO introduction session for smallholders

Smallholder RSPO certification audit

• *1 Wild Asia Groups Scheme (WAGS): A program aimed at smallholders and independent producers in Malaysia to support sustainable palm oil production.
• *2 GIZ GRASS program: A Germany-Indonesia joint initiative implemented from 2023 to 2025 to improve the sustainability and resilience of smallholders in West Kalimantan.
  GIZ> Improving the resilience of commodity-producing smallholder farmers
  https://www.giz.de/en/projects/greening-agricultural-smallholder-supply-chains-grass

(2) Palm Oil Working Group, the Japan Sustainability Local Group of the Consumer Goods Forum

Our Group has been a member of the Consumer Goods Forum (CGF), an international industry organization for consumer goods distribution, and we have participated in the Japan Sustainability Local Group since its inception in November 2017. We have been active in its steering committee and Palm Oil Working Group.^*
In 2025, the Palm Oil Working Group engaged in dialogue with NGOs and experts and, in line with the implementation guidance for the forest-positive approach advocated by the CGF, member companies exchanged information on the status of their respective initiatives. Through this process, the Working Group advanced sharing of issues and knowledge related to sustainable palm oil procurement.

• * Palm Oil Working Group: In January 2026, this group was renamed the Forest Positive Working Group to reflect the expansion of covered commodities to include soy, paper, pulp, and others.

(3) Japan Sustainable Palm Oil Network

Fuji Oil Co., Ltd. has been a full member of the Japan Sustainable Palm Oil Network since October 2019, in support of its aim of promoting sustainable palm oil procurement and consumption throughout the Japanese industry.

(4) Palm Oil Collaboration Group

Since June 2020, Fuji Oil Group has been participating in the Palm Oil Collaboration Group (POCG),^* which brings together companies from every stage of the palm oil supply chain with the aim of accelerating effective action toward NDPE commitments.
As part of this initiative, we are an active member of the Social Issues Working Group, which works to discuss and address human rights issues in the palm oil sector. In collaboration with industry partners, we help develop practical solutions and share good practices.
The main focus areas are as follows:

• Human rights due diligence in management systems
• Responsible labor practices in Malaysia’s palm oil industry, which is predominantly made up of migrant workers
• Protecting the rights of Indigenous peoples and local communities

• * The Palm Oil Collaboration Group
  https://palmoilcollaborationgroup.net/