Sustainable Procurement Management

Basic approach

The Fuji Oil Group has a vision to “contribute to the society by creating the future of delicious and healthy foods.” Building a responsible supply chain is essential for realizing this vision.
We view suppliers as key partners for addressing environmental and social issues in the supply chain. By promoting environmental conservation, respect for human rights, fair business practice, risk management and other initiatives in cooperation with our suppliers, we aim to achieve sustainable growth for all three of us: suppliers, the Group and society.
In 2012, we formulated CSR Procurement Guidelines (1st Edition) for Group companies in Japan. In April 2021, we published the Fuji Oil Group Supplier Code of Conduct as a high-level policy that precedes existing policies and guidelines that apply to specific companies and raw materials. Our goal in publishing this policy was to communicate to all suppliers a comprehensive approach to procurement that applies to the entire Group.
For specific raw materials, in 2016 and 2018 we published the Responsible Palm Oil Sourcing Policy and the Responsible Cocoa Beans Sourcing Policy, respectively. In 2020, we set medium- to long-term goals and KPIs for sustainable procurement of palm oil and cocoa beans. And in June 2021, we published the Responsible Soybeans and Soy Products Sourcing Policy and the Responsible Shea Kernel Sourcing Policy, and set medium- to long-term goals and KPIs for sustainable procurement of soybeans and shea kernels.

Management system

The Chief Strategy Officer (CSO) oversees the sustainable procurement of our main raw materials — palm oil, cocoa and soybeans — and the strategic raw material, shea kernels. In September 2020, we created the Global Sustainable Sourcing Committee. This committee meets monthly and has a subcommittee on each raw material (palm oil, cocoa, soybeans, shea kernels). Working group members are selected from each geographical region (Japan, Southeast Asia, China, Americas, EU) and discuss issues specific to their raw materials.
Additionally, the ESG Committee,^*1 an advisory body to the board of directors, monitors the progress and results of sustainable procurement initiatives as a material ESG issue.^*2 The ESG Committee reports insights to the board of directors for review.

• *1 Follow the link below to learn more about the ESG Committee.

  https://www.fujioilholdings.com/en/sustainability/approach/

• *2 Follow the link below to learn more about material ESG issues.

  https://www.fujioilholdings.com/en/sustainability/materiality/

Goals / Results

Commitments to sustainable procurement

We set medium- to long-term goals and KPIs for the sustainable procurement of palm oil and cocoa in June 2020 and of soybeans and shea kernels in June 2021.

• *1 Traceability to plantation
• *2 An oils and fats manufacturer wholly owned by the Fuji Oil Group
• *3 Roundtable on Sustainable Palm Oil
• *4 We plan to plant a variety of shade tree saplings, totaling one million trees over a 10-year period from 2021 through 2030.
• *5 Worst forms of child labour
• *6 Child Labour Monitoring & Remediation System
• *7 Round Table on Responsible Soy Association
• *8 We plan to plant mainly shea tree saplings at a pace of 6,000 trees per year starting in 2021.
• *9 Our KPIs for years 2021, 2022 and 2023 are 10%, 15% and 20%, respectively.
• *10 We plan to use shea kernel meal, a byproduct of oil production, and other raw materials as non-fossil fuels.
• *11 Our current non-fossil fuel rate as of 2021 is 75%.

Analysis

Social issues such as environmental and human rights impacts are reportedly linked to the production of palm oil, cocoa, and other raw materials used by the Fuji Oil Group. However, the cause of these issues — and the best approach to solving them — varies depending on the raw material. For palm oil, we have been partnering with NPOs to raise performance to an across-the-board standard since we formulated our sourcing policy in 2016. In FY2020, we were able to focus our efforts on plantation companies. Progress on cocoa, however, has been less than satisfactory due to a complex of factors. These include the fact that small farms make up the majority of suppliers, the great geographical distance between Japan and suppliers, and the difficulties posed by the COVID-19 pandemic of visiting suppliers to identify issues in person, as we had planned. For soybeans and shea kernels, we expect to be able to identify the issues unique to each raw material based on our new sourcing policies. As we identify the problems specific to each raw material we use and its producing regions, we at the Fuji Oil Group will seek to implement our policies by securing the resources we need to scale up our sustainable procurement efforts.

Sustainable procurement information by raw material

* Follow the links below to learn more about the Fuji Oil Group’s sustainable procurement initiatives for our main raw materials — palm oil, cocoa, and soybeans — and our strategic raw material, shea kernels.

• Sustainable Procurement of Palm Oil

  https://www.fujioilholdings.com/en/sustainability/social/palm_oil/

• Sustainable Procurement of Cocoa

  https://www.fujioilholdings.com/en/sustainability/social/cacao/

• Sustainable Procurement of Soybeans

  https://www.fujioilholdings.com/en/sustainability/social/soy/

• Sustainable Procurement of Shea Kernels

  https://www.fujioilholdings.com/en/sustainability/social/shea_kernel/

Comment from a sustainability manager

Carmen Alvarado Ascencio
Senior Manager ESG and Leader Sustainable Development Team
Fuji Europe Africa

Fuji Oil Group takes the possibility of human rights violations taking place in our supply chain very seriously. Although we expect our suppliers to pay as much attention on promoting human rights as we do, the globality and complexity of our supply chains presents a challenge for the traceability of our raw materials to their origin. Traceability is essential to identify risks, implement and monitor improvement initiatives and remedy human rights incidents. Through transatlantic expert teams, Fuji Oil Group is developing responsible sourcing policies for our main raw materials, which include targets for traceability and relevant social impacts. Additionally, we take a proactive and constructive approach in the dialogue with other stakeholders through our participation in industry associations. Our objective is to ensure a future-proof supply chain which considers resilience against sustainability issues and upcoming legislation like the EU-wide environmental and human right due diligence law.

Cooperation with suppliers in Japan

Three Fuji Oil Group companies in Japan — Fuji Oil Co., Ltd., Fuji Fresh Foods Co., Ltd. and Omu Milk Products Co., Ltd. — have published the CSR Procurement Guidelines (2nd Edition) as requests for suppliers. We explain these guidelines to suppliers, including both manufacturers and trading companies, to facilitate two-way communication. We also conduct supplier questionnaires and use the results in our supplier selection process.
In FY2020, we carried out a risk management project in which we reviewed our supply system for producing high-priority products in emergencies, using a Nankai Trough megaquake as an operational scenario. We held several discussions with suppliers to secure inventory in areas supposed to be unaffected and designated backup manufacturers in cases where primary production facilities become inoperable, among other preparations. We also set up opportunities for divisions that interface with suppliers to improve their understanding of environmental issues by taking online lectures taught by third parties.