Global Integrated Standard

9.003 Forest and Agriculture Products
Sourcing and Procurement (Public)
Relates to: Fonterra Environmental, Procurement and Sustainability Global Policies

1.

PurposeThis Global Standard defines the requirements for sourcing and procuring forest and agriculture productsProtection of forests and other natural ecosystems is critical for maintaining biodiversity, mitigating, and adapting
to the impacts of climate change, and sustaining livelihoods. The forest and agriculture products that Fonterra
sources – including palm, soy, paper, and bioenergy – can pose risks for deforestation and human rights
violations. Fonterra is committed to the elimination of deforestation and the conversion of all other natural
ecosystems as they apply to our operations and supply chains. All suppliers of forest and agriculture-related
products must be committed to human rights including protecting the rights and livelihoods of local communities,
indigenous peoples, and the rights of workers.
Fonterra commits to no deforestation across its primary deforestation-linked commodities, with a target date ofDecember 31, 2025. Any deforestation which has occurred after 2020 will be counted as a non-conformanceagainst this 2025 commitment.

2.

Scope

2.1

This Global Standard applies to all the entities and individuals outlined in the Scope section of theFonterra Global Policy Principles and Framework.

2.2

This Global Standard applies to the sourcing and procurement of all forest and agriculture products.

3.

Requirements

3.1

Supplier Environmental and Social Performance

3.1.1

To meet Fonterra’s stated commitments all suppliers must meet the expectations outlined in the Fonterra
Supplier Sustainability Code of Practice. Additionally, we will work within our own operations and throughour suppliers to achieve the following requirements, where applicable.

3.1.2

Protection of forests and natural ecosystems:a. Support the long-term protection of indigenous forests in the company’s operations or area ofinfluence, including protection of these forests’ conservation and cultural values, and recognition of
the overall importance of forests and other natural ecosystems;
b. Be publicly committed to “No Deforestation, No Peatland Development, and No Exploitation” and havebusiness processes in place to enact these commitments;c. Respect, protect and enhance legally designated protected natural areas, including no conversion ofHigh Conservation Value areas;d. Where applicable, use the High Carbon Stock Approach (HCSA) to guide site planning that protects
natural forests and other natural ecosystems;e. No development on peatlands (regardless of depth), and actively invest in restoring and enhancing
peatland in the landscapes in which they operate;
f. No clearance of land by burning;g. Work collaboratively with communities, farmers or other stakeholders to value and protect biodiversity
and ecosystem services; andh. Where relevant, support and invest in the restoration of natural ecosystems including conducting or
supporting restoration or compensation in cases where the company has caused or contributed todeforestation after 2020.

3.1.3

Respect for human rights:
a. Support existing human rights commitments including respect for farmers’ and communities’ land
rights, free prior and informed consent, and the rights of indigenous and forest-dependent people;

Version 3.0

Published 4 Sept 2023

Refer to the Policy and Procedure Library for version and approval history

PPL System Ref: 36971719
If printed, this document is an uncontrolled copy
Page 1 of 4Global Integrated Standard – 9.003 Forest and Agriculture Products Sourcing and Procurement (Public)b. Engage in victim centred remediation when human rights infringements are identified;c. Ensure a fair, safe, and healthy working environment for all employees, including the inclusion ofwomen in plantations; andd. Ensure that suppliers take appropriate steps to measure, identify, prevent, and address all humanrights infringements including but not limited to child labour issues, forced labour, debt bondage andunlawful recruitment.
3.2

Supplier Transparency and Traceability

3.2.1Fonterra expects suppliers to provide transparency over the supply of forest and agriculture products,
with raw materials being traceable to a point where compliance can be known, preferably point of harvest(i.e., species of tree where applicable).

3.2.2

Suppliers of palm products must be able to trace all products to mills, and:a. have time-bound plans in place and demonstrate meaningful progress towards traceability of all
products to plantation, with an aim of full traceability to plantation 1;
b. provide maps and coordinates of their operations, including all owned and third-party supplier mills
and refineries, and concession maps where legally permissible;
c. publicly report progress on compliance towards traceability; andd. use credible third-party verification or certification of environmental and social performance.

3.3

Engagement and Collaboration

3.3.1

Fonterra business units within the scope of their control are expected to:a. work with partners to identify new and innovative opportunities to improve the sustainability of forest
products within their supply chain;b. prioritise sourcing from those organisations demonstrating an active commitment to sustainability,
and those actively managing the risk of deforestation and conversion; andc. continue to review and implement change to ensure alignment with intent as new knowledge,technologies and practices emerge.

3.4

Sourcing Palm and Palm Related Products

3.4.1

Palm products must always be sourced from members of the Roundtable for Sustainable Palm Oil(RSPO) who are committed to the execution of the RSPO Principles and Criteria, including the use andprotection of smallholders.

3.4.2

Business units which are not currently sourcing palm oil from RSPO certificated supply chains must
commit to developing time-bound actions to meet this requirement. Refer to 5.3 for further detail.

3.5

Palm Oil Products

3.5.1

Palm oil products must always be RSPO certified products. Fonterra palm oil product specifications andpurchase orders should specify “Segregated” Certification or higher.

3.5.2

Ingredients that Fonterra purchases (indirect palm oil procurement) that contain palm oil of less than 5%
by total volume are not considered within the scope of this Global Standard.

3.6

Soy Products

3.6.1

Suppliers of soy must verify that soy is from deforestation and conversion free sources and meets therequirements of this Global Standard. This can be through a variety of standards and certifications,
including but not limited to, The Roundtable for Responsible Soy, ProTerra, Sustainable Agriculture
Network Sustainable Agriculture Standard, and the International Sustainability and Carbon Certification(ISCC 202).
Note: Ingredients that Fonterra purchases (indirect procurement) that contain soy of less than 5% by total
volume are not considered within the scope of this Global Standard.

3.7

Forest Products (timber, building products, and biomass for bioenergy)

3.7.1

Suppliers of forest products must verify that any virgin woody fibres are sourced according to thisStandard. Biomass for bioenergy sourced from wood-waste from the forest and timber industries andwould otherwise become landfill are excluded from the scope of this standard.

1Palm kernels are sourced from very wide catchment areas, may be transported across long distances from source, and may be passed
through numerous traders before being processed. This complex supply chain presents a significant challenge for traceability. Fonterra
recognises this challenge and will take this into consideration when verifying plans and demonstrated progress of suppliers

Version 3.0

Published 4 Sept 2023
Page 2 of 4Global Integrated Standard – 9.003 Forest and Agriculture Products Sourcing and Procurement (Public)

3.7.2

Fonterra prefers forest products which are Forest Stewardship Council (FSC) certified. Fonterra will also
accept forest products which are certified under national schemes, such as those approved by theProgram for the Endorsement of Forest Certification (PEFC), from countries which have robust legal
enforcement.

3.7.3

Forest products sourced from small suppliers in New Zealand which are not certified due to scale may
meet the standard if they comply with the requirements set out in the New Zealand sustainable forest
management standard, and the New Zealand Forest Accord.

3.8

Forest Products (Paper-Based Packaging Materials)

3.8.1

Suppliers of paper-based packaging materials must verify that any virgin woody fibres are sourced
according to this Standard. Repulped / recycled fibres may also be used in the manufacture of paperbased packaging materials and are excluded from the scope of this Standard.

3.8.2

Suppliers who manufacture packaging materials using a combination of virgin and recycled fibres must
maintain a transparent supply chain which can ensure the virgin content meets the traceability
requirements of this Standard.

3.8.3

To maximise availability, we are seeking to purchase packaging with the following valid productcertification claims: FSC Mix or FSC 95%, PEFC X% - at least 70%, SFI CoC Credit or Percentage
System – at least 70%.

4.

Accountability

4.1

In addition to the accountabilities set out in Std 2.001 Leadership, Roles, and Responsibilities thefollowing specifically applies to forest and agriculture product management:
Function

Accountability

Fonterra Management
Team (FMT)Accountable for ensuring appropriate policies and processes are in place
to effectively manage Fonterra’s Forest and agriculture related risks andopportunities in pursuit of the Co-operative’s strategic objectives.

Business Unit Leaders

Accountable for overseeing and managing forest and agriculture
outcomes and impacts within their business unit, site, or function,
including embedding alignment with this Global Standard and sourcing
commitments into strategic and operational planning.

Forest SME Functions(e.g., Procurement,
forest product users)

Accountable for supporting effective consideration, management andoversight of forest and agriculture risks and opportunities within their areaof subject matter expertise; maintaining and embedding appropriate bestpractice guidance across the business; aligning with the expectations
established in this Global Standard.

Environmental andSustainability
Managers

Accountable for managing forest and agriculture outcomes within theirremit, including identification of opportunities to improve performance andeffective management of environmental risks in collaboration with SME
functions5.

Compliance

5.1

The Fonterra Global Policy Principles and Framework details the expectations to comply with this GlobalStandard.

5.2

Fonterra procurement will work with the supplier to ensure that compliance with this standard is met.
Suppliers who do not meet the applicable requirements set out in section 3, will be required to explain toprocurement why they have not met these requirements, and Fonterra will work with the supplier toimprove and resolve any shortcomings.

5.3

Where a business unit is unable to comply with the requirements for primary-linked deforestationcommodities (such as palm oil) the following process applies:a. A time-bound transition action plan must be developed, submitted to (via the online exemption requestprocess) and approved by the Forest Governance Steering Committee (SteerCo). At a minimum theaction plan must ensure compliance by 31 December 2025.
b. If it is not feasible (as determined by SteerCo), for the business unit to develop a time-bound transition
action plan and transition sourcing to 100% deforestation and conversion free sources, an exemption
must be requested and approved by the Forest Governance SteerCo.

Version 3.0

Published 4 Sept 2023
Page 3 of 4

Global Integrated Standard – 9.003 Forest and Agriculture Products Sourcing and Procurement (Public)

6.

Monitoring

6.1

Compliance with this Global Standard is monitored via Fonterra’s Three Lines Model audit and assurance
activities.

6.2

Fonterra will utilise monitoring mechanisms of suppliers to identify any areas of non-conformance withthis Global Standard.

6.3

Fonterra will disclose and report annually (for example, via CDP and RSPO) against the use of forest
and agriculture products and performance of forest and agriculture product suppliers in relation to thisGlobal Standard, including steps taken to address non-compliance with this Global Standard.

6.4

Fonterra operates an independently administered whistle-blowing hotline for all stakeholders to reportconcerns, complaints, grievances, and breaches to this Global Standard. Our grievance mechanism isaccessible through our Code of Conduct.

7.

Definitions

Term

Definition

Forest andAgriculture products

Any material derived from forestry, including both timber and non-timber forestproducts. This includes but is not limited to food, feed, fibre, wood and paper
products, and their derivatives.

Primary
deforestation-linked
commodities

Direct procurement of cattle, soy, palm oil, wood fibre, cocoa, coffee, and rubber,where considered material for the Co-operative.

Deforestation

Any loss of indigenous forest (Including primary forest, regenerated forest and forest
managed for timber harvest that retains its main natural characteristics) as a result of1) conversion to agriculture or other non-forest land use, 2) conversion to a tree
plantation, or 3) severe and sustained degradation

Conversion

The change of a natural ecosystem (Including natural grasslands, woodlands,savannahs, wetlands, and peatlands) to another land use, or a profound change in
the natural ecosystem’s species composition, structure, or function

ForestLand spanning more than 0.5 hectares with trees higher than 5 meters and a canopy
cover of more than 10 percent, or trees able to reach these thresholds in situ. It does
not include land that is predominantly under agricultural or other land use.

Free Prior andInformed Consent(FPIC)

The principle that a community has the right to give or withhold its consent toproposed project

Palm products

Include palm oil, palm kernel oil, palm kernel expeller and any other derivatives ofthe palm crop. This includes ingredients which contain palm oil.

Paper-basedmaterials

Is limited to product packaging materials and excludes operational consumables
such as office paper and hygiene products

Roundtable for
Sustainable Palm Oil(RSPO)The RSPO is an organisation set up to support manufacturers of palm oil products
and palm plantations/mills to adhere to a set of standards to ensure palm oil and its
directivities are grown and sourced in a sustainable manner with minimal detriment
to the environment, people, and animals.

Soy and soy related
product

Include, but are not limited to soy derivatives such as soy lecithin and soybean oil.

8.

Related Information

Fonterra Supplier Sustainability Code of Practice
Accountability Framework Initiative

9.

Approvals

This Global Standard is approved by the Director Global Sustainability, Stakeholder Affairs & Trade.

Version 3.0

Published 4 Sept 2023
Page 4 of 4