H1 2020 Progress Report
January 13, 2021

Progress Report on the Responsible Palm Oil Sourcing Policy(January – June 2020)
Fuji Oil Group (Fuji) formulated and announced its Responsible Palm Oil Sourcing Policy inMarch 2016. The Responsible Palm Oil Sourcing Policy outlines commitments towards a No
Deforestation, No Peatland and No Exploitation (NDPE) policy for all palm oil production within
our supply chain – Fuji Oil Responsible Palm Oil Sourcing Policy.
https://www.fujioilholdings.com/pdf/en/csr/sustainable/160310.pdf
The progress on our initiatives to implement the Responsible Sourcing Policy is shared every
six months to our stakeholders. This report will provide information on new developments
made since January 2020.

ProgressFuji carries out a number of key activities to promote our Responsible Palm Oil Sourcing Policy as
explained in Figure 1. This report focuses on 4 activities which have made progresses since January
2020:
1. Traceability
2. Grievance Mechanism
3. Transformation Activities for Palmaju Supply Chain
A. Tools for Transformation (T4T): NDPE Self-Assessment & Monitoring Platform
B. Engagements to implement “No Exploitation” commitments [LTP: Labour
Transformation Programme]
C. Engagements to implement “No Deforestation” commitments
4. APT Landscape Initiative (Indonesia – Sumatra)
To enable us to meet our Responsible Palm Oil Sourcing Policy goals, we work together withsmallholders, millers, refiners and suppliers to identify and address gaps within our supply chain.

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H1 2020 Progress Report【Figure 1: Overview of Main Activities to Improve supply chain based on Fuji’s Responsible PalmOil Sourcing Policy】

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H1 2020 Progress Report

1. Traceability[ See Understanding Supply Chain through Traceability in Figure 1]

Fuji aims for a transparent NDPE compliant supply chain and plans to achieve full traceability tomills for all palm oil purchased and processed across the Group by 2020.
We are proud to announce that we have achieved a global palm oil traceability to mill score of100 % for the period from January 2020 to June 2020, which is consistent with the last reportingperiod. This refers to a global average of 100 % for both Palm Oil (PO) and Palm Kernel Oil (PKO)
products across all Fuji Business units across the world.
【Figure 2: Overview of Global Traceability To Mill Score From July 2018- June 2020】
Transition of Traceability Score to Oil Mills
Jul 2018-Dec 2018

Jan 2019-Jun 2019100% 100%99%99%

Palm OilJul 2019-Dec 20192

Jan 2020- Jun 2020100% 100%

99%

99%

100% 100%99%

Palm Kernal Oil

99%Total

The continuous efforts in strengthening communication with suppliers within all Fuji’s sourcing
regions and across all Fuji business units have attributed to the increase in the traceability.

Fuji is committed to supply chain transparency as stated in our Responsible Palm Oil Sourcing Policyand will continue to strengthen engagement with suppliers to maintain the full traceability scores.
Note on results•Traceability levels may vary over time due to data availability, changes in sourcing or otherissues.

•All traceability numbers are based on self-disclosed information provided by our suppliers. In
some cases, the GPS coordinates of mills were shared with our sustainability partner
Earthworm Foundation (EF) and not directly with Fuji.

•Some mill data is bound to NDA’s between EF and our suppliers. Plans for Fuji to hold this dataare being developed.

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H1 2020 Progress Report

2. Grievance Mechanism[ See Grievance Management in Figure 1]

We have established and published our grievance mechanism in May 2018 to carry out our NDPE
policy. The Grievance procedure and Grievance list have been published on our Grievance website
on the following link: https://www.fujioilholdings.com/en/csr/grievance_mechanism/
In April 2020, we had revised the grievance procedure to enable us to respond to grievances in amore effective manner. The update on our grievance process has included our commitment on
Group level association, establishing the suspension and engage protocol to all our suppliers andhas shown that we have a clear procedure on how we handle each category of grievance that may
come up.
The Grievance List is updated on a quarterly basis and the last update has been done in September
2020. Fuji continues to monitor, engage and communicate with our suppliers to ensure thegrievances raised by various parties are dealt with and managed in accordance to our Commitment.

3. Transformation Activities for Palmaju Supply Chain
Since July 2016, we have partnered with Earthworm Foundation to implement our Responsible
Palm Oil Sourcing Policy. As part of the policy implementation strategy, we had embarked on anAggregator Refinery Plan (ART)i for the Crude Palm Oil (CPO) and Palm Kernel Oil (PKO) suppliers inthe supply chain of Palmaju Edible Oil which is our group’s first refinery in Malaysia. The ART plan
was implemented and aimed to provide support to enable changes to take place on the groundthrough our partners in the supply chain which ranges from refiners, millers to growers.
Our implementation strategy has now evolved around a number of specific transformation activities
that are focusing on prioritized needs in the supply chain. These activities ranges from broad levelengagements (trainings & seminar) to self-assessment, monitoring activities and one on one fieldengagements. The overview of all Transformation Activities (and Evolvement of ART plan) can beseen in Figure 3.

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H1 2020 Progress Report【Figure 3： Transformation Activities Overview】

A. Tools for Transformation (T4T): NDPE Self-Assessment & Monitoring Platform

Fuji has been using the Tools for Transformation Self-Assessment (T4T) ii to scale up ourtransformation efforts and to help our palm oil suppliers to self-assess their practices while
understanding where they stand against Fuji Oil Responsible Palm Oil Sourcing Policy requirements(No Deforestation, No Peatland, No Exploitation). The tool is useful to both suppliers and us tounderstand the supplier’s current status versus Fuji’s Policy.
A total of 48 entities have been engaged and have attended the workshops on T4T in 2019. The
uptake in assessments by mills and plantation have also increased since 2018 as shown in Figure 4and this shows that our suppliers are equally committed to improve their practices.

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H1 2020 Progress Report【Figure 4: Total Number of Completed T4T Assessments for 2018 and 2019】

Palmaju

Indirect suppliers

Number of completed

Number of completed

T4T assessments FY 2018

T4T assessments FY 2019

Mill

78Plantation

510Mill‐

14Plantation‐

11For 2019, T4T had included Action Plan module in the system. Suppliers who have responded to thequestionnaire were provided with an action plan to address the gaps found through the answeredquestionnaire.
【Figure 5: Outline of T4T (Tool for Transformation) self-assessment】

The final report for the 2019 key findings and risks of non-compliance together with detailed follow
up steps for our team to work on and provide support has been handed over by EF in early Q3 2020.
The Fuji team will communicate with our suppliers accordingly to ensure the gaps identified areclosed and to continuously encourage our suppliers to live up to the policies in place.
B. One on One engagements to implement “No Exploitation” commitments [LTPiii]
Our work through T4T have also enabled us to have a better visibility on the need to strengthen ourtransformation work to improve labor practices and standards in the industry. We recognize theneed to eliminate forced and bonded labor within the palm oil supply chain and it is a priority for
key palm oil suppliers and buyers especially due to market demand for NDPE compliant supplies.
This support is especially useful for small and medium sized entities to embark on transformative6

H1 2020 Progress Report
activities especially in alleviating Forced and Bonded labor.
In H1 2020, Fuji continues to intensify its efforts to engage with its key suppliers through one on
one engagements to implement its “No Exploitation” commitments; The Labour Transformation
Programmeiv addresses specific labor exploitation risks such as : contract management, wages &working hours, grievance mechanisms, freedom of movement, freedom of association, migrant
workers’ post arrival recruitment processes as well as health & safety and access to safe
accommodations.
Unlike traditional field assessments, LTP focuses on supporting companies to improve key labor
practices through tailored assistance and the provision of resources; based on an initial gap analysis
on selected topics. Each transformative step is designed to be easily implementable andmeasurable. It thus provides qualitative and quantitative incentives for suppliers to adapt to newmarket requirements (NDPE) and change their practices.
Two additional LTP engagements have been planned for the year with key entities within thePalmaju supply chain. The visits are expected to be by end of 2020 as there has been restriction totravel in the first half of the year due to the COVID -19 outbreak. Discussions on the potential visit
dates has been continued and the team will be mobilized on the ground as soon as the condition
permits.
A workshop is also planned for Palmaju’s suppliers in early of 2021 where valuable findings andlearnings will be shared in order to improve the understanding and practices on the ground.
C. One on One engagements to implement “No Deforestation” commitments
At Fuji we are guided by our Responsible Palm Oil Sourcing Policy and we are committed to ensurethat our supply chain is free from deforestation and development on peatlands. In order to achievethis, we are collaborating with our sustainability partner and other industry players to shape a No
Deforestation Transformation Strategy in Malaysia.
A series of strategic activities were designed to complement the Theory of Change drawn by oursustainability partner Earthworm Foundation. The activities as shown in Figure 6 intends tomaximize our impact on deforestation, drive efficient implementation of No Deforestationcommitments and policies based on a two-pronged strategy aimed at both private and publicengagement.

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H1 2020 Progress Report【Figure 6: No Deforestation Strategy Activities and Objectives】
Focus in 2019 & 2020

Stakeholder Engagement
Objective:

Focus in 2019

Forest Categorization And
Prioritization

Invest In Stakeholder
engagement activities withthe objective to initiate
public-private integrated
deforestation strategies inpriority areas

Continued focus in 2020

Mill Level No Deforestation
Engagement Framework

Objective:

Objective:

Analyse forest coverchange in identified priority
areas most at risk of
conversion to oil palm andlikely drivers ofdeforestation

Engage mills to develop
system to guarantee 3rdparty supply isdeforestation free (1engagement planned inPalmaju Supply Chain)

No Deforestation
Strategy :Malaysia

In 2019 Fuji together with EF made significant progress through the collaboration and completed:➢ A baseline heat map of Malaysia to steer the engagement strategy with suppliers andgovernment agencies to focus on priority areas➢ Spatial analysis on 3 study sites in Sabah to understand drivers of deforestation➢ Stakeholder meetings with the Ministry and relevant department heads➢ Development of guidance documents to Implementation Traceability to Plantation.
In 2020, Fuji will continue concentrated engagements with Mill Level No Deforestation
Engagements* to meet the goals of building better process for Traceability to Plantation. The visitsto suppliers on the ground has been planned for the rest the year.
*Mill Level No Deforestation engagements
The Mill Level No Deforestation engagements are designed to engage CPO suppliers with theobjective to guarantee that FFB (Fresh Fruit Bunches) are sourced on a deforestation free basis. It isalso an opportunity to engage with relevant FFB traders and gather additional TTP (Traceability toPlantation) information
Two engagements are to be scheduled:-Engagement #1 is underway (with a first site visit completed)-A supplier has been identified for proceeding with Engagement #28H1 2020 Progress Report

4. APT Landscapes Initiative – Indonesiav[See Other Supplier activity in Figure 1]

Almost 60% of Fuji’s supply comes from Indonesia and this remains a key sourcing supply for oursupply chain.

Fuji joined the Areal Prioritas Transformasi (APT) or Priority Transformation Areas initiative in Aceh
Taming, Indonesia in 2018 to reduce deforestation and demonstrate the feasibility of balancing
commodity production, conservation and good social and labor practices at scale.
【Figure7: Location of Aceh Tamiang Landscape】

Location of Aceh Tamiang Landscape with respect to the Leuser Ecosystem.

Our involvement in the last two years has delivered positive impacts and continues to achieve newmilestones.
As the world faces uncertainty with the COVID-19 pandemic, the APT team had made good
progress in engaging with all the stakeholders involved in Aceh Tamiang and Southern Aceh,between January 2020 to June 2020, the team have reported achievements and progress:-

Presented sustainability self-assessments to Mayor and relevant agencies to build mutual
understanding of regional issues-Redesign and expansion of tree nursery in Pantai Cempa, Bengkeleng & Babo where 20,000
seeds and seedlings was distributed, trainings for 300 farmers was continued. This is part ofthe Livelihoods Programme pilot.

-Sustained enthusiasm from local communities engaged in Livelihoods Programme pilots-Confirmed decrease in the trend of deforestation in Aceh Tamiang and Southern Aceh

Next Steps
In 2020, Fuji continues to persist with its efforts to uphold its Responsible Sourcing Policy. While9H1 2020 Progress Report
work on the ground may have been disrupted a little, with the unprecedented situation with thecurrent Covid-19 widespread, we are doing all we can to compensate and innovate to ensure ourplans are met.

Fuji is working hard to ensure that its strategy is implemented across the supply chain. Traceability
to Plantation is one area that we will be intensifying our efforts as we acknowledge the importanceof understanding where our FFB supplies come from in order to reach our No Deforestation
objectives.
We will continue to work together with our suppliers by leveraging the Tools for Transformation
platform. The tool provides our team with key information on gaps and requests for support fromour suppliers and this guides us to better prepare our team when engaging them in the fields.
The ‘One on one field engagements’ planned with key suppliers will provide our suppliers with anopportunity to understand the industry expectation better and at the same time guide them tohave better governance of their practices when it comes to “No Exploitation” & “No Deforestation”
commitments as well as traceability implementation.
Fuji is also committed to continue to review and respond on grievances and will be regularly
updating our Grievance list (quarterly basis), supply chain data and our traceability score (every 6months) on our dedicated dashboard.

iART Plan

https://www.earthworm.org/news-stories/art-episode-1-how-tft-works-in-palm-oil-an-introduction-to-the-art-plan
https://www.earthworm.org/news-stories/art-episode-2-traceability-getting-to-the-heart-of-things
https://www.earthworm.org/news-stories/art-episode-3-mpp-plotting-the-road-map
ii

Tools for Transformation (T4T)

T4T is an online system created and managed by EF to help palm oil refineries engage their suppliers to improve practices on the ground and reportprogress. This automated system uses the power of digital technology to transfer and collect huge amounts of sustainability data, generate
automated action plans, link businesses with a know-how library and empower step by step transformative change on the ground.
iii Labour Transformation Programme (LTP)The LTP is a supplier engagement initiative focused on transformation around key labor issues developed by EF in 2019.

ivAPT Landscape - Indonesia
https://www.earthworm.org/our-work/projects/aceh-tamiang-sumatra-indonesia
https://www.earthworm.org/news-stories/tft-and-aceh-tamiangs-local-government-gearup-to-support-smallholders-and-protect-forests10