Progress Report on the Responsible
Palm Oil Sourcing Policy
January 2021 - June 2021

January 2022
Fuji Oil Holdings Inc.

1INTRODUCTION

Our ambition
The Fuji Oil Group Responsible Palm Oil Sourcing Policy
The Fuji Oil Group (FUJI) formulated and announced its Responsible Palm Oil Sourcing Policy in March 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.
https://www.fujioilholdings.com/pdf/en/csr/sustainable/160310.pdf

KPIs towards NDPE
To strongly promote the Responsible Palm Oil Policy, FUJI launched mid-to-long term KPIs in June 2020, as amilestone of our ambition.
1. Traceability to Plantation•
100% by 2030
2. Labor Transformation Program (LTP) implementation rate•
100% for all suppliers of Palmaju Edible Oil Sdn. Bhd. (Malaysia) by 2025•
100% for all direct suppliers by 2030

About the report
The progress on our initiatives to implement the Responsible Sourcing Policy is shared every six months to ourstakeholders. This report focuses on new developments of traceability and supply chain improvement activities topromote NDPE, made since January 2021 to June 2021.

Contents listIntroduction ....................................................................................................... Page 1Progress........................................................................................................... Page 2-6
1. Traceability ..................................................................................... Page 2
2. Transformation Activities for Palmaju Supply Chain ................................... Page 3-4
A. Tools for Transformation (T4T)
B. Engagements to implement “No Exploitation” commitments (LTP)
C. Engagements to implement “No Deforestation” commitments
3. APT Landscape Initiative ..................................................................... Page 5
4. Smallholder supporting project ............................................................ Page 6
Announcement ................................................................................................... Page 7

21. Traceability

OutlineSupply chain traceability has become one of the cornerstones of
responsible sourcing in the past decade for palm oil markets. Fuji
is committed to supply chain transparency as stated in our
Responsible Palm Oil Sourcing Policy and will continue tostrengthen engagement with suppliers to achieve and maintainfull traceability to raw material origins.

1008060

Progress
We are proud to announce that we have achieved a global palmoil traceability to mill (TTM) score of 100% for the period fromJanuary 2021 to June 2021, which is consistent with the lastreporting period.
We also achieved global palm oil traceability to plantation (TTP)
score of 84 % for the same reporting period. This represents anextra ordinary improvement over the scores of 59 % and 54 % for
the same period in 2020 and 2019, respectively.
However, the score might vary from time to time due to the large
number of production smallholders. We are trying our best toreach all smallholders in our supply chain, working closely withour key suppliers particularly in improving transparency in thesupply chain, traceable to the plantation level. Needless to say,we will continue to work towards 100 % TTP in the shortest timepossible to fulfill our commitments.

40200
H1 2019

H1 2020
TTM

H1 2021

TTPFigure 1: Global Traceability Scores3

2. Transformation Activities
for Palmaju Supply Chain

Activity Overview
As part of the policy implementation strategy, we employ an Aggregator Refinery Transformation Plan (ART)for suppliers in the supply chain of Palmaju Edible Oil, which is our group’s primary refinery in Malaysia. Since
2016, progress has been made to engage a range of partners in the supply chain, including refiners, millers andgrowers.
Our implementation strategy has evolved to now center around a number of specific transformation activities
that are focused on prioritized needs in the supply chain. This report focuses on 3 main activities, namely A.
Tools for Transformation, B. Engagements to implement “No Exploitation” commitments (LTP) and C.
Engagements to implement “No Deforestation” commitments.

A. Tools for Transformation (T4T)
OutlineFuji has been using the Tools for Transformation Self-Assessment (T4T) to scale up our transformation efforts andto help our palm oil suppliers to self-assess their practices while understanding where they stand against Fuji Oil
Responsible Palm Oil Sourcing Policy requirements. At the same time, practical recommendations are quickly
provided to suppliers on T4T, ensuring suppliers receive actionable guidance from Fuji to meet its policy. The tool
is useful to both suppliers and us to understand the supplier’s current status versus Fuji’s Policy.

ProgressIn H1 2021, Fuji’s suppliers, particularly from the Palmaju supply chain, have continued to show support in
updating the Self-Assessment questionnaire by continuing to record and keeping track of their progress and gaps.
We could get suppliers’ response to the questionnaire and capture their status. Continuous implementation ofT4T enabled us to understand suppliers’ progress. Progress tracking over a 3-year period is now possible. We willcontinue to monitor, support and work together with suppliers to achieve NDPE commitments.

# of Palmaju suppliers participate T4T assessment
30252520151051242%2015%

24%

85%

76%

2019

2020

58%

02018

# of supplier complete T4T# of suppliers in progress

Figure 2: # of Palmaju suppliers (mill) participate T4T assessment

2. Transformation Activities
for Palmaju Supply Chain

4

B. Engagements to implement “No Exploitation” commitments(LTP: Labor Transformation Program)
OutlineTo effectively engage suppliers at their own operations, Fuji launched the Labour Transformation Programme (LTP).
The LTP enables supplier to identify labour issues, to build their internal system and capacity to address the issue.
In collaboration with the non-profit Earthworm Foundation, our partner for promoting palm oil sustainability, wehave been engaging direct suppliers of Palmaju Edible Oil Sdn. Bhd..

Progress
Two on-going LTP engagements were planned for completion in H1 2021 and two additional engagements were tobe started over the same period with key entities within the Palmaju supply chain. The visits were expected to becarried out as scheduled, however, the continued rise in the COVID cases across Malaysia and restrictions of interstate movement prevented the team from completing the on-ground visits and assessments. The Fuji team has
been in close communication with our suppliers and have considered conducting the visits through virtualengagements. This method would enable assessments to be implemented despite the restrictions imposed due tothe unprecedented safety situation we are all facing across the globe. All activities (virtual and on-site whenfeasible) have now been re-scheduled for H2 2021. As of H1 2021, 40% of Palmaju suppliers have adopted LTP intotal.

C. Engagements to implement “No Deforestation” commitments
OutlineWe continue our efforts in Malaysia to address deforestation pressures arising from oil palm development,
through engagement with stakeholders. This translates into engaging supplier mills to Fuji’s Palmaju refinery todevelop and refine systems and processes that can ensure deforestation-free supplies of fresh fruit bunches(FFB). This will also include actors in the supply chain like FFB dealers who play an important role connecting
smallholder farms to the mill. With the traceability to plantation information obtained through the engagement,
we are confirming the No-deforestation status using satellite technology.

ProgressMill Level No Deforestation engagements: Two scheduled engagements were affected due to the worsening
COVID situation in Malaysia in H1 2021. The teams were unable to make progress at the ground-level withmovement restrictions in place that disallowed any inter-state travel.
Verified Deforestation Free performance:
Through our collaboration with EF and other stakeholder, we have been able to determine that 83 % of our
supply chain (estates and smallholders included) in Peninsular Malaysia through our Palmaju refinery isDeforestation Free (against 70% during the previous reporting period), based on supply chain data such assatellite monitoring data and traceability data. Fuji is committed to continue to improve our TTP data to ensure
we are able to verify and meet our 100 % No Deforestation commitment.

53. APT* Landscape Initiative* Areas for Priority Transformation

OutlineFuji has been supporting the Aceh Tamiang Landscape in Indonesia
since 2018 to address deforestation and demonstrate thefeasibility of balancing commodity production, conservation andgood social and labor practices at scale. Indonesia remains a keysourcing supply for our supply chain and we remain committed tothis Landscape, in collaboration with our sustainability
implementation partner Earthworm Foundation.

ProgressIndonesia had been hit hard with Covid-19 outbreak towards theend of June 2021. Despite these challenges, meaningful progress
was made.
••••

Following the completion of the Aceh landscape diagnostic
desktop research and risk assessment, five districts wereproposed as potential intervention areas, withSubulussalam selected as the pilot location for the firstyear. At the same time, the EF team presented thediagnostic study results to the Subulussalam District's
Office of Agriculture, Office of Manpower, and the RegionalDevelopment Planning Agency (BAPPEDA) for feedback
and input.
Engagement with PT Laot Bangko, regarded as one of thelong-standing deforestation actors, led to theestablishment of a grievance mechanism as well as
mentoring in conflict resolution and smallholder
relationship building.
EF held a coordination meeting with various local
government offices to socialize the project activity plan,
which included plans to work on issues of deforestation,
land tenure, alternative livelihoods, replanting programsfor oil palm smallholders, labour, and food security.
Following the engagements, we secured support from thelocal government to conduct Participatory Mapping (mapwith land ownership information) and Land Tenure Study
workshops in the Subulussalam District.
A baseline study, one of the most temporally and spatiallycomprehensive assessments of land sector carbon
conducted across the Aceh Landscape, was conducted toestimate greenhouse gas emissions linked to land usechange between 2000 and 2019.

Figure 3: Aceh Landscape area,
Indonesia

Figure 4: Multi-stakeholder workshop
convened by the Subulussalam local
district government and led by EarthwormFoundation.

64. Smallholder supporting
project

OutlineSmall holder inclusion into sustainable palm oil production is oneof the biggest industrial issue. To help smallholders acquire theknow-how for operating environmentally, socially andeconomically sustainable plantations, in January 2016 the Fuji
entered into a partnership with other companies and the nonprofit organization, Wild Asia, to support smallholders via theWild Asia Group Scheme (WAGS).
Fuji contributes to 2 projects in Sabah (Malaysia). Certification
project supports small holder to improve their farm management
practice to get RSPO and MSPO certification through training andtechnical support. WAGS BIO project train farmers forcultivation methods with the goal of raising smallholders’ income
and improving soil health and below-ground biodiversity on theplantation. By showing farmers how to make fertilizer fromwaste generated on the plantation, such as palm leaves that aretrimmed, they can cut their use of chemical fertilizers — andtherefore costs. Some of these farmers on the WAGS BIO regime
have also reported small increase in yields and health of palms.

Figure 5: Training to make BIO
fertilizer from compost leaves

Progress
Despite the pandemic, the team could continue to support forsmallholders. For Certification Project, 117 small holders in
Sabah had been provided trainings and certification
administrative supports, by FUJI’s contribution from June 2020 toMay 2021. During the state’s covid travel restrictions, efforts
were focused on data management and once travel restrictions
are lifted, the team was able to implement field work and visit
farms. The total number of small farmers FUJI has been
supported for certification through WAGS since January 2016 is423. We are very proud of this long term steady initiative forsmall holder inclusion.

Figure 6: Sprinkling BIO fertilizer
around oil palm trees

WAGS BIO project is now in the pilot stage, focusing onestablishing more BIO pilot farms; In the reporting period, theproject newly designated 5 plots as a BIO Farm, which fulfill theBIO Farm criteria defined by Wild Asia. Some farms were enabled
not only for reducing chemical fertilizer costs, but also earning by
the cash crops integrated into their oil palm farms with steadyyields.
Figure 7: Cash crops in oil palm farms
at WAGS BIO farm

7Announcement

Alignment series of reporting
In the past, Fuji Oil has communicated its progress on the Responsible Palm Oil Sourcing policy to stakeholders
through several channels, including the Integrated Report, Sustainability Report and the Responsible Palm Oil
Sourcing Policy Progress Report.
Starting this year, Fuji Oil will integrate the Responsible Palm Oil Sourcing Policy Progress Report and theSustainability Report to simplify and communicate its progress clearly and effectively to stakeholders.
The Sustainability Report will include information on all key projects and activities in place aimed atimplementing NDPE. Additionally, it will describe the progresses of these activities on an annual basis. The
Responsible Palm Oil Sourcing Policy Progress Report will be a mid-year update of the information included inthe Sustainability Report. This update will provide 6-month key developments after the sustainability report’s
reporting period. This new format will be implemented in the Fiscal Year 2022. The change is intended toimprove readability and reporting efficiency. Reporting Principles will not be affected by this change.
The latest information on Traceability and Grievance progress will continue to be updated through the Supply
Chain Data Base and Grievance list.
Upcoming Progress Updates:
Sustainability Report 2022 (H2 2022)
Responsible Palm Oil Sourcing Policy Progress Report, 6-month update (H1 2023)