FERRERO’S EIGHT PALM OIL PROGRESS REPORT

Ferrero is fully committed to securing a deforestation-free and exploitation-free palm oil supply chain through active cooperation with NGOs, key stakeholders and suppliers. We agree that this is an essential component of sustainable sourcing and supply chain responsibility.

Supply chain transparency

Ferrero committed to further increase transparency on its supply chain and regularly disclose the latest traceability data on its supplying mills. Ferrero has published the full list of mills it sourced from in 2017 second semester and in 2018 first semester, thanks to the help of its committed suppliers.

We are extremely pleased to confirm that the 2018 second semester mill list is now available online. Moreover, we confirm that Ferrero is in the position to publish the full list of mills it sources from twice a year also in the future, which clearly shows that Ferrero can “talk the talk and walk the walk”.

Our strengthened approach

The Ferrero Palm Oil Charter, launched in November 2013 goes beyond 100% RSPO segregated supply chain certification and is systematically based on the POIG Charter and its Verification Indicators. Moreover, the Charter has incorporated the HCS Approach in 2015 and the “Free and Fair Labor in Palm Oil Production: Implementation Guidance”.

Building on the many years of positive experience with the existing Charter, we are currently undertaking a major collaborative effort with our key internal and external stakeholders, to systematically review the Charter. The new Charter will better reflect future challenges and the value proposition of Ferrero.

Ferrero believes that mitigating risks requires a joint effort and maintaining an internal alert/early warning system is an asset. Therefore, we continue to actively engage with our suppliers in order for them to:

• continue to support Ferrero’s effort in maintaining a collaborative and transparent business environment, including full supply chain transparency;
• notify Ferrero immediately, if a producer OR its subsidiary OR its parent company OR other any business entity related to the producer is linked or accused of potentially illegal activities.
• notify Ferrero whenever a new producer is included in Ferrero’s supply chain; and
• maintain adequate Grievance Management Systems.

Ferrero commissioned a third-party verifier, Bureau Veritas to carry out a pilot assessment in November 2018 on the field in order to determine POIG compliance of suppliers. We are pleased to confirm that the assessment was successful. Ferrero is now systematically preparing third-party verification of several supplying mills against the full POIG checklist, with the intention to broaden the verification scope to the majority of the Ferrero supply chain by 2020.

The adoption of the new RSPO Principles & Criteria

Ferrero welcomes the new Principles &Criteria, as they present a number of substantive improvements to the certification standard.

In particular we welcome new and stronger “No Deforestation, No development on Peatlands and No Exploitation” restrictions by the RSPO to prohibit the clearance of forests, including incorporation of the High Carbon Stock Approach (HCSA). Ferrero will actively support the successful implementation of the updated RSPO criteria, and will engage with its suppliers on the improved Free, Prior and Informed Consent procedures as well as enhance local food security.

Our next steps

• Ferrero will continue to maintain and build on full traceability from factory gate to palm plantations and growers.
• Ferrero will work together with its suppliers to prevent any unsustainable practices with the aim to endorse and implement the most rigorous requirements of the Palm Oil Charter. We aim to design early warning systems to identify and resolve grievances at an early stage and finally, establish, roll out and maintain a transparent Grievance Mechanism.
• We will continue to engage with our direct suppliers to encourage the resolution of any current and future complaints and the adoption by potentially non-compliant suppliers of the steps set out above.
• Ferrero will continue to support RSPO and the supply chain partners involved in any complaints to highlight the need for a resolution and to help in overcoming any obstacles to resolving the case.
• We will continue to consult civil society experts to advise on Ferrero’s approach and help us to evaluate whether the rate of progress undertaken is sufficient.