Unilever Sustainable Palm Oil Sourcing Policy

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1 Unilever Sustainable Palm Oil Sourcing Policy Introduction Unilever uses palm oil and its derivatives in margarine, soups, sauces, bouillon and ice cream as well as a range of home and personal care products. So it is important that consumers have the confidence that our products are made from palm oil that has been responsibly sourced from known sources that respect the environment and local communities. Tackling the negative perception of the oil palm industry concerning deforestation and bio-diversity, is a shared responsibility with all stakeholders in the industry It requires collaboration and partnerships to successfully tackle the environmental and social challenges, so that we can begin to communicate the positive messages of sustainable palm oil. As one of the world s largest users of palm oil we use around 3% of the world s annual production so it is our responsibility to take a lead in making the industry sustainable and beneficial for the environment and the local communities it supports. Unilever is committed to continued leadership in the transformation of the industry for sustainable development. As well as being a founding member of the RSPO, we play a leading role in the Consumer Goods Forum steering group on sustainability and led the process which resulted in the creation of the Tropical Forest Alliance. By working together with our key palm oil suppliers, NGOs and local interest groups, we believe that the palm oil industry can transform to 100% sustainable palm oil delivering social, environmental and economic benefits. Although we realise there are challenges in achieving this in the short to medium term, we believe that sustainable palm oil should be the norm and not the exception. Unilever 2020 Unilever commits that by 2020 it will: purchase palm oil and palm oil derivatives from traceable, known and sustainable certified sources be transparent about the palm oil suppliers we deal with and the origins we source from not purchase through traders or from refiners selling palm oil from unknown origins engage only with palm oil suppliers that show commitment and adhere to principles consistent with our own sustainability ambition

2 Our 2020 roadmap Build partnerships Unilever will partner with our suppliers and other key industry stakeholders to promote the production and use of sustainable palm oil from traceable and sustainable certified sources by All Unilever palm oil suppliers are required to be RSPO members, which mean commitment to sustainable certification and with time bound plans in place to fully achieve this. For all Unilever suppliers with no direct plantation sources, we will specifically require a time-bound action plan to show how they will deliver 100% of their supply chain including from third party suppliers as being traceable to known and certified sources and that meet Unilever s sustainability ambitions. Unilever believes that NGOs have an important role to play in the transformation of the palm oil industry and must contribute to its solution. NGOs need to take an active role in the RSPO and work from within it engaging with producers to end users for the benefit to be felt across the palm oil industry. We are strongly convinced that through constructive dialogue and a close cooperation between all stakeholders positive change can be achieved throughout the supply chain to benefit consumers, wildlife, biodiversity and last but not least smallholder farmers and their communities. Demonstrate traceability of sources in Unilever s supply chain All palm oil and palm derivatives that Unilever currently purchases are sustainable through a combination of traceable certified sustainable volumes and Greenpalm certificates. We will work with our suppliers to deliver traceable certified sustainable palm oil from known origins including from their third party suppliers. This is in-line with our commitments within the Unilever Sustainable Living Plan to break the link of the sourcing of palm oil from deforestation and Greenhouse Gas emissions, and by respecting the economic and social values of responsible development for all stakeholders, including local communities. Communicating the positive messages of sustainable palm oil Working alongside our suppliers and the industry, we will continue to promote sustainable palm oil and stand alongside producers to actively communicate the positive messages that sustainable companies are doing to stop deforestation, lower GHG emissions, working with smallholders and bringing economic benefits to local communities.

3 Unilever Sustainable Palm Oil Policy Addendum Introduction: This addendum defines and describes the policy in more detail and provides information on implementation and expected methodology. Traceable to Known and certified sources: Unilever will trace all palm oil and derivatives through the supply chain from a known and certified source. Unilever will not purchase through traders or from refineries selling palm oil from unknown sources. traceable refers to the ability to identify the origin of palm oil sources and derivatives, with chain of custody evidence of origin to all originating Crude Palm Oil Mills and supply base. In this case, supply base refers to plantations or smallholders. known source refers to all originating Crude Palm Oil Mills and supply base, as the original source of crude palm oil and palm kernels. certified source refers to a known source or sources that are RSPO certified or certified against a standard that meets the RSPO principles and criteria. unknown origin refers to any source of palm oil or derivatives that cannot be identified to its originating Crude Palm Oil Mills and supply base/plantation; or that cannot provide the required chain of custody evidence. For all Unilever suppliers with no direct plantation sources, we will specifically require a time-bound action plan to show how they will deliver 100% of their supply chain including from third party suppliers as being traceable to known and certified sources and that meet Unilever s sustainability ambitions. Transparency on who and where we buy from Unilever will be transparent about the companies we deal with and the origins we source from. In our goal to achieve 100% traceable and certified palm oil by 2020, we will be clear, open and honest about who and where we are buying our palm oil from. We will provide information on an annual basis through the Unilever Sustainable Living Plan (USLP) progress report, published annually and complemented by our website, which is our principal means of reporting. It includes more background to our progress on the USLP and the scope of our assurance programme. By 2014, we will start reporting the current aggregated percentage of volumes that are traceable to a known source and the locations where we have sourced from in the previous year. This information will involve an aggregation of volume, supplier and location information up to a regional level.

4 Our sustainability ambition: Unilever s sustainability ambition for palm oil refers to two main elements: (i) breaking the link to deforestation and Greenhouse Gas emissions, and (ii) respecting the economic and social values for responsible development for all stakeholders including local communities. This is described below for all palm oil and derivative suppliers: 1. Palm oil is sourced from responsible developments that do not result in deforestation. In order to help Unilever achieve this ambition we encourage our suppliers to: i. Support and adhere to the RSPO guidelines or equivalent for new plantings, the identification and management of High Conservation Value Areas (HCVA), and GHG guidance for new and ongoing plantations as part of sustainable certification. ii. iii. Demonstrate their commitment to no new developments on peat areas - regardless of depth. We encourage suppliers to commit to no replanting on peat areas. Prior to any new developments of oil palm, our suppliers with direct control over plantations will identify all forests and other areas that need to be conserved or protected using internationally-recognized and scientifically robust methods or tools, and demonstrate that any new developments will only occur on lands or areas that have not been identified for conservation or protection. Suppliers without direct control of plantations are expected to demonstrate this requirement in their supply chains iv. Progressively reduce Greenhouse Gas (GHG) emissions by actively measuring, managing, reducing, and reporting their GHG emissions with internationally recognized and scientifically sound tools, equivalent to the RSPO s Palm GHG. This should also include existing plantations. We encourage suppliers to make public commitments to GHG reduction strategies, e.g. by planning the implementation of Best Management Practices for the various aspects of palm oil production. 2. Palm oil is sourced from areas that recognize the economic and social values of the responsible development of sustainable palm oil, and that respect local communities and community impact. i. To reflect Unilever s and our suppliers respect for human rights, we encourage all suppliers to ensure that palm oil supplied to Unilever is sourced from plantation areas where the principle of free, prior and informed consent has been applied to relevant communities and land conflict and settlement is conducted in a transparent manner. Beyond this, we encourage suppliers to resolve any outstanding social and land conflicts that exist with local communities to be resolved through an open, transparent and consultative process. ii. Unilever s suppliers will be asked to demonstrate how they are contributing to improving community well-being. This can include their investment in community facilities and resources

5 to ensure adequate land claims resolutions and mechanisms are in place to address social and land conflicts with communities. Measurement and Reporting Unilever will work with suppliers to measure and report progress annually towards our sustainability ambitions as defined above, verified through a programme of regular and independent audits. In working with suppliers, Unilever will conduct all of its operations in accordance with the principles of fair competition and applicable regulations. Suppliers and RSPO membership or equivalent Through our commitment to sustainable certification, Unilever expects our suppliers to adhere to principles consistent with our own, with all suppliers becoming members of RSPO or a Unilever recognized equivalent. Through this membership, we envisage similar commitment to supporting sustainable certification either through direct certification of a supplier s plantation, mill, refinery or other supply chain unit or indirectly thorough the purchasing of sustainable certified material. We encourage all suppliers to demonstrate the setting and implementation of time-bound plans to achieve 100% certification of all relevant plantations, mills, refinery or other supply chain units. For suppliers purchasing external sources of palm oil or derivatives, the time-bound plan should demonstrate that the purchasing of sustainable certified material will achieve the goal of 100% sustainable certified sources by Sourcing from smallholders Unilever see the importance of sourcing palm oil from smallholders and will prioritize purchasing from suppliers that have volumes that can be traced to known and certified smallholders. To facilitate the increase of sustainable certification of smallholders, Unilever will work with our suppliers with direct control of Fresh Fruit Bunch sources to ensure inclusivity of smallholders through active engagement, yield improvement programmes and extension services. We will actively work with other palm oil stakeholders, such as NGOs, governments, and others to encourage the integration of more smallholders into the global palm oil supply chain.