Unilever SAC Scheme Rules v4.5 1 April April 2017 v.4.5. Page 1 of 39

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1 1 April 2017 v.4.5 Page 1 of 39

2 BACKGROUND By 2020 Unilever intends to buy all its agricultural raw materials from farms applying sustainable agricultural practices, so that: Farmers and farm workers can obtain a liveable income and improve living conditions Soil fertility of agricultural land is maintained and improved Water availability and quality are protected and enhanced Nature, biodiversity and climate are protected and enhanced. This ambition has been the inspiration for the Unilever Sustainable Agriculture programme, which started in In 2010, this programme, in wide consultation with farmers, NGOs and academics, resulted in the publication of the Unilever Sustainable Agriculture Code. This, in turn, became the basis for the Unilever Sustainable Sourcing programme, one of the pillars of the Unilever Sustainable Living Plan, which was launched in November PURPOSE OF THE SCHEME RULES In order for Unilever to be able to report on progress in Sustainable Sourcing, the following scheme rules have been developed to determine whether a certain volume of raw material A, purchased from supplier X, qualifies to be included in the Unilever Sustainable Sourcing Metric, i.e. whether this material will classify as having been sustainably sourced. These scheme rules will be reviewed annually. THE SUPPLIER AND THE UNILEVER SUPPLIER CODE The concept of Sustainable Sourcing of agricultural raw materials revolves around farming. However, Unilever does not generally buy fresh produce from farmers directly. Unilever buys from suppliers (usually processors or traders). The supplier has to have acknowledged the Unilever Supplier Code and ensure their activities are conducted in accordance with it, in order for any volume that Unilever buys from this supplier, to qualify as sustainably sourced. It is Unilever s policy to formally request that all our suppliers respect the principles of our Supplier Code and adopt practices that are consistent with it. Unilever's direct suppliers will take responsibility to require adherence to the principals of this Supplier Code from their direct suppliers and exercise diligence in verifying that these principles are being adhered to in their supply chains. Unilever will develop mechanisms to ensure suppliers are informed about the Supplier Code, informed about any updates, and to ensure that the commitment is reviewed on a regular basis. STANDARDS AND VERIFICATION Sustainable Sourcing refers to the way raw materials have been produced, i.e. the term sustainable can be attached to materials produced by farmers who adhere to a certain set of farming practices, or a certain production code. There are two mechanisms through which adherence to such production codes can be verified: 1) Certification of farms against an external standard, formally recognised by Unilever as compliant with the principles and practices of sustainable agriculture Page 2 of 39

3 2) Active farmer engagement in, and commitment to, a sustainability improvement programme based on the Unilever Sustainable Agriculture Code 1.0 (SAC). The SAC contains mandatory requirements for performance reporting to demonstrate tangible continuous improvement in the sustainability of the raw materials. 1. Certified Practices Any material from farms that have been certified against standards and codes recognised by Unilever as compliant with the principles and practices of sustainable agriculture, qualifies as being sustainably sourced. The current list of recognised external standards and codes is given in Annex IA. 2. Self-Assessed Practices of Farmers Engaged in Sustainability Programmes Any material from farmers supplying our suppliers recognised by Unilever as compliant with the Unilever Sustainable Agriculture Code 1.0 as defined by the rules relating to the SAC (pages 5-8), qualifies as being sustainably sourced. Unilever has partnered with the software company Muddy Boots to develop a system (Greenlight Assessments 1 ) to collect information from suppliers on compliance, calculate scores and track metrics for continuous improvement. Annex II contains external standards which have been benchmarked against the SAC, which are not considered fully equivalent, but cover certain chapters that Unilever will accept as equivalent. If suppliers are compliant with the standards or codes in Annex II, they will need to self-assess against the SAC for any chapters not covered by the standard or code, e.g. through Greenlight Assessments. If a supplier is using a standard or code that is not listed in Annex II they can request, via their Unilever contact, for a benchmark to be carried out. In addition to publicly-available external standards and codes, Unilever will also consider any current in-house or industry-level sustainability programmes that suppliers use. In these cases suppliers are required to benchmark their system or programme against the UL SAC, and inform Unilever of the result. Unilever will make the final decision on which areas, if any, of a supplier or industry-level system are equivalent to the SAC. Any chapters of the SAC not covered will need to be checked through self-assessment. The current list of accepted industry-level schemes can be seen in Annex IB. If a supplier or farmer has any doubt or grievance with respect to our benchmarking of either an external standard or in-house or industry-level programme, please contact Vanessa King on vanessa.j.king@unilever.com. WILD-HARVESTED MATERIALS Assessment of the sustainability of wild-harvested materials requires a different approach, since the issues are different from those related to cultivated products and using SAC is not appropriate. For such situations a risk assessment approach is taken, using the template in Annex V. Rules relating the use of this approach are described in paragraphs 8-11 (page 9). 1 Previously called Quickfire Page 3 of 39

4 Different Supply Chain Options Several certification schemes, for example RSPO and RTRS, offer the possibility of buying certificates (e.g. Greenpalm certificates in the case of RSPO). These indicate that even if the actual raw material you have bought is not produced in a sustainable way, an equivalent amount of raw material has. Some schemes, which would also include FSC, offer different ways of allowing certified and non-certified material to be mixed (e.g. FSC Mixed Sources, RSPO Mass Balance). The important point about these supply chain systems is that there has to be a strict administrative system in place to ensure there is no double counting of sustainable raw material, i.e. the equivalent amount of sustainable raw material could not be sold to more than one purchaser, either as the physical raw material, or as certificates. Material produced under such systems will be counted by Unilever as sustainably sourced. However, in order to be credible and acceptable to Unilever, systems or operators that use mass balance and related systems need to: 1. have stated an intention to develop a segregated supply chain over time 2. have shown that segregated supply is not feasible in the short term 3. have an independently verified administrative system that ensures no double counting can take place The use of mass balance will be restricted to either single processing units or a group of processing units that operate under a single Internal Control System and with one homogenous supply base of farmers. In the absence of these elements, a segregated supply is required to ensure that the raw material bought is counted as sustainable. A detailed description of how mass balance can be used in self-assessment against the SAC can be seen in Annex IV of this document. Page 4 of 39

5 RULES RELATING TO THE USE OF THE UNILEVER SUSTAINABLE AGRICULTURE CODE (SAC) 1. General Conditions a) The scope and responsibilities as per sections 0.3 and 0.4 of the SAC 2 are adhered to. b) The units that need to do the farm assessments are the primary processing plants from which Unilever (or Unilever suppliers) buy raw material. c) A random sample of farms for self-assessment will be taken for each new assessment round from the full list of farmers supplying that processing plant with raw materials that are supplied to Unilever. The selection will be made automatically through the Greenlight Assessments software system, or, if the software is not being used, by a Unilever representative, but not by the supplier themselves. Point 6. in this document describes what is meant by a random sample. d) The number of farms to be sampled per processing plant is determined by the following rules: i. If there are fewer than 30 farms, all the farmers are assessed. ii. When the number of farms is >30 the sampling rule is the square root of N (where N = the number of farms) or 30, whichever is the higher. This means that >30 farms must be sampled only if there are more than 900 farmers for the processing plant. iii. Suppliers may choose to sample >30 farms per processing plant, even if this is not required in ii. e) Where more than one processing plant, more than one crop, and/or more than one farmer group is involved, the sampling rules apply to every farmer group who fall under a separate management scheme or Internal Control System 3. For example: Scope Unless otherwise stated in the text, the scope of this document is as below: Practices referring to Soils, soil management Crop husbandry Animal husbandry People, working conditions, health & safety, training Activities stretching beyond the farm, such as some aspects of Water or Value chain Scope Field on which Unilever crops are grown, including fields in rotation with other crops. Unilever crops Unilever animals. Animal slaughter and transport of animals off-farm is currently out of scope. Whole farm Whole farm 0.4 Responsibilities This Code of Conduct is applicable to all Unilever suppliers of agricultural goods, the farmers producing them and contractors working on farm. We hold our suppliers responsible for implementing this Code. However, many good practices must be applied by farmers, not suppliers. 3 A Management Scheme or Internal Control System is a documented and tested step-by-step method aimed at smooth functioning through standard practices. They generally include detailed information on topics such as (1) organising a programme, (2) setting and implementing corporate policies and targets, (3) establishing accounting, monitoring, and control procedures, (4) choosing and training employees, (5) evaluation procedures. Page 5 of 39

6 i ii Where one processing plant supplies more than one raw material to Unilever (e.g. different dried vegetables) the number of farms producing all the raw materials supplied to Unilever will be added together, and the total number used to determine how many farms need to be sampled, according to the rules under d). At least 2 farms must be sampled for each raw material. If a farm in the sample of 30 produces more than one raw material for Unilever, it may be asked to answer the metrics-related questions for each raw material separately. If a supplier has 3 plants in 3 locations (e.g. 1 plant per country), purchasing from different groups of farmers, each will be assessed separately. However, if different processing plants buy raw materials from the same group of farmers, or different groups of farmers under the same management system, the group need only be assessed once. f) When groups of farmers are located in different regions but are managed under the same management scheme or Internal Control System (i.e. are counted as one group for sampling purposes) documentary evidence of the common management system must be provided to Unilever. g) Assessments are carried out at the level of a particular raw material (farmer requirements) or product sold to Unilever (supplier requirements). h) The volume of material counted as sustainably sourced is the volume of product purchased by Unilever, or produced in a Unilever primary processing plant, not the volume of the harvested product. For example, soybean oil not soy beans, black leaf tea, not fresh leaf, tomato paste, not tomatoes. 2. Scoring system A farmer starts to count as compliant if their assessment (farmer and supplier questions combined) achieves: 100 % of Mandatory requirements 80 % of Applicable Musts in total 4 50 % of Applicable Musts per SAC Chapter The volume counted as sustainably sourced from a supplier is calculated as follows: a) If all farmers sampled and assessed (as defined in 1c.-e. above) are compliant then the total volume of product sold to Unilever is counted. b) If x/y farmers sampled are compliant then (x/y) * 100% of the total volume of product sold to Unilever can count. BUT all mandatory requirements must be achieved by all farmers sampled for any of the volume to count, i.e. if ANY of the sampled farmers fail ANY of the mandatory requirements, NONE of the volume of product sold to Unilever counts as sustainably sourced. Note: it is the number of farmers that is used in the calculation, regardless of the volume of material those farmers supply. This should be presented to Unilever as sustainably sourced (controlled mixing). c) If the conditions required for mass balance have been agreed with Unilever (see box Different Supply Chain Options ), the volume is calculated as (x/y)*100% (as in b), but the volume should be presented to Unilever as sustainably sourced (mass balance). 4 This percentage is calculated by dividing the number of musts complied with by the total number of applicable musts in the assessment multiplied by 100. Page 6 of 39

7 The calculation as under a), b) and c) above will apply to the volume purchased by Unilever after all assessments for a supplier have been submitted and closed in the software system and compliance confirmed ( compliant date ). 3. Timing of Subsequent Assessments (Re-assessments) Re-assessment of a supplier must take place in accordance with the following rules: a) For compliant dates between 1 January and 30 June, all re-assessments must be submitted and closed before 30 June of the following year. b) For compliant dates between 1 July and 31 December, all re-assessments must be submitted and closed before 31 December of the following year. A new random sample will be used for each round of assessments. 4. Other Conditions a) Breaches of mandatory requirements that are listed under Prohibitions in SAC, must be stopped immediately on discovery as a condition for continuation as a supplier to Unilever. If a self-assessment is carried out and any mandatory requirement is failed, re-assessment can only take place during the next raw material production cycle. For seasonally-produced raw materials this will be the next season, for non-seasonal raw materials re-assessment can take place as soon as the mandatory failure has been corrected. b) An improvement plan with interim goals and timelines must be agreed with suppliers and the respective Unilever representative, with the aim of ensuring that at the time of the next assessment all farmers in the sample meet the entry compliance level. The improvement plan must be implemented with all farmers supplying the processing plant, not just a sample of farmers. c) An improvement plan with interim goals and timelines must be agreed with suppliers and the respective Unilever representative with the aim of ensuring that at least 80% of musts per SAC Chapter are achieved at all farms within 3 assessment periods. d) If suppliers fail to comply with the jointly agreed improvement plan (for all farmers to achieve 80 % musts per SAC Chapter within 3 assessment periods), supplier s volume loses its status as sustainably sourced. This means that over time progress should look as follows: Requirements Assessment 1 Assessment 2/3 Assessment 4 Mandatory All farmers, 100 % All farmers, 100 % All farmers, 100 % Musts on average Musts per Chapter X farmers, 80 % X farmers, 80 % All farmers, 80 % X farmers, 50 % X farmers, >50 % All farmers, 80 % Table 1 - Improvement Requirements Page 7 of 39

8 5. Self-Assessment Verification Unilever will commission an independent verification body to spot-audit a random sample of Unilever suppliers who use self-assessment, weighted by a sustainability risk assessment of the raw material origin. Based on a combination of sustainability risk indicators (e.g. risk of corruption, human rights abuses, child labour, illegal land clearing) countries are assigned a High Risk or Low Risk category. Sample size for verification in Low Risk countries is square root of the number of suppliers who have done a selfassessment, sample size in High Risk countries is twice that. Samples are random. For each supplier in the sample, three farmers are selected at random. The verification process checks whether the self-assessment, both at supplier and farmer level, were done correctly. If negative deviations are found, a pro-rata discount factor is calculated and applied to the total self-assessed volume for the year. 6. Random Sampling In random sampling each farmer included in the sample is chosen entirely by chance and each member of the farmer group has an equal chance of being included in the sample. Every possible sample of a given size has the same chance of selection; i.e. each member of the farmer group is equally likely to be chosen at any stage in the sampling process. This reduces the chance of bias in the sample. The random sample of farms for self-assessment is an automated part of the assessment set creation process in the Greenlight Assessments self-assessment software. Prior to assessment set creation the full list of farmers supplying that processing plant with raw materials supplied to Unilever must be imported into Greenlight Assessments and the raw material assigned to each site. In exceptional circumstances, where Greenlight Assessments cannot be used to generate the random sample, suppliers must provide a database of their farmers, with numbers allocated to each farmer e.g Random numbers are then generated to select the sample. Random numbers can be generated using a calculator, spreadsheet or printed tables of random numbers. The generation of the random sample must be made by a Unilever representative, not by the supplier themselves. 7. Transition Period When new revisions of the Sustainable Agriculture Code or these scheme rules are published, suppliers and their farmers will have a transition period of 12 months from the date of publication, within which to comply with any changes. Page 8 of 39

9 RULES RELATING TO THE USE OF THE WILD-HARVESTING RISK-ASSESSMENT APPROACH 8. General Conditions a. A risk assessment needs to be carried out by an expert third party for each location from which wild-harvested products are collected using the template in Annex V. No sampling will apply. b. The volume of material counted as sustainably sourced is the volume of product purchased by Unilever, or produced in a Unilever primary processing plant, not the volume of the harvested product. For example, dehydrated blueberries not fresh blueberries. 9. Scoring system A collection site starts to count as compliant if the risk assessment shows the following: No high risks identified No more than 10 medium risks identified The volume counted as sustainably sourced from a supplier is calculated as follows: a) If all collection sites assessed are compliant then the total volume of product sold to Unilever is counted. b) If x/y collection sites sampled are compliant then (x/y) * 100% of the total volume of product sold to Unilever can count. c) If the conditions required for mass balance have been agreed with Unilever (see box Different Supply Chain Options ), the volume is calculated as (x/y)*100% (as in b), but the volume should be presented to Unilever as sustainably sourced (mass balance). The calculation as under a), b) and c) above will apply to the volume purchased by Unilever (not raw material see 8b) after all risk assessments for a supplier have been submitted and approved by the Sustainable Sourcing Assurance Committee ( compliant date ). 10. Timing of Subsequent Risk Assessments (Re-assessments) Re-assessment of a supplier must take place in accordance with the following rules: a) For compliant dates between 1 January and 30 June, updates to risk assessments must be submitted to Unilever before 30 June of the following year. b) For compliant dates between 1 July and 31 December, updates to risk assessments must be submitted to Unilever before 31 December of the following year. Updates must include reports on the improvement action plan from the previous year. 11. Other Conditions a) Any high risk identified for issues marked * in the risk assessment (areas where the hazard is particular serious) must be managed and hence reduced as soon as possible after identification as a condition for continuation as a supplier to Unilever. In such a case, re-assessment can only take place during the next raw material Page 9 of 39

10 production cycle. For seasonal raw materials this will be the next season, for nonseasonal raw materials re-assessment can take place as soon as the risk management process has been put in place. b) Any risks identified must be managed via the action plan on the final page of the risk-assessment template in Annex V. c) Self-Assessment verification as outlined in Rule 5. (Page 8) will apply to suppliers of wild-harvested products using the risk-assessment approach. Page 10 of 39

11 ANNEX IA: EXTERNAL STANDARDS RECOGNISED BY UNILEVER AS FULLY COMPLIANT WITH THE PRINCIPLES OF SUSTAINABLE AGRICULTURE ANNEX IA UPDATED 01/04/2017 Standard [Version #] Comments Applicable to Logos 1. SAN standard [Rainforest Alliance, July 2010] 2. SAN Cattle Standard [Rainforest Alliance, July RSPO [Principles and Criteria (2007)/ Certification Systems (2008)] 4. FSC Principles and Criteria for Forest Stewardship FSC-STD (Version 4-0) FSC Standard for Chain of Custody Certification FSC-STD (Version 1-1) 5. FLO [Version ] Sustainable Agriculture Network standard, basis for Rainforest Alliance certification Sustainable Agriculture Network standard, basis for Rainforest Alliance certification Roundtable for Sustainable Palm Oil. Either physical volumes of oil that are RSPO certified, or equivalent volumes of Greenpalm certificates, can be included. Forestry Stewardship Council Fair Trade Labelling Organisation Crops as per the SAN standard. Cattle (South America) Palm oil and all palm oil based products, including fatty acid, fatty alcohol, fatty amine. Paper and board Crops as per the FLO standards. 6. MSC [Principles and Criteria (2002)/Chain of Custody (2005)] Marine Stewardship Council Any seafood from fisheries certified by MSC Page 11 of 39

12 7. IFOAM [Soil Association Revision 16.3, November 2010/National Programme for Organic Production, India, 2005] International Federation of Organic Agriculture Movements. Any organic standard recognised by IFOAM Any raw material 8. RTRS [Version 1.0, ] Roundtable for Responsible Soy Soybeans 9. Utz Certified [Version 2009/2010] Utz Certified Good Inside Coffee, Tea, Cocoa 10. Proterra (Version 2.0) Proterra standard developed by CERT ID All crops 11. Bonsucro Production Standard Including Bonsucro EU Production Standard (Version 3.0 March 2011) Accompanying documents: Bonsucro Certification Protocol Including Bonsucro EU Certification Protocol (2011) Bonsucro Audit Guidance for Production Standard Including EU Audit Guidance for the Production Standard (2011) Sugar (from sugarcane) Page 12 of 39

13 12. United States Department of Agriculture (USDA) National Organic Program (NOP) As seen at: AMSv1.0/ NOPNationalOrganic ProgramHome Associated regulations 7 CFR Section 205 established under Organic Foods Production Act of Any raw material 13. KDV 1 ( ; NL Pigs Landless) Keten Duurzaam Varkensvlees Pork (Netherlands) 14. ECOCERT ESR Standard Fairtrade scheme with any IFOAM approved organic standard. [Version 3 15/06/2013] 15. ISCC PLUS 202 V2.0 with & RSB Standard [RSB-STD (Version 1.0)] ECOCERT Groupe Suppliers are obliged to deliver on the relevant SAC metrics Roundtable on Sustainable Biomaterials Any organic food cosmetic, textile, detergent or home perfumes. Global for all Arable Commodity crops Global for all bio-products 17. Trustea Sustainability Code v2.0 Tea from India Page 13 of 39

14 18. VVAK+DAB V ASC Shrimp Standard Version 1.0 (March 2014) 20. Fair for Life Social and Fair Trade Certification Programme (December 2013) 21. SCS Sustainably Grown v2.1 (July 2016) The DAB is a voluntary add on to the VVAK standard meant as a licence to produce, but must be added for this Annex 1 status to apply. Aquaculture Stewardship Council Institute for Marketecology (IMO) SCS Global Services Arable and Industrial Vegetable Crops in The Netherlands (NL) and Belgium (BE) Global for all shrimp products produced by Aquaculture Global, any raw material Global, any food or fibre crop 22. SAI Platform Farm Sustainability Assessment (FSA) v2.0 Equivalent at Silver level All crops, globally 23. Utz Certified Hazelnut Module (v1.0 November 2015) Utz Certified Good Inside Hazelnuts globally 24. Vegaplan (2014) Benchmarked by SAI as FSA Silver-equivalent Arable crops and vegetables 25. Fieldprint Platform (FPP) plus supplemental questionnaire Memorandum of Understanding between FTM and FSA users must complete supplemental questions and score Silver to be equivalent. Commodity crops in the USA Page 14 of 39

15 ANNEX IB: INDUSTRY-LEVEL PROGRAMMES RECOGNISED BY UNILEVER AS FULLY COMPLIANT WITH THE PRINCIPLES OF SUSTAINABLE AGRICULTURE ANNEX IB updated 01/03/2016 Programme Comments Applicable to Logos 1. Dairy Australia Approach 2. Sustainable Dairy Assurance Scheme (SDAS) Rev 01 (December 2013) 3. US Soybean Sustainability Assurance Protocol + Field to Market Fieldprint Calculator Industry-level standard plus action plans Use conditional upon extra data provided by Bord Bia showing compliance with environmental requirements Farmers must complete the full Field to Market Fieldprint Calculator ), including the Habitat Protection Index module Dairy Products supplied by Australian suppliers Dairy Products from Eire (Republic of Ireland) Soybeans from Iowa, Illinois and Kansas, USA Page 15 of 39

16 ANNEX II - EXTERNAL STANDARDS RECOGNISED BY UNILEVER AS PARTIALLY COMPLIANT WITH THE PRINCIPLES OF SUSTAINABLE AGRICULTURE ANNEX II UPDATED 12/07/2016 Standard Equivalence Areas not covered Applicable to Logo 1. PEFC (Programme for the Endorsement of Forest Certification) Equivalence is PEFC certification with full Chain of Custody in compliance with Noncontroversial Sources requirements (see Annex III) Additional requirements (see Annex III) Paper and Board 2. GLOBALG.A. P. Integrated Farm Assurance Standard (Crops Base) [Version 4.0, March 2011] and Fuels, Value Chain, Training Soils, Water, Energy, Waste, Social and Human Capital All crops 3. GLOBALG.A. P. Integrated Farm Assurance Standard (Livestock Base) [Version 4.0, March 2011] and Fuels, Animal Welfare, Value Chain, Training Soils, Water, Energy, Waste, Social and Human Capital Livestock 4. Food Alliance [Version ] and Fuels, Soils, Water, Biodiversity Energy, Waste, Social and Human Capital, Value Chain, Training Crops and livestock Page 16 of 39

17 5. LEAF Marque Global Standard [Version /10/13] and Fuels, Soils, Water, Energy, Waste, Social and Human Capital, Training Animal Welfare, Value Chain Crops and livestock 6. Red Tractor Combinable Crops and Sugar Beet Standards Version 2.0 (October 2011 and Fuels, Soils, Water, Energy (Risk Assessment), Waste, Value Chain, Training Energy (efficiency), Social and Human Capital Crops 7. Red Tractor Dairy Farm Standards Version 2.0 (October 2011) and Fuels, Water, Waste, Value Chain Training, Animal Welfare Soils, Energy, Social and Human Capital Dairy Production 8. SQF (Safe Quality Food) 1000 Level 3 [Version January 2010] Animal Welfare, Value Chain, Training and Fuels, Soils, Water, Energy, Waste, Social and Human Capital Crops and livestock 9. QS (Guideline Agriculture) [Version: ] Animal Welfare, Value Chain and Fuels, Soils, Water, Energy, Waste, Social and Human Capital, Training Livestock Page 17 of 39

18 10. DANISH Product Standard [Version December 2010] Animal Welfare, Value Chain and Fuels, Soils, Water, Energy, Waste, Social and Human Capital, Training Pig production 11. RSPCA Freedom Food [RSPCA Welfare Standards for dairy cattle (January 2010), beef cattle (March 2010), chickens (February 2008), pigs (January 2010)] Animal Welfare and Fuels, Soils, Water, Energy, Waste, Social and Human Capital, Value Chain, Training Livestock (specific standards for individual products) 12. IKB Pork v 9.0 [January 2012] and Fuels 5, Water (quality), Waste, Social and Human Capital, Animal Welfare, Value Chain, Training Soils, Water (irrigation management), Energy 5 IKB Pork is recognised by GlobalG.A.P. as equivalent to their standard (for details of benchmarking process see We have therefore assumed equivalence for the and Fuels chapter. Other chapters have been benchmarked according to our own procedures. Page 18 of 39

19 13. ISCC [V ] and Fuels, Soils, Social & Human Capital and Training Water (quality and irrigation management), Energy, Waste, Value Chain Oil seed rape within Germany (with additional requirements) 14. Sedex [Version ] SAC Criteria within Social and Human Capital and Fuels, Soils, Water, Energy, Waste, Animal Welfare, Value Chain, Training All raw materials 15. IKM v5.1/ Vegaplan (2014) and Fuels, Soils, Water, Waste, Social and Human Capital, Animal Welfare, Value Chain, Training Energy Dairy/Livestoc k and mixed farming including fodder 16. MgSzH (now NEBIH) + ISCC Plus 202 and Fuels, Soils, Water, Waste, Energy, Social and Human Capital, Value Chain, Training Biodiversity Sunflower within Hungary Page 19 of 39

20 17. FairWild Standard v.2.0 : Biodiversity and Social and Human Capital and Fuels, Soils, Water, Waste, Energy, Value Chain, Training Wild Harvested crops 18. Agro 2.1 and 2.2 version 2 and Fuels, Value Chain, Training Soils, Water, Energy, Waste, Social and Human Capital All crops 19. Teh Lestari v1.0 & Fuels, Soils, Water, Social & Human Capital, Value Chain and Training. Energy and Waste Tea from Indonesia 2BSvs v1.7 (May 2011)/Conditi onalité French Oil Seed and Wheat Production & Fuels, Soils, Water, Energy Social & Human Capital Waste, Value Chain and Training Oil seed crops, wheat, starches and sweeteners from France 20. CanadaGAP [Version ] Value Chain and Fuels, Soils, Water, Energy, Waste, Social and Human Capital, Training Canadian fresh fruits, vegetables and herbs Page 20 of 39

21 21. QS-GAP [Version 3.0, ] 6 and Fuels, Value Chain, Training Soils, Water, Energy, Waste, Social and Human Capital Fruit, Vegetables and Potatoes in Germany 22. Swiss-GAP Fruechte, Gemuese & Kartoffeln [Version published ] 7 and Fuels, Value Chain, Training Soils, Water, Energy, Waste, Social and Human Capital Fruit, Vegetables and Potatoes in Switzerland 23. Basis Quality Management Programme 2014 (BQM) 24. DTP112 CSQA Revision 2 (09/05/14) and Fuels, Soils, Water, Energy, Value Chain, Training Soil, Water, Energy, Social and Human Capital, Value Chain and Training Waste, Social and Human Capital (Animal Welfare not applicable] and Fuels, Waste Grain crops in Saxony-Anhalt, Germany Grain crops and oilseed crops in Italy 6 QS-GAP is recognised by GlobalG.A.P. as equivalent to their standard (for details of benchmarking process see We therefore consider QS-GAP equivalent for the appropriate chapters, as shown. 7 Swiss-GAP Fruechte, Gemuese & Kartoffeln is recognised by GlobalG.A.P. as equivalent to their standard (for details of benchmarking process see We therefore consider Swiss-GAP equivalent for the appropriate chapters, as shown. Page 21 of 39

22 ANNEX III - IMPLEMENTATION GUIDELINES TO THE UNILEVER SUSTAINABLE PAPER AND BOARD PACKAGING SOURCING POLICY Acceptable Forest Management Certification Schemes Unilever accept the following Forest Management Certification Schemes: Forest Stewardship Council (FSC) or Programme for the Endorsement of Forest Certifications (PEFC) with full Chain of Custody in compliance with Non-controversial Sources requirements. Legal Origin Virgin fibre used in the paper packaging product is from a traceable source down to the forest where the legal origin can be verified, by either a Legality Certification (a) or by Credible Evidence (b). Note: Virgin fibre from a forest based in a country according to the Country Exception List must have a Legality Certification a) Legality Certification according to any of the below verification schemes* 8 - SW VLC/SW VLO: - SGS TLTV: - Certisource: b) Credible Evidence proving legal origin. All following criteria must be met: - The fibre comes from a Known source: Reliable documentation from the supplier/s is provided that identifies the source location, the source entity, and each intermediary in the supply chain. - Suppliers have mechanisms in place to ensure that the timber has been harvested and traded in compliance with the applicable legislation - There is evidence of compliance with applicable CITES requirements, if applicable. Non-controversial Sources Paper Packaging Product is from legal origin and complies with one of the below criteria, a) or b) a) Virgin fibre from a forest not based in a country according to the Country Exception List: Suppliers conduct their own risk assessment to ensure compliance with the following requirements: - Wood is not harvested in violation of traditional and civil rights. - Wood is not harvested in forests where high conservation values are threatened. - Wood is not harvested in forests being converted to plantations or non-forest use. b) The virgin fibre comes from a forest based in a country according to the Country Exception List: - FSC Controlled Wood or 8 Schemes will be reviewed on a regular basis Page 22 of 39

23 - Regarded as equivalent to FSC Controlled Wood by a 3rd party audit initiated by Unilever or - Engaged in a phased approach to FSC Certification program, such as Rainforest Alliance's SmartStep, TFT or WWF s GFTN producer group. Certified Paper Packaging Products Certified Paper Packaging Products are Packaging Products that are supplied to Unilever under the following conditions: - They are in compliance with Non-controversial Sources requirements and - The supplying company holds a valid COC certificate of one of the Forest Management Certification Schemes and the certified paper packaging products supplied are included in the supplier s certificate scope. - The certified paper packaging products used are clearly identifiable as such. e.g. product carries the certification label, products are identified by a barcode or batch number clearly linked to the transport documentation and invoices, and are accompanied by documentation sufficient to link the invoice to the products supplied. - The certified paper products transport documentation and invoices contain clear indication of the certification claim of the products and the supplying company s COC certificate code. Country Exception List 9 Countries listed below have been identified by various scientific institutions and environmental NGOs as requiring special attention for one or more of the following activities related to wood product harvesting: - Illegal Logging - Forest Conversion - Civil and Traditional Rights Violations - Threatened High Conservation Values 9 This list will be reviewed on a regular basis Asia Indonesia Vietnam Malaysia China Myanmar (Burma) Cambodia Philippines Thailand Papua New Guinea Solomon Islands South Korea Taiwan Laos Africa Democratic Republic of Congo Gabon Ivory Coast Equatorial Guinea Liberia Cameron Ghana Sierra Leone Guinea Central Africa Republic Nigeria Latin America Honduras Peru Brazil Ecuador Europe Romania Russia Lithuania Bulgaria Ukraine Page 23 of 39

24 ANNEX IV MASS BALANCE AND IDENTITY-PRESERVED SUPPLY CHAIN IN CASE OF SAC SELF-VERIFICATION. GUIDELINES FOR IMPLEMENTATION TEAM Unilever defines the following three types of supply chain: 1. Physical Segregation - Full supply chain implementation [S] 2. Physical Segregation - Segregation of sustainable and non-sustainable products (Soft Identity Preserved or bulk commodity) [IP] 3. Mass balance [MB] 1. Physical segregation - full supply chain implementation All farmers in a specific raw material supply chain are sustainable and the entire input and output volume of the operation unit is sustainable. No need to keep a dedicated bookkeeping system. 2. Physical segregation - Segregation of Sustainable and Non-Sustainable Products (Soft Identity Preserved or bulk commodity) Within this option batches of sustainable products are segregated from non-sustainable products. Batches of sustainable products can be mixed even if origin and properties are different (see also following figure 10 ). 10 Picture and text from the ISCC 204 Mass balance calculation methodology ISCC V 2.3-EU Page 24 of 39

25 What does the consultant need to ask the supplier to do? 1. The supplier must create and maintain a book-keeping system able to record volumes of sustainably sourced volumes together with the non-sustainable as in the diagram above. 2. The supplier must provide on request the evidence that each batch of material delivered to Unilever come exclusively from the sustainable sources. 3. Mass Balance - Physical Mixing and Documentation of Quantity Credits Batches of sustainable and non-sustainable products are mixed within a company s internal process but within the book-keeping the batches are still kept separately, i.e. amounts and stated properties stay unchanged. Outgoing batches will be documented in the same way as batches received by the respective element of the supply chain (e.g. as sustainable product, although physically the batch is mixture of sustainable and non-sustainable products, see also following figure). Boundaries and limitations: the balancing of volumes is only allowed within one site of an operation (e.g. processing facility or logistical facility with the site being the geographical location with precise boundaries within which products of different source can be mixed), and over a time period of the Sustainably-sourced period (12-18 months, depending on the start date). Note that to avoid double counting, the book-keeping includes all volumes that are traded as sustainably-sourced volume and that are compliant to Unilever s SAC or equivalent scheme(s), even if traded with other customers than Unilever. Page 25 of 39

26 What does the consultant need to ask the supplier to do? 1. The supplier must create and maintain a book-keeping system to record a) the total volume of raw material produced by the SAC-compliant farmers (even if this is not delivered to the processor), b) the sustainable volume purchased from those farmers and c) the (processed) volume delivered to Unilever (this is a mix of sustainable and nonsustainable material). 2. Limitations of space (the site of an operation, processing or logistical facility with the site being the geographical location with precise boundaries within which products can be mixed) and 3. The time interval we count the sustainable volume till end of credit, corresponding to the dates of SAC diploma validity. Suppliers need to agree to disclose to Unilever, or their representatives, the above book-keeping figures 4. If on-pack claims are required, the supplier has to create a roadmap to develop a segregated supply chain either as Segregation (full chain implementation) or Identity Preserved within the time agreed with the Unilever Procurement. Frequently Asked Questions Q: Is it a requirement to develop a segregated supply chain? A: Only when needed to support a claim on pack. In all other cases, mass balance is acceptable Q: How do I identify the right number of farmers to sample and assess when there is a complex supply chain? How do I calculate the sustainable volume in case of mass balance? A: See the example below: UOM EXAMPLES a Unit of operation (where the mixing is carried out, e.g. processing unit, logistics facility) Name France India b Crop Name basil gherkins c Raw material volume produced from sustainable farmers (even if not delivered to the operation unit above) d Raw material volume delivered from sustainable farmers to the operation unit e Average Conversion factor (Processing yield). Note: this is total weight loss (or gain) for the total material and does not include other types of selection process (e.g. size grading in case of gherkins) tonnes tonnes % 60% 80% Page 26 of 39

27 f Semi-processed saleable sustainable material available for Unilever (credits) [c*e] g Start of the last cropping cycle as reference time to start counting the volume credit tonnes (dd/mm/yyyy) 01/07/ /03/2014 i j SAC diploma validity from date (the date from which we start counting the credit as Sustainably Sourced) SAC diploma validity to date (the date on which we stop counting the credit as Sustainably Sourced) (dd/mm/yyyy) 30/11/ /05/2014 (dd/mm/yyyy) 31/12/ /06/2015 Q: Would suppliers be willing to disclose their sensitive information such as the UL volume purchased versus their total volume? A: Suppliers need to agree to disclose only the minimum information needed to ensure transparency of the mass balance calculation to external auditors. Q: What if we have a trading organisations selling product to Unilever coming from separate sustainable and not-sustainable sources (i.e. just an invoicing activity)? A: In this case mass balance can be applied only to each single source. Q: Who advises the supplier about the elements of the mass balance approach (i.e: format of the book-keeping system, volume of raw material sustainably sourced, roadmap to segregated supply, time intervals etc). A: Unilever or their representative (e.g.: Control Union within their role of supplier consultant. Page 27 of 39

28 ANNEX V WILD HARVESTING RISK ASSESSMENT TEMPLATE Template for Risk Assessment on Wild Collection Name supplier: Country: Province: Crop: Primary Processor: Address: Assessor: Accompanied by: Assessment date: Executed by: [Insert general photo if available] Version December 2014 Page 28 of 39

29 Index; 1. Summary of findings 2. Region description 3. Region mapping - Sourcing / wild collection area 4. Harvest and Crop description 5. Collectors profile 6. Supply Chain information and structure 7. Laws and legislation 8. Scope assessment 9. Risk assessment 10. Improvement Action Plan Version December 2014 Page 29 of 39

30 1. SUMMARY OF FINDINGS Insert text to indicate that this should summarise findings including main risks and improvements recommended. 2. REGION DESCRIPTION Insert text to indicate geography, size and ownership of the land. 3. REGION MAPPING - SOURCING / WILD COLLECTION AREA [Insert appropriate maps to show the sourcing area] 4. HARVEST AND CROP DESCRIPTION Insert relevant information about the crop (including its IUCN status) and the cropping cycle should be included here. Add any appropriate photos. 5. COLLECTORS PROFILE Insert information on the number of collectors in the area, gender and age profile and further relevant information e.g. whether local, indigenous or immigrant workers etc. Add any relevant photos. 6. SUPPLY CHAIN INFORMATION AND STRUCTURE Version December 2014 Page 30 of 39

31 Include information on the chain from field to consumers, harvesting rate, number of traders, processors etc. involved. And any certifications held etc. 7. LAWS AND LEGISLATION Include information on relevant legislation and enforcement activities, requirements for permits, licenses and/or other restrictions. 8. FUNDAMENTAL REQUIREMENTS 11 Compliance Yes No NA If required by legislation, an authorisation or license to harvest from local responsible department (State forestry, management of the wild areas) is presented. Date of issue cannot be older than 1 year if expiration is not stated. * Laws, regulations and permits relating to harvesting are understood and respected by supplier, processors and collectors Conservation status of the area and wild harvest material has been assessed Remarks: [Insert any relevant comments on the above requirements, particularly if any are marked N/A. Comments should describe what form the assessment of conservation status takes.] 9. RISK ASSESSMENT 1 Users of this template need to consider both the SEVERITY of the hazard and the LIKELIHOOD of it taking place when coming to a conclusion on the final level of risk. Those risks marked with an * indicate a hazard of highest severity. Risk exists 11 Requirements marked with an * and in bold text show areas that are mandatory in the Unilever SAC Version December 2014 Page 31 of 39

32 9.1 Risk related to cultivation practices Chemical fertilizers are applied in the target area for wild harvesting Crop Protection Products are applied in the target area for wild harvesting Cultivation practices are performed in the wild harvest area such as seeding, planting or tillage There is a risk of high level of heavy metals, imbalanced macronutrient and PH levels in the soil of the wild harvest area Irrigation is done in the wild harvest area Risk assessment Weaknesses Remarks: [Insert any comments related to this section, in particular any weaknesses identified by the risk assessment.] 9.2 Risk of damage to the environment and biodiversity Risk exists Collectors and supplier have insufficient knowledge of national legal obligations with respect to biodiversity Collectors and supplier have insufficient knowledge of direct or indirect impact of harvesting on other species and habitats Collectors and supplier are unaware of prohibitions around hunting and the protection of biodiversity in and around the wild harvest area Collectors and supplier are unaware of available government support for biodiversity work and access to such support is not facilitated No assessment of biodiversity issues in and around the land area where the Unilever crops are collected has been performed * Collectors hunt or poison rare or endangered species in or around the wild harvest area * Collectors gather rare or endangered species in or around the wild harvest area Collectors gather wild harvest material outside the designated wild harvest areas * Rare, threatened and endangered species and habitats that are likely to be affected by wild collection and management of the wild harvest crop are not identified and protected Version December 2014 Page 32 of 39

33 The collection area is known to contain important habitats for wildlife and is destroyed or harmed by wild harvest practices Conservation status of the wild harvest material is threatened (local, national and/or global) Wild harvest collection negatively impacts biodiversity in or around the area Management activities supporting wild harvest negatively affect ecosystem diversity, processes and functions * Fuel is taken from important habitats or protected natural areas (high conservation value forest or peat bogs) where this is forbidden or constitutes a threat to the size or integrity of the area? Wild harvest material does not meet the requirements of CITES ( Species are directly or indirectly endangered by the collection process if the IUCN ( red list classifies it as critically endangered Areas are cleared to facilitate access to the wild harvest area and use of mechanised transport off-road in forest Fire is used in land preparation Collectors are not aware of the Convention on Biological Diversity (CBD) guidelines Wild harvest collection practices do not consider the local/national Biodiversity Action Plan (found on the CBD website) Risk assessment Weaknesses Remarks: [Insert any comments related to this section, in particular any weaknesses identified by the risk assessment.] 9.3 Risk related to waste Risk exists Wild harvesting of the target crop results in major waste streams * There is risk of liquid fuels and lubricants spillage during transport, storage, handling and disposal of wild harvest crop Waste streams related to wild harvest are entering and damaging the environment * Collectors dispose of wastes or chemicals in or around the wild collection area Fire is used for the disposal of harvest residues Version December 2014 Page 33 of 39

34 * Hazardous waste is stored in areas where unauthorised people have access Risk assessment Weaknesses Remarks: [Insert any comments related to this section, in particular any weaknesses identified by the risk assessment.] 9.4 Risk of natural resource depletion Risk exists The collection rate exceeds the species ability to regenerate over the long term The target material is harvested at inappropriate times (just before pollinating, breeding, etc.) Scale and trend of use and trade in the wild harvest material is high or increasing Crop or plant is damaged or destroyed by collection practice Harvesting and removing crop from the area leads to severe nutrient loss in the soil Other: Risk assessment Weaknesses Remarks: [Insert any comments related to this section, in particular any weaknesses identified by the risk assessment. Add any relevant photos.] Version December 2014 Page 34 of 39