Aggregator-Refinery

Transcription

1 Aggregator-Refinery Transformation ART

2 03 04 V The TFT Approach VALUES The TFT approach to transformation in partnership with our members includes four key elements: Values, Transparency, Transformation and Verification (VTTV). V Our work follows a four-step change journey T These steps tend to be additive and ongoing. In other words, transparency can continue to improve and be updated while transformation is underway, and both will continue as monitoring and verification procedures are put in place. VERIFICATION TRANSPARENCY Establishing company values (the initial V in VTTV) is the first step, leading to the development of a company policy covering commitments to No Deforestation, No Peat development and No Exploitation (NDPE). The subsequent steps (Transparency, Transformation and Verification) are all part of the ART framework, which continues to evolve as it is applied in different countries and situations within the palm oil industry around the world. T TRANSFORMATION elephant-in-forest

3 05 06 The ART concept emerged as a pathway to scale up and accelerate a shift to responsible production across hundreds of thousands of suppliers over a huge geographical area. It is a way to: help prioritise engagement with supply chain participants. visit sites and operations to identify issues and solutions. support widespread capacity building and transformation. implement monitoring and verification processes and systems. The five phases of an ART plan TRANSPARENCY It is essential to know where the product comes from in order to most effectively target transformation activities. Since most palm fruit is grown within 50km of a palm mill, identification of mills is a priority. It is much more demanding to obtain details of hundreds of oil palm growers, particularly those supplying indirectly via dealers. While grower information can be useful, there is more value in using limited resources to focus on transformative activities. However, grower details are being collected as other activities progress. Publishing names and other details of mills supplying each refinery provides traceability information to customers, but this is not an end in itself. It is a step towards engaging with mills, and their suppliers/growers, to ensure policies and practices are consistent with responsible production. Mill Transparency Deep Engagement Site visits and follow-up Mill Prioritization Process (MPP) 1 PaLm oil supply chain An observation from our work is that the plam oil supply chain resembles an hourglass shape: upstream, thousands of plantations/mills supply a handful of first refiners or first aggregators of crude palm oil, who then process it into basic ingredients or aggregate it for shipment to refineries in destination markets. Many Brands and Retailers Monitoring/Verification Broad Engagement Capacity building and workshops 100,000 s of Growers & 1,000 s of Palm Oil Mills

4 07 08 Traceability to mill can be calculated based on different definitions and criteria. It usually includes the mill s name (and parent group if any) and address/gps data. This can identify the number/percentage of mills that are traceable. If the quantity of product supplied from each traceable mill is available, the result can be expressed as the volume of oil that is traceable. So why does ART focus on parts of the supply chain that aggregate oil flow? Aggregators are important because they are pinch-points in palm oil supply chains. All oil in the industry flows through a relatively small number of refineries, bulking facilities and kernel crushers. Aggregators have supply catchment areas of mills, typically numbering somewhere between 30 and 250. This is a manageable number of suppliers to engage. TFT members are major players in this part of the supply chain, and have allowed access to the mills, as well as leveraging existing commercial relationships to encourage the cooperation of mill-owning companies. The combined picture of the supply catchment area allows for the completion of an MPP analysis.

5 09 10 MILL PRIORITISATION PROCESS (MPP) The MPP helps identify a sample of mill companies for deep engagement. It involves evaluating the prevalence of forests and peat within 50km of each mill, and other environmental and social information known about the area or the companies operating within it. High priority does not mean high risk. There are some high priority mills where companies have implemented practices to avoid deforestation, peat development and exploitation of communities and workers. These pioneers are great examples for other companies, and are actively encouraged to share their successes with their peers Parent Elements of Deep and Broad engagement By carrying out an MPP, refineries can make informed decisions on who to engage first in a vast catchment area involving up to a hundred mills or more. Parent The 50km supply catchment area surrounding a mill assessments, create action plans and provide direct assistance Peat Peat Forest Mill A Mill B Parent Independents Forest Mill C Estate Small grower Smallholder Social conflict

6 11 12 DEEP ENGAGEMENT Deep engagement commences at a senior level with the mill company/group owner, or senior managers, to explain objectives and seek permission to undertake a mill visit. The next step is to visit the mill and a sample of its Fresh Fruit Bunch (FFB) suppliers to develop an understanding of the reality on the ground and any barriers to responsible production. This helps us jointly formulate practical action plans with the mill and growers/suppliers. It also helps target further assistance, whether for a specific company and/or broader industry. Follow-up is required on the action plan to ensure relevant gaps are closed. Examples of how issues have been addressed can be good case studies for other companies. Support for Transformation (SFT) SFT involves more practical training and coaching with particular companies, and a collaborative process to develop solutions, to address specific issues. These are intended to accelerate transformation in the target site and provide demonstration sites and resources to help the wider industry. SFT is not intended to create model mills in all aspects, and is likely to be available only while new resources and processes are being developed. It can be available, for example, to mills already visited under ART, to companies that are the subject of grievances, or to mills in target landscapes. The onus for change remains with the upstream companies, utilising resources and service providers as necessary.

7 13 14 Overlap of supply catchment areas within different ART plans in Peninsula Malaysia BROAD ENGAGEMENT Peninsula malaysia While deep engagement provides the opportunity to work closely with a few companies, broad engagement allows the findings and lessons from the deep engagement, and other known good industry practices, to be shared with a wider audience. This includes all participants in a refinery s supply chain but can extend further to any grower, dealer or mill keen to participate in workshops and capacity-building activities. It is important for broad engagement to occur with decision-makers as well as implementers. Top management are invited to workshops to help them understand what issues have been identified and how they can be addressed, and what their responsibilities are for doing so in both their own and third-party supplier operations. They need the opportunity to provide feedback and inject their ideas, as well as understand next steps and authorise appropriate resource allocation to support action by implementers. This can include development of company policies and standard operating procedures, participation in demonstration and training, implementing activities or employing new staff. Training is also provided to those responsible for implementation in mills and plantations. This is often delivered in conjunction with other agencies and service providers that have particular skills in relevant areas such as human rights, health and safety, or HCV identification and management. Tracking attendance helps to maximise the reach of each new training session and target topics into areas where they are most needed. Tools for Transformation (T4T) This package is another part of the ART broad engagement process and is designed to support the industry by providing resources and advice. It also provides an opportunity to measure progress based on self-assessments at individual mill or broader industry levels. T4T consists of a resource library, a self-assessment questionnaire and an action planning tool all of which will be available online. The resources include guidance materials, templates and background information on issues. This will be a living resource, with new materials/links provided as they are identified/developed. The self-assessment questionnaire will help companies assess their own situation, and benchmark themselves against their peers. The action plan is based on questionnaire responses, and guides the company on what is required to make progress, providing links to relevant resources. Results can also help buyers identify where additional support may be required, e.g. training and guidance materials, and where companies demonstrate examples of good practice. Best practice examples can be used to provide case studies that show how issues have been avoided or addressed in different situations. These are key to enabling the industry to take responsibility for its own transformation.

8 15 16 The different elements that feed into Tools for Transformation Issues Action plan Visited mills Training workshops Overarching report Tools Resources Progress CONTINUING THE JOURNEY Supply shed Pioneers Forum Other mills Selfassessment Benchmark data Action plan The industry at large is now focused on transformation, building capacity and developing tools to help implement change throughout the supply chain. However, it is also beginning the monitoring and verification stage, and initiatives are available for this. Various remote sensing approaches (including Starling), and ground-based initiatives (like Kumacaya) are being tested and deployed. We are also working with our members to better display the basis by which progress is being made within ART plans against a range of criteria relevant to NDPE commitments. This initiative demonstrates that some companies are already implementing good practices; the industry is not being asked to meet impossible demands from external parties. Within this forum, to be held in various locations, companies come together to share their experience with each other, discuss why and how certain practices were implemented, and what the results have been. Each case study can be added to the Tools for Transformation resource library, which is accessible to a wider audience.

9 17 18 Policy implementation via ART Policy Communication Grievance Capacity Pioneers' mechanism Rurality building Forum Kumacaya VALUES TRANSPARENCY TRANSFORMATION VERIFICATION HQ engagement Traceability Mill Site Prioritisation Visits Transformation Resources Self Assessment Support for Transformation Starling Action plan/monitoring progress Action plan/monitoring progress

10 19 20 Additional tools and approaches that may be of interest include: TRANSFORMING LANDSCAPES Where ART plans overlap sometimes by as much as 70 percent of mills the logic of collaboration is clear. It is also evident that not only do our members need to work together, we need to expand the stakeholders we engage in the process to include other industries, communities, farmers and importantly, government and civil society. This approach, being piloted in several highly biodiverse landscapes, brings together key people to create and implement practical actions to address shared challenges. The aim is to create resilient, thriving communities and ecosystems in landscapes, compatible with companies NDPE commitments. Starling Making powerful new land use change information available through satellite technology, in partnership with Airbus and SarVision Kumacaya - Engaging civil society in monitoring companies' No Deforestation and No Exploitation policies Respect - Protecting the rights of workers in global supply chains Rurality - Empowering rural smallholder groups with greatly improved production models and access to markets Centre of Social Excellence In West Africa and Indonesia, building companies capacity to engage with communities constructively. TFT and our members understand that we cannot develop all the solutions alone. Individual companies, or even industries, are most impactful when they work together. Deforestation cannot be prevented by just one company turning off its excavators. All actors in the region must agree to preserve valuable land. If not, a peat dome being protected on one side risks being drained on the other. TFT It's clear there remains much to do, and ART is an evolving part of a bigger puzzle that includes other commodities like pulp/paper, timber and rubber, and other stakeholders including government, communities, farmers and civil society. We remain strongly resolved to continue on the path to bring about innovative solutions towards a responsible palm oil industry. We believe in the industry and its people, and we know that building on the positive steps that have been, and continue to be taken, can be a powerful mechanism for transformation. n Government Transformation to achieve Resilient, thriving communities & ecosystems Brand Civil society Producers society Smallholders & communities