ADM Commitment to No Deforestation, No Peat and No Exploitation

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1 ADM Commitment to No Deforestation, No Peat and No Exploitation Policy Implementation Q Soy Progress Report In Partnership with The Forest Trust

2 Introduction We are pleased to present our Q Progress Report on the implementation of ADM s Commitment to No Deforestation, No Peat, and No Exploitation (No DPE) within our global soybean supply chain. ADM has been in partnership with The Forest Trust since May, 2015 and we invite you to review our previously posted progress reports on this subject. Progress reports can be found at: ADM posts its progress reports in order to be transparent with the process of implementation which will ultimately provide ADM, and the industry in general, with a credible method of sourcing soybeans while remaining protective of sensitive biomes and the communities that exists at the locations where we live and work. During the first year of No DPE work, ADM leaders around the world collaborated with TFT to carry out a shared learning approach to assessing risks and developing policies and tools to evaluate risks that may exist in the soy supply chain. This approach has included analysis of all South America soy procurement data, field visits to assess and characterize environmental and social risk associated with soy growers in ADM sourcing regions, and identification of priority regions for engagement in ADM sourcing regions of highest risk. This Progress Report details our soy supply chain work from April 2016 through June During this time period, we have built on scoping and global foot printing exercises to develop a Soy Action Plan, which provides a roadmap for operationalizing ADM s No DPE Commitment. This quarter was focused on three primary activities: interviews of key ADM leadership to better understand important activities that range from sourcing to delivery to ports of destination, the evaluation of remote monitoring tools, and the coordination of available data layers to better delineate boundaries of higher risk that will be used to inform origination departments. Activities Development of a Comprehensive Soy Action Plan While the first year No DPE implementation emphasized gaining a high-level understanding of the scope of ADM s soy supply chain and potential risks, work during this quarter has focused on synthesizing and analyzing this information to develop a strategic action plan. Characteristics of ADM s supply chain namely procurement data and findings from field visits were overlaid with results of regional environmental and social risk assessment to identify priority activities in the soy supply chain. Data gathering and engagement across ADM management and regional leadership will inform the next year s Soy Action Plan (to be posted soon on ADM s Sustainability Progress Tracker). The Soy Action Plan will showcase ADM s strategic, time-bound approach to fulfilling the No DPE commitment, and will be used to guide on-the-ground activities in Brazil, Paraguay, Argentina, Bolivia and Uruguay. 2

3 ADM anticipates the following themes of work in ADM s Soy Action Plan: Transparency and Accountability: Publish quarterly progress reports and updating the ADM Progress Tracker website to provide information to external stakeholders. The continued development of a public facing Issues and Resolutions tracking page and the internal methods and procedures to administer issues related to this function. Monitoring Vegetation Conversion and Deforestation: Finalize the choice of a remote sensing monitoring tool, create an action plan and methodology for tool use, and roll out use of the tool on the ground. Refining and Operationalizing Regional Action Plans to Address Areas of High Risk: Develop materials and carry out trainings for supplier outreach on our No DPE Commitment, prioritize activities based on the risks identified within our No DPE work, and leverage the existing ADM sustainability programs within South America. Reaching Farm-level Traceability: Pilot reaching farm-level traceability and the use of remote sensing monitoring tool(s) with ADM origination teams in select areas with a view to future application of learnings to priority (high risk) regions. The Soy Action Plan will be posted on ADM s Sustainability Progress Tracker in the coming weeks. Developing an approach to supply chain mapping and supplier engagement Grower engagement and farm-level traceability in regions of high-risk is foundational for implementing ADM s No DPE commitment. At this time, there is no known established process for implementing No DPE within the global soybean supply chain. ADM is a leader in this effort. ADM and TFT have devoted significant effort during this quarter to the analysis of data, while compiling recommendations from subject matter experts. These activities will form the cornerstone of No DPE sourcing in South America. Soy procurement data was evaluated for 2014 (baseline) and established state/province level traceability for ADM soy in South America. Overlaying state-level sourcing data with the high risk biomes identified during the previous quarter allows ADM to identify sourcing areas in these high risk regions. In order to maximize positive impact and identify scalable application of the selected remote sensing monitoring tool(s), we are developing an approach which involves identifying the geographic areas within a given biome that are experiencing high degrees of natural vegetation conversion and agricultural expansion, and focusing monitoring efforts in these areas. By employing remote sensing tool(s), ADM can monitor farm-level land use change within these biomes and select priority municipalities. Within select priority municipalities, ADM origination teams will work closely with growers on the supplier qualification and supplier registration processes. Recommendations for the transactional 3

4 data system emerged from the global foot print data analysis. At minimum, these recommendations will include a harmonization of the type of supplier information (i.e. farmer, cooperative, silo, broker, etc.), supplier location, along with supplier maps in high risk biomes for coordination with the remote sensing monitoring tool(s). Approach to farm level monitoring in high risk areas High Risk Biome Identify priority states and/or municipalities within the high risk biome Collect supplier data/maps in priority areas Use remote sensing tool(s) to monitor compliance with No DPE commitment Work with suppliers who may not be in compliance today, but who are willing establish compliant operations. Evaluation of Remote Sensing Monitoring Tools Over the last twelve months, ADM and TFT have carried out a pilot process to compare the capabilities of available remote sensing monitoring tools. ADM and TFT have invited subject matter experts to review the results and make comments on the success and use of these tools. ADM anticipates that the selection process will be completed in Q3 of ADM intends to use the tool(s) on two geographic scales, each with a distinct purpose: 1. At the provincial, department, or regional level in previously identified high risk biomes, as a means to assess risk of ADM soy sourcing by monitoring for vegetation conversion, soy expansion, and social considerations (e.g. presence of indigenous lands), and as a means to identify the specific areas requiring field level engagement. 2. At the farm level in high risk ADM sourcing areas, to monitor farm-level deforestation and determine soy supplier compliance with ADM s No DPE policy. 4

5 The pilot process will compare five remote sensing monitoring tools. Monitoring service providers submitted output for two specific boundaries and four municipalities in order to demonstrate the tool s capability to identify High Conservation Value (HCV) and High Carbon Stock (HCS) areas in a variety of ecosystems, detect land use change/deforestation, etc. These outputs are currently under evaluation by a panel of remote sensing expert reviewers and subject matter experts from academia and NGOs. By employing remote sensing technology, ADM will monitor farm-level land use change within these biomes and select priority municipalities Subject matter experts have been submitting expert reviews. Thus far, several tools have produced strong results in a variety of ecosystems. In addition, reviewers have identified regionally appropriate datasets that could be integrated into a tool(s) to facilitate more robust identification of HCV and HCS areas. Results of the pilot will be shared in the subsequent progress report as well as how the tool(s) will be used to facilitate No DPE sourcing. Rather than developing a new standard as an outcome of the pilot process, ADM seeks to identify available credible technologies that support No DPE sourcing, complementing existing HCV and HCS approaches, and thereby facilitating the use of No DPE methods within the industry for use across sensitive biomes in South America. ADM shared the No DPE lessons learned to-date at a World Bank-convened workshop in Bogotá, Colombia in April. The workshop, Developing a Common Methodology for Landscape Conservation in Latin America, focused on conservation efforts and methodologies to meet sustainable supply chain commitments, challenges of turning existing approaches into action, and fostered a productive dialogue between industry, NGOs, and advocacy organizations. ADM will remain a part of this multi-stakeholder discussion. Conclusion ADM has made significant strides since beginning work on its No DPE commitment. While the initial phase of work has been dedicated to developing an in-depth understanding of ADM s soy sourcing risks in South America, the past quarter has been devoted to the piloting of available tools, and to the preliminary development of internal procedures needed to successfully implement our No DPE policy. We will report on progress quarterly to our many stakeholders, and we welcome feedback and comments from our interested readers at responsibility@adm.com 5