In following with RSPO requirements and our Sustainability Policy, we commit to ensure full traceability of our supply chain and systematically ensure that sustainability protocols are adhered to. More specifically:
Our traceability policies also extend to other third-party suppliers of FFB. In 2022, all of the 30 FFB suppliers that supply to our palm oil mills (or 100% of our suppliers) have signed the Company’s sustainability policy and have been engaged in its socialization program.
To fulfill our commitments, we embarked on our traceability project in 2019 to establish traceability to plantation in our Palm Oil business units that are in commercial operations. These plantations include North Sumatra (ANJA and ANJAS), West Kalimantan (KAL), Belitung (SMM), and West Papua (PPM and PMP). Our program aims to create a reliable system which can capture, process, and report data transparently. The system thereby increases trust with our supply chain stakeholders and promotes the reputation of the Company. We invest in our efforts to reach out and engage with our FFB supply chain at every level to educate them about sustainability issues that all actors in the palm oil supply chain need to manage. This process is necessary to obtain their buy-in and participation in establishing reliable traceability data.
In 2021, we started a digital transformation initiative to implement an electronic traceability system called eTIS. We aim to successfully apply this system in all our palm oil operations by 2022. The electronic traceability system will enable real-time recording and data entry to help our third-party FFB suppliers in collecting and reporting traceability data, such as FFB weighing results or delivery order information and troubleshooting. We have also monitored land clearing activities around our concessions using an automatic notification system provided by Global Forest Watch.
By December 2022, we have reached 99% traceability for FFB supplied from independent parties. All direct suppliers have signed our sustainability policy and have been engaged in its socialization program. With the assistance from an external consultant, we made some improvements to our traceability system. While we aspire to achieve 100% traceability of our smallholder vendors, we acknowledge that the practice in the industry is still evolving, and we will have room for improvements in the near future.
We currently only have one Palm Kernel Crusher located in West Papua, which represent an integrated crusher with our own mill and received only our own palm kernel from our West Papua plantation under PPM and PMP, therefore we have 100% traceability of palm kernel to its plantation from this crusher.
The monitoring of the traceability practice will be subject to our internal audit, which is done regularly on an annual basis. RSPO audit on certification is also done every other year. In 2021, we have produced 62% of CPO as mass balanced RSPO certified and 60% of our production are sold as certified sustainable palm oil by using the Book and Claim model and Physical model, including:
We plan to have all our plasma and kemitraan program smallholders to be 100% RSPO certified by 2025. All our scheme smallholders are involved in this RSPO certification program. As of December 2021, there are eight cooperatives from the total of 13 cooperatives in our plasma and kemitraan programs that are RSPO certified, representing 62% of our plasma and partnership suppliers.
To highlight the benefits of certification, we promote our scheme smallholders (our plasma and kemitraan program) that are RSPO certified to independent smallholders. We also encourage our outgrower suppliers to obtain RSPO certification.
80% of all FFB from direct scheme smallholder cooperatives in 2021 comply with ANJ’s sourcing policies. This can be verified because the supplied FFB originate from cooperatives that are already RSPO certified. We target 2030 as the deadline for 100% of our suppliers, including independent smallholders, to comply with our sustainable palm oil sourcing commitment.
As of December 2021, 64% of the FFB, by volume, are sourced from independent smallholders that comply with our sourcing policy (stating that suppliers must follow our sustainability policy, including the no deforestation, no peat, and no exploitation policy, and comply with relevant Indonesian Laws). The remaining balance are sourced from independent smallholders that still have inadequate licensing or legality for their lands, as is often the issue for independent smallholders in Indonesia and need to clarify their land legality to the Government. The Indonesian Government has allowed the opportunity for independent smallholders to obtain land legality and we intend to assist our independent smallholders in this process, working in partnership with local government bodies. Nevertheless, we will stop buying from smallholder suppliers that fail to clarify or solve their land legality issues by our deadline.
To achieve this target by 2030, we will implement the following action plan to assist all our smallholders and aid them in meeting our requirements:
Furthermore, as part of our traceability to plantation project, we have socialized the importance of land legality to all independent smallholders throughout our FFB supply chain. We also emphasize that we will not accept FFB sources from new areas that are in forest areas. The socialization efforts and formal training have kept going despite the COVID-19 pandemic by applying strict health protocols.
We are also an active member of the Indonesian Sustainable Palm Oil Forum (FoKSBI), a multi-stakeholder platform to coordinate all sectors and initiatives focused on sustainable palm oil. In 2020, we partnered with Conservation International (CI) to provide good agricultural practice training and fire support training for independent smallholders that meet land legality requirements in South Tapanuli, North Sumatra.
(All data accurate as of 31 December 2021)