Ferrero’s ninth palm oil progress report

19-Nov-2020 - Italy

Ferrero is fully committed to securing a deforestation-free and exploitation-free palm oil supply chain through active cooperation with NGOs, key stakeholders and suppliers and continues to source only palm oil that is 100% RSPO Segregated (SG) certified and traceable to growers.

Supply chain traceability and transparency

A key factor in Ferrero’s approach to sustainable palm oil is maintaining robust mill and grower level traceability, which allows us to have clear visibility of the first mile of our palm oil supply.
We decided to further increase transparency in our supply chain by regularly disclosing the latest traceability data on our supplying mills. Since 2018, thanks to the help of our committed suppliers, we voluntarily publish every six months the list of mills from which we source our palm oil. The latest list, related to the second half of 2019, can be found at Ferrero's Corporate Website.
In 2019, we sourced 209,000 tons of palm oil certified RSPO SG, of which 10% are also POIG (Palm Oil Innovation Group) verified. 100% of this palm oil is traceable to the 91 mills from which we sourced from and 99.96% to the estates (448 plantations). During this period, we included 25,281 smallholder growers in our supply chain.

Country	Volume %	# of Mills
Brazil	0.51%	5
Costa Rica	0.22%	2
Colombia	0.06%	1
Guatemala	1.91%	5
Honduras	0.85%	1
Indonesia	19.26%	34
Malaysia	75.80%	35
Papua New Guinea	1.35%	8

Countries from where Ferrero sourced its palm oil in 2019

We are dedicated to leading the way in industry transformation, working extensively with our suppliers and partners. The WWF Palm Oil Buyers Scorecard 2020, recognized Ferrero as the company with the most sustainable palm oil out of 173 companies in the industry. As part of the WWF Palm Oil Buyers Scorecard initiative, Ferrero’s case study, which includes our key achievements, challenges and plans for the future on our sustainable palm oil sourcing, is available on the WWF Palm Oil Buyers Scorecard website.

The Ferrero Palm Oil Charter, launched in November 2013, has fully incorporated the requirements and Verification Indicators of POIG. We actively engage with our suppliers and assess them using independent third parties against the Charter’s requirements. Moreover, in 2015 the Charter has incorporated the HCS Approach and the “Free and Fair Labor in Palm Oil Production: Implementation Guidance”.

Building on the many years of positive impact of the existing Ferrero Palm Oil Charter, we are currently undertaking a major collaborative effort with our key internal and external stakeholders to review it by the end of 2020. The new Charter will better reflect future challenges and Ferrero’s value proposition.

Ferrero is also an active supporter of the High Carbon Stock Approach (HCSA), which is a methodology that distinguishes forest areas for protection from degraded lands with low carbon and biodiversity values that may be developed. The methodology was developed with the aim to ensure a widely accepted, practical, transparent, robust and scientifically credible approach that implements commitments to halt deforestation in the tropics, while ensuring the rights and livelihoods of local people are respected.

In order to reinforce our Palm Oil Charter’s principles on “no-deforestation”, since 2016 we have been working with Earthworm Foundation to develop and implement our own Verification Protocol. As a result, from October 2020 Ferrero started using the Starling satellite monitoring and verification service across all its supply chain to ensure it is deforestation-free. Starling uses a system to independently verify and monitor land use, including identifying potential deforestation and conversion occurring within our palm oil supply chain. Developed by a consortium made up of Airbus Defence and Space, Earthworm Foundation and SarVision, Starling uses a combination of high-resolution radar and optical satellite imagery to monitor land cover change and forest cover disturbance in near real time.

Actively supporting Transformation

We are an active promoter of sustainable palm oil at multiple levels. We are contributing members of various multidisciplinary expert platforms and roundtables, where the future of the palm oil industry is tailored and discussed.

We work closely with the European Palm Oil Alliance (EPOA), a business initiative that collaborates with national initiatives throughout different European countries, by educating stakeholders on the full palm oil story, facilitating science-based communication and creating a balanced view on the nutritional and sustainability aspects of palm oil. EPOA strongly supports the uptake of 100% sustainable palm oil.

Ferrero welcomes the approval, by the Board of Governors of the Roundtable on Sustainable Palm Oil (RSPO), of landmark rules calling for “Shared Responsibility,” and for all members of the organization to do their part to “Mobilize, Act and Transform” to fulfil its mission. Following the Board of Governor’s actions, all members now share the same sustainability requirements and obligations that are the same across all member categories.

As an active member of the Forum for Sustainable Palm Oil (FONAP), Ferrero has been working very closely with WWF Germany and is in direct contact with the local NGO Wild Asia to discuss progress and track results of the Wild Asia’s Group Scheme (WAGS). We have sponsored the first phase of the project which began in July 2018 and have signed phase 2, which started in December 2019 and will continue through March 2021. Our contribution to this project is voluntary and goes beyond our membership within FONAP. The project, supported by global, national and local partners, has a strong focus on supporting smallholder farmers to join a sustainable supply chain, but it also tackles conservation and deforestation issues. Furthermore, the WAGS aims to test and apply FONAP addon criteria (criteria that FONAP has defined on top of certification schemes such as RSPO) in realistic conditions to scale these measures up in the whole palm oil supply chain in Malaysia.

The numerical data in this Report refers to January-December 2019.