FGV is committed to ensuring all raw materials are procured from responsible sources aligned to our GSP commitment. Traceability is instrumental in fulfilling this commitment to responsible sourcing as it provides an in-depth view of the origins of our raw materials. This information enhances transparency and is integral to directing sustainability efforts across our supply chain as well as facilitating the identification of our sources of supply and the associated suppliers. A first crucial step to responsible sourcing - the first line of defence - is the pre-qualification exercise to ascertain the suppliers’ credentials, suitability and alignment to our commitment to sustainability. Suppliers are required to comply with FGV’s Supplier Code of Conduct (SCOC) that spells out FGV’s sustainability requirements and expectations. Suppliers’ performance is monitored through our vendor management system known as e-Daftar, an online system that is connected to FGV’s SAP Enterprise Resource Planning (ERP) system. The system, which incorporates FGV’s policies and requirements, is compulsory for all suppliers’ registrations. The system allows FGV to monitor the status of suppliers (i.e. active and inactive). Blacklisted suppliers are put on a watchlist. By referring to e-Daftar, FGV is able to avoid engaging with blacklisted and inactive suppliers. In cases of minor non-compliance, FGV will provide guidance to suppliers concerned with an improvement plan to ensure better sustainability practices. For our Plantation business, traceability holds particular significance in allowing us to trace the raw materials we procure and use back to palm oil mills and subsequently to plantations. This enables performance evaluation of our suppliers against our sustainability commitments, specifically our NDPE policy, facilitates identification of high-risk suppliers and support the institution of remediation efforts in collaboration with them. Through our traceability efforts, we are able to foster deeper collaborations with all strategic partners to trace the origin and chain of custody of all materials used for our operations, and assess their sustainability risks. In addition, we continually improve and intensify information dissemination and communication with suppliers for proper end-to-end traceability. In ensuring suppliers’ compliance to our standards, FGV is working with the Centre for Sustainable Smallholder (CSS) Unit attached to Asia School of Business (formerly attached to Malaysia Institute for Supply Chain Innovation) and Malaysia’s National Applied Research and Development Centre (MIMOS) on validation of traceability data, verification of external suppliers’ compliance to our Group Sustainability Policy, and development of FGV’s suppliers’ sustainability status through Preferred Network Programme (PNP). Traceability, responsible sourcing & supply chain management Operating in an industry that is subject to stringent scrutiny, it is paramount that we adopt responsible, sustainable practices governed by strict ethical standards and be able to exhibit explicit proof of adoption to provide comfort to our customers so as to secure their continued support. On a broader front, our responses to this area contribute to environmental protection and respect for human rights. 61 CLIMATE ACTION & ENVIRONMENT PROTECTION ADDITIONAL INFORMATION SUSTAINABILITY REPORT 2020/2021
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