Apical Group Ltd places sustainability strategically at the core of our business. We launched our Sustainability Policy with the aim to build a transparent and traceable palm oil supply chain and it outlines our commitment to ensuring sustainable practices are adopted across the entire value chain of our palm oil production from cultivation to processing and delivery to end-users.
We recognise that our business is reliant on land availability for palm oil plantations and that there are serious risks of deforestation and biodiversity loss if proper monitoring and control mechanisms are not in place. For that reason, we are working closely with our suppliers to ensure adherence to local, international and our own sustainability standards for the protection of High Conservation Value (HCV) areas, High Carbon Stock (HCS) forests and peatland (defined as organic soils with 65% or more organic matter).
The palm oil industry brings about significant socio-economic benefits to the communities in Indonesia by presenting new sources of income through jobs and trading opportunities, thus helping to alleviate poverty and empower people to secure better livelihoods. However, we also understand that the development of our industry could adversely impact local communities, in particular indigenous people. We jointly work with industry stakeholders to protect all human rights, as well as the rights of local communities and indigenous people, and to advance transformation of industry practices.
We first published our Sustainability Policy in September 2014 and it has served as a roadmap to guide our group’s efforts towards becoming a sustainable global processor and trader of palm oil. We started working with sustainability consultancy organisations such as The Forest Trust (TFT) in 2015 and Consortium of Resource Experts (CORE – an association of Proforest & Daemeter) in 2017 to support us in our continuous efforts to develop the transparency of our raw material supply chains, assess and mitigate environmental risks of our supply chain and strengthen the implementation of our policy throughout our supply chain.
Apical is on track to building a traceable and transparent palm oil supply chain committed to:
- The protection of high conservation value (HCV) areas and high carbon stock (HCS) areas
- The protection of peat regardless of depth
- Driving positive socio-economy impact for people and communities
This commitment extends to all of Apical’s subsidiaries and to the refineries that we own and manage. We will work to ensure that our suppliers, business partners and employees comply with the above commitments, local laws and regulations. We ensure to source only through networks that are transparent and traceable and ensure that the palm oil we purchase, process and sell are in accordance with the policy. We will use our best endeavours, including our resources, to assist smallholders adopt sustainable practices and to facilitate their inclusion in the supply chain.
HCV forests have an especially high ecological and/or social value. HCS forests hold or have the potential to hold a high amount of carbon and should thus, be protected or restored. We have communicated the importance of HCV and HCS areas to our stakeholders and will continue to do so. We are committed to preventing deforestation in our supply chains and require the same from all our raw material suppliers.
We provide training and recommendations to mills that source from estates located close to HCV and primary forests and peatlands. Our team also assists priority suppliers identify, manage and monitor significant biological, ecological and social or cultural values through the High Carbon Stock Approach and geospatial analysis.
Through regular supplier engagement activities, we offer training to our suppliers on adopting agricultural best management practices, such as effective water management to maximise palm oil yield and minimise GHG emissions in existing peat estates.
If suppliers are found in breach of this policy, Apical will work with them to determine a corrective action plan that states detailed measures with timelines to facilitate improved practices. If suppliers refuse to comply or do not demonstrate efforts to implement corrective action, we will take additional measures and in some cases, suspend our business relationship with them until we are able to see significant positive improvements.
We will cease to contract any suppliers who breach our policy and do not take immediate action to correct their non-conformance or violations. In addition, Apical Group shall not conduct business with serious repeat violators of this policy, regardless of remedial action.
Where applicable, we will work to ensure our suppliers adopt the following criteria:
- Adopt the High Carbon Stock Approach that is based on field trials and expert and scientific recommendations, taking into account social considerations.
- Engage constructively with members of the High Carbon Stock Approach Steering Group, which was established to implement best practices and oversee the HCS approach.
- Utilise the HCS Approach methodology to identify protected areas prior to the establishment of any new plantations, while further robust scientific studies are being conducted.
- Conserve the existing biodiversity, riparian zones (areas bordering rivers and other bodies of surface water) and high conservation value (HCV) areas that are important to the social and cultural construct of communities within plantations
(this aligns with RSPO Principles & Criteria 5.2 and 7.3). Independent HCV assessments will be peer reviewed by technical members of the HCV Resource Network.
- Develop a landscape planning approach to conservation and existing conservation initiatives.
- Ensure the long-term protection of forests and other important areas by building an integrated forest management plan that integrates the recommendations of HCS, HCV, Special Environmental Impact Assessment (SEIA) and peatland assessments within larger landscape planning.
- Identify the sources of greenhouse gas (GHG) emissions and conduct GHG calculations for all operations linked to us (based on RSPO Principles & Criteria 5.6 and 7.8).
- Monitor GHG emissions and strive for progressive reductions in areas where it is environmentally and economically feasible.
- Commit firmly to the Zero-Burning Policy adopted by ASEAN countries in all operations and actively engage in initiatives of fire and haze mitigation.
- No new development on areas of peatland regardless of the depth of peat.
- Work with expert stakeholders to ensure Best Management Practices (BMPs) on peat in pre-existing plantations as defined by RSPO and peat experts.
- Collaborate with stakeholders and community experts to explore options for long-term restoration or alternative use, in areas where existing peat is unsuitable for replanting.
- The HCS approach is also designed to ensure that land use rights and the livelihoods of local communities are respected.
- Recognise the Universal Declaration of Human Rights and promote equal rights in employment regardless of age, race, colour, sex, creed, religion and disability. Child labour is strictly prohibited in any of our operations and we condemn any form of sexual harassment, discrimination and abuse against women.
- Respect the rights of all workers to form or become members of a labour union on their free will and the right to collective bargaining.
- Provide a safe and healthy working environment and practise the Fair Treatment Policy that ensures the rights of all people to be treated with fairness, equality and dignity and provide an environment free of discrimination and harassment including for contract, temporary and migrant workers. Empower gender mainstreaming and not condone any form of human rights violation or discrimination within our supply chain
- Facilitate the inclusion of smallholders, outgrowers and small fresh fruit bunch (FFB) suppliers and fully support them into our sourcing supply chain in a fair, transparent and accountable partnership.
- Respect and recognise the rights of indigenous and local communities to give or withhold their Free, Prior and Informed Consent (FPIC) to the utilisation of lands to which they hold legal, communal or customary rights to. Ensure a transparent and legal land allocation process.
- Consider and maintain strong food security of local communities in order to maintain their land use choice and future food security options.
- Work in a fair and transparent manner to resolve verifiable complaints and conflicts with all parties. Develop a transparent grievance mechanism system to ensure that all grievances and conflicts are addressed in an accountable manner
- Effective immediately, Apical and our subsidiaries (including companies we control, manage and/or have an investment regardless of stake) shall comply with this policy.
- We work with our suppliers to socialise and encourage the adoption of this policy. We shall not knowingly source from suppliers who are not in compliance with this policy.
- We have set up a transparent grievance system for stakeholders to inform us of issues within our supply chain. We shall respond to these grievances in a transparent manner and communicate a time-bound plan for handling of the grievance.
- We have progressively achieved 100% mill traceability in our supply chain in 2015 and have maintained this to date. We have an appointed sustainability consultant that conducts independent verification of our mill traceability every quarter. All new suppliers to our supply chain are also verified by our sustainability consultant.
- We actively report to the Roundtable on Sustainable Palm Oil (RSPO) through the Annual Communication of Progress (ACOP) since 2013 and will continue reporting annually. The ACOP is used by RSPO to assess our yearly progress towards 100% certified RSPO sustainable palm oil.
OUR SUSTAINABILITY ROADMAP
Apical Group continues our commitment to promote the production of sustainable palm oil in accordance to the principles and criteria presented by the Roundtable on Sustainable Palm Oil (RSPO), International Sustainability & Carbon Certification (ISCC) and the Indonesian Sustainable Palm Oil (ISPO). We are open to explore new initiatives to promote the production of sustainable palm oil through collaboration with stakeholders, experts and communities. We will monitor and assess the implementation of our policy for ways to improve its effectiveness and; as new information and knowledge come to light, Apical will adjust and improve policies to further align with our sustainability commitments.
Apical Group Ltd is one of the largest processors of palm oil/ palm kernel oil and exporters of palm oil products in Indonesia. It has an extensive palm oil business value chain from sourcing to distribution. It is engaged in the refining, processing and trading of palm oil and its products for both domestic use and international export.
Apical’s operations in Indonesia comprise of five refineries, three biodiesel plant, one oleochemical plant and a kernel crushing plant. It also owns a small refinery in China.
It is important that our customers and consumers have the confidence that our products are made from palm oil that has been responsibly sourced from traceable and transparent supply chains that respect the environment and local communities.
Likewise, it is important that we work together with our valued suppliers to ensure that their produce enjoy wide acceptance and have unrestricted global market access.
This sourcing policy has been completed pursuant to the Apical Sustainability Policy (September 2014) to build a traceable and transparent palm oil supply chain committed to:
- No deforestation of high conservation value (HCV) lands and high carbon stock (HCS) areas; – Protection of new peat areas, regardless of depth; – Drive positive socio-economy impact for people and local communities.
- Protection of new peat areas, regardless of depth;
- Drive positive socio-economy impact for people and local communities
This Policy covers all the internal and external operations within the Apical supply chain including refineries, palm oil mills, kernel crushing plants, plantations and smallholders.
Apical has committed in its Sustainability Policy to source palm oil supplies through a transparent network, traceable to the mills from which they come from.
Our sourcing strategy will focus on developing long-term relationships and understanding with all our suppliers. This Sourcing Policy will be implemented through:-
- Engaging our suppliers to ensure they are in compliance with our Sustainability and Sourcing Policy.
- Maintaining and updating our traceability database to the supplying mills and plantations.
- Ensuring that the company’s supplies come from legal sources and prevent encroachment on protected areas (natural forests/ HCS areas, national parks, etc) in compliance with applicable legal requirements.
As of Q3 2019, 100% of our direct and indirect supply within our supply chain comes from mills and plantations that are compliant with Apical’s palm oil sourcing policy. We only source from suppliers who agree to comply with our policy through a written declaration prior to sourcing.
Suppliers who are found in violation of our Sustainability and / or Sourcing Policy are subject to due processes and grievance procedures as an engagement measure to ensure full compliance. Since 2017 to 2018, a total of 5 suppliers have been suspended from our supply chain due to non-compliance out of 17 non-compliant suppliers in total.
New Apical suppliers are first screened and pre-qualified based on their company profiles and possession of proper licenses/permits to meet legal compliances. They also need to fill up a questionnaire on their sustainability status and traceability database.
For existing suppliers that have supplied for > 6 months, they have to fill up their detail mill and FFB traceability database.
We will require our suppliers to comply with our Sustainability and Sourcing Policy as part of the terms and conditions in our trading contracts with them.
Apical require our suppliers to comply with RSPO P&C and take immediate remedial action to correct any violation. They need to respect and recognize the rights of indigenous and local communities to give or withhold their Free, Prior and Informed Consent (FPIC) to the utilization of lands to which they hold legal, communal or customary rights.
They should recognize the Universal Declaration of Human Rights and promote equal rights to all workers. Human trafficking and child labor are strictly prohibited in all our operations.
Other requirements by the RSPO P&C such as progressive reduction of GHG emissions and efficient use of water & energy are also part of our requirements.
Bringing about this transformation across our entire supply chain is a major undertaking. We will support our suppliers technically to achieve policy compliance, via time-bound action plans, as quickly as possible and expect to complete implementation progressively by 2020.
Regardless of remedial action and subject to any legal requirement, as a last resort, we reserve the option to cease to do business with serious repeat violators of our Sustainability and Sourcing Policy.
We will work in a fair and transparent manner to resolve verifiable complaints and conflicts with all parties. We will develop a transparent grievance procedure to ensure that all grievances and conflicts are dealt and handled in an accountable manner.
There is a growing demand for traceable palm oil to known and certified sources and Apical intends to meet this as a core element of our growth strategy.
Sourcing from smallholders
To facilitate the increase of sustainable certification of smallholders, Apical will work with our suppliers with direct control of FFB sources, to ensure inclusivity of smallholders through engagement. We will advise and support our smallholders on the use of best management practices to enhance their productivity.
To prevent the inflow of illegal FFB into the supply chains, our suppliers will need to request independent smallholders and third-party palm oil suppliers to provide legal documents of their FFB sources.
Download the Apical Palm Oil Sourcing Policy (English)