Responsible Sourcing

We believe that the integration of sustainability is key to the success of our business and we are committed to ensuring that sustainable practices are adopted across our supply chain, from cultivation to consumption.

Apical is therefore committed to influencing and supporting our suppliers through meaningful engagements, with the aim of building a sustainable as well as a fully traceable and transparent network. This will also allow our suppliers to access the global market where demand for responsibly made products are increasing.

Apical’s Sourcing Policy was developed in 2015 to support our Sustainability Policy’s commitment to build a traceable and transparent supply chain, ensuring the following:

No deforestation of high conservation value (HCV) lands and high carbon stock (HCS) areas
Protection of new peat areas, regardless of depth
Positive socio-economy impact for people and local communities
Responsible Sourcing

Apical will only procure from suppliers who agree to comply with our policy through a written declaration. These suppliers will also need to provide basic information on their supply chain for us to perform a risk analysis based on geospatial indicators and non-spatial indicators.

Suppliers identified as higher risk will be prioritised for engagement while those who are found in violation of our Sustainability and/or Sourcing Policy will be handled through our grievance procedure.

We also seek to bring about a positive transformation in our supply chain. Through this approach, we are not only building our resilience to risks facing the business, we are also leveraging on our ability to support sustainable development where we operate.

Learn more about our Policies & Framework
Responsible Sourcing

We aim to deliver our sustainable development commitments through 5 strategic focuses including:

Traceability & Transparency
Policy Compliance & Implementation Framework
Stakeholder Relations & Grievance Management
Multi-Stakeholder Platforms & Collaborations
Delivering on Our Core Sustainable Development Goals (SDGs)
Traceability

Responsible sourcing through supply chain traceability

As one of the largest processors and traders of palm oil in the world, we have placed sustainability strategically at the core of our business. Our approach to sustainability includes risk-based assessments for supply chain profiling, stakeholder engagement for palm oil traceability and policy compliance and support for suppliers through capacity building and recommendations on sustainable good practices.

Supply chain traceability is a fundamental first step towards producing sustainable palm oil and ensuring the reliability and quality of our raw materials. Traceability lays the groundwork for compliance with our Sustainability Policy by revealing where our supply comes from and helps us identify priority suppliers to engage with for improved agricultural practices.

There are a huge number of players along the supply chain from the moment the fruit is picked by smallholders to when it reaches us as some supply goes through middlemen. It requires enormous effort to map our supply chain down to its origin; however this is necessary to ensure the level of transparency that is expected by our customers.

A reliable and extensive sourcing network upstream enhances our ability to trace the origin of the raw materials supplied to our refineries and to monitor sustainable practices. With the commitment of senior management and guided by a comprehensive sustainability framework, we have found that an effective way forward is to involve and engage with key decision makers from diverse groups of stakeholders: plantation owners and smallholders, government authorities, non-governmental organisations (NGOs), civic groups and activists.

Our traceability efforts are categorised into traceability to Crude Palm Oil (CPO), Crude Palm Kernel Oil (CPKO), Palm Kernel (PK) mills and traceability to plantation (Fresh Fruit Bunch suppliers).

Traceability to Mill (TTM)

As we do not own any upstream assets or facilities such as plantations and mills, we rely on third party supplying mills to provide us with raw materials such as CPO, CPKO, and PK. One of our long-term suppliers is Asian-Agri. A majority of our supplying mills are located within the provinces of Riau, North Sumatera, Jambi, and Kalimantan.

In 2015, we began gathering and verifying information about mills supplying to our refineries and achieved 100% traceability to mill in the same year. We have maintained full traceability to mill since then. We have 462 mills supplying CPO contracted as suppliers for all our refineries as of Q4 2021.

The total percentage of supply traceable to mill and traceable to Kernel Crusher Plant (KCP) is 100% as of December 2021. We have also achieved 100% traceability to mill KCP suppliers as of December 2021.

Sari Dumai Sejati Refinery
Sari Dumai Sejati Kernel Crushing Plant
AAJ Marunda Refinery
AAJ Tanjung Balai Refinery
Kutai Refinery Nusantara
Padang Raya Cakrawala Refinery

In order to be traceable, suppliers need to provide correct information of their GPS coordinates to show their accurate location, the name of their parent company and mill, and a specific address. This information is then further verified by our sustainability consultants known as CORE (which consists of Proforest & Daemeter). We update our Traceability Declaration Document (TDD) every quarter for the facilities above to reflect our changing sourcing patterns and the TDD can be accessed through the list below.

Supply chain information of our refineries can be accessed in the map below. The map comprises of Apical’s network of refineries, kernel crusher, oleo chemical and biodiesel plants. By selecting the facilities on the map, you can access details of the supply into each.

Traceability to Plantation (TTP)

Mills are usually in close proximity with supplying plantations as FFB needs to be processed within 24 hours of harvest, in order to maximise the quantity and quality of oil extracted. As such, achieving traceability to a mill will provide an indication of the approximate location of their FFB suppliers. However, traceability to plantation remains challenging due to the thousands of dealers and independent smallholders involved, and the highly dynamic relationships between FFB traders and mills.

Our network of FFB suppliers comes from three main sources: estates (usually owned by mills), smallholders (often linked to mills) and dealers (who buy FFB from a wide variety of sources). Apical subscribes to the Sustainable Landscape Working Group’s (SLWG) working definition of traceability.

FFB Sources
Estimated percentage of palm oil supplied to our mills
Estate (<25 Ha and ≥ 25 Ha)
60.88%
Cooperative/Schemed/ Smallholder Groups
11.62%
Dealers (sourced from independent smallholders)
27.50%

Apical’s suppliers source from either own estates or third party plantations. Out of our total number of third party supplier mills, 60.6% source from their own plantations while 39.4% source from third party plantations.

In terms of volume of FFB supplied to Apical, 38.6% is sourced from third party supplier mills’ own plantations while 61.4% is sourced from third party plantations. These figures are as of December 2021.

As of December 2021, we have been able to trace 99.7% of our FFB sources to plantations, which has been externally verified by Control Union. We target to achieve 100% traceability to plantations by 2025.

CPO

Sari Dumai Sejati Refinery
100%
AAJ Marunda Refinery
100%
Kutai Refinery Nusantara
100%
Padang Raya Cakrawala Refinery
97.73%

CPKO

Sari Dumai Sejati Refinery
94.39%
AAJ Marunda Refinery
100%
AAJ Tanjung Balai Refinery
97.53%
Kutai Refinery Nusantara
99.86%

Apical subscribes to the Sustainable Landscape Working Group’s (SLWG) definition of traceability and the following data as a requirement to establish FFB traceability by 2021:

FFB Sources
Data required for FFB Traceability
Estate (<25 Ha and ≥ 25 Ha)
• Estate name• Parent company name• Certification status• % of overall FFB tonnage to mill• A GPS coordinates as a representative source location• Planted hectarage• Total concession area• FFB volume
Cooperative/Schemed/Smallholder Group
• Number of smallholders• % of overall FFB tonnage to mill• Overall FFB volume• A GPS coordinates as a representative source location• Planted hectarage
Dealers (sourced from independent smallholders)
• Dealer names (and/or dealer unique ID)
• % of overall FFB tonnage to mill
• Overall FFB volume
• GPS coordinates of first-tier dealers (office/ramp)
• Number of smallholders
• Village/sub-district of smallholders

NDPE IRF

What is NDPE Implementation Reporting Framework (NDPE IRF)?

The NDPE IRF is a reporting tool developed jointly by industry companies and relevant stakeholders for participating companies to track and analyse their progress in the implementation of NDPE commitments across the entire supply chain which currently covers no deforestation and no development on peat.

For more information, please refer to https://www.ndpe-irf.net/.

Our Commitment

Apical is cognisant of our role and duty to ensure that we act responsibly and proactively in the sourcing and processing of palm oil in an environmentally and socially sound manner. We ensure our sources from suppliers, traders, or mills are in compliance with legal requirements and our policies.

In our endeavor to build a traceable and transparent supply chain, Apical is a member of the Active Working Group (AWG) for NDPE Implementation Reporting Framework (IRF). NDPE IRF allows Apical to understand what is required to deliver our NDPE commitments, monitor progress, identify gaps within the supply chain and implement action plan to close the gap in order to drive improvement.

We remain committed and will continue to responsibly manage natural resources and mitigate the environmental impact of our operations in compliance with our NDPE commitments.

Our NDPE IRF are annually verified by a 3rd party verifier.

No Deforestation, CPO Supplier Profile

In October 2021, our NDPE IRF reporting for the financial year ended 2020 was independently verified by Control Union for all our refineries in Indonesia

Data by Dec 2020, based on group level

No Peat, CPO Supplier Profile

In October 2021, our NDPE IRF reporting for the financial year ended 2020 was independently verified by Control Union for all our refineries in Indonesia

Data by Dec 2020, based on group level

No Deforestation, PKO Supplier Profile

In October 2021, our NDPE IRF reporting for the financial year ended 2020 was independently verified by Control Union for all our refineries in Indonesia

Data by Dec 2020, based on group level

No Peat, PKO Supplier Profile

In October 2021, our NDPE IRF reporting for the financial year ended 2020 was independently verified by Control Union for all our refineries in Indonesia

Data by Dec 2020, based on group level

Grievance & Whistleblowing

To ensure that the standards set out in our policies are being adhered to we have set up a robust grievance handling process for all stakeholders to raise concerns related to our business or suppliers. All grievances raised are dealt with in a transparent and accountable manner. The grievance process is managed and implemented by our Grievance Steering Committee (GSC), Grievance Secretariat, Stakeholder Engagement Team and Verification Team.

A Grievance Steering Committee (GSC) consisting of senior management and sustainability lead shepherds all policy compliance and grievances resolution within Apical’s supply chain and operations.

Apical’s Grievance Secretariat (GSR) consists of dedicated personnel from the Group’s Sustainability team. The GSR is tasked to assess, monitor and identify potential grievance issues within our supply chain through grievance alerts and a monitoring system.

With this system, any external feedback or allegations received through our grievance mechanism and whistle blowers are tracked and acted on if any suppliers are found to have violated the Apical Sustainability Policy or Sourcing Policy. The total area of deforestation recorded after December 2015 until December 2021 for all suspended suppliers is approximately 60,494 hectares.

We continuously engage with our stakeholders for deforestation, social and land conflicts, among others. For example, as and when grievances on conflicts arise, we engage with our stakeholders and provide them support and guidance in terms of conflict resolution and continuous improvement. We also conduct several physical and virtual meetings with our stakeholders to ensure compliance and progress. We engage suppliers through the “Strategic Engagement Programme” (STEP) which involves, including but not limited to, discussion and understanding of conflicts, propose action plans as well as bridging communication between stakeholders with relevant NGOs. This has led to successful resolution of conflicts Please refer to our Grievance Tracker for examples of conflict engagement and resolution with our stakeholders.

For land conflicts, we align with RSPO standards and regulations for the resolution process. The land conflicts resolution process below highlights the key activities for stakeholder engagement.

  • Pre-FPIC/risk assessment of identified land conflict area
  • Identify surrounding local communities
  • Conducted participatory mapping HCV/ESIA/land tenure survey
  • Involve Apical’s Grievance Verification team
  • Validate findings with community and affected stakeholders
  • Negotiate and formulate action plan
  • Report to Apical’s Grievance Committee
  • Finalisation of agreement with relevant stakeholders
  • Implement agreement and action plan

Grievance Procedure

The Apical Grievance Procedure covers all activities related to the management of stakeholders’ concerns include but not limited to deforestation, land and social conflicts. Our grievance process includes a whistleblowing channel and a Grievance Alert System that delivers prompt notifications on matters raised against Apical or our suppliers. The process of dealing with a grievance is illustrated on the flow diagram below.

Grievance Case

In 2021, there were 6 grievances raised against our suppliers. These are in our grievance tracker below. Apart from grievances tracked at group-level, each refinery also has their own grievance management process.

View Grievance Tracker

How to submit grievance

Grievance submissions should be made using the Grievance Submission Form below.

Email:

Address:

Level 6, Tower 2, Avenue 5
Bangsar South City No. 8
Jalan Kerinchi 59200
Kuala Lumpur, Malaysia

Fax:

Attn.:

+603 2785 8999

Grievance Secretariat

Aside from providing verification and feedback to any grievance raised, Apical values feedback and inputs from our stakeholders as a constructive way to enhance transparency in the supply chain and assist in monitoring progress on the implementation of their Sustainability Policy.

Whistleblowing

At Apical, doing good for the Community, Country, Climate and Customer is ultimately good for the Company. Integrity is part of Apical’s core value and we are committed to high standards of corporate governance, accountability and legal business conduct within our operations. We support honest and open communication and encourage all our employees and stakeholders to ask questions and report any concerns.

The whistleblowing channel is established to provide a platform for employees and other relevant stakeholders to raise concerns and report any misconduct to uphold integrity and governance of Apical’s operations and supply chain. All instances of whistleblowing will be reviewed by a dedicated Grievance Verification Team. At Apical, the whistleblower’s identity and interest will be protected and kept confidential, unless as required by law to reveal to parties such as lawyers, the police or investigators.

Scope of Reporting

Examples of “improper conduct” include, but not limited to the following:

  • Violation of Apical’s Sustainability Policy and Sourcing Policy;
  • Non-compliance of the Group’s Policies, internal controls and Code of Conduct;
  • Illicit and corrupt practices;
  • Fraud, misconduct or unsafe work practices;
  • Sexual harassment;
  • Questionable or improper accounting;
  • Misuse of confidential information; or
  • Any abuse of power or authority.

Zero tolerance for retaliation

Apical will not tolerate retaliation against anyone who raises concerns or participates in the investigation. Retaliation will result in disciplinary action up to and including termination of employment.

Reporting Channels

Telephone
+603 2785 8999

Address
Level 6, Tower 2, Avenue 5
Bangsar South City No. 8
Jalan Kerinchi 59200
Kuala Lumpur, Malaysia