Case study: How ANJ improves traceability across its supply chain
Austindo Nusantara Jaya (ANJ) is an agricultural commodity holding company engaging principally, directly and through its subsidiaries, in trading, services and operations related to palm oil plantations and processing. Traceability is a top material risk for the palm oil industry, and ANJ works hard to make sure it has systems in place to accurately track the source of its FFB (Fresh Fruit Bunches) supply base. Tweet This!
This case study is based on the 2019 Sustainability Report by ANJ published on the Global Reporting Initiative Sustainability Disclosure Database that can be found at this link. Through all case studies we aim to demonstrate what CSR/ ESG/ sustainability reporting done responsibly means. Essentially, it means: a) identifying a company’s most important impacts on the environment, economy and society, and b) measuring, managing and changing.
Abstract
The demand for certified sustainable and segregated palm oil is increasing worldwide, as many global brand manufacturers have committed to only use RSPO (Roundtable on Sustainable Palm Oil) certified and segregated palm oil solutions. Traceability is therefore important, in order to make sure that the certified sustainable palm oil and palm kernel oil used in the production of finished goods actually come from sustainable sources. In order to improve traceability across its supply chain ANJ took action to:
- implement a procurement policy
- work with existing and potential suppliers
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With this case study you will see:
- Which are the most important impacts (material issues) ANJ has identified;
- How ANJ proceeded with stakeholder engagement, and
- What actions were taken by ANJ to improve traceability across its supply chain
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What are the material issues the company has identified?
In its 2019 Sustainability Report ANJ identified a range of material issues, such as economic performance, biodiversity, occupational health and safety, emissions, local communities. Among these, improving traceability across its supply chain stands out as a key material issue for ANJ.
Stakeholder engagement in accordance with the GRI Standards
The Global Reporting Initiative (GRI) defines the Principle of Stakeholder Inclusiveness when identifying material issues (or a company’s most important impacts) as follows:
Stakeholders must be consulted in the process of identifying a company’s most important impacts and their reasonable expectations and interests must be taken into account. This is an important cornerstone for CSR / sustainability reporting done responsibly.
Key stakeholder groups ANJ engages with:
To identify and prioritise material topics ANJ engaged with its stakeholders through the following channels:
| Stakeholder Group | Method of engagement |
| Shareholders and Investors | · Production performance report · Financial performance/Investor newsletter · General Meetings of Shareholders (AGMS/ EGMS) · Annual Report · Sustainability Report · Corporate website · Speeches by BOD |
| Employees and labourers | · Labour union · Training and seminars · Soft skill trainings, certifications, seminars · Collective Labour Agreement · Socialisation, meetings, magazines, newsletters |
| Central Government/ regulator | · Licence and permit process · Regular meeting · Regular reporting, including Annual Report to OJK |
| Local government | · Participation in regional development planning forum (musrenbang) · Stakeholder meeting · Coordination of CSR working practices with local administration working units (SKPD) · Dialog and cooperation · Facilitation and mediation |
| Partners Smallholders
| · Regular meetings · Workshops · Training & assistance |
| Customers (B2B) | · Business partnership · ISPO and RSPO certification |
| Community (Including Local Leaders) | · Stakeholder meetings · Community involvement and development programmes · Responsible development projects · Capacity building · Stakeholder meetings and dialog · Socialisation of procedure · Response to grievance · Information dissemination and dialog |
| Media | · Production report · Financial performance/Investor newsletter · AGMS/EGMS · Annual Report · Sustainability Report · Press Releases · Media Briefings · Interviews · Site visits · Press conference |
| Non-Governmental Organisations | · Cooperation on community development programmes · Direct meetings |
What actions were taken by ANJ to improve traceability across its supply chain?
In its 2019 Sustainability Report ANJ reports that it took the following actions for improving traceability across its supply chain:
- Implementing a procurement policy
- In line with its Sustainability Policy, ANJ’s procurement policy is implemented in accordance with conditions that seek to minimise any negative environmental, social or economic impacts of activities undertaken throughout the supply chain. ANJ requires that all goods and services used in its operations are procured professionally, independently, efficiently and effectively, and in compliance with good corporate governance principles. As a part of its sourcing policy and continuous improvement focus, ANJ engages with suppliers to improve practices on the ground and strengthen its supply chain and thereby ensure positive developments in the sustainable palm oil production journey. In addition to specific technical, financial and administrative criteria, ANJ also requires that vendors meet and follow its commitment and standards on environmental, health and safety management systems. This is implemented through an Integrity Pact which is included in the contract. All vendors receive a copy of the ANJ Sustainability Policy in the Indonesian language, and ANJ holds information and awareness sessions to articulate the intent and requirements of the policy.
- Working with existing and potential suppliers
- ANJ’s strategies to prevent or mitigate negative environmental supply chain impacts include working with existing and potential suppliers, particularly independent smallholder farmers, in the vicinity of its estates to improve livelihoods, reduce the risk of social conflict, and in the case of potential suppliers, help them to comply with its vendor policies. ANJ has implemented a number of innovative programmes which have achieved promising results, including assisting plasma smallholder farmers to gain RSPO certification at SMM and KAL, as well as mapping of smallholders around ANJAS. ANJ’s traceability programme started in 2019, with a pilot project to be scaled up in 2020. As a result, ANJ did not yet systematically record new suppliers screened for environmental and social criteria. Similarly, ANJ was not yet in a position to report on negative environmental and social impacts in the supply chain and actions taken, but will be developing the screening mechanism/tool for environmental and social criteria to be applied to its suppliers.
Which GRI Standards and corresponding Sustainable Development Goals (SDGs) have been addressed?
The GRI Standards addressed in this case are:
1) Disclosure 308-1 New suppliers that were screened using environmental criteria
2) Disclosure 308-2 Negative environmental impacts in the supply chain and actions taken
3) Disclosure 414-1 New suppliers that were screened using social criteria
4) Disclosure 414-2 Negative social impacts in the supply chain and actions taken
Disclosure 308-1 New suppliers that were screened using environmental criteria does not correspond to any SDG.
Disclosure 308-2 Negative environmental impacts in the supply chain and actions taken does not correspond to any SDG.
Disclosure 414-1 New suppliers that were screened using social criteria corresponds to:
- Sustainable Development Goal (SDG) 5: Gender Equality
- Targets: 5.2
- Sustainable Development Goal (SDG) 8: Decent Work and Economic Growth
- Targets: 8.8
- Sustainable Development Goal (SDG) 16: Peace, Justice and Strong Institutions
- Targets: 16.1
Disclosure 414-2 Negative social impacts in the supply chain and actions taken corresponds to:
- Sustainable Development Goal (SDG) 5: Gender Equality
- Targets: 5.2
- Sustainable Development Goal (SDG) 8: Decent Work and Economic Growth
- Targets: 8.8
- Sustainable Development Goal (SDG) 16: Peace, Justice and Strong Institutions
- Targets: 16.1
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References:
1) This case study is based on published information by ANJ, located at the link below. For the sake of readability, we did not use brackets or ellipses. However, we made sure that the extra or missing words did not change the report’s meaning. If you would like to quote these written sources from the original, please revert to the original on the Global Reporting Initiative’s Sustainability Disclosure Database at the link:
http://database.globalreporting.org/
2) https://www.globalreporting.org/standards/gri-standards-download-center/
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