Controlled Purchase Mechanism

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Introduction

Contents
We have developed our responsible Palm Oil sourcing policy, which outlines legal, social and environmental parameters which all operations, including our third-party suppliers, should meet. A key element of our policy includes establishing and maintaining a robust and credible grievance procedure, which seeks to resolve grievances related to our suppliers in a timely and fair manner. 

Our grievance procedure has an additional mechanism that provides incentives or controls to our third-party suppliers, based on the progress being made against the identified grievances. This mechanism, called Controlled Purchase aims to drive progress and seek active resolution to the identified grievances.  

Background

Our grievance procedure aims to capture grievances linked to our suppliers and inform on our engagement with these suppliers towards resolution. We also monitor other existing grievance processes for our suppliers, where relevant. In particular, the RSPO complaints process continues to support as an additional mechanism for monitoring supplier progress. 

As not all of our suppliers are RSPO members, and there may also be occasions where the RSPO mechanism does not capture all facets of the identified grievance. 

The Controlled Purchase is only activated in the situation where:
(1) a grievance has been lodged against a supplier; and where 
(2) an action plan needs to be developed with milestones and timelines, together with the supplier, in the absence of a parallel and effective external grievance mechanism (eg. RSPO).

Therefore, in such situations, the Controlled Purchase mechanism guides us and the supplier to:
(1) Formulate and implement action plans;
(2) Determine jointly the milestones and respective timelines to ensure progress; 
(3) Determine the incentives we can provide to suppliers who make progress against the identified milestones (such as increased Palm Oil volume purchases). Where progress is not satisfactory, we will commit to controlling palm volumes purchased;
(4) Provide criteria for purchase cessation and purchase re-engagement.

The following criteria guides the Group’s decision to engage in a ‘stop purchase’ with suppliers:
(1) Critical legal violation: immediate suspension in cases of severe human rights abuse, use of child labour, or imminent endangerment of human life.
(2) Repeated refusal to engage: supplier shows no intent to engage within a six-month period
(3) Repeated failure: supplier consistently does not follow recommendations/implementation of remedial action over a six-month period
(4) Withdrawal/termination of RSPO membership

Managing Policy Breaches Process


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Controlled Purchase Process Details

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