Updated Controlled Purchase Protocol for Supplier Engagement
Singapore, 07 March 2019 – Effective from January 2019, suppliers involved in alleged new deforestation case and new development on peat will undergo the Controlled Purchase Protocol, a process design to incentivise the suppliers with the intent to commit to sustainability, or cease buying from the supplier if the supplier breaches our Sustainability Policy.
Suppliers, in this case, refers to the supplier groups who manage the third-party mills in our supply base. We define a supplier group as a group of Palm Oil -related companies with common ownership.
We recognise our stakeholders’ concerns that we will need to improve our supplier engagement approach, especially in articulating the criteria for grievance cases where immediate cessation in business relations is required. We will not knowingly source from suppliers who refuse to comply or are found in breach of our policy commitments, as stated in our policy.
Nonetheless, our experience has shown that showing support to our suppliers is necessary to build trust and goodwill for the long haul. Our Controlled Purchase Protocol is designed to motivate the supplier groups who may or may not have committed breaches to our Sustainability Policy, but are willing to commit to an action plan to start on sustainable practices.
Furthermore, to avoid inadvertently contributing to a growing “leakage market” or negatively impacting oil palm Smallholders , we will assist suppliers in bringing their operations to compliance.
We provide support to our suppliers, by working with suppliers on their action plans and milestones, and we will activate the Controlled Purchase plan to resolve grievances promptly. We believe that continued engagement in such cases is important for sector transformation.
The following grievance case here reflects the principles behind the Controlled Purchase Protocol.
For more information, please contact:
+65 6576 4770