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Kellogg uses less than 0.1% of the global palm oil produced. Despite our small footprint in this commodity, Kellogg has been on a journey to responsibly source palm oil since 2009. As a global, plant-based food company, we have a responsibility to engage our suppliers, supply chain and industry to drive faster, more effective action to protect the environment and advance the cause of human rights. We continue to evolve our strategies and actions to incorporate best practices and learnings from our own experiences, as well as those of our suppliers, peer companies and industry organizations.
In 2020, we updated our Global Palm Oil Policy and action plans to reflect key interventions that can drive impact at scale and support sector alignment and best practices. Our work is aligned with the widely embraced guidance provided by the United Nations Guiding Principles on Business and Human Rights and the Consumer Goods Forum Priority Industry Principles.
Kellogg is committed to sourcing palm oil produced in a manner that is environmentally, socially and economically sustainable. We also support the advancement of sustainable palm oil production through direct investment in on-the-ground projects and collaborative industry involvement. While current certification schemes have been instrumental in expanding and supporting sustainable palm oil production, we continue to see issues like deforestation and human rights violations plague this industry. In recognition of this, we continue to support sustainable palm oil production through a holistic and action-oriented platform that includes:
- Certification In Our Own Operations – In 2020, we strengthened our commitment to responsibly source palm oil by setting a goal of procuring 100% Roundtable on Sustainable Palm Oil (RSPO) Physically Certified palm oil by end of 2025.
- Supply Chain Management – In 2019, Kellogg became the first manufacturer member of the Palm Oil Transparency Coalition (POTC). This has allowed us to streamline reporting efforts for our larger suppliers and provide more targeted support for their programs. We have also maintained our engagement with Proforest, our third-party reporting partner for support in collection of supplier data, traceability, volume reporting, mill lists and grievance support.
- Impact Incubator – Smallholders and forest communities contribute 40% of the global palm oil supply but are under-supported in many supply-chain programs. We seek to invest in programs on the ground to support smallholder livelihoods, increase market access through certification support and provide training on regenerative agricultural production techniques. For example, in July 2020, we developed an “Impact Incubator” to support smallholders and forest communities, in recognition that current certification and supply chain models have not been effectively inclusive in these groups. Through this incubator, we partnered with Wild Asia as part of their Wild Asia Group Scheme (WAGS) in West Mayalysia enabling smallholder palm oil producers to protect forests and secure market access through RSPO certification and training in sustainable agriculture.
- Industry Engagement – We are working on multiple fronts to make sustainable palm oil the norm, not the exception. Kellogg is an active member of the Palm Oil Transparency Coalition (POTC), the Consumer Goods Forum Human Rights Coalition Palm Oil workgroup, the Palm Oil Collaboration Group, and is a founding member of the North American Sustainable Palm Oil Network. We participate in several other palm oil related industry group workstreams and maintain relationships with global and local NGOs.
To demonstrate our commitment to transparency, we issue annual reports regarding our palm usage. Following are 2020 highlights.
In 2020, Kellogg sourced a total of 65,233 metric tonnes (MT) of palm oil (crude palm oil and palm kernel oil) in comparison to 74,665 MT in 2019, equating to an overall 12.6% decrease, or 9431 MT. Thirteen suppliers sourced 95.8% of volumes. The vast majority – 83% – of our palm oil volumes were physically certified RSPO in 2020 (Segregated and Mass Balance), a 1% increase from 2019. Segregated material volumes increased over 2019 volumes, while both mass balance and the use of RSPO credits decreased from 2019.
Our suppliers are the key to achieving our commitments for sourcing sustainable palm oil and doing our part to support industry change in the palm oil sector. It is only through these partnerships and collaborative actions that we can achieve our collective goals to eliminate the social and environmental issues present within our supply chains.
- Beginning in 2019, in partnership with Proforest, Kellogg began providing annual Supplier Scorecards to the suppliers we purchase from directly. The goal is to support the advancement of reporting on the sustainability of their palm oil operations, facilitate communication and provide recommendations to close current gaps in performance.
- In 2020, we began to utilize the POTC survey and engagement process to reduce the reporting burden of our direct suppliers, specifically those already reporting to POTC.
- Also in 2020, Kellogg began engaging suppliers in reporting against the No-deforestation, No-peat and No-exploitation (NDPE) Implementation Reporting Framework (IRF).
Knowing where our procured palm material is sourced is an important element of our supply-chain-management strategy. In the absence of full, verifiable traceability from suppliers and due to the use of RSPO schemes such as mass balance and credits, we are unable to pinpoint the exact mill or plantation that each MT of palm material comes from. We can, however, gain a general sense of our supply chain exposure by country level, and in some cases regionally:
- Overall potential mill exposure: 1,806 mills spread throughout 23 countries
- Regional mill locations: Southeast Asia (91.6%), Latin America (8%), Africa (0.4%)
- Highest level country mill exposure: Indonesia (61%), Malaysia (27%), Colombia (4%), Thailand (2%)