PIL Group adopted No Deforestation, No Peat & No Exploitation Implementation Reporting Framework (NDPE IRF) in assessing and monitoring our suppliers. It is a reporting tool established by peer companies and pertinent stakeholders to track and analyse supplier’s progress in implementing NDPE commitments across their supply chain. PIL Group being an active member of the Active Working Group (AWG) for NDPE IRF in Palm Oil Collaboration Group (POCG) utilizes this tool to monitor and to measure the compliance level of our suppliers annually in terms of policy, deforestation, peat clearance and legal aspects. Suppliers are required to populate the NDPE IRF template annually and the compliance level of each suppliers are auto projected. The final output is a NDPE IRF profile that illustrates the entire compliance status of our refineries. The graphs generated is based on the sets of questions answered by the suppliers with regards to general information about the supplying mills, certification status, commitments to no deforestation and no peat clearance, action plan, self-assessment, supply chain, grievances and etc. The NDPE IRF profile is shared with our stakeholders upon request.
In palm operations, supply chain monitoring has become vital, and satellite, drone, and imagery reports greatly facilitate this. We maintain an eye on our suppliers in Malaysia and Indonesia using imagery from satellites to make sure they adhere to our policy, which forbids deforestation and peat clearance. PIL Group receives assistance from MapHubs and utilizes their platform - Palmoil.io, a dynamic dashboard which provides monthly real-time deforestation notifications, supply chain links, and the status of grievances related to our supply chain. The deforestation alerts received covers both for direct supplying mills that enters into our group supply chain and indirect plantation concessions that supplies fresh fruit bunches to the mills that we source from. It also includes information on historical deforestation, although we primarily pay attention to situations from our cut-off date (1 July 2018) until the present. At present, we monitor approximately 10.3932 million hectares and 30.6361 million hectares of our suppliers’ operation in Malaysia and Indonesia respectively. Besides that, we utilize reports generated by Palmoil.io to initiate engagement with our suppliers on non-compliance against our Sustainable Palm Oil Sourcing Policy. The legit deforestation and peat clearance after December 2018 is investigated as per our Grievance Procedure which requires all our suppliers to commit to a remediation, recovery, and/or restoration of all deforested/cleared land over a defined period of time.
PIL Group utilizes these results-NDPE IRF profile and Palmoil.io, annually to identify the risk level of suppliers by segregating suppliers into high, medium and low risk mills. In 2022, 64.4% of our suppliers are flagged as low risk, 19.3% as medium risk while another 16.3% as high risk. In terms of direct and indirect volumes of FFB received by our supplying mills, 55.4 % is deforestation free while 44.6% is non deforestation free. The high risk suppliers is not an indicative of non-compliance, but due to insufficient commitment or information provided at the time of reporting. This method of segregating suppliers is to engage and provide necessary support based on priority and different approach.
We value our suppliers and concurrently prioritize their compliance towards our Sustainable Palm Oil Sourcing Policy. Hence, we developed Supplier Outreach & Engagement Program (SOEPro) in 2022. This goal of this program is to provide support to our high risk suppliers annually via periodic supplier engagement in which we focus on areas that the suppliers scored poorly. We provide one-to-one assistance and support but not limited to guidance to establish policies, technical advices, managing grievances and rectifying non-compliance. This effort is to ensure they are improving progressively over the years to meet our Sustainable Palm Oil Sourcing Policy. We expect all our suppliers especially high risk suppliers to be able to benefit from our initiative and to be compliant within three years’ time (174).
*PIL Group operation refers to Pacific Inter-Link Sdn. Bhd, PT. Pacific Medan Industri, Pacific Palmindo Industri, Pacific Oils & Fats Industries Sdn Bhd, PT. Pacific Indopalm, PT. Oleochem & Soap Industri