Traceability and Risk Management
Supplying the world with 100% certified sustainable palm products that remain traceable to field of origin.
SIPEF is 100% RSPO compliant with all criteria for processing RSPO certified oil palm products in the Group. All of SIPEF’s mills are RSPO Identity Preserved (IP), with the exception of Dendymarker Palm Oil Mill, which is RSPO Mass Balance, due to a large proportion of its supply base currently being in the process of RSPO certification.
SIPEF’s two kernel crushing facilities are also RSPO certified. The facilities are fully integrated with the Company’s IP mills in Papua New Guinea, processing palm kernels that are 100% traceable to plantation level.
Of the Company’s entire production area, 69% of the area under SIPEF’s own estates and 80% of SIPEF’s smallholder production area are RSPO certified. Progress towards certification is reported annually through the RSPO Annual Communication of Progress (ACOP).
The percentage of uncertified estates is mainly due to new developments in Indonesia. All of these have passed the RSPO required New Planting Procedure but do not qualify for an RSPO audit yet, as they have not been issued a Hak Guna Usaha (HGU) by the Indonesian Government. Further challenges in Indonesia are due to a regulation requiring 20% of HGU areas to be under smallholders for all new and renewed HGUs. To ensure compliance, SIPEF has added and engaged new smallholders, and is working with them on their integration into the Company’s certified supply base.
SIPEF’s third-party suppliers are smallholders with whom SIPEF has a Memorandum of Understanding (MoU), whose production location is known and mapped, and who are either already RSPO certified or have the potential to become certified within the Group’s RSPO Time Bound Plan. As such, while some of the Company’s supply base is not yet certified, all of it is traceable.
All third-party suppliers must comply with SIPEF’s Responsible Purchasing Policy, which sets out criteria for selecting and working with smallholders on their journey towards certification.
It ensures that all of SIPEF’s supply base is or will become certified to the RSPO Standard where and when possible. For the smallholders SIPEF works with who are yet to be certified, fresh fruit bunches (FFB) are at present delivered to a third-party mill, in order to maintain the certified IP status of SIPEF’s own mills.
SIPEF’s Responsible Purchasing Policy also provides the framework for the procedures utilised to select, monitor, and if necessary, not include smallholders from the Company’s supply base. In alignment with SIPEF’s policy, these local procedures are based on requirements linked to human rights, labour and environmental issues.
Compliance & Risk Management in Indonesia
In Indonesia, PT Tolan Tiga Indonesia requires that newly engaged smallholders undergo a screening process before entering into a MoU. This process determines if their land and practices are compliant with SIPEF’s policies, and if they are over time, able to be integrated into SIPEF’s supply chain. Part of the screening process includes checking the locations of the plots and evaluating the smallholders against a set of geographic, fundamental, and continuous improvement criteria.
Any smallholder located on land that is unsuitable for growing oil palm according to the RSPO standard will not be able to be part of the supply chain. This includes any planting on peat, on steep slopes, within a riparian zone, within 100 meters of an area designated for forestry use or within 500 meters of a protected area. Smallholders are further reviewed against other fundamental criteria, including proof of legal authorisation of land use, engagement on respect of labour rights and whether they are a part of an association. The agronomic practices and the history of the land use are also reviewed. PT Tolan Tiga Indonesia works with a checklist to be completed by the smallholders as part of the screening process. The checklist also serves as a socialisation process to understanding of policies and the agreed commitments.
Under SIPEF’s company managed smallholder programme, the existing production areas are managed entirely by the Company and fall under the internal control system the Company has in place for its own operations. Any new smallholder development under this programme will undergo the RSPO New Planting Procedure (NPP). This ensures that there is compliance with all of the key criteria including assessing soil suitability, integrated High Conservation Value (HCV)/High Carbon Stock (HCS), land use change, social impact and greenhouse gas (GHG) assessments.
PT Tolan Tiga Indonesia engages with its smallholders through regular outreach, support and monitoring. In particular, the outreach has the main objective of socialising the policies and graduating growers into the scope of the certified supply base once they are ready for RSPO certification.
An internal Standard Operating Procedure (SOP) has been developed and is managed by PT Tolan Tiga Indonesia’s Smallholder Department in Indonesia. The SOP ensures alignment in the selection and monitoring procedures for smallholders across the operations. The aforementioned smallholder checklists can be found:
· here, for company managed smallholders
· here, for associated smallholders
More details on the different types of smallholders and programmes SIPEF works with in Indonesia can be found on the SIPEF Indonesia local website.
Compliance & Risk Management in Papua New Guinea
In Papua New Guinea, SIPEF collaborates with associated smallholders through Hargy Oil Palms Ltd (HOPL), who have maintained their RSPO certified status since 2009. Associated smallholders are in principle independent as they own their own land and maintain full decision-making power on which crops they grow. However, due to their geographic isolation, they can only sell to the mill within their vicinity.
HOPL also works with a checklist, but primarily for monitoring the compliance of its existing smallholders. The company is currently not adding any new growers to its programme due to the requirements of the RSPO New Planting Procedure (NPP). Similar to the approach with the company managed smallholders in Indonesia, all new developments must be approved by SIPEF and undergo the NPP. Unlike the company managed smallholders in Indonesia, these growers manage their own farms and therefore need to individually comply with SIPEF’s policies and the RSPO Principles & Criteria.
HOPL provides its associated smallholders with regular training, conducts block inspections and internal audits. These smallholders are also audited annually by an RSPO Certification Body utilising a sampling intensity formula. As is the case with the estates managed directly by SIPEF, once they are certified, their FFB is included within the certified supply base of the associated mill.
More details on the type of smallholders and the programme SIPEF works with in Papua New Guinea can be found on the SIPEF Papua New Guinea local website.
Non-compliances by smallholders are evaluated on a case-by-case basis to understand their origins and subsequently determine the appropriate actions to be taken. SIPEF’s approach prioritises maintaining engagement and providing the opportunity for smallholders to take remedial action.
Smallholders who do not comply are supported until they are able to enter the supply chain again. If a major breach is found, the crop is segregated from the certified supply chain until satisfactory corrective actions have been implemented.
Transparency: Traceability Tool
In order to communicate the progress towards achieving a 100% certified sustainable and traceable supply base, SIPEF has developed an interactive mapping application called Geo SIPEF. The Geo SIPEF Traceability Tool shows the location of all SIPEF palm oil mills, kernel crushing plants, rubber and tea factories, and their respective supply bases. Additional information is provided on each mill, factory and their respective supply base, including certification status (links to certificates) and production capacity.
Layers can also be applied to the maps to visualise own estate and smallholder boundaries, conservation areas, as well as any land conversion (potential deforestation) and fire hotspots recorded through SIPEF’s monitoring activities. These layers are updated on annual basis.