Towards a complete, objective and verifiable approach for the responsible procurement of significant raw materials for feed.
Agrifirm’s responsible procurement ApproAch
link to success
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Agrifirm Responsible Procurement Approach2
Contents
1. Introduction 3
1.1 reason why behind the new responsible procurement approach 3
1.2 Ambition and scope of Agrifirm’s responsible procurement approach 4
2. Agrifirm’s responsible procurement approach 6
2.1 Combining regions and crops 6
2.2 The advantages of the new approach 6
2.3 The steps in our new approach 7
3. Methodology & Data 9
3.1 establishing a framework of relevant responsibility issues 9
3.2 Determining ‘essential topics’ and ‘responsibility topics’ 9
3.3 Data collection 10
3.4 risk calculation method 10
4. Stakeholder involvement 13
4.1 Finding a balance between transparency and confidentially 13
4.2 strategic dialogue about the new approach 13
4.3 Dialogues in the countries of origin 13
5. Milestones 14
5.1 Brief overview of all milestones 14
5.2 objectives for 2016 14
5.3 After 2016: start the expansion to measures 15
5.4 once every two years: Monitoring of progress 15
Appendix 16
Appendix 1: Decision tree generic – specific risk assessment 16
Appendix 2: essential topics (light blue) and sustainability topics (light green) 17
Appendix 3: Data sources per sustainability category 21
Appendix 4: report of stakeholder session of 2 December 2015 22
3
1.1 Reason why behind the new responsible procurement approach
With a growing world population and increasing prosperity, demand
for food, feed and biomass for other purposes will increase in the
coming decades. This growing demand results in increasing pressure
on natural resources such as fertile land, biodiversity and water. The
agricultural sector faces the challenge of producing raw materials in a
sustainable way, managing the world’s natural resources responsibly.
Agrifirm is committed to play its part to contribute to this global
challenge. one of the main ways in which Agrifirm has an impact on
agricultural production is by means of the procurement of responsibly
produced raw materials for its feed solutions and crop caring solutions.
in this policy document of Agrifirm Group, the specific approach that
has been developed, together with the procurement department of
Agrifirm Feed (netherlands), for our agro commodities for producing
compound feed will be explained.
Feed safety and business integrity are essential aspects of our
operation and procurement. For decades now, feed safety has been of
the highest priority for Agrifirm and we have initiated generic control
systems for the branch, such as GMP+ and secureFeed. Monitoring
and controlling of feed safety standards is obviously at the core of our
operational guidelines, but is also part of our existing procurement
policy. A code for business ethics, which is the basis for legal and
transparent trading relations with our suppliers, is also part of our
existing procurement policy. Along with principles and agreements
for feed safety and ethical trade, setting up a system for responsible
production and processing practices in origination areas of other raw
materials is the new aspect in the procurement policy of Agrifirm Feed
(netherlands).
still, when it comes to the procurement of responsible raw materials
for feedstuffs and grains, historically we have always been a very active
stakeholder. For many years now, Agrifirm has been closely involved
in the debates regarding responsible soy and responsible palm oil;
two raw materials that are of great importance for the feed industry.
Both soy and palm oil are the subject of intense debates regarding
nature conservation, environmental impact and human rights. We
have learned a lot from the various initiatives taken in the palm oil
and soy chain.
Because we also procure other raw materials from soy or palm
regions, and because we are aware of the sustainability and social
challenges in the production regions closer to home, we believe a
more comprehensive view on agro commodities and regional risks
is needed. Therefore we have decided to develop a new approach
to create transparent, objective and specific information about all
important procurement regions and supply chains.
Being an intermediary actor in the supply chain, we believe that it is
important to work together on this approach with our suppliers and
stakeholders. We are highly committed to strong cooperation with
our supply chain partners and stakeholders and we are convinced that
we can only take the right measures to make agricultural production
1. Introduction
For quite a long time now, the responsible procurement of raw materials has been an important topic within Agrifirm. This was
mainly focused on the implementation of an advanced system for feed safety, but now it’s time to proceed to another phase.
In this document we present our new risk-based approach to responsible procurement of feedstuffs and grains. We explain
why and how we will proactively cooperate with our supply chain partners to arrive at the responsible procurement of all
our main raw materials. The approach presented has been prepared and piloted in close cooperation with two independent
consultancy companies.
Agrifirm Responsible Procurement Approach4
more responsible in close cooperation and based on a shared vision.
Generally speaking, when we talk about responsible procurement, we
think of the following actions as having an impact as Agrifirm: gathering
the right information, implemention of thorough regional-based risk
analyses, initiating supply chain cooperation and supporting the
creation of structural dialogues about impactful measures towards
responsible production of agro commodities. We are convinced that
it is of great importance to work on this ambition together with our
suppliers to realise true change in countries of origin.
1.2 Ambition and scope of Agrifirm’s responsible procurement approach
The use of responsibly produced raw materials is an important element
of Agrifirm’s Csr policy. in our Csr policy, we distinguish six different
pillars (see figure 1) and we frequently report on the progress for all
six pillars. When we report on progress, we follow the internationally
recognised principles of the Global reporting initiative (Gri). in the
current version of Gri, an organisation is challenged to focus on the
sustainability subjects on which it has the biggest impact (‘material
subjects’). That is what we are aiming at for all our activities, and also
for the new responsible procurement approach.
For the pillar ‘responsible raw materials’, we have formulated the
following ambition for 2020:
since we have sharpened our Csr policy in 2015, we make a clear
distinction between contributing to responsible raw materials
by supply chain initiatives and programs such as skylark and the
cultivation and supply of Dutch soy that are reported under the pillar
‘sustainable Consumer supply’, versus initiatives that contribute to the
responsible procurement of raw materials, that are reported under the
pillar ‘responsible raw Materials’.
We know we will have the greatest positive impact on ‘responsible
raw Materials’ if we first direct our energy and resources towards
the most strategic raw materials in terms of their shared volume
in the total raw materials portfolio. This volume based focus is also
very clearly linked to the ‘material’ activities (see table 1) of our feed
organisation; procurement major volumes of agro commodities.
Sales volume (x 1,000 tonnes) 2014
Compound feeds 4,248
Co-products 2,371
Premixes & concentrates 461
Cereals, potatoes, onions and carrots 612
Fertilisers 430
Organic fertilisers 537
Crop protection products (€ millions) 131.7
in the initial phase, we limit the scope of the program (at this
moment) to all purchases of Agrifirm Feed (netherlands), because of
the relatively large contribution of the procurement of raw materials
of Agrifirm Feed (2.9 million tonnes) as can be observed in figure 2.
However, Agrifirm Belgium and Agrifirm Germany (from 2017 Agrifirm
nWe) will be very relevant companies to continue with when the
approach has been implemented for the netherlands.
SustainableConsumer Supply
ResponsibleRaw Materials
Efficient Production and Logistics
Employees, the Foundation for
Success
Efficient Use ofRaw Materials
Healthy Plants and Healthy Animals for
Healthy People
Figure 1: The six pillars of the responsible procurement policy
Working on Responsible Raw Materials
By 2020, all major commodities, including wheat,
corn and soy, will be part of Agrifirm’s sustainable
procurement policy. The specific risks of
producing all these commodities are charted for
a certain region with the actions Agrifirm is taking
in that context. We also make organic fertilisers
and compost widely available to growers.
Responsible Raw Materials
Table 1: Agrifirm’s activities in terms of volume
5
For Agrifirm Feed (netherlands), the following raw materials are
included, based on the criterion that a raw material accounts for
at least 2% of the macro ingredients for Feed netherlands, which
is approximately 90% of our total volume of feed ingredients.
> Maize > soybean extract
> Wheat > Wheat feed meal
> rapeseed extract > Citrus pulp1
> Barley > sunflower meal
> Palm kernel expeller
Remark: The use of raw materials by our clients – the farmers – is not part of this specific strategy, neither is the search for alternative raw materials (e.g. alternative protein sources).
Generally speaking, we can identify a dominant production
region for each of the raw materials. Based on our own
procurement experiences, we identified the following main
procurement regions:
> south America > Black sea region
> UsA/ Canada > Asia
> northwwestern europe > Australia
> Baltic states
1 Citrus pulp is often substituted with beet pulp when relative prices change. We will take this into consideration when we start with the regional-
based risk assessment for citrus pulp by also taking into account sugar beet.
AGRIFIRM FEED6 production facilities2.900.000 ton compound feed
AGRIFIRM POLSKA3 production facilities
195.000 ton compound feed
AGRIFIRM BELGIUM1 production facility292.000 ton compound feed
AGRIFIRM MAGYARORSZÁG2 production facilities
229.000 ton compound feed
AGRIFIRM DEUTSCHLAND3 production facilities748.000 ton compound feed
STO POSTO*1 production facility
92.000 ton compound feed
* Minority interest
Figure 3: Regions of raw materials
Figure 2: Agrifirm compound feeds European production facilities
Responsible Procurement Approach6 Agrifirm
2. Agrifirm’s responsible procurement approach
2.1 Combining regions and crops
The basic idea behind this new approach is that there is a great deal
of public information available about sustainability risks in a particular
agricultural region. These risks can be supply-chain-specific or crop-
overarching. Analysing these risks using publicly available data can
help structure the dialogue with suppliers regarding the relevant,
specific issues that may play a role in the region in which the supplier
procures its ingredient.
In this chapter, we briefly explain what the new responsible procurement approach entails and we introduce
the basic elements: the generic risk assessment, the specific risk assessment and stakeholder involvement in
those processes. The leading idea behind the new approach is that we want to know the risks on societal and
environmental issues in our supply chain and start cooperation with suppliers to jointly work on these issues.
(the farmers) and our clients’ clients (the meat, dairy and egg sectors,
manufacturers of A-brands and retailers).
The approach as described in this document has the following
advantages for Agrifirm:
> strengthen cooperation and trust between Agrifirm and its
suppliers
> Take co-responsibility of certain sustainability problems and solve
these at the appropriate level
> involve local stakeholders to provide with up-to-date and realistic
data about local situations
> improve farming practices to increase productivity and make
farming more sustainable
> substantiate decision-making of the procurement department
concerning responsibility aspects of our supply chains
> Proactively identify and mitigate sustainability issues in the supply
chain
The added value for our suppliers is that they:
> improve and strengthen the relationship with their customers
> obtain a structured method to analyse sustainability
risks in their supply base
> Are able to share responsibility with the next link in the
supply chain
> Are able to implement measures that are supported by
local stakeholders
The added value for our clients – the farmers – is that they:
> Can make use of a transparent and reliable system to realise their
ambitions to also apply their responsible procurement principles
to raw materials for feed
2.2 The advantages of the new approach
Agrifirm has initiated this new approach because we see substantial
advantages in a structured risk-based approach to procurement of raw
materials. We are convinced that this is a very positive and constructive
approach that has additional advantages for our suppliers, our clients
Major crops in the Distinguished
analysis procurement regions
Maize South America
Wheat USA / Canada
Rapeseed extract Northwestern Europe
Barley Baltic States
Palm kernel expeller Black Sea region
Soybean extract Asia
Wheat feed meal Australia
Citrus pulp / Beet pulp
Sunflower meal
Table 2: Nine crops and seven procurement regions
7
> Cost-ineffective measures for responsible raw materials for feed
are prevented by integrating those with existing systems for
risk management (feed safety systems).
> Can refer their customers – the downstream partners2 who are
increasingly challenged on sustainability in their supply
chains – to Agrifirm to receive information about the responsibility
of their feed ingredients
The added value for the clients of our clients – downstream chain
partners – is that they:
> Do not have to be concerned about responsibility issues in
their supply chains (at least concerning the feed part)
> Gain sound insight into the process used by Agrifirm to arrive
at responsibly sourced ingredients
2 Egg, dairy and meat industry, producers of A-brands and retailers.
2.3 The steps in our new approach
Before we describe the risk assessment and stakeholder involvement
in greater detail in chapter 3 and 4, we would like to introduce the
various steps taken in the process.
Step 1: Generic region-based risk assessment
First, we make a generic risk assessment for our main procurement
regions and our major raw materials. The generic risk assessment is
based on publicly available data. All data sources used as an input for
the generic risk assessment are well documented. The purpose of the
generic assessment is to arrive at a systematic analysis of the most
relevant responsibility risks for a specific crop in a specific region. it
helps to focus the discussions with our suppliers rather than talking
about all potential risks. The generic analysis helps to quickly focus
on the main issues. in the first analyses we will carry out, we invite
independent third-party experts, to implement this process of a
generic region-based assessment in order to demonstrate the right
decision-making process when it comes to verifying publicly available
data sources.
Step 2a: Discuss supply-chain-specific situation with the suppliers
The generic assessment will be shared and discussed in detail with the
supplier(s). supplier meetings will be organised for every raw material.
in those cases in which the supplier does not recognise certain issues
that have been identified in the generic assessment, we will discuss
whether he has additional information that demonstrates the issue
does not occur/ occurs less in the specific region or supply base. in
case of agreement on certain risks, a discussion will be started about
prioritising these risks. More information can be found in the decision
tree as presented in Appendix 1.
Step 2b: Select priorities
When the one-on-one supplier meetings are finished for a minimum
volume share of 80% of each ingredient, the next step will be taken.
The 80% rule is established to prevent severe delay of the process if
one or few (smaller) suppliers cannot ( yet) cooperate.
When this substantial part of the supplier conversations has taken
place for a specific raw material/region combination, an overview
of the most important priorities can be discussed with a broader
range of local stakeholders. it is also possible that we will organise
a stakeholder session together with our supplier about a selection
of raw materials that is related to the same issue or region. it is also
possible that the dialogue about priorities with be integrated in step
3b (discussion mitigation options).
Step 3a: Discuss risk-mitigation options with the supplier(s)
The next step is to investigate possible measures to mitigate the high-
priority responsibility risks with our suppliers (the red areas in figure
4). We map all measures that are already taken by the supplier and we
will discuss additional measures that can be implemented (long list)
to achieve positive change (green areas in figure 4). subsequently, we
Figure 4: From risks to mitigation measures for a positive impact
RISK IMPACT CHANGE IMPACT
100% 20%
80% 40%
60% 60%
40% 80%
20% 100%
Prob
abili
ty
Agrifirm Responsible Procurement Approach8
will try to bring back the long list to a short list of measures, taking into
account the scope of influence of the supplier, the costs involved with
certain measures and the likelihood of the measure being accepted
by a broader group of stakeholders.
Step 4a: Draw up and implement an action plan
Together with our suppliers, we will develop an action plan for
collaboration on mitigating high-priority risks. These action plans
will be developed in such a way that the direct effect of mitigation
measures can be verified by external stakeholders.
Step 3b/4b: Connection with relevant stakeholders
To challenge and discuss the appropriate local measures for a high
priority responsibility risk, sessions will be held with local stakeholders
at various stages of the process. These stakeholders are invited to share
their thoughts about the impact and effectiveness of the proposed
measures.
Step 5: Monitoring and control
All action plans that Agrifirm agreed upon with suppliers will be
summarised in an overall action plan for responsible procurement. in
this overall document, Agrifirm will also account for the overall impact
of those plans on the entire supply base of our main raw materials
(see section 1.2). once every two years, all generic and specific risk
assessments will be updated, and the contribution of risk mitigation
plans will also be evaluated.
9
3. Methodology & Data
3.1 Establishing a framework of relevant responsibility issues
We first establish a framework for assessing all relevant responsibility
issues. This framework helps to direct the data search, ensures that no
issues are left outside the scope of the analysis and ensures that the
risk assessment is carried out in a similar manner for all crops, regions
and years.
Wherever possible, we use internationally established and recognised
definitions. Therefore, the iso 26 000 guideline – a well-known and
widely accepted international standard on responsible production
– is our starting point. We consider ‘consumer issues’ to be outside
the scope of our analysis and have decided to slightly alter the
‘organisational Governance’ category.
Figure 5: The ISO 26000 responsibility categories
In this chapter we will discuss the methodology that we will use to arrive at a prioritisation of responsibility risks. We will first
describe how we arrived at a framework covering all relevant responsibility issues, we discuss how we selected so called
‘essentials’, we elaborate on the data sources used in the generic risk assessment and we present the risk calculation method.
We used iso 26000 as a starting point to come up with a list of
concrete responsibility items per category. For example for Human
rights we listed child labour, forced labour, discrimination etc.
For The environment, we listed a number of topics such as water
depletion, water pollution, soil erosion, soil quality decline, invasive
species, waste, illegal agrochemical, etc. We noticed that the category
Consumer issues was not entirely relevant for our generic risk
assessment, as we are performing the risk assessments in a business-
to-business environment.
We observed a similar problem for Business integrity. A number of
items are relevant in the generic risk assessment and can be linked
to responsible production (for instance, interaction of farmers with
smallholders, market exclusion of smallholders etc.), but other topics
are about the individual business relationship between Agrifirm and a
specific supplier (for example, respecting confidentiality agreements,
keeping promises, etc.). As explained previously, the basic principles
of ‘business integrity’ are included in the Agrifirm a code of conduct
for conducting business. Following the principles from this code of
conduct is always a prerequisite of working with suppliers.
3.2 Determining ‘essential topics’ and ‘responsibility topics’
At Agrifirm, we consider it very important to have a structural
dialogue with our suppliers and relevant stakeholders about the
responsibility issues and mitigation options. our aim is to have a
complete list of all responsibility risks. We also recognise that certain
responsibility issues should be addressed with high priority. These so
called ‘essential topics’ are derived from the oeCD-FAo Guidance for
responsible Agricultural supply Chains and are based on a number
of Conventions and Treaties that are generally accepted as ‘ways to
Organisation
Human rights
Labourpractices
ConsumerIssues
Theenvironment
Fair operatingpractices
Communityinvolvement
and development
Holistic approach
Organisational
Governance
Interdependence
Agrifirm Responsible Procurement Approach10
conduct business in a responsible and ethical manner’, particularly
the 8-core iLo Conventions. The ’essentials’ are clearly defined in
Appendix 2 and deal with themes such as: forced labour, child labour,
discrimination, remuneration, protection of the right of workers to
organise themselves and to carry out collective bargaining and the
protection of land and water rights.
To be sure to cover all ‘risks’ that could occur in the production of raw
materials, we analysed several responsibility standards, programs and
codes (e.g. sAi, Un Code of Conduct, Global Gap, etc.). We therefore
formulated the remaining ‘responsibility topics’ in such a way that
they:
> describe a concrete risk – in other words they are
phrased negatively
> guide the third party that conducts the risk assessment
about what kind of information to search for
> do not, or as little as possible, describe (positive mitigation)
measures
> are specific enough to make sure that when we talk about
measures in a later phase of the process, the measures can
be connected to the specific responsibility problems
in section 3.4 we explain how and why we aggregate a number of
responsibility items into ‘overarching responsibility problems’. soil
depletion, soil pollution, soil compaction and soil erosion do for
instance add up to the risk category ‘soil’ and a similar example can be
given for biodiversity or water.
Although we have done our utmost to arrive at a consistent and complete
system, we welcome suggestions from our (local) stakeholders to add new
issues.
3.3 Data collection
The risk assessment process starts with a generic risk assessment
using publicly available data. The generic risk assessment is carried
out for all of the various raw material-region combinations. To avoid
unnecessary duplication, a general analysis of the responsibility issues
in a specific region is first made which will be the starting point for the
risk assessment of various crops in that same region.
For the first analyses, the generic risk assessment is carried out by an
independent third party. We want to make sure that the process of
data collection, validation, aggregation and analysis is transparent
and reproducible. Therefore all data sources used in the generic risk
assessment must be registered.
The information for the generic risk assessment is gathered from
a wide range of public sources. Wherever possible, official data by
governments or international institutions such as the World Bank
or FAo are used, for example World Bank open Data, FAosTAT,
eUrosTAT or databases managed by local authorities. Furthermore,
indices or tools created by universities or nGos are used, such as Yale’s
environmental Performance index, the Corruption Perception index,
commodity.globalforestwatch.org and LandMark. in Appendix 3 we
provide an overview of possible data sources for each iso category.
We explicitly instruct the third party who carries out the generic risk
assessment not to include supplier specific information in the generic
assessment. This supplier-specific information can come from annual
reports, responsibility reports, news articles, the company’s website
and so on. We make this clear distinction between the generic and
specific risk assessment because this supplier-specific information
might create a biased view on certain responsibility problems in a
certain region. The supplier-specific information will be obtained in
the one-on-one conversations with the suppliers and will be included
in the specific risk assessment.
3.4 Risk calculation method
We used the Fine & Kinney model (1971) as a starting point for
quantifying the responsibility risks in the generic analysis. Fine & Kinney
introduced a very pragmatic and objective management method for
analysing and prioritising risks: multiplying the expected frequency of
a certain ‘event’ to occur with the expected impact of that ‘event’. The
model is very helpful for determining various risk levels and coming
up with decision rules for dealing with these risks.
Before explaining the method to arrive at a numerical assessment of
various responsibility risks in detail, it is important to understand the
limitations of attaching numerical values to items as intangible and
diverse as responsibility risks in agricultural supply chains. The reason
why we still do so is to arrive at an approach that is transparent, can
be repeated in time and by different people, and enables an analysis
of effectiveness of various risk mitigation options.
11
We will explain the methodology in more detail using a concrete
example. The responsibility topic discussed below is biodiversity loss.
Based on the analysis of existing standards, we find that the decline
of species, the presence of invasive species, hunting on threatened
species and the preservation of high biodiversity value areas are
important observable indicators that tell something about the
risk of biodiversity loss. imagine we find that invasive species are a
major problem in a certain region because outbreaks of the species
occur very frequently. We count a 100% probability for frequency.
Let’s assume we do not find any signals that hunting takes place,
that species are declining or that highly protected areas are poorly
protected. Both receive a 20% probability for frequency. Adding them
up leads to an average score for biodiversity loss of 40%. This is below
the critical limit of 50%, however the score of indicator one is above
the critical limit of 50% and therefore will remain on the list of priority
topics.
in the Fine & Kinney model, particularly the impact classification can
be problematic for responsibility risks. Although it is possible to give
each indicator an individual impact score, we decided not to do so
also after consultation with stakeholders. it is difficult and subjective
to determine the severity of the impact of the various indicators and
they can hardly be compared with each other. it is more relevant to
observe whether or not the issue occurs and how frequently it occurs.
We use the following frequency scoring:
Because not all responsibility topics will have the same number of
observable indicators (the essentials automatically have one definition
for a topic), we will transform these scores into percentages to make
them comparable. For each topic the maximum overall score will be
100% (being the riskiest) and the score per indicator can vary between
20%, 40%, 60%, 80% and 100%. For the ‘responsibility topics’, an
average score will be calculated based on an average of all indicator. if
a separate indicator or an overarching theme scores 50% or higher, all
topics related to this theme will be on the priority list.
Frequency category Frequency score
Never happens, almost never happens (<5x per year) 20%
Happens occasionally (5-10x per year) 40%
Happens regularly (>1x per month) 60%
Happens often (>3x per month) 80%
Happens very often (>1x per week) 100%
Table 3: Frequency categories
Score on an essential topic ‘X’ Score on a responsibility topic ‘Y’
Indicator ‘a’ Indicator ‘b’ Indicator ‘c’
Never happens, almost never happens
(<5x per year) (20% probability)
Happens occasionally
(5-10x per year) (40% probability) 40% 40%
Happens regularly
(>1x per month) (60% probability) 60%
Happens often
(>3x per month) (80% probability) 80%
Happens very often
(>1x per week) (100% probability)
Overall score 60% Sum of 40%, 80% and 40% divided by 3 indicators = 53.33%
Decision ≥ 50%: On the priority list for ≥ 50%: On the priority list for further discussion with supplier
further discussion with supplier N.B. If indicator a or c would have scored lower, the theme
would not have been on the priority list, but indicator b would
have been part of further discussion.
Table 4: Critical thresholds for responsibility risk scores
Agrifirm Responsible Procurement Approach12
For the essential topics the analysis is slightly different. Because for
instance child labour or forced labour are typically topics that are
essential when it comes to responsible raw materials, the analysis if the
occurrence of such a problem is identified with one comprehensive
international acknowledges definition. However, such an essential
topic can be identified more or less frequently in a specific region. As
described previously, there are five categories to assess the frequency
with which a problem can occur.
in the example below, we give an example of what happens in the
case of an essential topic. First, it can be noticed that child labour is
specified with only one indicator. This is true for all essential topics, as
essential topics follow the exact definitions from their accompanying
Convention or Treaty (often the iLo Conventions). indicator 1 in the
table below defines child labour based on the age of the children,
the type of work and the interference with schooling. if there are
reports that child labour occurs occasionally, the score of 40% will
immediately be given for this topic. Because we are referring here to
an essential topic, it is very good to realise that a score of 40% does
not lead to a direct priority, but that it is very important to monitor and
check whether this assessment is still realistic for the generic situation
in a region.
The methodology as described above can also be used to assess the
impact of a proposed measure. if we take the example of biodiversity
loss, measures can be implemented that affect one of the three
indicators. As a consequence, the frequency of occurrence of that
specific item is likely to decrease and the risk score will improve, also
impacting the overall risk score. The framework therefore can also
help to make the impact of certain measures visible.
Responsibility topic Indicator Frequency Total score
Child labour Indicator: Children under 15 do carry out work that is mentally, 40% 40%
physically, morally or socially dangerous and interferes with their
schooling (e.g. they cannot attend school, must leave early, cannot
finish their education or must work lengthy hours after school)
Table 5: Example of a calculation for ‘essential’ child labour
13
4. Stakeholder involvement
4.1 Finding a balance between transparency and confidentially
Many important aspects play a role in the procurement of raw
materials: price, origin, technical specifications, quality, safety and
responsibility characteristics are all variables in the decision-making
process.
Agrifirm acknowledges the importance of transparency and
stakeholder involvement to arrive at credible and trustworthy
solutions for responsible procurement. At the same time the delicate
balance between various tradeoffs – see the items mentioned above
– cannot always be carried out in full transparency. if we want to arrive
at solutions that can count on support within our company and by
our suppliers, we must find the right balance between transparency
and confidentiality. We believe we do so when we are transparent
about the methodology, the risk-assessment process, the data sources
used and the actual mitigation measures taken, whilst not sharing the
supplier specific information.
Furthermore we greatly appreciate the involvement of relevant
stakeholders, as their knowledge and experience is invaluable in
‘new’ approaches such as the one proposed here. We involve our
stakeholders on two different levels: in the strategic dialogue about
the approach itself and in specific stakeholder dialogues with experts
of the countries of origin, about the priorities and measures to mitigate
certain responsibility risks in a region.
4.2 Strategic dialogue about the new approach
in the past year that we have been preparing the new approach, we
invited the representatives of a number of internationally operating
In this chapter we describe how we have involved and will continue to involve several stakeholders in
our new sustainable procurement approach. First, we discuss the strategic dialogue with stakeholders
in the Netherlands and then we discuss the role and responsibilities of regional stakeholders.
nGo’s, advice companies and food processing companies to discuss
the transition towards a risk-based approach. The outcomes of the last
meeting (2 December) can be found in Appendix 4.
We have adjusted and improved the approach on the base of the input
from these stakeholders and are really grateful for their willingness to
cooperate with us in a very open and honest way. in order to discuss
the plans and progress of our next steps, we will formalise this type of
process discussion in a stakeholder board.
4.3 Dialogues in the countries of origin
Local stakeholders play an important role in the stepwise, regional,
risk-based approach. in the process of assessing, prioritising and
developing mitigation measures, we will organise local stakeholder
session to include the right knowledge and experience regarding a
region/raw material combination or specific high priority topics. in
that way, we can:
> Make sure not to miss relevant responsibility risks in a
certain region
> set priorities that are recognised as logical by the relevant
stakeholders
> Come up with mitigation measures that are accepted
and supported
> Look for alignment with existing regional approaches
Agrifirm Responsible Procurement Approach14
5. Milestones
5.1 Brief overview of all milestones
Figure 6 provides a graphical representation of the various steps we
will take through 2020. We have used 2014 and 2015 to develop a
solid methodology and involve our stakeholders. We also tested the
first phase of the methodology (generic assessment and first supplier
discussions) in three pilot projects focusing on wheat, maize and
rapeseed. in 2016 we will gain experience with the stakeholder
conversations at the local level and finish the generic risk assessments
for the next raw material-region combinations. in the preceding years
up until 2020 we will run through all steps for the 9 major raw materials
and 7 regions. in 2020, all major raw materials will be included in the
responsible procurement policy.
In this chapter we will discuss the project planning in more detail. It is important to mention that we must gain experience
with this new approach to have a better idea of the time and effort involved in all the various steps. Therefore the objectives
mentioned below are not cast in concrete.
Figure 6: Schematic overview of the most important milestones
5.2 Objectives for 2016
in 2016, Agrifirm will achieve the following results:
> Finalise the generic risk assessments for the first 3 major raw
materials: wheat, rapeseed and maize
> The generic risk assessment will be discussed with a minimum
number of suppliers that are together accounting for at least 80%
of the total volume of the 3 raw materials
> This will lead to a first view on priorities related to specific
raw materials
> We will also gain experience with a first local stakeholder
session for one raw material and or region
15
5.3 After 2016: Start the expansion to measures
After these first steps, consisting of supplier meetings, we will continue
with the following steps:
> Complete the local stakeholder process for the first three raw
materials – wheat, maize and rapeseed extract
> Develop the initial plan(s) together with the involved suppliers
to mitigate high-priority risks and to start up the first local
stakeholder sessions to discuss those plans
> evaluate overall challenges and results with the generic
stakeholder board
5.4 Once every two years: Monitoring of progress
Because changes of situations might occur, all ‘finished’ content
processes related to working on risks for specific raw materials, will
become part of regular monitoring processes as described above. This
enables us to anticipate timely on changing risks, or different options
to realise impact with measures.
Figure 7: Schematic overview of the monitoring process
IN COOPERATION WITHSUSTAINABLE SUPPLY CHAINS
link to success
2014 CorPorATE SUSTAINABILITY rEPorT
Agrifirm &Stakeholders
Agrifirm, third party& suppliers
Agrifirm, suppliers& stakeholders
Agrifirm Responsible Procurement Approach16
Appendix 1: Decision tree generic - specific risk assessment
Does the generic analysis indicate
that there is a risk for a specific issue?
Does the supplier recognise the
outcome of the generic risk
analysis?
If the supplier considers this specific issue
relevant, does the supplier have
information that an issue is not
applicable for the region/supply
base?
This sustainability item is recognised as a priority and
must be discussed in detail with the supplier.
Adequate measures are taken to deal
with this risk, but it remains important to follow the latest developments for
this issue in the monitoring cycle.
Is this information considered to be
sufficient to prove that this is indeed
not an issue?
Adequate measures are taken to deal with this risk, but
it is still important to follow the latest developments for
this issue in the monitoring cycle.
This sustainability item seems not
to be an issue for this supplier and is therefore not a
priority, however it is important to track the latest develop-ments for this issue in the monitoring
cycle.
Does the supplier have additional
Information proving that this
is indeed not an issue?
This sustainability item seems not to be an issue and is therefore left off the priority list.
Are these Mitigation Measures
considered to be substantial?
This sustainability item is recognised as a priority and
must be discussed in detail with the supplier.
The generic analysis will remain
leading and this topic will be
discussed in further detail with the
supplier.
This sustainability item is recognised as a priority and
must be discussed in detail with the supplier
This sustainability item is recognised as a priority and
must be discussed in detail with the supplier
Did the supplier take
credible Mitigation
measures to ensure that the problem is not in their supply chain?
Does the Supplier
recognise the outcome of the
generic risk analysis?
No
No
Yes
Yes
Yes
Yes
Yes
Yes
Yes
No
No
No No
No
No
Yes
17
Appendix 2: Essential topics (light yellow) and sustainability topics (light green)
Item Definition Based on
1. Organisational governance
Conflict /
high-risk areas
Conflict / high-risk areas are those environments in which a significant proportion of the
population is acutely vulnerable to death, disease and disruption of livelihoods over a
prolonged period of time.
FAo (http://www.fao.
org/docrep/013/i1683e/
i1683e03.pdf )
Weak governance
areas / areas with
a high presence of
corruption
Weak governance, whether in formal land administration or customary tenure arrange-
ments, means that the land rights of the poor are not protected.
FAo (http://www.fao.
org/3/a-a1179e.pdf )
Areas with a high vio-
lation of tenure rights
(severe conflicts over
land or water)
Weak governance reduces security of tenure. illegal transfers may cause legitimate
owners or occupiers to lose their rights. informal transfers and informal ownership are
not protected by law, and the protection offered by customary tenures may be weake-
ned through external pressures, and may not be extended to newcomers.
FAo ( http://www.fao.
org/3/a-a1179e.pdf )
Vulnerable natural
resource areas (indi-
cators: food insecu-
rity, water shortages
or environmental
degradation)
Community-based natural resource conflicts may occur at the local level, but often invol-
ve regional, national or even global actors. They range from conflicts among local men
and women over the use of land, to conflicts among communities disputing control
over woodland, or fishers disagreeing about the devices used for fishing.
FAo (http://www.
fao.org/docrep/008/
a0032e/a0032e04.htm)
2. Human Rights
occurrence of child
labour
Child labour refers to situations in which children (younger than 15*) carry out work
that is mentally, physically, socially or morally dangerous and harmful to children and
interferes with their schooling by: depriving them of the opportunity to attend school;
obliging them to leave school prematurely; or requiring them to attempt to combine
school attendance with excessively long and heavy work.
* A declaration of 14 years is also possible for a specified period of time. Laws may also
permit light work for children aged 13–15 (not harming their health or school work).
Minimum Age Conven-
tion, 1973 (no. 138)
Worst Forms of Child
Labour Convention,
1999 (no. 182)
Violation of the
minimum wage
Violating the minimum age refers to a situation in which the minimum age of 15 years is
ignored. Countries are free to specify a minimum age for labour, with a minimum of 15
years. A declaration of 14 years is also possible for a specified period of time. Laws may
also permit light work for children aged 13–15 (not harming their health or school work).
Minimum Age Conven-
tion, 1973 (no. 138)
Forced labour Forced labour refers to situations in which persons are coerced to work through the use
of violence or intimidation, or by more subtle means such as accumulated debt, retenti-
on of identity papers or threats of denunciation to immigration authorities
Forced Labour Conven-
tion, 1930 (no. 29)
Abolition of Forced La-
bour Convention, 1957
(no. 105)
Agrifirm Responsible Procurement Approach18
Item Definition Based on
Discrimination Discrimination refers to situations in which certain individuals are placed in a position of
subordination or disadvantage in the labour market or the workplace because of their
race, colour, religion, sex, political opinion, national extraction, social origin or any other
attribute which bears no relation to the job to be carried out.
equal remuneration
Convention, 1951 (no.
100)
Discrimination (employ-
ment and occupation)
Convention, 1958 (no.
111)
Violation of the
freedom of collective
bargaining
Violation of the freedom of collective bargaining refers to a situation in which employers
and their organisations and trade unions cannot establish fair wages and working condi-
tions. it also provides the basis for sound labour relations. Typical issues on the bargai-
ning agenda include wages, working time, training, occupational health and safety and
equal treatment
Freedom of Association
and Protection of the
right to organise Con-
vention, 1948 (no. 87)
right to organise and
Collective Bargaining
Convention, 1949 (no.
98)
Violation of equal re-
muneration principle
Violating freedom of association refers to a situation in which employees cannot form or
join organisations of their own choosing.
equal remuneration
Convention, 1951 (no.
100) Discrimination (em-
ployment and occupa-
tion) Convention, 1958
(no. 111)
3. Labour practices
Fair compensation Violating fair compensation refers to a situation in which the level of minimum wages is
not appropriate in relation to national practice and conditions, include (a) the needs of
workers and their families, taking into account the general level of wages in the country,
the cost of living, social security benefits, and the relative living standards of other social
groups; (b) economic factors, including the requirements of economic development,
levels of productivity and the desirability of attaining and maintaining a high level of
employment
Protection of Wages
Convention, 1949 (no.
95)
Minimum Wage Fixing
Convention, 1970 (no.
131)
equal remuneration
Convention, 1951 (no.
100) -
Violating safe
employment
practices
Violating safe employment practices refers to a situation in which workers are not pro-
tected from sickness, disease and injury arising from their employment. e.g. no adequa-
te first aid/ medical assistance tools, protective clothing and tools, no clear instructions
for hazardous tasks (risk assessment), etc.
safety and Health in
Agriculture Convention,
2001 (no. 184)
19
Item Definition Based on
Violating working
hours
Violating working times refers to a situation in which workers do not have a daily and
weekly rest periods, and annual holidays. We talk about serious situations in which
employees carry out excessive hours of work (normal working hours do not exceed 48
hours, weekly overtime does not exceed 12 hours) and inadequate periods of rest and
recuperation, which damage workers' health and increase the risk of work accidents.
Forty-Hour Week
Convention, 1935
(no. 47)
reduction of Hours of
Work recommendation,
1962 (no. 116)
http://www.ilo.org/
empent/areas/busi-
ness-helpdesk/faqs/
WCMs_DoC_enT_HLP_
TiM_FAQ_en/lang--en/
index.htm
Item Definition
4. The environment
Climate _ ozone Products that are classified as destructive to the ozone layer are (still) being used
Climate _ Burning There is illegal burning of crop residues, waste or vegetation
Water _ Depletion Water sources are depleted by agricultural practices (e.g. irrigation) causing the availability of natural water for
neighbouring communities, farmers and future generations for drinking and irrigation to be threatened
Water_ Pollution surface and/or ground water are polluted by chemical residues, fertilizers, mineral oil or other sources of
contamination
soil _ Quality decline soil quality is threatened, there are for instance problems with soil compaction, loss of organic matter, macro
nutrients, pH, salinity, etc.
soil_erosion soil erosion is a serious problem. erosion can be caused by the circumstances in the region (water, wind, steep
slopes), poor farm management practices (tillage, lack of crop rotation, covering crops, etc.) or the removal of
native vegetation/ forest
soil_ Contamination soils are contaminated by a surplus or incorrect usage of agrochemicals, fertilizers, or improper disposal
of waste
Waste _ Pollution Waste ends up in the environment causing pollution of soil, water and air, caused by an inadequate storage
and disposal of fuel, batteries, tires, lubricants, sewage and other waste
Pesticides_ illegal use Banned agrochemicals are found in the environment or at the property of farmers (or there is evidence of a
black market for such chemicals)
Pesticides_ Pollution
of the environment
Agrochemicals are found in and threaten the environment (soil, air and water), caused by either incorrect
use (timing and dosing) storage or disposal of agrochemicals
Pesticides_negative
health effects people
Agrochemicals threaten the health of employees or people in the surroundings of the farm, for instance by
aerial spraying, drift, etc.
Pesticides_ resistance The (incorrect) use (timing and dosing) of agrochemicals causes problems with pesticides resistant pests and weeds
Fertilizers_ illegal use Forbidden fertilizers are found in the environment or at the property of farmers (or there is evidence of a
black market for such fertilizers)
Agrifirm Responsible Procurement Approach20
Item Definition
Fertilizers _ Pollution
of the environment
The (incorrect) use (timing and dosing) or storage of fertilizers causes threats to the environment
Fertilizers _negative
health effects people
The (incorrect) use (timing and dosing) or storage of fertilizers causes threats for employees or people in the areas
surrounding the farm
Deforestation Lands are illegally deforested
Biodiversity_Decline
in species
The number of animal and plant species is decreasing
Biodiversity_High
conservation value
areas
There is no preservation of high conservation value areas
Biodiversity_ invasive
species
invasive species and new pests threaten the local biodiversity
Biodiversity_ Hunting Hunting of rare, threatened or endangered species takes place on the property
Biodiversity _ origin
of seeds
Traditional crop varieties are threatened or smallholders have limited access to quality seeds and/or propagation
materials
5. Business Integrity
smallholders Trading opportunities for local smallholders are hindered
6. Consumer issues
7. Community involvement & development
Community_Grievan-
ce mechanism
Local communities or indigenous peoples have no possibility to discuss (or complain) developments in their lands
with land owners / farmers.
Community_ Free pri-
or informed consent
Local communities or indigenous peoples are not consulted when developments that impact their livelihoods are
planned
Community_ neigh-
bouring production
systems
The production systems of one farmer negatively impacts the production system or land use of neighbours
Item Definition
21
Item Definition
Appendix 3: Data sources per sustainability category
Organisational
governance
Human rights Labour practices Environment Business integrity Community
involvement and
development
Corruption perception
index
ITUC Global Rights
Index
ITUC Global Rights
Index
EUROSTAT Corruption perception
index
LandMark Map
LandMark Map Amnesty
international reports
per country
Amnesty
international reports
per country
Global Invasive
species database
FAO Indigenous Peoples
Map
‘Freedom in the world’
https://freedomhouse.
org/
‘Freedom in the
world’
https://freedomhouse.
org/
ILO STAT (ILO)
Country profiles
FAOSTAT
CIA ‘The world fact-
book’
World report on child
labour
Data.worldbank.org
FLUDE Forest data
explorer
(Commodity) Global
Forest Watch
Environmental
Performance Index
WWF’s
Water Risk Filter
Map of Agriculture
FAO Country profiles
Forestry Risk Profiles
Agrifirm Responsible Procurement Approach22
Appendix 4: Report of stakeholder session of 2 December 2015
on 2 December 2015 we organised the first stakeholder session on the Agrifirm responsible sourcing policy. This first session comprised the
conceptual approach of the methodology that was challenged against the experience and vision of three non-governmental and three busi-
ness parties. The objective of the session was to include the insights of those parties in the process steps for the coming years. We shared our
conceptual approach with the following parties: iUCn nL, rainforest Alliance (rA), solidaridad, Unilever, FrieslandCampina (FC) and a business
expert on agro commodity markets. We received comments on various aspects of our methodology that have been (partly) included in our
final approach. For each point of discussion, the following remarks can be categorised.
Conceptual setup and formulation of the region-based risk matrix (draft version December 2015)
Input from stakeholders
> Concerning the criteria used: There are already widely accepted definitions and wordings relating to degrees of impact. Adhere as closely
as possible to generally accepted definitions.
> For some topics, there is no degree of unacceptability, e.g. concerning child labor. The nuance is not needed in the impact, but in selecting
the mitigation actions.
> Quality standards are intended to mitigate risks. Through due multi-stakeholder dialogue risk topics have been discussed and addressed.
such frameworks (think of the well-elaborated rsB criteria) also serve for investigating possible risks on new chains and in new areas.
> Do not force yourself in five levels of impact, a high level of detail does not always contribute and deliver more. For social topics in particular,
less impact levels are needed to classify social risks.
> Probability is not the same as frequency, the fact that the impact does not occur (yet)
> does not mean that there is no chance of major incidents. Think, for example, about the impact of nuclear energy. This would also apply to
climate change (with events such as droughts, floods).
> Take into account that public or private regional risk assessments are available already.
Response from Agrifirm
> We have reconsidered the impact categories of our draft (version December 2015) region based risk matrix, which was built on criteria of
existing standards and programs, but the impact categories were a free translation and ‘forced’ into five categories.
> in order to make a clear link with existing internationally accepted definitions, we redefined our impact categories (and frequency
categories) by referring to internationally acknowledged resources/ institutes and took a critical look at specific topics that require less
nuance when it comes to ‘acceptable’ versus ‘unacceptable’ impacts.
> existing quality standards/ frameworks to assess the responsibility risk we want to take into consideration for our main agro commodities,
does not exist in a form we can directly integrate/apply to our procurement operations, because of the fact criteria are formulated in
terms of required actions and/ or mitigation measures, and not in terms of neutral issue definitions.
> We acknowledge certification as an option to mitigate risks and do consider this as a valuable method when those existing and suitable
standards are relevant for the specific situation.
Level of transparency regarding risk assessments and progress reports
Input from stakeholders
> There is no dilemma between credibility and transparency. share what is publicly available and share your methods and the process, but
do not share names of suppliers, etc.
> The is nothing wrong with sharing dilemmas.
> From assessment to actions is the most important thing to communicate about.
23
> Be aware of the engagement that is needed, do not go too deeply in detail.
Response from Agrifirm
> The stakeholder dialogue strengthened us in our approach: sharing our confidential supply chain information is not necessary, as long
as our impacts of supply chain cooperation are material and can be verified.
The way of working together in the supply chain
Input from stakeholders
> Who is the partner in the supplier chain for Agrifirm, the producer or the supplier?
Response from Agrifirm
> in our supply chains for raw materials, we aim to buy our products as much as possible from suppliers who are producer or closely
connected to the producer, as well. our efforts to cooperate on responsible raw materials start with good collaboration with the supplier.
obviously, we need a link with the producer as well, to actually change things in the origination areas.
Position of the responsible sourcing in broader context of Agrifirm policy
Input from stakeholders
> What is the relationship between responsible raw materials and the other pillars of the Csr strategy?
> How does it relate to your quality standards? Combine quality and Csr.
> risk driven approach does not give added value for your clients and members. What is the market value of your approach?
Response from Agrifirm
> our responsible sourcing Policy is clearly built on the pillar ‘responsible raw materials’. However, monitoring results and realising progress
can result in new supply chain partnerships that not only result in mitigating risks, but (in the long run) can also result in adding value
with programmes/measures that are related to market and consumer demands.
> obviously responsible sourcing is not an isolated approach within our procurement policy. The policy is completely integrated in a
broader set of procurement standards, such as safety risks, nutritional value and price of a raw material.
Overall comments on the conceptual approach
Input from stakeholders
> You selected 9 products, based on the main volumes. But are you sure that some other (smaller) products could not provide
higher risk? Look at the other product on a high level to avoid missing an important issue.
> supply chain approach is based on B-B market, but governments are often needed to reach
> improvement.
> Train your staff, buyers and suppliers.
> You cannot change the world. it is a way of thinking, therefore be transparent and achieve as much as possible.
Response from Agrifirm
> We will take those remarks into serious consideration with the implementation of our policy. With respect to the remark about the
selection of the 9 product: we will take this serious, but expect that material impact is important by implementing our strategy.
link to success
P.o. Box 200007302 HA ApeldoornThe netherlands
T +31 (0)88 488 10 00F +31 (0)88 488 18 00
Royal Agrifirm Group