Palm Oil is an important raw material for Kerry Group and its customers. Despite the well documented challenges within the industry, we recognise the crucial role that palm oil plays in the social and economic development in some regions of the world. Therefore, we remain committed to the responsible sourcing of this commodity from producers who share our views on sustainable production and who can demonstrate compliance with the Group’s requirements.

Palm Oil SourcingAssessment ProcessSince the publication of the Group’s Palm Oil Policy in July

2016, Kerry has made significant progress in understanding

and mapping the origin and supply chain of our global palm

oil volumes. As Kerry has no direct interaction with palm oil

mills, plantations, suppliers or growers of fresh fruit bunches,

we have conducted our engagement with direct suppliers who

represent 97% of our total global volumes. These suppliers

are processors and/or refiners, some of whom own mills

and plantations, while others buy palm oil from the market

for further processing in their own facilities. As part of the

engagement process, we have evaluated our direct supply

base against the criteria below. This assessment is for the

supply period from 1st September 2015 to 1st July 2016.

1. Forest protection (policy/management/independent

verification). No development on HCS/HCV/zero burning.

2. Protection of peatlands (policy/management/

independent verification). No development regardless of

depth.

3. Improvement of livelihood (policy/management)Protect

/ respect the position and rights of smallholders and

indigenous communities.

4. Traceability (policy/management/independent

verification). Ability to trace volumes back to mills and/or

plantation & smallholders

5. Transparency of policy and progress update frequency

(policy/independent verification). Ability and willingness

to share data publicly.

Progress Report (March 2017)

ResultsBased on the work undertaken by Kerry, we have identified

that ~88% of our volume in scope has been sourced from

suppliers that operate in accordance with the requirements set

out in the Group’s palm oil policy.

Following these assessments, we note the need for some

suppliers to improve their performance against one or

more of the five criteria outlined above and over the

coming months we will engage with these suppliers to

seek continued improvement in the relevant areas. Where

a supplier has received an overall score which is below the

threshold to comply with Kerry Group’s policy, we have clearly

communicated to them the areas that need improvement. We

will work with these suppliers and support them in improving

their performance over the next twelve months. Where

suppliers do not make the required progress in the areas we

have highlighted, Kerry will take appropriate action, which

may result in reduced volumes or their removal as a supplier

to the Group.

Kerry has also made significant progress in establishing

traceability within our supply chain for both our palm oil

and palm kernel oil volumes. The following graphs illustrate

the progress made in understanding the source of our Crude

Palm Oil (CPO) and Crude Palm Kernel Oil (CPKO) volumes and

where these are used within Kerry. It should be noted that this

reflects the traceability of Kerry’s volumes for the period from

1st September 2015 to 1st July 2016.

ConclusionLike many palm oil users, Kerry is working to support more

sustainably produced palm oil. Although the industry has

embraced many of the well-known challenges and is working

towards continuous improvement, we believe that there are

still many outstanding issues in producing countries where

further improvement is required. To make real progress on

these issues, commitment and constructive participation is

required from all industry stakeholders, including government

in the producing countries. As a member of RSPO, Kerry will

continue to play an active role in the process and will seek to

promote improvements that support sustainable production

practices.

0 20 40 60 80 100

97%

81%

CPO

CPKO

Figure 1: Global Traceability To Mill

Figure 2: Traceability To Plantation

75%99%

0 20 40 60 80 100

Plantation

MillFOODS

LATAM

NAM

APAC

EMEA

95%

62%100%

36%98%

20%

38%99%

CPO Traceability by Kerry Consuming Region

Figure 3: Palm Oil Traceability by Kerry Consuming Region

Figure 4: Palm Kernel Oil Traceability by Kerry Consuming Region

CPO Country of Origin

MALAYSIA

INDONESIA

55%16%

28%

1%OTHER COUNTRY

BRAZIL

Figure 5: Kerry Volumes by Producing Countries

0 20 40 60 80 100

42%

28%

CPO

CPKO

93%

0 20 40 60 80 100Plantation

MillNAM

APAC

EMEA

30%

76%

22%

25%

96%

CPKO Traceability by Kerry Consuming Region

CPKO Country of Origin

MALAYSIA

INDONESIA

76%

18%

2%4%OTHER COUNTRYCOLOMBIA