To procure sustainable palm oil, Kao is working to ensure full compliance with the principles of the NDPE Policy*1 and HCSA*2 with palm oil suppliers as well as its Group companies. In addition, it is aiming to expand its use of RSPO*3 certified oil and complete traceability back to small farms by 2025 in cooperation with palm oil suppliers and NGOs.
Meanwhile, independent smallholders in Indonesia (there are an estimated 2 million such farms) face challenging economic circumstances, as their oil palm cultivation technology is underdeveloped and their harvest yields are also small. Kao positions this palm oil supply chain as a high-risk supply chain, and in 2021 began conducting a direct support activity (training program) for independent smallholders in Indonesia in cooperation with partners*4 aimed at fundamentally resolving the issues (SMILE project*5 ).
As part of this activity, a specialist education team is providing technical support to increase productivity (target of doubling yield) and education for obtaining RSPO certification (RSPO Principles and Criteria, safety education, yield management methods) for approximately 5,000 farms by 2030. If all independent smallholders in Indonesia were to double their oil palm productivity, it could have the potential effect of curbing new deforestation equivalent to the area of the existing oil palm farms on the island of Borneo (approximately 4 million ha).
In addition, Kao is preparing to begin introduction of a Grievance Mechanism*6 for independent smallholders from 2022, as a means to rapidly take action on human rights problems. Grievance Mechanism are a way to autonomously provide response and follow-up for investigating, confirming and resolving issues (complaints) at sites (farms) together with NGOs.
These are some of the ways Kao is reinforcing its activities to resolve fundamental issues in order to improve its sustainability, based on dialogue with sites (farms). Kao intends to communicate the details of these activities to stakeholders (NGOs and others) so as to connect its initiatives with further improvements through dialogue.
Aligned with the 1.5°C target by SBTi*1 , Kao has been conducting activities to reduce its Scope 1+2 CO2 emissions (absolute value) by 22% (base year of 2017) by 2030, which is a medium-term decarbonization target set in Kao's ESG Strategy, the Kirei Lifestyle Plan, established in 2019. The Procurement Division is accelerating its decarbonization efforts, and as a result of installing solar photovoltaic power generation systems for captive consumption and switching to use of renewable energy sources, Kao was able to revise its 2030 reduction target for all global worksites significantly upward to a 55% reduction (compared with 2017).
To switch to procuring 100% renewable energy at all worksites in Japan by 2023, and at all global worksites by 2025, Kao will move ahead with installing solar photovoltaic power generation systems for captive consumption and optimizing renewable energy use (including use of renewable energy certificates, power companies' renewable energy options and PPA*2 ).
In addition, Kao will reduce its CO2 emissions at its worksites in Asia by installing biomass boilers and optimizing cogeneration systems at its production sites.