Year Organization Country HQ Country location Row Forest Risk Commodity Forest Risk Assessment Forest Risk Process Regulatory risks - Risk Present Regulatory risks - Further Details Reputational Risks - Risk Present Reputational Risks - Further Details Operational Risks - Risk Present Operational Risks - Further Details 2014 Eurostar United Kingdom (55.378051, -3.435973) 1 Timber Yes Assessed as part of a business environmental workshop No risk Low risk, only paper purchased No risk Only paper purchase No risk 2014 Morrison Supermarkets United Kingdom (55.378051, -3.435973) 4 Soy Yes Risk assessment based on materiality, likelihood and consequence to the business. Material risk Material risk Material risk 2014 Holmen Sweden (60.128161, 18.643501) 2 Biofuels Yes Risk assessment according to standard for FSC, PEFC, ISO14001 and EUTR Non-material risk EU Timber Regulations Changes in national and international legislation may affect the forest management system. Non-material risk There are political parties and NGO:s questioning the system for Swedish forest management and silviculture. No risk All harvested areas are reforested 2014 Morrison Supermarkets United Kingdom (55.378051, -3.435973) 5 Biofuels Yes Risk assessment based on materiality, likelihood and consequence to the business. Material risk Material risk Material risk 2014 Grupo JD Brazil (-14.235004, -51.92528) 1 Cattle Products Yes "Please, see note in ""Further Information"" of Traceability item" No risk Non-material risk No risk 2014 Metsä Board Finland (61.92411, 25.748151) 1 Timber Yes "Our products come from sustainably managed forests. Together with partners we ensure that when a tree is harvested, new ones get planted. We secure sustainable supply of raw materials for our units and a supply of renewable products for our customers. We have PEFC and FSC based risk assesments and wood tracing systems in place. Risk assesments are up dated at least once per year. Metsä Board is closely following market signals to detect if any drastic changes are expected in customer behaviour and demand. Metsä board assesses risks on different levels – Group, Business Area and production unit, which also cover supplier operations. At the Group and Business Area-levels, risks are assessed twice a year – one assessment for risks related to Business Areas’ strategies and one for risks related to annual planning. Insurance companies perform technical risk surveys at major production units annually focusing on key property damage and business interruption risks. Our risk assessment management covers the whole value chain from securing the availability of wood to being prepared for possible product liability cases. Risk assessments also cover the entire value chain including all five Business Areas. Our focus on risk management is on preventive damage and loss control. One of the most important tasks of risk management is to ensure undisturbed operations and continuous production, which supports the environmental risk management at the same time. An essential part of Metsä Board’s enterprise risk management is the active co-operation with insurance industry. The major hazard risks such as fires, machine breakdowns and environmental damages, are covered by global insurance policies by insurance companies. Key insurance policies are property damage and business interruption policy as well as general third party and product liability insurance. The centralised environmental risk management is also one of the means to mitigate accidental releases by making use of knowledge transfer within the company. included Sweden, the Baltic countries and Russia. The origin of wood is verified bymeans of the PEFC® and FSC® certified Chain of Custody tracing method managed by the Metsä Group’s wood supply organisation. Metsä Group’s wood supply meets the EU’s Timber Regulation requirement." No risk "Global over-consumption has led to climate change, polarisation of water resources globally and an unsustainable use of natural resources such as deforestation and water scarcity. Changes in consumption habits to favour renewable and sustainable products also endorse Metsä Group’s mission of promoting bioeconomy and sustainable bio-based products. Wood as a continuously renewable and recyclable raw material offers good growth opportunities for businesses focusing onrenewable packaging solutions, hygiene products and wooden constructions, among others. Our main operating countries have vast forest and water resources, and since we use them responsibly, they will be available for generations to come. Additionally, the forest industry is a global benchmark for resource efficiency. We continue to invest significantly into making our processes more material efficient. With our knowhow and skilled personnel, we turn wood – an endlessly renewable resource – into safe and recyclable products sustainably. One of Metsä Group’s main assets is that it covers the whole value chain from forest operations to the wood industry and pulp production all the way to board and tissue manufacturing." No risk Several paper companies have faced reputational losses due to illegal operations in wood procurement. However, all wood used by Metsä Board is traceable and comes from sustainable managed forests. PEFC and FSC Chain of Custodies requires detailed risk evaluation process and these due diligence system report are publicly available. Forest certification is a voluntary system which supports the well-being of forests and confirms the legal origin of the wood. Forest certification is based on an inspection carried out by an independent third party, and it consists of two parts: forest certification and certification of the chain of custody. Forest certification helps to demonstrate to the buyers of wood and paper products that the decision to purchase supports sustainable forestry. Metsä Group supports forest certification that is suitable for local conditions and inspected by a reliable and independent third party. We also actively promote forest certification initiatives in the whole wood supply region.Metsä Board fulfils the obligations of the European Union Regulation No 995/2010 (EU Timber regulation) and US Lacey Act, which prohibit the placing and trading of illegally harvested timber and timber products on the market. Material risk "Demand for forest biomass is increasing, particularly for energy production. This may present challenges to today’s forest products as the availability of wood is under threat due to government subsidies being granted to direct energy uses of wood. This may disturb the competition on the raw material markets. in addition due to the remote location of Finland and the structure of its economy, the need for energy and transportation is higher than the average in Europe. As Finland is completely dependent on maritime transport, any increases in the cost of energy and transportation resulting from climate change and energy policies can considerably weaken the relative competitiveness of its energy intensive industries in relation to the EU and external competitors. Deforestation and illegal loggings are seen as the most important challenges.Only about 9 % of world's forests are certified according to forest certication schemes. Also challenge is to increase total area of certified forests in areas that have low certification rates. Demand for certified products is much bigger that availability in the markets. Although amount of certified raw material in Metsä Group already on very high level, we constantly are looking for ways to increase amount of certified raw materials in our supply chain. In November, Metsä Group together with other world’s leading forest product companies released a leadership statement that commits to sustainable forest management. Metsä Group is a member of the World Business Council for Sustainable Development (WBCSD), and a core member in WBCSD’s Forest Solutions Group where it also held a co-chair position. The Group seeks to ensure that the supply of independently verified sustainable wood and other forest products continues to increase to meet the growing demand also in the future. Altogether, 26 companies – responsible for nearly 40% of annual global forest, paper and packaging sales – have committed to the statement." 2014 Kellogg Company USA (37.09024, -95.712891) 2 Palm Oil Yes "We are a very minor user of palm oil but we are deeply concerned about its environmental impacts. Based on these impacts we have developed a sourcing strategy to address the environmental risk associated with our purchases of palm oil. Since 2008 Kellogg has taken steps to source sustainably grown palm oil and to do our part to end the deforestation associated with palm oil cultivation. In fact, all of the palm oil we use today is 100 percent sustainably sourced through a combination of GreenPalm certificates, mass balance and segregated, sustainably grown supply. We are committed to the protection of forests, biodiversity, and peat lands, to mimimizing the carbon footprint of our palm oil supply chain, and to respecting human rights including no forced or child labor, slavery or human trafficking. Also, 100 percent of the palm oil we use comes from suppliers who are members of the Roundtable on Sustainable Palm Oil (RSPO), a multi-stakeholder organization (of which Kellogg is also a member) working to ensure that palm oil production is economically viable, environmentally appropriate and socially beneficial. Specifically, in Europe, we began using a segregated supply of sustainably grown palm oil in the summer of 2012. The palm oil we use in Pringles® in Europe is sourced through the mass balance system, which combines sustainably grown and conventional palm oil. In other markets, we are continuing to help growers fund the transition to sustainably grown palm oil by purchasing GreenPalm certificates to cover the remaining palm oil, as we have done since 2010. With the RSPO and other stakeholders, we continue to explore solutions to this global issue and to encourage our mass balance suppliers to increase their percentage of sustainable palm oil as the supply increases. We also require, through our Supplier Code of Conduct, our vendor partners to commit to reducing their impact on the environment. We are a member of the Consumer Goods Forum (CGF) and support the CGF’s pledge to help achieve zero net deforestation by 2020. Our purchasing policies relating to palm oil help us to meet this commitment. These commitments are summarized on our company website at http://www.kelloggcompany.com/content/dam/kelloggcompanyus/PDF/Corporate%20Responsibility%20Sustainability%20Commitments%201112.pdf" No risk Although we are very engaged in procuring sustainably sourced palm, we have not found any regulations that are or will be in place in the future that will significantly affect the sourcing of our palm oils. We work with our government relations team to determine if there are regulatory opportunities to grow sustainable and traceable palm oil supply. Material risk Palm oil continues to be an area of great concern for our consumers and our customers. Although there are reputational risks present with the use of palm oil, we have mitigated these risks by procuring 100% sustainably sourced palm through RSPO mass balance and segregated, GreenPalm certificates that are a sustainably grown supply. As customers continue to expand requirements of palm oil use, we may be required to have segregated supplies as we go forward. Non-material risk There are no operational risks for palm oil because we are able source our supply from RSPO suppliers and acquire GreenPalm certificates. As customers continue to expand requirements of palm oil use, we may be required to have segregated supplies of which there is a limited supply. 2014 Danone France (46.227638, 2.213749) 1 Timber Yes "Financial risk : the price volatility risk exposure is regularly monitored by our sourcing teams. Reputation : A reputation risk assessment has been done with an environmental consulting agency. Timber for energy and paper & board have been prioritized as a key commodity. Tropical deforestation risks : a list of high and medium risks countries has been developped with NGOs/consulting agencies (please read forest footprint policy and paper and board policy attached)." Material risk EU or US illegal timber import regulation Material risk Deforestation or illegal imported wood No risk 2014 Dai Nippon Printing Co., Ltd. Japan (36.204824, 138.252924) 1 Timber Yes From percentages accounted for in total purchased values of raw materials, and the scope of environmental impact, we recognize that print and processing paper are the major raw materials in our business activities. Consideration has also been made for GHG emission volume, and forest risk commodities have identified. Risk scoping has been implemented in line with paper for printing and converting procurement guidelines. The strengthening of restrictions against illegal logging have been scoped as regulatory risks. The existence of procurement policies not only at DNP, but also including suppliers, and the status of securing traceability have been scoped. The existence of stable raw material procurement and the potential for increased procurement costs were scoped as business risks. The impact of climate change on raw material procurement was also scoped. Material risk While regulations are being strengthened against illegal logging, such as EU timber regulations and the Lacey Act, given the fact that no domestic legal regulations exist in Japan, it is believed that there could possibly be an increase in raw materials derived from illegal logging, and from the flow of products for which traceability cannot be confirmed. The Company is aware of the need to strengthen control of the overall supply chain, and to establish traceability. Material risk In addition to paper being a major raw material for printing companies, it is also a raw material that is familiar to consumers, and as a result, social concern runs high. Therefore, the Company believes the legality of purchased products, their sustainability, and supplier procurement policies feed into risk. It is believed that loss of order opportunities, “outing” by NGOs and the media, and purchase boycotts are examples of reputational risk. Material risk As resources are limited, it is believed that the stable supply of forest resources as used raw materials exerts a significant impact on business. It is also believed that more difficult material procurement due to the reduction in forest resources, increased procurement costs, and rising paper cost rise are examples of business risks. 2014 Orkla ASA Norway (60.472024, 8.468946) 1 Palm Oil Yes The risk assessment process regarding usage of palm oil has been implemented as part of the overall risk assessment work in Orkla ASA. No risk Orkla is not directly involved in production of palm oil and will be able to switch to alternatives if necessary. Non-material risk The usage of palm oil in any products will expose you for reputational risk both with regard to health and deforestation/climate issues. No risk Orkla is not involved in any upstream activities regarding production, transport or distribution of palm oil. A sudden shortage in the market could potentially distort our production capacity for certain products. 2014 Marfrig Alimentos S.A. Brazil (-14.235004, -51.92528) 1 Timber Yes The Marfrig Group has a process of buying firewood and pallets considering buying from suppliers that comply with national legislation and can prove that the wood comes from sustainable origins. The purchase of paper and cardboard is made only of FSC certified suppliers. This process ensures the company to mitigate the financial, operational and reputational risks, related to the purchase of wood products. With this management process, the Group can ensure that the firewood used in Brazil is almost totally originated form planted forest. The Group have a commitment to bring to absolute zero the residual amount of native wood used in Brazil. Non-material risk Low risk, cause we eliminate the native wood purchase. The reforestation wood comes from legal areas and with all the traceability documents. Non-material risk Marfrig must monitor the situation of its suppliers periodically to guarantee that they continue in compliance with all legal and internal sustainability requirements, so that the purchasing of this commodity does not impact the company’s reputation Non-material risk The supply risk exists, however is low for the sources used by the Company, the current market practices in Brazil is that the wood from sustainable sources has a higher price, but it is available. 2014 Daito Trust Construction Co., Ltd. Japan (36.204824, 138.252924) 1 Timber Yes 木材供給量に関してのリスク評価を実施した。木材供給元の森林量と供給実績による評価。 No risk 北米からの木材の輸入に関するリスクとなる規制はない。 Non-material risk 北米産木材については、合法性が高いといわれている材料であり、その他の重要なリスクも現在は見あたらないと考えています。広葉樹・南洋材その他の地域の調達量・割合は小さい。 Non-material risk 北米産木材については、合法性が高いといわれている材料であり、その他の重要なリスクも現在は見あたらないと考えています。広葉樹・南洋材その他の地域の調達量・割合は小さい。 2014 Coop Genossenschaft Switzerland (46.818188, 8.227512) 3 Cattle Products Yes Life Cycle Assessment. Food Screening done. Working groups have been set up. Food screening of the Coop product range. Stakeholder dialog and collaboration with the Swiss Animal Protection and the Swiss research institute ART. Analysis of food raw materials with the Coop risk monitor (partially based on Maplecroft data). These processes cover the potential impact on reputation (farm animal welfare, origin of meat procucts) and environmental and social conditions. Following risks were assessed: alternative production country, where there is no deforestation risk. No risk Material risk CO2, energy, water, animal welfare Non-material risk Limited risk; Beef comes mainly from Switzerland; Switching the foreign origins to closer ones (Baltics) takes time 2014 JBS S/A Brazil (-14.235004, -51.92528) 2 Cattle Products Yes "JBS evaluated Regulatory, reputational and operational deforestation risks for soy. The identified risks are: Purchase of cattle from deforestation areas involves regulation risks as prosecution from the Public Ministry due to not complying with the conduct adjustment term; financial risks due to possible fines and; reputational (company image). A possible reputational and operational risk with buying cattle from deforestation areas may cause a trade embargo, which can affect exportation to Europe and other markets. Another reputational risk is NGOs`pressure. Another Regulatory and financial risk is a possible conduct from JBS`clients from banning purchases of meat from cattle raised in determined regions of the country, what may turn in a commercial restriction and increase production cost due to changes in supplier locations or plants reallocation." Material risk "Regulatory risks associated to this commodity are: Possible purchase of cattle from deforestation areas, which involves regulation risks (for example: prosecution from the Public Ministry due to not complying with the conduct adjustment term). There are also new requirements of new Brazilian Forest Code (2012) and Rural Environmental Registry – CAR, which JBS`suppliers must follow, otherwise JBS will not have raw matterial suppliers able to provide it." Material risk "Risks associated to this commodity are: purchase of cattle from deforestation areas, which involves reputation (company image). A possible problem with buying cattle from deforestation areas may cause a trade embargo, which can affect exportation to Europe and other markets impacting sales and company´s image. Another reputational risks is NGOs`pressure, such as Greenpeace. That may appear in media being not interesting for company`s image." Material risk "A possible risk with buying cattle from deforestation areas may cause a trade embargo, which can affect exportation to Europe and other interested. With this fact, units may be closed or also may be necessary to follow more requirements to avoid this kind of problems. Another risk may be the restrictions from JBS`clients from banning purchases of meat from cattle raised in determined regions of the country. This may cause shutdown of operational units, or even the necessity to buy raw materials from distant areas, increasing transportation costs." 2014 Danone France (46.227638, 2.213749) 2 Palm Oil Yes "Financial risk : the price volatility risk exposure is regularly monitored by our sourcing teams. Reputation : A reputation risk assessment has been done with an evironmental consulting agency. Palm oil has been prioritized as a key commodity. Tropical deforestation risks : risks countries are Indonesia and Malaysia - please read palm oil position attached" Material risk Labelling on product Material risk Deforestation or health image of palm oil No risk 2014 Grupo André Maggi Brazil (-14.235004, -51.92528) 4 Biofuels Yes The assessment covers the financial, reputational and operational risk, since it is directly related to the impact on the Amaggi's business. In addition, the risk assessment includes image (reputation) and impact on the supply chain (which includes the item deforestation). The assessment is related to the legality of the biofuel, ie, if ethanol production complied with all legal requirements and recommendations of the environmental agencies, contributing to preventing the spread of illegal deforestation. Amaggi has internal procedures and requirements that must be met for the acquisition of ethanol is approved. This assessment is needed in fulfillment of its commitment to sustainability not only domestically but also in its production, meeting legal requirements, which directly impact on financial risks and image (reputation). Material risk Changes in regulatory frameworks. Material risk Due to the impossibility of assessing the origin, as already mentioned, there is a risk that only evaluate the first level of the supply chain. Non-material risk There were identified operational risks due to lack of dependence on this by the company. 2014 Marks and Spencer Group plc United Kingdom (55.378051, -3.435973) 2 Palm Oil Yes Our risk assessment process evaluates materiality, potential impact on reputation, security of supply, productivity & agricultural practice (eg, use of pesticides), environmental & social conditions, deforestation risk, and availability of certified materials at production level and through the value chain. It also considers availability of solutions and their effectiveness. No risk There is no regulation applicable to M&S relating to palm oil sourcing or use. Material risk It is important to M&S that our customers trust us to be effective custodians of their values. Palm Oil faces significant social, environmental and land use change challenges and therefore attracts considerable media attention and NGO campaigning. We are reliant on the credibility of the sustainability schemes/organisations available in the market, and therefore are dependent on scheme acceptance by opinion formers for reputational risk management. Material risk We are reliant on palm oil for a wide range of our in-store food and non-food product offer. An inability to procure sufficient quantities of the right material undermines our operational efficience, product development and competitiveness. 2014 Morrison Supermarkets United Kingdom (55.378051, -3.435973) 1 Timber Yes Risk assessment based on materiality, likelihood and consequence to the business. Material risk Material risk Material risk 2014 News Corp USA (37.09024, -95.712891) 1 Timber Yes News Corp’s process for identifying deforestation risks and/or opportunities is the same process used to identify and monitor other pressures that could similarly impact the business. To identify these risks, we use the same process used to identify and monitor other pressures that could similarly impact the business. At the enterprise level, News Corp uses a risk assessment process to identify and track substantive business risks. (For the purposes of this CDP response, News Corp has defined “substantive” to mean noteworthy or caused by something other than mere chance, but does not necessarily include the concept of materiality within the meaning of the securities laws nor would it necessarily have meaningful financial impact). The enterprise risk framework includes an analysis including those risks that may be a result of climate change related impacts. The nature of the Global Environmental Initiative (GEI) as a corporate-wide program ensures senior management involvement and frequent reviews of the GEI’s progress and findings. As part of this corporate-wide program, impacts on and risks to the business overall are regularly shared with senior management, including members of the board. Non-material risk At this time there is no regulatory risk to News Corp related to deforestation. We do not source our paper from illegally harvested fiber, endangered forests, Indonesian tropical rainforests, mixed tropical hardwood, or Acacia and Ramin trees. If we were to change our suppliers, we would re-evaluate our risks at that time. Material risk This is a material risk but mitigated by the strong relationships we maintain with our suppliers to know the source of our paper purchases. Non-material risk As we have held ourselves to the standard of only procuring paper from certified mills, there could potentially be a risk of supply. However, we have evaluated the supply availability of the products we require and deem that to be a non-material risk. 2014 Kingfisher United Kingdom (55.378051, -3.435973) 2 Palm Oil Yes "Palm oil is not a material risk to the business as it is found in a limited number of products and can be replaced with alternative derivatives. The business has gone through a process of identifying products that might contain palm oil derivatives. We are screening B&Q, Screwfix and Castorama France products. Suppliers must confirm which oil derivatives are in their products and its source. " No risk We do not consider palm oil to be a material issue for our business. Non-material risk UK voluntary commitments. Increased focus from campaigning groups presents a reputational risk. Criticism of RSPO and media interest in forest and fires in Indonesia all raise the profile and therefore reputational risk of being associated with poorly sourced palm oil. However, our palm oil footprint is relatively low and Kingfisher is one of the first companies to address this issue outside of the food sector. Non-material risk The volumes and products involved in most cases would allow the business to find alternative materials or are of insignificant sales impact and if found to have any links with deforestation, could be delisted. 2014 Kingfisher United Kingdom (55.378051, -3.435973) 3 Cattle Products Yes "Leather is not a material risk to the business as in the Operating Companies it will make up less than 10 SKU's. It is however a potential reputational risk and its production could impact the sustained use of timber sources. Own-Brand risk assessed. Source region risk identification. We have requested and collated supply chain information from our suppliers of own brand products which contain leather and highlighted the risk of procuring leather from areas suffering from deforestation caused by cattle ranching such as the Amazon " No risk We do not consider leather to be a material issue for our business. Non-material risk Campaign to highlight the link between deforestation and cattle ranching to produce leather products. Non-material risk The volumes and products involved in most cases would allow the business to find alternative materials or are of insignificant sales impact and if found to have any links with deforestation, could be delisted. 2014 Greenergy United Kingdom (55.378051, -3.435973) 1 Biofuels Yes Greenergy have assessed the risk associated with biofuels commodities at a feedstock, country of origin and producer level. We also conduct additional due diligence of each prospective supplier because we understand that environmenta, reputational and operational risk change with specific circumstances, previous experience, across ecosystems, in the context of legislative changes and trading scenarios. We use the experience of our traders, equipped with the knowledge provided from our legal department, security of contracts and experience of our sustainability team to inform buyers on specific risks. On forest commodities we work with independent certification bodies, Roundtable Sustainability Standards, the Euroepan Commission and UK Renewable Transport Fuel Unit to ensure the most relevant risks are known and controlled. We also work with local and international expert advisors such as Ecosistemas, Proforest, WWF to stay informed of risk and relevant controls. We have built the www.biocarbontracker.com tool to view present the most reputable global and local sustainability risk data to our inform our buyers on risk. We present our sustainability work regularly to stakeholder forums including the Westminster Transport and Environment Forum, Roundtable on Sustainable Biomaterials and International Sustainability and Carbon Certificate seminars. These sessions allow us important interaction and constructive criticism to review our strategy and procedures to respond to relevant risks. Material risk The EU Renewable Energy Directive 2009 and UK Renewable Transport Fuel Order 2013 define the mandatory sustainability criteria which are required for market access in the UK. While the sustainability criteria defined in the Directive and RTFO are set out in Annual Technical Guidance the RTFO Unit they are liable to change dependent on policy support in the UK or EU institutions. The RTFO regulator also retains additional authority to define the sufficiency of sustainability evidence which can often be subjective and risky. We have managed these risks by supporting the better biofuels available in the market and being transparent about our buying policies and performance. As biofuels are a contentious commodity with diverse environmental risks and many industry stakeholders policy is prone to the added risk of influence through lobbying. As an international trading company with offices in UK, USA, Canada, Brazil and Dubai policy risk is complex. Material risk With a global supply chain that spans multiple international agricultural supply chains of products with homogenous or similar chemical and physical characteristics, there is a high risk of physical mixing and substiution causing loss of physical traceability. It is therefore critical to have verified traceability on a mass balance basis of biofuels under industry wide criteria with recognised certification bodies and sustainability standards overseeing the supply chain. This is necessary as we need to be able to differentiate ourselves from any cases of unsustainable agricultural activity which could be apportioned to the entire supply chain, regardless of the guilty actor or buyer. Our customers also make public commitments to sustainable supply chains and we have committed to help deliver on these targets. As such to continue to deliver the best assurances and transparency on sustainability we cannot afford to deliver any lower level of service. Material risk "With physical mixing of products we are depenent on chemical tests to verify the quality of the products we buy. With chemical properties being affeted during storage and processing, we are liable to fraudulent substitution of our products, logisitcal disruptions and failure of supply chain. In December 2013 Greenergy's biodiesel plant was struck by a significant tidal storm surge at Immingham which was catastrophic for operations there. The event was forecast and Management and staff safely completed emergency shutdown procedures on time as planned with no injuries or spillages. Plant recovery is being completed and production has begun again. Operations including delivery of significant volumes of used cooking oil were safely diverted to safe storage in the Netherlands." 2014 Nestlé Switzerland (46.818188, 8.227512) 2 Palm Oil Yes Our risk assessment process at the high level identified commodities that are material for Nestlé in terms of spend, known risks (in this case deforestation) and consumer interest/reputation. This highlighted palm oil as high risk. As per the above, at an operational level we use a more fine level risk assessment to target our waves of interventions. At this level we again look at main sourcing countries, and the presence of known risks at a country/company level. In addition market demand is also factored in as this can help speed up implementation. The presence of certification schemes which are aligned with our Responsible Sourcing Guidelines can reduce the risk and the priority that we give. Material risk Where deforestation occurs in contravention of international, national or local legislation, or in contravention of concession provisions. For example on land ownership, specific forest law provisions, human rights. In addition to producer country laws, there are early moves to instigate import lagislation on palm oil (mirroring the Lacey Act and EU Timber import regulations) Material risk In addition to the above (ie regulatory risks), where deforestation occurs within the law but outwith our policy or the expectations of society. All of these occurrences can lead to NGO campaigns, press commentary, customer and consumer boycotts. Currently palm oil is the commodity with the highest material risk in this category Non-material risk As a global company we buy palm oil products from a wide range of suppliers (who are very numerous). This limits the risk of supply disruptions. There is often also a degree of substitution potential from alternative oils which also reduces risk. Our approach to working with suppliers to help then improve their sustainability performance also mitigates risk rather than only trying to buy products that meet our RSG requirements. 2014 Ahlstrom Corporation Finland (61.92411, 25.748151) 1 Timber Yes Due Diligence System for EU Timber Regulation and the US Lacey Act. Pertinent risk assessments related to chain-of-custody forest certifications as described in the standard criteria. Three countries assessed for risk based on FSC criteria for own verification were France, Spain and the United States. Non-material risk The EU Timber Regulation and The US Lacey Act pose a regulatory risk associated with purchases of timber based raw materials. Ahlstrom has a Due Diligence System in place to comply with the legislations. Non-material risk Ahlstrom is a supplier to some of the world's most well-known brands, that may be subject to extra scrutiny for their fiber based materials. No risk Being a large buyer of market pulp, Ahlstrom has qualified alternative sources of supply for its key raw materials. 2014 Danzer Switzerland (46.818188, 8.227512) 1 Timber Yes "Our own forest production in a high risk area (in Rep. of Congo) is 3rd party verified (TLTV) , compliant with Controlled wood which does not allow deforestation. For our 3rd party suppliers in high risk countries, we consider the Controlled wood categories as a minimum, which does not allow wood originating from conversion of forest to other land-use (deforestation). We evaluate risk on country, district and species level. Where risk is high, our ISO 14001 Management System and LegalSource certification assures that we mitigate the risk (by documentary control, supplier visits and supplier audits). Since end 2011, we decided to increase our audits for all non certified suppliers (85% of supplies from high risk countries have a 3rd party verified traceability system in place and all supplies are verified by the ISO 14001 and LegalSource Due Diligence System." Non-material risk EU Timber Regulation, USA Lacey Act provides a risk. Nevertheless, our procurement for the EU has been certified NEPCon LegalSource (Interholco finalised, other Danzer companies will be finished by Aug. 14) and our procurement for N. America will also get certified. The certification provides a proof that our Due Diligence System is compliant with the legislation and therefore risk of non compliance negligeable. Non-material risk Environmental NGO's use tropical timber trade for campaigns (often against deforestation which is not directly linked to forest harvest). We have been focusing on stakeholder consultation and stakeholder input, but due to the focus on central Africa, the reputational risk is still present. No risk We have not identified direct operational risks for our supplies. 2014 British Airways United Kingdom (55.378051, -3.435973) 1 Timber Yes "In 2013 we refreshed our approach to Supplier risk monitoring, adopting an approach endorsed by the Institute of Risk Management with regular reviews undertaken. Our procurement team maintain a risk based approach to identify where potential Sustainability risks lie in our global supplier base. During 2012, their review has allowed a clear understanding of where the highest risks exist when measured against three elements: 1 - Impact on our customers through products or services. 2 - Impact on the environment. 3 - Exposure to potential labour issues. BA Responsible Procurement Strategy focuses on three themes: 1 - reduce supplier emissions 2 - source ethical suppliers 3 - behave responsibly towards our suppliers. Timber widely recognised as a risk commodity - this includes timber for building works, furniture/fittings and paper. To mitigate any risk, we have sustainable policies put in place to ensure paper used is certified or recycled. As additional mitigation to paper usage, we have programmes in place to reduce the use of paper in offices and to increase recycling. " No risk Where we use sustainable products we are proud to promote the fact. This enables the airline to raise topics of an environmental nature with its customers and the wider public. It also enables the airline to support companies which supply sustainable products through raising their profile with the airlines customers. Although this has not impact on deforestation, we worked with catering to induce our catering providers to purchase sustainable fish from MSC certified suppliers for some of the dishes we offer on board. These are identified by the MSC logo. We are also working on extending our sustainable sourcing to chicken and eggs. No risk BA is a transport service provider, our sustainability strategy focuses on reducing emissions through fuel efficiency programmes, advanced technology and new aircraft. The use of timber/paper is proportionally limited and so is the risk of reputational damage; however, the increasing public awareness of environmental issues means using products/services that may lead to deforestation is becoming less acceptable. Knowingly using such products is also against BA's aspiration to 'Set the standard for responsible aviation'. No risk BA is a transport service provider, our sustainability strategy focuses on reducing emissions through fuel efficiency programmes advanced technology and new aircraft . The use of timber/paper is proportionally limited and so is the risk of reputational damage; however, the increasing public awareness of environmental issues means using products/services that may lead to deforestation is becoming less acceptable. Knowingly using such products is also against BA's aspiration to 'Set the standard for responsible aviation'. 2014 Marks and Spencer Group plc United Kingdom (55.378051, -3.435973) 3 Cattle Products Yes Our risk assessment process evaluates materiality, availability of certification, potential impact on reputation, environmental & social conditions, animal welfare factors and chemical use during processing (leather). It also considers availability of solutions and their effectiveness. No risk There is no regulation applicable to M&S relating to beef or leather sourcing or use. Material risk It is important to M&S that our customers trust us to be effective custodians of their values. Beef and leather face significant social, environmental and land use change challenges and therefore attract considerable NGO and media attention and campaigning which could negatively affect our brand. Non-material risk Very limited risk for beef as the bulk of our beef comes from UK / ROI, however leather is required for a wide range of our fashion offer. 2014 British Airways United Kingdom (55.378051, -3.435973) 5 Biofuels Yes At BA we do not use jet biofuel yet as it is not commercially available; however, in partnership with Rolls-Royce we are testing alternative fuels. A number of sustainability aspects will be taken into consideration including the use of natural resources, energy, waste and by-products. The project uses the standards established by the Roundtable on Sustainable Biofuel. In addition we are working in partnership with Solena to build the first biojet fuel plant that will convert waste into biofuel. By using waste, the project will help to reduce the amount sent to landfill and will not have any impact on food stock. For ground vehicles identifying the makeup of our fuel content is currently highly challenging, working to identify the content is the next step. No risk Jet fuel is very tightly monitored and quality controlled and has to meet strict regulatory requirements - these related to operation regulation rather than deforestation related regulations No risk BA is a transport service provider, our sustainability strategy focuses on reducing emissions through fuel efficiency programmes. However, the increasing public awareness of environmental issues means using products/services that may lead to deforestation is becoming less acceptable. Knowingly using such products is also against BA's aspiration to 'Set the standard for responsible aviation'. No risk BA is a transport service provider, our sustainability strategy focuses on reducing emissions through fuel efficiency programmes avanced technology and new aircraft. However, the increasing public awareness of environmental issues means using products/services that may lead to deforestation is becoming less acceptable. Knowingly using such products is also against BA's aspiration to 'Set the standard for responsible aviation'. 2014 JBS S/A Brazil (-14.235004, -51.92528) 1 Timber Yes "JBS evaluated Regulatory, reputational and operational deforestation risks for timber. The identified risks are: Purchase of illegal timber, or from deforestation areas involves regulation risks (for example: IBAMA inspection) and financial risks due to possible fines and; reputational (company image). A possible reputational and operational risk related to the purchase of timber from deforestation areas may cause a trade embargo, which can affect exportation to Europe or other markets. Another regulatory and operational risk is a possible new regulation that may ban crops in determined regions of the country, being necessary to buy timber from other regions, which can increase production costs due to transportation or reallocation of plants." Material risk "Risks associated to this commodity are: Possible purchase of illegal timber, or from deforestation areas, which involves regulation risks (for example: IBAMA inspections). Another regulatory and financial risk is a possible new regulation that may ban crops in determined areas from the country, being necessary to buy timber from other regions, which can increase production costs." Material risk "Risks associated to this commodity are: Purchase of illegal timber, or from deforestation areas, which involves reputational (company image). A possible problem with buying timber from deforestation areas may cause a trade embargo, which can affect exportation to Europe and other markets. That may appear in media being not interesting for company`s image.. " Material risk "Risks associated to this commodity are: Possible purchase of illegal timber, or from deforestation areas, involves operational risks due to fines that can be imposed due to environmental agency inspection. A possible problem with buying timber from deforestation areas may cause a trade embargo, which can affect exportation to Europe and other interested affecting company sales. Another operational and regulatory risk is a possible new regulation that may ban crops in determined areas from the country, being necessary to buy timber from other regions, which can increase production costs." 2014 Neste Oil Oyj Finland (61.92411, 25.748151) 1 Palm Oil Yes "Prior to entering the biofuel area, Neste Oil conducted a profound assessment of palm oil related risks; and we found that the current palm oil trade would need further assurance and an entirely different mechanism for us to ensure risk assessment, traceability and certification. The major outcomes are reflected currently in the purchasing and operating principles and instructions of the company, but can be summarised as follows: 1 There was a need to ensure that companies in the supply chain are willing to disclose and commit to sustainability targets - a careful Due Diligence process had to be established to screen suitable partners and ensure transparency 2 There was a need to build and ensure traceability in the supply chain - need to create a totally new way of palm oil trading. Traders and middle-men were by-passed by and contacts developed directly to the growers of oil palms. 3 Obvious reputational risks were foreseen based on the campaigning that was ongoing - full support to RSPO, especially their grievance mechanism practices, to promote sustainable practises 4 (regarding all the vegetable oils) a major risk of uncontrolled expansion of the cultivation, increasing deforestation risks - need to set strict sustainability requirements for the supply, with specific clauses in the agreements. Direct physical risk: insignificant, as all suppliers comply with criteria, are traced back and monitored. Indirect risk is relevant, as Neste Oil is currently a major user of palm oil. Regulatory risk: biofuel industry is still currently the most regulated industry using palm oil (EU Renewable Energy Directive, Fuel Quality Directive and the US Renewable Fuel Standard) with the most stringent sustainability criteria that are not expected to be changed as such. However the debate over possible ILUC-emission risks may provide uncertainty to general acceptance of palm oil based products. Reputational risks are significant, as irresponsible expansion of palm oil cultivation may cause severe negative impacts - which are often linked to biofuels rather than the main uses, i.e. food and oleochemical industries; even though admittedly food industry remains the biggest user of palm oil products." Material risk "For all please see: http://2013.nesteoil.com/sustainability/neste-oil-sustainable-way/vastuullinen-toimitusketju/legislation-and-market-requirements/. The European RED directive mentioned earlier requires complete awareness on the origins of the raw materials in order to be eligible for biofuel status within the scope of the directive. - The European ILUC discussion is, however, focusing very much on palm oil, and in particular its use for biofuel production. Currently it has been decided that discussions will be included in the FQD only in 2016. In the original proposal, the indirect land use risk was capped by introducing crop and non-crop baskets for biofuels raw materials. Final decision remains to be seen. In the USA, the pathway approval for CPO makes it ineligable for the higher RIN classification, however some arguments on the classification of palm oil residues such as PFAD is still continuing." Material risk "Palm Oil in general is a reputation risk due to the issues raised by NGOs and other stakeholders related to deforestation and other social issues. Massive expansions due to palm oil and other industries in developing countries have given a bad name to oil palm cultivation in general, and thus it is a constant challenge for us to differentiate ourselves from other players by using certified and traceable palm oil. Biofuel industry has been blamed - despite the smaller use compared to the consumer goods manufacturers - of driving demand and expansion. Expansion of agriculture is a major contributor to deforestation, calling for clear and well implemented sustainability requirements for all uses of palm oil, and other vegetable oils as well. Biofuel business has been made a scapegoat for uncontrolled expansions of agricultural land." Non-material risk "The availability of sustainably produced palm oil might be of risk, if government and markets start restricting the available palm oil markets. This would cause palm oil suppliers to sell their products to less demanding markets with no sustainability requirements. Neste Oil has been promoting the certification systems and assisting our suppliers and relevant government meet the market demand. We believe our efforts have made possible the availability of certified palm oil for sufficient purchase to date. Our feedstock flexibility, i.e. more than 10 suitable feedstocks, limits efficiently the operational risks." 2014 Amcor Australia (-25.274398, 133.775136) 1 Timber Yes "An initial risk assessment of fibre sources covering regulatory, reputational and operational risk was conducted for Amcor in 2013 by the Forest Trust. Additional work has also been conducted by Amcor business groups: One business group assesses risk for paper suppliers in the same way as all other suppliers, covering issues of contingency, supplier managing their own supply chain, and product safety / legal compliance (such as meeting EU timber regulations for paper suppliers). For purchased market pulp – Petrie Mill has conducted a risk assessment process of its pulp suppliers (as part of its FSC Certification) using the risk assessment process in the FSC Standard (FSC_STD_40-005) for Company Evaluation of FSC Controlled Wood. This is also published on the FSC Website: http://info.fsc.org/Detail?id=a024000000844FSAAY." Non-material risk There is some small risk associated with ensuring suppliers of fibre products into the EU comply with the EU Timber Regulation. However, the risk is small as most suppliers are already compliant, and so alternatives are available if a supplier cannot comply. There is also a small risk of legislation being implemented in other regions, which may require additional time or financial commitments in order to achieve compliance. Material risk There is significant reputational risk associated with purchasing fibre products, particularly for non-certified products from Asia, due to prominent NGOs focussing in this area. This is mitigated by choosing suppliers with certification in place, operations in regions of low risk or good governance procedures. During the reporting year, Amcor worked with one such supplier who was considered to be the highest risk (although only supplying a small amount to Amcor), to ensure good procedures were in place to reduce this risk. Non-material risk Availability of certified paper may become limited as demand for certified paper increases. Increase in cost of certified paper may increase cost of production. However, the risk is considered to be minor as it is believed that certified paper needs can be met for the foreseeable future. 2014 Kirin Holdings Co Ltd Japan (36.204824, 138.252924) 3 Soy Yes "The Kirin Group operates its risk management system across group companies, and assesses risks and opportunities from a general point of view. The level of importance is assessed for risks and opportunities on a yearly basis based on an impact x incidence scale, and a priority ranking is assigned to each risk and opportunity. Forest risk is also reflected in the business plan of the entire group based on KISMAP (a management system unique to the Kirin Group) upon establishing policies for the entire group at a corporate level on the basis of assessment results for those risks and opportunities. KISMAP is a management system unique to the Kirin Group that uses a balance scorecard. Under this system, strategies are developed from four points of view (i.e. financial point of view, customer’s point of view, process point of view, and learning/development point of view), and the performance of each process is confirmed by PDCA cycle to ensure that a target can be achieved. The Kirin Group manufactures and sells carbonate alcohol beverages with a beer-like taste in the Japanese market using soy as a raw material, and the Group is the top player in this sector (it is the only case in which soy is used as a raw material within our Group). With regard to soy, an issue related to the deforestation of rain forests in the Amazon Basin has been reported recently, because soybeans are often cultivated in resulting pastures. The Kirin Group could be exposed to reputational risk if it happens to purchase and use soybeans produced in such an area. In 2011, the Kirin Group investigated procurement source of soy and confirmed that it is in China. The Group also confirmed that there was no forest risk related to this procurement source. In this investigation, we confirmed that forest risk associated with soy existed mainly in Brazil. Therefore, we established a rule that our Procurement Division should consult the Environmental Management Division if any procurement of soy from Brazil is planned. While the United States is currently included as a procurement source, we also confirmed that procurement from the United States has no negative impact on forests." Non-material risk At present, no domestic laws and regulations refer to the sustainability of soy. There are no signs of the potential introduction of regulatory controls. We consider that the regulatory risk is low also in the countries of origin (China and the United States). Non-material risk "Soy is used as a raw material only for a carbonate alcohol beverage with beer-like taste for the Japanese market. However, in the Japanese market, the general public is not aware of forest risk particularly in the Amazon Basin, caused by soy and concern is still low. Furthermore, currently, procurement source countries are China and the United States only. And we consider that there is no reputational risk. " Material risk Soy is an agricultural product. Heavy rain or drought due to climate change would inevitably affect harvests. Besides, we cannot exclude the possibility that soy could compete with bio-fuels in the long run. In our case, soy is used as a raw material for a carbonate alcohol beverage with a beer-like taste for the Japanese market. So we consider that, even in the event of a supply risk, we can properly negotiate the purchase amount with our supply chain partners through the appropriate use of our influence supported by our bulk purchases of other raw materials, paying due care on our business needs and other social impacts.Besides, because both China and the United States are the countries of origin, we consider it is possible to reduce the risk. Even if one of these countries is affected by climate change, we could purchase from the other country. 2014 Grupo André Maggi Brazil (-14.235004, -51.92528) 3 Soy Yes The assessment covers the financial, reputational and operational risk, since it is directly related to the impact on the Amaggi's business. In addition, the risk assessment includes image (reputation) and impact on the supply chain (which includes the item deforestation). Evaluation is concerned with the legality of soybeans gained, ie the production of soybeans in the farms that provide soy Amaggi conform to all legal requirements and recommendations of the environmental agencies, contributing to preventing the spread of illegal deforestation. In addition, there is an obligation to meet the demands of the Soy Moratorium, which covenants as to not market soy from deforested areas (legal or illegal) in the Amazon biome, from the date of signing, on July 24, 2006 . In addition to the above items, the Amaggi has internal procedures and specific social and environmental requirements that must be met for the acquisition is approved. These requirements are set out in the Qualification Program Production Chain soybeans, which details the Amaggi's commitment to sustainability not only domestically but also in its production, meeting legal requirements, which directly impact on operational, financial risks and image (reputation). Material risk Changes in national regulatory frameworks and increased demand or crisis in international markets. Material risk No compliance with national and international standards and do not compliance with institutional commitments. Material risk Soy is the main product of the company's business agenda. It is a critical matter that reflects in our own operations and in third part operations that trade to us. 2014 Associated British Foods United Kingdom (55.378051, -3.435973) 2 Palm Oil Yes "Individual ABF businesses are required to complete risk assessments for their organisation capturing risks as far ranging as financial, reputational, supply and regulatory/legal. As it relates to palm and palm derived products, each business is aware of the reputational and operational/supply risks that exist if we are unable to secure sustainable supply by ABF’s 2015 time-bound commitment. In turn, ABF businesses are aware of the interdependencies between sister companies and the reputational damage that can occur to branded businesses should the wider group not achieve its 2015 commitment. With this is mind, businesses have developed plans or supply strategies that are consistent with RSPO recognised supply chain options for sourcing sustainable palm oil and palm derived materials. These approaches include the direct purchase of physical CSPO materials, i.e. via segregated or mass balance methods, where commercially available and feasible. In circumstances where physical supply is not established, we have supported the development of sustainable supply through recognised Book & Claim methods using Green Palm certificates. Supply chain certification has been secured for a number of ABF businesses already, and further plans to secure this approval are built into relevant businesses sourcing strategies going forward." No risk Our businesses sourcing these commodities are responsible for monitoring legislation in the relevant countries and any potential impact on our supply chains and sourcing. Material risk If negative event/s were to occur in our supply chain, there is the high potential for there to be reputational impacts to certain brands. Sustainable sourcing of palm is a high profile issue with media and NGO campaign coverage. We are in dialogue with NGOs and working to ensure our products are suitably labelled. Material risk Operational supply issues may arise for a number of reasons such as price volatility, security of supply or issues associated with the commodity’s heritage. Individual businesses monitor these potential operational impacts as part of their risk assessments. 2014 L'Oréal France (46.227638, 2.213749) 3 Soy Yes "L’Oréal is well aware that some agricultural commodities may lead to deforestation and has been implementing specific action plans to avoid contributing to this phenomenon by favouring sustainable sourcing of soya oil, palm oil and wood-fibre based products. As part of its “zero deforestation” commitment by 2020, the Group plans to take this commitment further by closely involving its suppliers in this objective. Although L’Oréal is a low volume purchaser of soya oil and derivatives, L’Oreal sourced from second semester 2013, 100% of its soya oil from certified sustainable sources. We have started to work on traceability of derivatives." Non-material risk No regulatory risk considering that we comply with existing regulations and considering our extremely low consumption of this commodity for very specific uses. Non-material risk "No reputational risk given our extremely low levels of consumption and given to our sustainable sourcing. The Group obtains its organic soy from agricultural producers in Capanema in Brazil, who use traditional and ancestral multi-crop methods to plant, cultivate and harvest the soybeans, which are thus organic and GMO-free. By virtue of this Community Fair Trade programme, Capanema farmers obtain just and fair income from their soybeans and can therefore maintain their traditional lifestyle. At the end of 2013, all the Group’s soybean oil procurements were certified as sustainable: guaranteed GMO-free, produced by organic farming not contributing to deforestation and obtained from fair trade sources. The goal is now to use 100% of soya oil from sustainable sourcing and to work actively with suppliers to improve traceability to point of origin, to address sustainability of soy-based derivatives so that 100% are sustainably sourced by 2020." Non-material risk No operational risk considering our supply chain control & monitoring process (see below). 2014 Avon Products, Inc. USA (37.09024, -95.712891) 2 Palm Oil Yes While Avon is not a significant user of palm oil and we believe the physical operational, regulatory and reputational risks to the company are low, Avon has made a commitment through its Palm Oil Promise to take a leadership position in palm oil by purchasing GreenPalm certificates covering 100 percent of its global palm oil use. This will help drive demand for sustainable palm oil, increase the supply for sustainable palm oil, and help maintain biodiversity and habitat for endangered species. No risk Non-material risk Material risk 2014 Kimberly-Clark Corporation USA (37.09024, -95.712891) 1 Timber Yes "Kimberly-Clark has a Global Fiber Procurement Policy that applies to all of its wood fiber suppliers. As a first step, K-C requires all of its suppliers to acheive certification of their forest management and/or wood fiber procurement activties to one of five forest certifications systems we recognize. The goal is have all supplies certified by 2015 but we already acheived this goal in early 2012. Kimberly-Clark has instituted a due diligence process to evaluate deforestation risk in its supply chain to meet requirements of various illegal timber regulations such as the US Lacey Act and EU Timber Regulations and developing revisions to the Forest Stewardship Council chain-of-custody standards. Kimberly-Clark has identified all high risk countries that we currently source timber products (market pulp and fiber-based packaging). K-C also has a thorough fiber supplier approval and audit process. All wood fiber suppliers must complete a forestry questionnaire annually and K-C conducts a forestry assessment of all of its suppliers on a frequency not to exceed 3 years between site visits. Any requirements related to a supplier's forestry operations are incorporated into their pulp supply agreement with time bound requirements." No risk Kimberly-Clark is in compliance with applicable laws regarding the legality of wood products and associated deforestation sourced by the company such as the US Lacey Act and the EU Timber Regulations. No risk Kimberly-Clark maintains agreements with WWF as a member of the Global Forest & Trade Network and has a signed Memorandum of Understanding with Greenpeace and meets annually with both ENGOs to discuss timber risk issues to minimize any potential reputational risk to the company in sourcing its wood fiber. No risk Kimberly-Clark has been very successful in sourcing vrgin wood fiber from certified suppliers and increasing its purchases of FSC-certified annually since 2007 to meet its sourcing commitments and tissue business needs to label a significant proportion of our tissue products with the FSC logo. 2014 Nestlé Switzerland (46.818188, 8.227512) 1 Timber Yes "Our risk assessment process at the high level identified commodities that are material for Nestlé in terms of spend, known risks (in this case deforestation) and consumer interest/reputation. This highlighted timber products as high risk. At an operational level we use a more fine level risk assessment to target our waves of interventions. At this level we again look at main sourcing countries, and the presence of known risks at a country/company level. In addition market demand is also factored in as this can help speed up implementation. The presence of certification schemes which are aligned with our Responsible Sourcing Guidelines can reduce the risk and the priority that we give. " Material risk Where deforestation occurs in contravention of international, national or local legislation, or in contravention of concession provisions. For example on land ownership, specific forest law provisions, human rights Material risk In addition to the above (ie regulatory risks), where deforestation occurs within the law but outwith our policy or the expectations of society. All of these occurrences can lead to NGO campaigns, press commentary, customer and consumer boycotts Non-material risk As a global company we buy paper packaging products from a very wide range of countries and suppliers (who are very numerous). This limits the risk of supply disruptions. There is often also a degree of substitution potential from alternative packaging materials which also reduces risk. Our approach to working with suppliers to help then improve their sustainability performance also mitigates risk rather than only trying to buy products that meet our RSG requirements. 2014 Marks and Spencer Group plc United Kingdom (55.378051, -3.435973) 4 Soy Yes Our risk assessment process evaluates materiality, availability of certification, potential impact on reputation, security of supply, environmental & social conditions, and productivity. As we specify non-GMO soy for our Food products, availability of certified non-GMO materials that meet our sustainability standards is a key risk for M&S. It also considers availability of solutions and their effectiveness. No risk There is no regulation applicable to M&S relating to soy sourcing or use. Material risk It is important to M&S that our customers trust us to be effective custodians of their values. Soy faces significant social, environmental and land use change challenges and therefore attracts considerable media attention and NGO campaigning. We are reliant on the credibility of the sustainability schemes/organisations available in the market, and therefore are dependent on scheme acceptance by opinion formers for reputational risk management. Material risk We use soy for food and for animal feed. An inability to procure sufficient quantities of the right material undermines our operational efficience, product development and competitiveness. 2014 L'Oréal France (46.227638, 2.213749) 1 Timber Yes " To make sure that none of its products were linked to deforestation, and conscious that some agricultural commodities may lead to deforestation, L’ORÉAL has been implementing specific action plans as regards to the sustainable sourcing of wood fiber based products since 2007. L'Oréal only uses wood fibers from tree residues not suitable for wood making. The residues are obtained from a mixture of ""hardwood"" and ""softwood"" trees. We have put in place a process (supported by a database) to ensure that a balance is maintained between the ratio of hardwood/softwood residues. As a result, we have moved from 37 references to 12 references over the past few years - while maintaining our quality standards. Furthermore, according to our position paper on Paper Cardboard (in attachment), we explicitly demand that all of our suppliers of wood fiber-based products only use wood fibers from forests that are managed sustainably and that provide appropriate traceability. The wood fibers must come from a forest that is certified. All forests we are supplied from are either FSC , PEFC and other certifications recognized by PEFC certified. The process we have put in place ensures that all stages of our supply chain (forest-pulping-board-printing) use only certified material. In France, the certificates are delivered by Bureau Veritas. To date, over 98% of paper and cardboard packaging comes from certified forests. Regarding packaging, 98% (compared to 93% in 2011) of worldwide cardboard is certified (among which 71% is FSC certification), 100 % of Europe sourced cardboard is certified, 85% of Asia sourced cardboard is certified, 100% Latin America sourced cardboard is certified, 98% USA sourced cardboard is certified. A similar process has been put in place regarding POS materials : more than 60% of cardboard used in our POS is certified ( considering that we get a 66% response rate from our sites). The teams are working to achieve 100% certification for Flat Print POS starting with Europe zone. The goal is to have 100% certified board and paper for packaging and POS by 2020." Non-material risk No regulatory risk considering that we comply with existing regulations and considering our extremely low consumption of this commodity. Non-material risk All of our timber for construction as well as packaging paper/board come from certified sustainable sources, and therefore should not be exposed to reputational risk Non-material risk No operational risk considering our supply chain control & monitoring process ( 94% of the printing companies that work with L'Oréal are FSC certified at our explicit request. L’Oreal requiremnts increased years after years, starting with the certified paper for packaging and then the request of certified printers, the work done on office paper in Europe and the on going job all over the world, and finally the implementation of same strong requirements for POS.). 2014 Coop Genossenschaft Switzerland (46.818188, 8.227512) 2 Palm Oil Yes Internal working group on sustainable palm oil. Continuous Coop issue monitoring. Regular food screening of the Coop product range. Intense stakeholder dialog with WWF and Greenpeace. Retailers Palm Oil Group with European Retailers. Analysis of food raw materials with the Coop risk monitor (partially based on Maplecroft data). Following risks were assessed: material availability of RSPO supply chain options segregated and Identity preserved, substitution with other oils and the relevant nutritional aspects, biodiversity, social and economic aspects. No risk Material risk deforestation, orang utan, nutritional aspects. Risk of media coverage and NGO campaigning. Material risk Sufficient supply from existing, evaluated and accepted suppliers in the long term 2014 Morrison Supermarkets United Kingdom (55.378051, -3.435973) 2 Palm Oil Yes Risk assessment based on materiality, likelihood and consequence to the business. Material risk Material risk Material risk 2014 Coop Genossenschaft Switzerland (46.818188, 8.227512) 1 Timber Yes "As a first step, Coop identified and recorded the origin of all timber products. This was to comply with new Swiss legislation which demands the declaration of timber species and origin of a defined range of (solid) wood products. And it is forseeable that Switzerland will adopt the EU Timber Regulation in some kind or an other. Based on the identified origins, Coop analysed the entire timber assortment and classified them in three categories FSC certified, uncertified originating from low risk countries (based on a combination of information sourced at FSC risk register, WWF ratings and Maplecroft country analysis), and uncertified originating from high risk countries. All uncertified products with wood originating from high risk countries are then further analysed. Based on net revenues per year, all ""risk"" articles making 80% of the total ""risk revenues"" are subject to action to be taken by the purchasing department. The aim is to have a maximum effect. For each of these ""risk articles"", a commercial evaluation is also made where potential reputational risks are compared with the commercial success of the product." Material risk Declaration of timber species and origin as legal requirement; being fully implemented until end of 2011 ; EU Timber Regulation expected to be adopted by Swiss Legislator by 2016 Material risk Verification of origin of uncertified timber products difficult. Material risk Sufficient supply from existing, evaluated and accepted suppliers in the long term 2014 Associated British Foods United Kingdom (55.378051, -3.435973) 1 Timber Yes "Individual ABF businesses are required to complete risk assessments for their organisation capturing risks as far ranging as financial, reputational, supply and regulatory/legal. As a minimum ABF businesses comply with the local legislation of countries in which they operate for example the Packaging Waste and Timber Regulations in the EU to which all concerned ABF businesses comply, checking suppliers’ compliance in addition. ABF businesses hold a list of products and their suppliers. Numerous suppliers of timber derived packaging products are vertically integrated and where this is not the case the product specification held by the ABF businesses can also detail raw material source. As part of the supplier approval processes many ABF businesses request information on suppliers’ sustainability and environmental policies. There is no known regulatory risk having an impact on our operations and ABF businesses comply with all local legislation in countries of operation. There are no perceived reputational risks. Some of our larger consumer brands in our grocery businesses have full chain of custody for their packaging requirements with packs displaying the appropriate FSC logo. Packaging specifications are largely of industry standard and there is relative ease to switch supply should risk present in the future." No risk Our businesses sourcing these commodities are responsible for monitoring legislation in the relevant countries and any potential impact on our supply chains and sourcing. For example, the Packaging and Packaging Waste Directive and EU Timber Regulations. Material risk If negative event/s were to occur in our supply chain, there is the high potential for there to be reputational impacts to certain brands. Material risk Operational supply issues may arise for a number of reasons such as price volatility, security of supply or issues associated with the commodity’s heritage. Individual businesses monitor these potential operational impacts as part of their risk assessments. 2014 Morrison Supermarkets United Kingdom (55.378051, -3.435973) 3 Cattle Products Yes Risk assessment based on materiality, likelihood and consequence to the business. Material risk Material risk Material risk 2014 Marfrig Alimentos S.A. Brazil (-14.235004, -51.92528) 3 Soy Yes the sale of Seara, that used too much soy to feed chickens and pigs, and the decrease of feedlots plants, the group reduced their needs for soybean and exposure to risks of this commodity, besides, the price encourages the use of other protein food substitutes. Still, Marfrig own internal policies query lists of embargoed areas and slave labor, and prioritize suppliers that comply with the soy moratorium or are members of RTRS. Material risk Units that purchase soy from embargoed areas by the IBAMA may be interdicted. No risk Marfrig must monitor the situation of its suppliers periodically to guarantee that they continue in compliance with all legal and internal sustainability requirements, so that the purchasing of this commodity does not impact the company’s reputation Material risk If a large number of suppliers are present in the list of embargoed areas from IBAMA, it can affect the Group’s ability to purchase soybean. 2014 H&M Hennes & Mauritz AB Sweden (60.128161, 18.643501) 1 Timber Yes We have a wood policy which requires us to know the country of origin of the wood or wooden product, and if the country of origin is a country with rainforest, we must buy FSC certified wood. We promote the use of FSC for all our products to avoid risks connected to deforestation. Material risk EU Timber legislation, Lacey act. Material risk NGO, negative media, public boycotts etc. Material risk Price volatility, lack of supply 2014 Grupo André Maggi Brazil (-14.235004, -51.92528) 2 Cattle Products Yes The assessment covers the financial, reputational and operational risk, since it is directly related to the impact on the Amaggi's business. In addition, the risk assessment includes image (reputation) and impact on the supply chain (which includes the item deforestation). The assessment is related to the legality of the trade in cattle, ie, if developed livestock on farms that supply cattle to the Amaggi comply with all legal requirements and recommendations of the environmental agencies, contributing to the prevention of expansion illegal deforestation. Amaggi has internal procedures and requirements that must be met for the acquisition is approved. This assessment is needed in fulfillment of its commitment to sustainability not only domestically but also in its production, meeting legal requirements, which directly impact on financial risks and image (reputation). Material risk Changes in regulatory frameworks. Material risk Acquisition of animals from areas not socially and environmentally responsible and not meeting the institutional commitments. Non-material risk Only if this become a greater proportion of activity within the Amaggi. 2014 Nestlé Switzerland (46.818188, 8.227512) 4 Soy Yes Our risk assessment process at the high level identified commodities that are material for Nestlé in terms of spend, known risks (in this case deforestation) and consumer interest/reputation. This highlighted soya products as high risk. At an operational level we use a more fine level risk assessment to target our waves of interventions. At this level we again look at main sourcing countries, and the presence of known risks at a country/company level. In addition market demand is also factored in as this can help speed up implementation. The presence of certification schemes which are aligned with our Responsible Sourcing Guidelines can reduce the risk and the priority that we give. Material risk Where deforestation occurs in contravention of international, national or local legislation, or in contravention of concession provisions. For example on land ownership, specific forest law provisions, human rights Material risk In addition to the above (ie regulatory risks), where deforestation occurs within the law but outwith our policy or the expectations of society. All of these occurrences can lead to NGO campaigns, press commentary, customer and consumer boycotts Non-material risk As a global company we buy soya products from a wide range of countries and suppliers (who are very numerous). This limits the risk of supply disruptions. Our approach to working with suppliers to help then improve their sustainability performance also mitigates the risk rather than only trying to buy products that meet our RSG requirements. 2014 Kirin Holdings Co Ltd Japan (36.204824, 138.252924) 2 Palm Oil Yes "The Kirin Group operates its risk management system across group companies, and assesses risks and opportunities from a general point of view. The level of importance is assessed for risks and opportunities on a yearly basis based on an impact x incidence scale, and a priority ranking is assigned to each risk and opportunity. Forest risk is also reflected in the business plan of the entire group based on KISMAP (a management system unique to the Kirin Group) upon establishing policies for the entire group at a corporate level on the basis of assessment results for those risks and opportunities. KISMAP is a management system unique to the Kirin Group that uses a balance scorecard. Under this system, strategies are developed from four points of view (i.e. financial point of view, customer’s point of view, process point of view, and learning/development point of view), and the performance of each process is confirmed by PDCA cycle to ensure that a target can be achieved. With regard to palm oil, we comprehensively surveyed raw materials during the period from 2011 to 2012 to understand the status of palm oil procurement. As a result, we confirmed that the Kirin Group uses palm oil as a raw material, although the amount is insignificant. Because palm oil is often produced in plantations reclacing from tropical rain forests, many international food manufacturers that use raw materials obtained from non-sustainable sources are already exposed to reputational risk. There is also a risk to leading integrated beverages manufacturers such as us. To address this challenge, we examined countermeasures in collaboration with WWF and started procurement of sustainable palm oil using the procurement method for sustainable eco-certified oil (Book & Claim method) approved by Roundtable on Sustainable Palm Oil (RSPO) for sustainable palm oil in the current “Action Plan.” " Non-material risk At present, no domestic laws and regulations refer to the sustainability of palm oil. There are no signs of the potential introduction of regulatory controls. We consider that regulatory risk is low also in the countries of origin (Malaysia, Indonesia, etc.). Material risk It is often said that palm oil is used in almost half of the commodities sold in supermarkets. Therefore, people are gradually becoming aware of its sustainability. While some detergent manufacturers (chemical manufacturers) have been advised to take action to address this issue by NGOs etc., food manufacturers such as instant noodle manufacturers have been becoming targets recently. Within the Kirin Group, palm oil is used only for margarine and the amount used is extremely small. Although we consider the Kirin Group is less likely to become a target for this reason given such a trend, reputational risks are sometimes unpredictable. Non-material risk It is often said that palm oil is used in almost half of the commodities sold in supermarkets. Therefore, people are gradually becoming aware of its sustainability. While some detergent manufacturers (chemical manufacturers) have been advised to take action to address this issue by NGOs etc., food manufacturers such as instant noodle manufacturers have been becoming targets recently. Within the Kirin Group, palm oil is used only for margarine and the amount used is extremely small. Therefore, it is very unlikely that Kirin Group will become a target given such a trend. Besides, because alternative botanical oils are available, it is not difficult to replace the palm oil with one of them if using palm oil causes a problem. For this reason, operational risks are extremely low, although not 0%. 2014 Neste Oil Oyj Finland (61.92411, 25.748151) 2 Cattle Products Yes "In the context of biofuel raw material sourcing, the residual streams of beef production (and animal husbandry in general) are typically classified as waste or residue. This is based on the fact that these materials (e.g. animal fat not intended for human consumption) are not deliberately produced and are not the primary aim of the process. Waste animal fat production is increasing along the consumption of meat as a result of global dietary patterns. Physical, regulatory and reputational risks are minor, although the increase in cattle herding may result in grazing areas causing risks to forests. However Neste Oil ensures traceability to the rendering plants where the fats are processed." Non-material risk Waste animal fat not intended for human consumption from the food industry does not contain the same type of direct risks as the beef and leather production, but there is a loose connection to those, although in practice no farming and meat processing industry is producing non-edible waste fats on purpose. The demand within the other industries such as the food industry remains low for animal fats in general and low quality fats (not intended for human consumption) in particular, thus provides the opportunity for value-added conversion into high-quality traffic-fuel production, rather than e.g. simply incineration in the power plant. Most regulatory regimes are in favour of using residual and waste streams for biofuel production; however in some other markets challenges still remain (Germany). In the US market, the specified pathways have to be defined in order to gain eligibility for biofuel status. Additionally, separate food waste management plan has to be approved for waste or residue streams by the US EPA. Non-material risk Cattle production, as stated is not driven by the production of fat. Thus the risks would relate to the cattle farming industry in general; increasing grazing areas for example. The indirect risks related to use of residue streams of animal husbandry may become more significant in the long run, if the expansion of grazing happens in a non-controlled way. Non-material risk Waste animal fat has been a low-value stream very few operators have been interested in. Using animal fat as biofuel feedstock is an added value solution to big animal fat volumes currently under-utilised. Increasing demand may introduce limited operational risks. 2014 Kimberly-Clark de México S.A.B. de C.V. Mexico (23.634501, -102.552784) 1 Timber Yes Kimberly Clark de Mexico has a Public Sustainable Fiber Procurement Policy that applies to all of its wood fiber suppliers. As a first step, KCM requires all of its suppliers to achieve certification of their Forest Management and/or wood fiber procurement activities to one of five forest certification systems we recognize. Back in 2008 we set the Goal to have all suppliers certified by 2015, but this Goal has been already achieved in 2011.We are under the same supply agreements as Kimberly Clark Corporation who conducts audits and make sure that all suppliers complete a questionnaire anually on their forestry operations.We know what certifications schemes have each of our suppliers.We give priority to the use of recycled fibers, which accounted for 68 % of our fiber consumption in Tissue production in 2013. The balance is virgin fiber ( market pulp ) that is 100 % certified. No risk There is not applicable regulation to our operations and businesses regarding deforestation risk as we do not source wood pulp from suppliers in Mexico. However, we do comply with all applicable environmental laws in our country. Non-material risk We consider that it can be a reputational risk to our Company from the use of wood fibers in our products, however we believe that potential risks are minimal and under control. KCM only sources wood market pulp from responsible sources that practice sustainable forest management and currently is using 100% third party certified suppliers. In addition KCM through its post-consumer paper recycling operations and absorbent design for environment products avoids the use of more than 400,000 Tons of virgin fibers. Another example of this is in our Away from Home tissue products, which product portfolio counts on an Environmental / Ecologic line of products using 100 % post-consumer recycled fibers. Non-material risk We believe that there are minimal operational risks to KCM from buying certified wood fiber to manufacture our products. In addition KCM has developed tissue products containig up to 100 % recycled fiber and has set Sustainability goals to increase its use and hold the current use of 100 % certified fibers and an increased amount of FSC certified fiber, therein. 2014 Kesko Corporation Finland (61.92411, 25.748151) 1 Timber Yes It has been recognised that there are risks related to the origin of timber. The risk is managed with the help of timber certification. FSC or PEFC required of all wood products with raw materials originating from tropical forest or endangered wood species. All wood products originating from Europe (excluding RU) are FSC or PEFC. Material risk EU's FLEGT directive Material risk ngo, media Material risk Potential shortage 2014 Best Buy Co., Inc. USA (37.09024, -95.712891) 1 Timber Yes At Best Buy, we aknowledge the potential reputational risk of being seen as contributing to the global problem of deforestation. We categorize this risk as low due to our commitment to sustainable forestry and corresponding actions outlined in our Paper Procurement Corporate Statement. Through our enterprise risk process lead by our Risk Council and supported by Communications and Public Affairs Issue Management working group, we monitor all reputational issues, facilitate working group sessions and influence enterprise activities to mitigate risk. Non-material risk Due to our Paper Procurement Policy and current traceability, we view the reputational risk low although possible to be targeted by and NGO campaign related to corporate paper use. 2014 L'Oréal France (46.227638, 2.213749) 2 Palm Oil Yes "L’Oréal is well aware that some agricultural commodities may lead to deforestation and has been implementing specific action plans to avoid contributing to this phenomenon by favouring sustainable sourcing of soya oil, palm oil and wood-fibre based products. As part of its “zero deforestation” commitment by 2020, the Group plans to take this commitment further by closely involving its suppliers in this objective. At the end of 2013, all of L’Oréal’s palm oil purchases were made according to sustainable procedures whose aim is to guarantee preservation of the biodiversity of forests in South East Asia. Since 2010, direct purchases of palm oil (approximately 450 tons in 2013) have been based on total traceability certified by RSPO SG (Roundtable on Sustainable Palm Oil, Segregated Model). Since 2012, another category of ingredients, palm oil derivatives, whose supply channels are very complex, have also been certified as sustainable by the RSPO. This includes, for example, certain surface active agents which provide the detergent and foaming qualities of shampoos. They are compensated for by GreenPalm (RSPO Book & Claim) certificates, the purchase of which enables the marketing of an equivalent volume of palm oil certified as sustainable. The aim in the long term is that all raw materials obtained from palm trees should come directly from plantations certified as sustainable by the RSPO and free from deforestation (see L’Oreal Zero deforestation Commitment attached below)." Non-material risk No regulatory risk considering that we comply with existing regulations and considering our extremely low consumption of this commodity for very specific uses. Non-material risk "Since the beginning of 2010, 100% of our palm oil comes from sustainable sources and PSPO certified (Segregated model). Therefore, there is no reputational risk for palm oil. For the palm oil derivatives, whose supply channels are very complex, they have also been certified as sustainable by the RSPO. They are compensated for by GreenPalm (RSPO Book & Claim) certificates, the purchase of which enables the marketing of an equivalent volume of palm oil certified as sustainable. However, L'Oreal is conscious that some agricultural commodities may lead to deforestation and consider that they could represent in the furture a reputational risk. This is why, L’Oreal committed to reach the following targets: • By 2015, 100% palm oil and major palm derivatives should come from known sources. • By 2020 the latest: 100% of palm supply will be free from deforestation." Non-material risk No operational risk considering our supply chain control & monitoring process (see below). Concerning the derivatives, we buy small volumes compared to the market size. Therefore, we could be impacted by a suppliers risk and a price risk. In addition, it is hard today to find in the market derivatives sourced via the Segregated model. 2014 JBS S/A Brazil (-14.235004, -51.92528) 3 Soy Yes "JBS evaluated Regulatory, reputational and operational deforestation risks for soy. The identified risks are: Purchasing soy from deforestation areas may cause a trade embargo, which can affect exportation to Europe and other markets, representing an operational and reputational risk. A possible Regulatory and financial risk is a potential new regulation that may ban crops in determined regions from the country, with the need to change suppliers and/or their locations, which can increase production costs due to transportation or reallocation of plants. Another Regulatory and financial risk is a possible requirement from JBS` clients not accepting to purchase poultry and pork fed with soy from determined areas of the country, what could be a commercial restriction." Material risk Regulatory and financial risk may be new regulation that may ban crops in determined areas from the country, being necessary to buy soy from other regions, which can increase production costs. Material risk "A possible problem with buying soy from deforestation areas may cause a trade embargo, which can affect exportation to Europe and other markets. The effects may appear in media being not interesting for company`s image. With the expiration of the Soy Moratorium, JBS cannot guarantee to have suppliers involved or signatories of a substitute soy commitment. The uncertainty about the Soy Moratorium future can generate insecurity on JBS as a grain buyer, and on its clients in relation to the sustainable origin of soy fed poultry and pork." Material risk "Risk may be the conduct from JBS`clients from banning purchases of soy fed poultry and pork from determined areas of the country. This may turn operational costs higher due the necessity to buy raw material from distance areas. With the expiration of the Soy Moratorium, JBS cannot guarantee to have suppliers involved or signatories of a substitute soy commitment. The uncertainty about the Soy Moratorium future can generate insecurity on JBS as a grain buyer, and on its clients in relation to the sustainable origin of soy fed poultry and pork." 2014 Eurostar United Kingdom (55.378051, -3.435973) 2 Cattle Products Yes Assessed as part of a business environmental workshop No risk Only relatively small amounts of beef sourced in the supply chain. Non-material risk There is a small reputational risk if we were not to have such strict sourcing policies as per the horse meat scandal in recent years. However, our strict policies help to mitigate this risk. No risk 2014 Neste Oil Oyj Finland (61.92411, 25.748151) 3 Soy Yes "Soybean oil has to a great extent the same risks and challenges as palm oil, added with GMO issues. Our assessment of soy bean oil supply contained e.g. continent and region-based specific reviews. So far, Neste Oil has used soybean oil for test runs only. Should the use increase, all the supplier selection and sustainability criteria would be applied. Roundtable on Responsible Soy (RTRS, Neste Oil a member since 2006?) provides a suitable platform to share views and engage with soy producers. Primary reason for soybean cultivation is protein production for feed and food. Oil is a co-product. Direct physical risk: insignificant, as all suppliers have to comply with criteria, are traced back and monitored. Indirect risk is minor, as Neste Oil has used soy bean oil for test runs only, and is not currently using soybean oil. Regulatory risk: biofuel industry is still currently the most regulated soy-using industry globally (EU Renewable Energy Directive, Fuel Quality Directive and the US Renewable Fuel Standard) with the most stringent sustainability criteria that are not expected to be changed as such. However the debate over the risk of ILUC-emissions may provide uncertainty to general acceptance of soy bean oil based products. Reputational risks are moderate, as irresponsible expansion of soy bean cultivation may cause severe negative impacts - which are often linked to biofuels rather than the main uses, i.e. food and feed industries; even though admittedly food remains the biggest user of soybean oil products." Material risk The European RED directive mentioned earlier requires full knowledge on the origins of the raw materials to be approved within the scope of the regulation. So far, minor volumes of soy have been used, but the same regulatory risks are there, as well. For the US market, outside US produced soy requires more detailed records and book-keeping than domestic production. Material risk Although we are not buying any soy bean oil currently, if we were, the expansion of soya bean cultivation creates a most significant risk if the additional land use is done in a non-responsible way. The land-use efficiency of soy is insufficient, although it is mainly cultivated for feeding purposes. Soy cultivation has been linked to rainforest destruction directly or indirectly, thus being a potential reputational risk, if used in large amounts for biofuels. Non-material risk The availability of sustainably produced oil may be a risk in the future, if we start using soy, and if the certification programme (RTRS) is not progressing according to plans. Especially, the traceability of soy beans may be problematic. As our use has been minimal, non-material operational risks exist. 2014 Avon Products, Inc. USA (37.09024, -95.712891) 1 Timber Yes Because Avon is a significant consumer of paper products, Avon is positioned to influence both supply and demand in the market, and thus contribute to the development of environmental solutions that conserve. That is why Avon developed the Avon Paper Promise, to promote responsible forest use and protect forests. No risk Non-material risk Material risk 2014 Catalyst Paper Corporation Canada (56.130366, -106.346771) 1 Timber Yes Catalyst Paper uses the Forest Stewardship Council (FSC) risk assessment template / requirement to quantify the risk of 100% of the forest fibre it uses to make its products. The Catalyst risk assessment can be found at http://catalystpaper.com/sustainability/environmental-performance/chain-of-custody-and-fibre-certification Non-material risk Tighter regulation reduces the available supply of wood fibre and bark for our facilities. Non-material risk Catalyst does not want to be associated with illegally harvested or controversial fibre. Its important to our customers and Catalyst that all purchased fibre be from sustainably managed forests. Our chain of custody programs help us achieve this goal. Non-material risk Potential market campaign against us or our customers by special interest groups if our fibre is seen as controversial. 2014 Marfrig Alimentos S.A. Brazil (-14.235004, -51.92528) 2 Cattle Products Yes : Marfrig Group has a standard procedure for the management of the risks coming from the cattle products acquiring, which covers the reputational, financial and operational aspects. The risk management contemplates the geospatial monitoring specially focused on Amazon region, the consult to public information as the IBAMA’s list of embargoed areas, specific documents required from each producers, and the in-loco survey of the farms location. In Brazil, cattle purchase is traced by a sophisticated geo-processing system over the original suppliers. It automatically blocks any purchase from a property that could be associated to deforestation activities in the Amazon. Material risk Units that purchase animals from embargoed areas by the IBAMA may be interdicted. Material risk "The acquisition of irregular cattle, would result in large and serious damage to the reputation of the company, mainly by cattle is one of the main drivers of deforestation in the Amazon Biome and the company has made commitments to zero deforestation in the Amazon Biome. Mainly risks: NGO campaigns and corporate exposés; high levels of media coverage around the issue; government concern in your consumer market, or the country of origin; public boycotts of products; and customer reputation." Material risk If a large number of suppliers are present in the list of embargoed areas from IBAMA or Geographic Information System, it can affect the Group’s ability to purchase animals. Cattle are an input that cannot be replaced in the company’s activities. 2014 Kirin Holdings Co Ltd Japan (36.204824, 138.252924) 1 Timber Yes "The Kirin Group operates its risk management system across group companies, and assesses risks and opportunities from a general point of view. The level of importance is assessed for risks and opportunities on a yearly basis based on an impact x incidence scale, and a priority ranking is assigned to each risk and opportunity. Forest risk is also reflected in the business plan of the entire group based on KISMAP (a management system unique to the Kirin Group) upon establishing policies for the entire group at a corporate level on the basis of assessment results for those risks and opportunities. KISMAP is a management system unique to the Kirin Group that uses a balance scorecard. Under this system, strategies are developed from four points of view (i.e. financial point of view, customer’s point of view, process point of view, and learning/development point of view), and the performance of each process is confirmed by PDCA cycle to ensure that a target can be achieved. Kirin Group uses many paper packages to safely deliver products to customers, particularly in the integrated beverages business. Therefore, the Kirin Group has promoted green procurement and prioritized purchasing of recycled paper and eco-certified paper. However, with growing awareness for ecological risks in the source regions of biological materials used by our Group, it has become more apparent that preserving the ecological system including bio-diversity and sustainable use of forestry resources are imperative challenges for the sustainability of the Kirin Group. To address these challenges, we conducted a preliminary supply chain survey in 2012 for package materials and copy paper. The results demonstrated that there were no major problems related to the raw materials supplied by our dominant suppliers. On the other hand,as a result of risk analysis of the impact to ecosystem in the source regions of biological materials, it has become more apparent that global awareness to the issue of forest resources has increased and we also found that paper materials were distributed in the domestic market for which legal authenticity could not be verified." Non-material risk At present, no domestic laws and regulations refer to the sustainability of paper packages applicable to business organizations. While there is the “Green Purchasing Law” in Japan, this is applicable to government agencies, and private companies comply with the Law only as a guideline. Because we have already achieved the standard stipulated by the Green Purchasing Law, there is no material risk. We understand that EU countries ban timber obtained from illegal deforestation; therefore, such timber diverted to Japanese and Australian markets is increasing. However, Kirin controls the origins of timber based on our procurement standards and questionnaire to supply chain partners, so this has had no significant impact so far. Furthermore, we consider that there are no signs of potential implementation of regulatory controls. However, we continue to monitor regulatory controls. Material risk "At present, awareness of the sustainability of paper among the general public is not high in the countries where we operate; Japan, Australia, and Brazil. However, because paper packages are a commodity used in people’s daily lives, there could be serious reputational risk if a problem arises as in the following cases: Several years ago, in Japan, deceptive labeling on the percentage of recycled paper used by paper manufacturers caused a serious problem with regard to paper available in the general market. In Australia, discussions are ongoing about regulatory controls for general package recycling. This trend could lead to reference to the sustainability of paper packages, while the probability is not very high. As a result, while there is no individual risk currently manifested, paper packages, which are familiar commodities in daily life, could cause a serious reputational risk if a problem attracts public attention. " Material risk At present, awareness of the sustainability of paper among the general public is not high in the countries where we operate; Japan, Australia, and Brazil. However, because paper packages are a commodity used in people’s daily lives, there could be serious reputational risk if a problem arises as in the following cases: Several years ago, in Japan, deceptive labeling on the percentage of recycled paper used by paper manufacturers caused a serious problem with regard to paper available in the general market. In Australia, discussions are ongoing about regulatory controls for general package recycling. This trend could lead to reference to the sustainability of paper packages, while the probability is not very high. 2014 Brambles Australia (-25.274398, 133.775136) 1 Timber Yes "Management is responsible for the development, implementation and management of systems that: - identify, assess and manage risks in an effective and efficient manner; - enable decisions to be based on a comprehensive view of the reward-to-risk balance; - provide greater certainty of the delivery of objectives; and - satisfy the Group’s corporate governance requirements. One element of Brambles’ internal risk control systems is its Code of Conduct (attached). Brambles is committed to working towards Zero Harm (Charter attached), meaning no injuries and no environmental damage and no detrimental impact on human rights. Brambles focus is to provide innovative, efficient and sustainable pooling solutions to its customers. The Environmental Policy in the Code of Conduct is set by the Board and operates worldwide, including in countries that may not yet have enacted laws for the protection of the environment. CHEP maintains strict lumber sourcing policies that support the replenishment of natural resources by sourcing lumber in a responsible and sustainable manner. CHEP does not source from protected areas, parks or similar areas in which harvesting operations do not promote responsible forestry management. CHEP has a target of achieving chain of custody certification for lumber purchased for CHEP pallets by 2015, to provide a focus for the continual improvement and promotion of the responsible and sustainable procurement of lumber. In addition, in FY13, Brambles developed a global supplier policy covering areas of compliance, diversity, labour standards, human rights, safety and the environment and outlining the Group's commitment to working with suppliers to develop more efficient, safer and sustainable supply chains. Suppliers are expected to follow the principles of Brambles Zero Harm commitment. The supplier policy will be rolled out to all Brambles businesses in FY14. Further information on Brambles' risks management processes and controls are reported in the Corporate Governance Statement of its Annual Report pp 26-28 attached. In addition, when completing the demerger of its Recall business, Brambles disclosed key risks in the Scheme Book (attached below). This included Fluctuations in commodity prices and raw material availability (including lumber). (see p 106)" Non-material risk In Australia, The Illegal Logging Prohibition Amendment Regulation 2013 prohibits the importation and sale of all timber products containing illegally logged timber; prohibits the processing of illegally harvested domestically grown raw logs; requires importers of regulated timber products and processors of raw logs to comply with due diligence requirements; requires the accurate description of legally logged timber products for sale in Australia; establishes enforcement powers and offences, and imposes penalties; and provides for a review of the first five years of the operation of the Act. Similar legislation may exist in other countries in which CHEP operates. The risk associated with legality of purchased lumber means CHEP must be able to verify this within its supply chain, especially where pallets may be shipped internationally. Material risk Our customers are increasingly concerned about impacts on the environment. Reputational risk could arise if we are not seen to be addressing our impacts on the environment. Brambles’ Group risk matrix, which sets out the top 10 “net” risks facing the Group and the steps being taken to mitigate those risks, in FY13 included risks of competition and retention of major customers (p 7 of Annual Report 2013). Reputational risk could arise if we are not seen to be addressing our impacts on the environment. If we are not sufficiently transparent about our actions in these areas, it could lead to customers taking their business to competitors. The credibility and business value of our business brand could be undermined by negative publicity around any practices that are counter to reducing our environmental impact. In 2010, Brambles announced its sustainability strategy and its strategic objectives and initiatives over five years to 2015. The targets Brambles has set for 2015, including the target of chain of custody certification for lumber purchased for pallets, are key drivers in its efforts. Commentary on the targets and the progress made is in the 2013 Sustainability Review, pp 12-14. Brambles could face reputational damage that affects its share price through exclusion from ethical/green investment funds, including superannuation funds in Australia that consider sustainability initiatives. Brambles’ Group risk matrix in FY13 included risks to our business model, strategy and execution, innovation and others (see p 7 of the Annual Report 2013).] Brambles believes its sustainability strategy and targets, including annual reporting on progress against these targets, address the environmental concerns of its investors. It regularly provides communication to the investment community to alleviate this risk and considers sustainability throughout its business operations, including through its Code of Conduct and Zero Harm Charter. Material risk "Brambles’ Group risk matrix, which sets out the top 10 “net” risks facing the Group and the steps being taken to mitigate those risks, in FY13 included risks to the business model, where changing supply chain dynamics and customer needs could render CHEP's existing service offering and business model out of date (p 7 of Annual Report 2013). Current market issues that, in combination or separately, could support competitive service offerings include attributes of wood versus alternative materials, etc. These issues could, over time, have an impact on revenue, cost base, economies of scale and the value of CHEP's existing assets. The Scheme Book - demerger of Recall (attached) noted that rapid and sustained changes in the availability and price of lumber may result in decreased demand for Brambles' services, increases in its costs and reduced profitability (p 104). It also noted Brambles has operations directly or indirectly exposed to volatility in costs of lumber (p 106). While Brambles generally sources supplies of raw materials from a range of providers in each geographic region, in Australia Brambles is dependent on a single supplier for its lumber and plastic resin. CHEP's pallet pooling system operates on the principles of recover, reduce, reuse and recycle, reclaiming and reusing lumber when pallets are conditioned. This reduces the need for virgin raw materials (see p 14 Sustainability Review). Pallets Asia-Pacific (of which Australia is a part) reported $US391.8 million sales revenue for FY13. Pallets reported $US3,944.4 million in sales revenue for FY13." 2014 Grupo André Maggi Brazil (-14.235004, -51.92528) 1 Timber Yes The assessment covers the financial, reputational and operational risk, since it is directly related to the impact on the Amaggi's business. In addition, the risk assessment contemplates image (reputation) and impact on the supply chain (which includes the item deforestation). The assessment process is to garantee the compliance and legality of the supplier towards social and environmental requirements and recommendations as well as to prevent a deforestation related issue. Amaggi has internal procedures and requirements that must be met for the acquisition of approved timber. This assessment is needed in fulfillment of its commitment to sustainability not only domestically but also in its production, meeting legal requirements, which directly impact on financial risks and image (reputation). Material risk Changes in national regulatory frameworks (change in forest legislation) and requirements internacionas (FSC certification becomes mandatory). Material risk Purchases of illicit origin and non compliance to institutional commitments. Material risk The production process is dependent on this input, the lack of this would paralyze the drying process and industrial production of meal and oil. 2014 Kellogg Company USA (37.09024, -95.712891) 1 Timber Yes "Product packaging is essential for protecting our foods in their journey from manufacturing facilities to retailers to consumers’ homes. The outside of the packaging also provides us with space to communicate product attributes and nutrition information. Packaging is a component of every product we make and much of that packaging is based on forest products. It was important to Kellogg to have a strategy in place to address potential deforestation associated with timber based packaging due to the large purchase volume of these materials. Our process to identify the risks in our timber-based products started through discussions by executives to identify a strategy to mitigate potential risks. By identifying FSI in the United States and FSI for the rest of the world, Kellogg found the vehicle to ensure sustainable sourcing was occurring. After this decision was made, additional risk assessment was done at the individual level within the Procurement department to weigh availability, pricing and risk for each sourcing region and application. We continually look at packaging innovations that can help reduce the amount of timber based packaging we use. Our commitments are summarized on our company website at: http://www.kelloggcompany.com/content/dam/kelloggcompanyus/PDF/Corporate%20Responsibility%20Sustainability%20Commitments%201112.pdf " No risk We have not found that any regulations are or will be in place in the future that will significantly affect the sourcing of our timber-based packaging. No risk Since Kellogg Company has been using recycled content in our packaging since its inception, we have a reputation for being thoughtful around the content of our packaging. We continue this commitment by buying recycled content packaging and FSC/SFI certified virgin boards. No risk There are no operational risks for timber-based packaging products because the supply is secure. 2014 Danone France (46.227638, 2.213749) 3 Soy Yes "Financial risk : the price volatility risk exposure is regularly monitored by our sourcing teams but volume exposure is low. Reputation : A reputation risk assessment has been done with an evironmental consulting agency. Soy has been prioritized as a key commodity, because of the indirect exposure through milk/animal feeding but outside Danone direct control. Tropical deforestation risks : a list of high and medium risks countries has been developped with NGOs/consulting agencies (please read forest footprint policy)." No risk Material risk Deforestation or GMO controversial debate fro imported soy No risk 2014 Nestlé Switzerland (46.818188, 8.227512) 3 Cattle Products Yes "Our risk assessment process at the high level identified commodities that are material for Nestlé in terms of spend, known risks (in this case deforestation) and consumer interest/reputation. This highlighted cattle products as high risk. At an operational level we use a more fine level risk assessment to target our waves of interventions. At this level we again look at main sourcing countries, and the presence of known risks at a country/company level. In addition market demand is also factored in as this can help speed up implementation. in the case of cattle products we have quickly determined that we do not have exposure to cattle products sourced from areas where deforestation is occurring. Our responsible sourcing programme does look at other issues beyond deforestation so work continues in this area " Material risk Where deforestation occurs in contravention of international, national or local legislation, or in contravention of concession provisions. For example on land ownership, specific forest law provisions, human rights Material risk In addition to the above (ie regulatory risks), where deforestation occurs within the law but outwith our policy or the expectations of society. All of these occurrences can lead to NGO campaigns, press commentary, customer and consumer boycotts Non-material risk As a global company we buy cattle products from a wide range of countries and suppliers (who are very numerous). This limits the risk of supply disruptions. Our approach to working with suppliers to help then improve their sustainability performance also mitigates the risk rather than only trying to buy products that meet our RSG requirements. 2014 H&M Hennes & Mauritz AB Sweden (60.128161, 18.643501) 2 Palm Oil Yes We only use suppliers that are members of RSPO. Today we buy Green Palm certificates for all palm oil used, but we have a goal that from 2015, we will only buy products containing RSPO certified palm oil. No risk Material risk NGO, negative media, public boycotts etc. Material risk Price volatility, lack of supply 2014 McCormick & Company, Incorporated USA (37.09024, -95.712891) 1 Soy Yes McCormick has contacted our suppliers and that they have provided a list of the source countries. For countries potentially subject to deforestation risks (Brazil, Argentina etc.), they have also provided written statements that the soy did not originate from areas of deforestation in these countries. Soy production does not represent a material risk to McCormick to the best of our knowledge. We will continue to work with our suppliers on this issue. Non-material risk Based on our review we do not believe this represents a material risk to the best of our knowledge. We will continue to work with our suppliers on this issue. Non-material risk Based on our review we do not believe this represents a material risk to the best of our knowledge. We will continue to work with our suppliers on this issue. Non-material risk Based on our review we do not believe this represents a material risk to the best of our knowledge. We will continue to work with our suppliers on this issue. 2014 British Airways United Kingdom (55.378051, -3.435973) 3 Cattle Products Yes "In 2013 we refreshed our approach to Supplier risk monitoring, adopting an approach endorsed by the Institute of Risk Management with regular reviews undertaken. Our procurement team maintain a risk based approach to identify where potential Sustainability risks lie in our global supplier base. During 2012, their review has allowed a clear understanding of where the highest risks exist when measured against three elements: 1 - Impact on our customers through products or services. 2 - Impact on the environment. 3 - Exposure to potential labour issues. Participation for the fifth year running in the Forest Disclosure is educating our risk assessment process through making BA increasingly aware of the commodities we use, where they are sourced from and the wider implications (including risk). Our catering operation continues to be a primary source of risk. This is largely through using commodities which we are unable to clarify if and how they drive deforestation - which itself creates a potential reputational risk. Building on the annual CDP reporting process, we are developing a strong picture of where this risk is in our operation. This exercise and resources put into our catering and environment department has contributed in developing the relationship with our caterers and suppliers as we can be more focused and work together to minimise risks. To further mitigate the impact, we are looking at widen our scope to chicken and eggs as well so to reduce the risk of reputational damage." No risk Where we use sustainable products we are proud to promote the fact. This enables the airline to raise topics of an environmental nature with its customers and the wider public. It also enables the airline to support companies which supply sustainable products through raising their profile with the airlines customers. Although this has not impact on deforestation, we worked with catering to induce our catering providers to purchase sustainable fish from MSC certified suppliers for some of the dishes we offer on board. These are identified by the MSC logo. We are also working on extending our sustainable sourcing to chicken and eggs. No risk BA is a transport service provider, our sustainability strategy focuses on reducing emissions through fuel efficiency programmes advanced technology and new aircraft . The use of beef/leather is proportionally limited and so is the risk of reputational damage; however, the increasing public awareness of environmental issues means using products/services that may lead to deforestation is becoming less acceptable. Knowingly using such products is also against BA's aspiration to 'Set the standard for responsible aviation'. No risk BA is a transport service provider, our sustainability strategy focuses on reducing emissions through fuel efficiency programmes advanced technology and new aircraft.The use of beef/leather is proportionally limited and so is the risk of reputational damage; however, the increasing public awareness of environmental issues means using products/services that may lead to deforestation is becoming less acceptable. Knowingly using such products is also against BA's aspiration to 'Set the standard for responsible aviation'. 2014 Wesfarmers Australia (-25.274398, 133.775136) 5 Biofuels Yes Coles: Risk assessment undertaken by Coles' alliance partner Shell. Material risk Coles: The risk is managed by Shell as explained on its website. Material risk The risk is managed by Shell as explained on its website. Material risk The risk is managed by Shell as explained on its website. 2014 BillerudKorsnäs Sweden (60.128161, 18.643501) 1 Timber Yes Risk assessment in accordance with the certifications FSC Chain of Custody/Controlled Wood and PEFC Chain of Custody. Furthermore due diligence processes in accordance with the European Union Timber Regulation (EUTR). No risk The legislation (Forestry Act) is aimed to ensure two goals are achieved at the same level of importance, the environmental and the wood production goals. By that the legislation ensures wood procurement is sustainably ensured on long-term. Non-material risk As BillerudKorsnäs ambition is to ensure sustainable forest management acccording to certification and legislation and the bio-based products are environmentally better alternatives than other based on fossil materials there will probably be no risk on a larger scale. The risk is some mistake is done in the operational forest management followed by criticism. No risk There are several interests in how to use the resource forest, but BillerudKorsnäs' ambition is to thoroughly analyze and plan all operations, in order to take all different aspects into consideration. In the short run no significant risks can be seen. 2014 Kingfisher United Kingdom (55.378051, -3.435973) 1 Timber Yes "Risk must first be placed within a framework of materiality: Timber makes up 10% of the Cost of Goods, drives 16% of revenue, is found in up to 40% of the products in store and drives footfall in store. With a loss of 5.2 million hectares of forest each year around the world the global supply chain scenario could result in a material risk for Kingfisher amounting to 30% global timber shortages possible by 2020 and 75% price rises, could result from global timber shortages by 2020. Other risk assessment tools/mechanisms: Internal Audits. QA Approval processes. CR team Due Diligence. Operating Company level risk assessments. Product specific identification and action plans. On timber, our assessment of risk is species and country of origin specific e.g. For products which contain hardwood species sourced from the tropics: All Kingfisher Operating Companies will adopt the position where all products which contain hardwood species sourced from the tropics are ‘Certified, Well-managed or Recycled’. All Kingfisher Operating Companies will request, and where available within equal business terms accept, either FSC certified sources with a full chain of custody, verifiable recycled material or timber sourced via a TFT project, Rainforest Alliance (SmartStep) participant or from a forest source working with WWF (GFTN). Over the past 2 years Kingfisher has developed an internal Quality Management Tool (QMT) for unified responses to quality and legislative risk. The tool includes a risk matrix, designed to respond to the requirements of the EU Timber Regulation and harmonise the evaluation of risk and actions to mitigate risk across the Group. The QMT also includes a traceability element and document filing system as part of the Groups wider due diligence. In other areas of the business (Brico Dépôt France) the assistance of monitoring organisations and verifiers has been sub-contracted e.g. SGS/TFT/FTN etc.. with a view to verify across all product areas not just those pertaining to the schemes." Material risk New EU regulations on timber due diligence will have an impact on our EU operating companies. They will be required to demonstrate that they have exercised adequate due diligence to ensure they are using legally sourced timber. Kingfisher welcomes the new regulation and played a leading role in helping to set up the Timber Retail Coalition in support of the due diligence approach. Once fully implemented, we hope that the regulation will help provide a level playing field in the market place and fortify voluntary measures currently in-place. Material risk Consumer trust in the Kingfisher brands is dependent on the reputation of the Group to act responsibly on behalf of its consumers. Material risk "Timber is used in up to 40% of our products in store and we rely on an area of forest the size of Switzerland each year. Deforestation and growing global demand could result in shortages and price volatility. Taking a restorative approach is the best way to safeguard our future timber supplies at an affordable price. It is also important to protect biodiversity and to help mitigate the effects of climate change. In order to plan product strategies it is imperative to understand where we will be getting our timber from in the next 5 - 10 years. Tropical hardwood timbers and other species are gradually becoming scarcer, the market response has focussed demand on the 8% of certified forest resources. It is our obligation to build a product offer that customers can rely on. The availability of timber products is, due to the increasing demand for sustainable options, perhaps one of the biggest supply chain challenges facing the retail sector and Kingfisher has designed a foreword thinking timber policy designed to guide the business towards strategic responses. The team has also initiated internal timber strategy workshops. One key response will be the ability to incorporate sustainability into the product design phase." 2014 Coop Genossenschaft Switzerland (46.818188, 8.227512) 4 Soy Yes Internal working group on responsible soy. Food screening of the Coop product range. Intense stakeholder dialog with WWF and Greenpeace . Swiss cooperation with involved businesses along the soy supply chain (Swiss Soy Network). Analysis of food raw materials with the Coop risk monitor (partially based on Maplecroft data). Following risks were assessed: material availability of certified soy, risk of GMO-contamination, biodiversity risks, social and economic aspects. No risk Material risk Using soy feed for our Naturfarm Label programm is under discussion because feed is imported and not produced in Switzerland, also deforestation. Risk of media coverage and NGO campaigning. No risk 2014 Associated British Foods United Kingdom (55.378051, -3.435973) 3 Soy Yes "Individual ABF businesses are required to complete risk assessments for their organisation capturing risks as far ranging as financial, reputational, supply and regulatory/legal. As it relates to soy and soy derived products, each business is aware of the reputational and operational/supply risks concerned with soy and increasing interest and awareness of deforestation agenda with this commodity. With this is mind, businesses have developed plans or supply strategies that are consistent with developing responsible soy supply for businesses where this matter is of significant risk and relevance. These approaches include the direct purchase of responsibly sourced soy, where commercially available and feasible. The development of meaningful and relevant cross industry approaches within the animal feed sector is critical and our animal feed business have played a leading role in this area. Our bakery ingredients business has taken a proactive step to secure BM Trada certified soy status for its soy supply chain sourced from Canada." No risk Our businesses sourcing these commodities are responsible for monitoring legislation in the relevant countries and any potential impact on our supply chains and sourcing. Material risk If negative event/s were to occur in our supply chain, there is the high potential for there to be reputational impacts to certain brands. Material risk Operational supply issues may arise for a number of reasons such as price volatility, security of supply or issues associated with the commodity’s heritage. Individual businesses monitor these potential operational impacts as part of their risk assessments. 2014 Marks and Spencer Group plc United Kingdom (55.378051, -3.435973) 1 Timber Yes Our risk assessment process evaluates materiality, regulatory compliance, potential impact on reputation, security of supply, availability of certification, and environmental & social risk (including species, deforestation rates, high conservation values, conflict timber, corruption, illegal harvesting, value chain relationships and transparency, and commercial relationship). It also considers availability of solutions and their effectiveness. Material risk EU Timber Regulation requires M&S to put in place a due diligence system to minimise the risk of importing illegally harvested timber. Material risk It is important to M&S that our customers trust us to be effective custodians of their values. Timber faces significant social, environmental and land use change challenges and therefore attracts considerable media attention and NGO campaigning. We are reliant on the credibility of the sustainability schemes/organisations available in the market, and therefore are dependent on scheme acceptance by opinion formers for reputational risk management. Material risk We are reliant on timber for a wide range of our in-store product offer, for construction, marketing and consumable materials and packaging. An inability to procure sufficient quantities of the right material undermines our ability to operate. 2014 Neste Oil Oyj Finland (61.92411, 25.748151) 4 Biofuels Yes Neste Oil buys certified ethanol for blending of 95 E10 and 98 E5 gasoline grades. Global ethanol supply is well established and based on several suppliers, enabling stabile availability of acceptable products. Therefore, risks are less significant than e.g. with palm oil. Non-material risk Ethanol production has been concentrating in North and South America, mainly in Brazil and the USA. Both countries have well established agricultural land use controls in place. Therefore, taking into account the limited ethanol volumes Neste Oil uses in order to fulfil domestic gasoline mandates, and diverse sourcing options in the world ethanol market, the regulatory risks can be regarded as non-material. Non-material risk The production of ethanol, especially sugar cane based may create a significant risk if the additional land use is done in a non-responsible way. Corn and wheat as raw materials are sharing the same concerns as any large-scale cultivation. Novel processes, such as enzymatic ligno-cellulosic ethanol are in the ramping-up phase. As the penetration of ethanol in the global gasoline pool is so wide, the reputational risk can be regarded as non-material. Non-material risk The availability of RED compliant ethanol in the future might create an operational risk. On the other hand, there are several countries and companies involved in the ethanol business, which may decrease the risk on the longer run. 2014 Drax Group United Kingdom (55.378051, -3.435973) 1 Timber Yes Risk assessment process document the risks identified, level of severity and probability, ownership and mitigation measures for each risk across the sustainability spectrum. Summary risk registers are reviewed by the risk management committees on at least a quarterly basis.Within this framework, there is a well developed management system dedicated to the assessment of sustainability risks associated with biomass contracting. Each prospective contract has to be signed off on sustainability criteria before the procurement team can execute or modify a contract. An initial risk assessment is conducted to identify country-specific risks (whether sustainability, effectiveness of the legal system or social risks). This is incorporated into the Drax contracting process which ensures compliance with legal sustainability requirements as well as with corporate policy and which is founded on the provision of sufficient information for the assessment of risk associated with a supply contract. If a contract is, at any time during contract negotiation, deemed a ‘high risk’ then further detailed information (probably requiring a audit visit by third party auditors) is required before a contract can be signed. The determination of a potentially ‘high risk’ contract depends on (inter alia), relevant country environmental legislation, product nature, extent of product certifications (such as FSC, SFI, ACCS), production location (i.e. involving a need to avoid certain areas of high local biodiversity), previous audits and supplier reputation/performance as well as any stakeholder concerns. Material risk The Renewable Obligation requirements will demand compliance of all fuels with a minimum set of sustainability standards, probably in 2015. Failure to comply will involve signifacnt financial loss.Hence the emphasis currently placed on initiatives such as the extenal supplier audits, SBP and the ISAE300 auditing programmes Material risk Yes. Drax is a high profile purchaser of biomass and is subject to considerable enquiry by NGOs. The current sustainability policy has proven to be very robust against these enquiries and its effectiveness therefore needs to be maintained. The credibility of the policy implementation is important as witnessed by the high level of Board and Exective director involvement Material risk Failure to obtain sufficient volume of sustainable fuel would introduce significant reductions in renewable power output. Hence the need to extend the range of certified feedstock and to promote the SBP standard. 2014 Mondi PLC United Kingdom (55.378051, -3.435973) 1 Timber Yes "A Group-wide risk management framework ensures the effective governance of material risks, which are those with the potential to have an impact on the achievement of commitments or strategic plans. The Boards are responsible for establishing and maintaining an effective system of internal control. Regular management reporting provides a balanced assessment of key risks and controls and is an important component of the Boards’ assurance. Our Sustainable Development Risk and Change Management Standard guides the ways in which sustainable development risks are identified and managed, while our sustainable development risk register is updated annually to ensure mitigation plans are in place for those risks with a high likelihood of occurrence and/or impact potential. Risks include both inherent operational risks as well as strategic risks. In addition to the key impacts on our business and our stakeholders, we identify sustainability trends and opportunities and seek to mitigate risks that affect our longer-term prospects and financial performance. Risk management is one of the internal processes that have informed the identification of our six material sustainability issues, and the commitments we have set to monitor and improve our performance within these. We exercise due diligence prior to the introduction of new practices, processes and products. Our Sustainability Screening Tool has been developed to identify sustainability risks as part of business change, rather than on going management of assets or operation. The Mondi ‘Requirements for the Procurement of Wood, Virgin Fibre, Biomass and Finished Product’ is a mandatory guide for procuring wood, virgin fibre (including pulp), biomass and fibre-based finished product used in Mondi’s paper and pulp production. The procedure defines a risk based process for ensuring long-term legally and sustainably harvested wood/fibre supplies. The application of the procedure applies to all wood, virgin fibre and fibre-based product supplies and suppliers." Non-material risk The new EU Timber Regulations for harvested wood products and the US Lacey Act are strong incentives to ensure procurement from responsible sources Material risk In the short to medium term, loss of access to credible resources due to loss of certification as a result of unsustainable forestry practices, manifold external scrutiny of plantation forests and the harvesting of natural forests is a risk to our industry. However, Mondi is sourcing sustainably and is therefore not exposed to the risk of sourcing from controversial sources in its daily management. Mondi also has in place chain-of-custody requirements for all wood consuming operations. More information on Mondi's risks and mitigation measures can be found on pages 12-13 and pages 28-31 of the Mondi integrated Report 2013. Material risk In the short to medium term, loss of access to credible resources due to loss of certification as a result of unsustainable forestry practices, manifold external scrutiny of plantation forests and the harvesting of natural forests is a risk to our industry. However, Mondi is sourcing sustainably and is therefore not exposed to the risk of sourcing from controversial sources in its daily management. Mondi also has in place a chain-of-custody requirement for all wood consuming operations. More information on Mondi's risks and mitigation measures can be found at: http://integrated-report.mondigroup.com/2012/performance/risk-management-and-internal-control 2014 Holmen Sweden (60.128161, 18.643501) 1 Timber Yes Risk assessment according to standard for FSC, PEFC, ISO14001 and EUTR Non-material risk EU Timber Regulations Changes in national and international legislation may affect the forest management system. Non-material risk There are political parties and NGO:s questioning the system for Swedish forest management and silviculture. No risk All harvested areas are reforested 2014 Kellogg Company USA (37.09024, -95.712891) 3 Soy Yes "Soy and soy oils are components in many of our products. When assessing our risk associated with soy, we first did an analysis to determine where our soy is grown for our products globally. We do not purchase soy products from tropical deforested regions. Instead, we purchase soy almost exclusively from the U.S., with a small amount from Argentina. Due to the volume of our annual purchases of soy and the risk associated with soy production in some parts of the world, we felt it important to document this sourcing strategy for soy and soy oils. By buying almost all of our soy products in the United States, we know that there is a very small risk of deforestation for soy cultivation. Further, through assessment based on cost and risk within our procurement department, we source our soy from Argentina, rather than Brazil or other neighboring countries that have a larger likelihood of deforestation. In 2013, we engaged our soy suppliers in discussing risks of deforestation and potential engagement opportunities. Going forward, we will continue to be aware of the risk of deforestation associated with soy, communicate this risk with our suppliers and will periodically reassess our business needs and supplier performance. Our commitments are summarized on our company website at: http://www.kelloggcompany.com/content/dam/kelloggcompanyus/PDF/Corporate%20Responsibility%20Sustainability%20Commitments%201112.pdf" No risk We have not found that any regulations are or will be in place in the future that will significantly affect the sourcing of our soy or soy oils. No risk Soy does not have a reputational risk for Kellogg. Soy is mostly sourced from the United States, where the risk of deforestation is much lower. No risk There are no operational risks for soy since the supply is readily available and freely traded. 2014 Stora Enso Oyj Finland (61.92411, 25.748151) 1 Timber Yes Stora Enso traces 100% of wood it purchases to ensure the wood comes from legal and acceptable sources. 78% of wood used by the company (in 2013) was certified. All Stora Enso's own and/or joint venture plantations in production are third party certified (PEFC and/or FSC). In addition, independent third party Environmental and Social Impact Assessment (including economic assessment) and internal feasibility studies have been conducted to all Stora Enso plantations prior to their establishment. Please see more comments in the 'Further information section'. Material risk "We observe the new ""EU regulation laying down the obligations of operators who place timber and timber products on the market"" and comply its demands for the due diligence system. We also comply with the regulations of the Lacey Act in the USA." Material risk Stora Enso is observed by different NGOs (MST, World Rainforest Movement, Friends of the Earth, Greenpeace, Swedish Society for Nature Conservation etc.) - especially our operations in emerging markets (e.g. Veracel in Brazil and Stora Enso Guangxi in China) have received media attention. The criticism was not related to deforestation but to land ownership and land use rights. We see a reputational risk coming from the fact that the pulp and paper industry is the target for criticism, as it is often involved in using large areas of land and other natural resources. Material risk "We see a market related risk: Customers are sensitive and want ""conflict free"" products - this is especially true during periods of structural overcapacity/oversupply. If customers stop buying from us, we are forced to reduce our capacity." 2014 Unilever plc United Kingdom (55.378051, -3.435973) 1 Timber Yes "• In 2013, Paper and Board (P&B) reporting was carried out twice in the year. Our assessment covered 85% of our supply base for P&B packaging materials using a reporting tool – Global Traceability Solutions. The questionnaire covers traceability of fibre to country of origin, declaration if the materials are certified against FSC, PEFC or recycled, and includes verification by our suppliers of the sustainability materials that go into making our packaging products. These assessments enable us to determine the volumes of wood fibre we source and the sustainable sourcing of the materials. • In January 2013, Unilever facilitated a sustainability workshop with our key P&B suppliers to help shape the Unilever P&B 2020 vision and determine the challenges and opportunities to scale up the sustainability in the sector. The findings of the workshop, while internal, helped improve the reporting process and shape the revised paper and board sourcing policy that will be published in 2014. It affirms Unilever and our suppliers commitment to work together to make the reporting of our wood fibres more transparent and robust. Unilever regularly engages with WWF and Greenpeace and was involved in the active dialogues with Asia Pulp & Paper (APP) on their sustainable transformation. At an industry level, Unilever actively led the publication of the Pulp and Paper Sourcing Policy in The Consumer Goods Forum and supported the dialogue in the Tropical Forest Alliance breakout group on transparency in pulp and paper sourcing." Non-material risk • Unilever sees regulations that address deforestation as an opportunity. However, on both forest and palm oil, in the event that government regulatory bodies set up compulsory national standards while banning voluntary standards from being established or promoted, this can have consequences for the perception of these countries to tackle deforestation. Material risk • NGO criticism against non-certified virgin wood fibre products. These can lead to consumer boycotts and harm Unilever's brands. Material risk • Lack of sufficient, available certified sources. Also, continued NGO criticism and concerns around deforestation even if sources are certified. 2014 Pearson United Kingdom (55.378051, -3.435973) 1 Timber Yes We use the PREPS database which holds technical specifications and details of the pulps and forest sources of the papers we use. Based on the forest source information, each paper is awarded a grade of 1, 3, or 5 using the PREPS Grading System. This considers the country of origin of the wood fibre and how the forest sources have been managed. We also use the WWF Forest and Trade Network system to assess risk. Non-material risk The EU Timber Regulation (EUTR) came into force in 2013. Currently, Pearson products are not covered within the scope as printed paper - books, magazines and newspapers are excluded. That could change and Pearson would support such a development. The Lacey Act in the United States also sets out rules relating to responsible paper purchase. Non-material risk A number of environmental campaigning groups are concerned over the loss of natural forest and threats to biodiversity arising from the pulp and paper industry. Our approach is to prioritise FSC certified / PCW papers as well as to review all the papers we purchase against the PREPS grading tool on certification and well managed forests. The PREPS approach incorporates a country forest risk assessment designed to help assess threats to High Conservation Value Forests and to avoid controversial fibre entering the supply chain. Only papers graded 3 or above under the PREPS system meets our standards. Paper and pulp sourced from Indonesia is a key area of focus and no paper manufactured in Indonesia or paper that contains pulp from Indonesia meets our standards. Our use of PREPS is well established among production teams in Pearson. We also communicate our standards to printers and others who purchase paper on our behalf. Non-material risk There is a risk of supplier failure which Pearson mitigates through the purchase from a range of suppliers . We use the PREPS system as well as chain-of-custody controls to ensure effective oversight of the material we purchase. 2014 Wesfarmers Australia (-25.274398, 133.775136) 2 Palm Oil Yes "Coles: Risk assessment for palm oil covering regulatory, reputational and operational deforestation risk has been undertaken at Coles by auditing of all tier one suppliers who supply palm oil. Information is recorded in a risk register and monitored. Bunnings: Not applicable for this division. Officeworks: Not applicable for this division. Kmart: Have commenced reviewing products with palm oil but only in the early stages. The product review will be finalized by the end of 2014. Target: Have commenced reviewing products with palm oil but only in the early stages." Material risk Coles: The risk exists but our policies, 2015 target and the work being done to meet that target are all designed to mitigate risk of all kinds. Material risk Coles: The risk exists but our policies , 2015 target and the work being done to meet that target are all designed to mitigate risk of all kinds. Material risk "Coles: Upward price pressure on certified palm oil products. Securing enough volume of certified product to meet growing demand. Kmart: Upward price pressure on certified palm oil products. Securing enough volume of certified product to meet growing demand" 2014 Sky plc United Kingdom (55.378051, -3.435973) 1 Timber Yes "Sky’s risk assessment is carried out using the following approach. 1. Meetings are held with key areas of the business (e.g. procurement, creative, operational contractors) to understand scope of paper and wood based products procured, estimated volumes and processes followed to procure items. 2. The regulatory, reputational and operational deforestation risk based on the volume of the item being purchased by Sky are then assessed; the type of product; end use; country of origin; supplier; if Sky is the end user. 3. The risk assessment process is updated accordingly when procuring any relevant material, or, at a minimum, annually." Non-material risk "There is a small potential risk that wood and paper products procured by Sky could be derived from a CITES listed species. However, Sky’s Wood and Paper Purchasing Policy is there to mitigate this risk. The PEFC and FSC certifications ensure strict requirements for responsible forest management are being met. To further ensure compliance, we maintain a Responsible Sourcing Programme through which we uphold our Responsible Sourcing Policy and implement a third party Responsible Sourcing Questionnaire. It has become an integral part of our transactions with suppliers." Non-material risk "A small, immaterial reputational risk resides in Sky’s purchase of timber and paper products. If Sky was to procure a product that was sourced from illegal or unsustainably harvested sources, this would go against our policy and undermine Sky’s environment programme and its Sky Rainforest Rescue campaign, which is in partnership with WWF. However, Sky’s Wood and Paper Purchasing Policy, alongside Sky’s Responsible Sourcing Programme mitigate this risk and are an integral part of the relationship we have with suppliers." Non-material risk "The use of paper-based products is crucial for Sky's marketing communications and customer transactional communications. As a result, ensuring availability of supply of sustainably sourced paper is important and there is the risk that shortfall in supply of sustainably sourced paper would have a significant impact on business activity. However, in the context of Sky’s other operations there are much greater, business critical risks that exist and make the operational risk of a shortfall in sustainably sourced comparatively small, and as such make it an immaterial issue to the business." 2014 Smurfit Kappa Group PLC Ireland (53.41291, -8.24389) 1 Timber Yes At end of 2013 we have assessed 100 % of the wood entering our operations as from non-controversial origin. 56 % are FSC or PEFC certified, the rest is from controlled wood ( FSC Controlled wood certified). Regarding virgin paper we purchased from external, at end of 2013, 98 % of this paper was FSC or SFI certifed chain of custody or FSC Controlled Wood certified. Material risk In Europe the legislation in place since the 3rd March 2013 is the Eu Timber regulation (Regulation n° 995/2010) Material risk It is our policy to only purchase timber/wood from certified origin and/or from controlled wood origin. Our risk therefore should be non-material. However, there is an indirect risk, for example that NGOs campaign against forest product companies using non CoC certified and/or Non-controlled origin forest products such as pulp produced in Indonesia. From those campaign, indirectly there is a reputational risk, for the whole paper industry. Material risk To prevent any risk of deforestation when purchasing pulp and other timber based products we purchase only CoC certified material. However the percentage of certied forests is limited so there is a risk that there is less certified timber products available than our demand for such products. 2014 Resolute Forest Products Inc. Canada (56.130366, -106.346771) 1 Timber Yes "As part of the requirements of CoC standards used, Resolute has completed a full risk assessment of the forests entrusted to our care and this assessment is updated on an annual basis. 100% of the woodlands we manage are independently certified to one or more of three internationally recognized chain of custody (CoC) standards: Forest Stewardship Council® (FSC®), Sustainable Forestry Initiative® (SFI®) and Programme for the Endorsement of Forest Certification (PEFC). These standards ensure that our supply does not include fiber from controversial sources (illegal logging, deforestation, GMO, etc.). All our fiber supplies meet the PEFC due diligence requirements and the FSC controlled-wood requirements. All our wood fiber originates from Canada and the U.S. FAO's State of the World's Forests reports indicate that Canada's forest cover has not changed since 1990 and United States forest cover has slightly increased." Non-material risk We have environmental management systems in place at every location, most of which are readily third party certified to ISO 14001, Those that are not currently certified to ISO 14001 are on their way to achieve that certification. A key goal for implementing and certifying these environmental management systems is to ensure full compliance with forest management laws and regulations. Material risk We are subject to ENGO (market groups) campaigns on some forestry issues but none related to deforestation as deforestation rate is virtually 0 for Canada and the United States. We are actively engaged with our customers to inform them on these forestry issues and we created a blog where all pertinent information could be found (http://borealforestfacts.com/). We are also present on the social media to correct any misinformation on the company and on the company practices. In addition 100% of the land managed by the company is third party certified to internationally recognized SFM certification and all our North American pulp and paper mills and sawmills have third party certified CoC in place to one or more of the following standards; FSC, PEFC and SFI. No risk We do not see risk associated with the production or use in our production of timber. As stated under F10.1, there is virtually no deforestation in Canada and the United States and those countries are already covered by extensive forestry regulations. In fact, in Canada where we conduct our own operations on large track of public lands, it was demonstrated through independent studies (Cashore, B. and C.L. McDermott. 2004. Global Environmental Forest Policies: Canada as a constant case comparison of select forest practice regulations. Victoria, BC: International Forest Resources; and Indufor Oy. 2009) that Canada has already one of the most robust regulatory system in the world. Resolute is in compliance with these stringent and comprehensive forest regulation. Conformance is a prerequisite in order to maintain our volume allocations on public land in Canada. 2014 Sveaskog Sweden (60.128161, 18.643501) 1 Timber Yes Analysis of possible deforestation risks in Swedish forest management and in connection to limited imports of wood from the Baltic region. Material risk EU Timber Regulation Material risk Although Sveaskog are 100% certified on all timber sources there is always a reputational risk associated with tree cutting, due to high level of media coverage and potential NGO campains on forest issues Non-material risk 2014 PrimeAsia Leather Company USA (37.09024, -95.712891) 2 Cattle Products Yes Yes, PrimeAsia issued the PrimeAsia Procurement Policy and assures that all wet blue suppliers of hides to PrimeAsia follow the policy. Wet blue suppliers must be audited in the Leather Working Group guidelines, tested against the PrimeAsia Wet Blue RSL Policy and operate a hide traceability program. The hide traceability program that the wet blue supplier operates must be one of the following with preference for option 1, (1) documented traceability to slaughterhouse origin. With all hides physically marked, allowing traceability of individual hides. (2) Documented traceability to slaughterhouse origin of each shipment of hides. Material risk No regulatory risk in the countries PrimeAsia manufactures, but PrimeAsia's suppliers risk regulatory risk in their countries where the cattle graze and are slaughtered. Material risk PrimeAsia prides itself on buying from reputable wet blue suppliers who meet strict standards. PrimeAsia's reputation is built on sourcing from suppliers who provide traceable hides. Customers choose to purchase leather from PrimeAsia because of this value added aspect of the company's product. No risk 2014 Sofidel S.p.A. Italy (41.87194, 12.56738) 1 Timber Yes "Every year Sofidel send to pulp suppliers a questionnaire with the following requests: • Name of the manufacturer of pulp and the name and address of the manufacturing plant; • Geographical origin of the wood used for the production of cellulose and indication of the sub-national region of origin; • Indication of the percentage of wood associated with the geographical origin; • Indication of the type of wood used (common name and, where applicable, the scientific name); • Indication of the main steps in the logistics chain, from the origin of the timber to the stage of pulp and paper production; • Certificates of forest management and chain of custody forest owned by the manager of the forest resource and the producer of pulp; • Documents or other information indicating compliance of the harvested wood with the applicable legislation. • Human rights and working conditions; • Health and safety aspects; • Corporate ethics and corruption • CSR management Once received back the questionnaire, Sofidel checks the correct fulfillment of the questions, performs the risk assessment for each raw material and arranges for the archiving both paper and electronic questionnaires. Electronic archiving is done on the database “josh archive” accessed via web. The elements of assessment are the following: • Assurance of compliance with applicable legislation, which may include certification or other third-party- verified schemes which cover compliance with applicable legislation, • Prevalence of illegal harvesting of specific tree species, • Prevalence of illegal harvesting or practices in the country of harvest and/or sub-national region where the timber was harvested, including consideration of the prevalence of armed conflict, • Complexity of the supply chain of timber and timber products. For the suppliers that do not answer to the questionnaire are forecast different steps of action, from the remainders to the cancellation from the list of the suppliers . A sort of risk assessment is also carried out to evaluate the production of wood pulp at country level. The procedure is not formalized yet but every year information from difference sources (UNEP, UNECE/FAO, FSC, PEFC, GLOBAL FOREST WATCH, others) are collected to evaluate the risk related to each country. Sofidel is not purchasing pulp from risky countries to minimize the reputational risk." Material risk "Sofidel has to perform a due diligence accordingly to the regulation (EU) no 995/2010 of the European parliament and of the council of 20 October 2010 that lays down the obligations of operators who place, for the first time, timber and timber products on the European market. Sofidel’s operations are defined as operator and verifies that such requirements can be applied to virgin fibre pulp purchased. Reference documents are: Regulation (EU) no 995/2010 of the European parliament and of the council of 20 October 2010 laying down the obligations of operators who place timber and timber products on the market (the regulation). Commission implementing regulation (EU) no 607/2012 of 6 July 2012 on the detailed rules concerning the due diligence system and the frequency and nature of the checks on monitoring organisations as provided for in regulation (EU) no 995/2010. Guidance document for the EU timber regulation (available at http://ec.europa.eu/environment/forests/timber_regulation.htm)" Material risk Buying forest products from controversial sources could create major concerns on Sofidel stakeholders giving rise to NGO’s negative campaigns and public boycotts of our products creating major damages to Sofidel’s public reputation. A good reputation is a fundamental resource that can significantly help Sofidel to create added value for its products and to develop long term loyal relationship with its customer. Please consider Sofidel doesn’t have “business to business” relation but its customer is the consumer: that means a bad reputation will have an immediate bad impact on the consumer loyalty. A bad reputation could also decrease the possibility to get access to financial markets (reducing dramatically the negotiation power with banks and financial institutions preventing Sofidel from doing future investments) and to get access to the labour market since, for an equal pay, talent people will prefer a sustainable company than a company with a bad reputation. Material risk Certified forest sources are limited and concentrated in determined area of the world: this situation could create a lack of supply of certified forest products (in case of over-demand) with a related price volatility. To avoid this risk, Sofidel secures its needs with long term contracts with suppliers able to grant regular deliveries of certified forest products. 2014 Travis Perkins United Kingdom (55.378051, -3.435973) 1 Timber Yes Physical or operational risk Not all of our timber and timber fibre or derivative purchases are of certified well managed products. We know from our due diligence work around purchasing that there remains a high risk that a small number of purchases we make from traders in the EU will have inadvertently come from forest operations where the management is not yet good enough. We do not yet have full traceability on all our paper purchases. Regulatory risk As we directly import some timber based products in the EU we are subject to the EU Timber Regulations. There is then a risk of both product seizure and prosecution if our due diligence against the importation of illegal timber is not adequate. We have chosen to only import timber and timber fibre products covered by the regulation that are credibly certified to either FSC or PEFC. Reputational risk Timber remains a commodity which attracts lots of interest from both government and civil society. Since TP is a large timber trader we have a high profile in this area and are rightly subjected to a degree of scrutiny. Our customers, colleagues and investors all value the position we take on timber trading and consequently, turnover, employee brand and share price can all be affected by association to poor practice in the value chain. A high reputational risk remains. Financial risk Material financial risks are high because of the scale of our involvement with the commodity and could come about from regulatory seizure, customers boycotts or shareholder action. Material risk As we directly import some timber based products in the EU we are subject to the EU Timber Regulations. There is then a risk of both product seizure and prosecution if our due diligence against the importation of illegal timber is not adequate. We have chosen to only import timber and timber fibre products covered by the regulation that are credibly certified to either FSC or PEFC. Material risk Timber remains a commodity which attracts lots of interest from both government and civil society. Since TP is a large timber trader we have a high profile in this area and are rightly subjected to a degree of scrutiny. Our customers, colleagues and investors all value the position we take on timber trading and consequently, turnover, employee brand and share price can all be affected by association to poor practice in the value chain. Material risk Supply interruptions because of regulatory or civil society action in the UK could mean we would be temporally unable to supply some products. Government action in producer countries could mean that certain products need to be resourced, re specified or no longer traded. 2014 Tesco United Kingdom (55.378051, -3.435973) 2 Palm Oil Yes We have carried out a risk assessment for all palm oil used in our UK products, and have carried out an initial mapping exercise across the Group (our non-UK markets). This initial mapping exercise was carried out in 2011 and we are currently in the process of gathering the most up to date information from the Group. No risk Currently no relevant regulation regarding the use of sustainable palm oil and therefore no regulatory risk. Material risk We know that deforestation and sustainable sourcing is an area our stakeholders, namely customers and NGOs, care about. Sourcing products that could contribue to deforestation would lead to a loss of trust and confidence in our brand, and to NGO or pressure group campaign activity. Non-material risk Key operational risks for palm oil are price volatility and security of legal and sustainable supply. These are currently non-material risks but the risk level may increase in the future. 2014 Woolworths Holdings Ltd South Africa (-30.559482, 22.937506) 2 Palm Oil Yes "Our risk assessment process evaluates the following: Operational risks: We have assessed the level of consumption across the business and identified that Woolworths is not a major user of palm oil. As palm oil has unique qualities that meet safety, health, taste, shelf-life and rancidity requirements, however, suppliers find it difficult to substitute palm oil and therefore we are reliant on having a secure supply of palm oil. Security of supply: The current difficulty we face in securing physical supply of the limited amount of certified sustainable and traceable palm oil available globally is a risk to our business. We have also identified that continuing to support unsustainable palm oil production and environmental degradation, poses threat to long term security of supply. For now, we will have identified the value of purchasing GreenPalm certificates to help the RSPO incentivise more sustainable production and therefore mitigate these risks, until we are able to physically source certified sustainable palm oil. Environmental and social risks: This includes deforestation, biodiversity loss and species extinction, environmental degradation, land conflict and displacement, and social conditions. Whilst we are not major users of palm oil, we have identified that we can make considerable impact in mitigating these risks by using certified sustainable palm oil in our products, particularly because of the pressure it will put on other larger users of palm oil in South Africa. Reputational risks: With increasing pressure from consumers, NGOs and activists on the issue of deforestation, we have identified that this is a risk to our reputation. Our purchase of GreenPalm Certificates and commitment to physically sourcing certified sustainable and traceable palm oil has helped reduce reputational risk to a degree, but we recognise that this is not enough. Regulatory risks: Currently we are not required to use a certified sustainable palm oil, but we need to consider sourcing impacts should this become legislated. A recent change in South African food legislation around labelling has meant that we now need to declare the type of oil used in the ingredients panel of food products. This encourages transparency, but does lead to further reputational risk as consumers become more aware of palm oil in their products." No risk There is currently no legislation in place that affects our ability to continue sourcing palm oil, only legislation around packaging labelling that has increased transparency as to which products contain palm oil. Material risk With increasing media coverage, NGO and activist campaigns, business exposes, social media campaigns and consumer pressure around palm oil and deforestation, there are huge reputational risks for our business. As a leading sustainable retailer, we have already received a lot of criticism on our use of unsustainable palm oil and are expected to lead on this issue and set an example for other retailers in South Africa. We are reliant on being able to gain access to a supply of certified sustainable palm oil as well as the credibility of the sustainability standards and certification bodies that we work with, and their support from NGOs, activists and consumers. Material risk Whilst we are not major users of palm oil, we rely on palm oil, due to its unique qualities, we are reliant on palm oil for a wide range of foods and non-foods products. We have identified that palm oil is difficult to substitute, and possible alternatives come with their own sustainability challenges (e.g GM). Therefore an inability to source sufficient quantities of palm oil would undermine our product development and offering, and competitiveness. 2014 Unilever plc United Kingdom (55.378051, -3.435973) 2 Palm Oil Yes "• In 2013, Unilever committed to a public palm oil policy that includes three principles: to halt deforestation; no new development on peat regardless of depth; and to stop the exploitation of peoples and communities. The policy covers our suppliers and their third party suppliers. • Given the leadership role we play in sustainable palm oil, Unilever is often at the centre of attacks by NGOs and we recognised the constructive role that civil society can play in transforming this industry. Unilever regularly engages in discussions with organisations including WWF, Forest Peoples Program and Greenpeace on our progress and to discuss issues affecting the industry today. • In 2013, our senior leadership, including CEO Paul Polman, invited key oil palm producers and traders to discuss how we can collectively work together to shape a more positive palm oil brand and engage actively with consumers on the benefits of palm oil use. This resulted in the identification of the key issues the industry will need to tackle together over the next 1-3 years." Non-material risk • Upcoming European labelling policy for all vegetable oils, including palm oil, to be operative in 2014, although this will not affect the legality status of actual palm oil sourcing. We expect that there could be unintended impacts of biofuel regulation and further pressures from consumers to ban palm oil. Material risk • NGO criticism on the deforestation links of palm oil cultivation. These can lead to consumer boycotts and harm Unilever's brands. We can also be held accountable for the action of our suppliers over allegations of land use and community conflict. Material risk • Continued NGO criticism and concerns around the palm oil industry in general, even if sources are certified by the RSPO. Unilever is addressing this risk by seeking to strengthen the monitoring and enforcement mechanisms of the RSPO. 2014 Oriflame Cosmetics AB Sweden (60.128161, 18.643501) 1 Timber Yes Timber products and their specific risks are part of a risk assessment process where factors such as Oriflame's environmental and social impact, other sourcing risks, regulatory risks and reputational risks are taken into consideration globally and in specific regions. The outcomes of these assessments help prioritise actions. Non-material risk EU Timber regulation only concerns a minor share of Oriflame products, we have a process in place to help ensure we fulfill regulatory requirements. Material risk Oriflame is a large consumer of paper products (by selling through catalogues and not through retail outlets) and recognises that we have an important role in preventing deforestation and forest degradation. Therefore reputational risks are material if not managed correctly. No risk 2014 Sumitomo Forestry Co., Ltd. Japan (36.204824, 138.252924) 1 Timber Yes "[Physical operational risks] Since its foundation, the Sumitomo Forestry Group has developed its business centered around timber. Timber is one of the blessings of biological diversity, and there is the risk of the Group’s business losing its foundation if this blessing is lost. The Sumitomo Forestry Group considers these to be important risks, and in response in 2007 the Group established the Timber Procurement Philosophy and Policy, the Timber Procurement Standards that stipulate matters such as evaluation standards for legality, and the Timber Procurement Action Plan that established concrete numerical targets as handles sustainable timber. In the Timber Procurement Action Plan targets have been set to increase the handling rate for timber certified by a third party organization (timber from certified forests) . The Group not only procures sustainable timber from other companies, it also conducts plantation forest operations on its own in areas around the world such as Indonesia and Papua New Guinea. [Regulatory risks] As laws and regulations aimed at eliminating timber that has been logged illegally are being strengthened in countries around the world, if the Sumitomo Forestry Group is not capable of responding adequately to these laws and regulations as applicable, it could become exposed to risks including compliance risks and the risk of having to pay compensation for damages. To ensure that it does not handle timber that has been logged illegally, the Sumitomo Forestry Group established the Timber Procurement Philosophy and Policy and the Timber Procurement Action Plan in 2007, and conducts legality verification on all overseas suppliers of timber that it imports directly from. The procedures of the Group’s legality verification initiatives are described in the [“Futher Information”]. [Reputational risks] ・In the event of a supplier of the Sumitomo Forestry Group failing to comply with laws and regulations concerning logging, it could negatively affect Sumitomo Forestry and its impaired brand image may result in sales decrease in the timber distribution business. In order to avoid these risks, the Sumitomo Forestry Group conducts legality verification in accordance with the procedure described in [Regulatory risks]. ・Information on timber procurement risk is exchanged with NGOs such as WWF Japan as called for." Material risk "The Sumitomo Forestry Group has developed its business centered around timber. For this reason, if the Group is not able to appropriately respond to regulations concerning illegal logging, it could become exposed to risks including compliance risks and the risk of having to pay compensation for damages, and accordingly regulatory risk is considered to be an important risk. For example, the EU enforced the EU Timber Regulation (EUTR) in March 2013. A similar regulation (the Revised Lacey Act) has already come into effect in the US and regulations are also being developed in Australia. The objective of these regulations is to eliminate illegal logging that has an adverse impact on the economy, environment, and society and to eliminate unfair competition in order to increase the value of legal timber to ensure that timber and timber construction materials that have been managed appropriately are distributed in the market. The EUTR covers businesses (importers and suppliers) that import timber to the EU market (the 27 member countries) and the products covered by the regulations consist of nearly all timber and timber products that are sold in the EU. The regulations mainly obligate business to (1) take appropriate measure to ensure that timber that has been logged illegally and timber products from this illegal timber is not shipped, (2) to conduct due diligence to verify legality, and (3) to ensure traceability (having an understanding on the history information of timber handled). As a means of risk management for these issues, the Sumitomo Forestry Group established the Timber Procurement Philosophy and Policy and the Timber Procurement Action Plan in 2007, and conducts legality verification on all overseas suppliers of timber that it imports directly from. The Group’s legality verification procedures are described in the [“Futher Information”]. Legality verification was completed in FY 2009 based on these procedures, and subsequently the Group has continued to implement these initiatives. In FY 2012 the Group formulated the Third Timber Procurement Action Plan that stipulates targets for FY 2013 to FY 2015. It stipulates that legality checks shall be continued for not only directly imported timber, but all suppliers of timber and timber products handled by the Sumitomo Forestry Group." Material risk In the event of a supplier of the Sumitomo Forestry Group failing to comply with laws and regulations concerning logging such as the EUTR, it could negatively affect Sumitomo Forestry and its brand image and as a result cause sales in the timber distribution business to decrease. Accordingly, the Group considers a reputational risk as an important risk. As stated in F10.1, laws and regulations aimed at eliminating timber that has been logged illegally are being strengthened in countries around the world, such as the EU Timber Regulation in the EU and the Revised Lacey Act in the US. In the event of a supplier of the Sumitomo Forestry Group failing to comply with laws and regulations concerning logging, it could negatively affect Sumitomo Forestry as a trading company that handles their products, impair its brand image and as a result cause sales in the timber distribution business to decrease. If the timber procurement conducted by the Sumitomo Forestry Group is viewed by an environmental NGO as not giving sufficient consideration to environmental issues or social issues such as occupational safety and health or human rights, this could lead to a negative campaign on a global level, which in turn could negatively affect its brand image and cause sales to decrease not only in the timber distribution business, but in the housing business as well. As a means of risk management for these issues, the Sumitomo Forestry Group established the Timber Procurement Philosophy and Policy and the Timber Procurement Action Plan in 2007, and conducts legality verification on all overseas suppliers of timber that it imports directly from. The Group’s legality verification procedures are described in the [“Futher Information”].Legality verification was completed for all suppliers of directly imported timber in FY 2009 based on these procedures, and subsequently the Group has continued to implement these initiatives. The Group formulated the Third Timber Procurement Action Plan in FY 2012 that stipulates targets for FY 2013 to FY 2015. It stipulates that legality checks shall be continued for not only directly imported timber, but all suppliers of timber and timber products handled by the Sumitomo Forestry Group. Initiatives will be continued to clarify the traceability of all timber handled and further improve the accuracy of legality verification. Material risk Since its foundation, the Sumitomo Forestry Group has developed its business centered around timber, and the volume of timber procured from forest by the Group is one of the highest levels among Japanese companies. The Group’s business could lose its foundation if timber is lost. Furthermore, even if there is a change in only the quality or volume of timber, it will be necessary to respond in some way, and this could be a major factor of costs increase. Therefore, business risks are considered to be an important risk. In preparation for possible future insufficiencies in raw materials, the Sumitomo Forestry Group not only procures sustainable timber from other companies, it also conducts plantation forest operations on its own in areas around the world such as Indonesia and Papua New Guinea. 2014 Unilever plc United Kingdom (55.378051, -3.435973) 3 Cattle Products Yes • In 2013, Unilever mapped out the origins of all meat products including beef, pork, chicken and seafood. Beef now only represents 7% of our total meat purchases since our sale of the Bifi and Peperami brands in April 2014. Given the small volumes of cattle products in our supply chain, the commodity represents a relatively low risk to Unilever. In addition, for beef based by-products, we are moving to vertically integrated suppliers enabling traceability to the slaughter houses and farms. Material risk • There could always be unintended regulatory impacts such as biofuels on animal feed price or regulatory pressure on linking animal feed to deforestation, even if the beef production was in Europe. Material risk • For our branded products such as Unox and for Knorr bouillon because it is an iconic brand and product. Non-material risk • Our overall beef purchase is small and the sourcing could be moved to different origins. 2014 Sanoma Finland (61.92411, 25.748151) 1 Timber Yes demand for certifications and transparency documents for wood origin No risk No risk when the demands for the supply chain are made and monitored No risk We have minimized risks by creating the principals and acting according to them No risk 2014 SCA Sweden (60.128161, 18.643501) 1 Timber Yes "The SCA Environmental Committee and SCA Public Affairs Fiber Network are responsible for the assessment of risks relating to sustainable forest management and its potential business and physical effects on SCA and its stakeholders. The Committee includes environmental managers from all business areas and the Senior Vice President Sustainability. The tools for identifying business risk including regulatory risk (e.g. impacts of EU Timber regulations, the US Lacey Act, Australian Timber Regulations), operational risk (e.g. securing supply of sustainable wood material) and reputational risk (e.g. reliance on certification) primarily comprise of getting continuous reporting from the business units and the annual strategy process, which includes risk management. Much time and resources are dedicated to interact both vertically and horizontally in the organisation so that risks associated with sourcing of wood based products are identified and escalated to the Group. Most operational risks are managed by SCA’s business units at a local level, but are coordinated centrally when necessary and to inform SCA’s overall business strategy. SCA regularly carries out materiality analysis to understand what issues are most important and relevant to SCA to inform SCA’s strategy and operations. The 2013 analysis was based on a survey of 1,500 internal and external stakeholders in combination with SCA’s own assessment of the strategic importance of the areas. To mitigate the risks with sourcing of wood based products, SCA has a Group target to achieve and maintain zero fresh fiber-based material, including pulp, from controversial sources. This involves considerable control efforts along the supply chain. SCA requires pulp suppliers to demonstrate reliable systems and have documented procedures in place to enable control of the supply chain and traceability of the origin of wood raw materials. The company performs assessments and supplier visits to ensure suppliers meet the requirements in SCA’s Global Supplier Standard. Nine supplier mills were audited in 2013 and this work will continue in 2014. All SCA's pulp suppliers to mills and factories, with 100% SCA ownership, are FSC and/or PEFC Chain of Custody certified." Material risk "SCA manages several regulatory risks related to wood supply with a potential to impact pulp and pricing policy. Large changes in the FSC/PEFC criteria or in new timber regulations could affect the availability and access to certified timber, which would drastically reduce SCA’s supply. This would lead to SCA not fulfilling its own target to source from certified timber suppliers. It could also prevent SCA from delivering FSC/PEFC Chain of Custody certified products to its customers. This is seen as a material risk since this would negatively influence SCA’s sales and thereby profit. SCA conducts regular comprehensive strategic reviews and monitors developments in global legislative developments related to: - Impact of certification schemes standard changes (i.e. Due Diligence systems; forestry management practices etc.) - Impact of new legislation (EU Timber regulations, the US Lacey Act, Australian Timber Regulation etc.) - Developing demands for environmental (Eco) labels (e.g. EU Eco-label, Nordic Swan, etc.) - Carbon neutrality of Biomass - Genetically Modified Organisms (GMOs) - Social issues (e.g. Indigenous population rights) -Longer term macro trends (population growth, land use change, land availability, climate change etc.)." Non-material risk "SCA currently does not source from controversial sources. Although deforestation, in particular tropical forest deforestation is a major global issue to address, pulp, paper and packaging are not major contributors to deforestation. About 50% of wood raw materials used in SCA’s forest products operations are sourced from the Group’s forests. The remainder is sourced from suppliers, the majority of which are located in Sweden. SCA’s own forests have been certified according to the FSC standard since 1999, and the PEFC standard since 2011.All suppliers of pulp to factories and mills, with 100% SCA ownership, are Chain of Custody (CoC) certified according to FSC and/or PEFC. SCA’s purchasing policy for wood raw materials includes a step-by-step process to support suppliers in their transition to third-party certification. The Group undergoes audits to verify compliance with both standards for both SCA’s own forests and for suppliers. Since SCA actively undertake activities to ensure full traceability in our supply chain and that no sourcing is made from controversial sources, we don’t see that this pose a material risk for our reputation. SCA works with several groups including relevant industry associations (e.g. CEPI), the major certification bodies (SCA is a board member of FSC International), the World Business Council for Sustainable Development's Forest Solutions Group, and the consumer Goods Forum Pulp, Paper and Packaging group to support broader movements towards sustainable forest management practices. Promoting the use of forest products from sustainable sources can help counteract the economic and social forces driving deforestation by providing an alternative, sustainable land use." Material risk "Operational risks for SCA associated with producing timber are connected with SCA not meeting the criteria and demand from international certification organisations, such as FSC and PEFC. Should SCA lose its FSC certification for forest management, it would influence SCA’s availability of certified wood material since 50 % of the wood supply is from our own forest holdings. This is a material risk since it would lead to SCA not fulfilling its own target to source from certified timber suppliers. In addition, the demand of wood for fuel is increasing, which leads to higher competition of the wood resources globally. Operational risks for SCA associated with buying pulp are due to failure of internal control processes and the human factor. This could influence SCA’s aces to certified pulp. SCA has systems and tools in place to reduce the risks of mistakes and facilitate continuous assessment. Another part of this work is to communicate clear organizational responsibility." 2014 The Hain Celestial Group, Inc. USA (37.09024, -95.712891) 3 Soy Yes Review our products and suppliers to ensure compliance with our Supplier Code of Conduct. Our audit process includes a Sustainability Initiatives and Social Responsibility Questionnaire. We work with the Soyfoods Association of North America. No risk We are in compliance. Material risk No risk; periodic media reports drive consumer inquiries which are answered. Material risk A catastrophic event reducing or eliminating a crop or commodity.could drive operational risk, as well as social awareness of these issues that may not be catastrophic in nature. 2014 Toppan Printing Co., Ltd. Japan (36.204824, 138.252924) 1 Timber Yes EU timber regulation（regulatory risk）,Paper manufacturers that are not evaluated well by NPOs(reputational risk),Substitute procurement for a special paper(operational risk) No risk No regulatory risk in Japan. Non-material risk Depending upon the supplier, there are companies that have a bad reputation among NPOs because of activities such as destruction of the natural environment. We therefore believe that procurement of paper from such companies carries a reputational risk. Material risk Because the number of possible suppliers for special paper is limited, there is a possibility of business risk such as not being able to procure materials or not being able to procure them in time to meet delivery deadlines. 2014 Woolworths Holdings Ltd South Africa (-30.559482, 22.937506) 3 Cattle Products Yes "Our risk assessment process evaluates the following: Operational risks: We have assessed the level of consumption across business and have identified that we use a large volume of cattle based products in our supply chain. We do have full traceability when it comes to our food products however, which reduces this risk significantly (all beef and dairy products are sourced from farms in South Africa, Namibia and occasionally Botswana, areas where we know there is no clearing of forest land for farming). We have identified that our risk lies heavily with our leather based clothing, footwear and accessories, where we rely on large amounts of leather and do not have access to large amounts of South African leather or traceability back to point of origin. We have identified that we need to collect consumption data as a first step to being able to understand our operational risks better. Security of supply: We have identified this as a potential risk, when it comes to leather, and have identified need to help increase the supply of South African leather, but still need to do further work to understand this risk. Environmental and social risks: This includes deforestation, biodiversity loss and species extinction, environmental degradation, animal welfare, land conflict and displacement, and social conditions. We have identified that we can make considerable impact in reducing these risks due to the large volume of leather we source across the business. In the area of food products, we can help farmers develop more sustainable farming practices. Reputational risks: With increasing pressure from consumers, NGOs and activists on the issue of deforestation, we have identified that this is a risk to our business. Regulatory risks: We need to ensure that we comply with legislation and are prepared for changes in legislation that may impact our supply chain." No risk There is currently no legislation in place that affects our ability to continue sourcing leather. Material risk With increasing media coverage, NGO and activist campaigns, business exposes and consumer pressure around the issue of deforestation, there are huge reputational risks for our business should we be found to be contributing to deforestation. Material risk As we rely on leather for a wide range of clothing, footwear, accessories and homeware products across our business, an inability to source sufficient quantities of leather would negatively impact product development and competitiveness, as well as undermine our strategic goal of becoming a leading fashionable retailer in the Southern Hemisphere. No risk for beef and dairy products as these all come from South Africa, Namibia and Botswana. 2014 Oriflame Cosmetics AB Sweden (60.128161, 18.643501) 2 Palm Oil Yes Palm oil derivatives and their specific risks are part of a risk assessment process where factors such as Oriflame's environmental and social impact, other sourcing risks, regulatory risks and reputational risks are taken into consideration globally and in specific regions. The outcomes of these assessments help prioritise actions. No risk Material risk There are serious environmental pressures caused by the palm oil industry’s rapid expansion into eco-sensitive areas making the reputational risk material (e.g. through media coverage or NGO action). Material risk There are serious environmental pressures caused by the palm oil industry’s rapid expansion into eco-sensitive areas making the operational risks high. Currently the numbers of suppliers providing segregated palm oil derivatives are few, increasing the supply risks for Oriflame. 2014 Sekisui House, Ltd. Japan (36.204824, 138.252924) 1 Timber Yes "F1.3 当社は、木材に関して詳しい国際環境NGO “FoE Japan”の協力を得て作成した独自の「木材調達ガイドライン」を制定し、運用を行っている。この制定過程において、環境NGOから木材をめぐる国際的な規制の状況、伐採地の情報などを入手し、それを基に評判リスク、事業リスクなどへの影響を検討した。 F1.3 Our company has established and applies our own “Wood Procurement Guidelines” which has been created in partnership with an international NGO, “FoE Japan” which is knowledgeable about woods. In this establishment process, we obtained information on the status of international regulations regarding wood products and logging area from the environmental NGO, and based on those, examined the effects on reputational risks, business risks and others." Material risk "＜F10.1、10.3＞ Tightening global regulations threaten our　ability to ensure a stable wood supply ＜Our response against this risk＞ In many cases, local environmental NGOs have the latest information regarding logging restrictions. Since we have ties with a network of globally operating environmental NGOs, we can promptly obtain such information and share it with wood suppliers so that they can make preferential supply arrangements for us as needed." Non-material risk 2014 Reed Elsevier Group United Kingdom (55.378051, -3.435973) 1 Timber Yes "The company operates a multi-disciplinary companywide risk management processes. At a company level risks and opportunities (which are publically available at http://www.reedelsevier.com/corporateresponsibility/environment/Pages/risks-and-opportunities.aspx and include sustainable paper requirements) are laid out and reviewed once a year by our Environmental Champions network (which represents all areas of our business), reviewed by our Corporate Risk and Audit team and signed off by our Corporate Responsibility Forum, before being incorporated into the risk management process. Opportunities are explored as part of this process through dedicated working groups. The risk assessment covers: * Operational risk- including the security of supply, reliability of existing control measures * Regulatory - including compliance with existing regulations or schemes and the introduction of new regulations in different regions, such as the Lacey Act in the US or the Timber Regs in the EU. * Reputational - including customer reaction to the use of unsustainable fibre sources The risks identified through the above process are used in planning corporate targets/ objectives and in the environmental management system. Timber is included in the above process and reported as part of our published Corporate Responsibility report. Timber risks are managed through procurement by the use of the PREPS database, which holds technical specifications and details of the pulps and forest sources of the papers used by member organisations. Based on the forest source information, each paper is awarded a grade of 1, 3, or 5 using the PREPS Grading System. This considers the country of origin of the wood fibre and how the forest sources have been managed. Reed Elsevier policy is to use only papers graded 3 or above - these are the papers with known forest sources and certification against a recognised standard. The risk assessment leads to the annual review of the sustainable paper policy which commits the business to purchase sustainable paper and provides a framework for updating internal controls and processes." Material risk "US Lacy Act and European 'Due Diligence' EUTR We are obligated under the Lacy Act to ensure that we do not import, export, transport, sell, receive, acquire, or purchase in interstate or foreign commerce, any paper that contains illegal pulp. The Illegal Timber Law, previously known as the Due Diligence Regulation, is a European approach to ensuring non-importation of illegal pulp. Printed products are at present exempt but this is also expected to change in the future. As a founding member of The Publishers' database for Sustainable Ethical Paper Sourcing (PREPS), we grade our paper based on the sustainability of pulp and other sources. In doing so, we reduce the potential of non-compliance, fines, and other financial costs. In 2013, 100% of the paper graded through PREPS achieved a grade 3 or 5 (known and responsible sources). The Reed Elsevier Paper Policy commits us to purchasing sustainable paper wherever possible." Material risk "As a provider of professional information in environmental topics, any breach of standards in timber commodity sourcing could affect the perception of the integrity of those products or the company. Reed Elsevier has established a good reputation for sustainable paper sourcing, damaging that reputation could impact goodwill of customers and other stakeholders. Some customers have included questions about our approach to managing forest risks within their tender process or annual supplier surveys. As a supplier, our ability to fulfil their requirements is a benefit to maintaining good customer relationships." Non-material risk "There is a risk that disruptions to the timber market, such as lack of supply, could impact our ability to provide a printed product. This has been classed as non material because, through a process of risk assessment, this was deemed a low risk over a 5 year period. The assessment considered, among other things; the trend of customers away from printed products to online products, the efficiency of new print on demand models, existing sustainable procurement controls. Due to the year on year reduction of printed products sold by Reed Elsevier." 2014 Unilever plc United Kingdom (55.378051, -3.435973) 4 Soy Yes • In 2013, more than two-thirds of our soy crop originated in the USA, with the remainder sourced from Brazil and Argentina. We have engaged with our soy suppliers globally to get their commitment to sustainable soy standards. Material risk • If we took no action there is a real possibility of regulatory risk (e.g. at EU level) linked to deforestation and also the unintended consequences of biofuel legislation. Material risk • NGO criticism on the deforestation links of soy cultivation. These can lead to consumer boycotts and harm Unilever's brands. In 2014 we completed the WWF Soy Report Card. Material risk • Lack of purchasing by significant soy users, such as retailers and animal feed companies, of available certified sources. Also continued NGO criticism of RTRS and concerns around deforestation even if sources are certified. 2014 Saint-Gobain France (46.227638, 2.213749) 1 Timber Yes "We assess thanks to a 3 level assessment too : - supplier reputation and supply chain complexity - country of harvest risk (thanks to the Coface and Transparency International ratings) - species risk thanks to the CITES convention and the IUCN Red List" Non-material risk European Timber regulation (FLEGT) and the lacey act Non-material risk NGO's actions, newspapers articles, rating agencies Material risk demand exceeds offer for some species 2014 Tesco United Kingdom (55.378051, -3.435973) 4 Soy Yes We have carried out a risk assessment for the UK, including soy used as animal feed as well as ingredients in our products. No risk Currently no relevant regulation regarding the use of soy and therefore no regulatory risk. Material risk We know that deforestation and sustainable sourcing is an area our stakeholders, namely customers and NGOs, care about. Sourcing products that could contribue to deforestation would lead to a loss of trust and confidence in our brand, and to NGO or pressure group campaign activity. Non-material risk Key operational risks for soy are price volatility and security of legal and sustainable supply. These are currently non-material risks but the risk level may increase in the future. 2014 Wesfarmers Australia (-25.274398, 133.775136) 3 Cattle Products Yes "Coles: Risk assessment has been undertaken however considered low risk as majority of beef is produced in Australia where it is heavily regulated. Regulatory, reputational and operational deforestation risk considered low. Target:Not applicable for this division. Kmart:Not applicable for this division. Officeworks: Not applicable for this division. Bunnings: Not applicable for this division." Material risk Coles: The risk exists but our policies are designed to mitigate risk of all kinds. Material risk Coles: The risk exists but our policies are designed to mitigate risk of all kind. Material risk 2014 The Hain Celestial Group, Inc. USA (37.09024, -95.712891) 2 Palm Oil Yes Review our products and suppliers to ensure compliance with our Supplier Code of Conduct. Our audit process includes a Sustainability Initiatives and Social Responsibility Questionnaire. We will only buy directly from RSPO-certified sources. No risk We are in compliance. Material risk Palm oil has a problematic reputation and we do seek alternatives when feasible. Although we only buy RSPO-certified directly, someone could make a mistake and damage our reputation. Material risk A catastrophic event reducing or eliminating a crop or commodity.could drive operational risk, as well as social awareness of these issues that may not be catastrophic in nature. 2014 Woolworths Holdings Ltd South Africa (-30.559482, 22.937506) 4 Soy Yes "Our risk assessment process evaluates the following: Operational risks: We have assessed the level of consumption across our business and identified that whilst we do not use a large amount of soy in our products, we indirectly consumer large amounts of soy for animal feed for livestock. We have large volumes of locally produced soy, and as South Africa is not a major importer of soy, deforestation is not a large risk to the business when it comes to food. When it comes to animal feed; however, we do not have oversight as to where the soy has come from and are therefore at risk here. Security of supply: We need to take into account the availability and cost of required quantities of soy, particularly when it comes to animal feed. We also need to consider accessibility (or lack thereof) of certified sustainable soy. Environmental and social risks: This includes deforestation, biodiversity loss and species extinction, environmental degradation, land conflict and displacement, and social conditions. We have identified that we can make considerable impact in reducing these risks. Reputational risks: With increasing pressure from consumers, NGOs and activists on the issue of deforestation, as well as the issue of Genetically Modified Organisms (GMOs), we have identified that our use of soy is a risk to our reputation. Regulatory risks: We need to ensure that we comply with legislation and are prepared for changes in legislation that may impact our supply chain." No risk There is currently no legislation in place that affects our ability to continue sourcing soy. Material risk With increasing media coverage, NGO and activist campaigns, business exposes and consumer pressure around the issue of deforestation as well as Genetically Modified Organisms (GMOs) in soy, there are huge reputational risks for our business should we be found to be contributing to deforestation. Material risk As we rely on soy for our products as well as animal feed, an inability to source sufficient quantities of soy would negatively impact our supply chain, product development and offering, and competitiveness. 2014 Woolworths Holdings Ltd South Africa (-30.559482, 22.937506) 1 Timber Yes "Our risk assessment process evaluates the following: Operational risks: We have assessed the level of consumption across business and have identified that as we use a large volume of timber across the business, in both the supply chain and for operational purposes, this is a risk to the business. Our commitment to sourcing certified sustainable and traceable timber reduces this risk substantially. Security of supply: We have assessed the availability and cost of required quantities of certified sustainable timber at present, as well as in the future. As well as the risk should our sourcing practices support unsustainable timber harvesting. Environmental and social risks: This includes deforestation, biodiversity loss and species extinction, environmental degradation, illegal harvesting, land conflict and displacement, and social conditions. We have identified that we can make considerable impact in reducing these risks due to the volume of timber we source. Reputational risks: With increasing pressure from consumers, NGOs and activists on the issue of deforestation, we have identified that this is a risk to our business. Our commitment to sourcing certified sustainable and traceable timber helps reduce this risk. Regulatory risks: Currently we are not required to use a certified sustainable source of paper, but need to consider sourcing impacts should we be. We have identified that current our commitments to sourcing certified sustainable timber mitigate this risk substantially." No risk There is currently no legislation in place that affects our ability to continue sourcing timber. Material risk With increasing media coverage, NGO and activist campaigns, business exposes and consumer pressure around the issue of deforestation, there are huge reputational risks for our business should we be found to be contributing to deforestation. We are reliant on the credibility of the sustainability standards and certification bodies that we work with as well as their support from NGOs, activists and consumers. Material risk We rely on timber for a wide range of our products (clothing, accessories, homeware, and non-foods products in food market) as well as for packaging, marketing material and our operations internally. Therefore, an inability to source sufficient quantities of timber would undermine our product development, product protection, promotional activity, and ability to operate. 2014 Transcontinental Inc. Canada (56.130366, -106.346771) 1 Timber Yes Transcontinental's paper purchasing policy aims at buying paper that is either 100% Recycled, or 100% from forests that are certified through the Forest Stewardship Council (FSC), Sustainable Forestry Initiative (SFI) or Program for the Endorsement of Forest Certification (PEFC). In the 2012-2013 Financial Year, Transcontinental Inc. saw 76% of its paper purchasing fall into this category. Out of the remaining 24%, 21% contains certified fiber ranging from 10% to 70%, while the remaining 3% is paper bought from well-known, high-reputation companies who can provide sourcing information. No risk Non-material risk As a large paper buyer, TC Transcontinental needs to be sure that such a large purchase is a responsible purchase. The subject of deforestation is also highly publicized and companies can be targeted by environmental NGOs. Material risk The only risk to buying certified paper lies in the availability of the supply. 2014 Sappi South Africa (-30.559482, 22.937506) 1 Timber Yes "Based on FSC® Controlled Wood standard and/or PEFC™ Due Diligence System (DDS) which have classified all forestry based fibre as being low risk, including physical operations, regulatory and reputational risk. Procurement areas are relatively close to manufacturing facilities with identifiable sourcing. All fibre can be traced back to its origin. We operate in a cyclical industry. Global economic conditions may cause substantial fluctuations in our results. Our products are significantly affected by cyclical changes in industry capacity and output levels as well as by the impact on demand from changes in the world economy. Because of supply and demand imbalances in the industry, these markets historically have been cyclical, with volatile prices. In addition, recent turmoil in the world economy has led to sharp reductions in volume and pressure on prices in many of our markets. We took actions to improve efficiencies and reduce costs in all aspects of our business. We continue to benefit from a high level of economic pulp integration on a group-wide basis, which reduces the impact of pulp price fluctuations on our consolidated group results. We will continue to monitor the supply/demand balance, which might require us to impair operating assets and/or implement further capacity closures. The cost of complying with environmental, health and safety laws may be significant to our business. Our aim is to minimise our impact on the environment. The principles of ISO 14000, (FSC®), SFI®, PEFC™ and other recognised programmes are well entrenched across the group. We have also made significant investments in operational and maintenance activities related to reductions in air emissions, wastewater discharges and waste generation." Material risk "The regulatory climate is very dynamic and always changing – as an example, in South Africa, plantations require environmental authorisation and water licences. The risks are aggravated by the SA Government having placed limitations on cultivated forestry. In North America and Europe, the political preference to use timber for energy rather than material use poses a risk to our raw material availability. In North America, the regulations with which are having to contend include state and federal Renewable Electricity Standards, climate policies, and the Renewable Fuel Standard. In Europe, the Renewable Energy Directive sets binding targets for EU Member States. To reach these binding renewable energy targets, member states have put in place financial incentives (e.g. green certificates or feed-in tariffs). The support for the direct burning of wood to create renewable energy increases pressure on wood markets." Material risk Forest management policies are highly debated in many circles. Other relevant issues in SA include natural water use, biodiversity and alien invasive species. People have emotional associations to trees, forests and wood and timber material unlike those associated with any other bulk raw material. The intrinsic sustainable nature of this commodity is often misunderstood. We are mitigating this risk by supporting industry initiatives (TwoSides, Print power) focused on promoting the sustainability of power. In each region, we publish information with the same aim eg our Paper Here today, Here Tomorrow brochure, sappi positivity website in Europe (www.sappipositivity.com), eQ website in North America (www.na.sappi.com/eQ) Material risk Wood fibre is critical to the company's core manufacturing process. Fire, drought, pests and diseases all have a potential impact on our fibre sources. 2014 Wesfarmers Australia (-25.274398, 133.775136) 1 Timber Yes "Bunnings: Yes risk assessment completed annually for entire timber supply chains. Target:Not applicable for this division. Kmart: Risks assessments of timber products have begun but they are only in the early stages. risk assessment to be completed by the end of 2014 Officeworks: Not applicable for this division." Material risk Australian Illegal Timber Importation Act 2012 Material risk The risk exists but our policies, procedures and programs are designed to mitigate risk and ensure we move towards sustainable supplies and report publicly on progress. Material risk "Bunnings: Upward price pressure on certified timber products. Securing enough volume of certified product to meet growing demand. Officeworks: Local and international politics impacts on certification and availability of certified forest sources. Kmart: Upward price pressure on certified timber products. Securing enough volume of certified product to meet growing demand" 2014 Shiseido Co., Ltd. Japan (36.204824, 138.252924) 1 Palm Oil Yes 他社が被ったNGO等からの攻撃例とその対応について、自社で想定研究している。対象商品、サプライヤーリストを作成し、RSPOに入会し、認証取得を開始するなどリスク対応している。 No risk Non-material risk 現在、自社で使用しているパーム油についてRSPO認証を得ることでパーム原産地の森林保全に配慮しているが、仮にこれらの対応をしていない場合、評判リスクとなる可能性がある。 Non-material risk 現在、自社で使用しているパーム油についてRSPO認証を得ることでパーム原産地の森林保全に配慮しているが、仮にこれらの対応をしていない場合、評判リスクが顕在化し、事業リスクへとつながる可能性がある。 2014 Travis Perkins United Kingdom (55.378051, -3.435973) 2 Cattle Products Yes Physical or operational risk We do not have full traceability of the leather in our safety products. Neither do we have any traceability over any other cattle products that 3rd parties use to deliver our colleague catering services. The risk of operational deforestation resulting from our use of the products is therefore high. Regulatory risk There is no current or immediate threat of regulation that would impact on our current procurement practices around this commodity group. The regulatory risk is low. Reputational risk The link to deforestation may not yet be made to this commodity in most stakeholder’s minds. We have a small but growing profile around leather goods but, moreover, have a high profile when it comes to any association with deforestation because of our timber business. We therefore take a sensitive view to the reputational risk from our use of cattle products and are likely to regard the risk as high. We use small amounts of beef or beef by-products in our colleague meals and don’t believe that there is a material risk to our reputation from our 3rd parties’ use of cattle products in this way at this scale. Financial Risk Loss of sales of leather goods because of either, a lack of raw material, or, because of consumer boycotts, would not be a materially high risk. However, the risk of a reputational decline because of a general association to deforestation would be likely to also affect turnover in our timber business. The financial risk here is appreciable. No risk There is no current or immediate threat of regulation that would impact on our current procurement practices around this commodity group. Material risk The link to deforestation may not yet be made to this commodity in most stakeholder’s minds. We have a small but growing profile around leather goods but, moreover, have a high profile when it comes to any association with deforestation because of our timber business. We therefore take a sensitive view to the reputational risk from our use of cattle products and are likely to regard the risk as high. Non-material risk Whilst supply interruptions would be frustrating; leather goods are incidental in our companies product ranges and we could manage an exit of the market without material loss. 2014 Sveaskog Sweden (60.128161, 18.643501) 2 Biofuels Yes Analysis of life cycle data for RME, from domestic crops, and of wood material from Swedish forests. Material risk EU Criteria for biofuels Non-material risk Risks associated to RME insignificant. Risks in connection to other sources of biofuel currently small Non-material risk 2014 The Hain Celestial Group, Inc. USA (37.09024, -95.712891) 1 Timber Yes Review our products and suppliers to ensure compliance with our Supplier Code of Conduct. Our audit process includes a Sustainability Initiatives and Social Responsibility Questionnaire. We will only buy directly from FSC-certified sources. No risk We are in compliance. Material risk As we market natural and organic products, our stakeholders and consumers expect us to source sustainably. Material risk A catastrophic event reducing or eliminating a crop or commodity.could drive operational risk, as well as social awareness of these issues that may not be catastrophic in nature. 2014 Weyerhaeuser Company USA (37.09024, -95.712891) 1 Timber Yes "We ensure that we and our suppliers comply with the law and do not cause or encourage destruction of forest areas at risk of loss from unsustainable practices, as described in our Wood Procurement Policy (link to policy at bottom of page): http://www.weyerhaeuser.com/Sustainability/Customers/Certification/FiberSourcing. In regions where we and our suppliers operate, we work with governments, environmental nongovernmental organizations, indigenous peoples and communities to identify and help protect forest areas that are priorities for conservation. In the United States and some other areas, we also operate in conformance with the Sustainable Forestry Initiative® standard. When operations using the SFI® standard are procuring externally sourced logs and chips for use in our manufacturing and chipping facilities or by our log customers, we operate in compliance with SFI's procurement principles and objectives. We have a disciplined process for setting companywide strategic direction in environmental, health and safety, social and public policy matters. This direction-setting process guides company behaviour on market-driven issues such as climate change and endangered forests. Supporting the process are systems that give our senior management team information to make good decisions and effectively implement them. Our primary systems for evaluating potential risks and implementing leadership direction are: internal audits of our environmental compliance with government regulations, voluntary standards and company policies; environmental management systems to provide a disciplined approach to implementing our environmental policy and evaluating performance results; and cross-functional issue-management teams that recommend strategy and manage our response to environmental, health and safety, social and public policy issues. We are also committed to ensuring the sustainability of our products in the marketplace. Our Product Stewardship Policy states our commitment to integrate environmental, health and safety considerations into our products, from product design to end of life. For more information about our Risk Management Systems, please see: http://www.weyerhaeuser.com/Sustainability/Investors/RiskManagement" Material risk The forests we manage and from which we source wood are subject to extensive regulation at national and sub-national levels. We manage these risks on many levels. Material risk Weyerhaeuser's reputation depends on managing our forests sustainably and purchasing wood from responsible sources, guided by our sustainable forestry and wood procurement policies. We invest substantial time and effort ensuring we maintain our license to operate. Questions about sustainable procurement have led organizations that buy wood and paper based products to consider factors beyond traditional attributes of prices, service, quality and availability when making purchasing decisions. The environmental and social aspects of wood, pulp and paper products are becoming part of their purchasing decisions. We are responding to our customers' demands by making certain that our raw material is sourced responsibly and that ensuring the sustainability of our products in the marketplace. We are also the focus of attacks from certain NGOs that engage in market campaigns to advance their organization's agendas. Some of these market campaigning groups misrepresent information to discredit the SFI standard and to promote the FSC standard. We are responding to these attacks by clearly stating our certification strategy on our website and sharing independent third-party assessments that provide unbiased, balanced information concerning forest certification standards (http://www.weyerhaeuser.com/Sustainability/Customers/Certification). Material risk We recognize climate change poses both potential risks and opportunities, and we have strategies in place to address these challenges and capture future opportunities. Severe weather or other natural events capable of affecting the company's assets - standing timber and manufacturing facilities - have long been at the core of our risk management practices. We manage our timberlands for a variety of risks, including losses from storm blow-down, pest infestation, fire and drought. We locate our forestlands in geographies with manageable incidence rates of storms, drought and fire. We use regionally adapted sustainable forest management practices to reduce the effects of drought on regeneration, and we use thinning to reduce the potential effects of drought and insect attack. We also have one of the world's largest - if not the largest - traditional tree-breeding programs, through which one of our focuses has been to develop tree varieties that are able to withstand the regional extremes in climate that can occur over the multi-decade growth period for forests. We continue to build on over five decades of long-term growth and yield research to understand growth trends over time and their relationship to local and regional climate. This information forms a basis for adaptive management to address possible shifts in our growing environment. We invest in on-going monitoring of our forests to provide an early indication of change in adaptation and reforestation success. Our bio-mathematical models of tree growth in response to growing environment, climate and cultural practices enable assessment of possible vulnerabilities to shifts in climate that may affect our forests. We regularly update our forest timber inventories, growth projections, harvest schedules and planting activities to account for potential and actual annual losses from extreme weather. Logging and replanting schedules are also adjusted to account for weather-induced conditions that could delay either activity. In making these adjustments, we are able to draw on more than 100 years of silvicultural research and experience, as well as the most up-to-date statistical methods to quantify these risks by region.