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J Sainsbury Plc - Forests 2021
F0. Introduction
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(F0.1) Give a general description of and introduction to your organization. Our purpose is to help our customers live well for less. It’s about helping our customers get the most out of life, no matter how much money or time they have. We do this by giving them easy, affordable access to the things they need: like healthy food, quality clothes, stylish homewares, the latest technology and more ways to manage their money. We do all of this sustainably, so we can help our customers live well today and tomorrow. We offer our customers distinctive, quality products at competitive prices across food, general merchandise, clothing and financial services. Driving efficiency in our day-to-day operations enables us to invest in our customer offer in areas that they value: choice, quality, low prices, convenience and great service. We have created a multi brand, multi-channel business that provides choice, flexibility and convenience for our customers. We will continue to invest in both our digital offer and our stores so that customers can buy more and save time as well as money by shopping with us. We recognise that living well means living sustainably. This year sees the conclusion of our 2020 Sustainability Plan and we are proud of the progress and achievements we have made against our commitments. Our activities have spanned our five values, governed by our Value Management Groups, to help customers live healthier lives, make a positive difference to our communities, source with integrity, have respect for our environment, and create a great place to work for our colleagues. Highlights include reducing our absolute carbon emissions by 46 per cent against our 2005 baseline (reaching our 30 per cent target a year early), and achieving our water reduction targets early as well, saving one billion litres since 2005. We are the only UK food retailer to receive an A rating in the Climate Disclosure Project for six consecutive years. We were also the first retailer to achieve The Carbon Trust Water Standard in 2017 as well as this past year achieving the Climate Disclosure Project A-rating for water disclosure. This year we announced our commitment to achieve Net Zero across all our operations by 2040 and that we will invest £1 billion over the next 20 years to support seven commitments that focus on reducing carbon emissions, food waste, plastic packaging, water usage and increasing recycling, biodiversity and healthy & sustainable diets. The Board is accountable for the delivery of the seven pillars of our Net Zero plan and we will austr progress against each of them at our interim results in November. In a further demonstration of the importance we place on helping customers to live sustainably, we became signatories of the Task Force on Climate related Financial Disclosures, to provide consistent information to our stakeholders. We have committed to reduce carbon emissions within our own operations to net zero greenhouse gas emissions by 2040, increasing the use of renewable energy. As part of our Net Zero strategy, we will work with the Carbon Trust to assess emissions and set science-based targets for reduction, publicly reporting on progress every six months. The targets will align the business with the goal to limit global warming to 1.5°C, the highest ambition of the Paris Agreement. We have also committed to minimise the use of water in our own operations, driving towards water neutrality by 2040.
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(F0.2) State the start and end date of the year for which you are reporting data. Start Date End Date Reporting year March 7 2020 March 6 2021
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(F0.3) Select the currency used for all financial information disclosed throughout your response. GBP
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(F0.4) Select the forest risk commodity(ies) that you are, or are not, disclosing on (including any that are sources for your processed ingredients or manufactured goods); and for each select the stages of the supply chain that best represents your organization’s area of operation. Commodity disclosure Stage of the value chain Explanation if not disclosing Timber products Disclosing Retailing Palm oil Disclosing Retailing Cattle products Disclosing Retailing Soy Disclosing Retailing Other - Rubber Not disclosing Retailing Sainsbury’s 2019/20 CDP Forest disclosure focuses on the core commodities of the disclosure: timber, cattle, palm oil, and soy. Other - Cocoa Not disclosing Retailing Sainsbury’s 2019/20 CDP Forest disclosure focuses on the core commodities of the disclosure: timber, cattle, palm oil, and soy. Other - Coffee Not disclosing Retailing Sainsbury’s 2019/20 CDP Forest disclosure focuses on the core commodities of the disclosure: timber, cattle, palm oil, and soy.
F0.
(F0.5) Are there any parts of your direct operations or supply chain that are not included in your disclosure? Yes
F0.5a
(F0.5a) Identify the parts of your direct operations or supply chain that are not included in your disclosure. Value chain stage Exclusion Description of exclusion Potential for forests- related risk Please explain Supply chain Specific product line(s) Branded products sold by the business containing palm oil, soy, or cattle products. Potential for forests- related risk but not evaluated Sainsbury’s has a high proportion of own brand products and it’s across those supply chains that we recognise we have the most leverage. We only collect information from our Sainsbury’s Brand suppliers, for example Princes Ltd. who supply various Sainsbury’s drinks and canned goods from who we collected palm oil sustainability information for over 40 SKUs. The % of palm oil in our own-brand products, the palm ingredient and the RSPO certification that applies to the palm oil are disclosed, however we do not have that visibility for branded products. Timber is an exception however. Any timber or paper based product in scope of the EUTR, UKTR, or FLEGT is included in our disclosure, as we collect information on this via our third party, TRG. Direct operations Business activity Timber or paper used in goods not for resale (GNFR). Potential for forests- related risk but not evaluated We do not formally collect any information on the timber or paper used in the goods not for resale side of the business. Last year we conducted an exercise to determine if any products fell into scope of the UKTR, and will be continuing to monitor this to ensure we comply with legislation. Many of our GNFR products are FSC certified, for example, all our till receipts are printed on FSC paper. We are working with our GNFR teams to identify areas of material risk specifically for paper and timber products used across our business. Supply chain Specific product line(s) Leather used in our own-brand and branded products sold across the business. Potential for forests- related risk but not evaluated Leather is deemed as a by-product of the meat industry, as a commodity cattle are raised for meat & dairy products. We collect data on the volume of leather used across our own-brand products sold annually. We are part of the Leather Working Group which seeks to increase the volume of certified leather that we sell, and acknowledge the risk that exists with leather contributing to deforestation. It remains an important material that we collaborate with our key commercial and technical stakeholders across the business on. Supply chain Business activity Palm oil used in animal feed for our own-brand products and palm oil used in biofuels. Potential for forests- related risk but not evaluated Our work on palm oil has historically excluded palm oil used in animal feed and in biofuels. This is an area that we know we have a footprint in, and over the coming year will be conducting a scoping exercise to understand the scale of this. Our work done on soy in our animal feed supply chains puts us in a good position to replicate this for palm oil, and we will be taking our learnings into this workstream. We are collaborating with our technical team in fuel, and have been in conversations with our fuel supplier who is very engaged and open to developing their environmental agenda.
F1. Current state
F1.
(F1.1) How does your organization produce, use or sell your disclosed commodity(ies)? Timber products Activity Buying manufactured products Retailing/onward sale of commodity or product containing commodity Form of commodity Hardwood logs Softwood logs Sawn timber, veneer, chips Unprocessed wood fiber Pulp Paper Boards, plywood, engineered wood Primary packaging Secondary packaging Tertiary packaging Cellulose-based textile fiber Wood-based bioenergy Source Contracted suppliers (manufacturers)
Cattle products Activity Buying manufactured products Retailing/onward sale of commodity or product containing commodity Form of commodity Beef By-products (e.g. glycerin, gelatin) Hides/leather Source Contracted suppliers (manufacturers) Country/Area of origin Argentina Brazil Ireland United Kingdom of Great Britain and Northern Ireland Uruguay % of procurement spend 1-5% Comment Calculated with an estimated value of beef used as ingredients or in our whole own brand products. Soy Activity Buying manufactured products Retailing/onward sale of commodity or product containing commodity Form of commodity Whole soy beans Soy bean oil Soy bean meal Soy derivatives Source Contracted suppliers (manufacturers) Country/Area of origin Argentina Brazil Canada China France India Paraguay United States of America % of procurement spend <1% Comment Calculated with an estimated value of soy used as an ingredient or whole own brand product, or soy used as animal feed for our own brand products..
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(F1.2) Indicate the percentage of your organization’s revenue that was dependent on your disclosed forest risk commodity(ies) in the reporting year. % of revenue dependent on commodity Comment Timber products 1-5% Estimated value of timber products used as material or component in our own brand products. Palm oil 1-5% Estimated value of palm oil used as ingredients in our own brand products. Cattle products 1-5% Estimated value of cattle products used as ingredients in our own brand products or whole own brand products. Soy 6-10% Estimated value of soy used as an ingredient or whole own brand product, or soy used as animal feed for our own brand products. Other - Rubber Other - Cocoa Other - Coffee
F1.
(F1.5) Does your organization collect production and/or consumption data for your disclosed commodity(ies)? Data availability/Disclosure Timber products Consumption data available, disclosing Palm oil Consumption data available, disclosing Cattle products Consumption data available, disclosing Soy Consumption data available, disclosing Other - Rubber Other - Cocoa Other - Coffee
F1.5a
(F1.5a) Disclose your production and/or consumption data. Forest risk commodity Palm oil Data type Consumption data Volume 11876 Metric Metric tons Data coverage Full commodity production/consumption Please explain Forest risk commodity Timber products Data type Consumption data Volume 118629 Metric Cubic meters Data coverage Full commodity production/consumption Please explain Forest risk commodity Soy Data type Consumption data Volume 178771 Metric Metric tons Data coverage Partial commodity production/consumption Please explain This figure includes soy used as an ingredient or whole in our own-brand products, or soy used as animal feed for our own-brand products. Forest risk commodity Cattle products Data type Consumption data Volume 33473 Metric Metric tons Data coverage Full commodity production/consumption
(F1.5b) For your disclosed commodity(ies), indicate the percentage of the production/consumption volume sourced by national and/or sub-national jurisdiction of origin. Forest risk commodity Timber products Country/Area of origin Malaysia State or equivalent jurisdiction Specify state/equivalent jurisdiction (BATU PAHAT, JOHOR, MALAYSIA) % of total production/consumption volume
Please explain For any product that falls under the EUTR or UKTR, or that is deemed ‘high risk’ by the third party which collects this data, we have full traceability to the plantation (17% of our total timber volume). All our other timber products are traceable at least to the country of origin (83% of our total timber volume). For our timber sourced from Malaysia, we have visibility of the forest address for 61% of the total volume. Forest risk commodity Palm oil Country/Area of origin Any other countries/areas State or equivalent jurisdiction % of total production/consumption volume 100 Please explain The commoditised nature of palm oil has made tracing palm oil in products back to its country or jurisdiction of origin difficult to achieve. To address this sector-wide issue, we are members of the Palm Oil Transparency Coalition that aims to increase this visibility for its members and the sector. The POTC aims to create a common understanding of traders' adherence to No Deforestation, No Peat and No Exploitation (NDPE) and wider sustainability commitments relating to palm oil through an evaluation process, which facilitates engagement with these traders. Traders are asked to share detail of their due diligence process, share relevant evidence and provide volume and origin information for their traded palm oil. Forest risk commodity Soy Country/Area of origin Any other countries/areas State or equivalent jurisdiction % of total production/consumption volume 100 Please explain Municipalities identified as a priority through our Soy Buyers Coalition membership includes the following municipalities - Sapezel, Paragominas, Campos Lindos, Formosa do Rio Preto, Barreias, Mineiros, Gaucha do Norte, Nova Ubirata, Campos de Julio, Claudia. Forest risk commodity Cattle products Country/Area of origin Brazil State or equivalent jurisdiction Specify state/equivalent jurisdiction (Mata Atlantica) % of total production/consumption volume 5 Please explain We use beef as a primary ingredient and as a secondary ingredient in our own brand products. The vast majority (94.8%) of our whole beef is sourced from the UK or Ireland. Only a small proportion (5.2%) is sourced from Brazil, Uruguay, and Argentina. We have traceability to 100% of the abattoirs in Brazil that supply beef into our corned beef SKUs.
F1.5e
(F1.5e) How does your organization produce or consume biofuel derived from palm oil?
F1.
(F1.6) Has your organization experienced any detrimental forests-related impacts? Yes
F1.6a
(F1.6a) Describe the forests-related detrimental impacts experienced by your organization, your response, and the total financial impact. Forest risk commodity Timber products Impact driver type Physical Primary impact driver Rising mean temperatures Primary impact Increased production costs Description of impact The USDA Economic Research Service notes that the Consumer Price Index for all food may increase if large disruptive weather events occur in key food producing regions. A 2.5% increase would have a substantial impact on our supply chain costs and ultimately our cost of goods. Applying this factor to our retail revenues could cause a financial impact of £807m p.a. Primary response Other, please specify (Engagement with local community/customers/suppliers; Engagement in multi-stakeholder initiatives; Promotion of best practice and awareness & sustainable forest management; Voluntary engagement in conservation projects; Landscape level approach) Total financial impact 807125000 Description of response We have committed to investing £1 billion over the next twenty years to reach Net Zero by 2040, and already started to develop a revised set of targets for the sustainable sourcing of our products, which build on our successes and recognise existing and future challenges. We mitigate forest-related risks in our supply chain primarily through the development and deployment of policies to our supply base. These cover mainly our own-brand products and require suppliers to source certain materials and commodities in a sustainable way. We require that certain materials and commodities associated with environmental risks in our products be sourced to an independent, certified standard. We also recognise the importance of working collaboratively with others to address forest-related risks. We work with other retailers on the Palm Oil Transparency Coalition in order to minimise the impact of palm oil on deforestation and land change and promote its sustainable sourcing across the industry. Through the Retailer Cocoa Collaboration, we have committed to support the Cocoa & Forests We are also working as part of the Consumer Goods Forum Forest Positive Coalition of Action to accelerate efforts to remove commodity-driven deforestation from our supply chains. Forest risk commodity Palm oil Impact driver type Physical Primary impact driver Rising mean temperatures Primary impact Increased production costs Description of impact The USDA Economic Research Service notes that the Consumer Price Index for all food may increase if large disruptive weather events occur in key food producing regions. A 2.5% increase would have a substantial impact on our supply chain costs and ultimately our cost of goods. Applying this factor to our retail revenues could cause a financial impact of £807m p.a. Primary response Other, please specify (Engagement with local community/customers/suppliers; Engagement in multi-stakeholder initiatives; Promotion of best practice and awareness & sustainable forest management; Voluntary engagement in conservation projects; Landscape level approach) Total financial impact 807125000 Description of response We have committed to investing £1 billion over the next twenty years to reach Net Zero by 2040, and already started to develop a revised set of targets for the sustainable sourcing of our products, which build on our successes and recognise existing and future challenges. We mitigate forest-related risks in our supply chain primarily through the development and deployment of policies to our supply base. These cover mainly our own-brand products and require suppliers to source certain materials and commodities in a sustainable way. We require that certain materials and commodities associated with environmental risks in our products be sourced to an independent, certified standard. We also recognise the importance of working collaboratively with others to address forest-related risks. We work with other retailers on the Palm Oil Transparency Coalition in order to minimise the impact of palm oil on deforestation and land change and promote its sustainable sourcing across the industry. Through the Retailer Cocoa Collaboration, we have committed to support the Cocoa & Forests We are also working as part of the Consumer Goods Forum Forest Positive Coalition of Action to accelerate efforts to remove commodity-driven deforestation from our supply chains. Forest risk commodity Cattle products Impact driver type Physical Primary impact driver Rising mean temperatures Primary impact Increased production costs Description of impact
Timber products Value chain stage Direct operations Supply chain Coverage Full Risk assessment procedure Assessed as part of other company-wide risk assessment system Frequency of assessment More than once a year How far into the future are risks considered?
6 years Tools and methods used Internal company methods External consultants NEPCon Sourcing Hub FSC Global Forest Registry Please explain Our sourcing policy and supplier assessment process is aligned with the NEPCon sourcing hub and includes the following factors - legality, forest conversion, violations of traditional and civil rights, genetic modification and corruption. Palm oil Value chain stage Direct operations Supply chain Coverage Full Risk assessment procedure Assessed as part of other company-wide risk assessment system Frequency of assessment More than once a year How far into the future are risks considered? 6 years Tools and methods used Internal company methods External consultants Please explain We work extensively with a number of different consultancies (e.g. 3Keel) to assess our commodity specific risk for deforestation and for supplier compliance against legal requirements and our policy on Palm Oil SP005. Cattle products Value chain stage Direct operations Supply chain Coverage Full Risk assessment procedure Assessed as part of other company-wide risk assessment system Frequency of assessment More than once a year How far into the future are risks considered? 6 years Tools and methods used Internal company methods Other, please specify (World Check) Please explain Working with our technical teams we gather assurance from our corned beef suppliers that our beef is not connected to deforestation. Any South American origin is considered as high risk.
Soy Value chain stage Direct operations Supply chain Coverage Full Risk assessment procedure Assessed as part of other company-wide risk assessment system Frequency of assessment More than once a year How far into the future are risks considered?
6 years Tools and methods used Internal company methods External consultants Trase Please explain With our external consultants we have mapped our soy use origin and certification status for or imbedded soy use. Through the Soy Buyer Coalition we have worked with the Trase tool to follow trade flows to identify sourcing regions, supply chain risks and assess opportunities for sustainable production. Any South American origin is considered as high risk.
F2.1b
(F2.1b) Which of the following issues are considered in your organization's forests-related risk assessment(s)? Availability of forest risk commodities Relevance & inclusion Relevant, always included Please explain Although we do not directly trade or purchase these commodities directly, as they are embedded in our products as ingredients/components there is a risk that reduced availability in our existing supply chains may lead to supply disruptions or increases in our cost of goods. Quality of forest risk commodities Relevance & inclusion Relevant, always included Please explain The risk management process is embedded at the Operating Board level and supported by bottom-up risk processes and discussions within operating companies, Group functions and governance forums, so forest-related risks related to the quality of our food are always assessed. The quality of our food sets us apart from other supermarkets so we prioritise this to ensure we provide the best for our customers. Impact of activity on the status of ecosystems and habitats Relevance & inclusion Relevant, always included Please explain The risk management process is embedded at the Operating Board level and supported by bottom-up risk processes and discussions within operating companies, Group functions and governance forums, so forest-related risks related to the impact of activity on ecosystems and habitats are always assessed. Understanding the impact of each commodity in our particular supply chains on specific ecosystems helps inform us of the footprint of our products and the urgency for action. It also closely correlates with external interest (e.g. NGO or media) for each commodity. We use certification, to ensure where possible our key materials are sourced sustainably to an independent standard e.g. RSPO certification, this determines the amount of SKUs certified and therefore not linked to the impact on the status of ecosystems and habitats. Our Commercial Leadership Team (CLT), made up of senior business directors (e.g. the Commercial Director), governs all decisions under our Sourcing with Integrity (SWI) value. Regulation Relevance & inclusion Relevant, always included Please explain The risk management process is embedded at the Operating Board level and supported by bottom-up risk processes and discussions within operating companies, Group functions and governance forums, so forest-related risks related to regulation are always assessed. Ensuring we are legally compliant is a basic company requirement. Building compliance systems in time for new regulation (e.g. EUTR and UKTR) requires regular horizon scanning. Understanding regulatory changes in other countries is also fundamental to anticipating and responding to any impacts on supply. We use the a number of external sources including the BRC and CR&S Horizon Scanning, which are communicated to our Commercial Leadership team.
Corruption Relevance & inclusion Relevant, always included Please explain The risk management process is embedded at the Operating Board level and supported by bottom-up risk processes and discussions within operating companies, Group functions and governance forums, so forest-related risks related to corruption are always assessed. Our due diligence system for our timber/paper products, for example, explicitly considers the risk of corruption within a country as part of the product risk assessment process. Appropriate mitigation actions then follow from this. Suppliers are also run through World Check and results are fed back to the relevant commercial teams. When considering new sourcing countries, we refer to Transparency International's Corruption Perceptions Index, to inform our collection of due diligence to mitigate against this risk. Social impacts Relevance & inclusion Relevant, always included Please explain The risk management process is embedded at the Operating Board level and supported by bottom-up risk processes and discussions within operating companies, Group functions and governance forums, so forest-related risks related to social impacts are always assessed. Our business relies on strong, resilient communities. We’re committed to support social cohesion, economic prosperity and inclusive growth to help us achieve our vision of being the most trusted retailer – where people love to work and shop. Additionally, Our Human Rights Risk Assessment Tool gives us unique insights into human rights risks across our complex global supply chain, not only at product and service level but also for individual ingredients and components. This tool provides a level of detail that is unprecedented in our industry, combining our own data with economic models of sectors such as agriculture and manufacturing. This enables us to identify risks in multiple tiers of our supply chain, so we can take action. Importantly, this includes the lower tiers, where the risks are greatest but also more difficult to identify. This is then reported to the relevant commercial team. Other, please specify Relevance & inclusion Relevant, always included Please explain Internal information provided by our suppliers. It is important to consider the specific information on our supply chain provided by our suppliers to understand our actual risk and determining the accuracy and granularity of this supplier information is a key consideration.
F2.1c
(F2.1c) Which of the following stakeholders are considered in your organization’s forests-related risk assessments? Customers Relevance & inclusion Relevant, always included Please explain Understanding our customers' views on sustainability and their expectations about issues such as deforestation are extremely important in informing our approach. We track customer complaints and our Careline as a basis for decisions. Nectar also provides a rich source of data from which we can look at customer shopping habits to establish what really matters to them, so we can serve them in the best way possible. Employees Relevance & inclusion Relevant, always included Please explain It is important that we know how our 189,000 colleagues view sustainability and their expectations with regards to issues such as deforestation to inform our approach. As such, we have an annual "We're Listening" survey that is sent out to all colleagues and forms part of the information. In addition, Simon Roberts and other Directors host 'Yam Jams' on our internal communication platform, Yammer. This provides an opportunity for all colleagues to ask questions live to our senior team on topics that are important to them, and increasingly includes questions surrounding sustainability. Investors Relevance & inclusion Relevant, always included Please explain It is important that we know how our investors view sustainability and their expectations with regards to issues such as deforestation to inform our approach. As such, we have an Annual General Meeting, where every shareholder is invited to attend and question our CEO. We also engage with investors on ESG issues directly and throughout the year, and have found they are inreasing interested in understanding our management of biodiversity/deforestation risks. In light of this, in 2021/22 we will be holding our first ESG Investor Day, where we aim to communicate on our ESG agenda and performance. Local communities Relevance & inclusion Relevant, always included Please explain Our Human Rights Risk Assessment Tool gives us unique insights into slavery risks across our complex global supply chain, not only at product and service level but also for individual ingredients and components. This tool provides a level of detail that is unprecedented in our industry, combining our own data with economic models of sectors such as agriculture and manufacturing. This enables us to identify risks in multiple tiers of our supply chain, so we can take action. Importantly, this includes the lower tiers at the local communities we source from, where the risks are greatest but also more difficult to identify.
NGOs Relevance & inclusion Relevant, always included Please explain We communicate with NGOs on forest-related risks constantly, either directly or through industry groups. Close interaction with these 'critical firends' inform our approach to tackling deforestation and conversion of ecosystems. For example, through the Palm Oil Transparency Coalition (POTC) we interact with the Forest People's programme in partnership with other retailers. Other forest risk commodity users/producers at a local level Relevance & inclusion Relevant, always included Please explain Through groups such as the CGF Forest Positive Coalition of Action, we collaborate on the development of mechanisms that would incentivise the conservation and protection of forests by producers of commodities associated to forest-risks. One example of commodities linked at production level are cattle rearing and soy production in South America, where conversion associated to one will lead to rpduction of the other. Regulators Relevance & inclusion Relevant, always included Please explain The evolving legislative landscape on deforestation, whether in the UK, Europe, or globally in producing countries strongly informs our due diligence approach. We have engaged directly in consultation on the proposed UK Madatory Due Diligence law for example, asking for strong reporting requirements for importers to be put in place. We are also one of the first companies to collaborate with the UK government-funded Satellite Applications Catapult on the ForestMind initiative which launches this year. The programme aims to use satellite technology to monitor and track the impacts of sourcing from forest areas, so action can be taken where needed. Suppliers Relevance & inclusion Relevant, always included Please explain We work through our suppliers, mainly through our sourcing requirements and policies, to address forest-related risks. Supplier’s compliance with these requirements is then monitored internally. Other stakeholders, please specify Relevance & inclusion Not considered Please explain Not applicable
F3. Risks and opportunities
F3.
(F3.1) Have you identified any inherent forests-related risks with the potential to have a substantive financial or strategic impact on your business? Risk identified? Timber products Yes Palm oil Yes Cattle products Yes Soy Yes Other - Rubber Other - Cocoa Other - Coffee
F3.1a
(F3.1a) How does your organization define substantive financial or strategic impact on your business? We define substantive financial impact when identifying or assessing forest-related risks at a site level as a risk that could result in a loss of business continuity, or resulting in a site needing to be closed.
F3.1b
(F3.1b) For your disclosed forest risk commodity(ies), provide details of risks identified with the potential to have a substantive financial or strategic impact on your business, and your response to those risks.
Are you able to provide a potential financial impact figure? Please select Potential financial impact (currency) Potential financial impact figure - minimum (currency) Potential financial impact figure - maximum (currency) Explanation of financial Based on the commercial importance of paper and timber for our business. Primary response to risk Please select Description of response Sainsbury's has a due diligence system in place to comply with the requirements of the EUTR and this minimises risk. Our policy also requires certified material (eg. FSC or recycled) to be used in our products. 93% of the wood used in our own brand paper and timber products is either recycled, or FSC or PEFC certified and this further helps to reduce risk. Cost of response Explanation of cost of response Unclear to us as we have such a large range of suppliers involved, with different costing models and requirements. Forest risk commodity Timber products Type of risk Reputational and markets Geographical scale Country Where in your value chain does the risk driver occur? Direct operation Primary risk driver Negative media coverage Primary potential impact Reduced demand for products and services Company-specific description The unsustainable harvesting of timber and production of paper in certain countries has previously attracted media attention and is likely to do so in the future. NGOs also produce scorecards comparing company performance on sourcing sustainable timber. Timeframe
6 years Magnitude of potential impact Low Likelihood Unlikely Are you able to provide a potential financial impact figure? Please select Potential financial impact (currency) Potential financial impact figure - minimum (currency) Potential financial impact figure - maximum (currency) Explanation of financial Based on the commercial importance of paper and timber for our business. Primary response to risk Please select Description of response Sainsbury's has committed to sourcing the paper and timber in its own brand products sustainably and the advanced implementation of this helps minimise reputational risk. 93% of the wood used in our own brand products is either recycled or FSC or PEFC certified with full chain of custody. Cost of response Explanation of cost of response Unclear to us as we have such a large range of suppliers involved, with different costing models and requirements. Forest risk commodity Palm oil Type of risk
Physical Geographical scale Global Where in your value chain does the risk driver occur? Supply chain Primary risk driver Changes in precipitation patterns Primary potential impact Increased operating costs Company-specific description Climate change is likely to affect precipitation patterns and the frequency of droughts. This may well impact upon palm oil production if for example El Nino events become more frequent and reduce palm oil yields in Indonesia/Malaysia etc. This would impact the cost price of our SKUs that contain PalmOil. Timeframe
6 years Magnitude of potential impact Low Likelihood Likely Are you able to provide a potential financial impact figure? Please select Potential financial impact (currency) Potential financial impact figure - minimum (currency) Potential financial impact figure - maximum (currency) Explanation of financial Based on SKUs that contain Palm Oil. Primary response to risk Please select Description of response Global sourcing of palm oil will help to an extent to manage particular regional production disruption. Alternative oils can be used in many of our own brand products if necessary. Cost of response Explanation of cost of response Unclear to us as we have such a large range of suppliers involved, with different costing models and requirements. Forest risk commodity Palm oil Type of risk Regulatory Geographical scale Country Where in your value chain does the risk driver occur? Supply chain Primary risk driver Moratoria and voluntary agreements Primary potential impact Other, please specify (Additional Reporting) Company-specific description Potential for UK national palm oil statement to develop beyond a voluntary industry target resulting in tariffs to decrease the use of Palm Oil. Timeframe 6 years Magnitude of potential impact Low Likelihood Unlikely Are you able to provide a potential financial impact figure? Please select Potential financial impact (currency) Potential financial impact figure - minimum (currency)
Where in your value chain does the risk driver occur? Direct operation Primary risk driver Negative media coverage Primary potential impact Reduced demand for products and services Company-specific description The impact of using unsustainable palm oil has had widespread media coverage in the UK. Company targets and positions are very much part of this media coverage. Timeframe
6 years Magnitude of potential impact Low Likelihood Unlikely Are you able to provide a potential financial impact figure? Please select Potential financial impact (currency) Potential financial impact figure - minimum (currency) Potential financial impact figure - maximum (currency) Explanation of financial Based on SKUs that contain Palm Oil Primary response to risk Please select Description of response Sainsbury's has committed to sourcing the palm oil in its own brand products sustainably and implementing this helps address reputational risk. By the end of 2016 98% of the palm oil used in our own brand products was RSPO certified (either mass balance or segregated) and the remainder was covered by 'Book & Claim' certificates. Cost of response Explanation of cost of response Unclear to us as we have such a large range of suppliers involved, with different costing models and requirements. Forest risk commodity Soy Type of risk Physical Geographical scale Global Where in your value chain does the risk driver occur? Supply chain Primary risk driver Changes in precipitation patterns Primary potential impact Increased operating costs Company-specific description Climate change is likely to affect precipitation patterns and the frequency of droughts. This will likely impact upon soy production if droughts occur on a regional scale. This could potentially impact upon feed prices (if other sources are not available) which could impact on the cost of rearing animals and producing meat and dairy products. Timeframe 6 years Magnitude of potential impact Low Likelihood Likely Are you able to provide a potential financial impact figure? Please select Potential financial impact (currency) Potential financial impact figure - minimum (currency) Potential financial impact figure - maximum (currency)
Explanation of financial Based on SKUs linked to soy feed consumption (i.e. Soy-fed livestock). Primary response to risk Please select Description of response Global sourcing of soy helps to an extent to manage the risks of regional droughts in particular regions. We have worked to better understand the supply chains of the soy used as animal feed for our own brand proteins. This has improved our understanding of the key sourcing areas, the infrastructure in place and the dynamics and ability of the supply chain to respond to supply disruption. We have also researched alternatives to soy for animal feed to understand the potential for using other sources of feed. Cost of response Explanation of cost of response Unclear to us as we have such a large range of suppliers involved, with different costing models and requirements. Forest risk commodity Soy Type of risk Reputational and markets Geographical scale Country Where in your value chain does the risk driver occur? Direct operation Primary risk driver Negative media coverage Primary potential impact Reduced demand for products and services Company-specific description The production of soy and its impact on natural habitats in South America has attracted media attention and is likely to do so again. NGOs also produce scorecards comparing company performance on sourcing sustainable soy. Timeframe
6 years Magnitude of potential impact Low Likelihood Unlikely Are you able to provide a potential financial impact figure? Please select Potential financial impact (currency) Potential financial impact figure - minimum (currency) Potential financial impact figure - maximum (currency) Explanation of financial Based on SKUs linked to soy feed consumption (i.e. Soy-fed livestock). Primary response to risk Please select Description of response Sainsbury's has committed to sourcing the soy in its own brand products sustainably. Cost of response Explanation of cost of response Unclear to us as we have such a large range of suppliers involved, with different costing models and requirements. Forest risk commodity Cattle products Type of risk Reputational and markets Geographical scale Country Where in your value chain does the risk driver occur? Direct operation Primary risk driver Negative media coverage Primary potential impact Reduced demand for products and services
