Given the use of proceeds for the proposed investment, no issues and impacts have impacts which must be managed in a manner consistent with the other PSs are expected. This proposed investment is targeting the financing of Olam Agri’s wheat, maize, and soy sourcing operations in low-risk origins - high-income countries (as covered by PS2 (section 27-29) and PS6 (section 30)). As per Olam Agri’s Living Landscapes Policy (OALLP, 2018), no farming and/or sourcing operations can take place without the Free, Prior, and Informed Consent (FPIC) of IP and/or local communities, recognizing traditional and customary rights.                                                   

 This is a Category B project based on IFC’s 2012 Policy on Environmental and Social Sustainability. IFC’s review concluded that E&S risks and impacts associated with this project are limited, site-specific, and can be readily addressed through generally accepted mitigation measures described in this document.

The key E&S risks and issues for this investment are associated with: (i) effectiveness of Olam Agri’s Supply Chain and Environmental, Health and Safety (EHS) management systems applying to its sourcing operations, including relevant organizational capacity and competency; (ii) assurance of fair, safe and healthy working conditions in line with Olam Agri Fair Employment Policy (FEP), PS2 and legal labor requirements for direct workers and contractors in targeted origins; (iii) risk assessment of its suppliers, including effective implementation of Olam’s Supplier Code and sourcing E&S procedures; and (iv) availability and implementation of corporate stakeholder engagement and community grievance mechanism.

Environmental & Social Policies. Olam Agri adopted a Sustainability Strategy in 2022 which is structured across four pillars, namely (i) Nature; (ii) Livelihoods; (iii) Climate; (iv) Governance. To support a timebound implementation of the strategy, 2030 sustainability goals have been defined. The following goals are relevant for Olam Agri’s direct and indirect supply chains: (i) accelerate action to decouple commodity production from forest loss, reduce emissions from land-use change and support the transition towards forest positive landscapes; (ii) reduce greenhouse gas (GHG) emissions in its operations and supply chain, in line with a 1.5ºC pathway; and (iii) embed international environmental, social and governance standards and best practices in its operations and responsibly source all its materials and services.

Olam Agri’s specific policies applying to this proposed investment include the following:

(a) Living Landscape Policy (OALLP, 2018, http://olamgroup.com/sustainability/codes-policies-2/olam-living-landscapes-policy/) that reflect company’s approach to sustainable agriculture. It commits Olam Agri to eliminate unacceptable land management practices from its own operations and third-party supply chains, including: (i) no illegal activities (compliance with applicable national and international laws, including human and labor rights); (ii) respect legally protected areas or international recognized areas; (iii) no conversion or degradation of critical habitats, such as High Conservation Value (HCV) areas and other nationally-recognized conservation priorities; (iv) no conversion or degradation of peatlands of any depth; (v) no conversion or degradation of other natural habitats with high level of organic carbon such as High Carbon Stock (HCS) forests; (vi) no use of fire in land preparation, including planting and replanting; and (vii) no development without the Free, Prior, and Informed Consent (FPIC) of indigenous peoples and/or local communities, recognizing traditional and customary rights;

(b) Olam Agri Supplier Code (OASC, 2021) which sets out company’ supply chain requirements and encompass, among others, legal compliance, prohibition of child and forced labor, respect and non-discrimination, terms of employment, working hours, wages and benefits, health and safety, freedom of association and right to collective bargaining, local communities and land rights, grievance mechanism, forests and ecosystem conservation, biodiversity conservation, safe and responsible use of chemicals (including prohibition of WHO Class Ia and Ib products).

Based on the policy review, IFC confirmed the alignment and consistency of Olam Agri sustainability policy framework with PS1, PS2 and PS6 supply chain requirements.

Over the course of 2022, Olam Agri will be rolling out its Supplier Code to both its direct and indirect supply chain, including to high-risk supply chains. The company will prioritize the roll-out of the OASC to grains, edible oils, cotton and rice origins with high volumes (over 20,000 MT) and with high human rights or environmental risks. As part of this proposed investment, while the targeted origins are low-risk, Olam Agri will include the OASC in all its contracts with its suppliers (ref. local traders and aggregators) in the five origins for their acknowledgment and signing, on a yearly basis (ESAP#1). To ensure implementation effectiveness, the company will train its managers, field staffs and direct/indirect farmers, including visual aids, to further communicate the key principles. Olam Agri will update its 2016 EHS policies by end of 2022 to align with IFC’s PS requirements. Olam Agri follows international sustainability standards, e.g., RSPO, CMiA, BCI, FSC.

Company management approved OPEX/CAPEX for the implementation of the above-mentioned OASC and EHS policies’ objectives during the 2022 sourcing operations. Specifically, Olam Agri will be recruiting new staff for its Sustainability (CR&S) and EHS function, developing training e-module for its staff and image book for suppliers on OASC, strengthening its risk screening platform through registration with publicly available database (International Biodiversity Assessment Tool – IBAT; Global Forest Watch – GFW Premium) and increasing human rights risk assessment in selected supply chain. The effective implementation of its OALLP, OASC and EHS Policy are monitored and reported periodically to Olam Agri’s CR&S Committee (CRSC). Olam’s Code of Conduct applies to all its own activities and any third-party can write anonymously and confidentially to report concerns over noncompliant conduct to Olam Agri’s Ethics Point by phone or website (https://www.olamgroup.com/contactus.html). Olam Agri has also recently launched a third-party whistleblowing channel (Whispli).

Environmental and Social Risk Assessment and Management Programs. With the adoption of its global corporate commitment to zero deforestation in its own operations and direct/indirect supply chain by 2030 as stipulated in its OALLP and OASC, Olam Agri has moved to a proactive “sustainability” risk screening process to qualify the eligibility of its suppliers based on requirements not to engage in natural habitat conversion and to comply with laws concerning forest protection, infringement on protected areas and indigenous territories, and child or forced labor.

Specifically, Olam Agri has developed and implemented a supply chain risk screening process for its direct and indirect sourcing which is composed of two layers: (i) a contextual risk screening assessing the country/commodity specific supply chain risks using publicly available risk assessment tools, such as IFC GMAP (https://gmaptool.org/). The results of the contextual risk screening for the five origins have been shared by Olam during this appraisal. The findings confirmed the low-risk category of all five origins from a human right and biodiversity standpoint; (ii) a granular risk screening (using farmer registration in Olam Farmer Information System (OFIS) or SPYDER platform). This risk screening is mainly applicable for Olam Agri’s direct smallholder suppliers in high-risk origins (e.g. cotton sourcing in Ivory Coast) which do not apply for this proposed investment. Going forward, Olam Agri will undertake an annual risk assessment of its suppliers in the five targeted origins, covering supplier’s operational footprint, E&S policy commitment, traceability, risk screening and reporting, and existence of a grievance mechanism procedure, and monitoring any grievances directed against Olam businesses, including their third-party suppliers, via the external Grievance Procedure (ESAP#2).

As indicated, each supplier in the five origins must sign, as part of its contractual agreement, Olam Agri’s Supplier Code of Conduct on an annual basis. Where non-compliance is identified, Olam Agri conducts further investigation and, if non-compliance is confirmed, Olam Agri will then remove the supplier(s) from its portfolio. 

Organization Capacity and Competency. Olam Agri has established a Corporate Responsibility and Sustainability (CR&S) function, led by a Chief Sustainability Officer. The function is composed of four teams covering the 2030 Sustainability pillars mentioned above, namely the Natural Capital and Climate, the Social Capital and Livelihoods, Governance and Data and Analytics. In addition, an EHS function has been established which is led by a EHS Head, in addition of regional, country and sustainability business’ safety managers in Africa, Asia and the Americas. Facility safety officers are present in Olam Agri’s processing operations in destination countries.

Training. With the recent adoption of the Olam Agri Supplier Code, an e-module for its commercial and sourcing teams on the E&S requirements applying to its origination activities will be developed. Image book for raising the level of awareness of suppliers in high-risk origins on the OASC will also be prepared. The CR&S team will be soon launching a human rights training for all Olam managers. Finally, CR&S will be strengthening its risk monitoring resources through subscriptions to IBAT and GWF Premium which application will be rolled-out to Business Units, on a risk-based approach.

Monitoring and Review. To monitor the sustainability/EHS performance for its sourcing operations, Olam Agri has defined mandatory KPIs for all the 12 sustainability modules in its AtSource (https://www.atsource.io/index.html) framework (e.g. labor, health and safety, diversity and inclusion, food safety and quality, GHG emissions, forest protection, and water use). As the suppliers financed through this proposed investment will not be digitalized, monitoring and reporting will cover two sourcing KPIs: (i) 100% of the volumes sourced will be covered by Olam Agri Supplier Code, and (ii) 100% will be AtSource ready by 2025. Olam Agri will report its EHS performance through an annual Sustainability Report (aligned with Global Reporting Initiative – G-4 Guidelines).

Olam Agri intends to measure, monitor, and ultimately reduce its Scope 3 carbon emissions from its agro-commodity sourcing operations. Its carbon footpring platform - Terrascope (https://www.terrascope.com/) allows to calculate and visualize carbon emissions from various business activities using country/area emission factors from reliable sources, such ADME, AgriFootprint, Agribalyse, DEFRA, EEIO, Fitch Solutions Database. Terrascope is a subsidiary of Olam Ventures. Olam Agri aims to reduce its GHG emissions (tCo2e/ton product) in its operations and supply chains, in line with a 1.5ºC pathway by 2030. Its Scope 1 and 2 GHG emissions from Olam Agri are estimated at 1.3% of its total GHG emissions while its Scope 3 based on purchased volumes is estimated at 98.7%.

Supply Chain Risk Assessment and Management. The selection of the combination of commodities and sourcing countries has been carried out at the onset of this proposed investment to avoid supply chain risks associated with child labor/forced labor (CL/FL), significant safety hazards or conversion of natural and/or critical habitats to farmland used for commodities production. The five targeted origins do not represent material supply chain risks. The risk profile of the producers is low as the farms’ practices are fully mechanized, avoiding the risks of CL/FL and significant occupational health and safety (OHS) risks. The suppliers are also located in consolidated agricultural areas in the targeted origins, which eliminates the risk of conversion of natural habitats. This approach aligns with PS2/PS6 supply chain requirements. All targeted farmers must strictly abide by applicable country legal and regulatory provisions which are reviewed by local labor, OHS and environmental authorities. All suppliers in the five origins must sign, as part of its contractual agreement, Olam Agri’s Supplier Code of Conduct on an annual basis.                                                   

 As of December 31, 2021, Olam Agri had over 10,200 employees globally, of which approximately 12% are women. Except for the US, Olam Agri does not have any operational staff in the other countries from which the commodities are expected to be sourced under the proposed investment. Olam Agri operations also employed another 9,100 workers through third party contractors and service providers.

Human Resources Policies and Procedures: In 2018, Olam adopted a corporate level “Fair Employment Policy” aligned to IFC PS 2 requirements. The Policy defines six standards, namely Freedom of Association and Right to Collective Bargaining; Prohibition of Child Labor and Forced Labor; Wages and Benefits; Diversity and Inclusion; Health and Nutrition; Workplace Conditions, which apply to all workplaces where Olam maintains management control, including plantations, projects, farms, processing facilities, warehouses and offices. The respective Country Heads, Business Heads and Function Heads have the primary responsibility to ensure that all the workplaces under their management authority adhere to the Fair Employment Policy. Olam’s internal audit function undertakes an audit every two years of all workplaces against these standards. The Policy is applicable to all categories of employees and third-party contractors and service providers. The adoption and implementation of the Fair Employment Policy and associated standards across all of Olam Agri operations globally, including in the targeted origins, is currently on-going and will be reported by the company. 

In 2018, Olam also adopted a corporate level “Policy against Sexual Harassment”. This policy defines what may constitute sexual harassment, makes provisions for confidentiality and non-retaliation and outlines the process and procedures to follow in the event of any grievance. The policy is operationalized in consideration of and taking into account the local laws and regulations in each country of operations.

Labor Grievance Procedure: The Fair Employment Policy requires for all workplaces to have a written grievance resolution process that specifies the responsible authority, escalation mechanism and process for resolving issues raised. It also has provisions for confidentiality, non-discrimination, and non-retaliation. Whilst the Policy stipulates the minimum requirements for the process, it may also be informed by local laws and regulations within each country of operation.

Occupational Health and Safety. Olam Agri’s EHS function has defined KPIs and targets on safety performance for each of its business unit. Monthly safety report is being prepared for management review. For this proposed investment, Olam Agri is not involved in the physical handling of the grain until it reaches the destination countries - on-loading/offloading activities on to chartered vessels is the responsibility of the suppliers.

Supply Chain Risk Assessment and Management. As indicated in PS1 Supply Chain section, supply chain risks contemplated by PS2 (child labor, forced labor and significant safety issues) were not considered material under the use of proceeds for this proposed investment. The selection of the combination of commodities and sourcing countries for the proposed investment was carried out to avoid supply chain risks associated with child labor/forced labor (CL/FL) and significant safety hazards. The risk profile of the suppliers is low because of the careful selection of the origins and in consideration of the agricultural practices in such origins, involving fully mechanized farms avoiding the risks of CL/FL and significant occupational health and safety (OHS) risks. This approach aligns with PS2 supply chain requirements.                                                  

 Supply Chain Risk Assessment and Management. As indicated in PS1 Supply Chain section, supply chain risks contemplated by PS6 (conversion of natural and/or critical habitats to farmland used for commodities production) were not considered material under the use of proceeds for the proposed investment. The selection of the combination of commodities and sourcing countries was carried out to avoid supply chain risks. The suppliers are located in consolidated agricultural areas in the targeted origins, which eliminates the risk of conversion of natural habitats. This approach aligns with PS6 supply chain requirements.