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Progressing on responsible sourcing

in the coconut oil supply chain

Responsible sourcing of coconut

AAK has been sourcing coconuts from India and Sri Lanka since the 1930s. Nowadays, Indonesia, the Philippines, and India are the three biggest coconut producers with 70 percent of the global production. We source our coconut oil from the Philippines, Indonesia and India.

Coconuts as raw material

Coconut trees are often found along the shorelines of the tropics since they can tolerate saline and sandy soils, while other plants do not thrive under these conditions. This not only means that coconuts form an important source of income growing on soil with limited fertility, but also that they take on a huge importance in protecting the sandy shorelines from erosion from the sea with their elaborate root system.

Coconut-growing countries in Asia-Pacific rely on the sale of coconut products as export income. The majority of coconuts are produced by smallholder farmers. Progressing on responsible sourcing of coconut oil.

Responsible sourcing of coconut oil

In 2018, AAK has identified coconut oil as one of the key raw materials for responsible sourcing together with shea and palm oil. For coconut oil the major risks in the supply chains still had to be identified and no industry-wide sustainability standard exists. Therefore, AAK has teamed up with Proforest to conduct a risk assessment for our coconut supply chains. 

The main finding was that the traditional coconut supply chain is long and complex because the growing areas are far away from the mills that extract the oil from the dried coconuts (copra). Middlemen connect the farmers with the mills and deliver important logistical services. We have identified three main areas that need attention in the coconut supply chains. 

Based on Proforest’s recommendations from the supply chain risk assessment we have developed a coconut supply chain risk mitigation plan. The plan will be tested on a pilot scale in 2019 and brought to full scale in 2020. 

The traditional coconut supply chain

The traditional coconut supply chain is long and complex because the growing areas are far away from the mills that extract the oil from the dried coconuts (copra). Middlemen connect the farmers with the mills and deliver important logistical services.

Smallholder engagement

As stated in our Policy for Responsible Sourcing of Vegetable Oils, in AAK, we actively include smallholders in our supply chains. In order to simplify the supply chain for the farmers and to ensure traceability we have started a direct sourcing project in Indonesia. Here our partner mill collects the copra directly from the village level, as a means to ensure that a bigger share of the value goes to the farmers. We will continue to work with this project in 2019 and develop it even further.

Vegan coconut oil

AAK is the co-development company, closely working together with our customers and also closely monitoring trends in the markets. Coconut oil is a preferred ingredient for many plant-based applications like vegan ice cream or cheese. However, in 2018, together with one customer, AAK discovered that the vegan community was highly concerned that monkeys could have been involved in the harvesting of coconuts. 

It is a common practice, mainly in Thailand and Malaysia, that pig-tailed macaques are trained to pick coconuts from the trees. This means that coconut oil coming from a supply chain where monkeys are involved in the harvesting process cannot be classified as vegan anymore by the standards of The Vegan Society. 

AAK has been working closely together with our suppliers in 2018 to develop a supply chain that can verify that no monkeys have been involved in the harvesting process. Therefore, we are now able to provide products that can achieve The Vegan Society’s trademark on end products.

AAK House of Sustainability

Sustainable growth is the key objective of our strategy. For us, it is about our responsibility towards all of our key stakeholders—the local communities where we operate, our customers, our employees, our investors, and our suppliers.

Get in touch with your Co-Development partner

More about our responsible sourcing

Responsible sourcing of palm

Globally, palm oil is the most produced and consumed vegetable oil, accounting for 30 percent of the world’s vegetable oil production. Find out how AAK supports the move towards full sustainability in the palm oil industry.

Responsible sourcing of rapeseed

Rapeseed oil is one of the most important vegetable oils used in food as well as biodiesel. Today, rapeseed is the oil plant of Northern Europe and a key raw material for AAK.

Responsible sourcing of shea

The shea kernel is only about two and a half centimeters in diameter. But what it lacks in size it makes up in oil concentration—and a unique history.