MEIJI : Tackling Deforestation in our Cocoa Supply Chain

Procure Raw Materials With Consideration Toward Human Rights and the Environment

KPI< Cocoa >Improve traceability of cocoa< Palm Oil >Use 100% of RSPO (Roundtable on Sustainable Palm Oil) - certified palm oil by FYE March 2024< Paper >Use 100% of environmentally friendly paper raw materials by FYE March 2021

The stable procurement of high quality cocoa beans is an important issue for us as the global demand for cocoa expands. We implement procurement with consideration toward human rights and the environment, cooperating with suppliers in accordance with the Meiji Group Procurement Policy and the Cocoa Procurement Guideline.

Our cocoa procurement practices are mindful of human rights and the environment in keeping with the Meiji Group Procurement Policy and the Cocoa Procurement Guideline established in September 2018. These practices include legal and regulatory compliance in cocoa-producing countries and regions, securing a proper working environment respectful of human rights, maintaining ecosystems, partnering with the World Cocoa Foundation (WCF), and running Meiji Cocoa Support, our own farmer support program.

We improve the traceability of cocoa through Meiji Cocoa Support, which is intended to improve the operating environment of cocoa farmers. We have expanded the program to eight nations: Republic of Ghana, Republic of Peru, Republic of Ecuador, Bolivarian Republic of Venezuela, The United Mexican States, Dominican Republic, Federative Republic of Brazil, and in 2017, the Socialist Republic of Vietnam.

Palm oil, taken from oil palm trees cultivated in the tropics, is widely used in food processing. We implement procurement with consideration toward human rights and the environment, cooperating with suppliers in accordance with the Meiji Group Procurement Policy and the Palm oil Procurement Guideline.

We formulated the Palm Oil Procurement Guideline in September 2018. We implement procurement in accordance with the Palm Oil Procurement Guideline.

Meiji Co., Ltd. joined the Roundtable on Sustainable Palm Oil (RSPO) in March 2016. We are aiming to shift to 100% RSPO-certified palm oil by the fiscal year 2023.

Following the Meiji Group Procurement Policy and the Paper Procurement Guideline, we are working with our suppliers to procure paper raw materials for product and office use in ways that care for human rights and the environment.

We formulated the Paper Procurement Guideline in September 2018. We implement procurement in accordance with the Paper Procurement Guideline. We are expanding the range of eco-friendly papers (including paper with FSC^®* or other certifications and post-consumer paper) that we use for product containers, packaging, printing, and copying. By fiscal 2020, we aim to use only eco-friendly raw materials for paper.

Our goal is to deliver safe and secure products. To this end, we follow the Meiji Group Procurement Policy to ensure the quality and safety of raw materials and packaging. We use a fair and transparent supplier selection process, and practice socially responsible procurement mindful of human rights, the environment, and other considerations. When beginning trade with a new partner, we confirm the raw material and packaging data provided by the supplier and perform quality analysis. We survey and audit the supplier manufacturing plant's production and quality assurance system, production control system, and the supplier's fulfillment of social obligations, including human rights and the environment. Suppliers must meet rigorous planning standards set by each Meiji Group company. In addition, we work with suppliers to improve any problems.

To strengthen our response to CSR issues in the supply chain, we survey and check supplier consideration and initiatives with respect to human rights and the environment, based on the Meiji Group Procurement Policy.

• Companies audited in fiscal 2016: 185 (primary suppliers in Japan)
• Companies audited in fiscal 2017: 98 (primary suppliers in Japan)

Initiatives for Sustainable Procurement

The stable procurement of high quality cocoa beans is an important issue for us as the global demand for cocoa expands.
The Meiji Group supports cocoa-producing nations and farmers through the Chocolate and Cocoa Association in Japan, World Cocoa Foundation, and SMS-ECOM. In 2006, we began our own Meiji Cocoa Support program and have been deepening partnerships with cocoa-producing nations.

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Since 2006, the Meiji Group has supported the sustainable production of cocoa, working to improve the operating environment of cocoa farmers. Our employees visit cultivation sites to speak directly with cocoa farmers and confirm local needs before determining a support plan. We conduct seminars on cultivation technology and insect-pest control and supply seedlings to increase yield. Additionally, we support community and infrastructure development by building wells, donating school supplies, and supporting environment-friendly farming practices. We teach our own fermentation technology to promote the production of high-quality cocoa, which in turn increases farmer income.

Scope of initiatives (fiscal 2017)
Eight countries
Republic of Ghana, The United Mexican States, Republic of Ecuador, Republic of Peru, Dominican Republic, Bolivarian Republic of Venezuela, Federative Republic of Brazil, Socialist Republic of Vietnam
In 2017, we established a cocoa farm equipment bank as a joint investment with a local enterprise in Peru. This resource is stocked with cocoa farm equipment that farmers can borrow. This system reduces work for the farmers and the burden of initial investment and maintenance costs for equipment, allowing farmers to concentrate on production with confidence.

The governments of Côte d'Ivoire and Ghana and the world's leading cocoa and chocolate companies signed landmark agreements in November 2017 to end deforestation and promote forest restoration and protection in the cocoa supply chain.
This new public-private partnership - called the Cocoa & Forests Initiative (CFI) - has been organized by the World Cocoa Foundation (WCF), IDH - the Sustainable Trade Initiative, and the Prince of Wales's International Sustainability Unit (ISU). The Prince of Wales launched CFI in March 2017 in London. Thirty-three companies, accounting for about 85% of global cocoa usage, have joined CFI.
We implement an initial action plan from one part of Meiji Cocoa Support that spells out the specific actions it will take in 2018-2022 to deliver the commitments set out in the Framework. The Meiji's Cocoa & Forests Action Plan focuses on three pillars: forests protection and restoration; sustainable cocoa production and farmers' livelihoods; and community engagement and social inclusion.

The Current State of and Issues Facing the Japanese Dairy Business

Dairy farmers in Japan are aging and their numbers are decreasing. At the same time, dairy farming is hard work, and farms face a lack of successors. Drinking milk is an excellent food providing a convenient source of good quality protein and calcium; however, the diversification of drinking beverages is leading to a decline in the consumption of drinking milk.

Drinking Milk and Dairy Products Created Through Cooperation with Dairy Farmers

Raw milk, the raw material used to make drinking milk, is milked from healthy cows. The quantity and quality of raw milk is greatly influenced by temperature, humidity and feed. Our dairy managers work closely with local farmers and agricultural cooperatives to ensure stable access to high-quality raw milk. Hygiene is critical to the production of good-quality raw milk.
In 2009, the Meiji Group launched our drinking milk value enhancement campaign to increase fans of drinking milk. We work with dairy farmers to develop dairy farms and produce raw milk that our customers find appealing. As part of the campaign, we communicated the struggles and stories behind these efforts.

As part of the drinking milk value enhancement campaign, we promote activities based on unique policies, including establishing a system for maintaining hygienic operations and facilities, healthy cows, consideration for food quality and safety, and consideration for the environment. We also established a system that awards accreditation to farms meeting goal criteria and producing high-quality milk.

As of the end of March 2018, we have awarded accreditation to 262 farmers. In FY2018, we plan to expand this support to 724 farmers. Through these activities, we will increase the number of farms producing high-quality milk, and by communicating our commitment and these unique efforts to consumers, we will help increase the value of drinking milk.

Organic Drinking Milk

'Meiji Organic Drinking Milk is certified organic under the Japan Agricultural Standards (JAS). This milk comes 100 percent from dairy cows in Hokkaido, conscientiously raised on organic feed. In 1999, we began working with dairy farmers belonging to the Organic Dairy Research Council in the town of Tsubetsu. In 2006, five farms were certified compliant with JAS for organic livestock. The number of certified diary farms increased to eight in 2016. We supply new drinking milk value to our customers who are concerned with the environment and the health of dairy cows.

Our presence in agrochemicals and veterinary drugs contributes to the stable supply of safe and reliable agricultural, livestock, and marine products, as well as improves productivity around the world.

ORYZEMATE prevents plant diseases by raising the disease resistance of rice and vegetables. This chemical helps farmers throughout Japan by contributing to the stable production of rice and vegetables.

We develop and sell environmentally friendly agricultural chemicals. ZAXA is a highly-effective long-lasting herbicide suitable for a variety of plants. The main constituent of ZAXA is a type of amino acid commonly found in nature. As a result, this herbicide has minimal effect on soil and is highly safe for livestock. The active ingredients in Meiji Eco Series pesticides and fungicides are also derived from natural sources. The leading product in this series, Harmomate Water-soluble Powders, meets Japan Agricultural Standards for use in organic cultivation.

Our research and development of agricultural chemicals and veterinary drugs produces ground-breaking products that are eco-friendly and very safe. These products additionally contribute to human prosperity by developing global agriculture and stabilizing food production.

Afidopyropen / development code ME5343 (insecticide）

Afidopyropen is highly effective against hard-to-control pests like aphids and whiteflies that attack soybeans and vegetables. The product is fast-acting, with sustained effectiveness and highly degradable in the environment. Afidopyropen is expected to be particularly safe for honeybees important pollinators in the habitat. BASF received the first registrations in Australia and India for this new insecticide in June 2018. BASF submitted the regulatory dossier in the U.S., Canada, and Mexico, with additional registration submissions planned in upcoming years for key markets worldwide. Afidopyropen was discovered by Meiji in collaboration with a research laboratory at the Kitasato Institute, supervised by a 2015 Nobel Prize laureate, Prof. Satoshi Omura. Following a licensing agreement between Meiji and BASF in May 2010, BASF is exclusively developing the product around the world, except for some regions/countries in Asia.

Fenpicoxamide / development code ME5223 (fungicide)

The product is a innovative drug in the fight against wheat leaf blight, which is highly resistant to agricultural chemicals. The effect is long-lasting and the product is highly degradable in the environment. This chemical is scheduled to be registered as an agricultural chemical in Europe, a major market, in 2019.

Flupyrimin / development code ME5382 (insecticide)

Flupyrimin is a new insecticide discovered by Meiji, and is currently under development in Japan (submitted for registration) and overseas. Flupyrimin is effective against the major insect pests in rice, such as planthoppers and stem borers, including those populations resistant to existing insecticides. Furthermore, flupyrimin is a promising technology due to the low toxicity against honeybees, where there are few effective solutions due to growing concerns over the safety to pollinators.
Paddy rice fields in India are the largest in the world (44 million hectares annually), and India accounts for around 21% of global rice production. In India, rice yields may be reduced by up to 45% due to insect pests and diseases. Stem borers and planthoppers notably affect over 30 million hectares of rice. Flupyrimin is an innovative solution that is effective in controlling both stem borers in early cultivation stages and planthoppers in mid-to-late stages with a single application.
Meiji and Arysta LifeScience will make further contributions to the development of agriculture in India and make people's lives better by introducing this innovative technology. We will keep up efforts to distribute this technology worldwide, continuing to deliver innovative environmentally friendly products.