ADM Commitment to No Deforestation, No Peat and No Exploitation

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1 ADM Commitment to No Deforestation, No Peat and No Exploitation Policy Implementation Q Soy Progress Report In Partnership with The Forest Trust

2 Introduction ADM committed to Our No Deforestation, No Peat, and No Exploitation (No DPE) policy in our soy and palm oil supply chains in March We have been working with The Forest Trust (TFT) since May 2015 to implement this commitment, and build traceable and transparent agricultural supply chains. ADM posts quarterly progress reports in order to be transparent with the process of implementation, which will ultimately provide ADM, and the industry in general, with a credible methodology for sourcing soybeans while protecting sensitive biomes and the communities that exist where we live and work. Our hope is that ADM s No DPE work will support convergence within the soy industry on best practices for environmentally and socially sustainable soy. Our No DPE approach has included analysis of all South America soy procurement data, field visits to assess and characterize environmental and social risk associated with soy growers in ADM sourcing regions, identification of priority regions based on risk, and development of an approach to address identified risk in ADM sourcing regions. Of course, ADM cannot transform the industry alone and we encourage others in the soy supply chain to employ No DPE values and practices. Activities this Quarter Actions taken this quarter will be reported under the following categories: Transparency and Accountability disclosure of activities related to No Deforestation. Traceability traceability scores. Transformation supplier engagement in support of No Deforestation. Monitoring and Verification monitoring of issues within the supply chain and identification and application of available technology to verify compliance within the supply chain. Topics of Interest other relevant activities in support of No Deforestation within the industry. In Q3 2016, ADM South America leadership in São Paulo, Brazil approved the Soy Action Plan. The Soy Action Plan takes a risk-based approach to traceability and transformation work in South America, with an emphasis on actions in biomes at high risk for conversion of natural habitats, and for social issues. It is anticipated that the Soy Action Plan will be posted on the in the near future. 2

3 Transparency and Accountability ADM concluded pilot assessments of remote sensing monitoring tools, which included a team of subject matter experts, and we are now engaged in more detailed discussion with a select group of tool providers regarding possible partnerships activities will focus on integrating the monitoring tool into ADM origination procedures in order to support and monitor compliance with the No DPE policy in high-risk biomes. High-risk biomes include the Brazilian Cerrado and Paraguay Atlantic Forest; please see our Q Soy Progress Report for more details. Traceability The TFT and ADM origination teams are developing new processes/procedures for collecting farm information, and we are building a database of digitized farm maps of ADM soy suppliers. This will allow for farm-level traceability of ADM soy, and the monitoring of compliance of the No DPE policy at the farm level. Data security and producer anonymity will be a priority. New procedures will be piloted in a subset of origination areas and later expanded to all high-risk areas. Transformation The following activities were undertaken in Q3 2016: TFT and ADM Brazil and Paraguay teams collaborated to define lines of regional No DPE work, and better understand synergies between No DPE and existing ADM sustainability initiatives in both countries. Initiated detailed process mapping of all stages of ADM s soy procurement process. o Process mapping will serve as the basis for the incorporation of changes to ADM systems in order to: 1) achieve farm-level traceability of ADM soy, 2) incorporate elements of the No DPE Policy into ADM sourcing and documentation, and 3) integrate deforestation analysis provided by the remote sensing monitoring tool into ADM s sourcing decisions. o The process map of ADM internal soy purchasing has been reviewed in Brazil, with recommendations for changes to ADM s procurement policy currently being finalized. Carried out a scoping exercise of potential issues between soy producers and indigenous peoples in Mato Grosso do Sul, Brazil o The scoping exercise by TFT in Mato Grosso do Sul included interviews with civil society organizations, government, producer/industry associations, and ADM staff. 3

4 o Additional field visits to two communities of Mato Grosso Sul were subsequently carried out by TFT and FUNAI (National Indian Foundation). Recommendations are being finalized based on this research, which will inform an approach for ADM field staff to monitor and address any potential issues within the ADM supply chain. Monitoring and Verification The following activities were taken in Q3 2016: Finalized expert review process for the pilot of five remote sensing monitoring tools. Sensing experts from academia and NGOs provided perspectives on which tools are best suited to meet the challenge of the broad geographic scale of the No DPE Commitment. ADM is exploring internal arrangements for managing geospatial information generated by monitoring tools, and protocols for collecting and storing digitized supplier farm maps. Topics of Interest In Brazil, ADM is a member of the Management Committee of the Soy Working Group, among other multi-stakeholder dialogues. As part of Soy Working Group, ADM supported and participated in the indefinite renewal of Soy Moratorium in August ADM maintains the commitment to not do business with farmers growing soy in areas under the embargo by IBAMA, the Brazilian Institute of Environment and Renewable Natural Resources. ADM also continues to verify compliance against the Pará grain protocol and Brazilian program to eradicate slave labor. ADM Paraguay joined the United Nations Development Program (UNDP) in June 2016 and initiated a project called Mainstreaming Biodiversity Conservation and Sustainable Land Management into Production Practices in all Bioregions and Biomes in Paraguay in May The initiative is focused on protecting the Upper Paraná Atlantic Forest and brings together stakeholders to enhance sustainability from the soy and beef value chain, using tools including land use planning, deforestation monitoring, surveillance, and enforcement. In June 2015, ADM also attended the first roundtable of Green Commodities Platform in Paraguay to jointly discuss root causes and externalities of soy production in the country with other stakeholders. 4

5 Conclusion ADM has made significant strides since beginning work on its No DPE commitment. While the initial phase of work has been dedicated to developing an in-depth understanding of ADM s soy sourcing risks in South America, the past quarter has been devoted to the piloting of available tools and to the preliminary development of internal procedures needed to; a) successfully implement our No DPE policy, and b) enhance regional engagement with ADM s Brazil and Paraguay teams, who will be engaged in the implementation of the No DPE Commitment. In Q and Q1 2017, ADM s soy No DPE work will focus on developing institutional arrangements and an action plan for implementing the remote sensing monitoring tool, implementing changes to ADM purchasing processes to reach farm level traceability, and initiating training and capacity building on the No DPE Commitment with both ADM origination staff and suppliers. We will additionally develop an Issues and Resolutions mechanism to systematically address stakeholder concerns related to the No DPE policy implementation. With the collaboration of industry, NGOs, and academia, we hope our work will contribute to the development of a credible methodology and convergence on a standard model for implementation of No DPE Commitments and HCV/HCS approaches in the soy industry. We will report on progress quarterly to our many stakeholders, and we welcome feedback and comments from our interested readers at responsibility@adm.com. 5