US SOY SUSTAINABILITY ASSURANCE PROTOCOL

Kevin Roepke, USSEC Regional Director

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apartment

In Beijing

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apartment

In Kuala Lumpur

IMAGE SOURCES: ABC NEWS/SLATE

INDONESIA

Sustainability creates a positive emotional connection with consumers

• According to a 2015 Nielsen study on sustainability:

– 45% of consumers surveyed said that commitment to the environment now has the power to sway their product purchase

– 66% of consumers say that they are willing to pay more for sustainable goods

• The goodwill it brings can bolster a company’s social, environmental and financial bottom lines

Growing consumer demand for sustainable products

• More than 75% of Fortune Global 500 companies publish sustainability reports

• Corporate responsibility and sustainability platforms increase scrutiny on sustainability of raw materials

Sustainability reporting for publicly listed companies

• Many trade exchanges are requiring sustainability reporting, or are reporting on their listings

– NYSE

– FTSE and DAX

– Malaysia/Singapore

– Philippines/Thailand

• This trend is only going to continue to grow as sustainability comes more to the forefront

2020 Tokyo Olympics

• The 2020 Tokyo planning committee has set about a sustainability plan

• Sourcing code also defines the individual criteria for the sourcing of timber, agricultural products, livestock products, and fishery products

• Global spotlight on sustainability

Sustainability matters to our farmers

• Growing family businesses … for generations

• Enhancing diversity and reducing inputs

• Meeting customer demands

• Improving profitability

Corporate benefits of adopting sustainable ingredient sourcing

• Can improve brand reputation

• Identify more reliable partner suppliers

• Attract and retain employees

• Greatly improve operational efficiencies

• Create new revenue streams

• Meet the expectations of stakeholders/stockholders

Worldwide Sustainability Requirements

Agriculture sustainability schemes

• In its early stages, ag sustainability schemes were driven in

large part by EU consumers and companies, we believe

primarily as a result of other exporting nations’ deforestation

and social concerns.

Agriculture sustainability schemes

• The Round Table for Responsible Soy (RTRS) was born out of these

concerns and we believe it is primarily focused on the issues of

sustainability that affect those other nations (deforestation, land

rights, human rights, etc.).

• Approximately 12 other soy sustainability systems worldwide

• The U.S. Soy Industry has created an alternative tool to certify the

Sustainability of U.S. Soy. The only mass balanced approach to

sustainability.

The Soy Sustainability

Assurance Protocol (SSAP)

U.S. Soybean Sustainability Assurance Protocol (SSAP)

• Based on U.S. national system of conservation laws (farm bill)

• Aggregate/mass balance approach

• Benchmarked against FEFAC Soy Sourcing Guidelines

• Participation determined annually

• Quantifiable metric based results

• Third party audit

• Certification

• Continuous Improvement Goals

U.S. Soybean Sustainability Assurance Protocol

Four Directives with Control Measures & Regulations 1. Biodiversity and High Carbon Stock

– Wetland, grassland, forest, biodiversity

2. Production Practices

– Conservation tillage, crop rotation, precision farming

3. Public and Labor Health and Welfare

– EPA, EEO, OSHA

4. Continuous Improvement

– CRP, Conservation programs, training and info sharing

SSAP and RTRS

Comparison of SSAP with RTRS• The U.S. Soybean Sustainability Assurance Protocol (SSAP) is functionally equivalent to the

Roundtable on Responsible Soy (RTRS) Standard.• All five RTRS principles are addressed in the SSAP.

• The SSAP meets or substantially meets 84 of the 98 elements of the RTRS.

• The RTRS is a global standard and thus has to address many civil society criteria that are enforced in the

US by state and federal statutes and regulations.

• The 14 RTRS elements that were not directly met by the SSAP were predominantly

associated with communications and civil society requirements rather than conservation

activities on the land. • The RTRS does not address wildlife conservation as comprehensively as the SSAP

• Seven SSAP Directive elements associated with measurement and implementation of wildlife conservation

practices are not addressed in RTRS

Elements in SSAP that are NOT in RTRS

Seven of the 54 SSAP Directive elements are not met by RTRS, primarily associated

with measurements and implementation of wildlife conservation practices.

The SSAP outlines an auditing process to ensure compliance with the directives:

• Requires annual internal audits by the producers, which must be submitted to the

U.S. Department of Agriculture Farm Service Agency (USDA-FSA);

• Requires annual third-party audits conducted by the USDA-FSA for a percentage of

SSAP producers.

Continuous Improvement

SOURCE: Crop Rotation Source: USDA Economic Research Service (ERS) • Water Management Source: USDA Ag Census 2012 • Reduced Tillage Source: USDA National Agricultural Statistics Service (NASS) • Pest Management Source: Best Practices Report,

United Soybean Board, October 2014 • Nutrient Management Source: Best Practices Report, United Soybean Board, October 2014 • Detailed Recordkeeping Source: USDA Natural Resources Conservation Service (NRCS) • Conservation Source: USDA FSA

Cropland decreased while forest land increased

SOURCE: National Resource Inventory, USDA

The Continuous Improvement Pathway: Where are we going?

• Improve sustainability of U.S. soybean production by improving Key Performance Indicators (KPIs).

• KPIs are the things we care about that we can measure.

• We start with environmental KPIs because that is what the world is focusing on, but recognize that they are connected to economic and social KPIs.

Metrics/KPIs

• Field to Market – National Indicators Report

– Publically available data

– Report updated every four years

– FTM has diverse membership representing all aspects of the value chain

http://fieldtomarket.org/national-indicators-report-2016/

Source: Field to Market

National Indicators Report,

2016

Continuous Improvement

By 2025, U.S. soybean farmers aim to:

• Reduce land use impact by 10 percent (acres per bushel)

• Reduce soil erosion an additional 25 percent (acres per bushel);

• Increase energy use efficiency by 10 percent (BTUs per year):

• Reduce total greenhouse gas emissions by 10 percent (pounds CO2-equivalant gasses emitted per year)

These continuous improvement goals were adopted by key U.S. soy organizations in 2014 and are based on 2000 benchmark.

SSAP usage in markets

Verified Sustainable U.S. Shipments for MY14-YTD 18

• Helps customers meet sustainability goals and supplier guiding principles

• Differentiates customers from their competition

• 11,415,445 MT for MY2017

• 12,434,018 MT for MY2018

• As of 5/25/20186845 851933

5876807,681

11.415.445,51

12.434.018,780

0

2.000.000

4.000.000

6.000.000

8.000.000

10.000.000

12.000.000

14.000.000

MT

MT

MY2014-MY2018 (YTD – 5/25/18)

2014 2015 2016 2017 YTD 2018

Shipments to regions for MY 16-17

Region MTs of verified Sustainable U.S. Soy

North Asia 4,084,506.975

SE Asia 523,957.035

ASC 0.000

MENA 676,845.356

EU 2,708,663.930

Americas 2,183,822.622

Unknown 1,237,649.592

TOTAL 11,415,445.510

North Asia36%

SE Asia4%

MENA6%

EU24%

Americas19%

Unknown11%

SSAP/SES Shipments for MY16-17 by region

North Asia SE Asia MENA EU Americas Unknown

Shipments to regions for MY17-18 (as of 2.27.18)

Americas16%

ASC1%

EU19%

MENA8%

North Asia48%

SEA1%

SES/SSAP SHIPMENTS BY REGION AS OF 5/25/2018 FOR MY18

2904 SHIPMENT TOTALING 12,434,018.78 MTS

Americas ASC EU MENA North Asia SEA

Region # of Shipments MTs % of Total MT % of Total Shipments

Americas 694 2,030,493.66 16.33% 23.90%

ASC 6 106077.986 0.85% 0.21%

EU 66 2,369,063.32 19.05% 2.27%

MENA 29 994,232.50 8.00% 1.00%

North Asia 1898 5,896,409.19 47.42% 65.36%

SEA 211 1,037,742.12 8.35% 7.27%

TOTALS 2904 12,434,018.78 100.00% 100.00%

Leveraging the SSAP

How to get a certificate of verification

• Soy Export Sustainability LLC

– USSES.org

SES LLC• Exporter registers company on SES website and

assigns administrator and users

• Exporter request allocation of sustainable U.S. soy through SES website

– Exporter administrator can request additional allocations as needed

• Exporter creates a SES certificate of Sustainability

– Exporter enters/verifies following data:

• Product + Quantity + Shipment date + Vessel Name/Shipment

– Can add additional optional info for internal use that is not show of certificate

• Exporter shares completed certificate with buyer

About the Certification

• No cost

• Certification is shipment specific – does not provide traceability/nor transferable

• Certification available 7 days prior and 60 days post shipment

• Available only to U.S. sourced and shipped soy

• Web-site has shipment report feature if needed

• Exporter company name referenced on website – no other information

U.S. Sustainable Soy Logo

• U.S. Trademark approved

• In use in North Asia (Taiwan, Korea, Japan, China), and the Philippines.

• USSEC Board voted to rollout worldwide

• Can be used to differentiate U.S. soy, examples can include bags, totes, labels, etc.

USSEC designing tools for Customers of U.S. Soy

• Help them to find ways to add value in their business through their use of Certified Sustainable U.S. Soy

• IE:

– Corporate Social Responsibility –

– P.R. Opportunities – (contrast with negative press issues)

– Customizable for use as a part of Strategic Partner Relationships

While the U.S. Soybean Export Council (USSEC) does not guarantee the forecasts or statements of USSEC Staff or Contractors, we have taken care in

selecting them to represent our organization. We believe they are knowledgeable and their presentations and opinions will provide listeners with detailed

information and valuable insights into the U.S. Soy and U.S. Ag Industry. We welcome further questions and always encourage listeners to seek a wide

array of opinions before making any financial decisions based on the information presented. Accordingly, USSEC will not accept any liability stemming from

the information contained in this presentation.

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