52 SUSTAINABILITY REPORT - IJM Plantations€¦ · -orging Partnerships, Creating Shared F Value:...

SUSTAINABILITY REPORT About This Report 53

Sustainability Commitment 54

Sustainability Governance 55

Key Highlights FY 2019 and Key Priorities FY 2020

56

Managing Material Aspects 58

Mapping UN-SDGs to the Group 59

PRODUCTIVITY AND INNOVATIONS

- Economic Value Creation and Distribution

62

- Regulatory Compliance and Ethical Conducts

62

- Stakeholder Engagements 62

- Forging Partnerships, Creating Shared Value

66

- Marketplace Collaborations 67

- Priming and Driving Innovations 67

• PlantationDigitalisation 68

• PlantationMechanisationand Process Enhancement

68

• AerialTechnologyforPlantation 68

• FoodSafety(3-MCPDEandGE) 68

- Sustainability Certification and Quality Assurance

69

• ISCC 69

• MSPO 69

• ISPO 69

• QualityandProcessAssurance 70

- Traceability and Supply Chain Management

70

CARE FOR ENVIRONMENT

- Responsible Planting Procedures 74

- Environment And Biodiversity Protection 74

- Management of High Conservation Value Areas

75

• Protectionof ForestandRiparian Buffer Zones

75

• BiodiversityProtection 76

• Monitoringof Biodiversity 76

• Monitoringof Deforestation 78

• PeatlandProtection 79

• RehabilitationandConservation 80

- Fire Management and Monitoring 81

- Water Stewardship 83

• WaterSourceandConsumption 83

- Effluent and Waste Management 84

• EffluentManagement 85

• WasteManagement 86

- Carbon Emission and Energy Management

86

- Responsible Agrochemical Usage 90

INVESTOR IN PEOPLE

- Occupational Safety and Health 92

• OSHPerformance 93

• SOHELP 94

• ErgonomicRiskAssessment 94

• HearingConservationProgramme 94

• ChemicalHealthRiskAssessment 94

• MedicalCareandWellBeing 94

• SecurityinOperations 95

- Respect for Human Rights 95

• GrievanceProcedureandWhistleBlowing

96

• GuestWorkers’PassportLockers 96

- People Asset 96

• WomenCommittees 97

• RecruitmentandTalentRetention 97

• EmployeesRemunerationandWelfare 98

• EmployeesEngagementsand Development

99

• EmpoweringChildrenwithEducation 100

RETURNING TO COMMUNITY

- Community Care and CSR Initiatives 101

• YouthSportsDevelopment 101

• BreastHealthAwareness 101

• VolunteerismandScholarships 102

- Community Outreach and Development 102

- Free, Prior And Informed Consent 104

- Outgrowers And Smallholders Transformation Schemes

105

• Project“Rurality” – Upscaling the Transformation

105

• PlasmaandKemitraanSchemes 106

- Food Security 106

GLOBAL REPORTING INITIATIVE (GRI) STANDARDS 2016 CONTENT INDEX

107

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The Group is proud to present its Sustainability Report 2019 which is incorporated into its Annual Report.

This report was prepared in accordance with “Global Reporting Initiative (“GRI”) Standards: Core option and guided by the Bursa Malaysia’s Sustainability Reporting Framework which comprise the Sustainability Reporting Guide and six supporting toolkits, and the GRI Sustainability Reporting Guidelines. This report had also adopted the changes made on the GRI 303: Water and Effluents (2018), and GRI 403: Occupational Health and Safety (2018). This report focuses on activities carried out within the Group’s financial year from 1 April 2018 to 31 March 2019, with comparable previous years’ statistics, where available and relevant. Any significant changes beyond the reporting period will be reported in the following year’s publication.

The scope of the report covers the environmental, social and economic performances across the Group’s operations in Malaysia and Indonesia. This report also demonstrates the Group’s focus and goals to meet the United Nations’ Sustainable Development Goals (SDGs) that contribute to sustainable development and the betterment of the society. The Group strives to provide its stakeholders with an overview of the Group’s approach and progress in meeting its sustainability commitments.

The Group concurs external assurance adds credibility and transparency to the sustainability report, but it is not a requirement to be in accordance with the GRI Standards. The Group will endeavour to improve its data reporting and explore external assurance in future years.

ABOUT THIS REPORT

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The Group recognises the importance of operating in a responsible and sustainable mode to ensure a deforestation and exploitation free supply chain. The Group’s commitment on “No Deforestation, No Peat and No Exploitation” (“NDPE”) in its new development activities was released in February 2019. The NDPE commitment is detailed in the Group’s policy statements on Sustainability, Environment and Biodiversity, Human Rights and Occupational Safety and Health. The Group’s sustainability approach is also in line with the United Nations’ Sustainable Development Goals (“SDGs”) and guided by the Group’s overarching Sustainability Policy, which provides the organisation’s directions and strategies on the sustainability framework encompassing key sustainability aspects which include the following:-

3Complying with relevant local and national statutory and regulatory requirements.

3Adopting good agricultural and processing practices; including pursuing continuous improvements.

3Adopting zero burning policy in new planting and replanting developments.

3Endeavouring to protect natural resources and maintain conservation sites in the Group’s land bank.

3Promoting positive environmental impacts and establishing site-specific conservation and rehabilitation initiatives.

3Respecting human rights of relevant stakeholders in the supply chain including the local communities.

3 Facilitating the inclusion of smallholders into its supply chain.

3Addressing complaints and grievances in an open, transparent and consultative manner.

3Creating shared value through constructive partnerships and effective engagements with relevant stakeholders.

3

Complying with the principles under the national sustainability standards that include the Malaysian Sustainable Palm Oil (MSPO) and the Indonesian Sustainable Palm Oil (ISPO); or other international sustainability standards beneficial to its business activities.

The policy is applicable to all operations in the Group. The Group also strives to commit its suppliers, contractors and other relevant stakeholders of significance in its supply chain towards adhering to this policy.

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SUSTAINABILITY GOVERNANCE

The Group’s sustainability strategy is governed by the following framework.

The Board of Directors is responsible for approving the directions and overall sustainability strategy for the Group. The Audit Committee will oversee the assurance activities with respect to sustainability management and reporting processes. The management committee is led by the CEOs to ensure the strategies are implemented and in accordance with the Group’s policies and practices. The Management Committees are also responsible to update the Board of Directors on the progress of the Group’s sustainability initiatives and any significant matters that may arise.

The respective Sustainability Steering Teams in both the Malaysian and Indonesian operations are the key drivers of the Group’s sustainability practices and work closely with the respective Sustainability Working Teams and with relevant external stakeholders. They are also responsible to ensure that the sustainability initiatives and implementation plans are consistent with the Group’s sustainability strategy. Sustainability working teams are dedicated teams in the operating units that are responsible to implement the sustainability initiatives in the respective operations.

Board of Directors Audit Committee

Management Committees in

the Malaysian and Indonesian Operations

Operations Sustainability

Working Teams

Sustainability Steering Teams

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SUSTAINABILITY REPORT

SOCIAL ASPECTS

MARKETPLACE

1. In FY2019, efforts continued to be strengthened to raise productivity while operational costs were prudently managed set against the lagged effects from the El Nino weather and lower commodity prices. Mechanisation for infield crop evacuation was extended to cover other suitable areas in Sugut region. In FY2020, crop production in the Indonesian operations is anticipated to increase with more maturing areas, while a pragmatic replanting programme would be extended into Sugut region in the Malaysian operations. The Group will continue to refine its site-specific mechanisation initiatives involving in-field crop evacuation and explore other cost effective and innovative technologies to enhance operational productivity and efficiency and to reduce the dependency on labour.

2. In FY2019, the Group’s entire Malaysian operations were certified under the ISCC-EU certification. In the Indonesian operations, three (3) of the estates under PT Prima Alumga were successfully certified under the Indonesian Sustainable Palm Oil (“ISPO”) certification scheme. In addition, all estate and mill operations in Malaysia were certified under the Malaysian Sustainable Palm Oil (“MSPO”) mandatory

ENVIRONMENTAL ASPECTS

1. Zero fatality at the workplace was achieved in FY2019. This goal has been achieved over the last five (5) consecutive reporting years. The Group will continue to work fervently towards realising zero fatality in FY2020.

2. In the previous reporting year, the Group had initiated the provision of passport lockers for the safekeeping of travel documents of the guest workers in Sijas estate. In the reporting year, the passport lockers were now made available in all other operating units in the Malaysian operations.

3. The Group continued with various employee engagements and development programmes in FY2019. In FY2020, a systematic employees’ competency evaluation system will be implemented in the Malaysian operations to address competency gaps for personnel handling their respective given tasks.

4. In FY2019, the Group sustained its partnership initiative under the Rurality project with the Earthworm Foundation

1. The Group is committed to No Deforestation, No Peat and No Exploitation in all of its operations. All relevant policies were revised in FY2019 and made available in the IJMP’s website. (http://www.ijmplantations.com/statement-sustainability.php)

2. In FY2019, the Group continued with its multitude of partnerships with NGOs to promote awareness on wildlife protection and conservation. The Group recognises the importance of adopting landscape approach in the addressing of HCV areas, both within and outside its concession boundaries. The concerted efforts together with the surrounding stakeholders to strike a balance between economic, community and conservation interests will be extended into FY2020.

3. The Group adopts a practical approach in managing conservation sites. In the reporting year, the Group continued

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certification scheme. The Group will carry on with the audit process for the newly launched MSPO Supply Chain Certification (“MSPO-SCCS”) scheme in the upcoming reporting year. In FY2020, the Group will also re-certify for International Sustainability and Carbon Certification (“ISCC”) certified palm oil if the demand remains while the ISPO certification journey would continue covering other estates.

3. In FY2019, sustainability questionnaire was formulated and distributed to the crop suppliers in Malaysian operations for self-assessment on the gaps with the Group’s sustainability practices and commitments. More key suppliers will be covered under this assessment activities in the next reporting year. The Group will also continue the mapping activities for all the crop suppliers in Malaysian and Indonesian operations. The timeline of completion is extended to the next reporting year.

4. In the previous reporting year, the Group entered into a Memorandum of Agreement with the Malaysian Palm Oil Board (“MPOB”) for a pilot trial towards mitigating the 3-Mono chloropropanediol ester (“3-MCPDE”) through chloride reduction in the Desa Talisai Palm Oil Mill in Sandakan. In FY2019, the plant has been successfully commissioned and is in the process of fine-tuning for the chloride reduction capacity. Results achieved will be shared with the industry in FY2020.

5. For the Indonesian operations, about 7,068 hectares of Plasma schemes and Kemitraan or partnership schemes has been developed under the Group’s outgrowers’ scheme. The Group will work closely with farmers to develop further areas.

to conduct surveys in HCV areas in both Malaysian and Indonesian operations. On-going rehabilitation projects in the flood prone or degraded wetland carried out in the reporting year will continue to be carried out in FY2020.

4. Wildlife monitoring and patrolling were initiated and rolled out in FY2019. Encroachment and poaching activities were closely monitored in the operations. These efforts will be enhanced in FY2020 following structured trainings to be provided for designated personnels.

5. The Group adhered to a strict zero burning policy. In the reporting year, the Group monitored fire hotspots within its concession

areas and also surrounding areas within a 500 meter radius outside its concession boundaries using the data extracted from the Fire Information for Resource Management System (“FIRMS”). Similar effort will be taken in FY2020.

6. The Group continued to explore cost-effective and innovative technologies in pollution controls, greenhouse gas emission reductions as well as compliance to any new legal requirements. The Group had set a ten-year (10) plan to achieve the desirable reduction of 30% on carbon emissions intensity per tonne of CPO produced, compared with the base year figures.

(formerly known as “The Forest Trust”) in the Malaysian operations. With the assistance from the Rurality officers, the smallholders from Ulu Muanad village had participated in a Community Elephant Monitoring Training Programme (CEMTP) and established a monitoring group to mitigate and implement a long-term strategy in handling the human-elephant conflict. In FY2020, the Group will focus on the provision of relevant training to the smallholders and work closely with the Rurality officers in assisting the smallholders in the MSPO certification audit processes.

5. The Group continued to engage with NGO Humana Child Aid Society in the provision of informal education to the children of guest workers living in the plantations in the Malaysian operations.

6. The Group continued to engage with the local communities particularly the crop suppliers and contractors and cascaded its commitments on sustainability such as zero burning practices and no deforestation commitments. Frequent dialogues and briefing sessions were conducted on matters of mutual concern with local communities. The Group shall provide relevant training and supports to the local communities in the coming year.

7. The Group continued with its core community initiatives in FY2019 including youth sports development and breast health awareness involving partnerships with external stakeholders. In the reporting year, the Group also continued fostering the spirit of sharing and volunteerism amongst its employees and all these activities will continue in FY2020.

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MANAGING MATERIAL ASPECTS

The Group reviewed the material aspects with consideration to both the Group and its key stakeholders’ concerns pertaining to significant environmental, social, governance, and economic impacts. In this reporting year, the Group re-prioritised the material aspects to ten (10) and categorised them accordingly to sustainability frameworks and the relevant United Nations Sustainable Development Goals (“SDGs”) to the Group’s business activities. The Group also reviewed the significant risks and opportunities which are vital to its long-term success and continued growth.

The material issues were then assessed by the Group’s Sustainability Steering Team to ensure that these issues were governed under the Group’s policies and procedures with respective implementation plans were in place. The relevant targets and key indicators under each material topics were also reviewed and discussed periodically in the management meetings to ensure control measures and progress of the implementation targets were closely monitored. The material aspects are shown in the following table with its relevant SDGs and were discussed according to various sustainability framework.

No Material Aspects Corresponding UN SDGs Group Sustainability Framework

1. Profitability and Value Creation

SDG-1 No Poverty; Productivity and Innovations2. Corporate Governance

Stewardship

3. Assurance and Certification

4. Safety and Health SDG-3 Good Health & Well Being;

SDG-5 Gender Equality

SDG-8 Decent Work & Economic Growth

Investor in People5. Human Rights

6. Employee Retention & Engagement

7. Conservation and Land Use SDG-15 Life on land

SDG-13 Climate actionCare for Environment

8. Carbon Management

9. Stakeholder EngagementSDG-17 Partnership for the

GoalsProductivity and Innovations;

Returning to Community10. Community Development

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MAPPING UN-SDGs TO THE GROUP

The Sustainable Development Goals (“SDGs”) were formulated at the United Nations Conference on Sustainable Development in Rio de Janeiro in year 2012, and targeted to be achieved by 2030 (Source: https://sustainabledevelopment.un.org). The SDGs were adopted by United Nations members, working hand-in-hand with strategies to improve health and education, reduce inequality, and spur economic growth, while tackling climate change and preserve

the oceans and forests. There are 17 SDGs, with its 169 targets and respective 230 indicators.

The Group respects and recognises the importance of its role in this global initiative. As such, the Group had identified seven (7) UN SDGs with their specific targets that are most relevant to its business operations. The business activities that are relevant to these identified SDGs are summarised in the following table.

UN-SDGs Specified Targets Activities and Progress

SDG 1- No Poverty

1.1 – By 2030, eradicate extreme poverty for all people everywhere, currently measured as people living on less than $1.25 a day

All employees receive at least the regulated minimum wages.

Employees living in the operations are provided with free accommodation with basic amenities, including treated water and electricity supply.

The Group has offices in a local towns namely Sandakan and Balikpapan where it provides local communities with both employment and business opportunities. The multiplier effect on the business supply chain is able to bring and secure positive economic impacts to the local communities.

The Group’s operations in Indonesia assist local villagers to develop their land, including land preparation, provision of quality planting materials for cultivation of oil palms under the Plasma and Kemitraan schemes.

The schemes have uplifted the living standard of the surrounding local communities and helped to alleviate poverty. To- date a total of 7,068 Ha of outgrowers’ schemes has been developed.

SDG 3 - Good Health & Well-Being

3.8 – Achieve universal health coverage, including financial risk protection, access to quality essential healthcare services and access to safe, effective, quality and affordable essential medicines and vaccines for all.

The Group has a total of 22 clinics and 6 ambulances. There are full-time certified Hospital Assistants or nurses in every operating unit.

Besides, there are regular visits by the Visiting Medical Officers (VMO) cum Occupational Health Doctor (OHD), and also Health Officers from the local health departments.

Medical treatments in the clinics are provided free of charge to all employees and their dependents. The local communities are also able to access the medical treatment or ambulance services during emergencies. The children of employees are also provided vaccination and vitamins from the clinics and through local health outreach programmes.

The Group is committed to provide a safe and healthy environment to employees and take necessary preventive measures to secure the safety and health of employees at work.

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3.9 – By 2030, substantially reduce the number of deaths and illnesses from hazardous chemicals and air, water and soil pollution and

contamination.

Appropriate Personal Protective Equipment (“PPE”) are provided free of charge to the employees.

The Group ensures that the employees are competent in conducting their daily job tasks with regular training and briefings on the safety aspects and relevant Standard Operating Procedures (“SOP”).

Hazards Identification, Risk Assessment and Risk Control (“HIRARC”) are conducted and reviewed on an annual basis or as and when there are changes in work procedures or environment thus ensuring potential risks and hazards are identified and assessed with preventive measures in place.

Treated water supply is provided to all employees and their dependants living in the operating units. Treated water samples are tested to ensure the quality is in compliance to WHO drinking water standards.

River water samples were also collected and tested with parameters to ensure no hazardous agrochemicals contaminate the water sources.

The Group has stopped purchasing Paraquat and ceased its usage in both the Malaysian and Indonesian operations.

SDG 5- Gender Equality

5.1- End all forms of discrimination against all women and girls everywhere

5.2- Eliminate all forms of violence against all women and girls in the public and private spheres, including trafficking and sexual and other types of exploitation

The Group promotes diversity and inclusive culture in the workplace; Policies and practices are in place to remove discrimination against gender, marital status, race, nationality, ethnicity and age.

The Group does not tolerate any form of abuse, harassment, violence, intimidation and any other unsecured working conditions. This is stipulated in the Group’s Human Rights Policy. Any misconducts and grievances can be channelled through the grievance procedure and whistle blowing process.

Any grievance in relation to sexual abuses or gender discrimination involving women can also be channelled through the Women Committee in the respective operating units.

SDG 8 – Decent Work and Economic Growth

8.2 – Achieve higher levels of economic productivity through diversification, technological upgrading and innovation, including through a focus on high-value added and labour-intensive sectors.

In FY2019, The Group’s revenue was shared and distributed across to various stakeholders, with about 50% to its employees, 31% to capital providers and about 8% to the taxes and cess.

The Group conducted various trials and experiments using innovative technologies to enhance its work efficiencies and productivity, such as use of drone technology, in-field mechanisation and digitalisation in field management. Occupational safety is always emphasised when introducing changes to operations.

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8.8 – Protect labour rights and promote safe and secure working environments for all workers, including migrant workers, and those in precarious employment.

The Group is committed to protect and respect the human rights of its people, and strives to provide a safe workplace for all its employees. These commitments are stipulated in the Group’s Human Rights Policy and Occupational, Safety and Health Policy. Traning and briefings were held in all operating units to ensure awaraness and compliance.

SDG 13- Climate action

SDG 13.2 – Integrate climate change measures into national policies, strategies and planning

In appreciation of climate change measures, the Group computes and monitors greenhouse gas emissions (GHG) from its business activities, and strives to set realistic targets for the emission reductions and improve its reduction strategies.

Local tree species were planted in both in-situ and ex-situ rehabilitation sites, such as flood prone areas and wetlands.

The Group’s Indonesian operations continue with its tree planting initiative themed “Sejuta-Pohon” where suitable trees were planted in the conservation sites and housing areas throughout the operations. To-date, 181,698 trees were planted since 2015.

Oil palm biomass which include chipped trunks during replanting, fronds, empty fruit bunches, shredded fibre and shells are effectively utilised and recycled as organic matters back to the fields, or as a fuel source reducing the use of fossil fuels.

SDG 15- Life on land

SDG 15.5 -Take urgent and significant action to reduce the degradation of natural habitats, halt the loss of biodiversity and, by 2020, protect and prevent the extinction of threatened species

The Group implements conservation of the HCV areas and rehabilitate the fragile ecosystem found within its concession areas. Poaching is not allowed in these conservation areas and at the adjacent gazetted forest reserves. Besides, regular patrolling is implemented to monitor any poaching activities.

SDG 17- Partnership For the Goal

SDG 17.16 – Enhance the Global Partnership for Sustainable Development, complemented by multi-stakeholder partnership that mobilize and share knowledge, expertise, technology and financial resources, to support the achievement of the Sustainable Development Goals in all countries, in particular developing countries.

The Group is opened to engage in partnerships. It has hosted various visits for multi stakeholders’ groups and also organise workshops or trainings to share know-hows with the industry fraternity. The Group was also engaged in various partnerships and collaborations with the relevant stakeholders that were mutually formed on the basis of creating shared benefits for involved parties. The details can be found in the page 66.

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50%

31% Capital Providers: RM86.7 million

Reinvestment: RM31.2 million

Taxes and Cess: RM22.9 million

Employees: RM140.6 million

8%

11%

TOTAL RM281.4

MILLION

ECONOMIC VALUE CREATION AND DISTRIBUTION

Distribution of total value added (“TVA”)

PRODUCTIVITY AND INNOVATIONS


STAKEHOLDER ENGAGEMENTS

The Group continues to adopt an open and proactive approach in engagement with key stakeholders. Over the years, the Group had benefited from the various engagement programmes with multi-stakeholders. Many of those engagements had also led to constructive partnership and collaborations. The key stakeholders identified are those individuals or groups that have significant impacts or are influenced by the Group’s business activities. The proactive stakeholder

engagement includes both formal and informal approaches, through various platforms or channels at certain intervals throughout the year. During the engagement processes, information and feedbacks were collected or exchanged to better understand and improve the management on the potential risks, impacts and aspects of the material issues concerning the Group’s activities.

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The Group is committed to implement responsible and ethical business policies and practices in compliance with relevant legal requirements and regulations. This is vital to gain confidence and build trust among stakeholders. This is a shared commitment to create a corporate culture within the Group to operate the businesses in an ethical manner. Thus, employees were briefed to ensure their roles and duties were performed in accordance to the Group’s policies and core values.

The Group’s Code of Ethics and Conduct document defines the ethical standards and conduct at work, and more can be found in the following link

www.ijmplantations.com/media/corporate/ijmp_code_of_ethics_conduct.pdf

Employees, suppliers and contractors are encouraged to utilise the Whistle Blowing Mechanism, should there be any suspected violations of the Code. The Whistle Blowing Mechanism is available on the IJM website and in the internal website portal system. The management ensures no individual will be discriminated against for reporting on violations of the Code and will ensure the confidentiality of the identity of people who made the report. In the reporting year, there were no reports of misconduct or violation on laws and regulations in the Group.

The Group’s Statement of Value Added and Distribution on page 6 depicts the principle of shared destiny in the distribution of value addition or wealth creation arising from the Group’s business activities. Against the backdrop of a challenging year confronted with various uncontrollable external factors, the Group generates total value of RM281.4 million (2018: RM387.5 million). This was shared and distributed across to various stakeholders. In the reporting year, the employees through their services to the Group were recipients of RM140.6 million (50%) (2018: RM142.0 million). The government through taxes and cesses collected RM22.9 million (8%) (2018: RM53.6 million) while the providers of capital received a total of RM86.7 million (31%) (2018: RM104.1 million) which included the dividend paid out. The balance of RM31.2 million (11%) (2018: RM87.8 million) was retained for future reinvestment.

REGULATORY COMPLIANCE AND ETHICAL CONDUCTS

The table below summarises the engagement process and the topics of discussion with the various key stakeholder groups.

KEY STAKEHOLDER

ENGAGEMENT CHANNELS FREQUENCY AREA OF INTERESTS OUTCOMES

Government Authorities and Regulators, Industry Associations

Two-way dialogue through forums and workshops

Periodic 1. Latest news or updates and changes in regulations or standards

2. Relevant issues and updates on the plantation industry

3. Governance in compliance with regulations

4. Safety aspects in the workplace

1. Better understanding on the latest changes in regulations, and active participation in providing feedbacks

2. Voices from the industry to the relevant governmental bodies are heard

3. Improvement on the management of safety aspects in the workplace

Site visits and inspections

Periodic

One-to-one meetings

As and when needed, minimum once a year

Fraternity association meetings and seminars

Periodic

Constructive partnerships

Upon mutual agreements

Engagement surveys from the governmental agencies

Annually

Investors and Shareholders, Fund Managers

Active correspondences to address queries

As and when needed

1. Group performance and productivity insights

2. Updates on business strategy and impacts

3. ESG performance or analysis, updates and focused aspects

4. Updates on corporate changes and decisions made

5. Corporate governance and compliance matters

1. Establishing good relationship and affirmative standing with the investors

2. Enhancing insights on business progress and performance

Analysts briefings

Periodic

Site visits Annually or as and when is needed

Corporate website

Periodical updates or as and when is needed

Annual report Once a year

Annual general meeting

Once a year

Local Communities and Smallholders

Community outreach and development programmes

Periodic and according to programme

1. Sustainability policies and practices

2. Supply chain issues

3. Sharing of knowledge on agricultural best practices

4. Pricing mechanism and crop quality

5. National certification requirements

1. Forging enhanced understanding on the Group’s policies and sustainability practices

2. Enhancing relationship and establishing long term partnerships

3. Developing and implementing shared initiatives

Recurrent dialogues and engagements

At least once a year

Strategic partnerships

Upon signing of mutual agreements

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KEY STAKEHOLDER


6. Health topics, such as breast health awareness and contagious diseases

7. Fire related training which include no burning in land clearing

4. Uplifting the livelihood of the local communities

Customers Meetings Periodic 1. Supply chain issues

2. Sustainability commitments and progress – certifications, traceability, best management practices

3. ESG aspects and evaluation

4. Product quality and services

1. Forging enhanced understanding on the Group’s policies and commitment to sustainable palm oil production

2. Augmenting long term partnership and relationship

3. Identifying shortcomings and improvement plans

Phone calls and correspondences

Periodic

Site visits As and when needed

Customer feedback form

For all transactions of sales

Academic Agencies and NGOs

Strategic partnership

Upon mutual agreement

1. Sustainability related topics

2. Academia research and findings on the industry

3. Industry practices and technical aspects in the milling processes

4. Smallholders development and best practices training

5. Wildlife conservation and human-elephant conflict issues

6. Industry’s best practices and agricultural knowledge

1. Internship programmes to provide exposure to the college students and undergraduates

2. Strategic partnership that benefits both parties

3. Understanding the Group’s sustainability progress and updates

4. Nurturing the young generation to venture in the agricultural sector

Engagement and meetings, correspondence

Periodic

Site visits As and when needed

Surveys As and when needed

Contractors and Suppliers

Discussions and meetings

Periodic 1. Sustainability commitments and related matters including certifications, traceability, best management practices

2. Product specifications and work quality

3. Company’s policies and governance

4. Relevant laws and regulations applied

5. Cost-efficiencies and practicality of the new products or technologies

1. Raising awareness on the Group’s policies and practices

2. Augmenting relationships and establish long term business partnerships

3. Driving for innovations in the current operations and practices

Briefings and trainings


Products and /or technology trial

As and when

Assessment forms Once a year


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Employees Employee engagement surveys

Once every 2 years

1. Operational performance and productivity

2. Sustainability updates and practices

3. Welfare and remuneration

4. Workplace and living conditions

5. Safety and health issues and practices

6. Group’s directions, vision, policies and practices

7. Human resource related matters

8. Human rights topics

1. Enhancing understanding on the Group’s policies, cultures and core values

2. Improving awareness on the Group’s commitment on the sustainability practices

3. Enhancing and enriching inclusiveness and team work

4. Constructive feedbacks and comments for improvements

5. Positive engagements with employees and creating a shared destiny culture.

6. Balancing work- leisure lifestyle

7. Building a conducive working environment

Town-hall meetings


Operational and committee meetings

Periodic

Briefings and trainings

Periodic

Employees Wellness Programme

Periodic

Religious and cultural festivities, celebrations and sports events

Periodic

Annual appraisals Once a year

Visit by Head of Delegation of the European Union to Malaysia, H.E. Ambassador Madam Maria Castillo Fernandez and Austrian Ambassador, H.E. Ambassador Dr. Michael Postl to Group’s Operations to appreciate the Oil Palm Supply Chain from Seed to Oil and socio-environmental aspects of Plantation

Top management engagement with customers on sustainability

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FORGING PARTNERSHIPS, CREATING SHARED VALUE

The Group continues to sustain collaborations with partner-stakeholders. The partnerships were mutually formed on the basis on creating shared benefits. The Group believes that the joint efforts involving various expertise and parties will enable the intensification of

efforts and attention on areas where progress can be expedited. The partnerships will continue to deliver positive impacts to the relevant stakeholders and will be sustained in the coming years.

Commencement Year

No. of Years Organisation Project and Engagement Activities

1 2001 18 University Malaysia Sabah (UMS)

Tertiary students internship programme, research activities and field visits

2 2002 17 Tripartite partnership with Sabah Rugby Union (“SRU”), Eagles Rugby Club (“ERC”) and Sabah Education Department

School children and youth rugby sports development programme in Sabah

3 2006 13 Sandakan Pink Ribbon (“SPR”)

Grass-root students and public breast health awareness and outreach initiatives. Render support to the realisation of the SPR Centre in Sandakan, Sabah

4 2007 12 NGO Humana Child Aid Society Sabah (“HCASS”)

Education for guest workers’ children in Sabah

5 2010 9 Duchess of Kent Hospital in Sandakan (“DOK”)

Blood donation campaigns and health-related activities

6 2011 8 NGO Borneo Bird Club Sandakan

Avian fauna surveys and school outreach awareness program

7 2012 7 International Plant Nutrition Institute (“IPNI”)

Oil palm best management practices project “Seed to Peak” This project has ended in January 2019, due to the cessation of IPNI operations.

8 2012 6 ACGT Sdn Bhd and Genting Green Tech Sdn Bhd

Research and development trials in relation to the use of genomics-based solutions to increase productivity

9 2014 5 NGO Earthworm Foundation (formerly known as The Forest Trust)

Smallholders’ outreach Rurality Project

10 2017 2 Sabah Forestry Department Memorandum of Understanding (MOU) on the conservation works at IJMP’s Secret Garden Project

11 2017 2 Bornean Sun Bear Conservation Centre (BSBCC)

Environmental awareness outreach programme in schools

12 2018 1 Montfort Youth Training Centre (MYTC) and the Malaysian Estate Owners Association (MEOA)

Rendering leadership and related technical support in rural youth skill development programme focused on plantation conductorship. Course starting in July 2019


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MARKETPLACE COLLABORATIONS

PRIMING AND DRIVING INNOVATIONS

The Group is an active member of the Malaysian Estate Owners’ Association (MEOA). At present, the CEO and MD is a Council and Working Committee Member in MEOA following his retirement as its President. The CEO and MD is also a board member of Malaysian Palm Oil Board (MPOB). The Group has also participated actively in the plantation industry related presentations and dialogues at various national and international platforms including those organised by the Ministry of Primary Industries, MPOB and MPOC. Topics discussed ranged from sustainability aspects, industry competitiveness and prevailing issues relating to the plantation industry. The details on the key presentations in the reporting year is summarised in the Table below. Employees were also actively involved with the local Incorporated Society of Planters (ISP) branch.

The Group strives to make contribution while learning from others in leveraging its knowledge and expertise with other industry fraternity. Visits and workshops were organised for the networking on issues pertaining to the industry. In addition, the Group was actively engaging with multitude of relevant stakeholder on matters pertaining to sustainability and industrial concerns. The details are discussed under the partnership engagements in page 66.

The Group’s commitment in driving innovations is driven by the objective to uplift operational efficiencies and improve overall productivity, while living out the culture of continuous improvement. Implementing strategies for effective plantation management and positive transformation in the working procedures and mechanisms are imperative especially against the backdrop of challenging economic environment, acute labour shortage, and increasing customer expectations.

The Group’s R&D team continues to pursue with breeding and progeny testing to produce high quality planting materials. Besides, the Group has also invested and evaluated various technologies and innovative mechanisms to improve the operational efficiencies and sustainability performances in its operations. The following were the key innovations that have been implemented in the reporting year.

GROUP’S KEY PRESENTATION ENGAGEMENTS

1 Title: “Stakeholders Engagement – Key to Driving Sustainability and Innovations in the Palm Oil Sector”

Intensifying Sustainable Palm Oil Practices in Challenging Times & Enhancing Sustainable Practicesorganised by CMT Events Kuala Lumpur. 30 – 31 July 2018 at Bali, Indonesia.

2 Title: “Tribute to Planters: Planting Memories”

Presentation at Malaysian Estate Owners’ Association 74th Annual Dinner organised by the Malaysian Estate Owners’ Association. 13 April 2019 at Kuala Lumpur.

3 Title: “Fun and Engaging: Does It Sound Like the Palm Oil Industry?”

CEO Day @ UPM: Love MY Palm Oil organised by Malaysian Palm Oil Council (MPOC)18 April 2019 at Universiti Putra Malaysia, Selangor.

4 Title: “The Malaysian Palm Oil Industry: An Overview, Current Challenges and Way Forward – Our Shared Destiny”.

Dialog Penanam Sawit bersama YB Teresa Kok, Menteri Industri Utama organised by Malaysian Palm Oil Board (MPOB). 30 April 2019 at Sandakan, Sabah.

67

Plantation Digitalisation

Food Safety (3-MCPDE and GE)

The Group continues using GPS enabled hand-held devices in tracking plantation supervision. Under the conventional method, information on the crops production and the productivity of the harvesters were manually recorded. All estate operations in Malaysia, excluding those areas undergoing replanting have implemented the digital supervision system. Efficiencies in estate supervision have improved after using this digital data logger. The Group is also exploring additional plantation related applications such as incorporation of agronomic data into the estate blocks.

3-monochloropropanediol (“3-MCPD”) and Glycidyl Fatty Acid Esters (“GE”) are contaminants formed during food processing and refining of edible oils and fats at high temperatures. Based on the studies conducted by Malaysian Palm Oil Board (“MPOB”), one of the possible factors that contributes to the formation of 3-MCPD esters is the chloride level in crude palm oil. In the previous reporting year, the Group had entered into a Memorandum of Agreement (“MoA”) with MPOB for a pilot trial towards mitigating the 3-MCPD esters through chloride reduction in the Group’s Desa Talisai Palm Oil Mill in Sandakan. The plant was successfully commissioned and it is now in the stage of continuous trials with fine-tuning to reduce the chloride contents in the CPO.

Plantation Mechanisation and Process Enhancement

Aerial Technology for Plantation

The Group had carried out trials on various combinations of machineries for enhancing in-field mechanisation and customisation of options suited against site-specificness, time-motion, machinery breakdowns and cost-benefits. Grabbers coupled with bin system, motorised wheel barrows, mini-tractors and net and crane system are all widely used in the in-field crop evacuation. The trials on using the light-weight graphite against the conventional aluminium-based harvesting poles has demonstrated higher durability of the former and its ability to increase the productivity of the harvesters. The graphite harvesting poles are now widely used by the Group’s harvesters in Malaysian operations. Change management including engagement with harvesters are ongoing.

The mill operations have also incorporated upgrading works and innovative modifications in the processes to enhance efficiency and to minimise occupational safety hazards to the mill workers. The Group will continue to conduct trials and explore cost effective and innovative technologies to enhance operational productivity and efficiency and reduce the dependency on labour.

Unmanned aerial vehicle (“UAV”), or commonly known as drone, coupled with Global Positioning System (“GPS”) were widely used in the oil palm tree census and surveys. Surveys conducted using drones on the land boundaries and potential palm nutritional conditions have provided useful and accurate information to facilitate more effective estate management and resource planning. In the reporting year, the drone incorporating the Geographic Information System (“GIS”) was used to conduct HCV surveys and monitoring. The drone was able to assist the sustainability team in detecting any encroachment activities in the HCV areas and boundaries along the forest reserves within the Group’s concession areas. The drone was also useful in fire surveillance when there were fire hotspots reported.


CPO washing system in Desa Talisai palm oil mill

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ISCC is a multi-stakeholder organisation that provides a globally applicable certification system for the sustainability of biomass and bioenergy products. ISCC aimed to provide a holistic sustainability solution for fully traceable and deforestation free supply chains of agricultural, forestry, waste and residue raw materials.

All the Group’s palm oil mills and their respective internal supplying estates in the Malaysian operations were certified under this voluntary scheme. The total ISCC EU certified palm oil dispatched from the mills

were 69,063 MT in the reporting year or 56% of total CPO production in the Malaysian operations. Following the delegated regulation supplementing Directive 2018/2001 of the European Union Renewable Energy Directive II, the criteria to certify palm oil as low Indirect Land-Use Change (ILUC)-risk biofuels and the sustainable demand for palm oil as biofuel in European nations has changed and uncertainties loomed. The Group will continue to pursue with the re-certification under the ISCC-EU certification scheme, as long as there is demand and cost-benefit advantage from the sale of ISCC-EU certified oils.

International Sustainability and Carbon Certification (“ISCC”)

SUSTAINABILITY CERTIFICATION AND QUALITY ASSURANCE

The Group is committed to responsible agricultural production. The production of sustainable palm products are governed by various national and international certification schemes such as the International Sustainability and Carbon Certification (ISCC), Malaysian Sustainable Palm Oil (MSPO) and Indonesian Sustainable Palm Oil (ISPO). The approach is to focus and prioritise standards that are consistent with the Group’s overall commitments to improve market access by providing assurance to customers.

MSPO is a mandatory national sustainability certification scheme for the oil palm industry in Malaysia, covering the whole supply chain from oil palm plantations to downstream facilities. All oil palm industry players in Malaysia are mandated to be certified under the MSPO certification scheme by the end of 2019. Since 2015, Desa Talisai Palm Oil Mill and three (3) supplying estates have been certified under the MSPO scheme during the MSPO trial implementation period. The Group is pleased to announce that all of its mills and estates in Malaysian operations have successfully obtained the MSPO Certificates since November 2018.

The new addition to the MSPO scheme is the MSPO Supply Chain Certification Standard (“MSPO SCCS”), which was launched on the 1 October 2018. The standard which is applicable to the oil palm downstream industry covers management requirements and traceability of the production throughout the supply chain from the raw materials to processing and manufacturing of palm and palm oil-based products. The mandatory timeline is by 1 January 2020. Two of the Group’s processing units, Desa Talisai Palm Oil Mill and Kernel Crushing Plant at Mowtas Valley have been successfully audited under this scheme in March 2019.

ISPO is a national sustainability certification scheme established in 2011 for the oil palm industry in Indonesia. It is also a mandatory scheme that all producers in Indonesia are required to comply with the standards and requirements. The Group had embarked on the ISPO auditing process since 2014. In this reporting year, three (3) of the estates under PT Prima Alumga were also successfully certified under this scheme. All of the operations in Indonesia have completed the initial main assessment audit, with the exception of two estates where certain documentation is pending issuance by the authorities.

Malaysian Sustainable Palm Oil Certification (“MSPO”)

Indonesian Sustainable Palm Oil Certification (“ISPO”)

ISPO audit at Manubar Estate in Kalimantan

69

The Group’s processing operations and palm products are certified under quality management systems such as Good Manufacturing Practice (GMP) and Standard and Industrial Research Institute of Malaysia (SIRIM) quality standards. The Group adheres to stringent production requirements and delivering best quality products in compliance to the customers’ requirements and standards. The Group values comments or feedbacks from customers and take prompt responses and follow-up actions. In the reporting year, there were no significant product quality issues reported.

Quality and Process Assurance

Stringent selection criteria for IJM seed production in QTRC

In line with the growing customers’ demand on enhanced accountability and transparency, the Group tracked and monitored the origins of palm products from the estates and processing plants. The Group only receives crops from legal and known sources, and all the palm products traded were from its own processing plants. In the reporting year, 71% of the fresh fruit bunches (“FFB”) processed in the Group’s mills were from its own estates and the remaining 29% were from independent outgrowers, independent and schemed smallholders, plasma and “Kemitraan” schemes and small amounts from collecting centre.

99.7% of the FFB processed in Malaysian operations can be traced back to their sites of origin. The remaining 0.3% (approximately 1,500 MT) was from the external FFB collecting centre in Sandakan region, where the crops were collected from the independent smallholders and local villagers by collection operators. The crops from the collecting centre were supplied to the Group’s Minat Teguh palm oil mill. All palm oil mills in the Malaysian operations, except Minat Teguh palm oil mill, are able to trace back all the external FFB to its source of origins. Going forward, the Group will work closely with the third party collecting centre operators to increase the level of traceability and achieving 100% traceability back to the plantations in Malaysia in the next reporting year.

100% of the FFB processed in the Group’s palm oil mills in the Indonesian operations were traceable back to the plantations. All CPO and palm kernel products were produced from the Group’s processing plants with no CPO and kernels sourced externally. The assurance for the level of traceability was based on the information derived and collected from the FFB sources, including the company name, estate coordinates, availability of legal documents, size of estate and the amount of FFB supplied to the Group’s processing plants.

TRACEABILITY AND SUPPLY CHAIN MANAGEMENT

Internal Sources

Independent Outgrowers

Independent and Schemed Smallholders

Plasma and Kemitraan Schemes

Collecting Centre

71.0%0.2%

2.2%

6.7%

19.9%

Checking the FFB vehicle at Desa Talisai palm oil mill


CROP TRACEABILITY

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The Group continued with the mapping of its crop suppliers in both Malaysian and Indonesian operations (about 34% was completed). During the

mapping activities, basic information such as the GPS coordinates and the size of plantation were collected.

About 18,500 ha of areas belonging to outgrowers’ and 1,782 ha of active independent smallholders supply crops to the Group’s mills in the Malaysian operations. Whereas in the Indonesian operations, about 7,068 ha

of land were developed under the Group’s outgrowers scheme. The details are shown in the following table on the areas of the Group’s external crop suppliers (except for those from collecting centre)

In the reporting year, the Group provided related training and technical knowledge on plantation management to the independent smallholders and outgrowers groups including those under the Group’s plasma and kemitraan schemes. Besides the planting materials at discounted price and free agronomy consultation, the Group also assisted the crop suppliers, who are also the local communities living

near the areas where we operate, with the provision of machineries and building materials in improving road accessibility and upgrading their places of worship in the villages. In addition, the Group also funded the salaries of the teachers in the local villages such as Desa Kaliorang, Desa Susuk and Desa Kerayaan which were also supplying crops to us and live adjacent to the Group’s Indonesian operations.

Mapping of External Crop Suppliers

Planted Areas of Third-Party Crop’s Suppliers

Malaysian Operations Location/ Area of Crop’s SuppliersTraceable to

Plantation

Minat Teguh Palm Oil Mill Sandakan –Garinono, Muanad, Sekong, Lungmanis

96%

Desa Talisai Palm Oil Mill Beluran – Muanad, Ulu Muanad

Telupid – Ansuan, Kiabau, Baba, Buis, Bauto

100%

Sabang Palm Oil Mill 1 Sugut-Paitan – Sungai-Sungai, Binukalang, Pantai Boring, Kaliaga, Linayukan

100%

Sabang Palm Oill Mill 2 Sugut-Paitan – Sungai-Sungai, Pantai Boring 100%

Note: Limited informations are available from the external crop collecting centre supplying crop to Minat Teguh palm oil mill, thus gap to achieve full traceability in FY2019.

Indonesian Operations Location/ Area of Crop’s SuppliersTraceable to

Plantation

IPS Palm Oil Mill Kutai Timur – Susuk Dalam, Susuk Luar, Manubar, Marukangan, Mengenai, Kaliorang, Bual-Bual, Bengalon,Kolek

100%

Sinergi Palm Oil Mill Kutai Timur – Susuk Dalam, Susuk Luar, Manubar, Marukangan

100%

Category of Crop’s SupplierMalaysian Operations

(Hectares)Indonesian Operations

(Hectares)

Independent Outgrowers 18,500 11,085

Independent Smallholders 1,782 355

Schemed Smallholders

(FELCRA, Plasma and Kemitraan schemes)

1,028 7,068

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The purchases of products or services by the Group were conducted through established procurement procedures. Suppliers and contractors were reviewed prior to any awards of contracts or business deals. Suppliers and contractors, including all the crop suppliers were required to understand and adopt the Group’s sustainability policies and practices. The sustainability commitments were enforced through agreements and contracts, and there were briefings and stakeholder engagement meetings organised at least once annually to brief on the Group’s sustainability commitments and discuss any gaps in adopting the commitments. In addition, the contractors and crop suppliers were required to sign a self-declaration of their commitments to comply with the Group’s sustainability policies.

In the reporting year, a set of sustainability questionnaires was formulated and distributed to the crop suppliers in Malaysian operations for self-assessment on the gaps with the Group’s sustainability practices and commitments. This self-assessment activity was aimed to assess the level of compliance of the Group’s suppliers and contractors in their social-environmental practices as well as legal requirements. The scope of self-assessment includes the following:-

• Availability of legal documents such as MPOBpermit, land grant;

• Safety and health topics, such as safe chemicalhandling, provision of free personal protective equipment, any usage of chemicals under WHO Class Ia and Ib;

• Social practices including the compliance toMinimum Wage Act, respect of human and workers’ rights, provisions of basic amenities and housing; Environmental practices including the no deforestation on high conservation value and high carbon stock areas, zero burning on land clearing activities;

• Progress on the implementation of MSPOcertification scheme.

In the reporting year, about 20% of the crop suppliers in the Malaysian operations were assessed during the trial period and more will be under-going the assessment in the upcoming reporting year. The Group will closely monitor and engage with the suppliers and priorities will be given to those who are meeting the Group’s sustainability criteria. The timeline of completing the self- assessment and evaluation on the Group’s suppliers and contractors in the Malaysian operations is shown in the following table.

All operating units in the Malaysian operations were certified under the ISCC EU certification scheme and the movement of the sustainable products were monitored under the ISCC’s mass balance supply chain traceability system and audited during the annual ISCC EU recertification audit. In

addition, the Group’s Desa Talisai palm oil mill and kernel crushing plant in the Malaysian operations were successfully audited under the MSPO supply chain certification scheme that was launched in October 2018 to trace the palm products in the supply chain.

Evaluation of Suppliers’ Sustainability Practices

Supply Chain Certification


One of the smallholders under the Rurality Project filling up the self-assessment form with the assistance from the Rurality Officer

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Phase Activities Status/Timeline

1. Primary assessment on crop suppliers

• àIdentify active crop suppliers

• àObtain basic information

Completed

Formulate assessment/questionnaire & testing with the smallholder groups under the Rurality project

• àDistribution of self-assessment forms to the targeted independent smallholders’ group

• àReview of the questionnaires

• àConduct gap analysis on the collected questionnaires

Completed

2. Secondary Assessment • àDistribution of self-assessment forms to targeted key crop suppliers

• àConduct and review gap analysis on the collated questionnaires

FY2020

On-site verifications • Identify high sustainability risk crop suppliers

• àOrganise on-site visits or audits to the high-risk groups

• àPropose mitigation measures to reduce potential risks

• àProvide relevant training, if necessary

FY2020-FY2021

3. Extend the self-assessment to other contractors and suppliers

• àDistribution of self-assessment questionnaire to other contractors and suppliers.

FY 2021 and onwards

Delivery of FFB to Desa Talisai Palm Oil Mill

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RESPONSIBLE PLANTING PROCEDURES

ENVIRONMENT AND BIODIVERSITY PROTECTION

The Group is committed to No Deforestation, No Peat and No Exploitation in all of its operations and the commitments were detailed in the various respective policies. In line with the Group’s commitment in responsible palm oil production, prior to any new developments, the Group shall ensure that

• NodeforestationtakesplaceinanyHighConservationValues (“HCV”) and High Carbon Stock (“HCS”) areas.

• Nonewdevelopment occurs onpeat regardless of any depth.

• Free,Prior,InformedConsent(“FPIC”)procedurewasconducted at the newly acquired areas.

The Group strives to commit new development contractors, crop suppliers and relevant stakeholders within the supply chain to adhere to the above commitments.

In order to adhere to the above commitments, assessments such as soil suitability and topographic surveys, Social Environmental Impact Assessments (“SEIA”) and Analisis Mengenai Dampak Lingkungan (“AMDAL”), HCV and HCS integrated assessments were conducted as part of the new planting procedures. For quality assurance of the assessments, only assessors accredited by the HCV Resource Network’s Assessor Licensing Scheme (“ALS”) were appointed to conduct the HCV-HCS assessments.

Water catchment in Alumga Estate


CARE FOR ENVIRONMENT

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The Group established and released its new Environment and Biodiversity Policy which emphasise the commitments in protecting biodiversity and minimising the environmental footprints, through the following:

• Complyingwith localandnational lawsand regulations.

• Adopting good agricultural andprocessing practices.

• NonewlandclearinginHCS-HCVareasand within national gazetted protected areas.

• Nonewlandclearingonpeatregardlessof the depth. Adopting best management practices for existing plantations on peat.

• Adoptingzeroburningpolicyinallnewplanting and replanting developments.

• Monitoring fire risks and conductingfire surveillance in the operations and surrounding areas.

• Protectingandconserving flora, fauna,natural resources, HCS and HCV areas.

• Continuing improvement in operationalpractices and promoting environmental conservation awareness.

MANAGEMENT OF HIGH CONSERVATION VALUE (HCV) AREAS

The Group is committed to protect the HCV areas and its biodiversity found within the concession areas. In total, the Group sets aside 4,308 ha (FY2018: 4,192 ha) of High Conservation Value (“HCV”) areas for conservation and has an adaptive management approach in managing these HCV areas including constantly reviewing the environmental management plans and enhancing its capacity to monitor these areas. On-going HCV-HCS re-assessment is carried out by ALS licensed assessors for the Group’s operations in Indonesia. The Group targeted to complete the re-survey report in the next reporting year.

In addition, the Group also recognised the importance of adopting the landscape approach in managing the HCV areas and had worked closely with the neighbouring stakeholders in mitigating wildlife poaching and encroachment into the HCV areas. The Group’s conservation sites, such as the Hundred-Acre Wood in the Malaysian and Indonesian operations, and Sugut’s Secret Garden, are important stepping stones in connecting the oil palm landscape with adjacent forest reserves. The Group actively engaged with related stakeholders including the smallholders and villagers in protecting the wildlife that passing through their oil palm landscapes. The Group also supported and hosted the meetings of its crop suppliers affected by the human-elephant conflicts, which occurred in the Ulu Muanad areas in Sabah.

HCV-HCS re-assessment in Antutan Estate

(Top) Riparian reserves in Meliau Estate; (Bottom) Forest buffer zone in Minat Teguh Estate

Apart from designated conservation areas, forest buffer zones along the boundary of government gazetted forest reserves and riparian reserves along the natural waterways within the concession areas were protected and left-aside from any new or replanting activities. The width of buffer zones was in accordance to the regulations and conditions set under the Sabah Water Resources Enactment 1998 in Sabah’s operations and Peraturan Pemerintah No. 38, Tahun 2011 untuk Sungai for Indonesian operations. The Group had established its Standard Operating Procedures (“SOP”) for the management of riparian reserves, which provide the guidelines and do’s and don’ts for the management of the riparian reserves, such as no chemical application and only allows manual weeding or slashing on the palm circles and for the harvester’s path to facilitate the access to harvesting activities.

The Group is also committed to no development in the gazetted forest reserves and is guided by the local and national laws and regulations in protecting the forest reserves, such as the Forest Enactment 1968, Wildlife Conservation Enactment 1997 and Environmental Protection Enactment 2002 for the management of buffer zones.

Protection of Forest and Riparian Buffer Zones

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The Group is committed to protect and conserve` flora and fauna species including endangered, rare and threatened (“ERT”) species classified under the International Union for Conservation of Nature (“IUCN”), found or encountered within the Group’s concession areas and adjacent gazette forest reserves.

The Group prohibited capturing, hunting and poaching of flora and fauna species within the Group’s operations and adjacent forest reserve. In order to minimise human-wildlife conflict, forest buffer zones were demarcated along the boundaries with government gazetted forest reserves, and warning signages were erected at strategic places indicating prohibitions, such as “No Chopping Trees, No Fire, No Setting Traps, No Chemical Applications and No

Hunting”. One of the Group’s estates, Minat Teguh (“MTG”) estate had demarcated and set aside strips of buffer zones, along the 6 km boundary with the Kabili-Sepilok Forest Reserve to serve as a wildlife transition zone between the gazetted forest reserve and the estate.

The awareness of no hunting and biodiversity protection were promoted through internal training and stakeholder engagement meetings. Employees and local communities were briefed on the applicable laws and regulations on wildlife, such as the Sabah State’s Wildlife Conservation Enactment 1997 and Indonesian Government Regulation of the Republic of Indonesia No. 7/1999, and to make aware the penalty or punishment for violations of these regulations.

Biodiversity Protection

In the reporting year, patrolling teams were established in both the Malaysian and Indonesian operations, to conduct periodic patrols along the forest reserve boundaries and HCV areas, and report any sightings of the wildlife, poaching and encroachment activities to the sustainability teams. Any signs of poaching activities spotted will be duly informed to the relevant Authorities. Reiterating the Group’s commitment on no hunting in its operations, the Group had supported the Sabah Wildlife Department (“SWD”) in the Malaysian operations, with assurance that no permits on hunting will be granted in the Group’s concession areas.

The Group continued to enhance its human capacity and knowledge in handling the wildlife issues, and

another session of Honorary Wildlife Warden training with the assistance from SWD was successfully organised in the Sandakan region. To-date, eighteen (18) employees in Malaysian operations were certified as ‘Honorary Wildlife Wardens’. The independent smallholders under the Group’s Rurality project and the local communities were also trained under this ‘Honorary Wildlife Warden’ programme, as the Group believes concerted efforts involving all relevant parties were vital in protecting the biodiversity and its habitat. The table below provides the summary on the species sighted and identified in the Group’s operations, according to the list of ERT species under IUCN.

Monitoring of Biodiversity

Summary of IUCN List of ERT Species Sighted in the Group’s Operations

Critically Endangered

Endangered Vulnerable Near Threatened

Mammals 2 5 8 4

Reptiles - - 1 -

Birds - 1 8 18

Plants 16 9 12 2


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A

B C

D E F

Wildlife pictures taken during the patrolling activities-

A. Proboscis Monkey

B. Borneon Crested Fireback

C. Wild Boars

D. Orang Utan

E. Droppings of Civet

F. Long-tailed Macaque

Honorary Wildlife Wardens Training Programme

77

In addition to the existing Hundred Acre Woods in Malaysian and Indonesian operations, there is a site parked at Sugut named Secret Garden. Secret Garden is located in Sg. Sabang (“SSB”) estate in the Sugut Region in Sabah which was approved for agriculture, was set aside as HCV areas where it provided vital habitat for numbers of ERT species. The Group signed a Memorandum of Understanding (“MoU”) with the Sabah Forestry Department (“SFD”) in 2017, to establish a baseline information and develop management plan to carry out flora and fauna surveys. From the surveys, it was found that Secret Garden hosted the following species:

• Sixty-four(64)plantspeciesareendemictoBorneo

• Seven (7) plant species are endemic toSabah

• Six (6) insect species are endemic toBorneo

• Nine(9)mammalspecieswerecapturedbycamera trapping and recce transect method (Pig-tailed Macaque, Lesser Mousedeer, Plantain Squirrel, Orang Utan, Malay Civet, Long-tailed Macaque and Bearded Pig)

• Sixty-six (66) bird species were recordedduring the survey with three (3) of the species being endemic to Borneo (Black and Crimson Pitta, Bornean Black Magpie and Dusky Munia)

Based on the sightings of the species and report from SFD, it was suggested that the Secret Garden served as an important stepping stone in connecting the oil palm landscape with the adjacent larger forest landscape. A biodiversity management plan had been established for the management of the Secret Garden and a flora enhancement project will be initiated in the upcoming reporting year.

Awareness on the Group’s no deforestation policy was repeatedly briefed to the Group’s crop suppliers and local communities through annual stakeholder engagement meetings and periodic meet-up sessions. In the meantime, more frequent patrols coupled with the usage of drones in the HCV areas were carried

out. In spite of all the ongoing and enhanced efforts, safeguarding these areas from conversion by third parties remains a challenge. In the reporting year, five (5) encroachment cases with police reports were lodged and on-going engagement process with the involved parties.

Sugut’s Secret Garden

Monitoring of Deforestation

A

B

Pictures taken during the surveys by Sabah Forestry Department

A. Pig-tailed Macaque

B. Lesser Mousedeer

C. Pitcher plant


C

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The Group acknowledges the importance of the HCS area and has taken a pragmatic approach in moving towards better management and protection of HCS areas in any future development. The Group is committed to no new development on peatland regardless of depth. The Group also strives to commit its crop suppliers towards adhering to the “No Peat” commitment. About 10% of the total planted hectares of the Group’s operations were planted earlier on peatland, and there were no significant changes of total planted areas on peat in the past 3 years.

The Group adopted industry best management practices on the existing cultivation on peatlands, which include the following:-

• Monitoring the height of the water table in thefield through the installation of monitoring poles or planks that are slotted into the waterways at desired levels;

• Preventing irreversible water loss with effectivedrainage systems and installation of weirs in the collection drains;

• Monitoring water levels with water gates at thedischarge ends of the main drains;

• Monitoring erosion rates at specific locations onpeatlands;

• Maintaining good ground cover and applying noblanket spraying to reduce wildfire risks.

Peatland Protection

Total Planted Area on Peat

Monitoring of water level and soil erosion rates

Region

FY2017 FY2018 FY2019

Planted on Peat (Ha)

Total Planted

(Ha)


Total Planted

(Ha)


Total Planted

(Ha)

Malaysia 1,304 25,121 1,304 25,150 1,304 25,057

Indonesia 5,004 35,450 5,004 35,831 5,004 35,852

TOTAL 6,308 60,571 6,308 60,981 6,308 60,909

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Flood prone areas and riparian reserves that were previously planted with oil palms were rehabilitated and restored with suitable local tree species. The rehabilitation works aimed to restore its natural vegetative cover with cost-effective techniques. The high mortality rate of the planted saplings and challenging weather conditions were the biggest challenges in the rehabilitation works. In Malaysian operations, Bongkul trees were planted in the flood prone areas in Sungai Sabang and Rakanan Jaya South estates. Bongkul tree was selected for planting at flood prone areas due to its characteristic as flood-tolerant tree species. Over the years, these trees have grown vigorously and developed into an ‘oasis’ within the oil palm plantations with various bird species and wildlife such as pig-tailed and long-tailed macaque found in these areas.

In the Indonesian operations, about 181,698 saplings of various tree species including fruit trees and local tree species were planted at various sites within the Group’s operations under the “Sejuta Pohon” initiative since 2015. Various tree species consist of Ulin, Trembesi, Gaharu, Nangka, Ketapang and many more were planted at the rehabilitation sites and around the catchment ponds. The Group targeted to plant more trees in the future to achieve its target of planting one million trees and continues to monitor the survival rates of the planted trees.

Rehabilitation and Conservation Sejuta Pohon

A

B

Rehabilitation of flood prone area with Bongkul tree planting in Rakanan Jaya South Estate before (A) and after 2 years (B).

Tree planting at Pertama Estate in Kalimantan


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FIRE MANAGEMENT AND MONITORING

The Group adhered to a strict zero burning policy, where no fire was involved in land preparations during replanting and new development activities. The zero burning policy is applicable to all crop suppliers, contractors and other relevant stakeholders in the Group’s supply chain. Suppliers and contractors were constantly informed on the Group’s zero burning policy during stakeholder engagement meetings while employees were briefed during morning muster and internal training sessions.

The Group monitors and detects any fire hotspots within its concession areas and also surrounding areas within a 500 meter radius outside the concession boundaries using the data extracted from the Fire information for Resource Management System (“FIRMS”), a National Aeronautics and Space Administration (“NASA”) funded application. FIRMS provides near real-time active fire data within 3 hours of satellite overpass from NASA’s Moderate Resolution Imaging Spectroradiometer (“MODIS”) and NASA’s Visible Infrared Imaging Radiometer Suite (“VIIRS”). Any hotspot detected will trigger an alert process and information such as coordinates and time occurrence of fire were sent to the respective operating units and sustainability teams for ground verification.

In the reporting year, Indonesia observed a higher number of fire hotspots. Out of the fifty-five (55) fire hotspots detected from satellite images, on-the-ground verification confirmed that only twenty-four (24) cases were actual fires. From these, eleven (11) fires were recorded in unplanted areas, and

thirteen (13) fire cases occurred outside of the estate boundaries. There were three (3) fire cases that were observed occurring outside of the estate boundaries in the Malaysian operations. The details were shown in the chart and table on the number of fire incidences reported below. Most of the fire cases occurred in the period of August-September, which was the dry season in Indonesia and also coincided with peak paddy planting.

Upon investigation, the fire incidences were caused by land clearing activities using fire by local communities, for farming activities, such as paddy planting and vegetable farming. The Group strived hard to inculcate the awareness on zero burning practices among the local communities, with frequent engagements and trainings. The Group also understands that this is an incessant initiative and additional efforts are needed to convince the local villagers to conduct land preparations without slash and burn activities.

The Group monitored and conducted regular patrolling at the high fire risk areas using information from the Fire Risk Rating Indicators and surveillance from the ground watchtowers. To-date, the Group has eighteen (18) watchtowers and three (3) monitoring stations in the Indonesian operations. Emergency response teams were established in every operating unit and the teams were trained regularly to ensure preparedness in handling fire incidents. Fire drills and firefighting related trainings were carried out for the employees and their dependents living in the operating units.

0

5

10

15

20

25

30

35

40

45

50

Apr ‘18 May ‘18 Jun ‘18 Jul ‘18 Aug ‘18 Sep ‘18 Oct ‘18 Nov ‘18 Dec ‘18 Jan ‘19 Feb ‘19 Mar ‘19

Number of Fire Incidences

81

Ha FY2017 FY2018 FY2019

Malaysian Operations

Planted 1 0 0

Unplanted 0 1 0

Neighbouring area (≤ 500 m) No fire reported No fire reported 3

Indonesian Operations

Planted 1 0 0

Unplanted 2 1 11

Neighbouring area (≤ 500 m) No fire reported No fire reported 13

Number of Fire Incidences Reported

On-site verification of fire hotspots detected by satellite

Fire fighting simulation training at Binai Estate

Fire hazard risk rating at Binai Estate in Indonesian Operations


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WATER STEWARDSHIP

Water management is an essential basic business conduct in oil palm operations. With the constant changes in the weather patterns, the Group has adopted a wide-ranging environmental management strategy to manage the available water resources. The Group’s strategies in water management leads towards water use optimisation and reduction in water wastage. The Group strives to ensure water resources are utilised in the most optimum way with minimal impacts to the environment.

The Group’s water management strategies are as follows:

• Optimising thewater usage per tonne of FFBprocessed to reduce generation of Palm Oil Mill Effluent (“POME”);

• Recycling the treatedPOME for land irrigationand application in the fields;

• Increasing capacity of water storage andreservoirs;

• Minimising water wastage by using dripirrigation system for watering seedlings in the oil palm nurseries;

• Continuing to explore innovative and cost-effective technologies in optimising water usage;

• Protecting the riparian reserves and surfacewater quality.

The Group’s water sources in the operations were mainly from rain-fed ponds or reservoirs. The water demand for main Head Office in town is met by water supplied by the local utility company. As a continuous effort in improving the accuracy of water usage reporting, additional recording flow meters were

installed to track the amount of water consumed in the operating units. About 556,943 m3 of water was used for domestic purposes which includes for drinking and washing. The Group strives to improve the accuracy in water accounting despite the challenges to measure water usage from the rain-fed system.

Water Source and Consumption

Sources of Group’s Water Usage

Sources Water Consumption (M3) Water Discharge Treatment

Surface Water (Rain-fed water catchment)

1. Domestic use 556,943

No treated effluent discharged into the

waterways

1. Water treatment plant

2. Wastewater treatment plant- tertiary treatment with membrane technology, ponding system

2. Processed water

1,443,015

Third Party 3,393 Water treatment plant

Note: The figure on water consumption does not include the irrigation water at nurseries

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In the reporting year, the Group has included the water usage from the new palm oil mill in its Indonesian operations and recorded 1.38 m3 of average water usage per tonne of fresh fruit bunches (“FFB”) processed in both the Malaysian and Indonesian operations. The set target was water usage of 1.50 m3 per tonne of FFB processed. The Group has achieved this target consistently for the last five (5) years. Collectively, the Group had consumed 1.44 (FY2018: 1.27) million m3 of water for mill processing. This is the main water user component in the Group.

Apart from monitoring water usage, the Group also conducts periodic river water sampling to ensure the health of the river is not adversely affected by the Group’s business activities. The river water analysis results were benchmarked against the baseline data and river classification such as the Water Quality Index (“WQI”) in the Malaysian operations.

In addition, the water quality of the treated water for domestic consumption were monitored and tested by the external accredited laboratory to ensure the treated water quality is safe for human consumption and in compliance with the World Health Organisation (“WHO”) Drinking Water Standard Guidelines.

Processed Water Consumption Rate

Environmental Management

Water Quality Monitoring

Group’s Water Usage Per Tonne of FFB Processed (m3)

EFFLUENT AND WASTE MANAGEMENT

In Malaysian operations, the Department of Environment (“DOE”) had initiated the Guided Self Regulations (“GSR”) strategy that empowers the industry in managing its environmental compliance and performances. GSR comprises seven (7) Environmental Mainstreaming Tools, which are Policy, Budget, Monitoring Committee, Facility, Competency, Reporting and Communication, and Transparency. To date, all the Group’s processing plants had adopted and implemented the above tools through the formation of an Environmental Performance Monitoring Committee (“EPMC”), and reporting the environmental performances through the Online Environmental Reporting (“OER”) and Electronic Scheduled Waste Information Systems (“eSWIS”) and Continuous Emission Monitoring System (“CEMS”).

In addition, the Group also ensured that the people in processing plants were competent in handling

the respective environmental management matters, such as Certified Environmental Professional in the Treatment of Palm Oil Mill Effluent (Pond Processes) (“CePPOME”) and Certified Environmental Professional in Scheduled Waste Management (“CePSWAM”).

In Indonesian operations, one of the Group’s palm oil mills, IPS palm oil mill had received the green rating award for two (2) consecutive years under the Government’s Programme for Pollution Control, Evaluation and Rating (“PROPER”). The green rating award signified the IPS mill had performed environmental management beyond the regulatory compliance requirement. PROPER is a national-level environmental reporting initiative that encourages the industry to practice accountability and transparency in environmental reporting and improvement in pollution control.

River water quality monitoring


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Effluent and waste generated from the Group’s operations were managed in accordance to the guidelines and regulatory requirements. In the reporting year, total palm oil mill effluent (“POME”) generated from the Group’s mill operations was 777,577 m3. The POME was then treated by the ponding system and further treated with tertiary treatment system to achieve permissible quality limits. The treated POME was reused to irrigate the field through approved land irrigation and land application systems. Discharge water samples were collected at various designated sampling stations for testing by a third-party laboratory.

The Biochemical Oxygen Demand (“BOD”) and Chemical Oxygen Demand (“COD”) were determined on a monthly basis by accredited laboratories where the analysis results were then submitted to the local environmental authorities on a quarterly basis. In the reporting year, the POME discharge quality parameters in all the Group’s mills were within the stipulated regulatory limits. The Group continued to ensure that all BOD levels were in compliance with the limits set by local and national regulations. The table below depicts the BOD values and the respective stipulated limits in both the Malaysian and Indonesian operations. Although the COD values were not one of the regulated limits under the local regulations, the Group believed the COD values were one of the important indicators in monitoring the efficiencies of the effluent treatment. Thus, the Group strived to maintain its COD levels to be lower than 1,500 mg/l and targeted to achieve in the next reporting year.

Effluent Management

Land irrigation with treated POME in IPS Estate

Total POME Generated From The Group’s Mill Operations (m3)

BOD Levels for the Group’s Mill Operations (mg/l)

COD Levels for the Group’s Mill Operations (mg/l)

Malaysian Operations Indonesian Operations

BOD Level Limit (mg/l) FY2017 FY2018 FY2019

Land Irrigation 20 10 9 13

Land Application


1,000 68 73 89


5,000 204 390 453

COD Level Target FY2017 FY2018 FY2019


1,500

617 589 709


5,198 1,091 1,607

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In the reporting year, a total of 481,435 mt of biomass were generated from mill operations. About 98 % (FY2018: 97%) of the total biomass generated were utilised and recycled as fuel source or as mulch in the

fields whilst the variation in amount was attributed to the conversion of biomass into biocompost and sales to external parties as alternative fuel supply source.

Carbon emission is one of the key environmental concerns and has gained wider stakeholders’ expectation on the Group’s emission reduction targets and performance. The Group aims to provide enhanced transparency on its carbon footprint by closely monitoring and measuring the emissions from the business activities.

The operational emissions data was collected and calculated using toolkits that were aligned with the calculation methodology from the EU Renewable Energy Directive and guidelines from ISCC 205 - GHG Emissions 3.0 and in accordance with the GHG Protocol accounting standard. The greenhouse gas (“GHG”) measurements however, did not include the emissions from land use change, conservation set aside and carbon sequestration. The carbon emissions data for Malaysian operations

were externally verified during the annual ISCC re-certification audits.

In the reporting year, total carbon emissions for the Group was approximately 215,781 tonnes of carbon dioxide equivalent (“tCO2-e”), a 1% increase compared to the previous reporting year (FY2018:212,990), or 7% increase from baseline figures. This was the result from mainly the increased volumes of fossil fuel usage in the in-field crop evacuation and transportation in Indonesian operations where crop productions had improved. Analysis showed that methane emissions from palm oil mill effluent (“POME”) is still the main contributor of GHG, with around 53% of the total GHG footprint, followed by the fertiliser usage in the estate operations. A detailed breakdown of the Group’s GHG emissions is illustrated in the following graph:

The Group has identified various sources of waste and their respective potential impacts on the health of the people and the environment. Scheduled waste generated from the operations were stored, labelled and disposed by the licensed contractors in adherence to the local environmental regulations. In the reporting year, about 76 mt of scheduled waste had been disposed by the contractors of which about 78% of this scheduled waste was on spent oil. The quantities of scheduled waste generation were monitored and the inventory was reported online to the Department of Environment on monthly basis. The Group has competent personnel in the handling of scheduled waste and in the preventive measures in the event of any accidental spillages.

The Group continued to reuse and recycle wastes generated in the operations as much as possible to reduce the impact to the environment. Ultimately, the Group is working towards a dynamic and innovative waste management system aimed towards waste reduction and recycling initiatives as a continuous endeavour. The Group recognises the importance to put in more effective efforts in raising awareness among employees in practicing recycling and waste segregation. In the reporting year, about 2,472 mt (FY2018: 1,756 mt) of domestic wastes were generated from the operating units and 455 mt (FY2018: 232 mt) of recyclable items were sent to the recycling centres, whilst the remaining was sent to dedicated landfill sites in the operations.

By-Product Utilisation

Waste Management

By-Products Generated from Mill Operations

Total Quantity Produced (mt) Total Quantity Recycled (mt) Usage Type

Fibre 167,718 167,718 Fuel

Shell 69,409 68,781 Fuel

EFB 244,308 235,214 Organic Fertilisers

TOTAL 481,435 471,713

CARBON EMISSION AND ENERGY MANAGEMENT


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GHG emission intensity indicates the total carbon emissions per tonne of product produced by the operating units. Over the years, the Group observed no significant changes in the GHG emissions intensity in both estates and palm oil mills operations.

GHG Emissions Intensity

Carbon Emission by Source for the Group’s Operations, FY2019

GHG Emissions Intensity for Group’s Operations

CO2 eq

Methane from POME

FY2016

Fuel Used - Diesel & Petrol (Own Group)

FY2018

Pesticide, Chemical & Lubricant

Fertiliser

FY2017

Grid Electricity

Fuel Used - Diesel (Contractor)

FY2019

Processed Water (Mill)

0.3%0.4%1.9%

2.0%

12.6%

53.0%

29.8%

Biogas plant at IPS Mill

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The reporting methodology of the GHG emissions is based on the GHG Protocol, including the establishment of the emissions categories involving Scope 1, Scope 2 and Scope 3. Scope 1 refers to direct GHG emissions which was defined as “emissions from sources that are owned or controlled by the organisation”. The emission sources included in Scope 1 are fertilisers, fossil fuel used, methane from POME, pesticides, chemicals, lubricants and processed water usage from palm oil mills. Scope

2 refers to indirect GHG emissions which was the consumption of purchased grid electricity. While Scope 3 refers to fuel used by the Group’s third-party contractors in FFB transportation and machineries.

In the reporting year, there was higher consumption of fossil fuel in Scope 3 emissions, which was attributed by higher fuel used by the contractors for crop evacuation, transportation and machineries.

The Group periodically monitors and assesses its air emissions levels through the real time stack emission monitoring and emissions levels were tested by external accredited environmental consultation firms.

In the Malaysian operations, gaseous emissions were monitored through the Continuous Emission Monitoring System (“CEMS”) and installation of Closed Circuit Television (“CCTV”) near the chimney to visually monitor smoke released from the chimney. In the reporting year, the emission levels at all the processing plants in the Malaysian operations were generally below the stipulated limit of 0.4 g/Nm3 of dust concentration limit set by the DOE.

In compliance to the more stringent air quality standard under the Environmental Quality Act (Clean Air Regulations) 2014, in which the emission dust concentration shall not exceed 150mg/Nm3, the Group has opted for one of the dust removal

Greenhouse Gas Protocol Emissions

Air Emission Monitoring

FY2016 FY2017 FY2018 FY2019

Scope 1* (tCO2-e) 188,212 180,928 205,812 207,350

Scope 2* (tCO2-e) 4,826 4,048 4,105 4,065

Scope 3* (tCO2-e) 7,781 3,167 3,073 4,366

Total Carbon Emissions

200,819 188,143 212,990 215,781

*Note:

Scope 1: Direct GHG emissions which are defined as emissions from sources that are owned or controlled by the organisation such as fertilisers usage, fossil fuel used (diesel & petrol), methane from POME, pesticide, chemical, lubricant and processed water usage from palm oil mills.

Scope 2: Indirect GHG emissions which include consumption of purchased grid electricity

Scope 3: Indirect GHG emissions which are not directly owned or controlled by the organisation such as fossil fuel used by

the contractor for crop transportation and machineries.

technology, namely Electrostatic Precipitator (“ESP”) at one of its mills, Desa Talisai palm oil mill in the Malaysian operations. The Group will evaluate its efficiency in achieving the new dust concentration limit prior to installations at other processing plants. In the Indonesian operations, periodic ambient air monitoring is carried out by the accredited environmental consultant to monitor the pollutant levels in the surrounding outdoor air.

Ambient air monitoring at the Prima mill site


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The Group focuses on the avoidance of GHG emissions through enhancing its operational performance and optimising the usage of renewable energies as much as possible. As there is no connectivity or energy demand to the grid-lines, and set against the current challenging business environment, the installations of biogas plant that are able to significantly reduce GHG emissions were deferred. Thus, the timeline to achieve the desirable reduction of 30% on carbon emissions intensity per tonne of CPO produced, compared with the base year figures will be delayed. The Group strives to commit and set a more realistic and achievable target year, which is 2030, and believes that within the ten (10) year plan, innovative and more cost-effective technologies will be available.

Presently, the emission reduction strategies were focused on the following areas:

• Optimising the water usage per tonne of FFBprocessed in mills to reduce POME generation;

• Optimisingtheusageof POMEinthebiocompostingfacility;

• EnhancingthebiogaspowergenerationplantintheIPS mill to increase the percentage of POME uptake into the system;

• Enhancingtheefficienciesof thePOMEtreatment;

• Exploring other methane avoidance initiatives,other than biogas capturing devices;

• Installing of solar panel systems to reduce thedependency on fossil fuel-powered generation;

• Connectingof powersupplyfromthenearestgridline to operations wherever feasible;

• Improvingthein-fieldcropevacuationefficienciesto reduce the number of trips made

IPS palm oil mill in the Group’s Indonesian operations continued to utilise the mixture of POME, decanter solids and shredded fibre in the biogas digester system to produce electricity for operations and domestic usage.

In the reporting year, the Group consumed 139,820 Gigajoule (“GJ”) of energy with more than 75% of energy generated using renewable sources. The renewable sources are from milling biomass like palm fibres, palm kernel shells and shredded empty fruit bunches. The Group was able to substitute about 86% of non-renewable fossil fuels with renewable sources from the palm oil mills for energy generation, which effectively avoided approximately 32,000 tCO2-e of carbon emissions had non-renewable sources been used instead. The Group continued to explore and has carried out feasibility studies for alternative energy supplies to reduce dependency on fossil fuel powered generation, such as the usage of solar panels at guard posts and connection to the power supply grid.

Greenhouse Gas Reductions

Energy Management

Energy Consumption for the Group’s Operations

FY2018

FY2017

FY2019

Note:

1. Data converted from electricity readings in kilo watt (kWh)- direct measurement from the meters and the utility bills

2. Emission factor in reference to Biograce v 4d, 2014

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RESPONSIBLE AGROCHEMICAL USAGE

The Group is committed not to use the chemicals that fall under the World Health Organisation (“WHO”) Class Ia and Ib and the Stockholm or Rotterdam Conventions, when there are effective and safer alternatives available.

In the reporting year, the Group had realised its commitment when both the Malaysian and Indonesian operations had phased out and stopped purchasing Paraquat, and use safer Class III and IV pesticides wherever possible.

The Group is also committed to minimising the usage of chemicals and only utilise chemicals as the last resort in managing the outbreak of pests and diseases. Application of inorganic fertilisers is based on scientific data and palm trees’ nutrient levels reviewed by agronomist leading to appropriate application methods and dosage levels.

The Group also continued to collaborate closely with agrochemical suppliers to conduct trials and evaluate various new agrochemical products in the market to explore better agricultural products or alternatives to minimise the chemical usage Group-wide.

In the reporting year, pesticides usage was reduced compared to the previous reporting year (FY2019: 3.27; FY2018: 3.88) due to reduction in herbicide application at the Malaysian operations prior to replanting activities. Herbicides accounted for more than 80% of the total pesticides used as it is important to keep the palm circle free of weeds for the ease of crop evacuation operations. There was increment in the usage of insecticides, which was mainly due to the increase of Rhinoceros beetle’s population in the replanting sites in Malaysian operations. The pheromone trapping of Rhinoceros beetles was found insufficient to control the beetle’s population in the infested replanting sites, especially in the areas where surrounding estates were also replanted. Thus, the management of Rhinoceros beetles coupled with the usage of insecticides was needed to better control the infestation levels of Rhinoceros beetles. Besides trapping the beetles, the statistical information derived of the trapped beetles was used to assess the necessity for chemical spraying. The knowledge gained will be helpful as the Group moves into the replanting programme for the Sugut region.

Types FY2017 FY2018 FY2019

Herbicides 3.36 3.20 2.76

Fungicides 0.00 0.00 0.01

Rodenticides 0.75 0.52 0.26

Insecticides 0.13 0.16 0.24

TOTAL USED 4.24 3.88 3.27

The Group ensures all chemical handlers which include store keepers, laboratory assistants, supervisors to sprayers and manurers are competent in handling the chemicals prior to conducting their daily job task. Competency training in accordance with the Standard and Safe Operating Procedures (“SOP”) is conducted on a regular basis to ensure all chemical handlers are competent in conducting their work relating to chemicals. Apart from safe chemical handling, respective emergency response plans, first aid and nozzle calibration trainings are also part of the annual competency training programme. In addition, personal protection equipment (“PPE”) are provided free of charge for employees who handle chemicals and are in accordance to the recommendations from the Hazard Identification, Risk Assessment and Risk Control (“HIRARC”) and Chemical Health Risk Assessment (“CHRA”). Monthly basic health check-

outs and annual medical surveillance programmes are carried out to ensure that the health conditions of the chemical handlers are not negatively affected from the exposure to chemical hazards.

Application of inorganic fertilisers is vital for sustaining yields and overall growth of the oil palm trees. In the reporting year, there was a slight increase (FY2019: 378; FY2018: 371) kg/ha/annum in the inorganic fertilisers application which was due to the attainment of maturity in the palm trees in the Indonesian operations. Nevertheless, fertiliser application is closely monitored and managed to ensure that there is no run-off of fertiliser into the waterways. Riparian reserves were also maintained as buffers to potential run-offs of agrochemicals into the waterways.


Pesticides Usage in the Group’s Operations (kg/ha/annum)

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Integrated Pest Management

Integrated Pest Management (“IPM”) was widely practiced in the Group’s operations. The Group’s research and development (“R&D”) team is responsible for the stewardship and monitoring of the IPM implementation in the Group and to ensure the pest

and disease occurrences are below the threshold levels in collaboration with the estates. This consists of four (4) main components – Prevention, Monitoring or Surveillance, Physical Control and Chemical Control, being the last resort.

• Planting of beneficial plants

• Release of predatory bugs

• Planting of cover crops

• No blanket spraying

• Pest and Disease (“P&D”) census by Research and Development (“R&D”)

• Census is carried out by taking frond samples for damage assessment

• Removal of Ganoderma infected oil palm trees

• Use of pheromone traps to manage Rhinoceros beetles

• Chemical treatment is only carried out when the damage exceeds established critical thresholds

PREVENTION MONITORING PHYSICAL CONTROL CHEMICAL CONTROL

The Group strives to enhance the natural biological controls of pests and diseases in the fields, where planting of beneficial plants (Antigonon leptopus and Turnera subulata) in the strategic locations within the field and the release of predatory bugs when the level of predators is low in the fields, are widely practiced in the operations. Beneficial plants serve as a shelter and provide an alternative food source for the predators, such as the Platynopus melanoleucus.

In the reporting year, about 4,800 of predatory bugs were released to enhance the biological control of leaf eating caterpillars in the fields. Maintaining green cover with soft grasses or cover crops and applying a no blanket spraying policy are also part of the efforts in enhancing the natural biological controls of pests in the fields.

The Group’s Research and Development (“R&D”) team carried out regular monitoring and report on the census findings to ensure the pest levels are below the threshold levels or to assess the effectiveness of the pest control measures and treatments on the infested areas.

Ganoderma is one of the oil palm diseases that has yet to have a conclusive treatment method. More successful best practices include trenching, sanitation and leaving soil fallow after ploughing. However, the most commonly practiced method is the physical removal of the Ganoderma-infected trees from the field.

In the replanting sites where the infestation of Rhinoceros beetles occurred, besides the removal of beetles from the pheromone traps, the larvae found in the rotten biomass were also hand-picked to expedite the reduction of the beetles’ population.

Prevention

Monitoring Physical Control

Predatory insect for biological control

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OCCUPATIONAL, SAFETY AND HEALTH (“OSH”)

The Group’s commitment in securing a safe and healthy workplace for all employees and contractors engaged at work is reflected in the Group’s Occupational Safety & Health Policy, which was revised in the reporting year, and is summarised as follows: -

In striving to secure a safe and healthy work environment, the Group shall strive towards: -

• Complying with applicable statutory and regulatoryrequirements.

• Pursuing hazard identification, improving workprocedures and taking preventive measures on potentially hazardous processes.

• Developing and increasing self-awareness, individualresponsibility and accountability at all levels.

• Providing relevantandon-going training foremployeesand on-site contractors to conduct operations in a safe and healthy manner.

• Pursuing continuous improvement that can furtherenhance the occupational safety and health.

In order to realise the Group’s commitment in the provision of safe workplace and healthy living environment for its people, the following strategies are implemented: -

• Adoptrisk-basedapproachtoidentify,manageandtakepreventive measures on the potential hazards and risks in the workplace through the Hazard Identification, Risk Assessment and Risk Control (“HIRARC”) and Chemical Health Risk Assessment (“CHRA”);

• Refresher training on safe operating procedures andrespective competency training to ensure the employees are technically competent in handling their job tasks;

• PeriodicinspectionandclosesupervisionbytheHeadsof Operations to ensure the operations and practices are in accordance to the established safety procedures;

• Regular dialogues and discussions with stakeholdersthrough various platforms, including the employees, local communities and relevant Authorities on the safety and health related issues;

• Inculcationof thecultureof individualaccountabilityandresponsibility on self well-being and other personnel and facilities under their care;

Training by Road Transport Department Malaysia on safe handling of vehicles and machineries

Safety campaign with role play scenarios

Refresher training on electrical safety


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OSH Performance

The Group’s ultimate aim is to avoid incidents that will risk the employee’s life and to achieve zero fatality cases. The Group has maintained the record of zero fatality for the five (5) consecutive years.

The Group continued to monitor its OSH performance through the Lost Time Injury Frequency Rate (“LTIFR”) and Lost Time Injury Severity Rate (“LTISR”). LTIFR represents the number of accidents with lost days for every (1) million-man hours worked. Whereas LTISR signifies the total number of days lost for every one million man-hours worked.

In the reporting year, the Group recorded frequency rate of 7.45 cases of accidents with lost days in one million hours worked, which was 82% increase as compared to the previous reporting year. The Group also experienced the severity rate of 28.39, which was the number of days lost in every one million man-hours worked. This marks a 68% increase compared to the previous year.

Overall, the statistics had drawn the attention for the Group to intensify efforts to mitigate accidents and further enhance safe-working culture in the operations.

Every accident is followed by a thorough review of the cause and action undertaken to eliminate the factors involved. Investigations and root-cause analysis have shown that the major cause of the accidents was due to negligence at work. The Group has also re-strategised its safety approach to emphasise on the competencies of employees working at higher risk stations and behavioral safety to enhance the safety culture in the Group. All employees working at higher risk stations in processing plants will be re-trained and evaluated to ensure the safety procedures are well implemented. Besides, the supervision on the respective stations are tightened with working permits to ensure the works are done in accordance to the safety procedures.

In addition, the Group will review its safety induction programme to ensure the overall contents are covered for the newly recruited employees. Annual safety campaigns were organised at each operating unit to promote safety awareness among the workers. Role-playing scenarios, accident simulations and safety equipment demonstrations were performed during the period of the safety campaigns.

Total accidents with lost days

LTI Frequency Rate

(per 1,000,000 hours worked)

LTI Severity Rate (per 1,000,000 hours worked) Fatality

FY2016 193 7.86 20.03 0

FY2017 151 6.41 19.75 0

FY2018 96 4.10 16.92 0

FY2019 168 7.45 28.39 0

The Group ensures all the employees that can be potentially affected by the working environment or exposed to chemicals hazardous to health were screened under the annual health surveillance programme. This includes their hearing assessments, blood and urine tests to ensure that the employees are healthy and fit for the job tasks. The records of the health assessments were maintained to keep track on the health trends. In the reporting year, no work-related illnesses were reported.

Work-Related Illnesses

Annual medical surveillance at Antutan Estate

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Since 2016, operations in Malaysia have participated in this SOHELP programme initiated by the Department of Safety and Health (“DOSH”) Malaysia, under the initiative of the National Occupational Safety and Health Management Program-20 (OSHMP-20). The programme was aimed to enhance occupational health performance at the workplace under three (3) focal areas, which were on chemical handling, ergonomics at the workplace and hearing conservation. Another two (2) operating units in the Sandakan Region, Minat Teguh palm oil mill and Minat Teguh estate had participated in the SoHELP programme in the reporting year.

Initial Ergonomics Risk Assessments (“ERA”) was conducted internally for all the operating units in the Malaysian operations. The assessment is to identify various ergonomics risks associated with the work tasks and activities in the plantations and processing plants. Action plans to reduce the ergonomic risks based on the findings will be implemented in the coming reporting year.

Routine housing inspections were carried out by Hospital Assistants to ensure the property is well maintained, and the hygiene standards were in accordance to the Group’s policies. Regular ‘gotong-royong’ activities were organised to ensure that the living environment and sanitation conditions were satisfactory to the Group’s standards. Monthly fogging as vector-control measures were also conducted to prevent the transmission of the dengue virus. Vaccination and health checks for children in plantations were also conducted by the clinic nurses and by the local health department officers. Supplemental food was distributed to the workers’ children for better health growth in the Indonesian operations.

Healthy lifestyle was promoted through various health awareness talks and sports activities. The employees monitored their body composition on monthly basis at the respective estate clinics and the head office in Sandakan. The management also encouraged its employees to maintain an active lifestyle through exercises, such as Yoga, Aerobic and Zumba dance, cross-fit classes and hobby-oriented activities.

Hearing conservation programme was conducted to prevent occupational hearing loss for those working in the processing plants. Annual audiometry evaluations were conducted by the appointed Occupational Health Doctor (“OHD”) on workers who were exposed to the noise intensity above the approved threshold levels. In addition, all processing plants in the Malaysian operations had conducted the Noise Boundary Assessment to determine the various noise levels at the processing plant and appropriate hearing protective gears were provided to the workers who were exposed to the hearing risks. Training on the effects of noise on hearing by the OHD and importance of wearing suitable hearing protective devices were conducted to enhance the knowledge of the employees on the hearing conservation at work.

Re-assessment of Chemical Health Risk Assessment (“CHRA”) was carried out to evaluate the adequacy of existing chemical control measures. Annual medical surveillance and biological monitoring were conducted for those who were exposed to chemical risks under the recommendations of the CHRA. Training programmes in the use of personal protective equipment for workers exposed to hazardous chemicals are regularly conducted and documented. In addition, health status examinations were also conducted for the employees working in confined spaces.

Systematic Occupational Health Enhancement Level Program (SOHELP)

Ergonomic Risk Assessment

Medical Care and Well Being

Hearing Conservation Programme

Chemical Health Risk Assessment

Vaccination programme for employees’ children at Kutim Region


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All operating units were instructed to stay vigilant of the surrounding areas in the operations. Where risks were concerned, the Group worked closely with related local Government Agencies to safeguard the estates and associated facilities in order to provide a secure environment for the employees living in the operating units. Internal security personnel were involved to enhance the security patrolling and formed the ‘Rukun Tetangga’ patrol teams in order to be always watchful and alert on the surrounding areas within the various plantations. Security was also a topic of discussion during the Joint Consultative Committees’ deliberations held quarterly.

Security in Operations

Security briefing at Alumga Estate

RESPECT FOR HUMAN RIGHTS

The Group is committed to protect the rights of its people and to treat them with dignity in line with all relevant legal requirements and regulations, in line with key reference to the Universal Declaration of Human Rights. The Group endeavours to adhere to the standards and practices that were aligned with international principles, such as the International Labour Organisation (ILO) core labour standards subject to the restrictions of the governing laws and regulations of the countries where the Group operates.

The Group’s commitment is reflected in its Human Rights Policy (revision 2019), which uphold to the following principles: -

• Promoting diversity and inclusive culture in theworkplace, premised on mutual trust and respect, and by avoiding policies and practices that discriminate against gender, marital status, race, nationality, ethnicity and age.

• Not tolerating any form of abuse, harassment,violence, intimidation and any other unsecured working conditions.

• Ensuring that the operations do not employchildren. The minimum of employment age is guided by the local regulations.

• Not toleratinganyformof forced labour,slavery,human trafficking and sexual exploitation.

• Practicing two-way communication withrepresentatives of employees, and when the need arises addressing complaints and grievances in an open, transparent and consultative manner.

• Strivingtoprovideasafeandhealthyworkplacefor all employees. Dedicating to maintain a productive work place by minimising the risk of accidents, injuries and exposures to health risks.

• Allowing employees the right to form and joinappropriate organisations and in bargaining collectively as per applicable laws.

• Respectingandrecognisingtherightsof relevantsurrounding communities where the Group operates, adopting free, prior and informed consent to operate on lands that they hold legal, communal or customary rights. Free, prior and informed consent negotiations prior to commencing any new operations.

The policy is applicable to all the operations and the relevant stakeholders in the Group’s supply chain. The policy was communicated to all employees, contractors, crop suppliers and the local communities where we operate. The Group will strive to commit its people and the partners in its business supply chains to adhere to this policy.

95

The Group will not tolerate violations of the human rights principles and will address in a fair, effective and consultative manner for any grievances or complaints. The Group’s guidelines and grievance procedures to handle social related issues are stated in the Group’s Social Manual. The grievance procedures were reviewed in the reporting year to provide easier access to the people in need.

The grievance procedures provide a non-discriminatory and fair treatment framework for all involved stakeholders. Anonymous whistle-blowing

channels were also available to enable employees to report actual or suspected misconducts without the fear of repercussions. Complaints can be lodged manually using the complaint forms from the respective operating units’ offices and addressed to any head of operating units/ departments in the Group or email to [email protected]. Another channel for reporting grievances in relation to sexual harassment or domestic violence is through the Women Committee in the operating units, where the committees were trained in handling such issues.

In the reporting year, the Group employed 10,027 people as at 31 March 2019. From the total workforce, 33% were female and 67% were male employees. The Group actively promotes the employment of women in the plantation industry. However, the Group recognised that certain type of work in plantations are more suitable for men due to the demanding physical nature of the tasks. Women were mostly engaged in the weeding, loose fruit collection and gardening activities or worked as household helpers. Notwithstanding this, there are representations of female talents in the

management team, mainly involved in sustainability, R&D and administrative activities. Day care centres and kindergartens are available in operating units to support the Group’s female employees and their children.

The employment and promotions are based on the qualifications and the ability needed for the work to be performed. This commitment is governed under the Group’s Diversity and Inclusion Policy.

All employments in the Group is voluntary and the guest workers were recruited directly through the appropriate Government approved channels to prevent exploitation and wrong dissemination of information to the guest workers. This will also minimise the risks of sub-recruiting agents charging additional recruitment costs on the guest workers.

The Group prohibited any form of forced and bonded labour, including the withholding of workers’ travel documents, wages, passports and any personal belongings without their consent. In the previous reporting year, the Group had initiated the passport lockers room in Sijas estate in the Malaysian operations, to enable the guest workers free access to their passports without any restrictions. In this reporting year, every operating unit in the Malaysian operations were duly provided with the similar passport lockers to their guest workers.

Grievance Procedure and Whistle Blowing

Guest Workers’ Passport Lockers

Passport lockers in Minat Teguh Estate

PEOPLE ASSET

Categories

FY2017 FY2018 FY2019

Female Male Female Male Female Male

Directors 1 7 2 7 2 7

Senior Management 0 5 0 5 0 4

Management 2 31 2 32 2 29

Junior Management 6 37 6 35 9 33

Executives 38 151 35 146 33 142

Non-Executives 165 464 172 476 166 441

Workers 3,186 6,048 3,005 6,017 3,052 6,116

Total 3,397 6,736 3,220 6,711 3,262 6,765


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Women Committees were established in every operating unit with the assistance from the management. The representations were from the workers category and management to promote female participation and advancement in the workplace. The committees also functioned as a formal channel to manage sexual harassment complaints and provide support for domestic violence victims. In the reporting year, various training, health talks and get-together activities were organised by the respective women committees in the operating units.

Women Committees

Despite the number of employees hired being more than the number of employees leaving the Group in this reporting year, the Group observed a higher turnover rate for workers compared with the previous reporting year. The higher turnover rate was observed for the Gen-Y and most of them are from the workers category. In the Malaysian operations, the workers who have left are those who have completed their tenure of employment and decided to return to their home countries. Workforce recruitment and retention is difficult in the plantation industry, particularly in the younger generations due to the remoteness of the operations and the nature of plantation tasks

The Group recognised the importance of retaining quality employees than to recruit, train and orientate a replacement employee of the same quality. Besides offering competitive remuneration and conducive working culture, the Group will continue to nurture its young talent and empower them to explore innovative technologies and best-fit ideas in the operations.

Recruitment and Talent Retention

Malaysian Operations’ Workers Turnover Rate

Indonesian Operations’ Workers Turnover Rate

Turnover Rate - Workers

Group Turnover and New Hire Chart

FY2017

FY2018

FY2019

* the categories of the generation groups are in reference to the guidelines from TalentCorp Malaysia (https://www.talentcorp.com.my)

Born 1980 to 1996 (Gen Y)

Born1964to1979(GenX)

Born 1946 to 1963 (Baby Boomers)

Born 1997 & later (Gen Z)

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Employees in the Malaysian operations were remunerated at least at the minimum wages as guided by the Malaysian Minimum Wages Order (Amendment) 2018, of RM1,100 per month with effective from 1 January 2019. For the operations in Indonesia, the Group adhered to the local minimum wage agreements fixed by each provincial government and all related new guidelines or revisions made to

the agreements. All new guidelines or revisions to the existing agreements are communicated to employees. Wage payments were made timely and wage records were countersigned by the workers to acknowledge receipts and they were briefed to understand how payments were calculated. In addition, the Group practices gender equality policy on wages payment and remuneration for all of its employees.

Employees Remuneration and Welfare

Monthly Minimum Wages

Country / Region 2013 2016 2019

Malaysia

Sabah RM 800 920 1,100

Indonesia

Bulungan Rp. '000 1,875 2,254 2,865

Kutai Timur Rp. '000 1,765 2,276 2,894

Lampung Rp. '000 1,150 1,763 2,386

For eligible employees, benefits such as long-term incentive programmes involving share options were granted based on the annual performance appraisals, organisational performance and governed by the established by-laws. Other benefits, such as housing, utilities, medical, sports facilities, places of worship and access to basic education were also provided in the operating units. Employees’ performances were appraised annually with discretionary salary increments and bonuses awarded accordingly. For those employees who had served for more than 20 years, their contribution was dully recognised with the Group’s Long Service Awards. In the reporting year, 25 employees in the Malaysian operations were awarded with their Long Service Awards.

The Group encourages its employees to participate in sports with the provision of sporting facilities such as football fields and sporting equipment in the operating units. Friendly matches and competitions with neighbouring estates are organised to enhance teamwork and esprit de corps among the employees and fraternity fellowship with the surrounding neighbours. In addition, the Group also promotes social and cultural integration and inter-racial harmony through the celebration of festive occasions, such as Labour Day, Ramadan and other festive gatherings.

The group hosted the 12th Edition of IJM Games in Sandakan involving all divisions of IJM Group promoting the trancendent power of sports and healthy living. The 2018 Edition was won by the Plantation Division.

20-year long service award for employees in the Malaysian operations

Family day during Independent Day celebration in Kutim Region


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The Group’s management regularly engaged with its employees through various platforms. Town-hall meetings, surveys and consultative meetings were organised and allows the management to understand and identify the strength and opportunities in creating a better workplace for its employees.

The Group also strives to provide quality living environment and safe workplace along with attractive remuneration package for its employees. Joint Consultative Committee (“JCC”) meetings were organised every three months to discuss various issues and concerns on the aspects relating to the workplace and living environment. The workers’ representations in the committee were elected freely by the workers in the operating units.

All employees were trained and re-trained under a structured skills development programme based on the individual training needs and the types of job performed. With 91% of the Group’s workforce being in the workers category and with more than 20% annual turnover rate, it is imperative that competency or job specific trainings and retraining are constantly conducted. Every operating unit prepared its own annual training calendar to ensure that the relevant training was carried out on a regular basis throughout the year. In addition, the scope of training and the targeted groups were further widened including the sustainability related topics and involved the relevant external parties. For instance, training on waste segregation, wildlife conservation, fire drills and policy briefings were organised at the workplace periodically and with the participation of neighbouring communities and engaged contractors.

Employees Engagements and Development

Election of workers’ representatives for JCC in Berakan Maju Estate

Pest and disease training at Excellent Challenger 1 Estate

12th Edition of IJM Games in Sandakan.

99

Humana Learning Centre – Collaboration

with a local social NGO in Malaysia, Humana

Child Aid Society Sabah (HCASS) to provide

basic education to the guest workers’ children

aged between 5-12 years of age in the

plantations in Sabah.

Community Learning Centre (CLC) – An

educational effort initiated by the Indonesian

Government for Indonesian guest workers’

children aged between 13-15 years of age

with home studies, in order to continue with

their tertiary education subsequently in their

home country.

NOTES

The Group adhered to the minimum age of employment and prohibits the employment of child labour in the operations. The minimum age of employment is defined by law and is made known to the recruitment team, operations, suppliers and contractors throughout the Group’s business supply chain. Basic education and day care centres were provided at the operating units to ensure the workers’ children had access to basic education and young children were taken care of during working hours. Transportation for children in the operations to the local schools and learning centres were provided by the respective operating units. In the reporting year, the Group’s Humana Learning Centre at Desa Talisai South estate had hosted the annual Humana Sports Day which was participated by all the student representatives from Humana Learning Centres in Sabah.

The Group continues to upkeep and maintain the four (4) existing Humana Learning Centres, two (2) units of Community Learning Centres in the Malaysian operations. In addition, the Group operates twenty-five (25) day care centres, six (6) kindergartens to cater for the children in the operating units.

Empowering Children with Education

Care-taker at the day-care centre in Binai Estate teaching the young ones

Song performance by the children from Humana Learning Centre in Desa Talisai South Estate


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Living up to the Group’s tagline as being “Your Partner in Rugby”, the Group continued with its commitment to nurture promising Sabah youth through the game of rugby. The tripartite partnership with the Sabah Education Department, Sabah Rugby Union (“SRU”) and Eagles Rugby Club (“ERC”) continued with grooming students from 53 primary and 65 secondary participating schools in Sabah State under the Academy of Sabah Rugby Excellence partnership. The Group remains fully committed to its policy of “Returning to Community”. In the reporting year, the Group continued to sponsor and support organising State level Junior Age-Group Tournament.

Youth Sports Development

COMMUNITY CARE AND CSR INITIATIVES

Rugby coaching for school children in Sabah

Breast health awareness talk at SMK Gum-Gum in Sandakan

The Group embarked on its journey in promotion of breast health awareness since 2006 and continued to collaborate with a local NGO, the Sandakan Pink Ribbon (“SPR”) in the promotion of breast health awareness amongst the public and among the young school-going girls.

In the reporting year, the Group’s outreach team together with the education team from SPR has conducted breast health awareness talk in a local secondary school, SMK Gum-Gum in Sandakan. Breast health awareness talks and clinical breast screening were also conducted by the in-house nurses for the female employees in the operating units.

In addition, the Group has contributed and was instrumental in helping SPR in fund-raising for their Pink Ribbon Centre in Sandakan. The centre will be the venue for various training, workshops, consultations and information resource centre for the breast cancer survivors and the public in town.

Breast Health Awareness

RETURNING TO COMMUNITY

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The Group supports and encourages its employees to be actively involved in community outreach. In the reporting year, the Group had volunteered in the conservation awareness outreach programme organised by the local NGO Bornean Sun Bear Conservation Centre and continued to support the local annual Borneo Bird Festival in Sabah. In total, the Group organised six (6) blood donation drives in the Malaysian operations and contributed a total of 122 pints of blood to the local blood bank in Sandakan in the reporting year.

In the reporting year, the Group has provided leadership and assistance towards the starting of the Montfort Youth Training Centre - MEOA oil palm Plantation Conductorship in Kinarut, Kota Kinabalu. The course emphasises on both the knowledge and practical skills needed in the field of supervision in

plantation. The pilot skill training course will kick-start in July 2019. The programme is targeted with priority accorded to those who are orphaned, from poor and large families particularly from the rural and interior areas of Sabah and Sarawak. With their acquired new skill and know-how, the youth-in-need can be gainfully employed in the plantation sector or can be future entrepreneurs and good stewards of their lands when returning to their homes.

In addition, the Group continued to host field-day visits and internship programmes from local academic institutions to share and enlighten the young local talent with insights of the plantation industry. Since 2006, the Group has awarded full scholarships to eight (8) deserving undergraduates studying in tertiary institutions under the IJMP Scholarship scheme.

Volunteerism and Scholarships

(Left) Vocational school students given exposure to palm oil processing at Desa Talisai palm oil mill; (Right) Conservation talk at SK Ladang Sandak in Sandakan

Being part of a global community, the Group aspires to enhance the shared economic value not only through employment creation opportunities but also to drive positive social-environmental impacts for the surrounding communities where it operates.

Frequent dialogues and briefing sessions were conducted and matters of mutual concern were deliberated. In the Indonesian operations, frequent meet up and sosialisasi sessions with local communities were carried out to share and extend the information on fire mitigation and prevention in the areas with higher

exposure risk to fire hazards. The local stakeholders were also made aware of the Group’s sustainability policies and practices, including the communication mechanism and grievance procedures.

The Group conducted bi-annual environmental monitoring and periodically review the Social Impact Assessment (“SIA”) internally to assess any potential negative impacts while positive impacts were further replicated and enhanced. The negative impacts such as dust from the FFB transporting lorries and concerns on the potential river water pollution were

COMMUNITY OUTREACH AND DEVELOPMENT


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Donation to the Sulawesi earthquake and tsunami victims

(Left) Road maintenance for Desa Makartitama nearby Alumga Estate; (Right) Repair of the mosque in Desa Rimba Hijau at Kutim Region

mitigated with various action plans such as the installation of additional speed humps at the housing areas, and conservation of riparian reserves coupled with periodic river water analysis to monitor river water quality.

The Group had also extended its assistance to the local communities in repairing the roads and

community facilities such as community halls, worship grounds and portable water piping connections. In addition, the Group had supported the schools in the village by subsidising the salary of the teachers. In the reporting year, humanitarian aid was extended the victims impacted by the earthquake and tsunami in Sulawesi, and the fire victims in Kampung Bahagia in Sandakan.

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The Group respects the land use and tenure rights of the local communities, and practice the principles of Free, Prior, and Informed Consent (“FPIC”) in all the negotiations and interactions with the relevant stakeholders. The Group believes that

by promoting transparent avenues for dialogue with its stakeholders, any potential issues or conflicts can be amicably and fairly resolved. The diagram below indicates the various steps under the FPIC processes.

The FPIC processes are also one of the important stages in the HCV-HCS assessment prior to any new development activities. It is important to identify issues and find solutions together, in order to develop appropriate development options and

effective land use plans for concession areas. In the reporting year, FPIC was held at Sajau estate in the Group’s operations in Kalimantan, for the HCV-HCS re-assessment covering Sajau, Antutan and Binai Estates.

FREE, PRIOR AND INFORMED CONSENT

Investigation/ Study

Verification and Validation

Consultation and

Engagement ImplementationMonitoring and

EvaluationIdentification

and Engagement

Identify the stakeholders and proceed with engagement

Conduct study on the land

Verify and validate the information from the land study

Engage consultant and develop agreement

Implementing as per agreement

Monitor and

evaluate on the

implementation

and action

taken

FPIC at Sajau Estate


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Training on zero burning in replanting as part of Oil Palm Best Management Practices for crop suppliers in Sandakan

Discussion on Human-elephant conflict with the Sabah Wildlife Department

Smallholders are important players in the Group’s supply chain. Under the current volatile and challenging business environment, they were also facing various challenges in sustaining their agricultural activities. The Group strived to help its smallholders to increase their resilience under this business environment through improving crop productivity, supporting them to diversify income sources and provide the access to financial and governmental support services. These were achieved through various training programme, outgrowers’ schemes and the partnership project with NGO.

The Group provided the smallholders with sufficient resources and was committed to buy their FFB at government determined rates. In the reporting year, training on best management practices in plantation management was organised in Sandakan. About 20 independent smallholders and schemed smallholders (FELCRA) attended this training. The training covered various aspects in plantation management including effective fertilisation, safe handling of chemicals, integrated pest management and the zero-burning practices in new and replanting activities.

OUTGROWERS AND SMALLHOLDERS TRANSFORMATION SCHEMES

The Group embarked in its journey of partnership with an NGO, Earthworm Foundation (formally known as “The Forest Trust”) in a smallholder transformation project called “Rurality” since 2015. Rurality project was targeted on the smallholders supplying crops to Desa Talisai Palm Oil Mill in the Sandakan region. To date, 82 independent smallholders had participated and were assessed under this project with a total of 334 ha mapped.

Through the Rurality Project, the smallholders from Ulu Muanad village had participated in a Community Elephant Monitoring Training Programme (CEMTP) and established a monitoring group to mitigate and implement a long-term strategy in handling the human-elephant conflict at Ulu Muanad village. In the reporting year, three (3) of the independent smallholders from Ulu Muanad village who were affected by human-elephant conflict (“HEC”) were certified as Wildlife Wardens under the Honorary Wildlife Wardens program organised by the Group in collaboration with the Sabah Wildlife Department. The team of three volunteered and led the patrol team in the neighbourhood of Ulu Muanad village to monitor the movement of the elephants. The Group also hosted the HEC meetings for the community to discuss on the issues.

Besides the HEC issue, the smallholders also have the access to affordable tools and inputs, through a flexible payment scheme provided by the agro-input company.

Training was also provided to the smallholders, and to-date sixteen (16) best management practices training were conducted thus far.

Another initiative was to encourage the smallholders in diversifying their income sources through planting of fast-growing crops, harvesting of wild honey and bird nest farming. The housewives of the smallholders were also encouraged to gain additional income through the selling of their hand-made handicraft. The Group provided various platforms for the Ulu Muanad women group to promote, market and sell their handicraft products, such as setting up of booths at its organised events.

Project “Rurality” – Upscaling the Transformation

105

The Group ensures the land developed was allocated for agricultural purposes and did not negatively impact the local food security. Prior to any new land development, FPIC process, participatory Social and Environmental Impact Assessments (“SEIA”) and land-use planning with local people with various food provision options were conducted to ensure transparency of the land allocation process.

The management also recognised the needs of the employees on the accessibility to affordable food and daily necessities. The management periodically checked and monitored the pricing for the essential items sold in the grocery stores in the operating units. The employees were also encouraged to grow their own vegetables in the operating units.

FOOD SECURITY

Meeting with the community under the Group’s plasma scheme in Bulungan Region

Inspection of prices at the store in IPS mill

For the Indonesian operations, more than 11,000 ha were allocated for the Group’s outgrowers’ scheme. The Group was actively involved with Plasma and Kemitraan Schemes which were aimed to assist smallholders to become independent plantation growers.

Under the Plasma Scheme, the Group helped the villagers to develop their land, including land preparation and cultivation of oil palms. Once developed, the plantation is managed by the Group until it is ready to be handed over to the villagers for self-management. Prior to that, the profits made from the FFB produced, which were sent to the Group’s mills, after deduction of the development costs, were paid to the villagers. Some of the farmers are employed in the Group’s operations, with objectives that besides their employment income, they would equip themselves with plantation management knowledge and skills before taking over the land developed by the Group.

Plasma and Kemitraan Schemes

The Group envisaged that the scheme is able to uplift the livelihood of the local communities and help alleviate poverty. In addition, the Group seeks the opportunities for improvement in sustainable practices, such as steering the farmers from illegal logging and slash-and-burn farming activities. To-date, 4,191 Ha of Plasma schemes and 2,877 Ha of kemitraan or partnership schemes have been developed for a total of 4,865 farmers who were directly supported by the Group.


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GLOBAL REPORTING INITIATIVE (GRI) STANDARDS 2016 CONTENT INDEX

IJM Plantations Berhad Annual Report was prepared in accordance with the GRI Standards: Core option. The table below details the location of specific disclosures throughout the report. It also includes additional information and comments on some of the indicators.

GRI Standards Disclosure Reference/Response Page

GRI 102: General Disclosure

Organisational Profile

102-1 Name of the organisation Front Cover

102-2 Activities, brands, products, and services Management Discussion and Analysis 18

102-3 Location of headquarters Corporate Information b

102-4 Location of operations Location of Operations 05

102-5 Ownership and legal form Group Corporate Structure 06

102-6 Markets served Management Discussion and Analysis 18

102-7 Scale of the organisation Management Discussion and Analysis, Financial Statements

18,111

102-8 Information on employees and other workers People Asset 96

102-9 Supply chain Traceability and Supply Chain Management 70

102-10 Significant changes to the organisation and its supply chain

There were no changes during the reporting period regarding size, structure, ownership or supply chain.

However, changes in the Board of Directors is featured in Profile of Board of Directors & Secretary

102-11 Precautionary Principle or approach Statement on Risk Management and Internal Control

46

102-12 External initiatives Forging Partnership, Creating Shared Value; Marketplace Collaborations

66,67

102-13 Membership of associations Membership in Malaysian Estate Owners’ Association (MEOA)

Strategy

102-14 Statement from senior decision-maker Management Discussion and Analysis 18

102-15 Key impacts, risks, and opportunities Management Discussion and Analysis 18

Ethics And Integrity

102-16 Values, principles, standards, and norms of behaviour

Vision, Mission, Culture and Core Values; Regulatory Compliance and Ethical Conducts

02,62

102-17 Mechanisms for advice and concerns about ethics

Regulatory Compliance and Ethical Conducts; Grievance Procedure and Whistle Blowing

62,96

Governance

102-18 Governance structure Corporate Governance Overview Statement 32

Stakeholder Engagement

102-40 List of stakeholder groups Stakeholder Engagements 62

102-41 Collective bargaining agreements Respect for Human Rights 95

102-42 Identifying and selecting stakeholders Stakeholder Engagements 62

102-43 Approach to stakeholder engagement Stakeholder Engagements 62

102-44 Key topics and concerns raised Stakeholder Engagements 62

Reporting Practice


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102-45 Entities included in the consolidated financial statements

Financial Statements 111

102-46 Defining report content and topic Boundaries

About This Report 53

102-47 List of material topics Managing Material Aspects 58

102-48 Restatements of information There is no restatement of information

102-49 Changes in reporting No significant changes. About This Report 53

102-50 Reporting period About This Report 53

102-51 Date of most recent report Annual Report 2018

102-52 Reporting cycle About This Report 53

102-53 Contact point for questions regarding the report

Corporate Information b

102-54 Claims of reporting in accordance with the GRI Standards

About This Report 53

102-55 GRI content index Global Reporting Initiative (GRI) Standards 2016 Content Index

107

GRI 103: Management Approach

103-1 Explanation of the material topic and its Boundary

Managing Material Aspects 58

103-2 The management approach and its components

Sustainability Commitment; Productivity and Innovations; Care for Environment; Investor in People; Returning to Community

54,62,74, 92,101

103-3 Evaluation of the management approach Sustainability Commitment; Productivity and Innovations; Care for Environment; Investor in People; Returning to Community

54,62,74, 92,101

GRI 201: Economic Performance

201-1 Direct economic value generated and distributed

Management Discussion and Analysis; Economic Value Creation and Distribution; Financial Statements

18,62, 111

GRI 202: Market Presence

202-2 Proportion of senior management hired from the local community

People Asset; The Group’s approach is to hire employees with skills and positive attitude, with no discrimination towards the employees’ race, colour, religion, gender, national origin and sexual orientation

96

GRI 203: Indirect Economic Impacts

203-1 Infrastructure investments and services supported

Investor in People; Returning to Community; Financial Statements

92,101, 111

203-2 Significant indirect economic impacts Investor in People; Returning to Community 92,101

GRI 205: Anti-Corruption

205-2 Communication and training about anti-corruption policies and procedures

Regulatory Compliance and Ethical Conduct 62

GRI 302: Energy

302-1 Energy consumption within the organisation Energy Management 89

GRI 303: Water & Effluent 2018

303-1 Interactions with water as a shared resource Water Stewardship 83

303-2 Management of water discharge-related impacts

Water Stewardship; Effluent Management 83,85

303-5 Water consumption Limited disclosure in “Water Source and Consumption”

83

GRI 304: Biodiversity

109


304-1 Operational sites owned, leased, managed in, or adjacent to, protected areas and areas of high biodiversity value outside protected areas

Management of High Conservation Value Areas 75

304-3 Habitats protected or restored Management of High Conservation Value Areas; Rehabilitation and Conservation

75,80

304-4 IUCN Red List species and national conservation list species with habitats in areas affected by operations

Biodiversity Protection 76

GRI 305: Emissions

305-1 Direct (Scope 1) GHG emissions GHG Emission Intensity; GHG Protocol Emissions

87,88

305-2 Energy indirect (Scope 2) GHG emissions GHG Emission Intensity; GHG Protocol Emissions

87,88

305-3 Other indirect (Scope 3) GHG emissions GHG Emission Intensity; GHG Protocol Emissions

87,88

305-4 GHG emissions intensity GHG Emission Intensity 87

305-5 Reduction of GHG emissions GHG Reductions 89

GRI 306: Effluents and Waste

306-1 Water discharge by quality and destination Effluent and Waste Management 84

306-2 Waste by type and disposal method Effluent and Waste Management 84

306-3 Significant spills No significant spill was reported

GRI 307: Environmental Compliance

307-1 Non-compliance with environmental laws and regulations

No non-compliance was reported

GRI 401: Employment

401-1 New employee hires and employee turnover Recruitment and Talent Retention 97

GRI 403: Occupational Health and Safety 2018

403-1 Occupational health and safety management system

Occupational Safety and Health 92

403-2 Hazard identification, risk assessment, and incident investigation


403-3 Occupational health services Occupational Safety and Health 92

403-5 Worker training on occupational health and safety


403-6 Promotion of worker health Occupational Safety and Health 92

403-7 Prevention and mitigation of occupational health and safety impacts directly linked by business relationships

No work-related illnesses were reported

403-9 Work-related injuries Occupational Safety and Health 92

403-10 Work-related ill health Occupational Safety and Health No work-related illnesses were reported

92

GRI 404: Training and Education

404-2 Programs for upgrading employee skills and transition assistance programs

Employee Engagements and Development 99

GRI 405: Diversity and Equal Opportunity

405-1 Diversity of governance bodies and employees

No incidents were reported

GRI 406: Non-discrimination

406-1 Incidents of discrimination and corrective actions taken

No incidents were reported

GRI 407: Freedom of Association and Collective Bargaining

Hundred-Acre Wood in the Malaysian Operations


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9 I

JM P

LAN

TATI

ONS

BERH

AD110


407-1 Operations and suppliers in which the right to freedom of association and collective bargaining may be at risk

Traceability and Supply Chain Management; Respect for Human Rights

70,95

GRI 408: Child Labour

408-1 Operations and suppliers at significant risk for incidents of child labour

Respect for Human Rights; Empowering Children with Education

95,100

GRI 409: Forced or Compulsory Labour

409-1 Operations and suppliers in which the right to freedom of association and collective bargaining may be at risk

Respect for Human Rights; Guest Workers’ Passport Lockers

95,96

GRI 412: Human Rights Assessment

412-2 Employee training on human rights policies or procedures

Respect for Human Rights; All employees were trained on the Group’s Human Rights Policy and practices

95

GRI 413: Local Communities

413-1 Operations with local community engagement, impact assessments, and development programs

Traceability and Supply Chain Management; Returning to Community; Free, Prior And Informed Consent (FPIC)

70,101, 104

413-2 Operations with significant actual and potential negative impacts on local communities

Traceability and Supply Chain Management; Returning to Community; Free, Prior And Informed Consent (FPIC)

70,101, 104

52 SUSTAINABILITY REPORT - IJM Plantations€¦ · -orging Partnerships, Creating Shared F Value:...

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