IOI CORPORATION BERHAD Enhancing Reach & Engagement
(9027-W) r e s u T r a o n s p a r l e n c c s y i D ENHANCING REACH & ENGAGEMENT
g a g e m e n t E n IOI CORPORATION BERHAD (9027-W) Two IOI Square, IOI Resort, 62502 Putrajaya, Malaysia www.ioigroup.com SUSTAINABILITY REPORT 2017
SUSTAINABILITY REPORT 2017 WHAT’S INSIDE Message from Our CEO 02 About This Report 26 Our Environment pg: 04 04 Message from Our CEO 27 Responsible Sourcing & Sustainability for IOI Corporation Traceability 08 About IOI Corporation 34 IOI Plantation 13 Sustainability Highlights OUR FRONT COVER pg: 2016/2017 47 Commodity Marketing IOI Corporation Berhad (“IOI Group” or “IOI”) has made continued 16 progress on its sustainability endeavours and reinforced its good agricultural practices and management measures in all its divisions, at 14 August 2016 to June 2017 50 IOI Loders Croklaan Engaging with Stakeholders the same time increasing its community development initiatives. The linework image on the cover shows a hand holding a robust sapling with in Summary three leaves, representing the three pillars of IOI Group’s commitments 56 IOI Oleochemical to its stakeholders: transparency, disclosure and engagement. 16 Sustainability for 62 Appendix: Content of Report pg: REPORTING SCOPE & BOUNDARIES IOI Corporation 22 This report accompanies the Group’s Annual Report 2017, and covers the financial year ending 30 June 2017. This report has 63 Appendix: EES Data Memberships & Accolades Our Environment been prepared in accordance with the Global Reporting Index (GRI) 20 Sustainability Standards: Core Option. The scope covers our core 69 Glossary businesses including: IOI Plantation (estates, mills and refineries), 22 Engaging with IOI Loders Croklaan and IOI Oleochemical operations. This report also includes IOI Commodity Marketing activities, however excludes Stakeholders 70 GRI Content Index: pg: IOI Group Sales Offices. There have been no significant changes to the Group during the reporting period. Core Option 26 24 Our Community This report also contains information on the management of the Responsible Sourcing & Traceability Group’s material economic, environmental and social (“EES”) risks and opportunities in line with the sustainability-related disclosure obligations prescribed in the amended Main Market Listing Requirements of Bursa Malaysia Berhad. To avoid repetition, some of the information is reported in the IOI Corporation Berhad’s Annual Report 2017. pg: 27 About This
FEEDBACK & COMMENTS Dr. Surina Ismail, Report Group Head of Sustainability: IOI Group is open and committed [email protected] to listening to our stakeholder’s opinions and ideas. We welcome Hanna Hazirah Awaluddin, any feedback on this sustainability Sustainability Executive: report, our management approach [email protected] and performance. Please send your comments to:
Over the last year it has been a priority ensuring further guidance on the action for IOI Group to engage more fully with plans and sustainability initiatives required its stakeholders and further enhance going forward. Further details of the case are transparency and communication. The available on the RSPO website1. Group have committed to regularly share Over the last year Group has also and communicate on its policies, practices IOI appointed a Group Head of Sustainability and initiatives, and provide opportunities and built up its sustainability teams across all for everyone to give their feedback and Group companies to strengthen its internal response. This is fundamental to assure our capabilities. A Sustainability Advisory Panel stakeholders that we are keeping our (SAP) composed of both internal and external commitments and making constant progress. sustainability experts was also established. Following IOI Group’s certification This report is Group’s first stand-alone suspension from the Roundtable on IOI annual sustainability report and it reflects Sustainable Palm Oil (RSPO) last April the Group’s commitment to a stronger 2016, the Group refocused its approach to stakeholder engagement and more open stakeholder engagement and communication communication. It provides a detailed view on and paved the way for a cultural change Group’s sustainability efforts and updates in the organisation. The suspension was IOI on performance and progress to date. successfully lifted after only 4 months in Beyond this report, the Group will regularly August 2016 following the creation of our share relevant sustainability updates publicly Group Sustainability Steering Committee on its website. (GSSC) and a number of concrete measures
1 https://www.rspo.org/members/complaints/status-of-complaints/view/80
2 IOI GROUP Sustainability Report 2017 3 MESSAGE FROM OUR CEO
DEAR STAKEHOLDERS, As IOI embarks on the journey of corporate sustainability, we have encountered many challenges, risks and opportunities. We recognise that while corporate growth and profitability are pivotal to our business, the pursuit of societal goals specifically those relating to sustainable development – environmental protection, social equity, and economic development, are fundamental to our responsibilities as citizens of this world.
We believe that with strong leadership and Board oversight, but also to the United Nations Guiding Principles on as well as linking our peoples’ values and support for Business and Human Rights and the Principles of Free sustainability with their daily work and the company’s and Fair Labour in Palm Oil Production. We have recently operations, sustainability can be successfully embedded enhanced our Sustainable Palm Oil Policy (SPOP) on within our organisation. IOI’s major drivers in implementing Human Rights and Workplace by introducing strong policies our sustainability commitment are from our employees, on no recruitment fees for foreign workers, no retention customers, suppliers, surrounding communities and the of passport, freedom of association and ensuring above environment. minimum wage payment. We have also conducted our DATO’ LEE YEOW CHOR labor rights monitoring project with a labour consultant as Chief Executive Officer part of IOI’s overall efforts to strengthen our management Our Employees systems and tools. In the area of workplace safety, we They form the backbone of our success. To further continuously provide relevant training to our employees strengthen our commitment towards the care and and monitor the Lost Time Incident Frequency Rates as an wellbeing of our workers, we do not only subscribe important safety measure. to the Universal Declaration of Human Rights and the International Labour Organisation’s core conventions,
4 IOI GROUP Sustainability Report 2017 5 message from our ceo
Partnership with HUMANA provides education to students who are unable to enroll into national Capacity building given to IOI Group’s schools in Malaysia. employees across its operation.
Our Suppliers landscape level approach in our Ketapang concession in Indonesia where we collaborate with both the federal and provincial In the last few years, responsible sourcing has become a priority government agencies, local communities, NGOs and other for both IOI and our customers. Subsequently, we have added, plantation companies to promote sustainable management of the as an Annex to our SPOP, a more rigorous supply chain policy landscape. Part of the implementation of this approach includes commitment that applies to our third-party suppliers. In order continuous buffer zone monitoring to ensure the effectiveness of to communicate and engage with our suppliers regarding this fire prevention, peat management and biodiversity conservation. commitment, we have conducted many workshops, trainings and We also practice Zero Burning Policy during new planting and meetings facilitated by industry experts, government agencies, recycling of felled palm trees for biomass retention during replanting. Overview of one of IOI’s estates. and NGOs. Moving Forward The Surrounding Communities Our Customers IOI has done a lot in the area of sustainability throughout its We have a longstanding involvement with the surrounding operations and in promoting sustainable development in the As embodied in our core values, our customers’ needs and wants communities. Among the corporate social responsibility activities palm oil industry. We recognise that the journey of sustainability are forefront in our business. One of the areas of importance that we have carried out are awareness campaigns to empower is a long and arduous one. We are prepared and committed to to us and our customers is sustainability in the palm oil sector. women workforce in the estates, awarding of scholarships to undertake this journey by holding fast to our IOI Core Values, In our SPOP, we have made transparency and engagement with students from the surrounding communities to pursue education in line with our Vision IOI. our stakeholders one of the important elements of our sustainability at all levels, raising money to help fight diseases like Multiple commitments. For example, we have developed a Grievance Sclerosis and Zika, and working with the communities to Mechanism which allows full disclosure of our dealings with rehabilitate and conserve their natural environment. Additionally, any complaint raised and introduced a “Palm Oil Dashboard”, as a plantation-based company with over 23,000 employees, a public dashboard reporting tool to highlight at a glance, the we have helped to improve the income level and well-being of origin of our oil, a risk assessment and supplier verification many rural communities by providing jobs to the local people, associated with the source of our oil as well as latest updates. building infrastructures such as roads and bridges and providing We have also formed a Sustainability Advisory Panel (SAP) business for local enterprise. comprising of non-governmental oganisations (NGOs), customers and industry expert, to advise and to provide a critical review and advisory function on sustainability-related matters. The Environment Stakeholders engagement event involving our customers in Europe. We are now a member of the High Carbon Stock Approach Visiting IOI facility provides learning opportunity to students and Steering Group after agreement was reached at the High Carbon community. Stock (HCS) Convergence meetings. We are also developing a
6 IOI GROUP Sustainability Report 2017 7 About IOI CORPORATION
Dividend per Earnings per Our share share Results 9.5 sen 11.82 sen 2016 – 8.0 sen 2016 – 9.99 sen
IOI CORPORATION BERHAD
Profit before interest Share price Market capitalisation Commodity and taxation at 13 September 2017 at 13 September 2017 Marketing Corporate function* IOI IOI LODERS IOI RM1.56 RM4.64 RM29.16 PLANTATION CROKLAAN OLEOCHEMICAL billion billion 100% wholly owned subsidiary 100% wholly owned subsidiary 100% wholly owned subsidiary 30 June 2017 – RM4.45 2016 – RM1.45 billion 30 June 2016 – RM4.34 30 June 2017 – RM27.96 billion 30 June 2016 – RM27.29 billion
Source: IOI Corporation Berhad’s Annual Report 2017 • Oil Palm Cultivation • Palm Oil Refinery • Palm Oil Refinery • Crude Palm Oil Milling • Speciality Oils & Fats • Fatty Acids & • Palm Oil Refinery • Fractions Glycerine WHO WE ARE • Kernal Crushing • Infant Nutrition • Soap Noodles & Esters TAT • Speciality Chemicals AN ION PL I As one of the world’s largest and vertically-integrated palm oil producers, O I IOI Group’s business comprises the upstream plantation and downstream resource-based manufacturing. Corporation Berhad is IOI IOI Plantation is our core IOI Loders Croklaan IOI Oleochemical Group Commodity Marketing listed on the Main Market of Bursa Malaysia Securities Berhad. The Group business engaged in the Group (“ ”) produces (“ Oleo Group”) is is responsible for sales and have employed more than 23,000 employees, of which 71% are male IOILC IOI cultivation and the processing and trades specialty oils and manufacturing and supplying marketing, procurement, employees and the rest 29% are female employees. of palm oil. fats, focusing on palm oil lipid vegetable-based products, import and export activities, CHEM solutions. including fatty acids, glycerine, supply chain and logistic The Group’s plantation business covers Malaysia and Indonesia with a land EO IC L A O L soap noodles, fatty esters planning. bank of more than 230,000 hectares, and is one of the largest plantation i crok o s l and specialty downstream i r a owners in the industry. With our hands-on management approach and good e a d n oleochemical derivatives. agronomic practices, IOI Group is ranked highly among the most efficient o l
major plantation owners with one of the highest oil yields in the industry. A
i
o substantial portion of the Group’s plantation produce - crude palm oil and i palm kernel - is utilised in the resource-based manufacturing operations. IOI * Within the IOI Corporation Berhad Group’s downstream businesses are operated by IOI Loders Croklaan and market y in IOI Oleochemical. IOI Group have manufacturing facilities in Malaysia, t g i the Netherlands, USA, Canada, Germany and China. Currently, our d o
downstream products are exported to more than 85 countries worldwide. m
m o
A full description of the Group’s integrated business model can be found in c Palm Oil Business Stream in our Annual Report 2017.
8 IOI GROUP Sustainability Report 2017 9 ABOUT IOI CORPORATION
LOCATIONS
GLOBAL PRESENCE LOCAL PRESENCE
32
31 Kota Kinabalu Airport Sandakan Airport 30 38 27 28 Sandakan Port 25 22 26 29 21 23 20 24 19 18 17 16 SABAH Lahad Datu Port Lahad Datu Airport 15
9 11 Tawau Port Tawau Airport 15
8 12 Penang Port 10 14 34
13 PENANG 33 1 Penang 3 International 2 Airport 18 Sultan Azlan Shah SARAWAK 7 Airport 17
20 Kuantan Port 5 16 PAHANG 6 Kuantan Airport 19
2
SELANGOR 3
1
Port Klang 4 5 plantation plantation resource-based
West Port (PENINSULAR) (east malaysia) manufacturing 4 8 7 Australia NEGERI 10 6 1 Bukit Dinding Estate 15 Baturong Estate 34 Oleochemical KLIA SEMBILAN IOI 9 Operations 12 2 Detas Estate 16 Cantawan Estate 11 35 Pan-Century MALACCA JOHOR 13 3 Bukit Leelau Estate 17 Unico 6 Estate IOI 1 Channahon, USA 4 Sao Paulo, Brazil 5 Bobo Dioulasso, 8 Rotterdam, The Netherlands 16 Malaysia Oleochemicals & 14 4 Leepang A Estate & 18 Halusah Estate Burkina Faso Refinery Operations 2 New Jersey, USA 9 Wormerveer, The Netherlands 17 Xiamen, Senai Laukin A Estate 6 Tema, Ghana The People’s Republic of China International 19 Tas Estate 3 Toronto, Canada 10 Witten, Germany Airport 36 IOI Lipid Enzymtec 7 Cairo, Egypt 18 Shanghai, 5 Mekassar Estate & 11 Hamburg, Germany The People’s Republic of China 20 Unico 1-5 Estates Plant 35 36 37 Merchong Estate 12 Wittenberge, Germany 19 Kalimantan, Indonesia 21 Morisem 1-5 Estates 37 IOI Loders Croklaan 13 Milan, Italy 20 Manila, The Philippines 6 Pukin Estate Main Airport Tanjung Pelepas Pasir Gudang 22 Leepang 1-5 Estates Refinery/Specialty Fats 14 Warsaw, Poland Port Port 7 Shahzan 1 Estate & Palm Oil Mill IOI 23 Permodalan Estate Operations 15 Moscow, Russia Shahzan IOI 2 Estate Main Port 24 Syarimo 1-9 Estates 38 IOI Palm Oil Refinery/ North-South Expressway 8 Bahau Estate & Kernel Crushing Plant Kuala Jelei Estate 25 Bimbingan Estate East Coast Expressway North South 26 Mayvin Estate & Africa Europe Asia 9 IOI Research Centre & America America Regent Estate Tangkulap Estate 10 Gomali Estate, Paya 27 Laukin Estate Lang Estate & Tambang 28 Ladang Sabah Estates, Estate IOI Lab & Sandakan 11 Bukit Serampang Estate Regional Office & 29 Linbar Estates Sagil Estate 30 Sakilan Estate 12 Segamat Estate 31 Pamol Sabah Estates 13 Kahang Estate 32 Sugut Estate 14 Pamol Barat Estate, 33 Sejap Estate & Tegai Plantation & Mill Resource-based Sales/Procurement/Regional Pamol Timur Estate, Estate Manufacturing Office Mamor Estate & Unijaya Estate
10 IOI GROUP Sustainability Report 2017 11 ABOUT IOI CORPORATION Sustainability Highlights 2016/2017
Corporate GOVERNANCE & ETHICS Transparency CORPORATE GOVERNANCE Ensuring our and Stakeholder AND ETHICS COMMITMENTS EngagemenT • Launch of IOI Group’s revised • National and international Sustainable Palm Oil Policy NGOs are being actively (SPOP) and Sustainable engaged to enhance our Field visit by BSR. Risk Management Implementation Plan (SIP). understanding of material • Review of Assessments and environment, social and labour The board-level Audit and Risk Management Committee (ARMC) maintains risk and Procedures on KPAM - our last issues. audit oversight for Group through the adopted Enterprise Risk Management (ERM) IOI wholly unplanted concession - Strengthening our • Group Sustainability framework. A more detailed explanation on the risk management and internal control is IOI by Proforest. Sustainable Palm Oil Advisory Panel formed. explained in IOI Corporation Berhad’s Annual Report 2017. Policy (SPOP) • The independent labour rights • Palm Oil Dashboard launched Operational risks, including health and safety, quality, production, marketing and distribution, verification assessment work on 22nd December 2016. • Further revision to Group’s and statutory compliance, are managed at the business unit level and guided by approved completed by international IOI SPOP in February 2017 • Establishment of a Grievance Standard Operating Procedures. Operational risks relating to supply chain, environmental consultant BSR. was made to enhance our Procedure to resolve any sustainability, integrated systems, transfer pricing and reputation, are coordinated centrally. commitment in regards to third- stakeholder grievances raised. Read more on p.17,36 party suppliers. Read more on • Latest update made in June p.14,18,19,22,30,36,39,45 2017 to reflect the Group’s Corporate Responsibility commitments toward human Enhancing rights and workplace. 2 Conservation and IOI Group’s Corporate Responsibility Policy reflects our long-standing commitment to Biodiversity • IOI Group is also committed employees, surrounding communities and the environment. IOI Group also has in place to apply the newly revised a number of workplace policies related to occupational safety & health, no recruitment High Carbon Stock Approach fee for foreign workers, prevention & eradication of sexual harrassment in the workplace, • Actions such as training (HCSA) methodology and its no child labour, and equal opportunity employment & freedom of association, amongs others. communities in fire- associated social requirements fighting taken to empower in its operations. communities. Methane capture facility in IOI Plantation. • Tangible progress made in Read more on p.17,26 the development of Ketapang Anti-Corruption Landscape Level Approach. • Various initiatives such Reducing GHG IOI Group’s Code of Business Conduct and Ethics3 sets our commitment to integrity as wildlife protection in Emissions and maintaining fair and ethical practices. The Code is communicated to all Directors and collaboration with Indonesia’s employees upon appointment or employment. Natural Resource Conservation • Development of methane Agency (BKSDA) undertaken to capture program. We encourage feedback with regards to the Group’s compliance or any suspected save orangutans. violations of the Code. IOI Group’s Whistle-blowing Policy4 provides an avenue for all • Mitigation of biogas emission • Commitment to the High IOI Group employees, agents, vendors, contractors, suppliers, consultants and customers, Signage in conservation area. from palm oil mill effluent Carbon Stock Approach and a along with members of the public, to raise concerns about any improper conduct in a (POME). member of High Carbon Stock transparent and confidential manner without fear of retaliation. Approach Steering Group. • 2 biogas plants commissioned to capture methane and • Commitment to implement mitigate emissions, contributing global best-practice peatland to GHG reduction of 120,000 management. MT of CO2 per year.
Read more on p.26,42,43,45 Replanting programs in Ketapang, Read more on p.42 2 http://www.ioigroup.com/content/s/pdf/corporate%20responsibility%20policy%20statement.pdf Indonesia. 3 http://www.ioigroup.com/Content/CI/PDF/IOI%20Code%20of%20Business%20Conduct.pdf 4 http://www.ioigroup.com/content/ci/pdf/corp_whistleblowingpolicy.pdf
12 IOI GROUP Sustainability Report 2017 13 August 2016 to June 2017 IN SUMMARY
8 August 2016 1 December 2016 Updated IOI Group’s Sustainable Aidenvironment issued a joint statement with Palm Oil Policy (SPOP) was IOI Group regarding their satisfaction on the published following stakeholder OctoBER ground progress at the Ketapang concession, outreach and engagement with 2 September 2016 and the closure of the case where they are Proforest. The SPOP brought 31 August 2016 2016 concerned. 5 August 2016 together relevant commitments IOI Group and RSPO verification IOI Group, Global Environment Group’s new A draft settlement agreement which gives the from across the Group, and defined auditors, visited PT BSS (SNA IOI Centre (GEC) and Aidenvironment Grievance Mechanism native community land use rights was presented The RSPO lifted the suspension of clear actions going forward. The Group) in Ketapang, Indonesia to visited Ketapang, Indonesia was published and to the affected communities for consideration. RSPO certification for entire IOI Sustainability Implementation Plan verify the progress made by IOI. concession to assess progress developed with input Group based on the detailed action (SIP) was also published, setting of implementation of action plan from stakeholders and plan proposed by IOI to mitigate the activities, milestones and suggested by GEC on the ground. is being implemented issues at hand. timelines to realise the goals and since October. commitments established in the SPOP.
5 December 2016 IOI Group’s Sustainability Team in Indonesia, in collaboration with the Natural Resource JANUARY 2017 20 December Conservation Agency or BKSDA, saved orangutans from poachers in Desa Air Hitam JANUARY 2017 Engagement with international 2016 Besar, Kalimantan. labour rights monitoring consultant A series of workshops for employees A meeting was held BSR on fair and proper labour Supplier engagement & training initiated; best was initiated. The workshops to discuss further the practices across our plantations in practices for existing planting on peat. 24 JANUARY 2017 covered topics from third party terms of the settlement Malaysia. This system will support sourcing to High Conservation Value agreement with the Field verification visit by RSPO was the Group’s operations in addressing (HCV), High Carbon Stock (HCS), affected communities in conducted along with independent the concerns raised by Finnwatch, peatland, and third-party supplier’s experts at ’s plantations in as well as to review migrant IOI-Pelita concessions. IOI engagement to ensure compliance Ketapang - PT Sukses Karya workers’ management practices in 22 December 2016 During the meeting, the with our commitments stated in the Sawit (PT SKS), PT Berkat Nabati Sabah, where the majority of ’s community requested SPOP. IOI IOI Group’s Palm Oil Dashboard Sawit (PT BNS) and PT Bumi Sawit plantation reside. some additional terms was published online. Sejahtera (PT BSS). be put into the third settlement agreement.
15 MARCH 2017 IOI Group joined the Fire Free 28 APRIL 2017 12 JUNE 2017 3 FEBRUARY 2017 Alliance (FFA), a voluntary 19 May 2017 multi-stakeholder group consists of Greenpeace suspended its SPOP was further revised following consultation with NGOs to incorporate enhanced IOI Pan-Century was certified 8 companies including IOI, that aids campaign against IOI Group in light The first meeting was held for the application of the High Carbon Stock Approach (HCSA) methodology and its social with the new ISO 14001:2015 in the resolution of land forest fires of its action plan and commitments independent IOI Group requirements, and to address labour rights issues, commitments on Principles of Environmental Management in Indonesia, to further strengthen to the environment, labour rights and Sustainability Advisory Panel (SAP), Free and Fair Labour in Palm Oil Production as well as UN Guiding Principles on System, the first oleochemical its fire prevention and management third party suppliers assessments which consists of customers, NGOs Business & Human Rights. company in Malaysia to do so. efforts in the Republic. taken. and industry experts.
14 IOI GROUP Sustainability Report 2017 15 SUSTAINABILITY FOR IOI GROUP IOI CORPORATION SUSTAINABLE PALM OIL POLICY (SPOP)
IOI Group aims to be in the forefront in both sustainable palm oil production and sourcing, and is committed to the sustainable SUSTAINABILITY management of its oil palm plantations and the implementation of PRINCIPLES AND VALUES responsible, global palm oil supply chain. Some key commitments: The Sustainable Palm Oil Policy (SPOP)5 is based upon the following RSPO Next in our Malaysia’s plantations principles: IOI Group is working to further embed sustainability Zero Burning Policy within its businesses, promoting the adoption of best To comply with all applicable legislation and codes Eliminate all forms of illegal, forced, bonded, practices across all operations, ensuring the wellbeing 1 of practice. of our people and communities, as well as meeting our Define sustainability compulsory or child labor in operations or supply stakeholders’ expectations. Looking forward, this will within IOI Group chain help ensure mitigating critical concerns such as climate To implement leading sustainability standards laid change and water scarcity are integrated into our long- out in the SPOP for environmental management, Protection of HCV and HCS areas in existing and term business strategy. 2 human rights and workplace conditions, new plantations community development and social impact. To support this process, the Group has developed a Engage with No deforestation systematic approach which will be followed to manage its stakeholders Corporate Responsibility and Sustainability policies, risk To develop traceable supply chain where all No development on peatland for new plantation management approach, targets and goals, assurance, 3 suppliers are compliant with IOI Group’s as well as commitments to the stakeholders. commitments. No retention of passports
No Recruitment Fee Policy To strive for the highest levels of transparency and 4 stakeholder engagement.
The SPOP, which serve as the main guiding document for the Group’s sustainability Set goals and Our Approach to practices, was first launched in March 2014, with the revised SPOP published in commitments Sustainability August 2016. The Group had further revised and published the policy following our engagement with stakeholders to reflect our serious intent towards sustainability and sustainability practices. Specifically, on top of the addition of the Annex on implementation of policy commitment by third-party suppliers in February this year, the Group is now also committed to apply the newly revised High Carbon Stock Approach (HCSA) methodology and its associated social requirements. Sustainability Sustainability Vision In addition, the Group has made further enhanced commitments in the area of Human Implementation Rights and Workplace which include no recruitment fees charged to workers at any Plan (SIP) The Group believe that we should meet the needs stage in the recruitment process, in both receiving and sending countries, payment of the present without compromising that of the of monthly minimum wage in accordance with the current labour regulations, access The Sustainability Implementation Plan future generations by: Establish systems of trade unions to workers and to adopt both the Free and Fair Labour Principles and (SIP)6 serves as a working document and processes UN Guiding Principles on Business and Human Rights, amongst others. IOI Group to meet our goals and commitments • Committing to protect, rehabilitate and preserve is also committed to no retention of passport of our migrant workers by year end. stated in the SPOP. Outlining our the environment where we live in The Group stands firmly committed to the implementation of its sustainability policies activities, timeline, key milestones, • Ensuring that the economic, social wellbeing and believes that its progress in key areas, combined with these new commitments and ongoing progress. It is updated and health of our employees and families as and measures, sends a strong signal to stakeholders on our desire for continued quarterly and is available for download Track progress, on our website. well as the wider communities are safeguarded communicate actions, improvement. Any update on the SPOP will be announced on the Group’s website and the most up-to-date SPOP is available for download. • Leading and innovating as well as embedding and meet expectations sustainability into our business
5 http://www.ioigroup.com/Content/S/PDF/Sustainable%20Palm%20Oil%20Policy.pdf 6 http://www.ioigroup.com/Content/S/PDF/SustainabilityImplementationPlan.pdf
16 IOI GROUP Sustainability Report 2017 17 SUSTAINABILITY FOR IOI CORPORATION
SUSTAINABILITY GOVERNANCE GRIEVANCES
IOI Group’s Board of Directors oversees the management Sustainability Team – In line with IOI Group’s greater and governance, ensuring an effective implementation of the commitment towards a more transparent and effective execution Group’s sustainability plan. Aside from this we have set up a of policy, we have recently put in place a new Sustainability more systematic Sustainability Governance Structure which Team structure where the Sustainability Heads at all operating comprises of; divisions have a reporting line to the Group Head of Sustainability who reports directly to the Group CEO. This will ensure that the Sustainability Steering Committee – On the Governance operations personnel strictly adhere to all sustainability policies, aspect, to ensure that we keep our sustainability strategy and practices and commitments of the Group. performance on track and support the Board in setting high level direction and focus, IOI Group set up a Sustainability Steering During this reporting period, IOI Group has more than doubled Grievance Procedure Grievance List Committee that reports to the IOI Board of Directors. This its staff of sustainability professionals. For further details on our committee comprises the Group CEO, Heads of the Operating corporate governance, please refer to the Corporate Governance Group is committed to resolve any grievance All issues raised are fully disclosed in our Grievance Divisions, Group Head of Sustainability, and Senior Management Report included in the Group’s Annual Report 2017, or visit the IOI raised by our stakeholders. A Grievance List10. Outstanding grievances as of 30 June 2017 from Group Support Functions. Corporate Governance7 section of our website. Procedure8 is established for all stakeholders include environmental complaint in Ketapang, land who might identify issues or incidents in our dispute in Sarawak and labour issues highlighted by BOARD OF DIRECTORS supply chain that are not in line with principles Finnwatch in Peninsular Malaysia. Details are further stated in the Group’s SPOP. Grievances can be discussed under IOI Plantation section of this report. Group Sustainability submitted through a number of channels9 made CEO Steering Committee available on our website, and are dealt with in a (External Party) fair and timely manner. In view of transparency, a IOIC Group Head of Sustainability list of grievances received with progress updates Sustainability Advisory Panel is published and available to download from the Group’s website.
IOI LODERS IOI CORPORATE COMMODITY IOI PLANTATION CROKLAAN Oleochemical MARKETING 3 person 70 person 6 person 3 person 2 person Grievances can be summited through the following channels:
By email to: By sending text via SMS or Whatsapp HQ: 3 Europe: 3 Peninsular America: 1 [email protected] to: Malaysia: 6 Asia: 2 +6019 612 9101 East Malaysia: 50 By telephone to: Indonesia: 11 +603 8947 8661; In mailing to: +31 (0)75 629 2482 IOI Corporation Berhad, Sustainability Advisory Panel Oxfam, WWF and Mondelez, etc., as well as representatives Level 8, Two IOI Square, IOI Resort, from IOI Group senior management. Going forward, the Panel 62502 Putrajaya, Malaysia (SAP) will advise and challenge the Group on delivering its sustainability (Attn: Sustainability Coordinator) commitments and ambition. It will provide a critical review and The Sustainability Advisory Panel (SAP) supports the roll-out of advisory function to the Group’s sustainability activities and help the Group’s SIP, and advises on specific issues raised by multi- to review its progress in delivering its sustainability commitments stakeholders such as NGOs and RSPO. The SAP is composed of as set out in the SPOP and SIP. NGOs, customers and subject-matter experts and experienced professionals from various countries and sectors, including The Panel will also advise on an independent progress evaluation of IOI’s SIP in Q2 2018.
8 http://www.ioigroup.com/Content/S/PDF/30%20sept%202016%20Grievance%20Mechanism%20FINAL.pdf 9 http://www.ioigroup.com/content/s/s_grievance 7 http://www.ioigroup.com/content/ci/corp_governance 10 http://www.ioigroup.com/content/s/pdf/grievancelist.pdf
18 IOI GROUP Sustainability Report 2017 19 MEMBERSHIP & ACCOLADES AWARDS AND RECOGNITION MEMBERSHIPS
Prime Minister’s Hibiscus Award 2015 IOI Oleochemical (IOI Acidchem - formerly known as Acidchem International) is the current winner of the PMHA Challenge Trophy and the “Excellent Achievement” Roundtable on International Business for Social awards, the first palm oil company Sustainable Palm Oil – Sustainability & Carbon Fire Free Alliance – FFA Responsibility – BSR to do so, and retained the “Penang RSPO Certification – ISCC State Award” won previously.
Malaysian Oleochemical ASEAN Oleochemical Malaysian Palm Oil Malaysian Palm Oil Manufacturers Group – Manufacturers Group – Association – MPOA Board – MPOB MOMG AOMG
Anugerah Industri Sawit Responsible Care Prai Chemical and 2015/2016 Program under the Gas Group under SEDEX: Supplier B European Palm Oil Chemicals Industries Federation of Malaysian Membership Alliance – EPOA IOI Oleochemical won the biennial Malaysian Palm Council of Malaysia – Manufacturers – FMM Oil Board’s Palm Industry Award (Anugerah Industri CICM Sawit) 2015/2016 for Best Oleochemical Producer in Malaysia for the 4th time since 2006.
American Oil Chemists MVO – The Netherlands Dutch Alliance for Fediol Society – AOCS Oil & Fats Industry Sustainable Palm Oil for IOILC Americas
High Carbon Stock CSR Asia Approach Steering Strategic Partnership Group Member – HCSA Responsible Care Awards 2015/2016 IOI Oleochemical Group won a total of ten awards at the prestigious 13th Chemical Industries Council of Malaysia Responsible Care Awards 2015/2016.
IOI Pan-Century and IOI Acidchem among them won 2 Platinum Awards, 1 Gold Award, 6 Silver Awards and 1 Merit Award on Employee Health & Safety Code, Community Awareness, Emergency Response Code, Pollution Prevention Code, Distribution Code and Process Safety Code and Community Awareness.
20 IOI GROUP Sustainability Report 2017 21 engaging with stakeholders
Our workforce Customers Shareholders Communities
Employees, workers, trade unions. Global customer base across Investors, minority watchdog Local communities and multiple industries. groups, bondholders. indigenous people in and On-boarding program, training, around our operations. Improving our level of engagement newsletter, bulletin, meeting, A formal Customer Satisfaction FAQs at Annual General Meeting gathering, engagement platform Survey focusing on service, quality, (AGM), Extraordinary General Meetings, dialogue, corporate with stakeholders through ongoing through Kelab Keluarga IOI documentation and complaints Meeting (EGM), bondholders sustainability programs, (KKIOI). handling performance with our meetings, and other shareholder appointment of Community communication with full transparency customers every two years. Formal related meetings where necessary. Communication Officer engagement and presentations at For more information please refer to specifically to disseminate on our performance is a priority for major forums like Palm and Lauric IOI Corporation Berhad’s Annual information and serve as liaison Oils Conference (POC), Conference Report 2017. to the community at large. Group. on Roundtable Sustainable IOI Palm Oil (RSPO RT), European Roundtable (EU-RT) etc., to inform our customers on progress in sustainability related matters.
Civil Societies Regulators Suppliers Industry Associations
Local and international Stock exchanges, financial Smallholders and producers, RSPO, HCSA, FFA, AOMG, MOMG and EPOA. environmental and social NGOs, as authorities, government regulatory product manufacturers. well as non-profit organisations. bodies, Malaysian Palm Oil Board. Board member, Standing and Working Committee members of RSPO, active Vendor dialogue, vendor audit, member in the Malaysian Palm Oil Association (MPOA), active member and Meetings, calls, collaborations on Meetings, inspections, audits, vendor appraisal, vendor survey, Chairman of Malaysian Oleochemical Manufacturing Group (MOMG) and projects, policy and documentation correspondence on compliance workshops, meetings, calls, committee member of ASEAN Oleochemical Manufacturers Group (AOMG), reviews and publications. and regulations, technical industry, initiatives, conferences, member of the European Palm Oil Alliance (EPOA), High Carbon Stock Approach knowledge sharing. and Third-Party Supplier (TPS) (HCSA) Steering Group, IOI Sustainability Advisory Panel (SAP), and Free Fire program. Alliance (FFA), amongst others. Stakeholder Groups
How We Engage
22 IOI GROUP Sustainability Report 2017 23 OUR
COMMUNITY Young Achievers Awards • Annual ceremony rewarding children of IOI employees for excellence in studies, appreciating our staffs’ commitment to their children’s education and motivating the children to excel in their studies. IOI Group’s outreach programs focus on education • 68 students received cash awards and certificates this year for their outstanding performance in major exams (e.g. A-levels, STPM, O’-levels, SPM, etc.). They also received plaques, and Gold Achievers to empower the young to become leaders of were given the opportunity to share their story and develop their public speaking skills. tomorrow. The Group’s human capital development • Motivational speakers to enhance students’ skills and support optimistic mind-frames. • RM 33,400 invested for FY2017, with in-kind contributions including educational grants and and corporate philanthropic initiatives are mainly interest-free educational loans. undertaken by our charity arm, the Yayasan Tan Sri Lee Shin Cheng (“Yayasan TSLSC”).
IOI – Puchong Student Adoption Program STEM Program Bargain Basement • Underprivileged students receive a school bag and cash assistance of RM800 Scholarship for primary and RM1000 for secondary students each year. Collaboration with Chumbaka Sdn Bhd • Charity shop selling usable donated items (Chumbaka) and Agensi Inovasi Malaysia (AIM) to at affordable prices. Run by Yayasan TSLSC • Provides equal access to for students in need, and eases Awards basic education co-sponsor an after-school program focusing on and staffed by volunteers in their own time. financial burden on their families resulting in less drop-outs. Science, Technology, Engineering & Mathematics • Offered for full time (STEM). • IOI staff and the community donate undergraduate studies in local • Over 984 students from 2014 schools have been ‘adopted’ since introduction in 2008. pre-used items such as clothes, toys or higher learning institutions in books to sell in the shop. Malaysia. • RM403,449 invested during 2016/2017, with in-kind contributions including Weekly 2-hour workshops conducted by • Practical training/internships school bags and stationery. Chumbaka to promote interest and provide • 100% of net proceeds go to charity, with related to their future job, opportunities to learn and innovate in areas such as RM58,000 cash assistance given to educational grants and interest- digital marketing, coding and prototyping. 6 beneficiaries to date. free educational loans offered to • Two fund-raising events held for SJK (C) students, reducing the financial School Building Fund Kheng Chee and Living Hope and have burden on families and reducing 210 students from 10 schools participated: managed to collect combined total of drop-out rates of students. • New school buildings funded to provide 5 primary schools & 5 secondary schools. RM3,890. • Career opportunities within a comfortable study environment for students. IOI Group provided after • Featured in The Star newspaper twice this graduation, helping students to • Donations include: On 8 July 2017, STEM students from 5 schools year as a good community initiative. find a relevant job for their skills participated in Young Innovate Competition o RM 5,000,000 organised by Cyberview Sdn Bhd, and won 4 Gold, • Set-up cost contributions include after completing studies and for Kuen Cheng High School enabling the Group to hire new 4 Silver and 3 Bronze trophies. RM159,000 with software purchase of talent for the company. o RM 20,000 RM4,240. for Lahad Datu Middle School • Awarded to more than 250 RM112,875 contributed to the program during A total of RM61,890 has been donated in o students. RM 10,000 2016/2017, matching the funds donated by AIM. FY2017. for Yu Yuan High School • RM6,262,083.15 invested since 1998, of which RM424,000 o RM 10,000 invested during 2016/2017. for Lembaga Pengurus SRJK (C) Wu Teck • SJK (C) Shin Cheng (Formally known as SJK (C) Harcroft) is our own funded school situated in IOI Group’s township of Bandar Puchong Jaya.
24 IOI GROUP Sustainability Report 2017 25 OUR Responsible Sourcing ENVIRONMENT & Traceability
Traceability to Traceability to Certified volumes Third party supplier mills plantation sourced (TPS) program
Workshops and roundtable 99% PO 26% PO 34% PO session
PKO PKO PKO 21 97% 22% 17% on-site verifications
Palm Kernel Palm Oil Traceable to mill Traceable to 100% Plantation 100%
2016 2018 2020 SUPPLY CARBON HIGH CARBON CHAIN MANAGEMENT STOCK APPROACH IOI Group sources its palm oil products IOI Group is committed to address climate change through direct supply, procuring directly 2017 2019 by monitoring and reducing potential contributions (HCSA) from both the Group’s mills and third-party mills, and from indirect supply, procuring to greenhouse gas (GHG) emissions. The Group has Group is a member of the High Carbon Stock IOI from trading partners. already adopted both the ISCC and RSPO Palm GHG Approach (HCSA). Prior to this, IOI Group was a methodologies to proactively monitor GHG emissions and Palm Oil member of the High Carbon Stock Plus (HCS+) and 1,401 mills are supplying Group take practical steps to reduce GHG emissions from palm IOI Traceable to mill participated in the convergence process of the HCSA globally, with majority in Malaysia and oil production. IOI Group is developing a group-wide 100% and the HCS+ methodologies. In November 2016, Indonesia. Our suppliers are needed reporting format for GHG emissions along with a reduction the convergence process was successfully completed to comply with stringent quality and strategy that will include clear targets for the coming with the release of a new HCSA toolkit incorporating sustainability requirements and disclose years. Further details on initiatives and programs please the elements of both process. The Group’s SPOP was traceability information. refer to each specific unit in page 34 for Plantation, page updated in January 2017 to reflect this revised approach, 50 for Loders Croklaan and page 56 for Oloechemical. with recommendations to be implemented and important Though there has been no change to TRACEABILITY OF remaining issues to be addressed through engagement our supply chain during the reporting with the HCSA Steering Group. Further report on HCSA period, IOI Group had to temporary can be found under Plantation in page 34. suspend third-party oil suppliers due to SUPPLY CHAIN their non-compliance to our sustainability IOI Group is committed to building traceable supply chains. requirements. The latest updates are Phased supply chain traceability targets are communicated in provided on our Grievance List online. the time-bound SIP, and progress reported quarterly. To date IOI Group has achieved 100% traceability to mill level, including indirectly sourced volumes.
26 IOI GROUP Sustainability Report 2017 27 Responsible Sourcing & Traceability Engaging Our Supplier
RESPONSIBLE SOURCING
IOI Group’s Third Party Supplier (TPS) program ensures team will also push those mills verified by IOI and suppliers are compliant with our commitments stated in the Proforest to submit their time bound action plans within the Technical Workshop SPOP. Implementation of policy commitments for third party requested timing. IOI Group is part of various industry groups Johor Roundtable Session suppliers are incorporated in the SPOP through the Third (e.g. a partner of WRI Global Forest Watch, the Traceability IOI Group organised a two-day Supplier Party Supplier Annex. In addition, the Group had developed Working Group) and we actively seek collaboration with other Technical Workshop in Sabah to address Johor Roundtable Session was organised by IOI Group’s implementation and communicated to suppliers the new mechanisms to refiners at landscape level to drive changes on the ground. similar issues found in the supplier assessments partner, Proforest in collaboration with AAK and Mewah Oils to engage with proactively monitor third-party suppliers to ensure compliance conducted by Proforest. A total of 40 our suppliers while providing information on the Group’s Supplier Engagement to its policy commitments. For IOI Ketapang concessions, the Group have engaged participants from 11 companies attended the Program. The session was held on 22 March 2017 in Kluang, Johor where the Netherlands-based Satelligence to pro-actively capacity building workshop held in Sandakan the following issues were discussed: A total of 21 mill verification assessments were completed monitor the concessions and neighboring areas for forest on 5-6 December 2016. Speakers from during the reporting period, representing 1.5% of our suppliers. clearance and forest fires. Multiple satellites (Landsat 7/8, Proforest, World Wildlife Fund (WWF), Sabah 1) Proforest’s responsible sourcing approach methodology In total 1 direct supplier and 2 indirect suppliers were found Sentinel-1 radar ESA and ASTER) make one to three Environmental Protection Association (SEPA) 2) Introduction to IOI Group’s SPOP, Mewah and AAK (which was presented to be non-compliant during the reporting period. Appropriate (1-3) observations of the area per week. The change detection and Malaysian Nature Society (MNS) provided by a representative from each company) measures were taken in line with the Group’s commitments system detects vegetation conversion to bare areas with a technical expertise on HCV, peatland, fire issue, 3) Briefing on the supplier verification visits by Proforest – the process, laid in SPOP. specific focus on deforestation. Satelligence will provide and labour. SEPA covered topics on free, checklist used and expected outcomes coordinates for each alert so the Group can actively follow prior and informed consent (FPIC) principles, The names GPS coordinates and controlling groups of each 4) Introduction to the various certifications standards in the industry up on these alerts. Ultimately, IOI Group intents to use common labour issues and practices. mill and refinery in our supply chain are published on the IOI this technique in larger landscapes to pro-actively monitor 5) Challenges faced by millers in adhering to sustainability requirements Group’s website11. our direct supply chain (Sabah, Peninsular Malaysia). This IOI Plantation also attended the workshop as well as the opportunities and solutions that could be provided to technique is complementary to WRI’s Global Forest Watch to share field experiences on the ground and address the challenges (which were discussed within smaller groups in We have targeted another ten to fifteen (10-15) mills for tool. The Group will seek collaboration with other suppliers highlight the importance of addressing the gaps the breakout session) on-site verification in this financial year. The mill verification operating in the same landscape. found in supplier’s supply chain, and reiterated IOI’s continuous support to all suppliers. At the end of the session, a total of 16 participants from eight mills in Johor were each presented with a certificate of attendance.
Mill Verification Step 2: Risk Assessment Step 3: On-site mill verification Mill risk assessments are proactively conducted for all mills in our supply chain, including direct and indirect supply. Each mill’s risk Engagement visits level is categorised by: and compliance Trace • Spatial data focusing on biodiversity rich areas and land use workshops are PRIORITISE On-site mill Palm Oil change from the World Resources Institute’s (WRI) Global Forest Watch (GFW) conducted for verification to mill the mills platform, and near real-time satellite monitoring information from IOI Group’s mills in the direct Partnership with Visit high priority external partner, Satelligence. supply chain. Each trading partner GPS coordinates Step 1: Traceability Proforest and mills • Stakeholder alerts such as complaints from NGOs, media publications and in the indirect supply chain is also engaged to ensure a similar Mill name and parent Global Forest Check progress The traceability update for government sanctions. company 2016/2017 is also available on program for mill-level engagement Watch Focus: direct mills • On the ground information from IOI Group’s intel partner, providing valuable Group website12. We mapped is being implemented. Where Volume Remote sensing IOI insight on conditions. the Group’s palm oil supply chain non-compliance is identified, the in a yearly basis with the level of Risk assessments have been conducted on the Group’s entire supply base every mechanisms detailed in section detail that has increased over the year since 2014. All new mills in our supply chain undergo a risk assessment every 3.3 of the TPS Annex found in the Group’s SPOP are initiated. 1 2 3 years. quarter. IOI
11 http://europe.ioiloders.com/taking-responsibility/list-of-mills 12 http://europe.ioiloders.com/images/static_pages/Traceability_update_April_2016-_March_2017.pdf
28 IOI GROUP Sustainability Report 2017 29 Responsible Sourcing & Traceability
PALM OIL DASHBOARD Certified Volumes Sourced: July 2016 to June 2017 (Market Driven) 3% The IOI Group Palm Oil Dashboard13 was launched online in December 2016. The Dashboard presents key information relating to IOI’s operations and suppliers. 25% IOI Loders Maps for refineries and mills as well as the latest news and relevant links are also Croklaan Group available on the Dashboard. IOI Edible Oils Sandakan
The Origin of Our Oil IOI Oleo Palm Oil 6% Traceability Numbers: July 2016 to June 2017 0% 20% 40% 60% 80% 100% 66% 98% 99% 100% 1% 100% IOI Group Total 26% 51% 29% 2% 15% IOI Loders Croklaan Group Palm Oil IOI Edible Oils Sandakan
95% 83% IOI Oleo 97% 100% 1% 96% Palm Kernel Oil 0% 20% 40% 60% 80% 100% 22% 46% 20% RSPO MB RSPO SG ISCC Conventional IOI Group Total Source: IOI Group Palm Oil Dashboard
Risk Assessments & Supplier Verifications Palm Kernel Oil 777 IOI Group Total IOI Edible Oils IOI Oleo IOI Loders 685 Sandakan Croklaan Group
Traceability palm oil to mill Traceability palm oil to plantation
Volumes Sourced: July 2016 to June 2017
265 161 126 40.64% 39.20% 3.57% 9.47% 7.12% 95 110 106 72 64 5 1 10 9 0 0 1 0 5 2 Peninsular Malaysia Sabah, Malaysia Sarawak, Malaysia Indonesia Other Peninsular Sabah Sarawak Indonesia Other (Direct/indirect sourcing) (Direct/indirect sourcing) (Indirect sourcing) (Indirect sourcing) (Indirect sourcing) (Malaysia) (Malaysia) (Malaysia) Total # of mills in supply chain # of mills with on-site verification completed Total # of mills risk assessed # of mills with time bound action plan in place Source: IOI Group Palm Oil Dashboard 13 http://www.ioigroup.com/content/s/s_dashboard
30 IOI GROUP Sustainability Report 2017 31 Enhancing Reach & Engagement
IOI Plantation
In IOI Plantation, we see land as a community to which we belong to and to use it with respect. This is why we aim to always take responsibility for protecting and conserving the environment and habitat around it, as well as help to enrich the community in which we live in.
- NB Sudhakaran, Senior General Manager, IOI Plantation IOI PLANTATION
At a Glance LOCATION OF IOI PLANTATION ESTATES AND MILLS
Signing of MoU with indonesia’s natural HA* resource conservation 7,668.08 agency (BKSDA) HCV and conservation area
Management standards PENINSULAR MALAYSIA MALAYSIA MALAYSIA • Quality: ISO 9001 (43,471 ha) • Environment: ISO 14001 • Occupational health 25% safety: OHSAS 18001
EAST MALAYSIA Kalimantan Barat LiDAR Mapping Fire Management (114,460 ha) in Ketapang Programme for Community in Ketapang 144,727 HA 66% of certified estates kalimantan, indonesia (16,465 ha) Landscape Level Approach in pipeline 12 MILLS 2 BIOGAS PLANTS 9% RSPO Certified Plantation estates Palm oil mill Source: IOI Corporation Berhad‘s Annual Report 2017
Protecting the Environment: Passports to be Healthcare to returned to all workers Sustainability Commitments 17 employees by • Free medical Honorary Wildlife Ranger the end of 2017 • DEntal care • Proposed midwife International Sustainability and Carbon Certification assistance (ISCC) Roundtable on Sustainable Palm Oil (RSPO) 12 Honorary Forest Ranger Group actively pursues the International Sustainability Group’s all palm oil mills and estates in Malaysia, IOI Sponsored 2,918 students for HUMANA IOI and Carbon Certification (“ISCC”) for palm oil mills except 2 newly-acquired mills, have successfully attained and with over and estates in Malaysia. ISCC is the first international the RSPO certification. The final two mills will undergo certification system that can be used to prove sustainability certification by 2018. The current list of certified mills is and greenhouse gas savings for all kinds of bio-mass and MILLION available online from the Group Palm Oil Dashboard. * Source: RSPO Group Annual Communication RM1.5 IOI bio-energy. The current list of certified units is available on IOI on Progress (ACOP) Report, 2016 the ISCC website.
34 IOI GROUP Sustainability Report 2017 35 IOI PLANTATION
PEOPLE AND Personal Protective Equipment COMMUNITIES (PPE)
PPE usage enforced on site. Training is provided to ensure Our Workers workers understand the policies and the PPE available. Standard Operating Procedures (SOP) are enforced for chemical storage, Labour and social issues surrounding migrant and foreign Group’s SPOP was further revised in June 2017 in IOI fertiliser application, tractor handling, pesticide application and workers on Plantation estates were raised last year by consultation with various NGOs to address labour rights issues IOI Safety and weedicide application. Finnwatch. Specifically, concerns were voiced in a report including IOI Group’s No Recruitment Fee Policy, a freedom of published in November 2016 over the working conditions at association clause, no retention of workers’ passports by the Health estates in Peninsular Malaysia regarding minimum wages, end of 2017, a commitment on minimum wage for workers, An Occupational Safety & problems related to retention of passports, and freedom of and commitment on principles of Free and Fair Labour in Health (OSH) Policy is in place Joint management/employee association. Palm Oil Production as well as the UN Guiding Principles on that applies across the Group health and safety committees Business & Human Rights. Group also added additional IOI in providing a safe and healthy In January 2017, IOI Group addressed these concerns personnel to the Plantation Human Resource Department IOI working condition, especially in and tasked an independent sustainability consultant BSR to to ensure compliance in social and labour issues, especially in A Safety and Health Committee consisting of management and the estates. assist in the implementation of fair and proper labor practices the recruitment processes. employee representatives is in place in all IOI’s estates. Meeting together with a labor rights monitoring system for plantations is held every quarter to discuss safety and health matters across The OSH Policy is embedded in in Malaysia. BSR will also verify the corrective measures taken A number of social and labour related policies are to be the estates. To ensure the committee is effective, sub-committees the Group’s SPOP, compliant and recommend any additional actions needed. The full report finalised by the end of 2017. These include: such as Workplace Inspection, Accident Investigation, Training with the International Labor is expected in to be published in September of this year and Promotion, Emergency Response and Contractors were Organisation (ILO), and in together with an action plan to address any gaps highlighted. set up. Malaysia guided by the Malaysia Occupational Safety & Health Foreign Worker Recruitment Equal Employment Opportunity & Act 1994 as well as in Indonesia Minimum Wage Policy Guideline & Procedures Freedom of Association Policies guided by Law No. 1 Year 1970 Employee participation in safety regarding Occupational Safety. and health review The Policy includes promotion on safety and health, training and Workers representatives participate actively during workplace OSH management systems. IOI inspections and all accident investigations. These tasks are done Plantation operations also meet by the sub-committees. Term of References for Employee Consultative Foreign Workers Passport the world-class OHSAS 18001 Committee and Joint Consultative Committee Safekeeping Guideline standards.
The right to refuse unsafe work
The Group’s estate workers are provided with proper housing facilities along with necessary amenities, health facilities, education for the children including school projects in partnership with Borneo Child Aid Society, Sabah (HUMANA) and child care centre. Safety, health and welfare for employees is ensured by hazard IOI Plantation has further improved the welfare of estate workers and their school-going children by purchasing new passenger identification, risk assessment, and necessary controls to ensure transporter. unsafe work practices are prevented.
Periodic inspections
Workers equipped with personal protective equipment (PPE) for Periodic inspections are undertaken at least once every quarter. spraying works. Centralised locker for passport in Bukit Briefing on the new passenger Leelau. Child care centre in one of the estate. transporter.
36 IOI GROUP Sustainability Report 2017 37 IOI PLANTATION
Capacity Building COMMUNITIES Internal training is upgraded annually. Capacity building AND DISPUTES covers best practices for agriculture, environmental management, peat management, safety and health, and One of the engagement meeting with the long house fire prevention techniques. Generally, such trainings are community in Miri, Sarawak. normally conducted by competent sustainability personnel. There was a dispute over land ownership in Tinjar Long Lapok, Miri, Sarawak between a Joint Venture Company Capacity Building Initiatives (JVC), Rimwood-Pelita Sdn Bhd since 1997. This lead to A settlement has not yet been reached on the issue, but one of the community filing a writ of summons against the progress is being made through continued engagement 1. Anti-pollution Training Workers donning PPE as part of safety measures when handling JVC & State Government claiming Native Customary Rights conducted by IOI-Pelita, IOI Group and the Miri Residents’ chemical. (NCR) over Lot 3 and Lot 8, Dulit Land District. They won Office to reach an amicable settlement. In addition, IOI has their lawsuit at Miri High Court in 2010 but after a motion proactively engaged futher with Grassroots and RSPO to of appeal, the Court of Appeal (CA) overturned the decision ensure free and informed consent process when discussion Continuous training and awareness programs such as PPE training, in 2013. Then the community filed an application to appeal with community is taking place. To further enhance chemical handling training and hazard guidance are conducted against the decision of the CA in 2013, but the Federal our engagement with the community, a Community for employees dealing with potential hazards such as chemical Court dismissed the plaintiff application for leave to appeal Communications Officer has been appointed and is pesticides or machinery. Training and education programs are and further affirmed the CA decision that the natives have responsible to meet regularly with the wider community and scheduled based on a Training Needs Analysis conducted every no NCR. individual households to communicate and disseminate 6 months. information. In the interim, IOI Group acquired shares in the JVC in A grievance hotline number and whistle-blowing channels are open 2006 and inherited this community dispute. Then in 2010 Due in part to the land rights issue in Miri, as well as IOI’s for the workers to voice out safety and health concerns. Issues are a RSPO complaint was lodged against IOI Group by 11 respect for the community, the Group have not undertaken taken to the Safety and Health Committee, or other relevant parties international and local NGOs as well as the Long Teran any operation where involuntary resettlements either took to resolve the problem. Kanan community. place or are ongoing. No incidents of violations involving rights of indigenous people have been recorded. The following targets and progress to date are tracked on a monthly basis:
Reduce accidents, occupational diseases and occupational poisonings by at least 10% as compared to previous year; ENVIRONMENT & Based on the total number of man hours worked, ensure that an average of five man CONSERVATION hours is allocated for each employee to undergo occupational safety and health-related trainings in a year; IOI Plantation strictly adheres to Environment all relevant laws, RSPO and ISCC certification principles and criteria to Plantation is committed in ensuring minimum impact Investigate and find causes of all accidents, near 2. Honorary wildlife warden course IOI misses, dangerous occurrences, occupational protect, conserve and rehabilitate the to the environment through our good agriculture practices. diseases and occupational poisoning, and take 3. Training on buffer zone area environment. Sustainable practices are Our Environmental Impact Assessment (EIA) is being appropriate measures to prevent the recurrence adopted and incorporated including a revised annually to align with environmental regulations of such incidents; 4. Safety and RSPO requirements training no deforestation commitment, and set by the local authority. Environmental regulation for protection of High Conservation Value IOI Plantation’s concession in Indonesia is following the IOI Plantation sustainability initiatives include sending (HCV), High Carbon Stock (HCS) and Indonesian Environmental Impact Assesment or Analysis Ensure that every worker who is assigned to a new employees to undergo external sustainability training and peat areas in new developments. Dampak Lingkungan (AMDAL). task or machine is provided with Safe Operating courses such as ISCC Lead Auditor Course, RSPO Lead Procedures and on-job training before they are Auditor Course and HCV assessor training. allowed to commence work on their own.
38 IOI GROUP Sustainability Report 2017 39 IOI PLANTATION biodiversity and conservation Activities in BiodiverSIty Conservation initiatives and Enrichment in 2016/2017 • Rehabilitation and enrichment of degraded HCV Wildlife Management Training area High Conservation Values (HCV) A three-day training course was given to the staff in the Sandakan Region to enhance knowledge and skills in conducting on- IOI Plantation applies the High Conservation Values (HCV) approach. It site patrolling primarily on bird and wildlife species identification manages 4,735.79 Ha of land with high biodiversity value , located across which has been conducted by Sabah Forestry Department (SFD). Johor and Pahang states in Peninsular Malaysia, Sandakan and Lahad Participants are now aware of the diverse bird and wildlife species in Datu of Sabah, and Kalimantan, Indonesia. the plantation areas and are equipped with adequate knowledge to make sustainability a norm in their working lives. A monitoring and management procedure is established at a regional level. This procedure has been evaluated by an external third-party After the engagement and awareness training with the local authority, assessment, and is also constantly evaluated by our stakeholders our wildlife ranger have equipped with better understanding of with feedback provided during engagement or through the grievance endangered species and its handling. One of the examples was the mechanism if necessary. • Signage for information of restricted areas rescuing of juvenile orangutan. A two-year-old orangutan, believed to have escaped from a nearby forest reserve in search of food and HCV areas will be remapped over the coming year, followed by review a new secondary habitat, was rescued by our workers in the Sugut and enhancement of management and monitoring plans to ensure active Estate on 17 May 2017. The orangutan was handed over by the rather than passive management. Training for the Sustainability Team Estate Manager to the Sabah’s Wildlife Rescue Unit. It was then has focused on biodiversity management in accordance with specific handed over to Sepilok Orang Utan Rehabilitation Centre (SOURC) Bird and wildlife species identification training. regulations, and bird and wildlife species identification by Forestry Sandakan. Department. HCV assessment for every estate is reviewed and updated annually to track changes in requirement, law and regulations. Biodiversity Enrichment in Buffer Zone.
• Monitoring condition of conservation and buffer More than 50 volunteers attended the Tree Planting Day on 20 August 2016 as areas part of IOI Sandakan Region’s efforts to rehabilitate and conserve degraded forest buffer zones. More than 150 seedlings of various selected tree species such as Binuang, Gaharu, Pulai and Ketapang were supplied by the Komuniti Anak Pokok Kinabatangan (KAPOK) and planted based on the recommendation by the Sabah Forestry Department.
Following successful rehabilitation efforts at Terusan Baru 3 Estate, a further two Tree Rehabilitation program in Mayvin estate. Planting Day events were held in September and October 2016 for the rehabilitation of degraded riparian areas in Mayvin Group and Pamol Group, Sandakan.
• Monitoring wildlife
Green House Gas (GHG) Reduction Initiatives
Total GHG Emissions Scope 1 Scope 2
Source: Proforest 12,465 8,505 3,960 MT CO e MT CO e MT CO e The Group is also contributing to several conservation 2 2 2 efforts, for example the Malua Wildlife Conservations Initiative, Orangutan Foundation International’s Care Biodiversity and conservation in PT BSS, Ketapang. Centre and Quarantine Facility in Pangkalan Bun, * Data for IOI Plantation’s estates and mills excluding Indonesia region. * Data on GHG emission for Indonesia will start reporting in the next financial year report. IOI Plantation is in the process of preparing GHG Reduction Plan Kalimantan and the Malaysian Palm Oil Wildlife as part of the Group sustainability initiative. Source: Proforest Conservation Fund.
40 IOI GROUP Sustainability Report 2017 41 IOI PLANTATION
Methane Capture Sustainable Cultivation and Integrated Pest Facilities Processing Management
Methane emissions from the treatment of palm oil mill effluent IOI Group’s oil yield per hectare is approximately 50% higher The Group’s Integrated Pest Management (IPM) has (POME) is a large contributor to operational GHG emissions. Two than Malaysia’s average, mitigating climate change as less land is been in practice for over 10 years across all estates. IPM biogas plants have been commissioned in Johor and Sandakan to required in the production of palm oil. Best agronomic practices focuses on minimised use of pesticides and chemicals capture methane and mitigate emissions, contributing to a GHG and efficient land utilisation also lead to higher productivity, reduced to control pests. Emphasis on the IPM practices use of fertiliser and pesticide, improved energy efficiency and reduction of 120,000 MT of CO2 per year. Further plans include: in the Group’s plantations are by using biological lower GHG emissions. • Methane capture for a mill in Lahad Datu (Syarimo), Sabah, Zero burning practice: Aged palm trees control method. This method is highly beneficial in chopped and shredded for biomass reducing GHG emissions and eliminating the release of expected to be in operation at the end of 2017 (delayed due to retention and recycling. heavy rains). pollutants into the soil and waterways. • Methane capture for two mills in Lahad Datu (Leepang and Unico Desa), Sabah, to be in operation in June 2018. Fire & haze Beneficial plants Cassia cobanensis and • Methane capture for two mills in Pamol, Sabah, and Johor commitment Euphorbia heterophylla attract natural predators (Gomali) to be in operation in December 2018. for biological control of bagworms and other leaf-eating caterpillars. Going forward all IOI mills will be equipped with methane capture IOI Group Zero Burning Policy equipment in stages, in tandem with available proven technology. Member of the Fire Free Alliance Green Energy Barn owls effectively control rat populations. Group has been practising Zero IOI Rodent populations have reduced by over 50%. IOI Plantation’s operations produce a vast amount of biomass Burning Policy since 1998 after the by-products. Palm biomass and treated POME are recycled 1997 Haze incident in South East Asia. back to the soil as natural fertiliser. Other biomass such as shells Additionally, a fire prevention program is and empty fruit bunches (EFB) are used as a renewable energy in place across IOI Plantation estates. Elimination of breeding ground, planting of source to generate steam and electricity for mill processing. For Currently, IOI Group’s fire prevention legume cover crops and trunk chipped below 3 example, a 15 MW biomass co-generation power plant at the document is being peer reviewed inches to prevent beetle breeding ground due to refinery complex in Sandakan, Sabah uses biomass from its own by Indonesia’s Natural Resource zero burning policy. mills to satisfy almost all the steam and electricity requirements Conservation Agency (BKSDA) and of the complex. Overall, green energy is able to sustain 98% of Malaysia’s Fire & Rescue Department IOI Plantation’s milling energy needs. (BOMBA). In Indonesia, tube wells are being used in areas far from the water High-yielding oil palm clones developed to source in case of fire within fire prone further boost the productivity of estates and areas. Fire prevention techniques and enhance resistance towards pests. Peatland Management safety guidelines are part of annual Best Management Practices (BMPs) for Peatlands Management are applied as defined in Total planted area on peat training for workers to upgrade internal capacity. Beyond IOI Group’s estates, Continuous training is provided to the plantation workers the RSPO Principle & Criteria documents and referred to RSPO manual on BMP for Existing 8,396 hectares Oil Palm Cultivation on Peat. Where areas are identified as unsuitable for oil palm replanting, workshops focusing on zero burning in understanding the pest life cycles, economic threshold plans are developed for the appropriate management, such as rehabilitation, proper water and fire prevention and control were run levels, and the recommended pesticide dosage. The management and fire prevention. throughout the year with suppliers and following table shows type and amount of pesticide used; local communities. Peat drainability study of the area will be done one year prior to any proposed replanting on Pesticide use Total Amount Used IOI Group’s all existing plantations planted on peatland. Additionally, to identify soil profile IOI Group is one of the members in international multi-stakeholders group, Liquid chemical 1,463,857.64 litre in existing plantation on peat, an external consultant had been engaged to provide report pesticides on classification of soil. Fire Free Alliance (FFA). This will lead to more engagement and enhance Solid chemical 1,978,694.69 kg For new plantings, IOI Group is committed to no development of peatland regardless of knowledge transfer on fire management pesticides along with other stakeholders. its depth. A Peatland Protection Policy is currently in development, and will cover peatland Physical pesticides 42.5 MT management in existing IOI plantations, new concessions, and landscapes around IOI plantation. The policy is currently being reviewed by external stakeholders. Source: Proforest
42 IOI GROUP Sustainability Report 2017 43 IOI PLANTATION KETAPANG LANDSCAPE LEVEL APPROACH
FertiliSer IOI Plantation operates four concession areas within Ketapang, Management West Kalimantan. A Landscape Level Approach has been adopted for peatland management in these areas in partnership with various Fertilisers application in the plantations are recommended by the Fertiliser use* Total Amount Used stakeholders. agronomist through foliar analysis by the Group’s Research and Development. The application of fertiliser in the estate is guided Organic fertiliser 6,459,905.26 MT The Ketapang Peatland Landscape Approach involves mapping of by International Good Management Practice to optimise nutrient Liquid fertiliser 298.00 litre peatlands area within the concessions and implementing a plan for uptake of palm oil tree. The table show the type and amount of protection and rehabilitation. Solid Fertiliser 167,110.94 MT fertilisers used in IOI’s plantation. Way Forward The Ketapang Peatland Landscape Plan has been prepared by * Data excluding Unijaya Estate, Pamol Kluang. Ketapang Landscape Plan Global Environment Center (GEC) and implementation plans have been prepared for stakeholders to review. Following the Ketapang • Multi-stakeholders engagement Peatland Landscape Approach, some of the work and initiatives surrounding our Ketapang concession have commenced including engagement with multi-stakeholders on and other plantations including peatland rehabilitation and LiDAR mapping of the concessions. communities, NGOs, government agencies for sustainable landscape Water consumption per tonne As part of the commitment stated in the SPOP to HCSA, for the last management. 1.47 wholly unplanted concession of PT Kalimantan Prima Agro Mandiri • Expansion on rehabilitation area and 1.29 1.32 Water Management 1.21 (PT. KPAM) in Kalimantan, an approved HCSA practitioner has been increase conservation activities. hired to help in preparing the assessment which will be later peer • Communities’ empowerment including reviewed by a recommended HCSA panel. For the New Planting IOI Plantation practices water management throughout its operation. Water management improving economic livelihoods. is revised by the Sustainability Team annually in every plantation to ensure our water source Procedure (NPP), a HCV report will be sent to the HCV Resource • Enhance the fire prevention program is well managed and conserved. A number of measures are enforced to safeguard water Network for final sign-off before submission to RSPO NPP panel, across Ketapang landscape. resources: together with other NPP documents such as AMDAL report, FPIC document, development plan before development of KPAM can • Water-gates installed at strategic locations along drains to keep an optimum water table commence. level. 2013 2014 2015 2016
• Optimum level of water maintained to counter potential shortfall in rain and risk of fire.
• Riparian reserves to minimise soil run-off and act as a filter to preserve quality of water entering the waterways.
• Legume cover crops planted to prevent run-off and conserve soils. Planting on steep terrain avoided.
• Monitoring and treating Palm Oil Mill Effluent (POME) and wastewater before discharge. Greentubes applied to remove solids in POME, reducing BOD levels to within an acceptable limit as required by the Department of Environment. Water Management Initiative
• Water for domestic use is being monitored regularly and water sampling is done every On 16 March 2017 and 4 May 2017, 6 months to ensure it is safe to be used by the plantation workforce. Joint patrolling carried out in the training on drainage and irrigation was buffer area of Cagar Alam Muara conducted in Sandakan and Lahad Datu, Fire Drill Training in PT BNS. Kendawangan. IOI Plantation’s mills consumed an Fire Management average of 1.21m3 water to process Sabah respectively. The training was each tonne of fresh fruit bunches (FFB). attended by all Head of Departments of The Group’s peatland fire management plan and procedures In our Ketapang concession, joint patrols are organised A review of operations is currently the estates.The speaker was the Head of include construction of fire towers, working closely with local in collaboration with BKSDA, communities and plantation underway, and reduction targets will be Water Resources Management Section fire brigades, and fire patrolling using drones. Hotspots are workers to monitor illegal logging, hunting and potential fire set during our 2018 reporting cycle for from Sabah Department of Irrigation and also monitored via fire optical and radar satellites. Besides hotspots. Patrols are carried out in the buffer boundaries of the next five years. Drainage. The training highlighted the that, a series of awareness and training on fire prevention Cagar Alam Muara Kendawangan. The joint patrol is done compliance requirements of the Sabah awareness were done throughout the estate and local once a week during dry season and twice a month during Water gate installed in one of IOI Water Resource Enactment according Plantation’s estate. communities by the local authority. wet season. to law and regulation and it also covered issues such as management of riparian buffer zones and rights to water usage.
44 IOI GROUP Sustainability Report 2017 45 IOI COMMODITY PLANTATION MARKETING
Peatland Rehabilitation BUILDING OUR REPUTATION Case Study: Peat Management in Kalimantan IOI Group is the second most valuable palm oil plantation sustainability especially in emphasising the need for us and our Standard Operating Procedure (SOP) on Cultivation is company as well as the largest non-government-linked plantation suppliers to be sustainably compliant along the supply chain. For applied for existing plantations. This procedure consists of company in Malaysia. Building and maintaining reputation are this to work, continuous participation in extensive stakeholder best practices, water level management, integrated pest material to our business. While the suspension of IOI Group’s engagements, particularly with customers, suppliers and civil management and soil conservation practices and serves as RSPO certification in March of 2016 affected our reputation and societies are instigated and established. Further efforts are also a guideline to all operation units in managing peatland in the stock price, it quickly rebounded after our RSPO certification introduced such as tracking grievances, responding and reporting existing plantations. was reinstated in August of the same year. This is mainly due to the concerns voiced by our stakeholders which we hope, will relay the measures related to the action plans on sustainability being to our stakeholders, our commitment to not only engagement GEC was appointed to review the SOP in 2017. Nursery of native species plants and tree seedlings for put in place as well as IOI’s firm commitment to addressing and transparency but also to protecting and ensuring that the biodiversity enrichment. Recommendations have been implemented, including sustainability throughout the Group. IOI brand stands for responsibility and sustainability. 80 canal blocks installed in 35 locations and water gates installed to maintain water levels in peat areas. Rehabilitation In this instance, we seek to be proactive in building our brand and Further Group Business Review for Plantation including Operation Engagement with local government has started on of degraded peat areas is currently in progress. 2,948 reputation by being receptive to market’s demand pertaining to and Production review is reported in the IOI Corporation Berhad’s biodiversity enrichment within 500m buffer area native plants have been planted in the first quarter 2017 in Annual Report. boundary by planting native tree species in collaboration HCV areas. with local communities. About 39,284 seedlings such as Customer Engagement Program – Towards Enhancing 4.81 MT gelam, Astonia sp and Pulai sp. have been planted in Mapping of peatlands in Kalimantan concessions was 3.40 MT Knowledge and Sustainability IOI the area. Continuous monitoring through the three years initiated in March 2017 using LiDAR technology, with the Industry analysis to be available later in 2017. Average Integrated Management Plan is being done by our SNA On 6 March 2017, a group of 40 visitors comprising IOI Loders Group Sustainability Team with a submission of monthly Croklaan and IOI Oleochemical’s international customers visited progress report. Mortality of the trees is being recorded Pukin Estate and Pukin Mill for a guided tour to learn more about IOI’s and transplants are carried out as needed. oil palm plantations and the palm oil processes. After a presentation on the mill processing system, the visitors were brought to the estate 4.81 MT Industry and to witness a live demonstration on the harvesting of fresh fruit bunches IOI CPO Yield* (FFB) using the chisel and the sickle while collection of the FFB was MT/HA done using the buffalo-assisted method. 6.0 5.5 The Estate Managers, accompanied by other Keratong Region 5.0 Managers explained the whole process from harvesting till crude palm Empowering Community oil (CPO) production to the visitors. Barn owls were shown as the 4.5 biological control to reduce rat population in Pukin Estate. The visit 4.0 Communities and local governments are engaged to jointly develop and ended with a mill processing tour. The next day, some of the visitors 2013 2014 2015 2016 2017 implement landscape approaches contributing to effective fire prevention During one of the visits to the local village, departed for a Sustainability Update Breakfast Meeting that was held Desa Natai Kuini in PT BSS. Oil Yield Per Mature Hectare and biodiversity conservation in peatlands. Corporate and Social in conjunction with Palm and Lauric Oils Conference (POC) 2017 in Responsible (CSR) carried out for the local communities including repair Kuala Lumpur with the attendance of 75 customers from IOI. Source: Oil World 2015-2016 of bridges and roads, maintenance of a Mosque and church, and promotion of experimental agricultural programs that emphasise on no-burning as a method for land clearing. An example of this is the Farming Plots Project being implemented in Desa Natai Kuini in PT BSS. CERTIFICATION & TRACEABILITY RSPO and ISCC certifications as defined in the SIP enhance the sales and value of palm oil products. All mills in East Malaysia and Indonesia will be audited by RSPO in mid-2017 and early 2018 respectively.
IOI Plantation has one of the first mills to be certified RSPO RED. An additional 4 mills in Malaysia will undergo RSPO NEXT audit, of which one mill will be audited in the third quarter of 2017, two mills in 2018 and the remaining one mill in 2019.
Harvesting vegetables in Farming Plot Rehabilitation program involving Elementary Traceability goals and commitments are addressed in the SPOP, SIP, Sustainable Palm Oil Manifesto, Internal Traceability Project. student in Desa Pembedilan. Protocol (TIP) and IOI Group’s 3-step mill verification approach. A full breakdown of traceability figures and certified volumes sourced is shown in the IOI Group.
46 IOI GROUP Sustainability Report 2017 47 IOI Loders Croklaan
At Loders Croklaan, we are on a continuous journey to create a truly sustainable supply chain in oil palm products. This has required us to completely rethink our approach to sourcing raw materials, knowing their source and acting accordingly. We will direct our resources into existing priority landscapes and use our supply chain leverage to incentivise, and support, valuable landscape conservation initiatives. We aspire to support the palm oil sector as a whole to benefit from the sustainability opportunities and create a positive message.
- Julian Veitch, CEO, IOI Loders Croklaan Enhancing Reach & Engagement IOI loders SUPPLY CHAIN TRACEABILITY croklaan IOI Loders Croklaan (IOILC) take responsibility for building a IOILC sourcing operations remain compliant to all relevant global traceable, transparent and sustainable global palm oil supply treaties, national and international laws. Memberships include chain guided by the IOI Group’s SPOP and IOILC’s Responsible RSPO, ISCC, SEDEX, the European Palm Oil Alliance (EPOA), the Operating Principles. Dutch Alliance for Sustainable Palm Oil, and a partner of World AT A GLANCE: Resources Institute’s (WRI) Global Forest Watch (GSW). IOILC Group’s Sustainability Team is also in the lead for Systems and Certifications within the IOILC Group executing the TPS program for the entire IOI Group supply chain. Further information can be found in Responsible Sourcing and Supplier verifications are conducted by the internal audit team in Traceability in page 27 of this report. collaboration with an independent third-party consultant, Proforest. Management standards Product quality and Food Product • Quality: ISO 9001 safety standard Certifications • Food Safety: ISO 22001 • ISO 17025 • Kosher • Environment: ISO 14001:2004 (Europe only) • ISO 14001 • Halal • FSCC 22000 Case Study: IOI Loders Croklaan’s Sustainability OTHER Sustainability efforts Shea Supply Chain • RSPO • GMP+ • SEDEX • IOILC is a founding member of the Global Shea Alliance • ISCC EU • Hazard Analysis Critical Control • SQF Level 3 Product Quality and Shea is an important raw material for (GSA) and we hold a seat in the executive committee of the GSA. The GSA • ISCC PLUS Points (HACCP) Safety Standards IOILC. We have been sourcing shea for is a multi-stakeholder association promoting quality and sustainability in more than 50 years. Shea is a wild crop the shea industry. and its tree is very difficult to cultivate. It • is also an active member of the Sustainability Working Group (WG) is generally only found in the wild. The IOILC of the GSA. This WG facilitates social and environmental projects. The geographical area in which the shea Activities during the year objective is to improve the profit and well-being of women collecting the tree grows stretches for thousands of shea and the processors and ensure healthy tree populations. kilometres through numerous countries across West Africa. Millions of people in • In 2014, IOILC requested Rainforest Alliance (RFA) to audit Earth Hour 2017 this part of the world, especially in rural our shea supply chain in West Africa. The RFA report concluded that there areas, depend on shea for their very were no major sustainability issues in our supply chain. An IOI Group initiative. At IOILC, this livelihood. The collection of the shea nuts • In 2015, we obtained official ISCC Plus Sustainability certification for our included staff engagement to support is done predominantly by women. supply chain in Burkina Faso and Ghana. more sustainable practices, focusing on • published its Sustainable Shea Program in 2016-2017. recycling. All operations participated in the Our support to the local communities IOILC Earth Hour week through several events. in West Africa • On top of existing sustainability initiatives IOILC believes it also have Breakfast its own obligation to source, process and sell shea related products We have an obligation to develop a fair, Sustainability Update in a sustainable manner. We respect the environment, human rights sustainable and long-lasting relationship and labour conditions, and understand the economic benefits and Seminars with the people and communities value that shea productions bring to the people and companies who involved in the sourcing and processing Held during the Palm & Lauric Oils operate in the industry. We are committed to build a fully traceable, of shea in West Africa. We transfer Conference & Exhibition 2017 in transparent and sustainable shea supply chain by implementing knowledge of value-adding processes Kuala Lumpur and the global RSPO measures from our Sustainable Shea program. to West Africa via projects and Customer Roundtable meeting in 2016 in Bangkok, partnerships. To support our commitment, Part of the Shea Program plantation visit Thailand. Attendees included customers, IOI Loders Croklaan has two offices and Sustainability Managers and Directors, • Construction and donation of a warehouse in Organised by Plantation for a laboratory in West Africa. Medio 2018 IOI buyers and traders. Updates provided by Ghana. More information available at http:// and Oleochemical we plan to open a Solvent Fractionation IOILC IOI and Group included: status europe.ioiloders.com/images/static_pages/ customers to promote palm oil IOILC IOI plant in Ghana to process and distribute and progress of ’s sustainability Shea_Sustainability_projects_August_2017.pdf. and sustainability perspectives. IOI the shea butter locally. This plant will milestones and future initiatives, Ketapang The 1-day visit to plantation Customer Seminars create approximately 80-90 jobs locally. • Facilitation of shea rollers for women groups in IOI progress update, social and labour and mill allowed customers to held across Europe Over the past years IOILC managed to Burkina Faso. milestones, the recently published SPOP better understand the palm oil set up its own network in West African • All our shea efforts, pictures and background Seminars held in Milan, Italy (January Annex with details of the new mechanisms supply chain and harvesting countries such as Ghana, Burkina Faso, information can be found on our website14. 2017) Hamburg, Germany (April 2017) and through which will monitor and process. For more info please refer IOI Mali, Ivory Coast, Togo, Benin and Nigeria. Warschaw, Poland (June 2017) to actively ensure the compliance by ’s third to Commodity Marketing section IOI promote the SPOP and its commitments party suppliers to its policy commitments in this report. to customers. Topics including quality, and social and labour initiatives. Positive technical applications and sustainability feedback was received for the interactive in the palm oil sector were presented by Q&A sessions. The seminar series will be employees and external speakers. continued going forward. 14 http://europe.ioiloders.com/taking-responsibility/shea/
50 IOI GROUP Sustainability Report 2017 51 IOI LODERS CROKLAAN IOI Loders Croklaan - Asia IOI Loders Croklaan - Europe IOI Loders Croklaan - Americas
Total GHG Emissions per MT product: Total GHG Emissions per MT product: Total GHG Emissions per MT product:
MT CO e MT CO e MT CO e 0.25 2 0.05 2 0.18 2 PROTECTING THE Scope 1: Scope 1: Scope 1:
MT CO e MT CO e MT CO e ENVIRONMENT 0.15 2 0.03 2 0.12 2 Scope 2: Scope 2: Scope 2:
Strong environmental management is fundamental in MT CO e MT CO e MT CO e terms of both meeting stakeholder expectations as well as 0.09 2 0.02 2 0.06 2 operating in compliance with national laws and regulations. Total GHG Emission (FY2015/2016): Total GHG Emission (FY2015/2016): Total GHG Emission (FY2015/2016):
IOILC has its own Reduce Re-use Recycle program where we strive to reduce, recycle and re-use natural 0.24 0.05 0.15 sources at each refinery facility of IOILC. Our 3% increment from FY2016 5% increment from FY2016 23% increment from FY2016 commitment can be found in the Responsible Operating in Pasir Gudang, Malaysia, has Under Dutch regulations, Europe operating Principles15. A number of environmental programs are IOILC IOILC in Channahon, IL, United States an annual energy reduction target of 2%. sites in Wormerveer and Rotterdam have implemented to progressively reduce GHG emissions. has an annual energy reduction target Energy efficiency is reviewed and improved a mandatory energy reduction target of of 2% and participates in the Strategic IOILC is also minimising use of natural resources and through energy related housekeeping 2% and mandatory savings in energy waste produced limited with the goal of ‘zero waste to Energy Management team. It is a practices focusing on electricity, steam, usage of 2% annually. landfill’. Several projects are in place or will be initiated collaboration with 10 local companies natural gas, water and nitrogen use. at each regional level to achieve targets set. The key and utility suppliers. IOILC in Rexdale, environmental performance data is presented in the Canada, has its utilities supplied by Appendix: EES Performance Data. Unilever, who co-share the operating site.
MARKETPLACE
A multi-stakeholder approach is being practised to increase uptake of Certified Sustainable Palm Oil (CSPO). Case study: ComEd/Nicor Energy Savings Project
Continues to be an active partner of RSPO Starting as a way to look at reducing energy Works with various stakeholders to strengthen standards and enforcement. waste in a plant, IOILC Americas encouraged including suppliers, customers, actively participates in the RSPO a 7-member team of engineering, maintenance NGOs, government bodies and IOILC Trade and Traceability Standing Committee and operations staff to take on 2 energy savings independent certification bodies (T&T SC) working group, Technical Working projects in 2014. After 2 years of planning and 6 to implement IOI Group’s SPOP. Carbon Management months of execution more than 476,000 therms Group (TWG) for Sustainable Landscape, annually (or US$191,000) in natural gas was and the European Palm Oil Alliance (EPOA). GHG emissions data is currently being monitored and reported at saved by December 2016. The projects received individual operating unit level, with disclosures for IOILC Europe, a rebate cheque from Nicor for US$128,000 in Conducts technical workshops North America and Asia reported to the internationally recognised March 2017. and roundtable sessions Collaborates with other palm oil producers CDP. with suppliers to promote and processors to improve industry-wide implementation of the IOI Group’s SPOP. practices.
15 http://europe.ioiloders.com/images/static_pages/August_2017_Responsible_Operating_Principles.pdf
52 IOI GROUP Sustainability Report 2017 53 Enhancing Reach & Engagement
IOI Oleochemical Group
To the Oleo division, Sustainability means cultivating partnership with our valued stakeholders whilst enhancing the resultant value together.
- Tan Kean Hua, Executive Director, IOI Oleochemical Group IOI IOI Waste Management A training on Waste Management Awareness Awareness was held on 30 March 2017 Oleochemical in Pasir Gudang, Johor. A total of 30 IOI Oleo is committed to develop a participants including 11 representatives growing business relationship with from seven external companies attended all approved vendors and suppliers. the training which was conducted by IOI AT A GLANCE This includes the commitment to help Pan-Century Oleochemicals Mechanical develop their skills and knowledge Engineer Mr Kirubaharan, who is also a as well as ensure they comply with certified trainer from the Department of Environment. 3 manufacturing sites, more than 1500 employees and close to 700,000 MT products sold worldwide per annum applicable environmental, legal and other requirements to protect the environment. Management standards Product quality and safety standard Sustainable supply Chain • QUALITY: ISO 9001 • Food Safety System Certification • RSPO SCCS-certified • Environment: ISO 14001 FSSC 22000 • Occupational health • Animal Feed Safety Standard GMP+B2 Others: and safety: OHSAS 18001 • Hazard Analysis Critical Control • Laboratory accreditation: • Energy: ISO 50001 & Points (HACCP) drain. The environmental activity was ISO 17025 Revitalising Nature EMAS • Malaysian Standard Food Safety: aimed at educating the children on • Responsible Care Program through Mud Balls • Cosmetic GMP: ISO 22716 MS 1480 the effects of mud balls in treating the • SEDEX: Supplier B • Kosher waterways and instilling awareness Membership On 15 October 2016, about 100 • Halal primary school children and teachers on the importance of preserving from three different schools, namely nature among the children. SJK Tamil Perai, SK Khir Johari The participants donned aprons and SK St. Mark Perai gathered to and gloves to form pre-mixed soil participate in a mud ball-making with ‘friendly’ bacteria into balls. Activities during the year event. An estimated 2,000 mud balls were This community service project was released into the nearby monsoon initiated by IOI Oleo Prai’s Community drain to revitalise it. Service team in collaboration with MPSP to purify the polluted monsoon
Relieving Bukit Juru A community service project to revive the inactive hiking trail of Bukit Juru was initiated by the Community Services (CS) Doing Good in the In June, a total of 75 reams of A4 papers committee of IOI Oleo Prai, Seberang Perai Community were donated to SK Khir Johari, SJK Municipal Council (MPSP) and the Forestry Tamil Perai and SK St. Mark to benefit Department. The Reliving Bukit Juru project IOI Oleo Prai continued to give back to students from lower income families and was undertaken to encourage the public to the community through three thoughtful assist them to make copies of additional adopt a healthy lifestyle and to preserve the activities organised by the Community revision materials. environment. Service team. Throughout April to June 2017, the team members and volunteers A Motivational talk was held in June Some 80 volunteers consisting of IOI Oleo imparted environmental awareness while 2017 with a total of 45 students from employees and their family members as well providing assistance and support to SJK Tamil Perai benefited from a half- as MPSP workers gathered on the early recipients. day course on “Techniques in Answering morning of 25 February 2017 to restore UPSR Examination Papers” conducted the glory of Bukit Juru by cleaning up the In May, A Go Green project was by established speaker cum teacher hilly area and the hiking trail in addition to conducted in SK St. Mark to educate the Mr Justin Jeevaprakash. Gift vouchers repairing and painting a resting hut. school children on the correct techniques and certificates were also awarded to to plant various vegetable seedlings. ex-students for their impressive UPSR A total of 42 biodegradable pots and results. planter boxes were donated to the school to encourage the protection and preservation of the environment.
56 IOI GROUP Sustainability Report 2017 57 IOI Oleochemical Energy Efficiency & Eco-Productivity Eco-themed products Energy efficiency and eco-productivity ensure both operational and market success now Optimising sustainable agriculture is and in the future. a long-term solution to the challenge of gradually reducing dependency 2016/2017 2015/2016 on petrochemicals. IOI Oleo Group works on research and development Total GHG Emissions per MT product: Total GHG Emissions per MT product: for eco-themed products produced solely from palm derivatives such SOURCING as fatty acids and glycerine, natural MT CO2e MT CO2e 0.34 0.33 products for personal care, and RESPONSIBLY Scope 1: Scope 1: additive free and natural soap to meet customer requirements.
Responsible sourcing and traceability are essential to MT CO e MT CO e ® IOI 0.27 2 0.24 2 • P almsabun provides a range Oleochemical (IOI Oleo Group) operations due to greater market of additive-free soap noodles, Scope 2: Scope 2: demand and transparency requested by NGOs. Responsible offering quality ‘green’ base sourcing primarily focuses on ensuring raw palm material used is derived from natural sources and from known and credible sources as well as tracking our supply IOI Oleo’s responsible sourcing approach and policy extend MT CO e MT CO e 0.07 2 0.09 2 removing EDTA (Ethylenediamine chain to the mill level. This also applies for other non-palm products, beyond RSPO requirements and in compliance with IOI Group’s Tetraacetic Acid) and DTPA which are assessed in line with sustainability commitments. Further SPOP which extends to third party suppliers: (Diethylene Triamine Pentaacetic information on palm traceability can be found in Responsible Acid). Many countries have banned • Main suppliers are required to complete the IOI Oleo Group 3% Sourcing and Traceability in page 27 and Palm Oil Dashboard in increment from 2015/2016 or restricted the use of EDTA page 30 of this report. Vendor CSR Questionnaire to gauge vendor’s corporate responsibility initiatives, with their sites subject to verification to curb potential environment problems. The natural soap base All processing units are RSPO certified to the Supply Chain audits and risk assessments. also has good foaming capability Certification System (SCCS). All products can be offered as and so does not require additional RSPO certified Mass Balance (MB) and Segregated (SG) grades. • Grievance mechanism system allows for logging of complaints foam boosters or preservative Besides complying with the RSPO Physical Transition rules for and follow up actions to be taken. (chemical) systems. oleochemicals and derivatives, Oleo Group is also a signatory IOI • Vendor audits applied to ensure compliance with policy. Any to Supplier Ethical Data Exchange (SEDEX). actions needed to address non-compliance are determined Traceability for oleochemicals and its derivatives is complicated. through Risk Management. Challenges include vast processing steps leading to loss in timing Chemical-free technology • All suppliers met criteria with no further assessment required accuracy, flexibility in production routes and relatively smaller over the reporting period. product fraction volumes. Selection and installation of processes is based on Energy management minimum negative impact IOI Oleo Pasir Gudang in Johor and IOI Oleo on the environment. Various Germany in Wittenberge, Germany achieved ISO eco-friendly manufacturing 50001 certification last year while IOI Oleo Prai in processes are spearheaded, Penang achieved certification in June 2017.IOI including; Oleo Group is on track towards full ISO 50001 • Physical separation certification. Initiatives include: for glycerine through PROTECTING THE ENVIRONMENT • Solar panel system by IOI Oleo Prai generating ultrafiltration instead of more than 750,000 kWh of electricity annually chemical-treatment. since 2003, saving almost 450 MT of CO a Climate change, resource depletion, pollution and waste generation present challenges. A multi-faceted approach is taken to 2 • Replacing use of year, or equivalent to planting 40,000 trees. • Oleo Germany has a large address such challenges and enhance energy efficiency through the efficient use of natural resources, waste reduction, innovation detergent in the IOI amount of its products ECOCERT- of environmentally friendly products and use of green technologies. • Improvements in operational efficiency purification process of certified and approved for use in achieved by applying latest green technologies. oleic acid by using natural cosmetics. Natural raw IOI Oleo Group is certified to ISO 50001 Energy Management System and the voluntary Eco-Management and Audit Scheme Examples at Oleo Prai include low energy- crystallisation technology. IOI materials are also introduced to (EMAS). Life Cycle Assessments (LCA) are conducted for selected products together with the Advanced Oleochemical Technology high efficiency vapor adsorption chillers, and • Pioneering use of products such as MIGLYOL® Division (AOTD) of the Malaysian Palm Oil Board (MPOB). Energy Performance Indicators (EnPIs) are monitored and measured by co-generation heat and power plant which continuous reactive Coco810 (a natural alternative Energy Managers at respective operating sites and reported at monthly Energy Management Meetings. Voluntary disclosure of reduces GHG and other emissions including distillation technology in source to silicones), SOFTISAN® GHG emissions are made under the CDP Climate Change Module. NO and SO . x x the fatty acid esterification conditionHAIR (a natural IOI Oleo Group remains vigilant in its commitment to comply with all relevant laws, regulatory, procedures and practices which • Participation in the United Nations Industrial process – proven to be conditioning agent for hair care in turn protect its people, the public, its assets and the environment. There were no significant fines or non-monetary sanctions Development Organisation (UNIDO) on energy more energy efficient and application) and SOFTISAN® GC8 received by IOI Oleo Group over the reporting period for non-compliance with any environmental law and regulation. saving programs and hosting programs use less chemicals than (a natural preservative booster). on Pump System Optimisation (PSO) and conventional processes. Compressed Air Optimisation (CASO).
58 IOI GROUP Sustainability Report 2017 59 IOI Oleochemical MARKETPLACE
IOI Oleo Group supports the market transformation towards sustainable palm oil by working with industry partners and associations. In addition, we chair the ASEAN Oleochemical Going Green Campaign Manufacturer’s Group (AOMG) on RSPO and lead discussions with major oleochemical producers on matters relating to IOI Oleo Group’s Going Green Campaign focuses on cultivating an environmentally conscious RSPO-certified oleochemicals. IOI Oleo Group is a Steering workforce where ‘Refuse-Reduce-Reuse-Recycle’ is encouraged. IOI Oleo Group also partners Committee member of the RSPO Oleochemical and Derivatives with Hewlett-Packard (HP) Malaysia to cut down printing, reducing the environmental footprint and Working Group which drafts the RSPO Rules on Oleochemicals increasing cost efficiency. and Derivatives, as well as a member of the RSPO Trade and Traceability Standing Committee (T&T SC) that contributes to the interest of trade, traceability and related matters with respect to RSPO-certified Oleochemicals and Derivatives.
Certification and Promoting Certified volumes sourced by IOI Oleo Group RSPO products Palm Oil Palm Kernel Oil A wide and diverse spectrum of During 2016/2017: oleochemicals and derivatives are 2015/2016 2015/2016 • Zero notifiable or major available in RSPO-certified grades for customers, who further process certified certified incidents of fires, these products along the value 4.3% 2.8% (MB only) PROCESS SAFETY explosions or accidental chain. A difference can be made by (1.3% MB & 3.0% SG) chemical releases extending sustainability credibility Process safety is a top consideration for IOI Oleo Group manufacturing operations. to the next customer through 2016/2017 2016/2017 • No significant fines or sustainable products. IOI Oleo non-monetary sanctions Group offers various RSPO-certified certified certified for non-compliance products under many of brand 5.4% 0% Incorporated into the IOI Oleo Group Sustainability and Integrated (SG only) Management System (IMS) Policy with social laws and names. regulations. IOI Oleo Group is committed to In 2016/2017 financial year, we recorded a 26% increase in RSPO-certified palm uptake of certified materials since oil volume but no certified palm kernel oil was sourced as the result of the Group- the attainment of the RSPO Supply wide RSPO suspension, leading to high feedstock accumulation and reduced Regulatory safety inspection audits by the Department of Occupational Safety Chain Certification System (SCCS) sale orders. & Health (DOSH), district governments, and external certification bodies certification for the Johor plant in 2011. All manufacturing sites are We fully subscribe to and support RSPO-certified products. However, customers now RSPO certified to the SCCS, have yet to make substantial switch from conventional oleochemicals to RSPO- and products offered as RSPO certified versions.IOI Oleo Group is working to buck this trend and promote Any non-compliance discussed within respective departments and corrective certified Mass Balance (MB) or RSPO-certified products by providing frequent updates to customers on changes and preventive counter-measures are established and implemented Segregated grades (SG). in RSPO certification requirements and training agents worldwide to support customers who purchase RSPO products.
Benchmark against industry peers through online SHE benchmarking exercise Achievements administered by the Malaysian Productivity Corporation (MPC) • One of the few Malaysian oleochemical companies that has shipped bulk RSPO SG products
• RSPO workshop for regional Certification Bodies and RSPO officials Signatory to the Responsible Care program of the Chemical Industries Council of Malaysia (CICM), and support for codes on Process Safety, Employee • Jointly co-authoring presentations on RSPO Oleochemicals for MPOB International Palm Oil Health & Safety and Community Awareness & Emergency Response Congress and Exhibition (PIPOC) 2011, 2013 and 2015 Conferences
60 IOI GROUP Sustainability Report 2017 61 APPENDIX: APPENDIX: Content of Report EES DATA
Review & Conclusion As this is our first stand-alone sustainability report in line with the GRI Standards, information presented in this appendix represents the annual reporting period of 1 July 2016 to 30 June 2017. Going forward we will collate data to show our year-on-year performance and progress The report has been reviewed by our Group Head of Sustainability, approved by the Group CEO, and presented to the IOI Board of Directors. toward our targets. This report marks our first stand-alone sustainability report and also our first published in accordance with GRI Standards, and so this will be built upon moving forward. We endeavor to continuously improve our reporting disclosures and build the transparency of our operations. ECONOMIC PERFORMANCE DATA In connection with the audit of the financial statements of the IOI Group which will be reported in part, in the 2017 IOI Corporation Berhad’s Annual Report, BDO, the external auditors have the responsibility to read the other information. This includes the information in this report, In RM million unless otherwise 2017 2016 2015 2014 2013 in accordance with International Standards on Auditing (“ISA”) 720 (Revised), The Auditor’s Responsibilities Relating to Other Information. stated MFRS MFRS MFRS MFRS MFRS In doing so, BDO is to consider whether the other information is materially inconsistent with the financial statements of theIOI Group or their knowledge obtained in the audit or otherwise appears to be materially misstated. FINANCIAL If, based on the work they have performed, they conclude that there is a material misstatement of this other information, they are required Profit before interest and taxation 1,560.2 1,449.6 1,240.4 1,927.4 1,622.6 to report that fact. They have nothing to report in this regard in their independent auditors’ report of IOI Group for the financial year ended Profit attributable to owners of the parent 743.2 629.7 51.9 3,373.0 1,973.7 30 June 2017. Equity attributable to owners of the parent 7,457.4 7,138.1 7,069.0 6,036.8 13,650.5 Return on average shareholders’ equity (%) 10.18 8.86 0.68 34.27 15.03 1 PRIORITISATION of Material Topics Moderate Priority Topics 1 1 High Priority Topics Basic earnings per share (sen) 11.82 9.99 0.82 52.93 30.88 2 1 The report is focused on our medium and high priority material topics, High 2 Gross dividend per share (sen) 9.5 8.0 9.0 20.0 15.5 3 2 2 as shown in the materiality matrix. The most critical sustainability 3 4 3 4 3 PLANTATION 5 issues to our stakeholders were determined through stakeholder 4 6 5 FFB production (MT) 3,155,628 3,145,317 3,542,222 3,506,706 3,408,935 engagement undertaken throughout the year as part of our 7 6 Sustainability Implementation Plan. The topics most material to our 5 Total oil palm area (Ha) 174,396 179,271 178,768 174,061 160,626 8 7 business were determined through review by Senior Management MANUFACTURING and the sustainability teams across the IOI Plantation, IOI Loders Low Priority Topics Moderate Priority Topics Croklaan, IOI Oleochemical and Commodity Trading activities. 9 Oleochemical 10 Plant utilisation (%) 80 82 85 84 80
Importance to Stakeholders Sales (MT) 582,458 595,820 586,076 583,555 561,001 Refinery Plant utilisation (%) 63 62 66 68 70 Low Sales (MT) 2,414,773 2,427,326 2,591,197 2,706,786 3,052,027 Low Importance to Business High Specialty oils and fats Sector Material topics Plant utilisation (%) 57 47 52 50 56 IOI Plantation 1 High Conservation Value (Sabah and Ketapang, Indonesia) Sales (MT) 766,188 782,972 773,767 735,099 734,691 2 Labor and Social Issues (IOI Pelita land issues) 3 Peat Management (existing and new plantations) Note: In conjunction with the adoption of Malaysian Financial Reporting Standards (“MFRS”) framework by the Group, the above information from FY2015 4 Certification (RSPO and ISCC) to FY2017 have been prepared in accordance with MFRS, whereas information from FY2013 to FY2014 have been prepared in accordance with Financial 5 Environmental and Regulation Aspects (GHG emissions) Reporting Standards (“FRS”). 6 Safety and Health Source: IOI Corporation Berhad’s Annual Report 2017 7 Labor and Social Issues (migrant & foreign workers minimum wages and passport keeping) 8 Environmental and Regulation Aspects (fire and haze) 9 Environmental and Regulation Aspects (air & water pollution) Workplace IOI IOI IOI Loders IOI 10 Reducing use of Chemicals, IPM, Fertiliser Performance 2016/2017 Units Corporation* Plantation** Croklaan+ Oleochemical++ IOI Loders Croklaan 1 GHG Emissions Reduction (RRR program) Total employees Number 180 20,419 1,396 1,518 2 Responsible sourcing By employment contract 3 Third-party Supplier Monitoring Program 4 Traceability Permanent Number 175 10,900 1,275 1,478 5 Risk Assessment Temporary Number 5 9,519 40 121 6 On-site Mill Verification and Consultation Contract Number 0 0 0 7 Marketplace (stakeholder engagement: seminars/project etc.) By employment type IOI Oleochemical 1 Regulatory Compliance (environment) Full-time/Salary Number 180 20,419 1,317 1,499 2 Process Safety Part-time/Hourly Number 0 0 79 19 3 Responsible Sourcing & Traceability 4 Production of RSPO Product Streams By gender 5 Energy Efficiency & Eco-productivity Male Number 61 14,369 1053 1,218 Female Number 119 6,050 343 300 Commodity Marketing 1 Reputation in Market 2 Sustainability Certification By location 3 Traceability of Sources Malaysia Number 180 NA 536 1,243
62 IOI GROUP Sustainability Report 2017 63 APPENDIX: EES DATA
Workplace IOI IOI IOI Loders IOI Ethnicity Disclosure Performance 2016/2017 Units Corporation* Plantation** Croklaan+ Oleochemical++ Non-Executive Female Indonesia Number - NA - - Director 11% Asia (other) Number - NA 60 1 Independent 22% Europe Number - NA 486 272 Non-executive Americas Number - NA 314 2 Director Male Proportion of total employees % - - 79 to 96%^ 48%^^ 45% Executive 89% covered by collective bargaining Director agreements 33% Number of employees by gender Male: 16,701 as at 30 June 2017 Female: 6,812 Board Composition Gender Diversity * Data collected by Human Resource Department, IOI Corporation Berhad as at 30 August 2017 as at 30 August 2017 ** Data based on employment records from main subsidiaries (not necessarily as of 30 June 2017), collected by Human Resource Department, IOI Plantation + Data based on the headcounts per region, provided by the Financial department and used for Management Reporting Malay Indian ++ Data based on employment records from main subsidiaries (not necessarily as of 30 June 2017) 11% 11% ^ Data for IOI Loders Croklaan Europe only (Rotterdam and Wormerveer) ^^ Excludes IOI Pan Century Oleochemicals and IOI Pan Century Edible Oils (Pasir Gudang) employees as non-union companies 0-3 Years 4-7 Years 33% Chinese 67% Management and Directors Disclosure 78%
TAN SRI DATO’ LEE SHIN CHENG DATO’ LEE YEOW CHOR LEE CHENG LEANG PSM, DPMS, JP DSAP Executive Chairman Chief Executive Officer Executive Director Ethnic Diversity Tenure of Non-Executive Directors as at 30 August 2017 as at 30 August 2017
Source: IOI Corporation Berhad’s Annual Report 2017
LEE YEOW SENG TAN SRI PETER CHIN FAH KUI TAN SRI DR RAHAMAT BIVI BINTI Non-Independent Non-Executive PSM, SSAP, PGBK, PBS, ABS YUSOFF 1 Senior Independent Non-Executive PSM, SMW Occupational Health & Safety Performance 2016/2017 Director Director Independent Non-Executive Director Units IOI Plantation IOI Loders Croklaan2 IOI Oleochemical3 By Gender (male/female) M F Total M F Total M F Total Injuries4 Number 2,037 18 14 0 14 DATUK KAROWNAKARAN @ LIM TUANG OOI 2,037 18 CHEAH TEK KUANG Injury rate Million hours 56.38 7.0 3.2 KARUNAKARAN A/L RAMASAMY AMN JP Fatalities Number 2 1 3 0 0 0 0 0 0 DSDK, DMSM, KMN, AMN Independent Non-Executive Director Non-Independent Non-Executive Independent Non-Executive Director Director Fatalities rate Million hours 0.56 0 0 Lost days Number 3,474 3,474 512+ 512 138 0 138 Lost day rate Million hours 98.42 200.2+ 31.2 Absentees Number 336 7 343 10,310 744 11,0546 2,420 438 2,8585 Please refer to page 48-55 of the IOI Corporation Berhad’s Annual Report 2017 for their profile Absentee rate Million hours 3.64 5,029.7 788.3 Occupational Number 16 16 4 0 4 - - - disease rate Million hours 0.37 1.6 1 Figures include consideration of both employees and workers unless otherwise stated 2 During the reporting period IOI Loders Croklaan – Europe (Wormerveer) received a fine of EUR9,600 relating to an occupational accident. No other fines relating to social issues were received during the reporting period for IOIC and group companies. No all group companies distinguish between male and female in incident reporting, and so overall totals are presented where applicable 3 Data is collated for both employees and workers as IOI Oleo Germany make no distinction between the two. 4 Injuries reported include both minor injuries (first aid level) and major injuries 5 Absentee numbers presented exclude IOI Oleo Germany as days of sick-leave are not monitored 6 IOI Loders Croklaan Channahon does not record absentee day and is therefore not included in the Group total
64 IOI GROUP Sustainability Report 2017 65 APPENDIX: EES DATA
ENVIRONMENTAL PERFORMANCE DATA Hazardous waste Weight Disposed to Diverted from management 2016/2017 generated (Mt) landfill landfill Other disposal method IOI IOI Loders IOI Energy consumption 2016/2017 Units Plantation Croklaan Oleochemical IOI Plantation Total electricity consumption GJ 63,316 438,678 215,403 Scheduled Waste 31,061.03 0% 100% Disposed by licensed contractor - Electricity generated 000’kWh 12,102 - - Scrap Iron 5,844.74 0% 100% Sold to registered vendor - Electricity purchased 000’kWh 5,486 144,995 59,834 Clinical Waste 2.58 0% 100% Clinical waste sent to Hospital, which Total heating consumption GJ - - - will be further managed and disposed of registered vendor Total steam consumption GJ - - 169,608 Total pressurised air consumption GJ - - 1,886 IOI Loders Croklaan Total non-renewable fuel consumption* GJ - 2,629,386 - Spent nickel catalyst 48.4 0% 100% Recycled. Disposal recorded by - Natural gas Nm3 - 72,556,245 81,844,464 contractor - Diesel L 10,002,242 22,680 - Spent lubricant oil 1.5 0% 100% Recovered. Disposal recorded by - Petrol L 93,676 13,608 - contractor Total renewable fuel consumption GJ - - 33,341 Waste solvent 5.0 0% 100% Incinerated. Disposal recorded by contractor. - Biogas 000’kWh - - 1,594 Contaminated containers/ 13.2 0% 100% Incinerated. Disposal recorded by - Vegetable oils 000’kWh - - 6,824 packaging contractor. - Bio-gasoline 000’kWh - - 844 Laboratory chemicals 10.0 0% 100% Incinerated or recovered. Disposal * Conversion factors for fuels based on greenhouse gas reporting - Conversion factors 2016 (UK Department for Business, Energy & Industrial Strategy). recorded by contractor. The conversion factors are in line with the Intergovernmental Panel on Climate Change (IPCC)’s fourth assessment report which is consistent with reporting under the United Nations Framework Convention on Climate Change (UNFCCC). IOI Oleochemical Spent batteries 0.6 100% 0% - IOI IOI Loders IOI Spent nickel catalyst 166.3 0% 100% Recovered Greenhouse Gas Emissions 2016/2017 Units Plantation5 Croklaan Oleochemical Spent lubricant oil 18.3 0% 100% Recycled Direct (Scope 1) emissions ktonCO e 8.51 147.82 182.48 Spent solvent 653.7 0% 100% Recycled, incineration, used as fuel, or 2 storage for use in a biogas plant - Electricity generation ktonCO e 8.51 - - 2 Contaminated containers/ 40.1 0% 100% Recycled, blending or mixing prior to - Combustion1 ktonCO e - 147.82 182.48 2 packaging submission, used as fuel - Bio-genic ktonCO2e - - - 3.86 85.95 Chemicals and laboratory 2.4 0% 100% Recycled, incineration, physico-
Indirect (Scope 2) emissions ktonCO2e 3.86 85.95 51.44 chemicals chemical treatment 2 - Purchased electricity ktonCO2e 3.86 85.95 40.95 Florescent lights 0.1 0% 100% Recycled 3 - Purchased steam ktonCO2e - - 10.20 Contaminated rags and 13.7 12.4% 87.6% Recycled, used as fuel 2 - Pressurised air ktonCO2e - - 0.28 materials
- Contaminated metals 1.2 0% 100% Blending or mixing prior to submission Biomass ktonCO2e - - 0.43 3 Asbestos 4.8 0% 100% Storage - Biogas ktonCO2e - - 0.26 4 Sludge and residues 3,420.7 0% 100% Incineration, storage, blending, recycle - Vegetable oils ktonCO2e - - 0.07 4 Synthetic oils 0.9 0% 100% Blending or mixing prior to submission - Bio-gasoline ktonCO2e - - 0.10 Waste acid 16.3 0% 100% Physico-chemical treatment 1 2006 IPCC Guidelines for National Greenhouse Gas Inventories: http://www.ipcc-nggip.iges.or.jp/public/2006gl/pdf/2_Volume2/V2_2_Ch2_Stationary_ Combustion.pdf 2 Umwelt Bundesamt: https://www.umweltbundesamt.de/themen/klima-energie/energieversorgung/strom-waermeversorgung-in-zahlen?sprungmarke=St Non-hazardous waste Total weight Disposed to Diverted from rommix#textpart-1 management 2016/2017 generated (Mt) landfill (%) landfill (%) Other disposal method 3 Umrechnung 4 [Dreier 2000]. Dreier, Th.: Ganzheitliche Systemanalyse und Potenziale biogener Kraftstoffe;IfE Schriftenreihe, Heft 42; herausgegeben von: Lehrstuhl für IOI Plantation* Energiewirtschaft und Anwendungstechnik (IfE), Technische Universität München, Ordinarius: Prof. Dr-Ing. Ulrich Wagner; 2000; ISBN 3 - 933283 - 18 – 3 Domestic waste 51,209.48 100% 0% Disposed by licensed contractor. 5 Data covered for all estates and mills except Indonesia region Recyclable waste (e.g. paper, 4,128.30 0% 100% Recycled plastics etc.)
66 IOI GROUP Sustainability Report 2017 67 APPENDIX: Glossary EES DATA
Non-hazardous waste Total weight Disposed to Diverted from Carbon Dioxide Equivalents CO2e is a measure used to compare the emissions from various greenhouse gases based upon management 2016/2017 generated (Mt) landfill (%) landfill (%) Other disposal method (CO2e) their global warming potential. IOI Loders Croklaan Crude Palm Oil (CPO) First stage palm oil product produced from fresh fruit bunches (FFB) at a mill. Fresh Fruit Bunch (FFB) Bunch harvested from the oil palm tree. Bleaching earth/clay 46,812.8 6% 94% Recovered Global Forest Watch (GFW) GFW is an interactive online forest monitoring and alert system designed to empower people General waste and sludge 6,214.6 21% 79% Composted everywhere with the information they need to better manage and conserve forest landscapes. Plastic and stretch film 22.1 0% 100% Recycled Global Reporting Initiative (GRI) GRI is an international independent organisation that helps businesses, governments and other Carton and cardboard 291.7 0% 100% Recycled organisations understand and communicate the impact of business on critical sustainability issues Scrap metal 266.4 0% 100% Recycled such as climate change, human rights, corruption and many others. Flexi bag 56.61 0% 100% Recycled High Conservation Values (HCV) As defined by the HCV Resource Network, HCVs are biological, ecological, social or cultural values which are outstandingly significant or critically important at the national, regional or global level. Recycling collections 58.0 0% 100% Recycled High Carbon Stock Approach The HCS Approach is a methodology that distinguishes forest areas for protection from degraded Waste vegetable oil 1,609.0 0% 100% Recovered (HCS) lands with low carbon and biodiversity values that may be developed. The methodology was developed with the aim to ensure a practical, transparent, robust, and scientifically credible IOI Oleochemical approach that is widely accepted to implement commitments to halt deforestation in the tropics, Industrial/construction waste 3,000.1 72% 28% Recycled, reclaimed, or used as fuel while ensuring the rights and livelihoods of local peoples are respected. Domestic waste 1,815.7 47% 53% Recycled, storage, incineration Integrated Pest Management IPM is the careful consideration of all available pest control techniques and subsequent integration (IPM) Metal scrap 321.1 0% 100% Recycling or reclamation of metal of appropriate measures that discourage the development of pest populations and keep pesticides and other interventions to levels that are economically justified and reduce or minimise risks to Plastic waste 94.9 0% 100% Recycled, reclamation of organic human health and the environment. IPM emphasises the growth of a healthy crop with the least substances possible disruption to agro-ecosystems and encourages natural pest control mechanisms. Other 2,822.4 0% 100% Recycled, used as fuel, inorganic International Labor ILO is the United Nations agency for the world of work. It sets international Labor standards, material reclaimed, or storage Organisation (ILO) promotes rights at work and encourages decent employment opportunities, the enhancement of social protection and the strengthening of dialogue on work-related issues. * Data presented for Lahad Datu region only International Sustainability & ISCC is an independent multi-stakeholder organisation providing a globally applicable certification Carbon Certification (ISCC) system for the sustainability of raw materials and products. IOI IOI Loders IOI Non-Governmental Organisation NGO is used in this report to refer to grassroots and campaigning organisations focused on Water withdrawn by source Units Plantation2 Croklaan4 Oleochemical (NGO) environmental or social issues. Total water withdrawn m3 10,959,290 21,199,820 1,940,280 Oleochemical A chemical compound derived industrially from animal or vegetable oils or fats. - Municipal fresh water m3 2,069,713 1,133,918 1,860,446 Palm Kernel (PK) PK is the seed of any palm that yields palm-kernel oil. - Surface water1 m3 8,778,023 19,768,969 57,105 Palm Kernel Oil (PKO) PKO is a plant oil derived from the kernel of the oil palm. - Ground water m3 nil 0 nil Palm oil mill effluent (POME) By-product of processed fresh fruit bunch (FFB). - Rainwater m3 111,554 333 22,729 Peat An accumulation of partially decayed vegetation matter. Peat forms in wetlands or peat lands, - Waste water m3 nil 296,600 nil variously called bogs, moors, muskegs, pocosins, mires, and peat swamp forests. Total water recycled and reused^ m3 111,554 296,933 22,729 Roundtable on Sustainable A multi-stakeholder organisation based in Kuala Lumpur, Malaysia. The organisation has developed Palm Oil (RSPO) a certification scheme for sustainable palm oil. % 1.0% 1.4% 1.2% Roundtable on Sustainable Sustainable palm oil from certified sources is mixed with ordinary palm oil throughout supply chain. 1 Surface water includes water withdrawn from wetlands, rivers, lakes and oceans Palm Oil Mass Balance (RSPO 2 Data collected for IOI Plantation is for Malaysian mill operations only. Figures shown are direct values measured on site or taken from utilities statement MB) 4 Water data collected from metered usage. Rainwater figures obtained from harvesting project at PO Fractionation started in May 2017. Wastewater usage Roundtable on Sustainable Sustainable palm oil from different certified sources is kept separate from ordinary palm oil calculated from treatment plant discharge. Loders Croklaan in Europe currently does not record use of recycled water Palm Oil Segregated (RSPO SG) throughout supply chain. ^ Recycled and reused water includes use of rainwater and grey water such as wastewater Supply Chain Certification Downstream processors or users of RSPO certified oil palm products can claim the use of (or System (SCCS) support of) RSPO certified oil palm products when they adhere to the RSPO Supply Chain SOCIAL PERFORMANCE DATA Certification Systems and where this is independently verified by an accredited certification body. Sustainability Advisory Panel The IOI Group Sustainability Advisory Panel (SAP) was formed in January 2017 and tasked with Social contributions Yayasan Tan Sri Lee Shin Cheng (SAP) overseeing the application of IOI Group’s Sustainability Implementation Plan (SIP). The SAP also advises on sustainability issues raised by multi-stakeholders including NGOs and the RSPO. Total contribution for social, education and medical Over RM 6.4mil Sustainability Implementation IOI Group’s SIP serves as a practical working document that puts into practice the goals and * Yayasan Tan Sri Lee Shin Cheng, a CSR initiative of IOI Group Plan (SIP) commitments stated in the IOI Group Sustainable Palm Oil Policy. Sustainable Palm Oil Policy The IOI Group SPOP is the keystone policy to maintain the Group’s commitment to the sustainable (SPOP) management of oil palm plantations and to the implementation of responsible, global palm oil supply chain. Scope 1 Emissions All direct GHG emissions. Scope 2 Emissions Indirect GHG emissions for consumption of purchased electricity, heat or steam. Third-Party Supplier (TPS) IOI Group’s TPS program ensures that suppliers are committed to implementing the SPOP commitments.
68 IOI GROUP Sustainability Report 2017 69 GRI Content Index: Core Option
General Disclosures GRI Standard Disclosure Description Reference or IOI Reply GRI Standard Disclosure Description Reference or IOI Reply Reporting practice 102-45 Entities included in the organisation's This report covers IOI Plantation, IOI Oleochemical, IOI Organisational profile consolidated financial statements Loders Croklaan entities and IOI Commodity Marketing 102-1 Name of the organisation • About This Report, p.2 activities as core businesses. A full list of our entities 102-2 Activities, brands, products, and • About IOI Corporation, p.8-9 included in consolidated financial statements can be services found within our Annual Report 2017 from p.132 102-3 Location of headquarters • Locations, p.10-11 102-46 Defining report content and topic • Reporting Scope & Boundaries, inside front cover • IOI Corporation Berhad is headquarted from Two IOI Boundaries • About This Report, p.2-3 Square, IOI Resort, Putrajaya Malaysia 102-47 List of material topics • Appendix: Content of Report, p.62 102-4 Location of operations • Locations, p.10-11 102-48 Restatements of information • Reporting Scope & Boundaries, inside front cover • Location of IOI Plantation Estates and Mills, p.34 There are no restatements of information as this is our • IOI Corporation Berhad’s Annual Report 2017, p.64-67 first stand-alone annual sustainability report applying GRI 102-5 Ownership and legal form • Reporting Scope & Boundaries, inside front cover Standards. • About IOI Corporation, p.8-9 102-49 Changes in reporting • Reporting Scope & Boundaries, inside front cover • IOI Corporation Berhad’s Annual Report 2017, There are no changes in reporting as this is our first p.253-255 stand-alone annual sustainability report applying GRI Standards. 102-6 Markets served • About IOI Corporation, p.8-9 GRI 102: General 102-50 Reporting period • Reporting Scope & Boundaries, inside front cover • IOI Corporation Berhad’s Annual Report 2017, Disclosures 2016 GRI 102: General p.21,32,37,149 The report follows our financial year, 1 July 2016 to 30 Disclosures 2016 June 2017 102-7 Scale of the organisation • About IOI Corporation, p.8-11 • Appendix: EES Data, p.62-65 102-51 Date of most recent report This is our first stand-alone annual sustainability report • Corporation Berhad’s Annual Report 2017, p.12-17 applying GRI Standards. Prior to this, sustainability IOI information was included in our Annual Report 2016 102-8 Information on employees and other • About IOI Corporation, p.8 published 29 September 2016 workers • Appendix: EES Data, p.63-64 102-52 Reporting cycle • Reporting Scope & Boundaries, inside front cover IOIC’s significant activities are undertaken by our An annual cycle, with our Sustainability Report to be employees. There are no seasonal variations in our published alongside our Annual Report workforce. 102-53 Contact point for questions regarding • About This Report, p.2-3 102-9 Supply chain • Supply Chain, p.27 the report 102-10 Significant changes to the organisation • Reporting Scope & Boundaries, inside front cover 102-54 Claims of reporting in accordance with • Reporting Scope & Boundaries, inside front cover and its supply chain • Responsible Sourcing & Traceability, p.27-28 the GRI Standards This report has been prepared in accordance with the 102-11 Precautionary principle and approach • Risk Management, p.12 GRI Standards: Core option 102-12 External initiatives • Awards and Recognition, p.21 102-55 GRI content index • GRI Content Index: Core Option, p.70 102-13 Membership of associations • Memberships, p.20 102-56 External assurance • Review & Assurance, p.62 • Awards and Recognition, p.21 Strategy Material Disclosures: IOI Plantation GRI 102: General 102-14 Statement from the most senior • Message from Our CEO, p.4-7 Disclosures 2016 decision-maker of the organisation GRI Standard Disclosure Description Reference or IOI Reply Ethics and integrity Topic: High Conservation Value (HCV) (Sabah and Ketapang, Indonesia) and Reducing use of Chemicals, IPM, fertiliser GRI 102: General 102-16 Values, principles, standards and • Sustainability Principles and Values, p.16 Disclosures 2016 norms of behaviour such as codes of • Corporate Governance and Ethics, p.12 103-1 Explanation of the material topic and • Environment & Conservation, p.39 conduct and codes of ethics. its boundary • High Conservation Values, p.40 GRI 103: 103-2 The management approach and its • Environment & Conservation, p.39 Management Governance components • High Conservation Values, p.40 Approach 2016 GRI 102: General 102-18 Governance structure • Sustainability Governance, p.18 103-3 Evaluation of the management • Environment & Conservation, p.39 Disclosures 2016 • IOI Corporation Berhad’s Annual Report 2017, approach • High Conservation Values, p.40 p.80-112 • Website: Corporate Governance 304-1 Operational sites owned, leased, • High Conservation Values, p.40 managed in, or adjacent to, protected • Ketapang Landscape Level Approach, p.45-46 Stakeholder engagement areas and areas of high biodiversity 102-40 List of stakeholder groups • Engaging with Stakeholders, p.22-23 value outside protected areas 102-41 Collective bargaining agreements • Appendix: EES Data, p.64 GRI 304: 304-2 Significant impacts of activities, • Environment & Conservation, p.39 GRI 102: General Biodiversity 2016 products, and services on biodiversity • High Conservation Values, p.40 Disclosures 2016 102-42 Identifying and selecting stakeholders • Engaging with Stakeholders, p.22-23 • Appendix: Content of Report, p.62 304-3 Habitats protected or restored • High Conservation Values, p.40 • Ketapang Landscape Level Approach, p.45-46 102-43 Approach to stakeholder engagement • Engaging with Stakeholders, p.22-23 HCV areas in Malaysian estates include forests, namely GRI 102: General 102-44 Key topics and concerns raised • Engaging with Stakeholders, p.22-23 HCV1, HCV3, HCV4, HCV5 and HCV6. Disclosures 2016 • Appendix: Content of Report, p.62
70 IOI GROUP Sustainability Report 2017 71 GRI Content Index: Core Option
GRI Standard Disclosure Description Reference or IOI Reply GRI Standard Disclosure Description Reference or IOI Reply GRI 304: 304-4 IUCN Red List species and national • High Conservation Values, p.40 103-2 The management approach and its • Environment & Conservation, p.39 Biodiversity 2016 conservation list species with habitats We are focused on protecting nationally protected flora components • Fire and Haze Management, p.43 in areas affected by operations and fauna and those endemic to the areas in which we • Carbon Management, p.26 operate. We do match these species to the IUCN Red GRI 103: • Water Management, p.44 List status Management Approach 2016 103-3 Evaluation of the management • Environment & Conservation, p.39 Non-GRI Management of IPM • Integrated Pest Management, p.43 approach • Fire and Haze Management, p.43 Non-GRI Management of fertilisers • Fertiliser Management, p.44 • Carbon Management, p.26 Topic: Peat Management (existing and new plantations) • Water Management, p.44 103-1 Explanation of the material topic and • Environment & Conservation, p.39 GRI 303: Water 303-1 Water withdrawal by source • Appendix: EES Data, p.68 its boundary • Peatland Management, p.42 2016 303-3 Water recycled and reused • Appendix: EES Data, p.68 • Ketapang Landscape Level Approach, p.45-46 GRI 306: Waste 306-2 Waste by type and disposal method • Appendix: EES Data, p.67-68 GRI 103: 103-2 The management approach and its • Environment & Conservation, p.39 2016 Management components • Peatland Management, p.42 305-1 Direct (Scope 1) GHG emissions • Carbon Management, p.26 Approach 2016 • Ketapang Landscape Level Approach, p.45-46 • Green House Gas (GHG) Reduction Initiatives, p.41-42 103-3 Evaluation of the management • Environment & Conservation, p.39 • Appendix: EES Data, p.66 approach • Peatland Management, p.42 305-2 Indirect (Scope 2) GHG emissions • Carbon Management, p.26 GRI 3015: • Green House Gas (GHG) Reduction Initiatives, p.41-42 • Ketapang Landscape Level Approach, p.45-46 Emissions 2016 Non-GRI Breakdown of peatland areas affected • Peatland Management, p. 42 • Appendix: EES Data, p.66 by operations. Area given in hectares This includes existing plantations on peatlands. 305-5 Reduction of GHG emissions • Carbon Management, p.26 • Green House Gas (GHG) Reduction Initiatives, p.41-42 Topic: Labor and Social Issues (migrant & foreign workers minimum wages and passport keeping) • Appendix: EES Data, p.66 103-1 Explanation of the material topic and • Our Workers, p.36 its boundary Topic: Safety and Health GRI 103: 103-2 The management approach and its • Our Workers, p.36 103-1 Explanation of the material topic and • Safety and Health, p.37 Management components • Group Sustainability Palm Oil Policy (SPOP), p.17 its boundary Approach 2016 IOI GRI 103: 103-2 The management approach and its • Safety and Health, p.37 103-3 Evaluation of the management • Our Workers, p.36 Management components approach Approach 2016 GRI 409: Forced or 409-1 Operations and suppliers at significant • Our Workers, p.36 103-3 Evaluation of the management • Safety and Health, p.37 Compulsory Labor risk for incidents of forced or We are currently drafting our Foreign Worker Recruitment approach 2016 compulsory Labor Guideline, Minimum Wages Policy and Foreign Workers 403-2 Types of injury and rates of injury, • Appendix: EES Data, p.65 Passport Implementation Guidelines occupational diseases, lost days, and GRI 403: GRI 411: Rights of 411-1 Incidents of violations involving rights • Communities and Disputes, p.39 absenteeism, and number of work- Occupational Health related fatalities Indigenous Peoples of indigenous peoples None over the reporting period & Safety 2016 2016 403-4 Health and safety topics covered in • Appendix: EES Data, p.65 413-1 Operations with local community • Our Community, p.24-25 formal agreements with trade unions engagement, impact assessments, • Empowering Community, p.46 GRI 413: Local and development programs Material Disclosures: IOI Loders Croklaan Group Communities 2016 413-2 Operations with significant actual and • Communities and Disputes, p.39 potential negative impacts on local GRI Standard Disclosure Description Reference or IOI Reply communities Topic: Responsible Sourcing and Traceability Topic: Certification (RSPO & ISCC) 103-1 Explanation of the material topic and • Responsible Sourcing & Traceability, p.27-29 103-1 Explanation of the material topic and • Certification & Traceability, p.47 its boundary • Supply Chain Traceability, p.51 its boundary GRI 103: GRI 103: 103-2 The management approach and its • Responsible Sourcing & Traceability, p.27-29 Management Management 103-2 The management approach and its • Certification & Traceability, p.47 components • Supply Chain Traceability, p.51 components Approach 2016 103-3 Evaluation of the management • Responsible Sourcing & Traceability, p.27-29 Approach 2016 103-3 Evaluation of the management • Certification & Traceability, p.47 approach • Supply Chain Traceability, p.51 approach GRI 308: Supplier 308-2 Negative environmental impacts in the • Responsible Sourcing, p.28-29 Non-GRI Certification to RSPO • Sustainability Commitments, p.34 Environmental supply chain and actions taken Non-GRI Certification to ISCC • Sustainability Commitments, p.34 Assessment 2016 Topic: Environmental and Regulation Aspects (fire and haze) (air and water pollution) 414-1 New suppliers that were screened • Responsible Sourcing, p.28-29 GRI 414: Supplier using social criteria 103-1 Explanation of the material topic and • Environment & Conservation, p.39 Social Assessment GRI 103: its boundary • Fire and Haze Management, p.43 2016 414-2 Negative social impacts in the supply • Responsible Sourcing, p.28-29 Management chain and actions taken Approach 2016 • Carbon Management, p.26 • Water Management, p.44 Non-GRI Certification to RSPO • Marketplace, p.53
72 IOI GROUP Sustainability Report 2017 73 GRI Content Index: Core Option
GRI Standard Disclosure Description Reference or IOI Reply GRI Standard Disclosure Description Reference or IOI Reply Topic: Emission Reductions and Resource Management GRI 308: Supplier 308-2 Negative environmental impacts in the • Responsible Sourcing, p.28-29 103-1 Explanation of the material topic and • Carbon Management, p.26 Environmental supply chain and actions taken its boundary • Protecting the Environment, p.52-53 Assessment 2016 GRI 103: 103-2 The management approach and its • Carbon Management, p.26 414-1 New suppliers that were screened • Responsible Sourcing, p.28-29 Management GRI 414: Supplier components • Protecting the Environment, p.52-53 using social criteria Approach 2016 Social Assessment 103-3 Evaluation of the management • Carbon Management, p.26 2016 414-2 Negative social impacts in the supply • Responsible Sourcing, p.28-29 approach • Protecting the Environment, p.52-53 chain and actions taken 305-1 Direct (Scope 1) GHG emissions • Protecting the Environment, p.52-53 Topic: Regulatory Compliance • Appendix: EES Data, p.66 103-1 Explanation of the material topic and • Protecting the Environment, p.58 GRI 305: Emissions 305-2 Direct (Scope 2) GHG emissions • Protecting the Environment, p.52-53 its boundary GRI 103: 2016 • Appendix: EES Data, p.66 103-2 The management approach and its • Protecting the Environment, p.58 Management 305-5 Reduction of GHG emissions • Protecting the Environment, p.52-53 components Approach 2016 • Appendix: EES Data, p.66 103-3 Evaluation of the management • Protecting the Environment, p.58 GRI 303: Water 303-1 Water withdrawal by source • Appendix: EES Data, p.68 approach 2016 2016 303-3 Water recycled and reused • Appendix: EES Data, p.68 GRI 307: 307-1 Non-compliance with environmental • Protecting the Environment, p.58 GRI 306: Waste 306-2 Waste by type and disposal method • Appendix: EES Data, p.67-68 Environmental laws and regulations 2016 Compliance 2016 GRI 419: 419-1 Non-compliance with laws and • Protecting the Environment, p.58 Topic: Marketplace Socioeconomic regulations in the social and economic 103-1 Explanation of the material topic and • Marketplace, p.53 Compliance 2016 area its boundary GRI 103: Topic: Process Safety 103-2 The management approach and its • Marketplace, p.53 Management components 103-1 Explanation of the material topic and • Process Safety, p.60 Approach 2016 its boundary 103-3 Evaluation of the management • Marketplace, p.53 GRI 103: 103-2 The management approach and its • Process Safety, p.60 approach Management components 403-2 Types of injury and rates of injury, • Appendix: EES Data, p.65 Approach 2016 occupational diseases, lost days, and 103-3 Evaluation of the management • Process Safety, p.60 GRI 403: absenteeism, and number of work- approach Occupational Health related fatalities 403-2 Types of injury and rates of injury, • Process Safety, p.60 & Safety 2016 occupational diseases, lost days, and • Appendix: EES Data, p.65 403-4 Health and safety topics covered in • Appendix: EES Data, p.65 GRI 403: formal agreements with trade unions absenteeism, and number of work- Occupational Health related fatalities GRI 307: 307-1 Non-compliance with environmental IOILC received one small-value fine during the reporting & Safety 2016 Environmental laws and regulations period relating to environmental non-compliance for the 403-4 Health and safety topics covered in • Process Safety, p.60 Compliance 2016 Waste Water Treatment Plant (WWTP) at IOI Loders formal agreements with trade unions • Appendix: EES Data, p.65 Croklaan Wormerveer refinery in the Netherlands. Topic: Certification and promotion of RSPO products The fine was for a value of RM12,148 relating to operation without an appropriate permit. There were 103-1 Explanation of the material topic and • Certification and Promoting RSPO products, p.61 no non-monetary sanctions relating to environmental its boundary GRI 103: management at facilities during the reporting 103-2 The management approach and its • Certification and Promoting RSPO products, p.61 IOILC Management period, and no environmental cases brought up through components Approach 2016 the grievance mechanism. 103-3 Evaluation of the management • Certification and Promoting RSPO products, p.61 GRI 419: 419-1 Non-compliance with laws and • Appendix: EES Data, p.65 approach Socioeconomic regulations in the social and economic Non-GRI Certification to RSPO • Certification and Promoting RSPO products, p.61 Compliance 2016 area Non-GRI Promotion of RSPO products • Certification and Promoting RSPO products, p.61 Non-GRI Market engagement and responsive • Marketplace, p.53 management Topic: Energy Efficiency and Eco-Productivity 103-1 Explanation of the material topic and • Protecting the Environment, p.58 its boundary • Energy Efficiency & Eco-Productivity, p.59 Material Disclosures: IOI Oleochemical GRI 103: Management 103-2 The management approach and its • Energy Efficiency & Eco-Productivity, p.59 GRI Standard Disclosure Description Reference or IOI Reply Approach 2016 components Topic: Responsible Sourcing and Traceability 103-3 Evaluation of the management • Energy Efficiency & Eco-Productivity, p.59 approach 103-1 Explanation of the material topic and • Responsible Sourcing & Traceability, p.27-29 its boundary • Sourcing Responsibly, p.58 302-1 Energy consumption within the • Energy Efficiency & Eco-Productivity, p.59 GRI 103: organisation • Appendix: EES Data, p.66 103-2 The management approach and its • Responsible Sourcing & Traceability, p.27-29 GRI 302: Energy Management components 302-3 Energy intensity • Appendix: EES Data, p.66 Approach 2016 • Sourcing Responsibly, p.58 2016 103-3 Evaluation of the management • Responsible Sourcing & Traceability, p.27-29 302-4 Reduction of energy consumption • Energy Efficiency & Eco-Productivity, p.59 approach • Sourcing Responsibly, p.58 • Appendix: EES Data, p.66
74 IOI GROUP Sustainability Report 2017 75 GRI Content Index: Core Option
GRI Standard Disclosure Description Reference or IOI Reply 305-1 Direct (Scope 1) GHG emissions • Energy Efficiency & Eco-Productivity, p.59 • Appendix: EES Data, p.66 GRI 305: Emissions 305-2 Indirect (Scope 2) GHG emissions • Energy Efficiency & Eco-Productivity, p.59 2016 • Appendix: EES Data, p.66 305-5 Reduction of GHG emissions • Energy Efficiency & Eco-Productivity, p.59 • Appendix: EES Data, p.66 GRI 303: Water 303-1 Water withdrawal by source • Appendix: EES Data, p.68 2016 303-3 Water recycled and reused • Appendix: EES Data, p.68 GRI 306: Waste 306-2 Waste by type and disposal method • Appendix: EES Data, p.67-68 2016
Material Disclosures: IOI Commodity Marketing GRI Standard Disclosure Description Reference or IOI Reply Topic: Reputation in Market 103-1 Explanation of the material topic and • Building our Reputation, p.47 its boundary GRI 103: 103-2 The management approach and its • Building our Reputation, p.47 Management components Approach 2016 103-3 Evaluation of the management • Building our Reputation, p.47 approach GRI 307: 307-1 Non-compliance with environmental • Building our Reputation, p.47 Environmental laws and regulations Compliance 2016 Non-GRI Risk management • Building our Reputation, p.47 Non-GRI Industry average oil yield vs actual oil • Building our Reputation, p.47 yield Topic: Sustainability certification 103-1 Explanation of the material topic and • Certification & Traceability, p.47 its boundary GRI 103: 103-2 The management approach and its • Certification & Traceability, p.47 Management components Approach 2016 103-3 Evaluation of the management • Certification & Traceability, p.47 approach Certification to RSPO • Certification & Traceability, p.47 Non-GRI • Palm Oil Dashboard, p.30-31 Certification to ISCC • Certification & Traceability, p.47 Non-GRI • Palm Oil Dashboard, p.30-31 Topic: Traceability 103-1 Explanation of the material topic and • Responsible Sourcing, p.27-29 its boundary • Certification & Traceability, p.47 GRI 103: 103-2 The management approach and its • Responsible Sourcing, p.27-29 Management components Approach 2016 • Certification & Traceability, p.47 103-3 Evaluation of the management • Responsible Sourcing, p.27-29 approach • Certification & Traceability, p.47 GRI 308: Supplier 308-2 Negative environmental impacts in the • Responsible Sourcing, p.27-29 Environmental supply chain and actions taken Assessment 2016 414-1 New suppliers that were screened • Responsible Sourcing, p.27-29 GRI 414: Supplier using social criteria Social Assessment 2016 414-2 Negative social impacts in the supply • Responsible Sourcing, p.27-29 chain and actions taken
76 IOI GROUP IOI CORPORATION BERHAD Enhancing Reach & Engagement
(9027-W) r e s u T r a o n s p a r l e n c c s y i D ENHANCING REACH & ENGAGEMENT
g a g e m e n t E n IOI CORPORATION BERHAD (9027-W) Two IOI Square, IOI Resort, 62502 Putrajaya, Malaysia www.ioigroup.com SUSTAINABILITY REPORT 2017
SUSTAINABILITY REPORT 2017