SIME DARBY PLANTATION
INNOVATING FOR THE FUTURE SUSTAINABILITY REP O R T 2016 SUSTAINABILITY REPORT 2016
Plantation Sustainability & Quality Management (PSQM) Department
Level 3A, Main Block Plantation Tower No. 2, Jalan PJU 1A/7, Ara Damansara 47301 Petaling Jaya Selangor Darul Ehsan, Malaysia
T +(603) 7848 0000 F +(603) 7848 4363 [email protected]
www.simedarbyplantation.com COVER RATIONALE Sime Darby Plantation runs a diverse set of businesses worldwide, with a global reach and expertise spread beyond topographic boundaries. Guided by a clear vision and strategy, we are committed to deliver sustainable returns without compromising on improvements for people, planet, and prosperity. We believe in our people’s ability to maximise our operational and strategic potential. Even in the toughest of times, our value-driven culture, strong focus on sustainability, and innovation continue to help us remain resilient and maintain our position as an industry leader in good agricultural practices.
This report is printed on environmentally friendly paper. WHAT’S INSIDE
About This Report Performance Highlights ASSURING OUR PRACTICES World’s Biggest Producer of > Sustainability Certifications 002-005 > Participation in Standards Certified Sustainable Palm Oil Development > Responsible Agriculture Charter KEY MESSAGE 06 • Plays a leading role in the development and promotion of sustainable practices in > Managing Director’s Statement the palm oil sector 040-045 • One of the founding members of the Roundtable on Sustainable Palm Oil • Industry leader in good agricultural practices CARING FOR OUR PEOPLE 01 > Safety and Health 006-009 > Our Employees > Working with Our Local Communities OVERVIEW OF SIME DARBY PLANTATION 07 > Educational Assistance Sustainability Principles & Values: > Our Profile & Global Presence Produces > Key Milestones 046-065 • Delivering Economic Growth approximately > Our Supply Chain • Respect for the Environment • Respect for Community CARING FOR THE ENVIRONMENT • Accountability & Transparency to 02 010-015 > Biodiversity & Conservation Stakeholders > Carbon Management million tonnes > Fire & Haze Management 2.4 VALUES, GOVERNANCE & ETHICS > Our Core Values equivalent to 08 > Our Vision > Sustainability Principles and Values 066-079 Core Values: > Sustainability Governance > Our Sustainability Framework 03 CARING FOR OUR FUTURE • Integrity > Our Sustainability Governance 4% • Respect & Responsibility Structure > Lean Six Sigma & Continuous • Excellence Improvement of world’s annual crude palm > Risk Management • Enterprise > Research & Development oil output > Stakeholder Engagement & Material Disclosures > Sime Darby Renewables > Sustainability Strategy 09 > Our 6 Winning Mindsets 080-085 016-031 ACHIEVEMENTS FINANCIAL REVIEW > Awards and Recognition > Financial Review FY1415 – FY1516 > Key Highlights 10 > Media Highlights Upstream Activities: Downstream Operation is Present in 17 Countries: 04 032-033 086-091 • Malaysia • Malaysia • China • Indonesia • Singapore • Germany SUSTAINABILITY AT SIME DARBY PLANTATION • Liberia • Indonesia • United Kingdom > Global Reporting Initiative • Papua New Guinea • South Korea • South Africa > Sustainable Palm Oil Manifesto Content Index • Solomon Islands • Brazil • Netherlands & High Carbon Stock Study > Glossary • India • United States of America > Traceability of Supply Chain • Thailand • Papua New Guinea • Vietnam • Solomon Islands 05 11 • Japan 034-039 092-096 About This Report
Elphil Estate and Palm Oil Mill in Perak, Malaysia
Reporting Period and Scope This Report Boundaries As part of our Sustainability Reporting Guidelines Assurance All financial data in this This Sustainability Report is our second Report covers our global operations materiality analysis, we mapped and (Version G4) at a Core level1. This report has been independently stand-alone Report that covers the for the Financial Year ending analysed key issues identified report is intended for release on a assured as part the Group annual 30 June 2016. It contains through our annual review of the biennial basis. financial audit, while safety, carbon Plantation Division’s sustainability information that span throughout Plantation Sustainability Blueprint, emissions and Lean Six Sigma (LSS) performance, initiatives and achievements our supply chain, but excludes our management meetings, and based Greenhouse Gas Protocol Carbon performance data has been verified operations in Papua New Guinea, on the stakeholder engagement emission data shown in this report through a limited assurance that complements the Sime Darby Group Solomon Islands and United survey results in 2016. Our is for the period 1 January – engagement2. Annual Report 2016 where highlights Kingdom. materiality analysis and stakeholder 31 December 2015 and is part of engagement are detailed in the the Group carbon inventory that is from our other divisions, namely relevant section of this report. collated annually using the Sustainability Management System Industrial, Motors, Property, and Global Reporting Initiative The (SMS), and is in accordance with the Logistics, are illustrated. content of this Report is prepared in Greenhouse Gas (GHG) Protocol for accordance with the Global Scope 1 and Scope 2 emissions. Reporting Initiative (GRI)
1 Please refer to the GRI Content Index. 2 Please refer to Sime Darby Group Annual Report 2016 for further details.
002 Sime Darby Plantation Sustainability Report 2016 003 Performance Highlights
01 03 FINANCIAL HEALTH & SAFETY
Revenue (RMm) 11,876.5
Profit Before Interest and Taxation (PBIT) (RMm) 1,052.4
Lost Time Incident Fatal Accident Rate (FAR) More than Return on Average Invested Capital (ROAIC) Frequency Rate (LTIFR) for every 100 million incidents per million 2.0 hours worked 69,000 manhours worked SIME cards were received in 4.3% 9.3 FY1516
SOCIAL 02 ENVIRONMENT 04
Gender Committee Scholarships RSPO Certification HCS Study In all our operations to facilitate women Merit and need-based educational assistance in 98% of our SOUs are RSPO-certified We are currently carrying out trials of the HCS+ development at the workplace countries of our operation and HCS Approach methodologies in our Liberian operations CSPO Female Estate Assistant Managers Plantation Human Rights Task Force (PHRiTF) Notable Prime Minister’s Hibiscus Formed in January 2016 to identify issues around MT Award human rights that are material to our operations 2,196,186 SDP won this award for the first time in 2015 for
16 our commitment in environmental management Female Mill Assistant Managers CSPK
4 495,172 MT
004 Sime Darby Plantation Sustainability Report 2016 005 Managing Director’s Statement
Dear Stakeholders,
We are pleased to share with you our 2016 Sime Darby Plantation Sustainability Report. Similar to its inaugural edition back in 2014, this report contains updates on our sustainability journey as we stride towards meeting our environmental and social goals. This will include achievements made in various critical issues as well as a DATUK FRANKI ANTHONY DASS disclosure on the challenges we faced Managing Director, along the way. Guided by our Sime Darby Plantation Sustainability Strategy, I am proud that we have made significant progress in fulfilling both internal and external commitments made. However, we recognise that our biggest challenge is to increase sustainability awareness throughout our supply chain, especially when it involves independent suppliers. We will continue to develop initiatives on this front and many other outstanding issues over the next few years.
006 Sime Darby Plantation Sustainability Report 2016 007 ENVIRONMENT Recently, the Sime Darby Group has TRACEABILITY The protection of human rights also launched the Responsible regardless of sex, race and While the oil palm industry In the age of social media, Agriculture Charter (RAC). The nationality continues to be an continues to be accused for the companies have to be highly Charter outlines our aspirations integral part of our value system deterioration of the environment, conscious of how their brands are towards continuous improvement wherever we operate. Sime Darby we have consistently played our role perceived by customers. Growing and commitments in addressing Plantation will continue to support as a leader in plantation consumer interest in the original challenges around no-deforestation, the principles charted in the United sustainability. We are committed to source of their food products has no-peat and no-exploitation. With Nations Global Compact, as well as not only promote and adhere strictly further heightened the importance focused commitments on preserving other sustainability standards. We to various best practices, but to also of traceability in our supply chain. human rights, the environment, and strive to ensure that all our raise the bar on sustainability We realise the challenges that lie corporate integrity, the Charter will employees are equally entitled to standards. We have set ourselves ahead in achieving full traceability, be applicable to the Company’s their rights without any apart with zero burning replanting especially when it involves external entire oil palm operations, including discrimination. As a big portion of practices and even extended our suppliers. Nevertheless, guided by all third party oil palm suppliers and our workforce is made up of forest fire prevention commitment advanced systems and a structured other agricultural supply chains by migrant workers, we are committed beyond the boundaries of our Responsible Sourcing Guideline, we 2020. Additionally, results from the to ensure the credibility and operations. Additionally, we are committed to strive towards trials on the HCS+ and HCS transparency of their recruitment continue to pursue our carbon 100% traceability in our supply Approach conducted in our Liberian process, and that they receive reduction strategy efforts and have chain. operations are expected to further sufficient protection from human further intensified our biodiversity guide us on better management trafficking and exploitation in any protection initiatives. practices for any new developments PEOPLE form, for as long as they remain a in the future. member of our workforce family. Employees are our most important asset. We care about the livelihood Finally, it is important for me to and well-being of not only our highlight that the achievements workers and employees, but also highlighted in this report is the their families and the surrounding result of the collective energy of communities in our areas of our employees who truly believe in operation. I am truly sad to report the importance of upholding that we had a few fatalities in our sustainability in our operations. operations in the past two years, Without their commitment, efforts, despite our strict practices and innovative ideas and winning policies on safety and health. mindset, the company would not Accidents can come in the most have been able to achieve anything, unexpected way, under conditions let alone continue pushing the bar that are sometimes beyond our higher in implementing and control. However, be assured that embedding sustainable agro- we will continue to strive in management practices throughout providing better working our operations. environment and trainings for our employees and contractors towards It is my sincere hope that as you ensuring their safety and preventing read through the pages of this accidents at the workplace. report, you will also aspire and Although the number of fatalities in appreciate what all of us can do, our operations has been on a collectively, to improve the world downward trend over the past few that we live in for the benefit of DATUK FRANKI ANTHONY DASS years, our efforts will not stop here. our future generation. Thank you Managing Director, I truly believe that we can reduce for reading this report and for your Sime Darby Plantation such incidents even further in the interest in our journey. near future.
008 Sime Darby Plantation Sustainability Report 2016 009 Our Profile & Global Presence 18 988,599 71 COUNTRIES TOTAL LANDBANK (HA) Palm Oil Mills 254 628,995 102,551 ESTATES PLANTED HECTARAGE (HA) Employees
Sime Darby Plantation is the largest division of the Sime Upstream Darby Group, a Malaysia-based public listed conglomerate with a business that spans the entire palm oil value chain. • 603,254 ha of oil palm, 11,174 ha of As one of the founding members of the Roundtable on rubber, and 5,613 ha of growing cane Sustainable Palm Oil (RSPO), we are now the largest plantations in Malaysia, Indonesia, Liberia, 02 010–015 producer of sustainable palm oil worldwide, a testament PNG, and the Solomon Islands to our commitment in embedding sustainability in the core • Oil palm, rubber, and growing cane of our operations. We now manage approximately 629,000 cultivation ha of planted areas in Malaysia, Indonesia, Liberia, Papua • Palm oil milling, rubber factories, and New Guinea (PNG) and the Solomon Islands. bulking facilities Our upstream operations encompass more than 254 • Composting & biogas OVERVIEW estates and 71 mills. Our current Downstream operations comprise production of oils and fats, oleochemicals, biodiesel, other palm oil derivatives and renewables as Midstream well as the sales and marketing of these products in 17 • Trading countries. Additionally, our Midstream segment is involved • Marketing OF SIME in trading, marketing and logistics services. Sime Darby Plantation is backed by a diverse workforce of more than • Logistics services 100,000 people.
Our Key Markets Downstream Malaysia, India, Thailand, Indonesia, United Kingdom, • Oils & fats, kernel crushing, biodiesel, and DARBY South Africa, Germany, China, Netherlands and Vietnam. oleochemicals production PLANTATION • Sugar processing
United Kingdom Netherlands Germany
Liberia Japan China South USA Korea
Vietnam India Malaysia SingaporeIndonesia Papua New Guinea Solomon Islands Brazil
South Africa
010 Sime Darby Plantation Sustainability Report 2016 011 Key Milestones 2012 Largest producer of certified sustainable palm oil, leading total sustainable production, food safety, CSR, and GHG reduction 1985 Introduced zero 2010 2015 burning First SCCS and Acquisition of New ISCC certifications Britain Palm Oil 2002 Founding member of RSPO 1992
Elected to UNEP Global 500 Roll of Honour for 2016 and beyond commercialisation of zero burning practice 2008 As signatory of the Sustainable Palm Oil Manifesto we will test both HCS + and HCS First RSPO Approach methodologies to develop a certification single HCS methodology.
Sime Darby Group launched the Responsible Agriculture Charter (RAC) in September 2016 1990 1994 Biological control for IPM EMS-ISO 14001 2004
First GlobalGAP certification
SIME DARBY PLANTATION IS A LEADER IN PLANTATION SUSTAINABILITY • Pioneered the Zero Burning Replanting Technique in 1985 • One of the founding members of RSPO • Largest producer of CSPO: Malaysia 100%, PNG and Solomon Islands 100% & Indonesia 96% certified • No deforestation of primary and virgin forest • No new development on peatlands • No development of HCS areas, once defined • Committed to Environmental and Social Principles – HCV & FPIC
012 Sime Darby Plantation Sustainability Report 2016 013 Our Supply Chain
PALM OIL VALUE CHAIN Value Chain 98% R&D Advisory & Research of mills RSPO-certified
603,254 hectares of oil palm Planted in Malaysia, Indonesia, ESTATES MILLS Liberia, Papua new Guinea and Solomon Islands
• Processing Technology
• Research & Advisory • Seeds & Agriculture • Biotechnology & • Processing Technology Breeding • Product Innovation Centres
R&D REFINERIES
• Processing • Customer Requirements Technology • Product Innovation Centres EDIBLE OIL & FATS
CUSTOMERS BIODIESEL 100% Downstream Business Units RSPO-certified
OLEOCHEMICAL
014 Sime Darby Plantation Sustainability Report 2016 015 Our Core Values
01. Integrity 02. Respect & Responsibility 03. Excellence 04. Enterprise
03 Our Vision 016–031 To be a leading integrated global plantation company VALUES, GOVERNANCE Sustainability Principles and Values Delivering Respect for the Respect for the Accountability & Economic Growth Environment Community Transparency to & ETHICS Stakeholders
• Generate prosperity • No deforestation of • Deliver long term • Good corporate primary and virgin benefits to local governance and high • Continuously improve forest communities ethical values operational efficiency and sustainable • No new development • Respect fundamental • Continuous production on peatland human rights and social engagement with all values stakeholders – • Leader in sustainable Government, practices Regulators, NGOs and Communities
Disclose Engage Empower Protect Enhance Respect
016 Sime Darby Plantation Sustainability Report 2016 017 Sustainability Governance Our Sustainability Framework
We recognise sustainability as a key business differentiator and as such value it as a driver of our business. The Main Board is accountable for sustainability strategy and performance while 2030 our President and Group Chief Executive has overall management responsibility for sustainability; and the Group Chief Sustainability Officer is responsible for overall operational 5 YEAR ROLLING STRATEGIC GOALS sustainability performance. Sustainability Purpose Contribute to a Better Society, Minimise Environmental Harm, Deliver Sustainable Development
BLUEPRINT, ROADMAPS and KPIs
RISK CULTURE DISCLOSURE VALUE LEADERSHIP
Sustainability Beliefs Disclose, Engage, Empower, Protect, Enhance, Respect
The Plantation Division is led by its Plantation Sustainability Committee Managing Director (MD) who is and is a member of the Group actively involved in our Management Sustainability Corporate Values sustainability direction and Committee which reviews our Integrity, Respect & Responsibility, Enterprise, Excellence performance. The MD sets the overall sustainability direction. The agenda for sustainability initiatives Plantation Sustainability Blueprint is and drives business units towards reviewed annually with inputs from industry-leading achievements. The business units and receives final Plantation Division’s Flagship Board approval from the MD. The assumes accountability for the Blueprint guides our strategic Division’s sustainability strategy and actions in accomplishing performance. The MD heads the sustainability targets. Sustainable Development Goals
018 Sime Darby Plantation Sustainability Report 2016 019 Our Sustainability Governance Structure
ANTI-CORRUPTION DIVISIONAL Sime Darby Plantation has a zero-tolerance approach towards bribery and corruption in any form and is committed FLAGSHIP to behaving professionally, fairly and with integrity in all our business dealings throughout our operating areas. We SUBSIDIARY regularly engage with external agencies to support efforts to eradicate corruption, including with the Malaysian BOARDS SIME DARBY Anti-Corruption Commission (MACC) and Transparency International-Malaysia (TI-M). MAIN BOARD
GRIEVANCE AND WHISTLEBLOWING POLICY We aim to settle any grievance between the Company and an employee or third party fairly, quickly and internally. Our Grievance Policy provides a framework to support this process. An anonymous whistleblowing channel is also available to receive complaints, so that further necessary action can be taken by the management. BOARD President & SUSTAINABILITY Group Chief COMMITTEE Executive
GROUP Group Chief MANAGEMENT Sustainability SUSTAINABILITY Officer COMMITTEE
PLANTATION Plantation SUSTAINABILITY Managing COMMITTEE Director
Direct reporting
Administrative reporting
Note: The Plantation Managing Director chairs the Plantation Sustainability Committee. While the Group Chief Sustainability Officer chairs the Group Management Sustainability Committee.
020 Sime Darby Plantation Sustainability Report 2016 021 Risk Management
KEY PLANTATION SUSTAINABILITY RELATED RISKS AND MITIGATION MEASURES
Risk Description Mitigation Measures Risk Description Mitigation Measures
SAFETY AND Major accidents due to non- 1. Environment, Safety & Health (ESH) and HUMAN RIGHTS 2. Formation of Plantation Human Rights Task HEALTH compliance to policies and Emergency Response policies & procedures (CONTINUED) Force to coordinate assessments to identify procedures that may lead to death established and implemented areas for improvement where there may be or severe injury potential human rights violations 2. ESH performance monitoring & reporting implemented 3. Engagement with external consultant to provide assessments and constructive advice 3. Regular safety training, dialogues & roadshows on human rights practices and dedicated OSH departments/committees Further details can be found in the Safety & Health WASTE Impact of overflowing effluent waste 1. Established SOP on waste/effluent section of this report MANAGEMENT to monsoon drains, streams/rivers management causing pollution which can result in 2. Dedicated training courses (i.e. Certified LOCAL Challenges arising from local 1. Establishment of clear Free, Prior & Informed prosecution, fines, disruption in Environment Professional in the Palm Oil Mill COMMUNITY community grievances due to real or Consent (FPIC) procedures operations and severe reputational Effluent) conducted GRIEVANCES perceived concerns that may lead to damage 2. Grievance mechanisms implemented and issues operational disruptions and loss of 3. ESH performance monitoring & reporting addressed goodwill implemented 3. Regular engagement with stakeholders FIRE & HAZE Open burning and trans-boundary 1. Zero open burning policy established and Further details can be found in the Working with Our haze from Indonesia implemented Local Communities section of this report 2. Use of satellite surveillance to monitor CLIMATE Impacts from climate change i.e. 1. Water and soil conservation efforts including hotspots 24/7 CHANGE rainfall patterns, water scarcity, initiatives to create water bodies/reservoirs 3. Regular engagement with local authorities drought may adversely impact 2. Flood mitigation measures operations 4. Emergency response and fire prevention teams 3. Reduction in operational carbon emissions as established part of national and international reduction efforts DEFORESTATION New compliance requirement that 1. Commitment to avoid deforestation of primary does not allow development on forest as well as HCS & HCV area 4. R&D efforts into resilient planting material natural ecosystem and land with (e.g. drought-resistance, genome etc.) 2. Engagement with standard setters and NGOs High Carbon Stock (HCS) and High 5. Fire prevention system & SOP to prevent and Conservation Value (HCV) 3. Part of HCS convergence negotiations combat fires within 5km radius of operating areas
THREAT OF A The potential threat of disease 1. Breeding & utilisation of disease tolerant MAJOR PLANT outbreak and/or pests either not planting materials RSPO NGO attacks on palm products and 1. Observe best agro-management practices in all DISEASE being identified in a timely manner related products due to inconsistent field operations OUTBREAK 2. Regular onsite monitoring and control vis-à-vis or not being mitigated effectively practices which are against RSPO’s pests and disease outbreak at estates 2. RSPO, ISCC & SCCS Certification could potentially result in significant P&Cs
tracts of plantation being affected 3. Monitoring & reporting of RSPO Certification and/or being wiped out Audit non-compliance status
4. Sustainability Management System Manual implemented HUMAN RIGHTS Potential allegations of human rights 1. GCAD, Group Compliance, Group HR, Group abuses by NGOs/governments in SQM and SDP’s HR are conducting an relation to labour practices assessment on internal HR practices. These practices are assessed in terms of its effectiveness and compliance with UN’s Guiding Principles on Human Rights
022 Sime Darby Plantation Sustainability Report 2016 023 Stakeholder Engagement & Material Disclosures
KEY STAKEHOLDER GROUPS AND THE TYPES OF ENGAGEMENTS CONDUCTED
At Sime Darby Stakeholder Group Types of Engagement Sustainability Topics Discussed
Plantation, Customers Environmental and social issues Engagement survey, periodic we recognise Bulk and FMCG such as deforestation, human meetings, engagements and sharing players rights, biodiversity, and high engagement with on latest developments within SDP stakeholders as carbon stock fundamental to the Employees Permanent & Annual employee engagement Briefing and training on way we do business. contractual survey, Open Days, volunteer sustainability, health, and safety, employees programmes, recreational events, In line with our as well as sustainability direction (foreign & local) trainings commitment as a Non-governmental FPIC, expansion plans, palm oil producer, Meetings, telephone conversations, Organisations environmental issues we strive to engagement surveys Local and RSPO Certification, technical comprehend the international Collaboration: assistance to achieve best social and • traceability expectations of management practices, environmental • social and environmental biodiversity, human rights, NGOs projects through YSD our stakeholders. campaign to raise Ebola • health projects with IFRC & Awareness Their feedback is other societies vital for us to gauge Industry Groups our performance Green technology, RSPO & RSPO, MPOA, Working groups, task force, MSPO standards developments, and implement MPOB, MPOCC technical committees carbon higher sustainability standards across our We engage our stakeholders Internally, we organised meetings Government through multiple channels. Our key with relevant key functions to Agencies DOE, DOSH, Periodic meetings, on-site operations. stakeholder groups have been obtain their input on issues that Regulatory inspections, correspondence on Compliance, regulations identified through various activities they perceive to be material for Agencies regulations in the palm oil industry. They SDP. Additionally, Sime Darby include shareholders, employees, conducted external stakeholder customers, non-governmental engagement surveys in 2016, to Local Communities Regular on site meetings with PAC, Land rights, FPIC, fire and haze Indigenous people organisations, industry groups, and gauge feedback and analyse gaps in RSPO RT, RSPO complaints & prevention and communities government agencies. Our our previous reporting. The surveys, grievance engagement approach is not only together with comments obtained in our operational areas through formal meetings, but also from our internal team, helped us to Engagement on RSG Sustainability practices informal means such as surveys, have a better understanding of websites, social media, and market issues material to stakeholders. Academic research. Institutions University of Collaboration: Education on zero-burning Our key stakeholder groups are Riau, ULM, UKM, • fire/haze management practices and zero waste listed in the following page, and others • zero waste management management together with an overview of our engagement activities in the past year and the major concerns raised. Note: IFRC : International Federation of the Red Cross UKM : Universiti kebangsaan Malaysia ULM : Universiti Lambung Mangkurat
024 Sime Darby Plantation Sustainability Report 2016 025 Sustainability Strategy
MATERIAL DISCLOSURES We define material issues as subjects that have the biggest influence to our business in terms of environment, social, and economy, as well as ones with the most significance to our stakeholders. Our course of selecting SDP SUSTAINABILITY ROADMAP – CRITICAL KPIS material issues was guided by the Reporting Principle and Guidance for Defining Content in the GRI G4 Sustainability Reporting framework. Objectives & KPI FY1516 FY1617 FY1718 FY1819 FY1920
Protect Our Fatality cases Below are the sources and methodology used to identify our material issues: 0 fatality 0 fatality 0 fatality 0 fatality 0 fatality People by & rates Developing a LTIFR Reduce 10% Reduce 10% Reduce 7.5% Reduce 5% Reduce 5% Safe Working Culture With Concerned Commit target Achieve 10% Achieve 25% 50% 100% INTERNAL EXTERNAL Zero Fatalities reporting by 2020 target target 63 Mil 126 Mil Increasing LSS Financial 1% of 1.25% of 1.5% of (0.5% of (1% of Monetary benefits from FY1617 FY1718 FY1819 FY1112 FY1112 Benefits LSS projects Revenue Revenue Revenue revenue) revenue) • Management View. We analysed major • External Stakeholder Perception. We conducted sustainability issues across the organisation. external stakeholder engagement surveys to gauge Stakeholder Enhancing GRI 2nd Plantation Relook at their feedback on critical sustainability issues. Sustainability Engagement Sustainability Integrated • Division KPI. We identified and assessed SDP’s Sustainability Sustainability Target and Stakeholder groups engaged were existing and Reporting Material Assurance Reporting critical and trending sustainability Key Performance Reporting Report Commitment potential customers, NGOs, Industry Groups and assessment Index. Investors. % intensity . We reviewed SDP’s Risk • Risk Management Matrix Reducing GHG reduced from Management Matrix and selected key sustainability 15% 20% 30% 35% 40% Emissions baseline risks expected. (Upstream) Identify & Reducing establish The major topics raised were Waste Waste 10% 25% 50% 100% targets for then plotted on a materiality Generation 2020 matrix, where issues with the highest significance to Determine both internal and external Optimising Water Baseline 10% from 15% 20% 25% stakeholders were selected: High Priority Water Usage Footprint &Target baseline setting EXTERNAL STAKEHOLDERS Carbon Emissions
Biodiversity
Human Rights
Smallholders Low Priority Traceability
Deforestation Low Priority High Priority INTERNAL STAKEHOLDERS
026 Sime Darby Plantation Sustainability Report 2016 027 SDP SUSTAINABILITY ROADMAP – TRENDING KPIs
Sime Darby Plantation Sime Darby Plantation Trending KPI Current Programmes Trending KPI Current Programmes Sustainability Scorecard Sustainability Scorecard
• Update of the SDP Environment, Safety • Energy savings projects and initiatives at & Health Management System (ESHMS) Plantation Tower T5 Energy Reduction • ESH Risk Workshops • Contribution of Renewable Energy to T1 Implementing Divisional ESH Roadmaps • Periodical ESH data validation National Grid via Biogas projects • MSOSH and PMH Awards • Risk workshops + updated HIRARC & • Improvement in Effluent Management EAI/ESH Risks registers (compliance with Implementing, Measure and Monitor RSPO & Group Risk) Capacity Building: T6 Environment Safety and Health (ESH) Risk • Harvesting Safety (HCTP), Machinery Management • Launch Train-the-Trainer White Belt Safety (Model Mill), Transport/Road Programme Safety & Bauxite Mining • Conduct 3rd Batch of Black Belt • Review the current reporting guidelines Programme Socialising Sustainability Policies and • Training for gender committee • Conduct Centralised Green Belt T7 Procedures and deployed workshop • Awareness programmes related to child protection and reproductive rights • Identify LSS Coordinator for each operating Unit • Mill environmental Corporate Social Responsibility (CSR) projects in T2 Implementing Divisional LSS Roadmap Identify Gap and Opportunities: collaboration with YSD. (Eg: emergency response training for communities • Launch LSS Maturity Index Assessment affected by flood) (Upstream, Downstream, and R&D) T8 Enriching Local Communities • MOU with DOE Malaysia to collaborate in conducting environmental awareness Governance and Guidance: programmes for communities around • Launch LSS Standard Operating SDP’s operations by working together Procedure (SOP) with YSD • Revise 5S Certification SOP • ESH Caucus – Plantation industry, GLC, Contributing to National & International • War on Waste Awareness Event T9 MAPA stakeholders platforms • LSS White Belt Handbook • MSOSH and PMH Awards • Implementation at Minamas & West New • Risk updates & BCM programmes Britain Implementing Sustainability Management SQM alignment with Group’s GRC • MESHC & GSR + Effluent Management T3 T10 System (SMS) • System enhancement for Carbon to requirements improvement integrate Palm GHG features • Quarterly OSH data validation • Update of the SDP ESHMS • Introduce ESHMS-based internal audit in Certifying to an Integrated OSHAS 18001 & collaboration with GSQM to drive T4 ISO 14001 &/or ISO 9001 Standards ESHMS implementation & certification • IMS-based audit for Upstream Operations
028 Sime Darby Plantation Sustainability Report 2016 029 Our 6 Winning Mindsets
One message rang loud and clear in the Sime Darby Group’s townhall in November 2015: we need to RISE to our challenges. There is no doubt that the current global economy has been challenging. Lower commodity prices coupled with the weak economy has affected multinational companies around the world. To see us through this difficult time, and ensure that we meet our targets, we have initiated the RISE initiative (Results, Innovation, Sustainability and Energy) as part of the Group’s five-year strategic blueprint. DELIVER RESULTS We drive results In another townhall held in February 2016, our President & Group Chief Executive revealed six Winning Mindsets I exceed expectations we will need to bridge the gaps in our performance. We have to look at means of enhancing our approach of doing things, in order to stay relevant in the industries which we operate in. The 6 Winning Mindsets serve as a guide to all employees to innovate and focus on the results we want by adopting a new approach.
CUSTOMER FIRST We put customer first I win with the customer
VALUE TALENT We value talent I am team palayer WINNING BUILD TRUST Mindsets We build trust I walk the talk
CONTINUOUS IMPROVEMENT We improve and innovate I do better, every time
EMPOWERED DECISIONS We make empowered decisions I am responsible and proactive
030 Sime Darby Plantation Sustainability Report 2016 031 Financial Review
Financial Results (RMm) 2015 2016
Revenue 10,268.6 11,876.5 Operating Profit 1,323.2 1,060.9 Share of Results of Joint Ventures and Associates (32.4) (8.5) Profit Before Interest and Tax (PBIT) 1,290.3 1,052.4 04 Return on Average Invested Capital (ROAIC) % 6.6% 4.3% 032–033 FINANCIAL Key Highlights REVENUE (RMm) PROFIT BEFORE INTEREST AND TAX (PBIT) (RMm)
REVIEW 2012 14,126.4 2012 3,364.6 2013 11,672.1 2013 2,190.3
2014 10,953.3 2014 2,077.3
2015 10,268.6 2015 1,290.8
2016 11,876.5 2016 1,052.4
0 4,000 8,000 12,000 16,000 20,000 0 1,000 2,000 3,000 4,000 5,000
VALUE DISTRIBUTION RETURN ON AVERAGE INVESTED CAPITAL (ROAIC) (%)
Providers of 2012 25.1 Capital and Reinvestment 2013 15.9 (55%) 2014 14.6
2015 2015 6.6 Government (-3%) 2016 4.3
Employees (48%) 2016 0 5 10 15 20 25 30 2016
032 Sime Darby Plantation Sustainability Report 2016 033 Sustainable Palm Oil Manifesto & High Carbon Stock Study
05 034–039
Palm oil is a nutritious and versatile processors, we are committed to deforestation and build a food product that is fundamental to ensure sustainability and traceability transparent supply chain, we the livelihood of millions of people throughout our supply chain. In became signatory to the Sustainable in communities across Indonesia and alignment with our efforts to Palm Oil Manifesto (SPOM) in July SUSTAINABILITY Malaysia. As oil palm growers and accelerate the journey to no 2014. Our progress as a Signatory of SPOM is illustrated below:
Signatory to We halted all An independent HCS Study was AT SIME DARBY SPOM new oil palm HCS Study completed developments commenced PLANTATION July 2014 September 2014 November 2014 December 2015 CONVERGENCE OF THE HCS values that may be developed. The convergence of the two. The HCS APPROACH WITH HCS+ HCS Approach integrates with High Approach and the HCS+ METHODOLOGY Conservation Value (HCV) methodology are convergent in We are currently carrying out trials assessments, peatland and many respects and planning is of the HCS+ Methodology in our streamside (riparian) area underway for joint trials of the two Liberian operations. As a signatory identification, and Free Prior and methodologies in diverse to the SPOM, we will also trial the Informed Consent with local environments. These trials will allow HCS Approach, as per customary communities. This the comparison of both the HCS+ recommendation in the final report Approach proposes a conservation and HCS Approach methodologies in of the HCS Study. The report plan for a concession with areas for terms of conservation, risks, as well concluded that the HCS + method protection and areas that can as practicality of implementation. could be merged with the HCS potentially be developed as a This comparison will aid our efforts Approach to provide clear and land-use planning tool. towards the development of a single consistent guidance for companies HCS methodology for the oil palm and governments. While the HCS Approach focuses sector. Additionally, we have also more on conserving forests, the initiated a Light Detection and The HCS Approach is a methodology HCS+ methodology focuses more on Radar (LiDAR) study to obtain a that distinguishes forest areas for sustainable development, and the baseline carbon map of the area protection from degraded lands methods and outcomes may be identified to carry out our trials in with low carbon and biodiversity sufficiently complementary to allow Liberia.
034 Sime Darby Plantation Sustainability Report 2016 035 Traceability of Supply Chain
SDP’s palm and lauric products are a vital tool in the palm oil industry As a participant of the UNGC, Sime OPEN PALM TRACEABILITY widely used in the food industry, to assure sustainability claims in Darby Berhad is committed to DASHBOARD especially in the production of relation to palm products, and develop more sustainable supply Open Palm is SDP’s online baked goods, dairy replacer, infant ensure respect for the community chain practices and encourage dashboard that provides critical nutrition, and frying oil. Our and environment throughout the As of business management methods that information on the traceability of commodities are sold globally, supply chain. explore fundamental issues in 30 June 2016, our supply chain. Open Palm where a growing number of improving the sustainability of our provides customers with access to consumers are looking for product In A Guide to Traceability: A Practical sourcing practices. As of 30 June key data on the origin of the raw attributes such as origin of product Approach to Advance Sustainability in of our 2016, 92.9% of our FFB is traceable 92.9% materials used to produce all palm and sustainability practices of the Global Supply Chains developed by to the plantations. In downstream FFB is traceable products by our refineries, which plantation prior to purchasing the the United Nations Global Compact operations, 83.6% of CPO and 100% to the plantations include information of the supplying food item. Traceability provides a (UNGC) Traceability Taskforce, of PK is traceable to the mill. 78.9% oil palm mills, right down to its platform to satisfy consumers’ traceability is defined as the of our CPO and 85.8% of PK is plantations, as well as third party inquiries and create a connection following: traceable to the plantations. plantations. Full access to the with the brand advertised. It is also Realising the importance of traceability dashboard is currently traceability with the increase of made available to our key clients eco-conscious customers, we have with traceability information that participated in various initiatives to ties back to the individual clients’ “The ability to identify and trace the history, distribution, ensure transparency in our supply purchases. location and application of products, parts and materials, chain. to ensure the reliability of sustainability claims, in the areas of human rights, labour (including health and safety), the In downstream environment and anti-corruption.” operations,
83.6% of CPO and 100% of PK is traceable to the mill
78.9% of our CPO and 85.8% of PK is traceable to the plantations
036 Sime Darby Plantation Sustainability Report 2016 037 This guideline covers sustainability Another challenge in achieving full enterprise through a MOU to assist areas such as legal requirements, traceability is the complexity of the small oil palm producers in the avoiding deforestation of primary supply chain, especially when Lower Kinabatangan area in Sabah forests and HCV areas, human rights traders are involved. It is extremely in achieving RSPO certification. This protection, and implementation of difficult to trace the FFB up to collaboration aims to secure the social and environmental best plantation when it has gone through supply of oil palm Fresh Fruit Bunch SCCS FULL SEGREGATION their choice. A majority of this practices. Two pilot RSG projects multiple layers in the supply chain, (FFB) from small producers including group of smallholders are not RSPO are currently being conducted in as the fruits are often mixed up at certified small producers FFB under Fully Segregated Palm Oil Supply certified yet, thus posing a Selaba, Perak and Merotai, Sabah. the collection centres before being the Wild Asia Group Scheme Chain humungous challenge to palm oil RSG will be rolled out progressively transported to the palm oil mill. The (WAGS). We hope that this The RSPO Supply Chain Certification companies in ensuring transparency PHASE 1: in the other remaining areas. complexity further increases in partnership will significantly System equips refineries with the in their sustainability practices as Downstream operations, as the increase the participation of capability to implement traceability part of our supply chain. In IDENTIFICATION OF KEY Traceability and sustainability refineries could be buying smallholders in our sustainable of crude palm oil supply to alignment to SDP’s commitment to SUPPLIERS AND EFFECTIVE certification for smallholders have commodities from multiple mills. supply chain. supplying mills and estates through sustainability, we have developed a COMMUNICATION remained extremely challenging to Additionally, many traders are the RSPO e-Trace system and allows Responsible Sourcing Guideline achieve as obtaining sustainability hesitant in sharing the traceability Despite the numerous challenges for the production of fully- (RSG) to lead our decision in certifications often comes with high information of their commodity, faced in our effort to be 100% segregated certified palm oil costs. For instance, in order to fearing losing their position as our traceable, we are continuously sourcing externally. products. About 70% of our mills in obtain RSPO Certification, direct supplier. Tracing the product engaging our suppliers to work Malaysia and Indonesia are certified Development of Responsible Sourcing PHASE 2: smallholders will have to invest in back to its originating plantation is towards full traceability in our as Identity Preserved (IP), processing Guideline (RSG) for Independent pre-audit requirements such as also difficult for commodities supply chain. We have further only RSPO-certified FFB. Smallholders IDENTIFICATON OF PRE- conducting HCV, EIA, and SIA purchased from the open market, as strengthened our commitment QUALIFIED SUPPLIERS assessments in addition to bearing the traceability information is not towards this cause by being co- The RSG requires our third party THROUGH DESKTOP audit and staff training costs. This is readily available. chairs of the RSPO FFB Legality and suppliers and dealers to not only CHALLENGES IN ACHIEVING ASSESSMENT highly costly for independent Traceability Taskforce, striving ensure compliance with relevant FULL TRACEABILITY smallholders, as they often do not Collaboration with Wild Asia (WA) to towards developing a structured legal obligations, but to also have a benefit from the financial and Include Certified Smallholders in Our mechanism to trace the FFB derived One of the major challenges in mechanism in place to implement technical support of a mill, unlike Supply Chain from external suppliers for all achieving full traceability is the the requirements as appropriate and associated smallholders. A majority industry players. existence of third party smallholders as deemed practical without In striving towards including more of the smallholders do not have the in our supply chain, as outside crops compromising our social and PHASE 3: certified smallholders in our supply resources to set up a mechanism in make up approximately 10% of the environmental obligations. Suppliers chain, we partnered with Wild Asia VERIFICATION AND place to assure full traceability in total FFB processed by our mills. must be able to demonstrate (WA), a Malaysian-based social CONTINUOUS ENGAGEMENT their operations. Independent smallholders are traceability and transparency of TOWARDS COMPLIANCE self-financed and self-managed, thus supply chain, up to the supplying they are not bound to any one mill. farms/estates. The RSG will be Consequently, they may deal implemented in three phases: directly with local mill operators of
038 Sime Darby Plantation Sustainability Report 2016 039 Sustainability Certifications
Key Figures
CSPO CSPK 2,196,186 MT 495,172 MT
Total SOUs Certified: Malaysia (100%) 58/59 (98%) – 06 Indonesia (96%) 040-045
Roundtable on Sustainable Palm Oil 25,000 families. Out of approximately 75% of our mills in Malaysia and (RSPO) Certification 45,000 hectares of land developed Indonesia are now Identity Preserved, As founding members of the RSPO, for this purpose, we have obtained processing only RSPO-certified FFB. we continue to support and uphold RSPO certification for close to 25,000 100% of our downstream business the RSPO Principles & Criteria as a hectares (from 19,000 hectares in units have been RSPO Supply Chain ASSURING OUR FY1415) with a production capacity Certification System (RSPO SCCS) benchmark and assurance of sustainable planting of oil palm. By of over 695,000 MT of FFB. Three certified, meaning that these units are certifying almost all of our estates, smallholder schemes have successfully capable of delivering RSPO mass the RSPO badge has become a key obtained RSPO certification in the balance and/or segregated products. differentiator of Sime Darby palm oil reporting period. They are located in Central Sulawesi (PT. Tamaco Graha products and are sought after in all INDONESIAN SUSTAINABLE PRACTICES Krida), South Kalimantan (PT. Laguna markets; for quality and sustainability. PALM OIL (ISPO) CERTIFICATION Mandiri) and West Kalimantan (PT. ISPO is a mandatory certification Supporting Smallholders in achieving Sime Indo Agro). The total certified scheme adopted by the Indonesian RSPO Certification planted area is approximately 12,000 ha and contributed government that aims to improve Smallholders are a key part of the approximately 200,000 FFB. We are sustainable practices and reduce palm oil supply chain, contributing committed to certify the remaining greenhouse gas emissions in the approximately 40% to the global palm area under the RSPO Smallholder Indonesian oil palm industry. The oil production. The RSPO defines Certification Scheme through scheme is based on existing smallholders as farmers who grow oil engagement activities, facilitation Indonesian laws and regulations and palm, alongside with subsistence and technical support. aims to facilitate compliance by crops, where the family provides the producers. 12 of our SOUs in majority of labour and the farm Indonesia have been ISPO certified provides the principal source of RSPO CERTIFIED SUPPLY CHAINS remaining 13 undergoing different income, and the planted oil palm area The RSPO Supply Chain Certification stages for verification. are is less than 50 hectares. We are System equips refineries with the committed to assist smallholders in capability to implement traceability of increasing yields, improve agro- crude palm oil supply to supplying MALAYSIAN SUSTAINABLE management practices and eventually mills through the RSPO e-Trace PALM OIL (MSPO) CERTIFICATION achieve sustainable practices. system and allows for the production The MSPO Standard is a national of identity preserved and fully- certification standard created by the In Indonesia, we have continued to segregated certified palm oil Malaysian government and developed provide local communities with the products. A number of sustainable with input from various stakeholders means to make a living and raise their supply chain mechanisms exist for in the palm oil industry. It was first quality of life through our Kredit palm oil, including identity preserved, launched in November 2013, and Koperasi Primer Anggota (KKPA) and mass balance and book & claim. officially came into implementation in Plasma schemes, impacting more than January 2015. The SDP supporting the initiative throughout first verification SOU Labu. 040 Sime Darby Plantation Sustainability Report 2016 041 Participation in Standards Development
RSPO TASK FORCE AND WORKING GROUPS • 2 of Sime Darby’s representatives were nominated as In line with our sustainability goals, Task Force members in reviewing the Malaysian we strive to contribute our experience National interpretation (MYNI) P&C, which was then and expertise in a number of industry rolled out in May 2015. • SDP is a panel in the RSPO Complaints and Grievance groups that seek to improve and raise Panel, Dispute Settlement Facility Advisory Group and sustainability standards and actively also a member of the Human Rights Working Group, FFB Legality and Traceability Task Force, Smallholders engage with stakeholders. Working Group, and Emission Reduction Working Group. SDP is also participating in the Biodiversity and High Conservation Value Working Group, and Compensation Task Force for the development of the RSPO Remediation and Compensation Procedures.
OTHER INVOLVEMENTS • SDP is part of the Technical Working Committee of the Malaysian Sustainable Palm Oil (MSPO) on the drafting of MSPO Standard. • Datuk Franki Anthony Dass is a member of the Programme Advisory Committee (PAC) under the Malaysian Palm Oil Board (MPOB). • Datuk Franki Anthony Dass is the chairman of the Malaysian Palm Oil Association (MPOA). • Sime Darby was a Core Advisory and Steering Group member of the United Nations Global Compact’s (UNGC) “Voluntary Business Principles for Sustainable Agriculture” process, which developed the Food and Agriculture Business Principles (FABP). • SDP is a member of the Technical Committee that is currently developing national guidelines on ergonomics under the purview of the Department of Occupational Safety & Health (DOSH) Malaysia. • SDP is a member of Malaysian TC 207/SC 1 Committee. TC 207/SC1 is the ISO sub-committee that is responsible for ISO 14001 – the international standard for environmental management – and other supporting standards. • SDP is a member of Malayan Agricultural Producers Association (MAPA). • SDP represents MAPA in the Technical Committee on Safe System of Work and Practices in Occupational Setting, for the development of ISO 45001 standards. • SDP is a member of the Malaysian Employers Federation Health, Safety, and Environment (MEF HSE) Committee.
042 Sime Darby Plantation Sustainability Report 2016 043 Responsible Agriculture Charter
SDP launched its Responsible Agriculture Charter (RAC) on 21 September 2016. The Charter outlines our aspirations and commitments to continuous improvement and to address the continuing challenges around no-deforestation, no-peat development and no-exploitation. We are committed to deliver sustainable returns without compromising on people, planet and prosperity. RAC is drawn from the foundational principles of RSPO and frames our commitments in three key areas, namely human rights and social development, the environment and corporate integrity.
RAC IMPLEMENTATION TIMELINE Human Rights and Social Environmental Commitments Corporate Integrity Development Commitments Commitments With Effect from • Protect and enhance forests Crops July 2017 2018 2020 Date of Publication • Respect human rights and • Protect ethical standards • Protect and disclose empower communities environmental impacts and • Disclose performance and All Sime Darby Palm Oil Full Charter commitments implemented • Protect labour standards and minimise resource use objectives Full Charter commitments enhance employment All Palm oil 3rd Party Suppliers • Enhance supply chain implemented conditions traceability Human rights + Human rights + High Conservation Full Charter All Other Crops High Conservation value + High Carbon Stock* commitments Value
* Phased implementation of HCS for all other crops due to existing community commitments.
The commitments of this Charter are effective immediately for all of our palm oil operations, both upstream and downstream, including associated smallholders. However, acknowledging the challenges that it will create to independent smallholders in our supply chain, we strive to jointly find innovative solutions to ensure a balanced outcome and avoid exclusion of any groups. Should breaches occur, we will work through constructive engagement with our business partners to resolve and prevent further non-compliances. As part of our commitment to the RAC, we will be disclosing our progress in implementing the charter regularly.
For more details on RAC, please visit http://www.simedarby.com/sustainability/reports-and-resources/reports-and-resources
044 Sime Darby Plantation Sustainability Report 2016 045 Safety and Health
Lost Time Incident Frequency Rate (LTIFR) (Incidents Per Million Manhours Worked)
FY1516 FY1415 FY1314 FY1213 07 9.3 10.8 9.8 13.4 046–065
We take safety very seriously and strive to reduce the number of accidents in our operations. This concerns not only our workers and employees, but also their families, contractors who work for us, and visitors to our facilities. Overall, we have made progress with notable reductions in our LTIFR, while ensuring strict compliance to Standard Operating Procedures that have been developed. Unfortunately, there were 4 fatalities in our operations in CARING FOR FY1516. We offer our condolences to the families of the deceased. Guided by a Five-year strategy – Target 2020: RISE to ZERO HARM, we will continue to promote a culture of prevention among our employees and ultimately meet the target of zero fatality in our operations.
OUR PEOPLE SDP OCCUPATIONAL FATALITY RATE
Fatality cases FAR 10 10 9 FAR
8 Fatality cases 8 8
6 6 6 6
4 4.3 4 3.9 4
3.1 2.9 2 2 2
0 0 FY1112 FY1213 FY1314 FY1415 FY1516
046 Sime Darby Plantation Sustainability Report 2016 047 Fatal Accident Rate (FAR) of 2.0 for every 100 million hours worked – 31% lower compared to the previous Financial Year
Lost Time Injury Frequency Rate (LTIFR) of 9.3 cases per million hours worked – a 13% decrease compared to the previous Financial Year. Total reduction of 46% over the last 5 years KEY PROGRESS Malaysian Society for Occupational Safety & Health (MSOSH) Awards 2015. 30 operating units in SDP (2 Downstream, 2 R&D and 26 Upstream) won the MSOSH Awards in 2015
5 of SDP’s Indonesian operations received the National Zero Accident Awards another 5 operations also received the Provincial Zero Accident Awards
FATAL CASES KEY RISK AREAS AND Harvesting Safety CONTROLS Four fatal occupational cases were • 40% of LTI cases in estate recorded in FY1516. Two of these Lost Time Incident (LTI) Analysis operations were reported cases involved estate workers (one from harvesting-related • 51% of the total reported LTI each in Malaysia & Indonesia) – one activities such as cutting, cases are from upstream related to harvesting activity and pruning and the handling of operations while 94% of one pertaining to road accident FFB and fronds. these cases are from estate while transporting workers. The operations. However, the • In view of the risks, SDP has other two cases involved mill average number of lost days developed the Harvesting operators (one each in Malaysia & for LTI cases is higher in the Competency Training Indonesia) – in boiler and sterilizer mills than the estate (138 Programme (HCTP) to work stations respectively. compared to 17), suggesting enhance competency of that injuries are more severe workers, especially cutters in the mills although the and pruners in harvesting frequency of accidents is activities. This programme lower than in the estates. aims to make harvesting as safe as possible, by reducing injury and improving efficiency.
048 Sime Darby Plantation Sustainability Report 2016 049 Induction Selection of training of new Competency Competency workers & On Job workers at Sua evaluation & re-evaluation physical Training (OJT) Betong Workers verification & renewal health checks Training Centre
• We are also enforcing the the steriliser and boiler Chemical Safety – Elimination of use of non-conductive poles stations. Improvement actions Class 1B Chemical for harvesting near overhead taken include; • Malaysian Upstream power lines. – improving the Lockout/ operation is the only Tagout (LOTO) standards operation in SDP that is still Transportation Safety using Class 1B chemical in the – development of Model • 33% of LTI cases in the form of Methamidophos for Mills estates were reported from pest control purposes. the operation of vehicles by – development of Mill of • In view of the high safety and both SDP and our external the Future health risks posed by this contractors. These cases chemical, we have targeted to mainly involved tractors and Occupational Health & Hygiene eliminate the use of this Class lorries used in normal estate • We conduct Hearing 1B chemical and substitute it operations and replanting Conservation Programme in with a safer chemical by activities. all our operations to manage 2017. • Apart from enhancing the exposure to noise hazards. • In FY1516, 70% of our competencies of drivers/ • We are working together estates have started using an operators through the TDCC, with Universiti Putra Malaysia alternative chemical that is OST (for tractor drivers), and & Universiti Teknologi less hazardous, subsequent to ENHANCING ESH CULTURE IN Suagate (for train gate Malaysia (UTM) to review positive tests and advice by SDP keepers), we also reviewed ergonomic risk assessments the R&D team. Empowerment & Enforcement transportation contracts, and controls. conducted contractor • To date, we have seen a • We strive to enhance briefings, and increased our • 2 of our mills were selected marked reduction in the use ownership and accountability enforcement efforts. to participate in the of Class 1B chemicals and we in implementing ESH policies Systematic Occupational are positive in achieving our and procedures in our • We continue prioritise safety Health Enhancement Level target by 2017. operations. These initiatives and health factors in the Programme (SOHELP) include; selection of machineries to Programme organised by ESH Risk Management be used in our estate – Introduction of Department of Safety and operations. • As part of our continuous Operational Safety & Health (DOSH) Malaysia. improvement strategy, we Health (OSH) Index as • As commuting/road accidents • We are reviewing the use of have revised our ESH Risk part of the KPI at every continue to be an area of Tanizawa helmets (shorter Management procedures to function and level. concern for our workers, we lids) for harvesters, especially make them more robust and are continuously – Continuous training when harvesting tall palms, practical. They have been implementing Road Safety programmes for due to the higher visibility reviewed based on the ISO campaigns in our operations. Managers, ESH offered. 14001:2015, OHSAS 18001, Management and ISO 22301 standards. The Mill Machinery Safety • Our operations also carry out Representatives, and ESH new procedure will be dedicated Chemical Health Committee members at • 27% of LTI cases in the implemented FY1617 Risk Assessments and conduct every OU. estates were reported from onwards. health & medical surveillance the operation of mill – Assessment on adequacy programmes to ensure that • All our biogas plants in machineries, particularly in of controls in key our chemical risks are As Low Malaysia and Indonesia operational risk areas. as Reasonably Practicable undergo Hazard and (ALARP). Operability Study (HAZOP) – Issuance of Stop Work for risk assessment. Order in situations where risks are intolerable.
050 Sime Darby Plantation Sustainability Report 2016 051 Our Employees
SDP employs more than 100,000 people globally. Employees are our biggest and most important asset. We strive to provide the best working conditions to all employees regardless of their nationality, race, or gender.
Concerned reporting/SIME ENHANCING ESH GOVERNANCE ESH Governance & COMPLIANCE IN SDP EMPLOYEE PROFILE • SIME (Spot, Intervene, • SDP’s ESH Management As at 30 June 2016, our Malaysian operations had the highest head-count, followed by Indonesia, Liberia and Modify, Execute) is a ESH Compliance structure is defined in the programme specifically Thailand respectively. • SDP paid a total of RM139,300 SDP ESH Management designed to speed up the in fines/penalties/compounds System Manual that was evolvement of safety culture on 7 offences committed by issued in 2012. The Manual is at work, where safety its Malaysian operations in targeted to be reviewed in concerns are raised by FY1516. FY1617, focusing on an employees for management Integrated Management actions. • 4 of these fines were from System. DOE, 1 from DOSH, 1 • More than 69,000 concerns BOMBA and 1 from MBPJ. • ESH-related internal audits were raised through the Summons from DOE were are conducted by the RSPO, SIME cards by our employees related to offences in Quality Assurance, ESH, and in FY1516. This is 13% higher effluent and scheduled waste our internal audit teams, than the same period in the management in 3 mills and 1 which are followed by an last FY and 6 times higher biodiesel plant in Sabah, external data assurance by than when the programme Pahang, Melaka & Selangor PwC at the end of each FY. first started in FY1213. respectively. This is certainly The ESH internal audit Concerns raised were related an area of concern and SDP structure is targeted to be to near miss incidents, unsafe has made the necessary reviewed in FY1617. acts, and unsafe conditions. provisions to; • The Plantation Safety & Health task Force (PSHTF) is ESH Townhall Programme – enhance the technological capabilities at all of our the highest OSH authority in • ESH Townhall is an open effluent treatment. We SDP, consisting of SDP’s dialogue and sharing session are targeting to have Heads of Operations around between workers and the zero-discharge-mills by the globe. The committee management. It is conducted the year 2020. discusses strategies and every 6 months at all of our reviews ESH performance on operations. – enhance the capabilities a quarterly basis. and competencies of our • This programme helps in people through the • The Plantation Operational raising issues faced by Certified Environmental Safety & Health Committee workers directly to the Professional in the (POSHC) is the highest OSH management. Treatment of Palm Oil authority in our Upstream operations. The committee • ESH Townhall is attended by Mill Effluent (CepPOME) discusses operational policies all workers and contractors, and Certified and reviews OSH sometimes even their family Environmental performance on a monthly members, covering more than Professional in the basis. 70,000 people in every cycle. Operation of Industrial Effluent Treatment Systems (CepIETS) programmes organised by Environment Institute of Malaysia (EiMAS).
052 Sime Darby Plantation Sustainability Report 2016 053 EMPLOYEE BREAKDOWN AS OF FY1516 TURNOVER BY COUNTRY & EMPLOYEE CATEGORY
No. of Employees No. of Employees 6,780 35,000 33,807 7,000 No. of Turnover in FY1415 Male 6,000 No. of Turnover in FY1516 30,000 Female 5,178 5,000 24,114 25,000 4,000 3,500
20,000 3,000 2,351
2,000 15,000 533 1,000 405 277 119 132 85 90 192 2 4 2 21 28 62 10,000 7,542 7,699 0 Executives Non- Worker Executives Non- Worker Executives Non- Worker 5,000 2,382 421 Executives Executives Executives 272 150 62 34 214 102 1 4 Malaysia Indonesia Liberia 0 Country Malaysia Indonesia Liberia Thailand South Africa Vietnam Singapore Note: Information above only covers our operations in Malaysia, Indonesia and Liberia. Country
HUMAN RIGHTS – RESPECTING sectors all over the world and by Section 54 of the Modern Slavery In FY1516, we had a higher proportion of male employees compared to females in all different employee & PROTECTING OUR WORKERS sharing examples of good human Act 2015, we have drafted the Sime categories. Nevertheless, we are committed to provide equal employment opportunities to everybody based on rights practices in our operations. Darby Slavery and Human In recent years, global attention has merit and talent. Trafficking Statement. This focused on the rising issue of human statement would be our first trafficking. Some human-rights Plantation Human Rights Task Force disclosure on our efforts to address activists claim that the palm oil (PHRiTF) the issues of slavery and human TOTAL EMPLOYEES BY GENDER & EMPLOYEE CATEGORY industry, which has progressed with The PHRiTF was formed in January trafficking in our supply chains. For increasing demand from the U.S. 2016 to identify issues around human more details on this statement, No. of Employees and China, is part of the problem. rights that are material to our please visit http://www.simedarby. The industry, with a growing need operations and develop a 2,000 com/clients/simedarby_sustainability/ No. of Male Employees for unskilled workers, is said to lure methodology to ensure compliance assets/contentMS/img/template/ 1,641 undocumented migrants to Malaysia. to the Sime Darby Group Human No. of Female Employees editor/SDIAR%202016%20-%20 SDP strictly bans the use forced or Rights policy, which is currently in development. The task force will 386%20-388.pdf 1,500 1,377 compulsory labour. Employing more than 100,000 people globally, we supported by other relevant SDP’s human resources policy ensure contractual and permanent departments in implementing the enshrines the following: 970 employees are treated with respect. human rights action plan and mitigating human rights impacts that 1,000 Non-discrimination on the grounds Participation in the United Nation’s are linked to our operations. of colour, race, religion, ethnicity, 657 Global Compact (UNGC) Additionally, we are working with an national origin or gender. independent partner, Shift, to assist Sime Darby has been a signatory of us in assessing human rights risks in 500 379 the UNGC since November 2010. We our plantations in Malaysia. Shift is a 205 are committed to upholding the ten Zero tolerance towards physical non-profit organisation that helps 118 principles on human rights, labour, or verbal discriminatory 25 companies, governments and other environment and anti-corruption and harassment in the workplace. stakeholders put the UN Guiding 0 also committed to embed the Principles on Business and Human Non-Executives Junior Management Middle Management Senior Management principles throughout our operations. Rights into practice. Protecting the rights of employees to be treated with Employee Category Participation in Global Business Sime Darby Slavery and Human dignity and respect. Initiative (GBI) Note: Information above only covers our operations in Malaysia, Indonesia and Liberia. Trafficking Statement Sime Darby has also been a member At Sime Darby, we believe that Respecting the rights of employees Non-Executives = Non-Executives of the GBI on Human Rights since businesses have the responsibility to to freedom of association. Junior Management = Executives – Senior Executives 2012. We aim to advance the respect, support, and uphold the Middle Management = AVPI – AVPII respect for human rights in the fundamental human rights. This Senior Management = VPII and above business sphere by learning from Ensuring grievance channels are includes the right to not be held in the member companies from various available. slavery or servitude. In pursuant to 054 Sime Darby Plantation Sustainability Report 2016 055 RECRUITING FOREIGN WORKERS SDP employs more than 25,000 foreign workers and has developed a transparent process of bringing them into our plantations. This process ensures that workers are provided with adequate information on their rights, INDUCTION The induction programme is conducted in Bahasa Malaysia/English and duly safety, and health prior to starting work, as demonstrated below: translated into other relevant languages
The briefings will cover introduction to SDP, Malaysian culture, safety at workplace, Malaysian laws, immigration regulations, labour law and employment contract, as well as Child Protection Act
DEPLOYMENT Workers are deployed to Operating Units (OUs)
Manpower Agencies are appointed through Procurement Tendering Process AGENT SELECTION and approved by Plantation Division Tender Committee (PDTC) to avoid any bias in the selection process
Communication and interview arrangement are made by the SDP’s Workers Management Unit (WMU) INTERVIEW IN SOURCE COUNTRY Ground arrangements for the interview are made by the ANNUAL EVALUATION WMU’s Careline Team will visit selected Agent SUPPORT FROM all OUs to check on workers’ CARELINE TEAM VISITS BY CARELINE TEAM AT OUs welfare, salary, attendances, safety, and any grievances
Careline Team will handle any Careline Team provides workers grievances/issues raised during AIRPORT PICKUP Foreign workers are picked up at with a structured channel to inquire the visit the airport by the WMU team or voice out their grievances and after completing the necessary raise any issues throughout their legal procedures time with SDP
PRE-INDUCTION Foreign workers are briefed on Safety and relevant rules & regulation while at WMU ANNUAL VISITS BY AGENTS AT OUs
WMU’s Careline Team will conduct a joint visit with the respective MEDICAL CHECK UP agency to assist the workers in understanding their rights with regards to their contract terms and benefits Arrangement is made for FOMEMA registration and completion of medical check up (all cost fully borne by SDP)
056 Sime Darby Plantation Sustainability Report 2016 057 MANAGING GRIEVANCES CHALLENGES IN RECRUITING ensuring full transparency in our hiring process, we do not have In addition to conducting annual FOREIGN WORKERS control over the incidental costs visit to the estates and engaging Although SDP has developed this borne by workers prior to with the workers should they have structured process to bring foreign recruitment. However, we are any grievances, the Careline team is workers into our plantations, we still determined to assure their well- available to provide workers with a face challenges in ensuring full being and lessen their financial channel to voice out their grievances transparency in recruitment when it burden by supporting their traveling throughout their employment. Any involves sub-agents, who are also cost to our plantations, complaint raised by the workers are known as Sponsors. Some accommodation, and medical costs handled by a Careline executive that Manpower Agencies appoint upon hiring them as our workers, in initiates further investigation as Sponsors to pool applicants from addition to providing them with required. This grievance across the source country for our safe housing complexes, medical management mechanism ensures recruitment. During recruitment, and prayer facilities, and other basic that workers are able to raise their workers will have to incur the cost amenities. Additionally, we do not concerns directly to the of local transportation to the charge any recruitment fee to our management and their welfare is interview location, accommodation foreign workers for them to get well taken care of throughout their and meals prior to the interview. employment with us. employment with SDP. Additionally, Additionally, they will have to bear an anonymous whistleblowing the cost of preparing Identity Card, channel is also available to report Family Card or marriage certificate complaints, if any, to the that are required in applying for a CENTRALISED HOUSING management. passport. If workers cannot afford COMPLEXES to pay these incidental costs, the SDP provides safe housing Sponsor will pay on their behalf. complexes for all employees. SDP is Consequently, workers will then also on a mission to develop Central have to settle this debt once they Housing Complexes (CHCs) in all of start working. our estates. CHCs are high quality, centralised community living spaces Humana school children in uniform The money owed to the Sponsors that is comprised of residences, vary for each worker and might offices, public amenities, and differ according to the sub-agents. recreational facilities, which are all FREEDOM OF ASSOCIATION Humana Learning Centres Additionally, we also provide a Although SDP is striving towards nucleated in one location within AND COLLECTIVE BARGAINING Realising the importance of childcare centre for employees in easy reach of each other. our headquarters. This childcare We affirm the importance of the education for children, we have centre is subsidised by the company, right to collective bargaining, which collaborated with Humana Child Aid thus requiring only minimal fees is recognised as an essential Society in Sabah to provide formal from the employees every month. element in the fundamental right of education to children of migrant We aim to provide high-quality care freedom of association. Employees workers residing in our estates. for the children in a child-centred of the Sime Darby Group are From its humble beginnings in 2008, learning programme where children represented by 48 collective the programme has now expanded are respected and nurtured. The bargaining agreements in nine to cover more than 800 children in centre promotes the growth of countries, namely Malaysia, 11 Humana Centres across Sabah. children through a developmentally Indonesia, Australia, Singapore, Apart from constructing the centres appropriate curriculum. Liberia, Vietnam, South Africa, the and furnishing the schools with the Netherlands and recently, Papua necessary amenities, SDP also funds Kem Bijak Periksa for Employees’ New Guinea. utility costs and provides accommodation for the teachers. Children SDP organises a motivational and CHILDREN IN OUR OPERATIONS Employees’ Childcare Centre educational camp for the children of our employees sitting for their UPSR SDP’s Child Protection Policy SDP provides free childcare services and PT3 examinations. This two-day ensures that children of employees for our plantation workers through camp is held on an annual basis and who live within its housing the Nurturing Estate’s Toddlers is free of charge. It aims to help the complexes are provided adequate (NEST) programme. NEST centres children in preparing for their protection and care. The company are located across our operations, examinations and obtain valuable strictly prohibit below 18 years old where workers can safely leave their tips on different subjects. employ children and strives to children under the care of trained prevent any occurrence of caretakers while attending to work. mistreatment of children.
058 Sime Darby Plantation Sustainability Report 2016 059 Working with Our Local Communities
MOA Awareness Programme We organised a full-scale MOA awareness programme for three clans (Manoah, Zepeh, and Upper Togay) involving all key stakeholders to ensure smooth implementation of planned activities.
The Paramount Chief of Senjeh (right) seeking clarity during the MOA Awareness
Support to Refurbish Zarmian Town School We provided support to the Senjeh Community to refurbish their Town Hall to be converted into a school. The Land Committee implemented the project and handing over ceremony carried out on 10 December 2015. The project was highly welcomed by the community as it provides a conducive learning atmosphere for their children. SDPL also provided funds to support the operational costs of the school for FY1516, as requested by the Partial view of the renovated Town hall (left); Handing Over Ceremony (right) committee.
FREE, PRIOR AND INFORMED CONSENT (FPIC) At SDP, we always seek to gain the Free, Prior, and Informed Consent (FPIC) of local communities before embarking on any new development. Our FPIC process is as illustrated below: Assistance to Beafinie Clinic We provided support to the Beafinie Clinic for two quarters, based on the Once consent is amount stipulated in the MOA. The A new plantation obtained, we funding was used to purchase Identify & Participatory is established engage NGOs if essentials medicine for the clinic in engage with mapping, SEIA with a grievance necessary to agree order to provide better health care community assessments & resolution on compensation services to the citizens of Senjeh. representatives HCV assessments mechanism in and legal The citizens of Senjeh watching as the clinic staff and Bomi County Health place arrangements with Team Representative inspect the medicine the community
Building and Repairing Hand Pumps and IDENTIFY ASSESS CONSENSUS ESTABLISH Latrines In fulfilment of the MOA, we repaired three hand pumps in Senjeh. Two KEY FPIC INITIATIVES IN FY1516: surrounding villages benefited from the repair exercise intended to provide DEVELOPMENT OF MEMORANDUM OF AGREEMENT (MOA) BETWEEN SDPL & SENJEH COMMUNITY safe and clean water facilities. The An MOA was developed between Sime Darby Plantation Liberia (SDPL) and Senjeh Community on 23 July 2015. construction of three new hand pumps This was followed by the payment of crop compensation to 199 farmers. The following activities have been held in and four new latrines in four Community dwellers utilising the repaired hand pump in Zarmian Town (left) as SDPL collaboration with the community, with consultation by the Bomi Civil Society Organization (CSO) Secretariat: communities is ongoing. WATSAN Team train the youths on how to maintain the water pump (right)
060 Sime Darby Plantation Sustainability Report 2016 061 Educational Assistance
AWARENESS PROGRAMME ON HCS STUDY We engaged land committees in Zodua and Senjeh to conduct an awareness programme on HCS Study. This programme aimed to explain the importance of the study to the communities as well as obtain their consent to carry it out with their involvement. Bomi CSO Chairman responding to concerns raised by participants
LIBERIA – ENGAGEMENT WITH PROJECT AFFECTED COMMUNITIES (PAC) In 2009, SDPL’s development in Liberia faced a huge resistance from the inhabitants of 17 PAC. They claimed that the ownership of the land under the concession agreement (CA) was not given to the company with their full consent. In September 2011, the PAC filed a complaint to the RSPO compliance committee. The complaint was withdrawn in January 2012, after which we engaged The Forest Trust to help us to establish an SOP on obtaining FPIC and establishing clear guidelines on resolving community grievances.
We continue to work with all key stakeholders under the framework of the Sustainable Partnership Initiative (SPI). SPI aims to develop a new, sustainable model for large scale plantation development in Liberia. Experience gained from SPI will guide the industry and the Government of Liberia on what needs to be done, policy-wise, to make the oil palm industry in Liberia more sustainable, both in terms of profitability and benefits to the local communities and the country as a whole.
PT MAS – RESOLVING THE CLAIMS OF PLASMA FARMERS Despite our efforts in implementing FPIC and achieving 100% RSPO certification in our operations, there is still one SOU in Indonesia that has not received its RSPO certification due to legacy claim issues. SDP took over At Sime Darby Plantation, we believe sustainable development management control of PT Mitra Austral Sejahtera (PT MAS), located in West Kalimantan, in 2007. We have cannot be achieved by technological advancement or financial developed four estates, MAS 1 – 4, since then. To-date, total planted area of these four estates is over 11,000 hectares. 30% of this area belongs to Plasma farmers. contribution alone. We are guided by the belief that progress in education would have a far reaching effect in ensuring the 14 legacy claims were submitted to PT MAS in August 2007 by the PAC from nine villages in MAS 2 Estate. In November 2012, a report was filed to the RSPO on the 14 unresolved claims, after which SDP committed to sustainability of our business development. With this end in voluntarily report on the resolution progress on a quarterly basis to the RSPO. To-date, 12 of the 14 claims, have mind, we are committed to encourage learning and education been resolved. The remaining two unresolved claims are of land matters, i.e. the ownership of nucleus plantation after the expiry of land tenures, and allocation of Plasma plots within the Plasma original village/customary area. amongst all our employees, their family members, and surrounding The resolution of these two claims would require the involvement of various stakeholders, including the Indonesian government. communities. Through Yayasan Sime Darby (YSD) or Sime Darby Foundation, the philanthropic arm of Sime Darby Berhad, We have continued direct engagements with the PAC through regular on-site bi-monthly meetings with the community leaders and side meetings with the community representatives at each RSPO Roundtable Annual we endeavour to provide educational assistance to qualified Meeting (RT). SDP is working closely with the local authorities, as well as relevant NGOs, to find the best stakeholders. resolution to the remaining unresolved claims. Upon satisfactorily resolving these claims, we will resume our efforts to obtain RSPO certification for PT MAS.
062 Sime Darby Plantation Sustainability Report 2016 063 SCHOLARSHIPS FOR MALAYSIAN EMPLOYEES AND EMPLOYEES’ CHILDREN Scholarships in Liberia YSD offers scholarships to deserving employees and employees’ children to pursue undergraduate studies in Since 2012, YSD has awarded scholarships worth USD700,000 to 55 outstanding and deserving Liberian students to notable local institutions. To date, YSD has awarded scholarships to the following recipients: pursue their tertiary education in Liberia and Malaysia. 51 Liberians are now pursuing undergraduate and vocational studies Bomi Community College and other selected universities in Liberia, while the remaining 4 students are pursuing mechanical and civil engineering degrees in Universiti Kebangsaan Malaysia (UKM). • Three Sime Darby Plantation employees are pursuing Bachelor’s scholarships worth Degree, and two others are pursuing PhD in local universities RM394,000
• Twelve children of Sime Darby employees are pursuing diplomas bursaries worth and degrees in local institutions RM516,000
Scholarships in Indonesia
In Indonesia, YSD provides scholarships to promising students through a collaborative effort with PT. Minamas “Due to financial constraint, I could “My father dropped out of school in “I took up several odd jobs after high Gemilang; Sime Darby Plantation’s subsidiary. Since the inception of the Minamas – Sime Darby Scholarship not enter university right away. I the 10th grade due to poverty. I was school before being employed as a Programme in 2009, approximately 216 deserving individuals including employees’ children and underprivileged found a job in the oil business and forced to accept the same fate, as my construction supervisor by the Rural residents from the communities within and around Minamas operations, have benefited from the scholarships that then in construction before enrolling family could not afford to continue Agriculture and Development in a vocational training programme. sending me to school. I begged for Programme. I agreed for them to are worth more than RM4.8 million. Minamas now has a dedicated team to manage the scholarship programme in Due to financial hardship, I had to assistance from my relatives and took withhold my salary so that at the end Indonesia. drop out of the programme. I’m up odd jobs to support my studies. of the project, I can use the money grateful to Sime Darby for changing Sime Darby helped me to not only for my education. Unfortunately, my life and helping me to pursue a obtain a Bachelor’s Degree in upon project completion, they left the wonderful education in Cuttington Cuttington University, but also an country without paying me. I was University” Advance Certificate in Peace and forced into the coal mining business Conflict Resolution. I am so proud to to support myself. I saved USD20 and Jacob Sumowor be part of this big family!” used it to pay the entrance fee to Cuttington University, without any hopes of enrolling. Subsequently, Sam Robin Weah Sime Darby offered me this scholarship and it completely changed my life. I hope to pursue a Master’s Scholarship in Papua New Guinea Degree in the future and serve the company with full honesty.” YSD embarked on a scholarship programme with funding worth USD500,000 for 23 outstanding citizens including two Papua New Guinean students to pursue engineering degrees in Universiti Saturday V.S. Quellie Kebangsaan Malaysia (UKM) beginning August 2016.
“This scholarship has helped me in “This scholarship helped me to be the Scholarship in South Africa incredible ways. I am now able to first in my family to pursue an YSD also provides educational support to an outstanding and deserving young talent in South Africa to complete a attend Bogor Agricultural Institute, undergraduate degree. I am forever four-year undergraduate course, with job opportunities at Sime Darby Hudson and Knights in Boksburg, South one of the best colleges in the grateful to Sime Darby for not letting Africa upon completion of his studies. country. Thanks to this funding, I am financial hardship stop me from going also able to get the much-needed after my dreams” pocket money every month, purchase Senii School in Liberia a laptop, and all my text books” Apart from offering scholarships to Liberian students to pursue higher level of education, YSD also chipped in a funding of RM1.21 million to construct a community school for the PAC, called the Senii School. Since its launch in Aulia Rahman Purba Deri Nurrahman November 2013, 351 children and youth from nine nearby townships of Senii, Damah, Timbo, Sengamah, Lein, Kaylia, Johnson Town, Baaka and Kenemah have enrolled as students in the school. The school also provides employment opportunities to 10 teachers, consequently elevating their lives from extreme poverty. YSD’s funding is used for paying the salaries of both the teachers and staff, in addition to purchasing teaching and learning materials for the students.
064 Sime Darby Plantation Sustainability Report 2016 065 Biodiversity & Conservation
PLANT-A-TREE PROJECT Darby, approximately 694,000 trees around the nursery. The first phase have been planted through the Ulu of planting activity was done at the As SDP’s palm oil production is Segama Rehabilitation and RiLeaf Bukit Angin site in January 2014. heavily focused on some of the most programmes in Sabah, and North biologically diverse areas in the Selangor Peat Swamp Rehabilitation Planting initiative proved to be world, we strictly adhere to both Programme. difficult from day one, as the sites national and RSPO guidelines on were located against the backdrop biodiversity conservation. Sime One of our most challenging of extreme, unfavourable weather. Darby’s “Plant-A-Tree” Programme, initiative thus far would be the Rain is very scarce in the area, which was initiated in 2008, aims to Plant-A-Tree Project in Jentar. The consequently exposing the trees to increase biodiversity value in our Jentar Nursery began operations in scorching sun every day. The plantations with a target of planting September 2013 as a site to breed El-Nino phenomenon experienced in one million trees by the year 2020. Endangered, Rare and Threatened the country since 2015 added to the To date, we have planted a total of (ERT) indigenous tropical forest tree obstacles, as the bad weather was 330,000 trees comprising 276 08 species. The trees were then further compounded. 066-079 species in our estates. Additionally, planted in several sites identified in collaboration with Yayasan Sime CARING FOR THE ENVIRONMENT
“Plant today, for tomorrow”
– Datuk Franki Anthony Dass
066 Sime Darby Plantation Sustainability Report 2016 067 PRESERVING HIGH PEATLAND MANAGEMENT CONSERVATION VALUE AREAS SDP strictly prohibits new planting Many tropical regions are facing the in peat areas. No new plantings risk of losing their High have been established on any peat Conservation Value (HCV) areas due lands in any of our concession areas to extensive conversion of primary since 2013, as per our commitment forests into plantations. This in the Environment & Biodiversity destruction of biodiversity will Policy. Additionally, we employ best continue unabated without strict management practices for our past legislation and commitment of plantings on peat aimed at industry players to conserve these minimising the risk of peat fires and areas. SDP has a trained internal subsequent carbon emissions. Our team that conducts HCV water management technique assessments in all our operating ensures that the water table is units to identify, categorise and maintained at around 50 –70 cm maintain high-risk zones from below the surface to reduce development. We also train our decomposition rates of dried peat. personnel on the ground on HCV After almost three years, the project, area management methods as well We are also committed to maintain conducted at three sites – Bukit OTHER CONSERVATION & BIODIVERSITY as the necessity of periodical existing vegetation on peatland in Angin (59ha), Bukit Kiab (71.7ha) and monitoring to ensure the and adjacent to our oil palm Bukit Pasir (22.71ha) – has shown PROJECTS THROUGH YSD effectiveness of management plantations. In our effort to prevent promising signs of achievement with activities. To date, we have set slash and burn activities, we engage 93,161 trees comprising 96 species Danau Girang Field aside 31,793.04 ha of HCV area for with local communities to educate planted by the end of FY1516, 64 of Stability of Altered Forest Centre Projects conservation in our Malaysian, them on sustainable management of which are ERT species. This is about Ecosystems (SAFE) Project Conservation of Indonesian, and Liberian operations. peat areas. 85% from the overall target of The world’s largest experiment Proboscis Monkey, 110,000 trees to be planted to date to understand the impact of Bornean Banteng Programme, and in these three areas. On top of that, forest alteration on biodiversity PROGRAMME FOR POLLUTION CONTROL, EVALUATION, AND RATING (PROPER) there are 99,707 seedlings that are and ecosystem functions Conservation of Sunda still being nurtured at the nursery. Clouded Leopard in Indonesia’s PROPER is a national-level public environmental reporting initiative. This regulatory tool aims to Due to difficulties in sourcing and The Management Fragmented Landscape promote industrial compliance with pollution control regulations, facilitate and enforce the adoption of Programme identifying available ERT seedlings and Ecology of practices contributing to clean technology, and ensure a better environmental management system. PROPER Malaysian and the need to include more discloses information via a five-colour code, in which each participating firm is assigned a colour according Elephants (MEME) technical and research element into Borneo Rhinoceros Sanctuary to its environmental status. First large-scale Usage of advanced reproductive the project, SDP approached the research in Malaysia to study technology to ensure the survival Forest Research Institute of Malaysia the Asian Elephants of the Requirement (FRIM) to explore the possibility of Sumatran collaborating on this project. SDP Restoration and Rhinoceros The facility has made The facility has made The facility has met legal and FRIM signed a Memorandum of Protection of Orangutan species virtually no pollution some pollution control standards and has Collaboration (MoC) on 5 February Habitats in Northern Ulu control effort effort, but failed to meet reasonably frequent 2016. Segama Forest Reserve legal standards and had reporting Partnership with Sabah Project RiLeaf insufficient reporting Forestry Department A collaborative Thus far, a total of 122 seedlings (SFD) to rehabilitate project with Nestle The facility’s pollution from 14 ERT species received from 5,400 ha of degraded Malaysia to restore is significantly below The facility has met FRIM in December 2015 have been forest riparian reserves legally required international standards planted at Bukit Pasir site. With standards and it has of environmental Global Environment Centre (GEC) constant care and maintenance, the conducted good excellence Raja Musa Forest Reserve team managed to record 97% Reef Check Malaysia equipment maintenance, Aims to strengthen (RCM) – Cintai Tioman survival rate at this site as of June reporting, and 2016. With this encouraging survival efforts in fire Aims to build the In 2015, 20 of our SOUs in prevention and environmental work rate, we hope to ultimately hit our resilience of coral Indonesia have been awarded rehabilitation of 50 ha target of having the biggest ERT reefs of degraded forest with rating Blue collection in South East Asia by the Rating end of 2018 when the project ends. Note: For more information on our biodiversity & conservation projects in collaboration with YSD, please refer to Yayasan Sime Darby Annual Report 2016
068 Sime Darby Plantation Sustainability Report 2016 069 HUMAN-WILDLIFE CONFLICT aiming to develop a long-term SUNGAI JOHOR AMMONIA On 26 July 2016, we received a as our commitment to implement collaboration aims to promote and elephant conservation strategy letter from the Department of improved control measures at our publicise environmental restoration Conflict between communities and CONTAMINATION ISSUE based on the understanding of Environment, Johor, reinstating the mills. In order to further strengthen activities to the general public. animals, caused by competition for Authorities detected a high level of elephant behaviour, ecology, and license to operate our Ulu Remis our commitment in conserving the We are committed to protect the food and space, is one of the ammonia in the raw water from relationships with people. It is led Palm Oil Mill. In the letter, the environment through various environment and conserve biggest threats to the survival of Sungai Johor on 12 July 2016. by Dr Ahimsa Campos-Arceiz in Department cancelled the awareness programmes, SDP, biodiversity in all our areas of wildlife around the world. People Consequently, they stopped the the School of Geography at The suspension notice allowing the Mill together with YSD, signed a MOU operation, as sustainability is a end up losing their crops and operations at three water treatment University of Nottingham Malaysia to resume its operations, based on with the DOE Malaysia on prime consideration in all aspects livestock, while the animals, many of plants, which caused a major water Campus. the initiatives we have taken as well 25 September 2016. This of our business development. which are already threatened or disruption in southern Johor. SDP endangered, may end up injured or worked closely with the authorities In East Malaysia, we have dead. Human-wildlife conflicts in to investigate the cause of this continuous engagement with Sabah our plantations mainly involve pollution. During a joint-inspection Wildlife Department (SWD), Borneo 1 long-tailed macaques, elephants, in one of our estates within the Conservation Thrust (BCT) and and wild boars, with elephants vicinity, we discovered an overflow Danau Girang Field Centre (DGFC) in posing the biggest risk. SDP of treated POME in 1 out of 109 managing our wildlife conflicts. We has collaborated with a few field furrows. On 14 July 2016, 2 have conducted several meetings organisations to find the best SDP received a Notice of 60-day and trainings prior to constructing solution in managing this dilemma. Suspension of License for our Ulu the fences. DGFC, a collaborative Remis Palm Oil Mill from the research and training facility 3 In West Malaysia, we have been Department of Environment (DOE), managed by Cardiff University and working closely with the Johor, due to this overflow. We SWD, has pointed out that electrical Department of Wildlife and National worked together with the authorities, fencing is the best method to Parks (DWNP) on managing wildlife including the DOE, Badan Kawalselia Overflow was immediately cleaned manage elephant intrusion, provided conflicts and also reviewing the Air Johor and Syarikat Air Johor, to the fences are well-maintained. To establishment of electrical fencing rectify the issue. date, we have established electrical in our high-risk estates. Prior to The furrow was cleared fencing in three areas: Lanchang, constructing the electrical fences, Our investigation showed no Bandar Tenggara, and Sukau, in a we also consulted elephant physical evidence of POME being 4 total of seven estates. Additionally, behaviour researchers from the the cause of contamination in we are also developing new Management & Ecology of Sungai Johor. To further confirm The furrow bund was restored Standard Operating Procedures Malaysian Elephants (MEME), to that fact as well as to rule out the (SOP) on managing elephant ensure that the fences do not cause possibility of contamination from 5 intrusion, managing wooden any harm to the elephants. MEME is fertilizer application in our estate, fencing, and monitoring electric a 5-year research project that we took water samples from various fencing. commenced in March 2011, points in both Sungai Remis and 6 Sungai Sayong (both lead into Sungai Johor) and tested them at our own R&D labs. The results and Cleaning activities were carried out physical verification conducted on around the area of overflow the site indicated that indeed, there was no clear evidence that the mill or estate could be the cause of Buffer drain construction ammonia contamination. We 7 continued to give full cooperation to the local authorities to determine Identification of Critical Point (CP) the actual cause of high ammonia for monitoring purposes content in Sungai Johor.
Clean water was observed around the overflow area after restoration activities
070 Sime Darby Plantation Sustainability Report 2016 071 Carbon Management
We have monitored our carbon year 2015 includes SDP’s operations ANNUAL EMISSIONS BY SOURCE footprint since 2009 via the in Liberia, Papua New Guinea and Sustainability Management System, Solomon Islands covering oil palm Total Carbon Emission a carbon monitoring tool that operations. This has resulted in an (Millions tCO2-e) SDP TOTAL EMISSIONS enabled us to calculate our carbon increase in the Division’s overall emissions in accordance with the carbon emissions in the year 2015. 3.50 (tCO2-e) 2.96 2.99 GHG Protocol and identify hotspots The carbon data for our operations 3.00 that would enable us to reduce in Malaysia, Indonesia, and Liberia 2.59 2.56 2.41 Effluent Treatment 2.30 2.33 those emissions. For the first time, have been independently verified. 2.50 Boilers the carbon emissions data for the 2,988,116 Fertilisers 2.00 Purchased Electricity 1.50 Others ANNUAL EMISSIONS BY BUSINESS UNIT 1.00 Total Carbon Emission 0.50
(Millions tCO2-e) 0 3.50 2.96 2.99 OP Mill 2009 2010 2011 2012 2013 2014 2015 3.00 2.59 2.56 2.41 OP Estate 2.30 2.33 2.50 Downstream Emission Source 2009 2010 2011 2012 2013 2014 2015 2.00 Rubber Effluent Treatment 69.6% 70.7% 71.4% 71.7% 65.8% 69.1% 72.2%
1.50 (tCO2-e) 1,799,617 1,629,373 1,826,392 2,121,035 1,532,760 1,667,658 2,156,658
1.00 Boilers 13.8% 14.2% 13.8% 12.9% 15.9% 12.9% 12.3% (tCO -e) 356,291 326,245 353,950 383,025 370,395 310,701 367,122 0.50 2 Fertilisers 8.2% 7.8% 7.4% 6.2% 6.1% 5.6% 6.8% 0 (tCO -e) 212,955 179,856 189,875 183,784 142,516 134,612 201,903 2009 2010 2011 2012 2013 2014 2015 2 Purchased Electricity 1.7% 2.2% 2.1% 2.2% 3.5% 6.8% 4.0%
(tCO2-e) 43,894 51,287 54,352 64,046 81,920 163,044 118,998 Business Unit 2009 2010 2011 2012 2013 2014 2015 Others 6.7% 5.1% 5.2% 7.0% 8.6% 5.7% 4.8% (tCO -e) 174,236 116,949 133,770 208,090 200,770 137,694 143,435 OP Estate 12.9% 11.5% 11.1% 9.9% 11.5% 11.2% 10.6% 2
(tCO2-e) 332,611 263,956 285,007 293,944 268,584 270,337 317,546 Total 2,586,992 2,303,710 2,558,340 2,959,980 2,328,361 2,413,708 2,988,116 OP Mill 81.4% 82.1% 83.0% 83.5% 79.9% 81.2% 82.7%
(tCO2-e) 2,106,332 1,892,421 2,123,366 2,472,206 1,861,426 1,960,547 2,470,589 Downstream 5.5% 6.2% 5.6% 6.4% 8.2% 7.2% 6.5%
(tCO2-e) 142,222 142,847 143,812 188,986 191,784 174,960 193,852 Rubber Operations 0.2% 0.2% 0.2% 0.2% 0.3% 0.3% 0.2%
(tCO2-e) 5,827 4,486 6,155 4,845 6,566 7,863 6,128 Total 2,586,992 2,303,710 2,558,340 2,959,980 2,328,360 2,413,708 2,988,116
072 Sime Darby Plantation Sustainability Report 2016 073 ANNUAL UPSTREAM INTENSITY CARBON REDUCTION STRATEGY (b) Bio-Natural Gas (BioNG) Project CHALLENGES IN REDUCING in Collaboration with SIRIM CARBON EMISSIONS Division Intensity SDP targets to achieve 40% Emission Intensity reduction in upstream emission Project in progress at Merotai In 2015, we successfully reduced tCO2-e/mt CPO Target = 0.64 tCO2-e/CPO produced intensity. Our key carbon reduction Oil Mill. It aims to capture, 6.5% of our carbon emissions 1.20 1.06 1.04 1.03 1.01 1.00 1.02 initiatives are methane abatement intensity based on the 2009 0.94 store and refine methane so through biogas trapping and that it could be used as an emission baseline, for our operations 0.90 methane avoidance through alternative to natural gas in in Malaysia and Indonesia. We composting. gas-fired power stations and expect increased reductions in the future with the completion of 0.60 0.64 0.64 0.64 0.64 0.64 0.64 0.64 NGV vehicles. Composting biogas projects under various stages Closed system composting plants in (c) Captive Power Project for of planning and construction. For 0.30 Malaysia. In 2015, composting Electricity Supply to Kernel the reporting period, our key helped us to successfully reduced Crushing Plant challenges in carbon reduction include a challenging economic 0 6.5% of our carbon emissions 2 biogas projects in various environment, operational delays in 2009 2010 2011 2012 2013 2014 2015 intensity based on the 2009 stages of implementation in emission baseline, for our operations the commissioning of biogas plants, Reporting Year Pemantang and Rantau Oil Mill in Malaysia and Indonesia. and lower FFB yield that has in Indonesia. consequently limited the overall production capacity of our compost Biogas Projects (d) Other Biogas Projects ANNUAL DOWNSTREAM INTENSITY plants. We are currently reviewing (a) Joint Venture between SDP and Project in Tennamaram Oil Mill the methane reduction programme Emission intensity tCO2-e/10 mt Tenaga Nasional Berhad (TNB) Emission Intensity commissioned. 5 other biogas including biogas projects at the oil tCO -e/10 mt Target 2 2 biogas capture for grid- projects across Malaysia in palm mills due to operational and 1.60 connected electricity supply various stages of economic challenges. Nevertheless, we are committed to further reduce 1.15 projects in in various stages of implementation. our carbon emissions in the years 1.20 1.01 1.08 implementation at Hadapan and 0.92 0.85 Flemington Oil Mill. to come. 0.82 0.79
0.80 0.77 0.77 0.77 0.77 0.77 0.77 0.77 CLEAN DEVELOPMENT 0.40 MECHANISM (CDM) Four of SDP composting projects 0 (Lavang, Pekaka, Kerdau, Merotai) 2009 2010 2011 2012 2013 2014 2015 were registered under the Kyoto Reporting Year Protocol‘s Clean Development Mechanism (CDM), which delivered 183,897 certified emissions reductions (CER) to Denmark and ANNUAL ENERGY CONSUMPTION BY FUEL TYPE total net revenue of nearly RM5.9 million from 2010 to end-2012. Total Energy Consumption (Millions GJ) 39.43 On 4 February 2015, an appreciation 40.00 33.42 Biomass meeting and luncheon was held at 31.04 28.65 Diesel Wisma Sime Darby between 27.69 30.00 25.74 25.74 Electricity representatives from the Danish Energy Agency (DEA): Mr Ole Emmik Petrol Sørensen and Mr Bo Riisgard 20.00 Natural gas Pedersen; Mr Henrik Rytter Jensen, Others Country Head, Danish Energy Management (DEM), and Sime Darby 10.00 Plantation management, represented by the Managing Director, Datuk 0 Franki Anthony Dass. 2009 2010 2011 2012 2013 2014 2015
074 Sime Darby Plantation Sustainability Report 2016 075 Fire & Haze Management
WHAT CAUSES FIRE? FIRE MANAGEMENT IN SIME Programme (UNEP)’s Global 500 3. Hotspot Alert Dashboard and Award for outstanding Daily Hotspot Monitoring Fires can be started easily during the dry season, by even the smallest DARBY PLANTATION achievement in the protection Haze has become a source such as a lighted cigarette butt. Forest fires can be caused by Despite having had its share of The Hotspot Alert Dashboard is and improvement of the yearly phenomenon excessive drainage of peat land, as this results in the top layer of soil being listed as one of the culprits, our initiative at being transparent environment for the drying out, making these areas extremely susceptible to burning. Sime Darby Plantation (SDP) and its about the occurrence of hotspots in Southeast Asia commercialisation of our Additionally, fires could also be deliberately started by communities in subsidiaries do not engage in slash in our concession areas. We are zero-burning replanting in recent years. the course of land clearing. In Indonesia, a majority of smallholders are and burn activities under any committed to prevent and technique. Come the dry season still practising the slash and burn technique. This activity is propelled by circumstances. We have monitor hotspot occurrence not the fact that the Indonesian law allows land owners to burn up to two- implemented various policies and only in our concession area, but beginning June, the hectare of land for land clearing purposes. During the dry season, sparks initiatives to ensure a sustainable 2. Peatland Planting Policy also within a 5km radius from our air in some parts of or flying debris from a burning field can easily land on adjacent land and fire management system in our Realising the vulnerability of boundaries. The dashboard, Indonesia, Singapore cause rapid fire. operations and consequently, an peat lands to fires, we employ available on Sime Darby’s website environmentally-conscious approach best management practices (http://www.simedarby.com/hotspot- and Malaysia gets in our businesses. aimed at minimising the risk of alerts/), provides the public with polluted with peat fires and subsequent information on the number of 1. Zero-Burning Replanting carbon emissions in our past hotspots recorded throughout the smoke. The major Technique plantings. Our water year and actions that have been management technique ensures taken by the respective estates if contributor to this Over the years, various that the water table is the hotspots are confirmed to be sustainability practices have air pollution is the maintained at around 50-70 cm real fire within our areas. This is a been implemented in SDP’s below the surface to reduce the round-the-clock monitoring burning of forests operations. Of all these decomposition rates of dried system that utilises NASA to clear land for oil practices, the zero-burning peat. Additionally, we are satellite data for more accurate replanting technique can be palm plantations committed to maintain existing hotspot detection. The system considered as the hallmark of vegetation in and adjacent to will be triggered whenever there in Indonesia and, our sustainability practices. We our oil palm plantations in is a hotspot detected within or pioneered this method in 1985, to some extent, peatlands. We also engage with nearby our concession areas. which was later adopted as an local communities to educate Consequently, email alerts are Malaysia. The fires industry practice in Malaysia. In them on sustainable sent to the respective estates for 1992, SDP won the United are said to be caused management of peat areas in an investigation and immediate Nations Environment by multinational effort to prevent slash and burn action to extinguish the fire. The corporations as activities. respective estates will then revert with feedback either confirming well as small-scale the alert or on the action taken. farmers who use the slash-and-burn technique to clear vegetation for oil palm plantations.
076 Sime Darby Plantation Sustainability Report 2016 077 ALLEGATION ON SIME DARBY Meanwhile, there are local PLANTATION – UNCLEAR communities, smallholders as well as BOUNDARY ISSUES other plantation companies residing within the original concession area. Although SDP has implemented Therefore, fires caused by these various initiatives to prevent and communities or companies will mitigate fire in our estates, we have trigger the satellite signal. Although still been alleged of causing forest the hotspots would eventually be fires in Indonesia. In the recent haze identified to be outside the HGU, in 2015, which many agreed to be they will still be recorded to be the worst haze episode to date, a under SDP’s original concession. number of SDP subsidiaries in According to the law, since the Sumatra, together with other oil concession is still recorded as palm and pulp and paper companies, belonging to SDP, we are were again accused as the culprits. responsible for the fire occurrence. Although none of our subsidiaries were confirmed as offenders by the authorities after investigation, this incident raises the question on why CONCLUSION SDP is continuously alleged for any As the pioneer of Zero-Burning episode of haze. Replanting Technique, SDP strictly bans slash and burn activities in our The main contributor to these concession areas. Additionally, we allegations is the prevailing issue of adhere to the no new planting on unclear boundaries. There are peatland areas policy and ensure discrepancies in the Decree of proper water management of Forest Release or “Surat Keputusan existing peatland plantings. Haze is Pelepasan Kawasan Hutan” issued a regional issue that requires by the Ministry of Forestry and collaboration from neighbouring Environment in 1980’s and 1990’s countries to tackle its root cause. and the subsequent land title or the We need commitment from all “Hak Guna Usaha (HGU)” that was parties involved to educate the issued by the National Land Board. practitioners of the slash and burn After the issuance of the HGU, the technique to adopt a more Decree of Forest Release was not environmentally-friendly method of updated to the actual land size land clearing. Ending the practice of stated in the HGU. Hence, the slash and burn is vital. Companies, original concession area map is regardless of the size, must be held larger than the actual HGU. The accountable, before the law and the satellite data for the hotspot market, if found guilty. 4. On-the-ground Fire Prevention monitoring by SDP uses the original In addition to the satellite monitoring system, each estate also has its own fire prevention team that is concession maps, which show a well-equipped and trained to combat fire. There are also security personnel patrolling estate boundaries in all much bigger area than the actual our estates. Complementing the manpower, we also have monitoring infrastructures such as watch towers for area in our HGU. more effective surveillance.
5. Collaboration with Neighbouring Communities This collaboration includes the setting up of community fire prevention team or “Masyarakat Peduli Api” through the training of local men in combating fire. In occurrence of fire, these trained men will be able to assist our estate’s fire prevention team. Additionally, we also initiated a collaborative programme with University of Riau (UNRI) which educates communities in four villages neighbouring our PT Bhumireksa Nusa Sejati (PT BNS) about zero-burning farming. Following the encouraging results from this project, we have embarked on an expansion programme in Riau and South Kalimantan since April 2016. We have engaged another university – University of Lambung Mangkurat, Kalimantan to conduct the programme at seven villages surrounding three of our subsidiaries in South Kalimantan.
078 Sime Darby Plantation Sustainability Report 2016 079 Lean Six Sigma & Continuous Improvement
Lean Six Sigma Benefits (RM’million)
FY1516 FY1415 FY1314 FY1213 91.28 42.2 44.5 16.3
09 AMERICAN SOCIETY FOR QUALITY (ASQ) WORLD CONFERENCE QUALITY AND 080–085 IMPROVEMENT 2015 Project in collaboration between SDP’s R&D and LSS team won the Best Organizational Impact Award
PNB INNOVATION QUALITY (IQ) AWARDS CARING FOR SDP has been crowned the Champion for 5 consecutive years
SDP has embraced Lean Six Sigma (LSS), a term used to describe a management structure that aims to eliminate waste (muda in Japanese), so that all processes along the production stream create value. The Sime Darby LSS Business Management Strategy was implemented in 2013 to achieve operational excellence and capitalise on OUR FUTURE cross-divisional synergies. The financial benefits achieved in FY1516 is an evidence of the commitment shown by our business units in producing real results that reduce non-value adding activities and increase organisational capability.
FINANCIAL BENEFITS HARVESTED FROM LSS PROJECTS IN 2016
Benefits (RM) Percentage (%)
40,0000,000 37,085,663 100.0 100 96.8 30,436,900 32,0000,000 80 74.0
24,0000,000 20,855,623 60
16,0000,000 40.6 40
8,0000,000 20 2,903,097
0 0 Downstream Procurement Others Upstream
Department
080 Sime Darby Plantation Sustainability Report 2016 081 Research & Development
As part of War on Waste (WOW) campaign launched by the Group in FY1516, SDP also participated in the Kaizen Waste Elimination Challenge (KWEC) with the following results:
KWEC 2016
Total Projects Potential RM Saved within Potential Hours Saved Completed 12 months within 12 months 1,279 RM35,528,854 974,287 hours
FIRST PLANTING OF GENOME Over the past few years, our R&D the potential to produce at least SELECT OIL PALM team in Biotechnology and Breeding 15% more oil than SDP’s Calix 600, has sequenced over 200 oil palms currently our best planting material. SDP has been in the forefront of which were carefully selected to Under optimal growth conditions, agriculture research and represent the diversity of Sime the potential yield from the Genome development since early 1900s. We Darby’s collection. These genetic Select palms can go above 11 MT are committed to revolutionise the codes were analysed to identify the oil/ha, resulting in average yields process of oil palm breeding traits of high yielding palms. The above 6.1 MT oil/ha across all through innovative solutions and team was then able to produce a environments in our Malaysian technologies. In 2009, we were the formula to provide a genetic test, plantations, compared to Calix 600 first in the world to successfully use selecting the naturally high yielding yields of 5.3 MT oil/ha. By 2023, we new (2nd generation) technology to variants from our current premium will have enough genome materials sequence, assemble and annotate seeds without any genetic to meet all of our Malaysian the complex sequence of 1.8 billion modifications. replanting requirements. chemical units that make up the CASE STUDY: genetic code of the oil palm. The Genome Select Oil Palm Our innovation in oil palm breeding The Blue Ocean Journey planting initiative will be a major does not stop here. We will Seven years after successfully The Blue Ocean team is a strategic partnership between Downstream Jomalina Refinery and R&D Processing milestone that allows us to produce strengthen our R&D efforts to decoding the oil palm genome, we Technology. The team successfully completed a Lean Six Sigma (LSS) project titled “To Reduce Chemical more oil with existing land, in line produce palms that are not just high commenced our first large scale Cost of Waste Water Treatment Plant (WWTP) from Mean of RM2.29/m3 Influent to RM1.87/m3 Influent in with our sustainability commitment yielding, but are also more resilient planting of Genome Select high Jomalina Refinery by June 2015”. This project focused on chemical consumption at the Coagulation and to minimise green and brown field to weather fluctuations and other yielding oil palms in April 2016. Flocculation processes in WWTP, as it contributes to 97% of the total variable cost. The project has directly expansions. The selected palms have environmental conditions. reduced chemical cost by 31%, at RM1.58/m3 influent, with a potential benefit of RM173,254 per year.
082 Sime Darby Plantation Sustainability Report 2016 083 Sime Darby Renewables
SDR PORTFOLIO OF COMPANIES Business unusual – Sime Darby Renewables (SDR) aspires to re-define the traditional oil palm industry
RENEWABLES
Biosynthetic Technologies MYBiomass Verdezyne ESTATES MILL Biosynthetic Technologies, MYBiomass is a joint-venture Verdezyne, based in Carlsbad, based in Irvine, California, with Felda Global Ventures and California, is focused on manufactures a revolutionary Sime Darby to pioneer high developing unique fermentation new class of bio-based value green chemicals bio- processes for producing drop-in synthetic molecules that are refinery through coordinated alternatives to petroleum PIONEERING Trunks • Fronds • EFB • Fibers • POME • Studge oil made from organic fatty acids aggregation derived chemicals from INNOVATION found in plant oils, including sustainable materials, including palm-based materials palm-based products and by PALM KERNEL products
CRUSHING PLANTS
PKO
CPO
OLEOCHEMICAL SPECIALITY PLANTS FATS & OILS MAIN PRODUCTS
Fatty Acids • Glycerine • PFAD • Soapstocks • Expeller • Shells
BIODIESEL EDIBLE OIL PLANTS REFINERIES Palm Methyl Ester Refined Oils
SDR is SDP’s department established to invest in complementary and integrated platform to leverage the various products and by-products along the palm oil value chain, transforming these into high value-added goods. SDR aims to create a symbiotic portfolio of sustainable businesses in the industrial biotechnology sphere and invest in promising technologies at the point of pre-commercialisation.
084 Sime Darby Plantation Sustainability Report 2016 085 Awards and Recognition FY1415 – FY1516
Description Received from Received by Date received
Permodalan Nasional Berhad – Challenge Trophy KKS Sungai Dingin – Champion Permodalan Nasional Berhad (PNB) Innovation & November 2014 Permodalan Nasional Berhad Quality Awards – Challenge Trophy Morakot Industries – Second Place Good Performance & BJC Foods Limited Morakot Industries November 2014 Service Award 2014 Malaysian Palm Oil Industry Self-Sustaining Kernel Plant Award 2013/2014 – Kernel Nuri Kernel Crushing Plant January 2015 Crushing Plant
I'm Lovin' It Golden Ribbon 10 Award for "Quality Award Mc Thai Co. Ltd Morakot Industries February 2015 086-091 2014" American Society for Best All All-Around Quality (ASQ) World Presentation and Speaking SD Biodiesel May 2015 Conference Quality and Skills Improvement 2015 Malaysian Society for ACHIEVEMENTS SD Austral Gold Class I Occupational Safety & SD Research Health (MSOSH) SD Biodiesel SD Technology Centre Sandakan Bay POM Merotai Estate Mostyn Estate Malaysian Society for Lavang POM Gold Class II Occupational Safety & Bradwall Estate Health (MSOSH) Jentar Estate Sg. Dingin POM Flemington POM September 2015 Kempas POM Seri Intan Estate Padang Buloh Estate Tali Ayer Estate Rasan Estate Charquest Estate Malaysian Society for Elphill POM Silver Occupational Safety & Kok Foh POM Health (MSOSH) Lambak Estate New Labu Estate Pekan Estate Salak Estate
Permodalan Nasional Berhad Permodalan Nasional – Challenge Trophy Berhad (PNB) Innovation & R&D and Sime Darby Austral November 2015 – Champion Quality Awards Prime Minister’s Hibiscus Notable Achievement Sime Darby Plantation Sdn. Bhd. December 2015 Awards (PMHA)
086 Sime Darby Plantation Sustainability Report 2016 087 Description Received from Received by Date received
Pemantang Factory (PT TSA) Pondok Labu Factory (PT PSA) Provincial Zero Accident Gubernur Kalimantan Bebunga Factory (PT LMR) February 2016 Award 2016 Tengah Angsana Factory (PT LSI) Rantau Factory (PT LMI) American Society for Quality (ASQ) World Best Organizational Impact R&D and Sime Darby Austral Conference Quality and Improvement 2016 Teluk Siak Factory (PT AIP) May 16 Ministry of Manpower & Pinang Sebatang Estate (PT AIP) National Zero Accident Transmigration Republic of Aneka Persada Estate (PT AIP) Award 2016 Indonesia Teluk Siak Estate (PT AIP) Minamas Research Center (PT ASM) Malaysian Society for SD Austral GOLD CLASS I Occupational Safety & Jomalina Refinery Health (MSOSH) SD Research SD Technology Centre Elphil POM Melalap POM Bukit Puteri POM Seri Pulai Estate Malaysian Society for Ulu Remis Estate GOLD CLASS II Occupational Safety & Sungang Estate Health (MSOSH) Tingkayu Estate Serkam Estate Bukit Cheraka Estate Bukit Puteri Estate Chartquest Estate Tangkah Rubber Factory Pagoh POM August 2016 Kalumpang Estate Yong Peng Estate Tali Ayer Estate Sabak Bernam Estate Malaysian Society for Sungei Bahru Estate SILVER Occupational Safety & Dusun Durian Estate Health (MSOSH) Bradwall Estate Sg. Senarut Estate PD Lukut Estate Chenor Estate Rasan Estate Chaah Estate Malaysian Society for BRONZE Occupational Safety & St. Helier Estate Health (MSOSH)
Best Performing Cargill Meat (Thailand) Ltd. Morakot Industries 2014 – 2016
088 Sime Darby Plantation Sustainability Report 2016 089 MEDIA HIGHLIGHTS 090 Sime Darby Plantation Sustainability Report 2016 091 Global Reporting Initiative Content Index
This report has been prepared according to the ‘In Accordance’ – Core option as provided by the GRI Guidelines. The index shows each disclosure and relevant references within the report.
GENERAL STANDARD DISCLOSURES
Disclosures Description Reference Section Page Disclosures Description Reference Section Page
Strategy & Analysis G4-24 Stakeholder groups
Statement by the highest decision- G4-25 Basis for identification G4-1 maker in the organisation on Managing Director’s Statement 6-9 Stakeholder Engagement & Material Approach to stakeholder 24-26 sustainability G4-26 Disclosures engagement Organisational Profile G4-27 Key topics, concerns G4-3 Name of the organisation Overview of Sime Darby Plantation 11 Report Profile G4-4 Primary brands, products & services Overview of Sime Darby Plantation 11 G4-28 Reporting period G4-5 Location Overview of Sime Darby Plantation 11 G4-29 Date of previous report G4-6 Countries of operation Overview of Sime Darby Plantation 11 G4-30 Cycle G4-7 Legal ownership Sime Darby Group Annual Report 2016 3 About this Report 2-3 G4-31 Contact point G4-8 Markets served Overview of Sime Darby Plantation 11 G4-32 Chosen content index option G4-9 Scale of the organisation Overview of Sime Darby Plantation 11 G4-33 External assurance G4-10 Employment Caring for Our People 53-59 Governance G4-11 Collective bargaining Caring for Our People 59 G4-34 Governance Structure Sustainability Governance 18-21 G4-12 Supply chain Our Supply Chain 14-15 Ethics G4-13 Organisational changes Overview of Sime Darby Plantation 11 G4-56 Organisational Principles & Values Values, Governance & Ethics 17-21 G4-14 Precautionary approach Risk Management 22-23
G4-15 Externally-developed charters Assuring Our Practices 41-45
G4-16 Membership of associations Assuring Our Practices 41-45
Identified Material Aspects and Boundaries
G4-17 Entities Sime Darby Group Annual Report 2016 55, 178
G4-18 Process to define report content
G4-19 Material aspects identified
G4-20 Internal aspect boundary Stakeholder Engagement & Material 24-26 G4-21 External aspect boundary Disclosures
G4-22 Restatements of information
G4-23 Significant changes
Stakeholder Engagement
092 Sime Darby Plantation Sustainability Report 2016 093 SPECIFIC STANDARD DISCLOSURES
Material Aspects Indicators Reference Section Page Material Aspects Indicators Reference Section Page
Economic Human Rights
Economic Financial Review, Sime Darby G4-DMA Disclosure on Management Approach 47-65 G4-EC1 Direct economic value generated 33, 55 Performance Group Annual Report 2016 Freedom of Operations and suppliers identified in Indirect Association and which the right to exercise freedom of Economic G4-EC8 Significant indirect economic impacts Assuring Our Practices 41-43 association and collective bargaining Caring for Our People Collective G4-HR4 59-62 Impacts Bargaining may be violated or at significant risk, and measures taken to support these Environment rights G4-DMA Disclosure on Management Approach 67-79 G4-DMA Disclosure on Management Approach 59 Energy consumption within the Energy G4-EN3 Caring for the Environment 74 Operations and suppliers identified organisation Child Labour as having significant risk for incidents Caring for Our People G4-EN6 Reduction of energy consumption 72-75 G4-HR5 of child labour, and measures taken 59 to contribute to the effective G4-DMA Disclosure on Management Approach 67-79 abolition of child labour Biodiversity Caring for the Environment G4-EN12 Operational impacts on HCV areas 69 G4-DMA Disclosure on Management Approach 55-59
G4-DMA Disclosure on Management Approach 67-79 Operations and suppliers identified Forced or G4-EN15 Scope 1 emissions 72-75 as having significant risk for incidents Compulsory of forced or compulsory labour, and Caring for Our People G4-HR6 55-59 Emissions G4-EN16 Scope 2 emissions Caring for the Environment 72-75 Labour measures to contribute to the G4-EN18 GHG emissions intensity 72-75 elimination of all forms of forced or compulsory labour G4-EN19 GHG emissions reductions 72-75 Total number of incidents of Sustainability at Sime Darby Indigenous 38-39, Percentage of new suppliers that G4-HR8 violations involving rights of Plantation, Caring for Our Rights 59-62 G4-EN32 were screened using environmental Assuring Our Practices 44-45 indigenous peoples and actions taken People Suppliers criteria Environmental Total number and percentage of Sustainability at Sime Darby Assessment Significant actual and potential operations that have been subject to 36-39, Assessment G4-HR9 Plantation, Caring for Our G4-EN33 negative environmental impacts in Caring for the Environment 67-79 human rights reviews or impact 59-62 People the supply chain and actions taken assessments
Social Supplier Human Percentage of new suppliers that Sustainability at Sime Darby 36-39, Rights G4-HR10 were screened using human rights Plantation, Caring for Our G4-DMA Disclosure on Management Approach 47-65 59-62 Assessment criteria People Employment New employees, turnover by age, Caring for Our People G4-LA1 53-55 Human Rights Grievances about human rights gender and region Grievance G4-HR12 impacts filed and resolved through Caring for Our People 59-62 G4-DMA Disclosure on Management Approach 47-52 Mechanisms formal grievance mechanisms Occupational Health and Type of injury and rates of injury, Caring for Our People Society G4-LA6 occupational diseases, lost days, and 47-48 Safety Caring for Our People absenteeism Operations with implemented local G4-DMA Disclosure on Management Approach 47-65 Local We have carried out external Diversity & Equal G4-SO1 community engagement and impact 60-65 Caring for Our People Communities and internal social impact Opportunity G4-LA12 Number of employees by gender, age 53-55 assessments assessments for all our Supplier plantations Screening of suppliers based on Sustainability at Sime Darby Assessment for G4-LA14 35-39 labour practices Plantation Grievance Number of grievances about impacts Labour Practices Mechanisms for on society filed, addressed, and G4-SO11 Caring for Our People 60-65 Impacts on resolved through formal grievance Society mechanisms
094 Sime Darby Plantation Sustainability Report 2016 095 Glossary Notes
BCT Borneo Conservation Thrust MPOA Malaysian Palm Oil Association BioNG Bio-Natural Gas MPOB Malaysian Palm Oil Board CDM Clean Development Mechanism MPOCC Malaysian Palm Oil Certification Council CER Certified Emission Reduction MSOSH Malaysian Society for Occupational Safety CHC Central Housing Complex & Health CPO Crude Palm Oil MSPO Malaysian Sustainable Palm Oil CSPK Certified Sustainable Palm Kernel MYNI RSPO Malaysian National Interpretation CSPO Certified Sustainable Palm Oil NEST Nurturing Estate’s Toddlers CSR Corporate Social Responsibility NGO Non-governmental Organisation DEA Danish Energy Agency PAC Project Affected Communities DGFC Danau Girang Field Centre PBIT Profit Before Interest and Taxation DOE Department of Environment PDTC Plantation Division Tender Committee DOSH Department of Safety & Health PHRiTF Plantation Human Rights Task Force EFB Empty Fruit Bunch PK Palm Kernel ERT Endangered, Rare and Threatened PNG Papua New Guinea ESH Environment, Safety & Health POME Palm Oil Mill Effluent FAR Fatal Accident Rate R&D Research & Development FABP Food and Agriculture Business Principles RAC Responsible Agriculture Charter FFB Fresh Fruit Bunch ROE Return on Average Shareholders’ Equity FPIC Free, Prior and Informed Consent RSPO Roundtable on Sustainable Palm Oil FRIM Forest Research Institute of Malaysia SAFE Stability of Altered Forest Ecosystems Project FY Financial Year SCCS Supply Chain Certification System GBI Global Business Initiative SDP Sime Darby Plantation GHG Greenhouse Gas SDPL Sime Darby Plantation Liberia GRI Global Reporting Initiative SMS Sustainability Management System HCS High Carbon Stock SPI Sustainable Partnership Initiative HCV High Conservation Value SPOM Sustainable Palm Oil Manifesto IFRC International Federation of the Red Cross SWD Sabah Wildlife Department ISCC International Sustainability & Carbon Certification SWO Stop Work Order ISPO Indonesian Sustainable Palm Oil TI-M Transparency International-Malaysia KKPA Member’s Primary Co-operative Credit UNEP United Nations Environment Programme scheme or Kredit Koperasi Primer Anggota UNGC United Nations Global Compact KWEC Kaizen Waste Elimination Challenge UNMIL United Nations Mission in Liberia LSS Lean Six Sigma UNRI University of Riau LiDAR Light Detection and Radar WA Wild Asia LTIFR Lost Time Incident Frequency Rate WAGS Wild Asia Group Scheme LRC Liberia Red Cross WOW War on Waste MACC Malaysian Anti-Corruption Commission YSD Yayasan Sime Darby MD Managing Director MEME Management and Ecology of Malaysian Elephants
096 Sime Darby Plantation Notes