Contents Contents Introduction Making our mark 1 Vision and Mission 31 Reducing our carbon As one of the largest players in the palm oil industry, we believe that the best strategy footprint About this report 2 34 Water accountability and to ensure our continued success is to be the leading sustainable and responsible 4 Chairman welcome footprint company. 5 Highlights and targets 37 Reducing chemical use 5 Key highlights 39 Maintaining soil health 5 Our targets and structure 7 About Musim Mas 41 Social responsibility 7 Financial highlights 42 Protecting human rights 8 Our presence in the workplace 12 Driving change through 47 Partnerships with full vertical integration communities 13 Corporate and sustainability governance 51 Engaging suppliers to drive 15 Our operations change 54 Our approach to supplier 19 Our approach to sustainability engagement 20 Sustainability 58 Traceable supply chain certification and 61 Managing policy verification breaches 23 Improving productivity 63 Stakeholder collaboration VISION MISSION and enhancing yield and engagement 24 Industry collaboration A fully integrated palm oil corporation renowned for Driven by a passion for excellence and commitment to 72 Stakeholder partnerships and 27 Promoting positive collaborations quality people and products. continuous improvement, we strive to be the leader in the environmental impacts palm oil industry, producing all our palm products in an Base Data 27 No deforestation 75 economically viable, socially responsible and environmentally and conservation 83 Peat maps appropriate manner, in full compliance of all relevant legal commitments 86 GRI Content Index requirements. 29 Our zero-burn policy 96 Glossary 30 Protection of peatlands 99 Contact MUSIM MAS HOLDINGS PTE LTD • SUSTAINABILITY REPORT 2018 1 > About this report About this report This is the second sustainability report from Musim Mas boundaries. Unless otherwise stated, operational data Materiality matrix Group (‘Musim Mas’ or the ‘Group’) that provides updates presented covers all upstream operations controlled by and insights into the Group’s sustainability performance. Musim Mas as at 31 December 2018, and some 2019 Living wage and Conservation and The purpose of this report is to reiterate the commitments updates have been provided where significant. This labour rights management of HCS and HCV areas we made in our 2014 Sustainability Policy and provide includes data from our plantations and mills in Sumatra High more detail around our Policy Implementation Plan and Kalimantan, but does not include data from our Smallholder Traceability and engagement supply chain released in 2018. The first four sections of the report downstream business or joint ventures. While Musim Mas Carbon GHG Government engagement emissions Peatlands Supplier engagement and detail what we have achieved for our own operations holds land in Papua, there has been no work in these Sustainability certification verified NDPE progress while the remaining section focuses on our supply chain areas, and there are no plans to develop them. Therefore, Community rights Water usage Transparency engagement approaches. our Papua holdings have not been included in the scope Capacity and Pesticides and chemicals resource of this report. While it was previously stated that our sustainability Fire and haze prevention Child rights reports would be published biennially, we believe that Musim Mas supply base: Given the heightened focus on Occupational Human rights Grievances Stakeholder safety and health more frequent accountability is needed in light of the rapid responsible supply bases in the palm oil industry, we have engagement evolvement of the issues under discussion and we will dedicated an entire section of the report to supply chain Energy consumption release sustainability reports or impact updates annually. engagement detailing material aspects relating to our third- party suppliers, including smallholders. This last section SCOPE AND BOUNDARIES of the report content covers data for the calendar year Importance to stakeholders 2018. However, due to the timing of this report, we provide Food security Revenue While this report covers performance data for the calendar details on progress made from January to September 2019 Anti-corruption year 2018, historical figures are provided where available against our commitments, as well as planned activities as well as information about any significant milestones in towards 2020. We also furnish stakeholders with targets 2019. More specifically, the report covers the following: from our recently published No Deforestation, No Peat, No Exploitation (NDPE) Roadmap towards a responsible Musim Mas-owned operations: The first four sections of supply base, outlining our targets beyond 2020. Low this report showcase impacts within our own organisational Low Importance to Musim Mas High MATERIALITY, STAKEHOLDER our performance, particularly in relation to the unique social INCLUSIVENESS AND SUSTAINABILITY and environmental landscapes in Sumatra and Kalimantan. CONTEXT For this report, several issues have been evaluated as We have reviewed the major topics discussed in this report significantly important both for Musim Mas and for our through various forums and engagements. In this report, external stakeholders. Especially noteworthy are the we have included feedback from interviews and e-mail conservation and management of high conservation value correspondence with stakeholders from the social non- areas and high carbon stock forests, supplier engagement governmental organisation (NGO) sector, partner technical and verified NDPE progress, smallholder engagement and consultancies, and our customer base. We have also carried traceability. Since our last report, some themes – such out local engagement at site level through our operational as certification (in light of POIG verification), community teams, and international and sector-wide engagement rights, traceability to plantation, transparency, government through organisations such as the Roundtable on engagement and occupational safety and health – have Sustainable Palm Oil (RSPO), the Palm Oil Innovation Group increased in importance, while other topics have attracted (POIG), the High Carbon Stock Approach (HCSA) Steering less public attention. New specific topics such as human Group and other multi-stakeholder platforms. We have rights, grievances, and capacity and resource have been looked to leading standards and benchmarks, including the added to the list of material factors. Some indicators have Zoological Society of London’s (ZSL) Sustainability Policy also been updated or merged since the last report. Transparency Toolkit (SPOTT) initiative and the Forest Heroes Green Tigers Index, to ensure that we are responsive ASSURANCE to the themes and aspects that are of critical importance to stakeholders. The extent to which these themes are directly We have not engaged third-party assurance for this relevant to our business has guided us in balancing report report as we believe our multiple certification audits content and the depth of data provided. Throughout the provide adequate assurance on our performance to our report, we have sought to provide an appropriate context for stakeholders. We welcome feedback from all stakeholders. 2 MAKING OUR MARK MUSIM MAS HOLDINGS PTE LTD • SUSTAINABILITY REPORT 2018 3 > Chairman welcome Highlights and targets DEAR STAKEHOLDERS, KEY HIGHLIGHTS Chairman I am pleased to introduce the 2018 Musim Mas Sustainability In the social development context, we are also supporting welcome Report. It is our second such annual document and I hope Indonesia’s national agenda. Given the complex nature of Year Highlights the industry, we are forging partnerships with others to align readers will find it a comprehensive, detailed and transparent • Published the Musim Mas Sustainability Policy overview of our business and our on-going sustainability with national aspirations. We expect the political landscape 1 Before • Achieved 100% traceability to mill efforts. in Indonesia to become more conducive to smallholder • Committed to High Carbon Stock Approach (HCSA) as the leading methodology for land development 2018 initiatives, as Indonesia’s President Jokowi has been serious • Participated in the Earthworm Foundation (previously TFT) Aceh Areal Prioritas Transformasi (APT) programme for Highlights and Leuser Ecosystem targets 2019 was another ground-breaking year for Musim Mas. about making smallholder empowerment and productivity Just as we were pioneers when we became the first one of the defining elements of his presidential legacy. We are • Published inaugural Sustainability Report company with major operations in Indonesia to achieve supporting government initiatives that facilitate the issuance • Released Sustainability Policy Implementation Plan, with commitment to a group-level supplier engagement approach Roundtable on Sustainable Palm Oil (RSPO) certification, of land titles to smallholders, and assist second-generation instead of an individual mill approach • Received 11 Green PROPER (Program for Pollution Control, Evaluation, and Rating) awards we have achieved a new milestone in 2019 as the first palm smallholders with their replanting efforts. To maximise our 2018 • Certified all crushing plants as GMP+ Feed Safety Assurance (FSA) compliant oil major to be verified against the Palm Oil Innovation impact, we have also launched collaborative landscape • Achieved compliance with Italian National Sustainability