Sustainability Report 2010/11 Bebere Plantation Mosa KIMBE West New Britain Province Papua New Guinea Tel: +675 985 2177 Fax: +675 985 2003 www.nbpol.com.pg www.nbpol.com.pg CONTENTS PAGE Introduction CEO Welcome 2 Targets and Achievements 4 Overall Assurance Statement 6 Our Business in Brief 8 Developing Our Business – Strategies For Growth 12 Our Plantations At A Glance 14 Downstream Processing / Vertical Integration 16 Customer Comment 18 Products and Services 20 Governance and Engagement Leading Responsibly – Corporate Governance and Management 22 Policies and Standards 24 External View: What Are Investors Looking For 25 Stakeholder Engagement 26 Environment Climate Change – Footprint, Reductions and Risk 30 Chemicals Usage 34 Stakeholder Comment On Paraquat Phase-Out 36 Biodiversity 38 Cpo Spill In Milne Bay 40 External Impact Review 41 Water, Emissions and Effluents 42 Social NBPOL Foundation – A New Blueprint For Development 44 Smallholders And Outgrowers 46 Insight – Rehabilitating Smallholder Blocks Makes A Difference 47 Labour Standards 48 Health and Safety 50 Communities and Land 52 Employee Development and Diversity 54 Internal View – Working With The Community In Solomon Islands 56 About The Report Global Reporting Initiative G3.1 Index 58 Base Data and Notes 64 About The Report 70 Glossary 71 Contact Us 72 Further Resources 72 2 New Britain Palm Oil Limited Sustainability Report 2010/11 3 CEO Welcome The Group enjoyed a very successful 2011 with record crops years, our decision is a response to concerns from stakeholders Welcome to our third Sustainability Report which covers and record prices which of course resulted in record revenues over the risks this herbicide may cause to workers. There are our activities for the year ending 2011. Since our last and profits, not only for us but also our smallholders who grow currently no cost effective alternatives, but that is a challenge and sell their palm oil fruit to us and provide some 30% of our we now face and I am sure that we will find alternative solutions report in 2009, our business has undergone the biggest crop. The smallholders in New Britain are the most productive that are less toxic. and have of course become the most successful as a result transformation in the history of NBPOL of that productivity. However, smallholder yield levels on our The New Britain Palm Oil Foundation has had a serious overhaul new sites are still low and we are now providing the technical, of its governance and strategic direction. Over the coming year we financial and material support to assist them to double their will seek to identify the areas of greatest need for the communities yields and profitability. in which we operate, in terms of health and education. To ensure maximum impact of the Foundation’s work, we have increased In 2010, we acquired three new palm oil estates in Papua New Whilst we have expanded by acquisition over recent years, funding this year to one million PGK, in addition to the dividends Guinea from CTP, substantially increasing our capacity, and at with first GPPOL in Solomon Islands in 2005, second RAIL in from NBPOL shares. the same time we commissioned our first European refinery Papua New Guinea in 2008 and most recently the Higaturu, based in Liverpool. Our business continues to be focused on the Milne Bay and Poliamba estates acquired in 2010 we are also I would like to close with a few personal observations surrounding production of sustainable, traceable palm oil, so that consumers expanding organically most notably in New Britain and the the Roundtable on Sustainable Palm Oil (RSPO). We have been have assurance over the integrity of their ingredients. Ramu valley. Obviously one of the immediate consequences involved with the RSPO since its start, and its achievements in is the growth in employee numbers to the point where we are changing mindsets and practices within the upstream side of the the region’s largest employer with close to 25,000 employees. It is encouraging to see the market is also valuing our business industry have been nothing short of remarkable. However, we We are acutely aware of the responsibility of providing a safe model, evident in the impressive uptake from both our Liverpool need stronger market support. While we in NBPOL have been and rewarding environment for our employees. We have made refinery and more recently via a collaboration in Brake, Germany. able to build a segregated supply chain, other producers may not some progress in reducing the incidence of industrial accidents have this option. Unless there is a real sea change over the next and injury but much more needs to be done to reach our target couple of years in terms of consumer demand for sustainable Without sustainability being at the core of our business we of zero fatalities. We are aware of this and are focusing efforts palm oil, we run the risk of the whole process stalling. We see would not have been able to differentiate our oil. Without the to improve our occupational health and safety performance. food companies jettisoning palm oil for other oils, based on the dedicated refinery capacity in Europe we would not be able to notion that palm oil is a risk. Such decisions are economically, deliver the benefits of that sustainability. We now have a supply We continue to research and understand our environmental environmentally, morally and socially wrong. If we are to sustain chain model that directly links European food companies with footprint and have just released our first carbon footprint report. We this planet and the people who live on it, sustainable palm oil the people that grow the crop. Our integration brings us closer believe that this report is the first of its type in the palm oil industry. needs to be encouraged and sought after as the oil of choice. to the end user, and we can now engage in a discussion about Some may ask why would we be interested in understanding the Producing approximately 36% of the world’s oils and fats from the needs of the food industry and what we can do to improve carbon accounting for a tonne of palm oil? There are a number 6% of the world’s oilseed acreage is a compelling story in terms the quality and characteristics of our palm oil, so that it can be of reasons of which the most obvious is the effect that palm of land use efficiency. Sustainable palm oil is needed in increasing tailored to their needs. This is a remarkably simple concept, but oil production can have on the emission of greenhouse gases. quantities if we are to avoid rampant food inflation and increasing one that has been absent in the palm oil industry for 50 years, By accurately modelling our production profile, including its poverty and of course poverty is one of the world’s biggest drivers due to the fragmented supply chain. previous land use, we can see what detrimental and beneficial of deforestation. So paying fifty US cents per tonne to a palm effects our choices may have on the carbon equation. The fact oil producer who does not have access to a segregated supply that there is so much debate on the loss of the world’s forests chain via an offset certificate, whilst the same consumer pays and the effect of palm oil production has on carbon emissions; an unsustainable palm oil producer eleven hundred dollars per we felt that until we understood our own carbon emissions we tonne makes no sense to me at all. were not in a position to make logical comment or take sensible business decisions that were based on scientific data. Global The past two years have been truly transformational years in palm oil production accounts for only 3% of the 300 million realising these principles for NBPOL and for the palm oil industry. hectares that have been deforested during the period 1990 to I look forward to the coming years, and hope to see the market 2010. This estimate of 3% also covers crop conversion into supporting this through the increased uptake of, and investment oil palm from the likes of rubber and cocoa etc. By unravelling in, traceable, sustainable palm oil. the complexities of historical land use and measuring present emissions we can work for a future where palm oil has a more balanced approach to carbon issues. We believe that responsiveness to stakeholders and a precautionary approach is part and parcel of being a responsible palm oil Nick Thompson producer. In 2012, we will be ceasing use of the herbicide Chief Executive Officer Paraquat. Whilst we have used this chemical safely for many New Britain Palm Oil Ltd 4 New Britain Palm Oil Limited Sustainability Report 2010/11 5 Targets and Achievements StatUS FROM 2009 SUstaINABILITY Report targets NEW OR ONGOING targets Targets Status Comments Targets Target dates (year-end) No legal non-compliances Not achieved Achieved in RAIL, HOP, POL, No legal non-compliances 2012 GPPOL and Liverpool Reduce Group lost time accidents rates by 5% annually 2012 Reduce lost time accidents rates by 5% Achieved at Group level No work related fatalities 2012 annually No land developed on peat 2012 No work related fatalities Not achieved 6 fatalities in 2010 BOD levels below 90 ppm for all existing mills 2012 5 fatalities in 2011 No fatalities at MBE, HOP, POL or BOD levels below 20 ppm for new mills 2012 Liverpool Reduce smoke density to less than 40% for 20% of the operating period for all mills 2012 No land developed on peat Achieved All employees paid above living wage 2012 BOD levels below 90 ppm for all existing mills Not achieved Not applicable at RAIL and MBE No employees work more than