STATEMENT AND REPORT ON SUSTAINABILITY · the sustainability aspects, managing the material sustainability matters and pursuing a host of impactful corporate responsibility initiatives,

INVESTOR IN PEOPLE

RETURNING TO THE COMMUNITY

CARE FOR ENVIRONMENT

PRODUCTIVITY AND INNOVATIONS

• CEO’s Overview on Nurturing Sustainability 54• Managing Material Sustainability Matters 56• Group’s Sustainability Governance 58

• Economic Value Creation and Distribution 60• Regulatory Compliance and Ethical Conduct 60• Stakeholder Engagements 60• Driving Innovations 65• Assurance and Certification 66

• Conservation and Land Use 69• Resource Stewardship 74• Carbon Footprint and Energy 79

• Occupational Safety and Health (OSH) 82• Respect for Human Rights 84• Diversity and Inclusion 84• Employees Talent Retention 85• Employees Wages and Welfare 86• Employees Engagement and Development 87• Empowering Children with Education 87• Sports and Cultural Heritage 88

• Community Care and CSR Initiatives 90• Engagement with Smallholders 93

• Global Reporting Initiative (GRI) G4 Content Index 94

STATEMENT AND REPORT ON SUSTAINABILITY

53IJM PLANTATIONS BERHADANNUAL REPORT 2017

CEO’s OVERVIEW ON NURTURING SUSTAINABILITY

Businesses today operate in a very different environment. There is growing demand to balance the expectations of a wide range of stakeholders while the businesses have to continue building on sustainable models that also enhance their shareholders’ value. The Group, a mid-sized plantation company, is committed to produce palm oil in a responsible and sustainable manner. The Group will strive to ensure that it delivers on its commitment on sustainability aspects by operating in an economically, environmentally and socially sustainable manner.

The Group supports Bursa Malaysia Securities Berhad’s listing requirements on improving sustainability disclosures. The disclosures on the Group’s efforts in managing the material economic, environmental and social risks and opportunities are imperative for stakeholders to understand and evaluate the Group based on its sustainability commitments. In the reporting year, the Group carried out a detailed materiality assessment which assisted in mapping and reprioritising the focus in managing the material sustainability matters. The Group also aligned its focus and goals to the Sustainable Development Goals (“SDGs”) adopted by the United Nations in year 2015, with the underlying objectives of contributing to sustainable development and work for the betterment of the society. For example, the Group adopted the International Sustainability and Carbon Certification (ISCC) to support the SDGs.

In the reporting year, the Group had incorporated the guidance from the Bursa Malaysia’s Sustainability Reporting Guide and structured the reporting in accordance to the Core level of the Global Reporting Initiative (“GRI”) G4 Sustainability Reporting Guidelines. Being the first report following the GRI guidelines,


it was compiled internally. External assurance would be explored in future years. The objective in preparing this report was to enable the relevant stakeholders to better understand and appreciate the sustainability commitments and the Group’s approach in managing the material sustainability matters relating to its operations in a structured manner.

The Group had adopted a framework on sustainability, referred to as “Nurturing Sustainability”, as its organisational mantra or blueprint, intertwining key sustainability aspects in the production of palm oil. This framework enables the Group to realise its vision and mission in managing a balanced mix between sustainable growth and the interests of diverse stakeholders on sustainability. By ingraining all the sustainability aspects, managing the material sustainability matters and pursuing a host of impactful corporate responsibility initiatives, both on its own and in partnerships with other stakeholders, the Group is confident that the journey will continue to create enhanced shared values for the stakeholders and deliver positive social-environmental footprints. In addition, the Group believes that in the longer term, the ventures would contribute constructively to the socioeconomic development of surrounding communities and facilitate in generating other spin-offs and multiplier effects that lead towards an inclusive wealth creation and socio-economic security.

The following table provides a review of the Group’s salient sustainability initiatives in the reporting year and the key areas of priorities for FY2018. Going forward, the Group will continue to nurture sustainability in a way that creates and enhances value to the organisation and its stakeholders. Key areas of focus will include improving operational excellence in the supply chain, ensuring the socio-environmental components related to its business are operationalised and progressed with strategic partners through effective engagements.

Group’s signature “Walk with the CEO” annual activity

54 IJM PLANTATIONS BERHAD ANNUAL REPORT 2017

KEY AREAS OF FY2017 REVIEW AND FY2018 PRIORITIES

MARKETPLACE ASPECTS

• El Niño phenomenon had affected oil yield in FY2017. However, better CPO prices managed to cushion-off the effect of the drop. Some degree of El Niño lagged effect may manifest into FY2018. Continued efforts will be intensified to raise long-term oil yields and managing cost effectiveness. From FY2018 onwards, estates in Indonesian operations will move from start-up to higher yields while pragmatic replanting programme will continue in Malaysian operations with best practices in place, including zero burning. Larger areas for site-specific mechanisation and fitting use of innovative technologies will be introduced in phases.

• In FY2018, the Group will continue with the ISCC-EU certification where premiums are derived. Three (3) estates in the Indonesian operations were successfully certified under the Indonesian Sustainable Palm Oil (“ISPO”) scheme. By FY2018, the Group targets that all operations in Indonesia to complete with ISPO Stage 1 audit. Additional operating units in Malaysian operations will be geared for Malaysian Sustainable Palm Oil (MSPO) scheme.

• In FY2017, the Group had initiated mapping of crop suppliers in the Malaysian operations with identification of all sources of FFB supplied to its mills. This activity will be extended to the Indonesian operations in the coming year.

OUR PEOPLE

• Provision of safe workplace for its employees is of utmost importance. The Group strives to achieve zero fatality in the workplace and is pleased that the zero-fatality goal was achieved for the last three (3) consecutive reporting years including in FY2017. The Group will work vigilantly towards continuing to realise this target in FY2018. The Group will also drive to enhance its OSH performance through shared commitment involving all levels of its people and effective intervention programmes to mitigate risks associated with occupational safety and health.

• Human rights continue to be an emerging aspect of importance for the Group. The Group had started to roll out various awareness and capacity development programmes. In FY2017, gender committees were established in the operating units. The Group also welcomes its first female director on the Board. Further enhancement of the awareness and capability development across the Group will be pursued in FY2018.

• In order to drive a high performance-culture organisation, the Group will continue to inculcate the “I-TIC” core values across the Group. Employee engagements and development programmes will be continued into FY2018 with enhanced focus on both “innovations and sustainability”.

ENVIRONMENTAL ASPECTS

• The Group continued to uphold its commitments on no deforestation, no peat planting and no open burning. In FY2018, there will be continued thrust engaging with relevant stakeholders, particularly the local communities and smallholders in tackling risks relating to open burning, wildlife protection and human-wildlife conflict.

• In FY2017, the Group initiated a collaboration with World Wildlife Fund- Sabah in river water stewardship and forest fire mitigation. In FY2018, the Group will continue with its on-going collaborations with a host of stakeholders in creating positive impact and shaping the dialogue on sustainability.

• A dynamic approach in managing the conservation sites and high conservation areas within the operations had been adopted by the Group. In FY2017, an ex-situ conservation project was initiated involving restoration of mangrove forest in Sandakan. Tree planting initiatives continue in the Indonesian operations. Rehabilitation and in-situ conservation programmes are on-going and will be continued in FY2018 and beyond.

• The Group will continue to explore cost-effective and innovative technologies on pollution controls, enhancing its greenhouse gas emission reduction blueprints as well as compliance to all the legal requirements.

LOCAL COMMUNITIES

• The Group acknowledges the complexity and challenges to cascade its sustainability commitments to business partners and other stakeholders, particularly the crop suppliers and contractors. The Group envisages the need to strengthen the engagements.

• In FY2017, the Group embarked into the Phase 2 of its smallholders’ transformation project, named “Rurality”. This is a collaboration in partnership with TFT (The Forest Trust). The acceptance level from the smallholders from the project was encouraging and in FY2018 the Group plans to extend the participation to more smallholders supplying crops.

• The Group will build on its core CSR initiatives involving long-term and ongoing commitments and ensuring positive engagements and partnerships with external parties. Moving into FY2018, the Group will also continue to promote the spirit of volunteerism and sharing among its people to the surrounding communities.



MANAGING MATERIAL SUSTAINABILITY MATTERSThe material sustainability matters discussed in this report are the key sustainability aspects that were identified through various discussions held over different platforms with information drawn from both internal and external sources. The Group took into consideration the key stakeholders’ concerns on the environment, economic, social and governance aspects, impacts and practices that relate to the Group.

The Group reviewed the significant risks and opportunities with regards to its sustainability growth under the context of the industry and relevant global trends. In all the previous annual reports, the Group’s practices and strategies were set against its sustainability framework of “Nurturing Sustainability” which formed the Group’s blueprint and business mantra to operate in a sustainable manner. This consists of four (4) intertwined sustainability components namely

productivity and innovations, care for the environment, investor in people and returning to the community. The material sustainability matters in this report are discussed in accordance with the respective sustainability components.

The Group continues to adopt a balanced approach incorporating productivity improvements through both process and performance excellence while embarking on continuous improvement. In addressing the social-environmental agenda, the Group espouses sustainable and responsible stewardship by employing best management practices and pursuing impactful initiatives to promote environmental protection, conservation and biodiversity enhancements. The Group also strives to drive for positive social economic impacts for its employees and the surrounding communities through the provision of employment opportunities and creating multiplier effects in their livelihood and the surrounding local economies. In “Nurturing Sustainability”, 15 material sustainability matters have been identified and summarised in the table below.

NO. SUSTAINABILITY COMPONENTS MATERIAL SUSTAINABILITY MATTERS KEY STAKEHOLDER GROUPS

1

2

3

4

5

6

Productivity and Innovations Regulatory Compliance

Corporate Governance

Profitability & Value Creation

Assurance & Certification

Stakeholder Engagement

R&D and Innovations

Shareholders, Investors,

Legal Authorities,Smallholders,

Local Communities,Employees,Customers

7 Investor in People; Returning to Community

Human Rights

8

9

Investor in People Safety & Health

Employee Retention & Engagement

10

11

12

13

Care for Environment Conservation & Land Use

Pollution Control

Resource Management

Carbon Management

14 Returning to Community; Productivity & Innovations

Smallholders

15 Returning to Community Community Care & CSR Initiatives


MATERIALITY MATRIX

The material sustainability matters were assessed and prioritised in accordance to the concerns of the key stakeholder groups set against the importance to the Group. The results of the analysis are shown in the materiality matrix in the chart below.

MATERIALITY MATRIX

Importance to Group

The material sustainability matters were then assessed by the Group Sustainability Steering Team to ensure that those selected were ingrained into the Group’s policies and practices with their respective implementation plans identified and put in place. The assessment of the material sustainability matters would be reviewed on an annual basis to ensure the inclusiveness of significant issues, risks and opportunities that are relevant to the operations and business supply chain. The feedbacks from the relevant stakeholders would also be taken into consideration during the annual assessment.

HIGH

LOW HIGH

Impo

rtan

ce to

rel

evan

t sta

keho

lder

s

• Human Rights

• Conservation & Land Use

• Safety & Health

• Pollution Control

• Resource Management

• Carbon Management

• Community Care & CSR Initiatives

• Stakeholder Engagement

• R&D and Innovations

• Regulatory Compliance

• Corporate Governance

• Profitability & Value Creation

• Smallholders

• Assurance & Certification

• Employee Retention & Engagement



GROUP’S SUSTAINABILITY GOVERNANCEThe Group’s sustainability strategy is driven by the Board of Directors and shall be implemented and monitored using the following governance framework.

The Board of Directors is responsible for approving the direction and overall sustainability strategy for the Group. The Group’s Sustainability Steering Team is the key team that drives the relevant sustainability efforts and initiatives across the Group, working hand-in-hand with the Sustainability Working Teams in the operating units. The Management Committee, led by the CEOs, ensures that the strategies are implemented and in accordance with the Group’s policies and directions. They are also responsible to prepare progress reports to the Board of Directors periodically and produce the sustainability reporting in line with Bursa Malaysia Securities Berhad’s listing requirements.

MANAGEMENT COMMITTEEThe Management Committee oversees the delivery of the sustainability strategy, in line with policies set and the production of the Group’s sustainability reporting.

GROUP’S SUSTAINABILITY GOVERNANCE FRAMEWORK

OPERATIONS SUSTAINABILITY WORKING TEAMSDedicated working groups that implement the sustainability initiatives. The groups meet at relevant intervals to review their progress against the plan.

BOARD OF DIRECTORSThe Board reviews progress on quarterly basis to ensure that the best practices of sustainability are embedded across the Group. The Board also has responsibility for approving significant investments or directions for major innovations relating to sustainability.

GROUP SUSTAINABILITY STEERING TEAMThe Group’s Sustainability Steering Team interfaces with respective Sustainability Working Teams of each estate and mill operation in Malaysia and Indonesia. They drive the sustainability efforts and initiatives while ensuring consistency with the sustainability strategy of the Group.

AUDIT COMMITTEEThe Audit Committee oversees any periodic or ad-hoc audit or assurance activities with respect to sustainability management and reporting processes.


PRODUCTIVITY AND INNOVATIONSPlantation digital supervision


ECONOMIC VALUE CREATION AND DISTRIBUTIONThe Group’s principle of shared destiny in the economic value creation and distribution through its business is documented in both the Management Discussion and Analysis and summarised in the Statement of Value Added and Distribution on page 03.

Set against the backdrop of a challenging landscape in the reporting year, the Group was able to generate a higher total value addition amounting to RM421.9 mil. This was shared and distributed across to various stakeholders. In the reporting year, the 10,133 employees through their services in the Group were recipients of RM133.4 mil (31.6%). The Government through taxes and cesses collected RM82.1 mil (19.5%) while the providers of capital received a total of RM69.3 mil (16.4%) which included the paid-out dividend. The balance of RM137.1 mil (32.5%) was retained for future reinvestment.

In achieving a total revenue of RM753.7 mil, 44.0% or RM331.8 mil was channelled for the purchase of goods and services in order to meet the needs of the overall business. Inevitably, this had helped in the local economies both directly and indirectly, and facilitated in generating many spin-offs and multiplier effects ensuring continuity in an inclusive wealth creation and economic security.

REGULATORY COMPLIANCE AND ETHICAL CONDUCTIntegrity is one (1) of the core values continuously upheld by the Group. The Group strives to carry out its business operations and related activities ethically and in compliance with all relevant legal requirements and regulations. This is vital to gain confidence and build trust with our stakeholders. The Group recognises this is a shared commitment to create a corporate culture within it to operate the business in an ethical manner. Employees of all levels are reminded of their roles and responsibilities to perform their duties in accordance to the Group’s policies and core values.

The Group defined the various ethical standards and conduct at work in the Group’s Code of Ethics and Conduct. Any employee, contractor and vendor, who knows of, or suspects, a violation of the Code, is encouraged to whistle blow or report the concerns through the Whistle Blowing Mechanism. The mechanism is available on the IJM website and the internal website portal. The management will ensure no individual will be discriminated against for reporting in good faith on violations or suspected violations of the Code.

In the reporting year, there were no cases of non-compliance with laws and regulations.

STAKEHOLDER ENGAGEMENTSThe Group adopts an open and proactive approach in engaging with the key stakeholders as it recognises the importance to address the increasing expectations of its stakeholders. It believes in engaging with the stakeholders to strengthen partnerships and forge better understanding. The Group had identified key stakeholders for engagement on various aspects of its business activities. This includes governmental bodies, shareholders and investors, NGOs and other private organisations. The stakeholders were engaged using various channels and platforms at certain intervals.

During the engagement process, topics for discussion were centered on the material issues. One (1) of the engagement process involved the stakeholders visiting the Group’s operations to derive better insights and understanding of the best practices in the operations, in addition to the Group’s socio-environmental footprints. Some of the engagement activities had led to constructive collaborations and partnerships over the years.

DISTRIBUTION OF TOTAL VALUE ADDED

employees

capital providers

reinvestment

taxes and cess19.5%

31.6%

16.4%

32.5%



The table below summarises the engagement process and key issues discussed with the various key stakeholder groups.

KEY STAKEHOLDER

ENGAGEMENT CHANNELS

FREQUENCY

DISCUSSION ON KEY ISSUES

OUTCOMES

Government Authorities & Regulators

Fraternity association

Periodic 1. Relevant issues and updates on the industry

2. Governance in compliance with statutes and regulations

1. Lobbying for support for betterment of the industry as a whole

2. Better understanding on the latest regulations and compliances required

Two-way dialogue through organised seminars

Periodic

One-to-one meetings

As and when needed

Site visits and audit

Periodic

Engagement surveys

Periodic

Investors & Shareholders

Active correspondence to address queries

As and when needed

1. Business strategy and impacts

2. Operational performance

3. Sustainability updates and focused aspects

4. Socio-environmental practices

5. Governance in compliance with new regulations

6. Updates on corporate changes and decision made

1. Better understanding on the Group’s policies, culture, core values and sustainability practices

2. Better insights on business progress and performance

3. Established good relationship and affirmative standing with the investors

Analysts briefings Periodic

Site visits At least once a year

Corporate website Update as and when needed

Annual general meeting

Once a year

Local Communities and Smallholders

Community outreach and development programs

Periodic 1. Socio-environmental practices and requirements

2. Supply chain issues3. Sharing of knowledge

on agricultural best practices

4. Pricing mechanism and crops quality

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

2. Building better relationship and establishing long term partnerships

Regular dialogue and engagement

At least once a year

Strategic partnerships

Upon mutual agreement

Customers Meetings Periodic 1. Supply chain issues2. Quality and

productivity3. Sustainability updates

– certification, traceability, best management practices

4. Socio-environmental practices

Better understanding on the Group’s policies and commitment to sustainable palm oil production

Phone calls Periodic

Site visits As and when needed



KEY STAKEHOLDER

ENGAGEMENT CHANNELS

FREQUENCY

DISCUSSION ON KEY ISSUES

OUTCOMES

Academic Agencies and NGOs

Strategic partnership

Upon mutual agreement

1. Sustainability related issues

2. Academia research and findings on the industry

3. Challenges in the industry

1. Internship programmes to provide exposure to the school/college leavers

2. Useful research outcomes to be shared with industry fraternity

3. Strategic partnership that benefits both parties

4. Better understanding of the industry

Engagement and meetings

Periodic

Site visits As and when needed

Contractors & Suppliers

Discussions and Meetings

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

2. Works’ specifications and standards

3. Company’s policies and governance

4. Relevant laws and regulations applied

1. Better understanding on the Group’s policies and practices.

2. Raising of awareness on the Group’s commitment on sustainability requirements

3. Build up better relationship and establish long term business partnership

Briefings and Trainings


Employees Employee engagement survey – “My Voice”

Once every 2 years

1. Operational performance

2. Sustainability updates and practices

3. Welfare and remuneration

4. Workplace and living conditions

5. Safety & health issues and practices

6. CSR initiatives7. Group’s direction,

vision, policies and practices

8. Human resource related matters

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

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

3. Enhanced inclusiveness, team work and esprit de corps

4. Constructive feedbacks and comments for improvements

5. Positive engagements with employees and create the shared destiny culture

Town hall meetings


Various operational and committee meetings

Periodic

Get together events and sporting activities

Festive celebrations-periodic

Briefings and Training

Periodic

Annual appraisals Once a year


CORPORATE GOVERNANCE AND INVESTOR RELATIONS

Investor relations are fundamental in providing an effective two-way communication between the Group and its stakeholders. The Group continues to provide relevant information in a timely manner to the shareholders and the investing community. The Annual General Meeting remains an important platform for dialogue between the Group and its shareholders. Quarterly announcements to Bursa Malaysia, annual reporting, regular analyst’s briefings and visits were also pursued. In addition, the Group maintained a corporate website. The Group was listed in the top 100 companies with good disclosures and for overall corporate governance and performance by the Minority Shareholders Watchdog Group in December 2016.

The Group continued to reinforce the importance of good corporate governance in building a sustainable business and is committed to ensure that the highest standards of corporate governance are practiced throughout the Group. The Statement on Corporate Governance is presented on pages 30 to 44.

PARTNERSHIP ENGAGEMENTS

The Group is actively involved in several engaging partnerships with NGOs, governmental bodies and other private organisations. Some of these partnerships have been established and sustained for many years and continued into the reporting year. The Group is confident that the ongoing partnerships will deliver positive operational and social-environmental footprints whilst creating shared values with the relevant stakeholders.

The followings were some of the key and ongoing partnerships in the reporting year:

COMMEN- CEMENT

YEAR

ORGANISATION

PROJECT/ENGAGEMENT ACTIVITIES

2000 Malaysian Palm Oil Board (MPOB) Oil palm breeding

2001 University Malaysia Sabah (UMS) Internship programme, research activities and field visits

2002 Tripartite partnership- Sabah Rugby Union (SRU), Eagles Rugby Club (ERC) and Sabah Education Department

Youth rugby sports development programme in Sabah

2006 Sandakan- Kinabalu Pink Ribbon Grass-root breast health awareness and outreach

2007 NGO Humana Child Aid Society Sabah Education for guest workers’ children in Sabah

2010 Duchess of Kent Hospital in Sandakan Blood donation campaigns and health-related activities

2011 NGO Borneo Bird Club Sandakan Avian fauna surveys and awareness programmes

2011 Sabah Forestry Department Environmental education and exchange of information

2012 International Plant Nutrition Institute (IPNI) Oil palm best management practices project “Seed to Peak”

2012 ACGT Sdn. Bhd. and Genting Green Tech Sdn. Bhd.

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

2014 Wildlife Rescue Unit & Sabah Wildlife Department

Wildlife relocation, conservation awareness and human-elephant conflict issues

2015 NGO The Forest Trust (TFT) Smallholders’ Rurality Project

New (2016) NGO World Wildlife Fund (WWF) Sabah River water stewardship and forest fire mitigation



MARKETPLACE COLLABORATIONS

In the marketplace, the Group is an active member of the Malaysian Estate Owners’ Association (MEOA). The CEO & MD of the Group is the present President of MEOA while the Group is actively involved in the MEOA Council and various working committees. The CEO & MD is also a board member of the MPOB. In addition, the Group was engaged with a multitude of partners and stakeholder collaborators on matters pertaining to its operations. Refer to page 63 on partnership engagements.

The Group also seeks to contribute in leveraging its knowledge and expertise with the industry fraternity. The oil palm seminar of IJM was organised annually, with topics ranging from best management practices to

GROUP’S PRESENTATIONS IN FY2017

Title: “Factors Impacting The Competitiveness Of The Palm Oil Industry”12th National Incorporated Society of Planters’ (ISP) Seminar (NATSEM 2016) organised by the Incorporated Society of Planters (ISP), 18 – 20 July 2016 at Kuching, Sarawak.

Title: “Manuring Oil Palm: What You Need To Know – Opening Remarks”Learning and Brainstorming (LAB) Seminar organised by the Malaysian Estate Owners Association (MEOA), 24 October 2016 at MPOB Bactris Hall in Bangi, Selangor.

Title: “Nurturing a Purpose-Driven CSR Platform”Marketplace Series: Entrepreneurship & Partnership in Nation Building Forum – Rethinking CSR – Building Lasting Legacies jointly organised by Asian Strategy & Leadership Institute (ASLI) and Full Gospel Business Men’s Fellowship Malaysia (FGBMF), 29 November 2016 at Petaling Jaya, Selangor.

Title: “Know Our Past, Understand Our Present, Shape Our Future”Malaysian Estate Owners Association (MEOA) Commemoration of 100 Years of Oil Palm In Malaysia organised by Malaysian Estate Owners Association (MEOA), 25 March 2017 at Petaling Jaya, Selangor.

Exchange of views at the annual Oil Palm Seminar of IJM

oil palm nutritional requirements, physiology and yield components. Participants were invited from among the stakeholders including representatives from plantation companies, independent estate owners, researchers as well as investment analysts.

The Group participated in the plantation industry related presentations at the various national forums on topics ranging from the industry competitiveness, plantation inputs, sharing of sustainability initiatives and historical perspective of the industry. Management employees share and learn from other participants, exchanging viewpoints and together aspire to raise both the floor and bar in managing the challenges and opportunities impacting the plantation industry.


DRIVING INNOVATIONSAdvances in technology or innovations are keys to the future of tropical plantation as planters strive to feed the world with limited natural resources under sustainable stewardship. The Group’s motivation is to live out a culture of continuous improvement within its organisation, appreciating the cost-benefits and managing change in our people, especially among the younger Gen-Y employees.

QTRC is a testimony that a mid-sized organisation recognises the importance of R&D in order to contribute towards productivity and strives to balance growth with environmental stewardship. While the main focus is channeled to oil palm breeding, selection and seed production for better crop yields, QTRC also provides in-house agronomy and advisory services along with the promotion of IPM. In this respect, the Group continued to invest and excel in its long-term oil palm breeding programme to produce quality planting materials targeted for high yielding field performance and other desirable commercial breeding traits. In addition, the Group’s R&D team carried out experimental trials and tests on latest available agrochemicals in the market to find the best agronomy solutions for the estate operations.

The following are the two (2) key innovation areas that have been pursued by the Malaysian operations in the reporting year.

PLANTATION DIGITAL SUPERVISION

The Group initiated the use of digital devices in its supervision of estate operations. The digital supervision enabled it to harness on the GPS signals with Android hand-held devices in tracking plantation activities with a web-based backend system. In the conventional method, information on the crops and the productivity of harvesters were manually recorded and subsequently transferred to the administrative system. By using this digital data logger, in-field information can be better analysed, reducing human error and facilitating an improvement in efficiency and response time. The reports can be useful toolkit for the supervisory staff and management to rectify any shortcomings in the fields.

The Group targets for 100% implementation of digital devices in its estate operations in Malaysia by the end of year 2018. Ultimately, the system will be extended to apply into other plantation management activities, such as in replanting, pest, disease and agronomy monitoring.

PLANTATION MECHANISATION

The plantation sector is operating in a labour intensive environment. The Group is driving for pragmatic and site-specific mechanisation initiatives to address the shortage of workers. In view of the scarce human resource especially for the physical demanding tasks in the field, the Group explored innovative ways to change the modus operandi in the plantation operations as well as the mind-set and culture in the operations. Since year 2011, the Group had carried out numerous time-motion-cost studies on various combinations for in-field mechanisation. Motorised wheel barrows, mini-tractors, net with cranes, bin systems as well as grabber systems were utilised for in-field crop collection based on time-motion-cost studies.

Larger areas of coverage will be incorporated with mechanisation and the Group will continue to explore more mechanisation options or combinations thereof in the estate operations. The mill operations were also incorporated innovative modifications and constructive upgrades to reduce losses and enhance process efficiency.

IJMP featured in The Edge on digitalisation of estate operations



ASSURANCE AND CERTIFICATION

FROM COMPLIANCE TO VALUE-CREATION

Since 2004, the Group’s palm oil products and processes have been certified under various quality management systems. Subsequently, the Group embarked on another phase of the journey towards attaining sustainability-related certifications by taking into cognisance the global growing demands for third party assurance to facilitate building confidence with the stakeholders on the credibility, quality and effectiveness of disclosures made by the Group.

The Group’s staged approach on assurance started with the MPOB Code of Practices (CoPs) in the year 2009. The Group believes it is imperative to obtain buy-in from all involved in the Group. It aspires that assurance will venture beyond certification-per-se. Subsequent preparations for a phased approach towards attaining sustainable palm oil certifications entailed in-house capacity building, gap analysis, establishing base-lines and pursuing with continuous awareness programmes. The choices of sustainability certifications were then set against the Group’s priorities and resources of a mid-sized organisation. The Group embarked on the certification journey to deliver assurance to customers but it had also taken into account the financial prudence in managing cost containment measures involved in the overall certification process. As each operation is unique at its locality, we embarked on the best certification options.

The Group decided to focus and pursue with a staged certification in its Malaysian operations with the CoPs, migrating to the MSPO certification and subsequently with the ISCC; while the Indonesian operations continued with the mandatory ISPO certification. The Group’s involvement in the above certifications was deemed adequate to provide the assurance on sustainable palm oil production while not compromising on a host of ongoing sustainability collaborations. The Group continued to keep up with new and more demanding compliance requirements while embracing the other principles and criteria for sustainable palm oil production.

PROCESS AND QUALITY ASSURANCE

The Group’s palm oil processes and products continued to be certified under recognised quality management systems such as Good Manufacturing Practice (GMP) and SIRIM quality standards since the year 2004. The Group’s Malaysian operations were still certified under the MPOB CoPs in its supply chain covering from nursery activity, estate operations, palm oil milling and kernel crushing processes. Stringent production requirements were adhered to and highest quality products in compliance to the standards and customers’ requirements were delivered.

SIRIM Certified IJMP Oil Palm DxP Planting Material


CERTIFIED SUSTAINABLE PALM OIL (CSPO)

INTERNATIONAL SUSTAINABILITY AND CARBON CERTIFICATION

The Group’s operations in Malaysia were certified under the voluntary ISCC EU since 2015. Refer to ISCC website at www.iscc-system.org . All the Group’s palm oil mills and their respective internal supplying estates in the Malaysian operations were certified under this scheme, except for one (1) mill which has lesser production capacity.

The chart below indicates the ISCC certified CPO production over the last three (3) years in the Group. The total sustainable palm oil production from these mills was 85,575 MT in the reporting year. This accounted for 63% of the Group’s total CPO production from the Malaysian operations. Monetary premiums were derived from selling the ISCC certified CPO. Due to the absence of demand for ISCC plus certified oil, there were no sale during the reporting year.

The Group will continue to pursue with the ISCC EU scheme in the upcoming years and will also explore the possibility to introduce the ISCC certification scheme in the Indonesian operations.

MALAYSIAN SUSTAINABLE PALM OIL CERTIFICATION

MSPO started in 1 January 2015 on a voluntary basis. However, the MSPO certification compliance will be made mandatory by the end of 2019 to elevate the industry to global standards. It is a national move towards branding Malaysian palm oil as sustainably produced and safe.

The Group participated in the pilot project under the MSPO scheme since 2014. One (1) of its mills, Desa Talisai Palm Oil Mill and its three (3) supplying estates were certified under the MSPO certification scheme. The Group will move towards certifying the other mills in Malaysia under MSPO in order to meet the timeline for mandatory implementation.

INDONESIAN SUSTAINABLE PALM OIL CERTIFICATION

The Indonesian Government launched a mandatory palm oil certification scheme in 2011, namely the ISPO to ensure all palm oil producers are in compliance with laws and regulations while operating in Indonesia.

The Group had embarked on the ISPO auditing processes since 2014. In the reporting year, three (3) of the Group’s estates in Kalimantan, namely Manubar, Pertama and Belidan estates were successfully certified under the ISPO certification scheme. The Group targets to complete all Stage 1 audits for all its operations in Indonesia by the end of the next financial year.

FY2016FY2015 FY2017

20,7

21 M

T

1,42

5 M

T

85,5

75 M

T

GROUP’S ISCC CERTIFIED SUSTAINABLE PALM OIL PRODUCTION OVER THE LAST 3 YEARS

Sustainable CPO Production

Pertama, Belidan and Manubar estates certified under ISPO certification



CARE FOR ENVIRONMENT

Planting of mangrove trees


CONSERVATION AND LAND USE

MANAGING HIGH CONSERVATION VALUE AREAS

The Group is committed to no deforestation of primary forest and High Conservation Value (HCV) areas. The HCV areas in the Malaysian operations comprise of riparian reserves, steep slopes, swampy areas, forest remnants and forest buffer zones. HCV areas in the Indonesian operations are primarily HCV-1 and HCV-4 areas. Following accuracy mapping in the reporting year, a total of about 2,920 ha of land were declared as HCV areas in the Indonesian operations. In addition to the 1,260 ha classified as HCV areas in the Malaysian operations, a total of 896 ha were set aside for conservation purpose. Collectively, the Group’s HCV area accounted for 4,180 ha.

The Group believes in continuous improvement and has adopted a dynamic approach in managing the HCV areas identified in the operations. An internal re-assessment was carried out in the existing plantations to reaffirm the management strategies for these areas. Areas that do not fulfill the HCV criteria are classfied as conservation areas. It is still important for the Group to conserve these

Conservation Area Total HCV Area

MALAYSIAN OPERATIONS

INDONESIAN OPERATIONS

896

ha 1,26

0 ha

2,92

0 ha

areas for regulatory compliances and to mitigate wildlife poaching in adjacent forest reserves.

The no-deforestation policy was also cascaded to the smallholders during the stakeholder engagement meetings with them. Management and monitoring of HCV areas were carried out from time to time in accordance to the law, regulations, guidelines and criteria of the sustainability certifications.

Aerial view of the “Secret Garden” in Sugut region



HCV MANAGEMENT STRATEGIES

The Group employs the following strategies in managing the HCV areas:

STRATEGIES OBJECTIVES TARGET STATUS AS OF FY2017

i. Internal re-assessment for HCV areas in existing plantation operations. This is applicable to the Malaysian operations

Note: Indonesian operations have completed the HCV assessments conducted by competent HCV assessors which were registered under the HCV Resource Network

Obtained updated figures and information/conditions of the areas

Malaysian Operations: To survey all areas in the Malaysian operations which are classified as conservation and HCV areas by FY2018

Malaysian Operations: 80% completion on ground survey

ii. Establish site specific conservation and biodiversity management plans

Better management with site specific conservation and rehabilitation works

Malaysian Operations:i. Partnership or

collaboration with external expertise in establishing the management plans

ii. Establish site-specific management plans for Sugut region by FY2018

Indonesian Operations:Implement and monitor the management plans for all the estate operations

Malaysian Operations:Formalising a collaboration MoU with the Sabah Forestry Department

Indonesian Operations:Management plans are in place and were implemented

iii. Rehabilitate & enhancement

To rehabilitate and enhance the conservation sites with suitable tree species

Malaysian Operations:Rehabilitation of riparian reserves in the Sandakan region to be implemented by FY2018

Indonesian Operations:“Sejuta Pohon” tree planting project – Participated in nurturing and planting of one million local trees species at specific rehabilitation plots targeted to be completed by FY2020

Malaysian Operations:Areas of rehabilitation project have been identified

Indonesian Operations:Since 2015, the number of trees that were planted and enriched at the various sites had reached 20% of the initial target

iv. Monitoring and Awareness i. To increase the awareness level of the employees in the topics on conservation

ii. To monitor that the management plans are implemented

iii. Review plans for continuous improvement

Continue to organise awareness, training and implement effective monitoring programme

On-going awareness programme and monitoring activities


Signage displays at the high conservation value areas

ENDANGERED, RARE AND THREATENED SPECIES

Biodiversity surveying, an ongoing exercise to gather information on the biodiversity. Through ground surveys and interviews with people in the operations the information was updated annually. Where rare and endangered species were found, the habitats were conserved as HCV areas. Proper signages on “No Hunting”, “No Trespassing” and information pertaining to the species were erected at strategic locations to inform of the Group’s strict prohibition of wildlife hunting. In addition, sightings of any key species and patrolling were also carried out at the areas bordering forest reserves to prevent illegal poaching into the reserves.

The summary of the International Union for Conservation of Nature’s (IUCN) List of Threatened Species found in the operations of the Group is as follow:

IUCN RED LIST OF THREATENED SPECIES IN THE GROUP

NO.

SPECIES

CRITICALLY ENDANGERED

ENDANGERED

VULNERABLE

NEAR THREATENED

1 Mammals 2 4 8 3

2 Reptiles 0 0 1 0

3 Birds 1 3 6 13

4 Plants 11 10 4 0

Sun Bear’s (Helarctos malayanus) claw marks on the tree trunk

Critically Endangered Meranti Merah (Shorea almon Foxw.) in conservation area

Rhinoceros Hornbill (Buceros rhinoceros)



REHABILITATION AND CONSERVATION

The Group believes that conservation initiatives are vital to ensure the objectives of conserving the areas are fulfilled and able to deliver their ecological values and benefits. This can only be achieved through a structured and dynamic management approach, which include constructive partnerships with external stakeholders.

The Group continued to rehabilitate the conservation sites with the planting of local tree species in both the Malaysian and Indonesian operations. In the Indonesian operations, about 269,501 saplings have been planted since 2015 with total area covering about 2,421 ha under the “Sejuta Pohon” initiative.

Adding on to the rehabilitation initiative, employees from the Group, together with colleagues from the property division of the IJM Group in Sabah volunteered in an ex-situ mangroves tree rehabilitation project under IJM‘s Give Day Out in the reporting year. A total of 1,200 mangrove saplings were planted at a former encroached area at Tandawan, Elopura Forest Reserves in Sandakan. Appreciating the importance of the mangrove trees to the ecosystem, this conservation project will be sustained over the next two (2) years to ensure the mangrove ecosystem is successfully restored.

In this reporting year, the Group had taken another renewed approach in managing a designated conservation area, known as Secret Garden (formerly identified as Lost Paradise). As mentioned in the previous annual report, Secret Garden is home to a number of species of flora and fauna. However, due to the lack of expertise

and information, no specific management plan was initiated. The Group took

proactive steps to engage with the

Sabah Forestry Department (SFD) to tap on their expertise and know-how to establish the best management plan for Secret Garden. At the time of preparing this report, the Group and SFD were in the final stage of finalising the Memorandum of Understanding for the said project before the official signing.

In the reporting year, a briefing session focused on human-elephant conflicts was organised by the Group’s community project partner, TFT, with expertise from NGOs, HUTAN and Danau Girang Field Centre (DGFC). The briefing was to provide in-sight knowledge and technical know-how to smallholders and employees in handling elephant encroachments. It is believed that only with the use of landscape approach planning can the human-elephant conflicts that have critically affected the livelihood of the local communities be addressed more effectively. Thus, with the assistance from the Sabah Wildlife Department and Wildlife Rescue Unit (WRU), the meeting was held involving affected parties in the Ulu Muanad areas in Sandakan.

Ex-situ mangrove tree rehabilitation project

Tree saplings raised in the nursery for tree rehabilitation programme

Hosted the “Human-Elephant Conflict in Ulu Muanad Area” meeting with relevant stakeholders and NGOs


NO NEW DEVELOPMENT ON PEAT AREAS

The Group is committed to no new development on peat areas. There are about 10% of the planted hectarage in the Group classified under peat areas. Most of the cultivation in the peat areas were planted before 2001. Industry best management practices are in place in the existing plantings on peat in order to minimise carbon emission and safeguarding the long-term productivity of the cultivated land. These best practices include good standards in the land preparation and correct lining of drains, roads and planting rows, and employing effective drainage and water management system. In place are also the recommended agronomic practices from the agronomist covering all aspects in plantation management.

FIRE MITIGATION AND MANAGEMENT

The Group upholds a strict zero burning policy for all the operations where only mechanical methods are used for land clearing. The policy had also cascaded to smallholders, local communities and contractors who were engaged in the Group’s replanting programme.

In spite of strict policy implementation, fire occurrence could happen which were mainly due to prolonged dry spells and fires from neighbouring communities or smallholders spreading over into the Group’s estates. The Group trained fire emergency response teams at the operating units. Regular inspections of the firefighting equipment and tools were carried out to ensure readiness at all time. Apart from that, training on fire prevention and fire drills were held regularly to ensure that employees and their family members living in the operating units were prepared for any fire occurences. The Group also engaged with the local farmers who practiced open burning in their land clearing. In the reporting year, the Group had assisted the surrounding local communities in the Indonesian operations in firefighting and fire isolation during the dry spell periods in the months of April to June 2016.

Apart from that, fire surveillance and regular patrols were implemented at the estates with higher fire risks, particularly in the areas bordering with peat land. In compliance with the requirements, all the firefighting facilities in the palm oil mills in the Malaysian operations were certified by the Fire and Rescue Department of Malaysia (BOMBA).

AREAS IN THE GROUP AFFECTED BY FIRES

FY2016 FY2017

MALAYSIAN OPERATIONSPlanted (Ha)Unplanted* (Ha)

2.000.08

0.010

INDONESIAN OPERATIONSPlanted (Ha)Unplanted* (Ha)

28.160.08

0.060.24

TOTAL NUMBER OF FIRE INCIDENCESGroup

28

4

Note: * Includes incidences in the housing complexes

One of the fire fighting teams based at Binai Estate in Kalimantan

Hands-on training on establishing fire guards

Fire drills conducted in the operating units in Indonesia



Water gates installed in Alumga Estate, Lampung region

The Group continued to monitor its agricultural footprint related to POME and agrochemical use which can potentially pollute the water sources, particularly if discharged into the rivers. No chemical applications were permitted to be carried out within the riparian reserves. These ‘no-go’ chemical areas were demarcated with signboards and markings on the trees for easy identification by workers involved in spraying chemicals and fertiliser applications.

The baseline data was established at specific river sampling points that were identified as crucial for continuous river water quality monitoring. River water sampling was carried out twice a year to monitor the river water quality, and the river water analysis results were benchmarked against the river classification and local regulatory guidelines eg: Water Quality Classification based on Water Quality Index (WQI) in Malaysian operations.

The POME is treated via ponding systems and tertiary treatments to achieve the discharge quality stipulated by the local regulators. Water samples were collected at designated sampling stations for third party laboratory tests.

Biochemical Oxygen Demand (BOD) is determined on a monthly basis by an accredited laboratory where the results were submitted to the local environmental authorities on a quarterly basis. With effective management and monitoring, the BOD levels for POME discharged via land applications were lower than the stipulated limit of 1,000 mg/l in the Malaysian palm oil mills. As the BOD limit for discharge via land irrigation is set at 20 mg/l, the BOD levels were also lower than the limits set most of the time for the Malaysian operations. For Indonesian operations, the IPS palm oil mill had also achieved BOD levels lower than the stipulated limits for POME discharged via land application of 5,000 mg/l throughout the year.

Malaysian Mill Operations Indonesian Mill Operations

FY2016FY2015 FY2017

419,

490

599,

959

471,

380

213,

153

221,

511

TOTAL POME GENERATED FROM THE GROUP’S MILL OPERATIONS (m3)

RESOURCE STEWARDSHIP

WATER STEWARDSHIP

The Group adopted good water stewardship in its business activities as a progression of increased improvement in the water usage and a reduction in the water-related impacts towards the environment. More important, it is the Group’s commitment to sustainable management of water resources available in the area where it operates with the surrounding communities.

Water is material to the bottom line of the business activities. Thus, the challenges are to manage this vital and scarce resource where we operate. The strategies in water management were centred on optimising water usage, increasing the water sources and its longer-term storage, and reduction in water consumption and other potential water polluting sources.

Outlined below are some measures in place under the water management strategies:

i. optimised water usage in nurseries through drip-irrigation;

ii. reduce the water usage per tonne of FFB processed, thus reducing the production of palm oil mill effluent (POME);

iii. land irrigation and application with treated POME;

iv. increase in water reservoirs and storage tanks for rainwater harvesting in the housing sites; and

v. campaigns on water saving awareness among the employees.


BOD LEVELS ACHIEVED BY THE GROUP’S MILL OPERATIONS AGAINST THEIR DISPOSAL METHODS (mg/l)

FY2015 FY2016 FY2017

BOD LEVEL ‹20 mg/l – FOR LAND IRRIGATION

Malaysian Operations 10 9 10

BOD LEVEL – FOR LAND APPLICATION

Malaysian OperationsBOD Limit ‹1000 mg/l

Indonesian OperationsBOD Limit ‹5000 mg/l

228

Not Available

207

261

68

204

FY2015

FY2016 1.15

1.34

FY2017 1.05

GROUP’S WATER USAGE PER TONNE OF FFB PROCESSED (m3)

Rainfall in Sabah was abundant for the reporting year. This is important for both the estate operations and domestic use, where rainwater harvesting is being practiced. Additional water storage ponds were constructed at various operating units to serve as water reservoirs for domestic use and mill processing especially during prolonged drought seasons. For the mill process, the new target set was to achieve the water usage of lower than 1.5 m3 per tonne of FFB processed in order to reduce the intake of raw water from the available sources.

WASTE MANAGEMENT

Wastes generated from the operations were managed in accordance to the regulatory requirements. Scheduled wastes generated from the operations were stored, labelled and disposed by licensed contractor in adherence to the local environmental regulations. The Group generated about 66.78 mt of scheduled wastes. More than 70% of this scheduled waste was spent oil. Quantities of scheduled waste generation were monitored and submitted to the DOE on a monthly basis. Employees concerned were competent in the handling of the scheduled wastes and preventive measures in the event of accidental spillages. The accidental spillages in the reporting year were insignificant.

Proper waste management is essential to protect the water courses and the surrounding environment. Domestic wastes which were generated daily were disposed at designated dumping sites. Domestic wastes generated from offices and housing areas were collected at scheduled intervals. An estimated 1,560 mt of domestic wastes were generated in the Group. In order to reduce waste generation, the Group continued to promote 3Rs (Reduce, Reuse and Recycle) at all operating units. In the reporting year, more than 273 mt of recyclable materials including scrap iron were sent for recycling purposes.

Benthos sampling in Indonesian operations



Apart from that, wastes generated from mill processes were reused, recovered and recycled as organic fertilisers and as a source of energy. By-products generated from mill operations include empty fruit bunches (EFB), fibre and shells. The total quantities of by-products produced and recycled are shown in the table below.

BY-PRODUCTS GENERATED FROM THE GROUP’S MILL OPERATIONS

TOTAL QUANTITY PRODUCED (METRIC TONNES)

TOTAL QUANTITY RECYCLED (METRIC TONNES)

USAGE

Fibre 127,096 127,096 Fuel

Shell 59,272 48,386 Fuel

EFB 243,974 197,989 Organic Fertilisers

AIR POLLUTION CONTROL

Gaseous and dust particulate matter emitted from the mill operations were monitored both by the continuous emission monitoring system (CEMS) which are directly linked to the Department of Environment (DOE) and stack monitoring which was carried out by the third-party environmental consultant. In the Malaysian operations, the dust particulate matter remained lower than the stipulated level of 0.4 g/Nm3 since FY2015.

Performance monitoring of the air pollution control systems were also carried out by the mills to ensure pollution control systems were optimally operated and maintained through Guided Self-Regulation (GSR), a new approach initiated by the DOE with implementation started in July 2016 in the Malaysian operations. GSR aims to cultivate environmental ownership and self-commitment to regulatory compliance.

In the reporting year, Sabang Palm Oil Mill I (SBPOM I) in the Malaysian operations was awarded the “Best GSR Compliance” by DOE in October 2016.

The operations in Indonesia also monitored the air quality at various critical points which were in accordance to the recommendation from the environmental assessments. The Group’s efforts in managing the environment responsibly was recognised by the local Government. In the reporting year, IPS Mill was awarded by the Governor of East Kalimantan as the “Best Environmental Managed Operation”.

Air quality monitoring in the operations

Governor’s Award for “Best Environmental Managed Operation” for the Group’s

IPS Mill in Kaltim Region


RESPONSIBLE PESTICIDE USAGE

The Group had stopped purchasing Paraquat herbicide since 2015 in the Malaysian operations due to the concerns raised of potential poisoning from Paraquat. Trials on various new agrochemicals available in the market were on-going to develop an effective weed control programme with consideration on the chemical safety to the workers. In adhering to the government regulations, only chemicals approved by the Pesticides Board were used in the operations. In addition, pesticides categorised as Class IA or IB as listed by the Stockholm or Rotterdam Conventions were not used in the operations, except if any pest outbreaks occur and no suitable alternatives are available to the control. In the reporting year, Class IA and IB chemicals were not purchased, and the quantity of pesticide used in the Group for the reporting year was 4.25 kg/planted hectare (FY2016: 3.33kg/planted hectare). This increase compared to previous reporting year was mainly due to higher volume of chemicals under Class III and Class IV chemicals were required in controlling weeds.

All chemical handlers and sprayers were well trained with adequate knowledge on chemicals handling and relevant safe operating procedures, in the event that chemical treatment was needed for maintenance and pest control. The operators were equipped with adequate personal protection equipment (PPE) when handling the chemicals. The health conditions of the chemical handlers were being monitored on a monthly basis and medical surveillance carried out annually.

INTEGRATED PEST MANAGEMENT

The Group practices IPM which consist of four major components – Prevention, Monitoring, Physical Control and Chemical Control. The research teams carried out regular pest and diseases (P&D) census and regular monitoring to ensure that the P&D were below the threshold levels. The approach taken by the Group to control outbreaks was based on the steps as follows:

Prevention MonitoringPhysical Control

Chemical Control

Control of pest and disease (P&D) by planting beneficial plants and releasing of predatory bugs into the fields.

Physical control as approved by agronomist (eg. removal of infected trees or use of pheromones to trap Rhinoceros beetles) are implemented once pest attacks are above the threshold levels.

Research teams carry out census in all estates by taking random frond samples. These fronds are assessed by identifying damage caused by pests or symptoms of any potential diseases.

In the event where Steps 1 to 3 are proven unable to control the P&D outbreaks, chemical intervention as per advised by agronomist will be implemented.



As part of the preventive measures, planting of beneficial plants and releasing of predatory bugs to the fields were introduced to assist in the control of pests in a natural way. In the reporting year, about 3,362 predatory insects, Platynopus melanoleucus were released to the field to enhance the biological control of leaf eating caterpillars.

The Group adopted a pragmatic and zero-burned replanting programme in its Sandakan region. However, mechanical removal of oil palm trunks and biomass had resulted in a conducive breeding ground for the Rhinoceros beetles. Traps with pheromones sachets were set at strategic locations to physical trap the Rhinoceros beetles. The population of the Rhinoceros beetles at the replanting sites were closely monitored and innovative practices were being explored to prevent the Rhinoceros beetle infestation when the replanting programme commences in another region.

As part of the Group’s commitment to reduce chemical usage in the operations, systematic cattle integration in the oil palm plantation was introduced in the reporting

year. The aim is to reduce herbicide usage through cattle grazing or “biological weed-cutters”. The preliminary observation was encouraging and plans were in place to extend the cattle integration to wider plantation areas.

Systematic cattle integration in oil palm plantation for weed control

Training on chemical mixing


CARBON FOOTPRINT AND ENERGYThe Group had monitored its carbon emission since 2015. However, the base year of 2016 was selected when the mill operations and development in Indonesia were well established. The carbon emissions were measured using toolkits that were aligned with the calculation methodology from the EU Renewable Energy Directive and Guidelines derived from ISCC 205 – GHG Emissions 3.0. The GHG measurements however, do not include the emissions from land use change and carbon sequestration. The carbon emissions data for Malaysian operations were being externally verified during the annual ISCC re-certification audits. There was a slight reduction in carbon emission from the base year 2016 following some refinements in culculation.

In the reporting year, the Group has generated about 161,188 tonnes of carbon dioxide equivalent, tCO2-e, about 6% reduction from the previous reporting base year.

Indonesian Operations

Malaysian Operations

63,900 – 40%

97,288 – 60%

TOTAL CARBON EMISSION FOR THE GROUP’S OPERATIONS (UNIT IN TON CO2 EQUIVALENT) IN FY2017

ME

THA

NE

FRO

M P

OM

E77

,367

FER

TILI

SER

49,2

65

FU

EL

USE

D

DIE

SEL

&

PE

TRO

L29

,234

PE

STI

CID

E,

CH

EM

ICA

L &

LU

BR

ICA

NT

987

PR

OC

ES

S W

ATE

R (M

ILL

)28

6

GR

ID

ELE

CTR

ICIT

Y4,

048

GROUP’S CARBON EMISSIONS BY SOURCE IN FY2017 (UNIT IN TON CO2 EQUIVALENT)

Carbon Emissions

CARBON EMISSION BY SOURCE

The biggest contributor of carbon emissions for the Group was methane emissions from POME, which consisted of 48% of total carbon emissions. This was followed by the fertiliser usage by the estates. Other emission sources include the fuel used (diesel and petrol) for generators and transportation purposes, pesticides, chemicals, lubricants and the electricity used from the grid connectivity were accounted for in the calculation of the total GHG emission.

GREENHOUSE GAS PROTOCOL EMISSIONS

The reporting methodology for the Greenhouse Gas (GHG) emissions was based on the GHG Protocol, including the establishment of the emissions categories (Scope 1 & Scope 2). Scope 1 referred to direct GHG emissions which was defined as “emissions from sources that were owned or controlled by the organisation”. The emission sources included in Scope 1 in the reporting year were inputs such as fertiliser, fuel used (diesel & petrol), methane from POME, pesticides, chemicals, lubricants and processed water usage in the palm oil mills. Scope 2 referred to energy indirect GHG emissions which included the consumption of purchased grid electricity.

GHG PROTOCOL EMISSIONS FOR FY2016 & FY2017

MALAYSIA INDONESIAFY2016 FY2017 FY2016 FY2017

Scope 1 (tCO2-e) 92,926 93,320 73,598 63,820

Scope 2 (tCO2-e) 4,752 3,968 75 80

TOTAL 97,678 97,288 73,673 63,900



GREENHOUSE GAS REDUCTIONS

The Group continued to evaluate and source for innovative technologies and methods in reducing the methane gas emissions from POME.

The strategies were focused on the methane gas avoidance and capture, which include:-

(a) reduction of POME generation with process optimisation in mills;

(b) feasibility studies on methane-energy conversion projects with potential business partners;

(c) use of POME for composting facilities;

(d) anaerobic bioreactors for methane gas capture and power generation;

(e) enhancing POME treatment systems with functional ponds and aeration systems;

(f) exploring installation of solar panels for replacement of diesel-powered generation; and

(g) de-watering devices to reduce organic loads.

The Group’s IPS palm oil mill in Kalimantan has an advanced digester system and the methane generated was used to produce electricity for domestic use and potentially for other processes. The digester system fed on both the POME and shredded fibre, and in return generated a high production level of methane gas.

ENERGY CONSUMPTION

The Group closely monitored the use of non-renewable sources for energy production in order to ensure that the resources were used efficiently and at their optimal levels. The Group’s energy consumption from both renewable and non-renewable sources is shown in the next chart.

A total of 118,880 gigajoule (GJ) of energy was generated in the reporting year, of which more than 70% was generated using renewable sources (mesocarp fibre and kernel shells), the remaining of it was from non-renewable sources. Renewable energy was lower by 22% as lower crop was processed by the mills in the reporting year.

In the palm oil mills, the Group was able to substitute about 82% of non-renewable fossil fuels with renewable sources, which was equivalent to around 24,000 tCO2-e of carbon emissions savings, if diesel was used instead of the biomass.

RENEWABLE ENERGY

NON-RENEWABLE ENERGY

GROUP’S ENERGY CONSUMPTION FROM RENEWABLE & NON-RENEWABLE SOURCES (UNIT IN GIGAJOULE)

FY2016 FY2017

109,

231

84,9

46

33,6

87

33,9

34

Notwithstanding the above, the Group explored other alternative power supplies and carried out feasibility studies on various options, amongst others, the installation of solar panels for those buildings located remotely from the power supply from the palm oil mill. In the year of review, one (1) of the estates in the Malaysian operations, Meliau in Telupid, had installed solar panels to generate power supplying to the houses which were located away from the main complex.

The Group will continue to explore installing additional solar panels in the other estates where the source of power supply is still dependant on diesel-powered generation. On the other hand, sourcing power supply from the nearest power grid lines, wherever feasible, was also being investigated with the objective to reduce the fossil fuel consumption.

Solar powered panels installed at Meliau Estate


INVESTOR IN PEOPLE

Housing on the plantation


OCCUPATIONAL SAFETY AND HEALTHThe Group was committed to secure a safe and healthy environment for all employees and contractors engaged at work. The commitment was reflected in the Group’s Environmental, Occupational Safety & Health Policy, 2016.

In implementing and monitoring this commitment, the following strategies were in place:

(a) Commitment to be driven by the top management and implementation cascaded to the workers on the ground through the safety and health steering committee involving top management and heads of operating units and all the respective safety committees in the operating units.

(b) Focus on the risk-based approach to identify, manage and take preventive measures on all safety issues and risks using the relevant Hazard Identification, Risk Assessment and Risk Control (HIRARC) and Chemical Health Risk Assessment (CHRA).

Emergency simulation training at processing plant in Sandakan

Promotion of safe working culture in Indonesian operationsFire fighting training in Sandakan

(c) Continuous training on safe operating procedures for all operations on an annual basis as part of the competency training programme.

(d) Internal audits and inspection by an in-house safety and health officer at specific intervals involving all operations to ensure safety programmes are implemented and in compliance with legislative requirements.

(e) Promotion of safe working cultures with safety briefings and awareness campaigns which include all levels of employees and contractors engaged at work.

(f) Inculcation of the culture of individual accountability and responsibility on self well-being and the other personnel and facilities under their care.

(g) Regular dialogues with the local communities and relevant authorities on the latest legal requirements and safety related issues.

(h) Pursuit of continuous improvement, ie. reviewing the adequacy of safety equipment and other PPE (personal protective equipment).



OSH PERFORMANCE

The ultimate goal was to achieve zero fatality at the workplace. For the past 3 years, there was zero fatality at the workplace for the whole Group.

In the reporting year, the Group recorded a Lost Time Injury Frequency Rate (LTIFR) of 6.41. This indicator reflects the number of accidents with lost days occurring for every 1,000,000 of working hours. Analysis of the Lost Time Injury Severity Rate (LTISR) showed that the

severity of the incidents was minor. The most common causes of the accidents were from the harvesting activities arising from thorn pricks and minor cuts, road accidents involving motorcyclists in field and due to negligence in processing operations. All major accidents were subjected to formal investigations and necessary mitigating measures were taken to avoid re-occurrence of such accidents. In addition, HIRARC were constantly reviewed to assess the relevance of risk ratings and effectiveness of related precautionary measures.

TOTAL ACCIDENTS WITH LOST DAYS

LTI FREQUENCY RATE (PER 1,000,000

HOURS WORKED)

LTI SEVERITY RATE (PER 1,000,000

HOURS WORKED)

FATALITY

FY2016 193 7.86 20.03 0

FY2017 151 6.41 19.75 0

MEDICAL CARE AND WELL-BEING

The Group cares about the well-being of its employees and strives to minimise occupational related diseases and illnesses at the workplace. Medical surveillance and health tests were conducted on those employees who were exposed to occupational hazards, such as chemical handling, high noise levels and working in confined spaces. Regular inspections of the employees’ housing were done by the respective operating units’ safety and health teams, and periodically inspected by the local health department officers to ensure that sanitation and hygiene standards were in accordance to the Company’s policies. Vaccination and health monitoring for the children in the operating units were also carried out.

Healthy lifestyle were promoted through various health awareness talks and sports activities. In the reporting year, a challenge of a 100 km virtual run was initiated in the Malaysian operations to encourage our employees to maintain an active and healthy lifestyle. Anti-drug campaigns were also launched in the year of review.

Inaugural 100 km Virtual Run Challenge in the Malaysian operations

SECURITY IN OPERATIONS

All operating units were instructed to stay vigilant set against the backdrop of security issues particularly on terrorism threats that became a security risk especially to the operations in Sabah. In the recent years, Sabah was afflicted by a number of kidnaps-for-ransom and terrorism acts. Where risks were concerned, the Group took the initiative to cooperate and work closely with the local government authorities such as the Royal Police Department of Malaysia and the Eastern Sabah Security Command (ESSCOM). Internal security personnel were involved to enhance the security patrolling and formed the ‘Rukun Tetangga Team’ in order to be always watchful and alert on the surrounding areas in plantation.

Step up security with frequent patrols

Health monitoring for the employees’ children in the Indonesian operations



RESPECT FOR HUMAN RIGHTSThe Group is committed to ensure the dignity and rights of our people are respected in line with all relevant legal regulations and the United Nations’ guiding principles on human rights. These commitments are reflected in the Group’s Human Rights Policy, 2014 which uphold the following principles:

1. Discrimination based on race, religion, caste, nationality, gender, physical, sexual orientation, political views and/or age is strictly forbidden during recruitment, employment, dismissal or promotion.

2. All employment is voluntary. Any form of forced and bonded labour are not allowed. We prohibit any deeds such as withholding of wages, personal identification cards, passports, travel documents or other personal belongings without their consent.

3. We do not allow employment of child labour.

4. We respect the rights of the community as provided by the UN Declaration on the Rights of Indigenous Peoples.

5. Any form of harsh and inhumane treatment, including any sexual harassment, sexual abuse, corporal punishment, mental or physical coercion is strictly prohibited.

6. All employees have the right to form and join organisations of their own choice and to bargain collectively as per the applicable laws.

The Group will not accept any of the principles to be violated and will take the necessary actions to prevent and correct any misuse of the resources in connection with the workplace. The Group’s Human Rights Policy had communicated to all the employees, contractors and the smallholders supplying crops to the mills.

Guidelines and mechanism to handle social related issues occurring both internally and externally are stated in the Group’s Social Manual. The manual aims to ensure that the social practices in the operations are in line with the Group’s Human Rights Policy and it also specifies the grievance procedures in handling complaints and disputes. In the year of review, there were no grievance cases received.

DIVERSITY AND INCLUSIONThe Group promotes diversity and inclusiveness at the workplace, where employment and promotions are based on the qualifications and the employees’ abilities for the job tasks. The commitment was also governed and stipulated in the Group’s Diversity and Inclusion Policy.

The Group employed a total 10,133 people as at 31st March 2017, of which 91% were worker category. Most of our local employees in Malaysia are native to Borneo or Bumiputras under the Malaysian context. The breakdown of the employees based on their gender and position is as follows:

FY2016 FY2017FEMALE MALE FEMALE MALE

Senior Management 0 7 0 5

Management 9 71 8 68

Executive 36 148 38 151

Non-Executive 176 478 165 464

Workers 3,033 5,644 3,186 6,048

TOTAL 3,254 6,348 3,397 6,736


Bumiputras

Others

Chinese

Indian

81%

10%

6%

3%

ETHNIC DIVERSITY IN MALAYSIAN OPERATIONS

In the reporting year, the gender distribution consists of 34% female and 66% male employees which were in line with the norm in the agricultural industry. Additional effort were initiated to attract female talent to excel in the fields of laboratory, administration and agronomy research. In the reporting year, the Group’s operations in North Kalimantan or Bulungan region was recognised by the authorities in Bulungan region as the best company in empowering women in the operations. In addition, the Board of Directors had its first female member.

GENDER COMMITTEE

In the reporting year, the Group had assisted female employees in the operating units to form their gender committees. The representation of the committee members was selected from among the female employees. The objective of the committees was to

“Best Company in Empowering Women” award from the Head of Bulungan region, Kalimantan

promote female participation and empowerment in the workplace. The committees also function as a formal channel to report on any harassment and violence cases leading to investigations and follow up actions. Trainings were also organised such as subjects on women’s health awareness programmes, sexual harassment and abuses and family planning.

EMPLOYEES TALENT RETENTIONThe most frequent turnover in the Group was from the worker group. In Malaysian context, the higher turnover is from the repatriation of the guest workers who have completed their tenure of employment and left for their home countries. The Group also encountered a higher turnover rate especially among the younger generation employees. The remoteness of the operations and the nature of plantation tasks were the main reasons for this age group demonstrating a higher turnover. The Group will continue to nurture the young talent and empower

them with new technology whilst implementing innovative ideas. The Group recognised the pre-requisite to consider changing some of the modus operandi in the operations, as well as the mind set in order to retain and attract the young generation. The Group also endeavour to manage the inter-generational shift involving Gen-Y employees as an important component in succession planning.

Election of gender committee in Minat Teguh Estate



EMPLOYEES WAGES AND WELFAREAll employees in Malaysia were remunerated and guided in accordance to the National Minimum Wages Order. For the operations in Indonesia, the Group adhered to the minimum wage agreements fixed by each provincial Government and observed all related guidelines or revisions made to the agreements. Wage payments were made timely and receipts countersigned by the workers as acknowledgement. The workers were also briefed on the pay slip formats and comprehend the calculation of the payments.

In addition to the employee’s typical benefits, there was the long-term incentive programme involving share options that were granted to eligible employees based on the organisational performance and their respective performance appraisals. In the plantation operations, benefits such as housing, utilities, medical, sports facilities and access to education were also provided. The Group continued to upgrade and build new houses for the employees in the operating units. In the reporting year alone, more than 600 units of houses were either repaired or newly built. The Group also recognised the need for its employees living in the remote areas to have access to affordable food and daily necessities. The management periodically checks and monitors the pricing for the essential goods sold in the grocery stores while continued to encourage them to plant their own food with the provision of planting materials and other agri-inputs.

FEM

ALE

FEM

ALE

MA

LE

MA

LE

FY2016 (TOTAL 2,281)

FY2017 (TOTAL 1,821)

TURNOVER OF THE GROUP’S EMPLOYEES OF DIFFERENT GENDER AND AGE GROUPS IN FY2016 & FY2017

Born 1981-2000 (Gen-Y)

Born 1962-1980 (Gen-X)

Born before1962 (Baby Boomers)

375

463

12

2969

870

4

379

183

7

1985

837

5

“Green Book” Project planting of vegetables and fruits in Indonesian operations

Quality living environment


EMPLOYEES ENGAGEMENT AND DEVELOPMENTThe Group embraced the principle of “shared destiny” and core values of “I-TIC” which emphasised on integrity, team-work, innovations and customer focus. Without the passion, perseverance and a purpose-driven mantra in our people, the vision and mission of the Group will not be realised. The Group strives to provide quality living environment and safe workplace along with attractive remuneration package. The management actively engaged with the employees through various platforms at periodic intervals. Besides the regular meetings and discussions, the Group gathered the ‘voices’ from employees through the bi-annual surveys since 2011, namely “My Voice Survey”. In the recent My Voice Survey, 93% of staff in the Malaysian operations were positively engaged with the company (previous survey result was 87%). 98% of the employees were noted to feel proud to be associated with the company and would work beyond to help the company in achieving its goals.

Joint Consultative Committee (JCC) meetings or in Indonesia, ‘bipartit’ meetings were organised on a quarterly basis to discuss various issues and concerns arising from the living environment to workplace. The representation in the committees was based on election by the employees in the operating units. This was an effective channel to enhance understanding on the needs of employees on the ground.

All employees were trained and re-trained under a structured development programme based on the individual training needs and types of jobs performed. In the reporting year, various trainings covering technical, competency and other soft skills were conducted.

EMPOWERING CHILDREN WITH EDUCATIONEmployment of persons who have not attained the minimum age of employment defined by law is strictly prohibited throughout the Group. The Group’s recruitment team ensure the minimum age for employment was adhered to and was also known to the recruitment agencies. Basic education and day care centres were provided at the operating units to ensure the workers’ children had accessibility to education and the young children were safely cared for during working hours. During school holidays when there were no formal classes, the management in the operating units organised various child-friendly activities such as colouring competitions and English classes to ensure the kids were occupied by the activities. Free transportation was provided to send employees children as well as the nearby villagers’ children to local government schools or learning centres in the plantation.

Weekend activity for children at the kindergarten in Rakanan Jaya North Estate



The Group has a total 24 units of day care centres and 7 units of kindergartens. In the Malaysian operations, 3 units of Humana Learning Centres and 2 units of Continuous Learning Centre were established to cater for the guest workers’ children at the operations in Sabah.

DAY CARE CENTRES

KINDERGARTENS

HUMANA LEARNING CENTRES

CONTINUOUS LEARNING

CENTRES (CLC)

Malaysian Operations 15 5 3 2

Indonesian Operations 9 2 Not Applicable Not Applicable

NOTES:i. Humana Learning Centre – A collaboration with a local social NGO in Malaysia, Humana Child Aid Society Sabah (HCASS) to provide

basic education to the guest workers’ children aged between 5-12 years old in the plantations in Sabah.ii. CLC – An educational effort initiated by the Indonesian Government for Indonesian guest workers’ children aged between 13-15 years

old with home studies, in order to continue with their tertiary education subsequently in their home country.

SPORTS AND CULTURAL HERITAGE

The Group encourages the employees to participate in various sports activities by organising friendly matches and provision of sporting facilities such as in-door sports facilities, football fields in the operating units and also sporting equipment. The Group believes through sports and team work, an esprit de corps can be promoted among the employees.

More than 80% of the Malaysian employees are native to Borneo. All the different ethnic groups in Borneo are unique and rich with their respective traditions and customs. The Group encouraged the people to uphold their culture and traditions. One of the most important festivals that was widely celebrated by all ethnic groups in Sabah was the Harvest Festival or locally known as Pesta Ka’amatan. The management in the Sugut region organised the festive celebration since 2011. Cultural performances, traditional costumes and house replicas, food exhibitions and also Unduk Ngadau (Harvest Festival Queen) pageant contests were organised at the Pesta Ka’amatan. In the Indonesian operations, Dayak and Erau cultural events were also celebrated.

Sport day activities in operating units

Winners of the Ka’amatan ‘Unduk Ngadau” Pageant Contest

Sending guest workers’ children to the learning centres


RETURNING TO COMMUNITY“One-Day in Plantation with Smallholders” (13 February 2017)


COMMUNITY CARE AND CSR INITIATIVES

YOUTH SPORTS DEVELOPMENT

The Group had involved in nurturing youth sports development through rugby among the school children in the State of Sabah through the joint partnership with the Sabah Rugby Union (SRU), Eagles Rugby Club (ERC) and the Sabah Education Department since 2002.

Among the highlights in the reporting year was the annual state-level MSSS/IJMP/SRU/ERC Junior Age-Group Tournament which was held in Sandakan in April 2016. The participating players involved were the crème de la crème young ruggers from a total of

EMPOWERING WOMEN: BREAST HEALTH AND ENVIRONMENTAL AWARENESS

The Group’s Breast Health Awareness programme focusing on grass-root level was initiated in year 2011, although its involvement in breast health awareness started since 2006. This programme had evolved to combine both breast health and environmental educational awareness activities. In partnership with local NGOs-Sandakan Pink Ribbon, Borneo Bird Club, Borneo Sun Bear Conservation Centre and Sabah Wildlife Rescue Unit, the in-house sustainability team had outreached to other local schools including SMK Beluran-2 in the reporting year.

In the Pink October month, the Group initiated a “Protect Yourself, Get Screened Today” programme in the Malaysian operations by bringing qualified radiologist from the town to remotely located operations to perform ultrasound screening for female employees. Volunteers from social NGO-Sandakan Pink Ribbon were also invited to deliver awareness briefings and sharing their experiences with the participants.

State-level MSSS/IJMP/SRU/ERC Junior Age-Group Rugby Tournament

Volunteers showed the correct way to perform breast self-examination (BSE) to female employees

Female employees waited for the breast ultrasound screening at estate’s clinic

53 primary and 65 secondary schools currently under the wings of the Academy for Sabah Rugby Excellence.

The beneficial impact of the development programme was not just on the game itself but also on the students involved. The comprehensive activities covered under this project opened new windows of opportunities for many youth, especially those from the rural areas. Many of them were given the opportunity to travel to Peninsular Malaysia and even further afield to experience and learn the game at a higher level. A few very outstanding ruggers even earned the opportunity to go on 3-week stints of intensive rugby in New Zealand. In addition, several of the Group’s employees continued to don the State and national colours at various national and international rugby tournaments.



Environmental conservation awareness outreach programme to local schools

COMMUNITY OUTREACH

The Group aspires to enhance the shared economic value not only through employment creation opportunities but also to drive positive social-economic impacts for the surrounding communities where it operate. Various social outreach activities and regular communication initiatives continued to be carried out with the surrounding communities. Members in the communities were made aware of their accessibility to the in-house medical services and ambulances in case of emergencies. The Group also provided local support services such as provision of materials and machineries to repair the roads, maintenance and repairs of community facilities like kindergartens, community halls and worship grounds.

Vaccination for the villagers’ children at Binai Estate in Indonesia Road maintenance at local village, Desa Sg. Sidang in Indonesia

In the reporting year, the operations in the Kaltim Timur region assisted the local community in setting up the internet connectivity.

In addition, various awareness programmes were initiated to the neighbouring stakeholders involving sharing and extending the information on wildlife protection and fire mitigation and prevention especially in those located at areas with higher environmental risks and exposure to fire hazards. Stakeholder dialogues were organised in the operations annually and matters of mutual concern were deliberated. The local stakeholders were also made aware of the Group’s communication mechanism, including the grievance procedures and dispute handling mechanisms.



VOLUNTEERISM AND SHARING

The Group encourages its employees to share and be active volunteers in community outreach activities. Since 2011, IJM Group had initiated an annual event -“IJM Give Day Out”, where in the month of December, volunteers from the Group gathered for specific volunteering projects at their respective locality. In the 6th edition of IJM Give Day Out, the volunteers in Sabah operations initiated the planting of mangrove trees at one of the forest reserves in Sandakan.

Employees were also actively involved in the social-environment related activities which include avian-birds conservation awareness through the Group’s support of the annual Borneo Birds Festival in Sabah and other schools’ outreach programmes and blood donation activities. In the reporting year, the Group organised 9 blood donation drives in the Malaysian operations and contributed 212 pints of blood to the local blood bank in Sandakan. In addition, the Group continued to engage with local academic institutions hosting their student field-day visits and internship programmes. In the process, we share and enlighten the young talent with the operational know-how and social-environmental initiatives. The Group also has scholars under its IJMP Scholarship Award in the tertiary institutions.

Blood donation drives throughout the year

IJM Give Day Out 2016- Planting of mangrove trees

Students from Akedemi Komunitas Negeri Kabupaten Banyuasin visited the plantation operations in Alumga estate in Lampung


ENGAGEMENT WITH SMALLHOLDERS

TRACEABILITY AND ENGAGEMENTS

The Group received crops only from known and legal sources. This formed part of the responsible sourcing policy and the Group strives to adhere to it with an enhanced traceability approach. The Group initiated the crop supplier mapping in the Malaysian operations, where the relevant information with GPS coordinates were obtained. The information obtained was used to assess and understand the sustainability risks that the Group may encounter in the landscape approach. The same mapping project will be extended to the Indonesian operations in FY 2018 and is targeted to be completed in two years.

In the Malaysian operations, there were about 2,040 ha involving the independent smallholders and 2,151 ha of schemed smallholders supplying crops to the Group’s mills. The Group had initiated discussions and clarified issues raised at various dialogue sessions with the external crop suppliers. As the crop suppliers were also mainly the local surrounding communities living in the vicinity of where the Group operated, the engagements were also centered on the community’s accessibility needs and security issues.

For the operations in Indonesia, more than 11,000 ha were developed for the Group’s outgrowers’ scheme comprising

of more than 7,000 ha under the Plasma scheme and 4,246 ha of kemitraan or partnership schemes. The Group provided technical knowledge sharing and training to the communities or growers that were crop suppliers to the mills. In the Malaysian operations, “One-day in Plantation with Smallholders” workshop was organised in the reporting year to provide insightful and in-depth knowledge in plantation management to the smallholders.

PROJECT “RURALITY” – UPSCALING THE TRANSFORMATION

The Group was committed to a smallholder transformation project themed “Rurality” in partnership with TFT. It involved smallholders supplying crops to Desa Talisai Palm Oil Mill. The project entered into Phase 2, where action plans were initiated to assist the smallholders in resolving some of their major challenges.

Meeting with cooperative farmers in Indonesian operations (14 January 2017)

“Rurality has been well-received by the smallholders since its inception in year 2015. The initiative taken by IJMP in facilitating human-elephant conflict dialogues with all relevant parties is respected by smallholders, who are struggling to handle the issue. Although the impact on productivity has not yet been seen, access to knowledge and inputs to improve farm management are now available; especially via the training, field visits and stakeholder connections. These have been strongly appreciated by the smallholders.

Therefore, the momentum of engagements with smallholders needs to be maintained. Intensive field work and innovation with the smallholders will continue on the ground. This can, in return, drive full-scale change to benefit smallholders and the mill. Learning and outcomes from this project will also be valuable in order to scale up the project to cover more smallholders supply bases that are supplying to IJMP’s mill. They will also function as an inspiration for other producers in the industry to engage in the smallholder transformation journey.”

PRASAD VASUDEVONRurality Country Coordinator

FOOTNOTE:

Rurality (www.rurality.org) is an initiative of ‘The Forest Trust’ (www.tft-earth.org) aimed at driving innovation at the small farmer level. It was launched in 2015 to help farmers face modern-day challenges such as climate change, price volatility, pests and diseases. More information can also be found in their social media series #PeopleOfPalmOil


GLOBAL REPORTING INITIATIVE (GRI) G4 CONTENT INDEX

GENERAL STANDARD DISCLOSURE

G4 INDICATORS LOCATION OF DISCLOSURE/DIRECT RESPONSE PAGE NUMBER

STRATEGY & ANALYSIS

G4-1, G4-2 Management Discussion & Analysis 18

ORGANISATIONAL PROFILE

G4-3, 4, 8, 9, 12 Business Flow Chart; Management Discussion & Analysis 07, 18

G4-5, 6 Corporate Information; Location of Operations 02, 04

G4-7 Group Corporate Structure 05

G4-10, 11 Diversity & Inclusion 84

G4-13 No major changes in the reporting period regarding ownership or supply chain. However, changes in the Board of Directors and senior management team are featured in Board of Directors & Secretary, and Senior Management, Management Discussion & Analysis

08,16, 18

G4-14 Statement on Corporate Governance; Statement on Risk Management & Internal Control

30, 49

IDENTIFIED MATERIAL ASPECT & BOUNDARIES

G4-17 Financial Statements 97

G4-18, 19, 20, 21 Managing Material Issues 56

G4-22 No major restatements –

G4-23 This report covers both operations in Indonesia and Malaysia, but not including the joint venture activities

–

STAKEHOLDER ENGAGEMENT

G4-15, 16, 24, 25, 26, 27 Stakeholder Engagements 60

REPORT PROFILE

G4-28 Financial year 1st April 2016 to 31st March 2017 –

G4-29 This is our first Sustainability Report in the current format –

G4-30 Annual basis –

G4-31 Corporate Information 02

G4-32 Global Reporting Initiative (GRI) G4 Content Index 94

G4-33 Not for this report. Refer CEOS’ Overview on Sustainability 54

GOVERNANCE

G4-34 Statement on Corporate Governance; Group’s Sustainability Governance 30, 58

ETHICS AND INTEGRITY

G4-56, 58 Statement on Corporate Governance; Regulatory Compliance and Ethical Conduct

30, 60

G4-DMA, G4-S01 All operations have on-going community development projects. Community Care and CSR Initiatives; Engagement with Smallholders

90, 93

COMPLIANCE

G4-DMA Statement on Corporate Governance; Regulatory Compliance and Ethical Conduct

30, 58

G4-S02 None –



SPECIFIC STANDARD DISCLOSURE

G4 INDICATORS LOCATION OF DISCLOSURE/DIRECT RESPONSE PAGE NUMBER

ECONOMY

G4-DMA, G4-EC1 Management Discussion & Analysis; Economic Value Creation and Distribution; Financial Statements

18, 60, 97

ENVIRONMENTAL

EnergyG4-DMA, G4-EN3 Carbon Footprint and Energy 79

WaterG4-DMA, G4-EN8 Resource Stewardship 74

BiodiversityG4-DMA, G4-EN11, 13, 14 Conservation and Land Use 69

EmissionsG4-DMA, G4-EN15, 16, 18 Carbon Footprint and Energy 79

Effluents and WasteG4-DMA, G4-EN22, EN23, EN24 Resource Stewardship 74

ComplianceG4-DMA, G4-EN29 None –

SOCIAL

EmploymentG4-DMA, G4-LA1, LA2 Diversity & Inclusion; Employees Wages & Welfare 84, 86

Occupational Health & SafetyG4-DMA, G4-LA6 Occupational Safety & Health 82

Diversity & Equal OpportunityG4-DMA, G4-LA12 Respect for Human Rights; Diversity & Inclusion 84

Child LabourG4-DMA, G4-HR05 Respect for Human Rights; Empowering Children with Education 84, 87

Forced or Compulsory LabourG4-DMA, G4-HR06 Respect for Human Rights 84

SOCIETY

Local CommunitiesG4-DMA, G4-S01 All operations have on-going community development projects.

Community Care and CSR Initiatives; Engagement with Smallholders90, 93

ComplianceG4-DMA, G4-S02 None –


Documents

STATEMENT AND REPORT ON SUSTAINABILITY · the sustainability aspects, managing the material sustainability matters and pursuing a host of impactful corporate responsibility initiatives,