FGV Annual Report 2018

54 REMAINED FOCUSED ON VALUE CREATION FGV HOLDINGS BERHAD MANAGEMENT DISCUSSION & ANALYSIS FGV Holdings Berhad 22 Changed name to out of our 68 mills have been RSPO certified During the year we also relocated from Menara FELDA and Balai FELDA to Wisma FGV in Jalan Raja Laut, Kuala Lumpur, an exercise that took place between August 2018 and January 2019. Our headquarters was officially relocated to Wisma FGV on 1 October 2018. With over 2,000 staff now working under one roof, we have been able to improve efficiency and streamline our processes. EFFECTIVE COMMUNICATION AND ENGAGEMENT PROGRAMMES In 2018, we organised several environmental programmes for six community groups in five wildlife/biodiversity hot spot areas. The programmes were aimed at empowering local communities to manage the environmental-related issues in their vicinity, with the help from some of our collaborative partners in our environmental stewardship programme. These collaborations were undertaken through programmes such as World Wildlife Day in March 2018. We also contributed to a knowledge-sharing session with students from UKM during UKM Wildlife Day in November 2018. As one of Malaysia’s leading plantation companies, our participation in these activities was aimed at further engaging with the local communities on environmental protection and conservation. The FGV Tekam Forest Trail Run was held on 5 August 2018 at Pusat Penyelidikan Pertanian Tun Razak in Tekam, Pahang as part of our corporate brand positioning and to engage with our external stakeholders. More than 500 local and international participants took part in the trail run, which took them through our plantation and premises. Apart from creating brand awareness for FGV, this event also helped to promote the industry at large. ROUNDTABLE ON SUSTAINABLE PALM OIL The RSPO initiative serves as a platform to drive sustainability in the palm oil industry. The RSPO Principles and Criteria (P&C) is the most widely used sustainability standard, with about 20% of global palm oil certified to this standard. In line with our commitment to sustainability and SDG 11: Sustainable Cities and Communities, FGV has been involved actively in the RSPO since its establishment in 2003. We participated in the development of its P&C in 2005, the first P&C review in 2012 and the second review in 2017. Our commitment to the production of sustainable palm oil stems from its commercial and reputational benefits. A study shows that RSPO members outperformed the FTSE Bursa Malaysia Asian Palm Oil Plantation Index by around 6% in the last five years. From a business perspective, Certified Sustainable Palm Oil (CSPO) may increase revenues due to better premium for CPO and opportunities from increased market penetration. Furthermore, the requirements for CSPO encourage us to double our efforts to protect the forest and the communities that live in and around the forests. In line with our pledge to the RSPO, we received certification for 14 mills, making a total of 22 RSPO-certified mills as at December 2018, with certified quantities of 425,431 MT CSPO and 109,185 MT of Certified Sustainable Palm Kernel. We will continue to re-certify all our mills by 2021, as we seek to avoid loss of opportunity in the CSPO market due to non-compliance that prevents certifications. Further to this and following the government’s initiative on MSPO, seven mills have also been MSPO-certified, with the remainder to be completed by end of 2019. Since 2016, we have placed emphasis on enhancing the human rights & labour relations practices at our plantation operations. Despite our best efforts to implement fair labour practices, there are challenges that remain to be addressed, as outlined in the RSPO’s Complaints Panel directives published in November 2018. Recognising the urgency of the matter, we have formulated actions tomanage those gaps. All sustainability-related policies and procedures are being reviewed and revised, and shall be communicated for implementation. We are committed to ensure that the gaps and challenges are addressed effectively. In addition, we are in the process of engaging external consultants to verify and endorse the many new measures we are implementing. Further to this, we are also in the process of establishing an Independent Advisory Panel to the Board. The Panel will publish two independent reports every year on our progress in relation to addressing the RSPO’s requirements. The progress updates will be published on our website until all issues are resolved. SOCIAL & RELATIONSHIP CAPITAL