Shaped By High Standards Of Governance 164 FGV HOLDINGS BERHAD Monsoon Flood Incidents Management Monsoon season is a catastrophic environmental risk that poses a significant risk of flooding to FGV employees and the surrounding communities, disrupting business operations in the affected areas. In 2022, the reactivation of the Flood Incidents Management Taskforce (FIMT) from 2021 was a critical step towards mitigating the potential impact of the anticipated yearend monsoon floods. The FIMT serves as a vital communication channel for FGV employees during such incidents, and the information collected through this platform allows FGV to organise timely and effective relief assistance for affected employees and community members in affected areas. The FGV flood relief squad, comprised of volunteers from among FGV employees, works under the supervision of the FIMT to provide assistance during the monsoon floods. FGV is proud to have played a role as the Secretariat of this Taskforce in collaboration with other stakeholders, and FGV remains committed to working together with them to ensure the safety and well-being of FGV employees and surrounding communities during the monsoon season. Outcome: A mechanism was established for collecting information on flood occurrences, providing an overview of flood hotspots that served as flood disaster alerts. This alert mechanism indicated the total number of affected employees, companies and locations, and was used for guidance and monitoring by the Taskforce. The role and contributions of the Taskforce and the relief squad demonstrated FGV’s empathy towards the flood victims and its effort in driving the recovery process. On 27 December 2022, the Taskforce activated a flood relief aid mission to Terengganu, where FGV distributed 1,000 bags of essential food aid containing FGV products. In addition, a lifeboat was supplied to affected FGV employees and FELDA settlers. FGV also made a contribution of RM5 million to Tabung Bantuan Bencana Negara (TBBN) to assist flood victims in the country. Statement on Risk Management and Internal Control Russia-Ukraine Conflict Risk Assessments Three rounds of risk surveys with selected key businesses within the Group were conducted during the year to assess the impact of the Russia-Ukraine conflict. Survey questionnaires as rolled out by the GGRM provided the assessment context that complemented the quarterly Enterprise Risk Management System (ERMS) risk register updates by the participating businesses. The compiled results of these surveys were analysed, compared to ERMS risk registers and reported to the RMC. Outcome: The results indicated entities which were more vulnerable and more exposed to the risk. It also highlighted those entities which were facing challenges from the effects of increased operating costs. The findings of the risk survey were consistent with the updates from the ERMS risk registers, which included the war element and escalated key risks. WRO Imposition by the US CBP From September 2022 onwards, the United States (US) Customs and Border Protection (CBP) maintained a Withhold Release Order (WRO) against all palm oil and palm oil products imported by FGV at all US ports of entry, citing allegations of forced labour and forced child labour. The WRO was issued in response to a petition submitted by a coalition of non-governmental organisations, which alleged the use of forced labour in FGV’s estate operations, including the heavy reliance on migrant workers, suspected rivalry among vegetable oil producers/producing countries and possible high turnover of migrant workers, due to their unfamiliarity with FGV’s systems. This situation poses significant challenges for FGV’s import and export operations and may have negative impacts on its reputation and financial performance. Outcome: FGV has implemented several measures to address the risk of an extended WRO against its palm oil and palm oil products. These measures include an internal policy that prohibits the use of labour provided by contractors and refugees, direct engagement with migrant workers in their countries of origin and engagement with relevant ministries and agencies for government-to-government engagements and resolutions. Additionally, FGV has appointed an independent third-party assessor to monitor the progress of remedial action plans and provides regular updates to the US CBP. FGV has also established a grievance mechanism to provide a formal and transparent process for workers and external stakeholders to voice concerns or complaints related to labour practices or human rights violations. These measures demonstrate FGV’s commitment to responsible and ethical business practices and further enhance its overall approach to resolve matters relating to the WRO and get the WRO revoked.
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