PROGRESSING SUSTAINABLY SUSTAINABILITY REPORT 2022/2023
FGV HOLDINGS BERHAD PROGRESSING SUSTAINABLY Every day, we strive to advance our purpose of building a sustainable future for all, through the work that we do at FGV. As an organisation that is reliant on the natural resources of the land, we are deeply committed to nurturing a better planet for the next generation. We endeavour to achieve this by conscientiously cultivating the land, fostering an ecosystem that promotes inclusive growth for all. Additionally, we aim to develop affordable and high-quality products that are easily accessible, while also employing responsible business practices that create value. In doing so, we aim to ensure that resources are used responsibly and benefits are shared widely. The theme of this Sustainability Report, ‘Progressing Sustainably,’ mirrors our determination to shape the sustainable future that we envision. With this commitment, we aim to achieve equitable, prudent, and enduring growth, ensuring that we remain a force in delivering sustainable foods and agriproducts for generations to come. Our cover design for the year draws inspiration from the dynamic strokes of the FGV logo, embodying the essence of our organisation’s energy and resilience in the face of challenges. Positioned to symbolise forward momentum, these strokes encapsulate our commitment to progress, innovation, and sustainability. Reflecting the core values of FGV, the design represents simplicity, a focus on strengthening foundations, and a relentless drive for advancement through collaborative efforts and an inclusive mindset. COVER RATIONALE Scan Me Please play your part by choosing to access our Report digitally. You can download it from our corporate website or by scanning the QR code.
SUSTAINABILITY REPORT 2022/2023 WHAT’S INSIDE OUR SUSTAINABILITY JOURNEY Joint Leaders’ Statement 6 Key Highlights 11 Our Story 12 SECTION 1 PROMOTING ECONOMIC GROWTH Operational Excellence 24 Traceability, Responsible Sourcing & 30 Supply Chain Management Regulatory Compliance & 34 Sustainability Certifications Business Development & Product Quality 36 Economic Impact 38 Corporate Governance & 41 Risk Management Anti-Corruption & Anti-Bribery 43 Data Security & Protection 46 Community Development 48 SECTION 2 RESPECTING HUMAN RIGHTS Upholding Human Rights & Labour Standards 53 Diversity, Equity, Inclusion 58 Talent Development 66 Occupational Health & Safety 71 Smallholders 76 SECTION 3 PROTECTING THE ENVIRONMENT Climate Change 79 Waste Management 84 Energy Management 90 Soil, Pest & Disease Management 93 Water Use 95 Biodiversity & Land Management 99 SECTION 4 APPENDICES Stakeholder Engagement 108 Materiality Assessment 112 Linking Material Matters to Risks and Strategy 115 GRI Content Index 117 Independent Assurance Statement 122 Performance Data Table 126 SECTION 6 ANNUAL GENERAL MEETING Thursday, 20 June 2024 https://meeting.boardroomlimited.my (virtual meeting platform) 11:00 a.m. BASIS OF THIS REPORT 2
BASIS OF THIS REPORT REPORTING FRAMEWORKS AND STANDARDS To uphold high standards of reporting practices, we have complied with local and international reporting frameworks. As such, we have ensured that this Report has been prepared with reference to the Global Reporting Initiative (GRI) Universal Standards 2021. It complies with the enhanced Sustainability Requirements of Bursa Malaysia Securities Berhad’s Main Market Listing Requirements and contains the nine sustainability matters common indicators required to be reported for financial year ending 2023. In addition, the SR makes reference to the relevant United Nations Sustainable Development Goals (UN SDGs). We are proud to present our 6th standalone Sustainability Report (SR), which complements the FGV Annual Integrated Report (AIR) 2023. This SR provides a comprehensive overview of our sustainability-related efforts, reflecting our commitment to FGV’s Group Sustainability Policy (GSP). This SR communicates FGV’s sustainability goals and achievements, demonstrating FGV’s steadfastness in creating positive environmental, social and governance (ESG) impacts. REPORTING PERIOD, SCOPE AND BOUNDARIES FGV’s Sustainability Report is issued every two years, with an annual update featured in the sustainability statement of the Annual Integrated Report. This Sustainability Report covers the operations and subsidiaries in Malaysia, as well as FGV’s headquarters in Kuala Lumpur for the period of 1 January 2022 to 31 December 2023. The scope for this report is FGV Group’s business, subsidiaries and operations in Malaysia excluding joint ventures and associates. This report does not cover subsidiaries, joint ventures and associates outside of Malaysia. We strive to enhance our reporting disclosures to provide our stakeholders with a better understanding of how FGV generates and sustains value. The purpose of this Report is to communicate effectively with all our stakeholders, enabling them to make decisions about our sustainability performance and future prospects. Our sustainability initiatives are rooted in economic inclusivity, respecting human rights and environmental protection, underlining our dedication to embedding sustainability in our operations, decision-making and activities. With dynamic insights and interactive elements, this Report underscores FGV’s commitment to addressing global sustainability challenges and contributing to the UN Sustainable Development Goals (UN SDGs) by actively addressing sustainability issues. 2023 REPORTING SUITE For a comprehensive overview of our performance and prospects, this Report should be read in conjunction with the accompanying reports in our Reporting Suite below and other information accessible on our website. Annual Integrated Report 2023 Sustainability Report 2022/2023 Audited Financial Statements 2023 FGV HOLDINGS BERHAD 2
BASIS OF THIS REPORT MATERIAL MATTERS We undertake a Materiality Assessment every two years. The content of this SR is based on FGV’s sustainability material matters, which were identified via a comprehensive materiality assessment held in 2023. We have identified 20 material issues, including four new material matters and Bursa Malaysia’s mandatory material matters. In developing this report, we considered both qualitative and quantitative factors that could impact our strategic objectives and the sustainability of our business. This includes issues discussed in reports to our Board of Directors, identified risks, and the interests of our stakeholders. Additionally, we have taken into account the material impacts in the countries and regions where we operate. FORWARD-LOOKING STATEMENTS In this SR, we include forward-looking statements about our Group’s plans, objectives, strategies, future operations and performance. However, these statements should not be considered guarantees of future operating, financial or other results as we remain subject to risks, uncertainties and assumptions. Actual results and outcomes may significantly differ from forward-looking statements, whether expressed or implied. We are under no obligation to update these forward-looking statements or the historical information included in this SR. The Group makes no express or implied representation or warranty that the results targeted by these forward-looking statements will be achieved. ASSURANCE As part of our commitment to transparency and accountability, an external independent third party has conducted independent limited assurance for selected FY2023 indicators in accordance with the approved standard for assurance engagements in Malaysia, International Standard on Assurance Engagements (“ISAE”) 3000 (Revised), Assurance Engagements Other Than Audits or Reviews of Historical Financial Information. 03-2789 0000 sustainability@fgvholdings.com The subject matter of the assurance covers the FY2023 data for the following indicators: - Total amount invested in the community where the target beneficiaries are external to the listed issuer - Percentage of directors by gender and age group - Number of work-related fatalities - Lost time incident rate. We have taken rigorous measures to ensure the accuracy, consistency, and comprehensiveness of the information presented to maintain the Report’s integrity. This SR has been reviewed by the Reporting Committee to ensure alignment with national and global reporting standards and frameworks. Alongside FGV’s AIR and Audited Financial Statements, this SR has been reviewed by the Board Sustainability Committee before being presented to the Board for approval. The review and approval process is in line with our stringent governance practices. FEEDBACK Your input is important in shaping our sustainability journey. We believe that enhancing our reporting practices and standards requires ongoing engagement and collaboration throughout the year. For any feedback or questions, please reach out to our Group Sustainability Division at More information on Material Matters can be found on pages 112 to 114. More information on Assurance Statement can be found on pages 122 to 125. SUSTAINABILITY REPORT 2022/2023 3
BASIS OF THIS REPORT Natural Social & Relationship Intellectual Manufactured Financial Human New Growth Areas Product & Market Penetration Financial & Capability Building Operational Improvement Field Workers* Board of Directors & Employees Joint Ventures & Business Partners NGOs Suppliers Investors & Capital Providers FELDA and FELDA Settlers Media Regulators & Governments Customers * FGV's field workers are its operational labour ALIGNMENT TO THE UNITED NATIONS SUSTAINABLE DEVELOPMENT GOALS (UN SDGS) We align our sustainability strategies and initiatives with 13 of the United Nations Sustainable Development Goals (UN SDGs) as below in our efforts to contribute to a more sustainable future. OUR STAKEHOLDER GROUPS All icons featured here are Navigation Icons that will be consistently featured within our reports as a guide towards better integration and presentation of information. NAVIGATING THIS REPORT SIX CAPITALS OUR STRATEGIC THRUSTS FGV HOLDINGS BERHAD 4
OUR SUSTAINABILITY JOURNEY Joint Leaders’ Statement 6 Key Highlights 11 Our Story 12 SECTION ONE
OUR SUSTAINABILITY JOURNEY SEC 1 6 JOINT LEADERSHIP STATEMENT Dear Valued Stakeholders, It gives us great honour to present FGV’s Sustainability Report for 2022 and 2023. We are pleased to report that FGV has made commendable progress in advancing our sustainability agenda across the three key sustainability tenets of Environment, Social and Governance (ESG). This message highlights our main achievements and the challenges we continue to face, providing insights into our plans for the future. Tan Sri Rastam Mohd Isa Chairman Dato’ Mohd Nazrul Izam Mansor Group Chief Executive Officer
FGV HOLDINGS BERHAD | SUSTAINABILITY REPORT 2022/2023 7 Total Property, Plant and Equipment RM7.91 million Total Profit Before Zakat and Taxation RM336 million Total Profit for the Financial Year RM112 million In alignment with evolving global standards and regulations, FGV has embraced a robust stance on sustainability-related legislation. Our dedication is exemplified through our No Deforestation, No Planting on Peat, and No Exploitation (NDPE) policy. Through stringent measures, such as the protection of High Carbon Stock (HCS) Forests and High Conservation Value (HCV) Areas, the elimination of open burning across all premises, and the prohibition of hazardous agrochemical use, we are steadfastly advancing our environmental stewardship. Concurrently, our unwavering commitment to upholding human rights and labour standards ensures that our business operations remain free from exploitation. Key initiatives in this domain include the establishment of a sound grievance mechanism, rigorous pre-sourcing assessments for labour standards compliance, and the strict enforcement of the ‘no recruitment fee’ policy in the recruitment of migrant workers. Recognising the pivotal role of smallholders within our supply chain, FGV has launched targeted capacity-building programmes. These initiatives aim to foster awareness and empower independent smallholders, underlining our commitment to inclusivity and sustainability. By engaging directly with these stakeholders we are championing an inclusive and sustainable supply chain. FGV’s commitment to transparency and accountability is further underscored by our robust traceability system. This system enables us to meticulously monitor the provenance of supplied and raw materials, ensuring that every link in our supply chain upholds a high standard of sustainability and ethical conduct. OVERVIEW Over the past two years, FGV has continued to place sustainability at the forefront of our operations and strategic vision, aligning our actions with key sustainability themes that are central to our industry. We recognise the urgent need for climate resilience and have developed a comprehensive climate action plan to mitigate climate risk and adapt to climate change. Key to this initiative is our pledge to halve GHG emissions by 2030, aligning with our broader ambition of achieving net-zero emissions by 2050. Ultimately, we aim to achieve better outcomes by collaborating with the broadest spectrum of stakeholders. From non-profit organisations and United Nations agencies to government bodies and business networks, our collaborative endeavours seek to harness collective expertise and resources to meet our sustainability goals. Together, we are actively integrating ESG-related measures that drive sustainable value creation, ensuring that our actions resonate with our shareholders’ long-term aspirations. OUR COMMITMENT TO GOOD GOVERNANCE We adopt a tone-from-the-top approach in sustainability governance. FGV’s Board has oversight of sustainability-related matters, including climate-related risks and opportunities. The Board is supported by the Board Sustainability Committee (BSC) to oversee our Group policies, principles and operations related to sustainability. Assisting the BSC is the Sustainability Steering Committee (SSC), which is responsible for addressing sustainability-related issues such as human rights and environmental stewardship while ensuring compliance with greenhouse gas (GHG) emission targets. The mandate extends across FGV’s operations, including plantations, mills, refineries, and bottling plants in Johor, reflecting the Company’s broad operational scope. The Board is also supported by the Audit Committee and the Board Governance and Risk Management Committee (BGRMC) to oversee matters beyond financial management, including internal audit concerns. Additionally, we recognise the importance of market expectations where FGV operates. We ensure that our policies and operations are aligned with recognised sustainability and governance standards. To further ensure accountability, FGV has a whistleblowing policy to address governance or ethical issues promptly. JOINT LEADERSHIP STATEMENT 2023 HIGHLIGHTS
OUR SUSTAINABILITY JOURNEY SEC 1 8 During the review period, we identified a deforested area of 25 hectares associated with an indirect fresh fruit bunch (FFB) supplier. This discovery was made through the Global Forest Watch Pro platform that can trace and monitor deforestation activities, which we use to monitor areas owned by our suppliers in line with our NDPE policy. Despite attempts to engage with the FFB dealer collaborating with this supplier for corrective action, there was no response. Consequently, FGV has discontinued all business transactions with the FFB dealer, demonstrating our seriousness to promote adherence to sustainability standards across our supply chain. FGV is also committed to a diverse and inclusive workplace. The Gender Equality and Women Empowerment (GEWE) committee is instrumental in promoting gender equality, emphasising women’s representation at senior levels within the organisation. In conjunction with International Women’s Day in March 2023, FGV organised a panel discussion on Women’s Empowerment and Gender Equality in the Palm Oil Sector with LeadWomen as a supporting partner. The event gathered over 100 participants from various sectors including government agencies, corporate sectors, civil society organisations, UN agencies as well as the diplomatic corps. During the event, FGV also officially announced its commitment as a signatory to the Women’s Empowerment Principles (WEPs) to further promote women’s rights within its operations. Participants were introduced to the Anti-Sexual Harassment Act 2022 and the relevant international standards relating to gender equality in the palm oil sector, particularly the RSPO Principles and Criteria and the WEPs. JOINT LEADERSHIP STATEMENT OUR COMMITMENT TO SOCIETY At FGV, our operations are deeply interwoven with a steadfast commitment to society. As Malaysia’s largest offtaker of palm fruits produced by smallholders, our operations transcend the traditional boundaries of commercial enterprise. Annually, we produce three million tonnes of Crude Palm Oil (CPO) where two-thirds originate from fruits procured directly from smallholders. This commitment to purchasing such volumes underscores our deep-rooted connections with these communities and reflects the positive effect we can have on their economic upliftment. The remaining one-third of our CPO production, derived from our own plantations, is also important as it not only constitutes the margin-earning segment of our business but also serves a higher purpose. These earnings are strategically utilised to offset the elevated social costs we willingly incur, ensuring that our commitment to the community remains unwavering. This effectively makes FGV a business with the stripes of a social enterprise. While this approach may put us at odds with the goal of a business to maximise profit, this distinction sets FGV apart from its peers, and we believe it is something that our investors must be well aware of. In addition, our engagement with the settlers of FELDA often goes beyond transactional interactions. We recognise the intrinsic value of our smallholders and we continue to support them through consultation sessions to understand how we can help them further. This is particularly important in ensuring our smallholders are implementing sustainable practices in order to obtain MSPO certification. Through the Independent Smallholders Consultation programme that we started in 2022 in collaboration with the Malaysian Palm Oil Board (MPOB) and the Malaysian Palm Oil Certification Council (MPOCC), we have found that smallholders require technical support, training and financial support to meet MSPO certification requirements. Thus, from 2022 to 2023, a total number of 721 smallholders attended our smallholder training programme which provided technical advice and updates on the palm oil industry’s development, challenges, and regulatory requirements. Beyond our socio-economic contributions, FGV’s operations also play a pivotal role in ensuring national food security. Palm oil, a versatile and essential commodity, finds its way into various products, from food items to biofuels. By consistently producing vast quantities of high-quality CPO, FGV bolsters Malaysia’s position as a key player in the global food and agri-commodities landscape. Our dedication to sustainable practices ensures that as we contribute to national food security, we do so responsibly, preserving the environment and ensuring the well-being of future generations.
FGV HOLDINGS BERHAD | SUSTAINABILITY REPORT 2022/2023 9 JOINT LEADERSHIP STATEMENT OUR COMMITMENT TO HUMAN RIGHTS FGV acknowledges that it has encountered challenges related to human rights in recent years, particularly in our labour practices. Addressing the concerns of the U.S. Customs and Border Protection (CBP), which issued a Withhold Release Order (WRO) against FGV, has been a priority for us and we have taken numerous steps in our bid to obtain a positive outcome in the modification of the WRO. Firstly, we established a WRO Task Force to oversee the development and implementation of FGV’s WRO remediation plan, comprising 12 focus areas. Next, we appointed LRQA (formerly known as ELEVATE) an independent consultant, to assess FGV’s operations and support FGV’s remediation plan. In addition, we appointed a US-based international law firm that has deep expertise in international trade to support us in the revocation of the WRO. As part of the remediation plan, we have enhanced our recruitment procedures by reinforcing the principle of no recruitment fee and strengthening the due diligence and selection process of recruitment agencies. Going forward, we will only engage recruitment agencies which demonstrate a strong commitment to responsible and ethical practices. The Board has also approved and allocated RM605 million for a three year plan from 2024 to 2026 to further improve the accommodation and living conditions of our workers. In keeping with our commitment to the principle of ‘no recruitment fees’, we have allocated a total of RM112 million to reimburse recruitment fees to our migrant workers. Of this amount, we have since paid out RM72.2 million as of September 2023 to a total of 20,153 migrant workers. FGV’s recruitment fee reimbursement programme for its former workers is ongoing. As such, the latest update regarding the WRO issue is that we will be making our submission to the CBP to modify the WRO by June 2024. The submission date was revised as the reimbursement payment was made in three phases, between March 2023 and September 2023 reimbursement of recruitment fees as well as the implementation of FGV’s remediation plan. Verification of FGV’s remediation is expected to take place in the first quarter of 2024, after which a petition to modify the WRO will be prepared for submission to the CBP. Finally, we understand that it will take time for the CBP to decide on the modification of the WRO, which is consistent with the experience of other companies that have been issued a WRO. FGV remains committed to ensuring that all its 66 mills and supply bases are RSPO-certified. As of the end of 2023, 30 of FGV’s mills and its supply bases are RSPO-certified, while the rest of the uncertified mills have undergone and completed all required preparations and are ready to commence the certification process. FGV expects to achieve RSPO certification for all its remaining uncertified mills within 24 months upon the removal of the deferment by the RSPO for FGV to certify its uncertified mills. The deferment was put in place due to the WRO against FGV. To further operationalise FGV’s commitment to child protection and as part of FGV’s participation in the National Pledge against Child Labour, we have adopted a Policy Statement and Guidelines on Respecting and Protecting Children’s Rights. The Policy Statement reiterates FGV’s zero tolerance for child labour throughout its business operations and supply chain. The key aspects covered by the Guidelines include equal treatment of children, child protection, adequate living conditions for children’s development, access to education, and prevention of child labour, among others. OUR COMMITMENT TO CLIMATE CHANGE In our contribution towards reducing the impact of climate change, FGV has set a target of achieving net-zero emissions by 2050. As part of that effort, we have completed our carbon emissions baseline and greenhouse gas emissions inventory for Scope 1 and Scope 2 for all 20 operational units based on 2019 data. Due to the complexity of our supply chain, FGV is facing challenges in ensuring the accuracy of our Scope 3 inventory. Despite this, we aim to finalise our inventory by 2024. FGV acknowledges its role in environmental stewardship and is dedicated to transparently addressing our environmental impact through actionable measures. To ensure ecological balance, FGV has continued to implement specific measures within our plantations. This includes the creation of buffer zones and pathways to facilitate the free movement of elephants and prevent potential human-wildlife conflicts. Such measures mitigate risks, as unchecked encroachments by wildlife can result in substantial financial implications. Looking forward, FGV is strategically positioned to evolve beyond traditional plantation operations in alignment with the growth of greener businesses. Leveraging our biomass resources, we aim to diversify into the bioenergy sector. We envision FGV becoming a leading biomass feedstock supplier, expanding our footprint in power generation, and facilitating broader access to bioenergy solutions for stakeholders. Adopted FGV’s Policy Statement and Guidelines on Respecting and Protecting Child Rights.
OUR SUSTAINABILITY JOURNEY SEC 1 10 JOINT LEADERSHIP STATEMENT DIGITALISATION FGV has developed the FGV Traceability of Product (FGV TOP) system to provide details of FGV’s palm oil supply chain. To meet new business requirements, FGV has initiated the FGV TOP enhancement project. The enhanced system will be able to provide the following information: GOING FORWARD FGV’s commitment transcends conventional business metrics and profit margins. Rooted deeply in societal responsibility, our pledge is to our smallholder partners, our workforce, and the nation at large. While navigating the intricate landscapes of the global agricultural sector, our guiding principle remains the creation of shared value, community development, and a steadfast contribution to national food security. This vision is not confined to infrastructure or financial investments. With medium-term to long-term goals centred on climate resilience, upholding human rights, fostering diversity, and deepening engagement with our smallholder partners, FGV aims to lead with purpose, ensuring sustainability and inclusive growth in every endeavour. FGV is currently reviewing its Sustainability Framework. Once finalised, the framework will chart FGV’s sustainability journey for the next four years. ACKNOWLEDGEMENTS In closing, we would like to extend our heartfelt gratitude to all our esteemed stakeholders who have been instrumental in our journey over the past two years. A special note of appreciation goes to the Board of Directors for your guidance, foresight, and commitment to steering our organisation towards sustainable growth. To the Senior Management, your leadership, dedication, and strategic insights have been the driving force behind our achievements. Our heartfelt thanks to all FGV employees. Your hard work, resilience, and passion form the bedrock of our success, and it is your daily efforts that propel us forward. To our valued customers, your trust, feedback, and partnership are invaluable. We remain committed to exceeding your expectations and delivering value in every interaction. Last but not least, to our supply chain partners, your collaboration and commitment to excellence ensure the seamless operation and sustainability of our business. Together, we have achieved much, and as we look ahead, we are confident that our collective efforts will continue to shape a brighter future for FGV and all its stakeholders. Listing of FFB dealers/sub-dealers Dealers/sub-dealers’ Traceability Information Traceability Trail for palm oil product movement Individual mill supplier information – for data validation by Traceability Validation Dealer/sub-dealer sustainability credential Sustainability Dashboard Sustainability tracking report Customers’ Traceability Information
FGV HOLDINGS BERHAD | SUSTAINABILITY REPORT 2022/2023 11 KEY HIGHLIGHTS SUSTAINABILITY IN 2022 AND 2023 Held FGV’s Sustainability Week from 24 to 26 October 2023, in conjunction with National Environment Day (NED), to raise awareness on sustainability issues, best practices and innovation. Engaged in various conservation programmes for the Malayan Sun bear, Gibbon and Pangolin. Participate in the Achieving Coexistence with Elephant (ACE) project in Johor landscape with the Management and Ecology of Malaysian Elephants (MEME) of University of Nottingham Malaysia. Acquired 54 units of Euro 5 Prime Movers for general cargo and CPO tankers in partnership with Volvo Trucks Malaysia, to support Malaysia’s 2050 carbon-neutral goal and reflect our continuous commitment to innovation, sustainability and operational excellence across our business. Organised a tree planting event in Tawai, Gerik, covering a 300 Ha HCV management area, to promote sustainable land management practices. In 2023, FGV spent RM75 million on workers housing. We further allocated RM605 million for a three year plan from 2024 to 2026 to further enhance our workers accommodation and living conditions Completed the reimbursement of recruitment fees to 20,153 active migrant workers totalling RM72.2 million Organised a Child Protection Programme in Lahad Datu to raise awareness of child labour issues and emphasise the importance of child protection in FGV’s business operations. FGV Honoured with the ESG Positive Impact Awards 2022 in the Environment - Renewable Energy by The Star Media Group Berhad. MSM received the MSOSH OSH Award 2023 in the Manufacturing and Chemical Sectors category. MSM received the Penang Business Excellence Award for its contribution to shaping Penang’s sustainable future. MSM Introduced its first 100% Electric Vehicle (EV) van for last-mile delivery in Klang Valley as part of its ongoing ESG initiatives. Conducted 9 sessions to raise awareness among independent smallholders about sustainability-related matters and gather feedback and input from them for continuous improvement of our operation. Revised and strengthened the Guidelines and Procedures for Responsible Recruitment and Employment of Migrant Workers to align our practices with international standards, and ensure the application of No Recruitment Fees policy. Signed 16 Collective Agreements with our workers’ unions for the period of 2022 to 2024. Demonstrated our commitment to gender equality as the first agribusiness company in Malaysia to be a signatory of the Women’s Empowerment Principles (WEPs), established by the United Nations Global Compact and the United Nations Entity for Gender Equality and the Empowerment of Women (UN Women).
OUR SUSTAINABILITY JOURNEY SEC 1 12 OUR STORY OUR MISSION OUR PRIDE VALUES Best solutions and ideas come from working with both internal and external parties. Our sustained success and achievements can only come from respect for people as well as the environment, which is the main source of our business. It means being responsible and accountable for one’s own actions and behaviours. Each employee is responsible for the Group’s success and business reputation. Strive to discover, create ideas, and identify growth potential from uncharted opportunities and beyond traditional boundaries, all done in the best interest of our stakeholders. We are enthusiastic about what we do, committed to the growth and future of our agribusinesses, while propagating sustainable development around the world. FGV is an agribusiness based in Malaysia and one of the world’s largest producers of Crude Palm Oil (CPO), accounting for 3% of global and 14% of Malaysian CPO production. Since its listing on the Main Market of Bursa Malaysia in 2012, FGV has remained committed to achieving its strategic goals and leveraging synergies to create value for its stakeholders. 1 Developing and producing high-quality products sustainably that are both good for the people and the environment 2 Practicing a healthy and innovative working environment and culture within the Group whilst promoting the same to our suppliers 3 Establishing an integrated value chain business ecosystem 4 The embodiment of governance and compliance 5 Cultivating diversification in products and geographies PARTNERSHIP RESPECT INTEGRITY DYNAMISM ENTHUSIASM Delivering Sustainable Foods and Agriproducts to the World OUR VISION
FGV HOLDINGS BERHAD | SUSTAINABILITY REPORT 2022/2023 13 OUR STORY Total Landbank (including Malaysia and Indonesia) 438,867 Ha CPO Production 2.62 million MT FFB Processed 12.69 million MT FGV Estates: 28% (3.59 million MT) Third Parties: 30% (3.79 million MT) FELDA Settlers: 42% (5.31 million MT) Planted Area 344,472 Ha Unplanted 94,395 Ha Oil palm: 333,765 Ha Rubber: 7,203 Ha Other crops: 3,504 Ha Mills 66 MSPO-certified: 100% RSPO-certified: 45% Research & Development (R&D) of palm oil plantations for R&D purposes >12,000 Ha Producer of award-winning Yangambi ML161 seed with 39.4% domestic market share Malaysia’s leading fertiliser manufacturer with >700,000 MT annual production capacity highly qualified researchers 71 agronomists 22 The Plantation Division is at the core of our operations, encompassing the entire supply chain from Upstream to Downstream activities. It also covers Research & Development (R&D), Marketing & Trading, Rubber, and Renewable Energy. Plantation Consumer Products & Integrated Farming leverage on synergies within FGV to diversify into other forms of agriculture products, thereby bringing additional revenue to the Group. Consumer Products & Integrated Farming The Logistics and Support Division fortifies the core of FGV’s business entities with the nation’s largest liquid bulking installation and dedicated fleets, driving growth in logistics through innovation and technology. Other supporting businesses within this Divison encompasses Information Technology and Hospitality. Logistics and Support Total Storage Capacity (including Malaysia and Pakistan) 1.10 million MT Liquid: 974,490 MT Dry Cargo: 123,000 MT Mixed Fleet Vehicles >600 units The Sugar Division, operated through FGV’s 51% subsidiary, MSM Malaysia Holdings Berhad (MSM), is Malaysia's leading refined sugar producer and among the largest in Asia. Listed on Bursa Malaysia Securities in 2011, MSM offers a diverse range of products, including refined sugars and healthier alternatives such as sucralose and stevia mix, catering to a broad spectrum of consumer health preferences. Gula Prai >60% domestic refined sugar market share Sugar Refining Capacity 2.05 million MT Sugar Brands #1 refined cooking oil in Malaysia, with 44.7% market share #1 margarine brand in Malaysia, with 49.0% market share
OUR SUSTAINABILITY JOURNEY SEC 1 14 OUR STORY United States We operate in seven countries across North America, Europe and Asia. Spain France FGV’s Total Workforce1 84% 16% 49,430 84% 16% 16,601 Operational Labour 32,829 14% 86% Male Female 1 FGV’s total workforce as at 31 December 2023 includes FGV Employees and Operational Labour. FGV’S ASSETS More information on the assets owned by FGV can be found on our website, www.fgvholdings.com 214 Estates 66 Mills 6 Vegetable oil refineries (2 are JVs)* 7 Rubber processing facilities 4 Kernel crushing plants 3 R&D centres 3 Seed production centres 3 Fertiliser manufacturing plants 3 Trading offices* 2 Oleochemical plants (1 is JV)* 1 Biodiesel plant Plantation 2 Sugar refineries 1 Refined sugar warehouse Sugar 12 Bulking terminals (2 are JVs)* 10 Transportation hub and spoke 11 Warehouses (1 is JV)* 4 Transportation depots 2 Jetty operations (1 is JV)* 1 Hotel Logistics & Support * Joint Venture 2 Collection, Processing, and Packaging Centres (CPCC) 1 Chuping agro food valley 6 Paddy farming 3 Animal feed plant 1 Fresh milk processing facility 1 Integrated cattle dairy farm Integrated Farming FGV Employees
FGV HOLDINGS BERHAD | SUSTAINABILITY REPORT 2022/2023 15 OUR STORY Malaysia Cambodia Thailand Pakistan Indonesia# # The Indonesian operation was divested in November 2023 1 Biodiesel plant 1 Oleochemical plant* 2 Sugar refineries 1 Refined sugar warehouse 10 Bulking terminals 10 Transportation hub and spoke 10 Warehouses (located in three different locations) 4 Transportation depots 1 Jetty operation 1 Hotel 2 Collection, Processing, and Packaging Centres (CPCC) 1 Fresh milk processing facility 1 Chuping agro food valley 3 Animal feed plant 6 Paddy farming 1 Integrated cattle dairy farm Cambodia 1 Rubber processing facility Thailand 1 Rubber processing facility ASIA France 1 Trading office* Spain 1 Trading office* EUROPE NORTH AMERICA United States 1 Oleochemical plant Malaysia 214 Estates 66 Mills 5 Vegetable oil refineries (1 is JV)* 5 Rubber processing facilities (two are located in the same location) 4 Kernel crushing plants 3 R&D centres 3 Seed production centres 3 Fertiliser manufacturing plants Pakistan 1 Vegetable oil refinery* 1 Trading office* 2 Bulking terminals* 1 Jetty operation* 1 Warehouse* LOCATIONS
OUR SUSTAINABILITY JOURNEY SEC 1 16 OUR SUSTAINABILITY APPROACH OUR STORY At FGV, we are well-aware of the impacts of our activities towards the economy, environment and society. We recognise the responsibility we have to create long-term value for our community and minimise our negative impacts while generating sustainable profits for our business. As such, our ESG agenda remains guided by the three sustainability pillars of our Group Sustainability Policy (GSP 4.0) Embedding sustainability into business operations is no longer an option, but an obligation. Given the far-reaching impacts of an organisation, its activities and supply chain, sustainability has become a necessity to ensure long-term value creation for the stakeholders of a business organisation. PROMOTING ECONOMIC GROWTH RESPECTING HUMAN RIGHTS PROTECTING THE ENVIRONMENT As our business focuses on plantation, sugar and logistics, sustainability is key to our operations.
FGV HOLDINGS BERHAD | SUSTAINABILITY REPORT 2022/2023 17 At FGV, sustainability embodies both commitment and responsibility to stakeholders, society, and the planet. We prioritise sustainable practices to sustain adequate living standards, bolster economic prosperity, and protect environmental well-being. Central to our ethos is the recognition of the imperative to adopt responsible practices, safeguarding natural resources as fundamental to our business operations. Our business model hinges on the preservation and sustainability of the natural capital, emphasising the critical importance of renewable and non-renewable environmental resources. This is evident in our commitment to a circular economy, whereby sustainability considerations are integrated across all facets of our operations, reflecting our dedication to preserving the environment. Guided by ethical principles, we uphold human rights and environmental protection as core drivers in our sustainability endeavours. Leveraging our expertise and resources, we are committed to creating sustainable value for our business and stakeholders without compromising the availability of natural resources for our future generations. OUR STORY Our Sustainability Commitment Our business faces constant scrutiny and stringent regulations worldwide due to its large footprint, raising concerns about its potential negative impacts on natural resources and ecosystems, community and workers’ rights. These concerns include deforestation, biodiversity loss, pollution, and labour practices. Addressing these issues, building trust, and adopting responsible practices are central to our sustainability efforts. We aim to integrate sustainable practices across all aspects of our operations to explicitly reaffirm our commitment to sustainability. As we progress on our sustainability journey, our goal is to make sustainable practices a routine and integral part of our business operations, moving towards making them “business as usual”. As our business focuses on on plantation, sugar and logistics, sustainability is key to our operations. We take measures to mitigate the environmental and social impacts arising from our activities.
OUR SUSTAINABILITY JOURNEY SEC 1 18 OUR STORY FGV’s GSP was introduced in 2016 and aligns with Global Sustainability Standards to positively impact economic, environment, and social aspects. The GSP’s three pillars focus on Promoting Economic Growth, Respecting Human Rights, and Protecting the Environment. This policy guides FGV’s sustainability initiatives across all its entities, including listed and non-listed subsidiaries under its management control. Moreover, the GSP extends to contractors, suppliers, and other third parties working with FGV, ensuring a comprehensive and inclusive approach to sustainability. Profitability and economic growth as the main output of a holistic sustainability approach. Economic Growth SUSTAINABILITY FRAMEWORK FGV’s Sustainability Framework aligns our sustainability efforts with Environmental, Social and Governance (ESG) principles. The Framework guides the integration of sustainable practices into our business management and operations serving as a blueprint for sustainable development to generate long-term value for all stakeholders. Our sustainability endeavours priortise human rights and compliance with labour standards while aiming to foster positive environmental and social impacts. We are committed to this approach to strive for sustainable and holistic business growth. SUSTAINABILITY GOVERNANCE The Board at FGV takes a top-down approach to leading the Group’s sustainability efforts. This oversight sets the tone from the top to ensure sustainability is a key organisational priority. Supported by the Board Sustainability Committee (BSC) and the Sustainability Steering Committee (SSC), the Board oversees the strategic development and implementation of the Group Sustainability Policy (GSP). The BSC receives detailed reports from the Group Management Committee, and the SSC informing the Board’s decisions on sustainability matters. Furthermore the Board holds the responsibility for approving public disclosures regarding the Group’s sustainability efforts, ensuring that sustainability initiatives are well-coordinated and transparently communicated to all stakeholders. SUSTAINABILITY SCOPE AND BOUNDARIES FOR SUSTAINABILITY REVIEW This sustainability review in this report covers only FGV’s operations and its subsidiaries in Malaysia, excludes subsidiaries, joint ventures, and associates outside of Malaysia for the period of 1 January 2022 to 31 December 2023. More information on Sustainability Governance can be found in the Corporate Governance Overview Statement on pages 107 to 145 in our 2023 Annual Integrated Report. Transformation Innovation Social Environment Governance Our comprehensive sustainability approach is structured into three phases: Rethink, Repurpose, and Redesign, being executed from 2022 to 2024. This three-phased structured approach aims to generate significant positive impacts across economic, environmental, and social aspects. The strategy’s phased approach allows for focused and sequential implementation, ensuring thorough addressing and integration of each aspect of sustainability into the Group’s overall framework.
FGV HOLDINGS BERHAD | SUSTAINABILITY REPORT 2022/2023 19 OUR STORY GROUP SUSTAINABILITY POLICY • Addressing climate change • No deforestation and planting on peat • Protect High Biodiversity Value (HBV) and High Conservation Value (HCV) areas • Limitations on the use of hazardous chemicals and agrochemicals • Water management and waste management • Efficient use of natural resources Protecting the Environment • Equality and non-discrimination • Upholding labour standards • Respecting the rights of indigenous peoples and local communities • Health and safety • Preventing harassment and abuse Respecting Human Rights • Responsible sourcing - support for suppliers, and smallholders. • Responsible production - obligation of value chain partners through traceability and certification Promoting Economic Growth WHICH ARE SUPPORTED BY OUR SUSTAINABILITY POLICIES OUR SUSTAINABILITY FRAMEWORK GUIDES THE WAY WE APPROACH ESG ASPECTS Integration of sustainability objectives and targets into the Company’s core business strategy, model and governance structure. Integration of a responsible approach to social and human rights issues. Integration of environmental protection and sustainable food production in becoming a zero environmental impact business. Linking innovation and transformation to promote incremental and disruptive sustainability-oriented innovations and progress. Governance Social Environment Innovation & Transformation AND PROVIDES THE CATALYST FOR OUR SUSTAINABILITY STRATEGY RETHINK CROSSING THE CHASM 2022 • Revision of policies and standards • Resolving resistance and lack of integration • Feasibility study and re-assessment of existing and new business strategies • Enhancement of existing sustainability programmes • Strengthening governance for a holistic approach • Promoting sustainability-related innovation management BRIDGING AT PEAK 2024 • Redesign processes and products to close the loop • Full and continuous compliance with sustainability regulations and standards at national and global levels • Continuous engagement and materiality assessment • Continuous improvement in policies and internal standards • Branding of FGV as a sustainabilitybased commerce REDESIGN • Adoption and integration of a holistic sustainability approach at the operational level • Management of negative impacts throughout operations • Building a culture that integrates sustainability principles into improving profitability and livelihood • Commitment to zero-impact business operations through circularity (closedloop) • Full ethical investment and sourcing TAKING THE LEAP 2023 REPURPOSE
OUR SUSTAINABILITY JOURNEY SEC 1 20 For more information on our contributions to the UN SDGs, please refer to the disclosures of each of our material matter from pages 24 to 106 in this report. OUR STORY ALIGNMENT TO UNITED NATIONS SUSTAINABLE DEVELOPMENT GOALS (SDG) We advocate for sustainable development and believe in fostering global solidarity through collective action to promote peace and prosperity for both people and the planet, both now and in the future. As part of this global partnership, we align with the applicable Sustainable Development Goals (SDGs) and their targets within our operations to meet the increasing expectations of the public. This strategic approach not only strengthens our sustainability practices but also enhances our long-term business performance, while simultaneously presenting us with business opportunities across sectors such as food and agriculture, energy, and materials—all of which are intertwined with the achievement of the SDGs. Outlined below are the 17 SDGs that we aim to contribute to through our sustainable business endeavours, encompassing various aspects of our value chain. EMBRACING STAKEHOLDER DIVERSITY TO CULTIVATE AN INCLUSIVE APPROACH FGV acknowledges the importance of incorporating diverse viewpoints, recognising the multitude of stakeholders involved in its operations. Given the scrutiny faced by the industry, FGV prioritises amplifying the voices of its stakeholders to ensure a more inclusive and informed decision-making process. By fostering strong relationships with all stakeholder groups and actively seeking their feedback, FGV aims to gather diverse perspectives that contribute to balanced and unbiased sustainability responses. In 2024, FGV conducted extensive internal and external stakeholder engagements to gather insights and feedback on sustainability matters. These engagements are instrumental in shaping FGV’s approach to risk management and decision-making, ensuring that the concerns and expectations of stakeholders are adequately addressed. Through continuous engagement and attentive listening, FGV endeavours to enhance its business operations and strengthen its commitment to sustainability. SUSTAINABILITY STAKEHOLDER ENGAGEMENT During the reporting period, we engaged with 11 stakeholder groups namely, employees, FELDA settlers, the Board of Directors, regulators, field workers, customers, investors, suppliers, JV and business partners, media, and NGOs. These engagement sessions were guided and facilitated by an external sustainability consultant. During these interactions, we collaborated with stakeholders to ascertain the significance and impact of the various sustainability key issues that were considered important to the stakeholders and to our business. Feedback from these sessions highlighted key issues related to operational excellence, human rights, employee welfare, and environmental and resource management. Additionally, stakeholders recommended collaboration with NGOs and government agencies to enhance our RSPO certification status.
FGV HOLDINGS BERHAD | SUSTAINABILITY REPORT 2022/2023 21 OUR STORY Robust sustainability governance is vital to driving sustainability at FGV. Our Board of Directors have oversight of sustainability matters, including climate-related issues. This sets the tone from the top for sustainability governance. The Board is supported by the Board Sustainability Committee and the Sustainability Steering Committee to implement the Board’s sustainability priorities across FGV. The following chart illustrates the structure of sustainability governance at FGV: SUSTAINABILITY GOVERNANCE Group Sustainability Division Plantation Sector Logistics and Support Sectors Sugar Sector Corporate and Financial Services Sustainability Steering Committee (SSC) Board Sustainability Committee (BSC) Board of Directors (BOD)
OUR SUSTAINABILITY JOURNEY SEC 1 22 The Board of Directors is the highest governance body overseeing the management of our impacts on the economy, environment and people. An integral part of the Board’s role in sustainability is providing direction and strategic input into the formulation of the GSP as well as oversight and governance over the GSP’s implementation and execution. The Board also ensures that the GSP takes into account the material matters that impact business goals and ascertains FGV’s sustainability practices. In addition, the Board is responsible for approving FGV’s sustainability disclosures. It also reviews and approves the Sustainability Report and any other related information that has a major financial and/or reputational impact on the Group. Board of Directors (BOD) The Sustainability Steering Committee consists of members of GMC, facilitating the mainstreaming of sustainability principles and practices throughout FGV. The Committee is also entrusted with the effective implementation of FGV’s sustainability initiatives. The Group Chief Executive Officer (GCEO) chairs the Sustainability Steering Committee. Sustainability Steering Committee (SSC) The establishment of BSC reflects FGV’s commitment to ensuring that environmental, social and governance (ESG) considerations continue to take centre stage in FGV’s undertakings. The BSC is a board committee charged with overseeing the formulation of the GSP, sustainability strategies as well as exercising governance over their execution. BSC monitors the progress of execution, provides insights and advice to support execution and ensure that goals and objectives are achieved. Board Sustainability Committee (BSC) The Group Chief Sustainability Officer directs and oversees the day-to-day work of the GSD and advises the Group on matters pertaining to sustainability, which include aspects relating to human rights and environmental protection. The GSCO reports directly to the GCEO, who provides leadership and direction for sustainability initiatives. The GSD consists of four departments, namely Sustainability Compliance and Certification, Sustainability Regulation, Sustainability Engagement and Sustainability Technical. These departments deal with the full spectrum of the Group’s sustainability activities. Group Sustainability Division (GSD) OUR STORY Roles and Responsibilities
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