136 FGV HOLDINGS BERHAD ABOUT FGV MANAGEMENT DISCUSSION & ANALYSIS VALUE CREATION Topics FGV’s response Operational & Financial Updates • For the financial year in review, FGV’s FFB production, yield and oil extraction rate (OER) were lower than last year due to the impacts of pandemic disruptions that gave rise to a shortage of manpower, lowered demand and consumption and heightened costs • FGV rode on the increased CPO price with an average of RM4,470/MT in 2021, a 37% increase from the previous year due to the reduction in palm oils production, weaker ringgit and rising crude oil prices • The flood that hit the country in December 2021 had minimal impact on FGV estates, covering around 2% of FGV’s planted area • Our activities in the year continued to include our replanting programme. We have committed to a disciplined replanting schedule of approximately 15,000 Ha with an allocation of around RM300 million per year. The replanting programme is aimed at correcting our average palm age profile • With the recent announcement by the Government to bring in 32,000 migrant workers, FGV expects productivity improvement in 2H of FY2022 Sustainability Updates • FGV continues to focus on enhancing its labour practices under its affiliation with the FLA. An Independent External Assessment (IEA) by FLA involving on-the-ground assessments completed in FY2021 at several FGV’s mills and plantations. The outcome of the IEA will be used to develop other initiatives to enhance FGV’s labour practices • FGV is regularly following up with RSPO Secretariat on certification suspension outcome by RSPO Complaints Panel. Currently, FGV has 30 RSPO-certified mills • FGV has appointed a third-party assessor, ELEVATE, to assess FGV’s operations against forced labour indicators. ELEVATE is finalising a gap analysis based on desktop review and management interviews. The site assessments are expected to begin in the second quarter of 2022 • FGV is committed to becoming a net-zero business by 2050. FGV is Malaysia’s first food and agribusiness company to formalise the commitment by signing the United Nations (UN)-backed Science-Based Target initiative (SBTi) Business Ambition for 1.5°C pledge, which calls for limiting global warming to 1.5°C. To achieve this, FGV is finalising its comprehensive GHG Inventory by setting up an ambitious reduction target for the Group COVID-19 Updates • FGV takes COVID-19 precaution among its employees seriously. On this note, FGV has taken measures to maximise the vaccination rates among workforce, ensure stringent compliance to Standard Operating Procedures (SOPs) and effective containment measures for business continuity • Most FGV operations were not affected by the MCO save for the Government’s mandatory shutdown. However, if there are any COVID-19 positive cases found in estates, mills or plants, FGV will immediately shut down the operations according to the requirement of Majlis Keselamatan Negara (MKN) How We Are Governed Integrity in Corporate Reporting and Meaningful Relationship with Stakeholders COMMUNICATING WITH OUR STAKEHOLDERS
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