146 FGV HOLDINGS BERHAD ABOUT FGV MANAGEMENT DISCUSSION & ANALYSIS VALUE CREATION Sustainability Statement EXPLANATORY NOTICE For FY2021, FGV Holdings Berhad (FGV) will be publishing a standalone Sustainability Report. This is in line with FGV’s practice of publishing a biennial Sustainability Report. Given our many sustainability efforts across multiple areas, a standalone Sustainability Report will provide a more comprehensive and in-depth view of our sustainability commitments, initiatives and achievements. This Sustainability Statement provides an overview of our sustainability commitment, approach and practices. Scan here to view our Sustainability Report Please refer to the Sustainability Report to learn more about the Sustainability Report’s Scope and Boundaries. OVERVIEW Sustainability is no longer just a notion within the corporate consciousness rather it has become an activity embedded into business operations given its wide-ranging impact across the entire spectrum of stakeholders. FGV recognises our responsibility to balance our economic ambitions with positive environmental and social considerations, without compromising our governance and ethics. Our Environmental, Social and Governance (ESG) agenda is a compass that guides us as we set out to harness synergy and deliver values to our stakeholders in a responsible manner. As we commit to uphold this agenda, our actions are guided by the three pillars of our Group Sustainability Policy (GSP) 4.0. Promoting Economic Growth Respecting Human Rights Protecting the Environment Embedding sustainability into our operations is critical for growth and prosperity but more crucially for our continued survival and existence, without sustainability, there is no future. Accordingly, FGV’s sustainability is about fortifying our business to continuously remain viable, vital and vibrant. Our commitments towards sustainability has led FGV to be ranked at 19th position (previous spot was 23rd) among other 100 palm oil producers that were assessed against 182 ESG indicators. The 2021 overall SPOTT assessment score for FGV is 74% which was an improvement from 70% recorded in FY2020. Governance Integration of sustainability objectives and targets into company’s core business strategy, model and governance structure Social Integration of responsible approach to social and human rights issues in line with national and global standards Environment Integration of environmental protection and sustainable food production in becoming a zero environmental impacts business Innovation & Transformation Linking innovation R&D and transformation to promote incremental and disruptive sustainability-oriented innovations and progress Economic Growth Profitability and economic growth as the main output of a holistic sustainability approach I nnov at i on Tr ans f or mat i on Social Governance Environment However, our sustainability journey has not been without any challenges. Specific to the Roundtable on Sustainable Palm Oil (RSPO) certification, FGV has implemented the RSPO Complaints Panels’ (CP) directives of November 2018 and January 2020, respectively, and verification audits involving six of FGV’s mill complexes were conducted between January and April 2021 by an independent auditor appointed by the RSPO. FGV was made to understand by the RSPO Secretariat that the outcome and findings of the verification audit were deliberated by the RSPO CP in August 2021 and FGV has since been following up regularly with the RSPO Secretariat while awaiting the decision by the CP on the RSPO certification suspensions. While FGV understands that these matters need to be considered and deliberated thoroughly by the CP, we believe that the process is taking much longer than necessary. FGV is committed to obtaining RSPO certification for all its mill complexes to demonstrate compliance with the RSPO Principles and Criteria (P&C). In the meanwhile, FGV is forced to put on hold efforts to achieve certification for remaining uncertified mill complexes until and unless a decision is made by the CP on the matter. Our inability to provide a clear response to our stakeholders on the matter due to the delay by the CP puts FGV in a very difficult position, not to mention the significant negative impact this is having on FGV from a reputational and commercial standpoint. FGV was also issued a Withhold Release Order (WRO) by the United States (US) Customs and Border Protection (CBP) on 30 September 2020, against palm oil and palm oil products made by FGV, its subsidiaries and joint ventures (JV). FGV views the WRO very seriously and is determined to take all necessary steps towards the lifting of the WRO. In relation to this, we have recently appointed ELEVATE, an industry leader in sustainability and supply chain services globally to conduct an independent assessment of FGV’s operations against the 11 International Labour Organisation (ILO) Indicators of Forced Labour, as advised by the CBP. FGV estimates that we would be able to submit to the CBP, a petition to modify the WRO, together with the assessment and verification of remediation report by ELEVATE towards the end of 2022. OUR SUSTAINABILITY APPROACH We have re-strategised our approach to sustainability and our Group Sustainability Framework encapsulates our latest thinking. To continue thriving, remain relevant and competitive in an environment that is constantly changing, all businesses must transform and not be bound by but rather challenge tradition, which applies to FGV as well. Innovation will be pivotal to our transformation as we discover, through Research and Development (R&D), more effective ways to execute, new applications for our resources and develop ground-breaking products to elevate and bolster our market positioning all of which will lend to stronger, more sustained economic growth. ESG considerations are infused into our transformation and innovation efforts to promote incremental and disruptive sustainability-oriented progress.
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