65 ANNUAL INTEGRATED REPORT 2021 ADDITIONAL INFORMATION HOW WE ARE GOVERNED REINFORCING SUSTAINABILITY Challenges Action plans Outcomes Increase in raw materials price and costs • Adopted good positioning strategy in procurement of raw materials • Close monitoring of raw material price and inventory management to mitigate price risk exposure • Implemented cost savings initiatives to improve margins • Focused on high demand products that provided higher returns • Strategic hedging and trading for CPO to improve profit margin, ensure smooth operations, and deliver sustainable supply • Tightened control of processing costs with maximum utilisation factor of mills/plants, and efficient inventory control management to mitigate the surge in raw materials price • Continuous engagements with external crop suppliers have improved the raw material supply to the mills and plants for sustainable operations • Responded to consumer behaviour changes and price increases during the pandemic by offering a variety of packaging sizes to increase affordability in the market, and by venturing into other consumer packaged products like sauces and spices US CBP ban and on-going RSPO suspension causing sale restrictions to key customers and at destination market • Regularly followed up on the RSPO suspension • Explored new markets and continuously engaged with industry decision makers • Kept buyers well informed of FGV’s action plan in addressing the suspension and bans to keep their buying interest • Strictly adhered to fair labour practices and upheld human rights • The RSPO Complaints Panel (CP) has yet to deliver its decision. The CP is currently seeking endorsement from Assurance Service International (ASI) on the verification audit report on the implementation of the CP’s directive, conducted by an independent auditor appointed by the RSPO secretariat • The exploration for new markets by venturing into Middle East and North Africa (MENA) and South East Asia (SEA) regions have already commenced and currently, the suitability of future potential partners and distributors are being identified • FGV kept our stakeholders informed through periodic press releases, quarterly media and analyst briefings, and through direct communications detailing latest updates on the RSPO certification suspension and the United States (US) CBP • Together with the Fair Labor Association (FLA), FGV has developed a long-term and comprehensive programme to implement a range of initiatives to realign our labour practices to international standards and uphold the rights of our workers. Our progress under the FLA is subject to their validation and is made available to the public through our website
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