FGV Annual Report 2017

ANNUAL INTEGRATED REPORT 2017 ENSURING OUR BUSINESS STANDS THE TEST OF TIME 59 OUR STAND ON SUSTAINABILITY Effective Communications In 2017, we embarked on a multi-stakeholder approach to address sustainability challenges arising from allegations relating to environmental, social and human rights issues. Pursuant to this, we continue to collaborate with our Stakeholders to enhance our sustainability commitments and this has paved the way for progressive changes in tandem with our sustainability agenda. Economic Performance The oil palm industry is subject tomany challenges such as labour shortages and weather effects that can erode profit margins. Restricting to market access to more discerning multinational organisations that seek sustainability standards is another upcoming aspect that one should not take lightly. Therefore, sustainability certifications such as the Roundtable on Sustainable Palm Oil (RSPO) and the International Sustainability and Carbon Certification (ISCC) play an important role in widening market access and premiums for palm products. Upon obtaining our own RSPO membership in December 2016, we have taken steps to recertify our complexes.We have certified eight complexes as of December 2017, and will continue this effort until we achieve full certification by 2021. Our supply chain is very important to the sustainability of our operations since almost 70% of our Fresh Fruit Bunch (FFB) is sourced from external parties. To ensure the sustainability along our supply chain, we conducted numerous engagements to train our suppliers and buyers on Good Agricultural Practices (GAP), improving social and human rights elements and other sustainability aspects throughout FGV’s palm oil value chain. FGV is working towards knowing all palm sources within our supply chain and providing this information on an online platform called FGV-Traceability of Product (FGV-ToP). FGV-ToP is being developed in three phases. The first phase has been completed, which allows traceability to mill as an intermediary step in achieving full traceability. The second phase will trace the product to the plantation level owned by FGV and FELDA. The final phase will allow traceability up to the plantations of Smallholders and outgrowers. Human Rights Enhancing the Social andHuman Rights elements in the practices at the plantation operations has been one of the main focuses of FGV since 2016. We engaged with The Forest Trust (TFT) in reaching a few objectives. These include (i) identifying the gaps which existed in the operations and (ii) recommending action plans to eliminate or reduce the gaps identified. The exercise was completed in the first quarter of 2017 with some suggestions for improvements. In March 2017, FGV sealed a Memorandum of Understanding (MoU) with the Malaysian Human Rights Commission (SUHAKAM). Thecollaborationisforthetwoorganisationstoco-operatetoensure the Social and Human Rights elements at our plantation operations areenhanced.Using theTFTfindings as thebaseline,FGV teamand SUHAKAM have developed the FGV Social Compliance & Human Rights Action Plan (SCHR Action Plan) and subsequently approved it for implementation inAugust 2017. The SCHR Action Plan focuses on both internal and external improvements. Contractors in the FGV’s value chain have been briefed on the revised contract agreements to ensure foreign guest workers under their payroll are treated fairly. The revised contracts put a great deal of emphasis on the minimum wage structure, employment contract, conducive housing, provision of sufficient and suitable Personal Protective Equipment (PPE) and returning of passports. Engagement with our employees.