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0 Developing Sustainable Futures: Key Drivers for Sime Darby Maybank Investment Bank Plantation Conference 20 th October 2015

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    Developing Sustainable Futures: Key Drivers for Sime Darby

    Maybank Investment Bank Plantation Conference

    20th October 2015

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    The Sime Darby Group

    Diversified global business

    Operations in 26 countries

    Over 130,000 employees worldwide

    INDUSTRIAL

    One of the worlds leading Caterpillar

    dealers

    ENERGY & UTILITIES

    Core businesses in ports, engineering

    services and water management

    PLANTATION

    The worlds largest producer of

    certified sustainable palm oil

    MOTORS

    A major automotive industry player in

    the Asia Pacific region

    PROPERTY

    A leading Malaysian developer of

    sustainable communities

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    Developing Sustainable Futures

    PROFIT

    PROSPERITYPLANET

    PEOPLE

    Sustainability is a

    companys commitment to

    operate in an

    economically, socially

    and environmentally

    sustainable manner whilst

    balancing the interests of a

    diverse range of

    stakeholders

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    Our Strategic Sustainability Positions

    Strategic Positions Key Focus Areas

    Leverage on sustainability

    to create value

    Sustainability-led innovation and new business

    Carbon, energy and water management

    Mutual growth of communities1

    Effectively manage

    sustainability risks

    Sustainability risk identification, assessment and control

    Ethics and corporate values2Develop sustainability

    Thought Leadership Strategic participation in key sectoral and thematic organisations3

    Instill a performance

    culture

    Environmental, Safety & Health (ESH)

    Lean Six Sigma (LSS)

    Sustainability culture4

    Effective sustainability

    reporting Stakeholder engagement5

    Our five positions drive our sustainability strategy across the Group

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    Our Plantation Value Chain

    605,046

    0.54 2.35

    14Refineries &

    Crushing Plants

    Planted in Malaysia,

    Indonesia, Liberia,

    Papua New Guinea and

    Solomon Islands

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    Roundtable on Sustainable Palm Oil (RSPO)

    The RSPO is a multi-stakeholder initiative that aims to promote the growth

    and use of sustainable palm oil.

    Members include environmental and social NGOs, banks and investors,

    growers, processors, manufacturers and retailers of palm oil products.

    RSPO Principles & Criteria

    1 Commitment to transparency

    2 Compliance with applicable laws and regulations

    3 Commitment to long-term economic and financial viability

    4 Use of appropriate best practices by growers and millers

    5 Environmental responsibility and conservation of natural resources and biodiversity

    6Responsible consideration of employees and of individuals and communities affected by

    growers and mills

    7 Responsible development of new plantings

    8 Commitment to continuous improvement in key areas of activity

    The RSPO provides a robust framework to capture our good practices and provides a foundation to

    continuously improve our methods and address emerging issues of concern.

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    Towards 100% RSPO Certification1

    1. Progress of certification as at 30th June 2015

    2. CSPO Certified Sustainable Palm Oil

    3. CSPK Certified Sustainable Palm Kernel

    4. SCCS Supply Chain Certification System

    98% of Strategic Operating Units RSPO

    Certified

    97% of annual CPO production capacity

    RSPO certified

    Upstream

    Total No. Strategic Operating Units (upstream) 65

    Total No. Strategic Operating Units Certified 64

    Total Annual CPO Production (MT) 2,355,647

    Total CSPO2 Production (MT) 2,292,000

    Total Annual PK Production (MT) 547,005

    Total CSPK3 Production (MT) 520,000

    93% of refineries RSPO SCCS certified

    Downstream

    Total No. Refineries & Crushing Plants

    (downstream)14

    Total No. Refineries SCCS4 Certified 11

    Smallholders / Third Party FFB

    Total External FFB Processed (MT) 1,222,207

    Total Certified External FFB Processed (MT) 590,314

    95% of annual PK production capacity

    RSPO certified

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    Progress of Our Supply Chain Certification

    Mass

    Balance

    Certified

    Segregation

    Certified

    Not

    Certified

    South Africa

    Hudson

    & Knight

    Vietnam

    Nhabe

    SD

    Biodiesel Malaysia Jomalina

    Nuri

    Kernel

    Crushing

    NuriAustral

    Kempas

    IndonesiaPT GHN

    Refinery

    Rantau

    Kernel

    Crushing

    Netherlands

    & UKUnimills Liverpool

    Thailand

    Morakot

    Papua New

    Guinea

    Kumbango

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    Key Parameters for Traceability

    Plantation Estate

    Oil Mill

    Bulking Facilities

    Refinery

    Client

    Mill name

    Order number

    Date

    Quantity

    Bulking facility name

    Order number

    Security Seal number

    Bulk tank number

    Date

    Quantity

    Refinery name

    Order number

    Port details

    Ship details

    Date

    Quantity

    Client name

    Order number

    Date

    Quantity

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    Pioneering Good Agricultural Practices in Plantation

    Integrated Pest Management

    Historically, we pioneered the development of good agricultural practices

    Practice of felling and shredding old stands of oil

    palm to decompose in situ

    Preserves and restores the chemical balance and

    fertility of the soil

    Reduces associated carbon emissions

    Reduces risks of uncontrolled forest fires

    Admission to the United Nations Environment

    Programmes (UNEP) Global 500 Roll of Honour

    for Environmental Achievement during the Rio

    Earth Summit in 1992.

    Zero Burning Replanting Technique

    Use of leguminous cover crops (LCC) to assist in

    soil conservation, soil biological activity and

    moisture retention

    Use of compost and palm oil mill effluent as a

    soil conditioner

    Rainwater capture and utilisation

    Water table management to minimise impact of

    saltwater incursion and acidity levels

    Soil and Water Management

    Pheromone

    trapping for

    rhinocerous

    beetles

    Barn owl

    populations

    for rodents

    Beneficial plants

    for caterpillar

    predator insectsCordyceps fungus for insect

    population control

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    Progressing Sustainable Practices in Plantation

    and continue to progress developments in this area.

    Adoption of a no peatland planting policy

    Adoption of rigorous water management practices on

    existing plantations on peatland

    Peatland Protection

    Emissions monitoring via annual carbon inventories

    Strategic emissions reduction initiatives and targets

    Operational Carbon Management

    Adopted alternatives and stopped the use of

    paraquat in the early 2000s

    Mitigated potentially harmful effects of paraquat on

    the environment and high health and safety risks, if

    used inappropriately

    Alternatives to Paraquat

    Signatory of the Sustainable Palm Oil Manifesto,

    which commissioned a scientific study on HCS

    The HCS Study aims to

    develop a definition of HCS forests

    identify methods to delineate HCS forests

    provide guidance on how to accommodate the

    rights and livelihoods of local communities

    High Carbon Stock (HCS) Study

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    Annual Carbon Inventories

    Sime Darbys

    Carbon Inventory

    Across 8

    Countries

    Covers 517

    Operating

    Units

    Includes

    all

    Divisions

    More than

    95% of

    global

    operations

    Since 2011, we have been monitoring our carbon emissions annually and

    aim to reduce emissions

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    Sime Darbys Carbon Emissions

    Sime Darby Group Total Carbon Emissions (in million tonnes CO2e)

    2.41

    (93%)

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    Profile of Plantation Carbon Emissions and Energy Use

    On average, 69% of Sime Darby Plantations carbon emissions are from effluent treatment,

    and 86% of energy is sourced from biomass.

    Carbon Emissions Sources: Energy Use:

    86%

    6%3% 1%

    4%

    B20 BiodieselBiomass DieselElectricity Medium fuel oilNatural gas Petrol

    Biomass

    69%

    13%

    6%

    7%1% 3% 1%

    Effluent Treatment BoilersFertilisers Purchased ElectricityHeavy Machineries Electricity GenerationOther

    EffluentTreatment

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    Primary Carbon Reduction Target

    Plantation Divisions Upstream Emissions Intensity(tCO2e/ mt CPO processed)

    Sime Darby Plantation aims to reduce upstream emissions intensity by 40% by 2020,

    from 2009 baseline levels.

    2014

    1.00

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    Carbon Reduction Initiatives

    Biogas

    Capture from

    Palm Oil Mill

    Effluent

    Composting

    of Palm Oil

    Mill Waste

    Use of Low

    Carbon

    Fuels

    Building

    Energy

    Efficiency

    Programmes

    Process

    Energy

    Efficiency

    Programmes

    Use of

    Renewable

    Energy

    Peatland

    Planting

    Policy

    With the majority of carbon emissions coming from effluent treatment, biogas capture

    from palm oil mill effluent is a key feature of our carbon reduction strategy.

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    Free, Prior and Informed Consent

    He who brings kola nut, brings life Liberian proverb

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    Participatory Mapping

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    Lean Six Sigma

    Breakdown of Benefits by Division

    In FY2015, LSS benefits exceeded the target of RM100 million for the year. We are on track on-

    track to achieve our target of RM775 million cumulative cost savings from FY2013-FY2017

    RM208.99 million

    actual benefits

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    Plantation Lean Six Sigma Benefits

    Plantation Downstream,

    46.8%

    Plantation Upstream,

    3.0%

    Procurement Project, 50.2%

    RM42.2 million

    actual benefits

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    Health & Safety

    This year, we rolled-out a FELT Leadership Programme for the Sime Darby Groups Management Team, to

    ensure that an uncompromising health & safety culture is modelled and driven from the very top.

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    Respecting Fundamental Rights

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    Fire Management and Haze

    Find out more at www.simedarby.com

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    Implementation Our Values

    Engage

    Respect

    Enhance

    Protect

    Empower

    Disclose

    Respect &

    Responsibility

    Integrity

    Excellence

    Enterprise

    Core Values

    Sustainability

    Values

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    Our Sustainability Journey

    1985 Applied

    zero burning

    1990 Applied biological

    controls for IPM

    1992Elected to UNEP

    Global 500 Roll of

    Honour for

    commercialisation of

    zero burning

    practice

    2008First

    certification

    against

    RSPO P&C

    2004Founding member

    of RSPO

    2012Largest producer of

    certified sustainable

    palm oil

    2014Commissioned

    the HCS Study

    with other SPOM

    signatories

    2011Group-wide carbon

    inventory established

    and COBC launched

    2009Oil palm

    genome

    sequenced

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    Sustainability: A Journey of Continuous Improvement

    POIGNEXT

    New standards seek to strengthen approaches to Human Rights, No-Deforestation, Climate

    Change, community wellbeing and transparency.

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    High Carbon Stock

    Go /

    No Go

    A new method for sustainable land use planning

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    LiDAR for Carbon Stock Mapping

    The HCS Study proposes the use of new techniques to better balance environmental protection

    and socio-economic needs of developing nations.

    Source: HCS Study

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    High Carbon Stock Study

    Find out more at www.carbonstockstudy.com

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    Meeting Customer Demand

    Source: RSPO

    Current CSPO Commitments in Europe:

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    Regulatory Requirements

    Source: Adapted from Global Reporting Initiative

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    and Investor Expectations

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    Mutual Growth and Development

    Gbah town (2010)

    Gbah town (2012)

    A sustainable palm oil industry contributes to national and local economic development,

    while balancing traditional needs and environmental protection.

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    Thank You