Sime Darby: Sustainability as basis for entrusted Quality Palm Fruit - - PowerPoint PPT Presentation

Anetta Nowak, Sime Darby R&D Innovation Centre Europe MPOC symposium September 2015

Sime Darby: Sustainability as basis for entrusted Quality Palm Fruit Oils

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Sime Darby: Centuries of Heritage

Kumpulan Guthrie was founded in Singapore in 1821 by Alexander Guthrie as the first British trading company in South East Asia and one that introduced rubber and oil palm in Malaysia Golden Hope Plantations, previously named Harrisons & Crosfield when founded in 1844, was a major oil palm plantation player in Malaysia Kumpulan Sime Darby, founded in 1910 by British businessmen William Sime and Henry Darby, and grew into a diversified multinational. In 2007 all three companies merged to form the new Sime Darby Berhad.

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Sime Darby focuses on 6 core businesses…

Plantation Property Industrial Motor Energy & Utilities Healthcare

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…with operations in over 20 countries

Malaysia Indonesia Singapore Japan China The Netherlands South Africa Australia New Zealand Canada Liberia United States Qatar Germany United Kingdom Maldives Thailand Vietnam South Korea New Caledonia Solomon Islands Nauru Papua New Guinea

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Palm Oil Palm Kernel Oil

Palm fruit oils are key food ingredients

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Palm fruits oil: clean(est) edible oils from nature

• No natural trans fats and erucic acid
• No hexane used
• PAH-4 low
• Non GMO

Palm oil Palm kernel oil Hexane Pesticides Polycyclic Aromatic Hydrocarbons (PAH) Soybean oil High Medium Medium Sunflower oil Medium High High Rapeseed oil Medium Medium Medium Corn oil Low Medium Medium Palm oil Absent Low Low Palm kernel oil Absent Low Low Coconut oil Absent Low Very High Source: www.fediol.org Risk assessment matrix crude vegetable oils contaminants

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E133 BHA E621 E124 Climate change

Puzzled consumer

Chemicals

deforestation

Environmental Impact Social Impact

pesticides Local communities Smallholders

ALL AGRICULTURAL PRODUCTS HAS ENVIRONMENTAL AND SOCIAL IMPACTS IN PRODUCTION, BUT CAN BE PRODUCED IN A SUSTAINABLE MANNER

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Palm is one of the most efficient crops

Palm produces up to 10 times more oil per hectare compared to other major vegetable oils

Source: Oil World 2013

Hectarage

Area under Cultivation in 2012 (Total =258.9 mil hectares)

Volume (MT)

Global Production in 2012 (Total =186.4 mil tonnes)

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The Palm Footprint is very small Compared to Other Agricultural Products

32% 32% 68% 68%

Globa bal Area Und nder Agricul ultu ture

Crop Planting Livestock Pasture

Other Crops 34%

Vegetable Oil 18%

Cereals 46% Fibre Crops 2%

Agricultural Area Crop Planting 4911.6 million ha 1552.9 million ha

16.6 million ha Planted with Oil Palm Globally

0.3% of Global Agricultural Area 1.1% of Global Cropland

Source: Analysis of FAO Statistics 2011

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Oil Palm agriculture has proven to be a Major Driver of Economic Development

• Approx. 36% world palm oil production
• Approx. 29% of world exports.
• Contributes around 5% to 7% of GDP
• Exports revenue

2009 – RM 50 billion 2013 – RM 80 billion

• Avg. 10% to total export revenue
• The sector also provides

~500,000 employment opportunities

• National Key Economic Area: targets

to generate RM178 billion in gross national income by 2020.

• Approx. 53% world palm oil production
• Approx. 44% of world exports.
• Food and estate crops contributed

around 9% of GDP in 2013

• Exports revenue of USD19 bil in 2013;
• Avg. 10.4% to total export revenue.
• An estimated 3.7 million people are

believed to be employed in the palm oil industry in Indonesia.

Source: International Institute of Sustainable Development, The Star, Department of Statistics, Malaysia, Pemandu Source: Indonesia investments, Statistics Indonesia, International Institute of Sustainable Development, Schuster Institute for Investigative Journalism, Bank Indonesia

Malaysia Indonesia

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Yield is key for sustainability Sime Darby’s unique palm genome science

5 6 7 8 9 10 11 12 13 14 15 16 17 18 19

1 2 3 4 5 6 7 8 9 10 11

Oil Yield (t/Ha/y)

11.9 t/Ha TAG assembly, glycolysis, lipid bodies, energy, carbon sources Mesocarp size: amino acids, nucleosides, hormones, cell division, nutrients ?? Bunch number - ? Physically limited to ~90% dry weight When will we see source limitation? High Yield Architecture limits? Max Yield Theoretical Other factors?? ~18.2 t/Ha 5.6 t/Ha Low yield Lipid biosynthesis (O/M) Fruit characteristics (Mesocarp size) Bunch production (Bno)

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Sime Darby’s Total Value Chain Strategy

Good Agricultural Practices, minimize environmental impact of plantations, animal feed applications of side-streams and biofuels New generations Biofuels Biobased chemicals and nutritional ingredients 1965 - today 2015-2020 2015-2030 Available today

Since 1965 Sime Darby’s developed, implemented and commercialized technologies to achieve maximum use of palm fruit agriculture

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1985

Introduced zero burning

1990

Biological control for IPM

1994

EMS-ISO 14001

2002

POME utilisation as compost Largest producer of certified sustainable palm oil, leading total sustainable production, food safety, CSR, and GHG reduction.

1992

Elected to UNEP Global 500 Roll of Honour for commercialisation

• f zero burning

practice

2002

Founding member

• f RSPO

2008

Achieved RSPO certification

2004

First GlobalGAP certification

2010

First certification

• f SCCS and

ISCC

Sime Darby Plantation is a leader in plantation sustainability

 Pioneered the Zero Burning Policy in 1985.  One of the founding members of RSPO.  Largest producer of CSPO: Malaysia 100%, PNG 100% & Indonesia 96% certified.  No development of primary and virgin forest.  No new development on peatlands.  No development of high carbon stock areas, once defined.  Committed to Environmental and Social Principles – HCV & FPIC Acquisition of New Britain Palm Oil

Sime Darby’s Sustainability Journey

Beyond 2015

Spearheading study on High Carbon Stock forest and thresholds

2012 2015

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Corporate Responsibility & Our Sustainable Practices

Stability of Altered Forest Ecosystems (SAFE) Project in Sabah, Malaysia Sime Darby FC - Currently in the 2nd tier of the Malaysian Football League

Sime Darby has committed funding of more than RM 90 million over a period of 10 years for Corporate Responsibility activities.

Sime Darby actively supports sports such as lawn bowls Sime Darby’s Gender Policy looks after the wellbeing of its plantation workers Participants at Sime Darby’s Gender Policy workshop, in teambuilding activities Sime Darby’s Mangrove Research Centre is dedicated to mangrove conservation One of Sime Darby’s HUMANA schools in Ladang Binuang for children of foreign workers These children receive their education at one of Sime Darby’s HUMANA schools

• e. Rehabilitation of Orang Utan habitat in

Ulu Segama Sabah

• f. Protecting and preserving the biodiversity of

Tabin Wildlife Reserve, Sabah

Protecting Endangered Species No-deforesting and Restoring Plant Biodiversity Community Engagement Efforts

• a. Rehabilitation of Orang Utan habitat in Ulu

Segama Sabah.

• b. Wild tree species being raised in a nursery.
• c. Reaching out to the less fortunate at an

Aidilfitri celebration.

• d. Scholars attending an awards ceremony

with the Sime Darby Management.

a b c d e f

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Some Sustainability Practices Implemented

Good Water Management Ground Cover Crops for Soil and Moisture Conservation Excellent Plantation Management Practices Best Mill Practices Balanced Age Profile Through New & Replanting Exercise Integrated Pest Management Zero Burning Replanting Technique Palm oil mill effluent (POME) Treatment

As an industry leader, Sime Darby Plantation pioneered many of the sustainable plantation initiatives considered best practices today:

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Integrated Pest Management (IPM)

Pheromone trapping for Rhinocerous beetles Barn owl populations for rodents Beneficial plants for caterpillar predator insects Cordyceps fungus for insect population control

Usage of natural predators and biological solutions as a means to replace and reduce the usage of chemical pesticides in our estates

Sime Darby: More Nature – Less Chemistry

• Paraquat eliminated since 2006
• Rodenticides largely eliminated
• Pesticide usage/ha at lowest possible level

– Sime Darby: < 2 kg/ha – Avg. Soy industry: > 6 kg/ha

Sime Darby uses 25 times less pesticides to generate 1 MT palm fruit oils than typically used for soy bean oil

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Economic Benefits to Local Communities

Improving livelihood: Sime Darby has Outgrowers’ Scheme in Indonesia, Liberia, Papua New Guinea and Solomon Island and purchase from smallholders in Malaysia Sime Darby is committed to the balanced development of the economy and the local communities living in areas of its operations. In Liberia, 44,000 ha have been earmarked on top of the 220,000 ha concession area, for Sime Darby’s outgrowers’ scheme. In Indonesia, our outgrowers’ scheme involves 40,000 ha of area, supporting 25,000 families. Sime Darby is also committed to purchase FFB produced by smallholders under the scheme. Target to get 100% RSPO certified by 2020 In Papua New Guinea and Solomon Island, all our associated smallholders are certified in 2013. Purchase almost 600,000 tonnes of fruit from 16,000 smallholder blocks In Malaysia, outgrowers schemes are being managed by a special purpose entity. However, Sime Darby still purchases fruit from ~ 100 independent smallholders and estates

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Making sustainability real - Our commitment to local communities in Liberia

Sustainability in Liberia

• 3,000 jobs created – to date
• 7 schools – free education for 5,000

students

• 12 classroom junior high community

school for 322 students

• 2 community clinics – 40,000 residents
• 453 farmers from all 17 townships

surrounding our operations

• 12-months’ worth of technical

assistance and seeds from SDPL to set up rice, corn, and vegetable plots on 50 hectares of land

• USD500,000 in scholarships (through

Sime Darby Foundation) to enhance educational opportunities for Liberian students.

Ebola Outbreak in Liberia Sime Darby Plantation donated RM 500,000 to the International Red Cross in Liberia and has provided additional direct assistance to local communities and Liberian health authorities.

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CSR efforts in Liberia has improved the people’s quality of life and ability to earn a living

New Bomi School Under Construction School Project in Senii Completed Buses Provided to School Children Bomi Estate School Canteen Women Market for Community to Sell and Buy Groceries Well maintained water hand pumps

We are fully dedicated to bring positive impacts on Project Affected Communities.

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Sime Darby’s approach to sustainable agriculture

Sime Darby Plantation actively and continuously engages all necessary stakeholders including communities and their leaders before the commencement of any land development. Prior to developing an area express approval from both the communities and their leaders is required.

Social & Environmental Impact Assessment (SEIA) and High Conservation Value Assessment (HCV) Land Development and Planting Ongoing Sustainable Practices New Planting Procedure (NPP), Free, Prior, Informed Consent (FPIC) and Communications Strategy Community Development

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Sime Darby’s integrated supply chain allows us to manage risks and provide trust to our customers

seed ship consumer refine agriculture

• Sustainably produced palm fruit oils

– Guarantee sustainability: environmental and social sustainability – Traceability of raw materials to origin – RSPO certified (segregated) palm fruit oils

• Minimize processing

– Know origin of palm fruit oils – tracking – Less processing – more natural

• Better Quality

– Retaining goodies provided by nature (β-carotene, Vitamin E) – Longer shelf-life

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Thank you

anetta.nowak@simedarby.nl