FGV Annual Report 2020

RSPO Suspension In 2018, the RSPO Complaints Panel suspended the Serting Palm Oil Mill Complex in Nilai, Negeri Sembilan citing gaps in our labour practices. In response, FGV in consultation with the RSPO developed an action plan to address the concerns raised and numerous actions were implemented. Three quarterly reports were submitted to the RSPO in March, June and September 2019. FGV also made public its action plan. These measures led to the reinstatement of the RSPO certification of the Serting Complex in August 2019. However, in January 2020, the Complaints Panel decided to re-suspend the certification of the Serting Complex based on the verification audit in October 2019 that highlighted, among others, the situation relating to the regularisation of workers in Sabah. It also suspended the certification of other unaudited mills. Following this directive, FGV has addressed the concerns raised and another verification audit commenced in November 2020 and is expected to conclude in April 2021. RSPO Certification FGV strives to strengthen its sustainability credentials through the Roundtable on Sustainable Palm Oil (RSPO) certification as well as the International Sustainability and Carbon Certification (ISCC). RSPO is the most widely recognised global standard for oil palm sustainability. It adopts a holistic approach and certification is based on audits that measure the negative impacts of oil palm cultivation, oil processing and product manufacture on a variety of economic, environmental and social indicators. With an awakened marketplace for environmentally and socially responsible products, the demand for sustainable palm oil is on the rise. Growers, refiners and product manufacturers, in the meantime are also being incentivised by the higher profit margins of sustainable palm oil. RSPO certification began in 2008 and is a voluntary initiative. FGV volunteered for RSPO certification, and is one of the earliest plantations companies in the world to obtain the RSPO certification in 2010. Since then, we have in place a Time-Bound Plan that aims for all our 68 mill complexes to be certified by 2022. Following the RSPO Complaints Panel (CP)’s directives of 13 January 2020 – which resuspended the RSPO certification for FGV’s Serting Complex and suspended FGV’s ongoing RSPO certification processes – FGV remained steadfast in its efforts to continue implementing its action plan to address the CP’s directives. The verification audit by RSPO that was initially scheduled for June 2020 was delayed due to the COVID-19 pandemic and the Movement Control Order (MCO) imposed by the Malaysian Government. The verification audit eventually commenced with a desktop review in November 2020. Bureau Veritas Certification (BVC) has been appointed by the RSPO as the independent certification body to conduct the verification audit. Site audits at six (6) of FGV’s complexes - four (4) in Peninsular Malaysia and two (2) in Sabah - have been included as part of the verification exercise. The verification audit is expected to be completed by April 2021. The findings of the verification audit will inform the RSPO CP’s decision on the lifting of the certification suspension. FGV has addressed the CP’s directives to the best of its ability and FGV is committed to ensuring continuous compliance to all relevant standards as a responsible and sustainable business. When the suspension is lifted, FGV will proceed with the certification of the remaining mills. As at end 2020, a total of 33 FGV complexes had obtained the RSPO certification. This translated to 454,918 MT of Certified Sustainable Palm Oil (CSPO) and 112,398 MT of Certified Sustainable Palm Kernel. In view of the suspension of the RSPO certification, we were unable to renew the certification of our RSPO Palm Trace product that had expired. This affected the trading of this sustainable product. FGV is in the process of discussing with respective certification bodies to extend the validity of Palm Trace certification on a monthly and quarterly basis so that this certified product can be traded. In 2021, we will be reviewing the existing RSPO Time-Bound Plan together with relevant stakeholders. The review will also deliberate on the RSPO certification of FFB suppliers, especially large plantations. SUSTAINABILITY MATTER: SUSTAINABILITY CERTIFICATIONS 113 Who We Are How We Operate How We Are Governed Additional Information Sustainability Matters Statement & Discussion By Our Leaders