FGV Annual Report 2020

Sustainability Matters EFFICIENT USE OF NATURAL RESOURCES Besides reducing its impact on the environment, the efficient use of natural resources makes good business sense. Palm oil is by far the most efficient of oil bearing crop in the world in terms of yield per hectare. In FGV, we pursue to improve our yield by incorporating Good Agricultural Practices. As the world’s largest CPO producer, we focus on improving the productivity per unit area of its operations. In 2020, FGV has outperformed the industry level by 1%( 16.96 MT/Ha vs 16.73 MT/Ha). FGV had also recorded a 2% higher in our OER performance compared to industry level in 2020 ( 20.32% vs 19.92%). We have maximised land usage by undertaking inter-cropping initiatives in our plantations involving cash crops such as banana, SUSTAINABILITY MATTER: BIODIVERSITY & LAND MANAGEMENT pineapple and watermelon. This would protect the soil from erosion during the immature stage of our oil palm and at the same time bring additional economic returns. In addition, the introduction of legume cover crops during the early replanting stage, will also ensure that free nitrogen fixation process takes places to retain and improve soil health and conditions. Our pursuit of the circular economy has led to the increased utilisation of the palm biomass such as fronds, empty fruit bunches and trunks. In addition, we also pursue strict waste management and water management practices to reduce utilisation of these valuable natural resources. The GSP 4.0 advocates NDPE as matter of a mandatory practice. On 19 October 2019, the RSPO CP directed FGV to undertake the following actions in FGVK Indonesia: • To carry out a new soil survey by an external expert, subject to approval and confirmation by the CP, to verify the actual area and boundary of peat within PT Temila Agro Abadi (TAA)’s replanting area in Indonesia. • To provide necessary updates to the local community on the process and mitigation plan. LIMITING THE USE OF AGROCHEMICALS FGV advocates the responsible use of pesticides, herbicides and fertilisers in our plantations. We are guided by the World Health Organisation in this regard, and avoid agro-chemicals that belong to its Class 1A or 1B list. We also do not use hazardous chemicals and agrochemicals listed by the Stockholm or Rotterdam Conventions except in specific situations. Over the past few years, we have progressively reduced the amount of Class 1 herbicides used in our estates, and completely stop using the Class 1 chemical in 2019. We have recorded in year-on-year reductions since 2019. We practice integrated pest management in our operation and prefer to use natural methods to control pests and diseases. No new plantings on peatland, regardless of the depth. Under this practice, FGV maintains natural buffers to mitigate flooding and restore the hydrological function of planted peatland after August 2016. Since then, FGV is committed to preserve all peatland within our operation areas regardless of when the land was acquired. FGV conducts high carbon stock assessment based on High Carbon Stock Approach (HCSA) in determining new areas for oil palm development. Drainability assessment will be conducted to ascertain the viability of replanting in cultivated peatland. FGV ensures there will be no new development on high conservation value (HCV) areas that includes natural forest reserve, primary forest, protection areas and other areas with social concerns. There shall be no open burning/use of fire in any of FGV’s premises. With this, the Group is required to adhere to the following environmental practices: 152 FGV HOLDINGS BERHAD Annual Integrated Report 2020