How it Affects FGV How it Affects FGV How it Affects FGV Continuous changes and new developments in regulations over licensing conditions and certification requirements affect all players in the palm oil industry. The implementation of new regulations may require clarification and create uncertainty in FGV’s ability to comply without disrupting operational efficiency and in cost efficient manner. Climate Change: Unfavourable weather conditions significantly impact crop ripening, harvesting capability, and FFB yield. Prolonged droughts can harm oil palm inflorescence, leading to bunch failure, while floods can hinder estate access and cause FFB loss, resulting in low crop recovery. Sustainability Compliance: Stricter sustainability regulations, such as MSPO 2.0 and the EUDR, require traceability and compliance. Growing demand for certified Roundtable Sustainable Palm Oil (RSPO) pressures FGV to adopt responsible practices. Environmental risks such as land degradation and excessive water use may lead to fines or certification loss. Social issues, including labour rights and land disputes, can impact reputation and market access. As a public listed company, FGV is expected to continuously comply to the Bursa Securities’ MMLR including public shareholding spread (PSS) to ensure adherence to corporate governance and disclosures. The group strive to adhere to all the requirements. Mitigating Actions • Stakeholder Engagement: Continuous engagement with all relevant stakeholders to thoroughly understand the regulatory changes, evaluate the potential negative impact, and ensure timely adjustments to maintain compliance and operational efficiency. • Industry Collaboration: Collaborate closely with other industry players to maintain regular and proactive engagement with local regulatory bodies and authorities, anticipating policy changes, providing valuable industry feedback, and staying informed of any changes. • Certification Bodies: Select and appoint competent accredited certification bodies, work closely with them and work on recommendations on gaps closure. • Agricultural Practices: Uses moisture conservation and mulching to protect immature palms. • Flood Management: Builds bunds, improves drainage, and adjusts harvesting in flood-prone estates. • Climate Action Plan: Focuses on six key areas including Climate Governance, Waste Management, Operational Efficiency, Carbon Management, Water Management, and Climate Awareness. • Emission Reduction: Establish short-term and long-term targets to enhance sustainability efforts. • Labour Rights Compliance: Engaged LRQA for independent assessments and developed a remediation plan addressing 12 key areas. • Worker Welfare: Strengthened recruitment policies and procedures and enhanced workers’ housing and facilities. • Renewable Energy: Implement rooftop solar projects to reduce costs and carbon footprint Forced Labour Audits: Incorporated into routine compliance checks. • Energy: Actively expand solar, biomass, and biogas projects from Palm Oil Mill Effluent (POME) to meet energy needs while support sustainability goals at industry and national levels. Mitigating Actions • Internal Governance Risk Assessment: Strengthen policies, establish and update risk assessment of non-compliance with Bursa Securities’s requirements including tracking and monitoring of breaches and implementation of corresponding mitigations. • Transparency and Stakeholder Communication: Maintain transparency with shareholders, investors, and stakeholders through timely disclosures, issuing announcements on corrective actions, and reinforcing FGV’s commitment to governance and regulatory compliance. Additionally, uphold the Company’s reputation with internal and external stakeholders by effectively utilising various internal channels and media engagements to communicate key updates and initiatives. • Proactive Engagement and Remediation Plan: Continue engagement with FELDA and relevant stakeholders to implement the actions required to rectify the PSS breach within the time frame as set out by Bursa Securities. Licensing and Certifications Climate Change and Sustainability Compliance Compliance with Listing Requirements SUSTAINABILITY RISK SR LEGAL & REGULATORY LR 229 Sec 07 SUSTAINING VALUE THROUGH GOOD GOVERNANCE
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