HOME

OUTGROWER ENGAGEMENT

In preparing its 2012 Carbon Footprint Report, Kulim began a long-term engagement process with its out growers, who are estimated to account for more than 30% of its total footprint. This work has continued through 2018 and has now evolved into a full-scale programme to assist these outgrowers achieve RSPO certification. Two (2) out grower groups have, so far, achieved this certification, while we continue to work with the others. We believe that good agricultural practices, including the efficient use of fertilizers, will help to reduce emissions from third-party FFB.

INTERNATIONAL SUSTAINABILITY AND CARBON CERTIFICATION (“ISCC”)

ISCC is a multi-stakeholder initiative with a multi-pronged objective of reducing GHG emissions, promoting sustainable use of land, protecting natural biospheres and effecting social sustainability. The ISCC standard verifies compliance with the requirements of the European Unions, Renewable Energy Directive and Germany’s Sustainability Ordinance and it is now amongst the most successful certification schemes. Five (5) of our mills have been accorded to ISCC status. Palong Cocoa POM was latest mill to be certified with ISCC on 9 May 2018. The Group’s Sindora, Tereh, Sedenak and Pasir Panjang POMs were audited during the year and have successfully been recertified to the ISCC standard. 

RSPO CERTIFICATION

The sustainable production of commodities has now become mainstream, with Governments, industry players, traders and buyers,indigenous groups and consumers coming together to voice their concerns and forge systemic solutions to move forward. To allay the growing concerns of environmentalist and consumers, the RSPO was established in 2004 to promote the sustainable production and use of palm oil for the People, Planet and Prosperity. RSPO has drawn up eight (8) Principles and 43 Criteria (“RSPO P&C”) that define sustainable palm oil production, one of the most important being that no primary forests or areas that contain significant concentrations of biodiversity or fragile ecosystems or areas that are fundamental to meeting the traditional needs of indigenous communities may be cleared for the cultivation of oil palms. An infringement of the rules and standards may result in the RSPO certification being with drawn at any time.

In 2017, total production of certified palm oil amounted to 12.08 million tonnes or 19% of the global production (Source: RSPO, 20 February 2018). The demand for responsibly produced palm oil is growing as environmentally and socially responsible buyers are willing to pay premium prices. Kulim was among the first palm oil companies to be a member of the RSPO. Since January 2009, almost all of our plantations, including those of JCorp managed by Kulim, have been fully RSPO-certified. All our five (5) mills have also been certified, the latest being the Pasir Panjang POM, which was certified on 9 March 2017. RSPO certification is valid for five (5) years with a surveillance audit conducted annually and a recertification audit at the end of the fifth year. Since countries differ in their laws for the same criteria, the RSPO P&C are further adapted for use by individual countries through National Interpretations. At a meeting on 6 March 2016, the RSPO Board of Governors has endorsed the revision of the Malaysian National Interpretation (“MYNI”) document. MYNI 2014, as it is known, is based on the RSPO P&C and it super cedes MYNI 2010 which was used for certification of plantations and mills in Malaysia.

The RSPO also developed a mechanism for supply chain traceability from the plantation to the end user. Kulim’s Certified Sustainable Palm Oil (“CSPO”) can be purchased through three (3) mechanisms approved by the RSPO, whereby the “Book and Claim” option is the most simplified method for a buyer to obtain CSPO without high administrative costs and complex logistics.

Presently, CPO from the Tereh POM, Pasir Panjang POM and Palong Cocoa POM are sold under Identity Preserved (“IP”) status, while CPO from two (2) other mills is sold under the Mass Balance (“MB”) mechanism where CSPO is mixed with conventionally produced CPO and tracked throughout the supply chain. 

STAKEHOLDERS ENGAGEMENT

In today’s business environment, organisations do not exist in isolation. These include dealing with more sophisticated, better informed and engaged stakeholders with expectations that corporations will be responsive to their concerns. Hence, stakeholder engagement is no longer optional for most businesses and is in fact, a basis of good corporate governance.

For Kulim, engaging with our stakeholders gives us the opportunity to align our business practices with societal needs and expectations,helping us drive long-term sustainability and shareholders’ value. We pursue stakeholder engagement in sync with our business strategies, as an integral part of an idea-generating, innovative and collaborative exercise.


Objectives Benefit of Engaging Cost of Not Engaging

Tracking social political and environmental issues

  • Maximise positive environmental and social impacts
  • Issue Identification
  • Mitigating and adapting
  • Enhance business intelligence to improve decision making
  • Collaboration, feedback and identify remedial actions
  • Absence or loss of trust
  • Damage control
  • Negative media report
  • Ensure project success
  • Increased business risks
Monitoring and managing stakeholder expectations
  • Reputation capital
  • Ensure buy-in and build trust and understanding
  • Insights and feedback that contribute to value creation and delivering performance
  • Positive impact on business sustainability and a competitive advantage
  • Potential project delay
  • Impaired relations
Ensuring CR programme impacts
  • Strategic value creation
  • Successful outcomes for CR investment
  • Builds social capital and brand loyalty
  • Reputation capital impaired
  • Negative perceptions
Ensure buy-in of employees and builds impact
  • Convergence of company’s values and employee expectations
  • Boost morale and reduce anxiety
  • Increase productivity and efficiency
  • Job satisfaction and intrinsic motivation
  • Drives innovation
  • Disengaged employees
  • High turnover rate
  • Increase in absenteeism rate
  • Lack of trust in management


At Kulim, concerted efforts are continuously being made to build good relations and rapport with our employees, business partners, investors,members of the media, suppliers, government agencies, NGOs, pressure groups, unions and the community at large. We take the utmost care to ensure a variety of perceptions and inputs can be obtained that represents the views and opinions of a broad spectrum of stakeholders.To ensure balanced and fair representation of opinions on a subject matter, we recognise the importance of bringing opposing and critical voices on board. 

Stakeholders issues cannot be treated in isolation. Going back to 2008 and in line with the principles of the Global Reporting Initiative, Kulim has engaged with its internal and external stakeholders to develop a materiality process that will identify and prioritize issues that are of the most interest to our stakeholders and have a bearing on our business across the entire value chain.

MATERIALITY ASSESSMENT

During the year under review, we assessed sustainability-related issues that have an impact on the economic, environmental and social aspects of Kulim’s operations. Several factors were taken into account in identifying the key material matters including: 

• Material matters identified in 2014-2015; 

• Issues highlighted by our key stakeholders in previous engagements; and 

• Significant issues discussed during Board meetings, risks highlighted in our risk register and matters relating to global business trends.The materiality assessment process involved three (3) key steps, which have been described below:

1. IDENTIFICATION

This step involved identifying the matters that are material to Kulim’s business, from both the Group as well as the stakeholders’perspective. For this cycle of reporting,a total of 25 material matters were identified by the key personnel involved in driving Kulim’s sustainability agenda.While some of the material matters such as ‘compliance’ are broad and overarching,others such as ‘grievance mechanism’ are more specific in its impact both on the business and stakeholders’ influence. 

Moving from the 2014-2015 materiality matrix, we have replaced the titles of some material matters, without changing their meaning, to align them closer to GRI terminology. Furthermore, additional material matters have been identified in this cycle of reporting that represent the wide range of sustainability-related risks and opportunities embedded in our value chain.

2. PRIORITISATION

By assessing and ranking the material matters on its importance to the business and to Kulim’s stakeholders, we were able to identify eight (8) matters that are critical. Throughout the report we have expounded why these matters are material and the approach undertaken by Kulim to manage them.

3. REVIEW

This step involved seeking the approval of Senior Management to ensure the prioritisation of the material matters captured Kulim’s efforts and approach to strengthen its sustainability performance.


THE NEW FRONTIER

Today, we are at the new frontier of sustainability. The last decade has seen increased attention to global challenges that are now at the top of both the business and public agenda. Businesses the world over are doing more than ever to tackle the sustainability challenge– to recognise social responsibilities, reduce environmental impacts, guard against unethical practices, make governance more transparent and be more accountable to stakeholders. More than ever before, companies are looking to make sustainability a core part of every business decision they make and a means of creating opportunity and a source of competitive advantage.

Despite all the efforts of companies to shift to more sustainable strategies, the challenges before us are greater than ever before.Soon, more than nine (9) billion people will share our planet.Increasing demands for food, energy and water are pushing nature to its limits. Change has become an undisputed fact, along with natural resource depletion, loss of biodiversity and deforestation, ocean acidification, water and air pollution and acid rain, are all among a growing list of planetary challenges. 

Hence, now is the time for us to step up and forge ahead. Kulim is well aware that the road ahead will not be easy. Nevertheless, we believe we are able to find common ground solutions that are good for businesses, environment and people if we sharpen our focus and get things right. The journey towards a system of sustainability that will enable us all to “meeting the needs of the present generation without compromising the ability of future generations to meet their own needs” is not marked by a clear path. Kulim is determined to play its part in helping define that path that offers greater prosperity for the present as well as future generations.