STATEMENT AND REPORT ON CORPORATE RESPONSIBILITY

Land Use and Conservation Stewardship

The Group is prudent in managing its land use and mitigates the potential impacts in high conservation areas. The conservation areas in the logged over forests gazetted for plantation include riparian reserves, wetland landscapes, marginal soil areas, hilly terrains and water bodies. More than 8% or 5,884 acres of the Group’s total land bank in Sabah has been reserved for the purpose of conservation. High conservation sites within concession areas have also been identified for conservation purposes in the Group’s operations in Indonesia.

One of the important value-added conservation initiatives is the rehabilitation of riparian reserves. Existing riparian buffer zones had been demarcated and protected. During replanting, the old oil palm stands are retained if the riparian reserves have altered due to the meandering nature of the waterways. This helps to reduce water velocity and minimise pollution due to river bank erosion whist natural proliferation of vegetation is encouraged with minimal intervention.

In-situ forest tree planting initiatives are on-going in conservation areas such as steep terrains and flood prone zones. Suitable tropical tree saplings such as jelutong (Dyera costulata), bongkul (Neonauclea subdita) and mahogany (Swietenia spp.) continued to be planted at designated conservation sites. The management closely monitors the survival rates of these planted tree saplings, replaces dead saplings and continue to identify additional areas that can be rehabilitated with the local tree species.

Due to the systematic replanting programme in the Sandakan region, the mature oil palm areas have been reduced slightly to 80.3% (2013 : 82.6%) whilst the immature areas increased to 6.7% of the Group’s total land bank.

STATEMENT AND REPORT ON ENVIRONMENTStatement on Environment

The Group’s sustainability pillar involving ‘Care for Environment’ focuses on the environmental aspect of the

business. It relates to specific and relevant initiatives which promote site conservation, biodiversity enhancement

and also environmental protection. The effectiveness of sustainable resource management relating to soil,

water, air and waste stewardship is a vital component of management leading towards greener footprints

in the production of sustainable palm products. The Group’s effort in the “Hundred-Acre Wood” depicts an

unassuming centre of excellence for conservation that continues to showcase the Group’s green endeavour.

The Group also values its engagement with relevant stakeholders and hope that through effective and dynamic

dialogues, greater understanding and partnerships can be forged on the subject of sustainability.

Forest buffer zone inMalaysian operations

56 I J M P L A N TAT I O N S B E R H A D

The Group’s ‘Hundred-Acre Wood’, a conservation site located in Sg. Sabang estate in the Sugut region continues to serve as a platform for eco-conservation and plays an added role for natural science education, research and training imperatives. The site serves as a constant aide memoire for all stakeholders on the need to continue working together in search of achieving a balance between business goals and environmental stewardship especially in-situ conservation. In the reporting year, the Star Switchup TV programme telecasted a video footage of the ‘Hundred Acre Wood’, highlighting the conservation initiatives by the Group.

The Sugut Orchid Garden, an ex-situ conservation initiative is one of the flora enrichment projects in the ‘Hundred-Acre Wood’ where it house more than 200 species of indigenous orchids found in Sabah. This includes some endemic species such as the Dendrobium cymboglossum, Phaleanopsis bellina, and Paphiopedilum dayanum. This inconspicuous garden provides a conservation and educational stage for those who are fascinated in tropical Orchidaceae botany.

Hundred Acre Wood Orchid Garden

Dendrobiumcymboglossum

Phalaenopsis amabilis

Paphiopedilum lowii

Bulbophyllum lobii

Bulbophyllummastersianum

Phalaenopsis bellina

Sabang Orchid Garden

57A N N U A L R E P O R T 2 0 1 4

Water Management

The Group is careful in managing its water resources and adopts the industry’s best practices to optimise water utilisation. The Group strives to reduce and recycle the water where possible.

In the pre-nursery management, the pot-tray system has been adopted in order to reduce the consumption of both water and soil. In the management of the main nursery, the Group continues to implement the drip irrigation system as replacement of the conventional sprinkle system for the Sandakan replanting programme. This system was further enhanced with the installation of the additional drippers to reduce water wastage resulting from soil surface evaporation and help to minimise the duration for irrigation.

The Group is vigilant with the weather pattern in the regions where we operate. The management has put in place preventive and mitigating measures to address any prolonged water crisis such as droughts. All of the operating units have at least one large water reservoir for water security and it serves as part of risk management during drought. Alternative water sources such as underground water extractions and more storage tanks are also installed. In addition, all houses in the operating units and processing plants are equipped with plastic water storage tanks for rain harvesting. Agricultural practices such as EFB mulching is done systematically and this is assisted by the usage of mechanised buffaloes with particular focus on marginal soil such as sandy areas to retain soil moisture. Correct frond pruning is carried out to reduce excessive transpiration from leaf surfaces.

Resource Stewardship

Responsible stewardship of natural resources involves a commitment towards utilising, protecting and enhancing

the resources in a sustainable manner. In this respect, the Group adopts a comprehensive environmental

management system that covers all aspects from oil palm cultivation to palm oil milling. This management system

comprises sustainable agricultural practices, relevant policies, operating procedures, performance monitoring

and audit reviews. The system is developed in a structured manner and revised from time to time to manage the

resources from our business activities throughout the supply chain.

Water catchment in Minat Teguh Estate

In order to ensure that the water is safe for human consumption, all agrochemical weeding activities and application of inorganic fertilisers are strictly prohibited near water catchment areas. Water is being treated before being channeled for human consumption. The quality of treated water is being analysed annually by an accredited third party laboratory to ensure that the quality of the treated water adheres to the drinking water standards of the World Health Organisation (WHO).

Palm oil mill effluents (POME) are treated before being channeled to the selected fields approved by the Department of Environment (DOE) for land irrigation. The Group continuously monitors and reduces the Biological Oxygen Demand (BOD) level through the latest effluent treatment technology. In the reporting year, the membrane technology tertiary effluent treatment has been commissioned in the Desa Talisai palm oil mill.

In view of the impending dryness attributable to the El Nino phenomenon in 2014, efforts have been stepped up to conserve additional water for both operational and domestic use. This includes desilting existing ponds, bunding up new catchment areas, boosting rain-water harvesting and other related initiatives.

Soil Management

The Group has adopted the plantation industry’s best management practices in soil management to improve soil fertility, reduce erosion and address pollution management in all the operating units. The Group’s oil palm fertiliser

STATEMENT AND REPORT ON CORPORATE RESPONSIBILITY

I J M P L A N TAT I O N S B E R H A D58

programme is recommended by an in-house qualified agronomist and his team. The scientific recommendations are based on the leaf nutrient and yield performance profiling of the oil palm trees and their blocks. The planting of leguminous cover crop is the Group’s standard practice to reduce soil erosion, surface run-off and it helps to retain soil nutrient and moisture content. Besides, systematic frond stacking, application of empty fruit bunches, bio compost and dried decanter cakes are also carried out to improve soil fertility especially in areas identified as marginal soils. In replanting areas, all the oil palm tree biomass are chipped and spread in the fields to decompose in-situ. The nutrients of the oil palm biomass can help to improve and restore soil fertility.

The Group has also implemented integrated pest management involving a combination of different pest management techniques in order to keep the level of the pest population below acceptable thresholds while minimising the use of pesticides. The Group’s R&D Department continues to carry out an effective pest census system to monitor the pest populations and their natural predators. Blanket spraying is prohibited in the plantation. The epiphytes, leguminous crops and other ground cover including soft weeds such as Nephrolepis biserrata, Eleusine indica, Cynodon dactylon are important habitats for avian birds and beneficial insects. In this reporting year, another 850 predatory insects such as Platynopus spp. and Cantheconedia spp. were released in the fields to keep the level of the pest population below acceptable thresholds. In addition, planting of beneficial plants such as Antigonon leptopus, Turnera subulata and Cassia cobanensis continued to be carried out to encourage the proliferation of natural predatory insects. In the reporting year, the Group has planted more than 6,800 polybags of beneficial plants in the field.

Air Quality Management

The Group continues reducing air pollution levels at all operating units and processing plants. The air pollutant levels from the processing plants are closely monitored through Continuous Emission Monitoring System (CEMS) which is directly linked to the Department of Environment’s (DOE’s) monitoring system. Soil sealant technology was incorporated at several housing quarters and main roads to reduce dust levels.

The Group implements a strict zero burning policy in all land clearing sites including new planting areas in the Indonesian operations and the replanting programme in the Sandakan region. Moreover, the zero burning policy has been incorporated into land clearing contracts in which external contractors are engaged and continued to be monitored by management.

Recycling campaign in the operating units

Waste Management

Common waste generated from the plantations include biomass waste from the fields, domestic waste and sewage from human activities, scheduled waste from workshops and chemical stores and palm oil milling by-products and effluent. Improper handling of these wastes can pose environmental contamination risks to natural resources such as water and soil contamination. In this respect, the Group aligned its waste management strategy and policies in accordance with the industry’s best practices and adherence to the legal regulatory framework. All disposal and treatment methods adopted are in adherence to regulatory requirements. Domestic wastes from housing quarters and offices are collected on a routine basis by in-house waste collection units. All collected wastes are disposed at designated landfill sites which were carefully selected to avoid water source contamination. Scheduled wastes are securely stored, labeled, recorded and disposed in accordance to the Environmental Quality Act 1974 (Scheduled Waste) Regulations, 2005.

The Group also adopts a zero waste discharge policy in its milling activities. Treated palm oil mill effluent (POME) and empty fruit bunches (EFB) are recycled into approved and designated fields for irrigation and mulching purposes respectively. Besides, both POME and shredded EFB fibres are also used to produce bio-compost in a composting plant located at the Sabang Palm Oil Mill-1 in Sugut region. The bio-compost is then applied in the fields for its nutrient and soil conditioning benefits. Other palm oil milling by products such as mesocarp fibres and the fruit shells are also utilised as boiler fuel to generate electricity and steam as replacement for non-renewable fossil fuel.

The Group continues to promote recycling activity at its office and housing areas. Recycle bins are provided at strategic places to encourage employees to practice the 3Rs (Reduce, Reuse and Recycle) culture. The Group also organised regular recycling campaigns “Greening Saturdays” at the Sandakan headquarters.

59A N N U A L R E P O R T 2 0 1 4

Energy Management and Climate Change

TheGroupstrivestomaximisetheuseofrenewableenergyin our operations. Waste and biomass generated in themilling process are fully utilised either as fuel substitutesinthegenerationofsteamandelectricityorasvalueaddedby-products for consumption in the fields. The amount ofrenewableandnon-renewableenergyusageismonitoredona regular basis under the energy management monitoringplan. The processing plants continue to innovate ways tooptimise the use of shells in electricity generation so thatexcessshellscanprovideadditionaleconomicreturnstothebusinessunits.Inthereportingyear,theDesaTalisaipalmoilmillwasarecipientoftheIJMInnovationAward2013foraninnovationinenhancedefficiencyinshellutilisation.

TheGroup has taken the initiative tomonitor andmanageGHGemissionsthroughouttheGroup’soperations.WehavecloselymonitoredthesourcesofGHGemissionandits levelintheoperationsagainsttheavailablebaselineinformation.TheGroupwillalsocontinuetoadoptindustrybestpracticeswhile continuing to explore and implement available newinnovationsandtechnologiestominimisetheGHGemissionin the operations. We envisage that the greatest potentialfor GHG emission reduction will be from the avoidanceor capturing of methane gas produced from the palm oileffluenttreatmentplants.Themaidenpalmoilmilloperatingin Indonesia has included the biogas capturing plant whilebaselineworksareongoingtoincorporatebiogascaptureattheexistingmillsinSabah.

Oil palm trees are known to possess high rates of netprimary productivity and biomass growth. The trees actas a “carbon sink” and contribute to carbon sequestration

fromtheplantations.Basedon themethodologydevelopedby the Malaysian Palm Oil Board (MPOB), the total carbonsequestered at has reached about 800,000 metric tonnes,which is 3% higher compared with the previous year oraveraging 32 metric tonnes per planted hectare based onthe latest palm age profile in the Malaysian operations.The total amount of carbon sequestered achieved 303,276metrictonnes,a49%increasecomparedtothelastreportingyear for the Indonesia operations following thematurity ofthe trees.The total carbonsequestered theGroup’splantedareasaretabulatedandshownintheChartbelow.

Total Carbon Sequestered from the Malaysian and Indonesian Operations (FY 2006 to FY 2014)

1,000

800

600

400

200

0

FY20

12

FY20

11

FY20

13

FY20

14

FY20

09

FY20

10

FY20

08

FY20

07

FY20

06

MALAYSIAN OPERATIONSINDONESIAN OPERATIONS

Tota

lCar

bon

Seq

ues

tere

d(M

T)

Biogas facility atpalm oil mill in IPS – Indonesia

STATEMENT AND REPORT ON CORPORATE RESPONSIBILITY

I J M P L A N TAT I O N S B E R H A D60