Sime Darby: Sustainability as basis for entrusted Quality Palm Fruit - PowerPoint PPT Presentation

Sime Darby: Sustainability as basis for entrusted Quality Palm Fruit Oils Anetta Nowak, Sime Darby R&D Innovation Centre Europe MPOC symposium September 2015

Sime Darby: Centuries of Heritage Kumpulan Guthrie was founded in Singapore in 1821 by Alexander Guthrie as the first British trading company in South East Asia and one that introduced rubber and oil palm in Malaysia Golden Hope Plantations , previously named Harrisons & Crosfield when founded in 1844, was a major oil palm plantation player in Malaysia Kumpulan Sime Darby , founded in 1910 by British businessmen William Sime and Henry Darby, and grew into a diversified multinational. In 2007 all three companies merged to form the new Sime Darby Berhad . 2

Sime Darby focuses on 6 core businesses… Property Plantation Industrial Motor Energy & Utilities Healthcare 3

…with operations in over 20 countries China Germany The Netherlands United Kingdom South Korea Japan Vietnam Thailand Nauru Qatar Canada Malaysia Singapore Maldives Liberia Indonesia Papua New Guinea South Africa Solomon Islands Australia United States New Zealand New Caledonia 4

Palm fruit oils are key food ingredients Palm Oil Palm Kernel Oil 5

Palm fruits oil: clean(est) edible oils from nature • No natural trans fats and erucic acid • No hexane used • PAH-4 low Palm oil • Non GMO Palm kernel oil Risk assessment matrix crude vegetable oils contaminants Hexane Pesticides Polycyclic Aromatic Hydrocarbons (PAH) Soybean oil High Medium Medium Sunflower oil Medium High High Rapeseed oil Medium Medium Medium Corn oil Low Medium Medium Palm oil Absent Low Low Palm kernel oil Absent Low Low Coconut oil Absent Low Very High Source: www.fediol.org 6

Puzzled consumer E621 Environmental Social Impact Impact BHA E124 Climate Local communities Chemicals deforestation change Smallholders pesticides E133 ALL AGRICULTURAL PRODUCTS HAS ENVIRONMENTAL AND SOCIAL IMPACTS IN PRODUCTION, BUT CAN BE PRODUCED IN A SUSTAINABLE MANNER 7

Palm is one of the most efficient crops Palm produces up to 10 times more oil per hectare compared to other major vegetable oils Volume (MT) Hectarage Global Production in 2012 Area under Cultivation in 2012 (Total =186.4 mil tonnes) (Total =258.9 mil hectares) Source: Oil World 2013 8

The Palm Footprint is very small Compared to Other Agricultural Products 16.6 million ha 0.3% of Global 1.1% of Planted with Oil Palm Agricultural Area Global Cropland Globally Agricultural Area Crop Planting Globa bal Area Und nder Agricul ultu ture Crop Planting Fibre Crops Other Crops 2% 34% Livestock Pasture 32% 32% 1552.9 4911.6 million ha million ha Cereals 46% 68% 68% Vegetable Oil 18% 9 Source: Analysis of FAO Statistics 2011

Oil Palm agriculture has proven to be a Major Driver of Economic Development Indonesia Malaysia Approx. 36% world palm oil production Approx. 53% world palm oil production   Approx. 29% of world exports. Approx. 44% of world exports. Contributes around 5% to 7% of GDP Food and estate crops contributed   around 9% of GDP in 2013 Exports revenue  2009 – RM 50 billion Exports revenue of USD19 bil in 2013;  2013 – RM 80 billion Avg. 10.4% to total export revenue. Avg. 10% to total export revenue An estimated 3.7 million people are  The sector also provides  believed to be employed in the palm oil ~500,000 employment opportunities industry in Indonesia. National Key Economic Area: targets  to generate RM178 billion in gross national income by 2020. Source: Indonesia investments, Statistics Source: International Institute of Sustainable Development, Indonesia, International Institute of Sustainable The Star, Department of Statistics, Malaysia, Pemandu Development, Schuster Institute for Investigative Journalism, Bank Indonesia 10

Yield is key for sustainability Sime Darby’s unique palm genome science Max Yield Theoretical ~18.2 t/Ha 19 18 Other 17 factors?? High Yield 16 Oil Yield (t/Ha/y) Architecture 11.9 t/Ha 15 limits? When will we see 14 source limitation? 13 12 11 Bunch number - ? 10 Physically Mesocarp size: amino 9 limited to acids, nucleosides, 8 hormones, cell division, ~90% dry weight nutrients ?? 7 TAG assembly, glycolysis, lipid bodies , 6 energy, carbon sources 5.6 t/Ha 5 Low yield 1 2 3 4 5 6 7 8 9 10 11 Fruit Bunch Lipid characteristics production biosynthesis (Mesocarp size) (Bno) (O/M) 11

Sime Darby’s Total Value Chain Strategy 1965 - today 2015-2020 2015-2030 Good Agricultural Practices, minimize New Biobased chemicals environmental impact of plantations, animal generations and nutritional feed applications of side-streams and biofuels Biofuels ingredients Available today Since 1965 Sime Darby’s developed, implemented and commercialized technologies to achieve maximum use of palm fruit agriculture 12

Sime Darby’s Sustainability Journey Beyond 2015 Spearheading study on High Carbon Stock forest and thresholds 2010 First certification 2008 of SCCS and Achieved ISCC 2004 RSPO certification First 2015 1992 2002 2012 GlobalGAP Acquisition of Elected to UNEP Founding certification Largest producer of New Britain Global 500 Roll of member certified sustainable Palm Oil Honour for of RSPO 1985 palm oil, leading total commercialisation Introduced sustainable production, of zero burning zero food safety, CSR, and practice burning GHG reduction. 2002 POME utilisation 1994 as compost 1990 EMS-ISO Biological 14001 control for IPM Sime Darby Plantation is a leader in plantation sustainability  Pioneered the Zero Burning Policy in 1985.  One of the founding members of RSPO.  Largest producer of CSPO: Malaysia 100%, PNG 100% & Indonesia 96% certified.  No development of primary and virgin forest.  No new development on peatlands.  No development of high carbon stock areas, once defined. 13  Committed to Environmental and Social Principles – HCV & FPIC

Corporate Responsibility & Our Sustainable Practices No-deforesting and Restoring Community Engagement Efforts Protecting Endangered Species Plant Biodiversity e f d c b a e. Rehabilitation of Orang Utan habitat in c. Reaching out to the less fortunate at an a. Rehabilitation of Orang Utan habitat in Ulu Ulu Segama Sabah Aidilfitri celebration. Segama Sabah. d. Scholars attending an awards ceremony f. Protecting and preserving the biodiversity of b. Wild tree species being raised in a nursery. with the Sime Darby Management. Tabin Wildlife Reserve, Sabah One of Sime Darby’s HUMANA Stability of Altered Forest Sime Darby’s Gender Policy Sime Darby actively supports schools in Ladang Binuang for Ecosystems (SAFE) Project in looks after the wellbeing of its sports such as lawn bowls children of foreign workers Sabah, Malaysia plantation workers These children receive their Sime Darby’s Mangrove Participants at Sime Darby’s Sime Darby FC - Currently in education at one of Sime Research Centre is dedicated to Gender Policy workshop, in the 2 nd tier of the Malaysian Darby’s HUMANA schools mangrove conservation teambuilding activities Football League Sime Darby has committed funding of more than RM 90 million over a 14 period of 10 years for Corporate Responsibility activities.

Some Sustainability Practices Implemented As an industry leader, Sime Darby Plantation pioneered many of the sustainable plantation initiatives considered best practices today: Good Water Management Excellent Plantation Ground Cover Crops for Soil Best Mill Practices Management Practices and Moisture Conservation Balanced Age Profile Integrated Pest Zero Burning Palm oil mill effluent Through New & Management Replanting Technique (POME) Treatment Replanting Exercise 15

Integrated Pest Management (IPM) Usage of natural predators and biological solutions as a means to replace and reduce the usage of chemical pesticides in our estates Beneficial plants for Pheromone trapping Cordyceps fungus for insect caterpillar predator insects for Rhinocerous beetles population control Sime Darby: More Nature – Less Chemistry • Paraquat eliminated since 2006 • Rodenticides largely eliminated • Pesticide usage/ha at lowest possible level – Sime Darby: < 2 kg/ha – Avg. Soy industry: > 6 kg/ha Barn owl populations for rodents Sime Darby uses 25 times less pesticides to generate 1 MT palm fruit oils 16 than typically used for soy bean oil

Economic Benefits to Local Communities Improving livelihood: Sime Darby has Outgrowers ’ Scheme in Indonesia, Liberia, Papua New Guinea and Solomon Island and purchase from smallholders in Malaysia In Indonesia, our outgrowers ’ scheme involves 40,000 ha of area , supporting 25,000 families . Sime Darby is also committed to purchase FFB produced by smallholders under the scheme. Target to get 100% RSPO certified by 2020 In Liberia, 44,000 ha have been earmarked on top of the 220,000 ha concession area, for Sime Darby’s outgrowers ’ scheme. In Papua New Guinea and Solomon Island, all our associated smallholders are certified in 2013. Purchase almost 600,000 tonnes of fruit from 16,000 smallholder blocks In Malaysia, outgrowers schemes are being managed by a special purpose entity. However, Sime Darby still purchases fruit from ~ 100 independent smallholders and estates Sime Darby is committed to the balanced development of the economy and the local communities living in areas of its operations. 17