2016 Sustainability Report April 2016

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1 2016 Sustainability Report April 2016

2 Presentation Outline Business Overview Sustainability Statement & Approach Sustainability Commitment & Performance Appendix: Managing Our Material Issues 2

3 Business Overview 3

4 Integrated and Diversified Agribusiness Capturing Value Across The Entire Supply Chain 33 million oil palm seeds p.a. Develops sugar varieties Diversified crops Indonesia: Oil Palm: 246,359 hectares. Indonesia: Sugar Cane: 13,358 hectares Brazil: Sugar Cane: 52,843 hectares Annual Production Capacity Indonesia: 24 palm oil mills FFB: 6.4 million tonnes Indonesia: 2 sugar mills/refineries Cane crushing: 2.2 million tonnes Brazil: 1 sugar mill/refinery Cane crushing: 3.8 million tonnes Leading market share in branded cooking oil and margarine markets in Indonesia Strong sales and marketing expertise and extensive distribution network, serving ~370,000 retail outlets in Indonesia Indonesia: Rubber: 21,338 hectares Indonesia: 4 crumb/3 sheet rubber factories Leverage on PT Indofood Sukses Makmur Tbk s (PT ISM) 1,100 stock points Indonesia: Other crops: 19,578 hectares Indonesia: 1 cocoa/1 tea mill 5 refineries with annual capacity of 1.4 million tonnes 4

5 Geographical Presence Processing Crumb Rubber Sheet Rubber Sugar Mill & Capacity p.a. Palm Oil Mill Facility Facility Refinery Refinery in MT Unit FFB Unit Dry Rubber Unit Unit Sugar Cane Unit CPO SIMP 13 4,023, ,160, ,425,000 Lonsum 11 2,403, , , CMAA - Brazil ,800, Group 24 6,426, , , ,960, ,425,000 5

6 Key Sustainability Milestones 6

7 Sustainability Statement & Approach 7

8 Introduction Our strategic approach to sustainability and responsible agribusiness is to establish the material issues, set effective targets and manage the operations according to recognised sustainability standards. We identify and manage our material sustainability issues through these key areas:- Governance and integrity Environmental performance Sustainable palm oil sourcing Sustanable products People and communities We aim to manage all our crops according to their respective industry sustainability standards. members of RSPO, ISPO and the Partnership for Indonesia Sustainable Agriculture (PISAGRO) for palm oil Member of Cocoa Sustainability Partnership for cocoa Bonsucro certification for sustainable sugar cane for Brazil sugar operation 8

9 Our Sustainability Approach Establish sustainability strategy and principles based on key material issues A. Carbon Management B. Environmental footprint C. Governance and transparanecy D. Land rights E. Occupational health and safety F. Smallholders MATERIAL ISSUES D r i v e r s G. Product traceability /sustainable sourcing H. Product quality and safety I. Yield maximisation and innovation J. Human rights PRINCIPLES Manage material issues via setting of baselines and targets, guided by our sustainability policies, principles and commitment Compliance Healthy Living Smallholders Environmental Responsibility Respect Human Rights Innovation and Continous Improvement Meeting the world s food needs sustainably through innovation and management of excellence 9

10 Our Sustainability Policies We use RSPO and Indonesia Sustainable Palm Oil (ISPO) certification as part of how we deliver our Sustainable Palm Oil Policy, Palm Oil Sourcing Policy and Responsible Supplier Guidelines. Selected commitments under these polices are as follows Sustainable Palm Oil Policy 2013 (covering our own estates) Target to achieve 100% sustainable CPO supply, requiring all our mills and plantations, including smallholders, to be RSPO-certified by 2019 Zero burning policy for land clearing Demarcation of, and maintaining biodiversity of High Conservation Value (HCV) areas in accordance with RSPO guidelines since 2008 No deforestation or new planting on HCV areas No planting on peatland regardless of depth since 2013 Free, Prior and Informed Consent when engaging with local communities and stakeholders Protection of human rights and anti-sexual harassment policy to protect women and children s rights Prohibits child labour and forced labour Palm Oil Sourcing Policy and Responsible Supplier Guidelines 2014 (covering our own estates) 100% sustainable and traceable palm oil sourcing by 2020 Purchasing third party palm oil that is - not originating from areas cleared by primary forest since 2011, - not from HCV areas, - not from peat soil deeper than 3 metres planted after February 2009 in line with Indonesian Government regulations Respect the Sustainable Palm Oil Policy Encourages stakeholder engagement and best agronomic practices Sets the commitment to audit suppliers, using the Supplier Guidelines. Audits started in

11 Key Programmes Embed sustainability within our internal operational processes and across our supply chains through 6 core programmes 1. Growing Responsibly Encourage and promote sustainability as core to our operations 2. Sustainable Agriculture and Products Achieve sustainable agriculture practices in our crop cultivation 3. Safe and Traceable Products Ensure all products ffrom refineries and mills are traceable, safe and beneficial for human consumption 4. Smallholders Support the nucleus plasma scheme by developing and inclusive supply chain 5. Work and Estate Living Improve the safety, hygiene, and living conditions for our employees, workers and their families living on the estates 6. Solidarity Support the development of local communities in and around our estates and factories by improving their existing conditions and quality of life 11

12 Sustainability Commitment & Performance 12

13 Our Sustainability Commitment and Targets Meeting the world s food needs sustainably through innovation and management of excellence Sustainability targets 1. Achieve ISPO certification for all oil palm estates and mills managed by the Group by end of Achieve RSPO certification for all oil palm estates and mills managed by the Group and its plasma smallholders by end of % sustainable palm oil sourcing by end of Achieve internationally recognised standards for sustainable agriculture, where available, for all our other crops, including rubber, sugar, cocoa and tea 5. Set a baseline for environmental footprint by 2014 for all factories and develop environmental reduction targets by 2015 for carbon emissions, energy and water 6. Set a baseline and develop community development plans for welfare improvement for each site by Implement the Occupational Health and Safety programme and complete the Integrated baseline Agribusiness assessment with Leading for Brands all sites in 2015 to reduce work related accidents 8. HCV assessment study for all sites completed in Develop and implement HCV rehabilitation plan for each site by Phase out the use of paraquat by

14 Our Sustainability Performance Commitments Target Date Status RSPO certification for all estates, and those of plasma smallholders ISPO certification for all estates, and those of plasma smallholders End 2019 End 2016 On track 100% sustainable palm oil sourcing End 2020 On track Develop environmental reduction targets for carbon emissions, energy and water Set baseline and develop community Development plan for welfare improvement for each site Implement the Occupational Health and Safety programme and complete the baseline assessment for all sites to reduce work related accidents 73% completed. Extended to All data collected. Targets will be set in Achieved % completed. Extended to 2016 Zero fatalities On going Not achieved Develop and implement HCV Rehabilitation plan for each site 2015 HVC rehabilitation plan developed. 20% implemented Phase out the use of paraquat 2018 On track 14

15 Our Sustainability Performance 15

16 Our Sustainability Performance 16

17 Appendix Managing Our Material Issues 17

18 Material Issues Key material issues that affect both of our internal and external stakeholders: Key Material Issue Interest Group A.Carbon management including deforestation Global community including international NGOs and governments B.Environmental footprint including PROPER, ISO Community living around estates, local government and NGOs C.Governance including transparency, Investors and NGOs business integrity & anti-corruption, risk management D.Land rights including scarce land Local community; government and NGOs resources E.Occupational health & safety Local labour organisations and government F. Smallholders including plasma, social Smallholders, NGOs and local government conflict resolution G.Product traceability / Sustainable sourcing Suppliers and consumers including RSPO/ISPO H.Product quality and safety Suppliers and consumers I. Yield maximisation including innovation Investors, NGOs and government J. Human rights NGOs and government 18

19 Governance and Integrity Material Issue Governance including transparency, business integrity and anti-corruption, risk management Programme Growing Responsibly Key Initiatives Sets the policy framework for high standards of corporate governance and professional integrity Sustainability Management Information System (SMIS) to monitor and ensure the consistent implementation of sustainability efforts across the Group. Annual Sustainability Report based on GRI guidelines 19

20 Environmental Performance Material Issues Carbon management including deforestation Environmental footrprint including PROPER, ISO Yield maximisation including innovation Programmes Sustainable Agriculture and Products Smallholders Growing Responsibly Key Initiatives ISPO certification for all oil palm estates and mills by 2017 RSPO certification for all oil palm estates (nucleus and plasma) by 2019 PROPER (minimum blue) certification of all mills and refineries HCV management, including no new planting on peatland and HCV area Monitoring of GHG emissions Integrated pest management: replace pesticide usage with biological control, phasing out paraquat Precision agronomy, including innovation in seed breeding Fire and haze prevention measures nurturing the capacity and competencies of our employees and plasma smallholders via training programmes 20

21 Sustainable Palm Oil Sourcing Material Issues Product traceability/ sustainable sourcing including RSPO/ISPO Smallholders including plasma, social conflict resolution Programmes Safe and Traceable Products Smallholders Key Initiatives Palm Oil Sourcing policy and Responsible Supplier Guidelines Barcode system for BLRS oil palm seeds Supply chain tracking system for FFB supply RSPO supply chain certification for refineries Started implementation of RSPO smallholder certification programme Strategic partnership with Sustainable Trade Initiative (IDH) for smallholder certification 21

22 Sustainable Products Material Issue Product quality and safety Programme Safe and Traceable Products Key Initiatives Product fortification with vitamins and minerals Recyclable packaging for cooking oil bottles Implementation of Food Safety Management System through auditing against Food Safety System Certification (FSSC) ISO 9001 and Halal certification Food safety audit for supplier by Quality Assurance team. 22

23 People and Communities Material Issues Occupational health and safety (OHS) Human rights Land rights including scarce land resources Programmes Work and estate living Sollidarity Smallholders Key Initiatives OHS management system Provide essential services and basic amenities (health care, housing, education) to all estates residents Implementation of local community development programs such as: o Lip cleft operations o Cataract operations o IndoAgri Sehati: promote maternal and infant health o Infrastructure development o Donations and sponsorship 23

24 Contact Us Indofood Agri Resources Ltd. 8 Eu Tong Sen Street #16-96/97 The Central Singapore Tel: Fax: This presentation was prepared solely and exclusively for the parties presently being invited for the purpose of discussion. Neither this presentation nor any of its content may be reproduced, disclosed or used without the prior written consent of Indofood Agri Resources Ltd. This presentation may contain statements that convey future oriented expectations which represent the Company s present views on the probable future events and financial plans. Such views are presented on the basis of current assumptions, are exposed to various risks, and are subject to considerable changes at any time. Presented assumptions Integrated Agribusiness are presumed with correct Leading at the, Brands and based on the data available on the, date at which this presentation is assembled. The Company warrants no assurance that such outlook will, in part or as a whole, eventually be materialized. Actual results may diverge significantly from those projected. Indofood Agri Resources Ltd. All rights reserved. 24