Paving a path towards carbon neutrality by 2050
As global sustainability standards continue to evolve, companies are increasingly recognising the need to integrate robust environmental, social, and governance practices into their core operations.
FGV Holdings Bhd is at the forefront of this shift with its Enhanced Sustainability Framework, which consists of five main pillars: Economic Growth, Governance, Social, Environment, and Innovation and Technology.
According to FGV group chief sustainability officer Nurul Hasanah Ahamed, the group has identified specific focus areas under its Enhanced Sustainability Framework, including business development and product quality, traceability, responsible sourcing and supply chain management, upholding human rights and labour standards and climate action.
“The enhancement took into consideration the evolving environmental, social and governance (ESG) trends as well as sustainability regulations and standards around the world such as the European Union Regulation on Deforestation-Free Products (EUDR), among others.
“The proactive approach enables FGV to stay ahead of regulatory changes and market demands, ensuring long-term business resilience and sustainability,” she says.
Harnessing biomass to reduce carbon footprint
One key initiative under the group’s Enhanced Sustainability Framework is upscaling its biomethane projects at greenfield mills.
“The company is actively evaluating these projects to ensure not only their profitability but also their positive environmental impact. This proactive approach anticipates the forthcoming National Climate Change Bill, which will be developed by the Malaysian government,” says Nurul Hasanah.
She highlights that FGV has been actively engaged in renewable energy initiatives since the early 2000s, which are central to the group’s waste-to-wealth initiatives.
These efforts leverage gas, solid and liquid biomass from palm oil mills to generate biogas fuel, which powers both national and rural grid connections and bio-compressed natural gas (Bio-CNG).
Notably, FGV is leading the pack, being the only palm plantation company worldwide with a total of 28 biogas plants.
One of its largest biogas facilities, the Sahabat Biomass-EFB Power Plant in Lahad Datu, Sabah, can produce an average of 20,000kWh daily for rural electrification.
This facility, along with the Umas Biogas Plant, plays a crucial role in powering Sahabat and Umas rural areas.
FGV, in collaboration with the Malaysian Palm Oil Board (MPOB), pioneered developing a commercial-scale bio-CNG plant in 2015. According to the group’s Annual Integrated Report 2023, the plant, which underwent some major maintenance, will significantly enhance its renewable energy capabilities once operational.
In 2023, the group saw the commencement of commercial operations for the Keratong 9 biogas plant, injecting up to 14 million kWh of electricity into the National Grid annually through FGV’s Feed-in-Tariff (FiT) programme from five biogas plants.
Underscoring its commitment to sustainability, FGV has joined the United Nations (UN)-backed Science Based Targets Initiative (SBTi), committing to halve its greenhouse gas emissions by 2030.
The company also aims to achieve net-zero emissions by no later than 2050.
“FGV is establishing its baseline emission inventory. FGV has completed the data collection for Scope 1, 2 and 3 for all FGV’s operations, and this will be followed by setting a reduction target by the fourth quarter of 2024,” Nurul Hasanah explains.
To tap into new revenue streams through the circular economy, FGV Palm Industries made its inaugural shipment of certified palm kernel shells (PKS) to Japan in April 2024.
This significant milestone is part of FGV’s Waste-to-Wealth Initiative, which focuses on converting agricultural by-products into valuable resources.
Additionally, the group has obtained the Green Gold Label (GGL) certification, an internationally recognised programme dedicated to ensuring biomass sustainability.
The GGL certification allows FGV to enhance its market access, particularly in the bioenergy sector, where sustainability is a key requirement. It also helps the company comply with relevant national and international regulations, mitigate legal risks and enhance its reputation as a leader in sustainable biomass production.
In addition to initiatives to reduce its carbon footprint, FGV is committed to protecting and conserving endangered species through ongoing conservation programmes.
These efforts currently focus on the Malayan sun bear, gibbon, pangolin and pygmy elephant, demonstrating the company’s dedication to biodiversity.
Further reinforcing this commitment, FGV announced its support for the tiger conservation initiative at the 2nd Tiger Summit in Pahang on Aug 7, 2024. This initiative may include critical measures such as tiger breeding and rewilding, aimed at preserving and restoring the tiger population in Malaysia.
FGV has also conducted tree planting activities in a high conservation value (HCV) area as part of its restoration project in Gawai, Gerik, Perak. Over 2,500 indigenous and wild fruit trees have been planted in the Central Forest Spine (CFS) corridor.
Ensuring compliance across the supply chain
While FGV has made significant strides in renewable energy and sustainability initiatives, Nurul Hasanah points out that the group also faces challenges implementing these practices across its supply chain.
Chief among these is navigating the ever-evolving sustainability regulations and standards, which can be both complex and resource-intensive.
“It requires a nuanced understanding of both national and international regulations in the process of aligning both in FGV’s operations. FGV constantly reviews and updates its policies, procedures and practices according to the latest standards,” she says.
She highlights that FGV’s operations involve multiple tiers of suppliers, each with its own practices, standards, and varying levels of resources and capabilities to implement sustainable practices.
Nurul Hasanah also points out that the group also has a traceability system, enabling it to monitor the provenance of supplied and raw materials to ensure that every link in its supply chain upholds sustainability standards and ethical conduct. FGV currently has 100% traceability to its mills and plantations (Tier 1 and Tier 2).
FGV works closely with its supply chain partners through initiatives like the Independent Smallholders (ISH) programme and the Vendor Development Programme (VDP), which are designed to inculcate sustainable practices throughout FGV’s supply chain.
The ISH programme aims to raise smallholders’ awareness of sustainability practices. It covers topics including FGV’s sustainability commitments, the Malaysian Sustainable Palm Oil (MSPO) certification scheme, traceability, the 11 International Labour Organization (ILO) Indicators of Forced Labour and FGV’s sourcing criteria for fresh fruit bunches.
Meanwhile, the VDP initiative, which began in August 2024, streamlines vendor standards across its five business divisions, namely Plantation, Oils and Fats, Consumer Products and Integrated Farming, Logistics and Support, and Sugar. It aims to empower young entrepreneurs and enhance their commercial capabilities.
To ensure the strategic development and implementation of its sustainability initiatives, FGV entrusts oversight to its board of directors (BOD), which is supported by the Board Sustainability Committee and the Sustainability Steering Committee (SSC).
The FGV BOD is responsible for approving public disclosures related to the company’s sustainability efforts, ensuring that all initiatives are well-coordinated and transparently communicated to stakeholders.
Additionally, FGV actively seeks stakeholder feedback through a comprehensive grievance mechanism.
The public or any party can raise concerns via various channels, including a hotline, email and an online form available on FGV’s website, which will be promptly addressed.
“FGV is also committed to reporting its sustainability performance, in line with Bursa Malaysia’s Main Market Listing Requirements. This has been reflected in FGV’s sustainability statements or standalone sustainability reports over the years,” says Nurul Hasanah.
Looking ahead, Nurul Hasanah says FGV’s Enhanced Sustainability Framework will guide the company’s actions and decisions in implementing its sustainability commitments and contribute to Malaysia’s sustainability agenda.
She adds that the enhancement to the framework is also in line with the nation’s commitment to be a carbon-neutral nation and sustainability commitments reflected in the national action plans and policies, including the 12th Malaysia Plan, National Action Plan on Forced Labour 2021-2025, National Policy on Biological Diversity 2022-2030 and National Renewable Energy Policy.
Source: theedgemalaysia.com
