MOSTA Climate Change Webinar

Sime Darby Plantation’s

Response to Climate Change
13 April 2022
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Company Overview
Sime Darby Plantation is an integrated plantation company operating throughout the entire
palm oil value chain

Upstream Downstream (Sime Darby Oils)

Seed
production

Customised Refineries

Oil Palm Nursery

Bulk Refineries
Rubber/ Sugar
Mills – CPO & PK Food
Cane/ Cattle
Production
Products Oleo Chemicals

Biodiesel/Renewable Energy

Non-Food
Animal Feed
Palm Fibres, Sludge Oil,
Palm Oil Mill Effluent
(POME), Empty Fruit
SDP Oil Palm Planted Area 298,965 Ha 193,331 Ha 91,044 Ha Bunch (EFB), Kernel Shell Trading of CPO and
(FY2020)
Smallholders Bulk Sales
Aggregation

Business Snapshots RENEWABLE ENERGY

Solar

610,708 Ha of 15 countries of 3.7 mil MT/year Largest producer of Leader in

planted area* SDP operations of refining CSPO with global Digitalisation/E
(*Oil palm, rubber, sugar capacity share of 14%^ merging
(^ % of 2020 global CSPO production of
cane and grazing pastures) 17.2 mn MT as reported by RSPO) technologies
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What Sustainability Means to Us

We pursue sustainability in a way that creates value to our organisation, in line with the
Sustainable Development Goals (SDG)

Value Creation Value Protection Risk Mgmt Reputation

New Businesses, Existing customers, Future Proofing the Differentiation,
↑Revenue, Cost Savings market access Organisation, Regulatory Marketing, Branding
Requirements
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Committed to Good Agriculture Practices

100% of our global operations are certified to multiple sustainability standards
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Recent Developments Around Climate Change

Release of Intergovernmental Panel on Climate Change (IPCC) Report in August 2021, and the
Glasgow COP26 in November 2021 sees stronger commitments and expectations globally.

→ Movement around increased regulatory requirements globally, including

introduction of the EU & UK Due Dilligence for Deforestation Risk
Products, EU Commission Directive on sustainability due diligence, and
pending introduction of the EU Carbon Border Adjustment Mechanism
(CBAM).

→ Increasing activism by shareholders and investors in engaging investee

companies around Environmental, Social & Governance (ESG) issues.
Expectations from global investors around increased disclosures, e.g.
Taskforce on Climate Related Financial Disclosures (TCFD)
recommendations
(August 2021)

→ Increasing number of countries making Net-Zero commitments,

including Indonesia (by 2070) and China (by 2060). Malaysia made an
announcement to achieve Net Zero as early as 2050, with plan which
include ending new coal-fired power plants, increasing renewable
energy capacity, developing a carbon market and adopting a carbon tax
in the future.

→ In COP26, various traders including Wilmar and GAR announced a

commitment develop a sectoral roadmap for “enhanced supply chain
action that is consistent with a 1.5 degrees Celsius pathway by COP27.

→ Increasing number of corporates making Net-Zero commitments,

including Nestle, Petronas, Maybank, TNB and FGV.
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Response to Climate Change

As a certified sustainable palm oil producer, building resilience and decarbonizing of our
operations and supply chain is fundamental to our efforts in combatting climate change.

Targets and Goals

Our Existing Operational 1
Footprint 2020 Reducing Our
Operational → 40% intensity reduction by 2030 against 2009 baseline
→ 2,7m tCO2-e for Scope 1 &
Emissions
2 (excluding land use &
land use change)
• 69.0% from methane 2 Implementing
emissions from effluent
treatment Nature Based → Nature Based Solutions to significantly contribute to SDP’s
Solutions global footprint reduction
• 12.8% from boilers
(NBS)
• 7.1% from fertilisers
• 5.6% from purchased 3
electricity → Deforestation Free Supply Chain
Responsible → 100% fully traceable and NDPE compliant supply chain
Sourcing → 100% of direct smallholders adopting responsible agriculture
State of our Global Supply practices
Chain in 2020
4
→ 96.7% Traceable to Mill Adapting and
→ 64.3% Traceable to Mitigating to → 100% of material climate risks responded with progressive
Plantation Material adaptation / mitigation plans in place
→ 30,981 smallholders RSPO Climate Risks
certified (~50% globally)
→ 70 supplier grievances 5 Climate → Governance of Climate Change in line with the TCFD
• 16 no longer in supply
chain
Change- recommendations
Related
• 37 resolved
Governance & → Disclosures aligned with leading practices, e.g. TCFD and GHG
• 2 under investigation
Disclosures Protocol (Agriculture, Forestry and Other Land Use (AFOLU)
• 15 ongoing engagement
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Renewables Business to Drive Decarbonisation

Targeted approach to reduce carbon footprint & develop a sustainable income stream

Strategic Rationale
Reduce Carbon Sustainable & diversified
Maximise returns income stream
Footprint from assets
In line with SDP’s net zero carbon Stretch returns on existing Increase shareholders’ value by
aspirations landbank, co-products exploring adjacent businesses

Solar Biogas Palm Biomass

• Participated in Large Scale Solar (LSS1,
LSS3 & LSS4) as asset provider
• Solar for own use – Working with
partners to install solar panels on
SDP’s offices rooftop
▪ Biogas plants to capture methane ▪ Monetize SDP’s excess
emission from Palm Oil Mill Effluent biomass without negatively
in Upstream Malaysia, Indonesia affecting operations
and NBPOL ▪ Create further value from
Palm Kernel Shell SDP’s by-products towards
▪ Expand biogas development across
Circular Economy to
SDP’s operations and reduce
elevate SDP sustainability
emission from Indonesia and PNG
Agenda
mills

Oil Palm Trunk

Methane Capture at KKS Merotai

LSS1 at Ladang Byram
Empty Fruit Bunch

Nature Based Solutions
Implementation of Nature Based Solutions would also play a key role to increase the amount
of carbon sequestered from the atmosphere
Protect
Unplantable areas that having potential
for conservation and are in good
condition (i.e. intact vegetation). These
areas may be left untouched and require
less maintenance, depending on the
present condition/ quality of the areas.
Examples of field types
• Isolated forest patches
• River buffer with vegetative
• Pond with vegetative
• Swamp
• Tree planting site
8
Restore Connect
Unplantable areas that having potential for Unplantable areas that having potential
conservation but required intervention in to be connected with important habitat
order to increase the conservation & landscape & ecosystem. Focus will be
biodiversity values. The focus will be on on creating “stepping stone” , corridors
ecological service such as erosion control & & extension to such habitats &
waterways health & quality ecosystem
Examples of field types Examples of field types
• More than 25-degree areas • Jungle
• River buffer with old palm stand • Forest buffer
• Water catchment & pond • River buffer
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Nature Based Solutions

We have a total of 46,435 ha identified as areas of High Conservation Value (HCV) and
Conservation Set Asides (CSA) land across our global operations

Papua New
Malaysia Indonesia Guinea &
Solomon Islands
Total Landbank (ha) 343,327 287,479 146,096
Total HCV and CSA land (ha) 5,778 20,436 20,221

As of December 2020, we have planted 1,531,972 trees

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Sustainable Supply Chain Management

With satellite technology accessible to stakeholders, no one is hidden within the industry
31 January 2019 19 July 2020

Source: Mighty Earth, Rapid Response Palm Oil Report (August 2020)
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Sustainable Supply Chain Management

Land Use and Land Use Change is the largest emission source for SDP’s supply chain, hence
efforts to ensure NDPE compliance within SDP’s supply chain remains a priority in the
immediate term
SDO Refinery NDPE Performance • Significant efforts are being made to ensure NDPE compliance
(NDPE IRF Benchmark - 2020) in SDP’s supply chain. Eliminating deforestation and land
100% clearance in areas of high carbon stock within the supply chain
90%
80% would decrease the intensity of the Land Use Change portion of
70%
60% SDP’s feedstock emissions (scope 3)
50%
40%
30%
20%
10% • Key efforts on-going include:
0%

→ Improvement of SDP’s global traceability of supply chain

to mills and estates to enable transparency and
monitoring

Delivering Progressing Commitment Awareness Known Unknown

→ On-going satellite monitoring of SDP’s global supply shed
State of SDP’s Supplier Grievance Management to monitor forest cover loss via Aidenvironment and
741 RADD alerts
AidEnvironment Monitoring
Companies Monitored
263
Grievance Register Parent Companies with Grievances → Refinery supplier improvement programmes to engage
Logged and raise awareness amongst suppliers on responsible
103 agriculture practices, including issues around
SDO Supply Chain
Are in SDO’s Supply Chain
deforestation
23 Direct Suppliers
SDO Suppliers
80 Indirect Suppliers
33% Resolved → Smallholder Inclusion programme in all territories
36% Investigating underway, either by SDP, or with partners (WWF,
Status of Grievances
31% Ongoing Monitoring & Solidaridad, Proctor & Gamble, Wild Asia)
Engagement

To also consider reforestation programmes within supply chain / sourcing landscapes to contribute to emissions reduction
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Sustainable Supply Chain Management

Significant efforts are being made within the industry to improve the traceability and
transparency of palm oil’s complex supply chain

Crosscheck is an open access digital tool making traceability possible in the following ways:
▪ It traces our supply to specific mills and plantation (where available)
▪ It links mills to its owners and provides information on the network of relationships within our supply chain
▪ It provides location of any mill / estate and highlights risk areas
▪ It is a publicly available platform

SDP launched Crosscheck in 2018 to demonstrate it’s commitment to transparency and traceability of supply chain
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Smallholder Inclusion
Significant efforts are being made by the larger palm oil companies to engage with
smallholders within their supply chains to adopt responsible practices

SDP’s smallholder inclusion programme which targets to get all

direct smallholders to adopt responsible agriculture practices
Breakdown of RSPO Certified Smallholders by
Country
100% 0
90%
80%
17,278 30,738
70%
60%
50% 13,460 17,169
40%
30%
13,811 30,981
20%
10%
0% 1
Malaysia Indonesia PNG Overall

Number of Uncertified Smallholders

Number of RSPO Certified Smallholders

Malaysia Indonesia PNG Overall

Total Number of Smallholders 13,461 31,089 17,169 61,719
Number of Direct Smallholders 35 31,089 17,169 48,293
Number of Indirect Smallholders via Traders 13,426 - - 13,426
Number of RSPO Certified Smallholders 1 13,811 17,169 30,981
% RSPO Certified Smallholders 0.01% 44% 100% 50%
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Recap: Response to Climate Change

As a certified sustainable palm oil producer, building resilience and decarbonizing of our
operations and supply chain is fundamental to our efforts in combatting climate change.

Targets and Goals

Our Existing Operational 1
Footprint 2020 Reducing Our
Operational → 40% intensity reduction by 2030 against 2009 baseline
→ 2,7m tCO2-e for Scope 1 &
Emissions
2 (excluding land use &
land use change)
• 69.0% from methane 2 Implementing
emissions from effluent
treatment Nature Based → Nature Based Solutions to significantly contribute to SDP’s
Solutions global footprint reduction
• 12.8% from boilers
(NBS)
• 7.1% from fertilisers
• 5.6% from purchased 3
electricity → Deforestation Free Supply Chain
Responsible → 100% fully traceable and NDPE compliant supply chain
Sourcing → 100% of direct smallholders adopting responsible agriculture
State of our Global Supply practices
Chain in 2020
4
→ 96.7% Traceable to Mill Adapting and
→ 64.3% Traceable to Mitigating to → 100% of material climate risks responded with progressive
Plantation Material adaptation / mitigation plans in place
→ 30,981 smallholders RSPO Climate Risks
certified (~50% globally)
→ 70 supplier grievances 5 Climate → Governance of Climate Change in line with the TCFD
• 16 no longer in supply
chain
Change- recommendations
Related
• 37 resolved
Governance & → Disclosures aligned with leading practices, e.g. TCFD and GHG
• 2 under investigation
Disclosures Protocol (Agriculture, Forestry and Other Land Use (AFOLU)
• 15 ongoing engagement
Thank You