BEYOND

THE BENCHMARKS

Plantation Division
Sustainability Report 2014 - 2015
Contents
01 Overview 2

About this Report 4

About Kulim (Malaysia) Berhad 5
Plantation Division
The Case for Sustainable Plantations 6
Kulim’s Sustainability Journey 8
2014-2015 Report 10
• Highlights 10
• The Report Card 12

02

Message From The
Executive Director
16

Rationale 03 Sustainability Governance 22

The Kulim Group advocates looking beyond Our Sustainability Policy 24

benchmarks for continuous growth and Abiding by RSPO Principles & Criteria 25
sustainability. This stance calls for the Our Sustainability Mechanism 28
protection of the environment where it Sustainability Across Borders 29
operates, support for communities within its Engaging Our Stakeholders 30
jurisdiction and reward for stakeholders who
have placed their trust in the company.
04 The 3Ps of Sustainability 34 05 Disclosures 76

Protecting Our Planet 36 Scope of Report 78

• Reducing Our Carbon Footprint 37 • Sustainability Context 78
• Responsible Chemical Use 43 • Stakeholder Inclusiveness
• Sustainable Use of Water 45 and Materiality 78
• Protecting Biodiversity 46 Annex – Materiality Tiers 80
Annex – Completeness Aspects 81
Developing Our People 50 and Boundaries
Global Reporting Initiative (“GRI”) Index 83
Enhancing Employee Well-being 51 Data 90
• Training and Development 54 Location of Estates & Mills 95
• Developing Future Leaders 56 Glossary 96
• Protecting Labour Rights 57 Contact and Feedback 99
• Focus on Safety 58
• Promoting Gender Equality 59

Building Better Communities 61

• Fostering Volunteerism 63
• Women OnWards (“WOW”) 63
• Supporting Smallholders 64
and Outgrowers

Delivering Year-on-Year Profit 66

• Strategic Thrusts 68
• Financial Performance 70
• Compliance with RSPO
Principles & Criteria 74
• Ethics and Integrity 75
01
Overview

KULIM (MALAYSIA) BERHAD [ 2 ]

4 About this Report

5 About Kulim (Malaysia) Berhad

Plantation Division

6 The Case for Sustainable

Plantations

8 Kulim’s Sustainability Journey

10 2014-2015 Report
• Highlights
• The Report Card

[ 3 ] Sustainability Report 2014 - 2015

 About
This Report

Kulim (Malaysia) Berhad’s (“Kulim”) Sustainability Report 2014-2015 highlights the

performance of sustainability initiatives implemented by the Group’s Plantation Division
for the period 1 January 2014 to 31 December 2015. This is the Company’s fifth
Sustainability Report, and like previous reports, it is based on the Global Reporting
Initiative (“GRI”) guidelines, specifically GRI 4.0. Kulim is acknowledged as the first
Malaysian plantation company to publish a GRI-based Sustainability Report.

This report is based on Sustainability Performance Measurements developed by the

Kulim Sustainability Initiative Council in accordance with RSPO Principles & Criteria
(“P&C”).

we care

1 st
Malaysian
plantation
company
to publish gri-based
sustainability report
5
th
Sustainability
Report
People
Planet

Profit

The report evaluates the three pillars of responsible business operations – People,
Planet and Profit (“3Ps”) – as embodied in the Company’s Sustainable Management
System, the blueprint for balanced development.

Data presented in this report is on a best-effort basis, and may be subject to change.
The data was collated in-house and screened by a third party consultant from PVM
Communications Sdn Bhd, but it has not been subject to independent verification or
assurance.

KULIM (MALAYSIA) BERHAD [ 4 ]

About Kulim (Malaysia) Berhad
Plantation Division

1947 2015
190 hectares 47,010 hectares
of Rubber of Oil Palm
Kulim (Malaysia) Berhad (“Kulim”) traces
its history back to 1933, with the
incorporation of Kulim Rubber Plantation
Ltd (“KRPL”) in the United Kingdom. In The Group has built a strong and diverse
1947, KRPL began operations with 190 portfolio anchored in three (3) main lines
hectares of rubber plantations in Johor. of business covering Plantation,
In July 1970, KRPL changed its name to Intrapreneur Ventures and Oil & Gas,
Kulim Group Ltd and listed its shares on whilst consolidating its Agrofoods
the London Stock Exchange (“LSE”). In segment. This balanced and diverse
1975, Kulim (Malaysia) Sdn Bhd was asset base means that the Group has a
incorporated and the company’s broad platform from which to deliver
domicile transferred to Malaysia, where the levels of profitability and long-term
it was subsequently listed on Bursa value required to support growth.
Malaysia as Kulim (Malaysia) Berhad. In
1976, Johor Corporation (previously Plantation has traditionally been our
Johor State Economic Developement core business but over the years our
Corporation) became the major business model has been fine-tuned to
shareholder of the Company. reflect a rapidly changing operating
landscape. While we have divested our
As at 4 August 2016, with the completion plantation interest in Papua New Guinea
of the Selective Capital Reduction and and the Solomon Islands, we continue
Repayment Exercise (“SCR”) and the to strengthen our position by securing
delisting of Kulim from Bursa Malaysia, new areas in Indonesia. As at 31
the Company is now a wholly-owned December 2015, the Kulim Group’s
subsidiary of JCorp. direct and indirect landholding stood at
approximately 92,000 hectares spread
across Malaysia and Indonesia.

[ 5 ] Sustainability Report 2014 - 2015

Overview

The Case for

Sustainable Plantations
Palm oil and its derivatives are extracted from the Campaigns for a global moratorium on the conversion
pulp and kernel of the fruit of the oil palm that thrives of forests for oil palm cultivation have been going on
in the tropics. British daily The Guardian (26 October since the 1990s. Often aggressive, the campaigns,
2015) cites RSPO as stating palm oil as the most mounted mainly in the West, have awakened consumer
widely used vegetable oil in the world, accounting for conscience to environmental degradation caused by
some 65% of all vegetable oil traded. Palm oil and its irresponsible oil palm cultivation. Environmental
derivatives are increasingly sought as ingredients in activists have added pressure on big palm oil buyers
food, personal care items, cosmetics, nutraceuticals such as Nestle, Kraft, Cadbury and General Mills to
and pharmaceuticals. impose conditions on suppliers. Financial institutions
such as HSBC that provide funding to major planters
Although subject to price fluctuations, sometimes have also changed their lending rules, as the world
volatile, the long term forecast is for palm oil to moves forward towards a carbon-free green economy.
continue as the golden crop of tropical economies as
a result of demand generated by the rising middle class Producer nations may argue that the environmental
of emerging economies. Oil palm plantation agriculture card is being overplayed, and that the real issue here is
thus continues to be a business with bright prospects, protectionism. The popularity of palm oil is a threat to
and this has encouraged both established plantation vegetable oils such as soy bean oil and corn oil,
companies and newcomers to seek plantation lands. produced in temperate zones.

Herein lies the rub. Unfortunately, the industry’s bright

prospects has attracted profiteers with a reckless
disregard for the environment. Swathes of rainforest 1990’s
have been cleared for oil palm plantations, destroying Global Moratorium on
the habitats of flora, fauna and eco-systems essential the Conversion of Forest
for clean air, clean water and other eco-services. At risk for Oil Palm Plantations
are the biodiversity of priceless rainforests,
environmental stability and the sustainability of palm oil
cultivation as a pillar of socio-economic development.
2000’s
Towards a carbon-free
green economy

KULIM (MALAYSIA) BERHAD [ 6 ]

 Sustainability is no longer a mere CSR issue but a matter of business
survival and longevity - one that decides whether or not their
products are accepted in the market. Unsustainable practices can
seriously damage the company’s brand, reputation and profitability.

Still, the customer and lender is king, and many

producers are complying with the dictates of the
marketplace. The growing demand for sustainability RSPO is a Non-profit
when sourcing supplies, especially among major palm
Organisation comprising
oil users such as Unilever, P&G, Starbucks and Dunkin
Donuts, has resulted in a demand for certified
• oil palm producers
sustainable palm oil (“CSPO”). This has made the
• processors or traders
production of CSPO a critical strategy for business
• consumer goods
viability and growth. manufacturers

Sustainability is no longer a mere CSR issue but a matter

of business survival and longewvity – one that decides
2,941
Members
• retailers
• banks/investors
• environmental/ nature
whether or not products are accepted in the market. conservation NGOs
in 2015
Unsustainable practices can seriously damage the • social/developmental
company’s brand, reputation and profitability. NGOs

Sustainable plantation practices stress on protecting

the environment, requiring producers to take the
necessary steps to avoid or contain the degradation of RSPO has developed a set of environmental and social
rainforests, biodiversity and the reduction of carbon criteria that plantation companies must comply with in
emissions. Reputable plantation companies recognise order for their oil to be labeled as CSPO. These criteria
the merits of CSPO and the need to balance their are designed to minimise the negative impact of oil
economic, social and environmental obligations. palm cultivation on the environment and local
communities.
The growing demand for sustainably produced palm
oil led to the establishment of the Roundtable on A plantation player since 1933, Kulim became a member
Sustainable Palm Oil (“RSPO”) in 2004. Currently, the of the RSPO in 2004, and in 2009, the Company was
non-profit organisation has 2,941 members recognised as one of the earliest plantation companies
representing seven sectors of the palm oil industry, in Malaysia to obtain RSPO certification for all its mills
namely, oil palm producers, processors or traders, and supply base.
consumer goods manufacturers, retailers, banks/
investors, environmental/ nature conservation NGOs
and social/developmental NGOs.

[ 7 ] Sustainability Report 2014 - 2015

Overview

Kulim’s Sustainability Journey:

Leading the Way

2008
• Joins World Wildlife Fund (“WWF”) Malaysia
in a meeting with Greenpeace in London to
2004 seek clarification and engage in open
discussion.
• Becomes a RSPO member.
• Establishes Panel Aduan Wanita (“PAW”), a
• Launches Sustainable Palm Oil women’s grievance panel.
Programme based on 8 Principles and • Becomes first Malaysian palm oil producer
39 Criteria of RSPO. to publish the Sustainability Report for the
period 2007-2008.
• Appoints task force to implement
Sustainable Palm Oil Programme.

2007 2009
• First Internal Social Impact • Launches Kulim Wildlife Defenders
Assessment (“SIA”) based on to eliminate poaching in estates.
RSPO Principle 6 and contains
SA8000-(Auditable Certification • Becomes one of the earliest
Standard). Malaysian plantation companies
with RSPO-certified mills and
• Establishes Sustainable Palm Oil supply base.
team and appoints Group
Director for Sustainability. • Launches Kulim Sustainability
Handbook outlining policies and
guidelines for stakeholders.

KULIM (MALAYSIA) BERHAD [ 8 ]

2010
•  stablishes Sustainability
E
Initiative Council to monitor
performance against
sustainability metrics.
•  ebranding Panel Aduan
R
Wanita (“PAW”) to Women 2013
Onwards (“WOW”) that
launches Jejari Bestari, an • Publishes Carbon Footprint Report
entrepreneurship programme 2012, the first by a plantation
for women in local company in Malaysia.
communities.
• Launches ‘Raja Zarith Sofiah Wildlife
Defenders Challenge’, a programme
to increase awareness of wildlife
conservation among students.

2015
• Publishes Carbon Footprint Report 2014; targets to
achieve 58% lower carbon footprint by 2020.
2011
Launches the Natural • Kulim’s Carbon Footprint Report 2014 wins the Best
Corridor Initiative that links Carbon Disclosure Report at Asia’s Sustainability
natural habitats separated Reporting Awards (“ASRA 2015”)
by human modified
landscapes. • Installs biogas plants in Sedenak and Pasir Panjang palm
oil mills to achieve 58% carbon reduction by 2020.

• Bans use of Paraquat in all estates.

• Launches ‘Saving Orangutan Saving Forest’ campaign

with Orangutan Land Trust (“OLT”).

[ 9 ] Sustainability Report 2014 - 2015

Overview

201 4-201 5 H IG H L IG H TS
Buffer Zone HCV Forests
Set-Aside

52.46
HECTARES 32.67
HECTARES
to be preserved for wildlife - full-fledged
High Conservation Value (”HCV”) forest
and jungle patches in estates
Saving the Forest for
Orangutan
High Commendation for
Kulim’s Carbon Footprint Report 2014
This report disclosed the impact of
Kulim’s operations – from land use
to production – as well as detailed
information of the estates and
smallholders in Kulim’s supply chain.
For its transparency , the report was
given a “High Commendation” at
Donated the Asia’s Sustainability Reporting
Award 2015. Kulim was also
USD500, 000 commended by RSPO for being the
first Malaysian plantation company
(approximately RM2.0 million) to use RSPO’s PalmGHG calculator
to the Orangutan Land Trust for in this report.
Sabangau National Park, Central
Kalimantan - home to the largest
orangutan population.

KULIM (MALAYSIA) BERHAD [ 10 ]

 Methane capture and
Reduction in Carbon Footprint biogas generation

34% 38% 41% 2 Biogas

plants
commissioned

reduction lower lower

in total product fertiliser
GHG carbon emissions
emissions footprint
Sedenak and Pasir Panjang
Palm Oil Mills

ISO 14001:2004
certification
Sedenak Estate, Sindora Estate and Sindora Palm Oil Mill No to Paraquat!
(”POM”) obtained this certification for environmental Ends procument of this toxic
sustainability and operational performance. weed killer that is banned
in 32 countries.

Halal Palm Products

HALAL Certification for products from

Sedenak POM*, Sindora POM, Tereh Selected for FTSE4Good Bursa Malaysia Index
POM and Palong Cocoa POM that measures performance by Environment,
*POM: Palm Oil Mill Social and Governance Standards

[ 11 ] Sustainability Report 2014 - 2015

Overview

The Report Card

2014 - 2015
Description Target 2014 2015 Justification

Lost Time On-going 7.19 6.82 Declined due to consistent training

Accident Rate Commitment Achieved Achieved and strict supervision in all aspects
(“LTAR”) below 10 of safety & health in the workplace.

To reduce Severity On-going 2.44 2.28 Declined due to consistent training

Rate to below 3.5 Commitment Achieved Achieved and strict supervision in all aspects
of health & safety in the workplace.

Zero fatalities On-going 2 0 Declined due to consistent training

Commitment Not Achieved Achieved and strict supervision in all aspects
of health & safety in the workplace.

Zero peat On-going 0 0 There is a management decision

development Commitment Achieved Achieved against planting on peat land which
could cause haze during land
clearing. Currently, only 1,380
hectares or 2.92% of Kulim’s
planted area is on peat land.

Zero On-going 0 0 Kulim is committed to protecting

development on Commitment Achieved Achieved biodiversity and is bound by the
land containing RSPO Principles & Criteria in this
one or more High regard.
Conservation
Values (“HCV)”

KULIM (MALAYSIA) BERHAD [ 12 ]

Description Target 2014 2015 Justification

Zero penalty for On-going Achieved One case of Accidental burning due to heat
environment- Empty Fruit build-up on EFB that was not
related incidents Bunches (“EFB”) evacuated to field during the
burning at Pasir construction of a bio-compost
Panjang (POM) plant. Mill management to ensure
no large stock pile of EFB at the mill
Not Achieved area.

Carbon Report of Biennial Achieved Achieved Kulim’s 2014 Carbon Footprint

Kulim plantations Published in 2013 Published in 2015 Report was given “High
Commendation” at Asia’s
Sustainability Reporting Award
2015. Kulim was also commended
by RSPO for being the first
Malaysian plantation company to
use RSPO PalmGHG calculator to
process data for the report.

HALAL 2015 In progress In progress Sedenak POM, Sindora POM, Tereh

Certification of POM, and Palong Cocoa POM
palm products were awarded Halal Malaysian
Certification by Jabatan Kemajuan
Islam Malaysia (“JAKIM”), effective 1
May 2015 – 30 April 2017.

Certification for Pasir Panjang POM

is targeted in 2017.

[ 13 ] Sustainability Report 2014 - 2015

Overview

The Report Card

2014 - 2015
Description Target 2014 2015 Justification

2% reduction in 2020 In progress. In progress Continuous plastic mulching

usage of Initiative to reduce programme in selected replanting
glyphosate on usage of areas. It is proposed that monthly
1-year old palms glyphosate by records of glyphosate consumption
resorting to plastic on 1-Year after planting be put up in
mulching, a blackboard database beginning
commenced in January 2016.
September/
October 2014.

5% reduction in 2020 Not Achieved No new In 2015, there was a spike in the
Paraquat out of purchases of usage of herbicides, including
total herbicide paraquat effective Paraquat due to the clearing of vast
usage March 2015 tracts for replanting and the
removal of Volunteer Oil Palm
Seedlings.

Reduction in On-going Achieved - Achieved - The reduction was mainly due to

water usage to 1.2 1.05 m3 0.98 m3 the recycling of sterilizer
m3 per tonne of condensate into mill operation.
FFB

International 2017 In progress. Sindora, Tereh Our target is to certify Palong

Sustainability and Sedenak Cocoa and Pasir Panjang POM in
Carbon POM were 2017.
Certification audited and
(“ISCC”) for all recertified by
mills ISCC.

KULIM (MALAYSIA) BERHAD [ 14 ]

 Description Target 2014 2015 Justification

Reduction CO2 2017 In progress. In progress. • The biogas plant in Pasir

equivalent* by We have set a Two biogas plants Panjang POM was
90% progressive CO2e were commissioned in September
reduction target commissioned 2015. Construction of the
based on the (Sedenak POM biogas plant in Sindora POM is
commissioning of and Pasir Panjang expected to be completed by
a biogas plant in POM). and 2017.
each of our five another (Sindora
• There is on-going negotiation
mills by 2017. POM) is in
for the installation of biogas
progress.
plants at Tereh POM and Palong
One biogas plant
Cocoa POM to facilitate the
was commissioned The remaining
export of electricity to the TNB
and another is in two (Tereh POM
grid.
progress. Three and Palong
biogas plants are Cocoa POM) will
scheduled to be have biogas plants
commissioned by by 2017.
2017.

100% of external 2019 In progress. In progress. Target to certify more outgrowers

fruits to be We have set a and traders in 2016.
certified progressive target Two outgrowers
to fully certify our certified – Ladang
outgrowers by Wawasan and
2019 and traders Ladang Felda
by 2025 Paloh

Achieve an 2036 In progress. In progress. PPER improved from 26.14% in

average FFB yield 2014 to 26.41% in 2015.
of 30 tonnes per Achievement is due to continuous
hectare and Palm replanting with higher yielding
Product materials and improvements in
Extraction Rate crop quality and oil recovery.
(“PPER”) of 30%

*CO2 equivalent: CO2e

[ 15 ] Sustainability Report 2014 - 2015

02
MESSAGE FROM THE

executive
DIRECTOR

KULIM (MALAYSIA) BERHAD [ 16 ]

 Since its inception, the RSPO had made immense progress in
enhancing sustainability awareness. Whilst companies may differ as to
the level of compliance, by and large, sustainability forms an important
consideration in the corporate vocabulary.

We are proud to be one of the first companies to be RSPO certified

company-wide. Sustainability principles dictate how we conduct our
businesses and the principles are diligently guarded. We continue to
improve our practices in line with changes in sustainability standards.
Often, we exceeded those requirements.

Our Carbon Footprint Report 2014, commended as

Asia’s Best Carbon Disclosure Report, highlighted our
achievements of the year: a 34% reduction in total
GHG*; 38.4% reduction of carbon footprint on per
tonne basis; and 41% reduction in emissions from
fertilisers.

It is important to us that our statements are verified. Thus the Group’s

business units were re-certified in 2014. In 2015, we disposed our
entire stake in New Britain Palm Oil Limited to Sime Darby Plantation
Sdn Bhd closing a chapter of our operations in Papua New Guinea
(“PNG”) and the Solomon Islands (“SI”). A new chapter was then
opened with the expansion of our plantation business in Indonesia.

In 2016, the Kulim Group was privatized, and it will see us pursue a
balanced business strategy of diversification. On 5 November 2015,
the Board of Directors received a letter from our major shareholder,
Johor Corporation (“JCorp”), requesting Kulim to undertake a Selective
Capital Reduction and Repayment (“proposed SCR”) exercise. The
Proposed SCR will entail a capital repayment of the proposed cash
amount of RM4.10 per Kulim share. On 4 August 2016, Kulim was
removed from the Official List of Bursa Malaysia. The proposed SCR
was deemed completed following the delisting.

*GHG: Greenhouse Gas Emissions

[ 17 ] Sustainability Report 2014 - 2015

MESSAGE FROM THE executive DIRECTOR

In the RSPO context, the key challenges facing We are also pleased to report that four of our mills
plantation players is climate change and stakeholder were awarded the Halal Malaysia Certificate by
engagement. We know climate change is a global Jabatan Kemajuan Islam Malaysia (JAKIM) in 2015.
issue that requires collective action. On Kulim’s part, They are Sindora, Tereh, Sedenak and Palong Cocoa
the priority is to reduce our carbon footprint by POM. Pasir Panjang POM is scheduled for HALAL
targeting sources of GHG. certification in 2017. Halal certification is a non-RSPO
requirement. Nonetheless it is significant to us since
Our Carbon Footprint Report 2014, commended as the primary use of palm oil is as an edible oil, with a
Asia’s Best Carbon Disclosure Report, highlighted our variety of food applications.
achievements of the year: a 34% reduction in total
GHG emissions; 38.4% reduction of carbon footprint We also took in 2015 the decision to totally ban the use
on per tonne basis; and 41% reduction in emissions of Paraquat. Again, this is not RSPO mandatory. The
from fertilisers. success of our Integrated Pest Management system,
and ongoing research dedicated to finding alternatives,
As part of our verification process, we embarked on gave us the confidence to discontinue the usage of
the International Sustainability and Carbon Certification Paraquat. To further protect our waterways, larger
(“ISCC”) of our mills. In 2015, Sindora, Tereh and quantities of organic fertilisers are being applied to our
Sedenak POM were awarded the ISCC. Pasir Panjang fields.
POM is expected to be ISCC compliant in 2016.
Some of our estates border national parks such as
Another strategic decision was to install biogas plants Endau-Rompin in Johor and Sabangau in Kalimantan.
in all our five mills. The biogas plants will produce In the interest of safeguarding the biodiversity of these
renewable energy from methane generated by the tropical rainforests and to reduce air and water
waste product Palm Oil Mill Effluent or (“POME”) that pollution, we enlarged the buffer zone between our
has 21 times Global Warming Potential compared to estates and primary forest reserves. As at end 2015, a
other GHG. total of 52.46 hectares were designated as buffer
zones. Another 32.67 hectares of ecologically rich
We forecast that the biogas plants will effectively forests occurring within our estates are also to be
reduce the Group’s overall carbon footprint by 80.5% preserved. In total, 85.03 hectares of our land bank will
in 2020 from the 2012 emission baseline. As at the end be protected as High Conservation Value (“HCV”)
of 2015, we had commissioned two biogas plants, one forests.
each at Sedenak POM and Pasir Panjang POM. These
two plants are expected to reduce Kulim’s overall
carbon footprint in 2020 by 58%. The Sindora POM is
scheduled to have its biogas plant in 2017, and Tereh
and Palong Cocoa POM in 2018. Besides in-house
usage, we are also negotiating for the export of the
renewable energy generated by our biogas plants at
Tereh and Palong Cocoa POM with the aim of exporting
electricity to the Tenaga Nasional Berhad (“TNB”) grid.

KULIM (MALAYSIA) BERHAD [ 18 ]

A sum of RM17.19 million was spent on
stakeholder engagement for the period
2014-2015 compared to RM14.0 million
in 2012-2013. The funds were used to
sponsor welfare programmes, employee
volunteer projects such as Women
OnWards (WOW) to develop women
micro entrepreneurs, Infaq 1 Warisan
tree planting campaign as well as
commercial initiatives. A sum of
USD500,000 was contributed to the
Orangutan Land Trust (“OLT”) for efforts
in orangutan conservation initiatives in
Kalimantan.

During this period, we are pleased to

report that our outgrowers engagement
is beginning to deliver the desired results.
In 2015, two outgrowers, namely Ladang
Wawasan and Ladang Felda Paloh,
obtained their RSPO certification.
Outgrowers are an important link in
Kulim’s supply chain, accounting for
about 30% of Fresh Fruit Bunches (“FFB”)
processed by the Group’s mills. This is
an encouraging start, and Kulim plans to
increase the number of certified
outgrowers, and in doing so, increase its
production of CSPO. As certified
producers, outgrowers, in turn, can
seize opportunities to penetrate new
markets.

[ 19 ] Sustainability Report 2014 - 2015

MESSAGE FROM THE executive DIRECTOR

The dependence on foreign labour has been a cause

of concern for some years among many plantation
companies in Malaysia. In Kulim, foreign labour
accounts for 83% of the total plantation workforce.
Frequent changes in foreign labour recruitment rules
in source nations and end-user nations tend to be
destabilising at best and unproductive at worst,
especially since planting and harvesting still remain
labour-intensive operations. Despite the relatively safer
and healthier working environment, competitive wages
and comfortable housing and medical benefits, Kulim
continues to grapple with plantation worker shortages
in Malaysia. In Indonesia, where we are starting to
plant, the issue is the shortage of experienced workers.

To remain profitable, we will continue to focus on

improving yields, cost optimisation and replanting that
will improve the age profile of our palms in Malaysia. As
at end 2015, palms at 9-18 years made up 44% of total
planted area. On the field, we promote agricultural
best practices with Kulim’s Vision 30:30 – 30 tonnes
FFB yield per hectare; 30% palm product extraction
rate. In 2015, FFB yield per hectare stood at 22.50
tonnes compared with 22.34 tonnes the previous year.
Oil extraction rate grew from 20.58% in 2014 to 20.86%
in 2015. This is above the industry average in Peninsular
Malaysia. In 2015, we made two important announcements.
One was the completion of the disposal of New Britain
Kulim aspires to be a Group that is admired and Palm Oil Limited (“NBPOL”) that contributed towards a
respected not only for delivering superior business strong financial performance amidst a gloomy business
value but also for playing a leading role in delivering environment. The Group’s Profit Before Tax (“PBT”)
results sustainably. The Group’s recognition as a rose 70.10% to RM162.51 million in 2015 compared to
constituent of the inaugural FTSE4Good Bursa Malaysia RM95.53 million in 2014. Part of the proceeds of the
Index in 2014 is an affirmation of our commitment to NBPOL sale was used as working capital as well as new
sustainable practices. The Index, developed by FTSE, ventures, especially in Indonesia. As at end 2015, Kulim
measures the performance of public listed companies has 40,645 hectares in North Barito, Central Kalimantan
demonstrating strong environmental, social and to be developed, following the acquisition of a 74%
governance practices. We were honoured to be stake in PT Wisesa Inspirasi Nusantara (“PT WIN”).
selected as one of 24 public listed companies in the Planting of new palms in ongoing, albeit at a slower
inaugural Index in 2014. pace, with some 307 hectares planted at end 2015.

KULIM (MALAYSIA) BERHAD [ 20 ]

 The second announcement on the 4 August 2016 was
the privatisation of Kulim after 40 years of being listed
on Bursa Malaysia. The privatisation exercise was
concluded and Kulim devolved into a private company.
We are pleased that this exercise was recognised by
financial analysts as being one of the best privatisation
deals for outgoing shareholders. Notwithstanding our
present status as a private company, we will continue
producing Integrated Annual Reports and Sustainability
Reports as a testimony to our commitment to
More acquisitions are the table, to boost the Group’s sustainability and good governance.
land bank to more than 100,000 hectares. Besides
replenishing the area reduction caused by the sale of
NBPOL, the new acquisitions are expected to boost
the Group’s future earnings when a substantial area of
young palms mature in the next two or three years.
These new estates will contribute towards lowering the
overall age profile and increase the optimum productive Zulkifly Zakariah
life span of the Group’s oil palms. Executive Director
Kulim (Malaysia) Berhad

[ 21 ] Sustainability Report 2014 - 2015

 03
Sustainability
Governance
KULIM (MALAYSIA) BERHAD [ 22 ]
24 Our Sustainability Policy

25 Abiding by RSPO Principles

& Criteria

28 Our Sustainability Mechanism

29 Sustainability Across Borders

30 Engaging Our Stakeholders

[ 23 ] Sustainability Report 2014 - 2015

Sustainability Governance

Our Sustainability Policy

Planet
Carbon Footprint
Water Reduction
Chemical Reduction
Biodiversity
The Kulim Group became one of the earliest plantation
companies in the world to be certified as a sustainable
palm oil producer when its estates and mills in Papua
New Guinea (disposed in 2015) and Malaysia were People
Employee & Profit
awarded the RSPO certification in 2008 and early 2009 Worker Wellbeing, Business & Ethics,
Development & Safety,
respectively. Stronger Community,
Profit with Responsibilty,
Social Contribution
Outgrower & Smallholders 30:30 Production Charter
Engagement
Kulim has for decades envisioned itself as a company
committed to “sustaining people, planet and profit” to
ensure that present and future generations will continue
to benefit from today’s actions. In our pursuit of growth Our stewardship in sustainability also resonates Islamic
and value, we embrace sustainable development as principles and ethics. This is a value system that
the cornerstone of all our operations in Malaysia and advocates value creation through the sustainable use
overseas. We define it as “encompassing social of natural resources such as land and water, and to
responsibility, resource stewardship, appropriate respect the rights of flora, fauna and future generations
environmental control and the capacity to produce to enjoy the bounties of Mother Nature as much as
efficiently. We set out to achieve this by balancing the past and present generations.
considerations of People, Planet and Profit in all
management decisions and operations.”

KULIM (MALAYSIA) BERHAD [ 24 ]

Abiding by RSPO
Principles & Criteria
The Roundtable on Sustainable Palm Oil (“RSPO”) is a
global multi-stakeholder initiative on sustainable palm Oil Palm Total
oil that was formally established under Article 60 of the Producers RSPO Members
Swiss Civil Code on 8 April 2004. Members

RSPO’s strength lies in its multi-stakeholder membership

that ranges from oil palm growers, palm oil processors
17% 2015
2,941
and traders to retailers, consumer goods manufacturers,
banks/investors, environmental and social NGOs
worldwide. This accords the RSPO significant credibility
and acceptance in overseas markets compared to
domestic palm oil certification bodies. Kulim established its sustainability credentials via RSPO
certification. The Group was among the first palm oil
Oil palm producers accounted for 17% of the RSPO’s companies to be awarded the RSPO certification in
2,941 members as at end 2015, and membership is 2009, and since then all our operating units have
voluntary. With the growing demand for CSPO by undergone the prerequisite re-certification audits in
RSPO-accredited buyers, sustainable oil palm December 2013. The certification was renewed in April
cultivation has become the passport to gain access to 2014. As at the end of December 2015, four of our five
lucrative markets in the West. There is mounting mills had their RSPO certification renewed; the last
pressure from Western governments and NGO’s to one, Pasir Panjang POM is scheduled to be certified in
compel buyers to use only sustainable palm oil with 2016.
the publication of scorecards that disclose their
purchases.

According to the World Wildlife Foundation’s 2013

Palm Oil Buyers Scorecard, palm oil buyers have
increased their use of sustainable palm oil. The
scorecard assesses the amount of CSPO used by 130
major global retailers, food companies and
manufacturers. The scorecard, which is made public,
shows some companies making excellent progress,
while others are still lagging behind.

[ 25 ] Sustainability Report 2014 - 2015

Sustainability Governance

One of the challenges of RSPO certification is

keeping up with the frequent changes in criteria
and indicators. In 2013, for example, four criteria
and indicators were revised with regard to ethical
conduct (1.3), forced and trafficked labour (6.12),
Palm Oil Mills
respecting human rights (6.13) and minimising
GHG emissions from new plantation developments
(7.8). For Kulim, these revisions were easy to adapt
to because they were Group practices before
they became RSPO mandatories. But the issue is
ensuring compliance by outgrowers, typically Renewal New
of RSPO Re-certification Certification
small estates with limited resources that form
Certification of ISCC of RSPO &
Kulim’s FFB supply base. To date, two outgrowers ISCC
have become RSPO-certified, and Kulim is
assisting others to do the same.
Sindora Sindora

Falling crude oil prices and competition from

Tereh Tereh
2015

non-RSPO members notwithstanding, the Kulim

Group remains committed to safeguarding its
RSPO credentials and CSPO market reputation. Sedenak Sedenak
Kulim has controls in the form of policies,
monitoring systems and procedures to minimise,
Palong Cocoa
if not prevent, the risk of RSPO non-compliance.
2016

The RSPO’s eTrace system monitors the marketing

and movement of CSPO, from supply base to Pasir Panjang
consumer. The authenticity of Kulim’s CSPO can
be tracked via three RSPO-approved mechanisms, ISCC is a multistakeholder initiative focused on
namely “Book and Claim”, “Identity Preserved” and GHG emissions, sustainable land use, protection of
“Mass Balance” that are part of the eTrace system. natural biospheres and social sustainability

RSPO recognition has given Kulim access to world

markets while partaking in the collective effort to
mitigate the negativity surrounding palm oil
production. One of the oldest plantation
companies listed on Bursa Malaysia (since 1975),
we believe that our future lies in the adherence to
the principles of sustainability governance.

KULIM (MALAYSIA) BERHAD [ 26 ]

BEYOND RSPO: The Continuous Quest for Sustainability

Kulim has also made strides into other frontiers to maintain its leadership in sustainable palm oil production. They are
mainly market forces that dictate how oil palm is cultivated and extracted. By abiding by these standards, Kulim has
become a respected palm oil producer. Whether it is RSPO, Halal or ISCC compliances, their goals are interlocked
and linked to the sustainable production of palm oil.

Currently, the Kulim business kit includes compliances with the following standards:

ISO 9001:2008 Awarded to Sedenak POM, Palong Cocoa POM, Tereh Selatan Estate, Tereh POM and
Sindora POM. This is the ISO’s flagship quality management system to deliver high quality products and
services consistently.

ISO 14001:2004 Awarded to two estates and one palm oil mill - Sedenak Estate, Sindora Estate and
Sindora POM. This is the world’s first international environmental standard designed to help
organisations improve their environmental sustainability and operational performance.

ISO/IEC 17025 Awarded to Ulu Tiram Central Laboratory (“UTCL”). This is the main ISO accreditation
standard to ascertain the competence of testing and calibration laboratories.

Halal JAKIM Certification Four palm oil mills – Palong Cocoa POM, Tereh POM, Sindora POM and
Sedenak POM - obtained halal certifications from Jabatan Kemajuan Islam Malaysia (“JAKIM”), that is,
the Islamic Development Department of Malaysia.

International Sustainability Carbon Certification Awarded to three mills since 2013. In 2015, Sindora
POM, Tereh POM and Sedenak POM were re-certified. Pasir Panjang POM certification is scheduled in
2016.

Other Fundamentals

• Kulim’s Environment Policy is the cornerstone of business strategies.

• Malaysian Palm Oil Association Environmental Charter – Kulim is a signatory of the charter that outlines guiding
principles that members should uphold, including benchmarking and adoption of best management practices.
• Sustainable Management System is in place to strengthen the Group’s strategic approach to sustainable
management by setting out Key Performance Indicators and a system of monitoring and reporting on performance.
• Best Management Practices in the Group’s estates and mills.

[ 27 ] Sustainability Report 2014 - 2015

Sustainability Governance

Our Sustainability
Mechanism
BOARD OF INTERNAL AUDIT / RISK
DIRECTORS KASMAWATI KASIAN

SUSTAINABILITY INITIATIVES COUNCIL

EXECUTIVE DIRECTOR
ZULKIFLY ZAKARIAH
INSPECTORATE & SPECIAL PROJECT
MOHD AKHIR WANTEH

PLANTATION OPERATION
MOHD YAMI BAKAR

INDONESIAN OPERATION PLANTATION INSPECTORATE

MAHMUD SAIDOO DEPARTMENT

PALM OIL MARKETING

NOOR EFFENDY MOHD ALI
ESTATES OPERATIONS
DEPARTMENT
GENERAL SERVICES
IDHAM JIHADI ABU BAKAR

HUMAN CAPITAL SUSTAINABILITY

MANAGEMENT DEPARTMENT

FINANCE & IT SERVICES

AZLI MOHAMAD
SELAI SDN BHD – CATTLE PROJECT
BUSINESS DEVELOPMENT
ABDUL SHUKOR ABDULLAH

AGRO BUSINESS
KAMARULZAMAN OTHMAN ADVISORY ROLE

A comprehensive Sustainability Handbook

In 2009, the Company launched the Kulim Sustainability Handbook outlining policies, expectations and actions to be
taken by stakeholders in the course of implementing strategic sustainability initiatives.

The comprehensive handbook provides guidelines on wide-ranging subjects relating to People, Planet and Profit.
They include labour laws, safety & health issues, employee grievances and the creation of a safe, non-discriminatory
workplace; conservation of biodiversity, pollution control, soil and waste management, identification of High
Conservation Value (“HCV”) areas; business ethics and fraud; Free, Prior and Informed Consent in all negotiations and
interactions; sound land management systems and responsibility to local communities, among others.

KULIM (MALAYSIA) BERHAD [ 28 ]

Sustainability
Across Borders

When expanding its plantations, Kulim follows the Following the acquisition of a 74% equity in PT Wisesa
RSPO Procedures for New Planting. They take account Inspirasi Nusantara (“PT WIN”) concluded on 14
of the conservation of biodiversity, protection of February 2016, Kulim is developing 40,645 hectares of
cultural and customary land use and the capacity of its landbank in Central Kalimantan, Indonesia, The
the land to sustain development. planting of new palms is presently ongoing albeit at a
slower pace. As at end 2015, 307 hectares were planted
Prior to any new planting, the Company conducts a according to RSPO’s New Planting Procedures as well
comprehensive and independent social and as Indonesian regulations. Pre-planting stakeholder
environmental impact assessment. Kulim also ensures engagement resulted in dialogues with the local Dayak
that Free, Prior and Informed Consent is obtained and community in June 2013, to explain the development
fair compensation made to the affected communities. and to obtain their consent to proceed. A survey was
also conducted to determine HCV areas here.
The Company avoids development in primary forests
or on land with one or more High Conservation Value Kulim is a significant supporter of the Save the
(“HCV”). In the past, the Group has rejected proposals Orangutan campaign in Sabangau National Park that
for expansion due to a potential conflict with RSPO adjoins its estates. Kulim donated USD500,000 to the
principles and requirements. This includes plantings in Orangutan Land Trust, a NGO managing the home to
recently logged and peat areas. one of the largest populations of Orangutan.

In July 2014, Kulim submitted pertinent documents to

TUV Rheinland Indonesia, the leading provider for
RSPO certification in Indonesia. The Audit Report was
completed in September 2014 and published on the
RSPO website for public notification.

[ 29 ] Sustainability Report 2014 - 2015

Sustainability Governance

Engaging Our Stakeholders

Stakeholder engagement is at the core of all our business and sustainability strategies. Dialogues provide invaluable
inputs for informed decision making. We also place a premium on strengthening our relationship with local
communities where we operate.

These engagements not only help to enhance accountability, trust and transparency but also highlight potential
risks and opportunities. These overtures have helped us progress towards becoming a more responsible business
and corporate citizen.

Stakeholder Focus Method of Engagement Outcome

Employees • Talent retention • Management and • Conducted the Employee Climate

• Employee Employee Roundtable Survey (“ECS”) that was followed by
development Conference, benchmarking and review of salaries,
dialogues, surveys initiated career and succession.
and workshops • Initiated online peer and reverse
performance, feedback performance
appraisal and assessed competency
training needs.

Workers • Labour policy and • Annual Social Impact • Provided 82 staff families with new
workers’ lives Assesment (“SIA”) housing in five estates.
• Occupational • Enhancing skills and • Provided training and facilities for
Safety & Health income generation WOW members at Operating Units to
among housewives market their products at Company
by Women OnWards events and festive seasons.
(“WOW”) • Created awareness of economic and
social achievements and challenges
of women.
• Promoted entrepreneurship among
WOW members
• Presented “Anugerah Kecemerlangan
Pekerja Wanita” to honour women’s
contribution to the organisation and
community.

KULIM (MALAYSIA) BERHAD [ 30 ]

Stakeholder Focus Method of Engagement Outcome

Non- • Biodiversity loss • Partnerships, multi- • Implemented responsible business

governmental • Climate change stakeholder forums practices, compliance to local and
organisations and joint projects international laws.
• Environmental
(“NGO”) • Adherence to RSPO • Implemented Human/Wildlife Conflict
rehabilitation
Principle & Criteria management project with Wildlife
• Good Agricultural
• Charitable Conservation Society (“WCS”).
Practices (“GAP”)
contributions • Embarked on Kulim Wildlife
Defenders (“KWD”) monitoring and
patrol under Johor Wildlife
Conservation Project.
• Contributed to the Orangutan Trust
Fund.

Investors, • RSPO certification • Meetings, road shows • Incorporated sustainability issues into
bankers and • Labour policies and group meetings our investor relations communication
business partners and human rights • Update on RSPO strategies
• Grievance initiatives • Advocated sustainability ethics, values
mechanism and governance
• Sustainability risk
and opportunity
• Socially-
responsible
landbank
expansion

[ 31 ] Sustainability Report 2014 - 2015

Sustainability Governance

Stakeholder Focus Method of Engagement Outcome

Industry • Chemical usage • Multi-stakeholder • Certified as RSPO plantation

• Water usage initiatives, ad-hoc company.
meetings with • Published Carbon Footprint Report.
• Occupational
industry peers
Safety & Health • Provided feedback to GHG Working
• Climate change Group 2 on usability and accuracy of
PalmGHG tool.
• Biodiversity loss
• Community and
workers’ lives
• Good Agricultural
Practices

Outgrowers and • Commitment to • Annual SIA, ad-hoc • Met with FFB smallholders/suppliers
communities certify 100% of public meetings, with regard to RSPO certification.
FFB processed at workshops, individual • Succeeded in certification of two
our mills by 2019 meetings outgrowers.
• Disaster relief efforts, • Participated in homeless aid
community outreach programme “Assalamualaikum Dunia
development 1436H”.
programmes and
• Outreach programme for
humanitarian
assistance
vulnerable communities affected by
environmental disasters such as
floods.

Customers • Supply chain • Joint ventures and • Sold our CSPO to buyers via Identity
certification ad-hoc meeting Preserved, Mass Balance and Green
• RSPO and ISCC Palm Book and Claim traceability
briefing mechanisms - ISCC Oil EU and ISCC
Plus.
• Obtained Halal Certification for our
palm products.
• Awarded ISO 9001:2008 certification
for quality management.
• Awarded ISO 14001:2004 certification
for environmental management.

KULIM (MALAYSIA) BERHAD [ 32 ]

Stakeholder Focus Method of Engagement Outcome

Government and • Sustainability, • Regular engagement • Attended discussions/meetings with

regulators social issues, local and communication local/state governments to discuss
communities and • Corporate issues relating to biodiversity/
sectoral Responsibility sustainability.
development initiatives • Obtained views from participants of
• Sports and recreation “Rakan Alam Sekitar” (Friends of
activities Environment) as part of nation-
building agenda.

Unions • Labour policy, • Meetings and • Established local committee

workers’ rights conferences comprising elected union
and quality of life representatives for collective
bargaining.

Media • Sustainability, • Press releases, • Used media to highlight the Group’s

social issues, local regulatory sustainability initiatives.
communities and announcements, • Strengthened Kulim’s position as
business shareholders’ leading producer of CSPO.
development circulars, fact sheets
• Press conferences
• Other media relations
initiatives

[ 33 ] Sustainability Report 2014 - 2015

 04
The 3Ps of
Sustainability
KULIM (MALAYSIA) BERHAD [ 34 ]
36 Protecting our planet

50 Developing our People

66 Delivering Year-on-Year Profit

[ 35 ] Sustainability Report 2014 - 2015

The 3Ps of Sustainability: Planet

Protecting
Our Planet

Plantation companies of today are expected to take

appropriate actions to mitigate the impact of their
business operations on the environment. They are
being held accountable for the good health of the
planet that is being threatened by pollution, climate
change, the loss of biodiversity and ecosystems.
Markets have started to prevail themselves upon
plantation companies to act against environmental
degradation. Consumers now demand sustainably
sourced palm oil products and services.

A conscientious corporate citizen, Kulim has made

caring for the environment the cornerstone of its
business policies decades ago. In striving for balance
between its business objectives and environmental
conservation, Kulim complies with all national
environmental legislations; implements resource
management and pollution control; alleviates potential
environmental degradation in new developments; and
communicates its Environmental Policy to all
stakeholders. These are fundamental in all its business
operations.

Currently, the Company’s top priorities are the

reduction of its carbon footprint, the responsible use
of chemicals and water, and the protection of
biodiversity.

KULIM (MALAYSIA) BERHAD [ 36 ]

Reducing Our Carbon Footprint

In 2009, RSPO decided that a company could only claim sustainability

of its palm oil production “when explicit consideration has been given
to aspects of Greenhouse Gas Emissions (“GHG”). Since then GHG
emissions have received a clear position in the RSPO Principles &
Criteria.”

In 2013, Kulim became the first Malaysian plantation company to

publish the biennial Carbon Footprint Report using the PalmGHG
Calculator Beta Version 1a Guidelines. The guidelines, developed with
funding from RSPO, estimates net GHG emissions produced during
palm oil production.

34% 38% 41%

reduction lower product lower fertiliser
in total carbon footprint emissions
GHG emissions

In November 2015, Kulim produced its second Carbon Footprint

Report 2014 using the PalmGHG Calculator Beta Version 2.1.1, a new
and improved version. This report highlighted a reduction in total net
GHG emissions of 34% (using PalmGHG V1); 38% reduction of carbon
footprint (PalmGHG V2) on per tonne basis and a 41% reduction in
emissions from fertilisers.

[ 37 ] Sustainability Report 2014 - 2015

The 3Ps of Sustainability: Planet

GHG emissions in the palm oil industry are caused by Our net GHG emissions for 2014 amounted to 220,000
numerous factors. They occur during transportation tonnes CO2e. With a total Crude Palm Oil (“CPO”)
and use of fertilisers; carbon dioxide emissions from production of 257,881 tonnes and Palm Kernel (“PK”)
diesel and gasoline combustion of vehicles during production of 69,681 tonnes, this is equivalent to a
harvesting and collection of Fresh Fruit Bunches (“FFB”); carbon footprint of 0.71 tonne CO2e per tonne CPO/
carbon dioxide emissions by diesel-powered mill PK if we use PalmGHG Version 1a or 1.15 tonnes CO2e
engines; and methane emissions from Palm Oil Mill per tonnes CPO/PK using PalmGHG Version 2.1.1.
Effluent (“POME”) that has 21 times Global Warming These figures show the average amount of carbon
Potential compared to the other gases. dioxide produced per tonne of CPO by Kulim mills.
Comparatively in 2015, our net GHG emissions
amounted to 482,809 tonnes CO2e using PalmGHG
Version 2.1.1 with total CPO and PK production of
253,471 tonnes and 68,122 tonnes, respectively. This is
equivalent to a carbon footprint of 1.49 tonnes CO2e
per tonne CPO/PK (excluding Pasir Panjang POM).
These results have been communicated voluntarily to
RSPO as part of our GHG emissions monitoring effort.

The biggest culprit in gross carbon emissions generated

by Kulim is from land clearing for planting, which
accounts for 66% of total emissions. However, carbon
sequestration by planted oil palms offsets land clearing,
and the outcome was a carbon positive estimated at
113,084 tonnes CO2e. Only 1.8% of the land cleared
consisted of peat that produced 75,395 tonnes CO2e.
Emission Reduction by Mills

2012 2014 2012 2014

Remarks
MT CO2e/MT CPO MT CO2e/MT PK
Kulim Group 1.15 0.71 1.15 0.71 Decreased by 38.4%
Palong Cocoa Palm Oil Mill 1.32 0.85 1.32 0.85 Decreased by 35.6%
Sedenak Palm Oil Mill 1.51 0.71 1.51 0.71 Decreased by 53.1%
Sindora Palm Oil Mill 1.44 0.54 1.44 0.54 Decreased by 62.5%
Tereh Palm Oil Mill 0.66 0.73 0.66 0.73 Increased by 10.6%
Tunjuk Laut Palm Oil Mill 0.75 N/A 0.75 N/A No longer under Kulim’s
management

KULIM (MALAYSIA) BERHAD [ 38 ]

Our Carbon Reduction Strategy also covers the tracking
of palm kernel shells sold for fuel usage (allowing for a
Palm Kernel
significant emissions credit), reduction in fertiliser
Shells
usage and controlled peat land planting.
60,000
The Group’s net carbon footprint emission by mill has tonnes
fallen by 38% since 2012, largely due to the introduction 76% 24%
of a tracking system that monitors palm kernel shells In-house Sold as fossil fuel
power generation alternative
sold for power generation which awarded Kulim with
carbon credits. Similiar to 2012 and 2013, our mill
operations produced about 60,000 tonnes of palm Carbon credit of
kernel shells for the period 2014-2015, and 76% of this 37,234
was used for in-house power generation. This earned tonnes CO2e
Kulim a potential credit of 30,000 tonnes of CO2e. The
remaining 24% was sold to third parties as a fossil fuel It is widely acknowledged that draining and burning
alternative. Our tracking and monitoring of palm kernel peat land for agricultural expansion leads to sudden
shells sold as alternative fuel gave us an additional spikes in GHG. Peat fires can emit up to 10 times more
carbon credit of 37,234 tonnes CO2e in 2014 and 2015. methane (a GHG that is 21 times more potent than
carbon dioxide) than fires occurring on other types of
In addition, carbon credits were accumulated as a land. Taken together, the impact of peat fires on global
result of a decline in fertiliser usage, especially at warming can be more than 200 times greater than fires
Sindora POM’s supply base estates that underwent a on other lands.
replanting programme. As a standard operating
procedure, manuring was discontinued two years prior Peat land accounts for 1.8% of land cleared and
to replanting. cultivated by the Kulim Group and its outgrowers. Still,
GHG emissions is significant, contributing 97,871
The cultivation of oil palm on peat is discouraged tonnes CO2e (7.64%) of total emissions in 2015.
because it generates emissions from microbial
decomposition of exposed organic carbon in peat as To reduce emissions from peat, Kulim implements best
well as associated N2O* emissions. However, there is management practices that comply with RSPO
still a significant degree of uncertainty of the various Principles & Criteria. We actively monitor and control
factors affecting the magnitude of these emissions. water tables with a drainage depth of 60cm to limit
This includes drainage depth, peat subsidence and age GHG emissions. In determining GHG emissions from
of plantation. peat, the default emission value used is 0.91 MT CO2
per cm per year (or 54.6 MT CO2 per hectare per year
for 60cm drainage depth) and 16 kg N-N2O** per
* N2O : Nitrous Oxide hectare per year as proposed by the PalmGHG
** N-N2O : Nitrous Oxide with KgN fertilizers added calculator. During the reporting period, there was no
planting on peat.

[ 39 ] Sustainability Report 2014 - 2015

The 3Ps of Sustainability: Planet

Putting Methane to Good Use

Methane gas produced from the anaerobic process We commissioned our first methane capture and
in Palm Oil Mill Effluent (“POME”) is a huge source power generation plant in Sedenak POM on 8 April
of renewable energy that can be utilised for power 2014. In 2015 it produced around 5,000 m3 of
generation and cogeneration. Previously, palm oil methane gas daily for power generation. Another
mills mitigate the harmful effects of methane on biogas plant located at Pasir Panjang POM was
the environment by flaring it in order to reduce the commissioned in September 2015. The third biogas
amount released into the atmosphere. However, plant in Sindora POM, is expected to be completed
this is the least value added approach to in 2017. We forecast 50%-100% of methane from
sustainability. The harvesting of methane as POME degradation to be captured eventually and
renewable energy has the potential of creating a channelled for power generation by these three
viable revenue stream for the palm oil mills, while mills. Overall, we expect them to reduce our
addressing environmental and regulatory concerns. Malaysian emissions from POME by about 32% over
the next four years.
Beginning 2014, the Government mandated new
palm oil mills as well as established mills on There is also an on-going negotiation with Tenaga
expansion mode to install methane avoidance Nasional Berhad (“TNB”) with the aim of exporting
facilities in a bid to reduce GHG emissions and renewable energy from our biogas plants.
boost the industry’s sustainability efforts.
The installation of biogas facilities is also expected
Kulim has started to install biogas plants in its palm to pave the way for other viable downstream
oil mills in stages, and this is expected to help businesses.
reduce the Group’s overall carbon footprint by 58%
of the 2012 baseline emission by the year 2020.
Currently, our mill operations are the second largest
contributor of GHG emissions.

KULIM (MALAYSIA) BERHAD [ 40 ]

Biogas Plants: Projected Reduction of Emissions Overall: Projected Reduction of Emissions
2015 - 2019 2012 - 2019

250,000

1.15

200,000

150,000

0.71
0.65
100,000 0.59
0.56
0.52
0.48
50,000
180,808
200,705

160,566
182,259
202,155

0
162,016
173,262

149,321

150,771
171,812

100% 62% 57% 51% 49% 45% 42%

2015 2016 2017 2018 2019 (MT CO2e) 2012 2014 2015 2016 2017 2018 2019

POME MT CO2e/MT CPO/PK

NET Updated reduction target from 2012
baseline

Reduction of Chemical Fertilisers

Kulim has a long-term organic fertiliser programme to This is a significant reduction from 2012 where fertiliser-
reduce the GHG emissions from the production, related emissions was 98,000 MT CO2e.
transportation and use of chemical fertilisers by both
Kulim estates and outgrowers. The excessive use of Of this, Kulim’s estates contributed approximately
chemical fertilisers pollutes river and underground 64.8% of emissions while the remaining 35.2% was
water systems. To address this, we are currently in the generated by outgrowers. The chemical composition
midst of field data collection to find ways of optimising of fertiliser plays a critical role in this regard and can
organic and chemical fertiliser usage without affecting vary widely from 44kg to 2,380kg MT CO2e fertiliser.
FFB yields. Nitrous oxide emissions are from the nitrogen content
of fertilisers.
In addition, all our five palm oil mills have established
composting projects that involve recycling nutrients Organic fertilisers produced from treated and dried
from Empty Fruit Bunches (“EFB”) and POME to fertilise POME and the composting of EFB under our long-term
the fields. organic fertiliser programme will help to reduce our
dependency on chemical fertilisers. Both these
GHG emissions from the use of fertilisers for planting initiatives resonate the principles of 3R – Reduce,
contributed 62,369 MT CO2e or 4.87% of total emissions Reuse, Recycle – that has been a longstanding part of
in 2015 compared to 57,690 MT CO2e or 5.29% in 2014. our Environment Policy.

[ 41 ] Sustainability Report 2014 - 2015

The 3Ps of Sustainability: Planet

Outgrower Engagement

Besides the Group’s estates, our palm oil mills also conducted two rounds of internal audits for our
procure FFB from outgrowers, typically independent operating units and outgrowers. We have also initiated
smallholders cultivating oil palm on less than 50 acres a long-term engagement process with all of our
and larger size smallholdings that come under the independent outgrowers and this has evolved into a
ambit of organisations such as FELDA. In times of full-scale programme to assist outgrowers achieve
strong market demand, our palm oil mills also buy from RSPO certification. For outgrowers, the cost of RSPO
traders, who obtain their supplies from diverse certification and keeping up with changes in criteria are
smallholders. big hurdles. Kulim does its best to guide them to adopt
good agricultural practices, especially in the efficient
Since 2012, outgrowers have accounted for about 30% use of fertilisers and cultivation on land near primary
of FFB supply, and herein lies our RSPO challenge: forests and peat land.
tracing the origin of supply to sustainable RSPO
practices. As of 31 December 2015, two outgrowers were RSPO-
certified, and Kulim will continue to work with other
In an effort to maintain our RSPO certification and outgrowers to reduce emissions generated by external
ensure the sustainability of our supply chain, we suppliers.

KULIM (MALAYSIA) BERHAD [ 42 ]

RESPONSIBLE CHEMICAL USE

Chemical pesticides and herbicides used in agriculture

tend to contaminate waterways, and to address this
problem Kulim has always sought out environment-
friendly alternatives.

Under the stewardship of its Agronomy Department,

Kulim has adopted a more structured approach to
Integrated Pest Management, the first line of defence
against pests and diseases. The Integrated Pest
Management system uses alternatives such as barn
owls, pheromone traps, beneficial plants and microbes
to fight off palm pests. In 2008, Kulim invested in cattle
rearing to control the growth of unwanted ground
cover.

Meanwhile, the department’s R&D advisory services

provide solutions to our plantations on the most
effective way for weed and pest management to obtain
maximum yields based on land use conditions. We are
currently trialling the use of microbes such as
metarhizium to infect spores, larvae and adult beetles
that infest oil palm chips.

Chemical control is our last resort, used only when

biological measures have failed.

[ 43 ] Sustainability Report 2014 - 2015

The 3Ps of Sustainability: Planet

Kulim bans Paraquat

A significant development in 2015 was Kulim’s decision In 2015, Kulim recorded a spike in Paraquat usage. This
to ban the procurement of Paraquat in March 2015. This was old stock used for land clearing prior to replanting
decision reflects the concerns of stakeholders who and the removal of Volunteer Oil Palm Seedlings. Since no
recognise that the chemical is highly toxic and damaging new purchases were made with effect from March 2015,
to human and environmental health. To date, Kulim has Paraquat usage will become non-existent in Kulim estates
not recorded any reports of Paraquat casualties. in the future.

One of the most cost-effective agricultural herbicides,

Paraquat is an acutely corrosive and toxic chemical USE OF HERBICIDE AND PARAQUAT
formulation that also causes severe groundwater (Active Ingredients in litre/hectare)
contamination. It has been banned or disallowed in 32
countries. RSPO has not called for the outright elimination
of Paraquat, but advocates the minimisation of its use. It
calls upon growers to implement Integrated Pest

0.15
1.62 1.64
Management techniques that combine natural pest 1.50 1.47
management with restricted use of chemical pesticides. 1.33

In the meantime, the RSPO has commissioned a study

on integrated weed management and alternatives to find

0.07
replacements for Paraquat, and we are closely following

0.06
these developments to guide us in the future.

0.05
0.03
2011

2012

2013

2014

2015
Paraquat Herbicide

KULIM (MALAYSIA) BERHAD [ 44 ]

SUSTAINABLE USE OF WATER To protect our rivers and waterways, Kulim established
buffer zones that exceed the regulatory limit. Vegetation
Like many crop mills, palm oil mills consume large alongside major water bodies in and around the estates
volumes of water during operations. For efficient water and forest reserves are left undisturbed to prevent soil
usage, each mill has a set target. In 2015, Kulim reduced erosion and pollution from chemicals used in the
water consumption at the mills to 0.98m3 per tonne of estates. The estates of Tereh POM border the Sungai
FFB compared to 1.05m3 per tonne recorded the Tamok and the Jabatan Pengairan & Saliran (“JPS”),
previous year. This is significant because the tonnage stipulates a buffer zone of 5-10 metres by the river
of FFB processed had increased. bank, but Kulim has chosen to maintain a 20-metre
buffer on each bank. We are also vigilant in monitoring
Our primary sources of water are rainwater and rivers all buffer zones to prevent encroachment by human
that are collected and stored in reservoirs. While some and wildlife.
is used to water seedlings in the nursery, most of our
water is channeled to the mills to process FFB, power
steam boilers and for domestic consumption. High Protecting the Waterways
rainfall in our estates in the southern part of Peninsular
Malaysia has enabled us to harvest sufficient rainwater To prevent soil erosion and pollution of the waterways,
and keep water consumption in our estates within the Kulim has planted fast-growing leguminous cover
limit prescribed by Badan Kawalselia Air Johor (“BAKAJ”), crops in erosion-prone areas. Our biggest challenge is
the state water regulatory authority. our Agrofoods business that involves the rearing of
7,452 heads of cattle. This is proving to be a double
Water Consumption at Palm Oil Mills edged sword – on the one hand it is part of our
Integrated Pest Management System and a revenue
2014 2015 stream, but the down side is that it can lead to soil

1.05 0.98
compaction, over-grazing and top soil erosion. We are
constantly monitoring the project to ensure that our
business targets are in line with good agricultural

m3/ tonne FFB m3/ tonne FFB practices.

[ 45 ] Sustainability Report 2014 - 2015

The 3Ps of Sustainability: Planet

To reduce pollution from heavy metals and wherever PROTECTING BIODIVERSITY

feasible, the Group has combined the use of both
inorganic and organic fertilisers derived from Empty It may appear to be a contradiction of terms for a
Fruit Bunches (“EFB”) process. Our concern here is the practitioner of monoculture to promote biodiversity, but
level of Biological Oxygen Demand (“BOD”) that may the fact that Kulim is committed to sustainability means
increase due to the use of palm effluent on land. BOD that it honors the right of all life to a space to call its own.
is the amount of dissolved oxygen needed by aerobic This stance is vital since many of Kulim’s estates are
biological organisms in the oxidation of organic matter. located along the borders of Labis Forest Reserve and
The average BOD from our mill effluents has increased Endau-Rompin National Park that are home to numerous
significantly, by 104% since 2011. This was caused by endemic and endangered tropical flora and fauna.
desiltation at one of the anaerobic ponds in Tereh POM
in 2015. The desiltation, conducted with the approval Kulim has launched a series of initiatives to conserve or
of the Department of Environment, resulted in a high re-create the habitats and eco-systems of flora and
level of final discharge for about three months, but this fauna found in its estates or along its borders. Since
was within the approved limit. 2008, Kulim has progressively expanded its buffer
zones and natural forest corridors; launched anti-
poaching initiatives; and implemented Infaq 1 Warisan,
WATER CONSUMPTION BY MILL (m3/tonne) a voluntary tree planting initiative.
2011 0.94
As part of its business plan, Kulim abides by the
2012 1.15 Principles of Precautionary Approach and High
Conservation Value (“HCV”) Management prescribed
2013 1.17 by RSPO. The various definition of HCV includes
conservation of endemic, rare, threatened or
2014 1.05 endangered species

2015 0.98 Wildlife Corridor and Refuges

BOD LEVEL (part per million) As at 31 December 2015, Kulim had allocated 52.46
hectares of its plantation land as buffer zones in all
2011 261.00 estates. Another 32.67 hectares were identified as
jungle refuges within the estates, to be preserved as
2012 85.00 full-fledged HCV forests. These spaces are part of the
Central Forest Spine, a national initiative started five
2013 114.00 years ago to link natural habitats separated by human
settlements. By creating a continuous jungle corridor,
2014 114.50 wildlife are free to roam and not deprived of food,
shelter and the ability to multiply in accordance with
2015 532.83
the law of the jungle.

KULIM (MALAYSIA) BERHAD [ 46 ]

In 2015, Kulim constructed 0.3km of natural pathways
within Sungai Tawing estate, allowing elephants to gain
access to their watering holes without causing damage
to palm trees. This initiative also helps to manage
human-elephant conflict.

Every year, staff and the local community gather for a

tree planting event, rebranded as Infaq 1 Warisan.
Between 2010 and 2015, more than 3,600 trees
representing 30 different native species were planted.

Managing Human - Wildlife Conflict

Our plantations in Johor namely Sg Sembrong, Sg Tawing, elephants incursion at our estates. Among the measures
Tereh Utara border the Endau-Rompin National Park, a taken to contain palm destruction include electric fencing
part of the Central Forest Spine with significant biodiversity that acts as a physical and psychological barrier with
risk. As a result, these areas are the focus of conservation enough voltage to shock but not harm the elephants. Our
and rehabilitation efforts by the Government. efforts to establish natural pathways in the estates have
not been successful either as elephants are still damaging
Due to the proximity of our estates to these HCV areas, palm trees.
we have always had our own conservation programme,
with a special focus on big mammals such as tigers and We believe that to understand elephant-human conflict
elephants. Other wildlife in our conservation radar include we need to understand elephants. It is a question of
the wild boar, pig-tail & long-tailed macaque and securing food supply. Food shortages in their natural
migratory birds that roam freely in our estates. habitats drive elephants to our doorstep. As a plantation,
we try to address this issue and fully support the
In the estates bordering forest reserves, human-wildlife Government’s Central Forest Spine initiative that envisions
conflicts occur, especially with elephants, wild boars and a dedicated wildlife jungle highway that will accommodate
tigers. Conflicts with elephants are on the rise. In 2015, the needs of Malaysian flora and fauna.
we lost 658 palms at approximately RM53,000 to the

[ 47 ] Sustainability Report 2014 - 2015

The 3Ps of Sustainability: Planet

Protecting Wildlife and Endangered Species

A 2008 IUCN survey to assess the state of flora and fauna in areas
bordering our estates revealed that the biodiversity of wildlife on the
“Red List of Threatened Species” has become even more precarious.
They include the Asian elephant, tiger and Malayan tapir that are found
in our estates.

To prevent any further decline in their population, Kulim works closely

with the Government and NGOs to conduct Regular Rapid Biodiversity
Monitoring in hotspots identified in the vicinity of our operating units
and conservation areas. Hunting, fishing and removing fauna in our
estates and adjacent protected areas are prohibited.

We also continue to strengthen our internal monitoring and control

mechanisms to prevent poaching especially in areas bordering the
Endau-Rompin National Park. The Kulim Wildlife Defenders, now a
registered NGO, has joined forces with the Johor National Parks
Corporation, Wildlife Department, Forestry Department and the Police
Force under the Johor Wildlife Conservation Project for joint anti-
poaching efforts. As of 31 December 2015, Kulim Wildlife Defenders
had 48 border guards.

Kulim has collaborate with the Wildlife Conservation Society to

conduct a birds and bats survey to identify areas of high interest for
birds on the seasonal East Asian-Australian migratory route. The
society recorded two species of migratory birds that come under the
High Conservation Value category. They are the Brown-chested
Jungle Flycatcher, (“Rhinomyias brunneata”) and Straw-headed Bulbul,
(“Pycnonotus zeylanicus”) that are listed as Vulnerable on the IUCN
Red List of Threatened Species. The HCV tool used in the survey
continues to be relevant to monitor the their impact on biodiversity.
Meanwhile, Kulim’s man-made reservoir in Selai Estate has become a
haven for a variety of wildlife.

KULIM (MALAYSIA) BERHAD [ 48 ]

Raja Zarith Sofiah Wildlife Defenders Challenge

Under the patronage of the Permaisuri of Johor, the Raja

Zarith Sofiah Wildlife Defenders Challenge is a 3-stage
competition launched in August 2013 to increase awareness
of wildlife conservation among students. The long-term
objective of the biennial programme is to instil a lifelong spirit
of volunteerism and love of the environment among students.

The most recent edition of the challenge was based on the

theme “Symbiosis within Mangrove Forests and Eco-
Development”. It began in December 2015 and will continue
until October 2016, and involves participants from 11
secondary schools and 13 primary schools.

Conservation Efforts in Kalimantan

With our expansion to Central Kalimantan, we have

committed ourselves to the protection of the orangutan
in the area. Sabangau National Park here is home to one
of the largest orangutan populations in the world.

In 2015, Kulim donated USD500,000 to the Orangutan

Land Trust (“OLT”), an organisation that supports the
preservation, restoration and protection of forests for the
survival of the orangutan. Our contribution will assist OLT
to manage a sustainable orangutan conservation project
that includes the development of communities, outreach
and educational programmes as well as facilitate the
rehabilitation of orphaned or displaced orangutan, and
prepare for their return to the wild.

[ 49 ] Sustainability Report 2014 - 2015

The 3Ps of Sustainability: People

Developing
Our People

The sustainability of a company depends on the performance of its

prime asset: its People. At Kulim, this covers employees, the local
community, smallholders and outgrowers. They are the key to our
profitability, help to build our reputation, and determine public
perceptions. Unsurprisingly, our People Policy states: “We will treat
our people with respect, dignity and fairness”.

KULIM (MALAYSIA) BERHAD [ 50 ]

ENHANCING EMPLOYEE WELL-BEING

Our employees are our foundation. We say this because the

performance of our workforce drives the Company to deliver its goals
and targets, breaching barriers and continuously setting new
benchmarks. Our people are also the spirit of the Company to leave a
positive footprint.

At the end of 2015, Kulim had 6,979 full-time employees in Malaysia, a

4.4% increase from 2014. Of this, 5,782 or 82.85% were plantation
workers, while the remaining were administrative staff (managers and
office staff) who accounted for 17.15%. The majority of plantation
workers was foreign labour, mainly from Indonesia, Bangladesh and
India. We had a turnover rate of 27.2% in 2014 and 25.98% in 2015. This
is attributed to the repatriation of 1,477 foreign workers during the
2-year period upon the completion of their contractual obligations.

PLANTATION WORKERS BY COUNTRY

21.4%
Indonesian 64.5%

Malaysian 21.4%
Total
5,782 Bangladeshi 13.4%
13.4%
64.5% Indian 0.7%
0.7%

[ 51 ] Sustainability Report 2014 - 2015

The 3Ps of Sustainability: People

Kulim endeavours to attract, develop and retain To improve management-staff engagement, Kulim
qualified, creative and innovative staff by providing a conducts the Employee Climate Survey yearly. The
safe, nurturing and rewarding workplace through our findings provide the management with valuable insights
values, social responsibility, ethical business practices of staff mindset and performance. The survey measures
and business success. Our human resource policies critical contributing factors for high performance and
are governed by Malaysian labour legislation and the the employee value proposition. The 2015 survey
International Labour Organisation’s Declaration (“ILD”) revealed that our employees are generally happy with
on Fundamental Principles and Rights, among others. the work environment and proud to be a part of the
The Company also embraces diversity and pushes Group.
forth gender equality, non-discriminatory practices for
women, ethnic and religious minorities, and foreign Kulim also subscribes to the Performance Management
workers. We also have guidelines on HIV/Aids System to measure the performance of its staff who are
management that guarantees confidentiality and appraised annually. This is critical to sustain ourselves in
employment as long as the afflicted are able to perform a highly competitive business environment where the
their work. quality of our people is a key driver of success.

Kulim practises equal-pay-for-equal-work, and the

salary structure of office and management staff is
negotiated by the trade union. Plantation workers are
paid daily, and as of 1 January 2014, we adopted the
national Minimum Wages Order 2012 that raised the
minimum wage to RM900 in Peninsular Malaysia and
RM800 in Sabah, Sarawak and Labuan.

2014 - 2015

Staff
Increase +4.49%
Turnover
-1.22%
To promote a culture of integrity, the Group has in
place a Whistleblower Policy that encourages staff to
disclose illegal practices or violations of Company
policies. The Group also bans the use of illegal drugs
and alcohol in the workplace.

KULIM (MALAYSIA) BERHAD [ 52 ]

 TRADE UNION BASED PLANTATION WORKERS AS AT 31 12 2015

UNITS TOTAL EMPLOYEES (AMESU)* TOTAL EMPLOYEES (NUPW)**

ULU TIRAM 5 73
BASIR ISMAIL 4 62
BUKIT LAYANG 1 0
KMF-LBI 1 0
REM / PASAK 6 77
LABIS BAHRU 3 106
SUNGAI SEMBRONG 2 58
MUTIARA 3 62
KUALA KABONG 0 3
SEPANG LOI 2 0
KPF-UTE 6 0
TEREH UTARA 7 235
TEREH SELATAN 7 114
SUNGAI TAWING 5 79
SELAI 7 6
ENGGANG 6 106
SEDENAK 5 79
RENGAM 2 76
UMAC 3 19
SINDORA 8 149
SIANG / BALAU 4 46
ASAM BUBOK 2 0
SUNGAI PAPAN 6 44
PASIR PANJANG 8 44
MUNGKA 9 0
KEMEDAK 9 0
PALONG 4 0
SEDENAK POM 18 98
SINDORA POM 13 41
TEREH POM 11 66
PASIR PANJANG POM 13 64
PALONG POM 16 20
MERSING HILL 2 0
TUNJUK LAUT 9 0
BUKIT PAYUNG 3 0
PASIR LOGOK 8 0
BUKIT KELOMPOK 3 0
TOTAL 221 1,727
Note: Besides plantations within the Group, Kulim also manages estates belonging to its parent company JCorp

*AMESU : All Malayan Estate Staff Union **NUPW : National Union of Plantation Workers

[ 53 ] Sustainability Report 2014 - 2015

The 3Ps of Sustainability: People

Training and Development There are job-specific as well as generic training

programmes to bridge the skill gaps of staff. They
Staff training and development is a vital component of consist of formal courses, seminars and workshops
Kulim’s Sustainable Development Principles. Our goal conducted by in-house experts or by external specialist
is the continuous development of a pool of consultants. Besides job related training, employees
knowledgeable and empowered workforce. In 2015, also attend training courses on human rights, anti-
we allocated 1.12% of the total payroll budget to training corruption and anti-harassment.
to achieve 2.51 mandays per employee. This is
marginally lower than 2014 given the strategic shift in To strengthen our training and development
the direction of staff training and development. The capabilities, we collaborated with Pembangunan
current focus is on operational hands-on training, up- Sumber Manusia Berhad (“PSMB”), an agency under the
skilling and customised programmes Ministry of Human Resources. In 2015, we added 14
trainers, bringing the total of PSMB-certified internal
trainers to 30. They are mainly experts in Operational
Management. We also continued to collaborate with
Allocated Achieved PUSPATRI (Johor Skills Development Centre) for

1.12%
technical courses for our employees.

Total payroll
2.51
Mandays
budget for per employee
training

KULIM (MALAYSIA) BERHAD [ 54 ]

Towards a More Sustainable and Inclusive Workplace

Kulim entrusts estate and mill management to ensure that sustainability initiatives mandated by the top
management are effectively implemented on the ground. Managers are groomed on all aspects of
sustainable management, from biodiversity protection, carbon footprint reduction to workplace health
and safety. Sometimes, managers delegate the task of implementing and enforcing sustainability initiatives
to officers who are well-versed in the 3Ps.

Plantation workers are directly recruited by Kulim to avoid abuses and discrimination. All plantation workers
are provided with accommodation in accordance with the Labour Housing Standards Act. Typically, they
live in 2- or 3-bedroom houses that meets the minimum standard of the Housing and Amenities Act 1990.
There is clean piped water supply at no cost, subsidised electricity supply and clinics, as well as places of
worship and recreational facilities such football fields. In 2015, 82 families shifted to new houses built in five
estates.

Parents are discouraged from bringing their children to the workplace. Kulim does not employ children
under the age of 16. Over the years, Kulim has assisted the Government by allocating land for schools in
its estates. Now, all estates have schools and to encourage parents to send their children to school, the
Company provides free transportation and free uniforms. We want children of our employees, especially
of plantation workers, to complete secondary education.

[ 55 ] Sustainability Report 2014 - 2015

The 3Ps of Sustainability: People

Developing Future Leaders

Integral to our sustainability strategy is succession

planning that focuses on developing future leaders
from our pool of young talent. Succession planning
was a concern raised by some millennial generation
employees at a staff engagement session.

Noting their concern, Kulim is collaborating with its

parent company’s Johor Corporation Leadership
Programme (“JLP”), a 2-year leadership programme
designed for participants to improve their decision-
making skills and enhance their leadership attributes.
Participants will be exposed to different business
challenges and exchange their leadership experiences
during the course. In 2015, eight employees were
selected for the JLP, joining an earlier batch of five
candidates.

Kulim also continued with the Strategic Enhanced

Executive Development System (“SEEDS”), a
management trainee programme for new graduates,
that has benefitted 62 employees since its launch in
2008.

The shortage of young people wanting to work in

estates is a serious industry-wide dilemma, with
millennials preferring jobs in urban areas. To attract
them, Kulim’s estates are equipped with modern
conveniences that include well-furnished homes with
broadband coverage and good access roads to urban
centres. Another of Kulim’s staff retention strategy,
especially of young staff, is to provide them
opportunities for more personal and professional
development.

KULIM (MALAYSIA) BERHAD [ 56 ]

Protecting Labour Rights

In the management of our plantation workforce, we The Group keeps a close watch on working conditions
are guided by the principle of equality, fairness and of both local and foreign workers to ensure that there
respect. Kulim labour policies are grounded on good are no abuses and no underage or bonded labour,
labour practices and its commitment to protect labour especially among foreign workers.
rights with the implementation of non-discriminatory
policies, minimum wage, overtime wages, freedom of
association and the right to collective bargaining.

The National Union of Plantation Workers (“NUPW”)

represents 18.7% of our employees. We have an in-
18.7%
Trade Union
4,545
Foreign Workers
house committee comprising union representatives Members in 2015
elected by members to protect worker rights during
collective bargaining that also covers foreign workers.
This committee also acts as a communication channel
between workers and management.

Equal Rights for Foreign Workers

In 2015, there were 4,545 foreign

workers who accounted for 82.85% of
Kulim’s plantation workforce. Foreign
workers are managed by the Group’s
Estate Plantation Operations
Department that handles recruitment
and permits, and ensures the Group
abides by all relevant labour legislations,
ILO requirements and internal SOPs.

Foreign workers are provided comfortable and sanitary accommodation, recreational facilities and
clinics, just like their Malaysian counterparts. They are also free to join the union, and paid according to
the minimum wage legislation enforced by the Government. Among the challenges faced in the
recruitment of foreign workers are the frequent changes in Government policies, recruitment processes
and levy increases.

[ 57 ] Sustainability Report 2014 - 2015

The 3Ps of Sustainability: People

Focus on Safety These incidents alerted us to reinvest in safety, and we

are happy to report that in 2015 we achieved our goal
A safe and healthy workplace is an integral part of our of zero fatalities. The year also saw an improvement in
business objectives. In our effort to lower workplace the Lost Time Accident Rate that dropped to 6.82. In
accidents, we integrate good Occupational Safety & 2015, our injury severity rate of 2.28 is a marginal
Health (“OSH”) practices into all our daily operations. improvement, from the target of below 3.5. The
Our target is for zero accidents and zero fatalities. increase in the number of road accidents remains a
cause of concern despite road safety campaigns and
OSH practices are mandatory at all our palm oil mills stricter enforcement of traffic regulations.
and estates where there is a dedicated OSH Officer to
ensure the effective implementation of the Group’s lost time accident rate
OSH system. Besides organising safety training, tool- Target below 10
box safety briefings and OSH quarterly meetings, the
2011 5.8
Officer’s responsibilities include conducting
investigations and reporting all accidents to the OSH 2012 9.79
Manager.
2013 7.2

Field staff are required to attend an average of 40 hours 2014 7.19

or 5 mandays of safety training that covers the handling, 2015 6.82
application and safe disposal of chemicals. Lorry and
mechanical buffalo drivers have to complete 16 hours
severity rate
or 2 mandays of training under supervision. It is Target below 3.5
compulsory for drivers to pass their practical
examinations before they operate the vehicle 2011 4
independently. 2012 2.7

OSH also includes the provision of a clean and 2013 2.23

comfortable workplace, clinics, creches, canteen, 2014 2.44

clean toilets and comfortable worker’s quarters.
Additionally, we ensure a proper schedule of mosquito
2015 2.28
fogging, health surveillance, water treatment facilities
and the proper disposal of all waste material. fatality rate
Target at zero

In 2014, we recorded two work-related deaths. There 2011 1

was also a sudden increase in Lost Time Accident Rate 2012 1
to 7.19, which was still lower than our target rate of 10.
The same year, the Group was also fined for non- 2013 1
compliance to the procedures by Department of 2014 2
Occupational Safety & Health Malaysia (“DOSH”).
2015 0

KULIM (MALAYSIA) BERHAD [ 58 ]

Promoting Gender Equality All our female employees are entitled to 60 consecutive
days of paid maternity leave, in accordance with
Gender diversity in the workforce is more of an Malaysia Employment Act 1955 Part IX Maternity
economic imperative than a gender issue as it involves Protection. In 2014-2015, we recorded a 100% retention
retaining and attracting talents that are valuable to rate of staff who returned to work after their maternity
economic growth. McKinsey’s Women Matter: An leave. This bucks the national trend that shows that
Asian Perspective 2012 highlighted how the increasing new mothers are most likely to leave their jobs after
participation of women in the workforce could one year.
potentially increase Malaysia’s GDP by between RM6
billion to RM9 billion. We have been on a continuous mission to empower
our female workforce by eliminating sexual harassment
The importance of gender diversity in the workplace and other discriminatory practices. Our target is to
and measures to improve it is highlighted in the 10th create a zero sexual harassment environment for
and 11th Malaysia Plans. The most recent effort to women. In 2014, no sexual harassment cases were
promote diversity is the launch of the 30% Club in reported; but there were two in 2015. We have since
Malaysia that aims to increase the representation of accelerated efforts to create awareness among
women on corporate boards to 30%. employees of what constitutes inappropriate behaviour.

Kulim is an Equal Opportunity Employer. As at 31

December 2015, women made up 11.2% of the
workforce, of which 12.31% are in the management
level. The number of women in management increased
by 18.5% from 2014 to 2015. In five years, the number
of women in management rose by 146%.

MANAGEMENT BY GENDER
229

229
226
205
196

96
81
73
46
39

2011 2012 2013 2014 2015

Female Male

[ 59 ] Sustainability Report 2014 - 2015

The 3Ps of Sustainability: People

Realising women’s full potential

Discriminatory policies against women may hinder To stamp out sexual harassment, the Group establishes
organisations from fully realising their human capital Panel Aduan Wanita ("PAW"), a women's grievance
potential, especially that of women in the workplace. panel in 2009. Better known as WOW, this is a channel
Kulim celebrates women’s voices and participation in to resolve sexual harassment complaints. We continue
decision making and work related functions by to make headway in reducing the number of reported
implementing initiatives that break gender barriers. cases of sexual harassment. In 2015, there were two (2)
cases reported. This is a result of ongoing efforts to
In Kulim, capability, skills, knowledge, experience and create awareness among employees of what
potential are applied equally for both men and women. constitutes inappropriate behaviour and this is
Generally, plantation workers and estate managers reinforced from time to time. Through a concerted
tend to be predominantly male because of the physical campaign, women are also more aware of their rights
nature of the work. However, this gender stereotyping and more receptive to reporting cases of sexual
is being changed by women themselves, who have harassment.
started to apply to work in the estates. As at end 2015,
the Group employed two women veterinarians in the In 2010, WOW evolved into a community outreach
field, responsible for the health of cattle reared for programme. Led by the Group’s female staff, WOW
sustainable income generation, and there were 684 conducts Jejari Bistari that trains women in the local
women staff and workers employed in the estates. community to become micro-entrepreneurs, to
improve their household income and enjoy a better
As an organisation that aspires to be an equal quality of life. The training also focuses on building
opportunity employer, Kulim set up crèches and their confidence and self-esteem.
designated breastfeeding areas in offices in 2014. It is
an initiative to create a helpful and enabling environment The Group also holds the view that promotion must be
for women to thrive in their respective fields. Kulim also based on merit, not driven by quota. Company
wanted to send out the message that being a mother designations are not gender specific and anyone with
should not inhibit performance. These facilities have the desired aptitude and attitude can apply for a job.
borne good results. For the reporting period, the The Group also appraises staff by their knowledge,
company recorded a 100% return-to-work of staff after productivity and efficiency, irrespective of gender.
their maternity leave.

KULIM (MALAYSIA) BERHAD [ 60 ]

Building Better
Communities
Kulim has a long standing relationship with local
communities that form an important source of staff
and plantation workers. Hence, it is very much in our
interest to ensure their well-being. Our flagship
community outreach initiative “We Care, We Share”
was established in 2009, and it has five pillars:
community sports, welfare, education, health and
infrastructure development.

In 2015, Kulim adopted two primary schools and one

secondary school under the PINTAR Foundation school
adoption programme. During the year, Kulim sponsored
tuition classes, daily newspapers and motivational
courses under the PINTAR programme. The outcome
was encouraging, with examination year students
performing better than in previous years. We will
continue to support PINTAR in 2016.

[ 61 ] Sustainability Report 2014 - 2015

The 3Ps of Sustainability: People

During the reporting period, KULIM contributed to the following community activities:

Contribution
(RM’000)
No. Programme/Institution Objective 2014 2015
1 Persatuan Bola Sepak To support the development of 5,050 5,500
Negeri Johor football in Malaysia
2 Tabung Tijarah Ramadhan To improve the quality of life of 100 100
the underprivileged
3 Bistari Young To sponsor Tunas Bistari and 250 300
Entrepreneur entrepreneurship programmes
4 Mutiara Johor To sponsor a charity concert 77 -
Corporation
5 As-Sajadah Fund To fund staff charity 204 72
6 Raja Zarith Sofiah Wildlife To sponsor student outreach 570 -
Defenders Challenge programme on conservation
7 KPJ Charity Golf Waqaf To sponsor golf championship 100 -
An-Nur 2014
8 Golf Piala Menteri Besar To sponsor golf championship 49 -
Johor 2014
9 PINTAR Foundation To sponsor tuition and school - 86
essentials for three adopted
schools
10 Masjid Sultan Iskandar To contribute to mosque - 4,000
Bandar Dato’ Onn development
11 Johor Clay Target To sponsor IPSC Level IV - 800
Shooting Association Far East Asia Handgun
(“JCTSA”) Championship 2015 (“FEAHC”)

KULIM (MALAYSIA) BERHAD [ 62 ]

 Besides giving back to the community, these after work
initiatives also enrich the spirit of volunteerism and
camaraderie.

Women OnWards

Launched in 2008, Women OnWards (“WOW”) began

as an in house women’s grievance panel, and has
evolved into an outreach programme spearheaded by
Kulim’s women employees. Funded by the Group,
WOW implements initiatives and empower women in
the community. In 2010, WOW launched Jejari Bestari,
Fostering Volunteerism a vocational skills training programme for women in
the local community. Today, there is a WOW unit in
Kulim encourages the management and staff to almost every operating unit, where participants are
volunteer for community programmes such as the trained to become tailors, bakers and handicraft
cleaning of mosques, surau and schools, and wildlife artisans.
conservation awareness initiatives. Since charity begins
at home, we established the As-Sajadah Fund in 2009 Products by WOW participants are showcased at
to provide assistance to staff in need; Infaq 1 Warisan company events such as JCorp Carnival, Kota Tinggi
tree-planting campaign; and outreach efforts such as Eco Boat Fishing Challenge, Kota Tinggi MTB Jamboree
Tabung Tijarah Ramadhan that donates festive gifts to and Kota Tinggi Paintball Championship. In 2015, the
the needy during the holy month of Ramadhan. women entrepreneurs raised RM52,000 from these
events, and profits were ploughed back into their
• During the holy month of Ramadhan 2015, 70 fledgling businesses.
members of the sport club, Kelab Sukan & Rekreasi
Tiram (“KSRT”) organised and participated in
“Assalamualaikum Dunia 1436H” programme by
distributions food and other essentials to about 70
homeless folk in Johor Bahru.

• Every Qurban, employees pool their money to

purchase cows and donate beef to less fortunate
families.

• In December 2014 and January 2015, employees

travelled to the flood hit states of Kelantan,
Terengganu and Pahang to provide humanitarian
aid.

[ 63 ] Sustainability Report 2014 - 2015

The 3Ps of Sustainability: People

An empowered entrepreneur speaks

“When a woman has the skills to earn a living, she becomes The confidence gained from Jejari Bestari encouraged
empowered and it improves her life as well as that of her Masdiyanah to lead a women’s group in Sedenak Estate
family and community,” says Masdiyanah Mohd Salim, a that strives to improve the quality of life of local women.
housewife turned entrepreneur. She also teaches beadcraft at the local KEMAS centre that
trains women to be gainfully employed. “Many of the
The 41-year- old mother of four is a successful entrepreneur participants are housewives who do not have the financial
earning up to RM3,000 a month making beadcraft, thanks means or motivation to strike out on their own. With their
to WOW’s Jejari Bestari Programme. “Jejari Bestari runs new skills, they can look towards becoming financially
numerous classes such as baking, cooking, tailoring and independent. This is empowering. I am speaking from
making handicrafts. I chose to master beadcraft.” personal experience here.”

Masdiyanah’s most popular products are beaded tissue box Masdiyanah is now expanding her designs to reach a wider
covers, bead flowers and key chains that Kulim purchases customer base.
as corporate gifts while staff and the public buy them for
personal use. She says the support given by the Company
helped overcome her fear of becoming an entrepreneur.

SUPPORTING SMALLHOLDERS AND OUTGROWERS

RSPO wants more smallholders to be certified to increase the number of sustainable palm oil producers. Certified
smallholders have the benefit of improved market access. Between 2014 and 2015, about 30% of FFB processed
by Kulim’s palm oil mills were supplied by smallholders and outgrowers.

As part of our RSPO commitment and coupled with stakeholder demands for a traceable, ethical and sustainable
supply chain, we have been engaging with smallholders and outgrowers since 2012 on the certification process.
During our engagement, we identified challenges faced by smallholders such as land use changes and the use of
bonded labour. In 2015, we achieved the certification of two outgrowers, namely Ladang Wawasan and Ladang
Felda Paloh, that supply FFB to Tereh Palm Oil Mill. As a result, Tereh POM was upgraded to Identity Preserved mill
that delivers 100% CSPO.

KULIM (MALAYSIA) BERHAD [ 64 ]

FFB Production Chain

PALM OIL MILL

FFB SOURCES TEREH MILL SEDENAK SINDORA PASIR PALONG TOTAL
PANJANG COCOA
Kulim Group estates 284,991 216,417 142,786 66,838 156,832 867,866
JCorp-linked estates - 729.20 - 122,032 - 122,761
Smallholders - - - - - -
Traders - 244,079 89,275 - 27,965 361,320
Other outgrowers 30,511 16,490 11,017 - 655 58,673
TOTAL 315,502.54 477,715.91 243,079.54 188,871.68 185,452.63 1,410,622.30

Percentage of FFB from outside Kulim Group: 29.77% including Asam Bubok Estate

OUTGROWERS

Smallholders Schemed or Associated Independent

Smallholders Smallholders

Smallholders are farmers who grow They are structurally bound by Characterised by their freedom to
oil palm, alongside other subsistence contract, credit agreement or choose how they utilise their land,
crops, where the family provides the planning to a particular mill. They type of crops they plant, and how
majority of labour and the farm do not choose which crop they they manage them (being self-
provides the principal source of grow, and are supervised in their organised, self-managed and self-
income, and the planted oil palm planting and crop management financed). They are not contractually
area is less than 50 hectares. techniques, and are often bound to any particular mill or
organised, supervised or directly association, and may also receive
managed by the managers of the support or extension services from
mill, estate or scheme to which government agencies
they are structurally linked.

[ 65 ] Sustainability Report 2014 - 2015

The 3Ps of Sustainability: Profit

Delivering
Year-on-Year Profit

In the interest of preserving a livable future for life on earth, company profits are
now being scrutinised for their impact on people and the planet. Since the 1980s,
amid growing public restlessness over environmental and social abuses under the
conventional economic model, world class companies developed business models
that made them more accountable, transparent and responsible in their pursuit of
profit. This is also due to the recognition of the fact that delivering attractive returns
to shareholders is increasingly determined by socially conscious market forces,
public perceptions, regulatory controls and green activism.

KULIM (MALAYSIA) BERHAD [ 66 ]

 The Kulim Group’s business strategy for sustained
profitability is to focus on value creation of its traditional
palm oil business while diversifying its portfolio to
enhance its appeal to risk-averse investors. Today,
while plantation agriculture dominates Kulim’s business
profile, the Group has expanded into intrapreneur and
oil & gas ventures as part of balanced business strategy
to minimise earning fluctuations, sustain profitability
and realise long term growth. Kulim is confident of
carving this new growth path given its proven ability to
develop businesses, including those outside its
traditional palm oil business.

The Group’s pursuit of value and growth is firmly

underpinned by the commitment to embrace
sustainability and strong corporate governance as its
overriding philosophy. Kulim’s 5-Year Strategic Planning
outlines five strategic thrusts to achieve this. They are
productivity improvement, cost management, value
unlocking, human capital development and expansion/
diversification.

[ 67 ] Sustainability Report 2014 - 2015

The 3Ps of Sustainability: Profit

CORPORATE STRATEGY KEY PROGRAMME SEGMENT

Productivity - Progressive replanting - optimise FFB production, towards

Improvement ideal age profile
- R&D/continuous study on clonal palms and potential
commercialisation/tissue culture
- Application of Good Agriculture/Manufacturing Practices
and RSPO practices
- New technologies and innovative mechanisation

Cost - Mill working hours/optimum throughput

Management - Value-added ventures - Mills downstream, biogas plants,
biofertiliser
- Centralised bulk purchasing practice and longer-term
partnership

Value - Disposal of rightly priced assets

Unlocking - Listing of potential businesses/companies
- Share buy-backs
- Transforming estates into property

Human Capital - Ensure adequate pool of talent

Development - Succession planning and career development
- Promote sense of belonging/loyalty
- Periodical Employee Climate Survey

Corporate - Enhanced stakeholders’ engagement - internal and external

Responsibility - Continuous compliance with RSPO Principles & Criteria
- Sustainable Palm Oil (“SPO”) programme and realisation of
benefits

Expansion/ - Increase landbank - local and abroad

Diversification - Large scale cattle rearing, expand trading and feedlot
activities
- Upstream activities of O&G business
- Increase hectarage of pineapple planting
- Downstream pineapple products

KULIM (MALAYSIA) BERHAD [ 68 ]

VALUE CREATED

- Year-on-year improvement in FFB yield

STRATEGIC
THRUSTS
- Cost savings resulting from systematic work procedures
- More effective management of ever increasing foreign labour costs
- Best agriculture practices via training
- Deployment of performance measurement of each operating unit

- Cost savings resulting from systematic work procedures

- Additional revenue generated from by-products of mill processing

- Optimisation of resources
- Realisation of higher asset value
- Returns to shareholders via dividend

- Optimisation of resources
- Lower staff turnover/sustainable manpower/talent retention
Plantation

Intrapreneur Ventures
- More effective management of stakeholders
- Reduce cost of damage control
- More efficient in doing business as a result of good relationship
with stakeholders Oil & Gas
- Preserved environment and save the earth

Agrofoods
- Increase company value
- Diversified earnings base to reduce over-dependence on palm oil
activities
- Embrace national food security programme Property

[ 69 ] Sustainability Report 2014 - 2015

The 3Ps of Sustainability: Profit

Proposed Privatisation

In November 2015, our Board of Directors received a letter from its major shareholder, Johor Corporation (“JCorp”)
requesting Kulim to undertake a Selective Capital Reduction & Repayment (“SCR”) exercise. On 3 May 2016, Kulim
received the green light from its shareholders for privatisation and delisting from the Main Board of Bursa Malaysia
Securities Berhad. On 4 August 2016, Kulim was removed from the official list of Bursa Malaysia and the proposed SCR
was deemed completed following the delisting.

Minority shareholders are expected to benefit from the privatisation because of the disposal of New Britain Palm Oil
Limited (“NBPOL”) that was completed in 2015. This has left the Kulim Group with a smaller plantation hectarage as
compared to other regional players, even though the Group has taken steps to expand its holdings in Indonesia. In the
past, NBPOL is one of the key assets driving the market valuation of Kulim shares. Given the volatile market environment,
privatisation is seen an opportunity for minority shareholders to cash out on their investments at an attractive premium.

Strong Financial Performance Despite Against this harsh backdrop, the Kulim Group delivered
Challenges a stellar performance, substantially due to the
divestment of its entire stake in NBPOL at approximately
The financial years ending 31 December 2014 and RM2.75 billion. The sale to Sime Darby Plantations Sdn
2015 were challenging ones, marked by declining CPO Bhd that represents Kulim’s exit from Papua New
prices, rising operating costs, plunging crude oil prices, Guinea and the Solomon Islands was completed in
weakening Malaysian Ringgit, the devaluation of the February 2015.
Chinese yuan in August 2015 and the onslaught of
haze and El Nino-induced changes in weather patterns. The monetisation of the long-held NBPOL asset saw a
sharp rise in the Group’s revenue, from RM1.09 billion
World demand for CPO was a major factor affecting in 2014 to RM1.47 billion in 2015. Profit Before Tax
our performance. Despite the push for sustainability, (“PBT”) rose from RM95.53 million in 2014 to RM162.1
demand for RSPO-compliant CPO declined as million in 2015, a growth of 70.10%. The divestment of
consumers settled for lesser quality CPO. At the same NBPOL enabled Kulim to realise a gain of RM1.32 billion
time, demand from our main traditional buyer, China (net of expenses) in 2015. This has increased the
declined, causing a saturation of supply in the market. Group’s cash balance to RM1.53 billion at end 2015,
With supply exceeding demand, CPO prices fell from from RM342.60 million in the previous year.
RM2,534 per tonne in January 2014 to RM2,154 by end Subsequently, the gross gearing of the Group improved
2014, and continued to hover between RM2,000 and from 0.21 times in 2014 to 0.18 times in 2015 with a
RM2,400 for most of 2015. significant settlement of debt. Part of the proceeds will
also be used to strengthen the working capital of the
Group, to support its core plantation business and new
ventures locally and abroad.

KULIM (MALAYSIA) BERHAD [ 70 ]

Shareholders were also justly rewarded with a special overshadowed by the lower than average CPO prices.
dividend of 37.65 sen per ordinary share from the The production of FFB increased by 5.36% to 886,172
proceeds of the NBPOL sale, involving a total payout of tonnes, from 841,079 tonnes in 2014 while CPO
about RM500 million. This represents a 296% jump in production increased by 14.12% to 294,284 tonnes,
dividend per share, from the 9.5 sen per share paid in from 257,881 tonnes in 2014. In comparison, CPO
2014. prices headed south. The Group’s Malaysia operations
achieved an average CPO price of RM2,191 per tonne
The traditional plantation segment remained the in 2015 compared to RM2,370 per tonne in 2014. PK
biggest contributor to the Group’s revenue during this prices were also lower, averaging RM1,534 per tonne
period, accounting for 70.16% (RM777.26 million) in in 2015 compared with RM1,708 per tonne the previous
2014 and 52.89% (RM767.27 million) in 2015. Operating year.
profit, however was on the downtrend. Despite the
increase in the production of FFB, revenue was

GROUP FINANCIAL PERFORMANCE

HIGHLIGHTS

2014 2015

RM1.09 billion Revenue RM1.47 billion (+34.37%)

RM95.53 million PBT RM162.51 million (+70.10%)

Nil Realised Gain RM1.32 billion

from disposal of NBPOL

9.5 sen per share Dividends 37.56 sen per share

paid in December 2014 2015 (Special Dividend) paid
in March)

[ 71 ] Sustainability Report 2014 - 2015

The 3Ps of Sustainability: Profit

Better yields, cost optimisation and In Indonesia, guided by the RPSO’s New Planting
expansion Procedures, the Group plans to develop 40,645
hectares of new oil palm plantations in Muara Teweh,
Operationally, the Group recorded higher yield levels in Central Kalimantan. Having secured the necessary
the oil palm estates and laudable progress in cost permit from Indonesian authorities as of year end 2015,
optimization, especially with regard to fertilisers. a total of 307 hectares were planted with oil palm. We
However, we fell short of the pace of developing our are also in the process of obtaining permits to grow oil
new Indonesian estates in Kalimantan. The production palm on an additional 33,512 hectares.
of FFB and CPO for 2015 improved 5.36% and 14.12%
respectively. Total FFB processed also increased, by In line with the Group’s strategic goal of increasing its
12.60% to 1,410,658 tonnes higher while we achieved plantation land bank, our team visited and evaluated
an Oil Extraction Rate (“OER”) of 20.86%, a marked several plantations that were available for sale in
improvement from 20.58% in 2014. FFB yield per Malaysia and Indonesia during this period. In February
hectare also saw a 0.72% increase in yield per hectare 2016, we entered into several agreements to purchase
to 22.50 tonnes, from 22.34 tonnes recorded the additional plantations in Indonesia. With a total land
previous year. bank of 104,904 hectares, of which 82,785 hectares
have been issued with Permit to operate (Hak Guna
Usaha – HGU) and 34,382 hectares planted. The new
acquisition will accord us with the critical size for
Vision 30:30 efficient operations, whilst the availability of land with
HGU will allow us to plant at a brisk pace in Indonesia.
FFB yield 30
tonnes
per hectare

Palm product 30%

extraction rate

We continued to make headway with our replanting

initiative to improve the age profile of our palms.
Replanting of old palms with high yielding clones is
undertaken on a staggered basis at approximately 3% of
total planted area annually. As a result, the age profile of
our palms is at its best ever. Our prime trees of between
9 and 18 years constitute about 44% of the Group’s
total planted area in Malaysia as at end 2015.

KULIM (MALAYSIA) BERHAD [ 72 ]

 OPERATIONAL
2014 HIGHLIGHTS 2015
(Malaysia)

841,079 FFB
Production
886,172
tonnes tonnes

257,881 CPO 294,284

Production tonnes
tonnes (+14.12%)
RM2,370 Average RM2,191
/tonne CPO Price /tonne

Average Palm
RM1,708 Kernel Price RM1,534
/tonne /tonne

1,252,825 FFB Processed 1,410,658

tonnes tonnes

Oil Extraction 20.86%

20.58% Rate
(higher than industry
average in Peninsular
Malaysia)

22.34 Yield Per 22.50

tonne Hectare tonnes

51,160 Total Land Bank 50,999

hectares hectares

47,658 Planted Area

47,514
hectares hectares

RM268 Cost Management RM252

per tonne per tonne
FFB FFB

42%
of total planted
44%
of total planted
area
Age Profile area
9-18 years

[ 73 ] Sustainability Report 2014 - 2015

The 3Ps of Sustainability: Profit

Compliance with RSPO Principles & Criteria

Kulim has established its sustainability credentials via

RSPO certification. The Group was among the first
palm oil companie to be RSPO certified in 2009 and
since then all our operating units have undergone the
pre-requisite re-certification audits in December 2013
and the new certification was issued in April 2014. As at
the end of December 2015, four of our five palm oil
mills obtained RSPO certification; the last one is Pasir
Panjang POM that is to be certified in 2016.

To safeguard its RSPO credentials and CSPO market

reputation, the Group has controls in the form of
policies, monitoring systems and procedures to
minimise, if not prevent, the risk of RSPO non- Towards Sustainable Palm Oil
compliance. The RSPO has also developed a
Kulim recognises sustainability as an opportunity to
mechanism for supply chain palm oil traceability from
change the way we do our business. Our Sustainable
the plantations to the end users. Kulim’s CSPO can be
Palm Oil (“SPO”) programme defines our ultimate
purchased through three mechanisms approved by objective to improve Kulim’s business performance,
the RSPO. profitability and positioning as a world leader in SPO.
Our efforts with regard to sustainable development will
The “Book and Claim” option is the most simplified continue to guide our business. We hope that by being
method for a buyer to obtain CSPO without high mindful of our surroundings and the socioeconomic
administrative costs and complex logistics. In the impact of our actions, we will move forward by
“Identity Preserved” option, CSPO from a single, developing business methods that are economically
identifiable source is kept separate from conventional viable, environmentally appropriate and socially
palm oil and is tracked throughout the supply chain. beneficial.

Only CPO from Tereh POM is sold under “Identity

Preserved”, while CPO from three other mills is sold
In a meeting held on 6 March 2016, the RSPO Board of
under the “Mass Balance” mechanism, where CSPO is
Governors has endorsed the revision of the Malaysian
mixed with conventional CPO and tracked throughout
National Interpretation (“MYNI”) document. MYNI 2014,
the supply chain. An equivalent volume may be sold as
as it is known, is based on the RSPO P&C and supersedes
CSPO to customers.
MYNI 2010 that has been used for the certification of oil
palm plantations and mills in Malaysia. All audits and
annual surveillance audits with effect from 1 May 2015
will be based on the MYNI 2014.

KULIM (MALAYSIA) BERHAD [ 74 ]

Ethics and Integrity The MCCG 2012 plays a key role in the Group’s
direction and strategy, professional standards, business
Ethics and integrity are an integral part of the Group performance and internal control systems. The Board
that is recognised as a profitable plantation company. recognises that good corporate governance should
To ensure the highest standards of ethics and integrity extend beyond mere compliance to attain the highest
across the board, the Group has a Code of Ethics that standards of business ethics, accountability, integrity
defines the conduct of employees when performing and professionalism across all the Group’s activities
their jobs. All employees are required to adhere to the and conduct.
Group’s Code of Ethics and to submit the Ethics
Declaration Form annually. Sustainability is an integral part of the Board agenda.
Board competencies, Key Performance Indicators and
The Code of Ethics also requires employees to ensure remuneration are linked to specific targets related to
the following: RSPO certification, as well as other environmental and
social objectives.
• Maintain full and accurate company records
• Utilise company assets and property only for the Our whistle-blowing process, allows internal and
benefit of the Company external stakeholders to report cases involving fraud,
• Conduct transactions with customers and bribery, corruption and other such incidences directly
suppliers purely on merit and fairness to our Internal Audit Department. The Internal Audit
• Engage with competitors in a fair manner and not Department reports directly to the Board and is
engage in unfair or illegal practices to gain an empowered to conduct investigations of suspected
unfair advantage and reported incidents.
• Act to ensure a workplace environment that is free
from harassment and discrimination
• Engage with all team members with respect,
courtesy and fairness

The Board of Directors, our highest governance body

in leading and controlling the long term performance
of the Company, adheres to the Malaysian Code of
Corporate Governance 2012 (“MCCG 2012”) – the best
practice standard for corporate governance.

[ 75 ] Sustainability Report 2014 - 2015

 05
DISCLOSURES

KULIM (MALAYSIA) BERHAD [ 76 ]

78 Scope of this Report

80 Annex – Materiality Tiers

81 Annex – Completeness Aspects

and Boundaries

83 Global Reporting Initiative (“GRI”)

Index

90 Data

95 Location of Estates & Mills

96 Glossary

99 Contact and Feedback

[ 77 ] Sustainability Report 2014 - 2015

disclosures
Scope Of This Report

THIS IS THE FIFTH SUSTAINABILITY REPORT FOR THE PLANTATION DIVISION

OF KULIM (MALAYSIA) BERHAD, COVERING THE CALENDAR YEARS 2014 AND
2015. OUR PREVIOUS REPORTS WERE PUBLISHED IN 2008, 2009, 2011 AND
2013. WE CONTINUE TO USE THE GLOBAL REPORTING INITIATIVE (“GRI”)
GUIDELINES AS THE BASIS OF REPORTING, AND HAVE ADOPTED GRI 4.0 FOR
THIS REPORT.

The report brings together our sustainability initiatives, including current and future
directions. It is intended to be useful to all our stakeholders – our customers,
employees, shareholders, communities as well as being a communication tool to
various interested parties about our approach to the social, environmental and
economic aspects of our business.

This report covers Kulim’s plantation operations in Malaysia and the development of
Indonesia’s operations. This report does not include associate companies or joint
venture enterprises. Unless otherwise stated, all data is as at 31 December 2015. We
are committed to continuing our reporting journey, to publish a sustainability report
biennially on a best effort basis. This report has not been subject to independent
verification or assurance.

Sustainability Context

We have attempted to present our performance relative to the wider sustainability

context both in Malaysia and in the region.

Stakeholder Inclusiveness and Materiality

The report covers all sustainability issues deemed material by the Company. Since
2008, the Group has adopted a systematic approach in developing a materiality
matrix to analyse and prioritise the topics that are important to our stakeholders.

The materiality matrix was developed through consultations with stakeholders who
range from employees, business partners, investors and suppliers to the media,
community, government agencies, NGOs and unions. This is done through regular
and systematic forms of dialogue, such as meetings and road shows. Our ultimate
aim is to build a trust-based relationship.

KULIM (MALAYSIA) BERHAD [ 78 ]

The matrix lays down the business, social and environmental issues that affect our business activities and can be
used to guide our decisions and prioritise actions for implementation. Our materiality matrix is reviewed and
adjusted annually to reflect the current realities and concerns. This will ensure its relevance in identifying and
prioritising key issues and help us determine how best to allocate resources in strategic planning and programme
implementation.

Like the previous reports, those issues classified to be of high impact or to be of high expectations within the
Company and to stakeholders were explored in detail. Issues deemed to be of low impact but with high
expectations and high impact with low expectations have also been included but with less emphasis.

Some issues, such as detailed data on our operations and business activities that are already covered in our
Annual Report are not repeated at length here.

MATERIALITY MATRIX
High Stakeholder Concerns / Support Company Values

RSPO premium Environment rehabilitation Chemicals

Ethnic diversity Biodiversity Water
Waste management Safety & Health
Workers’ unions
Climate change
Foreign workers

Gender diversity Employee development

Agricultural productivity Talent attraction

Smallholders
Sand mining
Air pollution
Community and workers’ lives
Practices in the marketplace
Good Agricultural Practices

Business Risk / Opportunity

[ 79 ] Sustainability Report 2014 - 2015

disclosures

Annex
Materiality Tiers

Tiers Topic Significance Sections in Report

1 Use of chemicals such as paraquat, herbicides Significant to Kulim and to Responsible Chemical Use
and pesticides in our estates stakeholders Kulim ban Paraquat

Amount of water used for our estates and mills Sustainable Use of Water
Climate change: greenhouse gas emissions in the Reducing our Carbon Footprint
palm oil industry

Foreign workers: working conditions and welfare Enhancing Employee Well Being
in the context of the tight labour market

Health and safety standards in the workplace Enhancing Employee Well Being

2 Training and development for employees Significant to Kulim but not so Enhancing Employee Well Being
significant to stakeholders
Talent attraction in the context of the lack of Enhancing Employee Well Being
young people in the palm oil industry

Inclusion of smallholders into certification process Supporting Smallholders and Outgrowers

Welfare of local communities and workers Building Better Communities

3 Environment rehabilitation: reversing the negative Significant to stakeholders but Protecting Biodiversity
impacts on the environment not so significant to Kulim

Biodiversity loss Protecting Biodiversity

Responsible water management Responsible Use of Water

Workers‘ unions: workers’ rights to collective Protecting Labour Rights

bargaining

Gender diversity Promoting Gender Equality

Agricultural productivity to maximise land use Reduction of Chemical Fertiliser

Ethnic diversity Enhancing Employee Well Being

4 Good Agricultural Practices Significant to Kulim only and Data

not reported
Air pollution: pollutants emitted into the Reducing Carbon Footprint
atmosphere by the milling activities Data

Practices in the marketplace

KULIM (MALAYSIA) BERHAD [ 80 ]

Completeness: Aspects and Boundaries

We have identified 23 aspects as issues linked to the materiality matrix. These aspects are also linked to our commitment
to the RSPO P&C and the ISCC. We have identified nine aspects that border or are outside of Kulim’s boundary. Issues
relating to these aspects are addressed through our various engagement with our stakeholders.

Theme Rationale Environment Boundary Key Stakeholders

Compliance Ensuring compliance • Anti-corruption The impact of this • RSPO

with all legal and • Environmental Compliance topic covers our
voluntary • Relevant laws and regulations internal compliance • ISCC
commitments with state and national
regulations, laws and • Wildlife Department
international
certification standards. • Department of Environment

• Department of Safety &

Health

Environment Protect, enhance, and • Effluent and waste The impact of this • Environmental NGOs
minimise our topic covers our mills
environmental • Water and plantations as well • Wildlife Department
footprint on the local as the buffer zones
environment • Emissions surrounding our • Department of Environment
estates which border a
• Materials national park

• Biodiversity

People Provide a safe and • Employment The impact of this • Employees

conducive work topic involves our
environment that • Freedom of association and employees working in • Unions
promotes collective bargaining our operations.
opportunities for • WOW
• Equal remuneration for men
professional and and women
personal growth
• Training and education

• Occupational safety & health

• Non-discrimination

• Investment in human rights

• Diversity and equal opportunity

• Labour practices and grievance

mechanism

• Market presence

[ 81 ] Sustainability Report 2014 - 2015

disclosures

Theme Rationale Environment Boundary Key Stakeholders

Foreign Ensure protection of Forced or compulsory labour The impact of this Representatives of foreign
workers human rights and topic involves foreign workers
provide a decent workers in our estates
standard of living for
foreign workers

Communities Enhancing the lives of • Procurement practices The impact of this • Local communities
communities around topic is in the
our operations • Supplier environmental communities outside • Contractors
assessment our organisation.
• Places of worship
• Indirect economic impacts
• Schools

Product Ensuring quality Consumer safety & health The impact of this • Refineries
responsibility control and safety of topic lies in our
our products relationship and • Customers
engagement with
external stakeholders
and customers.

Assurance

We have chosen to conduct an assurance on six material areas of our operations. These areas were identified and
collated in-house on a best effort basis.

KULIM (MALAYSIA) BERHAD [ 82 ]

Global Reporting
Initiative Index

General Standard Disclosures Page

G4-1 Statement from the most senior decision maker of the organisation 16 - 21
Organisational Profile
G4-3 Name of organisation 5
G4-4 Primary brands, products and services 5
G4-5 Headquarters location 5, 99
G4-6 Countries of operation 5, 17, 29
G4-7 Nature of ownership and legal form 5
G4-8 Markets served 25 - 26
G4-9 Scale of organisation 5, 68 - 69
G4-10 Organisation’s workforce 51, 90 - 91
G4-11 Total employees covered by collective bargaining agreements 53, 57
G4-12 Organisation’s supply chain 65
G4-13 Significant changes during the reporting period regarding size, structure, 5, 17, 20, 70
ownership or its supply chain
G4-14 Explanation of whether and how the precautionary approach or principles is 24 - 33
addressed by the organisation
G4-15 Externally developed economic, environmental and social charters, principles 24 - 27
or other initiatives
G4-16 Membership of association and national/international advocacy organisations 6 - 8, 48 - 49
G4-17 Entities included in the organisation’s consolidated financial statements or 67 -70
equivalent documents
G4-18 Process for defining report, content and the aspect boundaries 78 - 82

[ 83 ] Sustainability Report 2014 - 2015

disclosures

General Standard Disclosures Page

Organisational Profile
G4-19 Material aspects identified in the process for defining report content 79 - 80
G4-20 Aspect boundary within the organisation 81 - 82
G4-21 Aspect boundary outside the organisation 81 - 82
G4-22 Restatements of information provided in previous reports No
G4-23 Significant changes from previous reporting in the scope and aspect No
boundaries
G4-24 List of stakeholder groups engaged by the organisation 30 - 33
G4-25 Basis for identification and selection of stakeholders with whom to engage 30 - 33
G4-26 Approach to stakeholder engagement, including frequency of engagement 30 - 33
by type and by stakeholder group
G4-27 Key topics and concerns that have been raised through stakeholder 30 - 33
engagement, and how the organisation has responded to those key topics
and concerns, including through its reporting
G4-28 Reporting period 4
G4-29 Date of most recent previous report 4
G4-30 Reporting cycle 4
G4-31 Contact point 99
G4-32 GRI Content Index 83 - 88
G4-33 External assurance None
G4-34 Organisation’s governance structure 28, 75
G4-56 Organisation’s values, principles, standards and norms of behaviour 75

KULIM (MALAYSIA) BERHAD [ 84 ]

GRI Specific Standard Disclosure

Specific standard disclosures

Material DMA and Indicators Page Comments
aspects

ECONOMIC

Economic G4-EC1 Direct economic value generated and 70 - 73, 90

performance distributed

Market presence G4-EC5 Ratios of standard entry level, wage by We do not record wages
gender compared to local minimum wage by location and gender
at significant locations of operations

Indirect economic G4-EC7 Development and impact of infrastructure 30 - 32, 55,

impacts investment and services supported 61 - 64, 92

G4-EC8 Significant indirect impacts, including the 11, 92

extent of impacts

Procurement G4-EC9 Proportion of spending on local suppliers 64 - 65

practices at significant locations of operation

ENVIRONMENTAL

Materials G4-EN1 Materials used by weight or volume 14, 41 - 46,

92

Water G4-EN8 Total water withdrawal by source 45 - 46, Data is not broken down
93 - 94 by source

Biodiversity G4-EN11 Operational sites owned, leased, managed 10, 46 - 49

in, or adjacent to, protected areas and
areas of high biodiversity, value outside
protected areas

G4-EN12 Description of significant impact of 46 - 49

activities, products and services on
biodiversity in protected areas and areas
of high biodiversity, value outside
protected areas

G4-EN13 Habitats protected restored 46 - 49

[ 85 ] Sustainability Report 2014 - 2015

disclosures

Specific standard disclosures

Material DMA and Indicators Page Comments
aspects

ENVIRONMENTAL

Emissions G4-EN15 Direct greenhouse gas (GHG) emissions 10 - 11, 15,

(Scope 1) 37 - 41, 93

G4-EN16 Energy indirect GHG emissions (Scope 2) 37 - 41, 93

G4-EN17 Other indirect GHG emissions (Scope 3) 37 - 41, 93

G4-EN18 GHG emissions intensity 37 - 41

G4-EN19 Reduction of GHG emissions 37 - 41

Effluent & Waste G4-EN24 Total nos. and volume of significant spills 94 No spills.

Compliance – G4-EN29 Monetary value of significant fines and 13 (1) Case for burning of
environmental total number of non monetary sanctions EFB @ Pasir Panjang POM
for non compliance with environmental
laws and regulations

Suppliers G4-EN33 Significant actual and potential negative 42 This involves our work
environmental environmental impacts in the supply chain with smallholders and
assessment and actions taken moving them towards
RSPO certification that
addresses potential
negative environmental
impacts in our supply
chain. Currently, no
supplier relationships
were terminated as a
result of assessment

KULIM (MALAYSIA) BERHAD [ 86 ]

Specific standard disclosures
Material DMA and Indicators Page Comments
aspects

SOCIAL

Labour practices and decent work

Employment G4-LA1 Total nos and rates of new employees 51 - 53, Data is not broken down
hired and employee turnover by age 90 - 91 by age group
group, gender and region

G4-LA3 Return to work and retention rates after 59 - 60

parental leave, by gender

Occupational Safety G4-LA5 Percentage of total workforce represented 58, 92

& Health in formal, joint management-worker
safety & health committees that help
monitor and advise on occupational
health and safety programmes

G4-LA6 Type of injury and rates of injury, 12, 58, 92 Data is not broken down
occupational diseases, lost days and by gender
absenteeism and total nos of work-related
fatalities by region and gender

G4-LA7 Workers with high incidence or high risk 58, 92

of diseases related to their occupation

Training & Education G4-LA9 Average hours of training per year, per 54 - 56, 91 Data is not broken down
employee, per gender, and by employee by gender and employee
category category

Diversity & Equal G4-LA12 Composition of governance bodies and 51, 90 - 91 Governance bodies are
Opportunity breakdown of employees per employee not broken down by
category according to gender, age group, gender, age group or
minority group membership and other ethnic group
indicators of diversity

Equal remuneration G4-LA13 Ratio of basic salary and remuneration of 59 - 60, Salary data not broken
for women and men women to men by employee category, by 90 -91 down by gender,
significant locations of operation however, employees are
paid according to
employee level
regardless of gender

Labour practices, G4-LA16 Nos of grievances about labour practices 59 - 60, (2 ) Cases was reported
grievance filed, addressed, and resolved through 63 - 64, 91 on 2015.
mechanisms formal grievance mechanism

[ 87 ] Sustainability Report 2014 - 2015

disclosures

Specific standard disclosures

Material DMA and Indicators Page Comments
aspects

SOCIAL

Human Rights

Investment in human G4-HR2 Total hours of employee training on 52, 57, 91 A one-hour human rights
rights training human rights, policies or procedures module is included as
concerning aspects of human rights that part of induction for new
are relevant to operations including the employees. The module
percentage of employees trained covers the policies and
practices of Kulim

Non discrimination G4-HR3 Total nos of incidents of discrimination 59 - 60

and corrective actions taken

Freedom of G4-HR4 Operations and suppliers identified in 53, 57

association and which the right to exercise freedom of
collective bargaining association and collective bargaining may
be violated or at significant risk and
measures taken to support these rights

Child labour G4-HR5 Operations and suppliers identified as 55 No operations or

having significant risk for incidents of child suppliers are at significant
labour, and measures taken to contribute risk for incidences of
to the effective abolition of child labour child labour

Forced or G4-HR6 Operations and suppliers identified as 64 No operations or

compulsory labour having significant risk for incidents of suppliers are at significant
forced or compulsory labour, and risk for incidences of
measures to contribute to the elimination forced or compulsory
of all forms of forced or compulsory labour
labour

KULIM (MALAYSIA) BERHAD [ 88 ]

Specific standard disclosures
Material DMA and Indicators Page Comments
aspects

SOCIAL

Society

Local communities G4-SO1 Percentage of operations implemented 32, 61 - 64 Our SIAs include gender
with local community engagement, impact assessments.
impact assessments, social impact Results of assessments
assessments and development are available upon
programmes request

Anti Corruption G4-SO1 Communications and training on anti 52, 75 A one-hour anti-
corruption policies and procedures corruption module is
included as part of
induction for new
employees. The module
covers the policies and
practices of Kulim

G4-SO5 Confirmed incidents of corruption and None

action taken reported

Compliance G4-SO8 Monetary value of significant fines and None

total nos of non monetary sanctions for reported
non compliance with laws and regulations

G4-SO10 Significant actual and potential negative 64 This involves our work
impacts on society in the supply chain with smallholders and
and the actions taken moving them towards
RSPO certification that
addresses potential
negative social impacts in
our supply chain.
Currently, no supplier
relationship was
terminated as a result of
assessment.

Product Responsibility

Customer Safety & G4-PR2 Total nos of incidents of non compliance 58 In 2014, Kulim recorded
Healthh with regulations and voluntary codes two work related deaths.
concerning the safety & health impacts of The company was fined
products and services during their life for non compliance of
cycle by type of outcomes workers safety & health
procedures by the
Department of Safety &
Health

[ 89 ] Sustainability Report 2014 - 2015

disclosures

Data
Category Indicator Measurement Unit/ 31/12/2015 31/12/2014 31/12/2013 31/12/2012 31/12/2011
Breakdown
Overall Total revenue- RM million 1.47 billion 1.09 billion 2,850 3,036 7,042
Kulim Group
Total revenue RM million 777.26 767.27 780 712 821
– Malaysian
plantations
Employees Nos of 6,979 6,684 7,053 6,667 5,206
employees
Employee Percentage 25.98 27.2 17.46 21.09 8.94
turnover
Management & staff as 4.85 13.77 9.79 9.90 5.87
percentage
Estate workers as 28.92 30.32 19.14 24.08 4.64
percentage
Employee Management 325 305 299 252 235
category
Non executive staff 872 862 837 826 528
Estate workers 5,782 5,517 5,917 5,590 4,443
Female 780 743 783 749 610
employees
Male employees 6,199 5,941 6,270 5,918 4,596
Nos of foreign Indonesian 3,730 3,585 3,879 4,201 3,268
workers
Indian 41 10 96 89 4
Bangladeshi 774 710 643 156 151
Others 0 0 0 0 3
Male non 673 684 651 632 339
executive staff
Female non 199 178 186 194 189
executive staff
Female workers 485 484 524 509 382

KULIM (MALAYSIA) BERHAD [ 90 ]

 Category Indicator Measurement Unit/ 31/12/2015 31/12/2014 31/12/2013 31/12/2012 31/12/2011
Breakdown
Employees Female 96 81 73 46 39
management
Male 229 229 226 205 196
management
Ethnic Bumiputra 1,165 1,138 1,105 1,039 728
breakdown
Chinese 1 2 2 5 4
Indian 31 31 28 33 31
Other non Malaysians 0 1 1 Nil Nil
Training Nos of 10 0 0 11 11
employees with
formal
qualifications
funded by Kulim
Total training Percentage 1.12 2.32 1.99 2.44 5.81
cost as per
centage of
payroll
Labour Minimum RM per month 900 900 900 850 850
Standards starting wage
Nos of Head count 1,727 1,277 1,322 1,530 1,334
employees who
are members of
a trade union
Nos of women Head count 26 23 12 14 17
who left on
maternity leave
Percentage who Per cent 100% 100% 100 100 100
returned after
maternity leave
Reported sexual Cases 2 0 1 Nil 2
harassment
cases

[ 91 ] Sustainability Report 2014 - 2015

disclosures

Category Indicator Measurement Unit/ 31/12/2015 31/12/2014 31/12/2013 31/12/2012 31/12/2011

Breakdown
Community and Breakdown of Sports 5,845,938 5,158,000 3,724,691 8,771,900 6,480,00
Housing charitable
contributions
(RM)
Culture/religion 409,564 535,000 27,200 13,000 5,500
Community health 2,313,000 102,000 110,000 290,105 22,500
Children and 389,116 643,251 213,850 169,800 167,500
education
Charity (basic needs) 2,801,362 239,152 562,481 217,300 56,100
Nos of Employees 9,786 9,270 9,624 4,504 4,434
employees and
dependants
housed
Square metres 9.60 9.60 9.60 9.60 9.60
per inhabitant
Safety & Health Fatalities Incidents 0 2 1 1 1
Lost Time Incidents per 200,000 6.82 7.19 7.20 9.79 5.80
Accident rate working hours
Severity rate Average nos of lost 2.28 2.44 2.23 2.70 4.00
time per accident
Major accident Reported incidents 37 29 40 33 54
Minor accident Reported incidents 436 558 252 310 507
Occupational Reported incidents 40 19 49 38 93
disease
Agricultural Herbicide usage Active ingredients per 1.3264 1.64 1.47 1.62 1.50
Production per hectare hectare (litres)
Paraquat usage Active ingredients per 0.1518 0.06 0.05 0.07 0.03
per hectare hectare (litres)
Yield per Tonnes 22.5 22.34 22.11 20.34 21.89
hectare
OER Percentage 20.86 20.58 20.22 20.29 20.20
Total titled land Hectares (Malaysia) 50,999.00 51,160.00 51,160 49,551 43,890
Total hectares Hectares (Malaysia) 47,010.06 47,122.53 47,107 45,592 43,890
of planted oil
palm
Peat developed Hectares (Malaysia) 1,380 1,380 1,380 1,380 1,380

KULIM (MALAYSIA) BERHAD [ 92 ]

 Category Indicator Measurement Unit/ 31/12/2015 31/12/2014 31/12/2013 31/12/2012 31/12/2011
Breakdown
Environment CO2 eq mt CO2 eq mt 243,274.83 221,933.28 262,078 184,911 168,571
equivalents (mill
only)
CO2 eq mt FFB 0.17 0.18 0.21 0.18 0.18
Methane from POME 240,557.88 220,126.21 260,150 182,732 166,545
Emission from diesel 2,716.95 1,807.07 1,928 2,179 2,027
BOD level PPM 532.83 114.50 114 85 261
Total fertiliser Tonnes 51,210.02 52,492.89 49,555 40,202 41,315
usage
Total chemicals Tonnes 236.05 185.12 217 204 130
Total FFB Tonnes 1,410,658.00 1,252,825.54 1,259,858 1,021,691 919,307
processed
Total effluents Tonnes 960,356.89 878,789.45 1,038,572 759,749 664,881
Total boiler ash Tonnes 7,053.29 6,264.13 6,299 5,108 4,597
Total production CPO (tonnes) 294,255.03 257,881.23 254,735 207,265 185,666
PK (tonnes) 78,289.75 69,680.55 70,891 58,773 53,678
Fibre (tonnes) 203,244.72 175,383.66 177,498 142,190 128,837
EFB (tonnes) 280,185.36 246,169.98 247,567 200,822 182,467
Acid oil (tonnes) 94.04 145.88 388 60 26
Total water Tonnes 1,247,802 1,309,204 1,471,627 1,174,732 864,050
usage (mill only)
Total water Per tonne FFB (tonnes) 0.98 1.05 1.17 1.15 0.94
usage (mill only)
Total diesel Litres 1,016,824.16 676,298.04 721,522 823,037 758,411
usage (all uses)
Diesel use per Per tonne FFB (litres 0.72 0.54 0.57 0.81 0.82
tonne of FFB
Total nos and Nil Nil Nil Nil Nil
volume of
significant spills

[ 93 ] Sustainability Report 2014 - 2015

disclosures

Category Indicator Measurement Unit/ 31/12/2015 31/12/2014 31/12/2013 31/12/2012 31/12/2011

Breakdown
Suppliers Kulim estate FFB Tonnes 867,866.60 814,843.31 765,665 570,989 554,156
JCorp linked Tonnes 122,761.44 30,413.81 78 34,309 Nil
FFB
FFB traders Tonnes 361,320.12 346,141.26 433,073 367,133 305,672
Smallholders
FFB
- controlled Tonnes 5,000.60 4,234.85 4,051 3,436 6,031
- external FFB Tonnes 53,673.04 57,192.31 56,991 45,825 53,449

Notes to Data

CO2 eq mt equivalent: For a complete breakdown of our GHG emissions, please refer to our Carbon Footprint Report 2014.

Oil Extraction Rate (OER): The total amount of crude palm oil produced divided by the total amount of fresh fruit bunches
(FFB) used, giving a ratio scale.

Lost Time in Accident rate: Shows how many employees per 100 employees have been injured or suffered an accident that
has to be recorded. The number of recordable cases is multiplied by 20,000, and then divided by the total number of labour
hours by the company.

Total payroll: Comprises basic salary and allowances extracted from the HR Management System. It includes training cost
paid to AKLI Resources Sdn Bhd, a subsidiary of the Kulim Group for carrying out staff training.

KULIM (MALAYSIA) BERHAD [ 94 ]

 Pahang

18
Negeri
21
Sembilan
17
22
23
16
15
13 14
12
Melaka 10 11
9

8 JOHOR
7

6 5
4 3 20

location of 2
1

estates & mills

19

Estates and Mills:

1. Bukit Layang Estate 13. Sungai Tawing Estate
2. Basir Ismail Estate 14. Selai Estate
3. REM Estate 15. Sungai Semborong Estate
4. Ulu Tiram Estate 16. Labis Bahru Estate
5. Sedenak Estate and Sedenak POM 17. Sepang Loi Estate
6. Kuala Kabung Estate 18. UMAC Estate
7. Rengam Estate 19. Sungai Papan Estate
8. Sindora Estate and Sindora POM 20. Siang Estate
9. Tereh Selatan Estate 21. Palong Estate
10. Enggang Estate 22. Kemedak Estate and Palong Cocoa Mill
11. Mutiara Estate 23. Mungka Estate
12. Tereh Utara Estate and Tereh POM 24. Pasir Panjang Estate and Pasir Panjang POM

[ 95 ] Sustainability Report 2014 - 2015

disclosures

Glossary
Biodiversity Extraction Rate

The diversity (number and variety of species) of plant The amount of oil extracted from oil palm fruit at a mill.
and animal life within a region. Oil is extracted from the flesh, Crude Palm Oil (“CPO”)
or from the nut, Palm Kernel Oil (“PKO”).
Biofuels
Fresh Fruit Bunches (“FFB”)
Biofuels are fuels that are derived from biomass
(recently living organisms such as wood or vegetable Fruit bunches harvested from the oil palm, with each
oil) or their metabolic by-products, such as manure bunch weighing 5kg to 50kg and may contain 1,500 or
from cows. They are a renewable energy source, unlike more individual fruits.
other natural resources such as petroleum or coal.
Global Reporting Initiative (“GRI”)
Biological Oxygen Demand (“BOD”)
A multi-stakeholder standard for sustainability reporting,
The amount of oxygen used when organic matter providing guidance on determining report content and
undergoes decomposition by micro organisms. Testing indicators.
for BOD is done to assess the amount of organic
matter in water. Halal

CO2e Equivalent Any object or action which is permissible to be used or

engaged in according to Islamic laws. The term covers
Carbon Dioxide Equivalents (“CO2e”) provide a universal and designates not only food and drink but also all
standard of measurement against which the impacts of matters of daily life.
releasing (or avoiding the release of) different GHG can
be evaluated. High Conservation Values

Effluent The concept of High Conservation Value Forests

(“HCVF”) was first developed by the Forest Stewardship
Water discharged from one source into a separate Council (“FSC”) in 1999 as its 9th principle. The FSC
body of water, such as mill process water. defined HCVF as forests of outstanding and critical
importance due to their environmental, socio-
economic, cultural, biodiversity and landscape value.

KULIM (MALAYSIA) BERHAD [ 96 ]

International Labour Organisation (“ILO”) International Sustainability & Carbon Certification
(“ISCC”)
A tripartite world body representative of labour,
management and government that is an agency of the An internationally oriented, practical and transparent
United Nations. It disseminates labour information and system for the certification of biomass and bioenergy.
sets minimum international labour standards called
“conventions”, offered to member nations for adoption. IUCN Red List

Independent Director The International Union for Conservation of Nature

and Natural Resources (also known as The World
According to Bursa Malaysia, an independent director Conservation Union) is an organisation based in
means a director who is independent of management Switzerland which is involved in the preservation of
and free from any business or other relationship which natural resources. It publishes the Red Data Book, that
could interfere with the exercise of independent lists the endangered species in every nation.
judgment or the ability to act in the best interests of an
applicant or a listed issuer. Non-Executive Director

Integrated Pest Management (“IPM”) A director who does not currently hold any other
employment with the company. Unlike an Independent
A pest control strategy that uses an array of Director, a non-executive director can have significant
complementary methods: mechanical devices, financial interests or close personal ties to the company.
physical devices, genetic, biological, legal, cultural
management and chemical management. These Non-Governmental Organisation (“NGO”)
methods are done in three (3) stages: prevention,
observation, and intervention. It is an ecological In this report, used to refer to grass-roots and
approach with a main goal of significantly reducing or campaigning organisations focusing on environmental
eliminating the use of pesticides. or social issues.

[ 97 ] Sustainability Report 2014 - 2015

disclosures

Palm Oil Mill Effluent (“POME”) Stakeholders

By-product of processed FFB. Any group or individual who is affected by or can affect
the company’s operations.
PEAT
Sustainability
Is an accumulation of partially decayed vegetation
matter. Peat forms in wetlands or peat lands, variously A term expressing a long-term balance between social,
called bogs, moors, muskegs, pocosins, mires and peat economic and environmental objectives. Often linked
swamp forests. to Sustainable Development which is defined as
“Development that meets the need of current
Roundtable on Sustainable Palm Oil (“RSPO”) generations without compromising the needs of future
generations”.
A multi-stakeholder organisation based in Kuala
Lumpur, Malaysia. The organisation has developed a
certification scheme for sustainable palm oil.

Social Impact Assessment (“SIA”)

Includes the processes of analysing, monitoring and

managing the intended and unintended social
consequences, both positive and negative, of planned
interventions (policies, programme, plans, projects)
and any social change processes invoked by those
interventions. Its primary purpose is to bring about a
more sustainable and equitable biophysical and human
environment.

KULIM (MALAYSIA) BERHAD [ 98 ]

Contact and Feedback

We welcome feedback and questions.

Please contact:

Salasah Elias
Kulim (Malaysia) Berhad
c/o Ulu Tiram Estate
Ulu Tiram, K.B 705
80990 Johor Bahru, Johor

Tel : +607 861 1611 / +607 862 2000

Email : [email protected]

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