Statement on Environment


The Group believes that palm oil can be produced in a sustainable manner if a responsible approach is adopted. The Group’s business model, in which environmental stewardship is an integral part, is geared to balance the conside ration for profitability with care for the environment. In line with this, the Group is committed to minimise the impact of commercial agricultural activities on the environment. This is done by adopting best management practices in oil palm cultivation while in parallel pursuing green initiatives such as biodiversity conservation and enhancement. The Group values engagement with relevant stakeholders so as to promote this message. It is hoped that by strengthening the dialogues, greater understanding on sustainable palm oil production can be forged.

LAND USE,CONSERVATION AND CARBON SEQUESTRATION

About 9% or 6,413 acres of its land bank in Sabah has been reserved by the Group for the purposes of conservation, education, recreation and training. Various natural landscapes are found on this reserve and they are scattered across the Group’s operating units. These include wetlands, water bodies, hilly terrain and secondary forest with conservation value. The overall land use for the Group is highlighted in the chart below. There were no significant changes in land use as compared to the previous year, except for immature areas that have been reclassified as mature with the palms planted on them coming into production.

The Group’s “Hundred-Acre Wood”, located in the midst of tropical rainforest in Sugut region remains the most visible statement and crowning glory of its commitment on sustainable green projects. The icon showcases the Group’s eco-conservation initiatives and centre for strengthening dialogues and education. The Group has established a training centre in this location. The natural surrounding also makes it an excellent spot for recreation. The plot of land covering over 100acres has ecologically important habitats that not only provide ecological services such as preventing erosion on steep slopes, reducing soil degradation and re-establishing a functional network of natural habitat, they also provide aesthetic values and recreational purposes.

The “Hundred-Acre Wood” also hosts a medicinal plant garden with more than 150 species of traditional medicinal plants, a fruit orchard, and a water catchment amongst the secondary forest. The secondary forest is home to more than 400 stands of various tree species. Of the 134 tree species identified, Shorea spp. is most dominant in the area.

“Hundred-Acre Wood” is important as it is the remaining remnant of forest that serves as the functional green corridor for the adjacent natural habitat. In the recent 2 days and 1 night bird and avi-fauna survey conducted by a group of bird enthusiasts and ornithologist, 70 species of bird were found and identified in the surrounding area of the “Hundred-Acre Wood”. In addition, few regularly sighted bird species are now the permanent residents in the “Hundred-Acre Wood” which mainly grazes on the fruits found in the wild and those planted in the fruit orchard.

The Group continued with the forest tree planting project and various sites have been identified in the estates for tree planting. In the reporting year, a nursery for forest tree saplings has been established in Meliau Estate in Sandakan. The flood-resistant tree species, bongkul (Neonauclea subdita), which were planted in the low lying areas in Sugut survived through the massive flood during the monsoon season and are growing vigorously. Oil palm trees have high rates of net primary productivity
and biomass growth, hence contributing in carbon sequestration. Based on the methodology developed by Malaysian Palm Oil Board (“MPOB”), the total carbon
sequestered in the reporting year has reached more than737,500 metric tonne or 29 metric tonne per planted hectare, based on the total planted area with age profileranging from 1 to 24 years. The Group monitored the total amount of carbon sequestered from its plantations in Sabah since year 2006, and the amount of carbon
sequestered has increased every year as more palm trees attained maturity.

RESOURCE STEWARDSHIP

Soil Management
Best Management Practices
Although oil palm trees positively contribute in carbon sequestration throughout the crop cycle, much of the carbon sequestered will eventually be returned to the atmosphere when the palms are felled. The return of the biomass to the soil is critical to ensure long-term soil fertility. In the replanting of Desa Talisai Estate, zero burning technique was adopted where all the biomass is shredded, chipped and well spread on the site for in-situ decomposing.

The Group’s Planting Manual and other Standard Operating Procedures which incorporate best management practices are the references for performance excellence in the operations throughout the Group. These practices will help to improve soil fertility, reduce erosion and leaching losses. In addition, legume cover crop is planted to reduce surface run-off and to restore soil fertility prior to the planting of oil palm seedlings. As and where required, terracing was realigned during replanting with proper silt drain on each terrace. Proper frond stacking and systematic application of empty fruit bunches and biocompost are also carried out. A green practice minimising the usage of herbicide and no blanket spraying is implemented.

Optimal Utilisation of Agrochemicals

The Group’s fertiliser application programme is recommended and monitored by the in-house agronomist under the ambit of the research and development department. The fertiliser programme is recommended based on scientific data derive from the leaf nutrient analysis and yield performance profile of the palm trees. Palm trees grown on marginal soil are closely monitored on their nutrient balance requirement. In addition, agronomy practices for these palms also involve best practices such as mulching and soil conditioning with empty fruit bunches and biocompost.

The Group has also implemented integrated pest management (“IPM”) which involves a combination of different pest management techniques. This includes pest and disease census, surveillance and monitoring as well as appropriate treatments. This integrated approach helps to maintain a high level of biodiversity in the estate, while keeping the level of pest population below thresholds. In the reporting year, 2,407 predatory insects such as Cantheconedia spp. and Platynopus spp. were bred in insectariums and were released to the field for biological control.

Water Conservation
All the operating units in the Group have more than one water reservoirs for water security. They serve as part of the risk management during drought season. The original vegetation around the water reservoirs are still intact and in some areas, fruit trees and timber species are planted around the perimeter of the water reservoirs. Agrochemical weeding and inorganic fertilisation are strictly prohibited near the water catchment area. Perimeter silt drain and traps are installed to reduce sedimentation in some areas where siltation may affect the quality of the water source. Water quality is being monitored through annual water sample analysis by accredited third party laboratory based on the guidelines of World Health Organisation (“WHO”) drinking water standard.

The palm oil mill effluent (“POME”) is treated before being channelled to the selected fields for land irrigation. The Group strives to reduce the Biological Oxygen Demand (“BOD”) through tertiary effluent treatment plant. We continue to closely monitor the amount of water used per tonne of fresh fruit bunches processed to ensure the optimal use of water.

For domestic consumption, all houses in the operating units are equipped with plastic water storage tanks to harvest rainwater. Harvesting rainwater can reduce the dependency on water supply from the treatment plant and it is also a source of good quality water. The rainwater can be used for washing and bathing purposes, while the treated water from the water reservoir is used for human consumption.

In the pre-nursery management, the pot tray system has been adopted. This system confers several advantages against the conventional polybag system. This system allows reduction in the consumption of important resources such as water and soil. In the main nursery, drip irrigation technology replaced the conventional sprinkle watering system. This precise irrigation system has helped to minimise water consumption and achieve uniformity in the growth of oil palm seedlings.

Air Quality Management
The Group has also made significant progress in reducing smoke and air pollutant levels in its processing plants. The Continuous Emission Monitoring System (“CEMS”) have been installed in the plants and are linked up to the Department of Environment via dial-up communication.

Solid Waste Management

The Group continued to review and improve its waste management strategy. Palm oil mill by-products are utilised and recycled back to the fields. The landfill sites for household wastes in the operating units are carefully selected based on site topography and soil suitability to avoid water source contamination. All chemical containers are triple-rinsed, punctured with holes to prevent re-use for water storage. The empty containers are then securely kept in the special storage area prior to submission to authorised recycling vendors.

EMISSION REDUCTION
The Group is cognisant of the global climate change issues and believes that it can play a vital role in reducing the green house gaseous (“GHG”) emission from its agricultural activities.

The Group is committed to reduce GHG emission by adopting the industry best practices,new technologies and innovations. One of the main sources of GHG emission is from the fossil fuels used in the operations and transportation. Zero burning policy is strictly adhered to for new land clearing or re-planting activities. Crude palm oil and palm kernel from the processing plants in Sugut region are mostly transported out to Sandakan via sea transport instead by road. This is cost effective and it also reduces the GHG emission arising from transportation. The Group has incorporated methane capturing in the construction of a new palm oil mill in Indonesia. The plant will capture methane gas from the POME discharge stream and utilise it for power generation. GHG emission will be reduced through avoidance in methane emission and substitution of fossil fuel for power generation. The Group has a biocomposting plant in Sugut that has been in operation since 2004. The plant converts the empty fruit bunches (“EFB”) and POME to organic biocompost for use in the estates. The use of POME and EFB in the composting plant results in zero discharge and helps to reduce the GHG emission. In palm oil mills where EFB is no longer incinerated, they are utilised as organic mulch in field. Biomass, such as fibre and shell, are utilised as fuel in the boilers for steam and power generation in replacement of non-renewable fossil fuels.