UNCERTAINTY RELATED TO GLOBAL WEATHER PATTERNS ENVIRONMENTAL CONCERNS AND INCREASING DEMAND FOR SUSTAINABLE AGRICULTURE PRACTICES The country’s palm oil production was significantly impacted by ongoing climate change and erratic global weather conditions throughout the year. In addition to the La Niña weather phenomenon in 2023, torrential rainfall resulted in floods in certain regions which were a hinderance to harvesting and logistics. Environmental concerns, including greenhouse gas (GHG) emissions, deforestation, loss of biodiversity, soil and water quality degradation, alongside potential human rights issues, persist in the cultivation and production of palm oil. • Pollination and planting schedule disruptions, along with compromised crop health • Industry volatility from fluctuations in palm oil production affecting palm oil prices and market dynamics Potential Impact • Persistent consumer concerns regarding the sustainability and traceability of palm oil products • The increasingly detrimental effects of environmental degradation and climate change on the global economy and businesses • Lack of sufficiently reasonable steps taken to maintain environmental, social and governance (ESG) values throughout the entire supply chain Potential Impact We maximised production to mitigate the impact of erratic weather conditions. How We Responded • We maintained a diligent commitment to upholding our ESG principles • We strengthened our global ranking by utilising internationally-recognised assessment instruments like the Sustainability Policy Transparency Toolkit (SPOTT) to address the management of risks pertaining to ESG • We upheld strict compliance across all aspects of our operations, including and not limited to: i) Consistent tracking of emissions with the Roundtable on Sustainable Palm Oil (RSPO) PalmGHG calculator and GHG Protocol ii) Vigilantly protecting areas of high conservation value (HCV) and biodiversity, as well as upholding the No Deforestation, No Peat and No Exploitation Policy iii) Complying with applicable acts and legislation as well as upholding the Zero Burning Policy • We continue to ensure sustainability standards are maintained throughout the supply chain by actively interacting with our smallholders, vendors and contractors every year How We Responded The uncertainty of weather pattern in 2024 could alter conventional precipitation patterns, impacting agricultural output and commodity markets. Should this be counterbalanced by higher-than-average rainfall, the anticipated effect on palm oil production in 2024 is expected to be minimal, despite potential irregularities in usual rainfall trends. Outlook With consumer awareness and desire for ESG-compliant products on the rise, environmental concerns and the call for greater sustainability in agriculture will only intensify. Further impetus from the European Union’s strict requirements to mitigate the negative effects from palm oil activities on the environment will also drive more sustainable practices industry-wide. Outlook Integrated Report 2023 047
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