Sustainability is Integrated into our internal processes and supply chain


Our strategic approach to sustainability and responsible agribusiness is to establish the material issues, set effective targets and manage the operations according to recognised sustainability standards. Whilst we manage a wide variety of operational matters, we focus our sustainability reporting on 10 key issues that matter most from an internal risk perspective and to our external stakeholders.

[G4-18]

Our materiality assessment process 2013 – 2016 aligns with reporting principles expected by GRI and Accountability; it shows our material aspects and where the relevant impacts occur in our value chain.

We assess the potential impact on (i) the business and (ii) external stakeholders and the environment. Potential risks/opportunities were assessed during a materiality workshop attended by senior management and our Enterprise Risk Management team in June 2013. The prioritisation process was informed by other internal meeting, peer review, engagement with international NGOs as well as social impact assessments at site level. As part of our assessment we reviewed the Additional Guidance shown on p20 of GRI's Food Processing Sector Disclosure guidance. In this regard, our Report presents our management approach and performance relating to sourcing (note, our risk assessment indicates that Genetically Modified Organisms are not a significant area of risk, and animal welfare is not relevant to SIMP Group's operations). Stakeholder engagement through the year provides information for the materiality assessment.

In 2014, we organised another workshop for our management team to review the 2013 materiality assessment and to align it to the GRI G4 Guidelines. It was concluded that the current materiality assessment and ongoing sustainability programmes were relevant and on track. All of our key material issues affect both our internal and external stakeholders.

Senior management and our ERM team re-validated the issues in 2015. Also, senior management discussed high level material issues with investor stakeholders in 2016. This review process was supported by external advice from sustainability consultants. This work endorsed the decision by senior management that the relative importance and emphasis of existing material issues is still valid and correct. All of our key material issues affect both our internal and external stakeholders.

[G4-19, G4-20, G4-21]

To manage and improve performance under the ten material issues identified, our sustainability Programmes seek to embed sustainability in our operations and our supply chains. For each material issue we have set targets. Management and performance are guided by our sustainability policies, principles and commitment.

 

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[G4-24, G4-25, G4-26, G4-27]

In addition to our Sustainability Report ‘Stakeholder Engagement’ subsection, please see below some further information.

Our key stakeholder groups are employees, customers, investors, government and civil organisations, and local communities. We connect, engage and collaborate with them to strengthen our mutual interests and establish common goals.

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The implementation of our programmes are guided by policies which refer to relevant sustainability standards and applicable laws and regulation.

Our Sustainable Palm Oil Policy refers to important sustainability principles and standards, including ISPO.

Underpinning this policy are the following core commitments to ensure traceable and sustainably produced palm oil:

  • No deforestation, and conservation of High Conservation Value (HCV) and High Carbon Stock (HCS) areas
  • No new planting on peat regardless of depth
  • No burning for land clearing
  • Respect for Labour and Human Rights including Freedom of Association and non-discrimination
  • Free, Prior and Informed Consent (FPIC).

The Policy applies to all SIMP Group palm oil operations, including our plasma smallholders and third party suppliers from whom we purchase crude palm oil (CPO) for our refineries.

Click here to download Sustainable Palm Oil Policy 2017

The Code of Conduct forms a guideline for the Board of Commissioners(BOC), Board of Directors (BOD), employees of the Company and its subsidiaries (the “SIMP Group”), as well as the Organ Support of the SIMP Group (“Organ Support”) in performing business ethics and the duties of the BOC, BOD, employees of the SIMP Group (“Company Members”) and Organ Support.

The Code of Conduct comprises two policies on Company Business Ethics and Working Ethics of Employees and Organ Support. It applies to all the Company Members and Organ Support, and any violation shall be considered a breach of employment contract which may result in disciplinary actions. The Code of Conduct is communicated to the Members during the Company’s orientation briefings.

The policy on Company Business Ethics regulates the following:

  1. Compliance with laws and regulations,
  2. Relation with shareholders,
  3. Relation with the customers,
  4. Relation with business partners,
  5. Confidentiality of information,
  6. Corporate soial responsibility,
  7. Environmental conservation,
  8. Occupational health and safety, and
  9. Fair treatment.

The policy on Working Ethics of the Company Members and Organ Support regulates the following:

  1. Compliance with law and regulation,
  2. Abuse of power and violence,
  3. Protection and use of tangible and intangible assets,
  4. Health and safety,
  5. Other work outside the Company,
  6. Conflict of interest and transaction with related parties,
  7. Prohibited behavior or actions,
  8. Gratification,
  9. Illegal drugs and alcoholic beverages/liquor,
  10. Gambling,
  11. Weapons,
  12. Misuse of communication and social media,
  13. Organizational/political relations,
  14. Insider trading,
  15. Family relation, and
  16. Whistleblowing system.

In 2013, 11 task forces were formed to drive six core programmes that underscore our Sustainability Framework. The programmes span the entire value chain behind our agricultural and edible oil products.

Our Growing Responsibly Programme sets the policy framework for high standards of corporate governance and professional integrity. All our business interactions must be conducted in an ethical, honest, and accountable manner, in accordance with prevailing laws, rules and regulations. The Board evaluates how well we manage governance and integrity based on our Code of Conduct.

This programme also supports Sustainable Agriculture and Products programme by nurturing the capacity and competencies of our employees and plasma smallholders and encouraging stakeholder engagement. In collaboration with the Policy and Enterprise Risk Management department,it provides a policy framework for decision-making and good practices, and outlines keyprocesses for improving corporate risk management, leadership and governance.

Our Sustainable Agriculture and Production Programme drives the adoption of sustainable practices in crop cultivation and the operation of refineries and mills. This will be done through auditing the plantation, mills and refineries against the respective sustainability standards for our various agricultural crops and products.

See Certification and Standard section for more information

Our Safe and Traceable Products Programme and the supporting quality assurance processes aim to ensure that all our products are safe for human consumption. We achieve this by complying with international and local food safety standards and certifications, and stipulating the same level of food safety commitment from our suppliers through our Sustainable Palm Oil Policy and Responsible Supplier Guidelines.

Our products are fortified with minerals and vitamins as required by legislation. Nutritional value is enhanced for certain products as an added health benefit to customers, and for product differentiation.

Traceability

Tracing the origins of the CPO, the primary raw material used in our edible oil refineries is an important priority. Today, we are able to trace all FFB that arrive at our oil palm mills to the nucleus and managed plasma plantation and field where it had been planted.

Each consumer product that leaves our refineries bears a batch number, which can be traced back to the production line, place of manufacture, CPO source and when it was produced.

We will continue to focus on and improve our product traceability along the whole supply chain, not just for CPO, but also for all other major raw materials.

SIMP Group fully supports the Nucleus-Plasma Scheme that was created by the Indonesian government for plantation companies (nucleus) to develop oil palm plots near their plantations for smallholders (plasma). About 40% of our oil palm plasma smallholders are managed independently, the remaining half is managed by SIMP Group.

Our Smallholders Programme covers our efforts with the plasma and ex-plasma farmers, and supports the Nucleus- Plasma scheme through the development of inclusive supply chains. We have extended our sustainability efforts beyond our nucleus plantation operations to include our smallholders.

The Indonesian Government plans to make ISPO mandatory for smallholder farmers; we aim to support and assist our smallholders achieve the ISPO certification once it is mandated. In 2018, we assisted one KUD (co-operative) in South Sumatra to achieve the ISPO certification. This smallholder KUD has successfully undergone the ISPO audit.

This programme also sets out practical guidelines on building good relations and engaging with our local communities. To alleviate conflicts relating to land rights and to cultivate strong social relationships, we actively engage with local landowners and community leaders. The benefits have been manifold, including the mitigation of theft, protests, roadblocks and other business disruptions.

We aim to provide a safe and healthy living environment for all employees and casual workers living on our estates. We work closely with the local governments and hospitals to provide essential medical support, facilities and infrastructure for the people living on all our estates.

Currently, basic amenities such as accommodation, proper sanitation, clean water supply, waste collection, and electricity are provided on all our estates. We also develop common facilities for the employees and their families as follows

  • Clinics and integrated health posts
  • Recreational and worship facilities
  • Schools for employees’ children
  • Service roads connecting to the main roads
  • Designated plots in the estates for employees to plant their own vegetables and fruits

We have initiated many community development activities through our Solidarity Programme, which seeks to improve the quality of life in the estates through capacity building, education and financial support.

To tailor our community programmes to the needs of each community and estate, we have started conducting Social Impact assessments through an external party at each of our estates and factories. We consider factors such as the cultural background, literacy rate, living condition and economic situation of the local community before tailoring a programme that suits the developmental need.

Over the years, we have provided support to our local communities in the following areas:

  1. Infrastructure development
  2. Disaster relief
  3. Preservation of culture, including religious activities
  4. Sports events
  5. Empowerment programmes, including training and financial support for local entrepreneurs
  6. Education,including scholarships for employees’ children, incentives for teachers and renovation of school facilities
  7. Environmental conservation initiatives outside the estates

We have a flagship programme, IndoAgri Sehati, that consists of several initiatives that have been implemented in group wide level, among other things are:

a. Community health programme

We have developed maternity programmes to promote maternal and infant health by improving the effectiveness of the posyandu. We provide expectant mothers with free prenatal checks, immunisation, essential vitamins and minerals,and other gynaecological attention at the estates’integrated health posts, known locally as the posyandu.

SIMP Group has also contributed to the public health infrastructure by building medical clinics and emergency care units for the local communities.

b. Cataract Operation

In Indonesia, cataract is a common ailment that is adversely affecting the vision of more than two million people across all age groups. To relieve the visual impairment for the local communities, we are working with doctors from the Indonesian Army to conduct on-site cataract operations for the locals living around our estates. Since 2014, 1,035 patients in Kalimantan, Sumatra and Sulawesi had their vision successfully restored under this programme.

c. Cleft Lip Surgeries

Cleft lip is a common medical condition affecting many children in Indonesia. A lot of families are too poor to pay for a simple operation that can transform their children’s lives. As our children are the future of Indonesia, SIMP Group has decided to fully sponsor the cleft lip surgeries for at least 1,000 children in Indonesia. Up until 2015, we have sponsored 32 operations for 30 children under the cleft lip programme.

For further details, please see IndoAgri Sehati section below.

The way we manage our resources is in compliance with government regulations and best practices, and measured against relevant sustainability standards and certification

TOur plantations are audited for Indonesia Sustainable Palm Oil (ISPO), a mandatory standard for all Indonesian oil palm plantations.

ISPO is a government effort led by the Indonesian Ministry of Agriculture to create a system for sustainable palm oil production and certification that will enhance Indonesia’s competitiveness in the global palm oil market and reduce GHG emissions from oil palm plantations and operations

Currently in 2018, we have 468,000 tonnes, which is 62% of our 2018 nucleus CPO production, certified under ISPO.

The Programme for Pollution Control, Evaluation, and Rating (PROPER) is a national level public environmental reporting initiative launched by the Indonesian government in June 1995 to promote industrial compliance with pollution control regulations, facilitate and enforce the adoption of practices contributing to clean technology, and ensure a better environmental management system.

A simple five-colour rating scheme comprising gold, green, blue, red and black is used to grade the different levels of pollution control practiced by factories against the regulatory standards. The rating system serves to inform the community and market of the impact of the company’s operations on the environment.

PROPER Ratings Criteria

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PROPER Achievement

Click here to download achivement of PROPER

We have implemented the Sistem Manajemen Keselamatan dan Kesehatan Kerja (SMK3), the Indonesian Occupational Health and Safety management system. The SMK3 is comparable with the OHSAS 18001:2007 performance standard. SMK3 implementation involves hazard identification and prevention, risk management, medical examination and programme evaluation.

The estate and mill managers are trained in SMK3 workplace safety and operational techniques. Safety messages are regularly communicated to the employees, and reinforced through our OHS pledge and policy, SMK3 manuals and procedures, work instructions, emergency and first aid procedures, and other health and safety processes.

As an agribusiness, SIMP Group is fully committed to product safety and quality. We achieve this by complying with international and local food safety standards andcertifications.

Food Safety System Certification (FSSC) 22000:2010

In 2015, the Tanjung Priok refinery – our largest – was audited for compliance to the Food Safety Management Standard (FSMS) for FSSC 22000. The FSMS is based on the Hazard Analysis Critical Control Points guidelines, which adopts a preventative management approach to remove hazards from production processes that may cause the finished food products to be unsafe.

Halal Certification

All our refineries are halal certified by LPPOM MUI, the Research Institute for Food, Drugs and Cosmetics of the Indonesian Ulemas Council. LPPOM MUI is recognised internationally by the World Halal Council.

Palm oil is an important, basic food product in today’s society.As palm oil producers, we understand the environmental challenges of business expansion, and acknowledge our duty to produce palm oil in a responsible manner.

At the core of our sustainability commitment is a robust approach to environmental management and compliance that delivers cost savings through eco-efficiency and accountability through strong stakeholder relationships.

Our Policy aims to prevent deforestation and conserve High Conservation Value (HCV) and High Carbon Stock (HCS) areas. We commit to ensure that there is no new development in HCV areas within our operations and to buying palm oil from smallholders/external suppliers that does not originate from areas cleared of primary forest since 2011.

Since 2008, we started demarcating HCV areas in our plantations. The HCV areas include riparian areas, reservoirs, bamboo gardens, swamps, graveyards, and important heritage and cultural sites. In 2014, we engaged with accredited assessors to evaluate the HCV areas in all the oil palm estates.

Following the identification of the HCV areas, we organised a stakeholder meeting with delegates from both the government and local community to validate the designated areas, and to mark out these locations clearly on a map.

We restore the HCV areas by planting trees beneficial to the local wildlife. All oil palm trees within 50 meters from the large waterways were marked with white crosses. These trees would no longer be treated with pesticides and fertilisers so as to avoid contaminating the riparian areas.The HCV areas in existing estates are constantly monitored and assessed.

We communicate regularly with employees and local communities living around our estates on the importance of the HCV areas and the restriction of activities at these locations. The protection of endangered species is one of the topics covered during our discussions.

Prior to any new planting we use the HCS Approach Toolkit which allows estates to quantify carbon stocks of assets and gauge FPIC in the community

Click hereto download Overview of IUCN Red List or other national conservation list species found on our estates.

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We acknowledge that emissions of man-made GHG can contribute to climate change and affect weather patterns. This in turn can have great impact on the agribusinesses in various ways. Changes in rainfall pattern and volume,for instance, have a direct effect on the productivity, performance and security of our supply chain.

The principal sources of GHG emissions in our operations are:

  • Carbon dioxide emissions arising from changes in carbon stock during the development of new plantations
  • Carbon dioxide emissions arising from the use of fuels by the palm oil mills, transportation and machinery
  • Methane emissions from Palm Oil Mill Effluent (POME) ponds
  • Nitrous oxide emissions from fertilisers
  • Since September 2013, we have committed to no new planting on peatland. Peatlands contain rich carbon stocks, which are a significant source of GHG emissions if disturbed. We are committed to a no-planting policy on primary forests and HCV areas for new plantings. To reduce the emissions from Palm Oil Mill Effluents (POME), our three aerated bunker composting facilities continue to reduce methane emissions by 30%-70% compared with standard composting.

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INDOAGRI SEHATI - CLEFT LIP SURGERY

Under our Solidarity programme, we support the development of local communities in and around our operationals by improving their existing conditions and quality of life. One of our flagship programmes is the Cleft Lip Surgery Programme. This programme is part of IndoAgri Sehati, a community health programme of SIMP and its subsidiaries.

The Cleft Lip Surgery Programme is a free cleft lip and cleft palate surgery for children below 2 years old from underpriviledged family. This programme aims to make a better life for children with cleft lip and cleft palate.

The programme covers all company’s operational area, including Head Office, Representative Office, and Plantation areas. We aim to engage all SIMP Group employees to participate in this programme and to grow solidarity by disseminating the information about this programme to their family, colleagues, and communities surrounding our operational area which may have children with cleft lip and cleft palate.

This programme was started on April 2014. Until December 2018, we have sponsored 384 operations for 342 children under the programme.

In order to help us searching for beneficiaries in this programme, we encourage all our stakeholders to inform us if they know information about children with cleft lip and cleft palate that are below 2 years old and come from underpriviledged family. Kindly fill in the registration form here and send back to us.(Attachment).

For further information and registration, please contact below:

  1. Dina Rosmayanti 0812-1967-8831 Dina.Rosmayanti@simp.co.id

Through this programme, we hope that our employees, business partners, communities and other stakeholders can join with us to create a brighter future for our next generation.

Corporate Governance of Sustainability

The Board and senior management of SIMP Group are responsible for enforcing the Group's high standards of corporate governance. This is achieved using business management processes. The aim is to deliver organisational performance, accountability and transparency.

As of 31 December 2018, the Board of Commissioners consists of six members including the President Commissioner and two Independent Commissioners with no affiliation with other members of the Board of Directors and Board of Commissioners or the majority shareholders. The structure of the Board of Directors consists of seven members including the President Director and Vice President Director.

In performing its duties, the Board of Directors is under the supervision the Board of Commissioners. The detailed information on the Board of Commissioners and Board of Directors can be found in the Corporate Governance section of our Annual Report available at http://www.simp.co.id/InvestorRelation/AnnualReport.aspx

SIMP Group has a comprehensive Enterprise Risk Management (ERM) framework that enables SIMP Group to maintain vigilance and oversight of all its operating and functional units. The ERM framework comprises a set of systematic, integrated and coordinated risk management strategies. The framework is executed by the ERM Unit, which reports to the Executive Committee and an independent Audit Committee. The Unit ensures the timely and accurate identification, assessment, mitigation, reporting and monitoring of risks that can adversely impact SIMP Group's ability to achieve its business objectives. Our Code of Conduct and our whistle-blowing mechanism complement our ERM.

Since there are various risk issues common to ERM and sustainability management, the Head of the ERM Unit also reports on the effectiveness of sustainability strategies and compliance. “Risk owners” and business unit managers conduct quarterly assessment and reports of current and emerging risks, including sustainability risks. The ERM Unit analyses risk reports and proposes an action plan to address specific issues. Risk reports are then shared with the internal audit team, who validates the findings and actions taken.

SIMP Group's sustainability management information system (SMIS) uses real-time data from our SAP system to help track the Group's progress against its sustainability targets. The Group's sustainability progress and performance can be viewed online using a 'dashboard'. We also track the level of ISPO 'readiness' at our operations. This means we can make adjustments to any relevant plans during operations meetings in Jakarta which can then be approved by the Board.

The Sustainability Team works with the R&D team to improve agronomic practices and HCV area development. The Enterprise Risk Management Unit supports the team in matters relating to policy development, strategy formulation and issues resolution.

The Sustainability team reports to the CEO and prepares the agenda for the Sustainability Think Tank, comprising the Board members of the Group and its principal subsidiaries. The Sustainability Think Tank meets regularly to review the progress and direction of the Group's sustainability management efforts.

To lend greater focus to the different geographic areas, the Sustainability Team is sub-divided into regional teams, who report directly to the Group's Sustainability Coordinator in Jakarta

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We published our first Sustainability Report in 2014 in an effort to institutionalise and strengthen traceability across the Group’s operations. Since then, we have been reporting on the Company's journey in sustainability covering stakeholder engagement, managing sustainability in the plantations, research and development, labour relations, social and community affairs, supplier, customer and consumer relations.

Our Sustainability Reports are guided by international best practice and measured against the Global Reporting Initiative (GRI) Standard. To download the reports, please click links below:

Sustainability Report 2014
Sustainability Report 2015
Sustainability Report 2016
Sustainability Report 2017
Sustainability Report 2018