Annual Report 2012 - IOI Group

ChallengesDespite its best efforts in responsible business, IOIGroup has encountered challenges arising fromoperating in a complex business environment. Withregards to the inherited land dispute with natives inSarawak, RSPO had conditionally lifted the suspensionon IOI’s certification process in view of IOI Group’scommitment to resolve the on-going dispute. TheGroup is committed to resolving the disputes in apeaceable and fair manner with full involvement ofthe RSPO plus an independent mediator.As for the Ketapang, West Kalimantan issue, theRSPO has concluded that there is insufficientevidence to prove that HCV areas were cleared bythe Group in Ketapang. Nevertheless, IOI Group hascommitted to tightening its operating procedures toprevent a repeat of the allegations in Ketapang.ENVIRONMENTIOI Group’s plantation operations produce a vastamount of biomass by-products, some of which areused to generate energy. For example, the 15MWBiomass Co-Gen Power Plant in its refinery complexat Sandakan, Sabah uses kernel shells and emptyfruit bunch fibres from its own mills to satisfy almostall the steam and electricity requirements of thehuge complex. Currently, IOI Group’s fuelconsumption for steam generation at all its millscomes from these renewable resources.In its efforts to mitigate greenhouse gases emission,IOI Group is in the process of planning andimplementing the methane gas capture systems inits palm oil mills to capture the methane gas frompalm oil mill effluent (“POME”), where the capturedmethane gas are utilised either in a boiler for steamgeneration or biogas for power generation. Theproject is being developed for the Group’s twolargest mills in Peninsular Malaysia and Sabah. IOI isalso exploring other possible biomass value additionoptions. Usage of biomass can be shifted over timefrom lower value activities to higher value bioenergy,biofuels and bio-based chemicals.On top of that, the Group also continuously investsin other green technology. For example new millingtechnology that reduces effluent and pollutantoutput plus waste water treatment facility tominimise its impact on the environment.In 2011, IOI Group commenced on a satellite imagerypilot project with Sarvision, a Dutch-based researchcompany, to improve and use satellite imagerytechniques to identify high carbon store areas inpotential growing regions, with the purpose ofavoiding or minimising greenhouse gas emissionsdue to land conversion. The project was completedand produced high quality satellite image maps ofIOI estates in Ketapang region in West Kalimantan.The pilot project with IOI Group helped Sarvisionprove the feasibility of the technique, which willnow be further developed as a commercial service.Besides that, IOI Group also contributed to wildlifeconservation. Among them are contributions to theOrangutan Foundation International (“OFI”) to supportits Care Centre and Quarantine facility in PangkalanBun, Kalimantan and contribution to the MalaysianPalm Oil Wildlife Conservation Fund (“MPOWCF”).MARKETPLACEIOI Group was the first company in the industry toimplement a set of criteria for suppliers that providespalm and palm-based products to its Europeanoperations. Established in 2009, the programme,known as “Controlled Source Palm”, will require allvendors that supply crude palm oil to IOI to becomemembers of the RSPO not later than the end of 2013.It is IOI Group’s intent to ultimately source only RSPOCertified Palm Oil once sufficient quantities areavailable to supply its worldwide clients.In the Netherlands, IOI Loders Croklaan Europe hasproudly published its ethical standards using theinternationally-recognised Supplier Ethical DataExchange (“Sedex”) format, sharing its standards andperformance with its customers and allowing themto use this as a tool in their supplier selectionprocess. This initiative is very well received by IOIGroup’s customers in Europe.Top left: Crèches lookafter the children whiletheir parents go to work inthe estates.Top right: Estate workers’living quarters in PamolEstate, Sandakan, Sabah.Annual Report 2012IOI CORPORATION BERHAD 51